Latest / The 47 Morning Update with Ben Ferguson / Dems' Poll Numbers PLUMMET, plus How to Save $1TRILL in Fed Spending & Why We Need to Fix the Tax Laws to Treat Poker Pros Fairly

Transcript

Dems' Poll Numbers PLUMMET, plus How to Save $1TRILL in Fed Spending & Why We Need to Fix the Tax Laws to Treat Poker Pros Fairly · The 47 Morning Update with Ben Ferguson

• 0:01
  Speaker 1: Welcome.
• 0:01
  Speaker 2: It is Verdict with center, Ted Cruz, Ben Ferguson with
• 0:04
  Speaker 2: you as always, and Senator it's nice to be with you.
• 0:07
  Speaker 2: Is We've got a couple of big things to chat
• 0:09
  Speaker 2: about today, including the Democrats getting the lowest rating from
• 0:15
  Speaker 2: voters in thirty five years.
• 0:18
  Speaker 1: Well, that's right.
• 0:19
  Speaker 3: The Wall Street Journal just did a poll and found
• 0:21
  Speaker 3: that the Democrats' approval rating has plummeted. It is at
• 0:24
  Speaker 3: the lowest level in thirty five years. It turns out
• 0:27
  Speaker 3: being angry, filled with rage, and being a party that
• 0:30
  Speaker 3: stands for nothing but hating Donald Trump, it is not
• 0:33
  Speaker 3: actually a popular platform. We're going to break that down
• 0:36
  Speaker 3: and talk about what that means for elections coming up
• 0:38
  Speaker 3: in twenty six and going forward. Secondly, we're going to
• 0:42
  Speaker 3: talk about a proposal that I've been championing to cut
• 0:46
  Speaker 3: spending and to cut spending dramatically, and that is for
• 0:50
  Speaker 3: the Federal Reserve to stop paying interest on bank reserves.
• 0:54
  Speaker 3: This is a proposal that could save over a trillion
• 0:57
  Speaker 3: dollars over ten years. I've made this case directly to
• 1:00
  Speaker 3: the President of the Oval Office. I've introduced legislation to
• 1:03
  Speaker 3: make this happen. We're going to talk about exactly what
• 1:05
  Speaker 3: it would mean and why it makes a difference. And finally,
• 1:09
  Speaker 3: we're going to talk about an element of the One
• 1:11
  Speaker 3: Big Beautiful Bill that was an unintended mistake, which is
• 1:16
  Speaker 3: the One Big Beautiful Bill changed how gambling losses are
• 1:22
  Speaker 3: counted in taxes and what it did for people like
• 1:25
  Speaker 3: professional poker players. Is it ended up putting in place
• 1:28
  Speaker 3: a rule that is wildly unfair, that punishes them, that
• 1:32
  Speaker 3: taxes them on income they didn't earn. And so I've
• 1:35
  Speaker 3: joined with some Democrats in terms of trying to fix this.
• 1:37
  Speaker 3: I hope we can fix it because we ought to
• 1:39
  Speaker 3: have a tax system that's fair.
• 1:40
  Speaker 1: We're gon't explaining that issue to you.
• 1:42
  Speaker 2: Also, Yeah, it's also really interesting because it goes back
• 1:45
  Speaker 2: to part of what the President did with no tax
• 1:48
  Speaker 2: on tips, and he's like looking out for a little
• 1:50
  Speaker 2: guys in their jobs. It matters. We're going to break
• 1:53
  Speaker 2: that down and be very interesting. I want to tell
• 1:55
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  Speaker 2: difference with every call you make. All right, So let's
• 3:42
  Speaker 2: go to the Democrats in disarray. I have a theory, Senator,
• 3:45
  Speaker 2: and I want to run it by you. I think
• 3:48
  Speaker 2: the reason why Democrats are the lowest rating from voters
• 3:51
  Speaker 2: in thirty five years is because they didn't police their
• 3:54
  Speaker 2: own party and get rid of the most extreme members
• 3:57
  Speaker 2: who've now taken over the microphone, the AO momars, the
• 4:02
  Speaker 2: list goes on and on.
• 4:03
  Speaker 4: The guy running for mayor in New.
• 4:04
  Speaker 2: York City, the radical Marxist, socialism and communists have taken
• 4:08
  Speaker 2: over the microphone. And that's why I think the American
• 4:11
  Speaker 2: people are terrified of them right now?
• 4:13
  Speaker 3: Yeah, It's not just they've taken over the microphone, they've
• 4:16
  Speaker 3: taken over the party. Yeah, there is nobody in the party.
• 4:20
  Speaker 3: Name one prominent Democrat who has stood up to Comrade Mondami.
• 4:25
  Speaker 3: You literally have a communist who is the Democrat Party
• 4:28
  Speaker 3: nominee to be Mayor of New York other than John Fetterman.
• 4:31
  Speaker 3: And I think John Fetterman is the exception that proves
• 4:34
  Speaker 3: the rule. Other than John Fetterman, I do not know
• 4:37
  Speaker 3: a single one of my colleagues in the Senate who
• 4:39
  Speaker 3: has said a word of criticism that, gosh, may be
• 4:42
  Speaker 3: a guy calling for the abolition of private property, may
• 4:45
  Speaker 3: be a guy that is openly calling for a communist government,
• 4:49
  Speaker 3: is not the best face of the Democrat Party. And
• 4:53
  Speaker 3: yet nobody disagrees. You look at when Chris van Holland
• 4:57
  Speaker 3: flies down to El Salvador and has has Margarita's with
• 5:01
  Speaker 3: an MS thirteen gang member illegal immigrant who's right now
• 5:05
  Speaker 3: being prosecuted for human trafficking. Not one single Democrat, again
• 5:10
  Speaker 3: except for John Fetterman, spoke out against it. And so
• 5:14
  Speaker 3: it's not just that the crazies have been given the microphone.
• 5:18
  Speaker 3: The crazies have been given the agenda and here's what
• 5:21
  Speaker 3: the Wall Street Journal reported. The Democrat Party's image has
• 5:24
  Speaker 3: eroded to its lowest point in more than three decades,
• 5:27
  Speaker 3: according to a new Wall Street Journal poll, with voter
• 5:29
  Speaker 3: seeing Republicans is better at handling most issues that decide elections.
• 5:34
  Speaker 3: The new survey finds that sixty three percent of voters
• 5:38
  Speaker 3: hold an unfavorable view of the Democratic Party, the highest
• 5:42
  Speaker 3: share in Journal polls dating to nineteen ninety and thirty
• 5:47
  Speaker 3: percentage points higher than the thirty three percent who hold
• 5:51
  Speaker 3: a favorable view. So the Democrats polling is thirty three
• 5:54
  Speaker 3: percent favorable, sixty three percent unfavorable. Journal goes on to
• 6:00
  Speaker 3: say that is a far weaker assessment than voters give
• 6:03
  Speaker 3: to either President Trump or the Republican Party, who are
• 6:06
  Speaker 3: viewed more favorably than favorably by seven points and eleven points, respectively.
• 6:12
  Speaker 3: So the Democrats are minus thirty, President Trump is plus
• 6:17
  Speaker 3: seven and the Republican Party is plus eleven. That is
• 6:21
  Speaker 3: a huge difference. And what percent of voters do you
• 6:25
  Speaker 3: think view the Democrats very favorably?
• 6:28
  Speaker 2: I'm going to guess it's probably not a very high
• 6:31
  Speaker 2: number based on the overall polling data. Eight percent, Yeah,
• 6:35
  Speaker 2: eight percent of America. That's not good. Just so everybody
• 6:38
  Speaker 2: knows in politics that's.
• 6:39
  Speaker 3: Bat And by the way, by comparison, nineteen percent of
• 6:43
  Speaker 3: Americans view Republicans very favorably, so there's more intensity. People
• 6:48
  Speaker 3: are very happy and the Democrats nobody except the Communists
• 6:54
  Speaker 3: are excited about the Democrats. That is a problem going
• 6:58
  Speaker 3: into an election. It's a huge problem for them.
• 7:01
  Speaker 2: And then you go forward with Democrats, They've got everybody
• 7:05
  Speaker 2: on their team.
• 7:05
  Speaker 4: I'm referring to the media.
• 7:07
  Speaker 2: I also think some of this comes down to the
• 7:09
  Speaker 2: fact that there's so many Americans are just going around
• 7:11
  Speaker 2: the mainstream media now and will never go back. You
• 7:14
  Speaker 2: look at the canceling, for example, of one of the
• 7:16
  Speaker 2: late night shows. We talked about that last week, Stephen Colbert.
• 7:19
  Speaker 1: Why.
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  Speaker 2: I think a lot of people are just like, we're
• 7:21
  Speaker 2: done with you when you alienate half the country and
• 7:23
  Speaker 2: mock us. And there's so many lies that have happened
• 7:27
  Speaker 2: over the last five, six seven years that were egregious.
• 7:31
  Speaker 4: The Russian Hoa's a great example.
• 7:33
  Speaker 2: I think that this is part of the reason one
• 7:35
  Speaker 2: of the Democratic parties failing right now is because they
• 7:38
  Speaker 2: don't have people covering for their propaganda.
• 7:41
  Speaker 1: Well and they're embracing. You know, it's amazing.
• 7:44
  Speaker 3: When a party decides, let's pick five issues and let's
• 7:48
  Speaker 3: take the wrong side of eighty twenty issues or ninety
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  Speaker 3: ten issues, it turns out that's really bad politics. When
• 7:54
  Speaker 3: you say, as a party, hey, let's be for open
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  Speaker 3: borders and Venezuelan gang members and relief seeing criminals and
• 8:01
  Speaker 3: rapists and child blesters, that is a really really unpopular position.
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  Speaker 3: It turns out when you say, hey, let's let's be
• 8:09
  Speaker 3: for abolishing the police and and attacking ice and fighting
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  Speaker 3: against law enforcement, that is a really really unpopular position.
• 8:16
  Speaker 3: It turns out when you cheer on pro hamas protesters
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  Speaker 3: who are cheering on we love Hamas, that is a
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  Speaker 3: really really unpopular position. It turns out when you advocate
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  Speaker 3: for boys competing in girls' sports and and for doing
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  Speaker 3: surgeries that sterilize and mutilize, mutilate little boys and girls,
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  Speaker 3: that is a really really unpopular position. And the Democrat
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  Speaker 3: Party as a whole has said, let's look at all
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  Speaker 3: those issues, let's take the wrong side of eighty twenty
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  Speaker 3: or even ninety ten issues, and let's see how that
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  Speaker 3: works out. And the way it works out as you
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  Speaker 3: get the most unpopular Democrat Party in the last thirty
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  Speaker 3: five years.
• 8:53
  Speaker 2: What is your biggest concern? And I always say, there's
• 8:57
  Speaker 2: there's a there's a reaction to every action. Right, it's
• 9:00
  Speaker 2: low right now, what is the worry that do we
• 9:04
  Speaker 2: get over confident? Do we not continue to stay together
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  Speaker 2: the party? Because look, we are notorious sometimes about conservatives
• 9:11
  Speaker 2: of screwing it up when we have these types of leads.
• 9:13
  Speaker 4: We have the House, you have the Senate.
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  Speaker 2: We actually have a chance, I think, to even have
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  Speaker 2: some gains in the midterms. And this is a mid
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  Speaker 2: term I want to be clear that actually is more
• 9:22
  Speaker 2: favorable towards Democrats and in the districts and there in
• 9:25
  Speaker 2: the in the Senate seats that are open.
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  Speaker 4: You look at it.
• 9:28
  Speaker 2: We have a real opportunity here to solidify our base
• 9:31
  Speaker 2: and get even more done with the president.
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  Speaker 4: What is your worry about that? Though?
• 9:35
  Speaker 3: So my concern is twofold. My concern is political, and
• 9:38
  Speaker 3: my concern is policy. On the political side, when when
• 9:41
  Speaker 3: one party is out of power, that can be a
• 9:44
  Speaker 3: dangerous dynamic because even though the Democrat Party is is
• 9:48
  Speaker 3: very unpopular generally speaking, their hardcore partisans are pissed.
• 9:54
  Speaker 1: They are filled with rage. They hate Donald Trump.
• 9:57
  Speaker 3: That means they're hard core partisans will crawl over broken glass.
• 10:01
  Speaker 3: These are the knots that are that are having riots
• 10:03
  Speaker 3: in the streets of la saying we want more criminal,
• 10:05
  Speaker 3: illegal aliens in our country. That energy is dangerous. Look
• 10:10
  Speaker 3: right now, the Democrats are out raising Republicans because their
• 10:14
  Speaker 3: side is really energized. They hate Trump, and if you
• 10:17
  Speaker 3: send out an email on the Democrats side, donald Trump
• 10:19
  Speaker 3: is the devil. Turns out people give a lot of
• 10:22
  Speaker 3: money because if you're a crazy left winger that that
• 10:25
  Speaker 3: energizes you. I worry about the enthusiasm gap that on
• 10:29
  Speaker 3: the right. Look, Republicans buy and large are feeling pretty good.
• 10:33
  Speaker 3: We're winning massive victories. We talked about last week's podcast.
• 10:37
  Speaker 3: We went through all of the major victories in the
• 10:40
  Speaker 3: first six months of President Trump's term.
• 10:42
  Speaker 1: That's fantastic.
• 10:43
  Speaker 3: But the danger from a political perspective is that our
• 10:47
  Speaker 3: guys get complacent. Okay, we're winning. Everything's taken care of.
• 10:50
  Speaker 3: It's not urgent anymore. And that plays out both in
• 10:54
  Speaker 3: terms of fundraising that people just give less money to
• 10:57
  Speaker 3: candidates this cycle around, but it also can manifest in turnout.
• 11:02
  Speaker 3: If the crazies on the left are much more likely
• 11:05
  Speaker 3: to show up in a midterm and our guys are
• 11:07
  Speaker 3: complacent and feel like everything's fine, that can yield a
• 11:11
  Speaker 3: really bad election. Secondly, the policy piece that I worry about.
• 11:15
  Speaker 3: We've talked a lot on this podcast about the battle
• 11:18
  Speaker 3: within the Trump administration on tariffs, how there is one
• 11:21
  Speaker 3: camp within the Trump administration that wants to use tariffs
• 11:25
  Speaker 3: as leverage to lower the tariffs of our trading partners.
• 11:29
  Speaker 3: And Scott Bessen, the Treasury Secretary, is in that camp.
• 11:33
  Speaker 3: Elon Musk when he was part of the White House,
• 11:35
  Speaker 3: he was very much in that camp, and I'm enthusiastically
• 11:38
  Speaker 3: in that camp. I very much agree with what the
• 11:40
  Speaker 3: President has been doing using tariffs, but using them as
• 11:44
  Speaker 3: a means to an end to lower the tariffs and
• 11:47
  Speaker 3: remove non tariff barriers so that we can trade more
• 11:50
  Speaker 3: and export more with our trading partners. The problem, and
• 11:53
  Speaker 3: we've talked about this a lot in the pod as well,
• 11:56
  Speaker 3: there is a contingent in this administration that doesn't view
• 12:01
  Speaker 3: tariffs as a means to an end, that rather views
• 12:03
  Speaker 3: tariffs as an objective as a good economic outcome. That
• 12:08
  Speaker 3: we have high teriffs forever, and if that contingent prevails.
• 12:15
  Speaker 3: I worry next year that if we have really high
• 12:17
  Speaker 3: tariffs that the US is put in place, and if
• 12:20
  Speaker 3: our trading partners have really high tariffs retaliatory tariffs, that
• 12:24
  Speaker 3: we could end up going into a recession. The economy
• 12:27
  Speaker 3: could turn downhill, and if that happens, that could lead
• 12:31
  Speaker 3: to a really rough election. And so I'm going to
• 12:34
  Speaker 3: continue to engage closely and regularly with the President to say,
• 12:37
  Speaker 3: keep using them as leverage, keep lowering the tariffs of
• 12:39
  Speaker 3: our trading partners. That will produce good economic results. But
• 12:44
  Speaker 3: it's not clear which side of that battle is going
• 12:46
  Speaker 3: to prevail day by day.
• 12:47
  Speaker 1: On the policy battle, Yeah, great point there.
• 12:50
  Speaker 2: One of the policies that got this president elected was
• 12:53
  Speaker 2: the issue of fiscal responsibility.
• 12:56
  Speaker 4: DOGE was a huge part of that.
• 12:58
  Speaker 2: And there is something that is happening in DC and
• 13:01
  Speaker 2: it deals with eliminating federal reserve interest payments on reserves.
• 13:06
  Speaker 2: This could sound certainly wonky and like wait what or hey,
• 13:11
  Speaker 2: it's over my head, this is actually something that is
• 13:15
  Speaker 2: about reform. It is within the federal reserve, and it's
• 13:18
  Speaker 2: something that I think is very clear long overdo and
• 13:21
  Speaker 2: can have a major impact for all Americans.
• 13:23
  Speaker 4: Dive into how this could work.
• 13:26
  Speaker 3: Yeah, So this is an idea that I went to
• 13:28
  Speaker 3: the White House, went to the Oval Office, and I
• 13:30
  Speaker 3: pitched to President Trump in the middle of the One Big,
• 13:33
  Speaker 3: Beautiful bill. And in terms of spending cuts, I gave
• 13:37
  Speaker 3: the President a total three trillion dollars of spending cuts
• 13:40
  Speaker 3: that we could have included in the bill, and that
• 13:42
  Speaker 3: I think we should have included in the bill. Ultimately,
• 13:45
  Speaker 3: my views did not prevail, and we didn't do it
• 13:48
  Speaker 3: on this first reconciliation bill. I hope we come back
• 13:50
  Speaker 3: and do it on a later reconciliation bill and we
• 13:53
  Speaker 3: can have two more reconciliation bills. This idea is one
• 13:57
  Speaker 3: of the biggest ticket items because if we do what
• 14:00
  Speaker 3: I'm suggesting, we could save over one trillion dollars over
• 14:06
  Speaker 3: the next ten years.
• 14:07
  Speaker 1: That is a big, big number.
• 14:09
  Speaker 3: You know, when we were doing reconciliation, we were pulling
• 14:11
  Speaker 3: our hair out to save fifty billion or one hundred
• 14:14
  Speaker 3: billion dollars. One trillion is a lot of money. No, No,
• 14:18
  Speaker 3: what does this issue mean? So banks, big banks, they
• 14:24
  Speaker 3: store reserves and they deposit reserves with the Federal Reserve.
• 14:27
  Speaker 1: Now that.
• 14:28
  Speaker 3: Now, the Federal Reserve was created in nineteen thirteen, and
• 14:33
  Speaker 3: from nineteen thirteen until two thousand and seven.
• 14:36
  Speaker 1: How did it work?
• 14:37
  Speaker 3: Banks would keep reserves with the Fed and they would
• 14:41
  Speaker 3: get paid zero nothing for the reserves. There was a requirement.
• 14:44
  Speaker 3: It was typically about ten percent. So if you're a
• 14:47
  Speaker 3: big bank, let's say you've got one hundred billion dollars
• 14:49
  Speaker 3: in deposits, you were required to keep ten billion dollars
• 14:54
  Speaker 3: with the FED. You didn't get paid any interest on it.
• 14:56
  Speaker 3: You just had to keep that there because it's what's
• 14:59
  Speaker 3: called fraction banking, which is you had one hundred billion
• 15:01
  Speaker 3: dollars in deposits, ninety billion of it you'd loan out.
• 15:05
  Speaker 3: You'd loan out to individuals, you'd loaned out for home mortgages,
• 15:08
  Speaker 3: you'd loanded out for car loans, you'd loaded out to
• 15:10
  Speaker 3: small businesses. So off the hundred billion in deposits, you
• 15:12
  Speaker 3: didn't have ninety billion of it, but you were required
• 15:15
  Speaker 3: to keep typically about ten percent, just keep it with
• 15:18
  Speaker 3: the Fed. So that if Ben Ferguson comes in and says, hey,
• 15:21
  Speaker 3: I want to withdraw a thousand dollars because you know,
• 15:24
  Speaker 3: I want to go buy a nice present for my wife.
• 15:28
  Speaker 3: They had to have the thousand dollars to give you.
• 15:31
  Speaker 3: So that's the way the system worked for almost one
• 15:33
  Speaker 3: hundred years. Then, starting in two thousand and eight, when
• 15:38
  Speaker 3: you had the Great Financial Crisis, Congress changed the law
• 15:42
  Speaker 3: and the Fed began paying interest on reserves, So the
• 15:46
  Speaker 3: reserves that the banks kept with the Fed, they began
• 15:49
  Speaker 3: paying interest. Now, at the time, the interest rate was
• 15:52
  Speaker 3: incredibly low, and so two thousand and eight, you know,
• 15:56
  Speaker 3: you had financial chaos everywhere. You know, how much the
• 15:59
  Speaker 3: FED paid in interest on reserves, and the entirety of
• 16:02
  Speaker 3: two thousand and eight, how much about one billion dollars,
• 16:07
  Speaker 3: So in big picture budgetary terms, a very small amount,
• 16:11
  Speaker 3: it was. It was almost nominal. But it was the
• 16:13
  Speaker 3: first year they began paying interest on reserves. Since two
• 16:16
  Speaker 3: thousand and eight, they've been paying interest on reserves going forward,
• 16:20
  Speaker 3: and it was small. It was small most of the
• 16:23
  Speaker 3: time until the last two years of Joe Biden, and
• 16:27
  Speaker 3: the last two years of Joe Biden, the interest rate
• 16:29
  Speaker 3: went up and up and up, and for both twenty
• 16:32
  Speaker 3: twenty three and twenty twenty four, the FED paid over
• 16:37
  Speaker 3: one hundred billion dollars in interest on reserves.
• 16:43
  Speaker 4: Wow.
• 16:44
  Speaker 1: Last year.
• 16:45
  Speaker 2: But it's just pure tax dollars. You're paying your taxes
• 16:48
  Speaker 2: and that money is just going to interest.
• 16:50
  Speaker 1: Period interest to giant banks.
• 16:53
  Speaker 3: So it is literally the FED is transferring your tax
• 16:56
  Speaker 3: dollars to the biggest banks in the world.
• 16:58
  Speaker 1: Now it gets worse.
• 17:00
  Speaker 3: So they no longer have a requirement a reserve requirement
• 17:04
  Speaker 3: of say ten percent.
• 17:05
  Speaker 1: There's actually no requirement at all.
• 17:06
  Speaker 3: You know why, because they're paying such a big interest
• 17:11
  Speaker 3: rate that the banks are happy to park their money there.
• 17:15
  Speaker 3: And in fact, they're not just doing the ten percent reserves,
• 17:19
  Speaker 3: they're putting a bunch more capital there. Right now today
• 17:22
  Speaker 3: the FED is paying four point four percent to the
• 17:25
  Speaker 3: banks to just park their capital with a FED. So
• 17:28
  Speaker 3: in twenty twenty four, last year, the last year of
• 17:30
  Speaker 3: the Biden administration, the FED paid one hundred and sixty
• 17:35
  Speaker 3: eight billion dollars in interest on reserves. That's tax payer
• 17:41
  Speaker 3: money that went straight to giant Wall Street banks.
• 17:45
  Speaker 1: I think that makes no sense. I think we need
• 17:47
  Speaker 1: to end that.
• 17:48
  Speaker 2: So what is it going to be the obviously a
• 17:52
  Speaker 2: hold up here, it seems like it's a sane policy.
• 17:56
  Speaker 2: Is it going to be the lobbyist and how many
• 17:57
  Speaker 2: people are being lobbied by the big banks to not
• 18:00
  Speaker 2: change this.
• 18:00
  Speaker 4: Is this going to be fighting also the federal Reserve.
• 18:03
  Speaker 4: I mean, where are the road?
• 18:04
  Speaker 1: Yes?
• 18:04
  Speaker 4: Yes, and dive in.
• 18:06
  Speaker 2: I mean, because this seems like a very simplistic, fiscal
• 18:09
  Speaker 2: responsible thing to do. You would certainly do this in
• 18:13
  Speaker 2: the private sector in your own life, so why wouldn't
• 18:15
  Speaker 2: the government do the same thing.
• 18:17
  Speaker 3: So I'll tell you, well, we were in the middle
• 18:19
  Speaker 3: of the one Big Beautiful Bill. I went on TV.
• 18:22
  Speaker 3: I went on Squakbox on CNBC. I love doing Squakbox.
• 18:24
  Speaker 3: It's one of my favorite shows because they're really smart.
• 18:27
  Speaker 3: You can get into substance, you can get into details.
• 18:29
  Speaker 3: In fact, several times I've done what they call guest
• 18:32
  Speaker 3: hosting Squawkbox, where you spend an hour on TV, and
• 18:35
  Speaker 3: so instead of a little six minute interview where you
• 18:38
  Speaker 3: have to do a SoundBite, if you guest host Squalkbox
• 18:41
  Speaker 3: for an hour, you can really get into substance and
• 18:43
  Speaker 3: economic issues and issues dealing with finances. So I was
• 18:47
  Speaker 3: doing Squawkbox during during reconciliation, and I raised this issue
• 18:53
  Speaker 3: and I got to say Becky Quick, who's one of
• 18:55
  Speaker 3: the hosts. She's like, oh my goodness, well this would
• 18:58
  Speaker 3: be terrible. I mean, how could this possibly work? The
• 19:01
  Speaker 3: Fed couldn't do its job. So there's several arguments that
• 19:03
  Speaker 3: are made against this. One is, well, the FED uses
• 19:07
  Speaker 3: this to control interest rates, and that's right. She's like, well,
• 19:10
  Speaker 3: if you took this away, the FED wouldn't be able
• 19:12
  Speaker 3: to control interest rates.
• 19:13
  Speaker 1: How would they do it?
• 19:14
  Speaker 3: And my response was, Becky, the same way they did
• 19:17
  Speaker 3: it from nineteen thirteen to two thousand and seven. Like
• 19:20
  Speaker 3: the FED existed for one hundred years and didn't pay
• 19:25
  Speaker 3: a penny in interest on reserves, and somehow the FED
• 19:30
  Speaker 3: managed to operate until it began. Ben Bernaki was the
• 19:32
  Speaker 3: head of the FED at the time, and it was
• 19:33
  Speaker 3: interesting Ben Bernaki said when this idea was being debated,
• 19:37
  Speaker 3: he said, well, if we pay interest on reserves, that's
• 19:39
  Speaker 3: going to be terrible. That's going to be corporate welfare.
• 19:42
  Speaker 3: People are going to get pissed that we're giving tax
• 19:44
  Speaker 3: payer money to giant Wall Street banks. That's what Bernaki
• 19:47
  Speaker 3: said when it was just a billion. Now it is
• 19:50
  Speaker 3: one hundred and sixty eight billion. But their argument, and listen,
• 19:54
  Speaker 3: it is true. The Fed's job has become much easier.
• 19:58
  Speaker 3: They have a very direct way to control interest rates.
• 20:00
  Speaker 3: Now they're paying four point four percent. If they want
• 20:03
  Speaker 3: interest rates to go up, they just raise the interest rate.
• 20:05
  Speaker 3: They say, okay, we'll pay you four point six percent,
• 20:08
  Speaker 3: and all the other interest rates go up automatically. So
• 20:11
  Speaker 3: it makes the Fed's job easier. If they don't do that,
• 20:14
  Speaker 3: they have to do open market transactions to impact the
• 20:16
  Speaker 3: interest rate. It's much more complicated. But again, they did
• 20:20
  Speaker 3: it for one hundred years.
• 20:22
  Speaker 1: Ben.
• 20:22
  Speaker 3: Let me give you another fact that's going to blow
• 20:24
  Speaker 3: your mind. Of the one hundred and sixty eight billion
• 20:28
  Speaker 3: dollars that the FED paid last year in interest on reserves.
• 20:32
  Speaker 4: Say that number again. You said, one sixty eight billion
• 20:35
  Speaker 4: billion Colley.
• 20:37
  Speaker 3: Roughly half of that, nearly fifty percent, went to foreign banks.
• 20:43
  Speaker 3: So not even American banks, foreign banks getting tens of
• 20:48
  Speaker 3: billions of dollars of US tax payer money every year
• 20:52
  Speaker 3: every year. And so I'll tell you, when I got
• 20:55
  Speaker 3: off squawk box, I literally walked back to my office
• 20:59
  Speaker 3: and the CEO of one of the biggest banks in
• 21:01
  Speaker 3: the United States, a very very well known CEO I'm
• 21:04
  Speaker 3: not going to name, but he mean, he's someone very
• 21:06
  Speaker 3: well known.
• 21:07
  Speaker 1: He called me very dismayed and saying this is a
• 21:13
  Speaker 1: terrible idea.
• 21:14
  Speaker 3: And I was sort of chuckling, saying, so you're saying
• 21:17
  Speaker 3: you like getting billions of dollars of taxpayer funds every year.
• 21:22
  Speaker 3: And his argument was, well, look, if the FED stops
• 21:27
  Speaker 3: paying interest on reserves, it's very simple, We'll just buy
• 21:30
  Speaker 3: treasuries instead. So you have to pay pay interest regardless now,
• 21:35
  Speaker 3: and he said, and if you don't let us, if
• 21:39
  Speaker 3: you just make us keep reserves, that's confiscation. And you
• 21:42
  Speaker 3: can't do that. And I'll tell you my reaction. Let
• 21:46
  Speaker 3: me take each of those arguments that he made. On
• 21:48
  Speaker 3: the first one, the FED would be forced to buy treasuries, well,
• 21:53
  Speaker 3: or I'm sorry, not the FED. The banks would be
• 21:54
  Speaker 3: forced to buy treasuries instead of just parking their money
• 21:57
  Speaker 3: at the FED. That in and of itself would be
• 22:00
  Speaker 3: a good outcome. Look, there's a lot of concern about
• 22:04
  Speaker 3: a failed FED auction. If the banks were buying treasuries,
• 22:09
  Speaker 3: that would create demand for treasuries. And you know, one
• 22:12
  Speaker 3: of the things that would do it would drive down
• 22:15
  Speaker 3: the interest rate by creating more demand for treasuries, which means, listen,
• 22:19
  Speaker 3: one of the things Donald Trump is trying very hard
• 22:21
  Speaker 3: to do is to get the Fed to lower the
• 22:24
  Speaker 3: interest rate, and Ja Powell doesn't want to do it.
• 22:27
  Speaker 3: This change would create a market dynamic that would lower
• 22:31
  Speaker 3: interest rates.
• 22:32
  Speaker 1: That's a good thing.
• 22:34
  Speaker 3: Secondly, you got a ton of money that are what
• 22:37
  Speaker 3: are called excess reserves. They're beyond what a reasonable reserve
• 22:40
  Speaker 3: requirement is and it's just sitting at the Fed.
• 22:44
  Speaker 1: You know what that means.
• 22:45
  Speaker 3: It means those billions of dollars or even those trillions
• 22:48
  Speaker 3: of dollars are not being loaned to small businesses. They're
• 22:52
  Speaker 3: not being loan to open a new store, to buy
• 22:55
  Speaker 3: new equipment, to hire new workers, to expand a new study.
• 22:58
  Speaker 3: They're not creating jobs. It's just sitting there. The Fed
• 23:02
  Speaker 3: is paying them just park your capital and do nothing.
• 23:05
  Speaker 3: I'd much rather banks, if they want to earn a return,
• 23:09
  Speaker 3: have to make loans and loan that out. And as
• 23:13
  Speaker 3: for the second argument that this CEO said of, well,
• 23:16
  Speaker 3: if you don't let them buy treasuries, you just force
• 23:18
  Speaker 3: them to keep reserves.
• 23:20
  Speaker 1: And he said that's confiscation.
• 23:23
  Speaker 3: I would point out for the entire history of our
• 23:25
  Speaker 3: country that has been the law. There has been a
• 23:27
  Speaker 3: reserve requirement that's called fractional banking. You know if you
• 23:31
  Speaker 3: have a bank. Again use the example. You got a
• 23:33
  Speaker 3: bank with one hundred billion dollars. It has not been
• 23:36
  Speaker 3: legal for most of the history of our country for
• 23:38
  Speaker 3: someone to take a hundred million dollars in deposits and
• 23:41
  Speaker 3: loan out one hundred million dollars.
• 23:42
  Speaker 1: Why is that not legal?
• 23:44
  Speaker 3: Because if your depositors come in and say, hey, can
• 23:46
  Speaker 3: I have my money back, if they've loaned all the
• 23:47
  Speaker 3: money out, they don't have money to give it back
• 23:49
  Speaker 3: to you. And so we have long had a regulatory
• 23:52
  Speaker 3: system that says you have to keep a reasonable reserve
• 23:56
  Speaker 3: so that if your depositors want their money back, you
• 23:58
  Speaker 3: can pay them. That has never been confiscation, and so
• 24:02
  Speaker 3: the banks have loved it because they have made massive
• 24:05
  Speaker 3: amounts of money. Just ending this on one provision over
• 24:12
  Speaker 3: ten years would save more than one trillion dollars. It's
• 24:16
  Speaker 3: a powerful, powerful idea, but I got to say, they're
• 24:20
  Speaker 3: really powerful forces that do not want to see this happen.
• 24:24
  Speaker 2: I want to finally move to that fix that you
• 24:26
  Speaker 2: mentioned coming for the one Big Beautiful Bill. There's a
• 24:29
  Speaker 2: push it's actually bipartisan, to undo a gambling tax hike
• 24:34
  Speaker 2: that they passed in the megabill, and there was an
• 24:37
  Speaker 2: outcry because it's, as you mentioned, it's unfair how it
• 24:41
  Speaker 2: was written specifically to one group of people in the
• 24:45
  Speaker 2: job that they do.
• 24:46
  Speaker 3: Yeah, so there was a little provision that was written
• 24:49
  Speaker 3: in the one big, beautiful bill, and nobody saw this.
• 24:52
  Speaker 3: This was a tiny little provision. That the bill is
• 24:54
  Speaker 3: a massive bill, it's thousands of pages. And what this
• 24:57
  Speaker 3: provision said is it is it deals with how you
• 25:01
  Speaker 3: pay taxes on gambling winnings and losses. And the way
• 25:06
  Speaker 3: the law used to work was very common sense, which
• 25:08
  Speaker 3: is that you deduct your losses from your wins and
• 25:12
  Speaker 3: you pay taxes on your net what you actually made
• 25:14
  Speaker 3: your profit. That's actually a sensible way to do a
• 25:17
  Speaker 3: tax law. The change now anyone gambling can only deduct
• 25:24
  Speaker 3: ninety percent of their losses rather than one hundred percent
• 25:28
  Speaker 3: of their losses. Now what does that mean. Let's take
• 25:30
  Speaker 3: for example, as you know, I like to play poker.
• 25:33
  Speaker 3: I play poker with a lot of buddies. I always
• 25:35
  Speaker 3: play really low stakes poker, but I enjoy the game
• 25:38
  Speaker 3: and I've got several friends who are poker pros. So
• 25:41
  Speaker 3: you know I do every year I do a fundraiser
• 25:44
  Speaker 3: in Vegas. That raises money for my campaign, and we
• 25:48
  Speaker 3: get people who come and hang out, and several poker
• 25:50
  Speaker 3: players come and hang out with us and play poker.
• 25:53
  Speaker 3: And so let's say you're and there. Look I like,
• 25:57
  Speaker 3: I think poker is a fascinating game. It is strategic game.
• 26:01
  Speaker 3: It involves math, but it involves reading people. I love
• 26:05
  Speaker 3: watching like the World Series of Poker, watching the strategy.
• 26:09
  Speaker 3: There's a whole vibrant world of people who earn their
• 26:13
  Speaker 3: livings playing professional poker. And it's uh, you know, as
• 26:18
  Speaker 3: you know. I several years ago I got a chance.
• 26:20
  Speaker 3: I played on Poker after Dark and and and I
• 26:23
  Speaker 3: played with with Doyle Brunson and Phil Hellmuth and and
• 26:26
  Speaker 3: Doyle Brunson who was known as Texas Dolly and one
• 26:29
  Speaker 3: of the greatest poker players to ever live. It was
• 26:31
  Speaker 3: truly a bucket list experience to play with him. I
• 26:34
  Speaker 3: also played with mister Beast, which was really fun. I
• 26:38
  Speaker 3: got to tell you sitting down, I was really really
• 26:41
  Speaker 3: excited to be playing with with Doyle and playing with
• 26:44
  Speaker 3: Phil Hellmuth.
• 26:46
  Speaker 1: Doyle.
• 26:46
  Speaker 3: So my goal going in, look, both of them are
• 26:48
  Speaker 3: much much better players than I am, obviously, Uh.
• 26:51
  Speaker 1: My goal was just to take chips off them.
• 26:53
  Speaker 3: I wanted to win at least one hand and be like,
• 26:56
  Speaker 3: all right, I want a hand and took chips.
• 26:58
  Speaker 1: I ended up being being lucky doing better than that.
• 27:00
  Speaker 3: And so with Doyle I went all in and ended
• 27:04
  Speaker 3: up busting him out, which is and you can watch
• 27:07
  Speaker 3: it if you want to Google you can watch online
• 27:09
  Speaker 3: me busting Doyle Brunson out. That was astonishing and I
• 27:13
  Speaker 3: got to say he was so gracious. I mean he
• 27:16
  Speaker 3: Doyle has since passed, but he won the very first
• 27:19
  Speaker 3: World Series of poker and is just a legendary poker player.
• 27:23
  Speaker 3: That was incredibly meaningful. And then towards the end of
• 27:26
  Speaker 3: the game on Poker after Dark, I was playing with
• 27:28
  Speaker 3: Phil Hellmuth. Phil Hellmuth, Phil will tell you he's the
• 27:31
  Speaker 3: greatest poker player alive by any measure. He certainly one
• 27:34
  Speaker 3: of the greatest poker players alive, and he's got a
• 27:36
  Speaker 3: good argument that he may be the greatest. Between Doyle
• 27:41
  Speaker 3: and Phil, they had at the time twenty five bracelets,
• 27:45
  Speaker 3: which means together they had won twenty five different World
• 27:48
  Speaker 3: Series events. To give you a sense of just how
• 27:51
  Speaker 3: accomplished these two players are. Phil and I end up,
• 27:55
  Speaker 3: We're playing Texas hold him and I went all in
• 28:00
  Speaker 3: and I had Ace King and he had Ace Queen,
• 28:03
  Speaker 3: so I had him dominated. I was a massive favorite.
• 28:06
  Speaker 3: I was about a three to one favorite. And then
• 28:09
  Speaker 3: what ends up happening is Phil got lucky and he
• 28:11
  Speaker 3: sucked out a queen and it was funny Phil, and
• 28:14
  Speaker 3: so he crippled me. Didn't knock me out, but he
• 28:17
  Speaker 3: basically crippled me, and then I went out a couple
• 28:19
  Speaker 3: of hands later.
• 28:21
  Speaker 1: It was funny. Phil was embarrassed.
• 28:23
  Speaker 3: Because I got my chips in as the dominant favorite
• 28:26
  Speaker 3: and he just got lucky, and he was like, oh,
• 28:29
  Speaker 3: I feel terrible to win like that.
• 28:30
  Speaker 1: I'm like, Phil, I am thrilled.
• 28:32
  Speaker 3: If I played that hand one hundred times, I'd want
• 28:34
  Speaker 3: to play it exactly the same way and get my
• 28:36
  Speaker 3: chips in every time. And look, that's why they call
• 28:39
  Speaker 3: it gambling, because some chunk of it you lose. Anyway,
• 28:42
  Speaker 3: let's talk about what this provision does. Let's say you're
• 28:46
  Speaker 3: a poker pro, and let's say in a given year,
• 28:50
  Speaker 3: you lose one hundred thousand dollars playing poker, and you
• 28:55
  Speaker 3: win one hundred and thirty thousand dollars Okay, so you're
• 28:58
  Speaker 3: you know, you're not a super rich play but you're
• 29:00
  Speaker 3: out playing, and you know you made you netted thirty grand.
• 29:03
  Speaker 3: Thirty grand is what you made that year. Ordinarily, you
• 29:08
  Speaker 3: would deduct the hundred grand from the one hundred and
• 29:11
  Speaker 3: thirty grand, and you would pay taxes on the thirty
• 29:13
  Speaker 3: thousand profit you had.
• 29:14
  Speaker 4: Which, by the way, is exactly what everyone else.
• 29:16
  Speaker 1: Does right now.
• 29:18
  Speaker 3: Under the new law, you lose one hundred grand that year,
• 29:22
  Speaker 3: you make one hundred and thirty, you could only deduct
• 29:26
  Speaker 3: ninety percent of one hundred grand you lost, which means,
• 29:30
  Speaker 3: instead of paying taxes on the thirty grand you made,
• 29:34
  Speaker 3: you would pay taxes on forty grand. You would end
• 29:38
  Speaker 3: up paying taxes on more than you made. That that's
• 29:42
  Speaker 3: wildly unfair, by the way. Even worse than that, let's
• 29:46
  Speaker 3: assume you had a really lousy year. Let's assume you
• 29:48
  Speaker 3: want one hundred thousand dollars and lost one hundred thousand dollars,
• 29:51
  Speaker 3: so you like just netted nothing. You broke even under
• 29:56
  Speaker 3: this law, you'd have to pay taxes on ten grand
• 29:58
  Speaker 3: because you could only deduct nine eighty percent of your losses.
• 30:01
  Speaker 3: So even though you made not a penny, you would
• 30:04
  Speaker 3: owe taxes on the ten grand. That is wildly unfair.
• 30:08
  Speaker 3: And I got to tell you, I don't know of
• 30:10
  Speaker 3: a senator who knew this was in There was a
• 30:12
  Speaker 3: tiny little provision buried in there. We were moving incredibly
• 30:15
  Speaker 3: fast at three in the morning, and so nobody saw
• 30:17
  Speaker 3: it there. When I heard about it, I said, that
• 30:21
  Speaker 3: makes no sense at all. But it was already pasted,
• 30:23
  Speaker 3: it was signed in a law at the time I
• 30:24
  Speaker 3: heard about it. And so what I've done, I've joined
• 30:27
  Speaker 3: with the two Nevada senators, with Catherine Cortez Mastow and
• 30:30
  Speaker 3: Jackie Rosen. They're both Democrats, and also Bill Haggert, who
• 30:34
  Speaker 3: was a Republican, and all four of us have joined
• 30:36
  Speaker 3: in legislation to fix this. I think we need to
• 30:38
  Speaker 3: fix it. We should not be treating people unfairly. The
• 30:42
  Speaker 3: income tax should tax people on real income, not imaginary income.
• 30:48
  Speaker 1: That is unfair.
• 30:49
  Speaker 3: I don't know that we'll get it fixed, because look,
• 30:52
  Speaker 3: changing anything in the law is complicated, but I hope
• 30:55
  Speaker 3: we will because I can tell you I don't know
• 30:57
  Speaker 3: of a senator, Republican or Democrat, who's arguing this is
• 31:02
  Speaker 3: a good idea. I've sat and talked with the number
• 31:04
  Speaker 3: of my colleagues, and it's not like someone is taking
• 31:06
  Speaker 3: the other side and saying no, let's let's let's be
• 31:09
  Speaker 3: wildly unfair. I hope we can get this fixed, and
• 31:14
  Speaker 3: I think we need to because because we need to
• 31:16
  Speaker 3: be fair and and look, there's a whole industry, particularly
• 31:21
  Speaker 3: around Vegas, of people who are poker pros and make
• 31:24
  Speaker 3: their livings and and generate a lot of revenue. And
• 31:27
  Speaker 3: if we don't change this, the effect will be to
• 31:30
  Speaker 3: drive those poker pros out of the US. We will
• 31:32
  Speaker 3: force them to go elsewhere. That that would be really
• 31:36
  Speaker 3: a tragic outcoming. So I don't want to see that happen.
• 31:39
  Speaker 2: Yeah, no doubt about it. Don't forget. We do this
• 31:42
  Speaker 2: show Monday, Wednesday Friday. Hit that subscribe or auto download
• 31:45
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• 31:48
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• 31:50
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• 31:53
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