🗳️ Democrats' Poll Numbers Plummeting
- A recent Wall Street Journal poll shows the Democratic Party's approval rating at its lowest in 35 years.
- Only 33% of voters view the party favorably, while 63% view it unfavorably.
- Cruz attributes this to the party being overtaken by extreme left-wing voices and unpopular stances on issues like:
- Open borders
- Defunding the police
- Support for controversial protests
- Gender and youth medical policies
- He warns Republicans not to become complacent despite favorable polling.
💰 Proposal to Save $1 Trillion in Federal Spending
- Cruz proposes ending the Federal Reserve’s practice of paying interest on bank reserves.
- This policy, introduced in 2008, cost taxpayers $168 billion in 2024 alone, with nearly half going to foreign banks.
- Cruz argues that:
- The Fed operated for nearly a century without paying interest on reserves.
- Ending this would encourage banks to lend more and support economic growth.
- It could also help lower interest rates and reduce the deficit.
♠️ Fixing Tax Laws for Professional Poker Players
- A provision in the “One Big Beautiful Bill” changed how gambling losses are deducted.
- Previously, players could deduct 100% of losses from winnings; now only 90% is deductible.
- This results in some players being taxed on income they didn’t actually earn.
- Cruz, along with bipartisan support, is pushing legislation to reverse this change, arguing it's unfair and could drive poker professionals out of the U.S.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Welcome.
Speaker 2 (00:01):
It is Verdict with center, Ted Cruz, Ben Ferguson with
you as always, and Senator it's nice to be with you.
Is We've got a couple of big things to chat
about today, including the Democrats getting the lowest rating from
voters in thirty five years.
Speaker 1 (00:18):
Well, that's right.
Speaker 3 (00:19):
The Wall Street Journal just did a poll and found
that the Democrats' approval rating has plummeted. It is at
the lowest level in thirty five years. It turns out
being angry, filled with rage, and being a party that
stands for nothing but hating Donald Trump, it is not
actually a popular platform. We're going to break that down
and talk about what that means for elections coming up
in twenty six and going forward. Secondly, we're going to
(00:42):
talk about a proposal that I've been championing to cut
spending and to cut spending dramatically, and that is for
the Federal Reserve to stop paying interest on bank reserves.
This is a proposal that could save over a trillion
dollars over ten years. I've made this case directly to
the President of the Oval Office. I've introduced legislation to
(01:03):
make this happen. We're going to talk about exactly what
it would mean and why it makes a difference. And finally,
we're going to talk about an element of the One
Big Beautiful Bill that was an unintended mistake, which is
the One Big Beautiful Bill changed how gambling losses are
counted in taxes and what it did for people like
(01:25):
professional poker players. Is it ended up putting in place
a rule that is wildly unfair, that punishes them, that
taxes them on income they didn't earn. And so I've
joined with some Democrats in terms of trying to fix this.
I hope we can fix it because we ought to
have a tax system that's fair.
Speaker 1 (01:40):
We're gon't explaining that issue to you.
Speaker 2 (01:42):
Also, Yeah, it's also really interesting because it goes back
to part of what the President did with no tax
on tips, and he's like looking out for a little
guys in their jobs. It matters. We're going to break
that down and be very interesting. I want to tell
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Speaker 4 (02:23):
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difference with every call you make. All right, So let's
go to the Democrats in disarray. I have a theory, Senator,
(03:45):
and I want to run it by you. I think
the reason why Democrats are the lowest rating from voters
in thirty five years is because they didn't police their
own party and get rid of the most extreme members
who've now taken over the microphone, the AO momars, the
list goes on and on.
Speaker 4 (04:03):
The guy running for mayor in New.
Speaker 2 (04:04):
York City, the radical Marxist, socialism and communists have taken
over the microphone. And that's why I think the American
people are terrified of them right now?
Speaker 3 (04:13):
Yeah, It's not just they've taken over the microphone, they've
taken over the party. Yeah, there is nobody in the party.
Name one prominent Democrat who has stood up to Comrade Mondami.
You literally have a communist who is the Democrat Party
nominee to be Mayor of New York other than John Fetterman.
And I think John Fetterman is the exception that proves
(04:34):
the rule. Other than John Fetterman, I do not know
a single one of my colleagues in the Senate who
has said a word of criticism that, gosh, may be
a guy calling for the abolition of private property, may
be a guy that is openly calling for a communist government,
is not the best face of the Democrat Party. And
yet nobody disagrees. You look at when Chris van Holland
(04:57):
flies down to El Salvador and has has Margarita's with
an MS thirteen gang member illegal immigrant who's right now
being prosecuted for human trafficking. Not one single Democrat, again
except for John Fetterman, spoke out against it. And so
it's not just that the crazies have been given the microphone.
(05:18):
The crazies have been given the agenda and here's what
the Wall Street Journal reported. The Democrat Party's image has
eroded to its lowest point in more than three decades,
according to a new Wall Street Journal poll, with voter
seeing Republicans is better at handling most issues that decide elections.
The new survey finds that sixty three percent of voters
(05:38):
hold an unfavorable view of the Democratic Party, the highest
share in Journal polls dating to nineteen ninety and thirty
percentage points higher than the thirty three percent who hold
a favorable view. So the Democrats polling is thirty three
percent favorable, sixty three percent unfavorable. Journal goes on to
(06:00):
say that is a far weaker assessment than voters give
to either President Trump or the Republican Party, who are
viewed more favorably than favorably by seven points and eleven points, respectively.
So the Democrats are minus thirty, President Trump is plus
seven and the Republican Party is plus eleven. That is
(06:21):
a huge difference. And what percent of voters do you
think view the Democrats very favorably?
Speaker 2 (06:28):
I'm going to guess it's probably not a very high
number based on the overall polling data. Eight percent, Yeah,
eight percent of America. That's not good. Just so everybody
knows in politics that's.
Speaker 3 (06:39):
Bat And by the way, by comparison, nineteen percent of
Americans view Republicans very favorably, so there's more intensity. People
are very happy and the Democrats nobody except the Communists
are excited about the Democrats. That is a problem going
into an election. It's a huge problem for them.
Speaker 2 (07:01):
And then you go forward with Democrats, They've got everybody
on their team.
Speaker 4 (07:05):
I'm referring to the media.
Speaker 2 (07:07):
I also think some of this comes down to the
fact that there's so many Americans are just going around
the mainstream media now and will never go back. You
look at the canceling, for example, of one of the
late night shows. We talked about that last week, Stephen Colbert.
Speaker 1 (07:19):
Why.
Speaker 2 (07:20):
I think a lot of people are just like, we're
done with you when you alienate half the country and
mock us. And there's so many lies that have happened
over the last five, six seven years that were egregious.
Speaker 4 (07:31):
The Russian Hoa's a great example.
Speaker 2 (07:33):
I think that this is part of the reason one
of the Democratic parties failing right now is because they
don't have people covering for their propaganda.
Speaker 1 (07:41):
Well and they're embracing. You know, it's amazing.
Speaker 3 (07:44):
When a party decides, let's pick five issues and let's
take the wrong side of eighty twenty issues or ninety
ten issues, it turns out that's really bad politics. When
you say, as a party, hey, let's be for open
borders and Venezuelan gang members and relief seeing criminals and
rapists and child blesters, that is a really really unpopular position.
(08:06):
It turns out when you say, hey, let's let's be
for abolishing the police and and attacking ice and fighting
against law enforcement, that is a really really unpopular position.
It turns out when you cheer on pro hamas protesters
who are cheering on we love Hamas, that is a
really really unpopular position. It turns out when you advocate
(08:28):
for boys competing in girls' sports and and for doing
surgeries that sterilize and mutilize, mutilate little boys and girls,
that is a really really unpopular position. And the Democrat
Party as a whole has said, let's look at all
those issues, let's take the wrong side of eighty twenty
or even ninety ten issues, and let's see how that
works out. And the way it works out as you
(08:50):
get the most unpopular Democrat Party in the last thirty
five years.
Speaker 2 (08:53):
What is your biggest concern? And I always say, there's
there's a there's a reaction to every action. Right, it's
low right now, what is the worry that do we
get over confident? Do we not continue to stay together
the party? Because look, we are notorious sometimes about conservatives
of screwing it up when we have these types of leads.
Speaker 4 (09:13):
We have the House, you have the Senate.
Speaker 2 (09:15):
We actually have a chance, I think, to even have
some gains in the midterms. And this is a mid
term I want to be clear that actually is more
favorable towards Democrats and in the districts and there in
the in the Senate seats that are open.
Speaker 4 (09:27):
You look at it.
Speaker 2 (09:28):
We have a real opportunity here to solidify our base
and get even more done with the president.
Speaker 4 (09:33):
What is your worry about that? Though?
Speaker 3 (09:35):
So my concern is twofold. My concern is political, and
my concern is policy. On the political side, when when
one party is out of power, that can be a
dangerous dynamic because even though the Democrat Party is is
very unpopular generally speaking, their hardcore partisans are pissed.
Speaker 1 (09:54):
They are filled with rage. They hate Donald Trump.
Speaker 3 (09:57):
That means they're hard core partisans will crawl over broken glass.
These are the knots that are that are having riots
in the streets of la saying we want more criminal,
illegal aliens in our country. That energy is dangerous. Look
right now, the Democrats are out raising Republicans because their
side is really energized. They hate Trump, and if you
send out an email on the Democrats side, donald Trump
(10:19):
is the devil. Turns out people give a lot of
money because if you're a crazy left winger that that
energizes you. I worry about the enthusiasm gap that on
the right. Look, Republicans buy and large are feeling pretty good.
We're winning massive victories. We talked about last week's podcast.
We went through all of the major victories in the
(10:40):
first six months of President Trump's term.
Speaker 1 (10:42):
That's fantastic.
Speaker 3 (10:43):
But the danger from a political perspective is that our
guys get complacent. Okay, we're winning. Everything's taken care of.
It's not urgent anymore. And that plays out both in
terms of fundraising that people just give less money to
candidates this cycle around, but it also can manifest in turnout.
If the crazies on the left are much more likely
(11:05):
to show up in a midterm and our guys are
complacent and feel like everything's fine, that can yield a
really bad election. Secondly, the policy piece that I worry about.
We've talked a lot on this podcast about the battle
within the Trump administration on tariffs, how there is one
camp within the Trump administration that wants to use tariffs
(11:25):
as leverage to lower the tariffs of our trading partners.
And Scott Bessen, the Treasury Secretary, is in that camp.
Elon Musk when he was part of the White House,
he was very much in that camp, and I'm enthusiastically
in that camp. I very much agree with what the
President has been doing using tariffs, but using them as
a means to an end to lower the tariffs and
(11:47):
remove non tariff barriers so that we can trade more
and export more with our trading partners. The problem, and
we've talked about this a lot in the pod as well,
there is a contingent in this administration that doesn't view
tariffs as a means to an end, that rather views
tariffs as an objective as a good economic outcome. That
(12:08):
we have high teriffs forever, and if that contingent prevails.
I worry next year that if we have really high
tariffs that the US is put in place, and if
our trading partners have really high tariffs retaliatory tariffs, that
we could end up going into a recession. The economy
could turn downhill, and if that happens, that could lead
(12:31):
to a really rough election. And so I'm going to
continue to engage closely and regularly with the President to say,
keep using them as leverage, keep lowering the tariffs of
our trading partners. That will produce good economic results. But
it's not clear which side of that battle is going
to prevail day by day.
Speaker 1 (12:47):
On the policy battle, Yeah, great point there.
Speaker 2 (12:50):
One of the policies that got this president elected was
the issue of fiscal responsibility.
Speaker 4 (12:56):
DOGE was a huge part of that.
Speaker 2 (12:58):
And there is something that is happening in DC and
it deals with eliminating federal reserve interest payments on reserves.
This could sound certainly wonky and like wait what or hey,
it's over my head, this is actually something that is
about reform. It is within the federal reserve, and it's
(13:18):
something that I think is very clear long overdo and
can have a major impact for all Americans.
Speaker 4 (13:23):
Dive into how this could work.
Speaker 3 (13:26):
Yeah, So this is an idea that I went to
the White House, went to the Oval Office, and I
pitched to President Trump in the middle of the One Big,
Beautiful bill. And in terms of spending cuts, I gave
the President a total three trillion dollars of spending cuts
that we could have included in the bill, and that
I think we should have included in the bill. Ultimately,
my views did not prevail, and we didn't do it
(13:48):
on this first reconciliation bill. I hope we come back
and do it on a later reconciliation bill and we
can have two more reconciliation bills. This idea is one
of the biggest ticket items because if we do what
I'm suggesting, we could save over one trillion dollars over
the next ten years.
Speaker 1 (14:07):
That is a big, big number.
Speaker 3 (14:09):
You know, when we were doing reconciliation, we were pulling
our hair out to save fifty billion or one hundred
billion dollars. One trillion is a lot of money. No, No,
what does this issue mean? So banks, big banks, they
store reserves and they deposit reserves with the Federal Reserve.
Speaker 1 (14:27):
Now that.
Speaker 3 (14:28):
Now, the Federal Reserve was created in nineteen thirteen, and
from nineteen thirteen until two thousand and seven.
Speaker 1 (14:36):
How did it work?
Speaker 3 (14:37):
Banks would keep reserves with the Fed and they would
get paid zero nothing for the reserves. There was a requirement.
It was typically about ten percent. So if you're a
big bank, let's say you've got one hundred billion dollars
in deposits, you were required to keep ten billion dollars
with the FED. You didn't get paid any interest on it.
You just had to keep that there because it's what's
(14:59):
called fraction banking, which is you had one hundred billion
dollars in deposits, ninety billion of it you'd loan out.
You'd loan out to individuals, you'd loaned out for home mortgages,
you'd loanded out for car loans, you'd loaded out to
small businesses. So off the hundred billion in deposits, you
didn't have ninety billion of it, but you were required
to keep typically about ten percent, just keep it with
the Fed. So that if Ben Ferguson comes in and says, hey,
(15:21):
I want to withdraw a thousand dollars because you know,
I want to go buy a nice present for my wife.
They had to have the thousand dollars to give you.
So that's the way the system worked for almost one
hundred years. Then, starting in two thousand and eight, when
you had the Great Financial Crisis, Congress changed the law
(15:42):
and the Fed began paying interest on reserves, So the
reserves that the banks kept with the Fed, they began
paying interest. Now, at the time, the interest rate was
incredibly low, and so two thousand and eight, you know,
you had financial chaos everywhere. You know, how much the
FED paid in interest on reserves, and the entirety of
two thousand and eight, how much about one billion dollars,
(16:07):
So in big picture budgetary terms, a very small amount,
it was. It was almost nominal. But it was the
first year they began paying interest on reserves. Since two
thousand and eight, they've been paying interest on reserves going forward,
and it was small. It was small most of the
time until the last two years of Joe Biden, and
(16:27):
the last two years of Joe Biden, the interest rate
went up and up and up, and for both twenty
twenty three and twenty twenty four, the FED paid over
one hundred billion dollars in interest on reserves.
Speaker 4 (16:43):
Wow.
Speaker 1 (16:44):
Last year.
Speaker 2 (16:45):
But it's just pure tax dollars. You're paying your taxes
and that money is just going to interest.
Speaker 1 (16:50):
Period interest to giant banks.
Speaker 3 (16:53):
So it is literally the FED is transferring your tax
dollars to the biggest banks in the world.
Speaker 1 (16:58):
Now it gets worse.
Speaker 3 (17:00):
So they no longer have a requirement a reserve requirement
of say ten percent.
Speaker 1 (17:05):
There's actually no requirement at all.
Speaker 3 (17:06):
You know why, because they're paying such a big interest
rate that the banks are happy to park their money there.
And in fact, they're not just doing the ten percent reserves,
they're putting a bunch more capital there. Right now today
the FED is paying four point four percent to the
banks to just park their capital with a FED. So
(17:28):
in twenty twenty four, last year, the last year of
the Biden administration, the FED paid one hundred and sixty
eight billion dollars in interest on reserves. That's tax payer
money that went straight to giant Wall Street banks.
Speaker 1 (17:45):
I think that makes no sense. I think we need
to end that.
Speaker 2 (17:48):
So what is it going to be the obviously a
hold up here, it seems like it's a sane policy.
Is it going to be the lobbyist and how many
people are being lobbied by the big banks to not
change this.
Speaker 4 (18:00):
Is this going to be fighting also the federal Reserve.
I mean, where are the road?
Speaker 1 (18:04):
Yes?
Speaker 4 (18:04):
Yes, and dive in.
Speaker 2 (18:06):
I mean, because this seems like a very simplistic, fiscal
responsible thing to do. You would certainly do this in
the private sector in your own life, so why wouldn't
the government do the same thing.
Speaker 3 (18:17):
So I'll tell you, well, we were in the middle
of the one Big Beautiful Bill. I went on TV.
I went on Squakbox on CNBC. I love doing Squakbox.
It's one of my favorite shows because they're really smart.
You can get into substance, you can get into details.
In fact, several times I've done what they call guest
hosting Squawkbox, where you spend an hour on TV, and
so instead of a little six minute interview where you
(18:38):
have to do a SoundBite, if you guest host Squalkbox
for an hour, you can really get into substance and
economic issues and issues dealing with finances. So I was
doing Squawkbox during during reconciliation, and I raised this issue
and I got to say Becky Quick, who's one of
the hosts. She's like, oh my goodness, well this would
(18:58):
be terrible. I mean, how could this possibly work? The
Fed couldn't do its job. So there's several arguments that
are made against this. One is, well, the FED uses
this to control interest rates, and that's right. She's like, well,
if you took this away, the FED wouldn't be able
to control interest rates.
Speaker 1 (19:13):
How would they do it?
Speaker 3 (19:14):
And my response was, Becky, the same way they did
it from nineteen thirteen to two thousand and seven. Like
the FED existed for one hundred years and didn't pay
a penny in interest on reserves, and somehow the FED
managed to operate until it began. Ben Bernaki was the
head of the FED at the time, and it was
interesting Ben Bernaki said when this idea was being debated,
(19:37):
he said, well, if we pay interest on reserves, that's
going to be terrible. That's going to be corporate welfare.
People are going to get pissed that we're giving tax
payer money to giant Wall Street banks. That's what Bernaki
said when it was just a billion. Now it is
one hundred and sixty eight billion. But their argument, and listen,
it is true. The Fed's job has become much easier.
(19:58):
They have a very direct way to control interest rates.
Now they're paying four point four percent. If they want
interest rates to go up, they just raise the interest rate.
They say, okay, we'll pay you four point six percent,
and all the other interest rates go up automatically. So
it makes the Fed's job easier. If they don't do that,
they have to do open market transactions to impact the
interest rate. It's much more complicated. But again, they did
(20:20):
it for one hundred years.
Speaker 1 (20:22):
Ben.
Speaker 3 (20:22):
Let me give you another fact that's going to blow
your mind. Of the one hundred and sixty eight billion
dollars that the FED paid last year in interest on reserves.
Speaker 4 (20:32):
Say that number again. You said, one sixty eight billion
billion Colley.
Speaker 3 (20:37):
Roughly half of that, nearly fifty percent, went to foreign banks.
So not even American banks, foreign banks getting tens of
billions of dollars of US tax payer money every year
every year. And so I'll tell you, when I got
off squawk box, I literally walked back to my office
(20:59):
and the CEO of one of the biggest banks in
the United States, a very very well known CEO I'm
not going to name, but he mean, he's someone very
well known.
Speaker 1 (21:07):
He called me very dismayed and saying this is a
terrible idea.
Speaker 3 (21:14):
And I was sort of chuckling, saying, so you're saying
you like getting billions of dollars of taxpayer funds every year.
And his argument was, well, look, if the FED stops
paying interest on reserves, it's very simple, We'll just buy
treasuries instead. So you have to pay pay interest regardless now,
(21:35):
and he said, and if you don't let us, if
you just make us keep reserves, that's confiscation. And you
can't do that. And I'll tell you my reaction. Let
me take each of those arguments that he made. On
the first one, the FED would be forced to buy treasuries, well,
or I'm sorry, not the FED. The banks would be
forced to buy treasuries instead of just parking their money
(21:57):
at the FED. That in and of itself would be
a good outcome. Look, there's a lot of concern about
a failed FED auction. If the banks were buying treasuries,
that would create demand for treasuries. And you know, one
of the things that would do it would drive down
the interest rate by creating more demand for treasuries, which means, listen,
(22:19):
one of the things Donald Trump is trying very hard
to do is to get the Fed to lower the
interest rate, and Ja Powell doesn't want to do it.
This change would create a market dynamic that would lower
interest rates.
Speaker 1 (22:32):
That's a good thing.
Speaker 3 (22:34):
Secondly, you got a ton of money that are what
are called excess reserves. They're beyond what a reasonable reserve
requirement is and it's just sitting at the Fed.
Speaker 1 (22:44):
You know what that means.
Speaker 3 (22:45):
It means those billions of dollars or even those trillions
of dollars are not being loaned to small businesses. They're
not being loan to open a new store, to buy
new equipment, to hire new workers, to expand a new study.
They're not creating jobs. It's just sitting there. The Fed
is paying them just park your capital and do nothing.
I'd much rather banks, if they want to earn a return,
(23:09):
have to make loans and loan that out. And as
for the second argument that this CEO said of, well,
if you don't let them buy treasuries, you just force
them to keep reserves.
Speaker 1 (23:20):
And he said that's confiscation.
Speaker 3 (23:23):
I would point out for the entire history of our
country that has been the law. There has been a
reserve requirement that's called fractional banking. You know if you
have a bank. Again use the example. You got a
bank with one hundred billion dollars. It has not been
legal for most of the history of our country for
someone to take a hundred million dollars in deposits and
loan out one hundred million dollars.
Speaker 1 (23:42):
Why is that not legal?
Speaker 3 (23:44):
Because if your depositors come in and say, hey, can
I have my money back, if they've loaned all the
money out, they don't have money to give it back
to you. And so we have long had a regulatory
system that says you have to keep a reasonable reserve
so that if your depositors want their money back, you
can pay them. That has never been confiscation, and so
the banks have loved it because they have made massive
(24:05):
amounts of money. Just ending this on one provision over
ten years would save more than one trillion dollars. It's
a powerful, powerful idea, but I got to say, they're
really powerful forces that do not want to see this happen.
Speaker 2 (24:24):
I want to finally move to that fix that you
mentioned coming for the one Big Beautiful Bill. There's a
push it's actually bipartisan, to undo a gambling tax hike
that they passed in the megabill, and there was an
outcry because it's, as you mentioned, it's unfair how it
was written specifically to one group of people in the
(24:45):
job that they do.
Speaker 3 (24:46):
Yeah, so there was a little provision that was written
in the one big, beautiful bill, and nobody saw this.
This was a tiny little provision. That the bill is
a massive bill, it's thousands of pages. And what this
provision said is it is it deals with how you
pay taxes on gambling winnings and losses. And the way
the law used to work was very common sense, which
(25:08):
is that you deduct your losses from your wins and
you pay taxes on your net what you actually made
your profit. That's actually a sensible way to do a
tax law. The change now anyone gambling can only deduct
ninety percent of their losses rather than one hundred percent
of their losses. Now what does that mean. Let's take
(25:30):
for example, as you know, I like to play poker.
I play poker with a lot of buddies. I always
play really low stakes poker, but I enjoy the game
and I've got several friends who are poker pros. So
you know I do every year I do a fundraiser
in Vegas. That raises money for my campaign, and we
get people who come and hang out, and several poker
(25:50):
players come and hang out with us and play poker.
And so let's say you're and there. Look I like,
I think poker is a fascinating game. It is strategic game.
It involves math, but it involves reading people. I love
watching like the World Series of Poker, watching the strategy.
There's a whole vibrant world of people who earn their
(26:13):
livings playing professional poker. And it's uh, you know, as
you know. I several years ago I got a chance.
I played on Poker after Dark and and and I
played with with Doyle Brunson and Phil Hellmuth and and
Doyle Brunson who was known as Texas Dolly and one
of the greatest poker players to ever live. It was
truly a bucket list experience to play with him. I
(26:34):
also played with mister Beast, which was really fun. I
got to tell you sitting down, I was really really
excited to be playing with with Doyle and playing with
Phil Hellmuth.
Speaker 1 (26:46):
Doyle.
Speaker 3 (26:46):
So my goal going in, look, both of them are
much much better players than I am, obviously, Uh.
Speaker 1 (26:51):
My goal was just to take chips off them.
Speaker 3 (26:53):
I wanted to win at least one hand and be like,
all right, I want a hand and took chips.
Speaker 1 (26:58):
I ended up being being lucky doing better than that.
Speaker 3 (27:00):
And so with Doyle I went all in and ended
up busting him out, which is and you can watch
it if you want to Google you can watch online
me busting Doyle Brunson out. That was astonishing and I
got to say he was so gracious. I mean he
Doyle has since passed, but he won the very first
World Series of poker and is just a legendary poker player.
(27:23):
That was incredibly meaningful. And then towards the end of
the game on Poker after Dark, I was playing with
Phil Hellmuth. Phil Hellmuth, Phil will tell you he's the
greatest poker player alive by any measure. He certainly one
of the greatest poker players alive, and he's got a
good argument that he may be the greatest. Between Doyle
and Phil, they had at the time twenty five bracelets,
(27:45):
which means together they had won twenty five different World
Series events. To give you a sense of just how
accomplished these two players are. Phil and I end up,
We're playing Texas hold him and I went all in
and I had Ace King and he had Ace Queen,
so I had him dominated. I was a massive favorite.
(28:06):
I was about a three to one favorite. And then
what ends up happening is Phil got lucky and he
sucked out a queen and it was funny Phil, and
so he crippled me. Didn't knock me out, but he
basically crippled me, and then I went out a couple
of hands later.
Speaker 1 (28:21):
It was funny. Phil was embarrassed.
Speaker 3 (28:23):
Because I got my chips in as the dominant favorite
and he just got lucky, and he was like, oh,
I feel terrible to win like that.
Speaker 1 (28:30):
I'm like, Phil, I am thrilled.
Speaker 3 (28:32):
If I played that hand one hundred times, I'd want
to play it exactly the same way and get my
chips in every time. And look, that's why they call
it gambling, because some chunk of it you lose. Anyway,
let's talk about what this provision does. Let's say you're
a poker pro, and let's say in a given year,
you lose one hundred thousand dollars playing poker, and you
(28:55):
win one hundred and thirty thousand dollars Okay, so you're
you know, you're not a super rich play but you're
out playing, and you know you made you netted thirty grand.
Thirty grand is what you made that year. Ordinarily, you
would deduct the hundred grand from the one hundred and
thirty grand, and you would pay taxes on the thirty
thousand profit you had.
Speaker 4 (29:14):
Which, by the way, is exactly what everyone else.
Speaker 1 (29:16):
Does right now.
Speaker 3 (29:18):
Under the new law, you lose one hundred grand that year,
you make one hundred and thirty, you could only deduct
ninety percent of one hundred grand you lost, which means,
instead of paying taxes on the thirty grand you made,
you would pay taxes on forty grand. You would end
up paying taxes on more than you made. That that's
(29:42):
wildly unfair, by the way. Even worse than that, let's
assume you had a really lousy year. Let's assume you
want one hundred thousand dollars and lost one hundred thousand dollars,
so you like just netted nothing. You broke even under
this law, you'd have to pay taxes on ten grand
because you could only deduct nine eighty percent of your losses.
So even though you made not a penny, you would
(30:04):
owe taxes on the ten grand. That is wildly unfair.
And I got to tell you, I don't know of
a senator who knew this was in There was a
tiny little provision buried in there. We were moving incredibly
fast at three in the morning, and so nobody saw
it there. When I heard about it, I said, that
makes no sense at all. But it was already pasted,
it was signed in a law at the time I
(30:24):
heard about it. And so what I've done, I've joined
with the two Nevada senators, with Catherine Cortez Mastow and
Jackie Rosen. They're both Democrats, and also Bill Haggert, who
was a Republican, and all four of us have joined
in legislation to fix this. I think we need to
fix it. We should not be treating people unfairly. The
income tax should tax people on real income, not imaginary income.
Speaker 1 (30:48):
That is unfair.
Speaker 3 (30:49):
I don't know that we'll get it fixed, because look,
changing anything in the law is complicated, but I hope
we will because I can tell you I don't know
of a senator, Republican or Democrat, who's arguing this is
a good idea. I've sat and talked with the number
of my colleagues, and it's not like someone is taking
the other side and saying no, let's let's let's be
wildly unfair. I hope we can get this fixed, and
(31:14):
I think we need to because because we need to
be fair and and look, there's a whole industry, particularly
around Vegas, of people who are poker pros and make
their livings and and generate a lot of revenue. And
if we don't change this, the effect will be to
drive those poker pros out of the US. We will
force them to go elsewhere. That that would be really
(31:36):
a tragic outcoming. So I don't want to see that happen.
Speaker 2 (31:39):
Yeah, no doubt about it. Don't forget. We do this
show Monday, Wednesday Friday. Hit that subscribe or auto download
button wherever you get this podcast, Please write us that
review and share this. It makes a huge difference in
whose season And here's a show and we will see
you back here on Wednesday morning.
Welcome.
Speaker 2 (00:01):
It is Verdict with center, Ted Cruz, Ben Ferguson with
you as always, and Senator it's nice to be with you.
Is We've got a couple of big things to chat
about today, including the Democrats getting the lowest rating from
voters in thirty five years.
Speaker 1 (00:18):
Well, that's right.
Speaker 3 (00:19):
The Wall Street Journal just did a poll and found
that the Democrats' approval rating has plummeted. It is at
the lowest level in thirty five years. It turns out
being angry, filled with rage, and being a party that
stands for nothing but hating Donald Trump, it is not
actually a popular platform. We're going to break that down
and talk about what that means for elections coming up
in twenty six and going forward. Secondly, we're going to
(00:42):
talk about a proposal that I've been championing to cut
spending and to cut spending dramatically, and that is for
the Federal Reserve to stop paying interest on bank reserves.
This is a proposal that could save over a trillion
dollars over ten years. I've made this case directly to
the President of the Oval Office. I've introduced legislation to
(01:03):
make this happen. We're going to talk about exactly what
it would mean and why it makes a difference. And finally,
we're going to talk about an element of the One
Big Beautiful Bill that was an unintended mistake, which is
the One Big Beautiful Bill changed how gambling losses are
counted in taxes and what it did for people like
(01:25):
professional poker players. Is it ended up putting in place
a rule that is wildly unfair, that punishes them, that
taxes them on income they didn't earn. And so I've
joined with some Democrats in terms of trying to fix this.
I hope we can fix it because we ought to
have a tax system that's fair.
Speaker 1 (01:40):
We're gon't explaining that issue to you.
Speaker 2 (01:42):
Also, Yeah, it's also really interesting because it goes back
to part of what the President did with no tax
on tips, and he's like looking out for a little
guys in their jobs. It matters. We're going to break
that down and be very interesting. I want to tell
you real quick about our friends over at Patriot Mobile.
If you're like me and you've made a commitment that hey,
you're gonna spend money with companies that are aligned with
(02:04):
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but there's one that I have been with for years,
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They've been on the front lines as a company fighting
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Speaker 4 (02:23):
And it's really awesome how this works.
Speaker 2 (02:25):
You switch to Patriot Mobile and about five percent of
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(02:45):
gonna have every month, you're actually standing up for what
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The other great thing about this is they've gotten exceptional
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Speaker 4 (03:00):
What does that mean? You don't have to worry?
Speaker 2 (03:01):
And literally there are hundreds of thousands of Americans who
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(03:23):
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difference with every call you make. All right, So let's
go to the Democrats in disarray. I have a theory, Senator,
(03:45):
and I want to run it by you. I think
the reason why Democrats are the lowest rating from voters
in thirty five years is because they didn't police their
own party and get rid of the most extreme members
who've now taken over the microphone, the AO momars, the
list goes on and on.
Speaker 4 (04:03):
The guy running for mayor in New.
Speaker 2 (04:04):
York City, the radical Marxist, socialism and communists have taken
over the microphone. And that's why I think the American
people are terrified of them right now?
Speaker 3 (04:13):
Yeah, It's not just they've taken over the microphone, they've
taken over the party. Yeah, there is nobody in the party.
Name one prominent Democrat who has stood up to Comrade Mondami.
You literally have a communist who is the Democrat Party
nominee to be Mayor of New York other than John Fetterman.
And I think John Fetterman is the exception that proves
(04:34):
the rule. Other than John Fetterman, I do not know
a single one of my colleagues in the Senate who
has said a word of criticism that, gosh, may be
a guy calling for the abolition of private property, may
be a guy that is openly calling for a communist government,
is not the best face of the Democrat Party. And
yet nobody disagrees. You look at when Chris van Holland
(04:57):
flies down to El Salvador and has has Margarita's with
an MS thirteen gang member illegal immigrant who's right now
being prosecuted for human trafficking. Not one single Democrat, again
except for John Fetterman, spoke out against it. And so
it's not just that the crazies have been given the microphone.
(05:18):
The crazies have been given the agenda and here's what
the Wall Street Journal reported. The Democrat Party's image has
eroded to its lowest point in more than three decades,
according to a new Wall Street Journal poll, with voter
seeing Republicans is better at handling most issues that decide elections.
The new survey finds that sixty three percent of voters
(05:38):
hold an unfavorable view of the Democratic Party, the highest
share in Journal polls dating to nineteen ninety and thirty
percentage points higher than the thirty three percent who hold
a favorable view. So the Democrats polling is thirty three
percent favorable, sixty three percent unfavorable. Journal goes on to
(06:00):
say that is a far weaker assessment than voters give
to either President Trump or the Republican Party, who are
viewed more favorably than favorably by seven points and eleven points, respectively.
So the Democrats are minus thirty, President Trump is plus
seven and the Republican Party is plus eleven. That is
(06:21):
a huge difference. And what percent of voters do you
think view the Democrats very favorably?
Speaker 2 (06:28):
I'm going to guess it's probably not a very high
number based on the overall polling data. Eight percent, Yeah,
eight percent of America. That's not good. Just so everybody
knows in politics that's.
Speaker 3 (06:39):
Bat And by the way, by comparison, nineteen percent of
Americans view Republicans very favorably, so there's more intensity. People
are very happy and the Democrats nobody except the Communists
are excited about the Democrats. That is a problem going
into an election. It's a huge problem for them.
Speaker 2 (07:01):
And then you go forward with Democrats, They've got everybody
on their team.
Speaker 4 (07:05):
I'm referring to the media.
Speaker 2 (07:07):
I also think some of this comes down to the
fact that there's so many Americans are just going around
the mainstream media now and will never go back. You
look at the canceling, for example, of one of the
late night shows. We talked about that last week, Stephen Colbert.
Speaker 1 (07:19):
Why.
Speaker 2 (07:20):
I think a lot of people are just like, we're
done with you when you alienate half the country and
mock us. And there's so many lies that have happened
over the last five, six seven years that were egregious.
Speaker 4 (07:31):
The Russian Hoa's a great example.
Speaker 2 (07:33):
I think that this is part of the reason one
of the Democratic parties failing right now is because they
don't have people covering for their propaganda.
Speaker 1 (07:41):
Well and they're embracing. You know, it's amazing.
Speaker 3 (07:44):
When a party decides, let's pick five issues and let's
take the wrong side of eighty twenty issues or ninety
ten issues, it turns out that's really bad politics. When
you say, as a party, hey, let's be for open
borders and Venezuelan gang members and relief seeing criminals and
rapists and child blesters, that is a really really unpopular position.
(08:06):
It turns out when you say, hey, let's let's be
for abolishing the police and and attacking ice and fighting
against law enforcement, that is a really really unpopular position.
It turns out when you cheer on pro hamas protesters
who are cheering on we love Hamas, that is a
really really unpopular position. It turns out when you advocate
(08:28):
for boys competing in girls' sports and and for doing
surgeries that sterilize and mutilize, mutilate little boys and girls,
that is a really really unpopular position. And the Democrat
Party as a whole has said, let's look at all
those issues, let's take the wrong side of eighty twenty
or even ninety ten issues, and let's see how that
works out. And the way it works out as you
(08:50):
get the most unpopular Democrat Party in the last thirty
five years.
Speaker 2 (08:53):
What is your biggest concern? And I always say, there's
there's a there's a reaction to every action. Right, it's
low right now, what is the worry that do we
get over confident? Do we not continue to stay together
the party? Because look, we are notorious sometimes about conservatives
of screwing it up when we have these types of leads.
Speaker 4 (09:13):
We have the House, you have the Senate.
Speaker 2 (09:15):
We actually have a chance, I think, to even have
some gains in the midterms. And this is a mid
term I want to be clear that actually is more
favorable towards Democrats and in the districts and there in
the in the Senate seats that are open.
Speaker 4 (09:27):
You look at it.
Speaker 2 (09:28):
We have a real opportunity here to solidify our base
and get even more done with the president.
Speaker 4 (09:33):
What is your worry about that? Though?
Speaker 3 (09:35):
So my concern is twofold. My concern is political, and
my concern is policy. On the political side, when when
one party is out of power, that can be a
dangerous dynamic because even though the Democrat Party is is
very unpopular generally speaking, their hardcore partisans are pissed.
Speaker 1 (09:54):
They are filled with rage. They hate Donald Trump.
Speaker 3 (09:57):
That means they're hard core partisans will crawl over broken glass.
These are the knots that are that are having riots
in the streets of la saying we want more criminal,
illegal aliens in our country. That energy is dangerous. Look
right now, the Democrats are out raising Republicans because their
side is really energized. They hate Trump, and if you
send out an email on the Democrats side, donald Trump
(10:19):
is the devil. Turns out people give a lot of
money because if you're a crazy left winger that that
energizes you. I worry about the enthusiasm gap that on
the right. Look, Republicans buy and large are feeling pretty good.
We're winning massive victories. We talked about last week's podcast.
We went through all of the major victories in the
(10:40):
first six months of President Trump's term.
Speaker 1 (10:42):
That's fantastic.
Speaker 3 (10:43):
But the danger from a political perspective is that our
guys get complacent. Okay, we're winning. Everything's taken care of.
It's not urgent anymore. And that plays out both in
terms of fundraising that people just give less money to
candidates this cycle around, but it also can manifest in turnout.
If the crazies on the left are much more likely
(11:05):
to show up in a midterm and our guys are
complacent and feel like everything's fine, that can yield a
really bad election. Secondly, the policy piece that I worry about.
We've talked a lot on this podcast about the battle
within the Trump administration on tariffs, how there is one
camp within the Trump administration that wants to use tariffs
(11:25):
as leverage to lower the tariffs of our trading partners.
And Scott Bessen, the Treasury Secretary, is in that camp.
Elon Musk when he was part of the White House,
he was very much in that camp, and I'm enthusiastically
in that camp. I very much agree with what the
President has been doing using tariffs, but using them as
a means to an end to lower the tariffs and
(11:47):
remove non tariff barriers so that we can trade more
and export more with our trading partners. The problem, and
we've talked about this a lot in the pod as well,
there is a contingent in this administration that doesn't view
tariffs as a means to an end, that rather views
tariffs as an objective as a good economic outcome. That
(12:08):
we have high teriffs forever, and if that contingent prevails.
I worry next year that if we have really high
tariffs that the US is put in place, and if
our trading partners have really high tariffs retaliatory tariffs, that
we could end up going into a recession. The economy
could turn downhill, and if that happens, that could lead
(12:31):
to a really rough election. And so I'm going to
continue to engage closely and regularly with the President to say,
keep using them as leverage, keep lowering the tariffs of
our trading partners. That will produce good economic results. But
it's not clear which side of that battle is going
to prevail day by day.
Speaker 1 (12:47):
On the policy battle, Yeah, great point there.
Speaker 2 (12:50):
One of the policies that got this president elected was
the issue of fiscal responsibility.
Speaker 4 (12:56):
DOGE was a huge part of that.
Speaker 2 (12:58):
And there is something that is happening in DC and
it deals with eliminating federal reserve interest payments on reserves.
This could sound certainly wonky and like wait what or hey,
it's over my head, this is actually something that is
about reform. It is within the federal reserve, and it's
(13:18):
something that I think is very clear long overdo and
can have a major impact for all Americans.
Speaker 4 (13:23):
Dive into how this could work.
Speaker 3 (13:26):
Yeah, So this is an idea that I went to
the White House, went to the Oval Office, and I
pitched to President Trump in the middle of the One Big,
Beautiful bill. And in terms of spending cuts, I gave
the President a total three trillion dollars of spending cuts
that we could have included in the bill, and that
I think we should have included in the bill. Ultimately,
my views did not prevail, and we didn't do it
(13:48):
on this first reconciliation bill. I hope we come back
and do it on a later reconciliation bill and we
can have two more reconciliation bills. This idea is one
of the biggest ticket items because if we do what
I'm suggesting, we could save over one trillion dollars over
the next ten years.
Speaker 1 (14:07):
That is a big, big number.
Speaker 3 (14:09):
You know, when we were doing reconciliation, we were pulling
our hair out to save fifty billion or one hundred
billion dollars. One trillion is a lot of money. No, No,
what does this issue mean? So banks, big banks, they
store reserves and they deposit reserves with the Federal Reserve.
Speaker 1 (14:27):
Now that.
Speaker 3 (14:28):
Now, the Federal Reserve was created in nineteen thirteen, and
from nineteen thirteen until two thousand and seven.
Speaker 1 (14:36):
How did it work?
Speaker 3 (14:37):
Banks would keep reserves with the Fed and they would
get paid zero nothing for the reserves. There was a requirement.
It was typically about ten percent. So if you're a
big bank, let's say you've got one hundred billion dollars
in deposits, you were required to keep ten billion dollars
with the FED. You didn't get paid any interest on it.
You just had to keep that there because it's what's
(14:59):
called fraction banking, which is you had one hundred billion
dollars in deposits, ninety billion of it you'd loan out.
You'd loan out to individuals, you'd loaned out for home mortgages,
you'd loanded out for car loans, you'd loaded out to
small businesses. So off the hundred billion in deposits, you
didn't have ninety billion of it, but you were required
to keep typically about ten percent, just keep it with
the Fed. So that if Ben Ferguson comes in and says, hey,
(15:21):
I want to withdraw a thousand dollars because you know,
I want to go buy a nice present for my wife.
They had to have the thousand dollars to give you.
So that's the way the system worked for almost one
hundred years. Then, starting in two thousand and eight, when
you had the Great Financial Crisis, Congress changed the law
(15:42):
and the Fed began paying interest on reserves, So the
reserves that the banks kept with the Fed, they began
paying interest. Now, at the time, the interest rate was
incredibly low, and so two thousand and eight, you know,
you had financial chaos everywhere. You know, how much the
FED paid in interest on reserves, and the entirety of
two thousand and eight, how much about one billion dollars,
(16:07):
So in big picture budgetary terms, a very small amount,
it was. It was almost nominal. But it was the
first year they began paying interest on reserves. Since two
thousand and eight, they've been paying interest on reserves going forward,
and it was small. It was small most of the
time until the last two years of Joe Biden, and
(16:27):
the last two years of Joe Biden, the interest rate
went up and up and up, and for both twenty
twenty three and twenty twenty four, the FED paid over
one hundred billion dollars in interest on reserves.
Speaker 4 (16:43):
Wow.
Speaker 1 (16:44):
Last year.
Speaker 2 (16:45):
But it's just pure tax dollars. You're paying your taxes
and that money is just going to interest.
Speaker 1 (16:50):
Period interest to giant banks.
Speaker 3 (16:53):
So it is literally the FED is transferring your tax
dollars to the biggest banks in the world.
Speaker 1 (16:58):
Now it gets worse.
Speaker 3 (17:00):
So they no longer have a requirement a reserve requirement
of say ten percent.
Speaker 1 (17:05):
There's actually no requirement at all.
Speaker 3 (17:06):
You know why, because they're paying such a big interest
rate that the banks are happy to park their money there.
And in fact, they're not just doing the ten percent reserves,
they're putting a bunch more capital there. Right now today
the FED is paying four point four percent to the
banks to just park their capital with a FED. So
(17:28):
in twenty twenty four, last year, the last year of
the Biden administration, the FED paid one hundred and sixty
eight billion dollars in interest on reserves. That's tax payer
money that went straight to giant Wall Street banks.
Speaker 1 (17:45):
I think that makes no sense. I think we need
to end that.
Speaker 2 (17:48):
So what is it going to be the obviously a
hold up here, it seems like it's a sane policy.
Is it going to be the lobbyist and how many
people are being lobbied by the big banks to not
change this.
Speaker 4 (18:00):
Is this going to be fighting also the federal Reserve.
I mean, where are the road?
Speaker 1 (18:04):
Yes?
Speaker 4 (18:04):
Yes, and dive in.
Speaker 2 (18:06):
I mean, because this seems like a very simplistic, fiscal
responsible thing to do. You would certainly do this in
the private sector in your own life, so why wouldn't
the government do the same thing.
Speaker 3 (18:17):
So I'll tell you, well, we were in the middle
of the one Big Beautiful Bill. I went on TV.
I went on Squakbox on CNBC. I love doing Squakbox.
It's one of my favorite shows because they're really smart.
You can get into substance, you can get into details.
In fact, several times I've done what they call guest
hosting Squawkbox, where you spend an hour on TV, and
so instead of a little six minute interview where you
(18:38):
have to do a SoundBite, if you guest host Squalkbox
for an hour, you can really get into substance and
economic issues and issues dealing with finances. So I was
doing Squawkbox during during reconciliation, and I raised this issue
and I got to say Becky Quick, who's one of
the hosts. She's like, oh my goodness, well this would
(18:58):
be terrible. I mean, how could this possibly work? The
Fed couldn't do its job. So there's several arguments that
are made against this. One is, well, the FED uses
this to control interest rates, and that's right. She's like, well,
if you took this away, the FED wouldn't be able
to control interest rates.
Speaker 1 (19:13):
How would they do it?
Speaker 3 (19:14):
And my response was, Becky, the same way they did
it from nineteen thirteen to two thousand and seven. Like
the FED existed for one hundred years and didn't pay
a penny in interest on reserves, and somehow the FED
managed to operate until it began. Ben Bernaki was the
head of the FED at the time, and it was
interesting Ben Bernaki said when this idea was being debated,
(19:37):
he said, well, if we pay interest on reserves, that's
going to be terrible. That's going to be corporate welfare.
People are going to get pissed that we're giving tax
payer money to giant Wall Street banks. That's what Bernaki
said when it was just a billion. Now it is
one hundred and sixty eight billion. But their argument, and listen,
it is true. The Fed's job has become much easier.
(19:58):
They have a very direct way to control interest rates.
Now they're paying four point four percent. If they want
interest rates to go up, they just raise the interest rate.
They say, okay, we'll pay you four point six percent,
and all the other interest rates go up automatically. So
it makes the Fed's job easier. If they don't do that,
they have to do open market transactions to impact the
interest rate. It's much more complicated. But again, they did
(20:20):
it for one hundred years.
Speaker 1 (20:22):
Ben.
Speaker 3 (20:22):
Let me give you another fact that's going to blow
your mind. Of the one hundred and sixty eight billion
dollars that the FED paid last year in interest on reserves.
Speaker 4 (20:32):
Say that number again. You said, one sixty eight billion
billion Colley.
Speaker 3 (20:37):
Roughly half of that, nearly fifty percent, went to foreign banks.
So not even American banks, foreign banks getting tens of
billions of dollars of US tax payer money every year
every year. And so I'll tell you, when I got
off squawk box, I literally walked back to my office
(20:59):
and the CEO of one of the biggest banks in
the United States, a very very well known CEO I'm
not going to name, but he mean, he's someone very
well known.
Speaker 1 (21:07):
He called me very dismayed and saying this is a
terrible idea.
Speaker 3 (21:14):
And I was sort of chuckling, saying, so you're saying
you like getting billions of dollars of taxpayer funds every year.
And his argument was, well, look, if the FED stops
paying interest on reserves, it's very simple, We'll just buy
treasuries instead. So you have to pay pay interest regardless now,
(21:35):
and he said, and if you don't let us, if
you just make us keep reserves, that's confiscation. And you
can't do that. And I'll tell you my reaction. Let
me take each of those arguments that he made. On
the first one, the FED would be forced to buy treasuries, well,
or I'm sorry, not the FED. The banks would be
forced to buy treasuries instead of just parking their money
(21:57):
at the FED. That in and of itself would be
a good outcome. Look, there's a lot of concern about
a failed FED auction. If the banks were buying treasuries,
that would create demand for treasuries. And you know, one
of the things that would do it would drive down
the interest rate by creating more demand for treasuries, which means, listen,
(22:19):
one of the things Donald Trump is trying very hard
to do is to get the Fed to lower the
interest rate, and Ja Powell doesn't want to do it.
This change would create a market dynamic that would lower
interest rates.
Speaker 1 (22:32):
That's a good thing.
Speaker 3 (22:34):
Secondly, you got a ton of money that are what
are called excess reserves. They're beyond what a reasonable reserve
requirement is and it's just sitting at the Fed.
Speaker 1 (22:44):
You know what that means.
Speaker 3 (22:45):
It means those billions of dollars or even those trillions
of dollars are not being loaned to small businesses. They're
not being loan to open a new store, to buy
new equipment, to hire new workers, to expand a new study.
They're not creating jobs. It's just sitting there. The Fed
is paying them just park your capital and do nothing.
I'd much rather banks, if they want to earn a return,
(23:09):
have to make loans and loan that out. And as
for the second argument that this CEO said of, well,
if you don't let them buy treasuries, you just force
them to keep reserves.
Speaker 1 (23:20):
And he said that's confiscation.
Speaker 3 (23:23):
I would point out for the entire history of our
country that has been the law. There has been a
reserve requirement that's called fractional banking. You know if you
have a bank. Again use the example. You got a
bank with one hundred billion dollars. It has not been
legal for most of the history of our country for
someone to take a hundred million dollars in deposits and
loan out one hundred million dollars.
Speaker 1 (23:42):
Why is that not legal?
Speaker 3 (23:44):
Because if your depositors come in and say, hey, can
I have my money back, if they've loaned all the
money out, they don't have money to give it back
to you. And so we have long had a regulatory
system that says you have to keep a reasonable reserve
so that if your depositors want their money back, you
can pay them. That has never been confiscation, and so
the banks have loved it because they have made massive
(24:05):
amounts of money. Just ending this on one provision over
ten years would save more than one trillion dollars. It's
a powerful, powerful idea, but I got to say, they're
really powerful forces that do not want to see this happen.
Speaker 2 (24:24):
I want to finally move to that fix that you
mentioned coming for the one Big Beautiful Bill. There's a
push it's actually bipartisan, to undo a gambling tax hike
that they passed in the megabill, and there was an
outcry because it's, as you mentioned, it's unfair how it
was written specifically to one group of people in the
(24:45):
job that they do.
Speaker 3 (24:46):
Yeah, so there was a little provision that was written
in the one big, beautiful bill, and nobody saw this.
This was a tiny little provision. That the bill is
a massive bill, it's thousands of pages. And what this
provision said is it is it deals with how you
pay taxes on gambling winnings and losses. And the way
the law used to work was very common sense, which
(25:08):
is that you deduct your losses from your wins and
you pay taxes on your net what you actually made
your profit. That's actually a sensible way to do a
tax law. The change now anyone gambling can only deduct
ninety percent of their losses rather than one hundred percent
of their losses. Now what does that mean. Let's take
(25:30):
for example, as you know, I like to play poker.
I play poker with a lot of buddies. I always
play really low stakes poker, but I enjoy the game
and I've got several friends who are poker pros. So
you know I do every year I do a fundraiser
in Vegas. That raises money for my campaign, and we
get people who come and hang out, and several poker
(25:50):
players come and hang out with us and play poker.
And so let's say you're and there. Look I like,
I think poker is a fascinating game. It is strategic game.
It involves math, but it involves reading people. I love
watching like the World Series of Poker, watching the strategy.
There's a whole vibrant world of people who earn their
(26:13):
livings playing professional poker. And it's uh, you know, as
you know. I several years ago I got a chance.
I played on Poker after Dark and and and I
played with with Doyle Brunson and Phil Hellmuth and and
Doyle Brunson who was known as Texas Dolly and one
of the greatest poker players to ever live. It was
truly a bucket list experience to play with him. I
(26:34):
also played with mister Beast, which was really fun. I
got to tell you sitting down, I was really really
excited to be playing with with Doyle and playing with
Phil Hellmuth.
Speaker 1 (26:46):
Doyle.
Speaker 3 (26:46):
So my goal going in, look, both of them are
much much better players than I am, obviously, Uh.
Speaker 1 (26:51):
My goal was just to take chips off them.
Speaker 3 (26:53):
I wanted to win at least one hand and be like,
all right, I want a hand and took chips.
Speaker 1 (26:58):
I ended up being being lucky doing better than that.
Speaker 3 (27:00):
And so with Doyle I went all in and ended
up busting him out, which is and you can watch
it if you want to Google you can watch online
me busting Doyle Brunson out. That was astonishing and I
got to say he was so gracious. I mean he
Doyle has since passed, but he won the very first
World Series of poker and is just a legendary poker player.
(27:23):
That was incredibly meaningful. And then towards the end of
the game on Poker after Dark, I was playing with
Phil Hellmuth. Phil Hellmuth, Phil will tell you he's the
greatest poker player alive by any measure. He certainly one
of the greatest poker players alive, and he's got a
good argument that he may be the greatest. Between Doyle
and Phil, they had at the time twenty five bracelets,
(27:45):
which means together they had won twenty five different World
Series events. To give you a sense of just how
accomplished these two players are. Phil and I end up,
We're playing Texas hold him and I went all in
and I had Ace King and he had Ace Queen,
so I had him dominated. I was a massive favorite.
(28:06):
I was about a three to one favorite. And then
what ends up happening is Phil got lucky and he
sucked out a queen and it was funny Phil, and
so he crippled me. Didn't knock me out, but he
basically crippled me, and then I went out a couple
of hands later.
Speaker 1 (28:21):
It was funny. Phil was embarrassed.
Speaker 3 (28:23):
Because I got my chips in as the dominant favorite
and he just got lucky, and he was like, oh,
I feel terrible to win like that.
Speaker 1 (28:30):
I'm like, Phil, I am thrilled.
Speaker 3 (28:32):
If I played that hand one hundred times, I'd want
to play it exactly the same way and get my
chips in every time. And look, that's why they call
it gambling, because some chunk of it you lose. Anyway,
let's talk about what this provision does. Let's say you're
a poker pro, and let's say in a given year,
you lose one hundred thousand dollars playing poker, and you
(28:55):
win one hundred and thirty thousand dollars Okay, so you're
you know, you're not a super rich play but you're
out playing, and you know you made you netted thirty grand.
Thirty grand is what you made that year. Ordinarily, you
would deduct the hundred grand from the one hundred and
thirty grand, and you would pay taxes on the thirty
thousand profit you had.
Speaker 4 (29:14):
Which, by the way, is exactly what everyone else.
Speaker 1 (29:16):
Does right now.
Speaker 3 (29:18):
Under the new law, you lose one hundred grand that year,
you make one hundred and thirty, you could only deduct
ninety percent of one hundred grand you lost, which means,
instead of paying taxes on the thirty grand you made,
you would pay taxes on forty grand. You would end
up paying taxes on more than you made. That that's
(29:42):
wildly unfair, by the way. Even worse than that, let's
assume you had a really lousy year. Let's assume you
want one hundred thousand dollars and lost one hundred thousand dollars,
so you like just netted nothing. You broke even under
this law, you'd have to pay taxes on ten grand
because you could only deduct nine eighty percent of your losses.
So even though you made not a penny, you would
(30:04):
owe taxes on the ten grand. That is wildly unfair.
And I got to tell you, I don't know of
a senator who knew this was in There was a
tiny little provision buried in there. We were moving incredibly
fast at three in the morning, and so nobody saw
it there. When I heard about it, I said, that
makes no sense at all. But it was already pasted,
it was signed in a law at the time I
(30:24):
heard about it. And so what I've done, I've joined
with the two Nevada senators, with Catherine Cortez Mastow and
Jackie Rosen. They're both Democrats, and also Bill Haggert, who
was a Republican, and all four of us have joined
in legislation to fix this. I think we need to
fix it. We should not be treating people unfairly. The
income tax should tax people on real income, not imaginary income.
Speaker 1 (30:48):
That is unfair.
Speaker 3 (30:49):
I don't know that we'll get it fixed, because look,
changing anything in the law is complicated, but I hope
we will because I can tell you I don't know
of a senator, Republican or Democrat, who's arguing this is
a good idea. I've sat and talked with the number
of my colleagues, and it's not like someone is taking
the other side and saying no, let's let's let's be
wildly unfair. I hope we can get this fixed, and
(31:14):
I think we need to because because we need to
be fair and and look, there's a whole industry, particularly
around Vegas, of people who are poker pros and make
their livings and and generate a lot of revenue. And
if we don't change this, the effect will be to
drive those poker pros out of the US. We will
force them to go elsewhere. That that would be really
(31:36):
a tragic outcoming. So I don't want to see that happen.
Speaker 2 (31:39):
Yeah, no doubt about it. Don't forget. We do this
show Monday, Wednesday Friday. Hit that subscribe or auto download
button wherever you get this podcast, Please write us that
review and share this. It makes a huge difference in
whose season And here's a show and we will see
you back here on Wednesday morning.
Host
Ben Ferguson
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