Breaking Points with Krystal and Saagar - Stories of Week 7/24: Uvalde Report, Recession Data, Russia-Ukraine, Trump Plan, Congress Acts, & More!

Episode Date: July 29, 2022

Krystal and Saagar discuss the new Uvalde report, Russia sabotaging diplomacy, recession warnings, Ukraine blacklist, Trump's bureaucracy plan, GDP numbers, CHIPS act, & Manchin deal!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  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. Good morning, everybody. Happy Monday. We have an amazing show for everybody today. Extra amazing because we're back. We're finally back, Crystal.

Indeed we do. Nice to be back in the chair. We did miss you guys, although it was a little bit nice to have a week off. Yeah, it was nice. Reset, refresh, regroup. If I say anything dumb, blame it on jet lag. I'm still blaming long COVID for any brain fog that I have from here on out.

Before we get to what's in the show, we do have a couple of announcements off the top that I do not want to forget. Number one, live show. Let's go and put that up there on the screen. We're getting closer and closer to that date, September 16th, 7.30 p.m. Eastern Time in Atlanta, Georgia. It's going to be the first of many. It's going to be a rather corner, huh? I know. I'm really excited.

We're already planning, making sure it's going to be a great tour. This is going to be the first of many. But as we've said, if you can help us out by buying tickets to this first one, help show the industry, venues, et cetera, that we can indeed sell tickets here at Breaking Points. The link is down there in the description. Second, for our premium subscribers, for those of you who have already done so, we deeply appreciate it. We've got that promotion going on right now. If you're a monthly subscriber, if you can help the show out for financial planning purposes, if you can realize some cash at this moment, you can upgrade from monthly to yearly for a 20% discount. The link is going

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that. Okay. In the show today, we do have some new developments out of Uvalde and actually some new indications that politically this is hurting Texas Republicans in terms of their failed response to the massacre of those students in that town. We also have a sort of deal between Russia and Ukraine on shipping out grain through the Black Sea, but then Russia immediately started shelling the port city that the grain is supposed to go out of. So we've got all of those updates for you. Also, Democrats finally making some intelligent political moves in the House and the Senate, putting Republicans on the spot with some tough votes on gay marriage and contraception access, and also some related to abortion, so we'll give you those breakdowns. New numbers about exactly who is to blame for the chaos at American airports,

and by the way, it is exactly what you think. It is the airline's fault. In spite of all of their attempts to blame shift, it is their fault, and of course Pete Buttigieg in charge of the Department of Transportation doing nothing and also sort of really gaslighting the public about exactly how on top of the issue he has been. Also, guys, stock alert here for those of you who are, you know, making moves in the market. Paul Pelosi, Nancy Pelosi's husband, making some big moves ahead of some potential legislation with regards to chips. So we will tell you about that. But Sagar, we did want to start with the very latest out of the investigation in Ubaldi. Yeah, we got to say on top of this story and when

we were looking over the things of the last week, yes, I know Biden has COVID. He seems fine, you know, wish him the best. But this is always going to be one that we want to try and stick to as much as possible because the reports out of it, every one seems to be more unbelievable than the next. And we finally have some even more horrific details. Put this up there on the screen. Now, the latest report out of the state of Texas is an 80-page report. It's basically been obtained by multiple media outlets. This was read by authorities, the Texas State Senate and others, tells us that nearly 400, 400 law enforcement officials were outside and had rushed to the mass shooting before they had actually gone in, breached the door. This picture that those who are watching can just see in front

of you is literally of a officer standing in front of other officers with his hands up like this, preventing them from going into the hallway to where the shooter was located. And throughout that report, they blame, quote, systemic failures. Yeah, you think? For exactly what exactly happened here. I think it's horrific because they really just point to the fact that, as we'd already learned, if these guys had done their jobs, the shooter could have been neutralized within three minutes of the shooting. Three minutes. And we already know, based upon video evidence, that there were not only officers on the scene, there were officers. They didn't just have handguns. They had high-powered rifles. They had what they needed. There even was an officer there who had a riot shield or some sort of

ballistic shield that could have been used. As we also know, the door itself was unlocked and they spent 20 to 30 odd minutes, you know, kind of faking around, trying to quote, find the key, even though they didn't need a key. Nobody even asked for a key in the initial 30 minutes of what was happening. It ultimately really took a tremendous act of insubordination on behalf of some border patrol officers who were like, you know what, forget it, we're just going to go in. Yeah. And all of that. So all of that is detailed here in the report.

But the top line, 400. That's almost as many kids who are in the damn school who are on scene. Completely insane. Yeah. And I think what it shows is, you know, we've seen so many shifting narratives. And that is actually another piece that came out, some talking points that they had about the narrative that they wanted to push, that you heard politicians from Greg Abbott, the governor of Texas on down, pushing immediately after this happened, before we knew any of the facts of just how failed this response ultimately was. Then once that narrative starts

to fall apart, then there was an attempt to really put 100 percent of the blame on Pete Arradondo, who is, of course, in charge of the Uvalde School District Police Force. Now, listen, that dude deserves a lot of blame. But when you've got 400 law enforcement officers and we're talking about 150 Border Patrol agents, 91 state police officials, and then you have the local PD. You had U.S. federal marshals on the scene. Every level of law enforcement, and they all just stand around for an hour and 20 minutes and do nothing. It really does show you how there is something that has gone really awry in terms of law enforcement. I mean, we were talking before the show about this Indiana shopping mall

where there was a shooting, and an ordinary civilian with a gun was able to take this guy out like this, and you just realize that, you know, something we said from the beginning is you honestly would have had a much more effective, much better, and much less deadly response if just random parents had been given guns and weapons

and been able to go in because this is an absolute atrocity. The fact that it was every single level, no, no, no. The blame is not on one person. It is on every single person who stood there and did absolutely nothing and was happy to shift the blame,

happy to shift the responsibility, happy to pretend that it wasn't their problem. Yeah, this is the 22-year-old in Indiana, Elisha Dickin. I hope I'm saying that right, Elisha, if you're out there. Definitely a hero. And you know, actually, just exactly what you're talking about. This is a proficient guy in firearms. He had his gun on him. He actually had, you know, found cover. He was asking people to move behind him as he moved forward, took the shooter out in a matter of minutes. And you have 400 here. I also do think that, unfortunately, some of the blame, that most blame has gone towards Pete Arradondo. And look, it should. And we're about to get to

even more of why that guy should be fired and some more cover-ups that continue. However, there were federal marshals who were on the scene. I actually got some messages from people who watch the show who are in the federal marshal service, U.S. Marshals, and they're like, this is outrageous. They're like, these people are a disgrace to our – so they even understand. He was telling me that the way that they train is specifically for situations like this. And they're like, yeah, you know, anybody can expect some small yokel PD not to do the best. But you have guys there with millions of dollars in training, you know, for, well, supposedly for situations like this and who don't do anything. I also want to spend some time on that narrative thing that you brought up,

because it's very important, which is similar. There were some documents that came out. The city of Uvalde itself, days after the shooting occurs and their meeting with the Texas Department of Public Safety, they're not going over what went wrong. They are lambasting him for criticizing their response and have created an official government document that was titled narrative. And it has a different version of events from what may be described as the facts in which they say, oh, well, he was barricaded. And according to that, well, do we have a different training regimen? Complete BS. They literally trained for this months before in the school where this actually happened.

They knew. And it even says written in the documents, you may be the first person there and you may have to put your life on the line in order to immediately stop. Everybody knows active shooter situation, that the bleeding stops whenever the shooting starts. And also, for those who were coming to these cops' defense, they were like, well, you know, the majority of the shooting took place in the first three minutes. Okay. Let's say you saved one, maybe two lives immediately, just in terms of those shots

worth it. And then even more so remember there are people who bled out on that floor. I mean, everybody who may know it's called the golden hour in combat for a reason because you need an hour or within that hour, you have a a i think it's dramatically exponentially higher likelihood of surviving like even horrific gunshot wounds so who knows how many kids uh may have been in critical condition versus who have been bled out on the floor another another piece that came out in this report is the fact that they did know the 9-1-1 9-1-1 calls were coming from inside the room and there was a lot of question of that initially of like oh maybe they didn't know that there were still kids in there and that those kids were still alive. No, this has now been revealed.

They knew. They knew that there were kids in there. They're calling 911, begging for help as they, you know, sort of like bumbled around and pretended like they were finding a key. When you've got, I mean, you had even, the door wasn't even locked, number one. They didn't even try the knob. That's number one. Number two, even if the door was locked, they had everything they needed within three minutes to forcefully breach that door, even if it was locked. So it's just, it's just mind boggling. It really is not mind boggling to watch 400 law enforcement officials from every single level, all in their gear, all G.I. Joe'd up, standing around and hoping that someone else is going to deal with the issue.

And we also have the video that we've seen, that we had heard described to us. Go ahead and put this up there on the screen. You have Officer Ruben Ruiz here. He is actually a Uvalde PD officer. You can see him, for those who are watching, he's coming forward with his gun in his hand and he's saying, she's been shot, she's been shot. You can see officers there actually putting their hands around him, kind of pushing him back. Look, there's been some judgment of the guy. He didn't fight hard enough. That's all Monday morning quarterbacking. He was clearly in shock and trauma. Actually, we talked previously about an officer who was on his phone.

He was actually the guy who was on his phone because he was checking to make sure he was getting text messages and calls from her. She was getting shot inside of the classroom. He knew she was shot. He says there in the video, she said she's been shot. And they still pull him back. So they know that people are getting shot inside. We know about the 911 calls. We know that her own husband is outside of the room being restrained by his colleagues

and pushed back kind of like that. I mean, it's just a horrific situation. As we said, also in terms of the reporting and Pete Arredondo, let's throw this up there. So this school board has now delayed their, they were supposed to fire him four days ago, Pete Arradondo. He was placed on leave, obviously, and from the city council as well. Well, they canceled the meeting, which was on Saturday, where they were scheduled to, quote, consider firing the police chief. And they're blaming it on process. Look, they had the vote ready to go. Then they canceled the meeting ahead of where this guy's been fired. It's been over a month since the shooting even happened. So in what world is this not even justice, accountability?

Most people have made peace with the fact that these guys will never be able to be criminally prosecuted, even though I think many of them should be, specifically Pete Arradondo. At the very least, we want him to be fired. We want him to have his job lost. And yet they can't even come around to firing him. It's crazy. What the residents are saying, and I think what any decent human being in the country would say, is that not a single one of these people deserves to have a badge. Yeah, that's right. All 400 of them that stood by, men and women in their gear that stood by and did nothing. Not a one of them deserves to,

you know, pretend to protect and serve. So the fact that even this one dude who, you know, really was supposedly in charge and was the one who came up with this idea of, oh, it's, you know, it's not, it's a barricaded subject, so we need to just do nothing for an hour and 20 minutes, and who even when they went in was still reluctant, was like, I guess you guys can go in, but seemed to not really think it was the right thing to do. At the very least, there could be some accountability for this guy. And I think the failed political response, just as the failed law enforcement response was at every single level from local to state to federal, the failed political response also goes across every single level. Clearly, the local good old boys network is closing ranks around these guys and trying to protect them in every way they can.

And they have from the beginning. I mean, blocking media, harassing the mom who did actually ultimately go in after being handcuffed and get her children and was willing to speak out to the press. But then you also see from the governor on down, everybody sort of trying to close ranks, trying to block any sort of public release of information and zero pressure for accountability at any level of government. Okay, let's go ahead and talk about Russia. I've been monitoring the situation there closely. Some mixed news out of the conflict at the geostrategic level. Let's put this up there on the screen. So at first, it seemed like we actually had some decent news that Ukraine and

Russia had actually signed a deal, which was going to allow Kyiv to resume exports of grain through the Black Sea. People should remember that Ukraine is one of the largest exporters of grain in the world and that that shortage was leading to a potential and actually even realized food crisis in much of the developing world, Africa, many others that import a ton of Ukrainian grain, Ukraine long known as the breadbasket of the Soviet Union during that time.

So the Russian Navy had been blockading those grain exports and they agreed to this deal where they said that they would be allowing Kiev in order to export that grain. What's interesting also about the deal is it highlights the changing nature of diplomacy in the year 2022. In the past, the United States would have been party

to this deal, or not even party, would have been the guarantor of this deal. But because of our policy, which is don't ever meet any Russians, don't talk to the Russians, I don't even think that the president has spoken with Putin since after the invasion. There's been no high-level diplomatic contacts. I think Blinken had maybe one phone call with his counterpart over there. Well, Turkish President Erdogan has actually stepped up to the plate. He's been holding a ton of talks between the two governments, and he's really the one who brokered the deal. Obviously, that's noteworthy because Turkey is in NATO. And Turkey and Erdogan specifically probably have the most heterodox of foreign policies within the NATO

alliance, especially given they have a complicated relationship with Russia. But as of recently, they've been talking with them, given what was happening in Syria. So they have a lot of high level military contacts specifically. And actually the Russian top general is one of the people who was there whenever this deal was signed. The deal was set to last for 120 days and was actually, it was going to be monitored out of Istanbul, but also staffed by the UN, Turkey, Russia, and Ukrainian officials. Now the issue though is, as was highlighted there, is that, Turkey, Russia, and Ukrainian officials. Now, the issue though is, as was highlighted there, is that, well, this deal is only a deal if there's not a military response. And unfortunately, the Russians doing what the Russians do, let's go and put this up there on the screen,

almost immediately went and hit the Black Sea port despite the grain deal. Russian missiles, hours after the deal was signed to resume Ukrainian grain exports, actually came in and fired two caliber cruise missiles, which hit port infrastructure and Ukrainian air defenses, which at least brought down two of the others. That's according to the Ukrainian military command. But it is noteworthy because while they did not strike grain storage facilities, which is what the Turks were highlighting, they did strike port infrastructure. And it does just generally comport with the Russian strategy, not only to starve the Ukrainians out food-wise, but really

in order to destroy their economy as much as possible because this is such a critical export. So it is a mixed bag in the diplomatic future for this conflict. And it doesn't inspire confidence. You know, something you and I have been saying here is like, hey, we need to have some diplomacy. But it's also not easy to have diplomacy if the people who are a party are going to be breaking deals like this and just immediately violating it. I mean, the Ukrainians said this is a spit in our face. I think that's correct. It's hard to argue with that. It's really hard to argue with that. I mean, it definitely puts, I mean, at the best, it puts the deal very much in doubt. And it really is a shame.

There's no enforcement mechanism in this deal. It's basically, you know. What enforcement can you do? What can you do? Right. It's a handshake kind of a deal. And immediately after the deal is supposedly inked and agreed to, Russia goes and does this and completely undermines it. And it's really sad, not just because, obviously, the Horn of Africa

in particular has been extraordinarily hard hit, not only by this war, also by failed crops, in part due to the climate crisis. So they were in a very precarious situation to start with. And also because of financial situation around the world and inflation, it's cost more to import grain anyway. So this has been really devastating for poor nations around the world. And so the fact that this was immediately undermined is truly a disaster. And the other piece here, too, was Erdogan was actually hopeful that maybe this could be the first step back to the negotiating table. Because you'll recall back when there were ongoing meetings and talks about a potential negotiated settlement and diplomatic end to this war, those were being facilitated by Turkey.

So, you know, Erdogan had said he hoped it would be the first step towards bringing the war to an end. This joint step we're taking with Ukraine and Russia will hopefully revive the path to peace. Obviously, that has not worked out. Yeah, it hasn't. I mean, I've said this, and this is the only way to look at it, which is that as they've shown in political science, the more attempts that you try to have a ceasefire. Most ceasefires fail, but eventually some of them work. So the mere fact that you're trying to sign a ceasefire can, again, can be something that indicates some sort of forward direction. But I do think the Erdogan government has done actually a pretty decent job of at least continuing the talks. It took two months just to get here. Maybe it'll take two months to get to one that actually sticks. And then maybe it'll take a year in order

to get to one that is further along the diplomatic process. But we should also not forget, you know, the war is still not going well for the Ukrainians in the eastern part of the country. They haven't suffered any major losses since we last did our show, but the continuing bombardment and artillery is happening on the eastern front. And they have not made any forward progress despite massive shipments of arms from the West. Another thing we wanted to highlight and update, let's put this up there, Kaliningrad. So we talked previously about how the Russians have an exclave outside of their country. Kaliningrad, this is an old Soviet Union type thing.

It guarantees them access to the Baltic Sea. Well, there had previously been a ban by Lithuania, a NATO country, in terms of rail transport of sanctioned goods in and out of the Russian area of Kaliningrad. How this is governed is very difficult, but the Lithuanians claimed, again, claimed that based upon EU sanctions that they could not allow the transport of these goods, the Russians were like, hey, you're preventing the free movement of goods in between our country. And this was never something that was supposed to even be on the table in the past. Lots of accusations flying between both Russia accusing and basically threatening, saber rattling against the Lithuanians, which of course

we have an interest in because Lithuania is in NATO and they have Article 5 protection anyway. So they have actually resumed the lifting of rail restrictions for the Russian exclave. I think that this matters because it generally is a soft folding on many sanctions grounds on the West. So the hardest hitting sanctions against the Russians, it's not just the financial ones, it was against their oil and gas infrastructure. And I talked a lot about before we left the natural gas, which we're about to update everybody on. But the Canadians ultimately did fold and they're like, all right, you can have your gas turbines because, and even the US government was like, okay, ship them the damn gas turbines because we don't want the Germans to be cut off from the

Nord Stream pipeline. So we're still pursuing this strange dual track policy where we're not actually sticking to the harshest sanctions. We'll stick to them-ish. But then when the Russians are really threatened and they start ratcheting it up and the stakes of that become clear, then we fold. So we're doing this strange thing where Russians are moving their stuff between Kaliningrad. They're getting their gas turbines. They're printing hundreds of billions of euros a day with gas and with oil. They're richer than they've ever been before. The Moscow government, not the people in Russia. And at the same time, we, so we're not hurting the Russian war machine, but then we're also not moving towards any sort of diplomatic solution. It's like the idiocy of the policy. Well, I think it's a recognition that the policy

has failed. And so they can't publicly back away from it because they've sold their population. Certainly here in the U.S., people are sold on like, you're going to pay high gas prices, but we're going to stick it to the Russians. This has not worked out at all. But they're too cowardly to actually fess up to that and say we got to try a different route. are not interested in pushing for a diplomatic solution, understanding that that may be unattainable right now, even if we were putting our force behind it. But the fact of the matter is we're not putting our force behind it. And so I think these little movements are a sort of subtle acknowledgement that the overall sanctions policy has been a failure. It has not bled the Russian war machine. It has not really hurt Putin ultimately. And I'm glad to see them back down here in Kaliningrad because this was a very, even though it may seem like a small thing,

this was a major escalatory talking point for Putin and for Russia that he was, you know, and state media there were really taking to their population as see how far the West is going, see how much they hate us, see how far they'll go beyond what even that they've said. And the EU ultimately decided that the transit ban only affects road, not rail. And that's what allowed the transit to be opened back up by rail to this area. So, you know, when we covered this originally, we said this is a very dangerous situation. I think that was still very much the case. And it appears the Europeans looked at it and said,

you know what, the juice is not worth the squeeze. It's not worth the risk here. But that's why it's such a foolish policy. It's like, oh, only by road, not by rail. Listen, either do it or don't. Because if you're not going to some half-assed policy, then what's the point? I mean, they're being half-punished, but not really.

They can still get their goods. They can still export whatever they want. They can still pump their gas. But, oh, God forbid, you know, some Russian guy plays in Wimbledon. Yeah. It's like, what? I know. What are we doing here?

Those are the ones that make me really crazy. I mean, it's just like complete xenophobia. It's complete theater and xenophobic theater that everyone has just broadly accepted. It's gross. It's very foolish. Good morning, everybody. Happy Tuesday. We have an amazing show for everybody today.

What do we have, Crystal? Indeed, we do. A lot of big stories to get to. First of all, are we in a recession already? Are we heading towards a recession? The White House very much out there trying to parse and come up with their own alternative facts around the state of the economy. Also, as we have been previewing, the Fed set to raise interest rates. The expectation is they will probably lift

at 75 basis points or 0.75%. There is an outside chance that they'll lift at one percentage point. Either way, this is an extraordinary move with major implications for you and for the economy. So we will break all of that down. Also, some new questions about whether the Murdoch's and Fox News are turning on Trump. Yeah, it's an interesting one. Big debate out there. So we'll read some of the tea leaves, see what they're up to. Also, yesterday, we brought you the news that Nord Stream 1, that critical pipeline bringing natural gas in particular to Germany, had been turned back on. Now we're getting numbers about how much capacity. It may be on, but not really. Not a full blast.

And also a new deal just breaking this morning among EU member nations to curb their natural gas consumption. So we'll break all of that down for you. Also another insider trading scandal, this time with a former congressman. And we have, this is with a former congressman. And we have, this is kind of a stunning development. A friend of the show, Glenn Greenwald, along with a lot of other figures, Tulsi Gabbard, Rand Paul Lula, the former president of Brazil, put on a blacklist in Ukraine of people who are, quote unquote, spreading Russian propaganda. It's outrageous. It's completely insane.

And it's part of a really disturbing trend in Ukraine of cracking down on any dissent. So bring that to you. We also have a first time guest on the show, Jonathan Swan, who had a big scoop about the plans being laid for a second Trump term. But before we jump into the latest news about potential recession, we do have a couple of announcements. Number one, you guys already know what I'm going to say, live show. We got to sell those tickets, people. Let's put this up there on the screen. September 16th in Atlanta. Obviously, we're going to have a lot to discuss. It's going to be election season, part of a bigger midterm tour that Crystal and I are doing with many other friends of the show. We'll be making appearances across the country. Yeah, I mean, we're obviously going to drag Marshall and Kyle down there. Of course, of course. But we're still looking at

some others. All right. It's going to be great. And listen, this tour, this is the first show, as we've said, we have to show people that we can sell these tickets. We'd really, really like to sell this one out as soon as possible just to prove it to many other venues who we're speaking with. Exactly how many tickets we can sell, booking, et cetera. I don't want to bring people too far in, but that is why we've been pushing it so hard. So we deeply appreciate it. Number two, also, as a reminder, our premium monthly subscribers. Just if you could help out the show for financial planning purposes,

we are offering a discount to upgrade to yearly. It is deeply appreciative on our part. It really helps, as we said, financial planning as we're looking to hire and expand further out into the show. Just given everything with the economic situation, we thought it was best. And as such, we're offering those existing

monthly subscribers the ability to upgrade. There is a link in your premium newsletter at the very, very top for you to do so. For all, for the many of you who have already done so, we appreciate it so much. And they've been sending in such nice messages like, of course I can. If you can't afford it, no worries whatsoever. We totally get it, you know, given what's happening with the economy right now. And so that's probably a good segue, actually, to what we should discuss, which is the Biden administration is facing down the barrel of a, quote, technical recession. And whenever you do such a thing, what do you do? You go, you know what? Let's just change the definition of recession. So that's what's happening. Let's put this up there on the screen. So Thursday, we are likely to see a GDP report that shows a second consecutive

quarter of negative growth. Now, technically, that should be a recession. However, the Council of Economic Advisors, which is appointed by the White House and which provides supposed to be nonpartisan economic analysis to the executive branch, is now changing the definition ahead of that Thursday GDP report. And so Jackie Henrich, who is over at Fox News, points out very clearly that the White House release says, what is a recession? Oh, please tell us. While some maintain two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle. Instead, both official determinations of recession economists' assessments are based on a holistic look at the data. Based on these data, it is

unlikely the decline in the GDP of the first quarter of this year, even if followed by another GDP decline in the second quarter, indicates a recession. Well, there's a little bit of a problem with that. Let's go ahead and throw this next one, or let's go ahead actually and listen on CNN whenever the White House economic advisor is pressed for changing this definition. And then we'll also show you some historical stuff, which outright proves that the White House is lying. Let's take a listen to the White House spin first. What will be comments from some saying two quarters of negative growth in a row, that's a recession. Right. And certainly in terms of the technical definition, it's not a recession. The technical

definition considers a much broader spectrum of data points. But in practical terms, what matters to the American people is whether they have a little economic breathing room, they have more job opportunities, their wages are going up. That has been Joe Biden's focus since coming into office. Yeah. So are any of those things happening? No. So it also is a recession. But as Michael Strain points out, let's go and put this up there on the screen. Of the past 10 times that the U.S. economy has experienced two consecutive quarters of negative economic growth, how many times was a recession officially declared? Ten. So ten out of ten times. Now, look, I get that it's not great PR optics, but redefining definitions of recession is frankly, in my opinion, worse than saying, yeah, we're living through hard times. I'm doing everything

I possibly can about it. I will give one counter defense, Crystal. I spoke with Joe Weisenthal, friend over at Bloomberg. Here's what he says. Every single post-World War II recession saw unemployment rise before it or during it. However, in the first half of 2022, we saw unemployment fall from 3.9 to 3.6. So that is the defense of the White House position. And Joe is not spinning. He's just giving you the facts of why this one is wonky. Fine, say that. Hey, this is a wonky recession. But redefining the term recession and really gaslighting people, also using criteria which clearly are negatively trending for all of the American people, on top of the fact that everybody knows that nothing is working in American society. You're not fooling everybody. It's such an insane

move on their part. Nominal wages may be rising, but of course, when you count inflation, everyone is getting a pay cut basically every week. So the idea that wages are going up, I mean, again, it's very gaslighting. And the bottom line is, this isn't going to work. People know what's going on in their own lives. I just was looking, you know, earlier this month, there was a poll that found 58% of Americans already think the country is in a recession. So they don't need your like technical parsing definition to figure out what's going on in the economy. And I think politicians really err when they try to persuade people that things are going better than what they actually think and feel. I think Obama made this same mistake in

his second term when he tried to sell the recovery as something that was really robust and really amazing when people were really still struggling. And it made him vulnerable to defeat if the Republicans had run anyone other than like a cartoon character, like monopoly, plutocratic villain. And so I think the Biden team throughout this period has consistently made this same mistake of trying to sell the unemployment numbers, trying to sell the nominal wage gains as this incredible recovery. And the media is just spinning and the economy is actually great. You just don't understand it.

When people know that things are really tight for them, they know that, you know, the job market already, there are signs of significant deterioration that we're going to get to in a moment. You have new unemployment claims coming in higher. So you see that starting to ebb. You already see massive impacts in terms of the housing market. So I was actually just reading an article about how upper middle class Americans, not that they're the most compelling or most sympathetic group, but they're really being squeezed right most sympathetic group, but they're really being squeezed right now, too, because they didn't benefit from the pandemic programs, which remains tested. And now their stock portfolios, which made them feel like they

had a lot of money, have all crashed. Their housing values, which also made them feel like they had a lot of money, are starting to crash. They recognize they can't sell into this market. If they did and tried to move somewhere else, they couldn't afford a new home. So you have people increasingly in their lives feeling like things are tight, like they can't afford what they could at the grocery store, like they're having to cut back. And the White House's, like, technical parsing of whether or not it's a recession is not going to change their minds on that. Yeah, and Janet Yellen, the Treasury Secretary, sticking to the same spin. Let's go ahead and put this up there on the screen. She says the economy shows no signs of recession. And once again, this is BS because Janet Yellen should know better. Her background is as a

technical economist. Her and her husband are both, I think her husband is a Nobel Prize in the field of economics. They're the ones who came up with this definition. And yet now they are saying, you don't see any of the signs. A recession is a broad-based contraction that affects many sectors of the economy. We just don't have that. In the very same breath, she acknowledges the impact of high inflation numbers on America, specifically gas, food, and other economic problems. And the issue that I really have on this is that they are all over the place. Remember, it was not even three months ago, Joe Biden was standing in front of the Port of Los Angeles telling us that we lived in the strongest economic recovery since World War II. Look, again, they're using technical

definition. They're like, whoa, unemployment is 3.9. What does the unemployment rate matter if you cannot literally afford anything in your daily life? If you can't buy a car? I mean, even just recently, I was looking again, especially with this Fed rate hike, which is like, we're about to talk about it. It's about to come down the pipe. That's going to raise the average car price to like $800 a month. That's not even including insurance and all the other attendant costs. And that's if you can buy a car. So the used car market is on fire. People are having real trouble taking out loans. Their credit card usage is sky high. We're seeing all sorts of insanity happen in the mortgage markets,

in the loan markets. That's on top of, have anyone been to a grocery store lately? It's crazy. Like you'll look at a price, you know, price of a pound of ground beef is going for like eight, $9. And, you know, we've even seen a reduction. And this is again, what really bothers me. People are making really material cutbacks in their daily lives. I told you about the booming YouTube channel about how to cook like a depression housewife. Like, this is not good for Americans. Yeah, they literally have these old videos. I have a lot of friends who could fill out that YouTube content. They're very effective at this. There's this grandma who has now died,

but in 2013 did like a whole series with her grandson. She's like, here's how we used to cook in the Depression. And now her views are going, like, booming right now because people are like, oh, how do I make, like, a single Costco rotisserie chicken last for a week? We don't want the American people. And that's a terrible situation to be in. You know, that leaves generational scars.

No acknowledgement by the government. That's the single failure, I think, by the administration. Yeah, I think that's right. You have to level with people. I mean, they just, they know what's going on. They see it and feel it better than you do. I mean, you know, we're talking about officials who aren't worried about their next paycheck. They're not worried about having to stretch a Costco chicken all week for their families. So the American people have a much better sense of what is

really happening on the ground. There's another reason why people like Janet Yellen in particular would be interested in sort of spinning the numbers and pointing to, oh, we have these really great, you know, low unemployment numbers, which is true, but does not even come close to telling the whole story of what's going on here. But if you have the economy already slipping into a recession, you can't have the Fed continuing to move forward with these incredibly drastic, hawkish measures. Because, you know, if you already have tipped things into a recession and you still have this high inflation, this proves the point that the Fed policy, the direction they're going in, is really not working and is actually just making things worse. And I guess that's a great transition

to talk about what the Fed is set to do this week. Let's go ahead and put this Bloomberg article up on the screen. They're on track at their Wednesday meeting to raise interest rates by 75 basis points. Again, that's just 0.75%. That's for the second straight month when they meet later in July. As you know, they raised interest rates by a quarter point in March, a half point in May, three quarters of a point in June. That was the biggest move since 1994, and they are set to replicate it this week on Wednesday. Now, there had been some expectation, which is not completely out the window, but seems like a very outside chance now, that they might go so far as to lift

the rates a full 100 basis points. That's a full percentage point. So that would be, you know, quite astonishing and quite significant of a move. But 75 basis points is no joke either. This is in an extraordinarily hawkish direction that the Fed is pushing things in. And, you know, they're kind of flying blind. No one really has a great sense of exactly how these interest rates increases are going to trickle down throughout the economy. We already see huge impacts in terms of financing cars, in terms especially of the housing market. As I was saying before, you're starting to see impacts even in the employment market as well,

in spite of the fact that you have had these low unemployment numbers for a long time. The reason that they seem to have backed off of the full 100 basis point move is because they got some data showing that U.S. consumers' long-term inflation expectations actually declined in early July. So they were forecast to go 2.8% versus 3.1% the month before. That's what people's expectations of inflation were. So they sort of looked at that and said, OK, maybe we don't need to go quite so far. But I don't want to underplay how extraordinary of a move this still is to have for the second month in a row an interest rate increase that we have not seen since 1994. Yeah. And actually, by the way, the 100 basis points is not off the table. I was just reading

this morning that Citibank and many other major traders on Wall Street are still betting on the 100. They're willing to be surprised if they do go ahead and hit 75 basis points. And the reason, again, that this matters is that not only was the previous rate hike the highest since 1994, and then you do it again, but it just shows you that given where inflation is right now, which is that we continue to have 40-year highs almost every month since the number comes out, there still doesn't seem to be any indication that they're going to stop. So what others are pointing to, the chief economist over at JP Morgan, says the real question is what comes after? Because they're going to have to continue

hiking rates. They could go up as high as 5%, 6%, 7%, 8%, 9%. And they could continue month after month every time that they have these quarterly meetings. And if they increase 75 basis points over a period of time, we could be looking at mortgage rates, which are 9% or 10%. Now, those of you who bought houses in the 90s won't be that sympathetic, but it's a different country. We haven't lived in a country like that for 30-some years. And I was actually reading that the real issue also is the housing stock. So obviously, we have a major housing shortage across the United States, low interest rates and low mortgage rate. The housing boom was actually fueling a hell of a lot of construction. But now, guess what the problem is? We actually need that construction

to finish. We really do. But why would general contractors finish their houses if they can't sell them? So it actually, the housing increase, while yes, will slow down the housing market, it also will probably increase the housing shortage that we have across the United States. So the investment that we have right now is really a major problem. And also, I just, you know, I can't emphasize enough in the past, which is that the key tool that the Fed has here is targeting demand and increasing unemployment. That is not going to solve the vast majority of inflation that we have right now in 2022. And you flagged this, and look, no fan of Elizabeth Warren here, but to be fair, she's been actually pretty relentless. Let's put this up there on the screen. Listen, she can be good on economics when she's good.

I agree. Her trade policy and all that, I always always supported. So let's go ahead and put this on the screen. Wall Street Journal opinion page. So very clearly targeted the business economic elite. And she specifically points out here, more aggressive rate hikes cost millions of jobs and will not address the cause of high prices. And she quotes the Federal Reserve chairman when she asked him whether that was going to bring down the price of gas or food. And he said, quote, there are many things that we can't affect. Again, the reason it matters is your demand at the grocery store is not the reason that we have seen 7%, 10%, to 20% increase for 20%, for example, in the price of egg. it's supply. We have massive supply problems. We have

fertilizer problems. Climate, obviously, there's a scorcher all across the country. There's wildfires all the way out west, not just here. Brazil had a massive shortage. So coffee is down by, there's a shortage of like 40%. That's the reason that there's such crazy increases. And we've had shortages in the economy now for two years. We've had bad corporate planning, and we've had over-financialization. The Fed can't do anything about all those things. And she very articulately lays that out. Yeah, this was well written.

Very easy for anyone to understand because she makes the argument very clearly. And, I mean, it echoes a lot of what we've been saying on the show, frankly. We played for you before that moment when she questioned Federal Reserve Chairman Jay Powell about, so hiking interest rates by the Fed, is that going to deal with increased gas prices? Is that going to deal with supply chain shocks? And he very honestly said no. So it's like, OK, she lays down here. She says, all right. So then if raising interest rates by the Fed, if that doesn't solve these underlying issues that are actually the main problem right now, what do they actually do? And she says, when the Fed raises interest rates, increasing the cost of borrowing money, it becomes more expensive for businesses to invest in their operations. As a result,

employers will slow hiring, cut hours, and fire workers, leaving families with less money. In the bloodless language of economists, that's referred to as dampening demand. But make no mistake, if the Fed cuts too much or too abruptly, the resulting recession will leave millions of people, disproportionately lower-wage workers and workers of color, with smaller paychecks or no paycheck at all. So making it clear that, listen, as bad as the inflation situation is, the inflation continuing to soar on top of a recession is a way worse situation. She closes by saying, before the Federal Reserve triggers a recession, Mr. Powell should remember that the one medicine in his kit does not treat every economic illness. Low unemployment and

high inflation are painful, but a Fed-manufactured recession that puts millions of Americans out of work without addressing high prices would be far worse. And as I pointed to before, the Washington Post has an article pointing to some of the signs that the job market is starting to slow down. In other words, that yes, not only are we going to have two quarters of GDP contraction, which is the sort of standard issue definition of a recession, but even the metrics that the White House is using here are heading in the wrong direction. Let's go ahead and throw this up on the screen. This is according to The Washington Post. They say the job market is beginning to show cracks.

Job growth is slowing. Vacancies are down and unemployment claims are ticking up. They point in particular to the tech sector, which has, of course, taken a beating. In terms of the stock market, we're going to get a lot of earnings out this week to get a better picture even of what's going on there. Sagar talked about some of this in his monologue yesterday. But they say that tech hiring has fallen 9% in just the past month. That's compared with a 5.4% dip in hiring across all industries. Number of tech firms and startups laying off workers has picked up in recent weeks. You've had Netflix, Tesla, Coinbase all announcing job cuts or hiring freezes. Vimeo, the online video

platform and one-time tech darling announced this week it is laying off 6% of their staff. They also interview a lot of job recruiters and ordinary workers. Some people who, when the job market was super hot, switched jobs or actually recruited into new jobs with big pay increases and exciting new roles and responsibilities only to see themselves laid off months later because of fears of recession and because of the fact that everything is slowing down. So even the one number that the White House really loves to point to and highlight, the low unemployment number, that is also beginning to show signs of cracking. And as I mentioned before, new unemployment claims are ticking up. Not a good sign.

The stuff that I pay even more attention to is like they point here here, 7-Eleven, 800 workers at the corporate level. Ford, 8,000 positions in the coming weeks. Meanwhile, Rivian, the electric car maker, down 700. Delivery, down 1,500. That thing has always been a mess though, hasn't it? Although I'm going to say this, Bezos aside, the Rivian looks cool. I've never driven one. I saw one on the road. It looks sweet. However, the mortgage lender, Loan Depot, 4,800 jobs gone ahead and slashed this year. So it's not just tech. And this stuff will bleed into the broader economy, especially if it hits manufacturing. And why this is such a tragedy is we are finally building more stuff in America for the first time in several years.

The supply chain crisis, the tariffs, all of it for the first year on record. We actually brought more manufacturing back to the United States. They said it couldn't be done, people. Well, we proved them that we actually could. And now, all of a sudden, a decrease in demand, specifically Fed policy, would absolutely hammer many of these new jobs and would, frankly, only increase the pressure on the White House right now in order to remove tariffs, to outsource even more, and to cut costs. Because I think that's the other point that we should remember, which is that manufacturing, investment, and all of that doesn't just come out of capital.

It comes out of your ability to borrow. And if borrowing is way more expensive, you can't hire more people and you can't invest in your future workforce. And we already know what Wall Street's going to do. They're going to cut jobs, try and buy back their own stock in order to try and save their pensions and all this other stuff. But none of that translates into a better economic future, I think, for people. So it's a grim picture. It really is. And the high-level view is that the reason why they are leaning so heavily on this,

as Elizabeth Warren puts it, this medicine that is not the right cure for the disease that ails us, is because the only institutions that still function, and I mean function in terms of actually being able to do anything, are basically the ones that are beholden to rich people. Also non-Elect. All of, and undemocratic, right? I mean, everything else has been completely, and intentionally, by the way, hamstrung, gridlocked, made so it, you know, is not responsive to the people whatsoever. And so the only institutions that are left that actually and intentionally, by the way, hamstrung, gridlocked, made so it, you know, is not responsive to the people whatsoever. And so the only institutions that are left that actually have

power and are able to operate, not in a good fashion, but able to operate are the ones that have been sort of designed by and for rich people, the Fed being key among those. Let's talk about Ukraine. This is a really troubling development, and you should be able to both separate the obvious view that the Russian invasion of Ukraine is unjust from your also ability to critique the Ukrainian government and the way that it acts domestically. They are not holy gods. They are able to criticize them supposedly as allies, given that we provide them billions of dollars. We should probably hold them to a allies, given that we provide them billions of dollars. We should probably hold them to a standard of which we try to hold all of the people who are in the West.

Unfortunately, the Ukrainian government has really pursued something that I find very troubling. Let's put this up there on the screen. They have issued a, quote, blacklist of Russian propagandists. And this was from the Center for Countering Disinformation established in 2021. That sounds familiar. Under President Zelensky and headed by a former lawyer who sits on the National Security and Defense Council of Ukraine. And its aim is to, quote, detect and counter propaganda and destructive disinformation and to prevent the, quote, manipulation of public opinion. Well, on July 14th, it went ahead and published a list of politicians, academics, activists that they say are, quote, promoting

Russian propaganda, including some not only Western intellectuals, but politicians. So let me read you some of the list. Rand Paul, the current Republican senator. Former Congresswoman Tulsi Gabbard. Military and geopolitical analyst Edward Luttwak. Realist and political scientist John Mersheimer. And finally, heterodox journalist Glenn Greenwald. Now, again, the criteria for the inclusion is completely unclear. They simply label them in a list of having, quote, pro-Russian opinions. Now, I love this because really dig into what exactly the reasons for being labeled this are. Edward Lutwak, for example, was labeled a Russian propagandist for suggesting that referendums should be held in the Donetsk and Luhansk regions.

Mersheimer is recorded as a Russian propagandist for saying this, quote, NATO has been in Ukraine since 2014, and for saying, quote, NATO provoked Putin. As far as Greenwald and others, they don't even give a proper reason. And I really think that going through the details of this matters because the quote Russian propagandist label is thrown out willy-nilly, but the Ukrainian government is taking its cue from the Twitter activists and the Western intellectuals here in Washington. And Edward Lutwak actually gives a perfect retort. He says, from 24th of February, day one of the war, I have relentlessly argued not just the United States, the UK, Norway, and others should send weapons to Ukraine,

but also called out the reluctance of France, Germany, and Italy to do so. I have personally lobbied the defense ministers of NATO countries to send more weapons as the part of a war effort. I am not exactly Putin's most faithful agent. What's happened is this. I said there is victory party, and the victory party is not realistic. Their idea is if Russia can be defeated, then Putin will fall. This is also a moment when nuclear escalations becomes a feasibility. It is a fantasy to believe Russia can be squarely defeated. In Kiev, they have interpreted this stance as meaning I am pro-Russia. I think that's the perfect example. Giving a realistic analysis, Edward Lutwak is an American strategist. He's trying to think about what is best for the United States, best for peace. He's not Ukrainian, and it's not his job to faithfully tout the Ukrainian

party line. Same when we think about John Mearsheimer, and we played even the clip here. Mearsheimer is a realist. the clip here. Mearsheimer is a realist. He's long been against NATO expansion. But by the same definition of John Mearsheimer, John Mearsheimer, as a, quote, Russian propagandist, well then, George Kennan, the father of containment against the Cold War and victory against the Soviet Union, he wrote the same thing in the 1990s in the New York Times. Well, by the way, Miersheimer was way more correct about a lot of this. Yeah, of course he was.

He actually predicted very accurately this exact sequence of events. So while, no, I don't co-sign everything that he says, the idea that he should be blacklisted, he's a Russian aide, this is crazy. I mean, maybe the most disturbing one is actually Senator Rand Paul. I agree. He's a sitting United States politician. Exactly. I mean, whatever you think of any of these characters and their views on the issues, we have to be able to have a debate that takes into account what the enemy is thinking as well. Rand Paul, you know, maybe his greatest great crime here in their view is that he didn't even say don't send

the weapons he said we should be tracking them yeah he said we should have inspector general to keep track of where these weapons are going and lo and behold just i think a few weeks later we covered this on the show too you had european law enforcement saying we have a problem with a lot of you know black market weapons coming out of ukraine and this is something we really need to pay attention to because this is a big problem. Because once those weapons are shipped into the country, we have no idea what happens next. So this was an incredibly rational, reasonable idea that everyone acted like, oh, this is ridiculous and you just are like a Russian puppet. And you know what? Here's the other thing is even people who do, I think, go too far and do, you know, echo some of the Kremlin talking points or whatever, they should be allowed to do that.

You should be allowed to hear what the enemy's line is, what they're thinking. And so this is why I've always been against, you know, cracking down on, oh, we can't see RT on YouTube and we can't have any of the sort of Kremlin state TV or state media available in the West because it really does hinder our ability to understand how they're approaching this and what they are thinking, what they're selling to their population. Oh, absolutely. I completely agree with that. And, you know, call me whatever you want for saying this, but, you know, Rand Paul is a sitting United States member, Senator, an elected member of the United States government. And last time I checked, we shipped you and $40 billion of weapons guaranteed your security to, quote, unquote, fight for freedom.

So how about you keep your mouth shut about our politicians, given the fact that we are literally guaranteeing the existence of your country? Right. And another one who's on the list, Lula da Silva, who is very likely to, I mean, he's the former president of Brazil. He's very likely to be the next president of Brazil, leading significantly in the polls. Last I saw, not that I follow Brazilian politics like extraordinarily closely, but this isn't Marine Le Pen is on there. Again, I don't care what you think about these people. And this is a broader trend in Ukraine that is very uncomfortable, I think, for people to talk about because they just want to, you know, put up the Ukrainian flag and be in support of the Ukrainian people. I totally get

it. I share the same sentiment. We also have to be honest about the fact that this is a state that has suffered from a lot of corruption that before the war and since the war has started has cracked down on a lot of dissent, banning opposition political parties, banning dissent in terms of what their population can consume, and then coming out with blacklists like this, which I do want to be clear. It is not at all spelled out what this list means, how they're going to use it. It is sort of like the, you know, disinformation board that they floated here, where it's very vague what the actual purpose of the list is. Here's my question. What if Rand Paul wants to go on a congressional delegation to Ukraine? Are they going to ban him from doing so? Also, Glenn, you know, Glenn is a journalist. Why shouldn't he be? He should absolutely be allowed to go into Ukraine and to maybe report on how some of these weapons are doing. Save this for

last. I love Glenn's response. Here's what he says. War proponents in the West and other functionaries of the Western security state have used the same tactics for decades to demonize anyone questioning the foreign policy of the US and NATO. Chief among them, going back to the start of the Cold War, is accusing any dissident of spreading Russian propaganda or otherwise serving the Kremlin. That's all this is. The Ukrainians is just standard McCarthyite idiocy. The Ukrainians have the absolute right to pursue whatever war policies they want, but then they start demanding that my country and my government use its resources to fuel their effort. Then I, along with all other Americans, have the absolute right to question that policy or to point out its dangers and risks. I don't care at all about

Ukraine's attempts to shut down debate in our country by smearing journalists and politicians who are questioning U.S. and NATO policy as being Russian propagandists. That tactic is as inconsequential as it is cheap, tawdry, and discredited. I completely agree with that sentiment. In our country, we have a robust debate

about who we support and who we don't. The whole reason, supposedly, by the way, for supporting these people. It's kind of out of bounds sometimes here, too. Okay, fine. But at least we should try and aspire to that. But the whole reason that we supposedly support these people is the cause of freedom, et cetera. Well, if you're going to be behaving just like the Russians, who also, by the way, probably have many of the people who accuse Glenn of being a Russian propagandist on their blacklist, then what is the point of this entire thing? It exposes a hell of a lot of hypocrisy. And people who really believe in the supposed free Ukraine, Western Ukraine,

that's the whole reason for letting them in the EU and all this. Yeah, joining the EU, potential NATO member. Potential NATO member, an EU person, is issuing blacklists against U.S. politicians and U.S US journalists, that's not how they're supposed to behave. Nobody will say it though, because they themselves will also be accused of a Russian propagandist. Ukraine, please don't put me on the list. I still do want to visit your beautiful country. Joining us now is a great guest, Jonathan Swan. He's a reporter over at Axios. He has a fascinating new story on the plans for a second Trump administration, if one to

materialize. Let's go ahead and put this up there on the screen. It goes ahead and details the radical plan for Trump's second term that focuses on something called Schedule F. So Jonathan, this is one of those things we focus a hell of a lot here on this show and try to emphasize to people that personnel is policy, something that not many can understand. So this is an entirely personnel plan that details an executive order and more that you've spent a long time reporting out. Why don't you go ahead and lay this out for the audience? Well, President Trump's or former President Trump's biggest regret from his first term is personnel. And it's not even close. I mean, of all the things that he wishes he could have done differently,

it's the people he hired. And every time he sees one of his former cabinet secretaries come out with a new book or go on television and criticize him, it reignites his animus towards them. And how the F did we pick these people? You know, blah, blah, blah. It's sort of well-worn rant. Fine. Okay. Great. He was ranting about that for a long time. The question I embarked upon actually really started thinking about this a year ago, but

the reporting got much more intense in the last six months was, fine, you can whine about this, but is anyone serious actually doing anything about it? Because if they're not, then who cares? I'm not writing a story about Trump, you know, whining about people being disloyal. And what I discovered, and it took me a while to kind of piece all the bits of it together, is there are actually serious people working on this problem who have Trump's blessing. In some cases, they have Trump's funding. And they're, sorry, let me just put this on more stable footing. No worries. Yeah. So there are actually serious people working on this problem and they're well-funded and they're experienced. Some of them are quite adept at using government power. And there

is sort of a network of groups out there. The Conservative Partnership Institute, which has got people like Ed Corrigan, who worked on Trump's transition. Mark Meadows, his former chief of staff. There's Russ Vogt's group. Russ was Trump's director of office and management of budget. And there's this group, America First Policy Institute, run by President Trump's former domestic policy director. Each group fits into this ecosystem in a different way. And then there are some interesting groups that aren't affiliated with Trump,

but I would say are affiliated with the America First movement. They're ideologically simpatico. And one of them is a group that I featured is a younger group, which actually you're on the board of, which is American Moment, which I think what they're doing is really interesting. They're younger guys, Saurabh Sharma, 24-year-old guy from Texas, very smart guy, and has very good connections in, I would just say, the younger America First movement. And they're developing a pipeline of talent at that more mid-level junior job.

So you can sort of see it. What the piece lays out is how it all comes together. And at the centre of all of it is this legal instrument, which most of your viewers probably weren't aware of. It's called Schedule F. Basically, every time a new president comes in, they can replace about 4,000 so-called political appointees, right? It's this rotating layer of personnel at the top level of the government. But below that sits this mass of people, around 2 million federal employees, and they're effectively insulated from being replaced or fired. It's

extremely difficult to fire them. They have really strong civil service protections that are enshrined in law. And to grossly simplify it, what this executive order does is it allows a cabinet secretary on behalf of the president to reassign potentially tens of thousands of civil servants into a new employment category called Schedule F, which removes all of their employment protections, or certainly almost all of them, and allows the president or the cabinet secretary to very quickly replace them. So what it does is it stipulates that any federal government employee who's working on policy, who's influencing policy, that doesn't apply to someone who's answering the phones in a field office. But people who are at that top layer influencing policy, they become replaceable. And so what is happening now on the outside of people affiliated with Trump is they're building an alternative labor source to meet that scale,

which would be unprecedented scale. They don't think, to be clear, they don't think they're going to need to fire 50,000 people, but they might need to fire an additional 6,000 or 7,000 people. And so therefore, you need a talent pool of not just 4,000, but probably 10,000, 11,000, 12,000. That's a lot of people. That's a very ambitious undertaking. And that's what's going on right now. Yeah. So I think there are a couple of things to point out here. First of all, part of what you're describing sounds a lot like what normal political operations do all the time. You think about, you know, the Clinton campaign, they had their sort of like administration in waiting, primarily the Center for American Progress. The Biden team, they had West Exec Advisors, which was essentially their like foreign policy team in waiting or their cabinet in waiting that they're able then to pluck directly from to staff up their administration.

The piece that is different is the Schedule F piece, which allows them to get rid of a much larger number of individuals and sort of put in place their true believers and the ideologues who are committed to their cause. I guess my big question reading this is whether you actually think that a Trump administration could pull this off. Because they're certainly, the last time around, they were not known for their discipline or their competence or their ability to follow through with a plan. I'm just thinking about like, you know, how many times did they, oh, this is going to be infrastructure week, and it never actually ended up being infrastructure week. So when you talk about

something of the level of scale and complexity that you're laying out in this piece, do you actually think that a second Trump administration is going to have the kind of discipline that it takes to carry something like this out? Well, I'm skeptical, and that's why I have throughout the piece, it's laced pretty heavily with skepticism. It's a huge undertaking. And as I said, developing that labor source, it would be of unprecedented scale. But there's a few things that I would just put in the column of it's possible and shouldn't be dismissed. The first is, I'm not suggesting in this article that Donald Trump himself has changed, that he is now some disciplined, you know, monastic figure who's transformed himself in exile and is sort of

reading Marcus Aurelius and is ready to, you know, come onto the scene as a complete. No, that's absurd. Obviously, that's absurd. Obviously, that's absurd. What's changed is the people working on this and the people around him. And he has a very hardened mentality against having any of these sort of people who I would call them the sort of restrainers, the people who wanted to restrain him from what they saw as his most extreme impulses. And there are some people working on it that I would say have a track record of implementation inside government. Russ Vought is a very good example of that. The other thing I would just say to you is this is not some fantastical document. This is an executive order that went through legal vetting, and it was issued, it was signed into law at the end of 2020.

And Democrats are alarmed enough about its resurrection that Representative Gerry Connolly from Virginia, who chairs the subcommittee that oversees the Federal Civil Service, he's attached an amendment to the annual defense bill this year to try to prevent a future president from reviving Schedule F. It passed the House. Republicans probably going to try and I know they're going to try and block it in the Senate. So Democrats are very worried about it. The other thing I would just say is it actually doesn't require a sort of you don't need to be Oliver Wendell Holmes to fire a whole bunch of people. You can do that pretty freaking easily. And actually, if you look at a big part of what they want to do, which is fire people in the intelligence community, they actually,

you don't even need Schedule F for that. A lot of those people are not protected by these civil service protections. So you might say, well, can they pull this off? Well, sending a letter and firing someone is actually not that difficult. And so you don't need, you know, the great geniuses of the world to come together to pull this off. What would be interesting to know is who's going to replace these people? Are you going to have that labor source? That's the part that I remain skeptical about. But implementing a purge is not actually that difficult necessarily if they have this legal instrument combined with the will to do it. Absolutely. I think one thing I also want to

focus on is what do these people believe? Because the real, you know, you can fire people, you can appoint them. But I think one of the things that stung Trump was that many of the people who he would hire and even many of these groups, they don't even necessarily ideologically agree with each other on anything. So when Trump has a criterion for who he wants to elevate and put into a personnel office, does he have any policy behind that? Or is it simply, he's never criticized me on TV

and he believes, or at least mouths the language of stop the steal? I mean, beyond that, does it matter for to be able to end up in one of these jobs? That's what I'm most curious about this. Well, this is where you distinguish between Trump himself and the people he appoints. And so what's interesting is,

so the answer for Trump is no, he doesn't really care that much about policy. It's stop the steal and loyalty to him. Absolutely. Like he said, this is a million times people. I want people who are loyal and you can get very closely, you can get very quickly into his inner circle by just sucking up to him. Of course, we know that. What's interesting, though, is the person that I expect him to appoint to run his transition,

which is John McEntee, who ran his personnel office. John McEntee is an ideologue, actually, and he does believe in these policies. He is very, very anti-interventionist on foreign policy. And he is hardcore on immigration. And so by dint of appointing John McEntee and people like him, Russ Vogt is authentically, is sort of comes out of the Ross Perot type of Republican. So some of the key people that will be, I expect, I expect things could change and, you know,

nothing's certain in Trump world. But some of the key people that I expect, I expect things could change and, you know, nothing's certain in Trump world. But some of the key people that I expect to be running this actually are America first ideologues. And so that's why I do believe there will be a pretty strong ideological criteria applied to these selections. And by the way, a lot of the groups that are developing this, you're absolutely right. Like, I don't know, I wouldn't describe the America First Policy Institute. I wouldn't describe their foreign policy proposals. You know, what they put out on Ukraine could have been written by John Bolton. So I'm not suggesting that there's ideological uniformity across these groups.

There absolutely isn't. But I do believe that if he has people like McEntee running it, they will be discerning. They're deep enough in this that they can discern between these groups and see the types of people that they want to have in key roles. Can that be done at scale? I'm very skeptical. Yeah, that's the excellent, excellent. Yeah, absolutely. And then lastly, you mentioned that Democrats, including Congressman Jerry Connolly from Virginia, are trying to block their ability to reimpose this Schedule F executive order. What do you think the fate of that is?

I think it's unlikely because I do think it's going to be very hard to get that through the Senate. And if they don't manage to block it, they'll certainly challenge it. There'll be huge legal challenges against it, but Trump's advisors lack their chances in a court system that's now dominated by conservatives at the highest level. If they do get Schedule F into, sorry, if they do get this amendment into force

to prevent a future president from introducing Schedule F, Trump could still execute, as far as I understand, I'm talking to experts on this, a pretty large-scale purge of the intelligence community, even without Schedule F. That's a great point, right? Because I believe they're governed by their different authority. Jonathan, this is fascinating, absolutely fascinating reporting. It's long, but I encourage everybody to go and read it. It just influences everything that we talk about here all the time. So we're going to put a link down there in the description. And we really appreciate you making

the time for us this morning. Thank you. Thanks for having me, guys. And it's a two-part series, so it really goes deep in the second part on Schedule F. So thanks for having me. Absolutely. Our pleasure. All right, literally while we're filming the show, we get the official live numbers of the U.S. economy as the recession definition game had been playing out. The Biden administration's fears have come true. So the U.S. economy shrinks for the second straight quarter as the press is saying it, quote, igniting recession fears. In other words, it is technically a recession. Now, all of these definitions just are so annoying to me. And I was talking about this yesterday. Nobody cares whether you're technically in a recession or you're technically in a boom. They care, can you afford something?

And are you employed? So to that extent, no, the definition doesn't matter. But to the extent that politically the White House is gaslighting all of us by saying, no, we're not technically in a recession. Actually, we're in the strongest job economy since World War II. Stop. Stop. That is just not comporting with the facts

whatsoever. The current facts are that the U.S. economy contracted for the second straight quarter growth falling by 1% approximately, so 0.9% annual rate in the April to June period. That matters because GDP also fell for 1.6 annualized rate in the first three months of the year. So you have two straight quarters of technical, again, technical shrinking GDP. Now, the pushback is that we have a low unemployment rate. Now, it does seem, while yes, inflation is high, that consumer spending does not be in typical recession territory. But that's the whole point as to this economic moment and the economy that we're living in is very wonky. Arguing whether we're technically in a recession or not really, honestly, doesn't

matter. Last time I checked, inflation is sky high on food and on gas. The Biden administration is celebrating that gas is only $4.30 a gallon nationally. The economy's not good. I just don't know why that we can't just lead with that and that be the demarcation point. But unfortunately, the White House has chosen

to majorly politicize the quote definition of recession when it does them no good. I see no point why they would pick this fight. It's so foolish. That's the part for me is it's just sort of silly.

It's like this is not helping you all politically to deny the reality that people are living and feeling every day. And it's, you know, filled with a sort of condescension towards the American people who know exactly what is going on in their own lives in real time. Even before you had these new numbers indicating that you had two straight quarters of negative GDP growth, you had 58% of Americans saying they thought we were already in a recession. Exactly. People have been there, whether you're parsing the words of the technical definition or not, ultimately. And also, yesterday, we did have the Fed move on, it was what we expected, 75 basis points, which I think in some ways, people are like, oh, that's no big deal because they had floated possibly 100 basis points.

That'd be a full percentage point interest rate hike. But we had not until last month, we had not had the Fed hike interest rates by that high of a number since 1994. So to do it two months straight in a row is really quite exceptional. And I continue to see news coming out of the housing market in particular about just what a dire impact that is having on new housing starts, which, by the way, need housing to be built. That's the other piece of this that is really important to remember is that when the Fed is hiking interest rates, that's not only hitting you directly, what they call like dampening demand, which just basically means you don't have money to spend, but it's also impacting companies' ability to invest in things like new housing construction. So it's also hurting the supply side, which is the exact opposite of what you

ultimately want to do. So again, some really disturbing numbers on the GDP growth piece. Last quarter, this was attributable a lot to the fact that companies have been struggling with what their inventory levels should be. You know, they got caught with, you know, their just-in-time practices not having enough, and they had shortages, then they stocked up, then they had too much, and they had surpluses. And so they've been having trouble sort of figuring out the proper inventory levels. And since they've been selling off inventory rather than acquiring more, that's a hit on GDP growth. That was a lot of the story of last quarter. And right now, personal consumption, as I've

talked about, it did grow by 1%, but it actually has decelerated significantly by a full percentage point from 1.8% in Q1. So that actually is less than what was expected for the personal consumption rate, which does mean that we are seeing a deceleration, although it is still growing. That's kind of the full picture. I don't think it damn matters, but White House doing itself no favor by trying to redefine all of this when honestly they're doing some good things. So let's talk about the good things, and we'll start with the CHIPS Act. So let's go ahead and put this up there on the screen. Yesterday, the Senate passed the CHIPS Act, providing grants and other incentives to the U.S. computer chip industry to better compete with China in science and technology.

It is now heading to the House for final approval. Now, this is kind of a landmark piece of legislation. We're talking here about $58 billion, with a B, being pumped directly into semiconductor chip manufacturing. However, it has split the US politics in some interesting ways. It was a 64 to 33 vote, but not all Democrats actually did vote for the bill. Let's put this up there. So the Republicans who voted for it are Roy Blunt, Richard Burr, Mark Capito, Cassidy, Collins, Cornyn, Daines, Graham, Haggerty, McConnell, Moran, Portman, Romney, Sass, Tillis, Wicker, and Young. Now, in terms of the Democrats or independents who voted against the bill, actually, Senator Bernie Sanders, and then those who did not vote were Patrick Lay, Joe Manchin, and Lisa Murkowski. So the reasons behind all of this are kind of fascinating.

Let's put this up there on the screen first, which is, what is this thing? Well, as I said, it is $58 billion, which is being sent directly to semiconductor manufacturing specifically, but it includes hundreds of billions of dollars more for National Science Foundation grants, which are able to be used specifically for investing in research behind cutting edge R&D as to the development of both AI, quantum computing, wireless communications, precision agriculture, and more. So it's a major grant towards funding institutions. Now, before we play Sanders's objection, I actually, and more. So it's a major grant towards funding institutions. Now, before we play Sanders's objection, I actually found it interesting. So I reached

out to some of my friends who are in the Senate and I was like, hey, like why did Marco Rubio and Tom Cotton, people who were very pro-CHIPS Act, vote against this bill? Here's the reasoning that I got, which is that the current bill actually gives an incredible amount of discretion to the Commerce Department. And part of the problem is that with that $58 billion, you don't just grant it to these companies, right? It's not in the legislation. You give power to the Commerce Department, who gets to use definitions and guidance to determine who's going to get it or not. And not only just who, but what projects. And part of the fear was that there was not stringent enough stuff written into the bill that would say that Intel or whomever might say, hey, we need you to subsidize this while also being able to boost

production in China. So their objection to the bill is that there was not enough guardrails on the legislation to make sure that the legislation would not be gamed by the computer chip industry in order to make sure that they still have production in China and not. But let's, oh, go ahead. Before we get to Senator Sanders' objections, because they echo that in certain ways. I mean, his concerns are more on the front of unionization. I mean, there are very few sort of requirements put on these companies who are going to be beneficiaries of a massive subsidy. So we've seen before, you know, these big corporate subsidies going to like Foxconn in Wisconsin. And it turns out to be a total boondoggle. That's a disaster for taxpayers and no jobs ultimately materialize.

So I think there are legitimate concerns here about whether we could be snookered again. And ultimately, you know, you think you're going to get this chips manufacturing facility, have this good bedrock piece of industrial policy, which is incredibly important. And then ultimately the whole thing falls apart and is just another big corporate giveaway. I do think that those fears are really justified. However, a little bit of context on this, which we've covered and you've covered in particular on this show extensively, but I just want to remind people of why this matters so much is because something like 786 chips manufacturing facilities have gone overseas in the past several decades. And it has left us with almost no domestic manufacturing capability. This is really critical.

It's critical for you as a consumer. This is in all your electronics. This is in a lot of the new cars, especially the new electric cars, really dependent on this technology. It's also really critical for defense. And this is why part of why Republicans are so interested in it is because you have to have these chips to be able to manufacture the advanced weaponry that we depend on. So the fact that this is overwhelmingly, I mean, actually, the advanced chips are overwhelmingly being manufactured in Taiwan. Yes, correct. Not a good situation whatsoever and something that people on both sides of the aisle have been interested in dealing with.

So the big question is whether this act has been crafted well enough to actually accomplish the goal or whether you're going to end up with corporations getting paid and no jobs being created and no new innate domestic capacity. So that's kind of the back story. Extremely well said. And as you said, we know we already live in a massive already. We have huge blows to the U.S. economy, hundreds of billions of dollars in lost economic growth from the ship shortage of the last two years alone. Let's play Senator Sanders' objection. I'll give you my thoughts on the other side. Madam President, I do not argue with anyone who makes the point that there is a global shortage in microchips and semiconductors,

which is making it harder for manufacturers to produce the cars, the cell phones, the household appliances, and the electronic equipment that we need. This shortage is in fact costing American workers good-paying jobs and raising prices for families. And that is why I personally strongly support the need to expand U.S. microchip production. But the question that we should be asking is this. Should American taxpayers provide the microchip industry with a blank check, blank check, of over $76 billion at the same exact time when semiconductor companies are making tens of billions of dollars in profits and paying their CEOs exorbitant compensation packages? That really is one of the questions that we should be asking. And I think the answer to that is a resounding no. This is an enormously profitable industry. So here's my objection to what Sanders is saying. And look, I'm not saying I enjoy corporate welfare, but we live in a free market capitalist

country. You cannot force companies to manufacture here. Now, there are enough stringent restrictions in the bill, which is the most objectionable one to me would be if you could buy back your own stock. You cannot use any of this money to buy back your own stock. So I'm like, okay. Second, it is earmarked specifically towards chip manufacturing. I also want to get to the point that he's making there. He is not wrong that they are more profitable than ever. Do you know why they became profitable? Because here's the issue. We design all of the world's best semiconductors right here in the United States, Intel and others. However, we manufacture them in Taiwan and in Asia. do so is because that was the way that chip manufacturers were able to boost profits. So in order to actually reduce profitability or at least incentivize them to go in the right direction, we are directly using this act to subsidize production. And the production is what matters

more than anything, both from a geostrategic point of view. I mean, look, this is part of the reason why if China invaded Taiwan, the U.S. economy, I'm not kidding, would shut down within like six months. Like the U.S. consumer electronic, gone. I mean, no more phone, no more televisions. Like everything that we use is over. And that is a bad situation. You shouldn't have a single choke point that exists like that. That's why I support this legislation. I hear the concerns of Sanders, of my other like-minded friends who work in the offices. But listen, we have got to get out ahead of this. It takes 10 years in order to build some of these chip fabs and other manufacturing facilities. We need the jobs already Intel is building. They've been

waiting for this piece of legislation to pass. We need them in Ohio. We need them in Arizona. We need them in Texas, all across the country. Other chip manufacturers are already saying they're going to invest increasingly $20 to $100 billion here in the United States. We need this money. We just simply do. We cannot exist. So listen, is it baked full of some stuff that I'm not going to like? And are some of these companies always going to do the best thing? Absolutely not. However, this thing got to 64 votes in the U.S. Senate. Hopefully, from what we see right now, it is going to pass in the House.

And to that, take the W. A little more in doubt, and we'll get to that in a minute. Yeah, that's right. Yes. Well, let me just say, I don't think that Senator Sanders is really wrong about anything that he's saying here. I think his concerns are entirely legitimate and justified. And the reality is, and this does suck, like Intel is basically blackmailing the U S government because they were going to create this production facility in Columbus, Ohio. And then they were like, ah, don't know if we're going to, you're going to have to bribe us to do it. And that's the reality of the situation.

And that does totally suck. And by the way, Bernie's Bernie offered an amendment here, which should have been included and, of course, was voted down, but is entirely reasonable, which says that if chip microchip companies get this taxpayer assistance, they shouldn't be able to outsource American jobs overseas. Good addition. get this taxpayer assistance, they shouldn't be able to outsource American jobs overseas, good addition, repeal existing collective bargaining agreements, and must remain neutral in any union organizing effort. That should have been added. It wasn't. So the bill is worse for not having provisions like that in place to make sure that you actually end up with these jobs and

with this production and that it is being done by union workers. However, when you look at it on balance and you say, OK, but this is the reality we live in. And yes, you are going to have to in order to get this through, you're going to have to have Republicans on board. It is 100 percent the case that the things that get through the Senate are things that corporate America likes. There is no doubt about that. Senator Sanders' point on that is well taken as well. He goes on to say,

like, OK, you know, what's the reason why we get the corporate subsidies through but not, say, universal health care? He's not wrong. He's not wrong about any of that. But when you take the reality as it exists on balance, if I was in the Senate, would I vote for this bill? I would, because it's industrial policy. That's something that has been sort of like off the table for a lot of years. Yeah, let's normalize something. Something I believe in. I wish it was done a little bit better than this, which is, you know, it does have some elements of basically like a corporate giveaway. But this is a really critical piece of bringing a critical supply line back to our shores and hopefully creating some good paying

American jobs manufacturing these advanced chips, which is critical for, again, consumer products, electric cars, advanced weaponry, all of the above. So even though I think the objections are well founded, I can't really disagree with anything that Bernie is saying here. If this is the only bill that I have a chance to vote for, yeah, I would probably vote in favor of it. And that's why I take the concerns of the people who say it's too much power in the hands of commerce. I take the concerns of that. But I do get annoyed when I see, like, Robert Reich and all those people, like, corporate welfare. I'm like, what are you, a Cato libertarian now?

I mean, listen, like, sometimes corporate welfare is good if it's good for the people who are workers, as we all found. It's like the airline bailout. I wasn't opposed to bailing out the airlines as long as you do it right. Now, it wasn't done properly, and I think that that is certainly an issue and we should use that as a track record. But is that the reason to never bail out the airlines again? No, we need air travel. So it's the same thing when it comes to the chips. I don't think it's going to be perfect. It certainly is not. And there's some interesting legislative

maneuvers we'll talk about in the Joe Manchin block, which are kind of interesting as to how all of this was kind of used to hoodwink Republicans. But on its face, we should celebrate when people do things which are good for the country. Sometimes, yes, that aligns with corporate interests. And I'm generally OK with that. Yeah, we got to keep an eye on it and make sure we hold them accountable. Oh, by the way, if there's cheating. If they end up just taking the money and running and never creating anything. If there's cheating, who do you think will be the very first people who talk about it? It will be right here on this show, and I can promise you that.

All right, let's talk about Manchin. Let's talk about Manchin. Well, this was a surprise. We actually might have a deal with Joe Manchin, and it's kind of significant. There's a fairly large, fairly large deal to be passed through reconciliation with just the 50 Democratic votes. Assuming we can get everybody on board, and we'll get to that in a minute. Let's go ahead and throw this first piece up on the screen. This really came out of nowhere.

They say Manchin announces support for the Inflation Reduction Act, a.k.a. the reconciliation bill formerly known as Build Back Better. His quote in this piece is, Build Back Better is dead, and instead we have the opportunity to make our country stronger by bringing Americans together. And he outlines the detail in the statement. I mean, read through the statement, it's classic Manchin. He takes a lot of shots at Democrats and progressives and the Biden administration and makes it clear that his priority is dealing with inflation and that he went through and made sure all of the pieces of this deal are ultimately

going to combat inflation. And he does, you know, some deficit hawk language here as well, which is part of this bill, too. But and we're going to get into the details in a moment. You know, everybody really thought that this was all dead, done, gone, that Manchin was not negotiating in anything approaching good faith. And now, truly, at the last minute, we have a possible fairly significant deal. So let's talk about what policies are in this from our friend Jeff Stein over at The Washington Post. Among policies, Manchin talks about an announcing deal with Schumer, prescription drug reform. So this would be the Medicare drug pricing negotiation, which Democrats have been running on for, like, decades now.

Fifteen percent minimum tax on corporations who earn over a billion dollars. Significant dollars for renewables, including hydrogen, nuclear, Sager, fossil fuels and energy storage. And then he says a separate deal to do permitting reform in the fall. Let me pause on that part for a minute. It's a kind of a side note. But one of the things that Manchin required in order to be involved in this deal is that the Biden administration is going to green light some new fossil fuel projects. That's when they say permitting reform. That's what that means. Now, as we're learning the details of this, and we can go ahead and put this next piece up on the screen. This is more from Jeff Stein. Here are some of the specific dollar amounts. So in terms of raising revenue

through tax hikes, you'd have about $313 billion on that 15% corporate minimum tax, which again, only applies to large corporations. You'd gain about $288 billion through that prescription drug pricing reform, Medicare being able to negotiate, something that is a complete no-brainer, $124 billion on IRS tax enforcement, and $14 billion on closing the carried interest loophole that benefits private equity ghouls. On the spending side, the big pieces are $369 billion for energy and for climate change, and $64 billion on ACA extension. So overall, the analyses that I've read have said that the spending on climate here, even though obviously it's not ideal to green light new fossil fuel projects when you're focusing on just the climate, the spending here goes way beyond the cut

emissions significantly, way beyond the increase that would be caused by this permitting reform that's going to happen in the future. Let me also tell you why I'm very happy with the, look, my credit to Joe Manchin, he specifically fought against the ideologues who tried to make this a non-technology neutral tax credit, which means that a tax credit will be allowed to go to wind, solar, biomass, and nuclear, which for the past, we have specifically blocked nuclear and other power sources out of these tech credits. This is one of my biggest critiques of climate policy is they specifically subsidize solar and wind to the detriment of nuclear power. Now, with technology neutral, it all comes down to carbon emissions, baby. And with that one,

I think that we all know, especially not only carbon, but in terms of good capacity. Of course, the devil's in the details. And if they do do this, spend this on boondoggle solar projects and wind projects, I will be the first. But to have that written into a law is actually a big win for nuclear power proponents like myself. Let's go and put the next one up there on the screen from David Dayen. This shows you, again, the specifics on the actual revenue raise. And let's spend a little bit of time here. The biggest revenue raiser is called the 15% corporate minimum tax, called a book min tax. That tax is a very interesting one, has not really been talked a lot in Washington, and was originally a proposal by Senator Elizabeth Warren, which kind of came out of nowhere. The reason why is it doesn't piss off Joe Manchin,

who is for raising corporate taxes. It also doesn't piss off Kristen Sinema, who is against raising individual taxes. So in that environment, it's actually pretty hard to raise revenue. The way this would work is that many corporations technically do not pay any corporate taxes whatsoever. What they do is they use energy tax credits and other write-offs in order to make sure that their corporate tax rate is often 2%. In some cases, they actually get paid money by the government. This would make it so that even if you have energy tax credits, even if you do so, you still have to pay 15% corporate tax on that. And again, this would only apply to corporations in the United States. And it does raise a pretty significant amount of money. The other way that it's quote unquote raising revenue, it's not really though,

because it's more about savings, prescription drug pricing reform, IRS tax enforcement, something I'm massively in favor of. As we've talked about here before, you are three times more likely to get audited as a person who makes less than $25,000 than you are if you are a billionaire. Don't tell me how that makes any sense. The current IRS mechanism is to go after poor people, steal their money, and because it's so complicated

to go after the super rich, they don't do anything. It's always been total and complete bullshit. And as long as they don't use this money to go after people's Venmo transactions, I'll be in favor of it. The carried interest loophole also is just outrageous. I'm actually very suspect it'll only raise $14 billion, so I have some questions on the details. On the investment side, as I said, listen, I mean,

as long as it's technology neutral, I really don't care. I think you should throw even more money at these things. And the Affordable Care Act extension credits as well. I mean, we're talking here about old people mostly. It's seniors who would have been hit with a massive increase in their- And it was going to happen like right before the election too. I mean, it was a moral catastrophe. It was also a looming electoral catastrophe for the Democrats. So it shows you they at least have like three brain cells to rub together to figure out that this was a bad idea moving forward. Now, the carried interest loophole, this is something I believe Trump claimed he was going to close it.

I mean, this is just benefits, just private equity, total giveaway in the tax code for a very small subset of very wealthy Americans. However, it does call into question whether Kyrsten Sinema is going to sign on to this. And again, this has got to go through reconciliation. You have to get every single Democrat on board in order to accomplish this. She has said in the past that she does not want to close the carried interest loophole. So we'll see. And, you know, since it is a small amount of the revenue, is that the thing that they toss aside to say, oh, we're negotiating and whatever?

Very possible that the private equity ghouls ultimately keep their little goody bag. Let me tell you, Crystal, I don't think Sinema is the biggest obstacle to this. It is going to be Josh Gottheimer and Bob Menendez who have already come out. Guess everybody what they're so pissed off about. The SALT tax. So basically, as we've really out before, state and local deductions, it used to be that you could deduct all of the taxes that you paid in state and local taxes from your federal income tax burden. Now, under the Trump administration, you were not able to do so. So they put a cap on it, basically, at $10,000. Now, removing the cap, which is what New Jersey and California and other high-income tax states want, would effectively be a massive boon only, again, only to millionaires and billionaires in the

United States. 90% of the benefit of lifting the salt cap goes to people who make over $1 million per year. So it's kind of a hilarious thing that they are going to the mat right now to try and include the salt cap removal. And Manchin explicitly trashes them in his long statement that he wrote and says, you know, we're not going to do these tax cut giveaways to red states and blue states in this way. So are they going to get on? How hardcore are they about no salt, no deal? Will they tank the deal over a multimillionaire tax giveaway? Let's see. Let's see.

I would love to see that. The other question is, are you going to have all the progressives on board? I think you likely are because this is a much more significant deal than – we hadn't even been following this closely anymore, guys, because frankly it was just so pathetic. The negotiations were so frustrating. Nobody really thought this was going to ultimately come together. And what the deal had collapsed to is like maybe we're going to do the ACA subsidies and the prescription drug pricing reform.

And that was basically it. you know, hiking taxes on the rich in a significant way, I suspect the Congressional Progressive Caucus is going to get on board with this and be, you know, uniform lockstep. So even if you have people like Gottheimer who are want to vote, you know, against it, you still have at least a few votes you could give away to the, you know, idiots over on the SALT Caucus. But the politics of this are also very interesting. And I have to say, a very rare kind of a gangster move from Democrats here. I'm kind of shocked they were able to do this.

Because they kept this thing so close to the vest. I mean, and that it didn't leak that they were this far along in negotiations. And the reason why this matters, go ahead and put this last piece up on the screen, D5. McConnell and Republicans said they were not going to pass that CHIPS Act that we talked about if a reconciliation deal like this was still alive. So they passed CHIPS. And that very day, hours later, Democrats announced this deal. So they really were able to keep any of the details leaking out, keep the Republicans from getting suspicious at all, because McConnell had said he's going to tank the chips deal if Democrats are going to go forward with a reconciliation deal. And now you have Republicans

because this thing, the Chips Act, still has to pass in the House. So you have Republicans actually whipping against the chips deal in the House now because they're pissed off about the reconciliation bill, which to me is really stupid. You either support the legislation or you don't. I don't get it. But that's their strategy is basically like we want to punish you for doing something that, you know, your voters find to be a priority. Anyway, I don't think that that's going to be successful in the House, but they are signaling their displeasure by doing that. And also and this is really just horrendous and stupid and wrong, they're also trying to hold up the funding for sufferers from toxic burn pits is their other thing that they're doing to express their

displeasure. They're going to make veterans suffer in order to express their displeasure over this deal with Manchin. Yeah, I think what's also really interesting about, by the way, on the CHIPS Act, I just checked, people are saying that the whip count, basically 20 Republicans are still going to vote for it, so it's very likely to pass, even if people do vote against it. We'll see, though. It's possible that they turn this into a much bigger thing. Anyway, it's fascinating. Let's see how it plays out. I just want to do the caution. We're still a long way away from this thing becoming law. So in terms of what the next steps are, number one, this still has to go through the parliamentarian. They have to decide every single one on whether it's revenue neutral or not, as in if it balances out, because otherwise it doesn't comport with the rules of reconciliation. Number two, the two parties have to go back and forth

in like a quasi-legal argument over every single piece of the bill. That takes a long time. Then we have to do- Is that what they call the birdbath? Yeah, it's called birdbath. Yeah, I know. Welcome to Washington.

What a town. Then we also have to do voterama, which means that during a reconciliation process, Republicans and Democrats get hours and hours on the floor time, and they try to add thousands of amendments to the bill, and they give speeches, and it can take days and days and days. So we don't know when that process is going to start. And as we said, the damn bill's still not out. As in, devil's always in the details. It's in the text. There are still many things that could be thrown at this, and it's

still, i personally think what maybe 70 chance that it becomes law so that's actually not that high if you consider yeah if you consider there are still many ways they could screw this up just have no doubt about it or the mansion could suddenly once again be like oh no and now i don't like this part of it that you wrote into it or kirsten cinema could be you know play the spoiler this time who knows josh gotheimer there's still a lot of of obstacles to cross here. But because this came from Manchin explicitly and wasn't like, you know, Biden Schumer bringing something to Manchin and say, hey, do you like it? And what do you think that it came directly from Manchin? I think it's giving people a little bit more confidence that

it may actually come to pass. And, you know, on the theme of like Democrats actually doing a few things here, shockingly, they also the House Dems are also preparing to pass a stock ban that includes members. They can't hold or trade stock, which is quite I mean, that's awesome. Members, their spouses and top aides. So something lit a fire under their ass. Again, listen, is it everything that I want? No. Are they at least doing something and trying to deliver for people in some way

and thinking strategically about the future of the country? Yeah, they're actually dipping their toe in those waters, and it's pretty shocking to behold. Yeah, I don't disagree. Like I said, a massive victory to get technology neutral and to not try and close down anything on gas in the middle of a gas crisis. I mean, I'm amazed that they actually were able to get this. Camp Shane, one of America's longest-running weight loss camps for kids, promised extraordinary

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