The Ricochet Podcast - Ups and Downs

Episode Date: February 9, 2018

Who doesn’t love a parade? Certainly not us. We also love a rising market, good explanations of complicated investigations, and clear and concise commentary on the economy. That’s why we invited Andrew McCarthy and Larry Kudlow on this week’s show. They ably guide us through both issues with clarity, good humor, and yes, a bit of scolding. Also, a Minnesotan’s view of the Super Bowl and more about... Source

We have special news for you. The forgotten men and women of our country will be forgotten no longer. Are you going to send me or anybody that I know to a camp? We have people that are stupid. The thing is, there's a huge hypocrisy factor here. Mr. Gorbachev, tear down this wall. It's the Ricochet Podcast with Peter Robinson. I'm James Lylex, and today we collude with Annie McCarthy,

and we spend some time with Larry Kudlow. Let's have ourselves a podcast. Bye-bye. Welcome, everybody. It's the Ricochet Podcast number 388. It's brought to you by the fine people at Bowlin Branch. Bye-bye. promo code Ricochet to get $50 off your first set of sheets, plus free shipping in the U.S. And we're brought to you by Quip. When it comes to your health, brushing your teeth is one of the most important parts of your day, and Quip knows that. They've combined dentistry and design to make a better electric toothbrush.

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Ricochet dollars to. Peter, Ricochet. Ricochet.com. It's fun, it's fascinating, and it's civil. For $5 a month, you become a member of Ricochet. That gives you the right not only – you can read Ricochet for free. I grant you that. You can read most of Ricochet for free. But for $5 a month, you get the right to post on Ricochet and participate in the conversation. Why do we ask $5 a month? For two reasons. One, for $5 a

month, we had all this lawyered up when we founded the site. For $5 a month, that gives us the right to impose certain rules of conduct. And that is what makes the comment section at Ricochet a pleasure instead of a swamp. If people misbehave, we have a word with them. If people misbehave continuously, we have the right to cancel their membership and kick them off the site. We do that very, very, very seldom because this is all self-selection. Good people join Ricochet. The second reason is it costs something to put Ricochet up and we need to cover those costs. $5 a month. Join Ricochet. Participate. Don't just read it passively jump in participate ask questions put up posts yourself ricochet.com there's something else too and i don't i i don't want people to think that ricochet is some backwater the place that reminds you of the internet circa many years ago but i was

reading a piece the other day about how facebook has ruined the internet it's ruined it visually it's taken away the incentive for people to create their own content because it's just scraped and posted on facebook and nobody ever goes there it's really been a baleful influence it's flattened it out and that's the thing you don't get from ricochet it is it still feels like a collection of voices and individuals It's outside of that template, outside of that blue, monotonous, churning, endless scrolling iteration. It's different. It really is a series of conversations with distinct personalities. And as Facebook gets larger and larger and starts to control more of the media environment, places like that are going to be more valued.

So go there, won't you? Peter, you don't spend a lot of time on Facebook, but if you did, what would you be saying to people right now who are screaming that John Kelly is the latest example of somebody who has been morally corrupted and is gone and he's lost his way and Trump corrupts everything? You worked in the White House. Is this sort of normal what Kelly's going through? The White House I worked in was so different from this White House that it's very hard to draw any comparisons. So I can't figure this out. Rob Porter, staff secretary. Staff secretary is a very big, very responsible job. The staff secretary is the person who reads all the material and decides what paper actually gets forwarded to

the president himself. Some things the president needs to sign, and that's obvious. You've got to give it to the man for his signature. But there is a wide discretion. Does this memo require his attention? Does that piece of paper require his attention? The staff secretary also has something to say about the way the president's scheduling works. It amazes me that the staff secretary, Rob Porter, has been in his job for over a year now. He was there from day one. He's been in the job for over a year without a security clearance. The FBI has been holding up his security clearance. How he was able to function, since so much of what reaches a president's desk is secret, I don't know. As for John Kelly, Orrin Hatch also made it, Senator Orrin Hatch, Rob Porter had served as

chief of staff to Senator Hatch. Senator Hatch made a statement in favor. All I can see is that Rob Porter, when you work with him professionally, is apparently totally squared away, dedicated, efficient, impressive in every regard. And Senator Hatch and General Kelly were unaware of difficulties in this man's personal life. That's all I can think. But I don't know. And again, I come back to the question to me is less – I mean I can see General Kelly has his hands full. Of course he does. And he would tend to – he would tend to praise a man who made his job easier.

And as far as I can tell, Rob Porter is so efficient, so good at what he did that everybody in the White House valued his presence there. Okay. I can get that. What I cannot understand is why the FBI is holding up his security clearance when he was in this extremely sensitive job, didn't raise flat, why there weren't flags weren't thrown on that play all over that I cannot understand. So there's there, James, I can't, I answer your question by asking another question. I don't get it. No, a lot of this seems, how can you do the job without the security clearance what's what would be the possible hang up um do you think you could get

a security clearance today could i yes uh unless they've changed the rules i don't think i've done anything terribly unscrupulous my see i have my my friend and colleague josh gilder who i don't think will mind my telling a story both of us were speechwriters for vice president as he was then, George H.W. Bush. And my security clearance came in pretty quickly. I think it was only a matter of a few weeks. I can't remember, but it came in pretty quickly. There was nothing – no problem with it. And Josh's security clearance got held up and held up and held up. Now, speechwriters, we didn't have to look at secret documents to do our jobs.

So it didn't impede his ability to do his job, at which, by the way, Josh Gilder was wonderful. What a beautiful writer. But we were talking one day and he said, well, I can't figure out what could possibly be holding up my security clearance. My grandfather was a communist. Do you think that could be it? Possibly. Possibly. Actually, to be fair, his grandfather probably wasn't a card-carrying communist,

but he was a union organizer and certainly dealt with – anyway, you get the picture. But as far as I am aware, I have no communists in my background. Well, I was in Russia. I've got that on my passport. Ooh. And the day ended. Collusion. Collusion, Lyle.

Well, the day ended up in a bar at 2 o'clock and 3 o'clock in the afternoon where we were doing shots of horseradish vodka and eating lard spread on black bread with pickles. You lived? I lived, but I have no idea what sort of things I spilled at that point. I just remember that I started talking a lot, and everyone grew silent and smiled, and there was this clicking sound from the ceiling and under the table. But other than that, I'm sure that everything was perfectly above board. I know that at the end of that day,

oh, Lord, I was in a comfortable state of mind when it came to Mother Russia. And let me, by the way, give you the most important words for getting a good night's sleep as well. That would be comfortable, comfortable, comfortable. If you want the best sleep of your life, you need to be comfortable. And that's what sleeping pills are trying to do for you. But you don't need that, no. You just need bowl and branch sheets. What makes bowl and branch sheets unique is that each sheet is crafted from 100% organic cotton.

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thanks to bolin branch for sponsoring this the ricochet podcast and now we welcome back to the podcast annie mccarthy former assistant u.s attorney for the southern district of new york and a contributing editor to national review and a senior fellow at the National Review Institute. You can follow him on Twitter, at Andy C. McCarthy. Andy, welcome back. We are so far from that moment months and months ago where the president tweeted out, hey, I'm being surveilled.

But yet it keeps circling back and back and back to that, to that strange New York Times article about the FISA court. Where are we now? And are the suspicions that people had at the time when the president first tweeted that out and the Times broke the story, is that all being borne out or are we overheating ourselves with paranoid conspiracy fantasies? Well, it hasn't all been borne out. That specific allegation, I think, has never been borne out, and I highly doubt it would be. But that is not to say that something very serious hasn't gone on here. advanced a great deal, maybe even a great deal more than we thought it could a little over a week ago, by what has been unsealed in the memorandum that was filed by Senators Grassley and Graham,

which now that that's out there, the Nunez memo, which was met with such hysteria, is now much more corroborated than the Steele dossier ever was or ever could hope to be. So, Andy, Peter here, let's just take this step by step just to lay the sort of basis for our listeners. The Nunes memo is the memorandum released by the house select committee on intelligence of which devin noon is of california's chairman and the memo was only what three three and a half pages written by staff correct that's right okay and then and by the way if i could just ask you one or two quick questions i want to get to the grassley graham memo and really bear down there because that's what's new but the quick couple quick questions on the Nunes memo. First, the press and indeed the FBI warned that the release of the memo would endanger

nationals. Was that nonsense or did we take a risk? It was absurd. Absurd. I mean, looking on the face of it, it's absurd. Okay. Next question. Next, we're told, just two more questions here.

We're told that the Nunes memo is flawed, that it's intentionally misleading, that we're told this by the press. We're told this by the Democrats, particularly Adam Schiff, who is Devin Nunes' Democratic counterpart on the committee in the House. were told that it's misleading that the FBI did, too, tell the FISA court that the dossier, that some of the information had political motivation. Are they on to something there? No, I don't think so. In fact, I think I wish I political backing of that application or the political providence of it, they'd probably be under indictment for fraud. Right. Essentially, they said that there was political motivation, but that was not, of course, the half of it. And my sense of it, and I think this is actually important to lay this out a little bit, my sense of it is that what they led the court to believe, and certainly what I think they led the Intelligence Committee to believe in their testimony to the intelligence committee, and a lot of it was classified, is that the project was basically run by Fusion.

And what they suggested was that it was political, and it was political in the sense exclusively from the second part of what Glenn Simpson of Fusion describes as his two-pronged or two-part Trump project. Okay, so go ahead. What I was going to say is the first part was the part that was done for the free beacon. But after they're out of the picture, that's when the Hillary campaign comes in to pick up the research. And that's when Steele is retained and they begin this Russia project. Okay, so to sum up on the Nunes memo, it establishes that the FBI submitted to a FISA court for an original application and then three renewals, information that was bought and paid for through third parties but nevertheless bought and paid for by the Democratic National Committee and Hillary Clinton's campaign, the FBI did not disclose this information, instead using it to get the FISA court to give the FBI a warrant to spy on an American citizen. The Nunes memo establishes that, and no reasonable person can doubt that much. We've got that much is effectively on the record, more or less indisputably.

Is that right? Yes. Okay. Now, Senator Grassley and Senator Graham, both Republicans, Senator Grassley, chairman of the Senate Intelligence Committee, Lindsey Graham, an important figure on that committee, have released what in the last couple of days? And what does this tell us? Well, what they have released is a kind of a declassified, more unredacted version of a memorandum that wasier, for lying to the FBI essentially about his communications with the media and what he told the FBI about those communications. And the reason the memo

is so important is now that it's been redacted and we can actually read most of it, which was not the case until a couple of days ago, we now see that it puts the lie to many of the criticisms that were made about the Nunes memo, such as that it was taken out of context and that there may have been plenty of other information in it that would have justified the warrant. The senators in the memo make it very clear, and quoting in parts from some of the actual submissions to the court themselves and some important testimony about them, they make it very clear that the bulk of the warrant, especially the first one for Page, was the Steele dossier allegations. And moreover, they also had testimony from then-FBI Director Comey,

or a briefing that Comey gave to the heads of the Judiciary Committee in the Senate, where he said that the reason, he acknowledged that they did go to the FISA court with these unverified, uncorroborated allegations from Steele, and when asked why they did that, he gave I just think it's mind-boggling, but he responded that they regarded Steele as reliable, and therefore they went with what he gave was to give them good information.

I guess the reason I find that so troubling and astonishing is that this is like Investigations 101. The court never cares about the purveyor of the sources. Right. about the purveyor of the sources. What the court cares about is whether the sources of the factual information, the people who have firsthand observations of the allegations, the factual allegations that a probable cause finding is based on, whether those people can be relied on, whether they actually saw or heard the things they said they saw or heard. You could have the best FBI agent in the history of FBI agents who's your case agent,

but the court is not going to care about how many nice medals he has from the Justice Department. What the court is going to want to know is does the agent or do the agent's sources have a basis for the allegations that they report? The credibility of the agent who amasses the information is irrelevant. Right. Excuse me. Andy, James Lylex here. I'm sorry. I've been dealing with microphone problems, which I blame entirely on Putin's operatives.

But now that I'm here, I've been hearing what you said. And I'm curious, if steel was the means by which they wanted to get some of this through, isn't it possible perhaps that some nefarious democratic operatives, such as Sidney Blumenthal, were the original people who came up with this idea and decided that this was the way they were going to wash it and make it a little bit clean? Because nobody would believe it if it came from Sid. But if it comes from steel, that's legit, right? Well, it's certainly his sources, James, Steele's sources, since we cannot at this point verify who they are

and have to regard them not only as unverified but probably unverifiable, we obviously have to be very concerned about that, not only because the information, at least some of it, may be sourced to Sidney Blumenthal, which is an even tighter connection to the Clinton campaign that wasn't disclosed to the court. But what I've been more concerned about from the beginning is that this is Russian disinformation, that the Russians could perceive through what Steele was running here that they had an open avenue to feed information into our intelligence community and that they did precisely that. So I think that's been a concern from the beginning.

Right. Andy, former United States, former assistant U.S. attorney for the Southern District of New York. You've been in case after case after case. You were involved in putting away the blind sheik who was involved in the first bombing of the World Trade Center. You know this world in detail. It was your world for years. Question, does the FBI behavior here, I mean, talking candidly, does this strike you as more or less normal behavior? They were just cutting a few corners, but this time they got caught because it's a higher profile case. Or do you look at this and say, this is not the FBI that I used to know and work with?

Peter, this is not only abnormal. I actually feel like I have some egg on my face because for and this is this is almost like deja vu with the Clinton investigation. But for many weeks, I confidently assured people that the Steele dossier business was going to in the end be a dry hole for for for people who are relying on it in the Trump camp, because I told them there was no way on the planet Earth that the FBI would ever bring to a court uncorroborated, politically motivated allegations. What I predicted was that the FBI would do what the FBI always does, which would have been take five or six interesting things out of the dossier and independently corroborate it by investigation to the point where the original source of the information would be irrelevant by the time it got to the court. As I pointed out to people,

in my career, I've taken information from terrorists, from drug dealers, from scamsters, from, you know, you name the bad source. And we all know the, you know, the trite old expressions that, you know, it's not priests and rabbis who can give you information of terrorist organizations and the mafia, right? You have to go to bad people. So you can't say, I'll never take information from suspect sources. But the FBI is the organization that we rely on to basically scrub that information before it goes to a court so that when we make decisions about the liberties of Americans, like whether they can be spied on, that's done on reliable, probable cause information.

Next question. Does it strike you as odd, surprising, lamentable that at least unless there's something I've missed, I have not heard a single word of remorse from anyone who not Comey, not the current director of the FBI, Christopher Wray, not Strzok, not nobody you know what we really we got carried away it's it's a it's a it's a professional temptation to become over committed when you're in involved in an investigation and we gave way to the investigation please don't hold our actions against the fbi as a whole it's filled with good there are all kinds of dignified ways they might have expressed some remorse. I haven't heard a word. They think they did right. Is that correct? Peter, I think this is a really troubling aspect of this. When you are in this business of prosecuting and investigating criminals and national security threats for a long time. There are any number of times in your career that you're dealing with such bad people that the thought more than once crosses your mind that you can cut a corner here or there because people will understand. And yet the culture of

law enforcement, and particularly the culture of the FBI and the Justice Department, has always been that that's the most reprehensible kind of behavior. That's what makes us like the people that we investigate, and that's why we resist it. for years and who have done great work for the United States against some really terrible criminal elements and national security threats to have gotten so carried away by the idea of Donald Trump, of all things, the president. I mean, I wasn't a Trump guy either. And I understand, you know, at a gut level, some of the revulsion that some of the people in law enforcement we've seen had at the prospect of a Trump presidency. But that's not an excuse to not do your job and to do it with professional detachment. I mean, that is the job. When you have these texts from these two lovers going back and forth, their animus toward Trump being a parent, it's astonishing, really, that it seems to them that they've decided to become McBain characters.

They're going to cut the corners, on the right at least? Is the end result of this just a lack of faith and a belief that it's all political and we should view it through that lens from now on? Indeed, we were fools not to view it through that lens before. James, you know, I really think that we're foolish if we make calls like that in the middle of a situation where it's clear that people have made mistakes. I mean, it would be kind of like if you ask somebody in the middle of the worst days of Watergate, should we just give up on the whole governmental system and the whole constitutional system? some detachment, some ability to assess what really happened here, a lot of which we still don't know because so much is classified. They have a side of the story that they really haven't been able to tell either, and they should be able to do that. And then we need to be able to assess

it, not in the heat of the moment. And I think that, I certainly hope, but I think that when we, when that time finally comes, what we'll say is the FBI is a great institution. It's a critical institution as far as the rule of law is concerned. We need the rule of law if we're going to have a flourishing society. And the fact that some people, even important people in the institution, made some bad judgment calls in a situation where the Bureau, through no fault of its own, was really thrust into the politics of the 2016 election. I think that's something that's going to be repaired or can be repaired. But I don't think we should fool ourselves that it's trivial. It's going to take some time to rebuild their credibility.

One more before I give it to Peter. And it's this. When we look, for example, at the most recent texts from Mr. Strzok, he's talking about being in Jim's skiff. Now, he may be saying that he's in the cabin of a small boat, but most of us took that to mean he is in the secure facility that you can't bring your phone into. And it's like one of those little things that we see sprinkled throughout these misdeeds that would land any one of us up against the wall with our hands behind our neck. There seems to be the idea that no matter what these guys do, nobody's going to pay.

The rules are different for them. At the end of the day, if indeed there is some skullduggery and malfeasance, is anybody going to pay or is it going to be resignations and handshakes and goodbyes and mistakes were made and the rest of it? Is there a different set of rules for the FBI, in other words? Well, James, I think there's some people who are paying already. People have been moved out of their jobs. They've been demoted. And that's just the beginning. There's going to be an inspector general's report and go into a court to get a warrant in a criminal case, even though it's an ex parte proceeding in the sense that it's only the prosecutor, the agent and the judge, everybody does it with their eyes open to the fact that you're trying to build something that will eventually be a prosecution, which means everything you're giving the judge is eventually going to be public. The defense lawyers are going to get it. They're going to be able to pick over it. And if you've made missteps, they're going to be revealed.

And the big problem we have here is all of what's gone on in this FISA situation occurs in the black box of classified information. And we all know that the nation needs to be able to protect not only its secrets, but the sources of intelligence and the methods by which we gather it. But it's a very tempting black box in order to hide things that are embarrassing or worse. And it does not lend itself to the discipline of a criminal proceeding where everybody knows they have to be on their good behavior because their behavior is going to be checked at some point down the road. Andy, Peter here with a couple of, you've got to go write more columns about all this.

So a couple of closing questions. Last question on the Grassley and Graham release. It was, it's an excerpt from a criminal referral. Does it look to you as though if you were in the Justice Department, you'd take a look at that and say, yeah, we should start a criminal investigation of Christopher Steele? Yes. It does.

Okay, now over to Mueller. Do you agree that these are two completely separate matters, that the Nunes memo the grassley graham memo that has no bearing whatever on muller and his investigation or do you take the argument that if this if the fbi's work has been discredited if the steel memo the steel dossier rather uh even today nobody claims that it's in any way, any serious way verified that that poisons the entire matter from the point of view of investigators and the special counsel. And Mueller should just wrap it up and say, we're done. Well, I think, Peter, and I wrote a column about this a couple of days ago, the Mueller investigation is separate from what went on with FISA, but to the extent

that they've been conflated, it's not the fault of the Nunes memo. It's the fault of the Justice Department and the FBI when Mueller's investigation was announced, when they made gratuitously public statements that should never have been made that suggested that a key element of Mueller's investigation, which is supposed to be a counterintelligence investigation of Russia's interference in the election, they said a key element of that would be whether there was coordination between the Trump campaign and the Kremlin't, given that they said that gratuitously and shouldn't have said it in the first place, I can hardly blame people for saying it's the Justice Department and the FBI that put these two things together as if they were one in the same from the start.

And that if you knock out the collusion aspect of it, then what's the point of Mueller's investigation? To my mind, Mueller's investigation, the most important part of it, then what's the point of Mueller's investigation? To my mind, Mueller's investigation, the most important part of it, and the part that all of the public should still support, is we need to get to the bottom of what the Russian threat to our institutions and our election system is. And I don't think that the collusion aspect of it collapsing makes the rest of the investigation illegitimate. But I do think it would be incumbent on Deputy Attorney General Rosenstein to make it fact that Trump was elected president, and some people simply cannot abide it. Andy, we'll talk to you again with the next little bombshell that erupts or explodes or lands, and we'll learn as we always do. Thanks for joining us today. Everyone, read Andy McCarthy in National Review.

He is doing the best analysis and reporting on this matter anywhere andy thank you thanks so much guys appreciate it is and i rely on it to to keep me sane and informed i mean if you just go by twitter you are whipsawed back and forth by the people who say nothing everything nothing everything you have to go to guys who don't don't necessarily i mean andy is fair and balanced on this. He's not trying to make a case like you feel so many people are. He's just saying – I mean it's the expertise of somebody who used to do this kind of stuff for a living. Hey, we're going to talk to somebody who does business for a living and talks about business in just a second, but I want to tell you, first of all, no, we've had so many mic troubles today,

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revolution you can listen to his nationally syndicated radio show and of course you will follow him on twitter at larry under slut under slash you know that that line thing i just just search for couple you'll find him larry we've got more deficit spending, but apparently it's okay. I guess we've learned to live with a deficit bomb. Indeed, love it, right? Well, look, on the deficit, the key there is economic growth. I mean, we haven't had any real growth for eight years. We picked up the economy in the last few quarters. Following the

tax cuts and the deregulation, I'm very bullish on the economy. I think we're headed for a 3% to 4% growth trajectory. And I think that's the single best way to lower the budget deficit. Every extra point of GDP above the baseline cuts the deficit by $3.3 trillion over 10 years. So I'm not near as bearish on it because I think the economy is picking up steam. Larry, Peter here. Listen, we talked to you on this podcast. You mentioned that you've seen the president. This is pre-tax reform.

You said, Mr. President, whatever you do, you've got to to cut the corporate rate you've got to get the tax reform through they get the tax reform through the year turns over and now the markets the have you seen my 401k lately kudlow what the what happened what happened i hold you responsible. Yes, you should. Absolutely. By the way, hold me responsible for the prior gain of 30% since the election. No, that's all mine. You forgot all that part, right? So we're in a normal correction. It was really started by higher bond yields, which themselves are a function of the stronger economy.

Real interest rates, in other words, are rising. It's not inflation. It's mostly real interest rates. And then I think really what could have been just a 5 percent correction or something got worse because of these crazy VIX short-selling covering. There are all these derivative products. They're very complicated. I'm not sure I understand all of it. But people were short the VIX because there hadn't been any volatility. Suddenly, volatility picks up. And a lot of these derivative instruments now have trouble covering their short positions

on volatility. That's the story of the so-called VIX fear index. But best I can tell, that's all that's really going on. And rising rates in a good economy is okay. So my point here is do not panic, as you are sounding like you're panicking, Peter. Do not panic, as you're sounding like you're panicking, Peter. Do not panic. Under Reagan, we had a 25% drop in October 1987. The Gipper went out. Most of it in one day. Yet that's correct. That's, by the way, much, much worse than what we're going through now.

Much, much worse. And he said the economy is fundamentally sound. And I would say the exact same thing today. The economy, in fact, is getting better. And earnings, mother's milk of stocks, are always profits. Earnings are rising rapidly. We're expecting 15%, 16%, 70% rise this year. Bottom-up earnings are looking good. The whole story looks good. And you just sit through this correction. Buy the dip, Peter. Do not panic. Buy the dip. It sounds like you are.

Just buy and hold. That's the Kudlow axiom. I have, Larry, I've known you for 30 years, and I've never heard you say sell. I don't want to sell. I want to own America. Okay, listen. Own the American economy.

Listen, selling is never a good idea. You and Warren Buffett. Never a good idea. to sell you i want to own america okay all the american economy i wasn't selling never a good idea you were a good idea so right buffett says the same thing jeremy siegel of pen is the guy who wrote the book stocks for the long run they outperform every other instrument by a significant margin and you know we you, we had from the depths. Look, imagine if we had this conversation in 2008. You'd probably be standing beside your window out there ready to jump. Don't. Don't.

And now we have better economic policy. The president has delivered, as I kept telling all you stiffs for all that period of time, that he'd get it done in the first year. And he has. Give him some credit. And'd get it done in the first year, and he has. Give him some credit, and he's deregulating the economy, and we're no longer attacking business, and it's all good.

Just sit through this silly little correction. It's nothing. Okay, so here, but here, one more big, big question, big policy question. Big one. Since the crisis,

Ben Bernanke at the Fed, then Janet Yellen. There is the Fed, the quantitative easing one, quantitative easing two, quantitative easing three. And our friends at the Wall Street Journal who are smart people, the editorial page of the Wall Street Journal have been fretting for a decade now. Then when it comes time, when the economy starts to take off. There's too much money in the system. There are inflationary pressures. The Fed is going to have to unwrap this by raising rates. And the argument is Janet Yellen is out. There's a new guy in, Jerome Powell. Nobody knows quite what to expect from him. But it looks as the feeling is he's going to continue this raising of the rates. You can talk about slow and steady and measured all you want.

This is going to be very painful and wrenching. The markets haven't been through this before, having money sloshing around for a decade, and now the Fed trying to take it back. Is the road back to normal something we can even travel? What did you have for breakfast this morning? I'm just after you, Larry. Boy, oh boy. I'm trying to, you know, what I want to make you do, you're such an equitable, even, I

want to make you angry. I want to get you fighting with me, Larry. That's my aim here. I don't have enough energy. I have a ton of distractions to fight with Peter Robinson, my old friend. No, look, by the way, after QE1, I agreed with the Wall Street Journal. QE1, I think, was necessary. The other QEs, probably ill-advised.

I don't know if they did any damage, but they skewered the markets in many inefficient ways. We could have done without all that. But look, I think we don't know enough about J-PAL. He's a smart guy. He's not as much of a reformer. He wasn't my first choice. I wanted Kevin Warsh, frankly, and I wanted John Taylor. Those are my two choices

because I think they would have reformed the Fed. But, but, but, let's give J-PAL a good opportunity or a good chance. He's a smart guy. So my thought about the gradual raising of rates to normalcy is fine. I think they're going to do it moderately. I don't think there's any rush. I don't see any inflation. If I have a quibble with the journal editorial page, I just don't see the inflation. I know a lot of people have been screaming about it for years. I'm not one of them. And gold prices have been very steady over the past four or five years. The dollar is a

little softer, although fortunately during this correction, it's held and actually gone up a wee bit. So I'd like to see a somewhat stronger dollar. And I think that's what's going to happen off of the strong economy. And so let them gradually raise the Fed funds rate, the target rate. I'm fine with that. I think that's all discounted in the market. What you do have to watch, and I will acknowledge this, if you dare to look at the short run, Peter, if you dare to look at the short run, bond rates are the key. you've had a big adjustment in the 10-year bellwether bond treasury bond from two percent to 2.8 my feeling is it's going up to about three and a half percent in really a year or so okay yes and and i think and i think in years ahead it'll go higher than

that so that is an issue i myself have been looking for a correction, not as big as the one we have because of the rising bond rates in the short run. That's congestion for the stock market. In the long run, it's healthy if the economy is doing well. So I don't fret about this stuff. Listen, I have one more question, then I'm going to turn you over to James Lilacs, who's champing at the bit to get back in here. Here's my champing at the bit to get back in here here's my camping mike champing my question so donald trump has made there he gave the state of the union address and the all of us conservatives said you know that was a very conservative state of the union address and then right five minutes later you say to yourself but wait a minute there wasn't a word

about this gigantic federal debt there wasn't a word about reform gigantic federal debt. There wasn't a word about reforming entitlement spending, which everybody knows simply cannot continue ad infinitum at the current rate. So, question, is Donald Trump aware of this problem that the federal government cannot continue domestic spending the way it has and simply saying as a strategic matter, all that matters right now is economic growth. Everything else, even the debt, is a detail that we can't get to. We mustn't even attempt to get to until we've got quarter after quarter after quarter of growth under our belt. Or is he just oblivious? Is he just oblivious is he just trying to buy his way into re-election in 2020 what i mean candidly what do you think is

going on no no i don't look he's aware of the debt as i said earlier the path to a lower deficit is growing the economy that's really important and his whole economic policy is aimed at that. And he's fulfilled so many of his promises. All you guys who have not given credit for that, he's changed the incentive structure of the economy. So that's a good thing. Now, regarding entitlements, he has attacked and wanted to repeal Obamacare. And we got part of that, as he says, we drove a stake in the heart of Obamacare by ending the individual mandate in the tax bill, which was something that I argued for with Cohn. And they didn't think it was possible, but it turned out to be possible. And they'll go after more of Obamacare.

That's the biggest entitlement problem today. Now, at some point, I will agree. And, you know, Mick Mulvaney's budget took measures to deal with Medicaid, which is the biggest and fastest spender. And he's not gotten through yet. I mean, Mulvaney's budget was really good. The problem is it didn't have any support. Republicans barely supported it. And whether they're going to tackle Medicaid, whether they have the votes in the Senate to do so, Peter, I don't think so right now. They're going to have

to pick up some more Senate seats and they're going to have to hold the House and so forth. So that's a hard thing. But the president himself has talked about reforming it, talked about abolishing Obamacare and reforming Medicaid. Look, they wanted to block granted and push it back to the states. That was in the original Trump budget. They couldn't do it. Votes weren't there. So let's hold back. GOP is going to do much better in November than a lot of people think it is. Much better. If you look at the rising polls, you can see it. Let's go back to that increased spending. We all hated the caps on military spending. They were kept about $550 billion. Now, Senate wants to increase that to about $630 billion and then more for supplements and emergency funding down the

road. So $700 billion. We've agreed that we have an underfunded military powerful than it is. We need to get the Navy up, et cetera, et cetera, et cetera. But the deal that they're striking and seem quite comfortable with is that the Democrats get to boost their non-military spending preferences by about $130 billion over two years.

Now we all know there's horse trading going on, but 130 billion. And on what, for example? It seems to me that the GOP continues to lose the intellectual argument against the perils of debt and at the same time is not making the argument that you're making that we want the president to make, which is to say that when you cut taxes, that's not costing the government something in the long run because it increases the amount of revenue that the government gets when the economy gets better. That's the statement that needs to be made.

And can you see the president making it, or is the GOP just sort of resigned to, well, you know, spending money is kind of fun, and it gets us votes, and what's the harm, really? What's the harm? I wouldn't. Look, I think, again, I think Trump understands all that. He doesn't have the votes to do what he'd like to do. If you go back, I'll say this again on behalf of Mick Mulvaney, who's a terrific budget director. He wants to do what we want him to do with respect to domestic spending restraint. He wants that. But unfortunately, the Congress is not cooperating yet.

Now, I don't know if this deal will go through this two-year deal you described. It's very good on the military side. It's not very good on the domestic side. Overall spending, James, though, overall spending is holding at about 20% of GDP. So I don't see this big spending surge. They're refunding and they're going to shift the caps. I agree with that. You know, progress should not be the enemy of perfection here. But basically, after the Obama stimulus package ran out, we moved back down from about 24% of GDP to about 20%.

I could live with 20% if the economy is growing at 3% to 4%. I'm okay with that, and I agree. The investment in defense, it is principally investment in weaponry and SDI and so forth. That's a good thing. That's a good thing. weaponry and SDI and so forth. You know, that's a good thing. That's a good thing. Democrats don't want to cut domestic spending. And the GOP is a little shaky on that, but they'd like to do it, but they don't have the votes. So, but I wouldn't, you know, I wouldn't go nuts on this. 20% GDP is okay. I mean, growing the economy will probably bring it lower. So let's see what happens.

You can only do what you can do. And the Mulvaney budget, unfortunately, that's a good blueprint for what you want and what I want. But you can't get it through. And let's see what happens in the midterms. It may take, you know, we may not get there until 2020 if the Republicans hold three houses. It's a very hard thing. But it's not crazed. We're not running at 24, 25 percent anymore.

We've got it down. And the sequester a couple of years back did help, helped, you know, a lot. And Mulvaney wants to go after the small entitlements, incidentally, you know, food stamps, which are now called SNAP and various welfare programs. They've wrecked the eligibility. During the Obama years, all the eligibility requirements were essentially taken off from the mid-90s deal between Bill Clinton and Newt Gingrich. Now, that needs to be changed. We need to create incentives to work, and we need to not create incentives to not work. And that's crept into the discussion. I mean, you guys should talk to Casey Mulligan of the

University of Chicago. He wrote the book on this. So that's an issue, the small entitlements, but they don't have the votes to push it through. And it'll play really well, too, because that's the Democratic playbook. We are now going to load up food stamps into airplanes and fly over cities 24-7 and drop them out. And the Republicans say, no, how about if you don't drop them out between noon and 3, and then the Democrats get on MSNBC and say the Republicans want to take food away from the mouths of poor people. It'll be great. That's the old fall. You know, we had record levels of food stamps spending.

Now, that's come off a bit because the economy is better. But I agree. It's a priority. I absolutely agree. I just don't think it's an end-of-the-world priority. The other rhetorical construct we've had this week has been apparently there was a proposal for a parade which instantly in the mind of the left turned into uh donald trump with his mussolini posture nodding as the as the tanks go by um and then they instantly came up with their own tiananmen square strategy where somebody will recreate the iconic photo in front of

well i don't know what i mean at this point military prowess would, it would be funny if there was just a spot in the parade where there was absolutely nothing, nobody marching. And if you looked overhead, you saw a drone circling, or perhaps just some of those small, small little drones that they have with the great cameras, because it's, you know, it's not might and hardware and power necessarily all the time everywhere. But so this is what we're debating. Are you in favor of a parade or do you think that this is just some A-level trolling and we'll be forgetting about this next week after something else happens? Well, I probably could do without it.

You know, I probably could do without it. You really pressed me hard. The generals don't want to parade i take it um we have we ever had military parades in this country yes i mean we have parades on independence day inauguration like that veterans day well big i think at the end of the second world war at the end of the second world war it was i think or the first War, for sure. FDR started a tradition of parades with hardware. Truman ended it. If you look at the inauguration photos for Eisenhower and Kennedy, they were taken some tanks by.

And this is different. I'm okay with a couple of tanks and so forth, but I could probably do without it. Trump is committed to a strong military, and that's a plus. And I don't know if we need a parade. I could live with it, but I could probably live without it, too. It'd be interesting how the ratings would be on the ratings. And you're probably right. All these left-wing Democrats probably run out and throw themselves in front of the tanks.

You're right about that. Now, that could, A, be hilarious, or B, be not hilarious. I don't know. Victory parades are great. Peacetime parades, I don't know. We'll see. It's not the most important

thing to me. We'll see who walks in front of the tank. If it's Bernie Sanders stamping along with a walker with a couple of fluorescent tennis balls on the legs, it will show the intellectual ferocity and newness of the party. Hey, Larry, thanks a lot for coming by again.

I appeal to you. Do not let Peter Robinson jump out of any windows. Buy and hold. Buy the dips and hold it forever. And you're going to make a lot of money in the stock market. That's all I have to say. Thank you, Larry.

Thanks, fellas. Really appreciate it. Bye-bye. Pleasure as ever. Yeah, you know, we hate these stock market gyrations and the rest of it. He's right. You buy, you hold, you maintain, you white knuckle. But I'm almost in a way sort of relieved when this happens because when the stock market has been going up –

when I hear the stock market has gone up 250, 300 points in a day, that doesn't make me feel confident. It doesn't because that's unsustainable. I look at the stock market and say, stop running around with scissors. You're going to put all of our eyes out. Stop doing that. What's the matter with 25 points a day? Can't you just calm down here? 30 points a day, that would be great. But then again, I remember back in college when I had no investment in the stock market whatsoever. And when I would hear that it was up, I sort of felt this sort of meaningless relief. When I was down, I felt this sort of dread. And that's really how you go. But I didn't know anything back then about stocks. And I'm not sure I know a great deal more.

But if I wanted to know more about anything, where would I go? You know where I would go, where you go. The great courses plus. It's one of the great enjoyments of life is learning. And where else can you find a better example of that? Well, not only can you learn about any topic that interests you, you can learn new skills and expand on your hobbies. From courses about how to cook, how to take better photos, how to speak another language, play chess, or even draw. The Great Courses Plus gives you unlimited access to over 9,000 engaging video lectures presented by top professors. You can watch from any television, any laptop, any tablet, any smartphone, or you can listen like you would through a podcast through the Great Courses Plus app. Now, there are so many things to learn about.

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well, special offer for you. We want to find you the courses that you want. Sign up now, and as one of our listeners, you'll get a free trial to enjoy all of their lectures, but you must go to our special URL. Start your free trial today at thegreatc plus dot com slash ricochet that's the great courses plus dot com slash ricochet and our thanks to the great courses for sponsoring this the ricochet podcast well peter um where do uh you you saw the super bowl right you saw it i saw the super bowl i saw the super bowl and I lost a bet to John Yoo as a result of which I am to pose in a Nick Foles jersey here in California for the satisfaction of John Yoo.

So my humiliation – I feel worse about the loss than Tom Brady or Bill Belichick possibly could. Well, watching it on television as you did, how did Minneapolis come across? Oh, by the way, that's a very, I thought Minneapolis, of course, it was snowy. It was Minneapolis looked beautiful. And that stadium looked absolutely spectacular. In fact, earlier this week, I spoke to somebody who was actually at the game, a New Yorker. And I asked you, is this is the stadium as spectacular as it looks? And he said, it's absolutely marvelous.

Not a bad seat in the whole stadium. Beautiful to look at. Anyhow, I thought it was a big day for Minneapolis. It was. And I was looking at those aerial shots, which, of course, is how everybody judges your city. And in one of them, we looked entirely blue. They used some filter or perhaps the aspect of light composition and moment and all that and everything looked as though it was frozen and carved from one block of glacial ice it was lovely and then

of course that wonderful unfurling of the prince symbol in purple from one of the shots during that otherwise forgettable justin timberlake uh celebration halftime moment. It was lots of fun. The city felt great. The only problem was that one Philly fan was caught taking a seat. He snapped off the seat, left the stadium with it, and actually – Are you kidding me? Unbelievable. And got it through the TSA. And I wrote a column about him. He got it through the TSA?

He talked his way through? Yes, he did. So essentially we have a monster in you know it's i'm sure in terms of personal property destruction among philly fans this is nothing but uh for us it was you come to our house you take a seat this is like this is like inviting a guest into your house who goes to use the bathroom and uses the specially wrapped soap that your wife set out you're not supposed to unwrap the soap you idiot that kind of guy that's who he is that's the sort of monster who came here well we found him and apparently he's going to pay us back which is which is nice but no it was fun here the city was not uh ground to a halt as many had predicted it

was i mean the next day they said oh you better work from home. Everyone's going to be going to the airport. Yeah, okay, I'll work from home. But we handled it well. We're a pretty big town. But at least nobody's saying that this qualifies now as to have a Winter Olympics because we're not that stupid. By the way, a question for John Yu.

Can John Yu, would john you justify he could john you probably could construct some argument under which that philadelphia fan was justified i'm gonna have to take that up with john i don't possibly see how john's a man were were law uh if you go with that that old adage i saw about uh possession is nine tenths of the law which i've never quite understood that's it he'd start there he'd start there i'm sure john would start there we'll have to see i'll have to talk to him about this i would like to think that john is a man of principles and that he would not adapt his formidable intellect to find a flexible justification for theory just because he happens to share a goal of the book of the uh the

sporting institution well we'll see you talk to you you're going to share a goal of the book of the uh the sporting institution well we'll see you talk to you you're going to post the picture of you in this jersey right uh oh oh i was planning just to send it to john but now you make a point john would certainly post it so i may as well post it myself this will happen yeah get out in front of that yourself because otherwise it's going to be you know ej i'm sure, will still have great fun photoshopping you in endless, endless competition. He'll have you in France at some point on a podium observing the military parade, which is what I love about some people saying, well, France has a military parade. And so now you have people on the right who are using French military traditions as a justification for this. Since when do we look to the French when it comes to these things?

Anyway, folks, I want to thank you for listening to this. Don't stop. Don't hit stop. It's not like I'm done. There's something else to come. I just wanted to remind you that we're brought to you by Bowling Branch, Quip, and The Great Courses. Please support them for supporting us. We'll see you next time. It'll go around, as the song says, and $2.50 a month, cheap, gets you a podcast listener tier membership. Join today.

You'll enjoy every single moment in the members and in the comments. And the thing that I was going to tell you is now you can turn your podcast off because we're done. Thank you, Peter. See everybody at the comments. Thank you, James. Next week. When I was a young boy, my father took me into the city to see a marching band. He said, son, when you grow up, would you be the savior of the broken, the beaten and the damned He said Will you defeat them

you demons and other non-believers the plans that they have made Because one day I'll leave you a phantom to lead you in the summer

to join the black parade When I was a young boy Your father took me into the sea The savior who I should be Is exiled when he grows When you leave The savior of the broken The patient and the beach and you're at the town.

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