A tale of two debt dramas on Capitol Hill

Make Me Smart June 1, 2023 Transcript

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Kai Ryssdal 

We may begin. Also it’s just too cold.

Kimberly Adams 

Hello, I’m Kimberly Adams. Welcome back to make me smort.. make me smart. Jeez not a great way to start. Welcome back to make me smart where we make today make sense and Happy pride to everybody celebrating.

Kai Ryssdal 

I’m Kai Ryssdal, thanks for joining us. Today we’re gonna do the news fix then the smile thing. Call it a day. Let’s get started shall we? What do you got? Kimberly Adams.

Kimberly Adams 

Two nice bits of Washington news. One, of course, quasi debt ceiling related, but the other one also debt related in a different way. So, you know, I like to segue. So debt ceiling in this bill that looks very much like it’s going to be you know, making it to Biden before the deadline at this point. Seems to be, knock on wood, through the hard parts at this point. Although there’s some scuffling over on the Senate side from folks who don’t like the potential spending cuts on the defense side if they aren’t able to agree to stuff down the road. But whatever. Anywho, in this legislation is some changes to SNAP benefits and cash assistance for needy families… Temporary Assistance for Needy Families known as TANF, known as you know, welfare cash. Highly recommend Krissy Clark and The Uncertain Hour team and all the work that they’re they’re doing on work requirements related to welfare, the history behind it and how it actually works. Because that’s very relevant to what is actually in this legislation, which is increasing the age up to which you would have to have, you would have to do up to 80, at least 80 hours a month of work in order to qualify for some of these benefits, particularly food stamps. And as the Washington Post points out, while this can potentially, you know, limit the number of people on this program, therefore potentially saving the government money. A lot of the people who need these benefits the most who are older, might have worked really physically demanding jobs when they’re younger, which makes it harder as you get older to continue to work, you know, a lot of hours in a month. So just that’s something that might show up in that regard. However, it’s interesting, but the new legislation would also create new exceptions on who’s required to work. Veterans, homeless people and adults aged 18 to 24 who were previously in foster care will be exempt from the new work requirement. And that’s new. And so that could potentially expand the number of people who have access to these food benefits in particular if people who are homeless or temporarily without housing, don’t have to prove that they’re working eight hours a week, doesn’t mean they’re not working 80 hours a month, sorry, 80 hours a month, it just means they don’t have to prove it. Same with veterans and people who’ve recently aged out of the foster care system. And that could, according to the CBO, an additional 78,000 people a month on average will qualify for SNAP benefits as a result of this chain change, resulting in $1.8 billion in extra spending for these low income folks. So I thought that was very interesting and will make a big difference to quite a few people. Okay, so the other congressional action related to debt is related to the student loan debt program. In this debt relief bill it acknowledges the thing that Biden has been saying, which is that student loan payments are going to start kicking back in and he’s got this big student debt relief program that’s being held up in the courts. But even as the courts are trying to hammer out what to do with it, Congress has now voted to overturn his debt relief program, or to block his debt relief program. The House and the Senate have passed a bill to block President Biden student student debt relief program. 52-46 on the Senate side, passed on mainly party lines in the House. But on the Senate side 52-46 because Joe Manchin and Kyrsten Sinema, I hesitate to say cross the aisle because they don’t really spend too much time on the Democratic side anyway. But anyway, they voted with Republicans on this one. Biden says he’s going to veto it. I think this is going to be like his fifth veto of his presidency, if I’m not mistaken. But uh, you know, it passed and just marking it, that’s all.

Kai Ryssdal 

Yeah, yeah. 52-46 though, ain’t veto override territory. So you know.

Kimberly Adams 

Not in the tiniest bit. Right. So it’s not gonna happen. I just do think it’s useful to note when what makes it through Congress, even if it doesn’t become law because that means they’ve, they’ve marked down who’s voted for it which means that in another presidential election cycle, even if it doesn’t make it through this time, they’ve got that legislation pretty much done and they know where their support is. Which means if there were a different president in the White House now, that would have made it through. And that means that is legislation ready to go if there’s a different person in the White House in 2025.

Kai Ryssdal 

Yes. Oh good for you for remembering that inauguration is a year later.

Kimberly Adams 

Thank you. Thank you took me a second.

Kai Ryssdal 

Okay so this one is firmly in the category of “TOLD YOU SO TOLD YOU SO TOLD YOU SO” an article in Bloomberg today… sorry I gotta open the door for Willie. But I mean, come on who didn’t see this coming? The headline in the article is “Billionaire SPAC Kings Dragged to Court After Boom Goes Bust.” We all remember what SPACs were right? Special Purpose Acquisition Companies. It’s a way for companies to go public without really going public and for investors, specifically big money investors to make a boatload of money seemingly really easily and often at the expense of regular investors. Well, it has come to tears. The subhead on on this Bloomberg piece is “with more than 100 SPACs down more than 90%,” that is to say the share prices have lost 90% “investor suits are mounting.” And the allegations in the suits are that these big money investors had allegations to push the deals through this so that they could become bigger money investors. Anybody who didn’t see this coming see me after class. For reals, for reals. I just… Anyway, that’s that. I just want to point that out. You all should read it. But we knew it was coming. It was, it was a, it was a moment of frenzy. And and holy cow, you got to keep your mind when all about you are losing theirs. Item number two and not to be wonky.

Kimberly Adams 

Can I just quickly add to that?

Kai Ryssdal 

Yes please.

Kimberly Adams 

There was that piece in The Journal a couple of days ago about how all of these company insiders made billions of dollars off these SPACS just before because The Journal I guess reviewed all these like insider trading documents on whatever. And said executives and early investors and companies that went public via Special Purpose Acquisition Companies sold shares worth $22 billion dollars through well time trade, profiting before share prices collapsed. So that’s where that lawsuit comes from.

Kai Ryssdal 

Just ugh anyway. So there’s that. Just because I made such a big deal of it while it was happening and while it was unclear as to whether or not there was actually going to be a debt limit deal, which while technically still unclear I believe it is actually going to happen. I talked a lot about the short term treasury yields and how those that were expiring into the middle of what would have been a default, had spiked to at or near 7% a week ago. Those rates on on short term T bills back down to a much more reasonable although still elevated, elevated 5.4%. So the bond market is paying attention. Had you been looking at it early on, in say the beginning of May, you would have had a precursor of the damage that could have been done. And now the bond market is calming down. And I think that tells you that bond traders are reasonably sanguine that this deal is gonna get done. As am I.

Kimberly Adams 

But we were not for a little bit. There were a decent number of people…

Kai Ryssdal 

Look that the Senate could still booger this up. There’s no question about it. They absolutely could. They absolutely could. I think for me, the real question is what happens next time? Because I wonder if enough Democrats are P-Oed enough, shall we say to keep it without the E rating. Bridget Bodnar thank you very much. If enough Democrats are P-Oed actually the ammount of drive to get rid of the debt ceiling once and for all. Not that it’s going to clear the Senate but the momentum has to start someplace. And as I had been on the record saying many a-time, this is the stupidest way in the world to run the biggest and most important economy in the world. Just so stunningly stupid.

Kimberly Adams 

I actually and this is me like layering on hypothetical after hypothetical after hypothetical… If we are in a situation where the person who wins the 2024 presidential election is not going to be the most stable for our economy, I can very much imagine…

Kai Ryssdal 

She says euphemistically

Kimberly Adams 

A lame duck Congress between November and January, knowing that another debt limit is coming up, passing some legislation to try to buffer that risk.

Kai Ryssdal 

I yeah, I think I endorsed that. I think that’s absolutely a reasonable summary. Yeah, for sure. For sure.

Kimberly Adams 

All right.

Kai Ryssdal 

Let’s hope we dont get there shall we? Because we don’t need that. Anyway Drew.

Kimberly Adams 

Sports one.

Kai Ryssdal 

Okay. I do have a sports one, and I’m a sports guy. I like sports. But I’m not a basketball guy. But the New York Times today did one of those interactives that makes you guess where the ball is… I don’t know if you’ve seen these, like when the World Cup was on, they showed a bunch of pictures. And the ball was removed from the equation and you had to guess where the pass was going or where the ball was going to be based on players positions and all the shifts. And it’s  a fun little, fun little sort of trivia like thing about, you know, where’s this ball gonna go? Anyway, NBA finals start tonight. Denver and Miami. I’m not gonna watch the game because I don’t like hoops. But the New York Times did another fun interactive today to see if you can guess where the pass is gonna go. Because NBA players, the really good ones and some of the not really good ones, can just like pass the ball like crazy and not even look and just dish the ball off. And it’s just a fun little, you know, see how the trivia thing goes. And I did it today. I got 8 out of 10. I sent it to my kids. And of course one of my sports crazed sons who will be watching this game got a 9 out of 10. So I have been bested by my own children, which is not news, I suppose. Anyway.

Kimberly Adams 

I feel like I shouldn’t even attempt this.

Kai Ryssdal  

Oh you should try it. Just try it.

Kimberly Adams 

I did very well on the Kentucky Derby versus inauguration… not inauguration, coronation hat game that one outlet did.

Kai Ryssdal 

Oh, did you? That’s funny.

Kimberly Adams 

I did very well on that. Was at the derby or at coronation? That I did well on. But I don’t know if I’m gonna do well on this one.

Kai Ryssdal 

That’s a sports analog. I’ll take that. That was good. Yeah. Gotta pick your lane.

Kimberly Adams 

Yeah, exactly. All right. Mine is just something that I thought was just so heartwarming, and I saw it on TikTok. And it’s this video about, somebody I guess in Vancouver or somewhere in Canada, who found a wingless Bumblebee and thought that it was like about to die, but they like put their hand down and Bumblebee like crawled onto it and they took it home. And they started giving it like flowers and little sponges soaked with honey and water. And they basically had a pet wingless Bumblebee for like a month. And the bumblebee got all jacked because it could only crawl around and since it couldn’t fly. And so its legs got all buff. And they were like taking it out to different places where it could hang out with other bees. And you know, set up this little terrarium and everything for it. And unfortunately, the lifespan of a bumblebee is only like 28 days, but it lived even longer than a month. But it was really a beautiful little snapshot of just like somebody who took a very small, helpless creature and had an amazing month of interacting with a creature that they didn’t even realize could have like a personality to it. And it’s just very sweet. And it made me smile. And the bumblebee, they named it Ruby, is very, very cute.

Kai Ryssdal 

Oh that’s funny.

Kimberly Adams 

Yeah, I thought it was very sweet. And so be nice to bumblebees. We need our pollinators.

Kai Ryssdal 

There you go. Be nice to bees. Alright, we’re done. Back tomorrow for economics on tap. We’ll do the YouTube livestream at 6:30 Eastern, 3:30 out here on the best Coast. News, game, drinks. I’m probably having coffee because I gotta think I gotta do tomorrow night. Anyway, just so everyone knows.

Kimberly Adams 

I’m gonna start off the month with a mocktail. So I’m going to be digging into all of my little items.

Kai Ryssdal 

Make Me Smart is produced by Courtney Bergsieker. Today’s episode was engineered by Drew Jostad. Our intern is Antonio Barreras.

Kimberly Adams 

Ellen Rolfes writes our newsletter. Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is the executive director of Digital.