The Dispatch Podcast - Blank Checks and Balances

Episode Date: March 17, 2023

Ron DeSantis takes a bold stand against theoretical "blank checks" to Ukraine. Sarah, Steve, and Jonah discuss what this says about the current GOP. Also: -What happens now to the Silicon Valley Bank carcass -Does Biden’s budgetary largesse mean anything -Steve gets real about America's soul Show Notes: Semafor: Goldman looked to buy SVB in 2020 but talks fizzled Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's 3 cents per liter in instant savings plus 20% more points when you link an eligible RBC card to your Petro points. Find out more at RBC.com slash Petro-dash Canada. Conditions apply. Welcome to the dispatch podcast. I'm your host, Sarah Isker, joined by Jonah Goldberg and Steve Hayes. We are going to talk about the great foreign policy split within the Republican Party. Ron DeSantis coming out with a new statement on Ukraine.

We will also, of course, talk about the Silicon Valley Bank Credit Suisse and what we learned about our financial system in the last week, Biden's budget. And finally, a little not worth your time where Steve has some real, finally, finally, Steve has real thoughts on a not worth your time, question mark. All right, let's dive right in. Steve, the Republican Party is clearly divided over the question of supporting Ukraine, but how much is it divided? Yeah, I think that's actually the real question at the heart of this discussion. And I don't mean to be so surprised that you led with that real question.

Or so condescending. Wait, what? That's the real question. How did she get out? As shrieves, it may sound, Sarah, you framed the question correctly. I can hear myself as I was getting going there. I'm like, wait, this sounds like I'm surprised. Am I this much of a jerk?

I thought I was from Wisconsin. Off the rails, and we're 15 seconds in. Sarah found the point blind and reaching around. I do think it's the real question. And I would say that if you read a lot of the reporting on that question this week, it seems like the reporters are trying to wheel into existence a shift that hasn't yet taken place, in my view. So there's clearly a divide in the Republican Party. You had Ron DeSantis come out this week give a statement to Tucker Carlson.

Tucker Carlson asked presidential candidates, potential Republican presidential candidates to weigh in on a number of different issues, asking very specific questions. Ronda Santis responded to those questions with sort of a statement of his position on Ukraine. And it was, I would say, in the sort of Trumpy, skeptical camp on Ukraine broadly.

There's been sort of Talmudic, dissecting of its meaning and did he mean what he said, what are the words actually mean? But I think taken as a whole, it's a very skeptical statement about continuing to be involved in funding Ukraine and supporting Ukraine to the level that we have under President Joe Biden. and a couple of the words in particular signal, maybe even a deeper level of skepticism. DeSantis sort of dismissed the entire thing as a quote unquote territorial dispute,

which our friend Noah Rothman at National Review, I think he analogized that to a bank robber and a bank fighting over money having a financial dispute or something like that. Obviously, this was more than just a terrorist. territorial dispute. And I think it's meaningful that Ron DeSantis gave his answer to Tucker Carlson, who has, as we pointed out on this podcast before, literally said he's on

the side of Russia in this fight. So there's definitely a divide. In fairness, Russia hasn't called Tucker a racist, which was one of his primary reasons. That is true. There is definitely a fight, and I think it's fair to say that we're in the middle of what appears to be a shift among some Republican elected officials and some of the Republican electorate. But if you look at actual polling on the question,

then let's caveat this with Sarah's issue polling skepticism generally. It's not clear that Republicans have sort of abandoned the idea of helping Ukraine or become sort of a pro-Putin party. It is the case that you have now in Trump and DeSantis with these statements. two of the leading Republican contenders for the presidential nomination in 2024 on the Ukraine skepticism side. I don't think that it yet signals a willingness or an eagerness of

Republican elected officials, particularly in Washington, D.C., or the Republican electorate to sort of abandon this idea of American leadership in the world and an embrace of a broader neo-isolationist position that it feels to me like lots of reporters are cheering for. Jonah, I don't want to skip ahead too far in this plot, but if the Republican primary ends up being a binary choice between Trump and DeSantis, which is, I'm not going to say it's far from a sure thing, but it's not a sure thing, certainly. And you have both Republican potential standard bearers in pretty similar places on, and it's not. not Ukraine to me. It's a sort of, are we continuing the Reagan foreign policy leg of the

stool, or are we doing something more isolationist, more nationalist? I think if you also looked at cutting defense spending or other things, there's a bundle of sticks that comes with this Ukraine question that is not just Ukraine, Taiwan, whatever you want to call it. If those are the two choices that Republicans have, question mark. Yeah, so look, I agree and disagree with a lot of what Steve says. I think the way to think about this is, at least as a heuristic, right, as a way of sort of exploring, probing the issue, is to ask yourself. Y'all, before the podcast, I referred to Jonah as a generational public intellectual,

so that's why he's using words like heuristic on this podcast today. He's let it go to his head. If one uses a Bayesian approach to this. So, no, look, I think, I think you should, let's work from the assumption for just a second at least. But this has just screwed up. I think this was a mistake. I think it was a mistake to take Tucker's cues as if, like,

he had some special obligation to answer questionnaire from Tucker Carlson. And Sarah and I talked offline a bit about the folly and peril of answering questionnaires from all sorts of places. And I think this was a mistake. He probably could have just said to Tucker, if he wanted to stay friendly with him, hey, look, I got a lot of stuff. I got to deal with. This is not the time or place. But, you know, I'll get back to you. And if Tucker complained, let Tucker complain.

I think, but I think the fact that you thought he had to answer to Tucker. And I think the way that they wrote this is Assam. that these guys, the DeSantis team is way too online and they think that this because like again if you actually read the full statement everyone was like read the full statement read the full statement and they're right

and this is where the Talmudic thing came in personally I would have said Jesuitical but you can you know people can make their decisions about this nobody says congregational let's get super unitarian on this question um no but the the thing is um i think he thought he was trying to please everybody i thought he thought he was splitting the baby you read this thing and if you do get really granular

about it he's not saying no to all sorts of stuff we've already done he's using the strawman thing about the blank check as a straw man um he's even the phrase territorial dispute which i find repugnant um for the reason steve alludes to um if you want to get super lawyerly about it. He's saying, we don't want to get bogged down in a territorial dispute. He's not actually saying that Ukraine is a territorial dispute. I mean, you can get really silly angels on ahead of a pin about it. And I think part of the problem is that they think the path to the nomination is to piss on the shoes of certain Republicans to say that they're owning the establishment and all of that kind of thing. And I think it's a dumb approach. Because

I think if you're going to have if you're going to run against Trump you have to be an alternative to Trump you can't just be the substitute because if you really like Trump you're going to vote for Trump and I think he just should have kept his powder dry

not said anything and he is creating the appearance of a schism that that surely exists but the wideness of the schism I think is narrower than this fight would suggest and I think this thing is going to come back to haunt him.

So yeah, if it comes down to Trump versus DeSantis in the general, my hunches is that at least before this pushback, DeSantis thought this gave him room to argue with Trump from the pro-you know, help Ukraine side or argue with, you know, some Rubio type on the anti-side. He was a very Clintonian thing. There was just no art to it.

And in his defense, it's not a sort of embrace of Putin of the likes we've seen from Trump. So you could argue that maybe it is. It does give him that room. But let me ask, Sarah, can I ask you a question about the polling on this? Again, stipulating that you don't love issue polling. Or foreign policy. You see these headlines and tweets, including from very good journalists who cover this stuff, saying, you know, this is a shift to the Republican isolationism is here.

And, you know, this is a minority. of Republicans who believe that it's worth supporting Ukraine. There's a Gallup poll out this week where Republicans were asked about. The 62% of Republicans say the Russia-Ukraine conflict is a, quote, critical threat to U.S. vital interest. 62%, almost two-thirds. 29% say it's important, but not critical. Only 9% say it's not an important threat at all.

And I would say if you want to look at where the divide is among elected Republicans, you take the sort of J.D. Senator J.D. Vance approach who said, I don't care what happens in Ukraine. You take the Tucker Carlson public intellectual, scare quotes around intellectual view that he's literally on Vladimir Putin's side. And I would argue it's not the case that the Republican base is where these spokesmen for the new right are. at all, and it's not really close. 9% of Republicans say it's not important at all. So Kristen Soltus Anderson's team over at Echelon did a really nice deep dive into the cross tabs, you know, getting a lot of Republicans and different types of Republicans to answer

a whole bunch of foreign policy questions, trying to dig out what was Ukraine, what was an overall shift in the foreign policy beliefs of Republicans, where does it fall on age or, you know, any other demographic shift and Donald Trump versus Ron DeSantis. I just want to read her sort of summarizing paragraph because, as you know, I don't think any number on this is very helpful. What I think is helpful is the trend over time when you've been asking these questions. Younger generations in both parties are trending away from a more muscular U.S. foreign policy worldview.

The Republican Party as a whole is less and less sure that the conflict in Ukraine affects American interest. But this view is far from unanimous, and there may actually still be space to rally older Republicans, a potent force in a GOP primary, behind a more traditional fight the Soviets Republican foreign policy after all. And just some additional notes. She found age was just this huge dividing line in this question. And again, not just on Ukraine, on the DOD budget, on Taiwan, on on any number of foreign policy issues, the younger generation's just like, F it.

They're not Cold War babies. And another interesting divide was between DeSantis leading GOP voters and Trump-leaning GOP voters. The Trump folks, not surprisingly, by a 20-point margin, viewed the Ukraine conflict as not really pertaining to U.S. vital interests,

but the DeSantis, potential voters, were very split down the middle, which might get to Jonas' point. He thought he wasn't, taking a position. Now, I think Jonah made that case persuasively, but I want to give a different perspective from the campaign side, because if you took the Ukraine statement in a vacuum, it does look very, hey, we'll just punt this to down the road and I'll take a strong position when things become a little clear one way or the other, either where the party is or what's

actually happening in Ukraine. But if you look at it as a whole of DeSantis's statements this year, or the last six months maybe, what you see is that he's not allowing Donald Trump to get away from him on any issue, even if it's a little bit of a difficult position for him. So take, for instance, entitlement reforms, the possibility of looking at social security and Medicare. DeSantis was one of the reformacons back when he was in the house, and his statement on that now is like we're not touching social security and medicare i think that's very clear that's not where republicans are it's a very interesting strategy because if you sort of went to a campaign operative one o one book what you'd see is draw distinctions with your opponent and you know fight those fights

but that is kind of a pretty one oh one look and i'm impressed maybe is i don't know if that's the right word because it appears to me that they've actually really studied the 2016 playbook and seen what went wrong for some of the candidates. And that drawing distinctions, policy distinctions with Donald Trump didn't actually work very well for any of the 2016 candidates. And in particular here, I'm thinking of Ted Cruz on immigration. Ted Cruz thought he had really flaked to the right of immigration. He let Donald Trump get past him because he thought that Donald Trump's statements were like so bonkers that, you know, he would look like the reasonable right-wing guy on immigration,

and it turned out that, no, people just really aren't going to make those distinctions. And so I think DeSantis, we'll see. We'll see what the next sort of issue is like this, but I'm willing to place a little wager on the fact that their strategy is hug Donald Trump so tightly that the only thing that you really get to make a decision on is whether Donald Trump or Ron DeSantis

has a better chance of rallying Republicans, beating Joe Biden in a general election, and so it can be this change narrative instead of allowing Donald Trump to own some issue and clobber DeSantis over the head with it. And so his Ukraine statement can be read in the same way that Jonah did, but slightly differently, which is, yeah, he maybe wants to say something different on Ukraine. He's not splitting the baby in the traditional sense. He's trying not to let Donald Trump move away from him while not saying what Donald Trump's saying either. So I think I think that's an accurate description of what of what they're doing, but I wonder, and I want to ask you about this, Sarah, are they potentially accurately reading 2016 in one sense and totally misreading 2016 in another in that one of the things that gave Donald Trump his strength in 2016 was his ability to say what he believed, even if the Republican establishment thought it was.

crazy, even if it was determined that this was outside of sort of the way that we had talked about these policy issues in the past. And there was this, even as, you know, I think Donald Trump was one of the most aggressive liars in the history of American politics, but he was authentic in that he would just say stuff that sort of came to his mind. Doesn't DeSantis by doing this, and especially by these, you know, what appear to be pretty dramatic flip-flops on issues like entitlement reform and debt and deficits. I mean, you look at him, he was fully in the sort of Paul Ryan, we need to reform this stuff and get ahead of the problems. You look at Ukraine and he chastised Barack Obama for not being more supportive of Ukraine and not taking the tougher line against Russia back before a war, before Russia truly invaded in the way that Russia invaded last year. Doesn't he risk looking like a total phony?

And isn't that part of the problem? Yep, we'll see. That's the risk, certainly. And Donald Trump already trying to use that to his advantage. They're putting out tons of statements about, you know, will the real Ron DeSantis please stand up type stuff. But remember that was tried against Donald Trump to some extent in 2016 on abortion, on being a Republican?

And it wasn't effective. I think it wasn't effective because of what you said, Steve, which is whether he actually there's any core there or not, he sure sounds like he's being authentic all the time because only an authentic person would say insane stuff, but nevertheless it didn't stick to him. I don't know, Jonah? Yeah, no, I'm thinking about this,

and I think your argument is a good one. I think the problem with DeSantis could still get himself caught up in is that people's brains process Donald Trump differently than they process other people. and that Donald Trump is an entertainment figure, right? And you just judge entertainers differently than you judge politicians. This is why when Marco Rubio did the whole, you know, small hands push back thing, people said, oh, that's so demeaning and inappropriate for a politician to speak that way,

but they had no problem with Trump speaking that way. So this focus on not giving any, not letting there be any major daylight between them on the issues still may be, as Steve says, a misreading of 2016 because it, it thinks that really the, that issues are still the dynamic that governed 2016 when in reality people wanted to vote on the biggest middle finger and the most entertaining middle finger.

and sticking close to Trump on the issues doesn't really create that space for him. It also, it assumes that that's what the 2024 election is going to be about. Is it electing a middle finger? And it certainly is for a big chunk of the base, but they're going to vote for Trump because he's, you know, he's their middle finger.

I wonder, I wonder, going back to 2016, and Jonah, you wrote about this, so I'll ask the question to you. But, you know, my view of what ultimately doomed Scott Walker, who was, as you pointed out in your piece, leading in the late summer, he surged to a lead. I think he was above 25, you know, nearing 30 percent in Iowa in 2015 in the summer and fall of 2015. And he did so on the strength of his challenging the establishment in Madison, standing up to the protesters who occupied the building in Madison, enacting these

bold reforms against criticism from the media, and he did it, and it worked. But then he goes to Iowa, and he's known as this sort of conservative Republican truth teller, and he's asked about ethanol. And he talks, he immediately, so rather than deliver the tough news in what I think actually Scott Walker believed, he embraced ethanol because it was what the people of Iowa wanted to hear, or what he thought the people of Iowa wanted to hear. and I think it badly diminished his reputation as a sort of truth-teller despite all costs. Doesn't DeSantis risk that, or is that just a misread? I mean, maybe it's, maybe it's, you're right, maybe it's just that Donald Trump was so unique.

He was just a middle finger. Nobody really cares about these policy issues anyway, and I'm totally over-reading. I think you're over-reading. I think, and we've talked about this a little bit before, I absolutely agree with you that the ethanol thing was a blow to his image. I don't think it was like a deadly blow in Iowa for him to pander to Iowans about it. It's sort of like pro-choicer's becoming pro-life.

Pro-lifers don't get really angry at politicians who flop towards them. I think where he flamed out was that it was part of a larger pattern of him just not being ready for the big stage. I mean, again, we've talked about this before, but, you know, he was asked, about whether or not we should have a border wall.

And he said that's something really I have to think about. But the question was about a border wall with Canada. And there were lots of things about foreign policy. He just didn't understand. I think Scott Walker's perfectly intelligent guy. You know, I don't think he's a genius, but I don't think he's a fool either.

But the guy was burnt out. He had won an election three times and four years in the most intense thing. And that whole message about being a fighter and stuff, I don't think his personality could sell it on the main stage because, Steve, I'm sure you run into this all the time. People from Wisconsin, they just need to put a little more effort into seeming mean and tough.

And so, yeah, I think the ethanol thing, but I think it was part of a larger series of problems that he was just, he was a spent force where I think it's historically really interesting and culturally interesting is that basically all of the I don't want to sound like David French here but one of my biggest problems with the we our side

always loses stuff is that the second we start winning we pretend that that wasn't one of the things we cared about right so my friend Remeshpreneur has a piece in the Washington Post this week talking about how Medicare for All has vanished so the socialized medicine thing

the Democrats are retreating from five years ago Medicare for All was the kind of thing that was freaking out the right. The second it no longer seems to be a problem, they do a plug and play and take some other thing to catastrophize. And we see this time and time again where, like, you look at the things that Scott Walker was concerned about, about, you know, unions taking money to, you know, to control the schools, control government, all that kind of stuff. He wins all those fights. And all of a sudden people are like, yeah, but was that really such a big deal? Now we've got

these other things to worry about. And that's why if you look over time at the issues that are that are most concern Americans on the right in terms of like proof that America's falling apart. The issues constantly are changing. You know, crime was top number one for decades and then it disappeared and it's not like people were like, oh, everything's going great now. It's just they found some other thing to bitch and moan about. Not long ago, I saw someone go through a sudden loss and it was a stark reminder of how quickly life can change and why protecting the people you love is so important. Knowing you can take steps to help protect your loved ones and give them that extra layer of security brings real peace of mind. The truth is,

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That's the powerful backing of Amex. Pre-sale tickets for future events subject to availability and varied by race. Turns and conditions apply. Learn more at amex.ca. slash Y-Mex. All right, we're moving on to Silicon Valley Bank. Steve, why don't you start us off with a little disclaimer? Yeah, disclaimer is that the dispatch was a Silicon Valley Bank customer.

We are no longer. Fair. And we are comfortable with this decision that was made in consultation with lawyers and all the best experts and the most expeditions and responsible way possible. All right, fair enough. So on the one side, you have Elizabeth Warren leading the charge that what we experienced in the past week was a failure to regulate, that Republicans, Donald Trump in particular, wanted to lower the regulatory. burden on regional banks, and that's what caused this. Not noting the dozens of Democrats who also voted for it and why they might have voted for it, which God knows wasn't because they loved Donald Trump and just trusted him intuitively with policy decisions on bank regulations.

Also, she left out what I thought was a relatively important fact, which is it was not only Silicon Bank that failed, but rather a bank in her backyard, signature bank, where Barney Frank of Dodd-Frank was on the board. So, like, Were they taking these huge risks and over leveraged on deposits? Maybe. Okay. On the other side, you have Josh Hawley and a Republican brigade saying that also just focused on Silicon Valley Bank.

This is woke capitalism and the proof that it fails, that it sucks, et cetera, et cetera. And I will admit I'm a little confused about that one because it seems like the real precipitating factor was holding too many treasury bonds where then when the interest rate not only changed, which I think people are right to point out, of course it was going to change, but it was the speed at which it changed, which caused them to have so much still on their books that they could not move. I didn't know T-bills were considered woke. That feels like if you're buying treasury bills, that's like the least woke thing you can do. So just set- It's also like I listened to Elizabeth Warren on NPR talk about this, and I started cutting myself again.

She kept talking about how the banks, when they're not regulated, will do riskier and riskier things for maximizing crazy profits and all that kind of stuff. Buying long-term treasury is not whack-a-doo. I mean, it was the wrong decision, but it is not what you normally associate with sort of frontier capitalism and taking crazy risk. and swinging for the fences. So this is my question. Let's set aside the actual merits of anything having to do with finance

because we are, to paraphrase Elena Kagan on the Supreme Court, we are not the world's three foremost experts on finance. However, on the political side, Steve, why is nobody willing to actually have a conversation about what went wrong here without it always having to confirm the exact thing that they were complaining? about not even like last year, like last week. It just fits so nicely into the very same tweets. I mean, Elizabeth Warren talking about needing more bank regulation and Josh Holly talking about

woke capitalism. It's like they didn't even have to like change gears. It's very frustrating to me. Well, I mean, in a weird way, this is a continuation of the conversation that we were just having about Scott Walker and Donald Trump and the importance of policy, right? I think it's just easier if you've been making the argument that wokeism is bringing the country down to take whatever events happen and claim that this fits the arguments you've been making. It validates your priors. And in fact, this is evidence that wokeism is bringing the country down. I think that's what we saw from a lot of, a lot of Republicans these days. It's worth noting that Silicon Valley Bank did seem to be embracing wokeism broadly, right? I mean,

there was some evidence of this. You've seen arguments. I think it was David Graham in the Atlantic who said, like, this was probably a good business decision from their perspective because they were appealing to, you know, that the young tech, the young woke tech crowd in Silicon Valley, and they wanted to be able to sort of wear on their lapels all of the causes that these people believed in.

So it's not that wokeism wasn't part of what Silicon Valley, Bank did, it's that it wasn't the precipitating factor in the events that we saw. And that's a pretty important distinction. Jonah, where do we go from here on the politics of bank regulation? Because, again, if we can the three of us agree that what caused this was neither wokeism nor a bank regulation failure, then how do we actually prevent this from happening again? Well, look, there's an argument that it should happen again in the sense that there need to be consequences for bad policies, both in the private sector and the public sector. I do want to push back on a couple things that you hear all over the place. And then I'll explain my point.

First of all, I constantly hear people, including friends of mine, on TV, on Twitter, in the urinal next to mine, saying how the moral hazard here is huge, because now banks are going to take even riskier, make even riskier moves knowing that everything's going to be backed up. Well, that argument would be very persuasive to me if, in fact, the Silicon Valley Bank were being bailed out. It is not being bailed out. Everyone's losing their jobs.

Their bonuses, which they probably should not have gotten, were put into their accounts at the Silicon Valley Bank, and they're going to be clawed back. And there is not a banker out there that was, there's not a banker out there who looks at what's happening to the Silicon Valley Bank in the last 10 days and says, gosh, I can get away with that too now. Right? I mean, like, there is a, there's a, there's a lesson for management out there not to make these mistakes. And so like bailing out depositors is different than bailing out a bank. And you can have arguments what the moral hazards are there, but a lot of people use them interchangeably. Can I real quick on that?

Do you think that any president, Republican, Democrat, you can use specific presidents, however you want to take it, do either of you think any president would have done anything differently? Big picture. I don't mean how fast he did it or some of the statements that went out. would any president have not made the depositors whole by Monday morning? I think not. I think the means might have been different.

There's this semaphore story about how the Biden administration locked out the big banks to bid on this thing, which is bonkers town, if true. But yeah, I think at the end of the day, I mean, everyone including, I think the Biden administration, would have rather have done this a different way. But at the end of the day, I think they would have ended up where they are in terms of the fact that depositors would be. made whole. So to actually answer the question that you asked before, I think there are some really good partisan arguments about that one can level up the Biden administration about why this mess happened. They just aren't the woke thing. Because first of all, if you think the woke thing is dispositive, show me a comparable bank that isn't putting money into ESG and marketing its diversity in DEI stuff.

I mean, they are all doing that. The idea that, like, this was uniquely about wokeness, I just don't find persuasive. But what this was uniquely about was inflation and high interest rates. And there's a very strong argument. We've all heard it because it happens to be true that the Biden administration deserves

a considerable amount of blame for high inflation, which in turn requires the Fed to raise interest rates very quickly. and there's a phrase like I'm going to butcher that is very common on Wall Street that basically is about how when everyone's everyone looks real everyone looks great when interest rates are low and then when interest rates are go high and the tide goes out you see who didn't have swimming suits and who did and so they're going to be more institutions we're seeing it with credit Swiss there are real consequences not just a family pocket

book things. There are real consequences to an economy when you have high inflation because the checks and balance against high inflation is raising interest rates. And this would, but for high interest rates, this would not have happened. But for the speed at which the interest rates were made higher. Correct. That's right. If it had happened more slowly, they would have been selling off the T-bills at normal pace and it would have been fine. That's right. No, that's absolutely fair and that's right. Because you don't have, they just didn't have time. Which raises another point about how- hasn't really happened in the past because this inflationary period was severe and the interest rate rise was so quick.

Right. But the, but this does raise, that does raise another point, which you often hear from the sort of MMT crowd, modern monetary theory, modern magical thinking, which they say, look, the Fed raised interest rates a quarter of a basis point and nothing happened. So all you're worrying about high interest rates being a problem, and that's not how it works. It actually takes time because there are these short, medium, and long-term contracts and durations for various treasuries and whatnot. And when they expire, that's when the high interests can nail you.

And so it's an unfolding thing. So anyway, I think that it's very clear that Silicon Valley Bank had some bad policies. I read somewhere that they only had one person on their board who actually had serious experience and finance, and I think he's the one who worked for Lehman Brothers, which if I were that guy, I would say, okay, now I'm going to open a sandwich shop. We need a serious

rethinking about banking policy and all this, and all the people who say it should have been obvious to depositors and they should have known the risks. That's an argument for saying we should just have three or four, too big to fail, massive banking institutions in this country, which I don't think is the answer anybody wants either.

Jonah, can you tell us in your personal bank where you do, your personal banking, where they've got their money? Yes, of course it can. They've got some over here and some over there and some spread out over a bunch of different places. Yeah, I mean, there's a phoniness, I think, to some of the criticism here that people were tracking,

you know, what banks, what percentage of deposits were uninsured and that they knew this. there's certainly an argument to be made that they should have known this but the idea that they did and the idea that the people who were making these criticisms could answer that question if it were posed to them

I think just strikes me as implausible. I think there, look, there is a rethinking of how we want to address these kind of risks in the future. On your question, Sarah, about whether other presidents would have handled this differently. I think you would have

had people who know banking, people who understand this world, making similar arguments to a president desantis or a president Trump if the situation had been similar. The question that I have just given the way that things unfolded, the timing and the fact that there was this weekend in between where you started to see all of these woke arguments is would they have been sort of receptive to the arguments about wokeism and decided to make policy on that basis. I think it would have been potentially calamitous if they had. And it's easy now to sort of look back and say, well, the moral hazard created is not worth the policy decisions that were made.

But I think it was a real risk that you would have had other banks collapse. And other banks collapsed pretty quickly. had the federal government not done anything. The semaphore reporting that Jonah mentioned strikes me as a pretty big deal on something that we need to learn more of, if it were the case that the federal government effectively blocked the big banks from bidding at auction.

That should, we should learn more about that. You want to talk about potential topics for oversight investigations? That would be one of them. Right, because that would be an example of ideology, getting in the way of the more correct response to this, right? They're so afraid of murders and acquisitions and consolidation that they decided they only want it, you know, it's like, let's give the macrobiotic food co-op a shot at buying the Silicon

Valley Bank first. If that story is true, it's fairly thinly sourced, so we'll see. But that would be bad. Can we just take on the regulation side for just a second, which is It is true that the big four banks are more regulated than these regional banks, but I hinted at the beginning that, you know, dozens of Democrats voted for this as well. My impression is that, like we know with everything else, regulation is a gift to sort of the biggest, most powerful, wealthiest groups in any industry because they can afford to get through the regulatory tape, and it keeps out their competitors, and it keeps out someone who would grow big because the small ones can't even afford to get in the game. And the idea, as I think

about it, and why Democrats, I think, voted for this was regional banks serve actually a pretty important purpose in the ecosystem of finance in the country, different than the big four banks. If you're, you know, Steve Hayes, and you want to start a new media company and you want to take out a loan, Bank of America doesn't really care. Your regional bank actually might. And so if you keep them at the same regulatory burden as the big four, there's no upside. Regional banks just simply are going to stop existing at some point because they can't really compete and they don't serve it then a different niche in the ecosystem. Whereas if you lower the regulatory burden, then you have basically two different types of banks.

You have the big four. And then you've got these regional banks that they have lower regulatory burdens. They can take more risk on their communities and on individual people who want to start businesses and things like that, is that now going to change or is everyone still pretty into that concept of the importance of regional banks? Or is it not even going to be up to the regulators or Congress because us, the depositors, are just going to say it's not worth the risk? Or is it the case that the effect of this is essentially a backstopping of anything and everything that anybody does and the risks are then mitigated? Right. We just said that from now on,

insuring all deposits in the United States to any amount and that whole $250,000 FDIC insured thing that you hear at the end of commercials is like quaint because it's not true. I mean, I don't understand another way of looking at the policy as it exists today, even if it's not articulated in exactly those terms. I think that's the de facto policy right now. It would be, you can't, I think you can't run sort of banking in the world's greatest superpower without a better articulation. People need to know what the rules are, but I think part of the problem, and I think where I'm very sympathetic to the arguments that libertarians have been making on this for years, is you need to set the rules, determine what they are, and then enforce them. And that isn't really

what happened here. I mean, this was this sort of rescue emergency backstopping that I think does create sort of a new set of now unspecified new rules. And you can't leave it to, you can't leave the U.S. economy dependent to a certain extent on people figuring out for themselves what those rules are. Yes, I agree with that. And obviously, I don't think we should, the federal government should be guaranteeing all deposits at every level, no matter what.

at the same time the distinction I was making earlier I think is one that's worth keeping in mind let's put it this way if the penalty for running your bank into the ground was death the fact that the United States backed up the depositors would not mean that the management of these banks would therefore take much riskier positions because there's still a punishment for them. And as a matter of justice, right? I mean, I'm not a big, let's do policy by justice kind of guy, but like, that would probably be okay, right? Because there would be another constraint. I'm not saying we should kill all the bankers, but I am saying that. It did sound like that just so you know. But my only point is if there was a severe enough penalty that we could hold

them accountable if they screwed up and the and the punishments were sufficiently harsh. It's, again, it's not the average hardware stores fault. If they, you know, they go to a bank, they're told that it's, you know, it's regulated, SEC, you know, FDIC, all this kind of stuff. And they put their money in the bank. They seek commercials for it, whatever. And, and, and then the bank does something really stupid that they're, that the hardware store owner is not on top of. It's, the hardware store owner, you know, it's, I get, okay, caveat mTOR, but it's kind of a different thing. And, The problem we have is that elites who screw up institutions aren't sufficiently punished for them. And so what you have to do is you have to outsource some of the personal responsibility

where it belongs, which is to the customers. And so I don't, you know, I don't think we should be backing all the depositors. I think we should be. Well, wait, if we shouldn't be backing all the depositors, then why did we back them this time and what distinction would you make next time? well so the reason why we i'm saying going forward we shouldn't back back them all i'm saying that the reason why SVB was backed in this case is because it was going to lead to a bank run around the country and the argument was was that this was systemic which is the magic word that says you can do all sorts of things and people say well you know why doesn't that apply to a small regional bank in the Midwest and it's a fair question you can make the argument and i think some people in the industry

we're making the argument, including a lot of irresponsible people in Silicon Valley, who are deliberately catastrophizing things so as to scare the banking system into saving them. There were a lot of bad actors in all this. But if it is like, why did we bail out all those financial institutions in 2008 to save the system, not to save those institutions? And so there's an argument there for it. I'm saying going forward, you can't have a regime where all depositors are always protected. But if you're going to err on that side, you need to counterfeit.

balance it with much more severe sanctions for people who are irresponsible running those institutions. Like death. But to save the system, you had to save those institutions to go back to 2007, 2008. And I guess my argument is whatever we determine going forward, I mean, it's nice to think that there might be a sort of sophisticated policy debate on that takes all this into account. It's very important, in my view, to have clearly articulated rules. I agree. Now, maybe it's less important today than it was a week ago or than it was 20 years ago before 2007, 2008, because you can have clearly articulated or not entirely clearly, but somewhat clearly articulated rules and then just abandon them because people are saying this is a crisis. But it seems to me that we're better off to have these rules. And if we make a decision that we want to backstop everything, then we make a decision that we want to backstop everything.

I worry about the behavior that that incentivizes, but maybe your point is right. I mean, maybe even people faced with deaths wouldn't change behavior. I just want to underline, Jonah, because we haven't actually said why this was all going to, why Biden or any other president, I think, would have at the highest level,

done the exact same thing. Again, maybe they would have gotten there differently. The Biden administration wanted to get there differently, yada, yada. but that Silicon Valley Bank was overinvested in these treasury bills that had the low interest rate, the interest rate moved too quickly and they were like, you know, animals stuck in the mud that just dried really quickly. And even though you could get out of mud if it dries slowly, you can't get out of it,

dries quickly, that the run was going to be caused if you didn't back up the depositors because no bank actually has enough liquid to match all of their deposits at any one time. And so as long as people thought that the only way that you could protect your deposits was in the big four, then basically everyone was going to have to take their money out of regional banks in the next three hours when the markets opened. And so every regional bank in the country was going to fail, regardless of how many T bills they had, how liquidized they were, because you were never going to be 100% liquid or even 90% liquid. And so no president was going to look at that and say, yeah, that's worth the risk.

Because maybe it won't happen. Maybe enough people just aren't paying attention. Because anyone who was paying attention would have said, like, yep, that's not worth it. Because then it's like the toilet paper thing. If you think everyone else is going to take their money out of the regional bank, you were going to have to as well. It just seemed like there was no alternative. And I think that it annoys me when I see a Nikki Haley, for instance, saying, we never should have done this. what was the alternative? And I don't believe for a second that you in this position,

a smart, thoughtful person who would have been surrounded by experts showing you a pretty easy chart, this leads to this, and it's a collective action problem, would have done anything differently. Again, you might have gotten there differently. And that would have been a fine statement. I never would have secured the depositors money using the insurance fee, basically from the banks, I would have gotten another bank to buy you. Like, that would have been a fine statement to me. But simply saying, I never would have backed up the depositors. We shouldn't have done a bailout is a stupid statement because I don't believe it.

Which is why I was smart for Biden to say in his statement, all the officers of this bank are being fired. All the stockholders in this bank are losing their money. That's my distinction here about it's not a bailout of the bank. It's a bailout of the depositors. You can be against both, but they're different things. things. This episode is brought to you by Squarespace. Squarespace is the platform that helps you create a polished professional home online. Whether you're building a site for your business, your writing, or a new project, Squarespace brings everything together in one place. With Squarespace's

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All right, last thing, and this really falls into my not worth your time, question mark and that is president biden's budget this happens every year it annoys me every year and yet here we are again back at the trough of a presidential budget it annoyed me during the trump years it annoys me during the biden years i do not like green eggs and ham i do not like them sam i am because this is pointless they're never going to happen they're a policy statement from the administration and they're barely even that steve why is this one of our topics I agree with your premise, actually. I think...

Once again, Steve is surprised that I said to the year. Actually. I agree. Yeah, I should have just left off the actual. Brilliant synopsis, Sarah. In terms of actual policy, the president's budget matters not a wit. It doesn't make any difference.

In terms of a statement about priorities and it's, it's, I think, can properly be viewed as an important way to understand what the president wants to do, what he says he wants to do and who he cares about. And if that's the case, what Joe Biden is saying is basically calling for another dramatic expansion of the government from a president who I think has already provided over pretty significant expansion of the government and massive, massive spending. You look at these budgets that come from the president precisely because they're not going to be enacted. There's no hope that they're going to be enacted in the way that he's proposing them.

Even if we had democratic control of Congress, Democratic control of Congress that could override vetoes, the president's budget is not going to be the actual budget. But as a political document, I think it tells us something. And he is proposing massive, massive new tax increase. increases. He is proposing massive, massive new spending in such a way that I think he wants to take that to the voters in 2024. Republicans were they, I think, on better footing in terms of fiscal responsibility than they are because of what they did over the past decade, more or less, would be in a position, I think, to really make this a pretty big issue. But they're not. And the other

big argument is that the very people who ought to be preparing a serious budget, Republicans in Congress, have not yet proposed one and don't show any signs of doing so any time in the near future. So in the one sense, you're right. This is all just rhetoric flying in both directions unlikely to mean anything immediate in terms of actual budgetary policy. But in terms of understanding where the priorities are, I think it does tell us something and therefore it is worth a discussion. Okay, I'm going to disagree with 90% of what Steve said. I mean, the part where he agreed with me, obviously, we're banking that one, but of the rest of what he said. Disagree with 90% except for this one nugget that I think is just so 100% right, which is the Republican side.

The Republicans, there's no platform at the RNC, which is not that important. It's not ever been that important? I mean, it used to be back in the day, but it's certainly not now. Now there's no budget. Now, I mean, there's a divide over entitlement reform. There's a divide over foreign policy. And of entitlement reform, by the way, I actually want to reframe that because it's not a divide over entitlement reform. It's a divide over whether to be a fiscally conservative party that believes in not spending more than you take in, a divide over foreign policy. So, Jonah, does the president's budget actually tell us more about the Republican Party being the party of no or just whatever they are were the other thing? And you talked about some of this on

Dispatch Live, which you can watch if you're a member of the dispatch, that when you let the other side define you, you still are basically beholden to the other side. Yeah, so I'm going to disagree with both of you a little bit. I think the budget, I mean, I'm as a political document, I agree with Steven, it matters. And that's funny, you bring up party platforms, because I was going to bring up party platforms. Party platforms don't

matter, except in so far as they tell you what the party wants you to believe the part, how the party sees itself. Yeah, that's fair. And that's interesting in its own right. And budgets are interesting for similar

reasons. They signal at least rhetorically, that if we had our druthers, this is the kind of president I would be. These are the kinds of things I would want to do. Now, there's an enormous amount of bovine excrement in all of it because, in fact, they wouldn't do some of the things if they actually had to be responsible for it. But directionally, notionally, I think it's of interest.

On the Republican Party, you know what I keep going back to? Do you remember the first, was it the American Rescue Plan? Was that the $1.9 trillion one? when Biden first came in so this was after $4.5 trillion of above you know

baseline above normal spending during the pandemic mostly almost entirely by Trump and then Biden comes in and says I got to spend enough what was it Haley Barbara used to say

spend enough money to skull to wet mule and so he comes in with the $1.9 trillion thing and the The GOP mentioned it, attacked, criticized it twice after it passed, but it didn't actually say anything about it, didn't put up any opposition to it.

The GOP is just simply not an anti-spending party. It is an anti-democrat spending party, and even there unreliably so. And the other thing I keep getting nostalgic about is the Obama years where a bunch of us, because we were so cool, kept using the phrase, this is all about expanding the baseline, which, as you know, that's the kind of phrase you drop at a bar and the chicks just come running. Absolutely.

And expanding the baseline basically means, like, so the budget is a normal budget. In a normal year, there's a budget. We spend X. and the next year whatever we spent the previous year that is considered the baseline and so Democrats for 50 years

have said anytime you want to spend less than you did the previous year that you want to cut even when all you're doing is reducing the rate of growth and spending they say oh that's a cut right unless they're talking about defense unless you're talking about defense right and then right exactly side note this bothers me so much with murder rates and violent crime rates

because inevitably people just used the year before but a violent crime has been going up every year for the last four years and you just keep telling me how much it's gone up percentage wise from the year before you're really missing something here.

Exactly, right, right. So anyway, we spent like $5, 6 trillion dollars whatever the number is over the course of the pandemic between Trump and Biden $7 trillion. And so now Biden is going around

getting to claim that he's a huge deficit reducer because he's only calling for $2 trillion in extra spending and the $3 trillion from the expanded baseline is counted towards deficit reduction, which is a really clever way of lying. And so I think the budget matters

also just in terms of as an educational or a miseducational document about how we talk about the nation's finances because it's all so frigging dishonest. And eventually we're going to have a debt crisis that's going to make the Silicon Valley Bank thing seem like a walk-in-a-park. All right. Last up, a true not worth your time. Steve, Aaron Rogers of the Packers, moving to the Jets.

You want to make the case that this should have been our leading segment today. The floor is yours. There's probably nothing more important in terms of understanding our society at this moment than a deep look at Aaron Rogers. And I say this as a devoted lifelong Packers fan. He's sort of the embodiment of the kind of narcissism that we've seen at the highest levels of our politics, the highest levels of our entertainment culture,

now at the highest levels of professional sports. This is a guy who sort of whined and complained last year, until the Packers gave him a new contract, one that you could argue he deserved. He was, after all, the back-to-back MVP of the National Football League. But Wyden and complained, cajoled the Packers into giving him an ill-advised $150 million contract. He then went to the team and said, here are the friends that I have around the league, and I'd like you to sign all of those friends, which struck, I think, many Packers fans and sane people of all stripes as crazy.

The Packers did some of that. They signed Randall Cobb and over the hill wide receiver. I think they paid him $3 million to do not much this past year. Now comes Aaron Rogers' decision that we, he told us two and a half months ago that he would make a decision on whether he wanted to continue to play football quickly. he had said the same thing last year and then held the Packers and sort of everybody else hostage for two months.

He did the same thing this year. People may have read about his journey into the darkness. He went into the darkness for four days, I believe. A darkness retreat. You mean that literally. Actually, literally. A sensory deprivation. Like a little cove carved into

the side of a hill or a mountain somewhere in California so that he could think for four days giving otherwise you know in the time leading up to this

giving sort of weekly interviews on the Pat McAfee show making a spectacle of himself drawing as much attention to himself in this decision as he possibly could and then goes into the darkness emerges and says that he has new clarity he claims now that he was going to retire,

that he was 90% on the road to retirement. But went into the darkness, emerged. It became clear that the Packers didn't want him back, and he then decided to play football again, sort of implying that he wanted to exact revenge on the Packers for not wanting him anymore. Anyway, this was all so much drama. and I won't pretend to speak for all Packers fans,

but I know that I speak for many, almost certainly most. We wish him good luck. We're happy. We're thrilled to have him gone. I don't ever have to pay attention to Aaron Rogers anymore. It'll make it a lot easier to root for even a Packers team that isn't very good if Jordan Love, his replacement has some growing pains as he gets the job. It'll just be a joy to root for the Packers without having to, at the same time,

root for success for Eric Rogers. Okay, well, I mean, we send Jonah back into the darkness every time we finish one of these podcasts. Like, in between podcasts, you guys think Jonah's like playing with the dogs, but actually we just put him back in his sensory deprivation tank. So that's relevant in that sense. It's relevant to me because my husband also from rural Wisconsin, feels identically to you, Steve. Smart guy.

Smart guy. So I feel like it was good for me marriage-wise to hear that because now I can have, I think, a more sophisticated conversation and really sound like I know what I'm talking about. We're going to have date lunch later today. So that'll be good. Cool, cool. Do you just eat dried fruits?

Ayahuasca. No, Aaron Rogers is now into psychedelics as well. I know, but I was thinking about date lunch, as opposed to, yeah, it was a date joke. It was a date joke. Sorry, a little slow on the dad joke uptake today. As I often feel when the topic of anything Packers Relator come up, I feel like the Japanese soldier is sitting next to the pilot an airplane who has to upend a jerry can of gasoline over himself and set himself on fire because the story will not end. Let's be fair. you think that about pretty much

any time I talk about any subject it's not more intensely on some subjects than others and so the only thing I don't completely understand I mean I get the sensory deprivation thing and yada yada yada and he's an arrogant kind of guy I mean it's like

but from my recollection I used to be back in the day a Jets fan my understanding that it is still the case that being sentenced to a position on the New York Jets is much like what in the military is considered being sentenced to a weather station in Nome, Alaska, right?

I mean, he'll just vanish from the national conversation. So I don't blame you for being very happy. So I think, unfortunately, that's not true. The Jets are actually good. The defense is very good, potentially. They've got all of the pieces to have a pretty terrific offense, including a good offensive line, and some young, very talented, offensive skill players.

It is the case if you're the Jets that you can make an argument, you bring in this guy who, as I said, did win back-to-back MVPs. He's won MVP four times. It's probably not as good as he was three years ago, but he's probably still pretty good, better than he showed on the Packers. To quote Toby Keith, I'm not as good as I once was,

but I'm as good once as I ever was. I mean, maybe. That's very good. So it's possible that he comes in, and, you know, puts the Jets on a path to the Super Bowl. I just think the drama quotient is going to be so high with him, particularly because he's now going to be covered by the New York media. Like everything, this is sort of his dream, right?

I mean, I think part of his frustration was that initially in Wisconsin, you know, he was revered and every single utterance was covered by the Wisconsin media, but he wasn't as big a presence in the national media for non-sports-related things as he almost certainly will be. But I'm going to mute Aaron Rogers on Twitter and not get any Aaron Rogers news as much as I can. And I think I'm just going to have a happier day-to-day existence

because of the longest not-worth-your-time segment ever. Do you want to keep going? The other problem with Aaron Rogers. Steve misses out on all of our not-worth-your-times because he he doesn't even know what we're talking about. It's not that he doesn't think

it's worth our time. It's that like he's, he cannot participate. So this is a nice change for him. We'll give him this. And then we'll now do a whole other six month period where he can't participate

at the end of the podcast. So see you've been a treat having you. And we'll see you in September. And with that, we're signing off. Become a member of the dispatch to hop in the comments section. And if not, that's cool too. Just rate us on wherever you're getting this. A good rating would be nice,

but any rating, any rating will do. Just don't rate Aaron Rogers. That feels unfair to rate. It's like when someone has their book on Amazon and it gets delivered late so they get a bad Amazon rating on the book. That's not nice. Don't do that to people. We'll talk to you next week. Calling all book lovers. The Toronto International Festival of Authors brings you a world of stories all in one place. workshops and more, with over 100 authors from around the world, including Rachel Maddow, Ketouru Isaku and Kieran Desai. The Toronto International Festival of Authors, October 29th to November 2nd. Details and tickets at Festival of Authors.ca.