← Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar
12/2/25: Black Friday Shoppers Crushed, Trump Frees Convicted Fraudsters, Hegseth Throws Admiral Under Bus Over Venezuela
00:48:27
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- [02:05]
Krystal Ball
Hey guys, Sagar and Krystal here.
- [02:07]
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.
- [02:14]
Krystal Ball
This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else.
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Saagar Enjeti
So if that is something that's important to you, Please go to BreakingPoints.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.
- [02:31]
Krystal Ball
We need your help to build the future of independent news media and we hope to see you@breaking points.com. let's turn now to poverty. There was a absolutely fascinating essay that went very, very viral amongst the, you know, the economy literati. And it was about the poverty line. And as you guys may know, the federal poverty line is a set standard. Where it's currently set is very, very low. There's long been a discussion about whether that poverty line really captures things. But this new essay by Michael Green argues that the federal poverty line should be higher. And not just higher, a lot higher. Let's put this up here on the screen. So what he writes very specifically is that the US Poverty line, which is currently set to keep a family out of poverty, is 32,150 for a family of four. Michael Green did some math. Quote, for a family of four to afford housing, health care, childcare and other necessities, he calculated that they would need at least $136,000,000 a year. He says it should be more than four times that a figure would mean that the majority of American households are living in poverty by his metric. This idea, which they specifically say publish on substack and again, it made a huge. It went so viral amongst economists and others. Basically what he's saying, the more like conservative faction is saying it's ridiculous, quote, disconnected from reality, laughable to put poverty line far above the median income in the United States, which is some $83,000. But the thing is, is that if you read it, it does make sense to me. The only quibble is about the definition of poverty. So the question is, is, does poverty mean destitute or does it mean not getting by? I guess we've learned of it as destitute, but not getting by for a long enough period. I don't know. I mean, maybe it does count as poverty. And I think that's one of the. And by the way, that's why part of the whole discussion is really frustrating. And anybody who has lived in a high cost of living area, we all know people making 100, 200, even 200,000 who are not close to making it, like not close to achieving even modestly more than what their parents did. I'm not gonna say sit here and call it poverty, but I would sit here and say that's a systemic failure. And that's part of why I appreciate the essay because all the you guys should go Read it just specifically about the way that he breaks down all the costs. The cost, all the costs, basic necessities, which we've talked about here before as well. The fact is, is like upward mobility, especially in the higher cost of living areas, which, no, you don't have to live there, but that is where most of the economic activity is, is mostly unattainable for anybody who makes a median household income. That's a systemic issue and it didn't always used to be like that. That's the bottom line.
- [05:16]
Saagar Enjeti
Yeah. And so here are his estimates of using what he describes as conservative national average data of the baseline cost. That's sort of like participation costs so that you can be in normal standing in society and participate in like a normal way with society. Child care most expensive 30 2007, $32,000 for childcare. Housing 23,000 plus food 14,000 plus transportation 14,000 plus health care, 10K. Other essentials, 21K required. Net income 118. And then you add taxes on top of that, you're getting 136, 500. That's where he gets the numbers from. And he says, you know, listen, the, the quibble that I get from people is, you know, yes, it's good to reevaluate where the poverty line is. I think everybody agrees that the way of calculating is certainly outdated. I can go into more on that in a moment. But they're like, listen, if you're getting a landline, you're putting in things here that are way more expensive than just the essentials. But he points out, in order to participate in society, back when the poverty line was established, you needed a landline which cost you a minimal amount per month. Now the same landline is even cheaper, but, but that doesn't allow you to fully participate in society. You need that $200 smartphone. And so while certain costs have gone down, the cost of being a full participant in society has gone up dramatically. And then of course, these categories have gone through the roof. All of these areas, except for food, are places where costs have gone up and up and up. We talk all the time about childcare, housing. This doesn't even factor in the cost of a college education, which is another extraordinary exp. And so this helps to capture why so many people who, when you look at their income, you're like, you should be doing fine. Why so many people are like, no, but I'm drowning. But like, life is really difficult and I feel like I'm getting behind and I feel like things are going to be More difficult for my children. So it's a very fascinating look, you know, with regards to the poverty line, what he points out is when it was established, food was made up about a third of overall spending. So the poverty line was established as three times whatever the average food budget was. And they have kept that metric the whole time, even though now food is only maybe 5 or 6% of the overall budget because these other categories have increased in cost so much. And also, you know, childcare, that used to not be something that needed to be considered at all because you typically had a one income family. That income was sufficient for, for this level of like baseline societal participation. And if you had childcare, it was like relatives usually who would, or neighbors who would take care and look after the kids. So now that you basically have to have two incomes in most instances in order to make it in society, that second income, it's not like that's all just going to the bottom line. The first $32,000 of that second income is just going straight to some other person to take care of your kids. That's the first part. So then you have to be clearing more than that to even make the second job worthwhile. And that's the other. You know, that's like the two income trap. That's like the hidden costs that have been added onto families. And then the other thing that he points out, which is, you know, part of why I support universal programs versus this like neoliberal, piecemeal social safety net thing that we do, is that if you are very low income, life is gonna be difficult. I'm not saying you've got it easy, but you do have some government supports, right? You're going to qualify for snap, you're going to qualify for Medicaid, you're going to get subsidies with regards to childcare as well. There's going to be some help. And at certain levels, as you climb up the income scale, there are these cliffs where, okay, now I'm not getting snap. So now that all is on me, okay? So whatever income I'm earning, I have to subtract out of that what I was previously getting. Okay, now I go up another level. Now I'm not getting Medicaid anymore. I have to pay full freight for healthcare, and that's an extraordinary expense. So whatever additional I'm earning is basically all being eaten up by those additional costs. And you can see how that allows politicians to turn middle class or working poor people against the very poor because they're like, this is not fair. This person is Working less than me and getting way more. And they're right, it's not fair. But the problem isn't that person who is also struggling. The problem is the design of the system. And the problem is those who have rigged the system for their benefit and keeping everybody immiserated in this way.
- [09:59]
Krystal Ball
Yeah, I mean the way I always look at it, especially with this one, is not only the 2 income trap, but also the prison of a lot of this. For you're, you're damned if you do and you really are damned if you don't. Also $30,000. We'd be lucky to have $30,000 childcare. Where I live we have the, I think the seventh highest in the United States, which is only beaten in Northern Virginia by Arlington, which is number one in the whole of America here in the DMV, 150k over a five year period. So the point though, actually I think it might be 1/6 crazy. So it is crazy. And that's after tax income.
- [10:35]
Saagar Enjeti
It should be a house.
- [10:36]
Krystal Ball
It is a house in some places in this country. But that's the issue. What you see inside of this is not only from housing but also healthcare. Because he says 10k, I'm lucky if I pay $10,000 for health insurance. That's a long dream. After you have a child, if you have employer sponsored healthcare, I guess you're lucky to pay for it even though technically it's part of your old benefit package. So the total cost of what could be your wages is much lower. And when you really dig down into his logic, I just think it's like very obvious that really what people are quibbling about is the definition of poverty. And what we should be talking about is making it. And if you don't make it for long enough, and what I've really been convinced, if you don't make it enough in the period of between 20 years old and 35. And I actually, I'm not going to say you're screwed because like anyone can beat the odds. But statistically those are the most formative best years of your life where you're laying the foundation that you can build something on top of. And if you miss that period where everything is on a downward trajectory, which is where I think things are right now, then you're going to end up in an area at 35, 40, 42, which is where some of these first time homebuyers are, and you're just way more behind schedule, which delays all kinds of things societally and creates just a deep amount of problems. So the point of his essay was, I think it was a wake up call for elites who are in charge and especially boomers. Again, you guys know I hate on Boomer, but like, part of the thing that drives me crazy is that typical boomer attitude of like, oh, just figure it out when you're in college or something. They don't look at overall educational inflation. They have no idea what it's like for people to be graduating at 20, 30, 40, $50,000 in debt at a 7% interest rate. And especially if you have a graduate degree, if you're pursuing something that's just debt in the student like loan realm applies though, even at the more basic level. Everyone always talks about trade school and accreditations. Accreditations are expensive. You know, they're not cheap. And so even whenever you take out loans for that, then if you have to meet your, you have to meet your payment obligation, you're on a newer salary, you're making this. If our cost of housing is some 50, 60% higher, then you have no idea what it's like to live on that very thin margin. And that's just not where they, where things used to be. The one thing I will give them is I do think that we need to readjust a lot of expectations because this is something I've been thinking about with the whole starter home thing. A lot of starter homes from the 1970s and 1980s would not pass for as something that builders would want to do anymore because they build big, more luxury items because people are buying homes, are mostly richer and have a lot more money. We do need to bring back those Levittown models of like 15002000 square foot houses which are not, look, they're not like nice, you know, it's not like full of marble and a bunch of other shit, but who cares? Like the boys place to park the car, modest area in the back, enough space, dining table and a kitchen. That's it. All right. Yeah, you're not going to have a palatial living room. That's okay. I think most people would sign up for that, I really do. But that option doesn't exist to be.
- [13:39]
Saagar Enjeti
Renting forever and like throwing money to a landlord instead of ever building any wealth and getting on that homeownership ladder, like, of course. But yeah, there's a giant hole in the market and yeah, because it's not as profitable for developers. So it's not what they pursue, which is why you have to get the government directly involved in some fashion. I think the childcare part of this is so important to highlight. And a couple things that I've been thinking of from a policy perspective. Affordable childcare was part of the build back better bill that ends up getting killed under Biden. So, you know, real missed opportunity there to actually do something that could have had such a tremendous benefit for families across this country. And it's also, I think, an undersung part of Zorin's agenda in New York. You know, I think the buses and the rent freeze and the grocery stores got more attention. But much more transformational actually would be the affordable childcare proposal, which she's trying to work with Kathy Hochul on to get implemented. If he's able to do that in New York City, it would be such a huge deal and such a big win for those families. And the other thing that this guy points out is, hey, you know, we talked about COVID and we talked about the stimulus checks and you know, as an explanation for why people had more money in their bank accounts. That's certainly part of it and the super Dole and all those sorts of things. But one thing that we really didn't account for or talk that much about is the fact that people were at home so they did not need to pay for childcare.
- [15:01]
Krystal Ball
Yeah. And there was a mini baby boom at that time.
- [15:03]
Saagar Enjeti
Yeah. So this gigantic, this gigantic expense, the single largest budget item for most any family that was taken off the table and people did not have to pay that. No, it was stressful in many ways, having to deal with your kids while you're trying to be on your zoom call or whatever. But financially, you saw bank accounts got larger for many people during that period for, you know, for most people. And so I think that that was an under underreported and under discussed benefit of COVID I mean, you know, a silver lining sort of. And one of the reasons why there were these sort of contradictory economic indicators, because just not having to pay childcare was such an incredible boon for people. And you're not eating out at work and you're not having to pay for gas or this much maintenance on your car. Cause you're just at home. So altering that expense landscape was really transformational for a lot of people.
- [15:56]
Krystal Ball
And those were 2020 prices. Now imagine the current prices. Oh yeah. Oh my God. Every time you go out to eat, you want to blow yourself in the head. Is this even worth it? Is this even? I don't even drink and my bills are like $50.
- [16:06]
Saagar Enjeti
And you're like, well, it's not all that much.
- [16:07]
Krystal Ball
Right. That's right. Seriously, like when you don't drink alcohol and the bills start tipping up near the $100, you're like, what the fuck is going on? It used to be like $20, but I'm not faulting the restaurants. I get it.
- [16:20]
Caroline Levitt
Make money.
- [16:20]
Saagar Enjeti
It's not your fault.
- [16:21]
Krystal Ball
The childcare thing, the one thing I do want to say is, as I've said, I truly believe free childcare, as in other people paying is not a good idea. I think what it should be is to preserve optionality, as in basically like a voucher or a tax credit system. So if people don't want to work mom or dad, then they can be paid to do that. Or you can spend that dollar and you can go spend it at childcare, but you need to cap a cost. This is a program that's been implemented in various other countries. It's been very successful. The point though is that if you subsidize only childcare, it actually screws over the non working mother or father because it means that they don't get the subsidy that they want. It's kind of a societal design that pushes people into the workplace if they don't want to be. So the thing is we have to design child tax credit was a very rudimentary form of this. The point though is you have to make it very specifically so people can do the family unit the way they want to do. And there's a lot of data that a lot of women and men would not work if they didn't have to. Most people, A lot of people would work if they have to. The point though is not to say to say nobody should work. It's to say what's easier whenever you actually want to have a kid. That's why the mini baby boom under Covid is criminally understudied. It happened for a reason. Like you just said, there's a lot less stress. People had more money in their bank accounts. It's pretty obvious. Now I'm not sitting here saying that the Hungarian model or throwing money at all of this is going to boost the fertility rate over 2.5%. Like that's not going to happen. That there's a lot. There's too much evidence that throwing money and making it acceptable just simply is not really enough to compete with modernity. But that doesn't mean that you shouldn't try to get marginally better than where we are.
- [18:06]
Saagar Enjeti
You shouldn't make life easier.
- [18:08]
Krystal Ball
Right, Exactly.
- [18:08]
Saagar Enjeti
Families, right.
- [18:09]
Krystal Ball
It's not a good reason.
- [18:10]
Saagar Enjeti
Even if it's not you know, so they breed more, but just so that their quality of life is better. I mean, let's put the next piece up on the screen. So much of the illusion of prosperity in America is just like a figment of our imagination. So I saw these headlines after Black Friday of like, oh, Black Friday spending is up. Oh, that's interesting. Maybe that's a good sign. But then you start to dig into the numbers. And here's Business Insider. They say that Black Friday shoppers are now relying more on Buy now, pay later plans. Here's how that could backfire. And put the next piece up on the screen. This person, Adam Carlson on Twitter or Cochran, sorry, broke down a bunch of the numbers here. So he says, yes, There was a 9.1 increase in spending on Black Friday from last year, but there was a -1% in total item volume from last year. Prices were 7% higher. Consumers bought on average 4% fewer items. So they spent more and they got less. Okay, that's number one. And an 11% increase on buy Now, Pay later use Klarna specific, which is one of these Buy now, pay later companies specific use was up 45% by volume since last year. Roughly 11% of all Black Friday spending was financed through BNPL and 84% of all purchases were financed by credit cards, where most 67% of those consumers expect to not pay the full balance in the first month. So overall, a total of 95% of Black Friday shopping was financed 95% and 67% of that was financed on debt that consumers do not expect to be able to pay in the next 30 days. Because it's one thing if your habit is just I put it on the credit card and they pay off the whole credit card. That's what I do or whatever. Like, okay, but we're talking about two thirds that are saying, no, I am putting this, I am taking on more debt to buy the Christmas shopping, the gifts. And I do not expect that I will be able to pay that off in the next 30 days. And then he opines, which I think is just an inevitable outcome of this. This is the sign of a weakening and stretched consumer. So you know the top line number, oh, Black Friday sales, your spending was up. Consumers must be doing fine. But you dig one layer deeper and you see people taking on more or more debt, spending more and getting less and being unable to pay those those debt balances off in the next 30 days.
- [20:30]
Krystal Ball
This is where my inner Dave Ramsey comes out, though. It's like, what are we doing doing Black Friday Shopping when two thirds of people, it's like, you shouldn't be buying. I mean, that's where the personal.
- [20:38]
Saagar Enjeti
But I think probably there's also a lot of people.
- [20:40]
Krystal Ball
It drives me nuts.
- [20:40]
Saagar Enjeti
I think there's probably also a lot of people who consolidated their shop into Black Friday to get the deals you're not to try to get the best, you know, price they possibly could as also a cost saving at one point.
- [20:51]
Krystal Ball
Let's do that debate in the future. Did you see that Ramsey host, Jade Warshaw? I love her, by the way. She went on Fox News and she's like, by the way, not all adults need Christmas gifts. I agree with her. I agree with her, okay. Pouring all this money into Amazon, into Jeff Bezos pocket so you can get some gift that the guy barely is going to open for your great uncle or something. Sorry, it's fucking stupid.
- [21:10]
Saagar Enjeti
Like, you know, in my family, we paired back this year where we're doing everybody, you know, did like Secret Santa drawing. And so instead of everybody buying for everybody, it's like, okay, you're getting for this.
- [21:20]
Krystal Ball
We do the same thing in my wife's family. In my family, we're like, we don't need gifts or we're Indian. We're not, you know, we don't need to celebrate Christmas. That's the way it should be now, if you want to. But just in general though, the amount of crap that we pour into Black Friday, I mean, you could go on Amazon today, look at their Cyber Monday deals and look through everything that you're supposedly saving money on and go check what the price was five years ago and then be like, do you really actually need it? That is one though, where people are way too comfortable with credit card debt. And you know, you're just, you're digging yourself into a hole which is very, very hard to get out of. And that's. But at the same time, I get it. You know, I talk here about weed and sports, gambling and all that stuff. If you've got nothing else going on in your life and buying cheap shit at Target or on Amazon makes you feel better, I do understand, like where that could come from.
- [22:06]
Saagar Enjeti
Well, this is like our social contract. You're not going to own a home, but you can get some random shit at Walmart. Like, that is the social contract that we have been given. So no, I don't blame people for availing themselves of the only benefit of the social contract.
- [22:19]
Krystal Ball
I'm giving them a little bit of blame. Putting yourself in a credit card, there's that viral video that the Ramsey team just did of Disney where they went to Disney and they're like, how much debt do people have? People have hundreds of thousands of dollars of debt going to Disney.
- [22:29]
Saagar Enjeti
Come on.
- [22:30]
Krystal Ball
But you know, people, look, I'm raised Indian. We don't do that.
- [22:32]
Saagar Enjeti
They want their kids Christmas to be special. You know, I mean there's a lot of pressure, there's a lot of pressure on parents to make it memorable. And it's a very consumerist society.
- [22:42]
Krystal Ball
So it's, it's a societal problem. But you know, be a hero and stand up for your for don't go into debt. Make sure your children don't have to grow up in a debt free household. But look, I, at the same time, I'm not going to shame people too hard because we can't talk too much about poverty and the system and how it's all rigged against you if the only outlet you have is some 28%, you know, high interest credit card debt to buy some new headphones or a PS5 or whatever. I do understand how things could get channeled into that. And that's ultimately why, like who's the villain in this discussion? Which I think is totally fair.
- [23:20]
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- [24:51]
Ulta Beauty Announcer
It's holiday cheer arriving at Ulta Beauty with gifts for everyone on your list. Treat them to fan favorite gift sets from Charlotte Tilbury and Peach and Lily. Go all out with timeless fragrances from ysl, Ariana Grande and Carolina Herrera. And you can never go wrong with an Ulta Beauty gift card. Head to Ulta Beauty for gifts that make the holidays brighter and even more beautiful. Ulta Beauty gifting happens here.
- [25:21]
Krystal Ball
Speaking of villains and fraud.
- [25:22]
Saagar Enjeti
Yes, indeed. So Trump has pardoned a new fraudster, seems to have a soft spot for them. Perhaps he sees kindred spirits here. And Caroline Levitt yesterday got asked about this particular commutation. So this was this guy who basically ran Ponzi scheme, defrauded, you know, was found guilty of defrauding over. There were over 1,000 people who testified to those, submitted statements to the court talking about the way that he had stolen their life savings. And we're talking, we're not talking about billionaires here. Those were like teachers and nurses and firefighters and stuff who had their life ruined by this dude. Trump decided that he deserved a commutation of his sentence. Caroline Levitt got asked about that. Let's take a listen.
- [26:00]
Krystal Ball
Why did the president commute the sentence.
- [26:02]
Saagar Enjeti
Of David Gentile recently? He was a private exec, private equity executive. He served 12 days out of a seven year sentence.
- [26:08]
Krystal Ball
Prosecutor said he defrauded $1.6 billion with thousands of victims, including veterans, farmers, teachers.
- [26:17]
Caroline Levitt
Why was he he issued a commutation for Mr. Gentile, who's the former CEO and co founder of GBP Capital Holdings. Unlike similar companies, GBP paid regular annualized distributions to its investors. In 2015, GBP disclosed to investors the possibility of using investor capital to pay some of these distributions rather than funding them from current operations. Even though this was disclosed to investors, the Biden Department of Justice claimed it was a Ponzi scheme. This claim was profoundly undercut by the fact that GBP had explicitly told investors what would happen. At trial, the government was unable to tie any supposedly fraudulent representations to Mr. Gentile. In short, again, this is another example that has been brought to the president's attention of a weaponization of justice from the previous administration and therefore he signed this commutation.
- [27:08]
Saagar Enjeti
Let's put E3 up on the screen so I can get into some of the details of what this guy was convicted of. So the headline here is Trump frees fraudster just days into his seven year prison sentence. By the way, this guy was convicted alongside his partner. The partner is still in prison serving the sentence. He had a lesser sentence than this guy, but he did not get the commutation. I'd be pretty pissed if I was that guy anyway, they say. In court filings, Prosecutors said that Mr. Gentile and Mr. Schneider over several years use private equity funds controlled by Mr. Gentile's company, GBP Cap GPB Capital, to defraud 10,000 investors by misrepresenting the performance of the funds and the source of money used to make monthly distribution payments. More than 1,000 people submitted statements attesting to their losses, according to prosecutors, who characterize the victims as hardworking everyday people, including small business owners, farmers, veterans, teachers, nurses. I lost my whole life savings, one wrote, adding, I am living from check to check. In a statement after the sentencing in May, Joseph Nacella Jr. The U.S. attorney in the Eastern District of New York, said Mr. Gentile and Mr. Schneider had raised approximately $1.6 billion from individual investors based on false promises of generating investment returns from the profits of portfolio companies, all while using investor capital to pay distributions and create a false appearance of success. The sentences, Mr. Nosella added, were a warning to would be fraudsters that seeking to get rich by taking advantage of investors gets you a one way ticket to jail. So I mean the structure of this classic Ponzi scheme, take in a bunch of money, make a bunch of big promises and then instead of actually develop, you know, generating returns that you can use to pay off your investors, instead they just would use new investors money to pay off the old investors. That's what's called a Ponzi scheme and that is what this guy was found guilty of. So you know, I we haven't discerned in this particular case whether there was some direct, you know, whether this guy was friends with Don Jr. Paid some whoever who was hunting buddies with him or you know, friends with Peter. We haven't discerned what that particular connection was. But we have seen a pattern in this administration of fraudsters and specifically fraudsters with direct connections to Donald Trump getting let off the hook for their white collar crimes. And it is quite disgusting.
- [29:31]
Krystal Ball
Yeah, if you read after they say he raised 1.6 billion from individual investors based on false pretenses and investments, this is literally as classic as a Ponzi scheme as it gets. But the White House is Saying it's actually not. Why are they getting involved in whether something is a Ponzi scheme or not? Is it maybe because somebody influential helped to convince them, as you said? I would love to see the behind the scenes on that. You don't just get a commutation from the President of the United States, especially from this one, without somebody somewhere saying something. And by the way, this is part of the issue. This is all part of a pattern now of a lot of these pay to play. Let's go to the next one, please. This is about this Ponzi schemer who got Trump clemency, then got a new 37 year term. Did you guys hear me correctly? Is that a convicted Ponzi schemer whose 24 year prison term was commuted by Trump in 2021 was sentenced to another 37 years behind bars for stealing $44 million from investors after he was released? Eliyahu Weinstein was sentenced Friday for defrauding investors who believed their Money was buying COVID 19 baby form, my 19 mask, baby formula and first aid. Kids bound for Ukraine instead used the money to repay early investors and for personal expenses like gambling in casinos and buying real estate. That is despicable.
- [30:59]
Saagar Enjeti
Yeah, incredible. And the other thing, when we were preparing for this segment, the thing that was crazy to me is like I didn't even like this guy who got reconvicted and is just like doing schemes instantly after Trump originally commutes his sentence. I didn't see news articles about that at another time. That would be a huge scandal. And then put this next one up on the screen. This is E5. This was another one. I mean, it barely broke through that this even happened. This tax cheat who got pardoned after his mom, who's a big fundraiser for Trump in general and attended this $1 million dinner. After she goes to this dinner, lo and behold, her son gets a pardon. Oh, gee, wonder how that happened. The allegation. Not even the allegation. I mean, he was convicted of this. This guy was running. And it was actually his, his mother and him were running this nursing home conglomerate. And you know how you're supposed to, as a business owner, withhold taxes from your employees that you send to the federal government and then, you know, then they pay off, whether they have to pay more or less at the end of the year. But there's, you know, tax withholding. He was withholding the money and just keeping it and spending it on yachts and vacations and luxury goods and whatever. Which I'm like, not only obviously Is that wildly unethical and illegal and wrong, but how did you not know you were gonna get caught like that? Seems to me like something so easy for the IRS to figure out what's going on here. And so he commits this blatant fraud, just out and out steals cash from his employees, spends it on yachts and vacations, et cetera, and then gets a pardon from the President because his mom does some fundraising for him. Million dollar per person.
- [32:45]
Krystal Ball
It is disgusting.
- [32:46]
Saagar Enjeti
I mean, we really genuinely, like, the pardon power is out of control. And do I have any hope that this is gonna be changed because it requires constitutional amendment? No, I do not. But I saw Ro Khanna calling for, hey, we gotta do something about this, because this is crazy. And Trump, Trump, of course, takes it to the most grotesque level. But it's not like he's the first to abuse the pardon power. Of course, we saw what Biden did with it. But Bill Clinton, what do you pardon his brother or whatever? I mean, there's always, like, sketchy shit that happens with the pardon power, especially at the end of the.
- [33:14]
Krystal Ball
He didn't just pardon his brother, by the way. Remember Michael Milken or any of these other people.
- [33:18]
Saagar Enjeti
Oh, that's right. Yeah, yeah, no, absolutely.
- [33:20]
Krystal Ball
Like, there's, There's a lot like this. The origins of, like, sketchy rich people buying pardons goes all the way back.
- [33:28]
Saagar Enjeti
Yeah. And what it used to be is they would do it like Biden did at the end of his term when it's like, yeah, there's gonna. People aren't gonna like this, but whatever, I'm outta here. Anyway, now Trump has just normalized. No, I'm just gonna pardon the fraudsters, the January 6th rioters, and like, all these white collar fraudsters and Republican members of Congress like George Santos. I'm just gonna do it all the time, and eventually there's gonna be so many, you're not even gonna keep track and you're not gonna really care anymore. And this is just how it is. Do something about it. I have. This power is like the power of the king, and I'm gonna use it as such. And it has major implication. We're about to talk about Pete Hegseth and whatever. Because anyone who is in Trump's good graces knows that they can commit illegal acts and be like, with impunity, because as long as they stay in his good graces, then they are likely to get the benefit of the pardon. So they don't really have to worry about whether or not they're following the law. It creates a whole class of people around the King who can act with impunity because they benefit from the King's favor and are able to do whatever they want with no consequences.
- [34:34]
Krystal Ball
I mean, one of the things that people don't appreciate is how monarchical the President can be. And one of the. I was kind of telling you this yesterday. The origins of pardon power go back to the time of the Constitution when the idea of a Republican small R leader was kind of anathema all across Europe. And so there were a lot of debates for all of these people who are former English subjects of like, how can we possibly confer authority onto our leader who is democratically elected, but who will retain the respect of the monarchs of Europe? Who, you know, they don't disappear until, I don't know, 1914. 1918. Right. So 200 years or 150 years or whatever after the Constitution is actually being written. So they put in a lot of these pardoned powers and it was actually was a debate there at the time. What eventually basically comes through is they're like, no, like, like because he's democratically elected, can, ah. As a check against a judicial branch. But the most convincing argument at the time was that the pardon power was necessary to quell and to quash like post like, like vindictive feelings after insurrection or rebellion. So if you think back to Andrew Johnson or how Lincoln potentially would have used the pardon if he had lived. Like that was one of the arguments that were really pushed through the Constitutional Convention. They did though envision. They're like, what if the President uses it to cover up treason and co conspirators. This was raised by some of the founding fathers eventually didn't really win out. But yeah, I mean, I do think that this is part of the problem. The pardon power is crazy. It's actually insane.
- [36:06]
Saagar Enjeti
Yeah.
- [36:07]
Krystal Ball
And it's one of those where at.
- [36:08]
Saagar Enjeti
Least you could, I mean you could imagine a process where like it has to be approved by Congress or something. But this just like, no, I'm gonna just give blanket immunity to anyone who's nice to me. Creates a really fucked up system.
- [36:21]
Krystal Ball
Totally. And then you have multiple presidents who pardon family members. Roger Clinton, that was a famous one back in the 90s. I mean, Biden's pardon for hunters. Look, I know it sounds quaint or whatever, but it's actually crazy. Like any and all crimes you are absolved. How can you possibly have that? Like, it's nuts. And then multiple billionaires and others who are, look, they always are able to be like, oh, it was unfair to me. The Milken one remains the craziest. One of my favorite books was specifically about Michael Milken, and it's by James Stewart, specifically about the whole, like, insider trading arbitrage scandal back in the 1980s and Rudy Giuliani was one of the people who helped prosecute them. And then he later becomes a lobbyist and he's like, actually, you should pardon Michael Milken. That's. I mean, that's what they got away with. And this is the first Trump administration. It's totally nuts.
- [37:12]
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- [39:43]
Saagar Enjeti
Let's talk about Pete Hegseth now briefly, because the show's going, going long, but I do want to touch on them because it actually relates directly to this. It appears that Trump and Hegseth are effectively throwing this admiral, yes, who was involved in the first boat bombing that was revealed to have been this double tap strike which we talked about yesterday. Two survivors remained and then they do another drone strike to murder those other two survivors. Now I think the whole thing was I think the first strike was illegal. I think the second strike was even more clearly illegal. I think it was all murder. I do not think we are at war with drug traffickers. I don't think they have the authority to do this. But if you accept their logic, which again, you shouldn't. But if you accept their logic, then that second one is almost clear. It's like a textbook definition of a war crime. Literally in the UCMJ manual where they talk about when it would be appropriate to disobey orders. The example they use is two survivors clinging to a shipwreck. That is the text. Literally the textbook example that is used of this is a time when you should disobey the orders because they are so clearly unlawful. So that's why this is getting so much attention. And Pete, we covered yesterday, did not really deny the reporting, of course, objected to the idea that it was illegal, did not deny the reporting. And then yesterday he and Caroline Levitt from the podium really seeks to position the decision making as having not been really with Pete Hegseth but with this admiral who was involved. And I'll get in a moment to why this is relevant to the pardon conversation, although you guys can probably put the pieces together here. But let's go ahead and take a Look. Listen to F3. This is Caroline Levitt being asked about this double tap strike.
- [41:28]
Krystal Ball
Does the administration deny that that second strike happened or did it happen and the administration denies that Secretary Hegseth gave the order?
- [41:36]
Caroline Levitt
The latter is true. Yabe and I have a statement to read for you here. President Trump and Secretary Hegseth have made it clear that presidentially designated NARCO terrorist groups are subject to lethal targeting in accordance with the laws of war. With respect to the strikes in question, on September 2, Secretary Hegseth authorized Admiral Bradley to conduct these kinetic strikes. Admiral Bradley worked well within his authority and the law directing the engagement to ensure the boat was destroyed and the threat to the United States of America was eliminated.
- [42:10]
Saagar Enjeti
So Admiral Bradley. So Pete directed Admiral Bradley and then. Oh, he definitely was within the laws of war. But they're really shifting. The decision making from the original report was that Pete had said kill everybody and then that was the order that led to this double tap strike. I also wanna point out, Sagar, people are surfacing at the time because I don't know if you guys remember, they shared the first bombing of the boat. Not the second part, but the first part they shared on Twitter and was bragging about. And Pete was doing a whole like victory lap around this. And he talked about how he watched it live and how deeply involved he was in this whole process. Now he's trying to position himself like, oh, Admiral Bradley was totally within his rights, but it was totally his decision, not mine.
- [42:59]
Krystal Ball
Yeah, can we go? Let's Skip ahead to F7 just to show this. So Pete says let's make one thing crystal clear. Admiral Bradley is an American hero, a true professional, and has 100% support. I stand by him in the combat decisions he has made on the September 2nd mission and all others since America is for. If you're a men and women who are serving in the armed forces, how can you possibly think that these people are gonna have your back when they're the ones who are putting you potentially in legal jeopardy and then hang your ass out to dry whenever anything gets even remotely hot. At least have the courage to stand up and own the overall attack. Now let's go to the New York Times story F5 this everything is murky. Stick with us because we will eventually get to this. Hegseth ordered a lethal attack, but not the killing of survivors. Officials say. So they interviewed five people. I'm assuming basically everybody goes on the record here or off. I mean on background here for who's actually involved. What they said is that Hegseth told them go and kill people on the boat. They do the initial strike according to them. He didn't say after the survivors existed, go and kill them. Bradley ordered a secondary strike to, quote, fulfill. Bradley ordered a secondary strike. This is where everything becomes complicated. What they say is that, quote, before the attack, he had briefed them on his execute order to engage the boat with a Lethal force. But they did not address what should happen if people survived. What then happened is that Admiral Bradley had an intended second strike. And the intention of that strike is kind of unclear. As in, was he going in to try and to kill the survivors? Was he apparently going in to try and destroy the rest of the so called drug cargo or. By the way, there's no evidence of that. But at the very least of this second drug cargo of the rest of the boat. So what they say is that in real armed naval conflict, it is lawful to fire on a partly disabled enemy warship that is continuing to maneuver or fire its guns, even if there's a wounded sailor aboard or shipwreck sailor clinging. But if the warship signals it's out of the fight by ceasing, firing and lowering its colors, then it becomes. This is the problem, though. These are drug boats. Well, okay, these are boats they say are drug boats. And the two people on that, they don't have color. It's not the United. You know, it's not the British Navy versus the, the Nazi.
- [45:31]
Saagar Enjeti
They're not firing on anyone.
- [45:32]
Krystal Ball
There's nobody. Well, yeah, exactly. I mean, there's no evidence they're firing on. They're saying that the drugs on board are the ones that are an imminent threat to America, that they're narco terrorists. So it's like, what the hell is going on here? And this is part of what. Look, this is going to get bogged down in tediousness where everyone will say, oh, well, technically they were. The point is that the strikes are bullshit. All right? They're just bull. Like, that's why even getting into all of this, like, well, the second strike. No, they have a memo which has never been released. Secret memo, which is. It reminds me of the secret NSA spying from back in the 2000s, where they're like, we have determined that the strikes are legal. Can we see the memo? No, you can't see it. Okay. We have determined these are terrorist groups and that even though Congress has never declared war, that we are in an armed conflict and thus have the authority. This is even sketchier than the drone strike authorities during the war on terror. But I do also want to say what a lot of people are pointing out is that all of this happened during the war on terror. And that's the problem, is that this became normalized and has now moved into the Caribbean with the same bullshit, sketchy legal authority that we bombed Somalia, Yemen, Libya, Afghanistan, Iraq. How many times have we gone through all these strikes? You see people on target. People were like, oh, we used to do this all the time in Afghanistan. I'm like, yeah, that's not a defense, though.
- [46:51]
Saagar Enjeti
Exactly.
- [46:51]
Krystal Ball
That's the issue, isn't it?
- [46:53]
Saagar Enjeti
Well, and I think to me, you're right about the, like, getting into the weeds on this misses the point in a couple of ways. Number one, the whole shit is illegal. It's all. The first strike was illegal. The second strike is illegal. The whole operation is illegal. It's unconscionable. These are all. This is not even war crimes. This is murder. Right. Okay, that's in one way that the details miss the point. But the part that that matters is the fact that they are scrambling to say, oh, Pete had nothing to do with the second strike. Tells you they are actually worried about the judgment of what this meant and the legal grounds, the very shaky legal grounds on which it stands. So that, to me, is the importance of this squabbling and trying to nitpick the exact details of who said what and when and who is technically responsible. And Pete in the White House, aggressively, we stand behind Admiral Bradley and the decisions that he definitely totally made all on his own on that day. That blame shifting is, I think, what's really notable and shows you a level of nervousness because what do we have now? We have a bipartisan Senate and a bipartisan House named Ro Khanna, once again stepping up, involved in this bipartisan House investigation into what the hell happened here. So this is where you get to. Okay, let's talk again about these pardon powers that Trump has used so expansively. Imagine you are Admiral Bradley and you are not, you know, household name with, you know, all the COVID of, you know, all the elite cover that comes with that. Not that admirals aren't their own form of elites, but we'll put that aside for the moment. Okay, you're being asked to testify now, what happened on that day. Are you gonna contradict the White House and their version of events? When you're worried about your own ass and your potential legal liability, are you going to contradict them when you know that the key to you staying in legal good graces is the President's pardon power? And the last thing you wanna do is piss him off, even if it means that you have to lie and cover up what actually happened on that day and what you actually think about it? That is the landscape that exists now. And so that's why these pardon powers, it's not just about these, even though that's bad, too, these fraudsters who are being let off the hook, it's also about the way it shapes behavior of people inside this administration right now, today, and the ethical and moral landscape and the choice array that it sets up for them. So that's why this is all very significant, the way they're setting this up and the way that they're framing it. And I think this is one of the first times where we've seen some Republicans get a little bit nervous, express some concern and even in some cases, some outright disapproval about the lawlessness with which this administration has conducted itself in these operations.
- [49:47]
Krystal Ball
Here's the. You know, why is that they are putting all of these people in such a shit situation.
- [49:53]
Saagar Enjeti
Absolutely.
- [49:53]
Krystal Ball
For example, at Bradley, he's a SOCOM commander, career Navy seal. He should not be worrying about whether his ass is legally on the line or not. Whenever he's in the middle of an operation, he's in a shit position. Right. Cause they're like, well, the SEC def. Said it's legal or SEC war. Sorry, I apologize. The SEC war said it was illegal. So we can go ahead. And now all of a sudden, this guy who's a career naval official Navy Seal is now a name who's gonna be called and subpoenaed before. What is he supposed to do? Yeah, right. And then what about the guys under his command? Allegedly, this is supposed to be Seal Team 6. We have the Tier 1 special operators, who again, they're used to going on these types of missions. They probably didn't even really know what the legality situation of. And now all of a sudden they are. Now they're like, oh my God, like, are we gonna get called in before Congress? They should never have to worry about that. That's why the process. Yeah, they will be.
- [50:46]
Saagar Enjeti
Exactly.
- [50:47]
Krystal Ball
So the process is supposed to work. Congress declares war, we're good, done, dusted. Right. You have an authority, laws of war. That's why even reading the naval warfare thing, they're like, oh, if they lower their. It doesn't apply. And that's why we have all of these processes and all these other things in place. And it was sketchy even under the 2001 AUMF against terrorism. Now we'll get to that. The fact is we normalized a lot of this behavior which set the terms for this. But this one is even crazier, easier because it's here. It's a domestic. Supposed to be a domestic law enforcement thing that then just gets determined. Active conflict, which is also part of an ideological regime change operation in Venezuela, which is why the whole thing is just. The whole thing is just completely insane. And so what they've done here to these operators, it's unconscionable because they've put them in a horrible situation. The civilian leaders are the ones who are 100% should own this. And the fact that they're trying to pass this off to a decorated U.S. navy SEAL SOCOM commander, total bullshit. Yeah, bullshit. It really is.
- [51:54]
Saagar Enjeti
And here's the thing is like I keep going back to that article about how these nonprofits that provide legal advice to service members, how they've seen this uptick in calls where people are calling them like, what do you think about this? And they said that it was the higher level. It was like not, you know, the rank and file, it was higher level people who were in decision making positions because they have some awareness of this way this normally functions is not functioning now. I no longer have faith that there's even, you know, some JAG and some process where there's any kind of a legal justification that at all remotely passes muster being prepared here. And so they're having to themselves become like lawyers. And you know, if you're in the military, you're, you're going to be schooled in the laws of war. You know, that's part of your training. And I assume the higher you are up the ladder, the more integral that is to your training. But you're still not a lawyer. And now you're having to question everything that comes in and say, well, is this like, what am I gonna say about this? When if I get called in front of a congressional committee and under oath have to testify, what am I gonna say about this? If the Democrats take power, it's only my ass is charged with the war crime. Like, how is this all going to go? That's where they are right now. So, you know, I think this is probably pretty eye opening for a lot of people to see them so brazenly pass the buck like this and try to wash Pete's hands of responsibility. And the last thing I'll say about this whole dynamic and part of why I think this is kind of breaking through is because Pete Hegseth, even, you know, putting any sort of ideological, like valence aside, people just feel like he's chaotic, like he's been a shitty, shitty at his job. I think that's evidenced by the fact that he's not really integral. He's not on this inside Marco Rubio Steve Witkoff team that's involved in these big decisions. He's been somewhat sidelined in that regard. His leadership has zero confidence with the Pentagon. A lot of people just don't like the. And one thing I've seen in, you know, whether it's in media or in other spaces is when, you know, there start to be some cracks in the facade. If people really love you and they appreciate you or they respect you, then they'll sort of circle the wagons. And if they hate you and they are pissed off at the way you've handled yourself or perhaps the way you've knifed them or knifed them in the back in some instances that we have some awareness of, guess what? Maybe they're not gonna be there to protect you. Or maybe they're gonna be the ones leaking. Maybe they're gonna be the ones who are. That leads to your downfall. That's where those interpersonal dynamics start to become very, very important.
- [54:31]
Krystal Ball
Right? That's what's happening with Cash Patel. Like, remember, these are Republicans in the FBI who are like, yo, this guy's a clown.
- [54:37]
Saagar Enjeti
Yeah, fuck this dude and his insecurities and his temper tantrums. Same thing because of his own incompetence. Yeah.
- [54:43]
Krystal Ball
All right, so there you go. Thank you guys so much for watching. Appreciate it. We'll see you all.
- [55:03]
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- [55:34]
Krystal Ball
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 free. No fees, no interest. I used it to get this portable spa with jets. Now the bubbles can cling to my sculpted but pruny body. 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 Janice Torres here and I'm Austin Hankwitz. We host the podcast Mind the Business Small Business Success Stories produced by Ruby Studio in partnership with Intuit QuickBooks.
- [56:14]
Saagar Enjeti
We're back for season four to talk to some incredible small business owners.
- [56:18]
Krystal Ball
The big thing about working at tech is that it's ever evolving, ever changing. Everyone's a rookie. That's how fast the industry is changing. So what I'm really excited about is to be part of that change. So listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
- [56:33]
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Saagar Enjeti
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