11/10/25: Data Center Backlash, Sam Altman Freaks On Bubble, Biden War Crime Coverup, Hegseth Says US On War Footing

Summary

Breaking Points with Krystal and Saagar – Episode Summary

Date: November 10, 2025
Episode Theme:
This episode dives into the political, economic, and societal upheaval caused by America’s rapid data center expansion (especially for AI), the soaring influence and risks of tech giants like OpenAI, the so-called “AI bubble,” and the deep-rooted issues of US foreign policy—particularly the US role in covering up Israeli war crimes. The hosts, Krystal Ball and Saagar Enjeti, critically examine how power is becoming concentrated in the hands of corporations and unaccountable elites, the bipartisan backlash against AI’s energy and economic toll, and America’s default toward endless military spending.

---

Key Discussion Points & Insights

1. Data Center Backlash and Energy Costs

(02:24–13:33)

Rising Energy Prices & Government Inaction

• The hosts discuss how electricity and other utility bills are spiking, with government responses being deflective.

• Quote (Saagar, 03:34):

  “So what are they going to do for you on your, like, nothing. It's not their problem... It's just the states, it's the localities. Sorry, sorry. Not sorry. We can't do anything. We won't do anything. We don't care. I mean, unbelievable.”

• Krystal suggests the government should at least try solutions, such as building new nuclear plants or refineries, rather than making excuses.

Data Center Buildout – Bipartisan Resistance

• Data centers, mostly for AI, are driving up both power demand and prices.
• Local communities across ideological lines (from rural conservatives to progressives) are opposing these developments due to water/electricity strains, environmental destruction, and NIMBY concerns.
• Impactful Moment (Krystal, 08:50):

  “Opposition to data centers is truly across the political spectrum … a genuine bipartisan concern about what is this going to do to our water supply… and electric bills.”

Electoral Impact

• In Georgia, data center opposition led to a historic 50-point swing, flipping a Republican stronghold to Democrat control, driven by promises to lower utility bills.
• Virginia saw similar effects at the state-delegate level.

Underlying Resentment

• Americans resent that economic growth is captured by giant corporations (Nvidia, Amazon), while ordinary people feel little benefit and bear higher costs.
• AI’s “benefits” touted as revolutionary have not materialized for most people—wages stagnate, social trust erodes, and new tech mainly seems to produce bizarre distractions or negative outcomes.
• Krystal (11:03):

  “If that's all we get is suicidal ideation, marginal increase in worker productivity or whatever, but huge sky-high bills, a destruction of social trust... Sorry, I don't think so.”

---

2. The AI Bubble & Sam Altman’s “Too Big to Fail” Logic

(15:39–31:25)

OpenAI’s Reckless Bet and Backstop Plan

• OpenAI (Sam Altman’s company) is planning trillions in spending on data centers, far outstripping current revenues.
• Altman acknowledges the government would function as “the insurer of last resort” if tech bets fail.
• Quote (Altman, 16:00):

  “When something gets sufficiently huge... the federal government is kind of the insurer of last resort... I'm worried they'll become the insurer of first resort and that I don't want.”

Altman’s Public Reaction & Criticism

• Pressed on how OpenAI could fund enormous commitments (making $13b in revenue, planning $1.4t in spend), Altman is defensive, evasive, and hints at “forward bets” that revenue will surge—reminiscent of dot-com/Enron-style hubris.

• Notable Exchange (18:13–19:51):

  Krystal: “How can a company with $13 billion in revenues make $1.4 trillion of spend commitments?”
  Altman: “First of all, we're doing well more revenue than that. Second... if you want to sell your shares, I'll find you a buyer... We plan for revenue to grow steeply. We might screw it up.”

• Krystal compares this to Enron’s downfall, highlighting the dangerous overconfidence.

Market Fragility—America’s Economy Now “All-In” on AI

• The hosts argue the US economy’s supposed strength is an illusion propped up by skyrocketing AI stocks (esp. Nvidia).

• If AI/tech stocks drop, consumer spending, housing, and retirement savings will collapse.

• Krystal (29:04):

  “It can't go down. We don't have anything else. We don't have pensions in this country. We only have 401ks. We have no guaranteed cash. The number has to go up. If the number doesn't go up, we're fucked.”

• Saagar:

  “The whole country has a bet on it. Literally.” (29:15)

Public Bailout All But Inevitable

• Altman denies lobbying for government backstops, but the scale of AI’s economic centrality means “too big to fail” logic is inescapable.
• Krystal warns:

  “If they don't radically change something soon… we absolutely will get a bailout because the alternative is so catastrophic.” (30:01)

---

3. Biden Administration’s War Crime Coverup in Gaza

(32:40–43:44)

Internal Evidence and Suppression

• The US possessed intelligence indicating Israel’s own military lawyers thought their Gaza operations might merit war crimes charges.
• State Dept. lawyers believed the same but reports were watered down to avoid legislated consequences (like halting arms transfers).
• Krystal (33:54):

  “You had that report internally that was basically like watered down and quashed… everyone’s just sort of covering their eyes and ears… If they can avoid making an assessment, then they can pretend, play dumb.”

Hypocrisy in Foreign Policy

• Krystal notes the Biden admin was simultaneously denouncing Russia for war crimes while shielding Israel.
• Outgoing officials avoided leaving a record of dissent due to concern for future career prospects (Harvard, podcasts, think tanks)—not morality.
• Saagar (39:06):

  “Biden officials worried that attaching their names to a recommendation to limit American support for Tel Aviv would hinder their future career prospects… appalling.”

Elite Impunity

• Former officials facing no accountability, instead receiving book deals, academic sinecures, or media gigs.
• Krystal (42:13):

  “They have no shame. They live completely normal life. Nothing happened to them. It’s sick. And now the next generation, it’s the same thing... Why does nobody pay a price for being bad in this country?”

---

4. America on “War Footing” & the Trillion Dollar War Machine (with William Hartung)

(45:07–57:01)

America Always at War—By Design

• Pentagon spending now tops $1 trillion/year, with contractors driving perpetual expansion despite end of major wars.

• Even Trump—who claimed to avoid war—expanded spending, nuclear buildup, and global interventions.

• Hartung (47:06):

  “Every president in the post-World War II period has made noises about streamlining the Pentagon... They’ve pretty much all failed or gone back on those promises.”

Military-Industrial Complex: Self-Perpetuating

• The logic: New threats (China, etc) always justify more money, often stoked by defense-linked think tanks and lobbyists.

• Money does not necessarily equate to capabilities or victory (e.g., F-35 underperforms, other systems obsolete or inefficient).

• Hartung (49:16):

  “Unfortunately it’s more of a money making machine for contractors than a well considered plan.”

• Congress’ incentives (jobs in districts, industry lobbying) override strategic debate or discipline; weapon systems funded for pork, not defense.

Silicon Valley vs. Legacy Contractors

• New tech firms try to disrupt old Pentagon players, but mainly seek deregulation and profit, not truly better outcomes.

• Hartung (50:34):

  “They’re overstating what they can do. If they didn’t have billionaires behind them, they never would have made it... The exchange is get rid of all regulations... Technology will save us. That’s never worked before.”

Societal Cost and Inertia

• Soaring defense spending squeezes social spending and leaves America inflexible.

• The only way out is broad coalitions—left, right, centrists—demanding accountability, banning lobbying conflicts, and prioritizing national interest, but the current system makes reform very difficult.

• Hartung (55:21):

  “I think it’s kind of a societal effort... The whole lobby is kind of embedded in our society. But there’s certainly people on the right who are tired of this... So I think you need kind of a coalition that says, all right, we know this doesn’t work. Let’s start by fixing that, and then we can debate what our strategy should be.”

---

Memorable Quotes & Moments (with Timestamps)

• “What are they going to do for you?... Nothing. It's not their problem... Sorry, not sorry. We can't do anything. We won't do anything. We don't care. I mean, unbelievable.”
  — Saagar Enjeti (03:34)
• “Opposition to data centers is truly across the political spectrum … a genuine bipartisan concern about what is this going to do to our water supply… and electric bills.”
  — Krystal Ball (08:50)
• “If that's all we get is suicidal ideation, marginal increase in worker productivity or whatever, but huge sky-high bills, a destruction of social trust... Sorry, I don't think so.”
  — Krystal Ball (11:04)
• “When something gets sufficiently huge... the federal government is kind of the insurer of last resort...”
  — Sam Altman (16:00)
• “If they don't radically change something soon… we absolutely will get a bailout because the alternative is so catastrophic.”
  — Krystal Ball (30:01)
• “We don't have anything else. We don't have pensions in this country. We only have 401ks... If the number doesn't go up, we're fucked.”
  — Krystal Ball (29:04)
• “They have no shame. They live completely normal life. Nothing happened to them. It’s sick. And now the next generation, it’s the same thing... Why does nobody pay a price for being bad in this country?”
  — Krystal Ball (42:13)
• “Every president in the post-World War II period has made noises about streamlining the Pentagon... They’ve pretty much all failed or gone back on those promises.”
  — William Hartung (47:06)
• “Unfortunately it’s more of a money making machine for contractors than a well considered plan...”
  — William Hartung (49:16)

---

Important Segment Timestamps

• Energy, Data Centers, and Local Backlash: 02:24–13:33
• AI Bubble, Sam Altman, and Too Big to Fail: 15:39–31:25
• War Crimes Coverup, US Policy on Israel: 32:40–43:44
• Military Spending, Contractor Influence, and Reform (William Hartung): 45:07–57:01

---

Conclusion

This episode is a wide-ranging, pointed critique of America’s captured political economy: from the spiraling cost and opaque politics of AI/data center expansion, to the lack of political will to confront entrenched power in both industry and foreign policy. The hosts warn that “too big to fail” logic now dominates everything from tech to military spending, with average Americans left footing the bill or suffering the consequences—while the elite enjoy total impunity. The show maintains a candid, adversarial tone, holding both parties and their aligned interests to account.

Transcript

[Commercial Announcer]

This is an iHeart podcast.

[Krystal Ball]

I turned off news altogether.

[Saagar Enjeti]

I hate to say it, but I don't trust much of anything.

[Krystal Ball]

It's the rage bait.

[Saagar Enjeti]

It feels like it's trying to divide people.

[Krystal Ball]

We got clear facts. Maybe we can calm down a little.

[NBC News Announcer]

NBC News brings you clear reporting. Let's meet at the Facts. Let's move forward from there. NBC News reporting for America.

[Krystal Ball]

This is Matt Rogers and Bowen Yang from Las Culturistas with Matt Rogers and Bowen Yang. JBL Tour Pro 3 earbuds are for.

[Sam Altman]

Those who don't conform to the standard.

[Krystal Ball]

Yeah, I mean, if you want to get into some touchscreen technology, how about the smart charging case? Clear sound? These are not standard things. You're only gonna get them with the JBL Tour Pro 3, baby. And I love the sound of JBL and goes. These earbuds are packed with innovation because you can't stand out by following others. Touchsc Smart Charging case for one Touch Control, Instant EQ customization, True adaptive noise canceling and the one of a kind audio transmitter which can plug and play with everything from game consoles to in flight entertainment. What more could you want first doesn't follow. Grab a [e-mail] no it's not too.

[Commercial Announcer]

Soon to start holiday shopping. Ulta Beauty's early Black Friday event is happening now through November 22nd. Shop $10 beauty minis from brands like Mac and Too Faced. Take 30% off Lancome and Touchland fragrances and body mists. With new offers dropping every week, our associates can help you find the perfect gifts. Head into Ulta Beauty today to shop our early Black Friday event. Ulta Beauty Gifting happens here.

[Krystal Ball]

Hey guys, Sagar and Krystal here.

[Saagar Enjeti]

Independent media just played a truly massive role in this election and we are so excited about what that means for the future of the show.

[Krystal Ball]

This is the only place where you can find honest perspectives from the left and the right that simply does not exist and anywhere else.

[Saagar Enjeti]

So if that is something that's important to you, please go to breaking points.com Become a member today and you'll get access to our full shows unedited ad free and all put together for you every morning in your inbox.

[Krystal Ball]

We need your help to build the future of independent news media and we hope to see you@breaking points.com.

[Saagar Enjeti]

Another issue that people are very understandably concerned about is their electric bill and the way that keeps going up and up. So let's take a listen to Scott Bessant of this administration talking about their plans to deal with that problem, the.

[Krystal Ball]

President says he just had posted this.

[William Hartung]

Morning that there's almost no inflation. The consumer price index is higher than.

[Krystal Ball]

It was in the beginning. The electric electricity rates are rising. So are prices for coffee, beef, vegetables, televisions. And it's not just me. It's not just. Economists are saying that.

[William Hartung]

Your own Republican members of Congress are.

[Krystal Ball]

Saying that, including Marjorie Taylor Greene, electricity prices are a state problem.

[William Hartung]

And, you know, I was very interested.

[Krystal Ball]

To see in the earlier clip where.

[William Hartung]

The governor, the governor elect of New.

[Krystal Ball]

Jersey said, well, I'm going to bring down energy prices.

[William Hartung]

Well, it was her predecessor, Phil, Phil.

[Krystal Ball]

Murphy, who took them up.

[William Hartung]

So, you know, look, there are things that the federal government can control.

[Krystal Ball]

Local electricity prices are not one of them. But energy prices, gasoline prices are way down.

[William Hartung]

And, you know, we are doing what.

[Krystal Ball]

We can every day.

[William Hartung]

I think we are on a very.

[Krystal Ball]

Good path to bringing prices down.

[Saagar Enjeti]

So what are they going to do for you on your, like, nothing. It's not their problem. These are Biden people can't do anything. It's just the states, it's the localities. Sorry, sorry. Not sorry. We can't do anything. We won't do anything. We don't care. I mean, unbelievable.

[Krystal Ball]

These are literally Biden. This is Biden. Shit. I remember, you know, during the gas price season, remember? Oh, the government can't do anything about gas prices. It's like, first of all, yeah, it may be kind of true, but wouldn't you want to try? Shouldn't you try or just something.

[Saagar Enjeti]

Well, and then they actually acknowledge they could because they did their whole, like, gas reserve, you know, the oil reserve.

[Krystal Ball]

Yeah, that's true. I mean, on the electricity price and more like, yes, in the immediate term, can the government do anything about it? Should you maybe at least pretend to give a shit? I mean, green light, some new nuclear power plants, See the path to making, you know, zero. We're gonna make. We're gonna have the cheapest energy in the world. It'd be awesome if somebody said something like that. We're gonna build nuclear power plants. We're gonna bulldoze these NIMBYs all across America. We're gonna build 50 to 100 of them. I would like a thousand, but let's start there. Let's start at 50, 200. We're gonna build a new oil refinery. We don't even have to be woke. Let's build a new oil refinery. We haven't built a new oil refinery in these countries in the 1970s. All right. I mean, look at the Port of Houston. Or lng. We can't do anything. Everything is structured to make these, like, establishment interests filthy rich. Yeah. And I think you made this point on our call. You were like, you know, when they have something in their way that they want gone, then they'll like, ignore the Supreme Court, whatever.

[Saagar Enjeti]

They'll send in the National Guard. We're not sending out the. We don't care that a court said we have to send out the food stamps. We're not doing something they want to do that benefits them. Then it's no problem. But now we're getting like, oh, the parliamentarian type of like, dem bullshit excuses coming from them. And yeah, and also think how different from how Trump talked on the campaign trail. He talked all about low prices and abundant energy. Right. That was something that was a core promise that he made. Also think of the contrast with, like, China, where they're out massively building out solar energy, like, really investing in a green future. And here we have this clown who's like, sor, sorry your life sucks. Can't do anything about it. And, you know, it's bullshit, because how involved is this federal government in pushing in this whole data center direction? And one of the big drivers of increased prices is the build out of these data centers. I mean, you know, here in Virginia, that has been very clear and apparently in the state of Georgia as well, because we'll get to some of the direct political results that are already emerging. And we're in the early phases of this data center buildout. Go ahead and put this Heat Map article up on the screen. Heat Map focuses on, like, climate politics and the climate crisis. But they talk about the fact that this headline is fantastic. The data center backlash is swallowing American politics. Activists on both the left and the right are pushing back against AI development. And one of the things they dig into, and they did some very interesting polling here as well, is that the opposition to data centers is truly across the political spectrum. Because if you think about it, you know, I live in. I've mentioned this a few times. I live in a rural community. We have two data centers that may be located. One of them is basically already greenlit. The other one is, you know, there's pushback, Amazon, they're trying. They're in court, whatever. Probably both of them are going to be ultimately located in the county. And it's a conservative county. It voted, you know, some like 65% for Trump, roughly, in any case, you know, the people who live there who are more, you know, they're committed to the rural character of the county. It is like an MBY issue. They don't want the data centers there. And there is a genuine bipartisan concern about what is this going to do to our water supply. And of course a genuine bipartisan concern about what is this going to do to our electric bills. So these are truly like non ideological. And then on the left you also have the concern about the environmental degradation as well, which Heat Map focuses on as well. I wanted to read you this one section which was kind of interesting to me of some of the activists who have gotten involved. They write on one end of the spectrum, left aligned activists and local leaders are raging against the energy and water system strain that'll come from the data center boom. You have folks like Blake Koh, an activist fighting data center projects in San Marcos, Texas. Koh told me he began opposing data centers after being politically awakened by a totally different issue. The Israeli government's offensive in Gaza and alleged genocide of Palestinians there. But as he told me, he didn't have, quote, the clout, the money, the whatever to work on fixing a genocide. After learning about the project in San Marcos, he concluded the community there was something he can fight for. So, you know, because it's so local, because it's such an extraordinary coalition, you have local activists who are stepping up, who are truly across the political spectrum who are saying we have to make sure that we refuse these data centers in our communities and block them from being built. In Georgia, this was apparently a major issue that helped to cause a truly historic shift, electoral shift, in that state's statewide results. Put C3 up on the screen here. This is a swing in one Georgia county. So Democrats flipped Morgan County, Georgia for the Utility rates Commission in 2024. It was R +47. Let me say that again. In the Trump election, it was R plus 47. Democrats won it by three points. It was a 50 point swing. And the Democrats who were running statewide in Georgia ran specifically on opposition to these data centers wanting to reduce electric bill prices. And look, it was a low turn on elections as unique circumstances, et cetera, gives you a little taste of how powerful these particular politics saga can ultimately be. And Greg Bluestein down in Georgia did some of the fantastic reporting, pointing out how much this ended up being a central issue in these campaigns. And we had a few races here in Virginia too for the House of Delegates where at least one of the Democratic House of Delegates candidates ran aggressively against a data center that was being built down in their county. And they also were able to flip a swing seat there on the strength of that message.

[Krystal Ball]

I think what I love about this is that Americans, it's not just their don't tread on me philosophy, a lot of it comes down to opposition to entrenched power, which they do not control. That's what this whole thing is about. If you look at our economy, the vast majority of the growth of the spending is coming from data centers. People understand this. You can look at a basic chart and they can feel viscerally, even if they're not reading the Wall Street Journal every day, they're like this Nvidia thing, like we're about to talk about that. This valuation, all of this hype around AI. I'm not sure I like this. I'm not sure this is making me feel better. I'm not sure this is really showing up in my workplace. It's been a couple years now of AI. If it does show up in your workplace, it's because the younger employees are getting fired. If it does show up in your workplace, it's probably you have to use it to be like a little bit more efficient. But overall your wages have not increased. The profits of the companies are going massively sky high. You're seeing your child use it, let's say in college. You're reading the stories also of people who are using it to commit suicide and IDA of mental health awareness. You see the porn thing from AI Instagram for teen chatbots that are springing up. You have a deep suspicion and then your electricity bill wants to go up. I showed you the SORA means. It's just shit. It's just literally like a bear shaking its ass and from a ring camera. I'm not. Did I laugh? Yeah. Should I pay more for it? No. I mean, why should anybody?

[Saagar Enjeti]

Do the benefits outweigh the cost?

[Krystal Ball]

Do the benefits outweigh the cost? I mean, we're already talking about AI ads in politics. Oh my God. Did you see this Bill Ackman thing? Recently Bill Ackman posted a video which was entirely AI of Elon talking and he fell for it. I mean, this is one of the richest men in the United States of America, which gives you a little bit of a view into their IQ for those who are those rich. But I mean, you know, from them to think about it, if you're an average Facebook boomer or any of these, how are you supposed to do anything with this? And I think the point that I come back to is if that's all we get is suicidal ideation, marginal increase in worker productivity or whatever, but huge sky High bills, a destruction of social trust. And you did, you know, remember they said they were going to cure cancer. They said they were going to massively benefit all of our lives. Sorry, I don't think so. The only thing that's going to cure cancer is probably people taking Ozempic because they're going to be less fat. That's the only thing I could potentially see. Nothing to do with AI, certainly. So you put that together and the people are rightfully afraid of centralized control and they see the infrastructure pop up. Also, if you're our age, we lived through the Amazonification of America. We watched Amazon become the second largest employer in the United States, second only to what Walmart. I think may have even surpassed Walmart in some cases to build warehouses for goods all over the nation. Everybody's neighborhood in America has the blue vest contractor in the Amazon thing. And they look at that and those guys are shitting in bags and peeing in bottles because their productivity is tracked every which way. And you're like, I don't know about this, right? I don't know about this. This is not right. It doesn't feel good to me. And so you can see that happening now with AI. I think that's what it all comes down to. And also, we just don't have cheap power. We don't have power in our countries of finite resources. It's not that finite in China. Even though they have over a billion people, the Chinese are willing to do anything. They don't care about environmental regulations, about nothing. They will do build anything to make sure that power is cheap. That makes it so that people can do AI and they can do whatever they want, which is awesome. That's a nice type of country. And you also have a huge electric vehicle infrastructure and all that built out here. We've basically got the worst of all worlds. We have an aging oil infrastructure, we have complete federal capture in the bureaucracy over nuclear power. We have no innovation. Power is going up and everything just looks like it's going to centralize power. And we don't have a government that's allowed to rein those people in either. So I think it's just, I don't know, it's tragic.

[Saagar Enjeti]

Someone saw someone who tweeted, basically all of the people who should have been building nuclear power plants are instead building data centers. And I also just saw this morning, we will cover tomorrow that there's a number of these data centers in video ones in particular that have been built out that aren't even functional because there isn't sufficient power generation. And yet where's the effort to deal with that? So basically there's something for everybody to hate in the data center build out, except for the corporations who are hoping that this big bet that they're placing is going to make them wildly wealthy.

[Krystal Ball]

I turned off news altogether.

[Saagar Enjeti]

I hate to say it, but I don't trust much of anything.

[Krystal Ball]

It's the rage bait.

[Saagar Enjeti]

It feels like it's trying to divide people.

[Krystal Ball]

We got clear facts. Maybe we could calm down a little.

[NBC News Announcer]

NBC News brings you clear reporting. Let's meet at the Facts. Let's move forward from there. NBC News reporting for America.

[Commercial Announcer]

No, it's not too soon to start holiday shopping. Ulta Beauty's early Black Friday event is happening now through November 22nd. Shop $10 beauty minis from brands like Mac and too faced. Take 30% off Lancome and Touchland fragrances and body mists. With new offers dropping every week, our associates can help you find the perfect gifts. Head into Ulta Beauty today to shop our early Black Friday event. Ulta Beauty Gifting happens here.

[NBC News Announcer]

Owning a home is full of surprises, some wonderful, some not so much. And when something breaks, it can feel like the whole day unravels. That's why HomeServe exists for as little as $4.99 a month. You'll always have someone to call, a trusted professional ready to help, bringing peace of mind to four and a half million homeowners nationwide. For plans Starting at just 499amonth, go to homeserve.com that's homeserve.com not available everywhere. Most plans range between 499 to $1,199 a month. Your first year terms apply on covered repairs and Sager.

[Saagar Enjeti]

You know, they've got a backup plan too, which is that if it doesn't work out, they think we should backstop their losses. So all the gains to them and the losses, you know, we're, we're here to backstop and make sure that Sam Altman and Elon and Mark Zuckerberg and all the rest are just fine. Here is Sam Altman in a recent interview. Sam, speaking to exactly this some level.

[Sam Altman]

When something gets sufficiently huge, whether or not they are on paper, the federal government is kind of the insurer of last resort, as we've seen in various financial crises and insurance companies screwing things up. So I guess given the magnitude of what I expect AI economic impact to look like, sort of I do think the government ends up as like the insurer of last resort. But I Don't. I think I mean that in a different way than you mean that. And I don't expect them to actually be like writing the policies in the way that maybe they do for nuclear. And there's a big difference between the government being the insurer of last resort and the insurer of first resort. Last resort's inevitable, but I'm worried they'll become the insurer of first resort and that I don't want.

[Saagar Enjeti]

So he says there the government is de facto the insurer of last resort. I mean basically that what he's saying is we're going to be too big to fail. We're already probably already, we're already too big to fail. I mean this is what we're tracking when we talk about how like the whole American economy is just basically one big bet on AI. Most of you know, all the construction growth is data centers and then all of the growth of the stock market is these AI and tech stocks. You know, they're rather than coming up with plans like detailed solutions to deal with the housing crisis and healthcare and whatever, they're just like putting all their wishes in the magic bucket of somehow, you know, AI is going to come to the rescue and save us all. So Sam Altman has been getting a lot of heat over those comments and over a suggestion that he may want government funding to help him build out his data centers. So not just being sure of last resort, but we're then actually on the hook for their build out. And the reason that this is a question is first of all because some of the comments you made, but number two, because they've said they're going to spend trillions of dollars on data center build outs when their revenue is not anywhere close to being able to, to, to float that sort of thing. So let me go ahead and play D3 which speaks to this issue of like wait a second, how are you going to spend trillions of dollars on these data centers? And then I'll, I'll give you Sam's response on the other side.

[Krystal Ball]

How can the company with 13 billion in revenues make 1.4 trillion of spend commitments? You know, and, and, and you've heard the criticism, Sam.

[Sam Altman]

First of all, we're doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I'll find you a buyer. I just enough like, you know, people are, I think there's a lot of people who would love to buy OpenAI shares. I don't, I don't think you want, including myself.

[Krystal Ball]

Including myself.

[Sam Altman]

Who Talk with a lot of like breathless concern about our compute stuff or whatever that would be thrilled to buy shares. So I think we could sell your shares or anybody else's to some of the people who are making the most noise on Twitter, whatever about this very quickly. We do plan for revenue to grow steeply. Revenue is growing steeply. We are taking a forward bet that it's going to continue to grow and that not only will ChatGPT keep growing, but we will be able to become one of the important AI clouds, that our consumer device business will be a significant and important thing. That AI that can automate science will create huge value. So, you know, there are not many times that I want to be a public company, but one of the rare times it's appealing is when those people are writing these ridiculous OpenAI is about to go out of business. And, you know, whatever, I would love to tell them they could just short the stock and I would love to see them get burned on that. But, you know, I. We carefully plan. We understand where the technology, where the capability is going to grow go and how the products we can build around that and the revenue we can generate. We might screw it up. Like this is the bet that we're making and we're taking a risk along with that.

[Krystal Ball]

Think about how modest of a question.

[Saagar Enjeti]

That was very touching.

[Krystal Ball]

It was just like some people say, you can't do that. And he's like, oh, well, if you want to share your. If you want to sell your shares, then I'm sure I could find a buyer for them. Many may not remember, but there was a famous moment in the Enron meltdown where the CEO kind of blanket on. Not the CEO, God, coo Jeffrey Skilling, that was his name, the guy who went to prison and an analyst asked him about irregularities in Enron books and he called him an asshole. On the. On the call.

[Saagar Enjeti]

He was an asshole.

[Krystal Ball]

It became a massive moment. If you ever watched the documentary, I read the book the Smartest Guys in the Room. That's what it reminded me of.

[Saagar Enjeti]

It was a tell.

[Krystal Ball]

It was a tell. It was super touchy. And that's what eventually led into the actual meltdown of the company. And by the way, just so you all know from that whole period about, I'd like to see them short the stock or whatever, go take a look at Nvidia over the last five days, you know, lost 10, 15%. And they're overall stock value modest reductions again in those stocks matter for the overall US Economy because Nvidia alone, the last Time I checked was 8% of the entire US S&P 500. 80% of all S&P 500 gains over the last year are from AI stocks. They are the only reason the United States is not currently in a full on recession because of AI data cap spending. So if they stop spending on the data centers and then what's going to happen if they come up short? I mean think about they've set up a system where $13 billion company with $1.2 trillion in outlays is a failure if it only spends 100 billion, 200 billion, that's still a lot. That's very profitable. Right? That's an awesome company that was able to go. But they are saying we're not just going to the moon, we're going to Saturn. You know, it's like, so if they fall short and we only go to Mars then you're like oh, it's a whole failure.

[Saagar Enjeti]

Well that's the problem. Yes. And here's the thing too with his response there of like, basically like well our stock's going to keep going up. It's like that doesn't answer that is not actually responsive to the question of how you're going to fund this massive build out that you're promising and speaks to the concerns that you're like hoping that the US government helps you to make sure or some sort of weird, you know, gimmick, gimmicky vendor financing like boondoggle, like okay, actually don't doubt that the stock continues to go up because I think this government is now all in on AI and is going to make sure that you don't collapse. You are too big to fail. Your entire industry now is basically too big to fail. So the fact that the government is likely to continue to inflate the bubble is not responsive to the question of how this is all going to work out. So in any case, Sam put out an Ackman esque post here in response to these questions and some others and concerns that he's been getting. The very fact that this post is so lengthy in my view is a red flag to begin with because if you have simple answers like oh yeah, our revenue is gonna like here's our revenue trajectory and that's how we're gonna fund it. That doesn't take, you know, however many words this is to be able to put out. So let's go and put D2 guys up on the screen here. This also got originally a community note that I'll get back to you. I'm gonna Read this, even though it's a little tedious, because I do want to get into what he's claiming here. So he says, I'd like to clarify a few things. First, the obvious one. We do not have or want government guarantees for open AI data centers. We believe governments should not pick winners or losers and taxpayers should not bail out companies that make bad business decisions or otherwise lose in the market. If one company fails, other companies will do good work. What we do think might make sense is governments building and owning their own AI infrastructure. But then the upside of that should flow to the governments as well. We can imagine a world where governments decide to offtake a lot of computing power and get to decide how to use it. And it may make sense to provide lower cost of capital to do so. Building a strategic national reserve of computing power makes a lot of sense, but this should be for the government's benefit, not the benefit of private companies. The one area where we have discussed loan guarantees is as part of supporting the build out of semiconductor fabs in the US where we and other companies have responded to the government's call and where we would be happy to help. Though we did not formally apply the basic idea, there has been ensuring that the sourcing of the chip supply chain is as American as possible in order to bring jobs and industrialization back to the US and to enhance the strategic position of the US with an independent supply chain for the benefit of all American companies. This is of course different from governments guaranteeing private benefit data center buildouts. So just on that first part, right, he's saying, oh no, we totally like, if companies fail, they should go under. We totally don't want the federal government backstopping our data centers. But we do think here's some ways that government should actually backstop data centers. And you know, it may be more for their benefit, but of course it would benefit OpenAI as well. If, you know, the government is getting involved in the business of building this strategic national reserve.

[Krystal Ball]

In theory, it's not a horrible idea. It's that in practice what it would be done is a way for OpenAI to offset its huge capital expenditure onto the taxpayer.

[Saagar Enjeti]

Exactly.

[Krystal Ball]

While they get to benefit from it. Now, in theory, if we were to build or own some stake in the. I mean, this is one reason I was very pro the intel deal. The whole reason that I thought we should have taken 10% in intel is like, yeah, at the end of the day, this company basically destroyed itself on the back of shareholder capitalism. And you do need some impetus in terms of a national strategy to say absolutely not. No, we're gonna take a stake in this company, we're gonna guide you in direction of the nation. The issue with just having that and then basically privatizing. No, what is it? Socializing the biggest cost center for these people is it would actually be a boon to their stock price while also not getting anything from them in return. What are the public things that we would all want from OpenAI from me, for me, what it would be is this whole porn suicide thing. It's over. It's over. Like anything that subsidizes or encourages addictive or mental health behaviors which are detrimental to the user. Absolutely not. I think that we should all have a real say in that. And as a result of us, let's say taking some of that off, a huge amount of your compute power is going to go to stuff which we think is more beneficial. Why don't you actually solve cancer? Why don't you actually go and point at some of the directions that we think that you should do? That's what we as a society, we should try to use this technology, especially if we're going to bail it out or provide some of a subsidy then into the benefit of what we can agree as a democratic society for what we want from it. But instead that's not what's gonna happen. David Sack said there will be no Federal bailout of AI. He's the White House. AIs are. We'll see. To be honest, I'm not sure they have a choice. Like if you allow it to fail. We are in a full blown recession. Full blown. It's not depression manufacturing. We have nothing. Yes, the interest rates would come down, but I mean stock portfolio will crater. Do people remember dot com? I mean at one point stock went down by 99%. Like we will see a full blown meltdown in assets for the boomers. So they'll have nothing if you're trying to retire. I mean, you know, could be worse. But for them, like their stock portfolios will melt. They will have nothing. Younger folks, of course will bear the brunt because no reduction in stock, no hiring. No hiring. You know, and then there'll be a huge mass layoff. And then what? Like at that point no one's going to be buying many houses because a lot of people use margin accounts. Like the rich people who buy how they use margin accounts on their assets to buy. And there'll be no tax subsidy. Like it'll be bad.

[Saagar Enjeti]

Yeah, bad.

[Krystal Ball]

I don't know if they have a choice. But to bail it out, we don't have anything else.

[Saagar Enjeti]

That's that. And that was the logic of the bank. That was. Was like, listen, we all know that this is not. But like, what if we let these institutions fail? We don't know what that looks like. Like, that could be a total like Cal.

[Krystal Ball]

Yeah, it would have been a climbing.

[Saagar Enjeti]

That you can't recover. So yeah, it's gonna be ugly, but we don't know. And so too big to fail is means that there's. They want to make it the logic such that the government has no choice or feels that they have no choice anyway, that the pain of allowing this organization to fail is so great that it's not like you need Sam in there. Advocating the logic of the system is what makes it too big to fail. And yes, we're already there. I mean, these tech stocks are covering up so many glaring disasters in the American economy. If you put the tech stocks, the Magnificent Seven or whatever aside, and you look at the rest of the performance of consumer stocks and banking stocks, et cetera, our stock market is actually underperforming even the European indexes. So the fact that we have Nvidia primarily, but all these other tech stock, Tesla, which is completely overvalued, insanely overvalued. That these things keep going up and up and up creates the illusion of momentum and growth in the economy that Trump can hang his hat on and that a bunch of rich people are benefiting from. Meanwhile, everything else is stagnating. And so if that goes away and you deal with the fallout of that, oh my God. So we are already really in a disaster.

[Krystal Ball]

It can't go down. We don't have anything else. We don't have pensions in this country. We only have 401ks.

[Saagar Enjeti]

That's right.

[Krystal Ball]

We have no guaranteed cash. The number has to go up. If the number doesn't go up, we're fucked.

[Saagar Enjeti]

The whole country has a bet on it. Literally.

[Krystal Ball]

The music will stop. 50% of all consumer spending in the United States today is from the top 10% who are doing so on the inflated value of their stock portfolio. What would happen? You know, what was that term you said about nafta? A giant sucking sound.

[Saagar Enjeti]

Yeah, that's what's for real.

[Krystal Ball]

If There is a 99% drop in the QQQ or the tech stocks or something like that, game over. Like, air travel done. Consumer spending done. Housing market done. Like, everything will collapse. And if you're poor, you may root for that. Cause you're like, oh, screw them. It's like. Yeah, well they control your destiny too. Okay. So they're gonna be at the. I don't want to be the same way. I'm just telling you you're gonna get fired, you're gonna make it so that you can't get a job. Interest rates and all that will go down for them. It's not gonna be to your benefit. So it's just, I don't know, it's very dark. If they don't radically change something soon, which of course they're not going to do, we will face this political question and in my opinion they absolutely will get a bailout because the alternative is so catastrophic. I mean it genuinely be catastrophic.

[William Hartung]

Traffic.

[Krystal Ball]

Yeah, I think to the US economy.

[Saagar Enjeti]

Put D4 up on the screen as the last element we'll throw to in this block just to show you the amount of debt that's already being taken on in order to finance the AI data center build out. And you can see, you know, in 2024 it's like a, you know, very minimal amount. And now you just have this absolute explosion in debt backed financing of these data centers. And you know, so you've got. But nobody asked for this, right? Communities in uproar. Political system already showing the signs of being roiled by this. And you have all this debt being taken on. These companies already too big to fail. And then these inklings from Altman and he's not the only, he's just the only one dumb enough to say it out loud apparently that they're looking for the federal government to help them, help them continue this build out and to be there for them when it's. If they fail. So that is, that's the landscape we're facing right now. Not looking very good.

[Krystal Ball]

I turned off news altogether.

[Saagar Enjeti]

I hate to say it, but I don't trust much of anything.

[Krystal Ball]

It's the rage bait.

[Saagar Enjeti]

It feels like it's trying to divide people.

[Krystal Ball]

We got clear facts. Maybe we could calm down a little.

[NBC News Announcer]

NBC News brings you clear reporting. Let's meet at the Facts. Let's move forward from there. NBC News reporting for America.

[Commercial Announcer]

No, it's not too soon to start holiday shopping. Ulta Beauty's early Black Friday event is happening now through November 22. Shop $10 beauty minis from brands like Mac and too faced. Take 30% off Lancome and Touchland fragrances and Body mist. With new offers dropping every week, our associates can help you find the perfect gifts. Head into Ulta Beauty today to shop our early Black Friday event. Ulta Beauty gifting happens here. Every holiday shopper's got a list. But Ross shoppers, you've got a mission like a gift run that turns into a disco, snow globe, throw pillows and PJs for the whole family, dog included. At Ross holiday magic isn't about spending more, it's about giving more for less. Ross, work your magic.

[Saagar Enjeti]

One more story here before we get to our guests that we wanted to make sure to highlight because it just really is so illustrative of the twisted relationship this country has to Israel and the way the logic of it permeate permeates every administration, whether it is Democrat or Republican. Let's put this up on the screen. This was a scoop from Reuters and Huffington Post fleshed out some of this reporting as well. So they say scoop. The US Gathered intelligence last year. This was during the Biden administration that Israel's military lawyers Israel's military lawyers warned there was evidence that could support war crimes charges against Israel for its military campaign in Gaza. That's according to five former U.S. officials. They say the previously unreported intelligence, described by the former officials as among the most startling shared with top US Policymakers during the war, pointed to doubts within the Israeli military about the legality of its own tactics that contrasted sharply with Israel's public stance. Two of the former US Officials said the material was not broadly circulated until late in the Biden administration, when it was disseminated more widely ahead of a congressional briefing in December 2024. Even before then, lawyers at the State Department had repeatedly raised concerns with US Secretary of State Tony Blinken that Israel might be committing war crimes, according to five former U.S. officials. As early as December 2023, lawyers from the State Department's legal bureau told Blinken in meetings they believed is Israel's military conduct in Gaza likely amounted to violations of international humanitarian law and potentially war crimes. There's so much in here that is important, and I know none of this will be surprising to you guys, but again, I think it's important to dig into exactly how this all unfolded. So there were three different things going on. First of all, there was a State Department assessment that had been reported on previously, and at least one State Department official resigned over the watering down of this assessment and the fact that once it went through the leadership, they changed the conclusions. They watered it down. Why? Because the minute that you say Israel is committing war crimes, it means by our own law we are not allowed to send them weapons. It also opens up the possibility of war crimes charges against our own officials because if you are complicit, you know that their intent is criminal. Then you yourself, if you are aiding and abetting that, then you opened yourself up to charge. So you had that report internally that was basically like watered down and quashed. You had a refusal to actually engage in any sort of an in depth assessment. So everyone's just sort of like covering their eyes and ears and pretending like they didn't know what was going on here. So if they can avoid making an assessment, then they can pretend, play dumb. And, oh, we think they're the most moral army in the universe. They told us that there was Hamas under that school bus or under that church or under that mosque or under that hospital or whatever. And then you have this, which is Israel's own lawyers and military saying, we think we're committing war crimes. And the way they got out of this one is by saying, well, we didn't come to our own independent assessment. So the fact that the Israelis think they're committing war crimes and that it spoke specifically to intent, which is also the key way that they always dodge. Accidents happen, war is hell, blah, blah, blah. But they don't intend to murder all of these babies and women and innocents. So since it spoke to intent, that's what created a further difficulty for them. And so their dodge there, which was led by Brett McGurk, was the most aggressive advocate for Israel in the administration, saying, we can't do nothing. We were not gonna change course. We're not gonna, you know, we're not gonna bring any of this to light whatsoever. In any case, the reason they were, they, their argument there was basically like, oh, well, we didn't come to our own assessment. So the, you know, the Israelis, they think that, but we haven't come to our own assessment. So we're just going to say and do nothing. I mean, it's just so incredibly disgusting. And then the Trump administration was briefed on all of this coming in and of course they, here's the difference between the two. In the Biden administration, there was some hand wringing about it and they did nothing. In the Trump administration, there was no hand wringing about it and they just continued to fully fund and support the genocide.

[Krystal Ball]

Yeah, I mean, but this is why the Biden one, I don't know, maybe it's just me, but I appreciate a little bit more honesty because for them, they were always hemming and hawing. The fact is, December 2023 on, they got a briefing and they said, hey, this is probably happening. And they decided to just cover it up as Secretary of State. And by the way, again, they. At the very same time, they were justifying US Support for Ukraine because they said that Russia was violating international norms and Putin is a war criminal who had to step down. And Russia was committing a genocid in Ukraine at the very same time of what was happening in Israel. There was no consistency between the two. This is why the whole human rights thing is a farce. It always has been. And instead they took it, like, to the max. Conclusion, I think, with the way that they conducted themselves, like, broadly. And so I don't know, for the Biden administration in particular, really, what I think I'm shocked by is the same what happened with Cheney, where in all of his New York Times obituaries and everything, even the political reporters and others, they would say, oh, he was a patriot. He died a patriot because he stood up to Trump. Like, that's the only lens that they look at politics, even right now. Jake Sullivan is launching a new podcast with Vox Media. Like, how can you. If you're Vox, right? Like, and Harvard, also the Harvard Kennedy School.

[Saagar Enjeti]

I think Brett McGurk, who is a genuine demon.

[Krystal Ball]

Yeah, he's on CNN.

[Saagar Enjeti]

Hired. I think he got. He's on CNN and I think he also got hired by Harvard.

[Krystal Ball]

That's what I. These people, they suffer no consequences. Like, the entire political elite is like, you work for Biden. Good guy, check mark. Right? They never look at you. They don't analyze your actual actions and the consequences of what they mean as long as you are opposed to the right side or if you speak in the right language. And that's basically what all current democratic neolib politics is centered around. I just think it's so crazy that a guy like Sullivan can not only get the HKS deal, but, like, launch a podcast with no shame, nothing. It's like acting like a victor. Like, sorry, dude, you actually presided over one of the worst foreign policy periods in American history. Period. End of story. Like, there's no question about it.

[Saagar Enjeti]

Put E2 up on the screen because this is also very telling. I would recommend you read this whole huffing opposed piece because it gets into some of the details about who it talks about the Brett McGurk piece more. More deeply. But. But here's what they said. They say Biden officials worried that attaching their names to a recommendation to limit American support for Tel Aviv would hinder their future career prospects, the former senior official said. Which is in itself appalling. Yes, it is. It is appalling. And to Sagra's point. Think about this, okay, actually like cutting on support for Israel's genocide, that would hurt their career prospects. But the fact that they were complicit in that and engaged in a multi year cover up, that has no problem for their career prospects. You know, they're getting podcasts, they're going to the Harvard School, other Ivy League institutions, corporate boards, whatever world is their oyster, no problem there. And so that is the sort of logic that pervades government. Now. I think on the Democratic side there is a shifting for the politicians, there is a shifting political calculus that they are grappling with now. And you see it in primaries that are playing out across the country. Obviously you saw it in the New York City mayoral race. You see it in terms of the members of Congress now who are having to look over their shoulder and worry about what did I do, what did I say, where am I going to locate myself now? And are wildly at odds with the Democratic base on the issue of Israel specifically. So there is some changing political calculus that is happening right now as we speak. But up until this very moment, all of the costs and the consequences were on doing the right thing. We're on asserting an independent foreign policy, we're on checking the abuses of Israel, calling out their war crime. Tony Blinken was running around the State Department talking about how this was ethnic cleansing. They knew. They knew. Of course they knew. I mean again, this is not gonna be a surprise to you, but they played dumb and they covered for them and they did it the whole time, right up until the end. And there was a final debate about okay, we've got this intelligence from Israel, should we on our way out the door do something that would be basically a virtue signaling, Cuz we know the Trump administration is gonna come in and they're gonna completely reverse course on whatever we do. But at least it would send a signal that this is unacceptable and kind of lay a marker down the way that Obama did when he let that settlement vote get through in the UN Security Council. This is something. And Biden did it on some other things. He took Cuba off the state sponsored terror list or something like that. Just sort of like again, it's like a signal of the direction they think foreign policy should go in. And they said no, even that because we're worried about is the Harvard school going to hire us then am I going to get my podcast? Yeah. Am I going to be able to go to SKDK as the chubby Indian.

[Krystal Ball]

Guy ultimately who does not look like me, to be fair, who does not look like me. He doesn't. He's just fat and wears a. It's not fair. It's not fair. Okay. I think it's the glasses. I actually think it's the glasses. That's what I think.

[Saagar Enjeti]

Yeah.

[Krystal Ball]

Anyway, yeah, he still has a job, so. Yeah, exactly.

[Saagar Enjeti]

These guys, their calculus, I mean, their calculus was correct.

[Krystal Ball]

No, of course it was correct. Because look at Cheney and all of the Iraq war people. They're all doing the exact same thing. I'm serious. I watch these people walk around town even today, take a stroll down K Street. You'll see Paul Wolfowitz. You'll see all these guys. They have no shame. They live completely normal life. Nothing happened to them. It's sick. And now the next generation, it's the same thing. And it happens over and over and over and over again. They'll be on CSIS panels till the day they die. And it's. Why does nobody pay a price for being bad in this country?

[Saagar Enjeti]

That's one of the things I appreciate about what Ro Khanna said about Chuck Schumer today.

[Krystal Ball]

Oh, right.

[Saagar Enjeti]

He's like, not only did he help march us into Iraq war, but he gave Netanyahu a blank check. Like, it's not an accident that those two things are connected to. By the way, the people who tend to be for endless war are always for endless war. Like they're always. And this will set us up well for the next block. Talking about the trillion dollar war machine. But in any case, I am somewhat hopeful that the logic, the just cynical political calculus, when you see someone like Seth Moulton coming out and being like, I'm not gonna take AIPAC dollars after he went to AIPAC and found out they weren't gonna give him any money, by the way. But he sees the cynical political calculus now if I'm going to win a Democratic primary is to say no AIPAC money. That is an absolute sea change. So we'll see how that translates into future American foreign policy, how it translates into future position for the Democratic party. But this is, you know, the COVID up here. Just disgraceful. No one, no one who was involved in this should ever be forgiven.

[Krystal Ball]

That's right. All right, we got our guest standing by. Talk about the book. Trillion dollar war machine. Let's get to to it. I turned off news altogether.

[Saagar Enjeti]

I hate to say it, but I don't trust much of anything.

[Krystal Ball]

It's the rage bait.

[Saagar Enjeti]

It feels like it's trying to divide people.

[Krystal Ball]

We got clear facts. Maybe we could calm down a little.

[NBC News Announcer]

NBC News brings you clear reporting. Let's meet at the the facts. Let's move forward from there. NBC News reporting for America.

[Commercial Announcer]

No, it's not too soon to start holiday shopping. Ulta Beauty's early Black Friday event is happening now through November 22nd. Shop $10 beauty minis from brands like Mac and too faced. Take 30% off Lancome and Touchland fragrances and body mists. With new offers dropping every week, our associates can help you find the perfect gift. Head into Ulta Beauty today to shop our early Black Friday event. Ulta Beauty Gifting happens here every holiday. Shopper's got a list. But Ross shoppers, you've got a mission like a gift run that turns into a disco, snow globe, throw pillows and PJs for the whole family, dog included. At Ross, holiday magic isn't about spending more, it's about giving more for less. Ross, work your magic.

[Krystal Ball]

Joining us now is William Hertung. He is a senior researcher at the Quincy Institute. He's the author of this excellent new book, the Trillion Dollar War, How Runaway Military Spending Drives America Into Foreign wars and Bankrupts Us at Home. A very apt time to be joining us. Thank you very much, sir. We appreciate it.

[William Hartung]

Yes. Thank you. And I should point out my co author Ben Freeman did all the heavy lifting.

[Krystal Ball]

Okay. All right.

[William Hartung]

He just put me on there as a courtesy.

[Krystal Ball]

All right. Well, hopefully you can speak to the facts of the book.

[William Hartung]

Book as well. Indeed.

[Krystal Ball]

I thought it was good to go ahead and start with Secretary of War Pete Hegseth here saying that the United States is now currently to a wartime footing and how that fits a little bit potentially with your book. Let's take a listen to Pete Hegseth. We're not just buying something. We're solving life and death problems for our war fighters. We're not building for peace time. We are pivoting the Pentagon and our industrial base to a wartime footing, building for victory should our adversaries fafo.

[Sam Altman]

All right.

[Krystal Ball]

How does a wartime fitting fit here with your book about the trillion dollar war?

[William Hartung]

Partly which war? Is it Venezuela? Is it China? It's pretty different. Well, what we point out is pretty much every president in the post World War II period has made noises about streamlining the Pentagon, better strategy, keeping us out of war. They've pretty much all failed or gone back on those promises. Oh, sorry. Donald Trump is an interesting case because he said things on the campaign trail like I'm going to drive the warmongers out of Washington. I haven't had any wars. I'm Going to be a peacemaker. And yet, you know, we're attacking boats off of Venezuela. There's a lot of tough rhetoric. There's a nuclear buildup. So I think he's conflicted partly because some of his base is sick of war. He has to at least give a rhetorical bone to them. But we're at a trillion dollars. Actually, there was concern writing the book if it would get above a trillion while it was in production. So I said, well, we'll have stickers.

[Krystal Ball]

Yeah, subscription, 1.2 trillion, counting 3 trillion.

[William Hartung]

And I think it's such a. We've invested so much in that tool that there's a tendency to lean towards it. And I think there's also strategy. It's not just about money, but. But if we want to have military primacy, fight wars all over the world, it's going to be hard to go below that trillion, especially when you got the tech folks, Lockheed Martin, fighting over that pie. The way to solve that is just increase it. Give them both a piece of golden dome, new fighter plane. And that's just going to be. It's like a sedimentary rock. You keep adding layers and you never make decisions. And that's not really going to lead you to a viable strategy.

[Saagar Enjeti]

Yeah. Can you talk a little bit more about that internal logic? Because you might think, okay, Cold War is over, maybe we can reel back in some of the military spending. That doesn't happen. It just keeps going up and up and up with the war on terror. Okay, we're out of Afghanistan now, maybe we can reduce military spend. Just keeps going up and up and up such that now, as you point out, it's over a trillion dollars. What is the internal logic that makes it so that we just continue to expand and expand and expand the military budget?

[William Hartung]

Well, I think if we go back to the end of the Cold War, Colin Powell said, I'm paraphrasing, I'm running out of enemies here. Yes, I got Cuba, I got North Korea. So they came up with this two major contingencies strategy, North Korea, Iran, Iraq, to at least put a floor under the Pentagon budget. And that tends to happen, you know, as the war on terror was winding down. Lots of writing about China as the new pacing threat. Some of those reports are written by people with tight ties to the arms industry. I think for some it's just a marketing technology technique. Say China get money other than believe it. But if you're in China, you can't tell the difference. Of course.

[Saagar Enjeti]

Right.

[Krystal Ball]

One of the things I always try to focus on is that money doesn't equal quality. Is in fact that might be the central kind of element of it is that we keep pouring money into this broken system but the actual output of, let's say the innovation of its ability to, let's say you end up in a conflict with China. Does anyone really believe that the trillion dollar investment is going to materialize into something better? According to even the Pentagon cutouts like csis, they're like no, we couldn't even win a war like this. So why, what's the logic? We keep pouring, is it good money after bad? Is it just the corruption?

[William Hartung]

Well unfortunately it's more of a money making machine for contractors than a well considered plan. The F35 is not performing as advertised. Congress keeps adding more. Some people say aircraft carrier can be taken out by a modern missile. We're building them at $13 billion a pop. There is the littoral combat ship. Even the Navy didn't want it. They said it's not useful for China, can't defend itself and it wasn't even about production. The places that maintained it in Florida and Virginia kept those in the budget. So if you're putting things in there because it's built in my state or my district, that's not a plan and that's not going to build you the best weapons. So Silicon Valley is coming in and say well we're different and we're going to have that fight. But my feeling is, well, okay, if you want to give us tools that work, that's fine. But don't tell me what our strategy should be. Don't tell me what our priorities should be. Nationally they're kind of, there's a bit of hubris and kind of, you know, we're the people that are going to save humanity. I'd rather they just were suppliers.

[Krystal Ball]

Yes, right, exactly.

[Saagar Enjeti]

Talk a little bit more about that dynamic between the legacy prime contractors, the Boeings, the Lockheeds of the world and like the Palantirs and Palmer Lucky's outfit of the world and how they're selling themselves and what that could look like in terms of the budget and in terms of what it means for our national priorities.

[William Hartung]

Yeah, well the Lockheed Martins are giving them a good argument because it's almost a monopoly. Five big companies get a third of what the Pentagon spends and build most of the weapons. They put Boeing in charge of the new fighter plane even though it's failed on every major project for decades. Probably just to keep them in business. So Palmer Luckey has a chief strategy officer Or Christian Broz, who's been talking about this for a long time. And basically they have this thing called, well, they put a, like a pamphlet out rebooting the arsenal of democracy. It's quite a good critique of the big companies and the kind of sclerotic system. But they're overstating what they can do. They are competitive and if they didn't have billionaires behind them, they never would have made it. They would have been bought up by the big companies. So in that sense, fine, shake it up. But the exchanges get rid of all regulations. Trust us, you know, we're the wave of the future. Technology will save us. That's never worked before. The electronic battlefield of Vietnam, the impervious Star wars, the fact that we had precision guided munitions didn't win US wars in Iraq and Afghanistan. So it's got to be motivated people, the countries behind it. The strategy makes sense. Otherwise you can do damage, but you can't. Technology itself is not going to win you a war. They seem to be kind of selling their technology as if it were would.

[Krystal Ball]

Yeah, if anything, technology is always the folly and the promise that leads to reality where you, you're like, wait, these guided munitions mean nothing when you can't build. Like have a bullet that rolls off of a factory. As you've looked at what's happening in Russia, you don't. Doesn't require all that much technology. As long as you have a decent industrial base, you can survive for quite a long time.

[William Hartung]

Well, they have an advantage because our stuff takes a long time to build. Once we got rid of stocks, their stuff isn't great, but it and our stuff takes a long time. So Ukraine is like has a do it yourself drone program.

[Krystal Ball]

Right.

[William Hartung]

They take Chinese, you know, commercial drones. They put a camera and some weapons. They're suicide drones anyway. They don't have to be perfect. So they're kind of falling back on low tech. Even though Silicon Valley says their technology is winning the war. A closer look would say otherwise.

[Krystal Ball]

Yeah, I totally agree. I heard for my entire time here in Washington. The fifth generation warfare will be unlike anything you've ever seen. It'll be about cyber, it'll be about this, where the next major conflict in Europe looks more like World War I than it does like World War II. If anything, we've reverted backwards. And the cost for all the stuff we poured money into doesn't seem to have yielded basically anything except a lot of profit for people who live in Northern Virginia.

[William Hartung]

Yeah, and then if you have a new situation, it's hard to address it. All that money's tied up. If you wanted to move towards more nimble, cheaper systems. First of all, the Pentagon wants the best and that costs more. Second of all, all these members are like, not in my district. And then the guy here says, well if you vote for my weapon, I'll vote for your weapon. Suddenly you can't budge and you can't be agile. And it's also ultimately, you know, Congress doesn't debate strategy anymore. They debate like, hey, isn't my weapon great? Which is shameful. I mean, they had a whole report about what should our nuclear strategy be? And, and the Senate Armored Service Committee, you know, the questions were like, well, we have a hypersonic missile that can, you know, take out theirs. Don't we need more of those? Finally, Senator Warren said, what'll this cost? The co chair of the committee who was former lobbyist for Northrop Grumman, a big nuclear. Oh, cost is not an object here. So they never discussed do we have enough? It was just about money. And you know, Congress is supposed to, well, ok, we know, but it's supposed to be a deliberative body that's looking at the future of the country. They're tied up in this whole money game. So very few of them will speak out. And the ones who do can't bring enough folks behind them to move the needle.

[Saagar Enjeti]

You know, how has this blocked down other potential priorities that perhaps the American people have?

[William Hartung]

Well, you know, it's certainly a significant component of the deficit which is now close to being the interest on the debt is close to being the biggest item in the budget. So that's not available to us anymore. And then depending how you look at it, if you want to reduce the deficit, if you want to invest in other areas, medical research or environment, that's a shrinking window, especially with tax cuts. So some people would say, well, we don't want the government to go big into public investment. But no matter how you look at it, we just have very little flexibility as a country for any kind of change. And so in a sense we're lagging. And to the extent we keep throwing that trillion and more in and it's sort of like if you're a weightlifter but you can't bring your arms below your shoulders, you're not really equipped to fight anybody.

[Sam Altman]

Right.

[William Hartung]

Somebody who knows how to box could take you out.

[Krystal Ball]

Such a good point.

[Saagar Enjeti]

So how do you get under control? I mean, you've got all these members of Congress who have their own individual incentives about this or that that effectively services jobs program in their district. You have a bunch of people making tons of cash. How do you reshape this ecosystem?

[William Hartung]

I think it's kind of a societal effort. Cause it's. The whole lobby is kind of embedded in our society. But there's certainly people on the right who are tired of this. They don't like corporate welfare. They don't feel like we should be throwing this kind of money at endless war. People on the left, centrists. If you're a military reformer, which we used to have 100 people in that caucus, build more reliable weapons, train the troops better. They can't work through this system anyway. So I think you need kind of a coalition that says, all right, we know this doesn't work work. Let's start by fixing that. And then we can debate what our strategy should be. So that means more transparency. Not letting people go straight to industry from government and lobby for them, or now to VC firms that invest in emerging tech. So. Or like if you have a government commission, have some people who aren't on the payroll, that would be novel. So I think it's a difficult process. And really people have to say, okay, if defense is our top priority, let's do it right. So, you know, it's public education. People have to feel like they can make a difference. And there's a big deficit, obviously now. Yeah, that's a problem across the board in terms of policy. So I think it's almost like a large cultural shift. We've had those before, but you never know when it's going to come. But you have to at least have the information, have the arguments, and people have to look a little more broadly about where they get their information. Because the mainstream media, whatever their framing might be, they're just reducing coverage of this stuff. I mean, some papers don't have a real Pentagon reporter. They just report when the budget comes out. Right. And you know that we need a lot more than that.

[Krystal Ball]

I totally agree. Everybody go buy the book Trillion Dollar War Machine. We'll have a link down in the description. Thank you for joining us, sir.

[William Hartung]

Appreciate it. Yes, thank you.

[Krystal Ball]

Thanks for watching, everybody. We'll see you tomorrow. Ah, greetings from my bath festive friends. The holidays are overwhelming, but I'm tackling this season with PayPal and making the most of my money. Getting 5% cash back when I pay in 4. No fees, no interest. I used it to get this portable spa with Jet. Now the bubbles can cling to my.

[NBC News Announcer]

Sculpted but pruny body.

[Krystal Ball]

Make the most of your money this holiday with PayPal. Save the offer in the app ends 12:31 see paypal.com promoter points can be redeemed for cash and more. Paying for subject to terms and approval. PayPal Inc. And MLS 910457 you know.

[Saagar Enjeti]

What a girl's best friend is not.

[NBC News Announcer]

Diamonds her lawyers from executive producer Ryan Murphy comes a fiery new legal drama.

[Commercial Announcer]

It's our own boutique women representing women.

[NBC News Announcer]

You can't afford to miss.

[Saagar Enjeti]

Make it rigged Showtime, ladies.

[Krystal Ball]

Stand up straight and breeze into that.

[Saagar Enjeti]

Room like a storm no one saw coming.

[NBC News Announcer]

Hulu Original Series All's Fair, now streaming on Hulu and Hulu on Disney plus for bundle subscribers. Terms apply.

[Saagar Enjeti]

Make their holiday unforgettable with a gift that says it all from Pandora Jewelry. A gift that tells a story and shows you know theirs that doesn't show just sparkle, but speaks. From new festive charms to forever rings and personal engravings, this season, give a gift that's perfectly theirs. Whether you're shopping for a shiny surprise for your significant other, matching bracelets to celebrate your friendship, or a heartfelt gift for a family member, say more this holiday season with Pandora. Shop [e-mail] or visit your closest Pandora store.

[Commercial Announcer]

This is an I Heart podcast.