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Krystal Ball
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Krystal Ball
Independent media just played a truly massive role in this election and we are so excited about what that means for the future of this show.
Matt Stoller
This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else.
Krystal Ball
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.
Matt Stoller
We need your help to build the future of independent news media and we hope to see you@breakingpoints.com Good morning everybody. Happy Tuesday. Have an amazing show for everybody today. What do we have?
Krystal Ball
First of all, indeed we do many things unfolding in this town. As per usual, the showdown over USAID continues as Elon Musk's hostile takeover of the government also continues. Canada and Mexico tariffs are off, at least temporarily. China Tariffs. Sagar and I are going to talk about it. Matt Stiller is also going to join to weigh in on this particular tariff regime as floated. And he is also going to talk to us about some of the movement at National Labor Relations Board, which has effectively been gutted at this point. The securities Exchange Commission, the cfpb, that's like the anti scam agency, which also enforcement actions seem to have been gutted there as well. So he'll weigh in on all of that. And the DOJ out with a new DEI program, this one to combat anti Semitism, taking some shots from both left and right. Not too happy about this particular direction. And Anthony Lowenstein is gonna join us to talk about his new documentary about the way that weapons systems have been tested in Gaza and Palestine in general, but specifically in Gaza post October 7th. And he's also going to weigh in on the latest developments with regards to Bibi's visit to the US which is today. He's also already announced he's gonna extend his visit.
Matt Stoller
That's right.
Krystal Ball
He's extending him in town for a little extra time.
Matt Stoller
There are a lot of open secrets, right, in terms of admitting, like where your bread is buttered in terms of what really all. There was an interesting meeting yesterday with Steve Witkoff and with Mike Waltz at Blair House. I am tapping my sources to find out about the laundry crystal. That's all I can think about. I gotta know whether it's true or maybe he's been shamed into stopping it. But. All right, let's get to usaid.
Krystal Ball
So Elon Musk's takeover of the government continues. Trump yesterday in the Oval Office was asked a little bit about his thoughts on how all of this is going. Let's take a listen to that. They're finding tremendous waste, really waste more than anything else.
Matt Stoller
I think you could say.
Krystal Ball
Probably fraud and abuse can be added to it. The more standard waste. Fraud and abuse. But they're finding tremendous amounts of really bad things, bad spending. Elon can't do and won't do anything without our approval and will give him the approval where appropriate. We're not appropriate. We won't. But he reports in and he it's, it's something that he feels very strongly about and I'm impressed because he's running obviously a big company, has nothing to do if there's a conflict that we won't let him get near it. But he does have a good natural instinct. He's got a team of very talented people.
Matt Stoller
The first term, though, USAID was something that you liked in some respects. I love the concept of it.
Krystal Ball
Yeah, sure, I love the concept, but they turn out to be radical left lunatics.
Sagar Enjeti
And the concept of it is good.
Krystal Ball
But it's all about the people. Will it take an act of Congress.
Matt Stoller
To do away with usaid or do you believe you have?
Krystal Ball
I don't know. I don't think so.
Sagar Enjeti
Not when it comes to fraud.
Krystal Ball
If there's fraud, these people are lunatics.
Sagar Enjeti
And if it comes to fraud, you.
Krystal Ball
Wouldn'T have an act of Congress, and I'm not sure that you would anyway. But we just want to do the right thing. But it's something that should have been.
Matt Stoller
Done a long time ago.
Krystal Ball
So weighing in there specifically on Elon's conflicts of interest and also on the USAID push to effectively dismantle that organization, bring it under the State Department. More on that in just a moment. Democrats are starting to try to make a stand with regard to USAID in particular. The conflict of interest piece is also quite important. Elon obviously has massive conflicts of interest across the entire federal government. Just as one example, we documented yesterday how he and his cronies gain access to the treasury payment system. Elon wants to turn Twitter into a payment processor. Not to mention that for any tech overlord having access to all of our data, kind of an important and valuable commodity. I also was just reading that apparently he was influential in the pick that Trump made for the head of the Air Force. And it's a guy who, lo and behold, was very influential in getting SpaceX contracts for Elon. So he is officially, we now know Sager, a special government employee. I think Caroline Levitt said that yesterday. There is actually criminal statute that governs the way you have to operate and the way you have to avoid any potential conflicts of interest when you are in that special government employee capacity. This is usually people who brought in on sort of like a temporary basis as specific experts in a field. That is the designation that Elon has. So, I mean, it's just, it's wild what's going on.
Matt Stoller
The status is the same one that was used by Ivanka and by Jared because they also didn't draw salaries last time they were in the White House. But as you said, it's actually legally important. I think you sent this. Richard Painter, who's a government ethics expert, says a special government employee still have to abide by conflict of interest laws. And I actually, what I took away the most from the Trump comments is I think he could see some of the dangers here that are ahead With Elon, because he's like, well, we'll give him permission whenever we need to. Anything he doesn't need to will take it away from him. They are saying that it's, quote, read only access to the treasury payments, et cetera. But no, you're absolutely right about that data, I guess. I mean, this kind of brings us back to our big debate yesterday, though. And look, I hate to give credit where it is, but mounting a fight about USAID is politically genius in a few ways. Let's put this up there on the screen, for example, where we have members of Congress attempting to enter usaid.
Krystal Ball
This is a. Three guys.
Matt Stoller
Yeah, they've given some speeches around this as well. The thing that I'm kind of like thinking about with all of this and it gets to what we were talking about yesterday is at the end of the day, not only are we talking about an agency with 0.7% of the federal budget, which is now getting rolled into the State Department, but mounting a fight on usaid, which, again, some of the least popular elements of the federal government, which is foreign aid to other nations, just doesn't seem like the ground for the Democrats where I would want to be. And we're gonna play some of the quiet part out loud. Things about what USAID is, I thought the strongest ground that the Democrats or opposition to Trump have had so far is on tariffs on Medicare, Meals on Wheels. Obviously they abandoned all three of those. Unfortunately, in the tariff case, we can talk about that in a bit. But the ground of fighting for USAID just doesn't seem like one of those political. To do it, you have to be reading the news and really involved and be like, okay, so Elon has gained access and they've rolled it onto the State Department. It's like, well, you've kind of already lost it. And then people are like, well, how does it affect my life? It's like, well, some Malawian healthcare program may get cut. And people are like, okay, well, why were we even paying for that in the first place? So I'm just not sure this is the right move for the Democrats on this one, the Medicare one, the Meals on Wheels. Absolutely. But I mean, I think it's very telling. Right? Immediately, the Trump administration bucked on that, where picking a fight on usaid, one of the smallest agencies, the only agency smaller than USAID is USTR, the US Trade Representative. 0.7% of the federal budget. Overwhelmingly. If you were to poll this stuff, super unpopular, maybe PEPFAR is the only one where people are like, okay, the rest of it, I mean, we'll talk about the money laundering and the CIA ops and all the other malfeasance and fraud that's run through USAID over the years. I just. I don't think this is it. Like, I feel like the Dems are searching for something, and this is where they were. Like, we're mounting our stand here for usaid. I mean, you know, like, are we really weeping tears for foreign aid programs? I'm not.
Krystal Ball
I think you make some good points there, but I think that that is intentionally why they went after usaid.
Sagar Enjeti
First.
Matt Stoller
No, I agree. That's what I was saying. I have to give them credit for being smart.
Krystal Ball
I mean, first, I think there may be also a personal element here because USAID was also involved in you pushing for the end of apartheid. So there may be some personal South African hurt feelings there. Not a joke.
Matt Stoller
Is that true? I actually didn't.
Krystal Ball
Yeah, that's true. Okay, well, blame Reagan, right? In any case, yeah. They see it as a sort of trial balloon, because if you can get away with dismantling usaid, which is, you know, was authorized by an act of Congress, which, you know, its authority comes from specific laws that were passed that give it statutory authority as its own independent agency. If you can get away with that, then you can get away with anything. And we already know that Elon and Trump have both projected Department of Education is next, and that'll be a more difficult fight because people like their kids being educated, and there's a lot of funding that goes for poor kids and for kids with special needs and for school lunches and things like that that come from the federal government. But if you've already been able to dismantle one agency without a fight, then guess what? You are gonna be able to do everything you want to do. And so we'll get to the rest of the elements here in just a second. But I do think it's useful to kind of zoom out and ask yourself, what is Elon's project here? And we've talked about this before. Elon's ideology is not the same as what Trump ran on in 2016 at his sort of populist peak. Elon is a fan of Javier Milei. Elon is an anarcho capitalist. Elon is a fan of Curtis Yarvin, who thinks that we should have literal techno feudalism. I know this sounds crazy, but Elon is a dramatic. He is a hardened ideological actor. So what does it mean if you're an anarcho capitalist, if you believe in this, like, techno feudalist project he thinks he should basically run as a CEO. The country, the government, the world, really? I think that is his. I know it sounds crazy, but that is his project. And you can listen to the way he talks about these things. I mean, his grand plans to like have a civilization on Mars and all of these sorts of things. So if that's your ideology and that's your goal, what you wanna do is completely take apart the federal government. And you hear this not just in Elon's rhetoric, you also hear echoed now in Trump's rhetoric, who talks about how his goal is for all federal government employees to be private sector employees. That's anarcho capitalism. That means even the parts of the state that you like, the pieces that deliver for grandma and Social Security, Medicare, Medicare, all of that, he wants to take an axe to. Elon has told friends that his entire metric is just how much I can cut, not how much of the, you know, the fat and the fraud and the abuse and the parts that everybody would be like, okay, fine, yes, cut that piece. He measures his success by just how much of the federal government can he take in Acts 2. Now, do I think that he is going to be able to realize his anarcho capitalist, no state whatsoever dream? No, I think at some point the state is going to reassert themselves. You know, Trump still has control of the military, for example. At any point, he could get sick of Elon and say, all right, we're done, you're out, goodbye. But do I think a lot of damage could be done in the meantime? Yes, absolutely. And I also, and this is where I want to come back a little bit to what we were saying yesterday and perhaps make a more persuasive argument about what I mean when I say people didn't vote for this. I'm not saying they didn't vote for, like cutting some waste, fraud and abuse, et cetera, et cetera, but the Trumpist ideology, which is really like the Steve Bannon, like, that's the OG MAGA ideology, that was what was sold to people. And this is not that. Right? This is not the political project that you're. This is not populist. Right? This isn't the political project you've been engaged in. This is something else entirely. Trump seems to have bought into it and seems to have given Elon, for now, the keys to the kingdom to do whatever he wants, up to and including dismantling entire federal government agencies, accessing whatever classified information he wants to accessing your Social Security. Numbers and private data accessing the system, the treasury payment system, which controls all of the money that goes out from the federal government. So if you imagine like, you know, it's like if Fort Knox actually held all of the, like, taxpayer dollars and gold and whatever, the richest man on the planet who has incredible conflicts of interest and a really radical ideology now has keys to that theoretical Fort Knox. That's where we are right now. And that's why I find it so deeply, deeply disturbing. And why, even though this is, you're right about USAID not being the best ground for Democrats to fight on, why I think they feel like, all right, well, we gotta do something here.
Matt Stoller
I get where they're coming from, but this is part of the problem, and this is where honesty is important. Not even Steve Bannon would tell you that he's in control of the federal government. Right. The Bannonist 2016 vision was almost immediately clarify.
Krystal Ball
Not even Steve Bannon would say that.
Matt Stoller
Who is his ideology in 2016 vision? Right? I mean, what is that?
Krystal Ball
So he sees Elon as a threat?
Matt Stoller
No, but part of the problem for a lot of the people who share my beliefs is let's look at the track record. Trump in 2017-2021 governs effectively as like a cultural right warrior with George W. Bush flavor. Yeah, well, he comes 40,000 votes away from winning the presidency, then over the interim four years, assembles a coalition effectively of people who hate Biden. And within that, there's not a lot being sold there, except for no more illegal immigration. The rest of it is really up for grabs. And so part of the new coalition, quote, unquote, of the people who signed up for Trump, I do think it does include some dope. Now, look, I hope that some of it is for the stuff that I've said here, but I have to be honest. I mean, tariffs are overwhelmingly unpopular. We're gonna talk about that. People like cheap shit. They don't care if their TikTok comes from China or whatever. They wanna live, like, a pretty basic life, and they don't really wanna think much about bigger things. Now, I think it's incumbent on the feds and on leaders like Trump and JD to make their case as to why they're important. But, you know, it's tough in a country like this where debt and all that is very, very high. Where I do think that, you know, the doge of the usaid, the Department of Education, there is a feeling within the intellectual and I think within the suburban right of things have gotten out of Control. Now, I think with usaid, it's actually literally not disputable that the agency has been involved in insane fraud, CIA coups, basically a front for State Department for soft power, you know, and all that, if you want to call it funneling money is money laundering to NGOs. But even, you know, you're talking about the Department of Education, so you're not wrong. People support Head Start. People support, you know, federal dollars coming into schools. Yeah, I don't think the majority of schools are funded by the feds. I think it's like 20 something percent. Right?
Krystal Ball
It's about 10%.
Matt Stoller
It depends on the individual school district.
Krystal Ball
Correct? Yes. And poor school districts rely more on federal, more on federal funding, so they would be the ones that would be more impacted. Overall, it's about 10% of funding that comes from federal.
Matt Stoller
So. But where does the maga DOGE instinct to say screw the doe? It's not just libertarian, right? It's. Well, let's be honest, it's about a lot of DEI or trans, you know, what was it? Title nine, I think that's what it's called that went through in terms of gender pronouns. That's where the instinct has now come from, is like these institutions have been used for good purposes but turned against us, so we're going to dismantle them. And if it does stick to that, as long as the dollars keep flowing, will people really notice? At the end of the day, my instinct is probably not. And it's probably going to be popular. I mean, and if you sold it to me that way and you're like, look, we're gonna get rid of this gender DEI stuff and all these bureaucrats, nobody really knows what they do and the dollars and the checks keep getting cut to all the states, like, well, okay, you know, you need some administrators. That's where the instinct comes from. Now, I get what you're saying and I think you're right. If they actually impact faa, noaa, the oceanic, the people who track the hurricanes, I always use that example because like, who's against that? You know, the guy who flies into the middle of a hurricane is like, oh, It's a category 4.5 now. It's awesome, right? It's a cool job. Or Coast Guard. There's a million different little things even that are non dod. They're actually pretty popular. That's why they start with usaid. Now I think DOGE in practice is going to look a lot like this is USAID. Total is 0.7. Let's say they cut 5% of the 0.7% of the federal budget. It's like, okay, we're going to declare victory. This actually kind of gets to the tariff conversation we're going to have in a little bit about, well, what really changed here in terms of what we want. But, but vibe wise, that's really important for both the media and for people to feel as if these parts of the federal government are getting paired back as long as their essential services go to them. And so that's why I think it is a big mistake and it feels rudderless and almost religious the way that the Democrats are reacting here to usaid. I mean, you and I both know a key tenant of neoliberalism are functions like USAID and others. They're literally admitting this stuff out loud. A normal person at home goes, what? Like I don't care about Malawi and healthcare?
Krystal Ball
I don't actually think that that is true because I looked up some of the polling on this and some 60% of Americans want the US to be a global leader in health. The PEPFAR program, what does it mean, the PEPFAR program in terms of, you know, like dealing with AIDS and HIV globally, which has been a tremendous success. The George W. Bush program, et cetera, et cetera, tremendously popular, dealing with malaria. I mean, USAID helped to combat Ebola. So yes, is it a. I mean the whole project of USAID is soft power projection. That is what it is.
Matt Stoller
Well, if it was just that, I think you'd be fine.
Krystal Ball
But here's the thing though, is like a couple pieces just to get to the actual substance with regard to usaid. I mean, first of all, you've got a lot of people on Twitter who didn't know what USAID was 3 days ago who suddenly are convinced that it's nothing but cid.
Matt Stoller
That's all politics.
Krystal Ball
That's number one. Number two, I think the notion that subsuming USAID under the State Department is going to make it less nefarious is kind of preposterous. Number three, listen, there is also just a key principle here of Congress is if you don't like usaid, if you don't like what they're doing, that's fine. Have that debate. We have elected representatives. Republicans have control of the House and the Senate. So you have to go through those channels in order to dismantle a congressionally authorized independent agency. That is what the Constitution says. So not to mention, as I said before, I think you really have to keep in mind what the broader project is here from Elon and Trump really has nothing to do with it at this point. I think it's pretty clear at every juncture when Trump could have reigned Elon in and said he backs him on H1BS. He backs them here. He gives them the Air Force Secretary you once like. I don't think Trump really cares that much outside of the areas of his interest. Tariffs and whatever else.
Matt Stoller
Tariffs and immigration, turning off the water.
Krystal Ball
Turning on the water in California, his performative stuff like, those are the things he cares about. Everything else, I don't think he really gives a shit. Elon's feeding him talking points about South African farmers now, so you know who is in real control. Elon's project is not just about usaid. It's not just about the Department of Education. It's about dismantling as much of the federal government as, as he possibly can. And so the USAID thing, it's a trial balloon. What can we get away with? And that is the way that everyone needs to understand what's going on. So regardless of how you feel about usaid, I've got my own issues with it. I'm happy to see the Imperial Project being sort of pulled back in this sort of way. But I'm also not a fool to think that that's really what's going on when you are talking about an administration that is openly, actually embracing an old school imperial mentality, a la William McKinley. Let's buy Greenland, let's invade Panama, let's try to make Canada the 51st state. Let's go to war with Mexico. I'm not enough of a fool to think that they're actually intentionally rolling back empire. Elon wants to make it so that the federal government is not strong enough, is not stronger than him. Right? That's the bottom line. He wants to be able to do everything that he wants to do. He wants to be able to profit as much as he can off of your taxpayer dollars. And that is the broader project that is.
Matt Stoller
I don't disagree with a war that you just said. I think what I get to again is trying to analyze how it will look like in practice and to the voter. And that's why come back to this democratic thing. I think another problem though, where you're talking about institutions is so many norms and other things have not only been blown up by Trump, but over the years. What I have seen more is we talked about this a little bit yesterday, right? With norms, for example. I mean, how many times have I listened to David Sirota and others criticize Biden for not legalizing weed on day one, for not canceling all. Yeah, but you could have.
Krystal Ball
I mean, but there's people who can do that.
Matt Stoller
Okay, but Krystal, they don't care about. But they don't care about Congress whenever it's about something they want to do. When Obama wants to legalize millions of illegal immigrants literally overnight and create an amnesty illegal program called daca. Oh, everybody's fine with it then, right? So there is a lot of hypocrisy here in terms of, like, which principles, which norms.
Krystal Ball
This is way above and beyond, like, overruling the parliamentary or something.
Matt Stoller
It's about. No, no, I agree. I think we're living through the most extraordinary takeover of the federal government since the 100 days over FDR. And if we look back to that time period, and I know many of the people who have read the same books that I have, is what did FDR learn? FDR said, I don't give a shit about Congress and I don't give a shit about the Supreme Court, Civilian Conservation Corps, wpa. We are gonna throw everything at the wall. And actually, the people who pared it back became way less popular. People hated the Supreme Court.
Krystal Ball
But those two did pass through Congress.
Matt Stoller
No, but actually, many of them either were passed through Congress or were created artificially by his program. I mean, many of the criticisms of fdr, of the Republicans, of FDR in that time period, rhyme exactly here. Like, hey, what about the power of the pers? And he's like, I'm a king. I just got elected with this and this. Not the same. But the spirit is. The thing is, is that if you look back at that time period, the population overwhelmingly backed aggressive federal executive action. And I think what's happening here is. I mean, Yarvin himself is a student of fdr, probably more so than anybody else in that project. And what they understood is that at a popular level, by doing this, they were basically able to win 90, almost 80% of what they wanted to, and that the norms and all of that were fake all along.
Krystal Ball
So, first of all, I don't accept the equivalence between what is being done here and, like, the lawlessness that is being executed here and the total disregard for the Constitution versus fdr. But in addition, just to make the coin on the popular piece, which I don't think so, is important because it matters in terms of how people are going to react to this. You know, FDR was like, creating jobs and healthcare programs and things that were delivering for people materially. This is the opposite of that. This is destroying things that people currently enjoy and take for granted from the federal government. That's the program, that's the project. So again, in theory, in the abstract, do people support cutting the federal government budget? Of course. Sure. Of course. Do they support rolling back free school lunch for poor kids? No. Probably 85% of the country would say no to that. Do they support rolling back Pell Grants also under the Department of Education? No, they do not support that. Do they support rolling back federal funding for poor district or any school district? I mean, one of the cautionary tales I think that people should look at is back during the teacher strike wave which hit red states, red states, in particular rural red areas, take public education very seriously. And I think you're right that there is, you know, there was a reaction against like this sense, oh my God, my kids are being indoctrinated, blah, blah, blah. But if you go after people's school districts in those towns, those are institutions of small town America, you will have a fight on your hands. So with usaid, I do think, you know, I don't think it's as popular as as you do, but I do think it is the most low hanging fruit, which is exactly why they went after it first. But if you think that this project doesn't have in its sights things that you or you or anyone out there appreciates and enjoys and takes for granted. Oh, food safety, hurricane tracking, planes not crashing into each other and falling out of the sky, Medicare, Social Security, you're a fool. So the question is, when will this be reigned in? How far does it go?
Sagar Enjeti
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Krystal Ball
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Sagar Enjeti
USAID fights terrorist groups all across this world, making sure that we address the underlying causes for a retreat to terrorism. USAID chases China all around the world, making sure that China doesn't monopolize contracts for critical minerals and port infrastructure all around the world.
Matt Stoller
It supports freedom fighters everywhere in this world.
Krystal Ball
We are witnessing a constitutional crisis. We talked about Trump wanting to be a dictator on day one, and here we are. This is what the beginning of dictatorship looks like.
Matt Stoller
And Elon, if you want to run aid, get nominated by Trump and go to the Senate and good luck in getting confirmed.
Sagar Enjeti
Elon Musk, you didn't create US Aid, The United States Congress did for the American people.
Krystal Ball
And just like Elon Musk did not.
Sagar Enjeti
Create US Aid, he doesn't have the.
Matt Stoller
Power to destroy it.
Sagar Enjeti
And who's going to stop him?
Matt Stoller
We are. We're going to stop him.
Sagar Enjeti
Elon Musk, you may have illegally seized power over the financial payment systems of the United States Department of Treasury, but you don't control the money of the American people.
Matt Stoller
The United States Congress does that.
Krystal Ball
So the funniest one there, of course, Chris Murphy at the beginning. That is the quiet part out loud. I'm like, hey, Chris supports freedom fighters.
Matt Stoller
We're not supposed to say that.
Krystal Ball
Fights terrorists.
Matt Stoller
Which freedom. What was that?
Krystal Ball
Yeah, yeah, but I mean, this is the first thing that they've really shown up to. I mean, somewhat. The Medicaid portal's being shut down.
Matt Stoller
Yeah, but it was over so quickly.
Krystal Ball
But yeah, that's right. But you know, they pushed back there and I think there was Republican pushback there too. Behind the scenes, no doubt about it, that helped get that flipped on a dime. But they are finally trying to show up for this. And yeah, not making the best arguments, but I think a lot of Democratic base voters will be happy to see at least they're doing something where so far they've been just like asleep.
Matt Stoller
I think you might be right. I don't know. I mean, when I look at that, I just see a supreme lack of political talent across the board.
Krystal Ball
And I'm just like, I thought Ilhan's comments there were probably the best.
Matt Stoller
Right. The problem again, is that you always have to be able to connect rhetoric to actual action, telling people like, I mean, what do you really learn from the campaign against Trump? I learned a lot from the 2024 campaign. But really what it was is like, you can warn all day long. And if people don't like the status quo, they do not care about a lot of this. They need to feel it for real and for right now. That's why I was saying it's kind of genius to start with usaid, a program that only people in Washington care about mostly cause it's paying a lot of their salaries. But also it's just one of those where if you explain it to a normal person, you made a compelling case about Pell Grants and all of that. If you're Doge, what do you do. Or if Trump really let's put Doge. Cause they probably would cut it. But if you're Trump, you're like, don't touch Pell Grant scholarship, don't touch federal stuff. Fire all the career bureaucrats or whatever that are working on anything title 9 or 10 or whatever related. And will anybody really notice? Probably not. And that's kind of what it gets to in the FDR thing. What's fascinating about this is this is a reverse fdr. It's a dismantling of as opposed to a building of. But in a sense, what's happened in both cases is that the crisis of 1933 was this idea that the government was not there to address all of these problems. Whereas the crisis of, I guess, 2024 in the minds of many Americans was that the government itself has created many of these problems or at least intellectualized the way that in practice, if we are to blame, we're talking about cultural issues or even immigration, literally just result of direct government policy. It's about a rolling back of like a regime, a government. So I think this is Nothing ever is 100% one to one. But analogy wise, it's the only thing I can really think of. Maybe the John F. Kennedy first 100 days. I hope we don't find ourselves in a similar international crisis, although I am worried about it. But that's kind of my mental model for how I'm thinking about it. And there is a big question mark that remains around how people will popularly receive a lot of this. I don't take a lot of these polls at face value. Just they've kind of been all over the place. I saw one yesterday, saw Trump at 52%. I saw the same tracking poll you're talking about. I'm curious to see the Virginia election, that gubernatorial election, which is always off here, in terms of what does it mean for enthused Democratic support.
Krystal Ball
Well, we already had a little test run in Iowa, that's true. There was a, what, 21 point swing. But you know, that's the first indication that we've gotten that even as the Democratic Party has been asleep, the Democratic base voters in that district in Iowa really showed up. I mean, it was like a 20 plus point swing in the direction of a Democrat for them to win. There was another special election in a Democratic blue district in Minnesota. I want to say that also shifted even more. It was like the Republican got like 8% of the vote or something preposterous like that. Whereas previously they were getting, I don't know 20% of the vote. I'm making up these numbers, but there's approximately what it is. So you're right, that will be the first really indication and test case. But I think where there's a huge vulnerability here that Democrats can exploit if they're willing to not do their whole good billionaires, bad billionaires shtick. But nobody wants the government run by an unelected billionaire. I mean, you pull that, it's dramatically, dramatically unpopular. And especially when it's so clear that he's running it for his own ideology and self interested reasons. Like I think the reaction against, you know, you're right in a sense, Sagar. I think if I were advising the Democratic Party, I would have focused more on the treasury takeover. And some of those things, which are way more, you know, to me are like the core of what's really frightening about what is being done here. And it's also, I think there's a bunch of lawsuits filed already against Elon and his acolytes and like the violation of privacy laws and other laws that have likely occurred here, not to mention the violation of just like separation of powers. And by the way, Elon, you weren't elected to anything that are gonna go forward, but you're in the situation where it's like the courts are slow. So even if they issue an injunction, that's gonna take some time. And then there's a question like, are they gonna listen? I don't know. I kind of doubt it given how they've operated thus far, where it's just like, we wanna do it, so we're gonna do it. Ultimately, Elon is already clearly, if he's a special government employee, he's already clearly violated the criminal statute with reg of interest and it doesn't seem to really matter. So that's why I think this can accurately be described as a constitutional crisis and beyond. Because they are clearly violating the Constitution, the separation of power, the power of the purse, et cetera. And the system is just totally unable to deal with it, to catch up, to handle the speed that this is all unfolding at which is. I shocked everyone, I think, including according to the reporting people in the Trump White House who are like, what the hell is going on here? And they're read in on it either.
Matt Stoller
Well, I think that's where the big Democratic check will come into is let's say we do start going after Pell Grants or whatever. Trump's gonna be like, yeah, I'm not dealing with all. I still think there is an existential risk Actually, to Elon, of getting Steve Bannon. You know, remember the whole sloppy Steve saga of 2017. If he causes a genuine political crisis for the Trump White House, which is eminently possible, he will have his ass out of there in no time.
Krystal Ball
Well, and I think Bannon is correct to understand, and Bannon's ideology is not my ideology. Although there are more shared ideas, there's.
Matt Stoller
A lot of overlap.
Krystal Ball
There's more overlap between my ideology and Bannon's than I have no overlap with Elon Musk. Ideology of just burn down the whole federal government and let the corporate overlords rule everything like God kings. That is the polar opposite of my ideology. Bannon is right to see this as an existential threat to his own project and ideology. And I think this will come up more when we talk about, I mean, tariffs somewhat, but even more so the gutting of the National Labor Relations Board, the gutting of the sec, the gutting of the Consumer Financial Protection Bureau, because Bannon likes Lina Khan. He thinks corporate power should be checked. That's the polar opposite of what Elon thinks. And so here you are. If you're a part of the populist right project, you got your J.D. vance in there. You've got your guy Trump, who has at least said some of the right things and done some of the right things in the past. Your moment. And now you got this billionaire who's just hijacked the whole thing and is running as fast as he can in the total opposite direction with no one. With no one putting a check into place. So I think this is. Obviously, none of this is like, I find this all to be horrifying, and I'm struggling to wrap my head around how bad things could actually get. But if you are also on the populist right, I think you should also perceive this as an existential threat to your project, which has its best moment of potential success right now and is evaporating like before our eyes.
Matt Stoller
I think they do, but I also think they know who the king is at the moment. You're gonna have to wait for a while to be able to strike, because, I mean, look, nobody else paid a quarter bill to get Trump elected. Trump takes that pretty seriously. So do a lot of the people in the government. Right?
Krystal Ball
I mean, Trump is not ideological. That's the thing is he never gave a shit about any of this.
Matt Stoller
Well, and I've always been pretty honest about that.
Krystal Ball
I know you see that.
Matt Stoller
I don't think many people. Many people do. And there's also, look, there's an element of political realism for a lot of this. We're like, yeah, look, as long as we get mass deportation, maybe we can live with some of this. That's kind of the thinking and the talk that I've heard from others. But I think there will be some big fights ahead. You know, another thing I was thinking about yesterday, even though it feels like eternity, it's been two weeks, and it's one of those where in the long cycle of all of these presidencies and Biden, Biden did not go negative until October 2021. That was nine months. Right. Where he basically was in a positive territory.
Krystal Ball
Yeah.
Matt Stoller
Although when someone asked me five years from now, what do you remember of the Biden presidency? Like, oh, people hated him. But the truth is, it's like the first nine months, it was kind of a honeymoon period.
Krystal Ball
Well, and you know why people like, because they did a lot of federal government action to materially benefit people. I mean, that was the most popular stuff that he did was at the beginning when checks were going out and there was a huge Covid relief program. That's when he was most popular. And then the two things that killed him, first Afghanistan, which I hate to admit, but that's the reality.
Matt Stoller
It's obvious.
Krystal Ball
And he never recovered from that. And then inflation.
Matt Stoller
Inflation murdered him.
Krystal Ball
And that was. And that was it. So, I mean, that's the complete polar opposite direction of what's being done here. That was a building up of government. I mean, I wouldn't call it fdr, but it was a break from the neoliberal era. It was an expansion of the social safety net. Trump did the same thing in his administration to deal with COVID as well. And when Biden really became unpopular was also because all of those pieces that had been added to the social safety net are stripped away. So that's why I think I disagree with you that there's some mandate, some desire to destroy all the federal government programs. Because when you ask people, they think that the Pentagon should be cut, which is not gonna happen, they don't think that programs that benefit Americans should be cut. And I think it is telling. That's why they do start with usaid, because you can also fit it into this framework of, oh, that's. That's where we're making it, America first. And then once you accomplish that, then you can move on to the things that are more politically difficult and where there may be more popular pushback, just.
Matt Stoller
To put a bow on it. I don't think that there's Ever a mandate to strip the federal government of all agency. I would equate it to. If you ever worked in a company and there's a bunch of HR people who have a ton of power but who don't do anything, who everybody hates, I would see it as the, the mandate is to strip that away. Whether it's reality or not. The feeling as if they're doing nothing and they're actually making operations here more difficult in practice. That's what I think basically will materialize as opposed to cutting any critical function. Now, I'm not gonna lie, you know, this whole move fast and break things ideology very much could move in the other direction.
Krystal Ball
I mean, it nearly bankrupted Tesla. We've seen what it did too. We've done it.
Matt Stoller
I mean, let's. This is the problem. The Peter Thiel quote comes to mind. It's like you look financially, should you ever bet against him? Probably not.
Krystal Ball
The government is not a business, though. I mean, that's the thing is if. Well, first of all, I mean, if you look at the management of Twitter, it's been a catastrophe both in terms of the functioning of the product and the profitability of the product, et cetera. That has been a total and complete disaster. But also, and we've talked about this before and I know you agree with part of this, the way you run a business and the consequences of a business cutting too deeply and having an off quarter in terms of their earnings or whatever, profoundly different than cutting too deeply at the federal government. And people die, or kids don't have their head start, or checks don't go out or the government defaults. Those are the sorts of things that, that's the way Elon operates, right? He comes in, he cuts massively, like not, oh, in this area we have a little fat, no blanket across the board. He causes a near catastrophe and then tries to rebuild from the ashes. Like, that's the way he operates. That's the way he's operating the federal government. And I know there's this instinct of like, oh, we should run the government like a business. The government should not be run like a business. Because businesses, it's all just about profit for the shareholders. The government is about providing critical at times, life saving programs and resources to the population. Not to mention, of course, what overarches all of this and why everyone should be disturbed by it is like, if you happen to like Elon, substitute George Soros or Bill Gates or whatever billionaire you don't like, we shouldn't have an unelected billionaire Appointing himself King and just operating carte blanche, cutting whatever programs he happens not to like, whatever agencies he happens not to like or has, like, a personal grievance with or whatever. That is the end of the project that we have known as America for the past several hundred years. That is the end of that. If we end up in a situation where one unelected billionaire can just appoint himself king and operate with impunity. And let's just. Last piece here. We can put the last element, guys up on the screen and then we can transition to talking about tariffs a little bit, which does fit in with all of this as well. But there have been, I think now, four different lawsuits that have been filed. This one was filed by, I know, afl, cio, seiu, and a couple other groups together. They're specifically going after Doge's access to the Treasury Department's payment system. They say that it violates the Privacy act of 1974 and other IRS statutes. As I said, I think there are three other lawsuits, at least, that have been filed in federal court at this point. So we'll see. I think the next couple pieces are what do the courts do? How does Elon and how did Trump. How do they react to any negative court decisions? And then the other piece, just to flag, which Matt Iglesias actually flagged on Twitter, is there's a big funding fight. We're about to hit the debt ceiling in mid March. And now you got Elon in charge of the treasury payment system, or I shouldn't say in charge. Access to the charge only.
Matt Stoller
Access, according to the White House, yes. I don't actually know what that means.
Krystal Ball
Yeah. But anyway, access to the treasury payment system and whatever else he wants access to. How Democrats are thinking that that's gonna be a place where they can exert some pressure and try to rein in what's happening here. How does that fight go down? Do they just say, oh, no, we're just gonna pay the things we wanna pay and that support our ideological ends and not pay the things that don't.
Matt Stoller
To be fair, that is basically what the ob them did in the.
Krystal Ball
With the extraordinary measures.
Matt Stoller
Yeah, that's what extraordinary measures are. So, I mean, at a certain point, Trump does run the government like he is the President of the United States. So in a shutdown, you can decide what you want to pay for or not. I don't disagree. I'm not saying it's good or anything, but. And you're right, we should prepare people for that. It's absolutely.
Krystal Ball
Yeah. So that is the next question mark. The next piece is okay, what happens to the courts? How do they respond to the courts? And what happens with the debt ceiling showdown? Tired of the winter cold? Don't worry. Spring break season is right around the corner and at cheap Caribbean Vacations. It doesn't matter if you're traveling as a family or going on an adults only getaway. They have beach deals for all types of all inclusive vacays. Just book your spring break travel in March or April to unlock an extra $250 off your package price. This offer is valid through February 27th on vacation packages of four nights or more. Don't wait. Book now@cheapcaribbean.com Looking for excitement?
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Krystal Ball
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Matt Stoller
Learn more@meaningfulbeauty.com all right, let's get to tariffs. A dizzying day yesterday in Washington as the news rolled in. Are the tariffs on? Are they off? What's happening? Let's go ahead and put this up there on the screen. Trump's Truth Social I just spoke with President Claudia Sheinbaum of Mexico. It was a friendly conversation. She agreed to immediately supply 10,000 Mexican soldiers on the border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl and illegal migrants into our country. We further agreed to immediately pause the anticipated tariffs for a one month period during which we'll have negotiations headed by Secretary of State Marco Rubio. I look forward to participating in those negotiations. Mexico confirmed this news. Claudia Sheinbaum let's go and put that on the screen actually broke the news first. Justin Trudeau similarly said, I just had a good call. With President Trump, Canada is implementing our $1.3 billion border plan, reinforcing the border with new choppers, technology and personnel, enhanced coordination, nearly 10,000 frontline soldiers. Our personnel are and will be working on protecting the border. In addition, Canada is making commitments to appoint a fentanyl czar. We will list cartels as terrorists, ensure 24, seven eyes on the border. Launch a Canada U.S. joint Strike Force to combat organized crime, fentanyl and money laundering. I have also signed a new intelligence directive that we will be backing with $200 million. Proposed tariffs will be paused for at least 30 days while we work together. So there's been, who knows?
Krystal Ball
Once your point is, our problem is basically, you're on, done, over.
Matt Stoller
It's a big question as to what happened here, whether this was the plan all along. Many people are pointing out the fact that much of this actually existed already. So, for example, put B3 up on the screen. Joe Biden, under the Biden administration, Mexico had apparently sent some 15,000 troops to the border. It's unclear whether there's gonna be an additional 10,000 here, bringing the total to 25,000. Similarly, in Canada, it appeared that some of these initiatives are already on the books on January 13, before Trump even took office. So I don't know, I mean, whether this is symbolic or not, in terms of the Trump demands, I mean, the fundamental difference, I guess, comes down to both the leverage, the power used and the interim 30 day period. As in, well, if we don't like the results, then we're gonna change things. So fundamentally, that's what I would say the overall difference is. But the tariffs are off for now, for the next 30 days. S&P 500 as of this morning, let's see, it is up by 0.14% even with the China tariffs. So the markets were a little, they were a little royal. They actually didn't expect as bad, they didn't react as badly as I thought.
Krystal Ball
I think they kind of assumed this is what was going on.
Matt Stoller
I was gonna say, so what if, if there is the rational market hypothesis that they were correct, that the tariffs itself were never gonna happen, maybe we should reconsider that. Right?
Krystal Ball
I mean, I'm just, I guess, still a little confused about what these tariffs are supposed to be about in the first place. Because the way I understood it and the way you, I think, accurately explained it yesterday is like, well, they're really about economics. But you have to put this bullshit layer of it's about fentanyl on top, even though, like, no fentanyl comes from Canada. Basically, it's a very small percentage, right, 1%. But then all the quote, unquote, concessions, even if we grant that they're concessions are about fentanyl, they're not about economics. And Trump previously had been saying the only way Canada comply is if they become the 51st state or if our trade deficit becomes zero and is balanced out. But then what he gets in exchange for this is we're gonna point a fentanyl czar and keep the troops on the border that are already there. So we're about to talk about the popularity of terrorists, which is something that you've been talking about. And. And I actually think that a tariff regime could be popular, even if it did require some pain, as Trump floated that there would be as a result of these things. But just as we're about to talk to Matt Stoller about this, we already recorded the conversation. That's why I'm previewing this. But just as Biden failed to enlist people in the antitrust project and the National Labor Relations Board and the cfpb, there has to be a story that people understand of why they're sacrificing, why they're experiencing this pain. And right now, there is no real. It's all over the place. It makes no sense. Why Canada? Why are you putting higher tariffs in theory on Canada than you are on China? What has Canada done wrong? So I think that's part of the thing here, is if you wanna make this about bringing back American manufacturing jobs, re industrializing the industrial Midwest, I think there's a chance that you could enlist the American people in that project. But number one, I don't think that most of these tariffs accomplish that goal. And number two, I think the story about them is deeply confused, contradictory.
Matt Stoller
Tariffs are a tool. I mean, look, in principle, I'm like, great, you know, 25,000 more troops at the border, great. Having leverage over our allies to Canada and Mexico, very questionable. But it's one of those where, like you said, look, I believe in the story. I believe in tariffs, I believe in bringing back a lot of this manufacturing. And so if this is all it takes in order to basically get you to call them off, I don't know. I mean, is it gonna be a fundamental difference? Maybe, you know, I guess it's an open question as to that. I think the reason I was excited about them, the reason I like the idea of even threatening, is I. They fundamentally Believe in using American assistance, power and the economy to achieve ends that are good for our people. Now, the American people have voted for Donald J. Trump on a message of immigration threatening the Mexican economy, which is 80% exports to the United States if they don't help us out. More on that is in principle a thing I think is fantastic. I think it's good to be able to get them to either send troops there and to have one month cliff falling over their head where it's like, hey guys, the guillotine's gonna fall if you don't get your act together. All I totally support, but the problem is, is that with this the way that it currently is, it runs the risk of what you were saying, of not falling into this broader national project. Now, the China tariffs, for example, luckily, at least in my opinion, have gone into place. And I hope, and we're about to talk, as you said, with Stoller, about the de minimis exception and more of which I really am praying and hoping that they close it just because of the impact it's had on our overall economy. But when there's not, there lacks explanation, when there lacks coherent vision, that's when you risk blowback. And in the event that these tariffs ever do go into power, we perhaps could see that. So we had. Do you wanna speak for Harry Anton?
Krystal Ball
One more thing and then we'll get Harry Anton. There is also a risk here that I think we already see playing out. And maybe, you know, honestly, from my ideological perspective, it's kind of a silver lining. But because all of this, you know, threaten, I'm threatening Colombia, I'm threatening Mexico, I'm threatening Canada for some reason, because this is all being done. And even after Canada had already announced this $1.3 billion package and enforced in anticipation of Trump coming in to try to please him in advance, Mexico had done a very similar thing with Claudia Sheinbaum. Massively increasing the number of raids, the amount of fentanyl that was being seized at the border dropped to some of the lowest levels in years. So they felt like, okay, we're doing the things he wants us to do. And still they end up in this situation of being bullied and threatened and shoved into crisis and all of this sort of stuff. So you already see European leaders talking, the Financial Times, for example, saying, we no longer see really China as the greatest risk to us. We actually think that it's these guys over here and maybe we need to form a sort of anti American alliance because individually we have no chance. And Trump is floating Tariffs against the eu, as you know as well, which.
Matt Stoller
I hope they go into place.
Krystal Ball
And so that's. The other piece is you are sort of aligning, forcing the world's hand, accelerating a shift that was already happening. Now, from my perspective, that may not be the worst thing in the world, but if you're interested in American power and empire, this is definitely counter to that particular political project.
Matt Stoller
I actually don't agree. I'll tell you why. Which. Okay. Hey, Mexico, what are you gonna do? 80% of your economy or exports rely on us. You ain't going nowhere. Okay, who are you gonna sell to? Canada. Geography matters. 74% of your exports come into the United States. They were floating. Oh, maybe we should join the European Union. Yeah, good luck. Same thing in terms of the Europeans. Oh, maybe we'll rely on China. Oh, China's gonna give you their nuclear umbrella and they're gonna protect you from all of your problems so that you guys can have universal healthcare, but you don't actually define yourselves in this giant social welfare state. So let's get real, too, about how long it's taken 75 years of integration for the European Union and for the European economies in the United states, it's taken 200 years now of Canada and Mexico. They are going nowhere. Maybe Africa, India, China, South Korea, Japan. Those are the countries I would worry much more about. But these people, nothing. I mean, no matter what, they will be heavily reliant. They're effectively clients. I mean, that's what it is. The problem is that they don't like that. I like reminding them of some of that, especially whenever it comes to the border. And the border alone is certainly justification for hitting them with tariffs or threatening tariffs if we want to. I would like, though, to see a return to some of what we talked about previously yesterday about manufacturing and about the fact that NAFTA itself had decimated a huge part of our manufacturing sector. The way that these automakers currently operate, where a single part will cross, like 40 or 50 times the Canadian, the Mexican border, it'll cross three separate borders, like, multiple times before it ever even makes its way into a car. And then, oh, it's called American made. There's still a lot of deficits in the usmca. So I had thought it was an opening on usmca. And I mean, I guess it certainly could be in terms of setting the ground for what that looks like, but for right now, seems to be wrapped up. Yeah, I don't really know what else to say.
Krystal Ball
Yeah, well, we'll see what happens a month from now when we go back to this, when we see this rodeo play on again? By the way, I should mention there were people floating also that, I mean, you got a bunch of billionaire, the treasury secretary is a billionaire hedge fund guy, George Soros, buddy. And wondering if there is also some profiting going on over these manufactured market drops and recoveries, something.
Matt Stoller
Oh, you're talking about the Soros finance like a forex trade. That's actually pretty interesting. I wonder if there, if anybody people flag any trades because these are all public, right.
Krystal Ball
If you're the Treasury Secretary and you know what Trump's basic plan is here? Well, you're in a position to profit off technology.
Matt Stoller
It wouldn't even be him per se, but at this point with all the guidelines or whatever. But maybe people who used to work.
Krystal Ball
For him, if we keep going through this cycle, it may be something to keep in mind for the future.
Matt Stoller
Wow, here's the problem. You're going to encourage a bunch of retail traders, traders to start doing forex and trying to recreate the shorting of the British.
Krystal Ball
I am not encouraging anyone to do anything, so be careful. I'm just telling you what others are floating online and something to keep an eye on.
Matt Stoller
You might be encouraging me to be. I'm like, well, maybe there's some money to be made here, you know, start making some phone calls. No, I'm not going to go to president.
Krystal Ball
All right, let's get to Harry Ensign, who broke down some of the polling about how people actually feel about tariffs. Let's take a listen.
Sagar Enjeti
Trump's tariffs on Canada, China, Mexico. Look at this. Just 38% support. You don't have to be a mathematical genius to figure out that 51% opposed is larger than the 38% support. Look, Trump has done some fairly popular things in his first few weeks in office. This is not one of them. No, no, no. Horrible, horrible, horrible. To quote Charles Barkley, the American folks are opposed to these tariffs. When you ask it specifically like this about the three countries, countries, or if you ask it more vaguely about tariffs overall, they simply put do not like it.
Krystal Ball
Mr.
Matt Stoller
Even with China in the question, people.
Sagar Enjeti
Say that they are opposed to tariffs.
Matt Stoller
The majority here, and there's not a majority on a lot of things these days.
Sagar Enjeti
The two big focuses for Trump in the polling are immigration and the economy. Tariffs ain't it, my dear friend? Tariffs, ain't it. Trump should focus on tariffs. In November of 2024 when Ipsos asked that it was 1%. Look at what happened in December of 2024, it doubled. It doubled, but to only 2%. When you double to only 2%, you know that the American people don't want Trump's focus to be here. They don't like it. They don't want his focus to be there. They want it to be on other issues. You know, Trump has done a lot of things that are unpopular in the past, but that poll numbers haven't moved. That may be the case here, but I'm a little skeptical of that.
Matt Stoller
Why?
Sagar Enjeti
Take a look at weekly Google searches for tariffs. Look how much higher they are versus a year ago. They're up 2400%. That reaches a 21 year high. You know, folks are paying attention when there are more Google searches for that than for Taylor Swift, who almost always is in the top of Google search.
Krystal Ball
So we got people's attention, but not necessarily in a good way.
Matt Stoller
Yeah. Okay, we'll see.
Krystal Ball
What do you make of that? Just going back to what I was saying before, I just looked it up. The original China tariffs that he put on in his first administration were initially somewhat underwater. And they became more popular.
Matt Stoller
Absolutely.
Krystal Ball
And they became majority, you know, in favor, which is why also, you see, the Democrats adopted a similar position. Biden continues that and does industrial policy. And I think it fits with what we were saying. People understand, okay, a lot of our jobs, a lot of these industrial factory towns, a lot of the jobs left and are now in China. And so it was a very easily comprehensible story around this is why we're doing this. Now, you can still disagree with them. I don't think they didn't do much in terms of accomplishing their goal of reshoring. They needed to be paired with industrial policy. There were issues there, but. But people understood the story of what it was about and I think were even willing to have a more expensive washing machine or whatever.
Matt Stoller
Not only that, all of the doom and gloom was fake. We had hundreds of billions of dollars in tariffs. I think The S&P 500 was up by like 25%.
Krystal Ball
Now, they did have to basically bail out the farmers because of the retaliatory tariffs. So it's not like there was no impact once the government addressed the problem.
Matt Stoller
Right, exactly.
Krystal Ball
But it is interesting to me that there does seem to be some. I mean, there's almost like a nuanced view of tariffs among the American public where, yeah, when it was China and we understood this, okay, we could go along with that. But when you're talking about Canada, Mexico, and this doesn't make any sense? And why are they being tariffed more than China? And it's just across the board. And why should avocados be have a tariff then? Yeah, you're not gonna have people like lining up to pay more at the grocery store, more for their cars or whatever.
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There you go. Well, we'll see how it all comes into practice for the next 30 days. We all have a stay. Okay. Okay, let's get to mass dollar with.
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Joining us now is Matt Stoller. He is the author of the big newsletter, great friend of the show. It's good to see you, sir. Thanks for joining us.
Sagar Enjeti
Thanks for having me.
Matt Stoller
So you just wrote this. Let's go and put this up there on the screen. What did Trump just do on the tariffs? It's very relevant, obviously this morning now that we no longer have China tariffs. We don't have Canada tariffs, but we do have or, sorry, Canada Tariffs or Mexico. But we do have China.
Sagar Enjeti
I was like, wait, did. Yeah, no, no, I know.
Krystal Ball
I was wondering that too. Like, all right, I gotta look at Twitter.
Matt Stoller
China is here, at least for now. We've got 10% tariffs on China, but there's some big question marks of exactly what's in it. This is obviously falls within something, an issue area that you care a lot about. Can you explain a bit to the audience and some of the important of this?
Sagar Enjeti
Yeah, I mean, so I wore a jacket with plaid to convey authority because this is going to be like, very sort of technical. I'm going to do my best. Sure. So the situation is changing really quickly. So we don't 100% know, but we'll know in a few days maybe. So there's this. So he put 10% tariffs on stuff that's coming in from China. Right. And that is, you know, there's a lot of industrial machinery and various other things coming in. But what is interesting, I think, particularly interesting, and I think what a lot of. We were just talking about this off camera. There's a loophole that is maybe more important than just the raw amount that he put on. And that loophole is called the de minimis exemption to trade, or de minimis loophole under $800. Right. When you bring something in, an individual does not have to have. Does not have to pay duties or tariffs or have that inspected. So this was set up if you've ever been abroad and you come back and you bought a sweater or whatever, when you're on the plane and you fill out like, they're like, do you buy anything? Right. Was it worth more than a certain amount of money? You don't have to get that inspected. You don't have to know the tariff codes. They don't treat you like a commercial importer. Right. That's what de minimis is. It's intended to let kind of tourists bring in a few things here or there. The problem is in the 1990s, or the dynamic is in the 1990s, what they said is this can be used not just. Just for tourists, but for E commerce. Right. And they said if you are an individual buying through, say like an Amazon or something like that, and they ship you something from China that can come in and it's less than $800 that can come in under this de minimis, under the de minimis rules, no inspections, no duties, no tariffs, and it can come in through what's called informal entry. So it doesn't have to have a licensed customs broker. It doesn't have to be bonded. Now there are about a billion, maybe more than a billion packages coming in every year. I think the number is 1.4 billion. But who's counting from China every year under the de minimis loophole? So this is the basis of the business model of Temu, of Shane, of Fast Fashion and of Amazon. Right. More than 50% of third party sellers, which is the majority of their sales, come directly from Chinese sellers. So this is kind of crazy, right? So if you're a bicycle producer in this country, you have to compete with bikes coming in duty free, no tariffs, no inspections, so on and so forth. And that is true kind of across the board. Now, what this tariff executive order did is they said that de minimis exemption or that de minimis loophole is gone sort of. Right. So they say you now have to pay tariffs on everything, whether it's $20 or $20,000. Okay. But what they haven't been clear on is whether they're going to force the de minimis stuff, stuff that's less than $800 to come in through a more formalized entry. Right. Are they going to make you, Are they going to make them put like Amazon or Timo or Shane, Are they going to have to use a licensed customs broker bonds? And if they do, it doesn't make sense to let you buy a $3 T shirt and then you have to get a licensed customs broker to handle that individual package. It makes more sense to bring in 20,000 T shirts or 100,000 T shirts, bring them into US warehouse, and then do fulfillment from there. And so it's not clear what they're doing with the actual process. But a tariff on a $3t shirt doesn't matter 10%, who cares? Especially because they're tariffing the wholesale price. So they're more likely tariffing a dollar or 30 cents, not the $3. So a 10% tariff on 30 cents is 3 cents, who cares? But if they're saying, all right, you have to change your whole, it's just going to be much more expensive to bring in an individual item. It doesn't matter for a bicycle that's $500. It doesn't really matter for a piece of industrial machinery. It does matter for a T shirt or a small PEZ dispenser. So that's. And that's not. There are different versions of that floating around and we don't actually know what they're going to come down and say because they're big logistical challenges. If you get rid of the de minimis, the tariff, just charging the tariff is not that big a deal. But the logistical question, formal versus informal entry. So I hope I haven't been too technical.
Matt Stoller
No, but I think this is important because this is originally what I want to talk about is that these businesses, I mean, we've got the super bowl coming up, right? Do you remember how many TAMU commercials were in our last Super Bowl?
Sagar Enjeti
Like a billion people.
Matt Stoller
Yeah. These things have become massive companies and. Yeah. Anyway, that's why I wanted to talk to you about this.
Krystal Ball
You focus on competition and there's definitely a competition tie in here. How does this disadvantage like small and medium sized retailers over, you know, gives Amazon and TEMU and these like big players a huge leg up?
Sagar Enjeti
Well, I mean, so it's like if you are making a product here, right, you have to comply with all environmental laws. You can't use slave labor. There's like a bunch of stuff you can't ostensibly can't do.
Matt Stoller
Right.
Sagar Enjeti
And if you are, you know, we don't have jurisdiction in China or other countries, but so the way we handle that is through the customs procedure, right? So you're not allowed to bring in goods and products where they are using certain techniques like human trafficking or whatever. If they don't do any inspections, right. Or if they don't do, you know, they are not charging tariffs, even if there's a tariff on the books, but they're not charging it, then you can bring all those goods in without any. There's no, there's no. You were just mentioning the nicotine. I didn't actually know about that. But that was a good example where you're competing against companies that don't have to adhere to the same standards that you do in this country. And that's just unfair. Right. So a lot of like the bicycle manufacturers are one of the coalition groups or bike stores. They're one of the groups that actually it's not just manufacturers, it's stores too. Right. Because if you're importing a bike from China, right, If you import it directly to an end consumer, it's cheaper than if you bring it to a store and sell it to. Because the store is going to bring in, you know, 100 bikes. So they don't get access to the de minimis. The de minimis duty free, tariff free. So it actually just changes the retail environment in the US and makes, you know, harms the little guy in all sorts of different ways. The other part of it that I think is kind of crazy is that you have a billion plus packages coming in. So that's like 4 million packages every day. And there's a ton of fentanyl in these packages. Right. They're going uninspected and it's brought here by our own post office. Right. So there's a lot of conversations about, oh, there's all this fentanyl coming in from Mexico. Right. That's what a lot of Republicans like to talk about, and Democrats too, but mostly it's a Republican thing. But really what's happening is, I mean, it's not to say there isn't fentanyl coming in from Mexico, but one of the things they say is, well, we haven't seized any fentanyl coming in from these packages in China. And so we know it's coming. We're seizing a lot from Mexico. It's like, well, that's because no one's looking.
Matt Stoller
Yes, right.
Sagar Enjeti
But when they start to look and they have started to do some pilot programs, they're finding a ton of fentanyl coming in through, you know, these packages. And so it's a really good idea to actually just start bringing them in through normal customs procedures so that we can apply the same techniques that we use to inspect everything else for this really important.
Krystal Ball
How does you know. We all watched the inauguration. Jeff Bezos was, you know, Trump's new buddy. His wife also was quite notably there. A lot of people had a lot to say about him. Sure. How does his influence tie into all of this?
Sagar Enjeti
Well, it's interesting because this has implications. So the tariffs have implications for Apple as well because they didn't put an exemption into the iPhone.
Matt Stoller
Yes, iPhone.
Sagar Enjeti
Right. Which I was just listening to CNBC and they were talking about how this is going to take 3% of Apple's profits because they are. What do they. Do they absorb the extra tariff? Do they raise prices and annoy Trump? Do they change their supply chains? Someone's got to pay. And this is, I think, a much bigger deal for Amazon than Apple, but it's a big deal for Apple. It's also actually, weirdly a big deal for Meta because the fast fashion Chinese groups were spending billions of dollars on advertising.
Matt Stoller
Advertising.
Sagar Enjeti
So this is the one where maybe Google and Microsoft are not actually super affected by it, but the other three are. And I think it says that these companies have some levels of influence on Trump, particularly on, you know, when they're negotiating with foreign countries. If he feels that those foreign countries are trying to regulate American companies, he will fight for that. But he's not. It doesn't look like he's doing explicit favors for these companies yet. And I'll say one other piece, and this is not about trade, but yesterday there was an argument having to do with a case against Google. It was an antitrust case against Google brought by Epic Games. So not a government case, but the antitrust division, because the government can intervene in private cases if they think the state has an interest. The government actually had a lawyer there and argued for basically Google was in the wrong. And that is an indication that the antitrust division could have said, you're not doing that anymore. They've been telling regulators and enforcers all over the government we're totally changing things. They haven't done that with the antitrust division in Big Tech.
Matt Stoller
That's interesting.
Sagar Enjeti
So this is a small hint of that. So this is really I don't know what to think because I see a lot of I don't trust Trump. I mean, candid, I'm a Democrat. I'm very skeptical. I see a lot of corporate favoritism. You guys talk about it. But some of these areas, Big Tech's not getting exactly what they want with.
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Breaking Points with Krystal and Saagar
Episode: 2/4/25: Dem Sen Admits USAID CIA Front, Trump Calls Off Tariffs, Temu Screwed From China Tariffs
Release Date: February 4, 2025
Host/Authors: Krystal Ball and Saagar Enjeti
Produced by: iHeartPodcasts
In this episode of Breaking Points, Krystal Ball and Saagar Enjeti delve deep into the ongoing political and economic upheavals shaping the United States. The discussion centers around the controversial takeover of USAID by Elon Musk, the recent suspension of tariffs by former President Trump, and the implications of these actions on both domestic and international fronts. Additionally, insights from Matt Stoller and Anthony Lowenstein enrich the conversation, providing a multifaceted view of the current political landscape.
Krystal Ball opens the discussion by addressing Elon Musk's increasing influence over the federal government. Musk's designation as a "Special Government Employee" has raised significant concerns regarding conflicts of interest and the potential erosion of governmental checks and balances.
Conflict of Interest Concerns:
At [05:01], Krystal states, "We documented yesterday how he and his cronies gain access to the treasury payment system. Elon wants to turn Twitter into a payment processor. Not to mention that for any tech overlord having access to all of our data, kind of an important and valuable commodity."
Dismantling USAID:
Musk's efforts to dismantle USAID and merge it under the State Department are seen as a strategic move to consolidate power. At [05:16], Kathryn notes, "USAID was something that you liked in some respects. I love the concept of it... but they turn out to be radical left lunatics."
Matt Stoller adds depth to the conversation by highlighting the systemic implications of Musk's actions. He draws parallels between Musk's strategies and historical governmental overhauls, emphasizing the constitutional crisis brewing.
Former President Trump's recent decision to suspend tariffs on Canada and Mexico, while maintaining them on China, has stirred significant debate regarding its economic and political ramifications.
Public Opinion on Tariffs:
At [60:34], Sagar Enjeti shares, "Trump's tariffs on Canada, China, Mexico. Look at this. Just 38% support. You don't have to be a mathematical genius to figure out that 51% opposed is larger than the 38% support."
De Minimis Exemption Changes:
The alteration of the de minimis exemption, which previously allowed low-value imports to enter the U.S. without tariffs, poses challenges for small businesses and consumers. At [66:16], Sagar explains, "If you're an individual buying through, say like an Amazon or something like that, and they ship you something from China that can come in under this de minimis, under the de minimis rules, no inspections, no duties, no tariffs."
Economic Impact on Businesses:
The suspension affects major corporations differently, with companies like Amazon, Apple, and Meta facing operational challenges. At [74:08], Sagar notes, "The tariffs have implications for Apple as well because they didn't put an exemption into the iPhone... It's going to take 3% of Apple's profits because they are."
The episode sheds light on the broader implications of Musk's government influence, particularly focusing on the structural integrity of key federal agencies.
Gutting of Key Agencies:
Discussions highlight the weakening of institutions like the National Labor Relations Board (NLRB), the Securities Exchange Commission (SEC), and the Consumer Financial Protection Bureau (CFPB). At [05:03], Krystal states, "the National Labor Relations Board, which has effectively been gutted... the CFPB, that's like the anti-scam agency, which also enforcement actions seem to have been gutted there as well."
DOJ’s New DEI Program:
The Department of Justice's initiative to combat anti-Semitism through a Diversity, Equity, and Inclusion (DEI) program has sparked backlash from both the left and the right. At [05:16], Krystal mentions, "the DOJ out with a new DEI program, this one to combat anti-Semitism, taking some shots from both left and right."
Democrats have begun to mobilize against the dismantling of USAID, although their strategies and public reception remain mixed.
Protests at USAID Headquarters:
At [29:37], Krystal comments, "Democrats finally showed up at the USAID building to protest the fact that it has been shuttered."
Challenges in Legislative Action:
The difficulty of rallying support for preserving USAID, an agency comprising just 0.7% of the federal budget, highlights the strategic challenges faced by the Democratic Party. At [07:48], Matt reflects, "I just think this is not the right move for the Democrats on this one... people are like, well, why were we even paying for that in the first place?"
The episode also touches upon international diplomacy and security, particularly focusing on military collaborations and threats.
Bibi’s Extended Visit:
Israeli Prime Minister Bibi has extended his visit to the U.S., positioning it as a strategic move amidst regional tensions. At [03:19], Krystal notes, "He's extending him in town for a little extra time."
Military Collaborations:
Discussions include the deployment of additional military forces to tackle issues like fentanyl smuggling and illegal immigration at the U.S. borders. At [50:35], Matt states, "What do you really learn from the campaign against Trump? I learned a lot from the 2024 campaign. But really what it was is like, you can warn all day long..."
The interplay between government policies and corporate strategies is a recurring theme, with particular emphasis on how tariffs and trade policies impact major corporations and small businesses alike.
Impact on Small and Medium-Sized Businesses:
The removal of the de minimis exemption disproportionately affects smaller retailers, placing them at a disadvantage against giants like Amazon. At [71:05], Sagar explains, "A lot of like the bicycle manufacturers are one of the coalition groups or bike stores... harms the little guy in all sorts of different ways."
Corporate Favoritism and Antitrust Issues:
The conversation also explores potential favoritism towards big tech companies and the ongoing antitrust battles, highlighting the complexities of regulating powerful corporations. At [75:46], Sagar shares, "Something to keep an eye on because the courts are slow... something that needs to be monitored carefully."
Analyzing public opinion, the hosts discuss the fluctuating support for tariffs and the broader strategies of the Trump administration.
Polling Data on Tariffs:
At [60:34], Sagar points out, "Just 38% support. You don't have to be a mathematical genius to figure out that 51% opposed is larger than the 38% support."
Public Understanding and Misconceptions:
The disparity in public perception regarding tariffs on different countries underscores the need for clear communication and coherent policy narratives. At [62:08], Matt observes, "There, that makes no sense? And why are they being tariffed more than China?"
As the episode wraps up, Krystal and Saagar emphasize the critical nature of the unfolding political and economic dynamics. They highlight the urgency for democratic oversight and the potential long-term consequences of unchecked corporate influence in government operations.
Potential Constitutional Crisis:
The overriding concern remains the potential for a constitutional meltdown if Elon Musk's influence continues unchecked, fundamentally altering the balance of power within the U.S. government.
Economic Stability and Policy Implications:
The suspension of tariffs and the ongoing changes to federal agencies pose significant questions about the future trajectory of U.S. economic policies and institutional integrity.
Krystal Ball on Fraud in USAID:
*"[04:00] 'Probably fraud and abuse can be added to it. The more standard waste. Fraud and abuse.'"
Matt Stoller on Political Strategy:
*"[05:03] 'Elon obviously has massive conflicts of interest across the entire federal government.'"
Krystal Ball on Constitutional Crisis:
*"[30:20] 'We are witnessing a constitutional crisis. We talked about Trump wanting to be a dictator on day one, and here we are.'"
Sagar Enjeti on Public Opposition to Tariffs:
*"[60:34] 'Trump's tariffs on Canada, China, Mexico. Look at this. Just 38% support. You don't have to be a mathematical genius to figure out that 51% opposed is larger than the 38% support.'"
Krystal Ball on Government vs. Business:
*"[43:23] 'The government is not a business, though... businesses, it's all just about profit for the shareholders. The government is about providing critical at times, life-saving programs and resources to the population.'"
This episode of Breaking Points offers a comprehensive analysis of the intricate power dynamics between tech moguls like Elon Musk and traditional governmental structures. The suspension of tariffs, the dismantling of key federal agencies, and the ensuing constitutional concerns paint a picture of a nation at a pivotal crossroads. Krystal Ball and Saagar Enjeti, alongside Matt Stoller, provide incisive commentary on these developments, urging listeners to remain vigilant and informed about the forces shaping their country's future.
Note: This summary intentionally excludes advertisements and non-content segments to maintain focus on the substantive discussions of the episode.