COMMENT: Marty, I remember your 1991 conference when you said Russia looked like it would collapse by the end of the year. I think it was December 31st when Gorbachev resigned. But I also remember how we were talking about how key reversals were still reappearing but migrating to different time levels. You never talk about that today. You had said that the migration of reversals would often hint at the next crash or slingshot. That was what we got in 1991 when Russia collapsed. Do you see anything like that again?
I am glad you are still at this. You have great insight as a trader.
If Scotty wants to beam you up, please say not yet!
DZ
ANSWER: Only for you Dave. Your memory is better than an elephant’s. OMG, how black was my beard. I also had some hair back then. Yes, you are right. I probably have not written here about the strange manner in which markets do move. Yes, the USSR collapse by the end of that year. There was the August 1991 coup against Gorbachev.
The Quarterly Array back then picked the 4th quarter of 1991 and the 4th quarter of 1992. The first was a Panic breakout to the upside and the second was a Panic to the downside making the reaction low the week of October 10th, 1992. The reversals were clearly fractal in nature and key reversals will reappear and migrate through the various time levels. That was something which was very fascinating. I promise I will find the time to express more detail on that phenomenon. It was indeed another aspect that the model revealed that I never expected. There is such a hidden order that lies behind the mask of randomness.
People who talk about random walks are simply incapable of forecasting for they cannot see the order behind what they think is chaos. Just as Einstein said, he cannot believe that God plays dice with the universe. I discovered the same thing when it comes to market activity. There is no such thing as random walks. There is a secret order to everything.
When I went to economics class, they said there was a business cycle but it is not regular and cannot be predicted because it was random. Then I went to physics class and they said nothing is random. I came to the conclusion someone was lying. It turned out to be the economics professor. Larry Summers still maintains that view. Hence, economists can manipulate society if it is random – not predetermined.
In plotting what Lorenz thought was random weather data, what emerged was a hidden order that we could not see otherwise. This even disproves the entire nonsense of Climate Change. It has always changed and there is a pattern to the movement – it is not random and we have not altered the climate cycle. Again, it is the same type of people who cannot see the patterns in markets so they say it is a random walk.
I ran markets through our Chaos models and patterns of regularity emerged – not random walks. Again, there is far more order to markets and that is why personal opinions will never cut it when we are trying to forecast the future.
I have on my bucket list to do the next book on the ECM – my gift to posterity. Hopefully, one-day people will wake up and understand that there is a hidden order to everything – NOTHING is ever random. When the USSR collapsed, the capital again fled to the USA in the face of a new level of uncertainty. The New Yorker ran the article on me in 2009 and called it – The Secret Cycle.
Watch the video above or click here for the latest interview with USAWatchdog.
Commentary from Greg Hunter:
Legendary financial and geopolitical cycle analyst Martin Armstrong said at the end of last year the U.S. is being set up for a “nightmare fall.” Train derailments and political problems are spinning out of control, but the biggest threat is war. Armstrong explains, “They want a war, but they also need it because the monetary system is collapsing. . . . You have had interest rates at negative since 2014. So, suddenly interest rates are rising. Any bond owned by any institution in Europe is a loser. They have lost so much money, it’s incredible. What happens? Nobody is interested in long term debt – period. . . . If you have interest rates rising, and rates are going to be going up because the Fed cannot stop this kind of inflation. Then, you got war. You have untold billions of dollars being shipped into Ukraine which is absurd. This is what you have. . . . You also have to look at what Janet Yellen said, and she was concerned with the tons of new debt coming out. You are exceeding the balance sheets of the Primary Dealers. To be a Primary dealer you have to be able to guarantee you will be able to buy X amount of debt. If you can’t sell it, what happens? The bank is stuck with the debt, and then, they go bust. So, we have a real problem here. They cannot continue to issue this kind of debt in perpetuity. They have been borrowing money since WWII with no intention of paying anything off. . . . The Fed is independent, and they don’t want the long term debt. They have been moving towards the short end of the curve. How do you continue to fund a government if there are no buyers for the debt? This is on a global scale.”
So, war checks all the boxes? Armstrong says, “Absolutely. They get to default on all this debt which is the real objective. That’s why (Klaus) Schwab is out there saying you’ll own nothing and be happy. He’s trying to make it sound like they are doing this for you. We are going to default on all debt and relive you of all your debt. This is because they are going to wipe out everything. Pension funds will be all gone. That’s why they are coming out with guaranteed basic income to replace your pension. They’ve got this all worked out. That’s what the end goal is here because they cannot continue to function this way. They cannot continue to borrow whatever they need with no intention of ever paying it back.”
Armstrong reveals why the 2024 elections may not happen. Can the Deep State commit enough voter fraud to keep Biden and the rest of the Neocons in power? Armstrong says most of what is happening today is the fault of the Neocons, and they have control of both parties. Armstrong points out Democrat Hillary Clinton paid for the phony Trump/Russia dossier, and Republican John McCain delivered it to the FBI. Armstrong calls it the “Uni-party,” and goes deep on the problems the Neocons are causing on purpose.
Armstrong also talks about the dollar, gold, civil unrest, tangible assets and the Ukraine war. Armstrong’s sources say the real number of casualties of Ukraine Army stands at a whopping 250,000 dead. Armstrong says Russia is NOT losing the war. It is winning.
The financial markets had become integrated globally prior to World War I. It was the globalization and openness of world financial markets that became the problem and are important to understand for we will face the same problem today. The capital was free to flow from one country to another before World War I. All the major countries of the world were on the Gold Standard at that point in time so exchange rates were not as volatile.
We can easily see that the currency market was very stable pre-1914 looking at the French Franc. Keep in mind that this was also a period of fiscal responsibility – pre-Socialism and Marx. Therefore, governments practiced balance budgets to retain confidence in their currencies. That enabled the gold standard to function. Furthermore, any differences in exchange rates were arbitraged. That is how the United States went into crisis in 1896 because the Democrats were inflating the system by overvaluing silver at 16:1 compared to 15:1 in Europe. That resulted in gold fleeing the United States and silver pouring in from international arbitrage.
There was also a viable arbitrage that took place trading the spreads between international bonds listed on the various world stock exchanges. Many countries would issue bonds in British pounds just as they do in dollars today to sell more to the investors in the financial capital of the world, which was London at that point in time.
A country such as China or Russia would issue a bond that was listed on the stock exchanges in London, New York, Paris, Berlin, Amsterdam as well as St. Petersburg in Russia. Here is a Chinese bond issued in British pounds in 1913 paying 5%. The differences in exchange rates, which would still fluctuate marginally, would be arbitraged by buying and selling bonds in different markets.
Consequently, during World War I, there was a global marketplace. In effect, this integration of markets presented a problem when the war hit. Capital could flee from one country to the next and thus the method to deal with the capital flows was to close the stock markets. The United States also closed the market in sympathy with Europe.
We will be taking a closer look at the various global markets. What you can count on is clearly CAPITAL CONTROLS. It would be best for those in Asia and Europe to have some capital tucked away in the United States. Once bullets start shooting, it will most likely be too late to move money.
Keep an eye on our Capital Flow tracking. This may become very critical in the months ahead.
Of course, the Goldbugs always misinterpret a rally in gold. The buying coming from China is in preparation for war – not bullish gold for the sake of gold. I have warned that if war was coming, then you will see China start to sell off US Treasuries. You certainly do not fund your adversary’s war against yourself.
China was buying aggressively during January, but they have backed off slightly. January was simply the standard 3-month reaction. The strong gold buying from China corresponded to China’s accelerated selling of U.S. Treasuries.
China is not buying gold because they think it will rally. It is perfectly fine if the price declines and just consolidates. They know war is coming and they can no longer maintain their reserves in dollars, euros, or yen no less than anyone else in the West – it all must go! Gold offers a non-political affiliation – neutrality. This is not buying gold as if it were an investment. We have completely different motives going on. Our own model warns that by 2032, there will be no United States acting as the reserve currency. The Biden Administration has done everything perfectly to destroy the world economy and the sad part about it, these morons do not even understand what they have done.
Tony, a reader, sent in a question. Message: “Mr. Armstrong what do you make of attorney general Merrick Garland’s recent approval to seize all of Russia’s assets that had been frozen in the United States to be given to the Ukraine?” Garland is violating every principle of international law. Denying Due Process of Law which comes from the Bible. When Cain killed Abel, God summoned him and gave him an opportunity to be heard, despite the fact he knew what he did. That is Due Process of Law – the right to be heard. What Garland is doing is outright unconstitutional and it is Treason to the foundation of every principle upon which this nation was founded.
The right to be heard resides in both the Sixth Amendment as well as the Fourteenth Amendment. A right to hearing entails that an individual maintains and be afforded the legal right to be heard in the venue of a court of law with adequate due process attached. Garland has shown he is violating the Civil Rights Act and is unworthy of holding any office whatsoever. If he were not in charge of the Department of Justice, he would be criminally prosecuted under 18 U.S.C. § 241.
18 U.S.C. § 241
Section 241 makes it unlawful for two or more persons to agree to injure, threaten, or intimidate a person in the United States in the free exercise or enjoyment of any right or privilege secured by the Constitution or laws of the United States or because of his or her having exercised such a right.
You cannot take anyone’s assets without Due Process of Law – PERIOD!
The confiscation of Russian assets is a clear violation of international law. They are including money confiscated from individuals as well. The destruction of NordStream was an act of economic warfare. These are acts that demonstrate what I have been saying – this is a war to DESTROY Russia. That is why Zelensky has instructed no peace negotiations. This has been planned for the fake Minsk Agreement. The West wanted to conquer Russia and they are prepared to see every Ukrainian die to weaken Russia so they will then send in Poland with tanks to conquer Moscow.
We are the aggressor. This is a Climate Change War and the end goal is a New World Order with one government. The current monetary system is collapsing. I believe Schwab’s Great Reset is our 2032. He knows our model. He realizes it is all collapsing. He is out to push it in his direction when the tree of liberty falls.
The current administration of the United States is out of control. It is destroying everything that we have worked for generations since World War II and it now even supports the nazis we once fought against.
Posted originally on the CTH on February 4, 2023 | Sundance
The Bureau of Labor Statistics (BLS) published a jobs report yesterday [DATA LINK] that has stunned the professional financial class. However, those who have followed the BLS data assemblies were laughing – not surprised. Eventually, if this continues, the BLS pretzel logic will start using terms like “eleventy.”
Throughout 2022, the BLS modified the underlying data they used to assemble their jobs reporting. The latest release shows that 517,000 jobs were gained in the labor market, despite every other economic indicator showing we are in an economy of contraction. The question becomes, why the disconnect?
There are two surveys that make up the BLS reporting. The Household survey is conducted by calling people and just asking if they are employed. The Payroll survey is conducted by reviewing large and medium businesses, no small businesses are included, and that plays a role in the disconnect.
Since the spring of last year, the two surveys have completely disconnected from each other. The household survey finds a net gain of 12,000 jobs in the last three quarters; the Payroll survey shows gains of 2.7 million jobs during the same time.
ZeroHedge did a good dive on the issue (SEE HERE), and their analysis reports, “[…] the number of full-time workers in March 2022 was 132.587 million. Fast forward to January 2023 when it was 132.577: that’s right: total US full-time workers declined by 10K over a period of 10 months. Meanwhile, part-time workers soared from 25.908 million to 27.400 million, an increase of 1.492 million! So at least we know where the bulk of the increase in US labor came from in the past year: virtually no full-time jobs, and all part-time.”
Additionally, Forbes dove into the data (SEE HERE) and reached a similar conclusion, the BLS data is all nonsense covered in statistical noise.
Forbes – […] “The Payroll Survey shows employment growth of nearly 2.7 million jobs between March and November. The Household Survey, over the same period, shows 12,000. Something is seriously wrong! The headline number that is broadcast in the media is the Payroll Survey, so if it is incorrect and the Household Survey is accurate, then the “hot” jobs market, which the Fed uses to justify its rate increases, is really a “cold” jobs market.
Looking at the recent past, the two surveys were in sync until March, when the Payroll Survey took off. Some of the issue could revolve around the small business birth/death assumptions. Since the Payroll Survey doesn’t sample small businesses, the Bureau of Labor Statistics (BLS) adds a number based on a time trend, and they even seasonally adjust this data. Over that March to November period, the Birth/Death model added 1.3 million jobs. This appears strange to any observer of economic trends, which tells us that business is contracting, not expanding. Even if the Birth/Death add-on is eliminated, the discrepancy is still 1.36 million jobs between the two surveys.” (read more)
QUESTION: Hi AE…so gov’t “money” (fiat currency) will become just some abstract floating measurement of value, an electronic entry in an electronic account in the cybersphere. As these various so-called gov’ts become less reliable, even between themselves, do you see the possibility of them simply skipping their phony currencies, & trading directly in gold. Russia could ship a specific quantity of crude to China, for a specific amount of gold bars. Your argument about the impracticality of a gold-backed currency makes sense, but what about large transactions being settled in gold?
HS
ANSWER: The entire problem that people do not grasp with regard to any return to a gold standard is that if the money supply is FIXED in any way, that necessitates the collapse of SOCIALISM. The two are directly linked. Politicians only know how to run with deficits. Vote for me and I will give you this or that!
The Bretton Woods gold standard collapsed because they FIXED the price of gold at $35, but they continued to print money far beyond the supply of gold at that fixed price. In addition, you have a business cycle. There will be times when no matter what the money might be, there will be boom times when the value of money declines and the asset values rise.
This argument over gold v fiat is absolutely just nonsense. The wealth of any nation is the productive capacity of its people. For centuries, the business cycle has existed and that is the entire cause for the “inflation” in assets when money declines in value, and then the “deflation” in assets with the value of money rises. Arguing over what we use for money will NEVER stop the business cycle.
The cycle is also in part driven by all governments. It becomes a drug of power that is abused. It would not matter what we use for money right now, they want to create World War III so they can default, and escape from the abuse of this Marxism that they have turned into a system of borrowing every year with no intention of paying anything back. But we have reached the confrontation between Keynesianism where central banks are expected to prevent inflation by rising interest rates, but that has no impact on the government which has become the biggest borrower in the system.
We are going BUST not because of the money we use, but because of the abuse of power in government which has always existed since ancient times.
Trust me. Forget gold standards. They will never work because all governments act only in their own self-interest. You should have learned that with COVID. They will never admit any mistake EVER! It is far better to keep gold on our side of the table and we can then use it as a hedge against governments. They are seeking to move to digital currencies ONLY so they can track when you hired the 16-year-old girl next door to babysit for you so they can go after her for the government’s 50% share.
Even Bitcoin is fiat. There is no backing. People have dived headfirst into cryptocurrency on the entire proposition that they are limited. All they have done is proven my point. Money, historically, has been everything from seashells and cattle to bronze, silver, and gold. Of all the various forms of money, only bronze and cattle had any real commodity value based on utility.
The Egyptians really invented paper money for the farmers would deposit their grain and receive a receipt which was a bearer instrument used in trade. They also used raw metal, not coins, and traded based on weight, as it stated in the Bible. Here is a piece of pottery from Egypt recording a complaint about taxes written in Greek. It stated the sum amounted to a total of 90 talents of silver with 15 talents of tax on the transfer of land – 16.6%.
For thousands of years, Egypt had no coins until it was conquered by Alexander the Great, and upon his death, his general Ptolemy I (305/304 – 282 BC) took the throne and it was his Greek line from which Cleopatra VIII came – not Egyptian.
Our system is starting to implode. Never in the history of human civilization have governments demanded taxes on income requiring reporting every year. This was the gift of Karl Marx. Just as this Egyptian tax on the transfer of land, we see that property taxes and a form of sales tax were the norms.
The American Constitution was intended to give thenational government greater power to raise revenue because the previous Articles of Confederation had been a fiscal disaster. Nevertheless, most people remained fearful of taxation by governments. Indirect taxes were to be the way to secure our liberty from tyrannical governments. It was generally understood that indirect taxes meant taxes on consumption like a retail sales tax and/or excise taxes on imports. It was believed that indirect taxes did not lend themselves to abuse by tyrannical governments. Consequently, the general belief was that “direct taxes” has to be taken off the table. Incomes taxes, throwing out the window of all the wisdom of the ages, were imposed by the new age of Marxism in 1913.
Our computer warns that 2025 will be the turning point in Marxism.
The Federal Reserve raised the benchmark by 25 bps, as expected. The Fed fully understands that the manipulation of the CPI is a necessary aspect both for containing government benefits and understating inflation also results in high tax revenues. The market loves hope, and as a result, they focused on the warning that we’ll be in restrictive territory for just a bit longer. Most still believe that there will be a slowdown in inflation just ahead.
The Fed’s cautionary commentary saying that the “disinflation process” has started triggered shares to jump ending up 1%. This shows how insane the analysis had become that they cheer a recession and think that lower interest rates are bullish for the stock market. Obviously, they just listen to the talking heads on TV and have never bothered to look at reality. When interest rates decline, so has the stock market. Interest rates rose for the entire Trump Rally, and they crashed during the Great Recession of 2007-2009. For the life of me, I just shake my head when the talking heads cheer lower rates and spread doom and gloom with higher rates.
Fox Business is reporting that economic conditions are much worse than you are being told. Unfortunately, this is the conclusion when you have ZERO understanding of the historical trends and economic conditions. It is true that the shortages of COVID have caused prices to rise faster than economic growth and most incomes. Therefore, they conclude that our standard of living has been rapidly declining. The number reveals that more than one-third of all U.S. young adults are being supported in part by their parents. Thanks to COVID, this disrupted society far greater than anyone is reporting. In addition to the shortages because of the lockdowns, by the end of 2020, more than half of young adults in America were living with one or both parents. That statistic actually exceeded the record high of the Great Depression.
Here is the worst part of this analysis. Many are jumping on the bandwagon claiming that the decline in real disposable income has been the largest since 1932 and therefore, this is a warning sign of a Great Depression is coming. They seem to be focused on the fact that the GDP report showed a significant decline in real disposable income, which fell over $1 trillion in 2022. Now let’s look closer!
First of all, the entire reason why unemployment rise to 25% during the latter part of the Great Depression was the Dust Bowl. Why? At that time, about 40% of the civil workforce was still agrarian. The Dust Bowl meant job loss. If you could not even plant crops, there was no need for people to pick crops.
Service during the Great Depression accounted for 17% of the workforce compared to 44%+ today. Government, federal, state, and local, was 22% of the civil workforce during the Great Depression compared to 33% by 1980. Things have continued to evolve and by 2019, services represent 79.41%. Agriculture is now a tiny fraction of what it once was – 1.41%.
In the USA, at the state level, their share of the civil workforce varies greatly. Florida is at about 11.3% compared to New Mexico which is 22.5% – a government employee’s paradise. The lowest is Michigan at 10.1%.
During the Great Depression, the entire reason for the collapse in disposable income was the collapse in agriculture which created a collapse in income due to massive unemployment. That is totally different from the crisis we have today.
Here we have rising prices due to shortages and then central banks raising interest rates in a fool’s quest to stop inflation when it is not based on speculation. Moreover, the biggest borrower is the government, and rising interest rates will only increase their exposure to keep rolling over the debt. Therefore, governments have been borrowing year after year. What happens when the public no longer buys their debt? Real disposable income has been collapsing for completely different reasons since 1932. Here we have the costs of everything rising and then these people want war with Russia and China. Every war since the start of recorded history has resulted in inflation. Add to this, the total insanity of trying to end climate change by outlawing fossil fuels at a time when the climate is prone to getting colder.
We are already witnessing riots around the world BECAUSE of inflation. During the Great Depression, people were suffering from DEFLATION. So comparing just that statistic of a decline in personal income and projecting we now face a Great Depression, does not even qualify to be classified as analysis. That is no different from someone warning that carrots must be lethal because everyone who has ever eaten a carrot has obviously died.
Posted originally on the CTH on January 31, 2023 | Sundance
On the literal eve of a House vote to end the COVID emergency through legislation, the White House announced they would end the COVID-19 Emergency Declaration on May 11th. [pdf here]
The managers of Biden knew they would face a bipartisan vote to end the power of the dictatorial fiat known as the COVID emergency, so they quickly rushed to give Democrats in congress cover for voting against the legislative end.
In the end this is all a matter of pure politics and posturing for narrative control, because the Democrat controlled Senate is not going to take up the House bills.
WASHINGTON DC – […] The two bills – the Pandemic is Over Act and the Freedom for Health Care Workers Act – were planned by Republicans last week; and late Monday, the White House announced that it will terminate the national COVID emergency on May 11. The White House also announced its opposition to the two bills up for a vote today.
But Republicans pressed ahead anyway and easily passed both measures despite the GOP’s narrow majority in the House.
The Pandemic is Over Act, which would end the public health emergency, passed 220-210 in a vote that saw every Republican vote for it and every Democrat vote against it. But the Freedom for Health Care Workers Act, which would end the vaccination requirement for federal health care workers, passed 227-203 with help from seven Democrats.
Those Democrat votes came even though Democrat leaders on the House floor argued against both bills. Rep. Frank Pallone, D-N.J., said he opposes the Pandemic is Over Act because it would “abruptly and irresponsibly end the COVID-19 public health emergency virtually overnight,” and Democrats on the floor similarly argued against the bill to end the vaccine requirement. (read more)
Predictably the White House is claiming that if the COVID-19 emergency is over, then Title-42 immigration restrictions -which are based on the emergency- should end. This means even more illegal aliens crossing the U.S. southern border, an outcome the Biden team embrace.
Posted originally on the CTH on January 29, 2023 | Sundance
With talking points in hand CBS’s Margaret Brennan drops all pretenses and goes straight into her role as defender of the Biden regime in the White House.
House Speaker Kevin McCarthy appears on Face the Nation for a dueling narrative contest with Ms. Brennan. WATCH (transcript below):
REPRESENTATIVE KEVIN MCCARTHY (R-California): Good morning. Thanks for having me back in studio.
MARGARET BRENNAN: It must be sobering to hear that reminder.
REPRESENTATIVE KEVIN MCCARTHY: Well, it took me a little while to get there, but it feels good.
(LAUGHTER)
MARGARET BRENNAN: Well, you are here now at this key moment in time. And I want to get to some of the top agenda items.
You have accepted an invitation to meet with President Biden. When will that happen, and what offer will you put on the table?
REPRESENTATIVE KEVIN MCCARTHY: Well, we’re going to meet this Wednesday.
I know the president said he didn’t want to have any discussions, but I think it’s very important that our whole government is designed to find compromise. I want to find a reasonable and a responsible way that we can lift the debt ceiling, but take control of this runaway spending.
I mean, if you look at the last four years, the Democrats have increased spending by 30 percent, $400 billion. We’re at a 120 percent of GDP. We haven’t been in this place to debt since World War 2. So we can’t continue down this path.
And I don’t think there’s anyone in America who doesn’t agree that there’s some wasteful Washington spending that we can eliminate.
MARGARET BRENNAN: Mm-hmm.
REPRESENTATIVE KEVIN MCCARTHY: So, I want to sit down together, work out an agreement that we can move forward to put us on a path to balance, at the same time, not put any — any of our debt in jeopardy at the same time.
MARGARET BRENNAN: But avoid a default, in other words?
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: But do you have any indication that the president is willing to discuss both lifting the debt ceiling and the issue of future spending?
REPRESENTATIVE KEVIN MCCARTHY: Well, if he’s changed his mind from his whole time in the Senate and vice president before — I mean, he literally led the talks in 2011 and he praised having those talks. This is what he’s always done in the past.
And if he listens to the American public, more than 74 percent believe we need to sit down and find ways to eliminate this wasteful spending in Washington. So, I don’t believe he would change his behavior from before, and I know there’s a willingness on our side to find a way that we can find a reasonable and responsible way to get this done.
MARGARET BRENNAN: But, right, I mean, you know why I’m asking that…
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: … in terms of not linking one as leverage for the other.
REPRESENTATIVE KEVIN MCCARTHY: Yes.
Well, in my first conversation — and, to be fair, the president, when he called me to congratulate winning speaker, this is one of the first things I brought up to him. And he said we’d sit down together.
Now, I know his staff tries to say something different, but I think the president is going to be willing to make an agreement together.
MARGARET BRENNAN: Well, we’ll watch for that on Wednesday.
REPRESENTATIVE KEVIN MCCARTHY: I’m hopeful, yes.
MARGARET BRENNAN: I want to dig into what you are willing to put on the table because Republicans campaigned on fiscal responsibility.
You promised you won’t spend more next year than you did last year. Are you willing to consider any reductions to Social Security and Medicare?
REPRESENTATIVE KEVIN MCCARTHY: No. Let’s take those off the table. We want to…
MARGARET BRENNAN: Completely?
REPRESENTATIVE KEVIN MCCARTHY: Yes.
I mean, if you read our commitment to America, all we talk about is strengthening Medicare and Social Security. So — and I know the president says he doesn’t want to look at it, but we’ve got to make sure we strengthen those. I think…
MARGARET BRENNAN: What do you mean by strengthen them? You mean lift the retirement age, for example?
REPRESENTATIVE KEVIN MCCARTHY: No, no, no.
What I’m talking about, Social Security and Medicare, you keep that to the side. What I want to look at is, they’ve increased spending by 30 percent, $400 billion, in four years. When you look at what they have done, adding $10 trillion of debt for the next 10 years in the short time period, if you just look a month ago, they went through and they never even passed a bill through appropriations in the Senate.
While Mr. Schumer has been leader, he’s never passed a budget. He’s never passed the appropriation bill. He simply waits to the — to the end of the year and allowed two senators who are no longer here to write a $1.7 trillion omnibus bill. I think we…
MARGARET BRENNAN: You want to work with Democrats to come to agreement on a budget?
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: Is that what you’re saying?
REPRESENTATIVE KEVIN MCCARTHY: Yes, I — I first think our very first responsibility, we both should have to pass a budget. We both should have to pass the appropriations bill, so the country can see the direction we’re going.
But you cannot continue the spending that has brought this inflation, that has brought our economic problems. We’ve got to get our spending under control.
MARGARET BRENNAN: OK, just fact-check, though, 25 percent of the debt was incurred during the last four years of the Trump presidency. I mean, this is cumulative debt over many, many years.
REPRESENTATIVE KEVIN MCCARTHY: Yes, well, over the short — this time period.
MARGARET BRENNAN: Yes.
REPRESENTATIVE KEVIN MCCARTHY: But you’ve also found that you had a pandemic.
MARGARET BRENNAN: Right.
REPRESENTATIVE KEVIN MCCARTHY: And, as that pandemic comes down, those programs leave. I have watched the president say he cut it.
No, it is spending $500 billion more than what was projected. They have spent more. And we’ve got to stop the waste.
MARGARET BRENNAN: Is defense spending on the table?
REPRESENTATIVE KEVIN MCCARTHY: Well, look, I — I want to make sure we’re protected in our defense spending, but I want to make sure it’s effective and efficient.
I want to look at every single dollar we’re spending, no matter where it’s being spent. I want to eliminate waste wherever it is.
MARGARET BRENNAN: But when you became speaker, you did come to that agreement I have referenced of capping ’24 spending at ’22 levels.
REPRESENTATIVE KEVIN MCCARTHY: Well, look, listen…
MARGARET BRENNAN: So that would call for reductions.
REPRESENTATIVE KEVIN MCCARTHY: Well, I mean, look, you’re going to tell me, inside defense, there’s no waste? Others? I mean…
(CROSSTALK)
MARGARET BRENNAN: So defense spending is up for negotiation?
REPRESENTATIVE KEVIN MCCARTHY: They spend a lot of — I think everything, when you look at discretionary, is sitting there.
It’s like every single household. It’s like every single state. We shouldn’t just print more money. We should balance our budget. So I want to look at every single department. Where can we become more efficient, more effective, and more accountable? That should be…
MARGARET BRENNAN: So, more efficiencies in Social Security and Medicare as well?
REPRESENTATIVE KEVIN MCCARTHY: The one thing I want to say, we take Social Security…
MARGARET BRENNAN: Completely?
REPRESENTATIVE KEVIN MCCARTHY: … and Medicare off the table.
MARGARET BRENNAN: Would you support a short-term debt limit extension until September, buy more time for talks?
REPRESENTATIVE KEVIN MCCARTHY: Look, I don’t want to sit and negotiate here.
I would rather sit down with the president, and let’s have those discussions. The one thing I do know is, we cannot continue the waste that is happening. We cannot continue just to spend more money and leverage the debt of the future of America.
MARGARET BRENNAN: Right.
REPRESENTATIVE KEVIN MCCARTHY: We’ve got to get to a balanced budget.
MARGARET BRENNAN: Well, and I think many people would agree with you on the issue of fiscal responsibility, but there’s that deadline on the calendar in terms of facing potential default.
Are you saying…
REPRESENTATIVE KEVIN MCCARTHY: Well, wait. Wait a minute…
MARGARET BRENNAN: … you will guarantee the United States will not do that?
REPRESENTATIVE KEVIN MCCARTHY: Listen, we’re not going to default.
But let me be very honest with you right now. So we hit the statutory date. But let’s take a pause. We have hundreds of billions of dollars. This won’t come to fruition until sometime in June. So the responsible thing to do is sit down like two adults and start having that discussion.
MARGARET BRENNAN: Mm-hmm.
REPRESENTATIVE KEVIN MCCARTHY: Unfortunately, the White House was saying before, like, they wouldn’t even talk.
MARGARET BRENNAN: Right.
REPRESENTATIVE KEVIN MCCARTHY: I’m — I’m thankful that we’re meeting on Wednesday, but that’s exactly what we should be doing.
And we should be coming to a responsible solution. Every family does this. What is — what has happened with the debt limit is, you reached your credit card limit. Should we just continue to raise the limit? Or should we look at what we’re spending?
MARGARET BRENNAN: Well, it’s paying past commitments.
REPRESENTATIVE KEVIN MCCARTHY: If Chuck Schumer — yes, but if — no, no.
Chuck Schumer never passed a budget since he’s been leading. He’s never passed an appropriation bill. Those are the most basic things that Congress should do. And what — if you’re going to show to the American public where you want to spend your money, and if you’re going to ask the hardworking taxpayer for more of their money, you first should lay out how you’re going to spend it, and you should eliminate any waste, so you don’t have to raise more taxes.
MARGARET BRENNAN: But just to put a fine point on it, because it matters a lot to the markets in particular, you will avoid a default? You will not let that happen on your watch?
REPRESENTATIVE KEVIN MCCARTHY: Look, there will not be a default.
But what is really irresponsible is what the Democrats are doing right now, saying you should just raise the limit.
MARGARET BRENNAN: But would you…
REPRESENTATIVE KEVIN MCCARTHY: I think…
MARGARET BRENNAN: Would you get in the way — if 15 Republicans came to you and said they would be willing to raise the debt limit…
REPRESENTATIVE KEVIN MCCARTHY: The only person — but let me be very clear.
MARGARET BRENNAN: … would you allow them to do so with Democrats?
REPRESENTATIVE KEVIN MCCARTHY: The person — the only person who is getting in the way right now is the president and Schumer. They won’t even pass a budget. They won’t even negotiate. We have now until June.
I want to make sure we have something responsible, something that we can move forward on and something that we can balance our debt with. So I’m looking for sitting down. That’s exactly what I have been asking for. The only one who’s playing with the markets right now is the president to have the idea that he wouldn’t talk.
Does the president really believe and, really, all your viewers, do you believe there’s no waste in government? Do you believe there was no waste in that $1.7 trillion? That’s what we were spending just four weeks ago. So, I think the rational position here is, sit down, eliminate the waste and put us on a path to balance.
MARGARET BRENNAN: We’ll watch for that meeting on Wednesday.
I want to ask you about your vision of leadership. You made a number of deals within your party to win the speakership. Senator Mitch McConnell, your Republican colleague, said: “Hopefully McCarthy was not so weakened by all this that he can’t be an effective speaker.”
How can you effectively govern with a very narrow majority and when your conference is so divided?
REPRESENTATIVE KEVIN MCCARTHY: Well, that may be somebody else’s opinion. So let’s just see what my father always said. It’s not how you start. It’s how you finish.
So, let’s — you see what happened in the first week. So, in the very first week, we have passed what? We repealed the 87,000 IRS agents. We bipartisanly created a new Select Committee on China, where 146 Democrats joined with us.
We bipartisanly passed to stop the Strategic Petroleum Reserve being sold to China, where 113 Democrats joined with us. We have just now, for the first time on the House — it hasn’t happened in seven years, the entire time the Democrats were in the majority, where you had an open rule.
And let me explain what that is. An open rule allows every single member of the House to offer an amendment on a bill. So what I’m trying to do here is let every voice in America have their ability inside the House. We opened the House back up so the public could actually join.
MARGARET BRENNAN: So you’re arguing you haven’t been weakened? But…
REPRESENTATIVE KEVIN MCCARTHY: I — no, it’s only been strengthened.
Maybe people didn’t like what they saw that we didn’t win on the very first vote, but that was democracy. And what you found at the end of the day, we’re actually stronger.
MARGARET BRENNAN: Well, I would…
REPRESENTATIVE KEVIN MCCARTHY: You know what else?
MARGARET BRENNAN: Yes.
REPRESENTATIVE KEVIN MCCARTHY: We changed it where members of Congress now have to show up for work. I know, in the Senate, they don’t come very often.
But if you look what we’ve been able to do, we’re transforming Congress. We’re looking for solutions.
MARGARET BRENNAN: But you also allowed one — just one member now can force a vote to oust you as speaker.
REPRESENTATIVE KEVIN MCCARTHY: OK.
MARGARET BRENNAN: How can you expect to serve in the next two years in this role?
REPRESENTATIVE KEVIN MCCARTHY: Exactly how every other speaker has served with that.
MARGARET BRENNAN: Without those rules like that right now.
REPRESENTATIVE KEVIN MCCARTHY: No.
MARGARET BRENNAN: That’s a risk.
REPRESENTATIVE KEVIN MCCARTHY: OK.
MARGARET BRENNAN: I mean, do you really think you can control the Freedom Caucus and some of those more conservative members who gave you such a hard time?
REPRESENTATIVE KEVIN MCCARTHY: Everybody has a voice.
But let me — let me explain that. That one vote to vacate, that’s not new. That’s been around for 100 years. The only person who took it away when they got a small majority was Nancy Pelosi. So, Nancy felt she did not have the power to stay in office if that was there. I’m very comfortable in where we are.
MARGARET BRENNAN: OK.
REPRESENTATIVE KEVIN MCCARTHY: So I don’t have any fear in that.
MARGARET BRENNAN: You don’t regret any of the concessions you made?
REPRESENTATIVE KEVIN MCCARTHY: The only concession I made was taking it from five to one, where it’s been around for 100 years.
MARGARET BRENNAN: I want to ask you about some of the makeup of your caucus.
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: According to CBS records, 70 percent of the House GOP members denied the results of the 2020 election.
You’ve put many of them on very key committees, Intelligence, Homeland Security, Oversight. Why are you elevating people who are denying reality like that?
REPRESENTATIVE KEVIN MCCARTHY: Well, if you look to the Democrats, their ranking member, Raskin, had the same thing, denied Trump when Bush was in there. Bennie Thompson, who was the…
(CROSSTALK)
MARGARET BRENNAN: Did you see those numbers we just put up there?
REPRESENTATIVE KEVIN MCCARTHY: Did you see the — yes.
MARGARET BRENNAN: Seventy percent.
REPRESENTATIVE KEVIN MCCARTHY: Did you also be fair and equal and where you looked at Raskin did the same thing. Bennie Thompson, who’s a ranking member and was the chair?
These individuals were chair in the Democratic Party.
MARGARET BRENNAN: I’m asking you, as leader of Kevin McCarthy’s House…
REPRESENTATIVE KEVIN MCCARTHY: But I’m also — I’m also…
MARGARET BRENNAN: … why you made these choices. These were your choices.
REPRESENTATIVE KEVIN MCCARTHY: Yes, They’re my choices, but they’re the conference choices.
But I’m also asking you, when you look to see just Republicans, Democrats have done the same thing. So maybe it’s not denying. Maybe it’s the only opportunity they have to have a question about what went on during the election.
So, if you want to hold Republicans to that equation, why don’t you also hold Democrats? Why don’t you hold Jamie Raskin? Why don’t you hold Bennie Thompson, when Democrats had appointed them to be chair? I never once heard you ask Nancy Pelosi or any Democrat that question when they were in power in the majority, when they questioned…
MARGARET BRENNAN: You’re talking about things going back to 2000, which was a time…
REPRESENTATIVE KEVIN MCCARTHY: Well, you’re talking about…
MARGARET BRENNAN: … when I didn’t have this show back then…
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: … which is why I’m asking you now about your leadership.
REPRESENTATIVE KEVIN MCCARTHY: No, on, but they were — they were in power last Congress. So, why — why…
MARGARET BRENNAN: But you’re talking about questions from 2000 election.
REPRESENTATIVE KEVIN MCCARTHY: But you’re asking me about that happened to another Congress.
MARGARET BRENNAN: About these choices you just made, you just made.
REPRESENTATIVE KEVIN MCCARTHY: You’re asking about questions for another Congress.
So, the only thing I’m simply…
MARGARET BRENNAN: This is your Congress.
REPRESENTATIVE KEVIN MCCARTHY: These — these are members who just got elected by their constituents, and we put them into committees, and I’m proud to do it.
MARGARET BRENNAN: Let me ask you about some specifics then. Marjorie Taylor Greene, you put her on a new subcommittee to investigate the origins of COVID.
REPRESENTATIVE KEVIN MCCARTHY: Yes.
MARGARET BRENNAN: She compared mask requirements to the type of abuse Jews were subjected to during the Holocaust. She called for Fauci to be arrested and imprisoned, and she spread conspiracy theories.
How is anyone supposed to take that work seriously and find that work credible?
REPRESENTATIVE KEVIN MCCARTHY: Very well. You look at all of it, so you have all the questions out there. I think what the American public…
MARGARET BRENNAN: You think these are legitimate questions?
REPRESENTATIVE KEVIN MCCARTHY: I think what the American public wants to see is an open dialogue in the process. This is a select committee where people can have all the questions they want, and you’ll see the outcome.
MARGARET BRENNAN: You know that there is a lot of doubt about institutions and faith in institutions in this country.
REPRESENTATIVE KEVIN MCCARTHY: Oh, yes, when you saw what happened in Congress where they had proxy voting, where bills didn’t go through committees, and you…
(CROSSTALK)
MARGARET BRENNAN: I don’t think most people know what proxy voting is.
REPRESENTATIVE KEVIN MCCARTHY: Well, let — well let — Well, let’s explain what proxy…
MARGARET BRENNAN: But — but approval…
(CROSSTALK)
REPRESENTATIVE KEVIN MCCARTHY: But I think it would be fair to your viewers…
MARGARET BRENNAN: Approval level, according to Gallup, of Congress is at 22 percent. Approval level of journalists is also not very high, I will give you that.
But doesn’t it further wear down credibility when you put someone who is under state, local, federal, and international investigation as a representative of your party on committees?
REPRESENTATIVE KEVIN MCCARTHY: Are you talking about Swalwell?
MARGARET BRENNAN: I’m talking about George Santos…
REPRESENTATIVE KEVIN MCCARTHY: No, I…
MARGARET BRENNAN: … representative from New York.
REPRESENTATIVE KEVIN MCCARTHY: Well, we should have that discussion. So let’s have that discussion.
You want to bring up Santos, and let’s talk about the institution itself, because I agree wholeheartedly that Congress is broken. And I think your — I think your listeners or viewers should understand what proxy voting was, because it never took place in Congress before.
MARGARET BRENNAN: But I’m asking you about George Santos.
REPRESENTATIVE KEVIN MCCARTHY: I know you asked me a question. Let me ask you.
MARGARET BRENNAN: Because you could put it to a vote to try to oust him.
REPRESENTATIVE KEVIN MCCARTHY: You asked me a question. I would appreciate if you let me answer.
So let’s go through this, because it’s not one simple answer. Congress is broken, based upon what has transpired in the last Congress. The American public wasn’t able to come in to see us. People voted by proxy, meaning you didn’t have to show up for work, Bills didn’t go — have to go through committee.
So what I’m trying to do is open the people’s house back for the people so their voice is there, so people are held accountable.
So, now, as I just had in the last week, for the first time in seven years…
MARGARET BRENNAN: Yes.
REPRESENTATIVE KEVIN MCCARTHY: … every member got to vote.
MARGARET BRENNAN: If you got a third of your caucus to vote to oust him, you could do so.
(CROSSTALK)
MARGARET BRENNAN: Do you — you don’t think you could get your Republicans to do that?
REPRESENTATIVE KEVIN MCCARTHY: I wasn’t finished answering the question.
So, if every single new person brought into Congress was elected by their constituents, what their constituents have done is lend their voice to the American public. So those members can all serve on committee.
Now, what I’m trying to do is change some of these committees as well, like the Intel Committee is different than any other committee.
MARGARET BRENNAN: So, you’re just not going to answer the question I asked?
REPRESENTATIVE KEVIN MCCARTHY: Well, no, I — no, you don’t get a question whether I answer it. You asked a question. I’m trying to get you through that.
MARGARET BRENNAN: I don’t think you’ve said the name George Santos, like, once.
(LAUGHTER)
MARGARET BRENNAN: I have asked you a few times.
REPRESENTATIVE KEVIN MCCARTHY: But you know what? I just — but — but…
MARGARET BRENNAN: You’re talking about proxy voting and other things.
REPRESENTATIVE KEVIN MCCARTHY: No, no, no, but — no, you started the question with Congress was broken, and I agreed with you.
MARGARET BRENNAN: No. Congress…
REPRESENTATIVE KEVIN MCCARTHY: But I was answering the question of how Congress is broken and how we’re changing it.
So, if I can finish the question that you asked me, how Congress is broken, I equated every single member…
MARGARET BRENNAN: Yes.
REPRESENTATIVE KEVIN MCCARTHY: … that just got elected by their — by their constituents. They have a right to serve.
MARGARET BRENNAN: OK.
REPRESENTATIVE KEVIN MCCARTHY: So that means that Santos can serve on a committee…
MARGARET BRENNAN: OK.
REPRESENTATIVE KEVIN MCCARTHY: … the same way Swalwell, who had a relationship with a Chinese spy.
MARGARET BRENNAN: Speaker…
REPRESENTATIVE KEVIN MCCARTHY: But they will not serve on Intel, because I think…
(CROSSTALK)
MARGARET BRENNAN: They’re wrapping me in the control room, because we have a break.
REPRESENTATIVE KEVIN MCCARTHY: Well that’s unfortunate. I wish I could answer the question.
MARGARET BRENNAN: I have to leave it there. I would love to have you back.
REPRESENTATIVE KEVIN MCCARTHY: I would love to be able to come back and have time to answer the questions.
MARGARET BRENNAN: OK. We’ve spent a lot of time here, and I have more questions for you.
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