Breaking Points with Krystal and Saagar - Mini Show #37: BLM Finances, DHS Board, Southern Baptists, Starbucks Workers, Bezos Posting, Baby Formula, & More!

Episode Date: May 28, 2022

Krystal and Saagar talk about the DHS board shutting down, BLM grifting, Netflix programming, Jared Kushner, American journalist killed, Southern Baptist abuse scandal, Starbucks workers, Bezos posting, Dem election fights, US Middle East diplomacy, Davos men, and Baby Formula crisis! 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/Matt Stoller: https://mattstoller.substack.com/The Intercept: https://theintercept.com/Marshall Kosloff: https://www.youtube.com/channel/UC3O3P7AsOC17INXR5L2APHQ Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

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in American history. So what are you waiting for? Go to BreakingPoints.com to help us out. We brought you the news of many different series which are getting canceled, and the latest one has some interesting implications. Let's put it up there on the screen, which is that Netflix is scrapping the animated projects, including Ava DuVernay's Wings of Fire, but also Anti-Racist Baby by Ibrahim X. Kendi. So obviously Mr. Kendi became a bestselling author during the BLM protests of 2020. He's the proponent of, you know, how to be an anti-racist, massive bestselling books, really the inventor of kind of anti-racist ideology going back about a decade. I actually read some of his books before he even became a thing, quote unquote, during 2020. I remember thinking he was totally

nuts at the time and continue to stand by that. But I think it's fascinating, Crystal, that this is being canceled in the context also of Netflix's business problems on top of the letter that they just issued all of their staff saying, hey, if you have a problem with the content that we produce here, you can leave if you would like. So I don't know if it's, I think we should be clear, it's not a political statement by Netflix to say we're canceling this because it doesn't agree with our content policy. But I mean, it is an empiric choice that they have to make about what's going to perform

and what's not. And I think that a lot of the projects that were being floated by cheap cash in order to buy off like liberal cachet, elite liberal cachet, like Meghan Markle, her series on her animated series, and now Anti-Racist Baby as well, does show you that the content, I think, on a mere business level was not going to perform very well for all people. And also, I mean, it does show you, though, that the promulgation of that, you know, this was one of the best-selling authors of just two years ago, is certainly not in fashion anymore. I think it's a net positive. But I think it's also fascinating just from a what people are willing to consume point of view, which obviously Netflix has the best data in the world on. I think that's all well said. Yeah. If you're depending for your movement on corporate backing, you know, and what's like fashionable and what's going to serve the bottom line, that's probably not a great long-term strategy, I think is what I take from this most of all. We did a segment before about Black Lives Matter and part of, you know, there's some new

transparency around where they're funding when. And as part of that story, also the sort of increasingly corporatized direction of Black Lives Matter from this sort of like more radical, militant, Marxist organization to doing events sponsored by Ugg booths and taking checks from Amazon or whatever. And Microsoft, yeah. And yeah, I mean, ultimately, corporations are gonna act in what they perceive to be their best interests. And if your movement doesn't happen to be the hot thing for affluent consumers right now, they're gonna drop it and they're gonna drop it fast.

That's basically what I take from this ultimately. So they don't think that there's money to be made on how to be an anti-racist baby anymore. And so whatever claims they put out there about their commitment to racial justice, that was all just, you know, to meet the moment in terms of what they thought would be good for their bottom line.

I do want to say, because you were telling me before, I only perused anti-racist baby once when I was at a bookstore. You actually read it. I did. So what's in this damn book? Because look, I read the book by Kendi, I think the predecessor to How to Be an Anti-Racist, where he advocates for the Department of Anti-Racism and the constitutional amendment

and the history of his view of anti-racism, what I saw very much as like a racialized view. I've always thought he's a cancer on the society and Nicole Hannah-Jones, all of them, far before Black Lives Matter. But, and I've assumed that the book would be within that vein, but you're telling me that it's different. It's, okay. It's cringe.

I'm not gonna say it's not cringe. Okay. There's nothing, I'll just, I'll read you a little bit and you get a sense of it. So the first page says, anti-racist baby is bred not born. Anti-racist baby is raised to make society transform. Babies are taught to be racist or anti-racist. There's no neutrality. Take these nine steps to make equity a reality. And then step one, just give you a sense of these. Open your

eyes to all skin colors. Anti-racist baby learns all the colors, not because race is true. If you claim to be colorblind, you deny what's right in front of you. There was one part that I actually liked, which is point at policies as the problem, not people. Some people get more while others get less because policies don't always grant equal access. There's nothing wrong with the people. Even though all races are not treated the same we are all humid human anti-racist babykin proclaim that's the vibe of it so it's as bad as this book i mean probably the most controversial part of it is like the typical mode in white

american parenting is like let's be color, like sort of polite society approach has been, we're just, everybody's the same, we're not going to talk about race. And so this is in some ways more true to how kids actually engage with physical differences, which if you are a parent of little kids, you know they're going to ask you about like why this person looks different or that person looks different. And so this is sort of like, rather than saying like, you know, it's no big deal and let's just like, you know, we're all the same and glossing over that to actually talk about, okay, you know, yeah, this person has this different skin color and this is how that might affect them in their life. Just sort of like leaning more into that conversation,

which personally I don't have a problem with because I don't know that not talking about those things and, you know, things that are obvious to kids about the different ways that people look, like, I'm not sure that that's really a great strategy. So anyway, I read this. I didn't think it was, like, anything that crazy. You're, like, going to kill your children or anything like that. To me, the most telling part is, like I said before, that Netflix clearly doesn't think that the equity moment is the hot thing right now. Thank God. And so, you know, for all those movement leaders out there,

no matter what your cause might be, don't depend on corporate America to have your back no matter what because ultimately they're going to look at the bottom line. Yeah, that's right. All right, guys, we're finally getting a little bit of a window into the finances of the Black Lives Matter Foundation, their international foundation, which raised massive, many millions amounts of dollars during the Black Lives Matter protests over George Floyd's killings and George Floyd's murder. And there was very little transparency

around this organization. They actually hadn't filed the forms that they needed to, that charity organizations are supposed to. And there was a real reckoning that came from other affiliated Black Lives Matter chapters that say, hey, where is this money going? What is it being spent on? We need some transparency and accountability here. There was also some reporting that raised a lot of questions. We covered some of it here, in particular surrounding a $6 million mansion that didn't seem to really have a purpose. And there were a lot of questions here, in particular surrounding a $6 million mansion that didn't seem to really have a purpose. And there were a lot of questions about, you know, Patrice Cullors, who was the head of the organization and what she was doing with the fund. So we finally got a little bit of

transparency here. Let's go ahead and put the New York Times tear sheet up on the screen. The lead graph here says, in the tragic whirlwind year of 2020 with racial justice protests prompted by the killing of Black men and women by police officers, the Black Lives Matter Global Network Foundation raised $90 million, much of its small donations from rank-and-file supporters. A recent tax filing from the group shows that by the middle of last year, more than half of that money had been granted to smaller organizations or spent on consultants and real estate, leaving the foundation with $42 million in assets. Now, the questions about this spending, which again emerged from affiliated organizations and supporters of the movement, that has caused some turnover at the organization. Patrice Cullors himself stepped down. You actually

had Mignon Moore, a longtime Clinton World aide, who sat on the board for a time. She now has stepped down. Some of the details that came out of this initial and delayed filing are also very concerning. Let's go ahead and put the Yahoo News report up on the screen. So the headline here is Black Lives Matter paid nearly $4 million to board secretary, co-founder's brother, and father of her child. The specific details here are that the payments that are listed in this filing include $970,000 to a company called Trap Heels LLC. That's a company established by Damon Turner, the father of Patrice Cullors' child, and also $840,000 to Cullors Protection LLC, a security firm owned by her brother, Paul Colors. That's, again, according to these tax firms. Patrice Colors herself received no compensation during the

fiscal year, instead serving as a, quote, unpaid volunteer. So that is what we have learned. Yeah, I just think it's ridiculous, you know, the funneling millions of dollars there. And, you know, I think also, you know who the people who blew the whistle on this? The Trayvon Mountain Foundation. People who are the victims of actual violence and whose families were, or whose family were family members of the people who were actually killed and in question. And no matter how you feel about that, it's a free country and BLM and many others are able to raise as much money as they would want. But clearly the funds are not being used in appropriate manner. So you both have the $40 million or so that they remain in assets,

the millions of dollars that they spent on their houses, on their personal compensation, on moving money around to certain family members, and it betrays the ethos of the organization. And if you legitimately believed and wanted to donate, and good-meaning people out there, I'm not saying I agree with them, but there were a lot of good-meaning people out there in 2020 who were like, hey, this is messed up. I want to give money and support something like this. Listen, it's America. You can do what you want with your money. Well, then though, these organizations owe it to them and others to fulfill that spirit, especially whenever there were families, like the ones who were families, members were killed or were injured or whatever in altercations with police officers. They were relying on some of that money, and they didn't get any of that money.

Yeah. That is especially galling. What you're talking about is some of the – they're called mothers of the movement actually wrote a letter saying, send a cease and desist, saying you cannot use our family members' names in your fundraising solicitations. And so effectively what happened here is when there was this massive outpouring of grief and rage over the horrific circumstances surrounding the murder of George Floyd, people were looking for where to give this, where can I send money so that I can be of service? And this Black Lives Matter, I think it's called Global National Foundation, became kind of the catch-all for that money. And they were not at all, I mean, the best thing you could say about them, the most diplomatic thing you could possibly say about them, is that they were not at all prepared to operate a charity at the scale of $90 million. They had two paid

staffers, two. Wow. Two paid staffers to handle this almost $100 million organization. And so, yeah, you see this spending that's all over know, all over the place to family members, to, you know, the father of her child. The reporting, which, by the way, came from a Black journalist on the real estate purchase, also, you know, raised some really, I think, difficult questions for the organization and how this money that was meant to be spent on racial justice and criminal justice reform was actually being spent purchasing this, you know, fancy $6 million mansion that's appearing in these sort of like glossy YouTube videos that are very like brand building, not seeming to be used for the purposes that they claim that it would be used.

There's also a detail in here that Patrice Cullors used it for a birthday party for her son, but she paid back. She then, you know, sent money in to say, okay, paid you back for the use of this house. In any case, you know, clearly the most relevant questions and the greatest concern initially came from the people who were most affiliated with this movement and really believed in the cause and really, you know, were some of whom were directly harmed by police violence. And we're only now belatedly, and these forms were really late in being filed, getting any kind of a picture of what actually happened with half of this money. So I think, you know, if you are someone who cares about racial

justice, like this should be, you should be the most concerned about this ultimately, because you, the more that you learn, the more you see a picture of resources that were just being squandered. And that's the problem with it. You know, everybody's just ignoring, you know, Microsoft and Amazon cut checks to this lady and to this organization, like major Fortune 500 organizations included donation links, not only from their companies, but also encouraging their employees. So you basically directed funds. And now this charity is in such disarray and controversy that they've been removed from like the Amazon Smile program. So, okay, I think somebody needs to explain, especially if you're a corporation and you encourage your employees to donate their money and your own money to this organization.

There's a lot of questions here to be asked. But unfortunately, it's been totally brushed under the rug. It took this New York – and by the way, I'm glad it's a black journalist. I don't think it should have to be a black journalist. Like Andrew Kerr over at The Daily Caller who I used to work with has been doing this for over a year. It just made it harder for them to say he's racist. Yeah. You could be like, you are a liar.

That is just an objective fact. And it's not just, it doesn't have to be a black person calling it out for us to all understand exactly what was happening here. So anyway, it's, you know, look, it's honestly tragic. Like I said, I have my problems with BLM even at the time and continue. But like, there are a lot of people who believed in it. And ultimately, I believe in freedom. And they were ripped off. And I think that that's wrong because at the very least it should have gone to the Trayvon Martin family or the family of George

Floyd. The local chapter. Or the local chapters. National BLM chapters. The other part of the reporting was that one of the local chapters wanted to do this like, you know, this local action, grassroots action. And they were told to stand down because the Black Lives Matter Global National Foundation had some electric slide competition sponsored by Ugg Boots planned. So this completely corporate thing, monstrosityity was put in place that's the other part of this story is that you know the founders here are uh describe themselves as marxist and yet yeah the alliance with um with big corporations and corporate money is you know and then ultimately mignon boar from clinton world coming in to like try to right the ship is is another tragic part of this story, in my opinion. That's really bad.

We've covered here the closure of the DHS's Ministry of Truth, or at the very least, the pause and then the eventual departure of Nina Jankowicz, the so-called disinformation expert. But she is now making the rounds on cable TV, defending her time in the administration. Here's what she had to say about the campaign by people like yours, truly, for criticizing her. Actually, Jamie, I would say that the Disinformation Governance Board was the victim of disinformation. So the difference between dis and misinformation is disinformation is false information spread with malign intent. And clearly, there was a malign intent on some actors in the media and in politics who just really stood up to the formation of this

board because it would be confronting disinformation. They completely mischaracterized its mission. And frankly, this childish behavior is endangering our national security now. This board was set up to counter real disinformation that makes Americans less safe. Things about false information related to disasters, border security, our elections and other critical infrastructure like pipelines and banks. So those who stand in opposition to the board, which, as the secretary said, was just an internal coordinating mechanism, something to make sure that we were efficient and using best practices,

are standing in the way of our national security. Well, we're standing in the way of national security for pointing out that this lady wants to edit your tweets and fell for herself many instances of disinformation. Actually, this morning, Crystal, we talked on our show about the Alpha Bank story that was complete BS. Guess who was, quote, very concerned about it at the time? And hey, listen, that's okay. But, you know, maybe you should not be in a position of deciding what is true and what is not on behalf of the government. And it's fascinating, too, because she continues to stand by a lot of her work. She says, this is the type of work I have built my career on, not a few contextless tweets. This is the type of work I will continue in the public sphere. She's referring to a U.S. Army war journal quarterly that she wrote about the war on disinformation after COVID, in which, and I went through it, she endorses exactly some of the most dystopian policies on behalf of the government in order to control the outright flow of information.

And if that's the person who also tweeted, remember, please lock – she was basically like, you need to lock us up during the lockdowns. Despite the fact that she said that wearing masks was disinformation and advocated for that. Three weeks later said, nobody is social distancing. We just don't have it on us. Government, please lock everybody down. Clearly has deeply authoritarian instincts. I was telling you also, I would love to have her on the show. I would love to have a conversation with her and be like, okay, tell me what we said was disinformation.

Tell me what was disinformation. See, that's a part that they never spell out. I mean, Taylor Lorenz in her infamous piece about this never really lays out the specifics of, okay, what was incorrect? What was wrong here? And from the beginning, I mean, the idea is terrible and anti-democratic

and authoritarian from the jump. So it's sort of like disqualified out of the gates. Then the rollout is a disaster. They can't explain at all to the American people what this thing actually does. And then the choice of her, this clearly very ideological actor who has been wrong in certain really key tests of the spread of misinformation and disinformation. It's just the whole thing was a compounding disaster layered on top of what was a terminally bad idea to start with. The other piece of this that, again, she does the same thing that Taylor did in her piece, which is on the one hand being like, this was just going to coordinate some people. It was

really no big deal. And on the other hand being like, you're destroying our national security for killing this board. They still, even now that the thing has been put on pause or disbanded or whatever it is, they still can't actually agree on whether this board really, really mattered and was critical to national security or whether it was no big deal and everybody's freaking out over absolutely nothing. That seems to me at the very least like gaslighting, if not active misinformation or whatever as well. That's a great point. And she's trying to point it as like, oh, our energy grid.

Nobody is upset that you are going to have something to say about our energy grid. We are upset because explicitly in the announcement, they talked about elections. Now, look, I think there's a lot of election misinformation from Donald Trump and from a lot of the people who support him. It also was not that hard without the help

of the government to say, hey, this is bullshit if you look into it, okay? If you go and look at every lawsuit that people file and all the bamboo ballots claims, and regardless, you'd be like, oh, you know, if you believe this, you're kind of crazy. And, you know, you can go with it if you want to, but just know exactly where you're coming from.

Or if some cell phone data from a Dinesh D'Souza documentary is enough for you, I don't know that the government telling you that you're wrong is going to help. Probably not. That's the point, though, which is that in a free society, it's actually not that hard in order to decide what is true and what is not after all of the facts generally come to light. And the concern that we always had was the ability of a government in order to try and be the arbiter of those facts, especially in a time of chaos when things are unclear, at a time, Crystal, when she has sided on the side of establishment lies almost every time in her career. There's one other piece of this that I think is really, really important, which is that

this board being disbanded is actually like a really positive sign that we have some semblance of democracy still. That's a good point. Like they put this thing out. There was a big reaction to it. I mean, she and Taylor Lerons tried to frame it as like, oh, it was this coordinated attack. No, what actually happened is you had, yes, some people with big accounts say, hey, this isn't great. And then there was a massive public reaction to it. It was not just right wing, although there certainly were a lot of right wing voices involved as well. There were civil rights organizations that were concerned. Dana Bash gave a very tough interview to the DHS secretary about all of this.

There were plenty of left wing voices who were concerned as well. And the administration saw that criticism and they said, we're going to pause. That is democracy. That's the like actual sentiment of the people mattering in terms of our public officials. The instinct of people like this woman and others with these sort of authoritarian tendencies and very elitist tendencies is to say, no, no, no. What these rabble rouser people over here think, that shouldn't matter at all. We just need to listen to the experts. We need to insulate ourselves from this messiness that's going on over on social media where people can like express themselves and quote unquote pile on in these

coordinated attacks. So she also backs this very sort of standard Washington elitist view that they should be completely insulated from any sort of public criticism and completely non-responsive to public criticism. I look at this as a real victory for the forces of democracy and for the public having a say in what their government ultimately does. I think that's really well said. It's very rare that we get any sort of real public response from the Biden administration to something that the public wants. Yes. I think because on the merits, you can't look at this and be like, all right, this is crazy.

Like, this is not, this is just not the right thing. And they could see also that it was bubbling up because of you. So that's another thing, too, which is that the power of the internet, the power of independent platforms, I'm not going to say that we were instrumental or whatever, but I think all of us together speaking out about this and culling past information, we were able to circumvent the establishment media, reach millions of people, and millions of those people had their voices heard enough that the government itself had to say, okay, you know what? We're going to go ahead and shut this thing down. So that is one for democracy, many others against it. Yeah, indeed. Some interesting new revelations in Kellyanne Conway's book. Let's put this up there on the screen.

Kellyanne coming out glorifying Trump, but skewing Jared Kushner. And her own husband. Her own husband, which I'm just going to put that aside because a certain person is known to call certain people if they ever talk about her relationship. Let's just say that that's a well-known fact out there in the open for anybody who works in this business. But beyond that, the targeting of Kushner is genuinely hilarious because it just confirms everything that we already knew at the time. She says that working with Kushner was like having a take-your-kid-to-work day. Some days it felt like an extended take-your-kid-to-work day when Jared was in charge of everything. And she talked about how Kushner is a very smart person whose heart is in the right place,

but had an out-of-balance, all-this-authority-and-no-accountability at the White House. She talks about how Trump would just say, why don't you guys just work together and cast it kind of as men brushing her aside. But really what it just confirms is she says with Kushner in particular, that he, every single thing he would touch, he would think that he was God. He was like, and she even writes this about how, oh, he knew so much about immigration all of a sudden. Oh, he knew so much about the Middle East because of his Abraham Accords. He knew so much about criminal justice or whatever. That one he might have known about because his dad was a criminal. But the point being that, and I always try to tell the Trump people, MAGA people this, I'm like, here's the truth. You vote for Trump, you're voting for

Jared Kushner. You need to be honest about that because Trump does not care at all about policy. I literally watched him behind the Oval Office just get bored with his papers. It's all Kushner. He was the only guy who cared about anything. And this is just further confirmation. And I also think if you look at all of the aides who were around him, who had any independent worldview whatsoever, Kellyanne was one. She actually worked on opioids and she did some okay stuff while she was there. The rest of them, they don't want to work for Trump anymore. They've all blasted him out in the open. Jared is a literal guarantee. Like you know what it means to go work for, to vote for Trump again, who is going to work in the White House. It's Jared. So do you want Jared to be back in the White House? That's the actual

answer. You know, I heard a lot of this during Biden. They're like, it's not about Biden. It's about his woke staff. It's like, okay, well, that applies to Trump, too. His staff and who he picks and entrusts, who is his frickin son-in-law, who is a legitimate moron. I have literally sat in meetings with Jared. I mean, he've learned more and more about how he's his position in the White House to then go ahead and like cash in immediately when he stepped outside of the door

raising money, yeah, from the Saudis and others in the Gulf region. So, I mean, it does strike me the framing of this, though, the lay,

I haven't read the book, so I'll just put that out there, caveats, et cetera, but the framing that she blasts Kushner but she sort of glorifies Trump. This is kind of typical MAGA World Cope. Absolutely.

Of like, Trump is, I mean, it's not, he's wonderful. Of course we love Trump, and he's always right, and he would do the right thing if it wasn't for these bad people around him. And it's the same thing we were talking about, how Bannon will bash some of the endorsements he makes, but it's never Trump's fault. It's the people around him. It's always the nefarious people around him who are steering him in the wrong direction. It's like, come on. I mean, he's a grown-ass man. He can make his own decisions.

He can make his own choices about who he hands his portfolio off to, who he trusts, who he puts on his staff, what endorsements he makes. So it always strikes me as extraordinary cope, this idea that like, it's not Trump that's a problem. It's really Jared Kushner. He's the issue. No, they're both the problem. Yeah. The problem is Trump who trusts Jared Kushner and elevated him at every single time whenever he was in the election. I mean, the man hired John Bolton for his administration.

Like, come on. And that's on him. He decided to do that. Like, it's disgusting. Trip down memory lane and you just know we're going to be cursed with these idiots again. CNN has just conducted an in-depth investigation into what exactly happened when Shireen Abu Akleh, who was a Palestinian-American journalist, was shot and killed while doing her job, while clearly marked as a member of the press in the occupied West Bank. Let's go ahead and put this tear sheet up on the screen. So what they say here, the headline is, they were shooting directly at the journalist. New evidence suggests Shireen Abu Akleh was killed in targeted

attack by Israeli forces. So a couple things came to light here, Sagar. And by the way, I should say CNN is one of a number of news organizations who have come to this same conclusion at this point. But what they point to is newly revealed video that allows them to pinpoint the direction that the shots were coming from. Also backs up the claims of Shireen's fellow journalists who were there, that there were no Palestinian militants. They were not in the middle of a firefight because, you know, and also as journalists, you're not an idiot. You're not going to put yourself in the middle of a firefight. But the only shots that were being fired seem to have come from the exact position of where

these Israeli defense forces were located in military vehicles. In fact, so let me show you with my hands here. You have Shireen here where she is shot and killed. You have the Israeli Defense Forces here. And the only Palestinian militants were all the way on the other side of this refugee camp, so far in the distance. They were also able to, using the audio of the shots, they were able to estimate the distance from which these shots occurred. It was about 200 meters, which again puts them exactly in the position of where these

IDF forces were known to be. To me, the most clear proof here, though, is the fact that you have video of individuals who were, you know, casually standing there, nothing, there's no firefight, there's no sort of tension or hostility and then out of nowhere these shots ring out and um kill shireen abu akhle the other thing they point to is uh there are bullet holes on a tree near where shireen is hit and killed and this is why they say that she was killed in a targeted attack because the bullet holes are so close together that it's impossible, experts say, for this to have just been random gunfire, that she was directly targeted and killed by the Israeli defense force. Now, in terms of what the Israeli government has said, their first statements were,

we have reason to believe it was Palestinians. That appears to be complete lies and bullshit. Then they said, there's no way we could ever know what ultimately happened here. Who can say what ultimately happened here? Well, you now have multiple news organizations that have been able to pretty precisely and conclusively conclude that, in fact, she was murdered in a targeted attack by the Israeli defense Forces. And now the question for us is, remember, this is an American journalist, Palestinian American journalist, who also was an icon in the region, household name, very well-known, trailblazing female journalist in the Middle East. For an administration that, you know, says a lot of fancy words about their commitment to the press and the free press and all of this, what are you going to do and say to your buddies in the Israeli government about the

fact that their military appears to have targeted and killed an American journalist while wearing a press vest and doing her job? Yeah, she's one of our citizens. This is not even a conversation. We need answers immediately. And obviously, you know, the IDF is not even open to investigation. You know, I'm not sure if you've seen that. They're fake investigation. They said preliminary findings, all of that. They're going to try and bury it under the rug. And look, I'm sorry. I mean, you kill one of ours, you're going to very clear. And even in the media treatment, I mean, if an American journalist went down and was killed in Ukraine by the Russians, they would be calling for World War III, you know? And look, I mean, I would be as equally outraged if they killed one of our people. One of a Fox News journalist was, you know, basically lost, I think, three of his limbs when he was shelled over there.

I mean, outrageous. We don't know who shelled him. It's still under investigation. If it turns out they're Russians, I mean, listen, I think they should pay big time. But this woman was one of our people, and she was shot and killed. I mean, even shot in the head as far as what we've seen. And one of their cameramen was shot in the back, by the way. Yeah.

Now, you know, I know the chaos and the fog of war and all that, but listen, they've got cameras. Israel is a very advanced society. I want to see all of it. There's camera. I mean, remember that time the IDF guy shot that one guy in the head? There's a direct footage of all this stuff. So where's the footage on this? I'm sure they have it. Well, there's important—there's a lot to say here because the State Department's official position from our friend Ned Price was, we trust the Israelis to be able to handle this independent investigation. Please, please. They already have been shown to lie and cover up the truth, not only in this situation, but many others. And when he was pressed in that briefing about, hey, what about the facts? Remember when they blew up a press building that housed, it was Al Jazeera and the AP in Gaza? Remember how they said like, oh, we're going to provide

you the proof that this was being used by militants? Hey, Ned Price, did they ever do that? No. No, they did not. I mean, he was forced to admit. No, they never actually came up with that evidence that they promised were, a UN report found that there was credible reason to believe that they directly targeted journalists previously in 2018 as well. So there is a pattern and a record here. The idea that you're going to get some like actually independent and honest report out of them is completely insane. And again, this is an American citizen. And the last point I'll make on this as a political one, which is that, you know, there's a lot of money coming into this, these progressive, to defeat these progressives who have anything to say about Palestinian rights. There is, I mean,

it's so hard to talk about this without sounding anti-Semitic, but I'm just telling you the facts. There were millions spent to try to defeat Summer Lee because she had something to say about Palestinian human rights, millions spent to defeat Nina Turner. And ultimately what they want to say that Israel should just be treated like any other country of which we have a bilateral relationship. I've had the same position. I like Israel. I've been to Israel. I spent a lot of time there. It's a cool place, but I'm just telling you, like, I would treat them as what I'd treat any other person. And anybody who calls himself American should probably do the same. Yeah, we definitely say the same shit about the Saudis. So you're not going to hit us with that, like, singling them out stuff. Although I'm sure my DMs will still be hot. Indeed. It's okay. I'm seeing you in Tel Aviv. A bombshell new third party report detailing the coverup of rampant coverup of sexual assault and

harassment allegations within the Southern Baptist Convention has really rocked that church from top to bottom. Let's go ahead and put this New York Times. Te terror sheet up on the screen. The headline here is Southern Baptist sex abuse report stuns from pulpit to pews. The results of a sprawling investigation are coursing through every level of Baptist society at an already fraught moment for the nation's largest Protestant denomination. This particular report documents just what an earth-shattering revelation some of the details of this report actually caused within the church itself. Now, this came out because there had been some reporting saga from a local paper in Texas detailing some sexual abuse charges against pastors within the Southern Baptist Convention. And that raised a lot of questions, and the

convention ultimately demanded that this third-party investigation be conducted. And that report just came out. And I want to read for you a little bit of what a previously high-ranking member of the church, Russell Moore, who served as president of the Ethics and Religious Liberty Commission, what he wrote about the revelations in this report. He was one of the individuals who has really been raising red flags about their handling of sexual abuse, who really pushed for this independent investigation. And what he says in terms of the details of what came out, the conclusions of the report are so massive as to almost defy summation. It corroborates and details charges of deception,

stonewalling, intimidation of victims, and those calling for reform. It includes written conversations among top executive committee staff and their lawyers that display the sort of inhumanity one could hardly have scripted for villains in a TV crime drama. It documents callous cover-ups by some SBC leaders and credible allegations of sexually predatory behavior by some of the leaders themselves, including former SBC president Johnny Hunt, who was one of the only figures in SBC life who seemed to be respected across all of the typical divides. And then there is the documented mistreatment by the executive committee of a sexual abuse survivor whose own story of her abuse was altered to make it seem that her abuse

was a consensual affair, resulting, as the report corroborates, in years of living hell for her. For years, leaders in the executive committee said a database to prevent sexual predators from quietly moving from one church to another to a new set of victims had been thoroughly investigated and found to be legally impossible. Given Baptist Church autonomy, my mouth fell open when I read documented proof in the report that these very people not only knew how to have a database, they already had one. And that was perhaps, Sagar, the most sort of earth-shattering revelation here was that all the time, people who were advocates who wanted to protect themselves, protect their children within these churches, they were asking the executive committee, can we keep a database of known allegations of

people who have been proven to be sexual predators so that we can make sure they're not just getting shuffled among churches? And they kept saying, no, we can't do that. Our lawyers say it's impossible because we have this democratic autonomous structure. Meanwhile, while they are saying this directly lying to the people who have concerns, They are maintaining their own database that included more than 700 names of people who were credibly accused of sexual assault. So there are a lot of parallels here with the Catholic Church and the cover up there. And the bottom line was that comes out of this report, and I actually went in depth and read a lot about this thing. The church and the leadership and their legal counsel were much more concerned about avoiding any sort of scandal or personal or

church liability than they were about protecting their most vulnerable members. In every single instance, they erred on the side of, let me protect my own ass instead of making sure that the people who are entrusted to my care are safe and taken care of. It's really just, you know, I grew up around a lot of Southern Baptists in College Station, Texas. And, you know, they put a lot of faith in their leadership. And one of the things that the Baptists always pride themselves on is that it's like a convention versus like the Catholic church where you have to take, it's more democratic, more American, as they say, versus the Catholic church where you have to take like the edicts or whatever from the Pope. But I mean, this is looking pretty Catholic Church to me. And fortunately, we see here that 400 leaders from youth pastors, that one really gets me, to top ministers pleaded

guilty or have been convicted of sex crimes against more than 700 victims since 1998. That's really not that long ago. And by the way, the only reason this entire thing happened was because the Houston Chronicle and the San Antonio Express revealed it. They would have kept covering it up if they could have. Oh, yeah. And that's really, you know, really the terrible part. Now, the report being revealed, will it actually change anything?

I think the part of the issue is that, you know, in a way, the church, the Catholic church, at least had an easier job if they had wanted to actually clean all this stuff up because they could legitimately fire people and prevent them from moving. With democratic congregations like this, you don't have as much of control. You know, they can, I think, and again, the Baptist can correct me, but you can like decide to leave and go off in like a splinter direction. So they have, well, and here's part of what is so controversial is they have expelled churches for seeming to back like gay marriage or anything regards to gay relationships. So they've been very, very happy to expel them from the flock. And also anyone who, you know, went in the direction of having like women pastors,

they're, you know, comfortable expelling them. But then when it came to literal sexual predators of children in certain cases, then that they swept under the rug and had nothing to say about. So they certainly had some tools at their disposal and continue to. first move that they've made is they say they're going to now release this list of all the ones who they're sort of like provable documented evidence, like you said, the ones who have actually been convicted, for example, or there's documentary evidence proving the charges against them. So you're not just, you know, putting someone's name out there because on relatively meritless accusations, but they're going to publish this list, so at least as a first start. But, you know, it's a pretty, it's a bombshell report. And I do think it's important to note that the impetus for this report came from within. One of the details that I also found extremely disgusting

is the way that at least one of the women who came forward, rather than, you know, accepting her claims or looking into it or dealing with it, they instead smeared her as an adulterer and made her like an outcast to the whole faith and the whole community, which also sets an example for others who are thinking of coming forward like, oh, this is going to, this will, they're not going to believe me. This is going to destroy my life instead. So pretty dramatic report here with massive implications. And as I said, to start with, the New York Times report really details just how much this has rocked this church and how much the membership is taking it in and is incredibly disgusted with the actions of leadership, some of whom were actually directly implicated in sexual abuse themselves. Yeah, they should all be obviously—I mean, look, we have no say, but if they want what's

good for them—and I do think, I'll just say, younger evangelicals who I know are really very against the actual personal corruption at the leadership level and are a lot less tribal in general whenever it comes to the way that people in the 60s and the 70s approached evangelism in that. So we'll see if it changes things down there, although I have my relative doubts. Indeed. Obviously, there has been a lot breaking in the news recently, but we did not want to lose sight of the extraordinary campaign of Starbucks workers across the country to unionize their stores. And one of the stories that we have been following is that of Layla Dalton. Let's go ahead and put Layla up on the screen. She was a Starbucks worker

who was fired. The NLRB says that firing was illegal retaliation. There's an effort to reinstate her at Starbucks. And Layla Dalton joins us now for an update. Great to see you. Hi. Thank you so much for having me. Absolutely. It's great to see you, Layla. Of course. Go ahead and put this more perfect union tear sheet up on the screen, which has some of the details of what happened here. They say Starbucks fires a union leader for protecting herself against harassment. So Layla, just so people know kind of the background here, Can you explain the circumstances of your firing? Yeah. So basically from the start of my store trying to organize the day or not the day,

I guess you can say the following shift after I handed out the ballot cards the first day, I got a write-up that went basically almost six months back. And it was a bunch of things that were never enforced before or things I brought to their attention. And that's really when the harassment started, where after that, I started to countlessly get pulled in the back, interrogated, questioned, and it was just the start of what led to my firing. And Layla, let's talk about the circumstance also, not only the retaliation, but what it means in the broader context of your efforts on the unionization effort? Yeah. So for this whole unionizing effort, we are just trying to have a voice as workers. It's not about left. It's not about right. It's about the working people, the working class, and we all can relate. We've all been short-staffed. We've all been put in unsafe conditions and maybe not trained. And we've all just, we've been, we can relate to get, like, we can relate to each other. So it's all of us coming together and realizing we have a voice and we shouldn't just expect this treatment because we're, we're the working class and we're part of the food industry or,

you know, Amazon. So I think that this is just showing everyone, especially people in my generation, that you can have a voice. You can, we can make change. It just, it takes effort and it's, it's a war. So it's going to take, you know, some people losing their jobs, sadly, to get this to actually, I think, succeed. What has this been like for you personally? What has the struggle been like for you since you were fired from the store? Yeah, I would definitely say it's been hard trying to keep going all the time when I miss my partners back at my store. These people weren't just like co-workers to me. They my best friends they still are my best friends

but I can't see them all the time especially because we all have our own lives and going to work was just a place at least it used to be a place where if I had something on my mind something going on I could just go hang out with my friends go think about get annoyed about maybe a customer saying something or just you know have fun and it's now not turned into that my co-workers my co-leader they're basically they feel like their their soul is being drained and it's not a place you want to be anymore so that's really hard it's just been it's been hard also not being able to be the person there helping everyone. Since I kind of, I've kind of like, everyone's like my friend.

And the way I kind of roll in the store, especially as a supervisor, is I don't just try and work as a worker. I like to have a friendly relationship and just have, you know, a great environment. Because people, I don't just see them as a person that brings in money. I see them as an actual person. I care for them. I want to make sure they know that I'm there for them, even if they don't have any training, even if they need extra help, like whatever they need. I'm not going to judge them. I'm not going to just throw them in, like, just too much stuff has happened.

And I just wish I could be there now. Can you explain, there's a process in place that may lead to you being reinstated in your job. First of all, are you hoping that that happens? And second of all, can you just walk people through what has happened and what that process looks like? Yeah, definitely. I would love to be reinstated. I think my biggest thing is being reinstated will show everyone that Starbucks, what they did is wrong and they're not getting away with it. And the process with me, basically June 8th, I have the federal court and now the Memphis seven which were seven workers from a organizing committee that all got fired theirs is now June 9th so basically for us eight I guess we all are gonna go to court and testify against Starbucks and hopefully they're found guilty

hopefully the judge finds all the information we have against them that you know they did illegal union busting and hopefully that leads to all the other fired workers or anyone that may be the next fired worker for that to stop happening or something to get resolved. Because Starbucks, no matter how many cases there are, I don't think Howard Schultz is going to stop. Yeah, I think that is well said. And you said something that was really important, which is that, you know, there's been this kind of mindset that like, oh, food service, you just, what can you do? It's never going to be unionized. It's impossible. The turnover is too great. There's all these barriers. And it's why what you all have done is so extraordinary, because you've

proven that to be wrong. You provided a successful model that really took off like wildfire across the country. I think your store was one of the early ones to first vote to unionize. And now this number isn't even up to date, but this is as of yesterday. Let's go ahead and throw this up on the screen. There are now 80-plus Starbucks stores across the country, 56 different cities and 22 different states. As I said, after I saw this map, I saw a couple more successful unionization efforts go through, so this isn't even up to date. But what do you think it is? What sparked this? What touched a nerve for you personally? Why has it gained such incredible momentum when for years and years and years, it was the case that food services was just almost

an impossible barrier in terms of unionization efforts? Yeah, I definitely think COVID-19, that pandemic, even though it's still going on, I think the start of it is really what pushed everyone to realize that. I mean, they've been getting treated bad since the start, but now there's a whole global pandemic and they still are treating people the exact same just because they choose profit over people so I think that just for me what pushed me is I started working at Starbucks almost about three years ago. I just turned 17 and I just wanted to get a job. And I basically was thrown into everything, but I didn't know. But as I grew and I developed and I learned and then COVID hit and then eventually I got my own health problems. Meanwhile, my family has theirs. I realized I was just a body to them because I worked part-time as a supervisor for a month since I just got out of the hospital. And I also still have college.

And then my dad's just getting a kidney transplant and my mom has cancer. So I have a lot going on, but they basically said, no, you have to demote yourself or you have to transfer. So it made me feel like, so I have to be a full-time student and a full-time worker. And it just, I didn't feel right. So that's when the co-leader said to me, when he saw that

I'd been complaining, I've been standing up for everyone since my first manager went on a trash run and never came back. So I got days when I came to the Scottsdale and Mayo store and we got a new manager. So the day I was told like, you have to transfer, demote yourself because you can't get that availability. It doesn't work within the Starbucks standards. That's when I talked to Bill Whitmire, my co-leader and said, I don't know what to do. And that's when he brought up the union. And that's how it really started for me. That's what really brought this push. I wish I knew about this from the start, but I think for everyone, it's, I think COVID-19 really showed everyone that there's a

whole global pandemic and they're still treating us the exact same way. Yeah. So their rhetoric about, oh, you're an essential worker didn't even come close to matching up with the reality you were experiencing on a day-to-day. Layla, we've been following your story. It's an honor to get to talk to you today. We're going to keep following it and pay close attention to what happens in court on, what did you say, June 7th, June 8th?

June 8th, yes. June 8th, all right. Thanks, Layla. Let us know, give us an update. Great to see you, Leila. Thank you. And thank you guys so much for watching. We'll have more for you later.

All right, guys, it is time for our weekly partnership segment with The Lever. And joining us to discuss his latest reporting is a journalist for that outlet, Andrew Perez. Great to see you, sir. Thanks for having me. So your partner in crime there, David Sirota, kind of got into it with some folks at The Washington Post over Jeff Bezos's ownership. It all started, in my understanding, you can correct me if I'm wrong, when Bezos tweeted something. He quote tweeted a Joe Biden quote. Biden had tweeted, you want to bring down inflation.

Let's make sure the wealthiest corporations pay their fair share. Bezos' take was the newly created disinformation board should review this tweet, or maybe they need to form a new non-sequitur board instead. Raising corporate taxes is fine to discuss. Taming inflation is critical to discuss. Mushing them together is just misdirection. So this is Bezos weighing in on Twitter with his public policy views. What happened from there, Andrew? Sure. David also got into it with another, with the Washington Post columnist who, Bezos shared her recent column, basically downplaying the idea that corporate profiteering is responsible in any way for inflation and

slamming Democrats for doing so. And David said, you know, these two things combined kind of just show you that, you know, Bezos is showing his editorial team what he wants right here. And, you know, some of them are, you know, really kind of following through already. And it was not taken kindly. Yeah. Well, I mean, let's talk a little bit about this, because I remember back when Bernie Sanders suggested that perhaps the Washington Post's economic coverage might be influenced by the ownership. And there was this whole like meltdown. Oh, my God, how can you suggest such a thing? That's so crazy. But when it's a billionaire whose ideology liberals are less comfortable with, Elon Musk, they see very clearly that there's a problem with him having ownership of Twitter, which, you know, in some ways is a publishing platform on its own and him, you know, putting out there to the world what his views are and how that can lead to a stifling effect and a problem with free speech and ability to cover the news properly. So why has there been such a blind spot here when it comes to Bezos, oftentimes the richest man on the planet,

owning one of our foremost journalistic institutions in this country? Yeah, I think it has to do with the Washington Post brand. It is a highly reputable paper, and no one would question that. But I think the truth is we really have no way of knowing what the editorial process there looks like or what kind of influence that Bezos has. I think what we know is that Bezos has been pretty upfront about why he bought the Post. He wanted a newspaper in the capital city, in the most important country in the world. That's what he said a few years ago.

But, you know, the truth is, we do kind of know generally that media owners, like where their influence is felt, and if it is at all, is in the opinion section. You know, we learned that with Mike Bloomberg's 2020 presidential run. We all got to learn that he actually, that the opinion section of Bloomberg had long represented his views. But, you know, I think on a general level, like, you know, obviously, like media ownership does have some influence here, right?

And it's probably mostly felt in like who's hired, right? Like the people that are hired at these outlets are brought there for a reason. It's because they share views that, you know, that the company does itself. And, you know, if there ever was any kind of question about whether Bezos is kind of injecting his ideological preferences into the news, you know, like it would probably happen with him posting on Twitter exactly what his preferences are, you know, basically saying that that it's wrong for Democrats to focus on corporate profiteering and touting his, you know, one of his columnists has been who's been doing just that. Yeah. So this columnist happens to back his view that nothing to see here on corporate profiteering and inflation. And he elevates her, and that's a sort of reward in and of itself. She's getting affirmation that the guy who runs the joint loves what you're doing. So of course, that's going to continue not only her, encourage

her in that same direction, but encourage other columnists who also want this sort of praise showered on them from Jeff Bezos to continue in that direction as well. Speak to the substance here, because there has been this sort of organized effort to erase the impact of corporate profiteering on inflation. And I don't think that anyone is saying that's the only story of what's going on here when we're coming out of a pandemic and you have supply chain issues, you have new lockdowns in China, You have the war in Ukraine. Certainly, there are a lot of factors going on here. But when you look at the numbers, there's just no doubt that especially companies that have monopoly pricing power are using inflation as an excuse to further raise their prices. Some of these CEOs are outright admitting it on their investor calls.

So speak to the substance here of the issue that she and Bezos are trying to say, no, no, no, that's not the problem at all. Yeah, yeah. So, you know, the Economic Policy Institute did a study on this just a few weeks ago. And the data that they produced has just been completely ignored by all the kind of pundits weighing in here, from Catherine Rample at The Washington Post to Matt Iglesias, as well as economists like Larry Summers and Jason Furman. What the Economic Policy Institute found was that more than half of the price increases that Americans are seeing right now can be attributed to larger corporate profit margins. And there was actually a federal,

a Boston Federal Reserve analysis that was released a few days ago, where they found that actually that like corporate concentration could be amplifying the inflation that we're seeing right now. You know, there's also been just a few few days ago, there was there was a report in More Perfect Union about how Tyson Foods had basically had actually put together like an investor presentation showing that that they'd experienced, you know, one point five billion dollars in higher costs over the last quarter and that they'd raised prices in a corresponding move by two billion dollars, which which means that consumers were just feeling another $500 million in costs. And they were, you know, they were able to do that because they are one of four giant meatpacking firms, right? And that's, you know, that's an industry that has been targeted by the Biden administration, or at least has been a focus of theirs. So there definitely is some pressure right now, or some of the inflation that we're feeling right now is certainly due to corporate profits. And saying that, scoffing at that idea is just completely insane.

Yeah. But if you write that column about how corporate profits are contributing, you know for sure you're not going to get retweeted by Jeff Bezos. So there's less incentive in that direction to expose that part of the problem. Andrew Perez, thank you so much as always for your great reporting. Thank you. Yeah, our pleasure. And thank you guys so much for watching. We'll have more for you later. Here with Ken Klippenstein again for another segment of The Intercept on Breaking Points. Thank you guys for supporting Breaking Points, which facilitates this partnership. We want to talk about this week's elections. So it followed on a brutal week for the Democratic establishment previously, where Summer Lee whooped up on Steve Irwin in Pittsburgh, despite millions of dollars spent to support Steve Irwin. Jamie McLeod Skinner whooped

on Kurt Schrader out in Oregon, despite Big Pharma running a super PAC on his behalf. The crypto guys, there were two crypto guys running in Oregon's 6th District. They both lost to a progressive caucus-backed candidate, Andrea Salinas. Fetterman from the hospital smoked Conor Lamb. Bad week all around for the kind of faction of the party that's been trying to slow down the Democratic Party from doing more while they have their majority. Or if you listen to Thomas Friedman, who's saving the party. Who's saving the party, yes. Our only hope of staying in power. Only hope is to do less. And so the do less faction was up on the ballot box again. Two members of the so-called Unbreakable Nine. This was Josh Gottheimer's group of nine House Democrats who teamed up with Manchin and Sinema

to basically try to derail Build Back Better. Two of them, Carolyn Bordeaux in Georgia and Henry Cuellar in Texas, were on the ballot box. Philemon Vela, who was also part of the nine, a Texas Democrat, was not up for re-election because he is already a lobbyist. So he announced last year that he was going to retire at the end of his term. And then in March, he announced, actually, you know what? I'm done now because there's now a cooling off period that you can't directly lobby your colleagues for a certain amount of time after you leave. So he just sped it up by saying, you know what? I'm done in March. And by April, he was at Akin Gump, which is one of the biggest lobbying shops in Washington. He can't technically lobby yet, but he can give strategic advice. He can give

consulting. He can have lunches. Basically, he can lobby, but it allows him to start making that money much earlier. And he's going to probably give up his seat to a Republican in a June special election. Just absolute perfect because progressives constantly getting told that they're not good team players. And this is what we got. So Carolyn Bordeaux wiped out by Lucy McBath. And we can talk about that one in a second. We're going to get your take on Henry Cuellar. NRA-backed, anti-abortion Democrat.

And Jim Clyburn and Nancy Pelosi and Reid Hoffman of LinkedIn andPAC come in just storming into the race to throw everything they have to defend Cuellar. And it looks like Cuellar is probably going to win once all the votes are tallied. What does it say about the Democratic Party leadership that they have this much enthusiasm to defend somebody like Cuellar in this moment. Well, this has got to be one of the most awkward primaries for them in, maybe in my memory, because we just had the Roe v. Wade and the horrible mass shooting. And this person who is just, you know, whatever criticism you have of the Democratic Party, he's way out on the extreme beyond pretty much everyone else. The Reid-Hoffman's PAC, super PAC that defended him, spent $750K on him, is called

mainstream Democrats. Pro-NRA and pro-life, anti-choice. The only pro-life Democrat, right? Yeah, that's not mainstream. That's not mainstream Democrats. Right. And so now they're in a position, party leadership, Nancy Pelosi, Clyburn, and others, of having to say, you know, this not only was the, you know, morally right course of action, but it was a pragmatically smart one to endorse this guy who was under FBI investigation. Yeah. Let's talk about that. So he has said, he's actually telling people he's been cleared. That's not true. Yeah. What. Was it a pack that he distributed to look like a newspaper? Yeah, he crafted a newspaper that says Cuellar cleared as supporters and allies were handing out this. Yeah, but what they're referring to is there was his attorney, Cuellar's attorney,

told the San Antonio paper that the FBI had told them that they are, quote, not a target. Now, being not a, first of all, that's his attorney saying that. FBI is not commenting on this. Second of all, being not a target doesn't mean you still won't go down. And it also doesn't mean you've been cleared. The FBI just generally doesn't clear people. As someone who's covered the FBI for a number of years, not famously known for their candor around who's being investigated because they don't want people to know. He says he's cooperating fully with the investigation.

How often does somebody's home get raided when they're fully cooperating? It's not something you see. It's not something you see very routinely. Yeah. So they went into his house with the warrants, with the windbreakers. They did that whole thing.

That was in January. In March, he qualifies for the runoff with Cisneros. Now he's up in the general election. This was the investigation appears to be around, and it's so bizarre, Azerbaijani corruption. One corrupt oil state to another corrupt oil state He took a trip with his wife to Azerbaijan that we know at least one that we know about that cost something like $20,000 it appears that that was Paid for by the Azerbaijan government He claims that he doesn't know that that was the case that he that it was the state-run oil company or whatever that was

But the state-run oil company was funneling the money through another organization all of it was the state-run oil company or whatever. But the state-run oil company was funneling the money through another organization. All of it just looked corrupt on its face. The idea that it was is bizarre. Let me add one more thing. From having covered the FBI, they're extremely sensitive to questions of political optics. They don't want to be in a situation where they're getting called before Congress. Not only are they not supposed to,

they really don't like to. Like right before the election. Exactly. So in order for them to launch that right. The bar that you have to clear, when I talk to some of these investigators, they describe anything politically sensitive. Like, for example, the Project Veritas investigation.

It's called a sim or something, right? Put into what's called a special investigative matter. And they lock that thing down so that only a very small number of people can see it. The point of this being that, again, they are very sensitive to not wanting to seem like they are interfering in any sort of fashion with either of the parties that they depend on for funding each year. So again, the bar that you have to clear to release an investment, conduct a raid like that, that close to an election is really extraordinary.

And whichever way the race ends up breaking, it's going to be 100 or 200 votes. And without the intervention of the party leadership, it just seems like there's no way that Cuellar comes out. Which AOC seemed to hint at in a tweet, which is really incredible. She just came out and said, what was it? She said,

party leadership acts as, I'm paraphrasing. Incumbent protection racket. How often do you hear something like that from either party? And she made the point that if they succeed in doing this, they will have suppressed all this grassroots energy, and all they did was then force a pro-NRA, anti-choice Democrat into the general election over the objections of the primary voters. And if they fail, they look terrible as well. In an electoral environment in which it seems that the insurgent candidates are doing really well. You know, I think there is... And the Republicans are just going to hammer him for his FBI investigation. Right. Like the whole way through. So he's popular. So we'll see. But it's not a guarantee that he's going to win his election. Real quickly, while we have time, the Carolyn Bordeaux race is

fascinating because Georgia lost a seat in the census. And so in the redistricting, you have Lucy McBath. These are two districts that are north of Atlanta. Lucy McBath in one, that's one that John Ossoff ran for, lost, but then Lucy McBath won it. And then you have Carolyn Bordeaux. So these are neighboring Democratic districts. They both flipped red to blue in 2018. Lucy McBath, her son was murdered and was a victim of gun violence.

And she has long had the support of Michael Bloomberg and his Everytown gun organization. And she also had the support of Democratic majority for Israel. And she got some crypto money. So it's not as if this was a kind of squad versus centrist candidate. But Carolyn Bordeaux, in the neighboring district, during this Build Back Better fight, during the Unbreakable Nine fight, she joined the Unbreakable Nine, and the analysis back in Georgia, and George Chidi talked about this, who writes for The Intercept,

kind of our Georgia correspondent. He said that it seemed like, and what people assumed that she was doing, is that everybody knew that there was going to be one less seat, one less Democratic seat. And so she was trying to signal both to centrist Democrats and also to Republicans that she was going to be the most right-wing Democrat. And to be the most right-wing Democrat. And so as the most right-wing Democrat, they better not kind of come after her because she'll be the most electable against a Republican. Whereas Lucy McBath generally,

despite all the different money she's getting from a lot of different places, generally just voted as a Democrat, mainline Democrat. Like whatever the party was putting up, that's what she voted for. And so Bordeaux thought that she was kind of saving herself. And so, in fact, they did end up eliminating Lucy McBath's district. Lucy McBath lives in Marietta, Georgia, which is nowhere near the 7th. But she ran in the 7th anyway, because there's no law that says you have to live

in the district to run there, to represent it. And by all accounts, she didn't visit there a whole lot, but she had enough money to run ads. And the party was just deeply frustrated, or the party electorate was just deeply frustrated with Bordeaux for screwing up Build Back Better and screwing up the Biden agenda. And McBath, as a result, just annihilated her. So it would be one thing if Bordeaux went down for her principles, that she was really against whatever's in Build Back Better. But she thought she was doing the clever play, and it just got crushed. What's amazing to me is that the voters seem to be punishing this kind of behavior,

more than the party leadership, and they're undercutting the party's vision for the entire presidency. from the first half of 2021 when he's doing a $2 trillion rescue plan and basically sounds like Bernie Sanders is doing ventriloquism through him. His approval numbers are through the roof. Then Afghanistan and the collapse of Build Back Better because if you remember, Build Back Better was killed in this brutal public fashion. They would take every popular piece of it, elevate it to the public and say, hey,

you like this child tax credit? This is really nice, isn't it? We're killing it. Hey, you like this climate money? You like this? So it wasn't as if it was all done quietly behind us. It was like, here are all these popular things we could do, and then day after day after day, the news would be, but we're not going to do it. And so now there's talk that Build Back Better is, and I've got some reporting on this too, that Manchin is negotiating earnestly with Schumer. Right, and I'm curious if this has to do

with this slaughter that we're seeing of the centrists. Voters are like, just do something. Right. And they're like, okay, fine. And classic. Because for months it had been, it's dead. You know, I'm done. Right.

And it's, of course, classic that King Manchin announced that it's still the responsibility of the party to get something done from Davos. From an interview with Davos. Davos man deems that, now it won't be the full 3.5 trillion. What they're talking about is like a 550 billion, 700 billion, something. But it would mean lower drug prices. It would mean climate money. It would mean taxes on private equity and the super rich. There's still good things that they can do, but the window's closing to get it done. What's your guess? I don't like to do the forecasts here.

Do you think this is just – I mean, the smart money is always on Democrats doing nothing. Exactly. It's failing, but what percentage would you put it at at this point? Oh, gosh. Well, it's certainly higher than it was in terms of something being able to happen. Because I do – I mean, this is such a clear message, not just the primaries today, but the ones in the preceding weeks that, again, voters are tired of nothing happening. They would like something visionary to be passed. So I think the probability is increasing. But I'm not going to stake any hopes and dreams on Joe Manchin.

Yeah, no, exactly. Well, Ken, as always, thanks for joining here. My pleasure. Anything good to plug? I mean, we got Deconstructed is the Intercepts podcast, as well as Intercepted. Check those out. Rising Fridays, if people are wondering why I'm here, I'm only doing Rising on Fridays now with Emily Jashinsky. We'll have Ken on there as often as we can get him. What else? Intercept.com and keep watching Breaking Points. What else? Anything else to plug? I mean, if you're a federal official, hit me up on Signal. There you go. Exactly. His Signal is basically in your pinned tweet or in

your bio? Yep. It's in my Twitter bio. Excellent. His Signal is basically in your pinned tweet or in your bio? Yep. It's in my Twitter bio. Excellent. All right. Welcome back to the Intercept Edition of Breaking Points here with Ken Klippenstein. And thank you guys for making this possible. The people who contribute to Breaking Points have facilitated this partnership that we've been able to get off the ground and allow us to do some of this independent reporting and bring it to you today. Ken has multiple scoops in a single piece about the relationship between the U.S. and Saudi Arabia, Saudi Arabia and Israel, Israel and the Palestinians, the Middle East and Iran, all of it coming together in the kind of creation of a new Abraham Accord while nobody's watching. It feels like the Biden administration is making history here in some ways by basically pushing forward with

Jared Kushner's, what I would say, catastrophic Middle East policy and basically cementing it in place and expanding it further. And there are so many different layers of what you've reported here. But let's start with the U.S.-Saudi relationship. So what did you uncover about what's going on between us and Saudi Arabia right now? Yeah, so it was reported recently that President Biden intends to meet with MBS, which is a huge about face from how he campaigned. This is the crown prince who ordered the bone sawing of Jamal Khashoggi. Yes. And whom, on whom, you know, Biden ran in contrast

to President Trump saying that I'm going to hold him accountable, going as far as saying that I'm going to make him a pariah. Right. I can't think of stronger language that the U.S. has ever used for Saudi Arabia. And began by refusing to speak to him. He said, you're not the official ruler of Saudi Arabia. You can talk to my flunkies. I'm talking to the king. And MBS said, cool, how do you like $4 a gallon gas, basically? Exactly.

And that contributes to inflation, as we've written about. And this is a huge dimension to all of the economic problems that we're seeing right now that I think gets short shrift in media reportage just because the Saudis and, you know, like the Emiratis and other Persian Gulf nations have a very effective think tank apparatus in Washington to make it so that you don't hear about these things. And I'm not saying it's the only factor, but it is a major factor behind, as you say, the gas prices that we're factor, but it is a major factor behind, as you say, the gas prices that we're seeing, but also inflation. Oil factors into the price of everything, as we've discussed

before on this show. And so you wrote about a recent, very high-level meeting to go over a classified 15-page document that lays out a new strategy for a relationship with the Middle East. What were you able to learn about that classified document? Yeah, so it looks like the Biden administration, or at least, you know, prominent factions within it, because there are different groups that, there are some that are not happy with what's going on, are pushing for normalization with Saudi Arabia. And so, you know, when Biden goes and meets with him, as it's been reported he is going to do, that appears to be a part of a regional push to try to tighten bonds with Riyadh. And so what I found over the course of the reporting and

talking to people close to the administration and the intelligence community about what they're working on, it's very interesting. They're going about this in a very quiet and secretive fashion. I reported recently on CIA Director William Burns' travel to the region, not just Saudi Arabia, to meet with MBS for the first known time that that has happened, but with other regional leaders, MBZ, the de facto ruler of the UAE. Now actual ruler. Yes, and that's right, now actual ruler.

And in Qatar. And so the question then is, well, why are they using the CIA director to conduct this? Well, that gives them a lot of discretion. That's what you do when you want to keep it quiet, when you don't want it to leak. And the question to me is, well, why don't they want it to leak? I mean, when you talk to people

close to the administration, what they'll tell you is, because it's embarrassing. The contours of this agreement, as you said before, are remarkably similar to what President Trump pursued in his Abram Accords. And so the insight that Jared Kushner brought to this process was, and he has said this out loud, he has said everybody for decades has thought that you need to resolve the Israeli-Palestinian question before you can make broader peace between the Arab countries and Israel, because the Arab countries have been saying we're not going to normalize relations with Israel as long as there's an illegal occupation of Palestinians going on. They say, well, whether they believe in it or not, they would say the Arab street, their public, would not allow

them to normalize relations with a country that is still engaged in an illegal occupation. Kushner said, no, that's not the case. In fact, it's just what he called a real estate dispute between the Palestinians and the Israelis. And with enough money, enough access to surveillance technology, and enough access to weapons transfers and other kind of elite cultural transfers, you can create deals between Saudi Arabia and Israel and the UAE and Bahrain and others that completely sidestep the Palestinian question. So that was the Kushner strategy with the Abraham Accords. The Biden administration is not going as far as to say that publicly, but is what they're doing suggesting that they're like, okay, maybe we'll just do what Kushner did,

just ignore the Palestinians? Again, I think prominent factors with the administration, absolutely, that's what they're doing. And one of the most frustrating aspects of reporting on this is that the way in which they're doing it, the very secretive fashion, you know, you don't use a CIA director instead of career diplomats who are supposed to do these things unless you don't want to come out, suggests that they're trying to lock this thing in before there is the chance for public to register their frustration with, you know, how bad of a deal this would be, not just for the people of the region, but for the United States. I interviewed for the story that I did, Trita Parsi, the vice president of the Quincy Institute. And he said, completely aside from the rights of Palestinians, the fact that this does nothing to address this burning regional problem there and Iran, what does this do for the United States? And depending on what's in it, I understand that there's some discussion about security guarantees for the Saudis. This could have the effect of locking us into a relationship that forces us to respond to

problems not only that affect them, but that might be of their own creation in terms of antagonizing the Iranians, antagonizing the Houthis in Yemen, and that this makes it more likely that, you know, we will have to expend blood and treasure in responding to those kinds of problems. And unfortunately, when that happens, you know, everyone's pulling their hair out. They're like, oh my God, I can't believe we're going to pull it. But they're setting the conditions now where that won't be able to be avoided if this agreement goes through. Yeah. Trita Parsi has this habit of asking this question that rarely gets asked in foreign policy circles here in the United States, which is, is this good for the United States? Why are we actually doing this? And it's an uncomfortable

question when you're looking at it because it does not seem that way because what these Gulf countries want out of this is a defense pledge that there will be basically a NATO-like military alliance, that if any of them feel like they have been affronted by Yemen or by some other Iranian proxy in the region, that then it triggers a Gulf version of an Article 5, and the U.S. is now obligated to go to war on behalf of these Gulf countries. This is happening while Iran and the other countries in the United States are within inches, it seems like, of striking an Iran deal, which the Gulf countries in Israel very much do not want to happen. Recently,

an IRGC colonel was assassinated in Tehran. All the speculation was that this was Israel that had assassinated this colonel in order to make it more difficult for them to strike a deal between Iran and the U.S. over their nuclear program because striking that deal would require delisting the IRGC from the terror watch list, the terror list. So what is Trita's argument about how, and this is part of your piece, about how the Iran deal fits into this defense, this kind of Middle East NATO that Saudi Arabia, the UAEE and Israel are trying to foist on the US Yeah, so the way he describes it, which I think is very reasonable is that it incentivizes these regional actors to get into more conflicts Knowing that the most powerful military Party on earth is going to be able to bail them out

And I think that's exactly right it not only incentivizes them to be more reckless in their foreign policy it disincentivizes moves towards drawing down hostilities with these regional powers. And my fear is that there will be some sort of short-term JCPOA, Iran normalization, thrown into this as a sweetener to kind of try to sell it to the progressive wing, knowing that when Biden is out of office, the Republicans will immediately abrogate it. But the U.S. agreement with the Persian Gulf states, the Gulf monarchies, will remain. Abraham plus stuff. Yeah. And these are already impulsive, reckless leaders. Like if you look at what's going on in Ethiopia, Somalia, Yemen, they blockaded Qatar, which has an American

base. Right. And you're going to embolden them to do more. Fascinating piece, and we're going to keep watching this. This is history in the making. We are reshaping our relationships with these countries right now, and not necessarily in a positive direction, and it's going to lead us potentially to more war. So stick around. We're going to come back with an election recap from this past week.

Thanks again for watching this. As always, go to TheIntercept.com to check out Ken and my work. And thank you for supporting Breaking Points, which supports this partnership. And thank you, Ken. Good to be with you. Hey, guys, our friend Marshall Kosloff, he's going to be conducting interviews with experts and newsmakers for us here on the Breaking Points channel. We're really excited. Yep. Here it is.

Hey, Breaking Points. I'm joined by Peter Goodman. He's the author of Davos Man. We're here to talk about Davos, the World Economic Forum, and the big event which is drawing a lot of attention, basically, from everyone this week. Let's just start with a very basic question. What is Davos and why is it on everyone's mind to the point where you wrote a book about it? Well, it is a gathering of the most powerful people on earth. We're talking billionaires, heads of state, the odd celebrity, and they get together under this mantra committed to improving the state of the world. They go up to the mountaintop in this otherwise unremarkable village of Davos in the Swiss Alps, committed to improving the state of the world. They go up to the mountaintop in this otherwise unremarkable village of Davos of the Swiss Alps, committed to improving the state of the world, which is a

curious phrase, considering that these are the ultimate beneficiaries of the status quo, and they would certainly like to keep it that way. Okay, that's interesting. What basically are they saying? What is the area of focus that they're saying needs to be identified? Well, I mean, they're always talking about the perennials like climate change. This year, they're talking about the war in Ukraine. They're talking about resetting capitalism to address inequality so that we can spread the benefits to more people. If you simply go by what happens in Davos itself, it's pretty unobjectionable. I mean, in terms of the official program, there are a lot of very brilliant people there. There are top academics who have all sorts of thoughts about things like climate change and racial and

gender imbalance. And you can learn a lot if you're there. The problem is that the people actually pay the bills. These are the billionaires, tech CEOs, finance CEOs. They use it as a way to signal their virtues to kind of protect themselves from those of us in democratic societies actually doing things that are meaningful to turn some of these words into action. Things like carbon taxes, regulations on emissions, progressive taxation to give governments the wherewithal to actually do the things that people want them to do, antitrust enforcement to deal with monopoly power. These sorts of things are discussed at great length. But guess what? Nothing ever really seems to change. And that doesn't seem like an accident.

You know, it's interesting. When you talk about benefiting from the status quo, I'm glad you talked about the topic du jour this year, obviously, which is the war in Ukraine. I know there are listeners who are thinking the weapons industry benefits from that status quo. That isn't really the type of folk or the type of industries that really go to these types of places. You focus on people like the founder of Salesforce. It's more just finance, technology, those aspects of it. So how would you define them as benefiting from this? Finance is hugely important. I mean, what's our strategy to end the war in Ukraine? It's to turn up the heat on the oligarchs with, and this is debatable, but with the assumption that if we upset the oligarchs, we make it hard

for them to access their play things like their yachts, and they're worried about what happens to their wealth. That will put pressure on Putin to then relent. Well, we have to deal with our own oligarchs. I mean, the people in Davos, including Steve Schwartzman, who's one of my five primary characters in my book, this is the world's most successful private equity magnate. they have lobbied over years to maintain private equity as a secret preserve. I mean, the US is the ultimate offshore banking center if you set aside traditional banking and you focus on things like private equity, which is exempt from all the sanctions. We don't have any idea who's investing in private equity. And that's not by accident. That's because private equity itself benefits when there's no audit trail and there's no ability to cut off people who are bringing

their ill-gotten gains. We are protecting our own oligarchs against the bite of the sanctions that might otherwise create pressure on Putin's oligarchs. You know, it's interesting. You're talking about how you have this system where folks are benefiting, they have their power, but there are also conspiracies that come out about Davos. You know, the great reset. You'll get a clip that goes wherever. If you just comment on that aspect of it without losing our monetization.

I'm not a big conspiracy guy. And I think it's really overdone. I think in a weird way, it actually helps the forum by reinforcing the relevance of the World Economic Forum by claiming that it's this like secret society that's making all the rules. Now, don't get me wrong. It is a gathering of the most powerful people on earth, and they will do what they do when they gather, which is to do deals outside of the scrutiny of annoying people like journalists or regulators. In that sense, it is significant. And I have been told by billionaires that they can see more people in four days in Davos than they might see in six months of flying around the world.

But I'm just using it in my book as a kind of like watering hole on our safari, right? Like I'm interested in this species of Davos man, a species that really is separate from the rest of humanity. Their experience is just different. And where do we go on safari to go see game? Well, we go to the watering hole. That's Davos. It's one of many watering holes. It happens to be a really significant one. Everybody's there. It's not that the rules are promulgated up on the mountaintop and handed down. In fact, it's the opposite. I mean, all of the agreements and the pledges, they rarely amount to anything. I mean, the forum now is talking about how it's so significant because it's the birthplace of Gavi, this international vaccine alliance that's supposed to have prevented exactly what has happened, which is tremendously unequal rates of vaccination against COVID-19. There's a lot of talk of COVAX, which Gavi is part of,

completely failed. I mean, it's succeeded as a kind of source of press releases so that pharmaceutical companies can say, hey, we've taken care of this. You don't have to stick us with rules. You don't have to violate our intellectual property, the World Trade Organization. We will solve this. That's, you know, it hasn't happened. So I don't think it's that Davos is so important in terms of the rulemaking. It's what Davos signifies. It's the billionaire saying, we've got this, don't stick us with antitrust enforcement rules to allow labor to organize so they can get a piece of the action of progressive taxation. It's the antidote to those of us in democratic societies actually using our democratic rights.

You know, and this goes to, I think, your correction on, aside from the lack of factualness to make up a word when it comes to the conspiracy theory. It's misidentifying where the problem there is. Because if I were to put a note on this, which is the issue from your perspective, is that what laws ring past in Washington? It doesn't matter that a blowhard billionaire is giving a big speech at a conference with other blowhard billionaires. That is not actually the center where a lot of these problems or solutions could really be adjudicated. But that's how I just sort of see that there. So something I'm curious about is how has, especially this year, the World Economic Forum and Davos itself responded to the past two years, not in terms of just like the COVID, but the criticism, the criticism from folks

such as yourself, the conspiracies, like whether obviously the conspiracies aren't true from our perspective, but I would say that Davos feels controversial in a way it hasn't before from a couple of different directions. How are they responding to that? I think they're responding to that by doing what they always do, which is co-opting the language of the people who are criticizing. So doubling down on talking about inequality, talking about the need for more bountiful capitalism whose gains are shared more widely, doubling down on talk of the pursuit of solutions to the pandemic and vaccine inequality. Essentially, they ignore their critics by making criticism part of their own talking points. And it's very effectively done.

I don't see a great amount of change. In fact, I was struck by seeing some analysis, I can't remember where it came out, showing the great relevance of Davos because suddenly there are more pledges than ever. Boy, if there's one thing we've got enough of, it's pledges and reports. I mean, if you just read all the reports that the World Economic Forum put out, we'd be much more enlightened. They hire top notch people to dig into important issues. And then it just gets put out as a press release. It becomes the basis for some panel discussion. And then meanwhile, the people who actually matter at Davos, these are the people paying hundreds of thousands of dollars for foreign memberships.

They ignore the proceedings and they meet in private suites where they don't have to disclose what they're discussing. I mean, the members of monarchies that control oil assets can meet with CEOs of fossil fuel companies, and they can do what they do, which is perpetuate the status quo. So help the audience here. Like you said, what makes this difficult to adjudicate is they will use language. Mark Benioff writes a book critiquing capitalism. How should viewers judge the seriousness of these statements, the seriousness of their approach? How do you separate the Davos speak, as you call it, from just actual serious confrontation with issues?

Follow the money. And don't get me wrong. If billionaires want to engage in philanthropy, if they want to run their companies so that they're more generous to their employees and they make their companies better places to work, good for them. If they want to boost their diversity in terms of hiring and that we can actually count on, and that's democracy. or to boost vaccine access or make it easier for girls in the developing world to go to school. Great. But we still need progressive taxation, antitrust enforcement. We need collective bargaining. We can't fall for the vows as a substitute for real action. And I frankly don't even think there's that much value in truth squatting all the claims because I don't come from the standpoint that, you know, the end game should be make Davos man live up to Davos man's rhetoric. I don't want to live in a world where I'm waiting for the real white knight to come in and solve all of our

problems. The solution to our problems is democracy itself. It's going to require the mobilization of people in major democratic societies to use the levers of democracy to get the things they want for themselves. And that's going to require things like progressive taxation to get the resources. Go ahead, have Davos. And let's just see what comes of it. But let's not put any stock in it as the solution to our problems. I guess my last question, and this is something I was just thinking about having actually read the book, what is the limits of Davos man's power? So an example of this would be Michael Bloomberg. He's the ultimate example of Davos man, I think, on a couple of different levels, even if it runs for president. He spends billions of dollars on gun control legislation. If you're a center left to left person, you're likely happy with and agree with the way he's putting it, but the legislation didn't advance.

So I'm just curious, thinking of that example and just other related ones, what are the limits of their power relative to democracy, whether you agree with their individual policies or not? That's a really interesting question. I mean, I would say their power in terms of perpetuating the status quo seems right now to be just about unlimited. It's very easy to defeat legislation in a democracy that's awash in campaign funds. I mean, in the U.S., we're living under Citizens United. We've got massive social media campaigns. I mean, think about the power of Amazon having come through the pandemic now with one of its plants unionized by Christian Smalls, this labor leader who was actually fired for staging a walkout in the worst months of the first wave of the pandemic. And we know that Christian Smalls has managed to score the significant victory. We also know that Amazon last year produced a bunch of television spots and put them out on social media and insinuated them into mainstream television coverage as, you know, regular local news spots in which they interviewed warehouse workers saying, you know, we're so happy and we're protected and we're part of this great enterprise. The capacity of Davos man to influence public opinion and tie up attempts to alter the status quo, not unlimited. Christian Smalls taught

us that, but it's pretty formidable and it's going to require continued mass mobilization for us to get what we want. Man, to wrap this, I actually really appreciate that last answer because you helped me better understand your point because your point isn't that Michael Bloomberg could magically change the status quo on gun control. Tom Steyer can't change the climate change status quo. The point is that they still economically benefit from that status quo. And that underlying rowdy seems to be the problem. Is that a good way of summing up what it is? Yeah, I think that's right. I mean, we come full circle, committed to improving the state of the world. Well, when you're the ultimate beneficiaries of the status quo, how much change

are you really in the mood for? And that's what we see time and again. The power structure gets replicated. And these attempts that we see at Davos to talk about stakeholder capitalism, new ways to organize companies so that the bounty is shared more widely, all this stuff, it's like unilateralist rhetoric. It's not a change in the power structure. And ultimately, we have a lot of people who recognize that they don't have power, and they're angry about it, and they're willing to embrace often extremist and nonsensical solutions to very real problems. And it's the power structure itself that has to be altered so that we actually do have a democracy. Well, Peter, thank you so much for joining us on Breaking Points. The book is Davos Man, and unfortunately, regardless of

the week, it is going to be relevant and apply, so definitely check it out. Thank you so much. Great to talk to you. Hi, I'm Matt Stoller, author of Monopoly-focused newsletter, Big, and an antitrust policy analyst. I have a great segment for you today on this big breakdown. Yes, today we're going to talk about the baby formula fiasco, what's going on with it, and what it says about the American economy. As you'll learn, it's not just baby formula in shortage, and the shortages across the economy have a common root. Okay, so let's start with the basics. A few months ago, Abbott Labs, which is the largest producer of baby formula in the United States, had to shut down its main production facilities in Sturgis, Michigan, because they had become contaminated with deadly bacteria. The FDA forced the shutdown after two

babies died and two others were injured who had drank the formula. Now, the company in another firm called Mead Johnson control about 80% of the formula market in the United States. So now, with the biggest player essentially off the market, there's a shortage. Now obviously the situation is a nightmare for parents, especially for those whose children require special kinds of formula because of gastrointestinal issues or food allergies. Babies are being brought to hospitals so they get food, and just to get food, and some are even having to get feeding tubes if they have problems with the only formula available to them. It's just horrible. So let's talk about the root of the issue. And to do that, we have to start with the firm at the center of the problem, Abbott Labs. Now, Abbott is a huge and profitable firm. It owns

lots of different divisions from infant nutrition to medical supplies to pharmaceuticals. And like a lot of huge companies, this is a $200 billion company, it does a lot of financial games. So share buybacks, dividends, tons of mergers. Domestic baby formula is actually a relatively small part of its bottom line, less than 5% of its revenue. So if that part fails, it doesn't really matter that much to the CEO. That's not a rounding error on the revenue, but it is pretty close. Now, here's a headline from Barron's, which is a financial magazine, making the point a bit too finely. Baby formula shortages are bad for parents. They could be good for Abbott stock. Ouch. Now, it's not just that Abbott is a massive conglomerate that cares more about profits than actually producing the products

that people rely on. You'd think that after this fiasco, a baby formula company that can't deliver baby formula, that it would be chased out of the market by angry parents and stores that couldn't get stuff on the shelves. But here's the thing. Even though Abbott failed spectacularly, it will still maintain, in all likelihood, a huge market share in the baby formula market after its factory comes back online. Why? Well, the answer is monopoly power. And to get into how it maintains its monopoly power, we have to look at how this highly consolidated industry of baby formula works. So let's do that. The biggest buyer of

infant formula in the United States is WIC, which is a government program called the Special Supplemental Nutrition Program for Women, Infants, and Children. It's a program run by the Department of Agriculture to make sure that low-income women can feed their babies. Roughly half of women get their formula from WIC, and that makes the government a very, very big buyer in the market, which is sometimes called a power buyer. The government in this case is a bit like Amazon or Walmart. It's so powerful, it buys so much that it can dictate terms to sellers, since the only way to get your product to customers is to go through that power buyer. Now the government structures the market state by state. Each state gives a monopoly way to get your product to customers is to go through that power buyer. Now, the government

structures the market state by state. Each state gives a monopoly contract to just one formula producer in return for better pricing in the form of rebates. That's how the WIC program handles its purchasing. The government is explicit about this, saying it is handing out, quote unquote, sole source contracts that allow, they only allow women or people who have children to buy formula from one company in most states. Now this sole source system distorts the entire market because if you're a retailer, if you sell baby formula, it's just not worth having alternative formulas on your shelf if half of the buyers simply cannot purchase those products. As a result,

the market in every state tips to the WIC supplier. This chart shows what happens to the baby formula market in California when the WIC contract changed hands. So one monopoly provider hands off nearly the entire market to another. And these contracts are long-term. They're four-year contracts. So this is a pretty solid market power situation we're talking about. Now, all of this is fine if you're getting your formula for free from the government, as long as the formula keeps flowing, which we'll talk about in a second. But here's the trick. The formula producer can raise its price on non-WIC recipients, and they do that. One study showed that to non-WIC recipients, they get formula for a higher price, about 26% to 35% cost higher than it would be if there weren't these WIC subsidies in the market.

This is called the spillover effect. One formula maker gets to control all the shelf space. They raise the prices on people that are not subsidized by the government. Now, that spillover effect is why it makes sense for a formula maker to give a low price to the government. They make it up elsewhere. Okay, now let's go back to the shortage. Reporter Helena Bottomiller-Evich, who has been all over this scandal, pointed out a few weeks ago that we really don't have kind of a national problem with enough formula. This is sort of the basic formula, which what she said was the average in-stock rate is currently about 79% across the U.S., far below the pre-pandemic norms

of 95%, but not critically low. The shortage, in other words, isn't just or even primarily a production problem. It's a regional distribution problem. Now, this is oversimplifying. There are certain specialty formulas that the Sturgis plant really was the sole source producer for, and the shortage there is really critical. But broadly speaking, when you can't get formula on the shelves, it's more of a regional distribution problem. Now, there are shortages in specific states like Tennessee and Missouri because these

are Abbott states. Abbott has contracts that let the firm control the market in those states. So it's hard to move formula into Abbott states even if non-Abbott formula is available elsewhere. All the infrastructure, all the bureaucracy is set up for that particular formula producer. Now, certainly this program, this WIC program, the specific way that it buys formula keeps players out of the market. Here's Congresswoman Ann Custer asking Scott Fitz from the Gerber Products Division at Nestle, which is a small player in our market, whether they would compete if this WIC purchasing system operated differently. Let's take a listen. This back and forth really gets to the heart of the monopoly distribution problem. Thank you. Would it change your business

plans generally overall? And this is hypothetical, but I think it's something we need to consider. If the WIC, Women, Infants, and Children formula was not a sole source, but if you could participate in that program, would that make a difference in your business model? Well, I can tell you as, again, a small player in the U.S. market, it's difficult for us to compete against two larger competitors. And if you had a larger potential market, would you see growth in Gerber production of baby formula? As you're probably aware, Nestle is a large manufacturer of infant formula globally. And if we saw the market opportunity here, I'm sure we would invest to satisfy that need,

opportunity. So there we go. The WIC program, with the government as a power buyer, is keeping players, even globally really big players like Nestle, out of our markets. That reduces resiliency, increases concentration. Okay, but it's not all a distribution problem. There is still the factory shutdown, which sparked the whole problem, sparked the whole crisis. And that brings us to the regulator, the Food and Drug Administration. Now, the FDA has a mandate. They're supposed to ensure that baby formula doesn't harm your baby, right? It's not really their job to make sure that baby formula is either cheap or available. They just have to make sure it's safe. Whether that's a good mandate or not,

that's the way that they think about their job. The FDA makes it really hard to get into the industry. Okay, so let's give you an example. As a regulator, this is what they do to new entrants. There's a company called Bobby, which makes European-style formula. Now, Bobby is the first firm to come into the market in five years. It was a rough road getting started. The firm faced a recall and a shutdown purely for manufacturing in Germany, and it had to go through millions of dollars of capital and a steep learning curve to get its product accepted by the FDA. Now that seems kind of nuts, right? I mean, it's a consolidated market, and here's a new entrant. Isn't that good? Wouldn't you want that? Yes, but there's a reason the FDA is skeptical. In the 1970s, baby formulas without adequate nutrition led to weight loss and

lifelong brain damage for hundreds of babies. So Congress passed a law with very specific standards on what nutrients need to be in formula. That's why the FDA makes it very hard for new players. There's zero incentive for regulators to let new firms into the baby formula market when, in their view, there are already excellent quality companies serving the market, such as Abbott Labs and Mead Johnson. Now, this was, of course, short-sighted. Baby formula is twice as expensive in the U.S. as in Europe. But like the shortage, that's not the FDA's problem. Well, that's the way that they think about it. Another issue is that the FDA, while really hard on new players, is too deferential to incumbents.

Baby formula made by the big guys in the U.S. is full of dangerous, brain-altering heavy metals. One organization called Healthy Babies, Healthy Futures tested 13 different baby formulas, and every single one had detectable levels of arsenic, cadmium, lead, and or mercury. This is bad for your brain. It's really bad for newborns' brains who are developing very quickly. So there are huge problems at the FDA, such as underfunding, a lack of authority to compel data from firms that regulates, and a general sense of powerlessness among regulators. There's also institutional problems. At the FDA, the medical part is cool, the food stuff, not so much. So the medical people kind of run the show and they give short shrift

to things, to food and infant formula is actually a food. But really, the FDA isn't the primary villain here. In September of last year, the FDA inspected Abbott's Sturgis factory, and they found it had old and dirty equipment, leaky water towers, employees wore dirty shoes in environments that were supposed to be sterile. And the FDA actually told Abbott to fix these problems, but the firm did not. Instead, Abbott falsified records, deceived regulators, had bad product tracing, and did not fix problems after discovery. A whistleblower went to the FDA in October. The FDA didn't really bother to even interview that whistleblower until December, but the next, from January to March, the FDA did investigate again, and they found 310 documented water leaks that could have allowed bacteria to grow into the formula. The equipment that turns liquid into powder, spray dryers, which is a

critical step for baby formula, had apparently been deteriorating since 2018. So this problem is longstanding. The FDA also found that when Abbott got complaints, they didn't investigate. Or if they did, they closed the investigation without finding a root cause for the reported illness associated with bacterial infection. The FDA, when they shut down the factory, they knew there would be a shortage. But they shut it down anyway to force Abbott to clean it up. That's really the only authority that they had. What else could they do when Abbott refused to clean up their factory and the only choice they had was to either close the factory or let Abbott continue to produce at clearly what was a substandard facility. Now,

from Abbott's perspective, because they have an argument on this, they claim that the strain of bacteria that killed those babies wasn't specifically traced back to their factory. And that is true. None of the five strains found at the factory were in the cans of food that the babies ate. But that might be because no one was really looking when that particular baby formula was produced and distributed, and the FDA couldn't compel Abbott to hand over samples or data. Remember, Abbott wasn't investigating when it got complaints, and the FDA only inspected a few different times, largely relying on Abbott's own records. So it's likely there were hundreds of different

types of that bacteria, but no one was collecting evidence or samples at the time, and it's obviously too late now. The company is clearly in big trouble, violated a host of different laws. And even Nancy Pelosi said, I think there might be a need for an indictment. That's the backstory. That's the scandal. But what about the immediate problem? What's happening now to fix it? Well, we obviously need the administration to move formula where it needs to go. Open imports temporarily, move supply around the country while allowing WIC recipients to buy non-contract brands. Fortunately, that's all actually happening. The Biden administration used the Defense Production Act, as well as military aircraft, to import formula from Europe and move it around the country. The USDA is letting WIC recipients get non-AVID formula. AVID is cooperating.

The Biden administration was late, months late, but their actions are now actually working. I think the shortage will dissipate at some point relatively soon. Now, on a broader level, though, what's important to recognize is that the shortage problem isn't just a baby formula crisis. We all remember nurses wearing garbage bags and ventilator shortages. We've had shortages of everything from ocean shipping containers to chlorine tablets to railroad capacity to black pipe to spicy chicken breasts to specialized plastic bags necessary for making vaccines.

Shortages today, and this is true for 15 years, but it was accelerated by COVID, are common in America. Last Sunday, 60 Minutes did a piece on shortages of hundreds of pharmaceuticals in hospitals, basic pharmaceuticals, things like chemo drugs for kids, stuff that's not expensive. This too is a story of power buyers handing out sole source contracts in return for rebates, which then fosters thinned out supply chains. In the case of these medical supplies and pharmaceuticals, the power buyer isn't the government, but a small number of corporations. In this case, they're called group purchasing organizations. And these

are firms you've never heard of. They're like Vizient or Premier or Red Oak, who manage in aggregate $300 billion of hospital purchasing or generic pharmaceutical purchasing for those hospitals. Now, these power buyers, middlemen really, do the same thing the government does with baby formula. They hand out sole source contracts in return for rebates. Make a lot of money doing it, too. But of course, this consolidates supply chains so there's only one or two producers. That is what a sole source contract means. You are the only producer. The problem is when there's a problem at the factory of a sole source producer making something, boom, you have a shortage. Shortages, in other words, are a monopoly problem. This is accelerated when you're actually preying on those suppliers and charging lots of

fees because all of a sudden you don't necessarily have enough money to maintain your factory, and then you have safety issues, and then boom, the FDA is in there. And that's why we have hundreds of pharmaceuticals in shortage. Anyway, in the hearing on baby formula this week, FDA Commissioner Robert Califf brought up this 60-minute story several times. There are medical shortages across the board, he said, and noted that industry fought bitterly against the agency when it tried to get more visibility into supply chains. The monopolists, whether Abbott or whether Vizient, they know where their bread is buttered and they want to keep their market power. Okay, so what do we need to do to end these shortages? Well, we have to take on the power buyers that run our economy using sole source contracts,

market power, and rebates. It's not that hard to do. First, ban exclusive contracts and predatory rebates. Frankly, this is already in statute in the Clayton Act. It hasn't really been enforced, but it's in there. It could be enforced. In certain cases, like WIC or exemptions from anti-kickback rules for GPOs, Congress actually has to act statutorily. Second, break up power buyers wherever they are. Most of them are a result of mergers anyway. You can use antitrust law to do that, but Congress could help by strengthening antitrust law or merger law or just going into specific sectors and breaking things up. Finally, pass a law, and this is probably a short-term fix that would do a lot of good. Pass a law that says that any life essential good, essentially anything regulated by the FDA, which is food and drugs, life essential, can't be sole source. No large buyer can purchase more than, say,

20 or 30% of its supply of any such commodity from any one supplier. That would immediately diversify supply chains, and it would mitigate shortages really quickly. Now, there needs to be some reform of the FDA as well, but the key here is to understand that the problem is in the market structure, in the monopolization. It's not just a regulatory issue. Now, here's the thing. These shortages are relatively new. They started in kind of the mid-2000s, 2004, 5, 6 or so, as monopolization gained steam. America didn't used to be a society with regular shortages of vital goods. And if you want some hope out of this situation, just remember, it doesn't have to be this way.

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