Breaking Points with Krystal and Saagar - Mini Show #53: Dark Money, Hillary Clinton, Ukraine Peace, Student Debt, & More!

Episode Date: September 3, 2022

Krystal, Saagar, & friends talk about Truth social, Hunter Biden, Hillary's new show, Ukraine peace sabotaged, combatting dark money, student loan debt, & more!To become a Breaking Points Premium Member and watch/listen to the show uncut and 1 hour early visit: https://breakingpoints.supercast.com/To listen to Breaking Points as a podcast, check them out on Apple and SpotifyApple: https://podcasts.apple.com/us/podcast/breaking-points-with-krystal-and-saagar/id1570045623 Spotify: https://open.spotify.com/show/4Kbsy61zJSzPxNZZ3PKbXl Merch: https://breaking-points.myshopify.com/Tickets: https://www.ticketmaster.com/event/0E005CD6DBFF6D47 Opening: [e-mail] The Lever: https://www.levernews.com/Marshall Kosloff: https://www.youtube.com/channel/UC3O3P7AsOC17INXR5L2APHQJosh Mitchell: https://www.simonandschuster.com/books/The-Debt-Trap/Josh-Mitchell/9781501199479 Learn more about your ad choices. Visit megaphone.fm/adchoicesSee omnystudio.com/listener for privacy information.

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for the midterms and the upcoming presidential election so we can provide unparalleled coverage of what is sure to be one of the most pivotal moments in American history. So what are you waiting for? Go to BreakingPoints.com to help us out. So we've got a new report from Fox Business on some additional significant financial troubles for Trump's social media company, Truth Social. Let's go ahead and put this up on the screen. Again, this is from Fox Business, so a little bit of a right-leaning site here taking a shot at the social media app. They say Trump's social media app facing financial fallout. Truth Social's finances may be in significant disarray, sources say. I'm sure everyone will be shocked by that. What's driving this report is

they're locked in what they describe as a bitter battle with one of their vendors, claiming the platform has stiffened the company out of more than a million dollars in contractually obligated payments. In October, RightForge, that's the company that they're in this dispute with, they had announced they entered into this agreement to host Truth Social. RightForge is this very sort of ideological group. I know some of the guys involved. You can imagine. I mean, their whole thing is like, we're going to be a place where we don't discriminate against your political views and free speech and all of that stuff. So they make this deal with Truth Social, but they now contend they have reneged on their contractually obligated monthly payments for setting up the platform's web servicing infrastructure.

That's according to three people with direct knowledge of the matter. And those people say that Truth Social made just three payments and then just stopped paying around March. RightForge claims Truth Social owes it around $1.6 million, and they are threatening legal action to recoup the money. They also say in this article that this would be one of the most significant vendors for Truth Social. So this isn't a small bill. It's not a surprise. I actually know the guys behind RightForge. I've known them for years. Martin Avila, he's the CEO of the company. He said,

Our founding vision was to make a second internet to support American ideas. They believe in the mission of President Trump's free speech buffer and wish to continue supporting the president in his media endeavors. But it's a problem if people don't pay. If you don't pay, that's difficult to do. This is always the issue with Trump, which is that this is why a lot of lawyers also won't work for the guy because, like, he doesn't pay his bills, which is actually true if you look well into the past. Now that he's got a campaign and a super PAC, yeah, he might actually pay their bills.

But with Trump, Truth Social, it's an actual private company, which is owned by a Trump organization and Trump himself. That's a whole other story. Yeah. Now, as you guys recall, because we've covered this closely, beginning True Social launch, it took me months before my account was accepted. It was a total disaster in terms of the launch, just from a technical standpoint. Then they were facing some legal troubles, inquiries from the SEC about the way that this was formed. It's a so-called blank check company, but there were questions of whether or not it was really a blank check company

or whether they actually knew what deal they were going to do. So there have been inquiries into that. And now you have these reports of, you know, if a company isn't paying their bills, it's not a good sign in general. Now, it could be this is just sort of like Trump's typical practice

of screwing over vendors and contractors. Or it could be that they're in like relative financial distress and don't really have the cash to be able to pay up. Well, how do they make money? Right. Like, ask Twitter how that's been working out for them for the last year. Well, and we know as people who have launched, you know, a small business that the energy is greatest right at the beginning.

So the fact that they screwed up their launch so badly, I'm sure was a major hit to them in terms of, you know, how many people like went and tried to sign up and it didn't work. And they're like, ah, screw this and never went back. I'm sure a lot of people felt that way. Now, reportedly there's been an increased sort of interest in adoption of the social media sites since the FBI raid of Mar-a-Lago. There's more interest in it and I think they've built down the database

a little bit. being like, well, we need to monitor what Trump is saying. True. I've been seeing a lot more of his truths

out there recently so it has made it a little bit more relevant so perhaps that will be enough to overcome their apparent financial difficulties. All right, guys,

we have a little treat for you, our audience, and also specifically for my dear friend Sagar here. Yes, haven't seen it. Who has not yet seen the big Breitbart movie trailer for their Hunter Biden supposedly based on a true story movie called My Son Hunter. The trailer is really something. Let's take a look. So I'll tell you what's going down. Do you know who I am? They told me you were VIP. Well connected to the government.

What kind of a moron forgets to pick up his laptop at a repair shop? You're a Biden. Act like one. Everything he built, life, I just ruined it all. I want to know everything that's on that laptop that can ruin my erection. My friends, it's time to party! I'm an artist. Tell me how I can help you. I don't deserve help.

Oh, I'm so sorry. I've been through worse. The smartest man I know. Thanks, Dad. Your thoughts? There's a Biden hair-sniffing moment in that trailer, too, that we didn't get to. That's something else. I don't know.

I mean, it looks terrible. No offense to Gina Carano. I actually like Gina Carano. She was awesome in The Mandalorian. Yeah, I don't know. You know what's interesting, too, is that there's a lot of— This is like a studio war because this is distributed, I was looking it up, by Breitbart, whereas Daily Wire has also been doing its own brand of new movie studios coming for Disney. Oh, for real?

All that stuff. So this is also like an internecine conflict. I think Gina, I think so, I think she works for Ben Shapiro and the Daily Wire, so I don't know how this all worked out. No idea. I'm going to be honest, it doesn't look very good. You don't think so? Yeah, it just doesn't look badly acted, not particularly. It just seems like a boomer. It's like a Dinesh D'Souza movie. That's the best way to describe it. That's what the market is, for sure. I mean, it seems also like they potentially make Joe Biden and Hunter Biden look a lot more cool. Oh, you think? Yeah,

that's exactly. Especially Joe. I assure you with Hunter, having seen some of these videos, it's not as glamorous as that. It's more sad than like- It's actually really pathetic with the crack pipe. Best life. Yeah, right? Yeah. He's not like Jason, whatever that guy, the action hero is.

He's actually just like a pathetic- Jason Bourne. Yeah, like Jason Bourne. He's like a pathetic, skinny crack addict talking with like Eastern European hookers who, yeah, who themselves are like obviously exploited. It's very sad, the whole thing. Yes, it is very sad. And also, like, I mean, they really seem in the trailer to paint Joe Biden as this like sort of like patriarchal mob boss type of figure that I also don't think, you know, I don't think he has that sort of like executive management type of skill. In reality, he was probably just a bad father, like a very negligent father, which from what

I can tell seems to actually be the case, at least with Hunter and his daughter. I don't want to go down that path because I don't know. I mean, like obviously his wife and daughter die in a car accident, and the boys are in the car. They're both injured. And he's sworn into office and starts his public life, like, while they're in the hospital. And so their life has been extremely public. You know, their father has been very busy and been in the public eye the whole time. I'm not going to go down the path of judging people's parenting. But on a serious note about the politics here, I mean, if Republicans take power in the midterms, they're going to be all about Hunter Biden. I mean, some of it we should learn, right? Especially the stuff— Some of it.

Put the druggist stuff aside. I mean, clearly they love the salacious personal part of this. But, I mean, listen, if there are things to learn about the corruption, we've always said that is incredibly relevant. But, yeah, I mean, they haven't been able to put together a policy agenda, but this for sure will be part of their plan if they take back power. So something to look forward to, guys. Some very exciting news that we want to share with you guys. Hillary Clinton and Chelsea Clinton have a new Apple TV show. It's called Gutsy. I know you're thrilled about this. Let's take a look.

Okay, here we go. We're hitting the road to shine a light on women who inspire us to be bolder and braver. Leadership doesn't look one way. It's a giant rainbow. You're not going to break me down. You'll get worn out before I do. Women who push us outside our comfort zone. You got this.

And make us laugh. I'm in deep Georgia and they might have never met a Muslim. Or they don't know they have. Or they don't know they have because we walk among you. You have a marriage that has been on public displays since the beginning. You said the gutsiest thing you ever did was stay in your marriage. That doesn't mean that's right for everybody. To throw someone's life away when people really do make changes, I just believe in second chances. My mother needed rehabilitation, not prison.

Your survival is your power. Someone say to me, you're not good enough because you have melanin? How dare you? I haven't mastered whites. I just want whites to get a GED in blacks. Here's how they marketed it. I'm having big time 2016 DNC flashbacks.

What do Kim Kardashian, Gloria Steinem, Megan Thee Stallion, and Jane Goodall all have in common? They're gutsy. Join us for intimate conversations with some of the world's boldest and bravest women. How do these people get stuck in a 2012 timeline? And how do they give people money to make this shit? This was an expensive production. Yeah, look at this. The production value and all this.

Traveling all over. Kim Kardashian and all these people. Yeah, this doesn't come cheap. I don't understand. It's like, do we learn nothing from the Fauci documentary, which was a huge flop for National Geographic. Oh, that's right. No shit, people.

I don't know. It's just like. It's like a brain worm. Here you know, here's what I think. I think Apple has too much money. They don't actually know anything about content. They're like, hey, we'll take it. By the way, sometimes stuff on Apple is incredible. Severance, one of the best TV shows I've watched in a long time.

Greyhound, awesome movie. Blackbird, great miniseries. So every once in a while, because they have such big pockets, but they're also willing, you know, Tim Cook and his guys are like, oh yeah, Hillary thing. That's what the people want. And so Apple TV- Imagine thinking that. It's really hard to say who's more out of touch, Hillary herself or the executives who greenlight something like that. Yeah, I agree. I think it's the executives. Everything I've read about Apple TV is these people don't have a clue. They just throw money out like nobody's business.

Morning show, which I personally liked, but guess what? Unless you host a morning show, not a lot to really. Yeah, it's like a little bit of a niche audience. I was like, oh, I can relate to that. Well, let me ask you this. Let me ask the real provocative question here. Do you think that this is part of like a comeback plan? Do you think there's still people, little birdies in our ear whispering like, now's your moment, Hillary. Now's your time.

Joe Biden's approval ratings are low. You should jump in there. You'll be the unifying figure. You'll have a redo against Donald Trump. It could be that. I think she's jealous of Obama for getting his Netflix deals and for his shitty National Parks special, which was a huge flop over at Netflix. Which, by the way, why is the American president talking about parks that aren't in America

and then calling it National Parks? I don't get it, okay? Really? Where were the parks? They were all over the world, which is fine, but that's for David Attenborough, not for Barack Obama. Whatever. That's my dream. I want to do that job. I would love to do it, too. Sounds great, right?

He didn't even go. He just narrated. All I want to do that job. I would love to do it too. Sounds great, right? Just narrate. He didn't even go. He just narrated. All right. So put that aside. Obama. I think you're right. I think you're right though.

She saw him doing his Netflix deal. I think that's why. And his podcast with Bruce Springsteen. Yeah, which didn't work out. But whatever. Yeah. And Michelle and him are doing all kinds of like that media stuff. Yes.

She wanted her. I think she's jealous about Obama. That makes sense. That makes sense. Also, these are the Clintons. They want money. Like, these are some of the greediest people who've ever lived. They want clout.

They want to reattain that moment when they were doing, like, the Clinton Global Initiative. Yes. And they were, like, heralded as these world historic figures and feted by elites. They want that, like like cachet back. But yeah, it just feels very like lean in feminism, throwback, cringy, the music choices, all of it. Yeah, there's a lot there. All right, guys, something to look forward to.

Buried inside of a new foreign affairs article is an absolutely stunning revelation. Let's go and put this up there on the screen. So those of you who might not be familiar, Fiona Hill is a former Russia staffer on the National Security Council, reveals exclusively in a new piece that Russia and Ukraine agreed to a tentative settlement in April that would have halted the war. But as Branko Marsetti points out, what ends up happening instead is that the UK Prime Minister, you guys will recall, Boris Johnson, flew over to Kiev to instantly say, this is off the table. So here's what the direct quote, according to multiple Russian former senior US officials we spoke with in April 2022, Russian Ukrainian negotiators appears to have attentively agreed on the outlines of a negotiated interim settlement. Russia would withdraw to its

position on February 23 when it controlled part of the Donbass and all of Crimea, and in exchange, Ukraine would promise not to seek NATO membership and instead receive security guarantees from a number of countries. Remember, those very, very, very early days of the war, we thought that that was a very distinct possibility. They were sitting down in Istanbul. They were sitting down also in some of the contested regions, even during the actual invasion and push on Kiev. Then it all falls apart. Billions of dollars of U.S. weapons and, well, some billions, not as many billions, from the U.K. And then a paltry tiny little sum starts to flow in from France and everybody else.

But the Anglo countries, Britain and the US make it clear, we don't want you to sign a deal. Zelensky sees that his real money train and political, by political necessity, the Ukrainian population wanted to fight. And then the foreign countries are like, no, we don't want you to give in at all. We want to keep the war going or we want to stand up. Our own populations are now, you know, aghast or whatever. Nobody can just settle this thing. And here we are.

And to be frank, you know, as where the battle line stands right now, this is basically exactly what's happened, except now a hell of a lot of people had to die for the Donbass region. And now Donbass is gone. And look, we'll see if that southern offensive by the Ukrainians amounts to anything. Personally, I have my doubts. This is, I mean, it really is a bombshell. And you lay out an important piece, too, which, yes, we know it was UK Prime Minister Boris Johnson who made the trip specifically.

This was according to reports in the Kyiv press and the Ukrainian press, specifically to say, we do not want you to settle. We are not ready for this war to end. But we know that the US and the UK have been in close alignment on our policy towards Ukraine. France and Germany were taking more of an approach of let's have talks, let's have diplomacy, especially Macron was on the phone with Putin all the time trying to keep them in dialogue and keep them in conversation. At this point, also remember what happened is Russia was sort of bogged down. Things hadn't gone well for them. All the analysts were sort of wrong about how quickly this was going to all occur. The Ukrainians were doing much better than expected. So this was a key moment when if there was going to be a deal, this was it. And now you have Zelensky much more consistent in the press with like, we're going to achieve our maximum. So we're

going to take back Crimea. We're going to take back every square inch of territory. At the time, there were sort of mixed messages coming out both from Kiev and also from the Russian side. So this is an astounding failure. It's an astounding loss. It is incredibly cruel to the Ukrainian people to have, you know, scuttled this deal and forced them to continue this war, which has been horrific for them. Now you have Europeans who are, we were just looking, I mean, they're facing a dire situation in terms of gas price, energy prices going into this winter, chaos around the globe.

I mean, in my view, scuttling this deal is a world historic error and disaster from a human perspective. So really key detail here. And also great commentary and really noteworthy that this gets mentioned like not at all, like barely noticed in the mainstream press. This is one of those things,

I'm going to read about that in a history book in 20 years. We'll finally get all the details and it'll be kind of like reading about the telegrams in World War I, which you don't get to read them until like 25 years later. So that's what's going to happen. And by that time, we'll all learn how it worked out. And I'm going to venture to say that probably is going to be better than whatever ultimately the real negotiated settlement looks like.

Whenever the sense after much hardship. And a lot of other people will be dead, unfortunately, for that reason. So be it. Time now for our weekly partnership segment with the man himself, David Sivarota of The Lever. There he is. Great to see you, David. Good to see you, man. Good to see you both. So you all had truly a sort of groundbreaking bombshell disclosing this $1.6 billion donation and getting the details on that. And this week, you have a bit of a follow-up. Let's go ahead and throw this up on the screen again at the lever. Here's how we can fight dark

money. Congress, state legislatures, shareholders, and news organizations must speak out and reform the system right now. David, you also personally published a piece in Rolling Stone. The headline there is, you're subsidizing the threat to democracy. A secret $1.6 billion donation shows why Congress, state legislators, and shareholders must act. What is the case that you're laying out here? How can we fight dark money in our system? So dark money refers to anonymous, unregulated money flooding into our politics. This is money that we don't know who is making the donations. Buying elections, buying legislation, buying court appointments. If you've seen an ad where there's some shadowy group that's named,

you know, Americans for Americans, typically we don't even know who's funding those ads. Okay, so that's what dark money is. In the last election, a billion dollars of dark money was spent. So what can we do about this? Well, there's legislation that's been sitting in Congress really for more than a decade that would simply require dark money groups to disclose their donors, to tell us who is funding them. The legislation sponsored by Senator Sheldon Whitehouse would also make sure that donors can't hide behind shell companies, LLCs and the like, just so we actually know who is funding this. Now, people go back to the Citizens United case and say, well, you know, the Citizens United era unleashed this era of unregulated spending. That is absolutely true. However, Citizens United and all of the other subsequent decisions in that vein continue to say that the government has the power to mandate wide and broad

disclosure so that we at least know who is funding the spending in our elections. In other words, these rulings say the government cannot limit the amount that's been spent. That's John Roberts' courts. That's their First Amendment argument. But they continue to justify those rulings by saying transparency is important. The government is well within its authority to require disclosure. So the bottom line is there are plenty of ways to get that disclosure. There's the Disclosed Act in Congress. There is a rider that's been put on appropriations bills for years blocking the SEC from requiring publicly traded corporations to disclose their political spending. There are shareholder

resolutions that can be brought against companies where the stockholders say you need to disclose your political spending. And there's been success with that. So the point is to bring this into the light so that we at least know who is doing the spending. You know, David, I think one of the craziest things about that billion dollar donation was just how it was structured with stock and all that other stuff. Is there even a way to get around that or in through the legal system? Or is the best way just to hammer disclosure as much as possible in order to try and discourage that behavior? I'm glad you brought that up. I mean, that that was the other part of the story where what happened in this case was the the donor donated his entire company to a tax exempt dark money group, and then the dark money group

sold the company. That maneuver meant that the donor didn't pay taxes on the sale because the asset was already in the tax-exempt organization. And when the tax-exempt organization did the sale, it was tax-exempt. So effectively, the tax code, aka all of us, delivered up to $400 million subsidy to that donation. There are ways to prevent that. You can, for instance, tax the gift on its way into a tax-exempt organization.

There was a 2015 law that actually made this easier to do. In other words, created the loophole itself. You can repeal that loophole. So there are ways to make sure that at minimum, the tax code is not forcing all of us to subsidize anonymous dark money political donations. Yes. Yeah. And so do you think that transparency would have much of an impact? Because I know it's not every reform that we would want, but you're saying like, at least this is something we can do. Do you think it actually will really change anything or will it just be, you know,

there's such a flood of cash that it makes people's eyes kind of glaze over? That's a fair question. I mean, I think it would, for instance, I think it might deter some of the biggest, most controversial spending if the donor knew they had to say who they were when they funded it. I mean, right now you're in a situation where you can fund completely outrageous things and know that you can fund them if you're a huge donor from behind a wall of anonymity. So in other words, it kind of makes a donor, gives a donor protection to do more outrageous things than they would perhaps want to admit to. So I think there could be a deterrent effect. I I think there could be a deterrent effect. I also think there could be a deterrent effect in the political conversation where,

you know, a candidate's running for office, a big, one of these groups swoops in, Americans for Americans, and we find out it's some donor from an industry that voters really, really don't like. I think voters obviously are entitled to know that information, but I also think it could affect the information that they have in casting their votes. Who am I really casting a vote for? It actually all goes back to the theory, if you take it on its face value, of what the Roberts Court says, which is if there's a First Amendment right, I don't fully obviously subscribe to the idea that money is speech. But if you take their argument that money is speech, they're protecting, the court is protecting the First Amendment, that disclosure is also speech.

That if there's going to be all this noise and all this speech in our politics, we should at least be able to know who is doing the speaking. Right. I think it's also important. We saw this with the disclosure on the, what is it called, the Stock Act? Is that the one that required members of Congress to have to disclose what traits they were making? It didn't solve the problem, but it gave journalists such as yourself and it gave independent journalists on Twitter the ability to say, hey, look at what Nancy Pelosi is doing over there. And oh, by the way, lo and behold, there's legislation that's relevant to this. And she just made a massive gain for, you know, herself and her husband. So that has started to galvanize the public around bigger changes that wouldn't have been possible if we didn't have this, that

information. I think you could see a similar thing with, you know, I mean, we know some of the money that Kyrsten Sinema and others are getting from industry. But if we had a full picture of like she got this much in her campaign and now she's doing this, guess why? It could help to galvanize the public around those bigger changes and bigger reforms. I 100 percent agree. And I want to just add one thing. This should not be a partisan issue. When we put our story out about the money going to Leonard Leo, the conservative operative who has been running the conservative effort to change the courts, some of the pushback was, well, what about George Soros? And my response to that is,

this is not a partisan issue. Whether you agree with Leonard Leo, whether you agree with George Soros, that's actually not the point here. The point is we should all be able to agree, whatever side of the political spectrum you're on, we should all be able to agree that we should have the information. We should be able to know who is doing the spending. If we believe that democracy really only works when voters have the information to cast informed votes, then this is the basic information. And one last point, as I said in The Guardian and in Rolling Stone, news organizations should not pretend to be impartial or quote-unquote objective here. We as journalists cannot do our day-to-day job of reporting on money in politics if there are not real disclosure laws. When we report on money in politics in a day-to-day way right now,

we're reporting on a smaller and smaller portion of the campaign finance system that is still in the light, while a larger and larger part of that system is completely hidden behind a wall of anonymity. So journalism organizations, journalists, news outlets should be pushing aggressively for these disclosure laws to help us do our job. And one last reminder, that's how the original disclosure laws happened. The Watergate scandal, the original dark money

scandal of the modern era birthed those original disclosure laws. Now those laws are out of date. It's time for an update. Yeah. All well said. Great reporting on this. Congratulations again, and we'll see you soon, my friend. Thanks, man. Thanks to both of you. Absolutely. Hey, Breaking Points. Marshall here. I'm joined by Josh Mitchell of the Wall Street Journal. He recently wrote, which came out in paperback, The Debt Trap, How Student Loans Became a National Catastrophe, which makes him the perfect guest to do a quick follow-up on last week's news. Josh, you start by giving us a real rundown of where things stand now with the student loan system, given the Biden administration's reform.

Yeah, there are two big things that I think President Biden did here. He basically said that the government is going to forgive $10,000 for people who earn $10,000 in student debt for people who earn under $125,000 a year, $250,000 for couples. and um and on top of that if you received a pell grant you can get up to twenty thousand dollars in forgiveness um so that's the first thing is that a lot of people are going to get a chunk of student debt forgiven uh the second thing which i think is very important but has not got as much detention attention is uh going forward if you take out loans to go to college, you can now pay only 5% of your discretionary income toward your student loans each month, and the interest will not accrue. And currently, you have the option to pay 10%. So basically, he's cutting in half the amount that families will have to pay down each month on their college debt, which is a very significant reduction in just how much people will end up having to pay back on their student debt.

I think your summary really gets at the tensions under the system now, because I see especially that second reform, that's going to be great for families, for people with student loans, all those bits coming out of college. I'm not sure that making it easier to pay down ever increasing amounts of debts is going to be the right pressure on the university system to reform. So how should we think about kind of the dilemma and the tension there? I have three broad bullet points when I think about what just happened. The first is the constitutionality of this move. The second is this idea of toxic debt, which I'll talk about. And the third is systemic reform. And so I'll go in order of those three things. The first involves the constitutionality. What is very remarkable here is that President Biden himself, Speaker Nancy Pelosi, certainly Republicans, basically every political

figure involved here, have at one point or another raised very serious doubts about the ability of an executive branch, the executive branch to wipe out what amounts to hundreds of billions of dollars in student debt wholesale. And so what's remarkable is that after months and the past couple of years of President Biden himself having at some point raised doubts about his ability to do this, he's come out and done it. And I think that that is very important to keep in mind here. That's like a broader story of the executive branch just, you know, increasingly throughout different administrations using powers that are very dubious from a legal perspective. The second thing is- Quick follow-up on that. Was the student loan pause itself, was that through the executive branch or was that Congress? both. So President Trump, at the very start of the pandemic, used executive powers to pause

student loans. He initially did it for a matter of months to basically say, you don't have to make payments on student loans for the time being, and we will suspend the interest. So that was a big benefit for families that he did with executive powers. And then Congress codified it with this broad law that they passed early on in the pandemic. And then after that law expired, the Biden administration comes in and they basically continue to extend the, I'll call pandemic pause, multiple times. And so now the other thing he did was he said, look, we're going to extend it one more time through December 31st of this year, and then that's it. People will have to start making their payments. So it's a combination of both a law that Congress passed as well as executive authorities.

So this time there's just no law. It's just an executive decision saying we're going to forgive the loans. Okay. So yeah, get to the second part. And just to clarify, they're arguing that this law passed in 2003 in the wake of the Iraq war or at the start of the Iraq War authorizes this. So, you know, they're saying we are using existing law, but, you know, there's a lot of people who say, well, that's a misuse of that law. It was not intended to, you know, be used in this fashion. So is it possible that this decision

could be overturned, like interrupted? Is there any uncertainty about the actual implementation? That's one of the very big questions here. You know, when, you know, if someone were to sue, you would have to argue what their standing is, you know, basically someone would have to say, I am, you know, harmed financially by this move. And so one question in my mind is, could the, you know, could, could some private institutions who are, who have business with the federal government when it comes to lending, could they argue this somehow financially harms them? I really don't know. This is speculation on my part, but for example, you know, and this gets a little bit in the weeds, but prior to 2010, there were a lot of people who had federal loans, but those loans were awarded by private lenders and they were guaranteed by the federal government. And so, you know, there is a certain amount of federal student debt that is actually on the books of private lenders. Not sure if this forgiveness applies to them, but

let's just say that you have federal loans that are held by a private lender, you consolidate into a new federal loan, which is basically a form of refinancing, and then you get forgiveness. Could the private lender say, hey, I'm being harmed because I'm being denied a future revenue stream that under contract I am entitled to get? So I think that there's a really thorny question of who will have the ability to sue and what their argument will be, but it's certainly a possibility. And then your second probably, it was toxic debt. Yes. So toxic debt, I think is a really important point here. I don't think people realize the scale of what I will call predatory lending or subprime lending

that occurred in this program over the past 15 years. One of the things I've noticed on Twitter is that there's like these caricatures of student borrowers, you know, on the right and even among centrist Democrats, there's this focus on people who got a degree, went to graduate school, have a job, are getting the so-called wage premium, you know, why should they not have to pay back all of their debt um far be it for me to argue for or against that argument um what i or so so

that's one that's one caricature and then you have this other caricature of people mostly on the far left, the Bernie Sanders crowd, for the most part, saying this doesn't go far enough because, you know, everyone who has student debt is struggling. And why not just wipe it all off, wipe it all out? You know, $10,000 is not nearly enough, you know, and everyone is burdened and, you know, everyone who has student debt is just struggling. And I think that both of those are a little bit of a caricature. It's not that I think that both of those statements have, you know, kernels of truth in them. But, you know, as someone who's covered this for a long time, I view the student loan market as the national mortgage market. There are a lot of people who have houses who have mortgages that they use to buy houses in very wealthy areas like Westchester, New York or Georgetown, Washington, D.C. And so, yes, there's a lot of, quote unquote, privileged, well-off people who got mortgages whose investments have paid off.

And why should they have any forgiveness of mortgage debt. But then you also have a lot of people, particularly think back to the housing crisis, who were in Arizona or West Virginia and bought houses at inflated values. They weren't really well-informed about the debt product that they were getting into. Maybe they had an adjustable rate mortgage. Very quickly, they defaulted on their loans. They were suddenly underwater. Their mortgages were higher than the value of their houses, which had gone down in the housing crash. And so the student debt market is the same way. You have people who took out loans to go to Princeton or to even go to the University of Maryland. My alma mater, the solid state school has great outcomes in terms of graduation rates and people getting jobs.

But then you have a whole lot of people who went to community colleges, for profit trade programs, a certain number of HBCUs, which are open enrollment. You know, this this group of schools there, you know, you can sort of categorize them as open enrollment schools in that they don't really have any admission standards. And so basically anyone who's anyone, regardless of their academic ability, their walk of life, they enroll, the government gives them a blank check. A lot of these students, which were disproportionately drivers of student debt in the housing crisis and when student debt boomed, ended up dropping out. So they didn't get a degree. They never got a well-paying job and they just instantly defaulted on their loans. Or maybe they did get a degree. They graduated into a historically weak labor market back in the early 2010s and they weren't able to keep up on their payments. There's a big cohort of those people. And that's what I

mean by toxic debt. And I'll just make one more point because I know that I'm going on for a long time here. No, it's good. This is kind of the point. Yeah. Counterintuitively, most people who default on their loans owe relatively small amounts between $5,000 and $10,000. And that's counterintuitive because when we think of people who struggle with student debt, I think in the public discourse, it's, oh, $50,000, $100,000. That's a big issue. We talked about this last time. But a lot of the toxic debt is people who, again, enrolled, spent a semester, and then dropped out. They never make a payment. Most people who default just never make a payment. Most people who default just never make a payment. They drop out of college. They fall off the radar. The loan servicers are hounding

them with emails and phone calls. There's millions of these people who their debt is just sitting on the government's books and the government and Congress just pretend like it's going to get paid at some point. And so when people say $10,000, that's not a lot. One of the things that I think about is this is just going to, in one fell swoop, wipe out all of that toxic debt that years ago, a private lender or a bankruptcy judge would have done. So notwithstanding the constitutionality, practically speaking, I think this takes off a lot of toxic debt. So that's point number two, and I'll stop there if you have any follow-up questions on that. No, I think you covered it. What's the third and final systemic reform point?

The third and final systemic reform gets partly to this income-driven repayment benefit that was included here. Basically, it's the idea of moral hazard. And I think a lot of, you know, a lot of progressives that I've followed in this debate, I think they think of this idea of moral hazard as this like esoteric economic theoretical problem that, you know, Milton Friedman-esque types worry about. I actually think it's a very big issue here. And I think if you look at how colleges behave, they have been able to raise their prices at such high levels because no one really suffers negative consequences, at least from the school's perspective, when they encourage students to overborrow.

And I think that this might make this worse. This really risks making that perverse incentive worse. If colleges can now go to students and say, don't worry about the balance, you know, yeah, you're going to have to take up $50,000 on the front end. I know that sounds like a lot, but look, when you come out, you're only going to have to pay 5% of your discretionary income. So whether it's $50,000 or $75,000, you're never going to pay this all back. I think that that's a very serious issue. Some colleges have already done that, basically. They're counseling students on how to take advantage of these options so that they desensitize students to the high tuition. And so what I find very remarkable here is this is, in some ways, the opposite of what happened in the housing crisis.

In the housing crisis, you had a lot of people who took out a lot of debt, that they overborrowed. And the government, I think there's a consensus that the government didn't do enough to help out individual homeowners, but that the government focused a lot on systemic reform. So they created the Consumer Financial Protection Bureau. They passed Dodd-Frank. They increased requirements for how much banks should hold in capital. to focus on, at least from their perspective, fixing the lending system so that going forward, there would not be such reckless lending that presented a systemic risk to the US economy. Here, it flips the script. Here, the government has done a lot

for individual student debtors. They've paused their payments for three years interest-free. They've forgiven $10,000 or in some cases $20,000 in debt. They've cut in half how much people with college debt are going to have to pay going forward each month. So they've done a lot on top of the stimulus that the government provided for households to get through the pandemic. They've done a lot for individuals. They've done nothing to solve the systemic problems. And they're just like ignoring that. And, you know, based on historical trends and based on the government's own projections, we're going to have as a country, another $1.6 trillion in debt within a few years. So I think it's really remarkable the lack of-over in a few years, which is probably both not a great thing from a systemic

problem issue, but also I think it presents an opportunity to learn from this current experience, the way you put it. Josh, this is really great. Can you do a quick shout out to the debt trap for anyone who wants to dive deeper into this issue? Yeah, so please, by all means, buy my book.

bit.ly bit.ly slash debt trap book. You can get it on Amazon. You can get it in independent bookstores. The paperback just came out. It goes over the whole history. I think it's very important to really understand how we got here, why we're here. And I think I try to unpack all of these various issues in detail. It also has a fair history about just a lot of stuff about how Sputnik launched this whole program in the first place.

So yeah, please, by all means. Josh, thank you for joining us on Breaking Points. Yes, thank you. I love being here. Thank you. What up, y'all? This your main man, Memphis Bleak, right here.

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