Breaking Points with Krystal and Saagar - Best of Week 4/24: Elon Twitter Mayhem, CNN+ Downfall, Ukraine War, Economic Contraction, Student Debt, & More!

Episode Date: April 29, 2022

Krystal and Saagar talk about Elon buying Twitter and the chaos that ensued, Ukraine war strategy, French elections, worker rallies, CNN+, student debt, economic statistics, Saudis, & More!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. mainstream by becoming a Breaking Points premium member today at BreakingPoints.com. Your hard-earned money is going to help us build for the midterms and the upcoming presidential election so we can provide unparalleled coverage of what is sure to be one of the most pivotal moments in American history. So what are you waiting for? Go to BreakingPoints.com to help us out. Good morning, everybody. Happy Monday. We have an amazing show for everybody today. What do we have, Crystal? Indeed, we do. Many wonderful, interesting stories to cover. Of course, we're going to talk about CNN+. We have Sarah Fisher on, and not to give it away, but we do have a little bit of a surprise for you. Something that we've purchased on behalf of the entire Breaking Points community, so stay tuned for that. We also have election results in France that are actually really interesting to unpack. On the one hand, Macron wins re-election, so it's sort of status

quo, and by a much more sizable margin than what had initially been predicted by the polls. However, Le Pen did better than the far right has ever done before, so we'll dig into all of that. Also, looking like Elon Musk is in fact going to take over Twitter. Amazing. I mean, well, so this is, you know, reports as of this morning, but we'll break it all down. Yeah, we'll break it all down for you. We also have now a movement from the CDC and the DOJ en masse. They are going to appeal that ruling. Sagar was right. I was wrong. But they did it, of course, in the worst possible way. So we'll give you all those details. We also have, starting this morning, workers on Staten Island at another Amazon facility are going to be voting on a union election. Bernie Sanders and AOC were at that location yesterday

for a big rally. So we have those details for you as well. And very excited to announce yet another Breaking Points partner, Jordan Sheridan and Status Coup. They're going to be providing us with exclusive on-the-ground footage. He was there. And by the way, Jordan was there from the beginning with regards to the Amazon Union election. One of the only reporters and news outlets that actually took the chance seriously that they could actually prevail there. He was there on the ground at the rally yesterday and sent us some exclusive footage that we're going to take a look at in the show. So very excited about that. Yeah, we've been relying on Jordan for years.

One of the things that we've heard from you and that we want to make sure that we're spending your hard-earned money correctly on is having an on-the-ground presence at some of the places that are completely undercovered and that you care about. So Jordan will be doing this for us, you know, basically on a continual basis, not just on Amazon, but on whatever story strikes everybody's fancy across the country. So there we go. All the administrative stuff out of the way. We've got actually more, even more for you tomorrow. We can't overwhelm everybody. We have to parse this out. But I do want to say about Jordan, you know, I'm really excited about the whole ecosystem that we're building out here and all the partners and relationships that we have.

And I hope you guys seem to have really enjoyed the content. I know Maximilian Alvarez put his first piece up over this weekend. People seem to really love Max being such a thoughtful person. Jordan adds another whole dimension. Yes. Because for the first time now, we'll have capability to have actual on-the-ground reporting, exclusive footage. So that's something we've been looking for, and we're really excited to add into the mix to make this a more complete and holistic experience for you all. The extended universe is expanding. Soon we'll have our own

shoot-offs. Okay, let's start with Ukraine. So Ukraine, I know it seems like it never ends, but there's some bigger news that came out this morning. Let's put this up there on the screen, which is Secretary of Defense Lloyd Austin and Secretary of State Anthony Blinken both visited Kiev this morning, and they came out with this very significant statement. So the Secretary of Defense in particular making some big news where he says specifically that he wants to see, and the United States policy, is that they want to see the Russian military weakened. Here's a direct quote. We want to see Russia weakened to the degree. It cannot do the kinds of things it has done in Ukraine. It has already lost a lot of military capability and a lot of troops, and we

want to see them not have the capability to very quickly reproduce that capability. So that is military speak for we want to continue to see the Russians suffer as much as they possibly can in Ukraine. Now, look, obviously, I agree with the sentiment. However, whenever it comes to official statement of US policy, it cuts against what we have been speaking about, Crystal, which is that the United States is not currently offering any sort of hope or even really want of a peace process. Obviously, we have to support Ukraine. If Ukraine doesn't want peace, then that's what it is. But in terms of what we should want, we should want an end to the conflict. And the U.S. is now pretty much explicitly declaring this as a proxy through which they want to see as official statement of U.S. policy by the Biden administration to,

quote unquote, weaken the Russian military. What does that mean? Well, it means, as we have seen what accompanied their visit, hundreds of millions of more dollars that have been sent to the Ukrainians in terms of military aid. That's right. It means that. It also means making Russia a permanent pariah state, you know, keeping these incredibly onerous sanctions on that, of course, are wildly indiscriminate, not just targeting Putin and his Kremlin leadership and his oligarchic buddies, but the entire population. And so what the official policy of the United States government, which has been clear for a little while, but, you know, this makes it even more official, is basically we are going to make Russia a pariah. We're going to try to bleed them dry.

And what Biden had said originally that Putin cannot remain in power and what aides had been leaking and saying privately that basically the only end game is to push him out of power, that is now becoming very close to official U.S. government policy. And the impact of our actions, look, it's not all about us, but, you know, we're kind of a big player in all of this and have significant influence over the direction of this conflict. We have never been further away from any sort of negotiated settlement and to these hostilities. Yeah. And that means for civilians in Ukraine, it means continued decimation, destruction, and death.

And that's what's so sad about this whole situation. 100%. And you look at it in the context of the war, it looks like Putin is also responding very much in kind. Let's put this up there on the screen. Michael Kaufman, the military analyst who we really respect, he put up that map that those who are watching can see in terms of where the front line in the battle is. But the real end result that you can say from Michael is that he says that this is very

likely the decisive period of the war beyond what happened in the first three weeks and that the Russian military here is basically exhausting what remains of its offensive potential. I want to emphasize this. They're exhausting their offensive potential in the context of how they're selling the war to the Russian population. Absent a full-scale mobilization, absent bringing in troops from other parts of the country and a full-blown war footing akin to basically what the Ukrainians are, they're calling it like a special action at home, not war. Although apparently sometimes the Russian anchors slip up and they're like, it's a war. In the heat of the debate, they call it a war, yeah.

Yeah, in the heat of battle, everybody acknowledges it's a war. But within what they have, what Kaufman and others are pointing to is that there is very likely the last of the offensive capability, which, look, I mean, we should not underestimate. Yes, they've made a joke of themselves on the world stage, but that doesn't mean that they're not going to be able to put up a fierce fight. And increasing Western intelligence assessments, you take that of what you will, you know, in terms of what they assess, in terms of what Putin is thinking. Let's put this up there on the screen. They say, and this is from the Financial Times, which first broke the news, so this is from British intelligence, Vladimir Putin abandons hopes of Ukraine deal and shifts to a land grab strategy. This would make sense given the complete basic breakdown of talks over the last couple of weeks. The Turkey talks basically

went nowhere. Escalation on the ground has continued. You saw the strategic withdrawal from the city of Kiev, and now you basically see a full-scale war for the eastern part of the country and of control. That Putin is now looking at this as a pure land grab in order to try and grab as much land as he possibly can, which is going to ensure an intense amount of death and, unfortunately, an intense amount of fighting on the parts of the Russians. Because if this is the last of their offensive capability, you can be sure that they are going to be grabbing as much as they possibly can before we even try to reach a negotiated settlement. And in terms of the parts of the Ukrainians, they've put up a fierce and, you know, a fierce, fierce resistance.

But we did see, you know, one of the major cities there in Ukraine already fall, and who knows how much longer they can hold out in that part of the country, which is already at, in a civil war for the last eight years. Yeah. Kauffman really, he's very clear. He doesn't want to hazard a guess as to what happens in Eastern Ukraine and which side is ultimately going to get the upper hand. And by the way, to your point about, you know, will there be a broader military mobilization from Russia where they actually are telling their population it's a war and preparing for that. There's a very ominous sign this morning that, you know, I'm not going to hazard a guess as to what exactly is going on there. But there are reports of explosions at a gas facility inside the Russian borders. So, you know, they could spin that as this was a Ukrainian attack.

Perhaps it actually was a Ukrainian attack and say this is a direct attack on our soil. Now it's time we have to fully mobilize and fully go to war. Right. Again, don't know that that's the direction it's going in. I'm just saying those are the reports that are out there this morning, and it's a very ominous development. With regards to Putin and this report that, you know, he was kind of interested in a deal, was going back and forth, and now has sort of decided that, no, we're just going to go for this land grab strategy. I mean, part of what he has

always wanted as a key priority here is not just the eastern region, but also this land bridge to Crimea. So that seems to be the direction that they are ultimately moving in. And the fact that the deal is effectively off the table now, I mean, that's just an extremely sad state of affairs. And I think it's an indictment of U.S. policy and U.S. actions with regard to Ukraine. They said there was hope for a deal. This is one of the sources who were speaking to the Financial Times. Putin was going back and forth. He needs to find a way to come out of this as a winner. And then you contrast that to Ron Klain saying, no, we have no interest in giving Putin any sort

of a face-saving off-ramp. And the administration's increasingly clear posture that their official policy is basically, you know, Cold War with Russia to the end. And it presages a new and very sad and dangerous, frankly, world order that we're moving into. Yeah. And, you know, whenever you have a situation where one side needs to save face, who knows what that looks like? Like you said, maybe there's some attack that they have staged. Maybe it's even a Ukrainian attack. The longer the hostilities go on, the longer that this type of situation and the worst case scenario can unfold. Who knows how Putin views the U.S. policy saying we want to see Russia weakened. I can guarantee you they're going to be playing that all over their TV all day long. This is exactly what they

want. They want to humiliate us. They want to destroy us, which is definitely going to consolidate their population. In terms of U.S. policy, we shipped hundreds of millions more dollars in military aid over just the last week. You know, several different appropriations of weapons that are heading over there. So, look, this is entering a new phase, unfortunately, one we basically predicted from the beginning, which is we're very likely to see a massive stalemate. You know, World War I, people thought the same thing. They're like, well, we've lost enough people now, so now we've got to come out of this thing on top. We have to go and grab this land. Alsace-Lorraine was really

worth 200, 2 million people who died over that soil. Pretty much everybody agrees not, but the same traps of war, the same leaders, and the same hubris. We are sadly in the same situation as we found out then and in almost every war since. Now, it's all a game of attrition, and we'll see how it works out, but it's sad. Let's update you on the election results out of France because I find this really fascinating. Oh, yeah. Based on your response, you all are pretty intrigued by it as well. So, this was the second and final round of the French presidential runoffs, and it pitted Emmanuel Macron, who, of course, is the incumbent,

against Marine Le Pen, who is a far-right president. She and her father have been running for president for quite some time now. So there was a lot of nervousness among establishment types because the polls were really quite tight there for a while. And there was a big question of who Mélenchon, who was the third- place sort of lefty candidate, kind of like France's Bernie Sanders to, you know, make a very casual comparison here. Who would his voters go ahead and support or would they show up to vote at all? Because there were protests in the street among students in particular saying, basically, we don't want either of these candidates. We hate both of these people. A sentiment that I think us here in America can very much understand with

regards to the type of choices we have been offered in our presidential politics as well. So we have official results. Let's go ahead and put this first element up on the screen from the Wall Street Journal. Emmanuel Macron has, in fact, won a second term in the presidential election. You know, they go on to say he's now under pressure to unite millions of French who cast ballots for his rivals in the election's first round of voting, because it's very important to note that when you combine the vote for the far left and far right candidates, more than 50% of the vote went against the sort of establishment neoliberal direction of France. So that's the first part. Let's put this next tear sheet up on the screen from Le Monde. They talk here about, you've got the

official results, 57.4% for Macron, 42.6% for Le Pen. So not particularly close in the end. But they talk about here how large the numbers of abstentions actually were. The abstention rate was on course for about 28%. That means people who who just said neither. Right. I don't want either of these people. I'm staying home. I'm casting a blank ballot. I'm not picking either one of these candidates. Twenty eight percent. That would be the highest in any presidential election. Second round runoff since 1969. So clearly voters not in love with these choices. And by the way, perhaps part of the reason why is because they report high on Macron's to-do list once he's back in office is pension reform, raising the French retirement age. So cutting back on social benefits. This has been – his tenure has been already wracked with protests.

They had the yellow vest movement against gas tax increases. He's been, in terms of economics, you know, just standard neoliberal and very dissonant from some of the social welfare traditions in France. Let's go ahead and put this next piece up on the screen that just has the margin, 58-42. So again, not that close. And you can see, go ahead and put the next tweet up on the screen that just has the margin, 58-42. So again, not that close. And you can see, go ahead and put the next tweet up on the screen. You can see as we got closer to election day, that the area where it was sort of like the tightest there on the screen, April 10th, that was right during the first round of voting. And ever since then, Macron has been gaining and gaining and gaining. So his message

of basically like, listen, you may not like me all that much, but we got to be a bulwark against the right seems to have worked. I know also that there were a lot of attacks from him on Le Pen over her ties to Russia, you know, as the Ukraine conflict continues to unfold. So that's what the lay of the land looks like there. It's pretty fascinating. In terms of Macron, I mean, he was an incredibly unpopular politician, but that's actually kind of par for the course. Now, unfortunately, some U.S. people are trying to read into this, one of them being the White House chief of staff, Ron Klain, put up this tweet. He says, quote, an interesting observation, just FYI, President Macron appears to have secured a double-digit victory over Le Pen at a time when his approval rating is 36%.

Now, that's incredibly low IQ and dumb for a variety of reasons. Number one, last time I checked, we live in an electoral college, not a direct democracy in terms of national popular vote. And I think Biden would have to have a 52 to a 54% margin just to win the electoral college. So that's number one. Number two, we don't have a runoff system, a 54% margin just to win the electoral college. So that's number one. Number two, we don't have a runoff system, a la what we had previously. So that might actually cut across. But third, you really want to celebrate the fact that the guy won. And, you know, look, on the one hand, Macron, it was a blowout. On the other, I mean, he comes into a much weaker position. His party does not look well poised when the upcoming parliamentary elections. France is obviously ensconced in turmoil. So you really want to celebrate a win on that. And just acknowledging how unpopular you are looks completely ridiculous.

Now, in terms of the election itself, what you were talking about with the crossover vote, let's put this up there. 42% of first round Melenchon voters actually backed Macron in the election. Now, 42% could be looked at as a lot, or it could be looked at as really not that much, given the fact that Melenchon actually said nobody should vote for Marine Le Pen. So a high level of abstention. And this was the lowest rate of turnout. So you had 42% for Melenchon voters backing Macron and 17% backing Le Pen. So many more went with Macron, but you can see quite a number just said, nah. Yeah, blank.

None of the above. I think that's what's really nuts. And like I said, in terms of his National Assembly, what he looks poised to win, who knows in terms of how this works out. But the polls there seem more accurate. Let's put this up there. Which is 66% say they do not want him to obtain a majority of seats in the National Assembly, which would all but spell doom for that pension reform and all of that. Now, in terms of deeper, in terms of the election, in the context of Le Pen, there's a lot going on here. Let's put with Daniel, who we had on the show. I actually kind of disagree with his point here. He says, important note of caution, it's the highest that the far right has gotten. In 2002,

Jean-Marie Le Pen got 18%. Five years ago, Le Pen got 34. This time, Le Pen gets 41 to 43. Now, I guess you could say that it is an accomplishment in order to get to 41 to 43, but in the context of any other politics, getting beat by, what is it, 56-43, that's terrible. I mean, that's a complete blowout. So really the story to me is one we said from the beginning. The story is that the center-left and the center-right in France are dead. There is a weird neolib constituency in Macron, but he still created his own party. He's got elements of the right.

He's got elements of the left. He's got elements of the center. He destroyed the his own party. He's got elements of the right. He's got elements of the left. He's got elements of the center. He destroyed the center-left. Le Pen also just remains really just a complete non-starter figure for a large portion of the French population. They're willing to begrudgingly vote for him. And in terms of the right, the Gaullist center-right party, which ruled France for, I don't even know, for decades, dead, gone.

That's the story to me, which is that you see these two independent candidates, which are now assembling new coalitions, and how that shakes out in the history of France. We're going to look back on this period and say this was a big, big moment in their history as to how a new coalition and a new center is evolving. It's really fascinating, and there's a lot of temptations to make analogies with American politics. And I think some of them are apt. Certainly we can see it in, you know, our reflection, our own politics of having these two choices that, you know, there's a lot of people who aren't terribly excited about having, you know, the message of basically like, look, you may not love me, but you got to be super scared of this person over here. So you got to suck it up and suck it up and vote for Macron in this case. Right. And ultimately, that won the day. So similar to Biden versus Trump, that message was compelling enough for

Macron not just to win, but win here by a comfortable margin. I think there's also something to be said about the fact that his political strategy looks sort of like what Biden's political strategy looks like right now, which is basically to piss off your own base. So Macron, since he's come into office, has on cultural issues in particular decidedly moved to the right, thinking like this will be a bulwark against Le Pen and against other right candidates. But instead, what he did is just pissed off everybody on the left so that you ended up having this, you know, large abstention among the left wing that, you know, would want to stand against the right. And so it ended up making the election closer than it might have been had he not gone down that path. And then I also think that you see, you know, this hollow neoliberalism that everyone hates. I shouldn't say everyone, but many people really hate. That's basically rejected by the population that leads Macron to have 36 percent approval rating. Very similar,

again, to Joe Biden. But that message of, yeah, but the alternative is worse is enough for people to sort of, you know, suck it up and deal with a lot of things that they ultimately don't like. The story below the presidential level at the National Assembly, also super fascinating because at the presidential level, you're right, the center-right and the center-left parties that dominated French politics for decades are, like, they got decimated. They weren't even a factor in this president, either of the presidential runoffs. Now, at the National Assembly level, it is a little bit of a different picture. But you see Mélenchon, the left in France, quite emboldened right now, too, because even though they didn't make the runoff, he didn't make the runoff. He

came a lot closer than he was ultimately being predicted. And because you have this large sentiment in favor of sort of a bulwark against Macron and some of the economic policies that he wants to pursue, they're really hoping to make some big gains at the National Assembly level. So I do think it's really interesting. I think it's very telling that clearly Ron Klain is taking, you know, Biden chief of staff, Ron Klain, is taking something from this, basically saying, like, look, we don't have to do any better. We don't have to deliver on material politics for people or, you know, stop pissing people off or actually govern well. You all can really not be too into Joe Biden and think he's doing a terrible job. And we still think we got a decent shot to win the election because Trump is that much worse. That's a very, very depressing state of politics that frankly, we've been living in for quite some time. I've been living in this for a while.

In terms of what plagues the West, that looks to be basically the same story. Germany, France, the UK, and here. It's not like Boris Johnson is super popular either. No, he's not. What a sad state of affairs that we live in. It really actually is. I mean, when you think of it, it really is an indictment of the whole neoliberal project over the past 40 years that, you know, we're, I don't know if you guys saw this news item, Bernie Sanders is still thinking of maybe I should run for president and God bless him. I mean, I certainly support the program and the agenda and what he has meant to the movement. But the fact that you have no standard bearer that can follow up,

that you have no bench, that you would seriously look around and be like, I guess I got to do it again, is also in that on the neoliberal side, the best they think they can do is Joe Biden. I mean, Kamala Harris, completely disaster. So it is kind of an indictment of the whole project that we've been engaged in for a number of decades. And look over on, I mean, after Trump, like, who is it, right? It's like a clown car of a bunch of people who want to try and fill his shoes. So,

you know, it's an ever-present story, unfortunately. Potential good news, depending on how you feel about it. Let's go ahead and move on here. Elon Musk. So there is breaking news this morning. This is what we had last night cut. Let's put it up there on the screen. Twitter is re-examining Elon Musk's bid, and it may be more receptive to the deal. Now, since that time, we actually have some breaking news that came out this morning that a deal could be signed as soon as today. Now, what they say is that Twitter is very likely to accept Musk's $43 billion offer. Now, this came after Elon actually secured funding officially per an SEC filing. Let's put that up there on the screen. Now, what they said is that he secured the $46.5 billion in funding. He was meeting with activists and bigger investors all over the weekend. Reports, Crystal, that over the last The reason that this is significant is that the big question

mark around Musk was, does he actually have the dollars? And that question was, of course, solved whenever he put forward the SEC filing, officially saying that he had the money. And then you point to the fact that a deal could come as soon as today with serious negotiations that are happening. The original poison pill appears to have been tossed out the window. I think what this comes from is that they were very skeptical, and I think rightfully so, given his past actions on Tesla. They were like, we don't think that he has the money. So when he came forward with that letter saying,

look, here's $46,500. I've got the cash. Let's go. Then I think they were forced from a fiduciary responsibility in order to actively consider the deal. And given that their stock is not doing all that well and this is a significant premium upon their stock, they have really no choice without facing a massive amount of lawsuits. That's the analysis that we basically gave everyone at the top. We're like, look, I mean, from a shareholder perspective, you can't not do right by the shareholders by giving them a 20% premium, and this would make it so that Musk outright owning the company, keeping it private, and then being able to enforce whatever content policy he wants without the whims of the public markets. It really is – I yes, it's at a premium, but it may not be in the best interest of the shareholders because ultimately he has

values that are separate and apart from just the financial performance of the company. So that was one thing that people had floated of basically how they can get out of this bind of their legal requirement to act in the best interest of the shareholders. I think you're correct, though, that, you know, that just became sort of untenable once the money was on the table and it was this significant of a premium over where the stock price has been. I just, you know, at a macro level, I think we should always keep in mind with this story what a dim state of affairs it is that our sort of public square and speech is subject to the whims of a small handful of elite overclass. Right. Like, whatever their whims are, good, bad, and different, whether you happen to agree with this one or that one or the other one, that's not a good place for us to be in.

That we have to, like, hope that this particular billionaire and what they feel like doing today is going to be ultimately good for the functioning of our democracy. I think that's a sad state of affairs. With regards to Musk himself, I am hopeful that his content moderation policies will be more in line with the healthy functioning of a democracy, less censorious, less in that direction, especially the direction Twitter has moved in since Jack stepped down as CEO, which has been very troubling. So, you know, am I hopeful that this particular billionaire might be a little bit better on those things? Yes. There may be some other decisions that we ultimately don't like. I personally am not a fan of the idea of adding the edit button,

something that he has purportedly been interested in. I don't understand. The edit button is a terrible idea. It is a terrible idea. Everybody has gone viral. Okay, anybody who is in the game, this business has gone viral and has misspelled something, perhaps done something wrong. Guess what? You know what the best thing to do is?

And this is my policy. If I tweet something which is wrong or I did incorrect, anytime I delete a tweet, I delete it and then I screenshot it and I say, this is why I deleted it. Because if you just reply and be like, hey, I got this wrong,

the fake news or the fake part of it could still go viral. And with an edit button, it would make it so that we could potentially have a tweet that goes viral for 100,000 and somebody edits it and you look at it and you think that the edited version is why it went. Or if somebody gets dunked on. Look, this is very, you know. Or like, what if you retweet something and then it gets edited to say something that you don't agree with. Exactly.

That you don't want to, you know, endorse if your retweets equal endorsements. So I'm not a fan of the edit button. I also just like the, like, humanizing aspect of seeing all of our fuck-ups and, like, misspellings and autocorrects and all that stuff. So that part of it I'm very opposed to. But I would say that's a smaller issue than, you know, the speech issues. Because Twitter, why this matters so much and why we followed it so closely and why there's been such a panic and freak out among a large set of sort of elite journalists in particular, is because Twitter really is disproportionately powerful in terms of impacting elite discourse. It is not, by far, it is not the most widely used social media platform.

But when you're talking about journalists and opinion makers, this is where they go to say their piece. This is where they go oftentimes to, like, get, which maybe they should do a lot less, but to gather information about how people are feeling about different things. So that's why it matters so much to the functioning of our democracy. It's funny, too, in terms of what you're saying. You know, Snapchat's earnings and reports came out. They have 115 million more daily active users than Twitter. Really? Yeah. Ask yourself, does Snapchat punch at the same level of cultural relevance as Twitter?

No. And actually, it fits really with our show as well. People ask me all the time, they're like, how come you guys aren of cultural relevance as Twitter? No. And actually, it fits really with our show as well. People ask me all the time, they're like, how come you guys aren't more active on Twitter? I'm like, dude, I don't care about Twitter. The majority of the people who watch our show and consume our content do so on YouTube to a limited extent on Instagram, and then to a far more limited extent on TikTok, where we have those channels. That's it. That's where the vast majority of people actually are. As in,. That's where the vast majority of people actually are. As in, I care about reaching the maximum amount of people, not necessarily being amongst elite

cachet, because that's a much smaller audience. And for this show, we talk about populist things and about things that are affecting real people's lives. Majority of real people are not on Twitter. Many people don't even have a Twitter account. The only time that we really engage on Twitter is either A, in order to make an announcement just because it's sufficient, or B, in order to penetrate elite discourse. When I talk about media and stuff like that, I'm doing it very pointedly at the specific media elites who I know shadow follow me or follow me because I'm sub-tweeting them. Whereas here on the show, I don't care about any of those people. I know they're going to watch anyway, and it's fine, free country.

What I want to do is reach the majority of the people, and that's what we do here. So in terms of the usages of social media platforms, it's just important to note Twitter is important for elites. And the reason why that matters is because elites run your life, my life, and all of ours. So the content policies on that platform have an outsized impact. At the same time, it doesn't matter for a lot of people because they're not even on the platform in the first place. I would just say I really hope that it works out from a content perspective. Musk's strategy saying, I don't care about the economics at all, really, in my opinion, is the only way to run Twitter. Twitter is not a very good business. It's probably a couple billion dollar a year profit based upon advertising, but it's long-term

prospects of adding daily active users and changing the product. The core product is what it is. There's not a lot of innovation really to be had, and I think that's fine. But the problem is that doesn't work with the stocks, right? You could have a situation where your product could grow by 20% or something like that, but your stock goes down because, oh, Wall Street expected 25%. So keeping it private, in my opinion, probably the best move. Possibly. I mean, I personally would like to see, like, total government takeover. So we have, you know, I mean, because honestly, then at least you have some democratic accountability. I mean, what I'm really interested in with all these platforms is I think the more neutral they can be, the better.

And I mean that both from a content moderation standpoint. You know, you have a set of rules. They should be as hands-off as possible. And then they have to be religiously applied consistently. And there isn't a single platform out there that meets that standard right now. And then the other piece, which is less relevant for Twitter but still relevant, is what content is being served to people. And, you know, seeing and having transparency of how those algorithms ultimately work. Because that shapes what you see and how people communicate. How they even, how their brains work. That shapes all of that so incredibly.

And so the fact that on YouTube, for example, we have no insight, that it's just a total black box, zero insight into how they're picking content to serve and what that recommendation algorithm looks like. I think that's really damaging as well. So, you know, on Twitter, they moved to this system where,

you know, they used to just show you whatever came up in your feed next. And now you have to choose, like, actively. You have to choose that option because the default is we're going to pick for you what we think you'd be into. And, you know, the fact of the matter is they're actually pretty good at that. Like, oftentimes, I find that feed that they sort of curated for me to be very useful. But it also makes the platform less neutral and makes it so that they have more control over what things are getting seen, what things are going viral, what things you feel like are most central and most important. And ultimately, I think that's a direction that is a problem for democracy. Yeah.

At least one thing in Musk's cap, he is saying he wants to make the algorithm transparent. And I think that would be great. That would be great. I mean, I want to see that on, I would love to see that on every platform because then at least you have the information and it would be better if we had

sort of democratic accountability and had these things run more like public utilities because I do think that they are critical infrastructure in terms of the function of our society. But at the very least, just like with the Stock Act, if you have that transparency, then people can do the reporting. They can expose what's really going on. And then you can have some sort of a populist democratic backlash to demand things be moved in a different direction, to demand, for example, that you don't

have CNN and Fox News and MSNBC propped up to the extent that they very clearly are by YouTube. It's an interesting conversation around tech, too. I was talking with a friend of mine, Sri Ramakrishnan. He's a venture capitalist. He actually used to work at Twitter for Jack Dorsey. And one of the, he put out a video where he put a recommendation on, which is that if we could control our own algorithm, more what I mean is you could opt as a user into the default recommendation algorithm. Give me the stuff that's going to make me engage the most. But now that's the default because of advertising. But if you move away to a different business model, or if you just give that up altogether, let's say that

we wanted to choose the consecutive timeline. You and I work in news. I don't care about the recommendation algorithm. I want to know what's happening right now. So I could opt into that. You could also opt into like an entertainment algorithm. You could opt into different ones that the company could select and give you different options over your user experience. I think that would be a lot more empowering for the user. And it moves more in a direction of like the tech should work for us, not we should work for the tech. Well other the the other big central problem um that was written about in uh the book stolen focus is the advertising driven model yes because the the that makes the whole incentive how do we not to how do we satisfy you and make you have a good pleasant like edifying experience. How do we keep you here, keep you clicking,

keep you agitated, right? That's the whole ecosystem because it is driven by ad dollars. The more time you're there, the more emotions like good, bad, or indifferent that you're having about the content that you're serving, the better it is for sort of the, you know, capitalist advertising system. And so, which is again, why we thought really carefully about our business model to move

it, you know, away from depending on ad dollars and towards depending on membership fees, because that just gives you a different set of incentives than if you're just wanting people to click and be mad or be disgusted or be fearful. So I think that super advertising-driven model is another really pernicious problem at the core of all of these social media platforms. If we were just straight YouTubers, our only goal would be to put out videos with as much clickbait or whatever as possible and just keep time on platform and the retention rate as high as possible.

Sometimes you do a clip that's only three minutes. You know why? Because it's only three minutes worth of stuff to say. Dragging it out for a long period is not good for the user and it's not good for us, it's worse content, but that's what the incentives actually look like. So, you know, just gives you a good behind the scenes into what that would look like

with an alternative funding model. With a direct subscription, we can give you the best product that we want to give you. Right. That's the difference. And I think the distance between what YouTube promotes and what actual human beings would choose for themselves was really demonstrated by when we asked our premium subscribers, what do you want us to talk about? Yeah, right. And it was wildly different than what, you know, the YouTube sort of algorithm would push to people and would ultimately reward. So for me, I think that says it all about the distance between what these platforms are actually serving you and creating and incentivizing versus what people would actually enjoy and find to be useful in their lives.

Some good news. Okay. As I previewed before, we have election number two at another Amazon facility on Staten Island. That voting begins this morning. My understanding is it will complete this week. So we may know by the end of the week whether the new Amazon labor union will go two for two. I do think this is, you know, I don't think we should take this for granted whatsoever. It's a very different facility. As Chris Smalls told me and has said publicly, it's a sorting facility. You have a lot more part-timers, so the concerns are different. That's a much more difficult workforce ultimately to

organize. Also, because this may not even be their main bread and butter, they may have two other jobs, but another job, you know, something else that is their sort of main source of income. So there are a lot of challenges here, not to mention, of course, Amazon's over-the-top union busting, which reportedly they ramped up considerably after the stunning victory at JFK 8, the Staten Island warehouse. is now the left politicians are fully engaged in the fight now that they have seen that this is a live issue and that Chris Smalls and Derek Palmer and all the rest of the folks at Amazon Labor Union are, in fact, capable of winning. Let's put this up on the screen. We had Bernie and AOC.

They're on the ground in Staten Island. Still not in her district, interestingly, Sagar. Sorry, I couldn't resist. But listen, let me just say this because obviously, you know, I got't resist. But listen, let me just say this, because obviously, you know, I got into a back and forth with AOC, was sort of trying to, you know, take a little bit of credit for the initial win when she had not only not been involved, but she'd actively stood these workers up and she pushed back of like, this isn't even in my district. This is all I

wanted. Look, I'm glad to see her show up and engage in the fight now. And we have to provide some accountability to these politicians. And this is not coming from me. This is from Chris Smalls. Typically, the only consequence would be on the other side. If she did show up and then it ended up in some sort of like embarrassing defeat, that would be the concept she'd be worried about. You know, does this damage my credibility and my strength and my brand, all of those things. So if you push back when they don't show up, you have to have some consequences and some costs on the other side for failing to back workers and stand up and support them in the first place. So I am very glad to see that she has joined this fight. And, you know, they said ultimately, Derek Palmer had a great quote here.

He says, starting this movement in the beginning, we did not have the support that we do now. And now that we won, I'm just glad that everyone's finally waking up and realizing the power that we have. We've woken the country up and I want us to continue on this journey, Sagar. Yeah. And luckily, thanks to our new partnership with Jordan Sheridan, we have some exclusive footage of an interview with Derek Palmer. Let's take a listen. You know, after the win, you know, it's been a historical win. You know, a lot of workers are now motivated.

You know, they've come to me congratulating me, texts, email, calls. You know, so I think the tide is definitely shifting after that win. You know, the labor movement, you know, was kind of asleep and now it's definitely awakened for sure. And now we're getting that support from the community as well. And workers actually want to get involved with organizing now, which is the goal. So I only see it spreading like wildfire throughout the United States. I wanted to ask you, because Bernie had mentioned when he spoke that before he spoke, you guys privately met and he was surprised he didn't know the full extent of the union busting. Do you know, do you think a lot of the politicians kind of like maybe know some bad things are going on,

but don't know like how bad in terms of the threats, retaliation? Yeah, you know, they hear, you know, they hear the stories. But, you know, it's nothing like being on the grounds talking to workers, you know, so they can really get the full scope of what's going on here. And obviously there was some criticism of AOC kind of flaked on you during the campaign. What does it say to you that she showed up? Because obviously a lot of people are saying, oh, she's trying to ride their coattails. But I think it's helpful to actually winning to have her out here. Yeah, I mean, you know, AOC gets a lot of scrutiny, but, you know, it was all the politicians, let's be real, who didn't show up. But, you know, now that they're here, you know, they're motivated. And, you know, ultimately, AOC once was best for workers,

as well as Bernie Sanders. So their support here means a lot. And moving forward, you know, they're all in. You know, we had a nice conversation back there at the Hilton and, you know, they want to support 110 percent. Hey, I'm with Charles, your supporter of Amazon Labor Union. You know, I've covered this for about a year. I've never seen so much press and support here. Can you kind of talk about what got you involved with supporting the workers here? And what did you think of Bernie and AOC speaking? I think this speech was right on time. For me, I am a rep with a union called the UE,

United Electrical, Radio and Machine Workers of America. I'm based in Virginia. So we came all the way up here on Thursday of this past week to help support. So we've been doing phone banking. We've been out in the parking lot talking to workers and all that. And right now, for me, I'm actually helping organize city workers down there. So the struggle is around us across the board. So we recognize that a victory for Amazon is a victory for the labor movement as a whole. Same with Starbucks and all these other places. Andy Jassy, who's Amazon CEO, don't fool it. Bezos is still

driving the bus. But Andy Jassy was on CNBC after the victory here. He said a place like Amazon empowers employees. If they see something they could do better for customers or for themselves, they could just go meet in a room, decide how to change it, and change it. Guys, you didn't have to do this. All you had to do was go meet in a room and change it yourself. No, I mean, that's ridiculous. It's bullshit,

frankly. I mean, we had a number of meetings with Felipe, with assistant managers to try to get things changed. I mean, this whole thing started right with Chris's walkout. Before he led the walkout, he was trying to meet with managers every day. He was in HR office every day trying to just get them to make changes about COVID or just tell people that COVID was being spread around and they wouldn't do it. So, I mean, these CEOs and bosses, like they can go on the news and spread all the lies they want, but the workers know the truth. Yeah. I mean, that idea that, oh, you could have just talked to us. We would have totally listened and addressed your... Come on.

That's so silly and ultimately ridiculous. Great footage from Jordan, by the way. And if you guys missed the beginning of the show when we announced this, so Jordan and Status Co., new Breaking Points partner. He's going to be giving us more exclusive footage from his trips on the road.

He also does great investigative journalism. Very excited about being able to add that piece to the ecosystem here. And you can see how valuable it ultimately is to actually hear from the workers who made this victory possible and how they feel ultimately about all of this. There's been a lot of debate over maybe it wasn't a bad thing ultimately that the politicians didn't show up the first time around because they were able to kind of sneak under the radar, was able to not be a partisan thing. But we also have to respect the fact

the workers themselves see this as very helpful and very energizing. Look, it's up to them. They get to decide what they think is helpful and what is not helpful. I do think personally it was a benefit to them in the first one. This one is going to be different.

We'll see how it goes. I think voting starts right now, right? Yes, that's right. Voting starts right now. It's literally happening right now. We'll find out. It's 9.01 when we're filming this, so you guys can get a little peek behind the scenes.

So we will see how it plays out. In terms of the tech side of this, Crystal, this is really nuts. Let's put this up there on the screen, which is that the largest subreddit for Amazon workers has banned the word union, and it has 43,500 members who decided to censor union related posts for, according to them, due to an influx of spam and outright malicious posts. Very interesting,

isn't it? That censorship is always yielded based upon protecting the community whenever it's the word union. Well, and so some members of that community, because they have it on basically like auto-censorship, so if they just see the word union, then a bot takes it down automatically. So some of the members have started using onion instead of union to get around it. So they're not going to be stopped.

But yeah, this is really significant because obviously, listen, when you're working for Amazon in those warehouses, I mean, you can ask Chris or any of these folks, you are, it really is relentless, the pace. So you have very little time to talk to your co-workers. You know, you've got bosses and supervisors and that multi-thousand dollar a day paid union consultants listening, listening over your shoulder to every word that you're ultimately saying. So online spaces like this are really important for organizing and building solidarity. So for them to decide, oh, this is too controversial, we have to take it down, it really is very unfortunate. And I thought there was a good quote in this article from Vice, too, speaking to one of the pro-union Amazon workers

who said, listen, when you ban the discussion of unions at a place with no unions, you are anti-union because you're preserving the anti-union status quo. And I thought that was a really good way to put it here, ultimately. And by the way, don't forget, we saw something very similar when Verizon workers, who now, by the way, have been successful. Some retail Verizon workers have been successful in ultimately unionizing. But we saw the same thing with a significant Verizon worker forum, where they also said, ah, we can't talk about this ultimately anymore. So this is a disturbing trend that we're seeing in a number of spaces as the worker momentum gains speed. Yeah, I just think when you put it together

and you really think about how exactly this works out, I've warned so long that content moderation policy will always be used by the establishment in order to push back against dissidents. Every time. I remember during the fact-checking era, when it was like, oh, we need fact checks on Trump tweets. I was like, okay, just wait until AOC

runs against Chuck Schumer or something in a debate. And then she tweets something about Medicare for all and somebody at Twitter or, you know, previously before Elon Musk possibly owned it, that they go ahead and slap a fact check on it. That literally happened with the Washington Post, just so you're aware. So do you want them to set fact checking policy for the entire nation? I don't. So whenever it comes to this content moderation, as long as it's within the first bounds of the First Amendment, I think it's ludicrous to try and crack down because it will always be used in this type of environment.

People really need to be wary of it. It always comes for the people who are dissidents. Yes, that is exactly right. There's also some big news with the Starbucks unionization drive, which has just been picking up steam by the day. It really is pretty incredible. That's what Stephen Greenhouse's tweet here up on the screen. So, baristas at a Starbucks in Leesburg, Virginia, voted overwhelmingly 23 to 1 to unionize, according to the NLRB's count. This

means that despite Starbucks' fierce anti-union efforts, the union's overall record increases to 29 wins versus 3 losses. So, they did suffer one very close defeat down in Florida. It was 14 to 13. Other than that, the Starbucks Workers United movement has been just racking up victories one after another after another. Since the very early days, there were a couple of early losses. And since then, they seem to have just picked up tremendous speed. In spite of the fact they brought back Howard Schultz.

And, you know, they're clearly upping the ante in terms of their union busting, firing workers. That's the other big piece that happened here is the NLRB has now gone to court to demand that some of the fired workers be reinstated immediately. Yeah. Because they're, you know, they're saying this was done illegally. They're continuing to look into a number of these firings, which seem to be direct retaliation for union organizing. But it's pretty extraordinary. And a number of these victories to Sager have been unanimous. Yes. Like this one is 23 to 1, so it's very close to unanimous. But a number of these have been 100% of the voting

workers said, yes, we want a union in spite of everything they've been subjected to, which I think is just extraordinary and also speaks to how a lot of these union busting tactics right now in this climate are just not working and completely backfiring. It's pretty interesting to me because what I see is that Starbucks is kind of the perfect ground. I hate to say it, but on Amazon, like you were saying, with a high turnover workforce, which is already company policy, and then you have short-term contract workers, it's going to be difficult, right? Especially in order to keep it sustained. But Starbucks, from what I can tell, based on what you told me, they have longer-term employment. They don't have as much turnover in terms of the workforce. More educated, more sympathetic toward union, and could make it so that the company's values, which always sold itself as, like, progressive, backfire because their workforce is disproportionately more likely to be receptive to that message.

It seems like it could be and is taking force as a national-wide movement. I mean, any food service is going to have high turnover, including Starbucks. But what you see, I think, with the Starbucks workers is a disproportionate number of Bernie bros and Bernie gals. There was an article early on, I think by the New York Times, that interviewed a number of the early organizers. And quite a few of them said, I volunteered for the Sanders campaign. And that changed how they were thinking about this. I mean, it just was like raised awareness around what they could do and how they could push back. And, of course, Bernie throughout his career has been a strong supporter, standing with labor.

On that note, we do have a little bit of footage of Bernie at the rally for Amazon. I have to say, I don't know if you guys saw, there were some pictures. I posted one of them to my Instagram, shameless plug, CrystalMBall over on Instagram. Yes, check it out. crystal and ball over on Instagram. But these incredible photos of Chris Smalls with Bernie Sanders, which really were, you know, pretty extraordinary to see. And you'll see the sort of like warmth between the two of them at the rally. Let's take a look at a little bit of that. But I'm so proud to be standing here with my brothers and sisters and my comrades and the community that's here to support. Without further ado, though, I want to bring up Senator Sanders from Vermont,

who came here to stand in solidarity with these Amazon workers today. Thank you, Senator. And Bernie seemed to be very well received there. But you just love to see that, like, across the generations, across race, religion, all of it. I mean, that's a labor movement at its best, and that's what solidarity really means at its best. So listen, these politicians were late showing up, but better late than never. They showed up, yeah, and I think that's what matters. We'll see how it turns out on the vote. Joining us now is the great Sarah Fisher of Axios. Sarah, welcome to the show. We really

appreciate you joining us. Hey, thanks for having me. Love this show. Thank you very much. Thank you. We appreciate your reporting. You were one of the best. Sarah, you were one of the first to really give us some insight into the downfall of CNN+.

Let's go ahead and put this up there on the screen. You first had the instance that they were inside the chaotic collapse there. You first had the reporting that they were suspending marketing operations, and then you were one of the first to the story in terms of talking about the demise. Sarah, I've always respected you as just a great analyst of inside media companies and what's happening here. What exactly happened with the death of this product that they poured $300 million into? Yeah, it's a great question.

So about two years ago, CNN executives thought, we really need to get ahead of the linear TV decline. Let's launch a bigger foray into streaming. Now, you have to remember, CNN has experimented with streaming for a really long time. They started CNN Pipeline in the 2000s. They had CNN Go, which is an app that still exists, but it really just allows you to stream the live cable network through authenticating your cable login. They had Great Big Story, which ended up shutting down a few years ago.

And so they never really nailed a smart streaming direct-to-consumer app. And so executives said, we're going to do it. In 2021, they started to make a lot of moves towards that. At this point, they hired Alex McCallum of ProductWiz from the New York Times. They acquired an app called Canopy, which sort of supported news aggregation apps, and they were ready to build. But the one thing they may not have seen coming was that their parent's parent company, AT&T, was being straddled with so much debt from its media acquisitions that it was looking to spin off Warner Media, which is CNN's

parent. And in May, we found out that the decision was made to spin it off and merge it with Discovery, which is run by David Zasloff. The challenge here became Discovery's streaming bet was to build one giant general entertainment app by combining HBO Max and Discovery Plus. But they didn't really have in their long-term vision standalone smaller subscription apps. And that's because they've tried that before. Discovery had launched Golf TV. They had a Food Network app that were all subscriptions. And they were tough to build. And so when it came time for the merger to close, you had a bunch of different things that made Discovery very wary about introducing CNN+. First, in February, CNN's longtime leader, Jeff

Zucker, had to resign in a shocking resignation. And that really put Discovery executives on edge. You know, he was the person that would be leading this charge. He's no longer going to be there. And then leading up to the merger, AT&T was very conservative. They didn't want to talk to Discovery because they were afraid of regulatory scrutiny. And so Discovery didn't have great visibility into what was happening at CNN+. And by the time they did in April, when that merger closed, what they saw was CNN had poured hundreds of millions of dollars into an app that they were worried would not become profitable within the four-year timeline that CNN had sketched out. And instead of waiting

to make the decision whether or not they were going to support this effort or not, discovery execs thought that what would be safest would be just to pull the plug early. And that way they could save heartache down the line. And so it's an unfortunate thing. You know, hundreds of jobs are likely going to be lost. A lot of hundreds of millions of dollars were already spent and wasted. But I guess the silver lining here

is that discovery took quick and decisive action as opposed to dragging this thing on a few more months. Yeah, I mean, you sort of have to respect the fact that they, you know, looked at the writing on the wall and the early numbers, which were reported by you and others, which were very poor, you know, fewer than 10,000 people watching in a day,

which is, you know, really pathetic, especially when you have that level of spend on marketing. But why did CNN push forward with this and decide to keep the launch date where it was to start with when, you know, it wasn't a secret. We talked about it here. I know you reported on it as well, that Discovery preferred to go in this direction, that it was likely that the CNN plus streaming service would be bundled inside of a larger streaming offering. So why did they push forward anyway, knowing that, you know, this was very much a possibility? Well, I think you have to look at the number.

We reported that there were 150,000 people that decided to pay within those two and a half weeks. I don't think CNN executives saw that as a huge failure. I think the challenge is, like any type of subscription streaming, you have to inject a lot of capital upfront before you can get the payoff later. And that includes marketing. And so it wasn't necessarily that they thought this thing was going to be so awful, although you're right. Some of the daily viewership numbers were low. I think it was just that the amount of money they would need to continue to spend to get the numbers to go up would be exorbitant.

And that's what Discovery was afraid of. Remember, they're running what is a legacy profitable cable business. It's a different model than something like Netflix or even like an Uber where you can afford to inject a lot of capital up front for some sort of payoff late. And so I think that's the reason why there is a discrepancy. CNN wanted to move forward. One, I think there was a little bit of, you know, sort of emotional decision making there, right? They wanted to stake a claim in CNN's digital future before the merger. But I also think, too, is that they thought that this was probably successful in a way Discovery just did not.

Right. I mean, Sarah, what is the broader cable industry look at this and what's their takeaway? I mean, this is something which is a big problem for them. And I talk about it all the time, which is that their main value add on linear is live TV, which they're not allowed to put on streaming. And a lot of their content on streaming, I mean, I'll say editorially, you don't have to say it. I don't think it's very good. So what exactly are they trying to do to plan for their future? Because I'm not a genius. Anybody can look at the upcoming negotiation for live TV streaming and linear and say, they're in a real problem in terms of what their future is going to look like.

So everyone's obviously going about streaming as their future, but they're doing different strategies. So one strategy is that direct-to-consumer subscription model. And some cable networks have been absolutely brilliant about spinning that forward, most notably HBO. HBO was a premium cable network that they've been able to spin into a smart direct-to-consumer subscription. The other option is free and ad-supported. And I think it's notable that Netflix said this past earnings that they're going to experiment with an ad-supported. And I think it's notable that Netflix said this past earnings that they're going to experiment with an ad-supported tier. And that's just because if you take a look

at consumer spend, consumers have said consistently over the past few years, even throughout the pandemic, they're only willing to spend around $40 a month on subscription streaming services. Other than that, it's gonna have to be free ad-supported. And so I think what's gonna be the future for CNN, Discovery is actually probably going to double down on CNN's free ad supported app. You have to remember, CNN's core digital app is one of the most widely consumed news apps in the world.

It's one of the most widely trafficked. So they'd actually be wise to put some video on there, sell some premium video ads against it. I think for other major cable networks, it really depends on sports or not. If you're really invested in live sports, this is a tough one. I think ESPN has done a pretty good job. You put some rights on streaming, some on linear, and you kind of have to do a balancing act. But if you don't have sports at this point, pretty much the biggest strategy is get as much of your content as you can on streaming, whether it's through an ad-supported streaming venture or subscription. And even if

it's not the most profitable part of your business right now, what you will have done is you will have planted the seeds, have consumer familiarity, have advertiser relationships, so that one day when that cable bundle sort of does collapse, you're at least ready to take on the future. Yeah, I think that's well said. I mean, one of the things that irritated me, I saw some hot takes that were like, oh, you know, subscription-based streaming news just doesn't work. And I think we're here to tell you that that's not the case. Thank you. But, you know, it is noteworthy that, look, CNN, Fox, and MSNBC all have their own streaming efforts.

CNN Plus was the highest spend and the splashiest rollout, and so it got a lot of attention that the numbers weren't, you know, very impressive. And, of course, it collapsed almost instantly. But the MSNBC streaming service and the Fox News streaming service also don't seem to be exactly doing gangbusters. So what do you think it is about their formulas that just doesn't seem to have much consumer appeal? I don't know the answer to that because I don't know the numbers.

Like Fox has never revealed how many people subscribe to Fox Nation. I don't know how many people are viewing MSNBC's Peacock portal. But what I will tell you is you bring up a good point, which is we sort of have this barbell phenomenon. On one end, you have massive scale and really general interest services. And on the other, you have niche. And I would put breaking points in niche. Niche is doing excellent right now. If you can cater to a very highly engaged audience, they're going to spend a lot of time with you. They're willing to give you a lot of money and they're going to be very engaged because they like the very specific thing that you're providing for them. The problem is when you try to hit the middle, if you're not super broad and

scaled or you're not super niche, you're going to have an issue. Now, when it comes to entertainment or leisure, it's pretty understandable where that barbell lies. There are going to be very, very, very niche entertainment subscription services that do well. My favorite example is Crunchyroll, which is bought by Sony. It's catered to anime fans. Great example of a niche service that does well. The problem with news is niche is really hard to figure out. You either lean into personality programming, which you guys aren't necessarily political personality programming.

You don't have necessarily a political take, but you do have very strong personalities. I mean, your brands are ones that I've been following since the Hill and people know you as two distinct people. And so that was why I would put you in niche. In the news sector, if you're not B2B, you know, catering to someone's professional news, if you're not sort of personality-proven like you guys are, then you have to be massive and broad. And the challenge with CNN is they actually should have and could have been massive and broad.

But the way that the subscription streaming service was rolled out, I don't think they had the broadest appeal possible. You could blame that on marketing. You can blame that on competition. I don't know what it was, but it didn't go as broad as it probably would have needed to have gone. I think that's really well said. Very interesting analysis. Sarah, thank you so much. Thank you for the great reporting that we have relied on here on this show many, many times. Appreciate it very much. We rely on you a lot.

Everybody go subscribe to Sarah's newsletter. We'll have a link down there in the description. I read it all the time. So thank you very much. We appreciate it. Thank you. I was just going to say, I feel the same way. When I have a question about how real people are thinking about things, I call you, Sager. So I appreciate it. Well, the appreciation goes both ways. Appreciate it very much. Take care, Sarah.

Now, at the same time, though, speaking of people who have this job and who are in the liberal media, these people are freaking out about Elon's acquisition and specifically about the free speech aspect. As usual, we can count on the one, the only Brian Stelter for having the absolute worst take possible on this in immediate reaction. Let's take a listen. Look, who knows? I think that's an example of a broader question for Twitter, which is, if you get invited to something where there are no rules, where there is total freedom for everybody, do you actually want to go to that party? Or are you going to decide to stay home?

And that's a question for Twitter users. Some Twitter users might love the idea that there's going to be absolutely no moderation and no rules at all. Others might not want to be anywhere near that. Am I crazy, Matt? No, no, you're right. And what happens to the advertising? I mean, if there's no moderation or little moderation, do the advertisers stay away? What does that do to the business prospects for Twitter itself?

I think that's very much an issue. That party sounds like a banger, Crystal. I don't know. You know, there's one thing. When I get invited to a party, the first thing I want to know is there are going to be rules in place, right? Because otherwise, I'm out. Right.

I actually, like, I genuinely, at this point, have affection for Brian Stelter because he is trying so hard, Sagar. He is trying so hard. He spent time workshopping this whole party analogy thing in his head and never once did it occur to

him that actually people do want to go to parties without rules. And it's silly to start with, because it's not like Twitter's going to have no rules, or that there are, you know, no rules already bounding and guiding the limits of free speech. You cannot directly threaten somebody as one, you know, example. So it's not like it's going to be completely wild and crazy and anything, absolutely anything goes. But yeah, the faces around the table, I don't know if you paid attention, they were like ranging from contempt, confusion, to just like humoring this poor guy. Before the other dude actually makes a decent point about it. The whole reason that the content moderation is what it is

has been to satisfy the advertisers. So if you take that piece out of it, and that's less important, not that it's going to be completely unimportant, but if it's less important and you're actually just trying to figure out what is the right and consistent content moderation, you're much more likely to come up with something

that is beneficial for everybody versus just trying to make it safe for a bunch of squeamish corporate advertisers. 100%. And you can also keep this with the rest. Also, I love how you put it that way. In Texas, we just say, bless your heart, Brian. Yeah, that's it. That's it. That's exactly the sentiment. That's the sentiment that you're putting forward. Let's put these up there on the screen, some hilarious ones from our friend Shu.

She says, today on Twitter feels like the last evening in a Berlin nightclub at the twilight of Weimar, Germany. Oh my God. Another one, I am frightened by the impact on society and politics if Elon Musk acquires Twitter. He seems to believe on social media anything goes. For democracy to survive, we need more content moderation, not less.

Another, if Elon Musk sexually purchases Twitter, it could result in World War III and the destruction of our planet. And finally, dear Parag Agarwal, if you're reading this right now, the world needs to know you are stronger, smarter, and more tenacious than Elon Musk. He thinks he can beat you. The free world needs to know he is wrong. Yours truly, a lifelong and long verified Twitter user. What a loser using your verified status. It's not that cool, bro. Trust me. The Verge also came in with a hilarious take. Let's put this up there on the screen. They say, how to deactivate your Twitter account, which is just absolutely incredible. Obviously, they're one of those tech hall monitor type outlets.

Well, and there are plenty of liberals on Twitter who were like, I'm deactivating. I'm not going to be on Twitter. Oh, I'm moving to Canada. This is my last tweet. I'm quitting Twitter, et cetera. Actually, Sean King actually did it, which, you know, props to Sean King for finally leaving us all alone. He had a big following, too, so it's a real loss.

Yes. Yeah. I mean, it's, listen, there were so many bad takes all the way around. I don't know if you also saw this, but Richard Henania, who is, you know, we've had him on the show before. He's, like, definitely, you know, on the right in terms of his politics and definitely not terrified of Elon taking over. He tweeted out something sarcastically. Oh, his, like, master's thing. Yeah, that was hilarious, by the way. Yeah, being like, Elon Muskically. Oh, his master's thing. Yeah, that was hilarious,

by the way. Yeah, being like, Elon Musk doesn't even have a master's degree. Are we going to trust this man with our democracy? And there were literally thousands of people who thought he was being serious. Oh, right. And he continued to, like, in the thread, make it more and more ridiculous. And they still did not get the joke. So you had people who just, like, you know, couldn't see sarcasm where there was obvious sarcasm. You had clearly, you know, the liberals that we're highlighting here, completely freaking out, who obviously were so much less concerned when Jeff Bezos bought one of the most significant and important news gathering organizations in the entire country, which he still owns.

But that was fine. And in fact, not only was it fine, but if you, like Bernie Sanders do, point out that this could be a problem for democracy, you were roundly mocked, shamed, disparaged, et cetera, et cetera. How dare you attack our news outlets? So there was, you know, there was that reaction. of the right that has been rightly concerned about elite power and control that is just completely celebratory about the idea of handing their fate over to a billionaire that they happen to have more affectionate feelings for, which again, you know, it's certainly not an answer to our bigger problems. Will it potentially be marginally better? Maybe. We'll wait and see. But if you're putting all your hopes on like, let's have a different, better billionaire, then I don't think you're going to end up ultimately in a good place.

Yeah, I think you're right. And to try and add some substance to this, it's a really interesting poll that Teddy Shifer actually tweeted out over Puck News. He does great work, by the way. Let's put this up there on the screen. Is that there's a poll here highlighted by Data for Progress and at Recode. This was in February of 2021. Elon Musk is actually very popular across the board. So his favorability and unfavorability for Democrats is 52-22, meaning he has high

favorability and a pretty unknown unfavorability. Amongst Republicans, his actually favorability is lower. It's 48-25. Amongst men, it's 66-21. Women is 37-27. Don't really have an opinion, it seems. Amongst young people, it's very popular, 54-22, and at 45-plus, at 48-25. So what he says here, and I think is really true, is the real schism is really not a public opinion on Musk between Democrats and Republicans. It's between men and women. Yeah, that's right. Interesting. Really, when you point out the favorability, I just think it bears repeating that normal people think of Elon in the context of Tesla and the context of SpaceX. They may have seen some of his antics, but they respect him as probably the greatest entrepreneur in the U.S. over the last 20 years. And they don't really think about him beyond that.

Well, that's the thing. Normal people probably just don't think that hard about him. Yeah, he's fine. Super evolved view on like all of the things that he's done or said or etc. It is funny. Yeah, it was interesting to me that there was basically no partisan divide whatsoever. It was very, very closely matched Democrat, independent and Republican. The big schism was dudes really love them. Elon Musk, women, not so sure. And he does, I mean, the big schism was dudes really love them. So Elon Musk, women, not so sure. And he does, I mean, just as his like public persona, I know there's something about him that's like magical to men, you know, especially young men under the age of let's say

50 or 40 or something like that. That is definitely where his key demo and his core superpowers lie. Well, he's like a teenager in a lot of ways. I mean, that's kind of how he behaves. Yeah. I mean, he's very childlike. If you read his, like I said, he reads biography. He literally talks about, he's like, his dream was to be a wizard whenever he was a child. He had a very tough childhood, to be fair. Apparently, his dad was kind of a psycho. Oh, really? Yeah, didn't treat him very well, him and his brother, and put a lot of pressure on him. You should go and read the book.

He was not treated well. Apparently, he was very emotionally abusive as a father, but really what they pulled into him is he was a huge nerd. I mean, that's really the only thing that comes out of it. He was bullied terribly. Whenever he was in high school, he was obsessed with computer games and coding, and that's why he became the computer scientist that he eventually became.

But what you learn about him is that he's quite an impulsive person. He's a lot like a child. He said his dream, now that he's a billionaire, is to be as much like a wizard as possible whenever he was interviewed most recently. So I think that's why he appeals to the... I mean, look, at the end of the day, the man did manifest several of his actual visions, which is a lot more than many people can say in life. So I think that you point to an interesting phenomenon there about what the actual divide is and probably where it actually cuts ideologically. But it just points to the fact that these liberal media folks, the establishment types, are just so freaked out. Because I think at the end of the day, they know that their ability to pressure Twitter

in order to censor exactly as they want is over. And that is where the real power that they've had over the last several years has come from. Well, they have this whole ideology that the way to combat ideas that they consider to be bad or dangerous ideas is just to shut them out, to censor them, you know, push them out of polite society. And that, you know, I think there's a genuine fear and belief that, like, that's the way that we can keep this whole thing together. I just happen to think that's not only wrong, but extremely counterproductive and leads you down the path of ultimately destroying the democracy that you think you're trying to protect.

And so their ideology depends on the ability to, you know, to have their ideology reinforced and have people who don't agree with that pushed out of the public square. So I think that's why there's such a freak out here versus, you know, what is Jeff Bezos, who is definitely not on the left in any meaningful sense, but is going to be anti-Trump, is going to be, you know, with them more or less when it comes to social issues. They didn't perceive that as a threat, even though anyone who's being consistent here should just see that billionaires controlling our news gathering, our public squares, is a big problem in society, whether you happen to be comfortable with that billionaire or not. I saw another poll similar to this Data for Progress poll that actually was an internal poll of Twitter employees. Because a lot of the narrative around Twitter employees is like, they're freaking out. Oh my God, they hate Elon and they can't, you know, they are so worried about he's going to destroy Twitter, et cetera, et cetera. And I don't doubt that because like

you said, they're likely to be layoffs and they're not sure what this means for their stock holdings. And is the headquarters even going to stay in San Francisco? And are they going to be able to continue to work from home? I don't doubt that there are a lot of concerns and angst around what it means literally for them and their livelihoods in their day to day. But in terms of sentiment around Elon, this particular poll internally, it was completely divided. You had, you know, an equal amount that liked him, an equal amount that didn't like him, and a group in the middle that was like, eh, not sure. We'll see. My guess would be that the technologists and the engineers are probably

the ones who are most excited about him because they're more familiar with what he did at Tesla and at SpaceX. And my guess would be that the, like that lady who went on Joe Rogan's podcast, Vijay Agade, the head of like trusted safety is probably freaking out because I hope that she gets fired. That's exactly the people. Those are the people who are the chief censors. So the, I would split the company into like the technologists are probably excited about Elon and then the HR industrial, you know, diversity industrial complex within the company is the ones who are freaking out the most. But look, maybe I'm wrong. I mean, because you could also imagine a scenario where the people who are involved in content moderation have hated the fact that they've been constrained by corporate advertisers

and their concerns. So who knows what the breakdown is, but I did find that interesting that the internal sentiments around him were actually very evenly divided, at least according to this poll. Yeah. I think a lesson in the show is always that things are a lot more complicated than people think. Okay, let's move on. This is a very important report here. Let's put it up there on the screen, which is, interestingly enough,

says how U.S.-Saudi relations reached the breaking point as to why we named this show what it is. What they point to here is that Saudi Prince MBS confronted Jake Sherman, the national security advisor of the United States, and began yelling at him. And what's very important in this report is that Saudi Prince MBS basically said, we will never speak about this again. Now, he was so, so upset about Mr. Sullivan that he shouted at him and basically said that he would be banishing him from the room and that the U.S. could forget

about its request to boost oil production. So that is the significant part of all of this, which is that whenever, and also I love the description, he was wearing shorts at his seaside palace. I already felt it was very disrespectful. Of course. Right? This is how they play.

This is like an alpha move. Like, I don't even have to get dressed up for you. I'm just going to be here relaxing in my shorts. I have heard stories about MBS and about the way that he would treat U.S. diplomats. And, like, he would specifically make them come on his yacht or whatever in the south of France in order to show his fake Mona Lisa or his fake Leonardo da Vinci. Oh, yeah. And pull all of these meetings. That's another story for another time. But I think that the important part is that shouting at him and specifically tying any criticism on the Jamal Khashoggi killing to US oil production just shows the Saudis demand total subservience from the

Americans. We are supposed to do anything that they want. Oh, they want our weapons? Give it to them. Don't say a damn thing about Yemen. If you talk about Yemen, you're done. This is one of those things which is an absolute red line for them. Oh, you want to talk about Jamal Khashoggi? Oh, it's over. We are never going to have this discussion, and you can forget about it. And it's a problem because they have the basically one of the only OPEC nations that are able in order to immediately spin up production. Because we've talked about here, America is a major oil producing nation in its own right, but our infrastructure is not such

that it would take six to nine months in order to make sure that we would want to. The Saudis could pump more tomorrow. That can complete control over the industry. And they have total control over the industry. And they've even said, they're like, oh, yeah, we can do it. Well, we're not going to. They've agreed to a, quote, modest increase. And you can just see the economic effect that this is having on all Americans. Let's put this up there. I had this cut from the AAA gas price national average. I mean, the national average of gas as we cut this was $4.12 a gallon. That's a lot of money. Okay, it's not $4.50, $4.30 like it was a couple of months ago. So yeah, the all-time high recorded was $4.33 a gallon, which was last month. But I mean, it's only dropped by $0.20.

That's still an enormous tax on the average American. In California, Crystal, the average price is $5.68 a gallon. I mean, the lowest prices are in the 370s, 360s in the South and in the Southwest. But here also in the DMV, I get lucky if I get $4.12 a gallon, which is the national average. I mean, that is an immense amount of money that Americans are outlaying every week to these oil companies and because specifically of the Saudis. Yeah. Although the truth is at this point, there was a time when it had a lot to do with the Saudis withholding production and basically serving, you know, as Russian, that's what the Russians want them to do. And there were all these little like diplomatic slights of the White House was trying to line up a phone call with MBS. They kept pushing them off. Ultimately, they cancel. And then the very next day is taking a call with Putin.

So there's all kinds of that kind of stuff that's ultimately going on here. But, you know, oil prices per barrel have dropped a lot, not thanks to anything that Biden or anyone else has done, but because of the new lockdowns in China, you know, curbing demand significantly. And as we covered here before on this show, the sad fact of the gas station operators are trying to make what they can and benefit from the distance between what they're paying for oil and what they can charge you at the pump. So I just want to be clear, there's a complex picture of why gas prices continue to be high right now. But the more important point here about the Saudis is, listen, I want to see our country have good relations around the world, period, even with regimes that I don't particularly care for. And that definitely includes the Saudi regime, which

has been extraordinarily nefarious, which, you know, the war in Yemen has been a moral atrocity that we have been completely complicit in. However, while in the micro, it has caused some pain at the pump for American consumers that I do not want to diminish, in the macro, us having a more arm's length distance from Saudi Arabia is a good thing. And, you know, it's interesting what it happened over because you had progressives who were kind of out on their own making the case and some other civil libertarians who I want to give credit to. Exactly. Who were kind of out on their own with regards to the Yemen war and trying to take a stand there. And then it was once the Jamal Khashoggi killing happened, that really started to galvanize public opinion and bipartisan sentiment, including with mainstream Democrats, against the Saudi regime. And that really did serve as a kind of a tipping point. So it's revealing here that it was those comments from Jake Sullivan bringing up Khashoggi that

causes MBS to totally freak out and scream at him. Because, you know, it's, look, it was horrific what they did to Khashoggi, but that's only one of many abuses that we should be concerned about. Yeah, they do it every day. From the Saudi government. But that was the thing that really sort of turned American public opinion and elite political opinion and caused them to question what this relationship with Saudi was ultimately like. So I do think that that was kind of a pivot point in this relationship. Yeah. And we shouldn't dismiss this either. Let's put this up there from Bloomberg. Rising oil prices, this is just from yesterday. They are a boon to the Saudi economy. I mean, they are making bank in a way that they have not made in a long time. The IMF

said its estimate for the country's economic growth is going up by three percentage points to 7.6%. That's China level growth for a country that produces and does nothing but pump oil. That's some pretty amazing, yeah, despite all of their propaganda about all their other fake business that they have, they're an oil country and they'll continue to be an oil country until the day that it runs out. And the reason it matters is because they don't have a whole lot of incentive here. The only reason they would do so is through some sort of diplomatic agreement with the United States in order to drop oil. And they know that they have us over a barrel. And what's worse is that they have great relationships with Jared Kushner because they are banking that a return from

the Kushner and Trump regime would make it so that it would be great for them. Yeah, this is the real foreign interference that people should be talking about. 100%. Ken Klippenstein's been saying that for a while too, by the way. This is absolutely foreign interference. Same thing whenever China would do the spot, they would try and raise spot prices for agricultural goods in the Midwest ahead of the election because they were upset about tariffs. These are the types of foreign interference with the country the media never wants to actually talk about but has very real political ramifications here in the U.S. We should all just be aware. Look, no matter what you think, I don't want to be screwed with by the people who are probably more responsible for 9-11 than anybody but Osama bin Laden.

And, you know, it's disgusting that we've been kissing their ass for the last 20 years and allowing all of this Saudi cash swimming around in our country. Even the Twitter deal, we talked about that, with Elon going against the Kingdom Holding Company. I mean, by the way, I'm aware that the Kingdom Holding Company does not actually tie to the kingdom,

but if you think that that prince isn't directly subject to the whims of MBS, given that he was literally imprisoned by MBS, then you're an idiot. And I just think that we should not allow these Saudi royal family members or rich people to throw any weight around in this country whatsoever. And this ties to my conversations around nuclear and all of that and why exactly that's necessary. But you can just look at this and it's really gross that they are printing money hand over fist. They're screwing with us and we continue to sell them weapons and give them preferential treatment in the diplomatic world. They don't

deserve it. Screw them. That's what we should say. That's a part of the Biden administration that's been really pathetic is even after some of these, you know, displays of contempt, they still are doing what they want them to do. Thinking that like, oh, well, maybe if we appease them a little bit more and give them what they want, then they'll lessen their hostile posture. This Wall Street Journal report that we started this block with admits that the administration, they aren't even bothering to ask anymore for them to lift production because they've just given up on it ultimately being a possibility that's how um you know that's how intransigent ultimately and arrogant i think the saudi regime is at this point let's get to sagar's part in this whole saga go ahead and throw this element up there on the screen so as i was just saying these executives really deserve a lot of scrutiny. And so Sager on Twitter provided a little bit of that scrutiny saying, Vijaya Gatti, is that how you say your

last name? The top censorship advocate at Twitter who famously gaslit the world on Joe Rogan's podcast, True, and censored the Hunter Biden laptop story is very upset about the Elon Musk takeover. And he includes in there a Politico story that says Twitter's top lawyer reassures staff and cries during meeting about Musk's takeover. This is reporting from Politico, okay? This is like, he's just showing the world what happened here and having some commentary about it. I can't stand Vijay Agade. Haven't been able to stand her since 2018 when she appeared on the Joe Rogan Experience with Jack Dorsey. Spent 90% of the time gaslighting all of us, and Tim Pool as well, about the censorship policies over there. So I found it amusing.

And I'm going to talk about this in my monologue. Was it mean? Yeah. Okay. I'll admit it. It was mean. I won't even defend you. Put this back up on the screen.

This is not even that mean. Okay, I agree. By the standards of Twitter, I actually think you're being a little too hard on yourself. Put that part back up on the screen because we've got another part we've got to get here. So you say she famously gassed the world. True. Censored the Hunter Biden laptop story. True. Is very upset. Also true. Just completely factual point by point based on the reporting from Politico. So then something very

unexpected happens. I did not expect this. Elon Musk himself replies and says also in a pretty neutral tone here. I agree. Suspending the Twitter account of a major news organization for publishing a truthful story was obviously incredibly inappropriate. And I don't know who at this point really disagrees with that. Who can disagree with that? I couldn't believe it. But guys, what ends up happening here is the most legitimately insane thing I have ever been a part of. So Elon replies to me me and I was like,

oh, that's kind of interesting. My phone literally won't stop buzzing. People wrote up his comments, all of that. Then in the next couple of hours, a narrative begins to develop that Elon and me are responsible for targeted harassment against this woman, Vijaya Gade, because apparently some rando accounts said she should be fired and said some racist stuff against her. Obviously, I do not condone anything racist against Vijayagade. You may not have noticed, but I'm Indian. Furthermore, I did some investigation. I called my mom. Now, according to my mom, Vijayagade is not only are we both Indian, she is also a Telugu person,

as in we are from the same region of India. Furthermore, I actually have a cousin with the last name who is similar to Vijayagade, so we may even be related. So maybe— You're just a self-hating Indian. That's right. I'm a self-hating Indian. So not only are we both Indian, we are from the same region of India, and our family's from the same region of India,

and I might actually be related to the lady. Okay. So let's go, let's put that out of the way. Yeah. So then the news media decides this is an angle we can pursue because they don't necessarily love being like overtly in favor of, no, we want the censorship. What if they have free speech? Oh my God. Because you know, these places like to pretend that they're free speech outlets and in favor of such things. So now they're like, oh, we've, we've got an angle. They've got their angle. Now we've got, you know, targeted harassment of a female executive brought on by these powerful figures, et cetera, et cetera. So Washington Post decides to go forward with this story. Elon Musk boosts criticism of Twitter executives prompting online attacks. And let me read to you the framing of this, which is so incredibly dystopian and gaslighting and dishonest. So they say, Elon Musk is using his powerful Twitter account to bolster right-wing

users who sharply criticized two company company executives exposing them to the online masses who join in the attacks exposing them to the online masses again these are powerful very powerful individuals that we're talking about here it started with the Tuesday tweet from political podcast host Sagar and Jetty always tried to do that Twitter users quickly piled on to the criticism of Gotti including calling on musta fire her and using racist language to and Jetty. He always tried to do that. Twitter users quickly piled on to the criticism of Gadi, including calling on Musta to fire her and using racist language

to describe her. Gadi was born in India and immigrated to the U.S. as a child. One user said she would, quote, go down in history as an appalling person. How could you say such a thing?

I actually found it kind of revealing that that was the worst response that they could find here. This is so mild. Yeah, I know. People said horrible things about me. Guess what? I don't care. You know, whatever. That's what comes with this business. And the people who criticize me, which prompted those, whatever. It's part of the game. I'm not going to be like, you're a racist for coming after me. So what really pissed me off, though, Crystal, was not just the framing of this, was inside of the article they wrote, and they've since updated it, they said Injeti did not immediately respond for a request to comment.

And so I'm literally just spending my Wednesday morning. I came back from the gym. It's like 730 or whatever. I'm like scrolling. And I said, whoa, I've never been – nobody's contacted me. I checked my Instagram. I checked my email. I checked my phone.

Nothing. So then I called our producer, James. And here's what James tells me. Let's go ahead and put this up there on the screen. This Washington Post lady emails James, not even me, at 2.06 AM. And she says here, hi there. We are quickly writing up his tweets tonight about Vijay Agade with the peg that Musk is piling on. Some questions. Here are questions. Listen to this. Piling on. Does he have any concern that mentioning a specific Twitter executive could result in attacks on that exec? What are the responsibilities here? For example, one of the commenters made racist tweets against Gade and others said she should be fired. Number two, what does he hope to accomplish by calling out Gade and getting Elon involved?

So there's a lot going on. So much. Number one, everybody in this town has my phone number, including half of the people who work at her newspaper. Yes. It's not that hard to find. By the way, please don't call me randomly. But it's really not that difficult.

I was a reporter. I know a lot of the people here. She could easily have gotten it. And many of her colleagues have contacted me and have spoken to me many times in the past. Number two, emailing somebody for comment at 2.06 a.m. Eastern time is complete BS. And what time did they go live with the story? They went live with the story like 6 a.m. Eastern time. By the way, I'm awake.

I was literally awake. I got up at five that day in order to go work out. You could have called me. I would have given you a comment. I would have been happy to do so. I'm actually pretty accessible whenever people write about breaking points. So seven hours after Elon Musk replied to me, they contact me for the story. Now let's get to the actual questions here. Vijayagade was paid $17 million last year. She literally appeared on the Joe Rogan podcast and is the top policy executive at Twitter. She's a public figure. I'm allowed to criticize public figures. In fact, that's literally my job. And under the guise of

the First Amendment, which I prize and which I think is very important for me to be able to do the work that I do, that is well within the bounds of both accepted and legal speech, but also I would think even within the respectability industrial context. Yes. Going after somebody on a substantive issue is not out of bounds. Who is very powerful. Very powerful. Her title is Twitter's, it's a very dystopian title,

Twitter's Legal Policy and Trust Leader. That's what I'm saying. So she's the head of the Ministry of Information. Right. So my criticism of her on a policy matter that she has publicly spoken about, how am I responsible for what some random ass Twitter account says to her? And same with Elon. He didn't say anything crazy about Vijayagada. He replied to a tweet and criticized her on a policy matter that she was directly involved in.

She's the person who censored the Elon Musk story. Now, number two, in turn is our second question. She accuses me of bringing in Elon. I've never spoken to Elon Musk in my entire life. We've had no connection. He's never tweeted at me before. I've never spoken to him. I've never corresponded with him. I've never corresponded with anyone at Tesla. I think the closest connection that we would have is that we also know Joe Rogan. Right. Okay. So just so people are completely aware, maybe he knows who I am. Which is a large group of people, the people who know Joe Rogan. I don't, maybe he knows who I am. I literally have no idea. So I didn't bring Elon. What was I hoping to

accomplish? What does he hope to accomplish by calling out Gadi and getting Elon involved? What does anyone hope to accomplish when I'm sending, I'm making a comment on a policy matter, but I think this is the perfect example. This is how they try to smear you. I make a substantive point. Some random people say something. Now me and Elon are racists and are responsible for the harassment that this lady is experiencing. By the way, I decry the harassment, okay? And any racist harassment against her would be equally applicable to me. So obviously that's not a thing. So all of this, as you said at the top, they are just covering up for the fact that they agree with censorship. And two, let me just take you a little bit behind the scenes because I found out a little bit more

since all of this happened. Vijayagade, I don't have a confirmation on this, but I'm just telling you, she has very, very close relationships with a lot of these reporters. In fact, the Washington Post reporter who wrote this story was going and liking a bunch of tweets about how Vijayagade is like some saint, you know, come back to earth and how she, you know, she's somebody who's been really helping people out. And it has been known to me via cutouts, I'm not going to reveal my sources, that Vijaya is very, very close with the entire tech press, which is why they are going after this.

So was she involved in maybe creating this entire narrative? I'll let you take that supposition for yourself. See, that's the thing that is so dishonest here. I mean, first of all, I think it really reveals what dishonest, hacky actors they are, that they would email James at 2 a.m. for comment and then make it sound like, oh, you just couldn't be bothered to respond

or didn't have any response. I mean, that just is a little window into how these people actually operate. And then, yeah, this isn't a straight, she wants to present this as just like a straight news report. But clearly this is advocacy. Yeah, you're obviously friends with the lady. Very clearly is advocacy here.

And listen, the same standard could be applied, you know, turn it right back around. How could the Washington Post, you know, call you out and target you for harassment? And Sagar, are you okay? I mean, you know, it's just, it reminds me a lot of actually what they did with Bernie Sanders and like the whole Bernie bro narrative

and trying to blame Bernie for any like bad thing that some random supporter of his ultimately said. It was equally ridiculous. And it's why I was really disappointed when he actually sort of gave into that narrative at one point, because now you can see the way this gets weaponized all the time. And it always gets weaponized to protect really powerful people. I mean, this is someone who is so clearly a public

figure, like not a question mark whatsoever, who is also extraordinarily wealthy and has all of the privileges and protections that comes with that class status as well, and whose influence really matters. So for, you know, a private citizen or a journalist or anyone else to have an opinion on that, that you express, I mean, it was like a little bit snarky, but it honestly was really, you know, totally within bounds of public discussion of issues that are very fraught and very important. To make that into some nefarious thing, I just, it's like you're right to be completely indignant in the way that they handled all of this. And I think we should also say, like, they were not the only ones.

No, no, no. Insider also wrote it up in a really sleazy and dishonest way. They called you a right-wing activist. Okay, I mean. Guys, ask the real right-wing activist i can't stand yeah right this is the funniest thing it's just but you know it's very clearly that the language is chosen to make you sound like some nefarious actor who's trying to stir up shit and you're in cahoots you know that's the sort of insinuation here from the watch you're in cahoots

with elon to target this harassment at this vulnerable person. Give me a break. It's ridiculous. No, it really pissed me off because, like you said, it spawned actually that Washington Post story, then spawned Business Insider and a bunch of other outlets are referring to me either as a right-wing activist or conservative YouTuber. I'm like, guys, why does we have to apply any of these adjectives? Why can't it just be host of Breaking Points, a popular political show? I mean, what's wrong with that? It's a right left show. We have an incredibly diverse audience. Ask people who actually know me, who actually listened to me. None of them would use that moniker whenever they're trying to describe me. But beyond that, it's not even

exactly how they refer to me. It's the tactics. And like, guys, this is what I want to show you. The inside, the 2am emails, the ridiculous questions, they rely on you not knowing how the sausage is made. And it comes back to the Taylor Lorenz point I made. Listen, lady, if you like Vajayagade, write an op-ed about it. Be like, Sagar and Jetty is a dishonest hack. I honestly wouldn't care. I'd be like, okay, fine, whatever. I disagree with you. I would probably do something here about it. But to do this all within a news story is just so incredibly dishonest. It just shows you why we're trying to do the work that we are here.

Both in order to expose this, but to try and build something so apart from this. And it does really relate to Taylor Lawrence because this is like the tactic that she uses all the time to shield herself from criticism. And the weaponizing of these these like, of identity too, to again shield powerful actors from scrutiny. I mean, Taylor, the thing that makes it so ridiculous with her

is everyone wants to sort of like infantilize her. It's like, how could you do this to this young woman? First of all, we don't know exactly how old she is. Yeah, she's lied about her age multiple times. But she's not that young at this point. She's like nearly 40. And second of all, this is a well-paid, prominent journalist at one of the top outlets in the entire country

in a tremendous position of power. And I don't doubt that there has been ugliness directed her way, and I do not want that for her or anyone else whatsoever. But to make yourself this, like, you're the victim in this country? Like, do you know anyone who has suffered anything real in your life? Like, look around at this nation and think about all of the pain and suffering that is going on, and you're going to make it about yourself and you're the victim in the story? That's why these things are so disturbing because ultimately, again, it is used to make sure you cannot critique the powerful. And so this is a perfect example of how they use these tactics really cynically to try to shut down what is a legitimate debate and discussion about the

policies that should govern our public square. Yeah. And the last thing I'll say on this is I'm lucky. Okay. I got this show. I have you guys. I have the premium subscribers. Like I, my livelihood is not going to be affected by this, but let's say I was still, let's say we still worked at the Hill. This is a problem. All right. This is a real problem for me. If I still worked in a, in a normal corporation or media company, this is a real. All right. This is a real problem for me. If I still worked in a normal corporation or media company, this is a real issue in terms of the way that you're getting described and your colleagues and, hey, you know, why are you being unprofessional? All of this. I have the liberty in order to expose all of it and just say, here's what they said to me. Here's the email. This is

complete BS. I can fully express myself. So I just want to say another thank you to everybody who listens to the show, to all the people who support the show. I am only able to do what I am able to because I know that you're my boss and not anybody else. Because if we're still working in media, this is a real problem. I have no doubt that our audience is going to, you know, almost 100% support what, you know, the fact that you were clearly in the right, the Washington Post is ridiculous here. But this is not without a cost for us either, because we're very dependent, you know, in terms of the YouTube world. Oh, yeah. We're dependent on whether they deem us to be a trustworthy news source or not,

and how the algorithm deals with our videos and how much they serve them and all of those things. So it's not without a cost and a price when the mainstream comes after you and tries to sideline you as some crank, some bully, some troll, et cetera. Are we a conservative YouTube show? Ask yourself that. Are we a conservative YouTube show? That's BS, okay? And just the way, yeah, look, I mean, I don't want to belabor the point, but it has real costs to us. Not as much because we rely on our premium subs and on our audience, but you know, this, this really could have been a big problem for all of us. So anyway, I want to thank you all once again, just for having my back and it gives me the confidence in order to speak out against these. This was, I mean, this was not a

borderline case. There was really no nuance here. You're very clearly well within the bounds of public debate and discussion. And The Washington Post is lost their minds and a very dishonest and nasty way. The Biden administration is thinking about maybe canceling some student loan debt. Let's go ahead and put this Wall Street Journal article up on the screen. They say Biden seriously considering student loan forgiveness. Officials say president may be warming to take executive action to erase at least some loan debt. Some Democrats believe a move would motivate young voters in midterms. Basically, what happened is he was in one of these caucus meetings and didn't detail his plans, but responded positively

when lawmakers pushed him to forgive $10,000 in student debt. The people said, suggesting they would be happy with his final decision. He also indicated he's open to further extending the current pause on student loan payments, which is set to expire on August 31st. Obviously, this is a massive issue just because the astronomical amounts of debt that are held by student loan debt holders, about 40 million people, 40 million people owe around $1.6 trillion in federal student debt. That makes up around 90% of student debt outstanding. So just pointing out that this obviously whatever Biden would do would only apply to the debt that's held by the government. That makes up about 90% of student debt outstanding. The politics of this, let's go ahead and put this insider report up on the screen.

So the reason that they are at long last considering this move is because young people are not happy with the Biden administration and are extraordinarily apathetic about whether they're going to vote in the midterms. But you have a Harvard poll that found 85 percent of young Americans wanting Biden to take some form of action on student debt. The flip side of that is in this Harvard poll, which is actually interesting, worth digging into in and of itself. But they found 42 percent of voters under 30 don't believe their votes make a real difference. And part of that is because, you know, whatever. And we're going to debate the merits of this particular proposal in a moment, but whatever you think of it, Biden did promise to do something on student loan debt, has all of the power at his disposal to do something about

student loan debt, made that promise on the campaign trail very popular with young voters, and then here we are, and he still hasn't done it. So, gee, I wonder why so many young voters feel like their votes don't make a real difference. And again, to the question of, you know, how this may impact them politically, go ahead and put this up on the screen. Biden's approval with voters under 30 now drops to 41 percent. Now, this was one of the strongest groups that helped to elect him president. You know, he won young voters overwhelmingly. At the beginning of his presidency, his highest approval ratings came among this youngest demographic. And now, as I covered last week, that has completely flipped. So actually, Biden's approval rating is best with

the oldest age demographic and worst with young voters. So they're looking at the midterms saying, guys, it looks like we are completely screwed. What can we possibly do? Joe Manchin continues to jerk us around and build back better. And that seems like as hopeless as it ever has. So this is something in our power. Geez, maybe we should actually do something at this point. Now, I do think the politics here are a little bit more complicated. For one thing, young voters, not particularly reliable midterm voters or otherwise, but particularly in the midterms. I do think that there is, you know, the backlash or the argument against this is basically like, well, what about people who aren't college, you know,

college student loan holders? And the other question, which our friend Philip asked Jen Saki is about, okay, well, what about people who, you know, worked hard and their parents scrimped and saved and they actually paid off their student loan debt? Aren't they kind of getting a raw deal? Let's take a listen to that question. Follow up on the student loan. Yeah.

You said that the president is looking at a range of options with regards to canceling some student debt, but is the president looking at any options for those students and parents who saved and sacrificed so that they wouldn't have to take out such massive loans? Is he looking at including them in relief retroactively? How would they be made whole if there was some sort of canceling of debt?

Ms. You mean for people who have paid off all of their student loans? The Press Yeah, who made sacrifices so that they wouldn't have to take out some of those loans. Ms. It's a good question. What I can tell you at this point is that there's legislation he'd be happy to sign for individuals who have $10,000 in existing student debt. If Congress wanted to send that to him, he'd be happy to sign it, and he's looking at executive actions and authorities. But I don't have anything to

preview on that front. So I think those two things are potentially politically potent, both the question of- I think they're fair questions. It's definitely a fair question. I will point out on the substance, and I want to get your thought on the politics, and then we can talk more about who actually would benefit and some of the details behind this. But you already do have subsidies for people who are higher wealth and able to save in advance

for their kid's college. So you have covered out in 529 education savings accounts so that you can have tuition functioning as a tax advantage intergenerational transfer. So you actually do already have subsidies in place for those parents that Phil is talking about there who are able to save in advance for their kids' education. So in fact, the system is kind of unfair right now towards those who don't have the ability to save in advance and have to take out these massive student loans. But on the politics of it, I think it is overwhelmingly popular with young voters who disproportionately

are the ones who are burdened by the student loan debt, who feel their futures are constrained by the amount of debt that they oftentimes graduate college with, who were sold this bill of goods of like, you know, the answer to everything is to get a college education. I think that's particularly true of black Americans who were told basically like, this is the way to build wealth. This is the way to close the racial wealth gap. And ultimately, you know, it didn't end up being the certain ticket that they thought it would be. And because the costs are so outrageous, they've been saddled with something for life. So for young voters, do I think it will help?

Maybe, marginally at this point, but I do think the overall politics are a little more fraught than maybe people would want to, people with my ideological view would want to. I'm glad you could say that because I do think that this is an important point. More than half of young people did not go to college.

And so look, I believe ultimately, I think the people who got saddled with student debt got sold a bill of goods. But you know who I blame the bill of goods for? The university system. So bailing out the university system who continues to bilk these kids, not have any actual stake in how they're doing, and also not change university financing, let's be honest too. Where is the major bloat coming in university budgets that's increasing tuition? Diversity and inclusion initiatives. So we should all bail out the diversity departments of Yale, Harvard, Texas A&M. Is that true? But I just don't genuinely don't know that. I know administration overall.

So I don't know that I have seen any numbers that back up that the overwhelming amount of the bloat is for diversity initiatives. Let's just say it's all administration. You can ask yourself where most administrative costs, new costs is being outlaid to. And I say say it's both my parents' work and university administration. But there's been escalation in administration for many, many, many years. Oh, absolutely. I'm talking in the last 10 years, which is also when the highest spike has also been. But I think the most valid critique and the most good faith critique here is the idea of like, okay, but what then? You do this one-time thing. Now, for me personally, because I do think that this is such an outrageous situation and a relatively new one too, I mean, it's easy for us to forget because we've always come of age during a time when college tuition

is fucking insane. But this is actually a really new phenomenon of it being so insanely expensive that no one could hope to be, very few people could hope to be able to actually afford it up front. And since it is such a burden that really does weigh down younger generations, and we've talked here about how, you know, this sets everybody back from being able to own a home, from being able to start a family. Student loan debt really puts this weight on top of both millennials and Gen Z, that it is worth some sort of solution, even if it is, you know, not 100% of what you would ultimately want. So what I would say is don't let the perfect be the enemy of the good. This is the tool that is at their disposal.

This would provide tremendous relief for, you know, millions and millions of people. And so I do think it's worth pursuing, even as I acknowledge it's nowhere near a complete solution without those other reforms that you're talking about. My point would be, first of all, I think it would be a political disaster because I think a lot of people will feel slighted. But two, and I should also be clear, I actually believe in very forward student loan forgiveness. However, it has to be paired with a complete change in the financing system of the universities. Number two, we can never let this happen again. I was looking at some of the data.

Even if you wipe out $1.9 trillion in debt, the debt load in about five to ten years would also be $1.9 trillion. So what? We're going to wipe it out again? Yeah, do it again. But we can't do that because we're just bailing out the university system. But that's just an argument for, you know, okay, you do this, and then you have to actually reform. You have to have, you know, I personally think we should have free public college, public university at this point, or at least very affordable. So that's just an argument for this isn't the end all be all. This is just the beginning. But I think it's, I think,

again, to say, well, it's not perfect and it doesn't actually solve the whole problem. So let's just forget about it. Well, that denies a lot of people relief right now that would be very beneficial to them. And so we have some stats that kind of make points in both directions. Let's go ahead and put the next piece up on the screen there from Brookings. This is interesting because a lot of the help would go to people who are relatively high income, who went to graduate school. If you did, you know, and this is if you did complete debt cancellation. So what Biden's talking about at most is $10,000, even that's uncertain. And they've also floated like, you know, it may be income based. So some of this debate may be a

little bit moot, but you know, they point out that in this piece, which I actually hadn't really thought about that. In fact, the way to think about it is, okay, well, how much is this debt as a percentage of your income? Because obviously, if you're someone who's earning a relatively low income, you're going to experience that $10,000 in debt as a much heavier burden than someone who's at the high end of the income threshold. And the person who wrote this analysis made the case of like, you know, sales tax is widely considered a regressive tax because it takes up more of your income if you are a low income person, even though wealthy people, because they spend more money, they pay more of the tax. So it really is important to think about it in relation to a percent of

income. And then also we'll get to in a moment, it also is very different. The picture is very different when you're thinking about income versus when you're thinking about total wealth. And one thing we've talked here a lot about recently is how much the sort of asset and wealth economy is even more important indicator at this point than thinking about just what your income is, because you could have a relatively low income, but if you've got, you know, if you own a home, for example, then you're in a much better position. So people who have high levels of student loan debt, that really puts a huge burden on them in terms of being able to buy a home or have that asset creation that puts them

into middle class life. So that's why I think even as it's not, you know, 100% or perfect solution or all that I would see, all that I would want to see, having at least some student loan debt relief will really be significant for a generation that has just gotten screwed over again and again and again their entire lives. Let's put the next one up there on the screen because this is also important. So take a look actually at that pie chart because the largest amount of the benefit, 60% of household, bottom 60% receive only 34% of the benefit because of the outstanding load of the amount of debt. People cannot conceive of just how much debt these lawyers and these doctors are holding. And once again, I just am completely against the idea of bailing out these low-rate law schools, which are charging $60,000 to $100,000, really criminalizing a lot of these students and setting them up for lifelong amounts of debt.

Are you opposed, though, even to the more like $10,000 or if it's income constrained? It depends because, once again, even on the $10,000, you know, here's another point, which is part of the reason why the student debt is so high amongst the bottom quintile, because the bottom quintile is also disproportionately more likely not to have gone to college or not graduated from college. So the data does show us that if you actually graduate, you're mostly on track in order to pay off your debt if you went to a public university. However, the people who get most screwed, who take out loans, and then they drop out. So actually, those people I'm the most

concerned about and I'd be most in favor of wiping out their debt because they have none of the benefit, all of the saddle. So that's really tough. Like I said, and I think about this a little bit like Wall Street. Look, there was a decent case to bail out Wall Street, right? Like, hey, we got to bail out Wall Street. People need to make payroll. We need a financial system, all of that. But did we deal with the underlying problem? No, we actually have probably more of a criminal Wall Street system than we do today than before because we didn't solve the incentives. Regular borrowers are not equivalent to Wall Street ghouls who deserve to go to prison. Right, but the whole point was at the time is how are people going to make payroll? Normal-ass people need to get their paychecks.

People, all this. That's why we did it ultimately in the first place. There was a case, a decent case at the time that real people's lives were going to be affected by a complete bank collapse, which was correct. But, and I think the correct case at the time, which I know you agree with, is we had to change the underlying system, which we did not do. So we can't keep doing this. I don't think it's a good analogy because you're talking about bailing out people who profoundly did not deserve it. This is talking about people who profoundly do deserve it, who were really like sold a bill of goods, you know, walked down this rosy path of just take on the debt, go to college. This is a way to build wealth.

And then we're stuck with a bill that is just completely insane. And which, by the way, if we're just being real, many of them will never pay. I mean, that's part of it too. It's kind of like social security. The amount of debt that has been loaded on top of these generations,

it's just gonna be with them hanging like a rock around their neck for their entire lives. So yeah, I would like to see us reform our system so that we have free public college. I would like to have debt completely wiped down. But I would support even a limited forgiveness so that people can start to get ahead again. Because the real path to the American dream at this point is to be able to own a home. And if you've got this debt burden on top of you for your entire life, it makes it so

difficult for you to be able to ever become part of the asset ownership class, which is why we see millennials and Gen Z so consistently screwed. We have some, this is, let's put Matt Brunig's analysis up on the screen here because this is interesting as well. He's got just some numbers about what is the current student debt situation. You could see there just how much money is owed somewhere between 1.1 trillion and 1.65 trillion. Let's go ahead and put the next piece up on the screen, the next chart that we have here. So this makes the case you're making, Sagar, of if you look at the share of student debt owed by each income quintile, it actually goes up as you become wealthier. But he points out another way of thinking about it is if you

look at the share of student debt by wealth rather than income, go ahead and put this next piece up on the screen, the dynamic actually flips. And that's partly because if you are weighed down by student debt, then undoubtedly you're going to have less wealth overall because that student debt is putting a tremendous burden on you and bringing your wealth down to really low levels. So you have here the least wealthy fifth quintile has 55% of the share of student debt. So I think, you know, that's a really important distinction to make too, is it's one thing to think about income flows in, but not everybody who is, you know, earning the same level of income is in the same boat in terms of their overall wealth and ability to own assets. Yeah. And let's put the next one up here just to be entirely clear

about what the Biden people are actually considering. So a source familiar tells NBC that they are thinking no decision is made and that any loan cancellation would be linked to income. So according to the people I've spoken to, a 10K, up to 10K capped by income is the most likely scenario. Look, I mean, I guess I would be okay with it, but I actually think it would be dramatically unpopular. And one of the reasons why I'm against this type of ad hoc type policy is we have to have everybody have some buy-in here. So I would be much more in favor of a $10,000 type wipeout as long as we restructure the incentive systems for all younger Americans. So think about how many working class young people over the last couple of years have been saddled down by credit card debt and others. If you even

look at the polling data on why people aren't getting married or having children, the number one reason is financing. So again, in a country where 55% of people don't even go to college, don't even try, they also have an immense amount of debt. I would be much more in favor of, okay, let's say 10K, cap it by income. Those people, all this here, frame it as like a new start, a new deal, some sort of thing for those folks. Because universal systems like Social Security and Medicare, where everybody in a generation actually universally benefits from something, is just much more preferable to me. Because right now, this is class warfare.

I mean, let's be honest. These people are disproportionately Democrats, so it's a bailout also of their own voters. And also, I don't think it's right to have the educated class get a bailout when young working class folks who actually pay taxes are getting nothing from this. It all depends on what problem you're trying to solve. Right. If the problem you're trying to solve is just like people have been screwed overall and so they should get help overall.

Which I believe. Honestly, like I'm totally good with sending out a $10,000 check to everybody in the country and having it happen on a routine basis. And, you know, redistribution so that we have, you know, massive of wealth to make the country less unequal. I am 100% on board with that. I don't hear that particular argument coming from many conservatives. Mostly they just want to argue against any help for anybody. And so if the problem you're trying to solve is people are poor and they need help overall, in general they've been screwed, okay, that's one problem that requires a universal solution.

If the problem you're trying to solve is people have been screwed over specifically by the college education system and the massive tuition bills, then this makes more sense as a solution. And by the way, you know, the younger you go on the, on the demographic scale, the more likely you are to have gone to college. So like Gen Z, overwhelming majority, do some college. They may not graduate with a four-year college degree, which gets to your point of like, those are the people who really get screwed. But to paint this as like, oh, it's just for the educated class. I don't think that's fair because you have so many young people now who do go to college because they've been sold. This is the only way you can even have a chance at succeeding in American society.

So listen, to your point, what we're likely looking at here is going to be probably very limited if it happens ultimately at all. And I think that will limit some of the Republican attacks on it as well, because if it is constrained by income, that makes it much harder to paint it as just like a wealthy class bailout. But, you know, I think it would be at least some help to a lot of people in generations that have been pretty much hurt. We'll see how it works out. We will see what happens. Joining us now is the executive editor at the American Prospect, the one and only David Dayton. Great to see you, David. Good to be here. First of all, I have to just say that I cannot say enough what great work you guys do over the American Prospect.

We really lean on it in the show. You guys do in-depth analysis that nobody seems to, you know, dig into the numbers the way that you guys do. So I just want to applaud you for the work that you're doing, first and foremost. But second of all, we'll a new report that says that the U.S. economy, the GDP, shrank at a 1.4 percent annual rate in the first quarter. That is according to the Commerce Department. That is its first contraction since early in the pandemic. Just the news just came out. So I know you're just sorting through it as we are. But what do you make of these numbers? Yeah, I mean, I think the expectation was for pretty slow growth for something around 1%. So this is a surprise to the downside.

I think there are a couple of factors. Number one, the first quarter we had Omicron, which really at the beginning of the year was a significant lead weight on the economy. And then for the last month, you had the war in Ukraine and what that did to gas prices. And I think overall, you're seeing the effects of inflation on consumer spending. But also, my understanding is that a lot of this has to do with inventory reductions. Can you explain that?

Yeah, there's a weird thing about GDP where if you end up having a lot of buildup of inventory, that kind of counts as part of your gross domestic product because it's sitting there in a warehouse. And if you have less, then it counts less. So sometimes GDP is a little noisy as that goes. And this is also the first advance estimate. And we'll get a more fine grained understanding of it. And it could change from there. But yeah, sometimes you get these weird swings because of inventory. So the other one

here is about exports, David, which also links back to what we were going to be talking about with you. I mean, so why are exports contracting and our trade deficit ballooning? Because that also seems to be a significant part of the reduction here in GDP. Yeah, I mean, it's a good question. Obviously, as demand has increased for goods, just basic goods, necessities and durable goods like furniture, washing machines or whatever, you almost can see it like, OK, we don't make any of that stuff. So if the demand increases, the trade deficit is going to increase. People are going to eat the same amount of food. Agriculture is largely our biggest export. increases, the trade deficit is going to increase. People are going to eat the same amount of food. Agriculture is largely our biggest export. So unless people are consuming massive amounts of food, that's going to stay pretty even. But if people are consuming more durable items,

just more stuff, that's going to come in from overseas. So that's one way to think about it. So David, you had a great piece kind of evaluating where we are in terms of the supply chain crisis, where we are in terms of, you know, is inflation just continuing to go up and up and up? Are there any signs of that abating in any sectors? Let's go ahead and put this tarot sheet up on the screen. It says supply chains are easing or they're not. Our system is so unstable that we could be seeing endless waves of supply dysfunction with dangerous impacts on the economy. You point to the fact that you've got variables pointing in sort of every direction that enable you to look at this a number of different ways. And you also talk about something called the bullwhip effect, which is what could cause us sort of careening from one problem to another problem back and forth. Can you just break some of that down for us? Yeah. I mean, the bullwhip

effect is this sort of standard understanding of supply chains where it takes time from when you order something, if you're a retailer, to it actually getting to you. And conditions could change in that time period. And that's the bullwhip. It's the time for the whip the crack and then move back and straighten out again. So for example, a lot of companies fearing that they're not gonna be able to get all of their supply, but they might be able to get some of it. They overordered or double ordered in the past six

months, hoping that they'd get something that stuff, then the demand has shrunk because of inflation. And there's now you've gone from shortage to glut. And there was a sense, especially in the beginning of April, I mean, the GDP number comes out now and we're a month into beyond where the GDP is measuring. So April in particular, you started to see this softening in freight, particularly trucking, where there just weren't as many orders being asked to move goods and things like that. And you're seeing what could be, what has been described by some experts as a recession in trucking. And that's because of lower consumer spending, right? But the goods are already on the way by the time we get the lower consumer spending. And so you could end

up with this glut from these retailers that have a bunch of inventory they can't sell. Now, that's like sort of happening on the, you know, it's kind of happening in real time. But the other part of this that cuts against that whole concept is the fact that Shanghai has been locked down for three weeks, and now we're seeing Beijing potentially going into lockdown. Shanghai is more important as manufacturing goes because it's more of a hub. You have factories that have been shut down for a month. And for basic items, for things that people just ordinarily consume, that's going to create shortages. And it could create shortages of component parts for manufacturing in other parts of the world.

And so the bullwhip is going to whip back, right? I mean, you have this shortage. You went to glut. And now you might go back to shortage. And it's just an indicator of the essential instability of the way that our commerce and logistic systems work right now. Well, that's the point is this is none of this has to be built that way. It's just that, you know, this micro thin like ability to have a slightly higher profit margin trumped any sort of focus on resiliency

that would keep us from careening from crisis to crisis to crisis and having such fragility built in, which is really what's been exposed over the past couple of years. David, I'm also wondering, are we seeing impacts from the Federal Reserve hiking interest rates and indicating they're going to do that at, you know, at least the same pace, potentially an even more accelerated pace, and also indicating that they're planning to sell, you know, get unload assets from their balance sheet at a pretty good clip as well. Are we seeing an impact from that policy play out here too? I think not direct effects yet, because they've only raised a quarter point at this point. There's an expectation of a half point or maybe even a 0.75 point rise in May. But expectations are trending in that direction.

And that particularly comes through the channel of mortgages. Mortgage rates are over 5%. And so it costs a lot more to buy a home. And we're starting to see that play out in some softening of housing markets. But to get back to your point, I think there's one very key thing that you can say about the Federal Reserve's intention to increase these interest rates to break the back of inflation. And that's to ask the question, what are increased interest rates? How are they going to end the lockdown in Shanghai? How are they going to stop the 500 ships that are currently off the coast of Shanghai Harbor? How are they going to shrink that number?

They're not. I mean, we have a supply problem and the Fed is targeting demand, essentially, is the issue to me. And I think what we've seen is not only the chaos that can arise from a pandemic, but the fact that we're in kind of a world where there are these threats to supply shocks at every turn. I mean, the war in Ukraine has been a much bigger spur, particularly on food prices, wheat being a very major commodity export out of Ukraine. We've seen that be a much bigger deal, and of course, oil, than what we saw in the two years leading up to the pandemic.

Climate issues have been periodically problems for supply. Last year in China, the Yangtze River flooding led to a lot of production delays. A heat wave led, because of the way in which China's energy sector goes, led to shutdowns at factories of electricity for several weeks, and that led to shutdowns. We've seen freak fires. There was a fire in Japan that reduced a lot of semiconductor capacity. And then there was a fire early this year in Berlin at the factory that makes the machines that make semiconductors. Oh, Jesus. Right? So, I mean, we don't, I mean, we've been able to make the very long intermediated supply chains work, I mean, work to the extent, not really for workers, but at least for cheap prices,

for a long time. But I feel like the threats to this are rising. The hidden risks that this kind of system draws out have risen over the last several years, whether it's through more political unrest, climate and extreme weather events, and now a pandemic. And I think it demands a rethink of this system. I think that we are all living through that in real time. David, thank you so much for breaking it down. Great to see you. Thank you. Absolutely, thank you.

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