You know. Joe Biden Started off with a position he wouldn't talk at all, he wouldn't compromise. He was unwilling to consider anything that was obviously unreasonable and and he had to fold from that because it that didn't withstand scrutiny. Where we are now: I Don't know if the White House is willing to be reasonable I I'll tell you what I've encouraged President Joe Biden to do which is listen to Vice President Joe Biden In 2011, the last big debt ceiling Showdown we had where Republicans held a line and said we need to rein in spending.

It was Vice President Joe Biden who negotiated what was called the budget Control Act designed to cut 2.3 trillion in spending and he sat down with with Mitch McConnell and and with with the house speaker and they negotiated that deal I hope Joe Biden As president has at least some modicum of the same willingness to do that. I'm worried that he doesn't have the ability to do it anymore and and look, I will say honestly, this is going to be a negotiation that plays out Kevin McCarthy definitely has a stronger hand because he passed the bill in the house that gives him a stronger negotiating power. He is not going to take something to the floor that he can't get at least a majority of his caucus to sign off on, so hopefully the two of them can work some sort of a deal out. look I Think we both agree that it's not a good scenario any way, shape or form.

if we default on our debt, we should absolutely not default on the debt. And and I will tell you I'm I am more worried now that we might default than I ever have been really. And the reason is I Don't think Biden is is up to the task I Don't think he's engaged in the negotiations personally and directly. Yeah, they literally met yesterday.

What are you talking about? Ted His mental capacities are markedly diminished from from even a few years ago. and don't make me go through this and what What makes me worry is yeah. I Think the decision making in the White House is being done by a bunch of 20-something and 30 something little Marxists who don't have an appreciation for reality. I told you I didn't want to dig into this.

We're going to get stuck digging into this. I mean I will say the same argument. There have been people who questioned the last President's ability to be able to have rational conversations and do these things. There were people who were talking about having him removed with the 25th Amendment but look, he's in the room.

He's making the talks. hopefully. so I can tell you the reality. All right.

when the Senate is in session. every Republican senator we have lunch together, we sit around and talk about how virtually none of us have spoken to the President even once he doesn't talk to Republican Senators And that's weird. We all know Joe I was sworn into office by Vice President Joe Biden he was a man of the Senate This White House hides him and and it's unfortunate Donald just meet with him McConnell Had met with him briefly but it is I Used to talk to Trump every week, sometimes every day I spoke with Obama I spoke with Obama regularly. It is weird Lindsey Graham has flown all over the world with Joe Biden for 20 years Lindsay hadn't talked with Joe They keep him hidden that's not disputed like no.

but nobody denies that. they keep him. he's not doing media. He doesn't do media.

He doesn't just sit down with McConnell and McCarthy is talking to him every day. He also just went to the G7 It's not like this guy I don't want to be in the corner of um on on things great. If he is, then he ought to do what he did in 2011. I I Don't think he is and I'm worried because I think the young extreme staffers in the White House have no appreciation for just how damaging a default would be and so I think they are quite willing Force the default because they think the media will blame it on Republicans and I think that would be wildly responsible.

The talking points I hear all the time is that this would be much worse for the president to go into a default because he's the President who would get blamed in the next election cycle. which is why Donald Trump is urging anyone in the house to say no. So I I Don't think that's what the White House believes I Think the White House believes Whatever happens the media will blame it on Republicans Whether that's true or not, I Think that's what the White House believes. And and one thing to be clear: Joe Biden Today could take the chances of a default to zero.

Here's what I Think a responsible president would say He would stand up and say, under no circumstances will we ever, ever default on the debt, no matter what. The United States honors our commitments. Now, how could he do that? He could do that by claiming the 14th Amendment I Know, except that would be patiently unconstitutional. But but he could do it in a very simple way that is clearly legal.

Which is that every month federal tax revenues coming into the Federal government significantly exceed interest on the debt. and he could say we're going to pay interest on the debt. We're not going to default everything else. That's what's called prioritization.

He could do that and then they. They're very well may get to that situation. They may get to that situation. But the reason that he hasn't said that which he could say he could take the chances of default to zero.

The reason he hasn't is is I think the White House is trying to scare Monger on this, They're trying to threaten to fall. Not paying the rest of our bills would not be great either. Well, but but let's stop paying the veterans. Do you stop paying the Defense Department about paying the salaries of people in Congress Okay, not paying the salaries of people in Congress would actually be a pretty good step.

So so that that actually those should be the first bills they don't pay. Actually, to be clear, everyone agreed that the death ceiling needs to be raised. but if you look historically it has been the only leverage that has been effective in reigning in out of control spending. Look, it's a negotiating tool.

I Get it and it's the only thing that works. And you know, given squawk bucks, get it. gets into the numbers. I Think it's worth pausing for a second and reflecting at how different this is from the past.

So 2017 total federal spending was about four trillion dollars. Total federal tax revenue was about 3.3 trillion dollars. Now quick math: that means we had about a 700 billion dollar deficit. That was 2017..

Fast forward to today: Total spending has gone from 4 trillion up to six and a half trillion dollars. Six point, four trillion dollars tax revenues have exploded. Tax revenues have gone from 3.3 trillion to 4.8 trillion now. quick pause to note when we signed the 2017 tax cuts that I fought very hard to pass every.

Democrat Went on TV and said this is going to slash Federal revenues and blow up the deficit. Turns out they were entirely wrong on that. Every year federal tax revenues have gone up and they've gone up from 3.3 trillion to 4.8 trillion. The problem isn't tax revenues.

The problem is we had a spending binge from the Democrats that has caused the national debt to go from 20 billion to 30 to 20 trillion rather to 32 trillion. Reasons: Infrastructure Bill A chip spill. The ridiculously named inflation Reduction act. Yeah, look.

I Voted against those bills. Those were mistakes. You voted against the infrastructure Bill too. Yes, Okay, so there are people who who would say even once we get through that, you got to cut the spending back because those are long-term projects that maybe even if they were in need of spending.

And by the way, if the infrastructure Bill had focused on actual roads and bridges and infrastructure that we need, I would have happily voted for it. The problem was it was filled with with all sorts of goodies for special interest that had nothing to do with real infrastructure. So you said the numbers. So CNBC So the S P 500 is at 4200.

There seems to be a firm belief in the market that a deal will be reached. It sounds like you, you're saying to Market participants, brace yourself because we could actually go to default. That's a scenario that we are not pricing into the markets right now. I Agree and listen.

I Think a deal will be reached I Think at the end, even though you're saying Joe Biden's not going to be the Vice President of 2011, you think a deal is going to be I think a deal will be reached. but I worry that the chances of a default are greater than they ever have been. that I worry that this White House is reckless enough to force a default I Don't think that'll happen I think that's less likely than not, but the odds are higher than than we should be happy with. Let's switch to technology.

We were just having a well the the discussion about what happened. Yes, we'll respond to some of these things as well in just a moment. Sure of the Pentagon being bombed. What what else can you imagine under the scenario? How do you stop it? How do you make sure that this is not going to be something that we have to be worried about every day? Oh look, it's it's a Brave New World We're in and and it is frightening.

Between technology, the technology of deep fakes, Between where AI is going. um, it's just going to be a very dangerous environment for the foreseeable future and we're going to have to have real skepticism to almost anything you see to make sure it is real and accurate. It's not going to be that hard to suddenly have video of some politician saying something they never said uh or somebody you know, people doing things that never happened and and so it's going to be incumbent on. It's actually why I'm a big believer in in Free Speech that if you have lots of people engaged, uh, you can have real-time fact checking.

You remember one of the first big instances of this was Dan Rather back in I guess it was 2004 where he had 60 Minutes this Brig big expose on George W Bush with these documents and you know it's one of the first instances of I Guess there's a bunch of you know, bloggers in their pajamas who noticed the documents that he claimed to have appeared to be fraudulent and it ended up within a couple of days revealing that they were faking fraudulent documents. That was one of the first real illustrations to me of the power of the community of folks online being able to point to facts and correct them. And and with new technology, we're going to need to do that. It's easier to do that when you have a limited number of news sources and a bunch of people.

When everybody is a news service, which is essentially what you have on a lot of these social media apps, you know that that becomes. It's how something can get faked and spread instantaneously and before you have the time to fact, check it. Yeah, there's questions about security. Something along those lines say yes and no.

Um I Worry about what has happened to much of the media. There's a reason I Like coming on squat box because because you all actually talk about substance and you get into it and and you guys are much much less partisan than most of the other media Outlets out there. Um, one of the really unfortunate consequences: I think of the age of Trump is that much of the media Trump broke the media that that stations like CNN MSNBC they hate Trump so much that they've stopped practicing journalism and and I don't think that's good for America when when people who are supposed to be journalists view their role as advocates pushing a point of view particularly in that context I Think it's important to have lots and lots of people where everyone can be a publisher and can press back so the media is broken. But back to the question: is there anything Congress can do about AI Because misinformation can spread and it's like shouting fire in a crowded movie theater.

and and in this case it could be billions of dollars in market cap shaved off the stock market a single stock. So many different ramifications here. Well, it's It's not like Congress is going to be able to waive a magic wand and make ai go away. Um, it's not like Congress is going to be able to stop, uh, criminal activity and make suddenly criminals go away either.

But you stand up on an amicus brief against Section 230 and I think that's a good start? Yeah, absolutely yeah. Look, section 230 was passed at a time when the internet barely existed and it was designed to protect a Nason industry and to enable it to grow. We now have Big Tech is are these massive behemoths, the largest companies in the world and the power they exercise the Monopoly control they exercise and in particular 230. When it was passed, Congress assumed that Big Tech would be a neutral Public Square In other words, it wouldn't be putting it some on the scale, it wouldn't be silencing some voices and not others, but it would let everyone speak and and the reasoning was, it's not fair to sue Facebook because of a comment you make or I make because if you make it or I make it, it's not Facebook's fault.

Now now that's true. If they're an open Public Square For everyone, what's happened is that Big Tech in recent years has decided to actively and aggressively censor speech and silence views they disagree with and I gotta say, Elon Musk's buying Twitter and making the Twitter files public was an absolute Game Changer If that is your view though about Big Tack and their ability to control speech Etc then that should be even more of a concern when it comes to AI. Yeah, they are the leaders in AI right now. they're the ones that have accrued billions of Market billions of dollars in market cap because of the notion they are in the lead on AI So is that a much bigger concern? And how does it factor in? Also, because there's a thinking that if you, if you constrain the development of AI in this country, that you're going to actually allow other countries particularly China right to take the lead in this technology.

look I think you make a very good point and I am quite nervous about constraining the development of AI And are there very real dangers coming from AI across the board? Yes, I I Chaired the very first congressional hearing ever on artificial intelligence. The problem is and and is there a need for congressional action on some point? Almost surely there is, but the problem is most people in Congress don't understand this at all. Look, we don't do intelligence very well, much less artificial intelligence. Um, and you know the Senate I think the median age is about 142.

Um, you know one of my colleagues on Judiciary referred to the internet as a system of tubes. We should be careful asking folks who don't really understand it to regulate it. I think Congress needs to get smarter I think we need to have hearings I think we need to consider testimony but I think we should proceed slowly so that we don't go in and break things. The last thing I want is for China to get way way ahead of us on AI because government Regulators have gotten in the way so it is reasonable to be worried about where AI is taking us.

but I don't think Congress is going to fix the problem overnight Crews Want to thank you for coming in today. Always a pleasure! Good to see you! This was actually surprisingly a really good piece. Like that's one of the reasons I like this five to uh you know, six o'clock hour even though this began a little bit before that with CNBC is is they they have really good guests on around this time. uh and uh, it really better than than what you see or closer to Bell time on CNBC or or earlier in the morning.

uh, just my take, you know. anyway. so uh, I'll go backwards here a little bit and just address a few things. Uh, first of all, a lot of people are talking about investing in Chinese AI uh I actually think there's a reason to be cautious about that specifically because with uh Chinese AI you're running into severe risks of U.S sanctions basically destroying Chinese AI companies I Know that sounds extreme.

like how could America destroy a company? oh, a vacant uh, even just limiting China's access to some of the most powerful or Advanced microchips could sandbag saw social intelligence race and I think that's probably exactly why America is sanctioning China's ability to get their hands on Advanced lithography machines to to make uh uh, you know, uh, smaller uh, transistors? uh, you know, or reduce the spacing between them down to you know that five to three nanometer? uh, level? uh or below that? mostly because one of the best weapons we have is just having better chips than China I still refer to China as the uh, a teenager of the global stage where China is kind of coming into its uh, discovery of its sort of like power like ah, you know I'm a I'm a big you know, uh, he had like I went to the zoo last week I went to San Diego with uh, my kids Lauren and I and uh, they're they're teaching the kids about uh, you know, the gorillas and and it's kind of like the gorilla teenagers. they uh, they get really aggressive because they're just coming to realize how strong they are, but they don't know what they're doing so they're constantly like hurting themselves and stumbling over each other and they have to kind of like realize how strong they are and to some extent it maybe a little bit. feels like China is kind of like that. And so personally, I I can't invest in China Uh, because a I don't understand like it's a totally different culture.

so I don't understand how to even analyze what companies would do well with Chinese consumers. So this is why I've always stayed away from from China. But also I Think that the United States and Europe will probably make it their mission to continue to sort of keep a boot uh, or on on the neck or or maybe more appropriate, like keep the the gorilla of China caged a little bit. basically limit their ability to really explode with artificial intelligence relative to what I think American companies will be able to do.

Uh, keep in mind as well, you know, just sort of on the the uh a topic of China Joe Biden's suggested potentially some softening relations coming with China I Really believe this is because they have to, you know, China's GDP is coming in uh or is expected to come in substantially lower than what they've been growing at the last like two decades. and they've been growing at somewhere around 8.9 percent. Now, their GDP will grow somewhere around five percent. and they're trying to stimulate their economy to grow more because they want that growth.

Uh, the United States has way more Partnerships around the world than China does. And and their their potentially way stronger I Mean think about American Alliances are not just trade Partnerships but they're defense Partnerships Uh, sure, China's got their Belt Road initiative and they've got some friends in Pakistan and North Korea and maybe Iran now after their negotiations with the Saudis. But I mean when you look at and then maybe you could say Russia but I mean what kind of friend is that? I mean that's you know that's the Loose Cannon friend. You're like, you know, just just leave us alone.

but maybe, uh, settle down. You know China really ought to condemn Russia but I don't want to go like super deep here on China But but really, if if you think about it, it's it's tough It's It's tough to argue that investing in Chinese chips or AI is the best move when you know the International Community is good to do everything they can to limit uh Chinese growth. Now then you wonder like okay, well, how much of that is already priced in I I I Don't know, You have to figure that one out. but then again, trying to underwrite Chinese stocks with with their public filings relative to what we have.

and I'm not saying in companies with public filings over here are not shysters. There are plenty of reasons to think that companies with public filings are, are you know shysters? uh, like just look at uh, not to mention any names not possible. Uh, but um, but yeah. so so going back to Ted Cruz's argument: I'm not terribly worried about Chinese AI uh as an individual, mostly because I actually think that Congress uh, we'll give them credit there and the International Community will already cage in China So uh, that that leaves me less worried about that.

Uh, and uh. it will be interesting to see how regulation evolves for for AI here. but uh, you know that that'll all come in time, probably too late, as it usually does. Uh, there's already research now that AI is getting more attention than Bitcoin has been getting over the past three to four to five years.

I Find it very interesting because the stock market's been trending up, but Bitcoin really has that. I mean Bitcoin had a really nice run there. So yeah, we're at 27 3 right now. Uh, so it's done very well because it's nearly doubled, right? I mean we're at 15 something so so maybe it's just on its uh, natural break so to speak.

You know you go to the one year. Yeah, we're about to the same level as the one year on BTC right now. but uh, at the start of the year, we were at 16 nine. So I think it's Bitcoin Just fine, because if you think about it, it's outperformed the other indices 16 9.

Yeah, it's up 61. It's way outperformed. You know it's basically performed like a tech stock, not not the NASDAQ though Nasdaq's only up like 27. But anyway.

uh, this. uh, this debt ceiling. Just to sort of finish that, it's interesting that Ted Cruz argues that Joe Biden should come out and declare that America will not default when. and this is what: I just so much hate about politics.

It's literally what Joe Biden has done. and I'm not here to like shell a party or Joe Biden or whatever. But you know, of course if you're Joe Biden you're like we will not default and then the Republicans are like man, if only Joe Biden would come out and say we Will Not default, you know it's Gotta suck being the president because you're just like dude I Literally just said that man if only he would just say it. it's like ah uh but uh, but I I think that Ted is.

You know the talk was good, but I think it's There's a little bit of extremeness in this idea that uh, you know the the quote-unquote 20 year olds in the White House are willing to let the Uh government default I Uh I'm not that skeptical. Do I think that uh Joe Biden is at a hundred percent in that mental capacity Department No uh, but I do do I think that like somehow, uh, woke left this? uh, 20 year old staffers are running the White House I mean hopefully not. I mean nobody knows. But but I I Don't think that would lead to a default I Think that's a really weak argument to say that.

Oh yeah, woke leftists who are 20 years old. they're gonna be willing to gamble. Uh, you know, our entire economy on this debt ceiling negotiation. It actually, it doesn't sound like the negotiations are going that badly and this is what you know earlier.

We started on the Dead Sea land like this is just so annoying. but really I mean every day it's like uh you'll get the oh Republicans walked out and then like a day later things are better or like Kevin McCarthy on Sunday Joe Biden should be here instead of at the G7. It's like dude, the presidents are always at the G7 meeting. The United States president has never missed a meeting of the G7 because if they did, it would be G6 Okay, well has never been a gsign.

no uh so the United States president has never missed that meeting and then over the weekend you get Kevin McCarthy Well Joe Biden should be here instead of over there. It's like that's a popular thing to say but like you can't all of a sudden stop the the global calendar of events. Uh you know because you want to sit down and Duke things out and sure enough they end up sitting down and and you know had Progressive talks. Uh so I I I don't know I I uh I think Becky Quick, really held uh held a good discussion here with with Ted uh you know I obviously uh it's a lot of it's party talk but uh none of this was particularly scary and uh I don't know what to say other than that not not scared, uh maybe uh the lead.

Are we able to say that though because I feel like the stock market is slightly uh taken to continue red today after yesterday's rally. But then again, you would kind of expect a little bit of a get a give back. So uh, that's uh, that's pretty typical now I Want you to know this when it comes to AI time is what's going to make you money, and if you can prove that value to an employer, you'll always be able to be employed. So this is another way of making sure that you don't get replaced foreign.