WEBVTT - Trump CFO Pleads, SBF's Sentencing and Antitax Movement

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<v Speaker 1>This is Bloomberg Law with June Brusso from Bloomberg Radio.

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<v Speaker 1>Alan Weiselberg, the former CFO of the Trump organization, is

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<v Speaker 1>going back to jail. The seventy six year old pleaded

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<v Speaker 1>guilty to felony perjury charges, just the latest twist in

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<v Speaker 1>his legal saga, one where he's always remained loyal to Trump.

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<v Speaker 1>Manhattan prosecutors have given him a deal for lying on

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<v Speaker 1>the stand at Trump's civil fraud trial and for lying

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<v Speaker 1>in deposition testimony. Weiselberg was facing five counts of first

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<v Speaker 1>degree perjury, a felony punishable by as many as seven

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<v Speaker 1>years in prison, but under the plea deal, he'll be

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<v Speaker 1>sentenced to five months in jail and doesn't have to

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<v Speaker 1>cooperate with prosecutors against his former boss. Joining me is

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<v Speaker 1>Bloomberg Legal reporter Patricia Hurtado. Why are they giving Weiselberg

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<v Speaker 1>a deal? He perjured himself several times day depositions and

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<v Speaker 1>on the stand, and he's not testifying against Trump in

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<v Speaker 1>the hush money case.

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<v Speaker 2>Well, the prosecutors said yesterday in court they were giving

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<v Speaker 2>him credit.

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<v Speaker 1>For basically his age.

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<v Speaker 2>He's going to be seventy seven. He's seventy six, right, Now,

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<v Speaker 2>the fact that he'd already done prison time once before,

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<v Speaker 2>as well as this willingness to plead guilty and admit responsibility,

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<v Speaker 2>was a reason to give him credit. So they basically

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<v Speaker 2>gave him a discount. He had faced five felony counts

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<v Speaker 2>of a perjury and they gave him credit, and they

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<v Speaker 2>only made him plead guilty to two.

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<v Speaker 1>Yeah, So why he's never fully cooperated with prosecutors against

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<v Speaker 1>Trump and with this perjury at the trial. He's also

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<v Speaker 1>violated his probation after serving time for another deal he'd

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<v Speaker 1>made with prosecutors over dodging taxes. So why give him

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<v Speaker 1>another deal when he's not giving them anything.

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<v Speaker 2>It's hard to divine why they decided to give him

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<v Speaker 2>a break. Possibly is because of the fact that you

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<v Speaker 2>know he is going to be seventy seven years old

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<v Speaker 2>when he goes to serve five months in prison. Now,

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<v Speaker 2>maybe they've decided they've got to cut their losses and

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<v Speaker 2>go on and prosecute other people related to the Trump

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<v Speaker 2>organization like Donald Trump. I was also advised, sources tell

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<v Speaker 2>me neither side intends to use him as a witness,

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<v Speaker 2>and his plea deal was very specific about that. It

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<v Speaker 2>didn't make any mention as it did last time he

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<v Speaker 2>pled guilty that he was not going to be expected

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<v Speaker 2>to testify as part of the terms of his plea deal,

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<v Speaker 2>and his lawyer basically said, he looks forward to moving

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<v Speaker 2>on with.

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<v Speaker 1>His life and he's not going to testify. Even though

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<v Speaker 1>Michael Cohen says that he was a part of that

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<v Speaker 1>hush money scheme.

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<v Speaker 2>Well, you could understand why the prosecutors wouldn't want to

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<v Speaker 2>call him at all, because, I mean, what kind of

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<v Speaker 2>credibility does a guy have that has pled guilty and

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<v Speaker 2>admitted to not only tax fraud chargers. I think it

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<v Speaker 2>was fifteen counts of tax fraud that he played guilty

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<v Speaker 2>to in twenty twenty two, and now he faces two

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<v Speaker 2>more felony counts, so that's like seventeen felonies he pled

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<v Speaker 2>guilty to, including two perjury counts. I think what's good

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<v Speaker 2>about this guilty plea from the prosecutor's perspective is if

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<v Speaker 2>the defense tries to attack or assailed Michael Cohen's credibility

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<v Speaker 2>as a twice convicted perjurer, as they have been alleging

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<v Speaker 2>and confronting him with whenever he's shown up as he

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<v Speaker 2>did when he testified at the state Attorney General's trial

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<v Speaker 2>as a witness. They can turn around and used Ellen

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<v Speaker 2>Weisselberg's admissions of he also committed fraud on Donald Trump's behalf.

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<v Speaker 1>Well, I suppose jurors have believe cooperators with worst records

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<v Speaker 1>tell us what Weiselberg lied about under oath.

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<v Speaker 2>Well, there were five counts of perjury that he admitted

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<v Speaker 2>to committing, and he pled guilty and took responsibility for

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<v Speaker 2>two of those. So the Pejoria's statements include the fact

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<v Speaker 2>that he lied when questioned under oath and depositions on

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<v Speaker 2>three occasions with the New York Attorney General Leticia James's office,

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<v Speaker 2>and I believe Leticia James was also one of the

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<v Speaker 2>people questioning him those days and lied about the size

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<v Speaker 2>of Donald Trump's triplex apartment at Trump Tower. Alan Weiselberg

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<v Speaker 2>claimed that it was thirty thousand square feet instead of

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<v Speaker 2>the actual one third, which is just over ten thousand

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<v Speaker 2>square feet. He also lied repeatedly in other depositions about

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<v Speaker 2>what statements of financial condition claimed on the size of

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<v Speaker 2>Trump Tower triplex, as well as other assets and the

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<v Speaker 2>processes and what they told Forest Magazine or didn't tell

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<v Speaker 2>Forbes magazine, and he also lied when he testified on

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<v Speaker 2>behalf of Donald Trump in October of last year at

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<v Speaker 2>the trial.

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<v Speaker 1>Whenever it's between the law and Trump, he chooses Trump.

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<v Speaker 1>And I wonder how much of this has to do

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<v Speaker 1>with his two million dollars severance package and are they

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<v Speaker 1>still paying his legal bills?

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<v Speaker 2>I understood. I did a story last March in which

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<v Speaker 2>his former lawyers were forced to get off the case

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<v Speaker 2>unless they were going to deflect any prosecution or any

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<v Speaker 2>problems for Trump. So they were viewed as disloyal his

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<v Speaker 2>prior to criminal defense lawyers, and they were forced off

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<v Speaker 2>the case because the Trump Organization and the Trump family

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<v Speaker 2>wasn't going to pay his legal bills any longer. Now

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<v Speaker 2>regarding he did get a two million dollar severance package

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<v Speaker 2>from the Trump org. And some people have said that's

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<v Speaker 2>two million reasons to protect Donald Trump. In this case,

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<v Speaker 2>it came out that he only got paid a million

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<v Speaker 2>because it was being paid in tranches by the Trump organization,

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<v Speaker 2>So he had only been paid a one million dollars

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<v Speaker 2>as of October of last year when he testified, and

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<v Speaker 2>he was also going to cough up a million dollars

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<v Speaker 2>in fines as part of the New York ag verdict

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<v Speaker 2>that the judge imposed in February.

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<v Speaker 1>And the severanceage requires him not to cooperate with any

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<v Speaker 1>law enforcement investigation unless legally required to. And Judge and

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<v Speaker 1>Goren wrote, the Trump organization keeps him on a short leash,

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<v Speaker 1>and it shows. Did the judge completely discredit Weiselberg's testimony

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<v Speaker 1>at the civil fraud trial.

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<v Speaker 2>He did in his opinion in his verdict that he

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<v Speaker 2>issued that basically anything that Alan Weiselberg said, and he

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<v Speaker 2>testified on the stand for several hours on behalf of

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<v Speaker 2>Donald Trump as a star defense witness, that he was

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<v Speaker 2>not credible and should be discounted.

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<v Speaker 1>Did he even testify against Trump in the criminal tax

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<v Speaker 1>fraud trial against the Trump Organization?

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<v Speaker 2>And he didn't actually testify against Donald Trump in the

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<v Speaker 2>tax fraud case before Judge Mershawn, who's now presiding over

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<v Speaker 2>Donald Trump's criminal case. The agreement he had was not

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<v Speaker 2>a cooperation agreement. It was just that he agreed to testify,

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<v Speaker 2>but he had to testify truthfully. He basically was very

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<v Speaker 2>careful in his testimony, and Mershawn later said to him

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<v Speaker 2>when he sentenced him in January twenty twenty three that

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<v Speaker 2>he was very concerned with some of Weiselberg's testimony, and

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<v Speaker 2>if he'd known how he was going to behave and

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<v Speaker 2>what he was going to testify to on the stand

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<v Speaker 2>at the tax fraud trial, he would have not agreed

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<v Speaker 2>to give him that break which the judge had agreed

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<v Speaker 2>to of five months in prison, which ended up being

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<v Speaker 2>a very minimal sentence.

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<v Speaker 1>Let's talk a little bit about the hush money case

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<v Speaker 1>that's coming up. That's coming up pretty quickly.

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<v Speaker 3>Well.

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<v Speaker 2>The case that the Manhattan District Attorney Alvin Bragg has

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<v Speaker 2>made is that Trump did what was called a catch

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<v Speaker 2>and kill scheme engaged in just as he was running

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<v Speaker 2>for president in twenty sixteen, there were stories out there,

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<v Speaker 2>including salacious stories that he'd had sex with the Stormy Daniels,

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<v Speaker 2>an adult film actress, and he wanted to kill the story,

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<v Speaker 2>so he basically broke her to deal through intermediaries like

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<v Speaker 2>his lawyer, his personal lawyer, Michael Cohen, to buy the

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<v Speaker 2>story from being published from any national inquirer or any

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<v Speaker 2>publication that would write about these salacious allegations and bury

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<v Speaker 2>the news so that wouldn't come out and it would

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<v Speaker 2>help his chances of getting elected. Alan Bragg is now

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<v Speaker 2>calling it not a hush money case but actually an

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<v Speaker 2>election interference case.

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<v Speaker 1>I know, I noticed that difference, and is the point

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<v Speaker 1>to make the case seem more important because the case

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<v Speaker 1>has been put down as the worst of the criminal

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<v Speaker 1>case is against Trump. So is he trying to make

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<v Speaker 1>it something different.

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<v Speaker 2>I mean, some people say it's so taundry the allegations

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<v Speaker 2>involve a porn star. There are also other allegations that

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<v Speaker 2>Alvin Bragg wants to include in the evidence, which are

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<v Speaker 2>two other instances prior to the election, maybe years before,

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<v Speaker 2>including that he had had sex with a playboy model

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<v Speaker 2>Karen McDougall, and also that he had bought catch and

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<v Speaker 2>kill story and buried involving a Trump doorman who had

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<v Speaker 2>some salacious allegations against Trump. So Alvin Bragg is fending

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<v Speaker 2>his case that it's a valid case that nobody is

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<v Speaker 2>above the law, including Donald Trump. I mean, the allegations

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<v Speaker 2>are pretty serious, including that there were checks cut and

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<v Speaker 2>written to Michael Cohen to reimburse Michael Cohen for making

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<v Speaker 2>these payments, and that you know, Trump did them while

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<v Speaker 2>he was in the White House, so that these canceled

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<v Speaker 2>checks include Donald Trump at the White House writing out checks,

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<v Speaker 2>fabricating a protectual reason of why the checks were reading

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<v Speaker 2>signed that it wasn't hush money, it was for legal expenses.

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<v Speaker 2>So there goes the allegation that Trump was on falsifying

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<v Speaker 2>business records. So it sounds like, you know, it's a

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<v Speaker 2>business crime. Everybody gets accused. Other people who commit these

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<v Speaker 2>crimes get prosecuted, So why should Donald Trump be different.

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<v Speaker 1>I understand that the defense is arguing that Bragg shouldn't

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<v Speaker 1>be allowed to argue election interference. Is the judge decided.

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<v Speaker 2>Now, there's many many things that judges being asked to decide,

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<v Speaker 2>including you know, limiting what kind of evidence gets before

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<v Speaker 2>the jury. The DA is arguing that Trump should be

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<v Speaker 2>basically gagged from speaking about the jurors and mention them

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<v Speaker 2>by name. I understand that there's no proviso under New

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<v Speaker 2>York state law for jurors to be anonymous. And the

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<v Speaker 2>federal cases that were the Egen Carroll defamation case and

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<v Speaker 2>sexual assault case, the to federal trials that we just

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<v Speaker 2>had last year and then in January, both juries were anonymous.

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<v Speaker 2>But there's no provision for that under state law. And

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<v Speaker 2>the DA has argued and worried allowed that some people

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<v Speaker 2>or some Trump followers could get the names of these

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<v Speaker 2>potential jurors and then release them to the world. And

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<v Speaker 2>then how could these people operate in kind of secrecy

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<v Speaker 2>of doing their job as jurors.

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<v Speaker 1>It's really reminiscent of a mob trial because you don't

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<v Speaker 1>hear the these kinds of concerns from prosecutors in any

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<v Speaker 1>other cases. So jury selection starts March twenty fifth. Any

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<v Speaker 1>idea how long it might take to get a jury.

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<v Speaker 2>I've heard estimations of at least two weeks and maybe longer.

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<v Speaker 2>And if we had a controversial case with a high

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<v Speaker 2>profile defendant, and there was Harvey Weinstein who lived in

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<v Speaker 2>Manhattan and he was the Hollywood mogul accused of sexually

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<v Speaker 2>assaulting these women and that trial, I went back and looked,

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<v Speaker 2>and it was ten days of jury selection.

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<v Speaker 1>Because the lawyers in New York get to ask questions.

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<v Speaker 1>It's not like the federal system where the judge asked

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<v Speaker 1>the questions and it moves along quicker.

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<v Speaker 2>Yeah, and there's some discussion, and I don't know if

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<v Speaker 2>it's been decided yet. There was some requests by the

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<v Speaker 2>DA to have people fill in a jury questionnaire, and

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<v Speaker 2>it sounded like the judge was shining away from actually

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<v Speaker 2>agreeing to that. So the jury questionnaire would sort of

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<v Speaker 2>pre screen people ahead of time. And I think what

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<v Speaker 2>the judge basically told the lawyers the other day was

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<v Speaker 2>he would do what Judge cap And did in federal

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<v Speaker 2>court in the Egene Carroll trial and basically have people

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<v Speaker 2>raise their hands and say, anyone here feel they can't

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<v Speaker 2>be fair and impartial to Donald Trump, And if they

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<v Speaker 2>raise their hands, he would get excused.

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<v Speaker 1>You'll have to tell us, Patty, how much raising of

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<v Speaker 1>hands there is at that point. Thanks so much. That's

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<v Speaker 1>Bloomberg Legal reporter Patricia Hurtado. Up next, Sam Bankman Freed's

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<v Speaker 1>sentencing is coming up. I'm June Gross. When you're listening

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<v Speaker 1>to Bloomberg, Sam Bankman Freed remember him. His spectacular fall

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<v Speaker 1>from grace and trial for masterminding a multi billion dollar

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<v Speaker 1>fraud kept him in the headlines for months. But since

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<v Speaker 1>his conviction last November, things have been quiet for SBF,

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<v Speaker 1>at least in the media, but behind the scenes, he's

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<v Speaker 1>been preparing for his sentencing and appeal, most notably by

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<v Speaker 1>changing lawyers. His family and friends have flooded the judge

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<v Speaker 1>who will sentence him next month with please for leniency,

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<v Speaker 1>arguing that his public image as a quote freak with

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<v Speaker 1>evil intentions was dead wrong. His lawyers are asking he'd

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<v Speaker 1>be given no more than six and a half years

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<v Speaker 1>in prison, quite a contrast to the one hundred years

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<v Speaker 1>the Probation Department has suggested. Joining me is Bloomberg Legal

0:13:14.600 --> 0:13:18.679
<v Speaker 1>reporter chryst O Mesh, what is the maximum he's facing?

0:13:19.200 --> 0:13:21.080
<v Speaker 1>How long could the judge sentence him too?

0:13:21.520 --> 0:13:25.040
<v Speaker 4>So obviously there are a lot of factors that play here,

0:13:25.679 --> 0:13:29.240
<v Speaker 4>given the seriousness of his conduct and the number of

0:13:29.320 --> 0:13:31.920
<v Speaker 4>charneys he was convicted of. But I talked to a

0:13:31.960 --> 0:13:35.280
<v Speaker 4>lot of defense attorneys about this, and they he's going

0:13:35.360 --> 0:13:38.480
<v Speaker 4>to get probably at least a decade in prison, which is,

0:13:38.800 --> 0:13:41.120
<v Speaker 4>you know, a lot of time for a person of

0:13:41.200 --> 0:13:44.199
<v Speaker 4>his age. But it's kind of reasonable given what the

0:13:44.280 --> 0:13:47.760
<v Speaker 4>sentencing guidelines paul for him to sturb, which is a

0:13:47.800 --> 0:13:51.120
<v Speaker 4>lot of time, which is a life sentence essentially, given

0:13:51.160 --> 0:13:53.760
<v Speaker 4>the size of the loss in the case. But you know,

0:13:53.960 --> 0:13:58.320
<v Speaker 4>anybody who follows the criminal justice system America, and especially

0:13:58.360 --> 0:14:03.400
<v Speaker 4>the federal system, knows that white collar sentences, which are

0:14:03.440 --> 0:14:07.680
<v Speaker 4>driven by monetary losses are often the proposed sentences under

0:14:07.679 --> 0:14:11.199
<v Speaker 4>the guidelines are really they're draconian. This the work, so

0:14:11.720 --> 0:14:15.520
<v Speaker 4>it's very unlikely he would serve you know, twenty five

0:14:15.600 --> 0:14:18.800
<v Speaker 4>years is probably a little bit on the higher end.

0:14:19.000 --> 0:14:22.040
<v Speaker 4>See what the government says when they submit their commission

0:14:22.160 --> 0:14:25.720
<v Speaker 4>later this month. But the judge himself in this case,

0:14:26.040 --> 0:14:30.360
<v Speaker 4>rush Kaplan has issued skepticism about the guidelines in the past,

0:14:30.480 --> 0:14:33.040
<v Speaker 4>especially in white collar cases where the lost amount is

0:14:33.120 --> 0:14:36.000
<v Speaker 4>very high. And if you look back at some of

0:14:36.040 --> 0:14:38.480
<v Speaker 4>the cases that he sends, he doesn't tend to throw

0:14:38.520 --> 0:14:41.880
<v Speaker 4>the book at people. He's obviously a tough judge. You know,

0:14:41.920 --> 0:14:44.800
<v Speaker 4>he gave the SDS defense team a hard time during

0:14:44.840 --> 0:14:48.000
<v Speaker 4>the trial, but he seems to see sympathetic to the

0:14:48.120 --> 0:14:51.080
<v Speaker 4>argument at very least that throwing him in prison for

0:14:51.120 --> 0:14:53.240
<v Speaker 4>the rest of his life is really not going to

0:14:53.280 --> 0:14:56.120
<v Speaker 4>do society or him any justice.

0:14:56.320 --> 0:15:00.200
<v Speaker 1>So the Probation office recommended a sentence of one one

0:15:00.280 --> 0:15:02.960
<v Speaker 1>hundred years. What did they base that on?

0:15:03.600 --> 0:15:06.720
<v Speaker 4>So the majority of that is based on the Montsterori laws,

0:15:06.760 --> 0:15:09.080
<v Speaker 4>which is, you know, the estimates very but it's probably

0:15:09.080 --> 0:15:13.080
<v Speaker 4>at least eight billions, probably upwards of ten FBF attorneys

0:15:13.240 --> 0:15:16.320
<v Speaker 4>argue that really the victims here are going to made

0:15:16.360 --> 0:15:20.520
<v Speaker 4>hole by the bankruptcy case, and that they're not really

0:15:20.640 --> 0:15:22.960
<v Speaker 4>going to be victims, and that he shouldn't really have

0:15:23.080 --> 0:15:26.080
<v Speaker 4>to pay resolutions. They made a kind of similar argument

0:15:26.320 --> 0:15:29.000
<v Speaker 4>in the Trevor Milton case with the Nicola founder who

0:15:29.040 --> 0:15:32.360
<v Speaker 4>was convicted a fraud in his fencing, saying that Nicola

0:15:32.440 --> 0:15:34.760
<v Speaker 4>paid a lot of money to the SEC and the

0:15:34.800 --> 0:15:37.200
<v Speaker 4>Centtal shareholder lawsuits to resolve a case.

0:15:37.480 --> 0:15:39.880
<v Speaker 1>He's gotten a new attorney, Mark mccazy.

0:15:40.480 --> 0:15:43.320
<v Speaker 4>Yes, Mark mccasey, very well known in the Southern District

0:15:43.320 --> 0:15:46.880
<v Speaker 4>of New York, is father's former attorney. He's a former

0:15:46.920 --> 0:15:50.720
<v Speaker 4>federal prosecutor in the Southern District. He's represented many a

0:15:50.760 --> 0:15:53.440
<v Speaker 4>white collar criminalities, well known to the bar.

0:15:54.000 --> 0:15:57.520
<v Speaker 1>So his lawyers are arguing that he should serve no

0:15:57.680 --> 0:16:00.280
<v Speaker 1>more than six and a half years in is. And

0:16:00.360 --> 0:16:03.200
<v Speaker 1>that's on the very very low end, isn't it.

0:16:03.720 --> 0:16:08.960
<v Speaker 4>Yes, they couldn't have really logically argued for less. Probably

0:16:09.200 --> 0:16:12.320
<v Speaker 4>practically that really probably wouldn't have worked with this judge.

0:16:12.440 --> 0:16:14.600
<v Speaker 4>So they're going to take their shots where they can

0:16:15.240 --> 0:16:18.000
<v Speaker 4>on the lower end. And you know, their arguments are

0:16:18.360 --> 0:16:21.320
<v Speaker 4>kind of similar to what a lot of people are saying,

0:16:21.440 --> 0:16:24.600
<v Speaker 4>is that throwing him in prison for the rest of

0:16:24.640 --> 0:16:28.680
<v Speaker 4>his life doesn't really serve the purposes of justice, especially

0:16:28.680 --> 0:16:32.040
<v Speaker 4>for somebody who, you know, despite the fact that junto

0:16:32.200 --> 0:16:35.120
<v Speaker 4>to tell him arguably has a lot to give in

0:16:35.200 --> 0:16:38.680
<v Speaker 4>terms of, you know, his contributes to society, and Marky

0:16:38.760 --> 0:16:41.480
<v Speaker 4>Casey and others have made this comparison to Michael Milkin,

0:16:41.600 --> 0:16:44.560
<v Speaker 4>who you know, is very young when he was convicted

0:16:44.840 --> 0:16:48.600
<v Speaker 4>and managed to build up a life of philanthropy, which

0:16:48.640 --> 0:16:51.440
<v Speaker 4>is really what FBS and that's what they talk about

0:16:51.440 --> 0:16:53.840
<v Speaker 4>in these letters that he has devoted to plan that's

0:16:53.880 --> 0:16:55.960
<v Speaker 4>the whole driving force of his life is.

0:16:56.560 --> 0:16:59.680
<v Speaker 1>Yeah. The quote that you talked about is the genius

0:16:59.680 --> 0:17:03.600
<v Speaker 1>of both both men is undeniable. Their contributions were vast,

0:17:04.000 --> 0:17:07.560
<v Speaker 1>their wealth and fame were unplanned, their means and methods

0:17:07.600 --> 0:17:12.000
<v Speaker 1>were questioned by prosecutors, and their downfall was swift and tragic.

0:17:12.320 --> 0:17:15.879
<v Speaker 4>Sounds a little poetic, yeah, I mean that's mark me Casey.

0:17:16.000 --> 0:17:21.359
<v Speaker 4>His submissions are pretty poetic, I would say, and are passionate.

0:17:21.880 --> 0:17:25.000
<v Speaker 4>He's the passionate advocate for his clients, and that's what

0:17:25.080 --> 0:17:28.240
<v Speaker 4>kind of a hallmark of his sentencing submissions now.

0:17:28.320 --> 0:17:31.920
<v Speaker 1>Are they saying that SBF is autistic?

0:17:32.600 --> 0:17:35.840
<v Speaker 4>He has medication. There's a lot of letters that were

0:17:35.840 --> 0:17:40.760
<v Speaker 4>submitted along with this. It doesn't seem to really directly

0:17:40.880 --> 0:17:45.119
<v Speaker 4>say that he is autistic, but you know, it implies that.

0:17:45.560 --> 0:17:51.359
<v Speaker 1>There were letters about his social awkwardness and inability to

0:17:51.400 --> 0:17:55.479
<v Speaker 1>read social cues, and that that might have led to

0:17:55.520 --> 0:18:01.000
<v Speaker 1>see his responses after the implosion of FTX as uncaring

0:18:01.119 --> 0:18:05.359
<v Speaker 1>and dispassionate. And they're also saying that prison will be

0:18:05.480 --> 0:18:07.840
<v Speaker 1>especially harmful for him because of that.

0:18:08.400 --> 0:18:12.040
<v Speaker 4>Yeah, one hundred percent. They definitely argue that some of

0:18:12.080 --> 0:18:15.560
<v Speaker 4>the social awkwardness that he has and some of the

0:18:15.800 --> 0:18:19.680
<v Speaker 4>social cues he misses leads people to believe that he's

0:18:20.080 --> 0:18:24.000
<v Speaker 4>not emotional or not caring, and that instead that's just

0:18:24.040 --> 0:18:26.880
<v Speaker 4>the way he deals with, you know, his social environment.

0:18:26.960 --> 0:18:29.400
<v Speaker 4>I know he's had. There's more than a two dozen

0:18:29.480 --> 0:18:33.080
<v Speaker 4>letters here from friends, family, his mom and dad, but

0:18:33.160 --> 0:18:36.480
<v Speaker 4>also from people who don't even know him, you know,

0:18:36.680 --> 0:18:41.320
<v Speaker 4>concerned that throwing him in prison kind of ignores the

0:18:41.480 --> 0:18:43.000
<v Speaker 4>challenges for people like him.

0:18:43.240 --> 0:18:45.880
<v Speaker 1>And also a fellow inmate submitted a letter.

0:18:46.520 --> 0:18:50.040
<v Speaker 4>Yes, fellow inmate, a former New York City police officer,

0:18:50.359 --> 0:18:52.200
<v Speaker 4>who said he had a bunk right next to him

0:18:52.240 --> 0:18:55.640
<v Speaker 4>and said, you know, they became pretty good friends, and

0:18:55.640 --> 0:18:58.119
<v Speaker 4>that he believed that dam is just the kind of

0:18:58.160 --> 0:19:00.399
<v Speaker 4>person that should not be in prison and would not

0:19:00.480 --> 0:19:02.080
<v Speaker 4>turn any purpose at all.

0:19:02.480 --> 0:19:05.120
<v Speaker 1>And his mom wrote, was his mom's letter the most

0:19:05.160 --> 0:19:06.520
<v Speaker 1>emotional of them.

0:19:06.880 --> 0:19:09.679
<v Speaker 4>I would definitely say so. His father's letter was pretty

0:19:09.720 --> 0:19:12.280
<v Speaker 4>much to the point and very direct. It was only

0:19:12.320 --> 0:19:15.280
<v Speaker 4>a couple of pages. His mother's letter it was about

0:19:15.320 --> 0:19:19.199
<v Speaker 4>six pages long and was very passionate, even being a

0:19:19.280 --> 0:19:23.159
<v Speaker 4>law professor and attorney herself, you know, addressed the judges.

0:19:23.359 --> 0:19:27.320
<v Speaker 4>As his mother. She took aim at the media, for sure.

0:19:27.680 --> 0:19:31.639
<v Speaker 4>She said that really he's a very misunderstood person. He

0:19:31.760 --> 0:19:34.359
<v Speaker 4>was empathetic from the time he was a young child,

0:19:34.560 --> 0:19:36.840
<v Speaker 4>almost to his own detriment. And what a lot of

0:19:36.840 --> 0:19:40.760
<v Speaker 4>the letters talked about, which I found interesting, is his vegetarianism,

0:19:41.320 --> 0:19:44.840
<v Speaker 4>which he loved steak and fries, his mother said, and

0:19:44.880 --> 0:19:47.520
<v Speaker 4>his brother, but he gave them up at an early

0:19:47.560 --> 0:19:51.399
<v Speaker 4>age out of an ethical responsibility to animals. He wasn't

0:19:51.480 --> 0:19:54.560
<v Speaker 4>some animal lover, they said, this was just something he

0:19:54.600 --> 0:19:57.159
<v Speaker 4>felt he needed to do, and they felt that that

0:19:57.320 --> 0:20:01.040
<v Speaker 4>demonstrated the kind of devotion to plan for being ethical

0:20:01.280 --> 0:20:04.280
<v Speaker 4>causes that he kind of hat in his life.

0:20:04.960 --> 0:20:08.439
<v Speaker 1>His lawyers recommended this surprise me, that he not the

0:20:08.680 --> 0:20:13.359
<v Speaker 1>order to pay restitution or forfeit any assets. Why so.

0:20:13.600 --> 0:20:16.919
<v Speaker 4>Yeah, So they're basically saying that the victims of this

0:20:17.119 --> 0:20:20.320
<v Speaker 4>from the FBX investors will be made Hults Bank CONCEI,

0:20:21.119 --> 0:20:23.600
<v Speaker 4>and that there's no real actual losses to them. It's

0:20:23.960 --> 0:20:26.400
<v Speaker 4>a pretty interesting argument. And like I said, they kind

0:20:26.440 --> 0:20:29.440
<v Speaker 4>of made this argument in the Trevor Milton case as well,

0:20:29.880 --> 0:20:33.560
<v Speaker 4>that Nicola paid a lot of money to settle those

0:20:33.640 --> 0:20:37.399
<v Speaker 4>cases and to resolve, you know, with the sec some

0:20:37.480 --> 0:20:39.840
<v Speaker 4>of the allegations. So was the heart of that case.

0:20:40.000 --> 0:20:42.560
<v Speaker 4>So therefore he shouldn't be on the holtress. What they say,

0:20:42.960 --> 0:20:44.760
<v Speaker 4>same here with sambank Free.

0:20:44.840 --> 0:20:49.399
<v Speaker 1>And sam Bgminfried. He was involved in charitable endeavors, wasn't he.

0:20:49.880 --> 0:20:50.080
<v Speaker 2>Yes?

0:20:50.480 --> 0:20:53.760
<v Speaker 4>Indeed, I mean that's definitely a hallmark of his life.

0:20:53.920 --> 0:20:56.480
<v Speaker 4>And I mean that's part of also the the gates

0:20:57.160 --> 0:20:59.960
<v Speaker 4>is that you know, he would funnel at THEX customer

0:21:00.080 --> 0:21:03.800
<v Speaker 4>funds into political donations and the charitable donations and the

0:21:04.600 --> 0:21:07.359
<v Speaker 4>speculative investments. So it was all kind of mixed up

0:21:07.400 --> 0:21:08.240
<v Speaker 4>in the same bucket.

0:21:09.200 --> 0:21:12.040
<v Speaker 1>I'm curious as to whether the lawyers that you spoke

0:21:12.080 --> 0:21:14.920
<v Speaker 1>to thought that, you know, as you mentioned, there was this,

0:21:15.520 --> 0:21:18.640
<v Speaker 1>I don't know if we could say antagonistic relationship between

0:21:18.760 --> 0:21:23.639
<v Speaker 1>Judge Caplan and bankman Freed, where bankment Freed disobeyed his

0:21:23.840 --> 0:21:27.879
<v Speaker 1>orders and so he ordered him to go to jail

0:21:27.960 --> 0:21:31.480
<v Speaker 1>before trial despite this enormous bail package, and then he

0:21:31.560 --> 0:21:35.679
<v Speaker 1>made him testify for three hours outside the presence of

0:21:35.720 --> 0:21:38.920
<v Speaker 1>the jury, before he could testify. I mean, does any

0:21:38.960 --> 0:21:43.640
<v Speaker 1>of that end up finding its way into a sentence, Well,

0:21:43.640 --> 0:21:44.639
<v Speaker 1>it definitely could.

0:21:45.400 --> 0:21:47.960
<v Speaker 4>He definitely could find that he pursioned himself on the

0:21:48.000 --> 0:21:51.720
<v Speaker 4>spand during this testimony which he implied that you know,

0:21:52.240 --> 0:21:55.360
<v Speaker 4>happened and that he stroll We would take that into account.

0:21:55.680 --> 0:21:57.800
<v Speaker 4>I mean, look, they brought it new council, so you

0:21:57.800 --> 0:22:01.560
<v Speaker 4>can read into that what you will. I'm supposed to say.

0:22:01.720 --> 0:22:04.040
<v Speaker 4>You know, sometimes that's just a good thing to have,

0:22:04.160 --> 0:22:06.920
<v Speaker 4>like a fresh spot of eyes. He has another lawyer

0:22:06.960 --> 0:22:09.439
<v Speaker 4>who is also working with me, Casey's gonna work on

0:22:09.480 --> 0:22:12.760
<v Speaker 4>the appeal, So they definitely use the sentencing to kind

0:22:12.800 --> 0:22:16.399
<v Speaker 4>of turning eye towards the appeal. And you know the

0:22:16.440 --> 0:22:18.960
<v Speaker 4>implication that there wasn't really a lot of intent here

0:22:19.080 --> 0:22:22.359
<v Speaker 4>to do bold. So it's hard to say whether or

0:22:22.440 --> 0:22:27.480
<v Speaker 4>not the antagonistic relationship between the judge an SBS former

0:22:27.600 --> 0:22:29.840
<v Speaker 4>legal team will come into play in the sentencing, but

0:22:30.119 --> 0:22:32.000
<v Speaker 4>there's certainly one of the reasons you get a new

0:22:32.119 --> 0:22:35.400
<v Speaker 4>set of lawyers for that part of the see and.

0:22:35.359 --> 0:22:37.119
<v Speaker 1>Where does the appeal stand.

0:22:37.440 --> 0:22:39.159
<v Speaker 4>We don't really know that, and I have to have

0:22:39.200 --> 0:22:41.719
<v Speaker 4>the sentencing first, which is about March twenty eighth, and

0:22:41.760 --> 0:22:45.280
<v Speaker 4>then they would proceed once the judgment is issued. There's

0:22:45.400 --> 0:22:49.000
<v Speaker 4>another question involved as to whether or not he would

0:22:49.440 --> 0:22:52.880
<v Speaker 4>get a discount of any sort for his time spent

0:22:52.960 --> 0:22:55.680
<v Speaker 4>in the Metropolitan Stations Center in Brooklyn, which is a

0:22:55.760 --> 0:23:00.560
<v Speaker 4>notoriously bleak jail no more spentologists so certainly get unserved

0:23:00.560 --> 0:23:03.000
<v Speaker 4>to some story, whether or not the judge's are that's

0:23:03.080 --> 0:23:05.359
<v Speaker 4>the weight hard to tell. And it's also hard to

0:23:05.400 --> 0:23:08.919
<v Speaker 4>tell whether or not the judge would order him immediately

0:23:09.040 --> 0:23:11.760
<v Speaker 4>to go to prison, you know, like designate him to

0:23:11.840 --> 0:23:14.479
<v Speaker 4>a prison and have him go there while the appeal

0:23:14.560 --> 0:23:18.600
<v Speaker 4>is pending, or whether he has him sit in Brooklyn.

0:23:18.720 --> 0:23:21.080
<v Speaker 4>I mean, these are all questions that have to be

0:23:21.200 --> 0:23:23.680
<v Speaker 4>answered as the sentencing is it the.

0:23:23.720 --> 0:23:27.560
<v Speaker 1>Judge or the prison system that decides whether he's placed

0:23:27.600 --> 0:23:31.720
<v Speaker 1>in a medium or a high security prison or low security.

0:23:32.320 --> 0:23:34.520
<v Speaker 4>It's entirely up to the Bureau of Prisons as to

0:23:34.560 --> 0:23:36.760
<v Speaker 4>where he goes and where he serves this, but the

0:23:36.800 --> 0:23:40.000
<v Speaker 4>judge should make a recommendation and almost we'll certainly do

0:23:40.119 --> 0:23:44.240
<v Speaker 4>so on the recommendations of Castle. I would guess probably

0:23:44.359 --> 0:23:48.280
<v Speaker 4>somewhere in California, but that's all up to the Bureau

0:23:48.320 --> 0:23:50.800
<v Speaker 4>of Prisons. And like I said, the judge would have

0:23:50.880 --> 0:23:54.680
<v Speaker 4>to order him into custody of the Bureau of Prisons

0:23:55.080 --> 0:23:57.560
<v Speaker 4>after the sentencing proceeding. I mean, he is already in

0:23:57.600 --> 0:24:01.400
<v Speaker 4>custody technically because he's in jail. But there's a matter

0:24:01.480 --> 0:24:04.360
<v Speaker 4>of a bureaucracy and how do.

0:24:04.400 --> 0:24:09.160
<v Speaker 1>Federal prison sentences work. As far as getting any credits

0:24:09.200 --> 0:24:11.960
<v Speaker 1>for time served or good behavior.

0:24:12.400 --> 0:24:15.320
<v Speaker 4>There's no parole, but you can get cramp for good

0:24:15.440 --> 0:24:18.680
<v Speaker 4>behavior basically, so I think it's one year for every

0:24:18.720 --> 0:24:21.440
<v Speaker 4>ten years or so. I don't know if that's exact,

0:24:21.560 --> 0:24:23.800
<v Speaker 4>but you know, if he would get say a twenty

0:24:23.800 --> 0:24:27.119
<v Speaker 4>five years seventy less than twenty one good behavior.

0:24:27.000 --> 0:24:29.920
<v Speaker 1>That is a lot of time. He does have time,

0:24:29.960 --> 0:24:33.680
<v Speaker 1>though he is only thirty one years old. Thanks so much, Chris.

0:24:34.160 --> 0:24:37.639
<v Speaker 1>That's Bloomberg Legal reporter Chris Domesh coming up next on

0:24:37.680 --> 0:24:42.359
<v Speaker 1>the Bloomberg Law Show. How the anti tax movement hijacked America.

0:24:42.800 --> 0:24:46.000
<v Speaker 1>It originated as a fringe movement but evolved into a

0:24:46.040 --> 0:24:51.040
<v Speaker 1>mainstream political force. I'm June Grosso and you're listening to Bloomberg.

0:24:51.800 --> 0:24:54.359
<v Speaker 1>How much do you know about the anti tax movement

0:24:54.400 --> 0:24:58.560
<v Speaker 1>in America? It originated as a fringe movement and developed

0:24:58.560 --> 0:25:02.840
<v Speaker 1>into a mainstream police fource that's growing strong and growing

0:25:02.880 --> 0:25:06.399
<v Speaker 1>the national debt. Columbia Law School's Michael Grtz has written

0:25:06.440 --> 0:25:09.639
<v Speaker 1>about it in his new book entitled The Power to

0:25:09.720 --> 0:25:15.080
<v Speaker 1>Destroy How the Antijax Movement Hijacked America, And he joins me, Now,

0:25:15.680 --> 0:25:18.360
<v Speaker 1>we've all heard about the civil rights movement, the women's

0:25:18.440 --> 0:25:22.320
<v Speaker 1>rights movement, not so much the anti tax movement. So

0:25:22.320 --> 0:25:23.560
<v Speaker 1>how would you describe it?

0:25:23.960 --> 0:25:27.199
<v Speaker 3>Well, on the first page of my book, I describe

0:25:27.240 --> 0:25:31.720
<v Speaker 3>the anti tax movement as the most important, successful, and

0:25:31.920 --> 0:25:35.960
<v Speaker 3>overlooked social and political movement of the past half century.

0:25:36.440 --> 0:25:38.720
<v Speaker 3>Like you, When I asked people to name the most

0:25:38.720 --> 0:25:42.879
<v Speaker 3>important social and political movements of the time, they answer

0:25:42.960 --> 0:25:47.840
<v Speaker 3>the civil rights movement, the women's movement, sometimes the LGBTQ movement,

0:25:48.080 --> 0:25:52.120
<v Speaker 3>the Christian evangelical movement, and recently the MAGA movement. But

0:25:52.160 --> 0:25:54.760
<v Speaker 3>no one has ever mentioned the anti tax movement.

0:25:54.920 --> 0:25:55.800
<v Speaker 1>Why do you think that is?

0:25:56.200 --> 0:26:00.320
<v Speaker 3>Well, you know, it's about taxes, and people all like

0:26:00.400 --> 0:26:02.760
<v Speaker 3>to talk about taxes, and they all like to think

0:26:02.800 --> 0:26:06.960
<v Speaker 3>about taxes, and it's managed to be done largely with

0:26:07.080 --> 0:26:11.320
<v Speaker 3>support from elites, but also a lot of popular support.

0:26:11.840 --> 0:26:15.240
<v Speaker 3>I remember when I looked at polling data about the

0:26:15.760 --> 0:26:19.800
<v Speaker 3>repeal of the estate tax in two thousand and one,

0:26:20.480 --> 0:26:24.320
<v Speaker 3>forty percent of the people who answered the questions said

0:26:24.359 --> 0:26:26.920
<v Speaker 3>that they expected to be in the top one percent

0:26:27.119 --> 0:26:30.760
<v Speaker 3>when they died. And sixty percent of the people repeal

0:26:30.800 --> 0:26:33.960
<v Speaker 3>of the tax suppose the tax. That's hardly surprising. I

0:26:33.960 --> 0:26:37.359
<v Speaker 3>suppose if you ask American public if they'd like to

0:26:37.400 --> 0:26:40.000
<v Speaker 3>repeal any tax, if you get about sixty percent who

0:26:40.000 --> 0:26:41.640
<v Speaker 3>would say yes, if not more.

0:26:42.040 --> 0:26:44.320
<v Speaker 1>In resistance to taxes. Can we go back to the

0:26:44.320 --> 0:26:47.760
<v Speaker 1>Boston Tea Party? I don't know. You start in your

0:26:47.800 --> 0:26:52.720
<v Speaker 1>book in nineteen seventy eight with California's Prop thirteen. Tell

0:26:52.800 --> 0:26:54.919
<v Speaker 1>us how that got the ball rolling?

0:26:55.600 --> 0:27:00.159
<v Speaker 3>Well, I think the seventies were the prime time for

0:27:00.200 --> 0:27:05.359
<v Speaker 3>an anti government, anti tax movement. We had experienced a

0:27:05.480 --> 0:27:10.560
<v Speaker 3>very rapid inflation along with high unemployment, something that Kynesy

0:27:10.600 --> 0:27:13.800
<v Speaker 3>and economics had said could not happen together. They were

0:27:13.840 --> 0:27:17.680
<v Speaker 3>known as stagflation. At the time, the Civil rights movement

0:27:18.280 --> 0:27:22.439
<v Speaker 3>was very much on people's mind, particularly in California, where

0:27:22.880 --> 0:27:26.679
<v Speaker 3>the Supreme Court in California had said that property tax

0:27:26.920 --> 0:27:30.719
<v Speaker 3>differences in school finance could not be more than one

0:27:30.760 --> 0:27:33.919
<v Speaker 3>hundred dollars per student and that they needed to be

0:27:33.960 --> 0:27:38.920
<v Speaker 3>made much more equal. So the public in California thought

0:27:38.920 --> 0:27:42.040
<v Speaker 3>they were paying property taxes for other people's children to

0:27:42.080 --> 0:27:45.200
<v Speaker 3>go to school. And many of those other people were

0:27:46.040 --> 0:27:50.560
<v Speaker 3>not only black, but also Latino because of immigration into

0:27:50.600 --> 0:27:54.960
<v Speaker 3>California at that time from the southern border. So you

0:27:55.080 --> 0:27:59.239
<v Speaker 3>had a perfect storm for an anti tax movement. It

0:27:59.320 --> 0:28:02.840
<v Speaker 3>was led by a very interesting fellow. I mean, one

0:28:02.880 --> 0:28:05.280
<v Speaker 3>of the things that I really do spend time in

0:28:05.320 --> 0:28:09.639
<v Speaker 3>my book honor small biographies, if you will, of people

0:28:09.720 --> 0:28:13.720
<v Speaker 3>who were crucial in moving the anti tax movement forward.

0:28:14.200 --> 0:28:18.200
<v Speaker 3>And here Howard Jarvis, who had been a Republican operative

0:28:18.480 --> 0:28:23.640
<v Speaker 3>and had unsuccessfully supported other tax limitation movements in California

0:28:23.680 --> 0:28:27.240
<v Speaker 3>before this, including one a few years earlier that had

0:28:27.280 --> 0:28:30.320
<v Speaker 3>been pushed by Ronald Reagan to limit the income tax.

0:28:30.720 --> 0:28:35.280
<v Speaker 3>Howard Jarvis became the face of the Proposition thirteen movement,

0:28:35.359 --> 0:28:39.640
<v Speaker 3>and he really emphasized that we should not be paying

0:28:39.720 --> 0:28:43.120
<v Speaker 3>taxes for things for quote them, and he made it

0:28:43.120 --> 0:28:46.840
<v Speaker 3>clear by them. He met welfare and other expenditures for

0:28:46.960 --> 0:28:51.760
<v Speaker 3>African Americans and Latinos particularly, But he was very successful,

0:28:52.000 --> 0:28:56.440
<v Speaker 3>and the anti tax movement, like all social movements, was

0:28:56.760 --> 0:29:01.200
<v Speaker 3>motivated by a combination of ideology and self interest. And

0:29:01.240 --> 0:29:06.760
<v Speaker 3>in California, housing prices had really begun to inflate dramatically,

0:29:07.680 --> 0:29:10.960
<v Speaker 3>and the rise in housing prices wasn't producing any nicer

0:29:11.040 --> 0:29:14.280
<v Speaker 3>housing for anybody. All it was doing was producing greater

0:29:14.400 --> 0:29:17.400
<v Speaker 3>property taxes. And there had been a lot of corruption.

0:29:17.600 --> 0:29:21.960
<v Speaker 3>There were three property tax assessors who had actually been

0:29:22.000 --> 0:29:26.400
<v Speaker 3>convicted of crimes in California shortly before the proposition passed,

0:29:26.560 --> 0:29:29.840
<v Speaker 3>And so you had corrupt property tax assessors, and you

0:29:29.960 --> 0:29:34.400
<v Speaker 3>had people, particularly the elderly, who were finding themselves reasoning

0:29:34.520 --> 0:29:37.880
<v Speaker 3>a cash crunch to pay their property tax bills. And

0:29:37.960 --> 0:29:42.200
<v Speaker 3>so self interest was an important component Proposition thirteen. But

0:29:42.280 --> 0:29:44.040
<v Speaker 3>it took on a new life of its own. And

0:29:44.200 --> 0:29:48.160
<v Speaker 3>recently California just rejected an increase in property taxes on

0:29:48.240 --> 0:29:53.280
<v Speaker 3>commercial property, which also benefited from the Proposition thirteen tax

0:29:53.320 --> 0:29:54.840
<v Speaker 3>cuts benefited greatly.

0:29:54.880 --> 0:30:00.040
<v Speaker 1>I should add, how did Christian evangelicals become part of

0:30:00.080 --> 0:30:01.280
<v Speaker 1>the anti tax movement?

0:30:02.080 --> 0:30:05.240
<v Speaker 3>Well, this is a really important and interesting and really

0:30:05.640 --> 0:30:11.719
<v Speaker 3>largely unknown story. In nineteen seventy one, the IRS was

0:30:11.840 --> 0:30:16.240
<v Speaker 3>confronted with a case that had been brought in Mississippi

0:30:16.640 --> 0:30:19.560
<v Speaker 3>that said that it was a violation of the law

0:30:19.880 --> 0:30:25.360
<v Speaker 3>to provide tax exempt status and allowed charitable contribution deductions

0:30:25.520 --> 0:30:30.080
<v Speaker 3>for private segregated schools. The ruling applied only to Mississippi,

0:30:30.120 --> 0:30:33.160
<v Speaker 3>but the IRS was in what the Commissioner called a

0:30:33.240 --> 0:30:36.040
<v Speaker 3>pickle because they didn't want to have one rule for

0:30:36.120 --> 0:30:39.600
<v Speaker 3>Mississippi and a different rule for everybody else. And until

0:30:39.600 --> 0:30:43.120
<v Speaker 3>that point they had allowed tax exemptions and charitable deductions

0:30:43.160 --> 0:30:46.800
<v Speaker 3>for segregated schools. But the Commissioner, with the support of

0:30:47.040 --> 0:30:50.880
<v Speaker 3>President Nixon, ultimately issued a rule that said that if

0:30:50.880 --> 0:30:54.160
<v Speaker 3>you were a segregated private school, you were no longer

0:30:54.200 --> 0:30:58.080
<v Speaker 3>eligible for these tax benefits, which had been the lifeblood

0:30:58.200 --> 0:31:01.720
<v Speaker 3>actually along with some grants from the states of private

0:31:01.840 --> 0:31:06.320
<v Speaker 3>segregation academies, as they were called. These private schools were

0:31:06.360 --> 0:31:09.600
<v Speaker 3>limited to whites, and they had arisen in response to

0:31:09.640 --> 0:31:13.520
<v Speaker 3>around the Board of Education, which was accompanied by massive

0:31:13.560 --> 0:31:18.840
<v Speaker 3>resistance to desegregation in the South. A couple of Republican operatives,

0:31:18.960 --> 0:31:23.520
<v Speaker 3>Paul Weirich and Richard Vigery, both of whom were anti

0:31:23.800 --> 0:31:28.400
<v Speaker 3>tax Catholics but important in the Republican Party, and the

0:31:28.480 --> 0:31:33.760
<v Speaker 3>two of them convinced Jerry Folwell Senior, an important evangelical

0:31:33.840 --> 0:31:38.400
<v Speaker 3>minister from North Carolina, to create what he then named

0:31:38.440 --> 0:31:42.520
<v Speaker 3>the Moral Majority. And the impetus for that was a

0:31:42.680 --> 0:31:47.240
<v Speaker 3>nineteen seventy eight ruling by Jimmy Carter's Commissioner of Internal

0:31:47.280 --> 0:31:50.680
<v Speaker 3>Revenue that basically said that not only did you have

0:31:50.760 --> 0:31:53.959
<v Speaker 3>to say that you were not a segregated school, but

0:31:54.000 --> 0:31:57.680
<v Speaker 3>you actually had to have minority students. And that created

0:31:57.720 --> 0:32:02.200
<v Speaker 3>a major outcry among the Christian evangelicals and produce an

0:32:02.280 --> 0:32:06.560
<v Speaker 3>antiros element in the anti tax movement.

0:32:07.040 --> 0:32:09.880
<v Speaker 1>I mean it seems like that continues even today.

0:32:10.280 --> 0:32:13.840
<v Speaker 3>Yeah, I mean we've seen Congressional Republicans, for example, basically

0:32:13.920 --> 0:32:17.080
<v Speaker 3>saying they want to repeal the funding that was voted

0:32:17.120 --> 0:32:20.560
<v Speaker 3>for in twenty twenty two. To allow the IRS to

0:32:20.760 --> 0:32:25.440
<v Speaker 3>enforce the existing tax law, even though the IRS claims

0:32:25.440 --> 0:32:28.040
<v Speaker 3>that for every dollar of additional funding it will get

0:32:28.120 --> 0:32:32.560
<v Speaker 3>twelve dollars additional revenue and has committed itself not to

0:32:32.640 --> 0:32:36.320
<v Speaker 3>increase audits some people, except those above four hundred thousand

0:32:36.320 --> 0:32:38.760
<v Speaker 3>dollars of income. But none of that seems to matter.

0:32:38.840 --> 0:32:42.719
<v Speaker 3>That is, anti IRS movement and the anti tax movement

0:32:42.760 --> 0:32:45.840
<v Speaker 3>are bound together, and as a result of the denial

0:32:45.920 --> 0:32:50.840
<v Speaker 3>of these tax deductions, the Christian evangelicals entered politics in

0:32:50.920 --> 0:32:55.160
<v Speaker 3>an anti IRS fashion, anti tax fashion, and became a

0:32:55.280 --> 0:32:59.160
<v Speaker 3>very important part of Ronald Reagan's efforts to become president

0:32:59.520 --> 0:33:03.520
<v Speaker 3>and have been part of that sense. Reagan basically said

0:33:03.520 --> 0:33:07.320
<v Speaker 3>that he was going to overrule the IRS and withdraw

0:33:07.560 --> 0:33:12.200
<v Speaker 3>the denial of tax exemptions for Christian evangelical schools, but

0:33:12.440 --> 0:33:15.320
<v Speaker 3>ultimately the Supreme Court had to hear a case and

0:33:15.400 --> 0:33:19.480
<v Speaker 3>they ruled that allowing those deductions and exemptions was illegal.

0:33:19.520 --> 0:33:21.080
<v Speaker 3>Who violated the tax law?

0:33:22.000 --> 0:33:26.840
<v Speaker 1>The national debt is over thirty four trillion dollars. So

0:33:26.880 --> 0:33:31.280
<v Speaker 1>how do we lose our sense of fiscal responsibility in

0:33:31.360 --> 0:33:33.719
<v Speaker 1>favor of tax cuts and more tax cuts.

0:33:34.440 --> 0:33:38.120
<v Speaker 3>Well, I think that that happened after the Reagan administration.

0:33:38.480 --> 0:33:40.920
<v Speaker 3>Ronald Reagan. This is a very little known fact, but

0:33:41.040 --> 0:33:45.520
<v Speaker 3>Ronald Reagan essentially tripled the federal debt. It went from

0:33:45.640 --> 0:33:49.520
<v Speaker 3>under the trillion dollars when he became president to two

0:33:49.520 --> 0:33:53.680
<v Speaker 3>point seven trillion when he left office, and therefore he

0:33:53.760 --> 0:33:58.040
<v Speaker 3>created more federal debt during his time in office than

0:33:58.120 --> 0:34:01.200
<v Speaker 3>all of the presidents before him. This was due not

0:34:01.240 --> 0:34:04.680
<v Speaker 3>only to the tax cuts, but also to increases in spending,

0:34:04.760 --> 0:34:08.400
<v Speaker 3>particularly defense spending, which he was very much in favor of,

0:34:08.800 --> 0:34:12.480
<v Speaker 3>and that meant that his successor, George Herbert Walker Bush,

0:34:12.840 --> 0:34:16.680
<v Speaker 3>who faced a piece of legislation that we've now all forgotten,

0:34:16.920 --> 0:34:21.880
<v Speaker 3>known as Graham Rudman Hollings, which required automatic cuts in

0:34:21.920 --> 0:34:26.800
<v Speaker 3>spending that would produce a balanced budget. When George Herbert

0:34:26.800 --> 0:34:29.560
<v Speaker 3>Walker Bush came into office, those cuts were going to

0:34:29.560 --> 0:34:34.440
<v Speaker 3>be huge, and they were unacceptable to both Republicans and Democrats.

0:34:34.640 --> 0:34:39.040
<v Speaker 3>And the first president Bush had said when he accepted

0:34:39.040 --> 0:34:42.840
<v Speaker 3>the nomination for president, read my lips, no new taxes.

0:34:43.040 --> 0:34:46.040
<v Speaker 3>And then in nineteen ninety he agreed to a budget

0:34:46.120 --> 0:34:50.640
<v Speaker 3>deal that raised taxes, and many people have claimed that

0:34:51.320 --> 0:34:54.760
<v Speaker 3>was at least partially responsible for him losing the election

0:34:55.120 --> 0:34:58.560
<v Speaker 3>of nineteen ninety two to Bill Clinton and then Dell Clinton,

0:34:58.640 --> 0:35:02.200
<v Speaker 3>who had run for office on a tax cut platform,

0:35:02.560 --> 0:35:06.320
<v Speaker 3>decided that because of deficits, he had to raise taxes.

0:35:06.400 --> 0:35:08.640
<v Speaker 3>And what happened is that there was a result of

0:35:08.680 --> 0:35:13.640
<v Speaker 3>these two pieces of legislation and very robust economic growth

0:35:13.719 --> 0:35:17.839
<v Speaker 3>in the latter part of the nineteen nineties. When George W.

0:35:17.920 --> 0:35:21.560
<v Speaker 3>Bush came into office in two thousand and one, the

0:35:22.000 --> 0:35:26.560
<v Speaker 3>budget deficits had disappeared. We were in surplus, and the

0:35:26.600 --> 0:35:30.719
<v Speaker 3>Congressional Budget Office was promising that we would have surpluses

0:35:30.760 --> 0:35:33.440
<v Speaker 3>for at least a decade and perhaps longer, and began

0:35:33.520 --> 0:35:37.400
<v Speaker 3>to pay off the federal debt. And George W. Bush

0:35:37.520 --> 0:35:41.399
<v Speaker 3>proposed a massive tax cut in two thousand and one,

0:35:41.960 --> 0:35:46.520
<v Speaker 3>and it was enacted faster than Reagan got his tax cuts.

0:35:46.640 --> 0:35:50.440
<v Speaker 3>And then nine to eleven happened, and we entered into

0:35:50.480 --> 0:35:54.960
<v Speaker 3>a war on terror that cost well over six trillion dollars,

0:35:55.520 --> 0:35:59.840
<v Speaker 3>and George W. Bush also added a prescription drug benefit

0:36:00.160 --> 0:36:03.960
<v Speaker 3>to Medicare, and the War on Terror was the first

0:36:04.040 --> 0:36:07.360
<v Speaker 3>war in American history that was not paid for with taxes,

0:36:07.440 --> 0:36:11.160
<v Speaker 3>at least in part. And the prescription drug benefit was

0:36:11.200 --> 0:36:14.120
<v Speaker 3>the first new entitlement that was not paid for by

0:36:14.160 --> 0:36:18.719
<v Speaker 3>any new or dedicated taxes, and as a result, we

0:36:18.800 --> 0:36:24.160
<v Speaker 3>started accumulating very large deficits and the debt started growing.

0:36:24.520 --> 0:36:28.640
<v Speaker 3>And the Republicans, i think, having seen what happened to

0:36:28.719 --> 0:36:32.640
<v Speaker 3>George Herbert Walker Bush, were not going to raise taxes,

0:36:33.600 --> 0:36:38.279
<v Speaker 3>and the Democrats abetted the Republicans in two thousand and

0:36:38.360 --> 0:36:43.080
<v Speaker 3>one in reducing taxes. And then when Obama became president,

0:36:43.200 --> 0:36:47.600
<v Speaker 3>he essentially extended ninety percent of Bush's tax cuts, and

0:36:47.640 --> 0:36:50.360
<v Speaker 3>then he agreed that he would only raise taxes on

0:36:50.440 --> 0:36:54.120
<v Speaker 3>people over four hundred thousand dollars of income, which, as

0:36:54.160 --> 0:36:57.960
<v Speaker 3>you know, became Joe Biden's electoral promise and the promise

0:36:58.000 --> 0:37:00.320
<v Speaker 3>that he is stuck to. So I think it's the

0:37:00.360 --> 0:37:03.880
<v Speaker 3>twenty first century story where both the Republicans and the

0:37:03.960 --> 0:37:07.359
<v Speaker 3>Democrats have decided they don't want to raise taxes. The

0:37:07.360 --> 0:37:10.200
<v Speaker 3>Republicans don't want to raise taxes on anyone, and the

0:37:10.239 --> 0:37:13.319
<v Speaker 3>Democrats refuse to raise taxes on anyone but the top

0:37:13.360 --> 0:37:15.920
<v Speaker 3>two percent, so they don't want to raise taxes on

0:37:16.000 --> 0:37:19.040
<v Speaker 3>ninety eight percent of anyone. And in my view, this

0:37:19.160 --> 0:37:21.640
<v Speaker 3>is not a way that you can sustain a government.

0:37:21.880 --> 0:37:25.200
<v Speaker 1>Thanks for joining me. That's Columbia Law School's Michael Gratz.

0:37:25.239 --> 0:37:28.400
<v Speaker 1>His book is entitled The Power to Destroy. How the

0:37:28.440 --> 0:37:32.160
<v Speaker 1>Anti Tax Movement Hijacked America. And that's it for this

0:37:32.320 --> 0:37:35.640
<v Speaker 1>edition of The Bloomberg Law Show. I'm June Grosso. Stay

0:37:35.640 --> 0:37:38.680
<v Speaker 1>with us. Today's top stories and global business headlines are

0:37:38.719 --> 0:37:40.080
<v Speaker 1>coming up right now