Debating a California Wealth Tax & Adding AI to Therapy 8/21/26

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1:27Actually as stupid as would appear from trying to do things that have never worked. And then let's talk about feelings.

1:35Andrew Ross Sorkin:I will ask large language models all sorts of questions. You've never asked about me. How do I deal with Joe Karnan today? How AI is used in mental health care. Teletherapy platform Talkspace will now reach even more patients through universal health services. And CEO Dr. John Cohen is optimistic about its AI companion, T. It is truly a safe model that's been developed, and it's the only safe model that's out there. Plus the latest on the Besant buyback, the Bitcoin boom, and you get what you pay for. You're paying$50 a month for artificial intelligence? Yes, and in fact, for a period of time, I was paying the$200 max fee on Claude.

2:13It's Friday, August 21st. Squawk Pod begins right now.

2:18Andrew Ross Sorkin:Stand and or buy in 3, 2, 1, cue and it. Good morning. Welcome to Squawk Box right here on CNBC. On this Friday morning, we are live at the NASDAQ market site in Times Square. I'm Andrew Ross Sorkin, along with, ta-da, he's back, Joe Kernan. Meanwhile, Becky Quick is off. Nice to see you, sir. I figure two full weeks, you know, come back on Friday, let people know you're live. And then it's only one, you know, then it's Friday, then the weekend is here. and i figure you know what i leave if if i didn't come in today you're gonna let let the debt be 42 trillion when i get back so that i i would let the debt get to 40 i'm gone and now we're 40 trillion it's 40 trillion we're we're we're doing intervention projects with uh is it different oh yes oh yes oh you don't like this i think this is creating a real because if If it doesn't work, then what do you do?

3:16Andrew Ross Sorkin:Correct. OK. And I think there's a right now, I think there's like a credibility question about how that's all going to play itself out. Maybe on the back of this, and this is maybe the credibility story, it's a boon for Bitcoin jumping again this morning. It's now up close to 20 % just in the last two days, breaking out of a range. It's been in for the last few months. We had a conversation with Brian Armstrong just yesterday from Coinbase about this, about the Clarity Act, whether that would be the driver of some of this. We talked to Anthony Scaramucci earlier in the week, whether actually it's a function of the credibility around our bond, our bonds right now, and whether that would actually inspire people to go buy Bitcoin or gold or things like that.

4:00Always tough, right? With Bitcoin to really point to anything definitely definitive. We do know a pretty good low put in by, well, he's not your buddy, but Grantham. 58 ,000 the day that he was on. But he's not short. So we get some yack, yack, yack, say whatever he wants.

4:22Andrew Ross Sorkin:In fairness, just the last two days, though, the two people who came on around Bitcoin actually did not think that any of this would actually, that there was a catalyst for Bitcoin right now. That's what I mean. Yeah, I don't know. No, I'm saying even Scaramucci, who's in the Bitcoin business. It's been nine weeks where Bitcoin is in the tightest volatility band that it's been in in the last five years. So it really hasn't moved much at all. I mean, when the war started in February, it was roughly the same price that it is today. I'm saying there doesn't have to be one for it to go down or to go up.

4:55Right. Which makes it that much more complicated. Well, same with stocks and everything else. But the thing is, you know.

5:04Andrew Ross Sorkin:Hopefully with stocks and hopefully with bonds, there's things you could point to and say, OK, this is what's driving. Well, it's always supply and demand, though, isn't it? Well, and then there's a question about the supply or the demand of Bitcoin and what it is. But that's a separate matter. Well, I know you thank God you didn't short it at$58 ,000. Short it today. Short it today. That way you actually feel the actual moves instead of just being able to talk about it. I'm not in that business. OK. Let's get back to it would help. Maybe it would help. Let's get back to the story in bond yield.

5:38Treasury Secretary Scott Besson telling CNBC his department could upsize a buyback of government debt. He was speaking with Sarah Eisen on Squawk on the Street. We routinely do buybacks and we're going to increase the size of the buyback. And, you know, Sarah, I would note that it could be more than the four billion per issue. Yields initially fell on Wednesday after the Treasury announced it would be doubling its scheduled$2 billion in buybacks to$4 billion, though by yesterday some of that decline had been erased. Bessett's remarks yesterday caused another easing in yields, but that only lasted a few moments.

6:18Bessett said he doesn't think yields reflect the underlying fundamentals of the U.S. economy. He also said there's a good chance U.S. budget deficit under President Trump has peaked. There are other people saying it does reflect the underlying fundamentals of the U.S. economy in that a strong economy would be a reason for rates to go higher.

6:42Andrew Ross Sorkin:Look, the thing I'm hoping for, there was a comment he made, which I am hoping is right. Which is he says, look, I have asymmetric information. He made a comment about Japan. So I wonder whether there's an indication that somehow there's going to be something that the Board of Governors in Japan do with the central bank there, Bank of Japan do. Maybe he knows something else about what's happening in the markets in the U.S. That is my prayer. But obviously there's a lot of people asking a lot of questions. Meantime, more news from the Treasury Secretary. He says the Trump administration is planning to squeeze Iran's economy, probably negates any current need to resume a muscular military campaign.

7:25If we are doing the maximum economic pressure, then that means that likely there will not be a large-scale kinetic restart. But I would emphasize that is for now. And we do have control of the strait.

7:43Andrew Ross Sorkin:Those comments followed a social media post by President Trump earlier this week that said that the U.S. was about to impose what the president called an economic D-Day on Iran. But on that score, you know, we had had you had interviewed the Treasury Secretary just two weeks ago. He told us that there was basically a deal in Iran that was going to be made. Right. The markets popped. Everybody, everybody. This gets to the credibility issue. They listen to what he said. The markets did what he said. And then, of course, what happened in Iran was the Oman. That was when Oman was going to do something.

8:16Andrew Ross Sorkin:Then we got mad at Oman. Turned around. So these are sort of, to me, the sort of longer term questions about how you're supposed to read what the administration says about some of these things. I remember the Treasury Secretary talked to, I remember months ago talking about sort of economic ninjing. Remember he used this, we're ninjing Iran and it's going to force them into a corner. Things aren't great. It has not worked. You kind of have a smile while you're saying all those things. I guess you can't help it. It's okay, though. No, it's the truth. I know, but it sort of shows. But hopefully everything does work out.

8:58I honestly genuinely want it to.

9:01Andrew Ross Sorkin:I know. I do, too. I do. We both do. And Anthropik executives believe the company's IPO will probably match or beat SpaceX's debut in size. A Bloomberg report saying that Anthropik could file publicly for its listing before the end of the month. SpaceX IPO'd in June. It raised$75 billion in what was then the largest ever first time share sale. Bloomberg saying that Anthropik's recent investor briefings have avoided the question of valuation thus far. But we're going to keep our eyes, of course, on this. And I think the entire industry is largely dependent on what valuation Anthropic comes up with, because then it will move towards what valuation OpenAI ultimately comes up with.

9:44Cloud gets backed up. If I pay for it, does it not get backed up?

9:47Andrew Ross Sorkin:You need to pay. Have you heard of it getting backed up? I ask, and it's like I can't do anything for you right now. It's hurtful. I pay. I'm a customer. So I don't know about these situations that you're having. Even after what Alex Karp said, so you're paying. You don't... It's a great service, but I also pay for OpenAI. You pay for both of them? Of course. What are we talking about? And you pay for neither of them. No, are you kidding? What are we talking about? What do you mean? How much? A month? It's the price of the thing,$25 a month each one. You're paying$50 a month for artificial intelligence?

10:29Andrew Ross Sorkin:Yes, and in fact, for a period of time, I was paying the$200 max fee on Claude. But I found that I didn't need it as much. The U.S. Army unit dangling a chance for re-enlisting troops to binge what's sure to be the year's hottest video game. The 9th Brigade Engineer Battalion based at Fort Seward, Georgia, has now offered soldiers four extra days off around the time that Take-Two Interactive releases Grand Theft Auto 6. This is happening in mid-November, if the troops extend their military commitments. Fort Stewart's spokesperson telling the Associated Press an Army career counselor came up with the idea, in part, to remind soldiers of approaching re-enlistment dates.

11:14Andrew Ross Sorkin:The spokesperson said that at least 20 of 130 eligible soldiers so far take in the perk. And... But by the way, people are addicted to this game. I have kids who play this game. They shouldn't be playing this game. I don't know if you know how violent this game is. No, we've talked about it with Becky. You run over a hooker and you get extra points or something. It's wild. You're robbing the banks. You're stealing the this. It's pretty crazy. I had to explain to my mother what my kids were doing, which was not the most comfortable conversation. Anyway, I think it is for 18 and above. So I don't know how my kids are even playing this and maybe it's showing that I'm not doing as well as I should as a parent with the parental controls.

12:04Well, it's good that it's 18 year old because if you want to do all that stuff, you're actually in a position to be able to go, you know, buy the firearms and do everything necessary to do the grand theft auto. Right. You're able, you know, to act. I'm not a person that thinks video games is the root of all evil. But don't you think I can't help. It cannot. But overall, don't you think that there's a general decline in sort of civility and everything else? And some of it might be from all of this stuff. It's social media for sure.

12:34Andrew Ross Sorkin:I think video games, social media is all not. It is all not helping. But and it's also something we're just not going to stop anytime soon. I wish I knew. I wish I knew how. Right. Well, now we just got to survive the, you know, the hunter killer Terminator type situation staring us in the face right now. Or the, you know, so good to know that they've designed some viruses from scratch and that AI can do it just like intent. I asked Claude, you know, to help me with, you know, reservations. He couldn't do that, but he's ready to design me a virus for a pandemic. Cheese will be next. Coming up on Squawk Pod, the wealth tax proposed by a union in California that's riling up entrepreneurs, billionaires and investors.

13:21One of Silicon Valley's investors, Ben Marison, joins the chorus. This is the first time that the preeminent position of Silicon Valley as the innovation hub of the planet has been at threat. No other country has been able to do it, no other state, no other city. But now we're going to create self-inflicted wounds to drive out the entire ecosystem that feeds the success that is a majority of our economy. trading at schwab is now powered by ameritrade bringing you an expanding library of education with even more ways to sharpen your trading skills access new online courses insightful webcasts articles engaging videos and more all curated just for traders plus guided learning paths with content designed to fit your unique interests and no sifting to find exactly what you need so you can spend your time learning to trade brilliantly learn more at schwab.com slash trading.

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15:47You're listening to Squawk Pod from CNBC, today with Joe Kernan and Andrew Ross Sorkin. Here's Andrew.

15:55Andrew Ross Sorkin:Welcome back to Squawk Box, a debate about Proposition 40, that proposed wealth tax in California playing out online and right here on our set. Joining us right now to weigh in is Ben Harrison. and he's the founder of Tenacity Venture Capital. Good morning to you. You've seen Mark Cuban's comments. You've seen Bill Ackman's comments. You've seen Palmer Luckey's comments. Ro Khanna, obviously, on the other end of this. And I think we're all trying to figure out, A, what ultimately happens in California, but maybe more broadly, what happens across the country if some version of this passes. So this one won't pass, but the next one probably will.

16:35The reason for that is this was orchestrated by the second sleaziest group of humans on the planet behind politicians, which is a union. And only one union was involved, and they will get most of the benefit. They wouldn't let the other unions play, but when they fail this time, they'll let the other unions play, and it'll be almost impossible to defeat. And it'll be tragic. One of my LPs reached out to me when it was first announced and said, should I be worried? And I was like, I didn't know you were a billionaire. He said, well, I'm not, but I'm worried this will drive innovation and entrepreneurship out of California.

17:06And he is dead right. This is the first time that the preeminent position of Silicon Valley as the innovation hub of the planet has been at threat. No other country has been able to do it, no other state, no other city. But now we're going to create self-inflicted wounds to drive out the entire ecosystem that feeds the success that is a majority of our economy, as far as I can tell.

17:28Andrew Ross Sorkin:Let me ask you a different question, though, which is clearly there's a shifting opinion in at least parts of the country around wealth, around affordability, around all of these issues. And the one thing that people in the industry in the Valley and elsewhere haven't done is say, you know what, there is low hanging fruit and things about our tax system that don't make sense. Whether it's carried interest, you may disagree with these kinds of things. We can debate them. You know, Dave Freeberg, who's on the All In podcast, has suggested that we should have higher capital gains rates for people, perhaps at certain types of numbers that match closer to things like income.

18:09Andrew Ross Sorkin:You may be against that. But there are things that, you know, I don't know where you are in a 1031 exchange. I don't know where you are about people taking loans against their stock and then not paying taxes effectively. So that's the trickiest one, I think. Well, but the question is whether the answer to this and nobody seems to be engaged in this conversation is to say, look, we shouldn't be taxing unrealized gains creates all sorts of truly perverse incentives. Right. But there are other things that we could do to raise funds. And by the way, part of it is we need to raise funds. Part of it is we need to cut costs and whether you can actually have that real conversation.

18:48Andrew Ross Sorkin:But it seems to be that either people say we should only be cutting costs on one side, don't raise taxes on me. And the question is whether that is a long term solution. OK, so first, with the basic premise that Silicon Valley wealthy have not proposed other alternatives, I don't think that's fair. I think you just talked about Freeberg's discussion. There should be higher capital gains. Somebody else put forward that anybody that makes under, say, one hundred hundred fifty thousand dollars, no tax at all. Jeff Bezos has made that comment. entirely supportive of that. Look, the top 1 % pays 50 % of California's tax income.

19:22Here's the other issue, though. California is not a good steward of our money. I would be perfectly happy to have a logical conversation about how taxes should be reorganized if I thought something useful would be done for it. We had a$95 billion surplus less than five years ago. They blew through it and more, reset the baseline. It was a one-time gain, and they spent it like it was an annual. What do you think's going to happen? If you hire an extra 100 people on this set because you had a one-time bonus because I dropped$100 million on the table, and then next year, nobody comes along and drops$100 million, oh, woe is us.

19:54We don't have any money to spend. Horrible. We approved$33 billion to build high-speed rail. We spent$15 billion in 18 years, zero miles of high-speed rail. In the same amount of capital spent, Elon put a reusable rocket into base and brought it back and caught it. But we're at 24 percent spending now. We're usually at 20 and we raise the same amount of 18 or 19 percent. So it you know you can say well we could talk about something but all the heat and all the energy and all the discussion is about about raising taxes at the same time that one side is talking about Medicare for all. So there's no genuine impetus to try to cut the 24 percent that we're spending.

20:40That's where the problem, that's why we're at 40 trillion. And working around the edges and its fairness and all these fat cats with their yachts, it doesn't even raise any money. It doesn't even raise any money.