Trump's Big Week: Middle East Trip, China Deal, Pharma EO, "Big, Beautiful Bill" with Ben Shapiro

26:25So, Iran is very good negotiation. They are quite sophisticated in how they approach these issues. And when President Trump says they can't have a nuclear weapon, that's all we need to know, all the rest is details. But actually, when it comes to things like negotiating a nuclear deal, the devil is the details because is it going to be JCPOA part two, which is basically you can enrich to civilian levels with a certain level of transparency, but also you get money and the money can be used for terrorism or for ballistic missile development or rebuilding your air defenses. And what do those details actually look like?

26:53And obviously Qatar is very, very close with the Islamic Republic of Iran. And so they've been negotiating again as sort of a representative of Iran in those negotiations. And so I'm going to hold off. Let's just say I'll be, I'll be skeptical until I agree with you. They need to be in the penalty box for some number of years because they have not earned the trust of the world in that they can conform to these things and they're not going to do the various things once they get access to capital and funds. So to you. I think they have to earn their way out. That's right. And I think that when you look at Saudi Arabia, I think that one of the things that that would be interesting to see is President Trump said in his speech in Saudi Arabia that he would he would consider it an honor if they would join the Abraham Accords.

27:32His signal accomplishment, obviously, during his first administration was the Abraham Accords, the notion that he again, continue to press for the commerce matters more than sort of ideological conflict, right? That's why you, and Israel, for example, now have a pretty solid relationship that's withstood a lot of the the the stressors that have been created by October 7th and the ensuing war, the question of whether Saudi actually does that is an interesting one because if you're looking for a new region in which commerce really does take the four, then obviously UAE, Saudi, they're very close.

28:03I mean, essentially UAE is a client state. There's no distinction. There's no distinction. There's no better place I think in the world right now. If you're trying to find a net new place to put capital to work than the UAE and then Saudi. Yeah, I mean, I agree with that. And I think that, you know, obviously integrating the region across religious boundaries would be a very, very good thing. And I think President Trump also has an interest in that. So it'll be interesting to see how things develop from here. Now, I could, it's, it'll be, again, I remain skeptical of sort of the idea that just commerce alone is going to usher in a new era.

28:35I do think that, that the United States typically, when it's, when it's brokering these deals, does put its thumb on the scale in particular ways. And those ways are not just putting money into KSA or taking money out of KSA, which again, I'm great with that. I think it's brilliant when President Trump is doing. I know a number of businesses, obviously, that are working in Riyadh and doing wonderful work in Riyadh. And I think what MBS has done, transformatively, to KSA is incredible. If what you're looking for is a broader sort of regional calm that's going to last the course of time, what you don't need is an upsurgent Muslim Brotherhood or a resurgent Iran or the rebuilding of terrorist groups that threaten both Saudi Arabia as well as as Israel and other Sunni allies in the region.

29:16And so, you know, I think that there are a couple of ways to see what President Trump is doing. One of them is I hope that there's a step too, right, which is, okay, now Saudi Arabia. We have a great relationship with you. It would be really great if you did join in Abraham Accords. And now you have this very strong regional block that economically is more interdependent, which is of course what he pursued during his first administration. or is he moving in the direction? And this is also plausible, or he's basically saying, listen, everybody's sort of on their own, we're going to cut independent deals with each one of these nations in bilateral fashion with the United States.

29:46And I think it's sort of remains to be seen, which strategy president Trump is taking, sort of bilateral approach to relations with each one of these countries individually, or whether he's attempting to forge more of an interdependent regional economic block. Two questions for you, Ben, rapid fire. Abraham Accords was brought up. Will the Saudi sign it? Will MBS sign it? and Trump sort of alluded, hey, they're going to do it in their own time. What's holding it up in your mind? And if they, if and when they do sign it, what impact would it have on the region? Then number two, your thoughts on this guitar, plain, kerfluffle and the media sort of obsessing over it?

30:19Are they over indexing on it or not? So as far as the Abraham Accords, again, I think that this is a, it is a shift in tone for President Trump. Abraham Accords was considered sort of his signal foreign policy accomplishment during term one. And it is my belief, if he'd been reelected in 2020 by February 2021, I think Saudi would have been in the Abraham Accords. Obviously, one of the obstacles continues to be the war in Gaza, what actually ends up emerging there. But one, ironically, one of the things that actually has undermined the kind of incentive for Saudi to join the Abraham Accords is Israel's complete devastation of all of the proxies of Iran.

30:53So one of the things that was driving Saudi and Israel together was the fact that there was this really giant threat in Iran. And so now it appears it could be at least plausibly read that one of the reasons why President Trump is selling $150 billion worth of military hardware to KSA is to provide a defensive barrier against Iran while assuming that maybe Iran does end up going nuclear. So, you know, what happens with Iran does have serious ramifications for the possibility of an Abraham accord, including Saudi Arabia. That seems like it's more distant than it was a couple of years ago. And it may take more time than I think that that special envoy Steve Whitkopf and the Trump administration would like it to be.

31:29As far as the plane, Krofluffle, on my show, I said that it looks skeasy. And I will maintain that position. It doesn't have to be that it's illegal in order for it not to look particularly good, because of course the other half of the deal is that once the plane is retrofitted and used by the president for a certain period of years, it then goes to the Trump presidential library. And that was one of the conditions of the gifting. And Qatar is quite famous for putting a lot of money in a lot of various pockets, It's ranging from the current, I mean, the current Attorney General of the United States Pambondi was a foreign registered agent for Qatar for a while, being paid by Qatar to do that sort of lobbying work.

32:05Qatar is pretty famous for putting its money in a variety of pockets. Anyway, just just to put a number on that Qatar in sovereign wealth fund, the QIA, the investment authorities about a half trillion dollars of capital, about 50 billion of which is invested in US funds. And many of the folks in and around the circles that are associated with the White House obviously have a QIA as an LP or have had funds that they're affiliated with that have QIAs in LP. And my point about this is that put aside whatever moral qualms, you know, anybody has about this sort of stuff, which again, you can argue either way, the key to me is if you like president Trump's agenda, the biggest obstacle to president Trump's agenda, they're basically two obstacles.

32:47One is the economy goes south, right? That's an obstacle to any president's agenda. That's why it's really important what he's doing in the Middle East. It's why it's important what he's been doing backing off of the terrafore in a lot of ways is why deregulation passing the tax cut is important. All of that's important. And then the second thing that can really hurt any administration is corruption and even allegations of corruption can be incredibly damaging. And so for example, there's a crypto bill that was on the floor of the Senate or is about to enter onto the floor of the Senate just last week and it ended up being killed by Democrats plus a couple of Republicans and Democrats at least publicly maintained the reason they killed the crypto bill, who specifically because of allegations surrounding the Trump family and Trump coin, Trump meme coin, world liberty financial, and all this sort of stuff.

33:26And so the question is, as a Trump supporter who raised money for President Trump and campaigned with President Trump and campaign for President Trump, as a person, what I want is his agenda to be successful. If an obstacle to that agenda is the optics of a thing like taking a $400 million jet from Qatar, which does amount to the single biggest monetary gift ever given than to the United States, even if you consider it, to just be a gift to the United States generally, not to the Trump library personally or anything like that, is that the kind of thing that harms him in the public mind. And if that ties into a broader narrative that his political opponents are trying to drive that he is corrupt or the people around him are corrupt, is that a win for him?

34:04Right, just on a practical, efficacious level. Is that a win for him? Is that a win for his agenda? Because the media coverage this week, if you could have all been about him doing deals in these various places and bringing money back home to the United States. And unnecessary distraction. And that's kind of my view of it at the very least. And the appearance of impropriety amongst half the country who doesn't like him and he's now tipping into almost as unpopular as his first term, they're just going to weaponize that in the midterms and it's going to scut all the important agenda, doge. And this is one of the things that I'm actually afraid of.

34:38You know, this is the thing that also ties in to the economic problem, right? Right now everybody is basically like, who cares about this? I think a lot of people, who cares about the kind of stuff, as long as the number goes up into the right, then all this sort of stuff doesn't matter very much. If the number starts going down, then you start having all these kind of corruption allegations rise to the surface in a new way, right? Because that's what happens with presidents very often is what you see is there kind of a bunch of little dents that are in the vehicle. And then there's a car crash and suddenly, you know, all the dents are very evident to the naked eye.

35:09And that's what I like from Newvoid. What if he loses the midterms and then we start impeachment three, four and five. investigation through 4 .5. Now we're back to law fair and insanity, which nobody wants to be in. Let's talk about another win. It was a pretty great week objectively for Trump. On Sunday, Treasury Secretary Besint announced a trade deal with China in Geneva, the details were basically, here we go, another pause. Tariffs will go down from 145 % to 30%. Maybe that's managed, both China's cutting their tariffs for the US from 125 to 10 % and they're going to end this diminimous rule also known as the like garbage fashion rule, T -Moo, Sheen, all that kind of stuff when they drop shift you stuff that's under I think the numbers 800 or so.

35:55The market love the news. Don't, don't make America dress well again. Don't do it. I think this is like an important part of this is like this ridiculous garbage fashion. I hated it. The market was up massively, but you know, the down in the NASDAQ are basically a flat to slightly negative our partners over a polymarket. You know, have a nice market on the chances of a US recession. That peaked at 66 % during the liberation day chaos fallout. And hey, Here we go. Now it's 38%. So we're kind of maybe cleaning up the chaos. He shook the globe, the economic globe, Friedberg, and now maybe, as I think a lot of people are predicted, he found an exit ramp.

36:42Maybe that was the plan all along. Maybe it's 40 chess. Maybe he's reacting to the market. Maybe all that doesn't matter, but here we are. Dave Friedberg, when we look back on this whole trade, Trump, tariff, turmoil, what are we gonna look back on this a year from now and think, was it just a distraction or is it actually gonna create a trillion dollars in tariff revenue and we're gonna get rid of 150 people playing taxes who make under $150 ,000. What's gonna happen with this when we look back on it a year or two from now? Well, I don't know where the tariff deals are gonna end up so we don't know yet, right?

37:19That's asking for a guess right now. Yeah, and so I don't know. I don't know, like I said, I think one of the biggest things that needs to happen that is being discussed in these trade deals is regulatory parity such that US companies can participate evenly in foreign markets. I kind of highlighted a few examples of why it's challenging for US companies to set up and do business in the local jurisdictions for a lot of our trade partners across multiple industries. I think that's being heavily negotiated. So that doesn't make the headlines. That's not kind of the top of the news. Everyone talks about the tariff number, the tariff number, the tariff number, but at the end of the day the access to foreign markets for US companies.

37:56You can even think about, I mean, a good example for us is a lot of the fines that happen to US tech companies in the EU. And there are just billions and billions of dollars of fines being paid out of our companies. That's another form of taxation. The fact that China won't allow US tech companies to operate, but we allow Chinese tech companies to operate here. So the regulatory parity is kind of the biggest thing that I think needs to kind of be identified in these deals before we have a real sense, Jake Al, because this again could be a real economic growth driver for American businesses and that could have a real effect on our GDP.

38:31So that's the biggest thing I'm looking for versus just the tariff number is parity and access to global markets for US companies. and I don't think we know. And those are the details of the deals that are gonna take several months. Normally, these are multi -year trade negotiations with big trade teams that go back and forth over several years to figure these deals out. So to create maximum leverage and accelerate outcomes, it seems like a lot of this trade hype got everyone to the negotiating table. Now the hard work's being done to figure out the details of these deals. And hopefully we end up in a better place for American businesses because of it.

39:05But Tramatha, I know where you stand on this, he creates that big pothole crater. Everybody gets excited. It creates a lot of attention and then maybe the real negotiation starts. So a year from now, when we look back on this, what would success look like for the Trump administration in Tramatha Poghapati's mind and assessment? I think this goes back to what I said at the beginning. I think tariffs have the potential to be the on -ramp to our version of Belt and Road. And I think that that is an incredible jujitsu move of what was an exceptionally well -executed and methodical program by the Chinese government to cement hard and soft power all around the world while the United States wasn't looking and obsessed with cheap garbage that they could buy a target.

40:00Okay. So this should be a wake -up called to us. We don't need all this cheap nonsense. We can live with fewer things. Those things could be of higher quality. They may be of higher price. But more importantly, we need to make sure that we're cementing bilateral deals with as many countries in the world and building the next phase of Pax America, of American hegemony. We need to do it. So the fact that we are negotiating with China, I think is very good. I think that they are a necessary partner of ours. But we can't take our eye off the ball. The tariffs was a way of ripping the bandaid of all this globalist free trade nonsense.

40:43And now we need to reset this in a methodical, calm way. Now some markets we're not going to get right. And in some industries, we have some very complicated thinking to do. As an example, which we'll get to later, the pharma EO is very complicated and very nuanced. Okay? But this is the hard and necessary work. So my perspective is, this is the beginning of Belt and Road 2 .0. I think we started with a real bang in the Middle East, and I just encourage the administration to go and finished the job and get as many bilateral deals done as possible and reset how important the United States is as a partner.

41:23We always knew it, but we allowed that hard influence and hard power to get frittered away with all kinds of nonsensical, idealistic thinking that was just wasteful. And now we just need that. And it was also globalists who wanted to make money, right? It's like easier to make cheap stop over there and then sell it here. And it's harder to make money selling it once. I think that was short -term and non -strategic thinking by many of those companies. I think that we've created dynamics that we can change. We can change the incentives for how consumers consume in the United States. And I think it's worth thinking about how to do that.

41:59All right. Well, here is the polymarket on tariffs generating greater than 250 billion in 2025 that we set or polymarket set. But basically no chance that that's going to happen. So we will see here. I think everybody coming to the table and rest of the bed. I don't even know how you're going to settle this Jason because what does it mean will terrorist generate? I think it's a really interesting bet. But the real question is on the measurement. There is not going to be some number that OMB or somebody else puts out that says it generated X. Well, I think let Nick was saying he was tracking that, but we'll see.

42:34I mean, because if it's reciprocity and we see us making more money or getting charge less fines to the examples we had earlier, then you could include those in it. But yeah, it's a hard bet to settle, but I think people believe it's not going to generate a massive amount of revenue. The relationship with China and this sort of changing concept of consumerism, you think that's a possibility for America to Americans just want cheap stuff on Amazon and unlimited the number of Amazon boxes in their recycling. I mean, I'm not sure that's how consumers have ever thought about this sort of stuff. I remember when I was younger, there was a lot of talk about made America cars, by made an American.

43:14And that just kind of failed because it turns out that the American cars just weren't as good as the stuff that you could get elsewhere. And it turns out that Americans are both producers and consumers. And yeah, it's easy to say don't buy cheap crap from China, but it turns out a lot of stuff that actually is not all that cheap. We also was manufactured in China. Hopefully now it will be manufactured in Vietnam or manufactured in India or in other third party countries. The idea that we're going to be reshoring all that stuff to the United States. We're not going to be making t -shirts in the United States.

43:41That's not a thing. But I do think that right now my read is that it's too early to tell, meaning that this just reminds me of the old Yiddish joke where the couple isn't getting along so they go to the rabbi and they say, what do we do rabbi? Because I want you to bring a chicken into your house. They bring the chicken in their house and still isn't working and they go back to the So I want you to bring a cow in your house. So I bring a cow into their house and they say it's still isn't working, or a rabbi is just terrible. They go back to the rabbi says, I want you to bring two goats in your house.

44:06They do that. The husband says, this is awful. I can't handle this. Just take everything out of your house. They take all the things out of their house. And they're like, oh my God, this is just fantastic because that's basically what Trump did here, right? He put the chicken and cow and the two goats in the house. I still think he left the chicken, right? And so it's kind of, it's gonna be, you know, a question is to how much impact the chicken has, meaning the 10 % tariff rate that we still have on the rest of the world is, you know, more than quintuple what it was at the very beginning of this process.

44:33I mean, the average tariff rate, and not to use, you know, a number of David doesn't like, but the average tariff rate right now is higher than it's been any time since the 1930s. Is that going to have some carryover effect? I mean, Walmart is already suggesting they're going to have to start increasing their prices. So I don't think they were out of the woods. And I do think that the biggest threat with regard to this sort of stuff is less the tariffs than the feeling of uncertainty for investors as to what comes next. And that's where the pharmaceutical EO starts to come in or or the negotiations over the tax bill, what actually makes it in?

44:59What doesn't make it in? Well, when it comes to, you know, the stuff that makes investors sanguine, and one of the reasons why investors are sanguine about Saudi Arabia is because Saudi Arabia is a kingdom, and that kingdom is very wealthy, and that very wealthy kingdom doesn't have to worry about the next election. They don't have to worry about the next policy that they just have to throw out there for public consumption. President Trump, because of the rapid shifts in policy, the feeling, if the feeling comes way is we're now back on a solid path. This was all a tactic and we're hunky -dory.

45:28Great. You're going to see the markets go up. You're going to see more investment in all the rest. If the feeling it basically more Scott Bessent and fire Peter Navarro into the ocean via catapult with you my advice to the Trump administration. And if you do that. A reasonable, actionable suggestion, man. A really reasonable answer. What predictability, you know, we're sitting here a couple of weeks ago and I was as I was mentioning, I would I know a lot of e -commerce folks and they were saying layoffs coming, we don't have predictability and the really hard part is how do you invest in a business?

45:57You're running daily wire, it's a nine -figure business, you want to hire people. You need to have advertisers. Many of the advertisers you probably have are somehow related to consumption in America. What's the first thing they're going to pause? They're going to pause advertising. Why am I advertising this mattress? Why am I advertising eight -sleep? The best mattress in the world, I happen to be an investor, but I'm a little biased. But why am I going to market it's leap if I can't get it to the country or if the price is too high You know, it's like it's it causes all these downstream Issues, I guess during all of this now Talking about like shaking the globe and the in the economy here Republicans are working hard on the big beautiful bill.

46:36It's big and it's beautiful Ben I don't know if you want to get into your Trump doing trumps, but it's a big beautiful big so beautiful many people are saying. And many haters Nancy Pelosi nasty woman she bet on Walmart bad bet GOP's plan is to push this bill via reconciliation so they can avoid the Senate filibuster with 51 votes instead of 60. The Trump bill would extend the 2017 tax cuts and jobs act through 2034. That's kind of the big piece here is these tax cuts. And there's a budget campaign stuff like no taxes on tips or overtime, things that Trump promised to, you know, in some cases, swings to it's like Nevada, those are trying to get in there and an increase on universities in downwind tax and the tax foundation, this is a nonprofit that analyzes tax policy estimates the tax cuts would reduce revenues by 4 .1 trillion over 10 years, 400 billion a year, and the bill also aims to cut 1 .5 trillion in spend over the next decade.

47:35Some Republicans think this is weak and are pushing for 2 trillion in cuts or more notable cuts include a stricter snap rules, tighter Medicaid caps and removing taxpayer benefits from illegal, gosh, free brand you actually, I understand from our group chat, did a deep dive here. And you, I think, are responsible in many ways for bringing the issue of our national debt to the forefront, especially, particularly with this administration in Doge, which we give you a lot of credit for. You being a single issue voter for this, are you worried about the budget now? We're 100 plus days into Trump. Do you think he's got any chance of cutting the deficit?

48:16I'll talk about the House tax bill, which I think is to use your term, and Jake Hal, absolute discratiata. Oh, Bill is a discratiata. Oh, yeah. It is absolute discratiata. If you're an American, you should feel shame that your elected officials are proposing that this is the bill that gets passed, that we vaporize this much money, that we put ourselves this much further in debt, that we do not treat the situation as the fiscal emergency that it is. The bill ultimately yields no real change in the annual deficit. The annual deficit could climb to $2 .5 trillion being added to the federal debt load every single year going forward.

49:02In fact, if you look at the Treasury yields, the 30 years now kissing 5%. So the United States has called $37 trillion of debt. at 5 % we're paying close to $2 trillion a year, just an interest on our debt. As this debt gets refinanced. Freeberg, do us a favor for the audience if you could explain why it's going up, why it's so high. And what that means is that the debt or the interest rates. The interest rates. Well, the interest rates are going up because the probability that the US will default on its debt payments, which is what you're buying when you buy US Treasuries. you're getting the US government to pay you some number of dollars with interest over time.

49:45And the market is now demanding that that interest rate be as high as 5 % because of this fiscal situation that the United States finds itself in. We are now burning an additional 2 .5 trillion dollars a year adding to our debt load. We are in a fiscal crisis and we're not willing to admit it. And I've said this from day one that Doge can only do so much. And clearly that's the case where they're now talking about sub 300 billion dollars a year potential annual savings from DOJ action. At the end of the day, Congress needs to take action. And this bill from Congress doesn't take much action. I will tell you that if you look across the board, all of these programs are still being proposed to be run at a cost that is well in excess of their pre -COVID levels.

50:27And so I would say who guiding principles, if I was to be the benevolent dictator of the United States of America, my guiding principle number one, would be that any program that we intend to continue to persist have its budget level cut to pre -COVID to 2019 levels. Second would be, and if we did that by the way, we would be in a much better fiscal situation, the second would be that we add no new programs in the moment. There's a whole bunch of new shits thrown into this bill, as well as increasing the cost and a few cuts here and there. I'll just highlight a couple that I think are worth noting.

50:56There's a cut in the SNAP program, which is the supplemental nutrition and assistance program. That's food stamps. And I talked about this with Brook Rollins in the interview. I did a few weeks ago. You can watch it on YouTube. And we talked a little bit about how this snap program has absolutely exploded in size from 60 billion a year in 2019 to 120 billion a year today. So in this budget proposal, they're actually cutting it back by about 30 billion, so to 90 billion. So it's still 50 % higher than it was pre -COVID. And there's a lot of kind of stories we could go through on what happened during COVID that caused this thing to blow up the way it did, but political wrangling pulled money out of the government into people's pockets and that is persisting today.

51:40I'm a big believer in cutting taxes. Obviously, I'm probably more libertarian than anyone else on the show or that we've ever had on the show. But at the end of the day, you can't just say, hey, let's cut taxes and spend more than we're making. It doesn't make sense. A lot of the stuff's going to be exploitable. the tips and overtime exclusions are a way to pander to people to get votes and now keeping your promises on those votes. I think at the end of the day the tips and overtime rule could invite a lot of gamesmanship and loopholes that will be created and people will wake up and be like, uh -oh, for example, if I'm an independent contractor, I will enter into a contract with someone that says, here's the service I'm providing you for 50 bucks, and then there's an optional tip you can give me at the end.

52:19And then I will pay taxes on that tip and I can give you a hundred other examples that this will create an inordinate number of crazy insane loopholes. The interest on the debt at $1 .9 trillion a year equates to 7 % of GDP. That means seven cents of every dollar that moves in every transaction in this country is being used to pay down interest on money we overspent in the past. It has become an absolute crisis. I think that there's a few folks that should be shout out on this, which is Senator Paul and Senator Ron Johnson, who both highlighted how ridiculously under impressive the spending cuts are in this bill.

52:58I think we've got a lot of work to do. I'm deeply disappointed. I'm scared. And I hope that this all gets kind of fixed up in time. Do you think that we should line item out all the new spending irrespective of what all new spending line itemed out? That's rule one and rule two is all existing programs got to go back to pre -COVID levels. You do those two things. We're in a great place. Yeah. And just to put some numbers and some charts behind it, here is the debt back to Clinton era. Clinton obviously balanced the budget. So you get this nice flatness there. Clinton added 392 billion in years.

53:31It's barely noticeable on the chart, 40, 50 billion a year. Bush, 5 .4 trillion, four years, about 1 .3 trillion a year, Obama, a trillion a year. And then we get to Trump 1 .0, two trillion a year. Suddenly we decided we would double it. Biden, same thing. they added almost exactly the same amount to the right way to get the right way to do the same. Yeah, it's not total dollar amount. It's percent of GDP that you're adding. And right now at two and a half trillion dollars a year of deficit, we're talking about a deficit to GDP of like 8%. Yes. 8 % a year. This is like Argentina. This is like insane.

54:16I have the fact that we don't treat this like a fiscal emergency and everyone goes up and they tout, oh, we're going to make 60 billion in cuts and Medicaid. That's out of $820 billion dollars of annual spend. You know, oh, we're making 30 billion in cuts and snap. That's still 50 % higher spend in total than we were in 2019 a few years ago when we didn't have that much of a problem. This has become like such a reset of expectations. And I worry again that we went into this, I think in a very optimistic way, thinking that this administration was gonna treat things differently. We had Doge, we had alignment on the importance of the budget, best in as highlighted it.

54:53And then it's kind of back to gamesmanship in DC. All these representatives from Congress show up and try and get money for their constituents in a way that is not sustainable. We're not gonna be able to keep this up and we're not really having the hard and tough conversations we need to be having. And every year, everyone wants to get elected by keeping programs and keeping money flowing that their constituents elected them to do and they want to add new programs They can go on CNBC and say look at this cool new program. I stood up. It's great It's gonna create the future of America and meanwhile there's no future of America because we're burning two and a half trillion dollars a year So would you call this the best it wants the 333 plan you'd call this the 338 plan?

55:30I don't know if there's a 3 But yeah, it's definitely the 8 this is 8 almost 9 Yeah, I think all of this is right. I mean, the reality is the US debt to GDP ratio is extraordinary already. It's only going up from here. And we have to acknowledge here that the Republican majorities in the House and the Senate are incredibly narrow that for every Ron Johnson who's saying the right things, you have a Josh Hawley who's saying the wrong things in Missouri and writing full scale op -eds in the New York Times talking about how not a buck should be cut from Medicaid under any circumstances. And this, you know, does run headlong up against a reality, which is that the one one of Trump's signal changes from the old Republican party was not just a change away in terms of foreign policy toward more realism and less, you know, interventionism, but it really was a change away from the Paul Ryan Tea Party Republican party as well.

56:20And when everything about Paul Ryan on a lot of other issues, Paul Ryan was on your side of this David when it came to actually trying to fix the fiscal problems with the United States. And I'm old enough to remember the Tea Party when we were out protesting literally in the streets about government overspending as a response to Obamacare and that's gone completely by the wayside. And so when you're looking at Republicans today arguing over whether to zero out waste fraud and abuse, the problem is not in the end waste fraud and abuse. The problem is the programs themselves as they are currently structured.

56:47And unless you're willing to make serious systemic changes, like Medicare and Medicaid and Social Security, you're not going to solve any of these problems. And here's the sad reality is nobody is willing to do that. So just as we were saying earlier, maybe Americans are addicted to cheap goods from abroad. Americans are certainly 100 % addicted to government sustenance. They are, they're absolutely addicted to this. All that taxes in this country are paid by the top quintile, all of them because below the top quintile, you're getting as much back from the government or more than you are paying into the system.

57:14And we are also gaming out to the future, paying away our kids, fiscal future because of all of this. So when people ask me what's going to happen, I mean, the answer is we're going to either wildly inflate our currency or we're going to go into massive austerity measures, you know, five to 10 years from now. There's not going to be a third choice. So maybe politicians keep kicking it down the road. Maybe that's what this is. But even the kind of cuts that are being talked about by some of the people in Congress who I like are not going to be enough to actually put us back on the right fiscal road, even if the Republicans do what they're talking about with regard to work requirements, for example, on Medicaid.

57:46They're saying there should be an 80 hour a month work requirement if you're enabled a month. That's crazy. That's crazy, right? that five hours, four hours a week a day for a month to get your Medicaid requirement. If you're an able bodied person in the United States of working age, you know, that sort of stuff is not sustainable, but nobody's actually going to take that on. So the question for President Trump is going to be, is he willing to actually go to the barricades and not just make the case that the tax cuts have to be maintained because they absolutely do, but also that Republicans need to get on board with some of these cuts because you're going to have a lot of pushback from the purplish Republicans, from the Josh Halle's in Missouri and from the Mike Lawyers in New York.

58:26That's right. And all of the people who are afraid they're going to lose their seats if there are any cuts. That's right. And existential cuts. I mean, it is like an existential crisis that no one's willing to stand up and highlight just how critical this emergency is. Two and a half trillion dollars of deficit spending on a $28 trillion GDP. Tell me when in history that's actually worked out at the end of the day, except when you're in a some war and you're going to end up taking over some country and getting all their resources. And as you mentioned, this has not kind of effects with regard to things like de -dollarization.

58:57Why are you investing in the American dollar if you believe that's right? That's why treasure is going to. That's right. This is the debt, debt spiral that we find ourselves in because what happens is people stop owning treasuries when they start to question whether or not 30 years from now, the US government is going to meet its debt obligations. Even the smallest marginal question of that drives interest rates up 1%, 2%, suddenly your 30 or treasury yields at 6%, 7%. And then your interest rates climb, and then your deficit spending climbs, and that's how it becomes a spiral. So now the debt goes up even more than it did the year before.

59:29And then the next year it goes up even more per year than it did the year before. That's why it's called a debt -death spiral. And I will say that, let me, sorry, let me say one thing. One of the things I've heard in a lot of members of Cabinet that I've met with over the last couple of months is we've got all these new sources of revenue. I had an interview with Doug Bergen. He talked about unlocking America's assets. We've got this balance sheet with lots of assets. We're going to do land leases and all sorts of other things. We met with Latinx. He's going to sell the Trump Gold card, the immigration card.

59:56We met with Besan. He's got these ideas on how we're going to drive. Everyone's got great theory on how we're going to grow GDP and actually grow government revenue. But until those dollars start to flow in, we have to get our fiscal house in order. We have to cut spending. when those dollars start to flow in, then you can start to spend. But you can't spend ahead, because otherwise the cost of the debt and the economics uncertainty is gonna limit our ability to execute on the back end on that revenue generation. And I'm very worried about no one's kind of paying enough attention to this. So I just, you know, I feel very passionate having seen this bill that we're just not on the right track.

1:00:30It's really frustrating. Let me pull up a tax chart here, Nick, from the chat and get Tremoffeer comments on this bar chart here, just who's paying taxes, as you can see, you know, the top 1%, which I think is this panel here, and the top 5%, paying the majority of the taxes in the country. Is there any way to increase revenue and is there any way for politicians to say, hey, let's cut military, that hasn't come up yet as a concept, but maybe cut a little bit of military spending and maybe put in some modest austerity measures now, before as Ben's pointing out, we get to, you know, Spain and, you know, Greece, I don't know, what was that 10 years ago when they had to Portugal and they had to do, like, intense things, so you're home country, Chimoffa, Italy, like austerity measures Americans.

1:01:24I don't think we've had to ever face austerity measures, certainly not in our lifetime. So income taxes, can we get more revenue in? Or is that our realistic and then cutting military, Maybe on the margins, Tomoff, or do you not see this as a major issue? It's easy to catastrophize. Okay. I think that is easy, because I think there's enough data there. The harder thing if you're going to make a directional bet is to try to find the nuance. So what is the nuance? The nuance is you can point to all of these countries, but what is singularly different between all of those countries in the United States of America?

1:01:59Is that a question? It's entrepreneurship? It's rhetorical. Okay. The difference is we are the shining city on Hill and every other country is not. And as much as we want to believe that there is equality, there isn't. There's a hierarchy in America is the most important country in the world. Period full stop into story. What does that give us the ability to do? It gives us very different parameters with which to solve this problem. It gives us, I think, the parameter of time. And it gives us the parameter of acceptance from a lot of other foreign governments. That's why because they need America to also succeed.

1:02:33There's this very funny quote, which is, when you owe the bank a million dollars, it's your problem, but when you owe the bank a billion dollars, it's their problem. This is true here. And I think that we have to recognize that the right thing to do is obviously what Ben and Dave are saying. I don't disagree with that. But if you panic, I think you're going to start a cascade that is unnecessary. And by moving to a place where you're all of a sudden trying to cut entitlements Incredibly aggressively I don't think sets the stage for a thriving American population that then allows this problem to actually be solved So what is my proposal?

1:03:17I do think we have to monetize the balance sheet of America. I Do think we own probably 100 trillion to 150 trillion of assets that's all of us as citizens. We own that. And I do explain what those assets are to the people listening because they may not know. So the largest land owner in the United States is the United States of America. The ability to allow you to drill is given by the United States of America. The ability to do many things. By the way, Chimath, I'll just give you the numbers from my interview with Bergam. The federal government owns 500 million acres of land. And they have control over 3 .2 billion acres in the outer continental shelf, which is the land under the ocean around North America.

1:04:06The resource availability in that land under the water and the kind of main land is in the kind of immeasurable trillions of dollars of value. And their business model, Bergen's stated business model in the interview I did with him, is land leases and royalties. So enter into private partnerships and then participate in the value version. I've talked to talk about this. So I agree with him. We're talking about a balance sheet. Again, I said 100 trillion. You could probably make the case that it's two or three or 400 trillion. But let's just use 100 trillion. My point is that our balance sheet is much larger than our debt obligations.

1:04:43Number one, number two, we owe $33 trillion. It's as much their problem as our problem. And number three, every country that owns that does so in part because they need America to be successful so that they themselves can be successful. So I think if you look at all of these interdependencies, the right thing to do is we need to monetize the balance sheet of America much more aggressively than we've looked at before. And two, what Dave and Ben said we must do, which is we need to draw a firm line and say no new spending. I completely agree with that idea. But I think if you do both of those two things at once, you have meaningful inflows.

1:05:23That can fund a lot of the tax cuts that people want to propose. It'll also allow us to show that we have some level of discipline by not overspending in all of these other random pork barrel projects. And I think it allows us to set a path towards this 333 plan, just to be clear to everybody what Scott Bessons 333 plan is. It's 3 % in inflation. It's 3 % GDP growth and it's a 3 % deficit to GDP percentage. And if we do that, that's the Renaissance in the United States mathematically. We can quibble about the politics, but it would be an economic and mathematical Renaissance. So that's what I would do.

1:06:09If this is the best plan that Jason Smith and Mike Craypo can get done between the House and the Senate, if this is the best plan, I urge the United States government to figure out how to start aggressively and quickly monetizing our balance sheet. I'll just respond to two things. Hold on, before you do that, let me just ask one question. The land we're talking about here, Friedberg and the oil, I guess, or the minerals that are under the ocean floor. Everything. Everything. Well, I mean, what else is there under the ocean floor? Is it sort of the question? Yeah, so cobalt. Who's going to buy the, um, yeah, okay, who is the customer?

1:06:52I think is what we're all wondering of this land in the United States and for what purpose, the private companies that that would then use those resources to manufacture critical requirements for the United States and other countries who are buying. And so for example, the US is now the largest exporter of methane. We have four pipelines that go to this facility that I visited with Doug in the interview I did in Louisiana. They liquefy that natural gas, which is methane. They put it on ships, though ships go to India. They go to Taiwan. They go to Japan. So US companies are selling liquid methane that we're pulling out of the ground to those countries that they then use to heat their homes and power electricity production.

1:07:36We don't necessarily We need to go back today and say, hey, let's cut entitlement programs deeply. We certainly should make entitlement programs more efficient. We don't need to. All we have to do is take all the other programs and reset them to COVID or pre -COVID levels. And secondly, get rid of all the new programs. What's wrong? So we all agree on the new programs. No, my wife says she texts me. She's sitting there and she does things to tilt me and she says, in the series moment, my wife, what did she do last night? We got to find last night. And I just sent her a very quick text that said I'm really sorry about last night and she says I moved on

1:08:16Did you send her that text you move on while I was talking about

1:08:28I'm playing with them playing with them flying back

1:08:36I asked how do you, you were talking to the waitress and you look at the way you look at the way. No, no, it's more serious than that. It's more serious than that. And it's like when you're in a like in a coffee house or a coffee shop in Europe, and there's this like European couples speaking some language you don't understand.

1:09:01The more you hang out with us, there will be a moment where you will observe me in that fighting. It will be a multi -hour affair. It is not an issue, it is not a one -to -one even going. It does end with a passionate love of making from a 12 -30 to a 12 -36 AM. It's a full of six minutes of an exaboloscene. I take a lot of time. Honestly, right now six minutes feels like a long time. And then we go down stairs and we eat the left over managot. It's an incredible tradition in We fight three hours. We make a love for four minutes and then we eat. Okay, look, get the sink back on the rails. Okay.

1:09:38I want to ask you an important question, Dave, if I may. Are you as a man of science who believes in global warming and who cares about the environment? Is it a great idea? Is what a lot of people are thinking here? Is it a great idea for us to rip everything out of the ocean shelf in Alaska and sell all this incredible land we have that's preserved with nature and trees to foreign governments and people who own our debt. Is this a great idea you have concerns about this? Great question. Austerity and maybe not buying as many bombs. Here's the economic argument. Energy demand, heating demand, power demand is growing globally with or without the United States.

1:10:15Okay. Does the United States, which produces that energy cleaner than anyone else, want to participate and benefit from that energy demand, or do we want to leave it to other countries that are going to do it in a dirtier way? What do I mean by that? Natural gas is methane. I'll just give you the natural gas story real quick. We pull it out of the ground. We figured out a technique for putting pressure into the ground that pressure forces the methane to come up through the rocks. We capture that methane and then we liquefy it so reduce it down by like 800 times size. Now it's liquid. It's negative 160 degrees Celsius.

1:10:49We can transport it. Methane, when it burns to create electricity, is 60 % less carbon into the atmosphere than burning oil or coal. So the first argument is methane is a cleaner way of producing electricity than oil or coal, which would be alternatives. However, when methane leaks, it's 80 times more heat capture than CO2. So you've got to make sure that your methane production, your methane extraction systems are tight, aren't leaking methane, and that makes it a cleaner from a net regulation in America and other countries don't. And other countries don't do it's good at job, etc., etc., and then that power is going to be generated and someone's going to make that energy somewhere.

1:11:29So if it is a cleaner power source and we can make it cleaner and we can do it better, then it's certainly the case that the United States should be as we are today, an LNG or liquefied natural gas or liquid methane exporter. So that's like, Can I build on this? Also, it's like, can Americans grow up? I mean, these are industries that have to exist. Have the courage to have some hierarchy and some priorities, please. Like we are talking about a potential debt spiral on the one hand, we're talking about cutting entitlements on the other and people wanna run around and basically say, don't do anything.

1:12:07Well, don't do anything is not an option. So, yeah, monetize the assets. Okay. You may not like the way that Trump says it when he says, Drill, baby, drill, but the actual outcome is the same. We need to monetize. We need to generate revenue in the United States as quickly as possible. We need to do the things that maintain technical supremacy. We need to do the things that maintain political supremacy. If we don't, we will be a second and third to your country. Why does anybody in America want that? If you're an American citizen that wants that, go to another country. Ben, as we're saying here, do you think maybe we do solar or maybe clean gas here, drill baby drill, or probably some people in the audience are thinking, well, why don't you rich guys pay a one percent more taxes and cut the military 5 % and then a little bit of austerity measures on the margin, sound like a better strategy.

1:12:58How would you respond to that argument? That made people in the audience and probably think of right now. So I mean, if the numbers added up, that might be plausible, but the numbers just don't add up. I mean, the idea that if you just incrementally increase the top tax bracket that's going to pay off the massive national debt that we have racked up or the national deficit that we're racking up every year. The numbers don't add up in any way like that. And when you take a look at energy production, the same thing is true. Solar is not going to be making up for LNG any time soon. That's for sure true globally.

1:13:24And when it comes to America's role in the world, which is the biggest thing here, when we talk about cutting the military budget, that always sounds sexy, but the reality is that undergirding things like, for example, the big deals the president Trump is cutting in Saudi and UAE is the giant American airbase that we have in Qatar and the ability of the United States to provide the defense mechanisms for those countries. I mean, let's be very clear about what's going on in the Middle East. If the United States did not exist, there's a solid shot that the Saudi monarchy, the Qatar Emirates and the UAE would not exist in their current form and you would have something like a Muslim brotherhood running many of those nations.

1:13:58And so the reality is that always backing American soft power is the threat of American hard power. And this is for sure, when you look at things like what's going on in Taiwan. I mean, one of the ways that we, you guys know much more about this than I did, one of one of the ways we've been talking about getting out of the possible debt spiral is massive increases in productivity due to AI. Well, if China outcompetes us in AI or if China were to take Taiwan, like right now, that would basically crush the hope of that. And the reason that China is not doing that right now is because number one, we actually are building up the American naval assets.

1:14:28President Trump is working on that. But number two, because we are rapidly scaling with regard to our own energy production. I mean, you have to be an energy -intensive nation in order to produce AI. And so the United States has to play this game. If we're not playing this game, we're losing. I mean, China is out producing us that energy by leaps and bounds right now. It's my simple request for Americans is don't be mathematically illiterate and let's all grow up together. Come on. Yeah. And I'll just say, like, just to go back a couple comments to Chimoff's point. Number one, monetize our assets.

1:15:00Totally agree. There's opportunities. We got to do it in a clean way. We follow the law. We follow the EPA's there to make sure that these methods and systems that we use are not endangering species or the planet or whatever other kind of acts were important. But I'm not sure that the ramp up is gonna make up for the deficit. I think that's really important. As I, it's great to say that at a high level. There's a North Star there. We can monetize our assets. But as you build out the annual plan over the next 10 to 15 years. First of all, political cycles are going to affect this. If the Democrats come back into power in this next election cycle, they'll put a blockade on this stuff.

1:15:36It's not going to be persistent. So again, we have to fix the spending problem. And this idea that we have to cut entitlements to fix the spending problem, I don't even think that that's step one. I think step one is don't add new programs. Step two, go back to COVID level spending. And then step three is you can address the entitlements and all the other kind of spending. And step four is you execute as quickly as you can on monetizing America's assets. But I'm not sure that the ramp up is going to be fast enough to make up for the deficit of the next year. One could comment here also that I think is important.

1:16:07And that is that the American people, we're going to have to get used to the idea that we can't just spend every dollar that comes in. So if you take a look at the Spanish Empire in the 16th century, Spanish Empire in the 16th century is a dominant power in Europe. And then they discover all the gold in the new world. And so suddenly they are easily the richest power on earth because of the amount of money that's coming in and they immediately start spending all of it and they immediately start Expending all of that capital in order to build up and build up and do different projects and pretty soon They're bankrupt and they're defaulting on their debt routinely.

1:16:36I mean, there's there's not a correlation between your asset base and Inability to go bankrupt. I mean, we all know very rich people who go bankrupt because they outspend their asset base and the United States we can expand our asset base for sure and we should do that of course. But if we don't wean ourselves from the addiction to spending particularly on social programs because that's what's going to bankrupt us, then all we will do if we increase our asset base is say, hey, look how much more money we now get to spend because there. Just so you know, Shamath did hit the brakes before he hit that situation.

1:17:06He hit the brake. He pumped the brakes. I touched a couple of billion but I learned a couple of lessons. He almost flipped the car. I, not really, but I think I just want to pick up on what Ben and Dave They've said, this is a great opportunity for us to grow up as a society, collectively to have some priorities. The problem that we have right now is we allow all kinds of fringe belly aching, and we don't have a good sense making mechanism to prioritize that belly aching. And so everything seems like a class five hurricane, and everything is not a class five hurricane. And how we respond should be proportioned.

1:17:39We need to react proportionally to the actual challenge at hand. And I think what maybe has just said differently is this is a class 5 category issue. How we spend and our revenues are completely, completely broken. So we need a new way of addressing it. And the people that would have issues with how that solve need to have the maturity to actually point to what the alternative is. because there is no way to quickly raise several trillion dollars without selling land and without giving land leases and without taking royalties for drilling. And so they should say explicitly, I would rather the country go into a debt spiral and go bankrupt.

1:18:24Okay, then just say that. Yeah. I mean, and to the point of taxes, if you even if you raise taxes 20 % on the rich, it's going to like impact 300 billion. It's not at the pimple. It's the pimple on the dogs ass people We we have to stop the spending train. Hey, let's talk about Do we want to go farmer? Do we want to go science quarter? I don't want to have you uh mr. Science Quiner there Free time for me today is just a rant against the governors who are signing laws banning cellular meat And uh, I'll just uh hit on it real quick Oh, this is a this is a your this is your take -to on this because you've done this once this rant correct like governor DeSantis did this in Florida since then Alabama, Mississippi, Indiana.

1:19:06What's your issue with the cellular meat, sir? A government. Why are you talking about making this thing? You're meat. And what do you think the print of the flamenian? It doesn't become, it tastes like a little pepperoni. Yeah. Okay, so this week, this week Montana's governor, Greg G. on forte, signed a law, House Bill 401, banning cellular meat that bill goes into effect on October 1st. You guys can laugh all you want. If it was in a market that you were an investor in, in innovation or technology. For example, if they said we ban AI in our state, how would you guys react? What sort of opinion or commentary would you guys have on the show?

1:19:43Move around, move around the state, let the state go to zero and then come pick up the Yeah, we have 49 other ones. And I think that that's really important. And now by the way, there's a house bill being proposed to do the same thing throughout the United States. Meanwhile, China and Europe are building cellular meat systems that are rocketing ahead. They're actually economic drivers because they make the cost of food cheaper, they're creating new industries, there's a lot of supply chain that goes into these industries. Whether consumers like or want to buy the product or not should be left to the consumer, it should be a free market, the market should decide.

1:20:12As long as they're regulated, check for health, check for safety as they all are today, the FDA, the USDA, and others are all involved in regulating these systems, they shouldn't be banned because in every single state, what is the reason? The reason we're banning them is to protect our ranchers, our cattle ranchers. And so in all these cases, their say. I think that's an economic protectionism. No, but that's I look, I take this very different view. I mean, these are people. Okay, let's ban Uber to protect the cat drivers. But what we just 90. I guess the cat. Easy. Yeah. I don't like the benevolent dictatorship model of running a country.

1:20:45Each of these 50 states have the ability to make decisions. Some are good, some are bad, some are neutral. If they want to make fundamentally bad decisions for themselves, let them. If they want to fundamentally good decisions for them, let them. At the end of the day, those populations in those places are making those decisions. I don't see it as a big deal. Yeah. And I think the reason is that most of the consumers, 95 % of them don't give a shit about the product, whereas Uber and others were different. Many people did care about the product. But fundamentally, it unlocks economic opportunities that they don't see today.

1:21:15And I think that's what's really frustrating about this. Is a small cohort that's created regulatory capture mechanisms by getting these laws passed in these states. These are this rancher industry. Can I say something? As somebody who's tried this, that meets success, okay? If the meat was delicious, that's fine. Just be honest with you. You don't have to buy it. No, this is my point. I've not even had it. I don't give it to the amount of meat. No, let me make my point. If this product was exceptionally delicious, it would be widely consumed all over America. And this would never come to pass.

1:21:44Because there were taxi drivers in Montana, but the reality was Uber was better in Montana. And there were taxi drivers in Florida, but Uber was better in Florida. And my point is that when the product is so good, it allows adoption and it quels the naysayers at the fringes. Okay, let me point to you. When the product is a little bit more man. I got it. But what if someone banned Uber before it had a chance to do it? Yeah, that's a good point. I mean, I think your point is, this is a developing technology. It's early stage, and they're stopping it for guys. Because what would happen is there were places that banned Uber and what happened?

1:22:18They all flipped that's because because I thought it and broke the law. No, no, they were we reinterpreted Regulation even try I was there of what's right for the people of America what I'm saying is not in the place that it was banned But there were enough places around it. Yes where the product value could be demonstrated and government Demons that doesn't mean you pass a law banning it you should still let the country have the choice It's regulatory capture. Who cares? If this was one of your companies, Chimalt, and they were banning some pharma company or social media or some bullshit that you'd started or gotten vested in, you'd be all up in arms saying, they're blocking us, they're keeping us from developing where early stage would happen.

1:22:58I wouldn't try. No, I don't, I don't cry about this. I'm not an investor in anything that's gonna benefit from this, I think it's tough. Well, I don't think so, because it happens all the time. I would say, get over it, grow up, figure out the markets where you can make it and make the product excellent so that then all these people in these states at bandit. a very different point of view on regulatory capture capitalism and free markets. It's a fact. No, no, no. I mean, would you need pork that's made in a fermentation tank? Oh, he just made this as Jewish. You got to bring up pork. No, I'm actually curious about this.

1:23:26I'm sorry. I was just, I got this. This is the only reason I'm interested in this topic at all. This is like, not to get into extrude Jewish law. But this is like an actual open question is that if you grew pork in a tank and it didn't come from an actual pain, what did then become kosher and is it considered a vegetable as opposed to a meat because it's not coming from an animal. Right. like this stuff to me is really interesting. And hey, if it gets me to be able to eat bacon, I'm all for it. I've heard amazing things. The reviews are excellent on bacon. Yeah. Okay, let's go to farm here, shout out to Long Hill Bacchanus Steaks.

1:23:55We'll send you some. Oh, I just made an order from Long Hill. I just bought $500 worth of stuff. I got a discount though. I don't know if you got the email, but if you put the memorial day promo code, you get 10 % off. Oh, we got to get paid for water. I have to get paid for the water with Long Hill Wagyu Well, I mix it up. I mix up the kind. No, I do the pecania, but I do some Denver steak sometimes. I mix it well. Nice. Yeah. I like the New York strip. We'll send you a Ben Wheat steak, right? Of course. Of course. Of course. Of course. I try this place called Long Hill Wagyu. It kicks us. It's right by me and Austin.

1:24:25It is incredible. And you know, Freiburg doesn't eat meat. And you know, it's just the nature of it. Okay. Let's wrap on farm. Okay. Trump signed an executive order to slash Trump prices on Monday. I mean, this is like a great week for Trump. But like everything Trump did this week, the goal is to cut prices 30 to 80 % by giving the US MFN, if you don't know, MFN stands for most favorite nation status. That's a generic term in business. It means we get to pay the same price of whichever country gets the lowest price for a specific drug. This executive order would cut out the famous middleman. He's talking about PBMs.

1:25:02You've heard Mark Cuban friend of the pod talk about that a whole bunch. Here's RFK. Juniors quote, Congress is controlled in so many ways by the pharmaceutical industry. This was an issue that people talked about, but nobody wanted to do anything because it was radioactive. It's radioactive, obviously, Chimoff. Because listen, so many politicians are getting donations and lobbyists. What's your take on this? Obviously, Amore is in this business and is in pharmaceutical. So she has some great insights. I'm sure as you do. Yeah, let me start by talking about the specifics of the EO. The really interesting thing about this EO was that there was a very detailed report that was published in the National Bureau of Economic Research a few years ago.

1:25:47That studied this exact thing. So the president used the term MFN, but the concept here is called international reference pricing. anything. Anyways, there was an extremely detailed study that said, okay, what happens to drug prices when you use this IRF pricing mechanism? Okay. And what they showed in that study was a very interesting takeaway, which is if you set the IRF with only one country, typically what happens is for the United States, the change is about minus 2%. If you do it with the basket, the actual profitability of the pharma companies would go up slightly. If you had a required comparison, meaning it had to be a like for like opportunity, profits fall about 20 percent.

1:26:38And if you use the US bargaining framework, then profits could fall about 27 .5%. So this is the impact of that, but there are a lot more nuances of it. So the question would be, what does this all mean then to the downstream impact of pharma? The thing to keep in mind is that we are in a very complicated situation on the R &D side of the house. And what this chart shows is clinical trial enrollments in China versus the United States. Now this has been happening well before the EO. But what this effectively shows is a really important comment which I'll come back to. China a few years ago, very smartly, completely reformed the way that it does trials and the procedures.

1:27:24And as a result, what they saw, when they had this regulatory reform, was an explosion in the number of clinical trials. And there are as many clinical trials now in China as there are in the United States, and oftentimes they're bigger, which is to say that the amount of innovation and the surface area there is already exceeding what's happening in the West. So that's where we are. Now, Now why does this all matter? If you go to the next chart, to tie it all together. As you saw at the beginning, international reference pricing has an impact to profits. Profits can have an impact on R &D. As we stand today, R &D, we are neck and neck with the Chinese.

1:28:09What is more important to understand is that actually the last 10 years has been very complicated for Western pharmaceutical businesses when you look at the average rate of return. As an industry, these things used to be extremely profitable businesses. But as of the last decade, it's been very, very hard. In fact, I think like the Delight study that I saw was that the, can you believe this, the average ROI for broad -based farmers 1 .5 % as of 2022 per year. So if you invest a billion dollars or make about 10 million a year, you'll make 10 million which is not enough to fight this R &D battle.

1:28:46So if you then further affect the profitability scale of Pharma, the impact is probably that we push R &D to different places. So I bring all of this up basically to say, I think that what Trump did in one vein was brilliant. Why? He took a plank of the Democratic Party, like if you guys think about like what Bernie Sanders ran on, yeah, it was this, and he took it, and he jiu jitsu it and now he owns it, he'll be able to take credit for it. And the Democrats are robbed of a very critical political plank that they have, which they'll have to fill in with something else. And if you saw, by the way, Rokana and other folks said, oh, we agree with this, and we'd like to do this via, you know, some bill.

1:29:33So even they had to kind of flip and say, yeah, this is kind of a good idea. So politically, it's good. The execution of this is going to be complicated because of what I showed. We were already at this delicate balancing act of how to make sure that there could be a lot of domestic R &D that was still economically viable. The last thing I'll say is we still need to do one important thing, which is I think that this EO is an important start, but it doesn't yet address the much bigger problem, which is that there is a lot of money that goes to many other things other than drugs. So when you look at a dollar of healthcare spend, which is almost 20 % of GDP.

1:30:13I think the number is that there's 30 % that is administrative complexity, 20 % that is pricing failures, which is effectively to say, PBMs, failure of care coordination is 5%, over treatment is 10%, fraud and abuse is almost 10%. So there's a lot of other organizations in this value chain that kind of eat out of that dollar before it gets to the sense that goes to Pharma. And so it's important to make sure we don't overlook those. The biggest ones being the PBMs. Yeah. Ben, your thoughts on this? 9 % goes to Pharma. Yeah. What do you mean? What do you mean? Your thoughts have been on this broadly speaking.

1:30:48I mean, I have a general rule. If Bernie Sanders likes a policy, I don't like the policy. And so when it comes to, when it comes to this particular EO, I mean, the real problem here for using MFN status as President Trump is calling it, is that if we are going to use the kind of tariff tools the president Trump has talked about to even the playing field. It seems to me this is where you actually should put pressure on places like Canada or Mexico or the EU is for them to actually pay their fair share for the drugs that they are getting from the United States because we're patenting all the drugs over here.

1:31:20And then we're selling it at discount prices to all of these nationalized healthcare systems. And so if you do that with Medicaid, what you will probably get is number one, a lot of these pharmaceuticals just won't be used by Medicaid. Farm will won't sell it to them. Instead, you'll have to go into the private sector, which means it's going to be more expensive in the private sector than it would have been otherwise. If you're covered by private insurance, your pharma bill is actually going to be higher than it otherwise would be. What we should be doing is getting other countries to pay their fair share, drive up the price on those other places.

1:31:45And then you can actually do something that looks more like an MFN status because you're not artificially, you're basically squeezing the balloon here and you're inflating the balloon here, the inflation side being the private healthcare insurers in the United States and private consumers in the United States. And so if you're talking about, you know, just artificially lowering prices by basically clocking pharma, I mean, the reality is if you want to kill R &D, this is a great way to kill R &D. People in the United States, I don't think have a clue as to how much money gets spent on R &D that craps out because what you see is the big winners.

1:32:15It's like going to a casino and only swatching the guys got the hot hand with the dice, right? I'm the version with the dice and I've got the hot hand. Right? It's me. But you don't see the other 100 guys, the casino is absolutely cleaning out. And the reality is the vast majority of biotech companies and pharmaceutical, a startup pharmaceutical companies and people who are trying to do this sort of stuff, it's been literally billions of dollars and then crap out at phase three in the afternoon. Right. And just to build on this, because you're making an excellent point, do you guys know what the cost of the average trial was in the early 90s?

1:32:45It was about $250 million. The average cost of that same trial in 2025 is $2 .3 billion. 10x. And effectively what happened in that 30 year period was a thousand regulations became 150 ,000 regulations. And so to your point, one thing that we could do is if this EO is going to continue and really be implemented in a forceful way, the other side of it is we have to find a way of decreasing the regulatory burden so that then the cost of the trial isn't all the administrative, but it's the core science. Well, and isn't the issue here, Friedberg, that there is a free market for drugs outside of the United States where they seem to negotiate really well.

1:33:28And then inside the United States, we don't seem to negotiate our prices for drugs as aggressively as Canada, Mexico, and European countries do. As is the case with the cost of education and the cost of housing, the cost of drugs is largely inflated because of the federal government's role in being the primary buyer or capital provider to that market. So, similar to how the US government provides all the capital through the Federal Home Loan Program and all of the capital through the Federal Student Loan Program, the cost of tuition has no market check and the cost of housing doesn't have a great market check because there's an unlimited endless supply of capital coming from the federal government.

1:34:05Similarly, through our purchases of prescription drugs, the federal government as a buyer doesn't have any incentive to keep prices low. There is no individual, there's no shareholder, there's no one that has some, check that says, you know what, we're actually not going to buy that drug because it costs too much or Hey, we need an alternative. If every individual had to pay for their drugs or private insurance was the only way to get your drugs With through private insurance we would have a much more dynamic marketplace So the way that we negotiate drug prices is pretty messed up. There's also this construct in the market these pbms are pharmacy benefit managers If they got cut out of the market it would save a lot.

1:34:42I'll just give you guys some numbers on these pbms There's three major PBM, CVS CareMark, Express Scripts, and OptumRX. These three companies make, on average, approximately three bucks in operating profit per prescription claim process. They make money in markups. The FTC has been investigating them and have several open cases between 2017 and 2022. The estimate that these companies generated $7 .3 billion in excess profit by marking up prices on specialty generic drugs. The list goes on on kind of the egregious behavior and the role that they play as middlemen in the industry. Their job, and I'll kind of describe it, is to be the managers of prescription drug benefits on behalf of the health insurers, large employers, Medicare, Part D plans, and other payers.

1:35:29So, as an intermediary, they provide this role where they coordinate between the health insurer, the pharmacy which dispenses the drugs and the drug manufacturer. but they're allowed to be owned by the pair, which is crazy. And now they're allowed to be owned by the pair. And there's a lot of obfuscation of the true cost of the drugs. There's a lot of markups, a lot of spread taking. And so if you took the PBMs out of the market, that would solve one of the problems. But at the end of the day, I've said this many, many times before, any time the federal government is involved as a pair in any market -based system, it creates a distortion and the market is no longer free or efficient.

1:36:05All right, four. Ben Shapiro. of the Ben Shapiro show in Daly Wire, it's MothapollyHoppetia, and David Freedberg, I am. Executive producer for a life, we'll see you all next time. Love you boys, y 'all. Bye -bye. Bye, bitches.

1:36:36You want to fly? What? What? You want to fly? Oh, I'm not flying. Besties are gone. Go thrifty. That's my dog taking a wish to drive away. Sit next. Get it off. Oh man, my ham is the actual meat. We should all just get a room and just have one big hug or two because they're all just like this like sexual tension that we just need to release them out. What? You're the beef. What? You're the beer of beef. Beef of beef. What? We need to get mercy. I'm doing all this!

1:37:14I'm doing all this!