Breaking Points with Krystal and Saagar - 12/27/22: Housing in 2022, Pentagon Fails Audit, Sanders War Powers Resolution, Crypto Bros Want Your 401k, Art of Class Warfare with Max Alvarez

Episode Date: December 27, 2022

In this holiday roundup we cover Housing in 2022, Pentagon failing another audit, behind the scenes on Senator Sander's push for Yemen War Powers Resolution, Crypto Bros going after your 401k retirement savings, and a look into Unionization struggles this year with Max Alvarez.To become a Breaking Points Premium Member and watch/listen to the show uncut and 1 hour early visit: https://breakingpoints.supercast.com/To listen to Breaking Points as a podcast, check them out on Apple and SpotifyApple: https://podcasts.apple.com/us/podcast/breaking-points-with-krystal-and-saagar/id1570045623 Spotify: https://open.spotify.com/show/4Kbsy61zJSzPxNZZ3PKbXl Merch: https://breaking-points.myshopify.com/ Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

This is an iHeart Podcast. voices, and the perspectives that matter 24-7 because our stories deserve to be heard. Listen to the BIN News This Hour podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. What up, y'all? This your main man Memphis Bleak right here, host of Rock Solid Podcast. June is Black Music Month,

so what better way to celebrate than listening to my exclusive conversation with my bro, Ja Rule. The one thing that can't stop you or take away from you is knowledge. So whatever I went through

while I was down in prison for two years, through that process, learn. Learn from me. Check out this exclusive episode with Ja Rule

on Rock Solid. Open your free iHeartRadio app, search Rock Solid, and listen now. I'm Jeff Pearlman. And I'm Rick Jervis. We're journalists and hosts of the podcast Finding Sexy Sweat. At an internship in 1993, we roomed with Reggie Payne, aspiring reporter and rapper who went by Sexy Sweat. A couple years ago, we set out to find him. But in 2020, Reggie fell into a

coma after police pinned him down, and he never woke up. But then I see my son's not moving. So we started digging and uncovered city officials bent on protecting their own. Listen to Finding Sexy Sweat coming June 19th on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. All right, guys, wanted to take a minute to check in on the state of the housing market as we head into 2023. And as with all things in the economy, the picture is kind of mixed and a little bit complicated. Let's go and put this up on the screen. This analysis from The Wall Street Journal, they say why this housing downturn is not

like the last one. If you could leave this up on the screen, because there's a chart there on the screen that you can see the levels of equity this time around, even as we have experienced a huge housing downturn, including a decline in prices that started sometime around May, but you have much more equity with homeowners. So there are fewer people who are in the category of potential foreclosure. You have people with a lot more sort of wiggle room in terms of their financial picture. Now, on the one hand, that's good. Obviously, you don't want people losing their

homes, being foreclosed on. That's like a seminal event in people's lives. It's extraordinarily traumatic. It's horrific. People still have the scars and are still recovering from what happened last time around. On the other hand, the reason why people's equity is so high compared to their debt is because basically at this point you have to be rich in order to be able to purchase a home. So people who were able to purchase homes, who had the mass amount of cash they needed up front in order to get their foot in the door and compete with private equity and all these permanent capital players who are in the markets, by definition are sort of financially better off. So it may mean that you're not going to have a mass foreclosure crisis, but you have another crisis on the other side of a total lack of housing affordability,

which has obviously been wildly exacerbated, and intentionally so, by the Fed and their interest rate hiking. Yeah. And I was actually looking right now, as predicted, even with the rise of interest rates and the tripling or quadrupling in some cases of some of the payments that the average person would have to make, the average price of a home has only dropped by like 1% or 2% on the overall index. So the price is staying stagnant while the cost is going up through the roof. So it is a complete crisis of affordability. Yeah, I don't really know what exactly people can do at this point. And even, we've talked about this, well, with the interest rates where they are, you're actually disincentivizing even building new housing because a lot of builders are like,

nobody's going to buy in this environment or they're not going to buy as much. People are not going to leave their old house and buy a new one and finance it. So that means that both the price remains high and housing stock is actually arguably going to shrink as a result of all of this. Right. And it's not just they're anticipating like, OK, people aren't going to buy, which is correct. And they won't be able to fetch as high of quite as high of a price because, you know, people won't be able to afford it. But they also have their own borrowing costs that they have to factor in as well. So as interest rates go up, if they're going to borrow in order to finance a big development or a big project,

they're much less likely to do that just because it's monetarily makes a lot less sense. So what the Fed is doing right now really is exacerbating one of the core issues in terms of the housing market, which is just a lack of stock and especially a lack of affordable housing stock. I remember seeing some statistics about how much of affordable housing stock. I remember seeing some statistics

about how much of our housing now is, you know, basically like the sort of suburban McManus, the like upper middle class housing is the bulk of what is ultimately created. Or if you're in an urban setting, like the more high-end condos, there is so little, what used to be called like a starter home,

there's so little of that stock being created and which remains in existence. So for young people, for new families trying to get their foot in the market, this is a massive, massive issue that, you know, there's no obvious solution in sight. And I do think it's going to continue to sort of royal our politics. And I don't think policymakers, I don't think that the press has really paid sufficient attention to it because having a place of your own and having that sort of stability and security from having home ownership, the type of wealth that you're able to build then over generations, I mean, this is really the path to moment in terms of American economic history. It really changes our conceptions of ourselves, our conceptions of our society. And it's, you know, it's going to continue to be a massive issue going forward into 2023. Absolutely right. It's one of those undercurrent sleepers that is going to explode one day. And some of us told you so. All right,

guys. So turns out the Pentagon has failed an audit again. Let's go and put this up on the screen. They say here defense spending reaches record high as Pentagon fails its audit for the fifth time. Now, let me give you the backstory here. Back in 1990, apparently Congress passed a law that directed all federal agencies to produce regular audited financial statements. I'm reading from the piece here. More than 30 years later, the Department of Defense is the only agency that has never passed a single audit. And now the Pentagon has just announced that they have failed their fifth attempt. By the way, these audits themselves are tremendously expensive, enormous undertaking, requiring 1,600 auditors.

That cost, back in 2019, about $428 million to conduct and another $472 million to try to fix the problems that the audit uncovered. Obviously, that attempt to fix the issues is completely failed. So as audit costs, they say, approach a billion dollars a year with no meaningful change, the conclusion is obvious. Audits are not enough to bring the Pentagon's bookkeeping back into order, much more than incremental improvement is needed to create transparency. But for now, the Department of Defense seems intent to keep trying the same thing and hope for different results. This comes on the heels of Congress passing an $858 billion budget for the Department of Defense. And when they can't pass an audit, it just shows you this is a gigantic

slush fund. This is a higher defense budget than at any point during the Cold War. It gets voted for overwhelmingly. There are a few handful of, what's the word I'm looking for? Objectors, yes, to the massive amounts that get spent here ultimately. And there is an effort by a group, by a person group of eight senators to pass something called the Audit the Pentagon Act would require any entity within the Department of Defense that fails an audit to surrender 1% of its budget a year. So at least there would be some incentive for them to get their act together

and have some sort of transparency and accountability. But, you know, Sagar, this is one of these stories that it'll be a blip on the radar. It will not even really get covered by the mainstream press because it happens so routinely. But we should continue to be shocked and outraged that this much money is going to an agency that cannot even account for where the funds are ultimately going. And the crazy thing is it's still costing a billion dollars a year to keep doing these failed audits. So clearly the entire system has to be revamped.

And yeah, look, I mean, we should all care. Like if you're going to spend all this, you're going to spend nearly the GDP of like several nations combined. Like you should at least find out if it's being spent properly and or well. Like are we getting anything for this? And this has always been one of my major criticisms too of the military industrial Like, it's not even they're particularly good at what they do. Right. Look at the F-35 program or many of these others, which have had massive cost overruns without being actually effective. And then the Chinese will just steal it and do it for like one twentieth of the cost. Well, hold on a second. Like, what did we just do here?

I don't know. It's a failure on so many levels. And, of course, it doesn't get any, you know, even close to the amount of coverage that it deserves. Even from the so-called defense press. Like, they just look past this stuff. Mostly because they get funded. Yeah, that's right. And they just accept it as like, oh, well, this is old news.

They failed an audit for five years now. So what's the big deal? It's like, well, that in itself is the huge story. That's a huge, huge story. And so there is no way ultimately to have any sort of accountability on an agency when you are just willing to funnel them billions and billions. They can't account for it. And so, of course, they're not going to get their act together when they can just go and get an even larger defense budget increase the next time around. This is bipartisan. Republicans, Democrats, really doesn't matter. And the fact that there is no sort of shock and outrage over this is itself extraordinarily telling ultimately.

Absolutely. Hey, folks, I'm Ken Klippenstein. This is Breaking Points, the Intercept Edition. I'm joined today by my colleague, investigative reporter for the Intercept, Dan Boguslaw, who broke a very important story a couple weeks back that we know significantly more about today that we want to talk to you about. That story was about the War Powers Resolution advanced by Bernie Sanders and ultimately blocked by the White House. What we know now that we didn't know then was a lot of what was going on behind the scenes in Congress, how this story came to pass, how that resolution was killed,

what its current status is, which we're talking with Dan about today. And what's really interesting about all this to me is the fact that Dan really caused this entire firestorm to take place by just walking up to Senator Sanders, asking him about the status of that legislation. Sanders made a comment saying, yes, I have the votes for it. We're going to go ahead and pursue it. Unbeknownst to us, or at least to me and probably much of the public at the time, was the fact that Bernie actually had no plans to do that and that that question actually triggered this entire range of events. So Dan, can you tell us how that happened? And really, why are media not doing this more and posing these questions? Because this is

really press at its best, is posing questions, putting pressure on senators. And I think what we saw here was you really strong-armed Senator Sanders by just asking him about the status of that thing he's talked about before and got him to have to do something about it. Yeah, well, I think that, you know, a lot of what you see with congressional reporting is this sort of horse race to break small crumbs of news, to beat out other large news outlets for, you know, information is probably going to come out in one respect, one way or another. And so for me, the really exciting thing about congressional reporting is the opportunity to kind of do your background research, talk to staffers, try to get as much intel about what's happening behind the scenes as possible. And then, you know,

go into the Hill with a game plan to try to ferret out information that you know is simply not going to come from mainstream news outlets. What you're describing just sounds like the job of journalism to me. Why does that not happen? Why was there no one else of the entire press pool? I mean, you're a relatively young guy, you're still fairly new to congressional reporting. Why were you the first person to walk up to him? My understanding from our conversations off set was that the senator was just standing there and he thought, hey, well, here's an important question. I'll just ask him it. Why did no one else do that? It's shocking, you know, when you're in there and you see, you know, U.S. senators walking by and you have these journalists waiting in the wings and sometimes they'll just

let, you know, a senator walk right by them because they're sort of waiting to pounce on, you know, appropriations chair for, you know, spending bill or, you know, foreign relations chair if there's a, you know, a foreign policy debate leading the news cycle. But really what you see is just these competing factions to break news that's going to come out one way or another and, you know, critical pieces of legislation like a bill like the Yemen War Powers Resolution, which is taking power away from the president and, you know, trying to create some mode of accountability for another nation, which has been waging a war that has led millions to the brink of starvation. There's no there's no appetite. There's no appeal if that's not running the news cycle. And so these critical issues just get completely pushed to the wayside.

I do think it's an abdication of responsibility for reporters. At the same time, I think the incentive structure for corporate media is such that they're all trying to beat one another out for their editors to break that crumb, that kernel of news before everyone else. I mean, how much of this is political? Because I know that it's very clear that the White House didn't want the War Powers Resolution to pass. And just to give folks a sense of what that is, you alluded to it before, it's basically

making it so that Congress has say in what the White House decides with regard to military conflicts, wars that we become engaged with, which to me is like so uncontroversial. I mean, this was the whole point of the Constitution is the president is not a king. We're going to have checks and balances. We're going to have different, in theory now, different branches of government. And the decision to go to war is very explicitly the domain of Congress. So it's crazy to me that we even need legislation for this. But be that as it may, the White House began whipping votes, as you reported, against it to try to stop this, ultimately succeeded in doing so. Senator Sanders says he's going to try again. And from sources that I know in Congress, that's not a bluff. He really is going to reintroduce this. And that's what makes this relevant now to folks is that, you know, they're going to introduce this again. And the question is going

to be, what is the language going to look like? Will it be the same? What will it change for him to try to get support? But this ball is very much up in the air. How do you see media responding to the second bite at the apple when they bring this back? I mean, I hope that it's been, I hope that my reporting has kind of re-elevated it into the consciousness of... Oh, clearly. No one was talking about it. And again, this is a core constitutional question. Sure. But I think, you know, yeah, the White House basically said, you know, we don't want to deal with this. We don't want this in the news cycle.

You know, we have other priorities. And it's shocking given the fact that, you know, Saudi leadership has walked all over the Biden administration. Humiliated them. They've done Lucy in the football over and over again. And this is one more instance. I mean, this had bipartisan buy-in. You know, you had senators and representatives from both parties saying this is the least we can do to pull, you know, military support back in this one instance. And, you know, the Biden administration said that's too much, you know, that's ceding too much control, despite the fact that it's been

clear over and over and over again that Saudi Arabia has no intention of acting in good faith and negotiating in good faith, you good faith with the U.S. Yeah, that's something we've covered pretty extensively here at The Intercept. Another issue that media doesn't like to touch, and I can speculate as to why, but the reality is the administration is getting walked all over. They're making oil production decisions that just fly in the face of not just norms in the past, but specifically what the administration is asking for. And so you would think that this would be a layup. That's to say nothing, the specifically what the administration is asking for. And so you would

think that this would be a layup. You know, that's to say nothing. The fact that the White House itself has said that there are going to be, quote, consequences. You report in your story that the Senate Foreign Relations Chair, very powerful figure, Senator Bob Menendez, said that we were going to stop military support. Here's a prime opportunity to go ahead and do that, uphold, you know, one of the core components of the Constitution on an issue that I got to say is really bipartisan. I know a lot of conservatives in the military and in the national security world, not to mention just ordinary people, that are completely on our side in terms of being very opposed to this war and our involvement in

this war, which as you said, has had a devastating and just profound humanitarian effect. Millions of people food insecure, going hungry, thousands of children maimed, as the UN pointed out last week. So this just seems like a layup. Why is the White House whipping against it? And why are Senate Democrats not standing behind Sanders in this proposal? Well, you know, I think when the White House calls you up and tells you to do something, you know, people often do it. I mean, I've had the White House call me up and tell me not to run a story, and I revel in telling them, no, I'm going to run with the story I have. Is this why media doesn't ask these things and put these things on the agenda?

Well, yeah, I mean, I think there is an extension of that logic. I mean, you see these reporters forming these really cozy relationships with senators. You know, there's no aggression. There's no hostility. You see their body language when they approach senators, the total reverence and willingness to take, you know, no comment for an answer instead of, you know, pursuing them. Or are they just like starstruck? This is so interesting to hear this perspective. Yeah, I mean, it's shocking to me. I mean, these people are supposed to be representing Americans. They're supposed to be working for us. And so the notion that, you know, and they work tirelessly to build these protections, these senses of awe and fear and grandeur. And if you have the privilege of being accredited press and you have the ability to push them on obvious conflicts of

interests or push them on moments where they are prioritizing their donors or their political fortunes above the interests of the American people. And you don't take those opportunities. I mean, it's shocking to me. I mean, there is there's so few people who have that type of access. And to be cowed by these people who are public servants never ceases to amaze me. Yeah, it's incredible. Changing gears for just a minute, you more recently had a story on a piece of legislation before Congress now that would put protections in place for journalists

that report on classified information to protect them from being subpoenaed by courts under various conditions. And that, again, sounds like something that's pretty uncontroversial to me in terms of maybe in Washington, maybe it's controversial. But across the country, I would imagine most people would be open to something like that. You just you had heard through your sources that Senator Grassley had a role alongside Senator Cotton in stopping that piece of legislation from advancing. You just walked up to him, just like the Sanders War Powers example, put the question to him, and he more or less copped to it. So once again, I ask you, why are you the one doing these things? Why aren't other reporters? I picture them being a little more evasive and clever about dodging these things than

they just aren't. Well, I think there's different spreads. I mean, there's different overarching pressures that these reporters face from the corporate structure of their outlets. I think some are much more egregious and provide far less flexibility than others. And there's a pressure to try to squeeze out whatever breaking news about omnibus spending or whatever that's possible. But again, I'm always shocked, sort of like, you know, I remember on the Hill yesterday, I saw Senator Feinstein, you know, going into the elevator and, you know, at this point, her staff basically, you know, runs the entire operation.

You know, she's really not all there. And yet it's just incredible. But she's a U.S. senator. Right. And it was shocking watching these reporters kind of glance over at her. And instead of seeing that as an opportunity to press someone, you know, and to, you know, try to highlight, you know, the fact that, you know, here is, again, one of the most powerful people in the world walking by and an opportunity to try to get information and at the very least highlight, you know, the current state that she's in. Instead, it's like, oh, well, like we can't get anything on the omnibus out of her.

You know, we can't get anything on this news cycle. So they just go to like her chief of staff. And so, you know, instead it's like, oh, well, like we can't get anything on the omnibus out of her. You know, we can't get anything on this news cycle. So they just go to like her chief of staff. And so, you know, or just whatever, or just completely, you know, ignore her. And I think, yeah, I just think that there's a increasingly perverse set of incentives, you know, with the speed of the news cycle and with, you know, the competition between corporate outlets, there's just really not an incentive to push senators in this way. It's a shame because it doesn't have to be that way. As you've shown, you can just post things, walk up to them. They're not cordoned behind glass walls or anything. They're not hiding away. I mean, they're just out there and you can walk up to them that's what's extraordinary to me um is that that suggests that they face so little

pressure they don't have to worry about hiding these guys behind walls of aids and things like that it's just because nobody comes up to them and asks these things yeah um yeah it's it's it's shocking i mean it's also somewhat shocking too especially some of these more seasoned people you know the sort of caution and reverence they hold. Is this like a West Wing sort of like you had to show this deference and they're just in awe of the stature of the office? I think so. I mean, I think a lot of these people, you know, have spent their entire lives, you know, dreaming about being able to talk to septuagenarian, you know, lawmakers and sort of bow down before them. But I think that there is this conditioning then that happens.

There's conditioning, there's tremendous conditioning to try to make it seem like these people can't be held accountable ever and that these people don't work for us. Oh, don't even try. Yeah. be held accountable ever and that these people don't work for us, you know, and that they are intransigent and they know exactly what is going on. They know exactly what they're saying at all times. And, you know, a lot of them have no idea about their policy portfolios, you know? So if you push them on that, you know, that's their job. That is what, you know, that is what they're elected to do. And so they have a responsibility to answer your questions. And, you know, that is what they were elected to do. And so they have a responsibility to answer your questions. And, you know, that applies to all sorts of things, not just whatever's dominating

the news cycle. Okay. Well, this is a really helpful and insightful look at, I think, why congressional reporting doesn't produce what, you know, people really need and what would be very interesting. So that's Dan Boguslov, The Intercept. Thanks so much for joining us. Thanks, Ken. Time now for our weekly partnership segment with our great friends at The Lever. And joining us today is Matthew Cunningham.

Great to see you as always, Matthew. Thanks so much for having me on, Crystal. I really appreciate it. Of course. So you have this great look. Let's go ahead and put it up on the screen on the potential infection of the crypto collapse into the rest of the economy. Your headline here is crypto bros want your 401k subhead. Despite FTX's collapse, a lawsuit linked to the exchange's investor is trying to force regulators to allow crypto into the retirement market. What did you find here, Matthew? Yeah, so we knew about this lawsuit that was trying to overturn a great guidance from the

Department of Labor that just said, basically, if you're a fiduciary like Fidelity and you're adding crypto to your 401k lineup, you better watch out. And so that was what the guidance said. And immediately there was a lawsuit. And what we revealed is that the company behind this lawsuit, For Us All, a 401k services company, is also backed by Ribbit Capital, which is one of FTX's backers as well. And then we go into the whole broader problem, which is that crypto is highly speculative, subject to huge price swings, doesn't have any underlying value like stock in a blue chip company or bonds in a blue chip company,

and so really has no place in a 401k lineup. But the largest 401k service provider, Fidelity, has started to do that. And that's why it's all the more important that the Department of Labor be aggressive on this matter. So I have obviously been distressed about the people who have been hurt by crypto's collapse, who thought that they were getting in on the ground floor of something that was new and exciting, that was going to bring them sort of stability and prosperity into their lives, and who have really been hurt by this. But I think the silver lining is that it happened when it did, because there has not been a lot of broader economic contagion, precisely because these

crypto securities hadn't been integrated into things like 401ks. Because one thing we've learned from previous financial collapses is once you get big enough, once you're integrated into all facets of the economy, then guess what? You're too big to fail. And when you collapse, regulators don't just, and lawmakers don't just let you collapse. They then go in and bail you out. This seems to me to be one piece of a broader scheme in the crypto world to get themselves integrated into the mainstream economy so that they would have those same types of fail safe protections as the big banks do. Yeah, and that's what we go. So Sam Baikman-Fried was on this Bloomberg podcast earlier this year where he basically admits that

his whole strategy is to get a huge amount of people's retirement money. He calls it locked up money. He doesn't specifically say it's retirement money, but that's the implication of what he's saying, to drive up the price of an asset that, again, fundamentally has no value. So, I mean, the closest analogs to crypto are gold or platinum or silver, all of which have major, highly important industrial usages in addition to kind of their historic value as a precious metal. None of that applies to crypto. It's indescribably more speculative than even the most speculative assets. Gold is not an appropriate investment, I believe, for a 401k or a retirement plan. And crypto is many orders of magnitude riskier. Yeah, I think that's very well said. Who are the lawmakers that have been carrying water for crypto in this town?

Yeah, so I mean, Senator Cynthia Lummis and Senator Kirsten Gillibrand have been the main champions. Lummis is a crypto investor. We're planning on digging into her personal financial relationships with the crypto industry more at levernews.com. And Senator Gillibrand is from New York. And I think that the main reason why she's so interested in this is because the same large New York-based banks like Goldman Sachs or JP Morgan that really were behind the 2008 financial crisis really see a huge opportunity in crypto. There's very large fees that can be gained from it. There's a huge new customer base that can emerge from the crypto market.

And that's what the big banks are really trying to do. And I think Senator Gillibrand has really always seen Wall Street as part of one of her core constituencies. And I think that more than anything else, it's showing kind of how interested Wall Street is in this latest scam. And I think really also undercuts arguments about how crypto is disruptive or a threat to the establishment in any way, because I think, you know, the senator from New York would not be championing crypto if it wasn't in any way a threat to the establishment.

That is such a great point. Another question for you. I see some efforts to paint SBF like he's this sort of like soul bad actor rather than emblematic of an industry that's basically built on fraud and scams. Do you see in D.C., has the downfall of SBF put a chill through some of the greater crypto enthusiasts on the Hill? In addition to Senator Gillibrand and Senator Loomis, there have been others, of course, who have taken a lot of cash from various crypto players. There was a group of lawmakers who I think you guys were the ones that reported on, wrote a letter basically saying like, hey, SEC, let's let this Sam Bankman Freed guy. He's a great guy, don't take a look at what he's doing over there at FTX. Has there been a rethinking of that

posture towards the industry overall, or are they seeing it more as just sort of one bad apple? I think that the biggest roadblock is this investigation into Sam Bankman Freed. So I think when it was just the collapse before the arrest, I think that you basically saw this, there was no impact on Capitol Hill. But now that he's been arrested and there's this investigation into his political straw donor scheme that has implicated some people like Sean McKelvey, I think that now you're going to see much greater scrutiny of the crypto contributions to Congress

and as a result, a slowing down of any type of pro-crypto regulation that helps integrate it into people's retirement funds. I think you're going to see that slowing down because Sam Bankman Freed was the largest donor from the crypto industry on the Democratic side and potentially on the Republican side as well due to his dark money contributions. And it's clear that prosecutors are now examining those contributions and as a result I think that yeah the zeitgeist has slowed significantly but to your point when it was just the collapse and

not before the arrest I think it was status quo ante. Wow I mean that political piece I know you guys are going to continue to follow up on and report on because I'm very interested in that. I'm interested in who got money from him. I'm interested in, you know, some of the allegations are that there were corporate contributions using stolen customer funds going to these politicians. There are allegations that they were using straw donors. So there are a lot of other pieces to come into place here and sort of players and names to be revealed. So I know you guys will be keeping your eye on that as I will be as well. Hi, I'm Maximilian Alvarez. I'm the editor-in-chief of the Real News Network

and host of the podcast Working People. And this is the art of class war on breaking points. There are a lot of businesses out there that claim to be progressive, that claim to be inclusive and responsible, and that claim to care deeply about their employees. And make no mistake, marketing yourself as a progressive and socially conscientious company can be very lucrative, and it can help you secure a loyal customer base. But as we have seen time and time again, you really see a company's true colors. You see how committed they really are to their ostensibly progressive values when their workers band together and say, we're forming

a union. From Starbucks waging a scorched earth union busting campaign, firing union organizers left and right, to beloved vegetarian staple Amy's Kitchen shutting down an entire California plant earlier this year where workers were organizing. Many so-called progressive companies have set their public image on fire and shown us all who they really are in their ruthless efforts to crush their workers back into subservience. Another nominally progressive brand with a seriously tarnished reputation that I've reported on at The Real News is the vegan meat alternative company, No Evil Foods. In 2020, workers famously tried to unionize with the United Food and Commercial Workers during a pandemic at No Evil's main production

plant in Asheville, North Carolina. And management infamously and successfully busted up that union drive, only to turn around a year later and thank the workers who had gotten the company through COVID by abruptly shutting down the plant, moving to a new state, and laying everyone off with no severance pay. Well, earlier this year on the Evolve CPG podcast, Sadra Shadel, co-founder and CEO of No Evil Foods, reflected openly on the union drive at the Asheville plant and spoke about some of the lessons management has learned along the way. Let's take a listen.

At some point in that process, we thought we were building this company that had this culture. We actually won an award in 2020 or 2021. I can't remember now. It's late 2020 as the best startup to work for in our area did have interest in forming a union. We were a very small company, and we were trying to get a fairly substantial investment in a new manufacturing facility off the ground. They're trying to scale up to this new space, which had a lot more overhead than when we previously had. We were still not profitable by quite a long shot. We had a cash burn of, you know, hundreds of thousands of dollars every month as we were trying to scale up and ramp into this manufacturing. Our team grew from about 16 to 60 overnight. Just this rapid kind of critical points of growth and change for our company. And, you know, at the same time, we're bringing up to raise more money and investors and some of our board members are saying to us, you know, we've never seen a company with a union raise VC capital. And that was really scary for us to hear, being people that were not seasoned entrepreneurs. These are the experts that we have in the room to learn from and to take guidance from.

And so, you know, we did hold meetings to not discourage. I mean, from our perspective at the time and have learned a lot about this movement and a lot about how, you know, power structures and imbalance are at play in these situations that we weren't really keyed into at the time. And it sounds naive, but it's very true. But we, you know, held meetings from our perspective to educate and help kind of share the pros and cons of what unionization might mean for our company at this stage of our growth. Later, we learned that that's, you know, termed union busting, and it's really frowned upon. And we just didn't know. And it's, you know, termed union busting and it's really frowned upon. And we, we just didn't know. And it's, you know, it's kind of crazy to look back on now. You guys know me. I'm a patient, understanding guy. And I know that no one's perfect. Everyone makes mistakes. I mean, whomst among us hasn't screwed up before and wished we could go back and do things differently if we had the chance.

And I mean, Cedra Shadel certainly seems genuine in that clip. If you just stumbled upon the interview on YouTube, you'd have no real reason to doubt what she's saying there. And maybe she and co-founder Mike Woliansky and the whole No Evil Foods management team truly didn't know that they were union busting during those mandatory captive audience meetings that they made workers attend at the Asheville plant two years ago. Maybe they really did just want to, you know, sit down and level with their employees and give them the basic pros and cons of unionization so they can make an informed decision about whether or not a union was right for them. I mean, we just have to take her at her

word, right? It's not like we were physically there during the captive audience meetings that management made workers attend to hear a litany of anti-union propaganda speeches. And it's not like we have leaked audio recordings from those meetings that we could check to see if Shadel's account of events even holds up. Oh wait, we totally do. As it just so happens, North Carolina is a one-party consent state. And it just so happens a former No Evil Foods employee leaked their recordings of those captive audience meetings to me and a few other journalists a couple of years ago. And it just so happens that I published clips from the recordings on my podcast two years ago. And it just so happens that No Evil Foods tried to abuse the Digital Millennium Copyright Act

to get the episode of working people permanently taken down. But they failed. The episode is still up. So let's go to the tape. So here is Shea Dell speaking to now former employees at No Evil Foods during a 2020 captive audience meeting at the Asheville, North Carolina plant. The UFCW has over $340 million in assets. It brought in $292 million in 2018 and it spent $278 million. So for me, that raises two questions. One, how did they make $298 million. So for me, that raises two questions. One, how did they make $292 million?

And two, how did they spend that much money as well? So where did the money come from? That's what makes unions very unique. And I say this from having worked in a union facility before, and I'm promising to say that I don't think unions are bad, conceptually. I think there's a hell of a lot of people in industries that work in very shitty ways. I don't think that comparing apples to oranges, saying that this union represents a meat packing plant, is equivalent.

I just don't. So that is my personal stance and my personal belief going into this. That also raises my thought that unions are unique. They don't provide, with most businesses, you provide a service or you provide a product. We make plant meat, we sell plant meat, that's how we make our money. Our customers expect something, when they get money, they get a product. Unions don't, however, make a product, sell a product, and they don't provide a guaranteed service. With unions, they make their money off of dues. That's it. So how does the union keep on making so much money if they can't promise anything?

How do they get people to keep paying paycheck after paycheck? Maybe this is hard. So this is guaranteed. They make it really, really, really hard to stop paying dues. Now, I don't know about you, but to me, that sure as hell doesn't sound like someone who didn't know goddamn well that they were union busting. So let's talk about this with someone who was also there and experienced that not union busting firsthand. I'm honored to be joined today on Breaking Points by Megan Sullivan, a former employee of No Evil Foods who worked at the production plant in Asheville and participated in the Union Drive there. Megan, thank you so much for joining us today on Breaking Points. Thank you so much for having me. I'm so happy to be here.

Well, we really, really appreciate you taking the time to chat with us. And let's start by introducing you to the good breaking points, viewers and listeners. So could you talk a little bit about what you did at No Evil Foods and what it was like to work there, what it was like to be part of that unionization effort? And I'm curious to know if your memory of what happened during that union drive syncs up with Sandra Sheaadel's description, uh, of, of events in that interview that she did earlier this year. So I worked for No Evil Foods on their production line, which included, um, making the product packaging and boxing their vegan food product. And if I'm being honest, I truly enjoyed the work itself.

I really liked the way that place ran as far as who I worked with and what we did on the floor with the other rank-and-file workers. That was one of my favorite jobs as far as that goes. But Cedra's depiction of events during the Union Drive is not what I would call accurate by any means. When the rank and file workers at the Asheville facility filed for a union election, no evil foods owners waged war on those efforts. Like you name it, captive audience meetings, anti-union posters, just intimidating vulnerable employees there, just textbook union busting. And they even hired a prominent union busting lawyer, Constanji. And so it's like this shit doesn't happen by accident, right? Like you know more than anybody, they abused the copyright law to try to censor your coverage about it. So it's just wild to me that she pretends like

she's this innocent bystander in all of it when she was running those meetings. It's, it's pretty astounding to me. Me too. And the, and the other like telling thing from that interview is she admits before she says, oh, you know, apparently what we were doing was called union busting, but we just didn't know that. But right before that, she admits that oh, you know, apparently what we were doing was called union busting, but we just didn't know that. But right before that, she admits that their, you know, board members and shareholders were telling them like, you're not going to raise money without a union, like essentially giving them marching orders to bust the union drive. Like, so you know goddamn well what you were doing. You can't have it both ways. You can't pretend like you're just some aw shucks startup just trying to figure this stuff out. And at the same time, you know, like,

you know, just, just actively try to kind of kill this union effort so that you can please your, you know, you know, venture capital backers or future venture capital backers. Well, it's crazy too, because her and the other owner, Mike Wolianski, for the last two years, essentially, they've been running around saying that it was a free and fair election. Any criticism that they were faced with it, they would just deny, deny, deny. But as soon as they didn't have any employees at that facility to answer to, that's when this pivot started to happen, where they're saying, oh, well, we just didn't know. You know, we know better now. We wouldn't do that again.

It's because they don't have employees to answer to. And so just to be clear, is it safe to say that, you know, again, in that interview, Sager Shadel claims that they did not know that what they were doing was union busting. So I'm getting from you that you're calling bullshit on that. And again, we played the clip. We played the clip from one of the captive audience meetings. They seem pretty clear about what they're doing in those meetings. Yeah, absolutely. There was, it was entirely transparent the way that they were just busting a union.

You know, companies, it's not even just No Able Foods. Like, companies will use this line, we just want to have you guys be informed. We want to give you this information. They treat it like this educational sermon. They're just trying to tell you not to use your collective power. Just everything she said there was nonsense. Well, and you know, like, I think what, there, there are many things that infuriate and anger and sadden me about this. And, you know, obviously I'm not the only one, but, you know, the last time that we spoke on my podcast, Working People, it was right after they closed down the Asheville plant. And sadly, if workers

had had a union at that point, then the founders would not have been able to just unilaterally say, we're closing, everyone's laid off, no severance pay, sorry, thanks, and good luck, right? If you have a union, you have to like, if you have a unionized workforce, you have to negotiate the terms of that kind of move. But workers who had labored throughout a pandemic, who had saved that company through working through a deadly pandemic and who had had their efforts to unionize squashed by the company were left completely holding the bag when Woliansky and Shadel decided to close that plant and move to a new facility in Illinois. So I wanted to ask, since that was the last time that we spoke, for viewers and listeners, could you just say a little more about what's happened to everyone

since then? Like what's happened to the company and what's happened to your coworkers? So, yes, the last time we spoke, my partner John and I, who he was actually fired from No Evil Foods as well for his organizing activity, we had set up a fundraiser for these people who had been laid off. And we were talking to you right around the time we were just, you know, trying to platform that everywhere and get the word out. We were able to raise about $3,500 and it got split between 12 of the employees there who reached out and needed it most. So that was something that was really great that we were able to help with in the immediate aftermath of that. Of course, time marches on, you know, people found new jobs. But the struggle continues. I mean, you know, people found new jobs. But the struggle continues. I mean, you know, as well as I do, the struggle continues for the working class. It's not so much, you know, these people, yes, they were affected by No Evil Foods, but it's going to be the same problem

anywhere that you go, working in these service industry jobs and these non-unionized workplaces. But to answer the rest of your question, No Evil Foods did end up moving to a co-manufacturing facility in Illinois where things went so horribly wrong that they're now being sued for failing to pay over $200,000 that they owe for their leased equipment. So, I mean, that's a whole mess. It's just leaving a trail of destruction everywhere that they go. And for the last month, they've been shamelessly fundraising to regain shelf space and Whole Foods and open up their new online store. And they were only able to raise about half of their goal. It still stings, though, that they didn't have that kind of enthusiasm for the people that they laid off while we were fundraising. I remember going on

and talking to David Feldman and being like, help us out with this. I would collaborate. I hate you guys, but I'll collaborate with you on this. We should help these workers together. We both supposedly care about them. And I was only met with radio silence. So really where we're at right now with the company is they've been on a tour begging for money and they're trying to make a comeback. But we don't want that to happen. Well, I'm just kind of picking up on that and by way of, I guess, rounding us out, because I can't keep you for too long, but yeah, I mean, that's something that has really stood out to me, right? Listen, like I said in the beginning, I get that people make mistakes. I get that people need to do what they can do to kind of like keep their business alive. I would argue that

busting your union drive, treating your workers this way, tarnishing your reputation, that's on you. Maybe you wouldn't be in this position if you hadn't treated your workers that way. But who am I? I'm just an outside observer, right? But you're right. It did like, you know, really sort of strike an odd tone to see, you know, the founders out there furiously fundraising at the same time that they're doing interviews like the one that we played in the intro where they're trying to whitewash, you know, their, their shitty history of union busting at the same time that when workers, their workers, the workers who got them through a pandemic, you know, were told abruptly last year that the plant was closing, that everyone was going to be without a job, all the, any benefits that they had accrued and that, you know,

there was no, there was going to be no severance pay. Like you said, there's a real dissonance there between the kind of current fundraising efforts for No Evil Foods and the lack of fundraising for those employees this time last year, or a little earlier, who really needed help paying rent, you know, and who have kids and all that stuff. And we can't just let that go by, right? Like, you know, yeah, No Evil Foods, you know, you got to do what you got to do, but we cannot just let this stand, right? If you want to claim that you are both a progressive company, that you're, that, you know, you care about your workers and everything like that, then you need to hold yourself to that standard and the rest of us are going to do the same. So Megan, like in that vein, I wonder if you could

just say a little bit about what people out there can do to help, you know, I guess where you see things going from here for No Evil Foods. Yeah. And how we can kind of keep that struggle going, as you mentioned. So, yeah, to me, it's really important not to forget what this company did, you know, in them trying to kind of rebrand and reemerge, you know, from the ashes and all the scandals. You know, facts don't expire. You know, what they did is never going to be different. And until real accountability, until they actually hold themselves accountable and take accountability publicly, I just can't fathom why somebody would support this company. And to stay up to date on everything, you know, that No Evil Foods might be

doing, how they may be treating their workers and updates like that, moevilfoods.com is a great resource. There's also an Instagram page, So Evil Foods, where you can stay up to date specifically on No Evil. And even though there's no current fundraising going on for former No Evil Foods workers, I would encourage folks to donate money to individuals or group strike funds. John and I have been working with this nonprofit union busting watchdog labor lab where he and I are able to give interviews and a platform to working class organizers going through union elections and are actively organizing. And what's more aggravating than anything is more often than not, many of these people and organizers face retaliation for their organizing activity. So I guess the short answer, I'm sorry, is that you can go to laborlab.us slash 4315 and you can always stay up to date on what John and I are currently fundraising on because there's always a cause out there that's worth putting your money towards as far as the working class goes.

And, you know, people are really starting to wake up to the reality that unless frank and file workers come together collectively to advocate better pay and conditions, then those things aren't going to happen. And the best way to help this collective fight continue is to really just organize your workplace. Hell yeah. Couldn't have said it better myself. So that is Megan Sullivan. Megan was a former or is a former employee of No Evil Food. She was involved in the unionization effort there. And as you mentioned, you can find the work that she and her partner, John, are doing over at Labor Lab. Megan, thank you so much for joining us today on Breaking Points. I really appreciate it. Thank you so much for having me. I'm so happy to be here. Thank you for watching this segment with Breaking Points and be sure to subscribe to my news outlet, The Real News, with links in the description. See you soon for the next edition of The Art of Class War.

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