1 00:00:01,200 --> 00:00:01,560 Speaker 1: Welcome. 2 00:00:01,600 --> 00:00:04,480 Speaker 2: It is Verdict with center, Ted Cruz, Ben Ferguson with 3 00:00:04,519 --> 00:00:07,480 Speaker 2: you as always, and Senator it's nice to be with you. 4 00:00:07,640 --> 00:00:09,840 Speaker 2: Is We've got a couple of big things to chat 5 00:00:09,880 --> 00:00:15,480 Speaker 2: about today, including the Democrats getting the lowest rating from 6 00:00:15,560 --> 00:00:18,200 Speaker 2: voters in thirty five years. 7 00:00:18,800 --> 00:00:19,440 Speaker 1: Well, that's right. 8 00:00:19,480 --> 00:00:21,560 Speaker 3: The Wall Street Journal just did a poll and found 9 00:00:21,560 --> 00:00:24,200 Speaker 3: that the Democrats' approval rating has plummeted. It is at 10 00:00:24,239 --> 00:00:26,880 Speaker 3: the lowest level in thirty five years. It turns out 11 00:00:27,280 --> 00:00:30,319 Speaker 3: being angry, filled with rage, and being a party that 12 00:00:30,400 --> 00:00:33,320 Speaker 3: stands for nothing but hating Donald Trump, it is not 13 00:00:33,440 --> 00:00:36,000 Speaker 3: actually a popular platform. We're going to break that down 14 00:00:36,200 --> 00:00:38,879 Speaker 3: and talk about what that means for elections coming up 15 00:00:38,880 --> 00:00:42,400 Speaker 3: in twenty six and going forward. Secondly, we're going to 16 00:00:42,440 --> 00:00:46,240 Speaker 3: talk about a proposal that I've been championing to cut 17 00:00:46,240 --> 00:00:50,400 Speaker 3: spending and to cut spending dramatically, and that is for 18 00:00:50,440 --> 00:00:54,680 Speaker 3: the Federal Reserve to stop paying interest on bank reserves. 19 00:00:54,720 --> 00:00:57,400 Speaker 3: This is a proposal that could save over a trillion 20 00:00:57,960 --> 00:01:00,800 Speaker 3: dollars over ten years. I've made this case directly to 21 00:01:00,840 --> 00:01:03,760 Speaker 3: the President of the Oval Office. I've introduced legislation to 22 00:01:03,800 --> 00:01:05,960 Speaker 3: make this happen. We're going to talk about exactly what 23 00:01:05,959 --> 00:01:09,400 Speaker 3: it would mean and why it makes a difference. And finally, 24 00:01:09,480 --> 00:01:11,240 Speaker 3: we're going to talk about an element of the One 25 00:01:11,240 --> 00:01:15,240 Speaker 3: Big Beautiful Bill that was an unintended mistake, which is 26 00:01:16,000 --> 00:01:20,400 Speaker 3: the One Big Beautiful Bill changed how gambling losses are 27 00:01:22,520 --> 00:01:25,320 Speaker 3: counted in taxes and what it did for people like 28 00:01:25,319 --> 00:01:28,600 Speaker 3: professional poker players. Is it ended up putting in place 29 00:01:28,640 --> 00:01:32,200 Speaker 3: a rule that is wildly unfair, that punishes them, that 30 00:01:32,280 --> 00:01:35,479 Speaker 3: taxes them on income they didn't earn. And so I've 31 00:01:35,560 --> 00:01:37,640 Speaker 3: joined with some Democrats in terms of trying to fix this. 32 00:01:37,720 --> 00:01:39,280 Speaker 3: I hope we can fix it because we ought to 33 00:01:39,319 --> 00:01:40,880 Speaker 3: have a tax system that's fair. 34 00:01:40,920 --> 00:01:42,200 Speaker 1: We're gon't explaining that issue to you. 35 00:01:42,200 --> 00:01:45,640 Speaker 2: Also, Yeah, it's also really interesting because it goes back 36 00:01:45,720 --> 00:01:48,600 Speaker 2: to part of what the President did with no tax 37 00:01:48,680 --> 00:01:50,840 Speaker 2: on tips, and he's like looking out for a little 38 00:01:50,880 --> 00:01:53,560 Speaker 2: guys in their jobs. It matters. We're going to break 39 00:01:53,560 --> 00:01:55,040 Speaker 2: that down and be very interesting. I want to tell 40 00:01:55,040 --> 00:01:57,360 Speaker 2: you real quick about our friends over at Patriot Mobile. 41 00:01:57,400 --> 00:02:00,880 Speaker 2: If you're like me and you've made a commitment that hey, 42 00:02:01,240 --> 00:02:03,880 Speaker 2: you're gonna spend money with companies that are aligned with 43 00:02:04,240 --> 00:02:09,240 Speaker 2: your values, then you're gonna love Patriot Mobile. 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If you use 73 00:03:31,600 --> 00:03:33,960 Speaker 2: the promo code vertict, you'll get a free month of service. 74 00:03:34,280 --> 00:03:37,400 Speaker 2: That's Patriot Mobile dot com slash verdict or nine to 75 00:03:37,440 --> 00:03:39,560 Speaker 2: seven to Patriot. Make the switch today and make a 76 00:03:39,560 --> 00:03:42,200 Speaker 2: difference with every call you make. All right, So let's 77 00:03:42,240 --> 00:03:45,400 Speaker 2: go to the Democrats in disarray. I have a theory, Senator, 78 00:03:45,720 --> 00:03:48,120 Speaker 2: and I want to run it by you. I think 79 00:03:48,160 --> 00:03:51,120 Speaker 2: the reason why Democrats are the lowest rating from voters 80 00:03:51,160 --> 00:03:54,080 Speaker 2: in thirty five years is because they didn't police their 81 00:03:54,080 --> 00:03:57,320 Speaker 2: own party and get rid of the most extreme members 82 00:03:57,480 --> 00:04:02,200 Speaker 2: who've now taken over the microphone, the AO momars, the 83 00:04:02,280 --> 00:04:03,320 Speaker 2: list goes on and on. 84 00:04:03,640 --> 00:04:04,880 Speaker 4: The guy running for mayor in New. 85 00:04:04,880 --> 00:04:08,400 Speaker 2: York City, the radical Marxist, socialism and communists have taken 86 00:04:08,440 --> 00:04:11,040 Speaker 2: over the microphone. And that's why I think the American 87 00:04:11,040 --> 00:04:12,760 Speaker 2: people are terrified of them right now? 88 00:04:13,240 --> 00:04:16,480 Speaker 3: Yeah, It's not just they've taken over the microphone, they've 89 00:04:16,480 --> 00:04:20,000 Speaker 3: taken over the party. Yeah, there is nobody in the party. 90 00:04:20,160 --> 00:04:25,120 Speaker 3: Name one prominent Democrat who has stood up to Comrade Mondami. 91 00:04:25,200 --> 00:04:28,880 Speaker 3: You literally have a communist who is the Democrat Party 92 00:04:28,920 --> 00:04:31,520 Speaker 3: nominee to be Mayor of New York other than John Fetterman. 93 00:04:31,600 --> 00:04:34,559 Speaker 3: And I think John Fetterman is the exception that proves 94 00:04:34,560 --> 00:04:37,359 Speaker 3: the rule. Other than John Fetterman, I do not know 95 00:04:37,400 --> 00:04:39,560 Speaker 3: a single one of my colleagues in the Senate who 96 00:04:39,640 --> 00:04:42,360 Speaker 3: has said a word of criticism that, gosh, may be 97 00:04:42,440 --> 00:04:45,160 Speaker 3: a guy calling for the abolition of private property, may 98 00:04:45,480 --> 00:04:49,400 Speaker 3: be a guy that is openly calling for a communist government, 99 00:04:49,520 --> 00:04:53,320 Speaker 3: is not the best face of the Democrat Party. And 100 00:04:53,400 --> 00:04:57,120 Speaker 3: yet nobody disagrees. You look at when Chris van Holland 101 00:04:57,120 --> 00:05:01,719 Speaker 3: flies down to El Salvador and has has Margarita's with 102 00:05:01,760 --> 00:05:04,920 Speaker 3: an MS thirteen gang member illegal immigrant who's right now 103 00:05:05,000 --> 00:05:10,880 Speaker 3: being prosecuted for human trafficking. Not one single Democrat, again 104 00:05:10,960 --> 00:05:14,000 Speaker 3: except for John Fetterman, spoke out against it. And so 105 00:05:14,080 --> 00:05:17,719 Speaker 3: it's not just that the crazies have been given the microphone. 106 00:05:18,120 --> 00:05:21,120 Speaker 3: The crazies have been given the agenda and here's what 107 00:05:21,200 --> 00:05:24,680 Speaker 3: the Wall Street Journal reported. The Democrat Party's image has 108 00:05:24,720 --> 00:05:27,040 Speaker 3: eroded to its lowest point in more than three decades, 109 00:05:27,040 --> 00:05:29,720 Speaker 3: according to a new Wall Street Journal poll, with voter 110 00:05:29,800 --> 00:05:33,560 Speaker 3: seeing Republicans is better at handling most issues that decide elections. 111 00:05:34,279 --> 00:05:38,200 Speaker 3: The new survey finds that sixty three percent of voters 112 00:05:38,960 --> 00:05:42,799 Speaker 3: hold an unfavorable view of the Democratic Party, the highest 113 00:05:42,839 --> 00:05:47,839 Speaker 3: share in Journal polls dating to nineteen ninety and thirty 114 00:05:47,920 --> 00:05:51,640 Speaker 3: percentage points higher than the thirty three percent who hold 115 00:05:51,640 --> 00:05:54,680 Speaker 3: a favorable view. So the Democrats polling is thirty three 116 00:05:54,680 --> 00:06:00,800 Speaker 3: percent favorable, sixty three percent unfavorable. Journal goes on to 117 00:06:00,800 --> 00:06:03,160 Speaker 3: say that is a far weaker assessment than voters give 118 00:06:03,200 --> 00:06:06,400 Speaker 3: to either President Trump or the Republican Party, who are 119 00:06:06,520 --> 00:06:12,120 Speaker 3: viewed more favorably than favorably by seven points and eleven points, respectively. 120 00:06:12,680 --> 00:06:17,400 Speaker 3: So the Democrats are minus thirty, President Trump is plus 121 00:06:17,440 --> 00:06:21,120 Speaker 3: seven and the Republican Party is plus eleven. That is 122 00:06:21,720 --> 00:06:25,360 Speaker 3: a huge difference. And what percent of voters do you 123 00:06:25,400 --> 00:06:27,760 Speaker 3: think view the Democrats very favorably? 124 00:06:28,760 --> 00:06:31,040 Speaker 2: I'm going to guess it's probably not a very high 125 00:06:31,160 --> 00:06:35,000 Speaker 2: number based on the overall polling data. Eight percent, Yeah, 126 00:06:35,400 --> 00:06:38,160 Speaker 2: eight percent of America. That's not good. Just so everybody 127 00:06:38,200 --> 00:06:39,560 Speaker 2: knows in politics that's. 128 00:06:39,400 --> 00:06:43,159 Speaker 3: Bat And by the way, by comparison, nineteen percent of 129 00:06:43,200 --> 00:06:48,000 Speaker 3: Americans view Republicans very favorably, so there's more intensity. People 130 00:06:48,040 --> 00:06:54,800 Speaker 3: are very happy and the Democrats nobody except the Communists 131 00:06:54,800 --> 00:06:58,240 Speaker 3: are excited about the Democrats. That is a problem going 132 00:06:58,240 --> 00:07:01,520 Speaker 3: into an election. It's a huge problem for them. 133 00:07:01,560 --> 00:07:05,040 Speaker 2: And then you go forward with Democrats, They've got everybody 134 00:07:05,080 --> 00:07:05,640 Speaker 2: on their team. 135 00:07:05,800 --> 00:07:07,240 Speaker 4: I'm referring to the media. 136 00:07:07,400 --> 00:07:09,240 Speaker 2: I also think some of this comes down to the 137 00:07:09,240 --> 00:07:11,440 Speaker 2: fact that there's so many Americans are just going around 138 00:07:11,480 --> 00:07:14,400 Speaker 2: the mainstream media now and will never go back. You 139 00:07:14,440 --> 00:07:16,360 Speaker 2: look at the canceling, for example, of one of the 140 00:07:16,400 --> 00:07:19,200 Speaker 2: late night shows. We talked about that last week, Stephen Colbert. 141 00:07:19,840 --> 00:07:20,080 Speaker 1: Why. 142 00:07:20,200 --> 00:07:21,600 Speaker 2: I think a lot of people are just like, we're 143 00:07:21,600 --> 00:07:23,680 Speaker 2: done with you when you alienate half the country and 144 00:07:23,720 --> 00:07:27,520 Speaker 2: mock us. And there's so many lies that have happened 145 00:07:27,640 --> 00:07:30,920 Speaker 2: over the last five, six seven years that were egregious. 146 00:07:31,040 --> 00:07:32,880 Speaker 4: The Russian Hoa's a great example. 147 00:07:33,560 --> 00:07:35,280 Speaker 2: I think that this is part of the reason one 148 00:07:35,280 --> 00:07:38,080 Speaker 2: of the Democratic parties failing right now is because they 149 00:07:38,120 --> 00:07:40,680 Speaker 2: don't have people covering for their propaganda. 150 00:07:41,440 --> 00:07:44,840 Speaker 1: Well and they're embracing. You know, it's amazing. 151 00:07:44,840 --> 00:07:48,360 Speaker 3: When a party decides, let's pick five issues and let's 152 00:07:48,400 --> 00:07:51,000 Speaker 3: take the wrong side of eighty twenty issues or ninety 153 00:07:51,000 --> 00:07:54,880 Speaker 3: ten issues, it turns out that's really bad politics. When 154 00:07:54,960 --> 00:07:56,840 Speaker 3: you say, as a party, hey, let's be for open 155 00:07:56,920 --> 00:08:01,480 Speaker 3: borders and Venezuelan gang members and relief seeing criminals and 156 00:08:01,600 --> 00:08:06,080 Speaker 3: rapists and child blesters, that is a really really unpopular position. 157 00:08:06,160 --> 00:08:09,120 Speaker 3: It turns out when you say, hey, let's let's be 158 00:08:09,200 --> 00:08:12,760 Speaker 3: for abolishing the police and and attacking ice and fighting 159 00:08:12,760 --> 00:08:16,400 Speaker 3: against law enforcement, that is a really really unpopular position. 160 00:08:16,480 --> 00:08:20,000 Speaker 3: It turns out when you cheer on pro hamas protesters 161 00:08:20,000 --> 00:08:24,000 Speaker 3: who are cheering on we love Hamas, that is a 162 00:08:24,120 --> 00:08:28,120 Speaker 3: really really unpopular position. It turns out when you advocate 163 00:08:28,280 --> 00:08:32,200 Speaker 3: for boys competing in girls' sports and and for doing 164 00:08:32,320 --> 00:08:36,360 Speaker 3: surgeries that sterilize and mutilize, mutilate little boys and girls, 165 00:08:36,800 --> 00:08:39,840 Speaker 3: that is a really really unpopular position. And the Democrat 166 00:08:39,880 --> 00:08:42,000 Speaker 3: Party as a whole has said, let's look at all 167 00:08:42,000 --> 00:08:45,360 Speaker 3: those issues, let's take the wrong side of eighty twenty 168 00:08:45,440 --> 00:08:47,920 Speaker 3: or even ninety ten issues, and let's see how that 169 00:08:47,960 --> 00:08:50,480 Speaker 3: works out. And the way it works out as you 170 00:08:50,520 --> 00:08:52,959 Speaker 3: get the most unpopular Democrat Party in the last thirty 171 00:08:52,960 --> 00:08:53,600 Speaker 3: five years. 172 00:08:53,760 --> 00:08:57,040 Speaker 2: What is your biggest concern? And I always say, there's 173 00:08:57,080 --> 00:09:00,319 Speaker 2: there's a there's a reaction to every action. Right, it's 174 00:09:00,400 --> 00:09:04,240 Speaker 2: low right now, what is the worry that do we 175 00:09:04,280 --> 00:09:07,800 Speaker 2: get over confident? Do we not continue to stay together 176 00:09:07,800 --> 00:09:10,920 Speaker 2: the party? Because look, we are notorious sometimes about conservatives 177 00:09:11,160 --> 00:09:13,920 Speaker 2: of screwing it up when we have these types of leads. 178 00:09:13,960 --> 00:09:15,040 Speaker 4: We have the House, you have the Senate. 179 00:09:15,080 --> 00:09:17,480 Speaker 2: We actually have a chance, I think, to even have 180 00:09:17,600 --> 00:09:19,960 Speaker 2: some gains in the midterms. And this is a mid 181 00:09:20,080 --> 00:09:22,240 Speaker 2: term I want to be clear that actually is more 182 00:09:22,240 --> 00:09:25,520 Speaker 2: favorable towards Democrats and in the districts and there in 183 00:09:25,559 --> 00:09:27,440 Speaker 2: the in the Senate seats that are open. 184 00:09:27,840 --> 00:09:28,720 Speaker 4: You look at it. 185 00:09:28,760 --> 00:09:31,439 Speaker 2: We have a real opportunity here to solidify our base 186 00:09:31,520 --> 00:09:33,200 Speaker 2: and get even more done with the president. 187 00:09:33,520 --> 00:09:35,200 Speaker 4: What is your worry about that? Though? 188 00:09:35,720 --> 00:09:38,200 Speaker 3: So my concern is twofold. My concern is political, and 189 00:09:38,240 --> 00:09:41,800 Speaker 3: my concern is policy. On the political side, when when 190 00:09:41,880 --> 00:09:44,599 Speaker 3: one party is out of power, that can be a 191 00:09:44,679 --> 00:09:47,920 Speaker 3: dangerous dynamic because even though the Democrat Party is is 192 00:09:48,080 --> 00:09:53,400 Speaker 3: very unpopular generally speaking, their hardcore partisans are pissed. 193 00:09:54,120 --> 00:09:57,760 Speaker 1: They are filled with rage. They hate Donald Trump. 194 00:09:57,800 --> 00:10:01,480 Speaker 3: That means they're hard core partisans will crawl over broken glass. 195 00:10:01,520 --> 00:10:03,600 Speaker 3: These are the knots that are that are having riots 196 00:10:03,600 --> 00:10:05,880 Speaker 3: in the streets of la saying we want more criminal, 197 00:10:05,880 --> 00:10:10,640 Speaker 3: illegal aliens in our country. That energy is dangerous. Look 198 00:10:10,720 --> 00:10:14,280 Speaker 3: right now, the Democrats are out raising Republicans because their 199 00:10:14,400 --> 00:10:17,240 Speaker 3: side is really energized. They hate Trump, and if you 200 00:10:17,280 --> 00:10:19,800 Speaker 3: send out an email on the Democrats side, donald Trump 201 00:10:19,840 --> 00:10:22,080 Speaker 3: is the devil. Turns out people give a lot of 202 00:10:22,080 --> 00:10:25,280 Speaker 3: money because if you're a crazy left winger that that 203 00:10:25,480 --> 00:10:29,280 Speaker 3: energizes you. I worry about the enthusiasm gap that on 204 00:10:29,640 --> 00:10:33,080 Speaker 3: the right. Look, Republicans buy and large are feeling pretty good. 205 00:10:33,160 --> 00:10:37,600 Speaker 3: We're winning massive victories. We talked about last week's podcast. 206 00:10:37,640 --> 00:10:40,280 Speaker 3: We went through all of the major victories in the 207 00:10:40,280 --> 00:10:42,079 Speaker 3: first six months of President Trump's term. 208 00:10:42,120 --> 00:10:42,960 Speaker 1: That's fantastic. 209 00:10:43,679 --> 00:10:47,560 Speaker 3: But the danger from a political perspective is that our 210 00:10:47,600 --> 00:10:50,400 Speaker 3: guys get complacent. Okay, we're winning. Everything's taken care of. 211 00:10:50,520 --> 00:10:54,000 Speaker 3: It's not urgent anymore. And that plays out both in 212 00:10:54,080 --> 00:10:57,680 Speaker 3: terms of fundraising that people just give less money to 213 00:10:57,720 --> 00:11:02,480 Speaker 3: candidates this cycle around, but it also can manifest in turnout. 214 00:11:02,760 --> 00:11:04,960 Speaker 3: If the crazies on the left are much more likely 215 00:11:05,000 --> 00:11:07,720 Speaker 3: to show up in a midterm and our guys are 216 00:11:07,760 --> 00:11:11,360 Speaker 3: complacent and feel like everything's fine, that can yield a 217 00:11:11,400 --> 00:11:15,040 Speaker 3: really bad election. Secondly, the policy piece that I worry about. 218 00:11:15,720 --> 00:11:18,160 Speaker 3: We've talked a lot on this podcast about the battle 219 00:11:18,200 --> 00:11:21,520 Speaker 3: within the Trump administration on tariffs, how there is one 220 00:11:21,600 --> 00:11:25,240 Speaker 3: camp within the Trump administration that wants to use tariffs 221 00:11:25,240 --> 00:11:29,440 Speaker 3: as leverage to lower the tariffs of our trading partners. 222 00:11:29,480 --> 00:11:32,760 Speaker 3: And Scott Bessen, the Treasury Secretary, is in that camp. 223 00:11:33,440 --> 00:11:35,400 Speaker 3: Elon Musk when he was part of the White House, 224 00:11:35,400 --> 00:11:38,120 Speaker 3: he was very much in that camp, and I'm enthusiastically 225 00:11:38,200 --> 00:11:40,120 Speaker 3: in that camp. I very much agree with what the 226 00:11:40,120 --> 00:11:44,520 Speaker 3: President has been doing using tariffs, but using them as 227 00:11:44,559 --> 00:11:47,520 Speaker 3: a means to an end to lower the tariffs and 228 00:11:47,559 --> 00:11:50,199 Speaker 3: remove non tariff barriers so that we can trade more 229 00:11:50,200 --> 00:11:53,800 Speaker 3: and export more with our trading partners. The problem, and 230 00:11:53,840 --> 00:11:55,720 Speaker 3: we've talked about this a lot in the pod as well, 231 00:11:56,600 --> 00:12:01,160 Speaker 3: there is a contingent in this administration that doesn't view 232 00:12:01,200 --> 00:12:03,880 Speaker 3: tariffs as a means to an end, that rather views 233 00:12:03,920 --> 00:12:08,560 Speaker 3: tariffs as an objective as a good economic outcome. That 234 00:12:08,640 --> 00:12:14,480 Speaker 3: we have high teriffs forever, and if that contingent prevails. 235 00:12:15,320 --> 00:12:17,760 Speaker 3: I worry next year that if we have really high 236 00:12:17,760 --> 00:12:20,160 Speaker 3: tariffs that the US is put in place, and if 237 00:12:20,160 --> 00:12:23,640 Speaker 3: our trading partners have really high tariffs retaliatory tariffs, that 238 00:12:24,480 --> 00:12:27,679 Speaker 3: we could end up going into a recession. The economy 239 00:12:27,679 --> 00:12:31,880 Speaker 3: could turn downhill, and if that happens, that could lead 240 00:12:31,920 --> 00:12:34,400 Speaker 3: to a really rough election. And so I'm going to 241 00:12:34,400 --> 00:12:37,280 Speaker 3: continue to engage closely and regularly with the President to say, 242 00:12:37,400 --> 00:12:39,679 Speaker 3: keep using them as leverage, keep lowering the tariffs of 243 00:12:39,720 --> 00:12:43,520 Speaker 3: our trading partners. That will produce good economic results. But 244 00:12:44,080 --> 00:12:46,320 Speaker 3: it's not clear which side of that battle is going 245 00:12:46,400 --> 00:12:47,640 Speaker 3: to prevail day by day. 246 00:12:47,679 --> 00:12:49,760 Speaker 1: On the policy battle, Yeah, great point there. 247 00:12:50,040 --> 00:12:53,040 Speaker 2: One of the policies that got this president elected was 248 00:12:53,080 --> 00:12:55,920 Speaker 2: the issue of fiscal responsibility. 249 00:12:56,040 --> 00:12:57,480 Speaker 4: DOGE was a huge part of that. 250 00:12:58,160 --> 00:13:01,000 Speaker 2: And there is something that is happening in DC and 251 00:13:01,040 --> 00:13:06,000 Speaker 2: it deals with eliminating federal reserve interest payments on reserves. 252 00:13:06,559 --> 00:13:11,160 Speaker 2: This could sound certainly wonky and like wait what or hey, 253 00:13:11,240 --> 00:13:14,880 Speaker 2: it's over my head, this is actually something that is 254 00:13:15,040 --> 00:13:18,560 Speaker 2: about reform. It is within the federal reserve, and it's 255 00:13:18,559 --> 00:13:21,360 Speaker 2: something that I think is very clear long overdo and 256 00:13:21,360 --> 00:13:23,360 Speaker 2: can have a major impact for all Americans. 257 00:13:23,800 --> 00:13:25,200 Speaker 4: Dive into how this could work. 258 00:13:26,040 --> 00:13:28,560 Speaker 3: Yeah, So this is an idea that I went to 259 00:13:28,600 --> 00:13:30,880 Speaker 3: the White House, went to the Oval Office, and I 260 00:13:30,960 --> 00:13:33,320 Speaker 3: pitched to President Trump in the middle of the One Big, 261 00:13:33,360 --> 00:13:37,600 Speaker 3: Beautiful bill. And in terms of spending cuts, I gave 262 00:13:37,640 --> 00:13:40,600 Speaker 3: the President a total three trillion dollars of spending cuts 263 00:13:40,600 --> 00:13:42,199 Speaker 3: that we could have included in the bill, and that 264 00:13:42,320 --> 00:13:45,040 Speaker 3: I think we should have included in the bill. Ultimately, 265 00:13:45,320 --> 00:13:47,960 Speaker 3: my views did not prevail, and we didn't do it 266 00:13:48,000 --> 00:13:50,520 Speaker 3: on this first reconciliation bill. I hope we come back 267 00:13:50,559 --> 00:13:53,040 Speaker 3: and do it on a later reconciliation bill and we 268 00:13:53,080 --> 00:13:57,600 Speaker 3: can have two more reconciliation bills. This idea is one 269 00:13:57,600 --> 00:14:00,440 Speaker 3: of the biggest ticket items because if we do what 270 00:14:00,480 --> 00:14:06,320 Speaker 3: I'm suggesting, we could save over one trillion dollars over 271 00:14:06,320 --> 00:14:07,199 Speaker 3: the next ten years. 272 00:14:07,480 --> 00:14:09,320 Speaker 1: That is a big, big number. 273 00:14:09,400 --> 00:14:11,920 Speaker 3: You know, when we were doing reconciliation, we were pulling 274 00:14:11,960 --> 00:14:14,640 Speaker 3: our hair out to save fifty billion or one hundred 275 00:14:14,640 --> 00:14:18,360 Speaker 3: billion dollars. One trillion is a lot of money. No, No, 276 00:14:18,520 --> 00:14:23,960 Speaker 3: what does this issue mean? So banks, big banks, they 277 00:14:24,080 --> 00:14:27,840 Speaker 3: store reserves and they deposit reserves with the Federal Reserve. 278 00:14:27,920 --> 00:14:28,160 Speaker 1: Now that. 279 00:14:28,160 --> 00:14:33,000 Speaker 3: Now, the Federal Reserve was created in nineteen thirteen, and 280 00:14:33,080 --> 00:14:36,240 Speaker 3: from nineteen thirteen until two thousand and seven. 281 00:14:36,280 --> 00:14:36,960 Speaker 1: How did it work? 282 00:14:37,080 --> 00:14:41,120 Speaker 3: Banks would keep reserves with the Fed and they would 283 00:14:41,120 --> 00:14:44,680 Speaker 3: get paid zero nothing for the reserves. There was a requirement. 284 00:14:44,720 --> 00:14:47,280 Speaker 3: It was typically about ten percent. So if you're a 285 00:14:47,320 --> 00:14:49,920 Speaker 3: big bank, let's say you've got one hundred billion dollars 286 00:14:49,960 --> 00:14:54,000 Speaker 3: in deposits, you were required to keep ten billion dollars 287 00:14:54,040 --> 00:14:56,720 Speaker 3: with the FED. You didn't get paid any interest on it. 288 00:14:56,760 --> 00:14:59,320 Speaker 3: You just had to keep that there because it's what's 289 00:14:59,320 --> 00:15:01,920 Speaker 3: called fraction banking, which is you had one hundred billion 290 00:15:01,960 --> 00:15:05,320 Speaker 3: dollars in deposits, ninety billion of it you'd loan out. 291 00:15:05,360 --> 00:15:08,120 Speaker 3: You'd loan out to individuals, you'd loaned out for home mortgages, 292 00:15:08,120 --> 00:15:10,080 Speaker 3: you'd loanded out for car loans, you'd loaded out to 293 00:15:10,120 --> 00:15:12,760 Speaker 3: small businesses. So off the hundred billion in deposits, you 294 00:15:12,840 --> 00:15:15,440 Speaker 3: didn't have ninety billion of it, but you were required 295 00:15:15,480 --> 00:15:18,080 Speaker 3: to keep typically about ten percent, just keep it with 296 00:15:18,160 --> 00:15:21,280 Speaker 3: the Fed. So that if Ben Ferguson comes in and says, hey, 297 00:15:21,320 --> 00:15:24,200 Speaker 3: I want to withdraw a thousand dollars because you know, 298 00:15:24,240 --> 00:15:27,960 Speaker 3: I want to go buy a nice present for my wife. 299 00:15:28,880 --> 00:15:30,560 Speaker 3: They had to have the thousand dollars to give you. 300 00:15:31,240 --> 00:15:33,640 Speaker 3: So that's the way the system worked for almost one 301 00:15:33,680 --> 00:15:38,240 Speaker 3: hundred years. Then, starting in two thousand and eight, when 302 00:15:38,240 --> 00:15:42,120 Speaker 3: you had the Great Financial Crisis, Congress changed the law 303 00:15:42,960 --> 00:15:46,520 Speaker 3: and the Fed began paying interest on reserves, So the 304 00:15:46,600 --> 00:15:49,200 Speaker 3: reserves that the banks kept with the Fed, they began 305 00:15:49,280 --> 00:15:52,560 Speaker 3: paying interest. Now, at the time, the interest rate was 306 00:15:52,640 --> 00:15:56,200 Speaker 3: incredibly low, and so two thousand and eight, you know, 307 00:15:56,240 --> 00:15:59,720 Speaker 3: you had financial chaos everywhere. You know, how much the 308 00:15:59,720 --> 00:16:02,880 Speaker 3: FED paid in interest on reserves, and the entirety of 309 00:16:02,880 --> 00:16:07,160 Speaker 3: two thousand and eight, how much about one billion dollars, 310 00:16:07,200 --> 00:16:10,960 Speaker 3: So in big picture budgetary terms, a very small amount, 311 00:16:11,320 --> 00:16:13,280 Speaker 3: it was. It was almost nominal. But it was the 312 00:16:13,320 --> 00:16:16,800 Speaker 3: first year they began paying interest on reserves. Since two 313 00:16:16,880 --> 00:16:20,640 Speaker 3: thousand and eight, they've been paying interest on reserves going forward, 314 00:16:20,800 --> 00:16:23,080 Speaker 3: and it was small. It was small most of the 315 00:16:23,120 --> 00:16:27,360 Speaker 3: time until the last two years of Joe Biden, and 316 00:16:27,400 --> 00:16:29,680 Speaker 3: the last two years of Joe Biden, the interest rate 317 00:16:29,720 --> 00:16:32,680 Speaker 3: went up and up and up, and for both twenty 318 00:16:32,720 --> 00:16:37,040 Speaker 3: twenty three and twenty twenty four, the FED paid over 319 00:16:37,240 --> 00:16:42,440 Speaker 3: one hundred billion dollars in interest on reserves. 320 00:16:43,200 --> 00:16:43,640 Speaker 4: Wow. 321 00:16:44,200 --> 00:16:44,760 Speaker 1: Last year. 322 00:16:45,080 --> 00:16:47,880 Speaker 2: But it's just pure tax dollars. You're paying your taxes 323 00:16:48,200 --> 00:16:51,240 Speaker 2: and that money is just going to interest. 324 00:16:50,840 --> 00:16:53,280 Speaker 1: Period interest to giant banks. 325 00:16:53,400 --> 00:16:56,200 Speaker 3: So it is literally the FED is transferring your tax 326 00:16:56,240 --> 00:16:58,560 Speaker 3: dollars to the biggest banks in the world. 327 00:16:58,560 --> 00:16:59,360 Speaker 1: Now it gets worse. 328 00:17:00,360 --> 00:17:04,600 Speaker 3: So they no longer have a requirement a reserve requirement 329 00:17:04,640 --> 00:17:05,399 Speaker 3: of say ten percent. 330 00:17:05,400 --> 00:17:06,800 Speaker 1: There's actually no requirement at all. 331 00:17:06,800 --> 00:17:11,480 Speaker 3: You know why, because they're paying such a big interest 332 00:17:11,560 --> 00:17:15,120 Speaker 3: rate that the banks are happy to park their money there. 333 00:17:15,840 --> 00:17:19,040 Speaker 3: And in fact, they're not just doing the ten percent reserves, 334 00:17:19,080 --> 00:17:22,479 Speaker 3: they're putting a bunch more capital there. Right now today 335 00:17:22,520 --> 00:17:25,159 Speaker 3: the FED is paying four point four percent to the 336 00:17:25,160 --> 00:17:28,600 Speaker 3: banks to just park their capital with a FED. So 337 00:17:28,720 --> 00:17:30,760 Speaker 3: in twenty twenty four, last year, the last year of 338 00:17:30,760 --> 00:17:35,360 Speaker 3: the Biden administration, the FED paid one hundred and sixty 339 00:17:35,440 --> 00:17:41,280 Speaker 3: eight billion dollars in interest on reserves. That's tax payer 340 00:17:41,320 --> 00:17:45,199 Speaker 3: money that went straight to giant Wall Street banks. 341 00:17:45,280 --> 00:17:47,479 Speaker 1: I think that makes no sense. I think we need 342 00:17:47,520 --> 00:17:47,879 Speaker 1: to end that. 343 00:17:48,640 --> 00:17:52,280 Speaker 2: So what is it going to be the obviously a 344 00:17:52,320 --> 00:17:55,240 Speaker 2: hold up here, it seems like it's a sane policy. 345 00:17:56,000 --> 00:17:57,720 Speaker 2: Is it going to be the lobbyist and how many 346 00:17:57,720 --> 00:18:00,240 Speaker 2: people are being lobbied by the big banks to not 347 00:18:00,400 --> 00:18:00,760 Speaker 2: change this. 348 00:18:00,960 --> 00:18:02,960 Speaker 4: Is this going to be fighting also the federal Reserve. 349 00:18:03,000 --> 00:18:03,880 Speaker 4: I mean, where are the road? 350 00:18:04,320 --> 00:18:04,480 Speaker 1: Yes? 351 00:18:04,720 --> 00:18:06,200 Speaker 4: Yes, and dive in. 352 00:18:06,320 --> 00:18:09,800 Speaker 2: I mean, because this seems like a very simplistic, fiscal 353 00:18:09,960 --> 00:18:13,720 Speaker 2: responsible thing to do. You would certainly do this in 354 00:18:13,760 --> 00:18:15,719 Speaker 2: the private sector in your own life, so why wouldn't 355 00:18:15,720 --> 00:18:16,720 Speaker 2: the government do the same thing. 356 00:18:17,880 --> 00:18:19,480 Speaker 3: So I'll tell you, well, we were in the middle 357 00:18:19,480 --> 00:18:22,120 Speaker 3: of the one Big Beautiful Bill. I went on TV. 358 00:18:22,200 --> 00:18:24,920 Speaker 3: I went on Squakbox on CNBC. I love doing Squakbox. 359 00:18:24,920 --> 00:18:27,119 Speaker 3: It's one of my favorite shows because they're really smart. 360 00:18:27,160 --> 00:18:29,639 Speaker 3: You can get into substance, you can get into details. 361 00:18:29,760 --> 00:18:32,159 Speaker 3: In fact, several times I've done what they call guest 362 00:18:32,160 --> 00:18:35,879 Speaker 3: hosting Squawkbox, where you spend an hour on TV, and 363 00:18:35,920 --> 00:18:37,960 Speaker 3: so instead of a little six minute interview where you 364 00:18:38,000 --> 00:18:41,440 Speaker 3: have to do a SoundBite, if you guest host Squalkbox 365 00:18:41,440 --> 00:18:43,879 Speaker 3: for an hour, you can really get into substance and 366 00:18:43,920 --> 00:18:47,639 Speaker 3: economic issues and issues dealing with finances. So I was 367 00:18:47,680 --> 00:18:52,280 Speaker 3: doing Squawkbox during during reconciliation, and I raised this issue 368 00:18:53,280 --> 00:18:55,359 Speaker 3: and I got to say Becky Quick, who's one of 369 00:18:55,359 --> 00:18:58,840 Speaker 3: the hosts. She's like, oh my goodness, well this would 370 00:18:58,840 --> 00:19:01,399 Speaker 3: be terrible. I mean, how could this possibly work? The 371 00:19:01,440 --> 00:19:03,840 Speaker 3: Fed couldn't do its job. So there's several arguments that 372 00:19:03,840 --> 00:19:07,679 Speaker 3: are made against this. One is, well, the FED uses 373 00:19:07,720 --> 00:19:10,360 Speaker 3: this to control interest rates, and that's right. She's like, well, 374 00:19:10,680 --> 00:19:12,520 Speaker 3: if you took this away, the FED wouldn't be able 375 00:19:12,520 --> 00:19:13,480 Speaker 3: to control interest rates. 376 00:19:13,600 --> 00:19:14,359 Speaker 1: How would they do it? 377 00:19:14,400 --> 00:19:17,760 Speaker 3: And my response was, Becky, the same way they did 378 00:19:17,760 --> 00:19:20,840 Speaker 3: it from nineteen thirteen to two thousand and seven. Like 379 00:19:20,920 --> 00:19:25,840 Speaker 3: the FED existed for one hundred years and didn't pay 380 00:19:25,920 --> 00:19:29,920 Speaker 3: a penny in interest on reserves, and somehow the FED 381 00:19:30,000 --> 00:19:32,720 Speaker 3: managed to operate until it began. Ben Bernaki was the 382 00:19:32,760 --> 00:19:33,920 Speaker 3: head of the FED at the time, and it was 383 00:19:33,960 --> 00:19:37,679 Speaker 3: interesting Ben Bernaki said when this idea was being debated, 384 00:19:37,720 --> 00:19:39,640 Speaker 3: he said, well, if we pay interest on reserves, that's 385 00:19:39,680 --> 00:19:41,840 Speaker 3: going to be terrible. That's going to be corporate welfare. 386 00:19:42,080 --> 00:19:44,200 Speaker 3: People are going to get pissed that we're giving tax 387 00:19:44,240 --> 00:19:47,440 Speaker 3: payer money to giant Wall Street banks. That's what Bernaki 388 00:19:47,480 --> 00:19:50,159 Speaker 3: said when it was just a billion. Now it is 389 00:19:50,160 --> 00:19:54,240 Speaker 3: one hundred and sixty eight billion. But their argument, and listen, 390 00:19:54,280 --> 00:19:57,959 Speaker 3: it is true. The Fed's job has become much easier. 391 00:19:58,040 --> 00:20:00,800 Speaker 3: They have a very direct way to control interest rates. 392 00:20:00,840 --> 00:20:03,280 Speaker 3: Now they're paying four point four percent. If they want 393 00:20:03,320 --> 00:20:05,840 Speaker 3: interest rates to go up, they just raise the interest rate. 394 00:20:05,840 --> 00:20:08,040 Speaker 3: They say, okay, we'll pay you four point six percent, 395 00:20:08,440 --> 00:20:11,000 Speaker 3: and all the other interest rates go up automatically. So 396 00:20:11,040 --> 00:20:13,760 Speaker 3: it makes the Fed's job easier. If they don't do that, 397 00:20:14,200 --> 00:20:16,840 Speaker 3: they have to do open market transactions to impact the 398 00:20:16,880 --> 00:20:20,120 Speaker 3: interest rate. It's much more complicated. But again, they did 399 00:20:20,160 --> 00:20:21,760 Speaker 3: it for one hundred years. 400 00:20:22,480 --> 00:20:22,640 Speaker 1: Ben. 401 00:20:22,720 --> 00:20:24,720 Speaker 3: Let me give you another fact that's going to blow 402 00:20:24,760 --> 00:20:28,760 Speaker 3: your mind. Of the one hundred and sixty eight billion 403 00:20:28,840 --> 00:20:32,160 Speaker 3: dollars that the FED paid last year in interest on reserves. 404 00:20:32,560 --> 00:20:35,120 Speaker 4: Say that number again. You said, one sixty eight billion 405 00:20:35,400 --> 00:20:37,080 Speaker 4: billion Colley. 406 00:20:37,960 --> 00:20:42,680 Speaker 3: Roughly half of that, nearly fifty percent, went to foreign banks. 407 00:20:43,480 --> 00:20:48,800 Speaker 3: So not even American banks, foreign banks getting tens of 408 00:20:48,840 --> 00:20:52,200 Speaker 3: billions of dollars of US tax payer money every year 409 00:20:52,520 --> 00:20:55,760 Speaker 3: every year. And so I'll tell you, when I got 410 00:20:55,760 --> 00:20:59,000 Speaker 3: off squawk box, I literally walked back to my office 411 00:20:59,119 --> 00:21:01,280 Speaker 3: and the CEO of one of the biggest banks in 412 00:21:01,320 --> 00:21:04,400 Speaker 3: the United States, a very very well known CEO I'm 413 00:21:04,440 --> 00:21:06,680 Speaker 3: not going to name, but he mean, he's someone very 414 00:21:06,680 --> 00:21:07,200 Speaker 3: well known. 415 00:21:07,800 --> 00:21:13,159 Speaker 1: He called me very dismayed and saying this is a 416 00:21:13,280 --> 00:21:14,120 Speaker 1: terrible idea. 417 00:21:14,600 --> 00:21:17,679 Speaker 3: And I was sort of chuckling, saying, so you're saying 418 00:21:17,760 --> 00:21:20,640 Speaker 3: you like getting billions of dollars of taxpayer funds every year. 419 00:21:22,040 --> 00:21:26,360 Speaker 3: And his argument was, well, look, if the FED stops 420 00:21:27,080 --> 00:21:30,640 Speaker 3: paying interest on reserves, it's very simple, We'll just buy 421 00:21:30,640 --> 00:21:35,240 Speaker 3: treasuries instead. So you have to pay pay interest regardless now, 422 00:21:35,960 --> 00:21:39,120 Speaker 3: and he said, and if you don't let us, if 423 00:21:39,160 --> 00:21:42,480 Speaker 3: you just make us keep reserves, that's confiscation. And you 424 00:21:42,560 --> 00:21:46,159 Speaker 3: can't do that. And I'll tell you my reaction. Let 425 00:21:46,200 --> 00:21:47,960 Speaker 3: me take each of those arguments that he made. On 426 00:21:48,000 --> 00:21:52,399 Speaker 3: the first one, the FED would be forced to buy treasuries, well, 427 00:21:53,119 --> 00:21:54,760 Speaker 3: or I'm sorry, not the FED. The banks would be 428 00:21:54,760 --> 00:21:57,040 Speaker 3: forced to buy treasuries instead of just parking their money 429 00:21:57,080 --> 00:22:00,720 Speaker 3: at the FED. That in and of itself would be 430 00:22:00,760 --> 00:22:04,040 Speaker 3: a good outcome. Look, there's a lot of concern about 431 00:22:04,040 --> 00:22:08,960 Speaker 3: a failed FED auction. If the banks were buying treasuries, 432 00:22:09,000 --> 00:22:12,520 Speaker 3: that would create demand for treasuries. And you know, one 433 00:22:12,520 --> 00:22:15,080 Speaker 3: of the things that would do it would drive down 434 00:22:15,119 --> 00:22:19,600 Speaker 3: the interest rate by creating more demand for treasuries, which means, listen, 435 00:22:19,640 --> 00:22:21,880 Speaker 3: one of the things Donald Trump is trying very hard 436 00:22:21,880 --> 00:22:24,240 Speaker 3: to do is to get the Fed to lower the 437 00:22:24,240 --> 00:22:26,399 Speaker 3: interest rate, and Ja Powell doesn't want to do it. 438 00:22:27,200 --> 00:22:31,240 Speaker 3: This change would create a market dynamic that would lower 439 00:22:31,320 --> 00:22:32,040 Speaker 3: interest rates. 440 00:22:32,280 --> 00:22:33,200 Speaker 1: That's a good thing. 441 00:22:34,040 --> 00:22:37,080 Speaker 3: Secondly, you got a ton of money that are what 442 00:22:37,119 --> 00:22:40,679 Speaker 3: are called excess reserves. They're beyond what a reasonable reserve 443 00:22:40,720 --> 00:22:44,200 Speaker 3: requirement is and it's just sitting at the Fed. 444 00:22:44,920 --> 00:22:45,840 Speaker 1: You know what that means. 445 00:22:45,880 --> 00:22:48,520 Speaker 3: It means those billions of dollars or even those trillions 446 00:22:48,520 --> 00:22:52,800 Speaker 3: of dollars are not being loaned to small businesses. They're 447 00:22:52,840 --> 00:22:55,360 Speaker 3: not being loan to open a new store, to buy 448 00:22:55,440 --> 00:22:58,560 Speaker 3: new equipment, to hire new workers, to expand a new study. 449 00:22:58,600 --> 00:23:02,240 Speaker 3: They're not creating jobs. It's just sitting there. The Fed 450 00:23:02,359 --> 00:23:05,320 Speaker 3: is paying them just park your capital and do nothing. 451 00:23:05,359 --> 00:23:08,080 Speaker 3: I'd much rather banks, if they want to earn a return, 452 00:23:09,320 --> 00:23:13,280 Speaker 3: have to make loans and loan that out. And as 453 00:23:13,359 --> 00:23:16,760 Speaker 3: for the second argument that this CEO said of, well, 454 00:23:16,800 --> 00:23:18,840 Speaker 3: if you don't let them buy treasuries, you just force 455 00:23:18,880 --> 00:23:19,960 Speaker 3: them to keep reserves. 456 00:23:20,359 --> 00:23:21,800 Speaker 1: And he said that's confiscation. 457 00:23:23,160 --> 00:23:25,439 Speaker 3: I would point out for the entire history of our 458 00:23:25,480 --> 00:23:27,760 Speaker 3: country that has been the law. There has been a 459 00:23:27,840 --> 00:23:31,520 Speaker 3: reserve requirement that's called fractional banking. You know if you 460 00:23:31,560 --> 00:23:33,520 Speaker 3: have a bank. Again use the example. You got a 461 00:23:33,520 --> 00:23:36,360 Speaker 3: bank with one hundred billion dollars. It has not been 462 00:23:36,480 --> 00:23:38,359 Speaker 3: legal for most of the history of our country for 463 00:23:38,400 --> 00:23:40,919 Speaker 3: someone to take a hundred million dollars in deposits and 464 00:23:41,000 --> 00:23:42,399 Speaker 3: loan out one hundred million dollars. 465 00:23:42,440 --> 00:23:43,560 Speaker 1: Why is that not legal? 466 00:23:44,200 --> 00:23:46,199 Speaker 3: Because if your depositors come in and say, hey, can 467 00:23:46,200 --> 00:23:47,879 Speaker 3: I have my money back, if they've loaned all the 468 00:23:47,880 --> 00:23:49,760 Speaker 3: money out, they don't have money to give it back 469 00:23:49,800 --> 00:23:52,800 Speaker 3: to you. And so we have long had a regulatory 470 00:23:52,880 --> 00:23:55,760 Speaker 3: system that says you have to keep a reasonable reserve 471 00:23:56,720 --> 00:23:58,919 Speaker 3: so that if your depositors want their money back, you 472 00:23:58,960 --> 00:24:02,520 Speaker 3: can pay them. That has never been confiscation, and so 473 00:24:02,600 --> 00:24:05,720 Speaker 3: the banks have loved it because they have made massive 474 00:24:05,760 --> 00:24:12,240 Speaker 3: amounts of money. Just ending this on one provision over 475 00:24:12,359 --> 00:24:16,800 Speaker 3: ten years would save more than one trillion dollars. It's 476 00:24:16,840 --> 00:24:20,160 Speaker 3: a powerful, powerful idea, but I got to say, they're 477 00:24:20,200 --> 00:24:23,160 Speaker 3: really powerful forces that do not want to see this happen. 478 00:24:24,080 --> 00:24:26,000 Speaker 2: I want to finally move to that fix that you 479 00:24:26,080 --> 00:24:29,760 Speaker 2: mentioned coming for the one Big Beautiful Bill. There's a 480 00:24:29,800 --> 00:24:34,280 Speaker 2: push it's actually bipartisan, to undo a gambling tax hike 481 00:24:34,359 --> 00:24:37,080 Speaker 2: that they passed in the megabill, and there was an 482 00:24:37,119 --> 00:24:41,320 Speaker 2: outcry because it's, as you mentioned, it's unfair how it 483 00:24:41,400 --> 00:24:44,919 Speaker 2: was written specifically to one group of people in the 484 00:24:45,000 --> 00:24:45,720 Speaker 2: job that they do. 485 00:24:46,560 --> 00:24:49,760 Speaker 3: Yeah, so there was a little provision that was written 486 00:24:49,800 --> 00:24:52,600 Speaker 3: in the one big, beautiful bill, and nobody saw this. 487 00:24:52,600 --> 00:24:54,720 Speaker 3: This was a tiny little provision. That the bill is 488 00:24:54,760 --> 00:24:57,800 Speaker 3: a massive bill, it's thousands of pages. And what this 489 00:24:57,880 --> 00:25:01,400 Speaker 3: provision said is it is it deals with how you 490 00:25:01,560 --> 00:25:06,280 Speaker 3: pay taxes on gambling winnings and losses. And the way 491 00:25:06,280 --> 00:25:08,760 Speaker 3: the law used to work was very common sense, which 492 00:25:08,840 --> 00:25:12,199 Speaker 3: is that you deduct your losses from your wins and 493 00:25:12,240 --> 00:25:14,640 Speaker 3: you pay taxes on your net what you actually made 494 00:25:14,720 --> 00:25:17,919 Speaker 3: your profit. That's actually a sensible way to do a 495 00:25:17,960 --> 00:25:23,840 Speaker 3: tax law. The change now anyone gambling can only deduct 496 00:25:24,680 --> 00:25:28,080 Speaker 3: ninety percent of their losses rather than one hundred percent 497 00:25:28,080 --> 00:25:30,440 Speaker 3: of their losses. Now what does that mean. Let's take 498 00:25:30,480 --> 00:25:32,919 Speaker 3: for example, as you know, I like to play poker. 499 00:25:33,320 --> 00:25:35,560 Speaker 3: I play poker with a lot of buddies. I always 500 00:25:35,560 --> 00:25:37,920 Speaker 3: play really low stakes poker, but I enjoy the game 501 00:25:38,160 --> 00:25:40,760 Speaker 3: and I've got several friends who are poker pros. So 502 00:25:41,640 --> 00:25:44,040 Speaker 3: you know I do every year I do a fundraiser 503 00:25:44,680 --> 00:25:48,119 Speaker 3: in Vegas. That raises money for my campaign, and we 504 00:25:48,200 --> 00:25:50,879 Speaker 3: get people who come and hang out, and several poker 505 00:25:50,880 --> 00:25:53,960 Speaker 3: players come and hang out with us and play poker. 506 00:25:53,960 --> 00:25:56,439 Speaker 3: And so let's say you're and there. Look I like, 507 00:25:57,480 --> 00:26:00,920 Speaker 3: I think poker is a fascinating game. It is strategic game. 508 00:26:01,000 --> 00:26:05,040 Speaker 3: It involves math, but it involves reading people. I love 509 00:26:05,160 --> 00:26:09,520 Speaker 3: watching like the World Series of Poker, watching the strategy. 510 00:26:09,560 --> 00:26:13,520 Speaker 3: There's a whole vibrant world of people who earn their 511 00:26:13,560 --> 00:26:18,120 Speaker 3: livings playing professional poker. And it's uh, you know, as 512 00:26:18,119 --> 00:26:20,400 Speaker 3: you know. I several years ago I got a chance. 513 00:26:20,400 --> 00:26:23,160 Speaker 3: I played on Poker after Dark and and and I 514 00:26:23,240 --> 00:26:26,199 Speaker 3: played with with Doyle Brunson and Phil Hellmuth and and 515 00:26:26,240 --> 00:26:29,040 Speaker 3: Doyle Brunson who was known as Texas Dolly and one 516 00:26:29,040 --> 00:26:31,119 Speaker 3: of the greatest poker players to ever live. It was 517 00:26:31,200 --> 00:26:34,119 Speaker 3: truly a bucket list experience to play with him. I 518 00:26:34,160 --> 00:26:38,080 Speaker 3: also played with mister Beast, which was really fun. I 519 00:26:38,080 --> 00:26:41,800 Speaker 3: got to tell you sitting down, I was really really 520 00:26:41,840 --> 00:26:44,159 Speaker 3: excited to be playing with with Doyle and playing with 521 00:26:44,200 --> 00:26:44,880 Speaker 3: Phil Hellmuth. 522 00:26:46,160 --> 00:26:46,560 Speaker 1: Doyle. 523 00:26:46,760 --> 00:26:48,879 Speaker 3: So my goal going in, look, both of them are 524 00:26:48,960 --> 00:26:52,160 Speaker 3: much much better players than I am, obviously, Uh. 525 00:26:51,920 --> 00:26:53,800 Speaker 1: My goal was just to take chips off them. 526 00:26:53,840 --> 00:26:56,000 Speaker 3: I wanted to win at least one hand and be like, 527 00:26:56,040 --> 00:26:57,600 Speaker 3: all right, I want a hand and took chips. 528 00:26:58,520 --> 00:27:00,840 Speaker 1: I ended up being being lucky doing better than that. 529 00:27:00,960 --> 00:27:04,760 Speaker 3: And so with Doyle I went all in and ended 530 00:27:04,840 --> 00:27:07,720 Speaker 3: up busting him out, which is and you can watch 531 00:27:07,720 --> 00:27:09,640 Speaker 3: it if you want to Google you can watch online 532 00:27:09,920 --> 00:27:13,800 Speaker 3: me busting Doyle Brunson out. That was astonishing and I 533 00:27:13,840 --> 00:27:15,919 Speaker 3: got to say he was so gracious. I mean he 534 00:27:16,200 --> 00:27:19,840 Speaker 3: Doyle has since passed, but he won the very first 535 00:27:19,840 --> 00:27:23,200 Speaker 3: World Series of poker and is just a legendary poker player. 536 00:27:23,280 --> 00:27:26,800 Speaker 3: That was incredibly meaningful. And then towards the end of 537 00:27:26,800 --> 00:27:28,600 Speaker 3: the game on Poker after Dark, I was playing with 538 00:27:28,600 --> 00:27:31,800 Speaker 3: Phil Hellmuth. Phil Hellmuth, Phil will tell you he's the 539 00:27:31,800 --> 00:27:34,600 Speaker 3: greatest poker player alive by any measure. He certainly one 540 00:27:34,640 --> 00:27:36,240 Speaker 3: of the greatest poker players alive, and he's got a 541 00:27:36,240 --> 00:27:41,240 Speaker 3: good argument that he may be the greatest. Between Doyle 542 00:27:41,440 --> 00:27:45,160 Speaker 3: and Phil, they had at the time twenty five bracelets, 543 00:27:45,160 --> 00:27:48,080 Speaker 3: which means together they had won twenty five different World 544 00:27:48,119 --> 00:27:51,080 Speaker 3: Series events. To give you a sense of just how 545 00:27:51,080 --> 00:27:55,879 Speaker 3: accomplished these two players are. Phil and I end up, 546 00:27:55,880 --> 00:27:58,880 Speaker 3: We're playing Texas hold him and I went all in 547 00:28:00,040 --> 00:28:03,119 Speaker 3: and I had Ace King and he had Ace Queen, 548 00:28:03,280 --> 00:28:06,440 Speaker 3: so I had him dominated. I was a massive favorite. 549 00:28:06,640 --> 00:28:09,480 Speaker 3: I was about a three to one favorite. And then 550 00:28:09,680 --> 00:28:11,720 Speaker 3: what ends up happening is Phil got lucky and he 551 00:28:11,760 --> 00:28:14,720 Speaker 3: sucked out a queen and it was funny Phil, and 552 00:28:14,760 --> 00:28:17,639 Speaker 3: so he crippled me. Didn't knock me out, but he 553 00:28:17,680 --> 00:28:19,400 Speaker 3: basically crippled me, and then I went out a couple 554 00:28:19,440 --> 00:28:20,120 Speaker 3: of hands later. 555 00:28:21,240 --> 00:28:23,800 Speaker 1: It was funny. Phil was embarrassed. 556 00:28:23,960 --> 00:28:26,919 Speaker 3: Because I got my chips in as the dominant favorite 557 00:28:26,960 --> 00:28:29,040 Speaker 3: and he just got lucky, and he was like, oh, 558 00:28:29,080 --> 00:28:30,359 Speaker 3: I feel terrible to win like that. 559 00:28:30,440 --> 00:28:32,040 Speaker 1: I'm like, Phil, I am thrilled. 560 00:28:32,480 --> 00:28:34,920 Speaker 3: If I played that hand one hundred times, I'd want 561 00:28:34,920 --> 00:28:36,639 Speaker 3: to play it exactly the same way and get my 562 00:28:36,720 --> 00:28:39,280 Speaker 3: chips in every time. And look, that's why they call 563 00:28:39,320 --> 00:28:41,640 Speaker 3: it gambling, because some chunk of it you lose. Anyway, 564 00:28:42,640 --> 00:28:46,200 Speaker 3: let's talk about what this provision does. Let's say you're 565 00:28:46,240 --> 00:28:49,080 Speaker 3: a poker pro, and let's say in a given year, 566 00:28:50,440 --> 00:28:55,360 Speaker 3: you lose one hundred thousand dollars playing poker, and you 567 00:28:55,440 --> 00:28:58,480 Speaker 3: win one hundred and thirty thousand dollars Okay, so you're 568 00:28:58,720 --> 00:29:00,520 Speaker 3: you know, you're not a super rich play but you're 569 00:29:00,520 --> 00:29:03,320 Speaker 3: out playing, and you know you made you netted thirty grand. 570 00:29:03,360 --> 00:29:08,800 Speaker 3: Thirty grand is what you made that year. Ordinarily, you 571 00:29:08,840 --> 00:29:11,280 Speaker 3: would deduct the hundred grand from the one hundred and 572 00:29:11,280 --> 00:29:13,360 Speaker 3: thirty grand, and you would pay taxes on the thirty 573 00:29:13,400 --> 00:29:14,680 Speaker 3: thousand profit you had. 574 00:29:14,800 --> 00:29:16,920 Speaker 4: Which, by the way, is exactly what everyone else. 575 00:29:16,720 --> 00:29:18,400 Speaker 1: Does right now. 576 00:29:18,520 --> 00:29:22,200 Speaker 3: Under the new law, you lose one hundred grand that year, 577 00:29:22,320 --> 00:29:25,920 Speaker 3: you make one hundred and thirty, you could only deduct 578 00:29:26,320 --> 00:29:29,560 Speaker 3: ninety percent of one hundred grand you lost, which means, 579 00:29:30,160 --> 00:29:33,240 Speaker 3: instead of paying taxes on the thirty grand you made, 580 00:29:34,280 --> 00:29:38,360 Speaker 3: you would pay taxes on forty grand. You would end 581 00:29:38,440 --> 00:29:42,040 Speaker 3: up paying taxes on more than you made. That that's 582 00:29:42,160 --> 00:29:46,000 Speaker 3: wildly unfair, by the way. Even worse than that, let's 583 00:29:46,000 --> 00:29:48,920 Speaker 3: assume you had a really lousy year. Let's assume you 584 00:29:48,960 --> 00:29:51,800 Speaker 3: want one hundred thousand dollars and lost one hundred thousand dollars, 585 00:29:51,800 --> 00:29:55,960 Speaker 3: so you like just netted nothing. You broke even under 586 00:29:56,000 --> 00:29:58,880 Speaker 3: this law, you'd have to pay taxes on ten grand 587 00:29:58,920 --> 00:30:01,080 Speaker 3: because you could only deduct nine eighty percent of your losses. 588 00:30:01,080 --> 00:30:04,080 Speaker 3: So even though you made not a penny, you would 589 00:30:04,120 --> 00:30:08,680 Speaker 3: owe taxes on the ten grand. That is wildly unfair. 590 00:30:08,760 --> 00:30:10,520 Speaker 3: And I got to tell you, I don't know of 591 00:30:10,560 --> 00:30:12,240 Speaker 3: a senator who knew this was in There was a 592 00:30:12,280 --> 00:30:15,840 Speaker 3: tiny little provision buried in there. We were moving incredibly 593 00:30:15,880 --> 00:30:17,960 Speaker 3: fast at three in the morning, and so nobody saw 594 00:30:17,960 --> 00:30:21,520 Speaker 3: it there. When I heard about it, I said, that 595 00:30:21,560 --> 00:30:23,160 Speaker 3: makes no sense at all. But it was already pasted, 596 00:30:23,160 --> 00:30:24,320 Speaker 3: it was signed in a law at the time I 597 00:30:24,360 --> 00:30:27,320 Speaker 3: heard about it. And so what I've done, I've joined 598 00:30:27,360 --> 00:30:30,480 Speaker 3: with the two Nevada senators, with Catherine Cortez Mastow and 599 00:30:30,560 --> 00:30:34,160 Speaker 3: Jackie Rosen. They're both Democrats, and also Bill Haggert, who 600 00:30:34,200 --> 00:30:36,280 Speaker 3: was a Republican, and all four of us have joined 601 00:30:36,320 --> 00:30:38,880 Speaker 3: in legislation to fix this. I think we need to 602 00:30:38,880 --> 00:30:42,880 Speaker 3: fix it. We should not be treating people unfairly. The 603 00:30:42,960 --> 00:30:47,840 Speaker 3: income tax should tax people on real income, not imaginary income. 604 00:30:48,640 --> 00:30:49,760 Speaker 1: That is unfair. 605 00:30:49,840 --> 00:30:52,000 Speaker 3: I don't know that we'll get it fixed, because look, 606 00:30:52,120 --> 00:30:55,400 Speaker 3: changing anything in the law is complicated, but I hope 607 00:30:55,440 --> 00:30:57,760 Speaker 3: we will because I can tell you I don't know 608 00:30:57,840 --> 00:31:02,000 Speaker 3: of a senator, Republican or Democrat, who's arguing this is 609 00:31:02,040 --> 00:31:04,240 Speaker 3: a good idea. I've sat and talked with the number 610 00:31:04,240 --> 00:31:06,720 Speaker 3: of my colleagues, and it's not like someone is taking 611 00:31:06,760 --> 00:31:09,240 Speaker 3: the other side and saying no, let's let's let's be 612 00:31:09,400 --> 00:31:13,960 Speaker 3: wildly unfair. I hope we can get this fixed, and 613 00:31:14,240 --> 00:31:16,280 Speaker 3: I think we need to because because we need to 614 00:31:16,320 --> 00:31:21,440 Speaker 3: be fair and and look, there's a whole industry, particularly 615 00:31:21,520 --> 00:31:24,760 Speaker 3: around Vegas, of people who are poker pros and make 616 00:31:24,800 --> 00:31:27,320 Speaker 3: their livings and and generate a lot of revenue. And 617 00:31:27,320 --> 00:31:30,120 Speaker 3: if we don't change this, the effect will be to 618 00:31:30,200 --> 00:31:32,360 Speaker 3: drive those poker pros out of the US. We will 619 00:31:32,360 --> 00:31:36,920 Speaker 3: force them to go elsewhere. That that would be really 620 00:31:36,960 --> 00:31:39,680 Speaker 3: a tragic outcoming. So I don't want to see that happen. 621 00:31:39,960 --> 00:31:42,160 Speaker 2: Yeah, no doubt about it. Don't forget. We do this 622 00:31:42,200 --> 00:31:45,360 Speaker 2: show Monday, Wednesday Friday. Hit that subscribe or auto download 623 00:31:45,360 --> 00:31:48,120 Speaker 2: button wherever you get this podcast, Please write us that 624 00:31:48,240 --> 00:31:50,600 Speaker 2: review and share this. It makes a huge difference in 625 00:31:50,640 --> 00:31:53,360 Speaker 2: whose season And here's a show and we will see 626 00:31:53,400 --> 00:31:55,040 Speaker 2: you back here on Wednesday morning.