BUCK: We wanted to talk to you about the $5.8 trillion Biden budget preparation. Let’s just all put that in quick context because the part of this I find so interesting… Well, there’s the wealth tax which, Clay, had mentioned we want to get into that, “the billionaires tax” as they called it sounds good, hugely problematic — and I’m not shilling for billionaires here, although I would like to be one, although I’m gonna have to win several lotteries to get there.

CLAY: (laughing) You and the listeners, I would imagine, yes.

BUCK: Yeah, exactly. Someone hand me a billion, I’m not gonna say no. But we’ll also discuss the funding for law enforcement in this which is essentially a policy repudiation of where the Democrat Party was in 2020, which was the whole defund the police madness, which as we have agreed here — I’ve been saying for years ’cause, remember, this was defund 2.0 with BLM 2.0 — defund the police is the dumbest political slogan in the history of modern American politics, certainly in my lifetime.

But in terms of context first we’ve got a $5.8 trillion budget request, Clay, when Ronald Reagan proposed a budget — this is from the New York Times — back in 1982, you want to take a guess or you want me just to read it?

CLAY: Of what the total federal budget was in ’82?

BUCK: What was the total federal budget in 1982.

CLAY: Oh, that’s such a good question. So 40 years ago, two generations ago. If I remember correctly, we had this conversation. I feel like the national debt was around $1 trillion at the time. Now we’re at a national debt of $30 trillion.

BUCK: Mmm-hmm.

CLAY” I’m gonna guess in 1982, if we’re at $5.8 trillion federal, about that now, I’m going to guessthat it was $800 billion.

BUCK: That is an excellent guess. 695 billion. So well done, Mr. Travis.

CLAY: Not too bad. Not too far off.

BUCK: Yes, you get an A+ on that one. We did not coordinate this beforehand, like the Chris and Will slap, this was not coordinated beforehand. So, excellent. Yeah. $695 billion. I just think everyone needs to know this because neither party really wants to talk to you about this. They don’t want to talk about the — and the Republicans pretend, but there are very few that are serious about the structural issues for the economy of $30 trillion in debt.

Look at where we were when the Tea Party was worried the debt in 2010 versus where we are now. So we have a basically $6 trillion of federal spending that Biden is putting forward. Now, we know that the spending from the president is a wish list and it’s Congress that has to actually deal with all this, and he’s not gonna get this through. But it’s essentially telling the American people, “Hey, here are my priorities.” But just the fact that it’s gone from $695 billion in 1982 —

CLAY: That’s wild.

BUCK: — to $6 trillion today? So basically over the course of my and your lifetime, Clay, it has gone up so much, this gives you a sense of how we’re just in a whole other universe of spending. And now we get into what exactly Biden’s looking at. Do you want to do cops first or do you want to do wealth tax first?

CLAY: The cops we actually agree on. Do we want to have a positive? I mean, the one thing in Joe Biden’s career, Buck, that he may have gotten right was the 1994 crime bill that he then tried to run against in the 2020 election, but I don’t think there’s any doubt —

BUCK: There are some Republicans taht were trying to criticize him for that bill. Like, no, no, no, guys, no, no, no. Just ’cause he did it doesn’t mean it’s wrong.

CLAY: The ’94 crime bill definitely decreased the amount of crime that’s going on in the United States because — and there were some parts of it, obviously, that were Draconian. But three strikes and you’re out was a big part of that, and it put violent criminals behind bars, and as a result… This shouldn’t be considered, you know, rocket science; but unfortunately it is ’cause people have the memories of goldfish now.

When you put violent criminals behind bars and when you let them know that if they commit crimes there are gonna be significant consequences for those crimes, crime goes down and so the ’94 crime bill, that was kind of the peaks, right, Buck, of there’s a couple of more years after that. The idea was that the crime rate was gonna continue to skyrocket. I remember being a kid in those days and reading about all the crime wave and everything else, and then, boom! Suddenly crime collapsed, up until the last three or four years when suddenly it’s come surging back.

BUCK: Here is Ted Cruz on the budget before we dive into the police aspect of it. Again, just putting this all in context. Senator Cruz from Texas on how this would, over the course of the spending that this would initiate — and we know this is, again, the wish list, but this is showing you the vision for the country. Ted Cruz says $45 trillion national debt’s what we’d be looking at. Play clip 20.

BUCK: So you’re gonna have raising interest rates here, they’re going to raise them, coming up. That’s already underway, which is going to mean that also payment on the debt, that service payments on the $30 trillion of national debt is going to start to crowd out other spending within the government  budget, and the purse strings are gonna have to get even looser as a result of this.

The grip of the IRS… A big increase in IRS agent funding in the Biden budget, and they’ve already been pushing for this. I think they wanted, what, $70 billion of new funding for the IRS over a period of time. They want a lot of IRS agents to be able to come after you. And then, Clay, we get to part of this was where they’re going to — kind of like the way they’ve created the “don’t say gay” bill that doesn’t actually have anything to do with being able to say gay — the “billionaires tax.”

Now, they’re talking … This will affect, I would assume some billionaires. I will tell everybody listening that the wealth tax that they have tried in places like France ends up essentially not getting paid by anybody. They all either repatriate their tackle, they leave, they find ways around it, they’re very rich, they have a lot of ways to game the system; so the wealth tax ended up being a very small driver of revenue in France where they tried it I think about 10 years ago. Gerard Depardieu. (impression) “Do you celebrate all of his movies, Mr. Travis?”

CLAY: I did study French, and I’ve seen a lot of the Gerard Depardieu canon of films. I believe he is now #MeToo’d. I think he’s out of the commission.

BUCK: Did he really get #MeTooed? I didn’t know.

CLAY: #MeTooed.

BUCK: Big deal in France. I think. If I’m wrong, I don’t want Gerard Depardieu… Somebody look it up on the staff. I’ll correct if I’m wrong. But I believe that Gerard Depardieu has been #MeTooed in France, one of the casualties of the #MeToo movement, and France didn’t have the same level of #MeToo. They actually had a debate in France about whether #MeToo made sense. But I think he got caught up in the crossfire there.

BUCK: A lot of French politicians worried about their mistresses coming out and saying things.

CLAY: Well, yeah. That was sort of a trend, everybody just had that. That was widely accepted that —

BUCK: Very different vibe in France for all that stuff.

CLAY: Yes.

BUCK: Anyway; so we have the wealth tax doesn’t really get paid. And the talking point you’ll always hear from people who are allergic to actual history or actual knowledge, they’ll say, “Oh, in the Eisenhower administration the top tax rate of  95%.” Okay, well, ask how many people actually paid, how many people actually made and paid that top tax rate.

The answer is basically nobody. Nobody was paying 95% income tax, really. So now we get to what this would do. So, Clay, they’re talking about taxing unrealized gains in the stock market. It’s amazing they could even put this forward — and again it is annoying that the tax code is gamed in so many ways. I’m for a flat tax. I’m a flat tax advocate.

CLAY: Me too.

BUCK: I have been for a long time. So it’s not like I sit here and just whine about this. The tax code is a massive monument to influence peddling, grift, corruption. That’s why it’s tens of thousands of pages long —

CLAY: Nobody can apply it. We’re relatively smart guys. I was texting with my accountant earlier today. I have no idea how to do my taxes. None.

BUCK: You send ’em all your stuff, you’re like, “Please, you know, I don’t want to go to jail, tell me what I have to do, tell me what I have to pay.” That’s basically what I do too. And here we are looking at them, putting forward this billionaires tax, and, I mean, Clay, for them to go after unrealized gains in stock portfolios, how would that…?

Let’s just work this out for everybody. Let’s say you’re a early investor in Tesla. Now you’re a Tesla billionaire. You’re worth $10 billion on paper in Tesla stock. So you pay based on the value for tax year 2022 of whatever that is. What happens when the stock, you know… Let’s assume the stock gets cut in half the next year.

CLAY: Yeah. It’s a great question. Unrealized gains, for people out there — ’cause a lot of people don’t spend time thinking about this. Let’s say you bought a stock, right. You buy a stock for $10 and it goes to a hundred dollars. Until you sell that stock, that is a paper gain. That is an unrealized gain in income in your possession.

But if you never sell it, then you don’t pay taxes on that gain, right? So what the government is now saying they’re going to do — which is a pretty revolutionary idea — is they are going to tax the unrealized gain that you may have in your stocks. The challenge with this, Buck, is, stocks don’t just go up. So let’s say that stock went from 10 to a hundred and you’re forced to pay a tax on that unrealized gain.

Do you get a refund if the company goes bankrupt and you never sold it? Because until you sell that stock, you don’t have the physical possession of the money. So there hasn’t been a tangible realization of that gain. So you could ride a stock price, as I’m sure some of our listeners have — you could have a stock that goes on fire for years, goes from 10 to a hundred — and then that company could go bankrupt and you end up with zero.

So is the government gonna give you a refund for all of the money that you lost in that stock? As soon as you start taxing unrealized gains, the reality is there are stock price declines that occur as well where the government could be having to give refunds in theory, if they’re going to implement this, for billions of dollars, right? I mean this is crazy.

BUCK: And remember for them to get real revenue, folks — and this is what they always want to hide from you — they gotta tax a lot of people.

CLAY: Everybody.

BUCK: They could seize 50% of the assets of billionaires and it wouldn’t cover the costs over time of what Nancy Pelosi wants to spend on, you know, studying tree frogs in the Pacific Northwest and getting everybody ready with windmills for the Green New Deal. It’s just not enough. There’s always more spending that they’re gonna want to push.

On that, by the way, Clay, they have four times what Obama had in this Biden budget — four times what Obama wanted — for climate change specific causes I think is the number. That’s the number that I saw: $17 billion for climate research across federal agencies: $17 billion to research essentially the average temperature around the globe. Do we think they’re gonna come up with this and say, you know what? It’s actually not that big a deal, guys. It goes up, it goes down, we’ll all be fine. I have a feeling they’re not gonna say that.

CLAY: When we come back I want to hit you ’cause some people are saying, oh, it’s a billionaires tax. “I don’t care about billionaires,” because to your point, Buck, you and I and probably almost everyone, do you think we have a billionaire listening to us right now, Buck?

BUCK: Oh, yeah, we got a few.

CLAY: You think?

BUCK: Oh, yeah.

CLAY: Listening right now? Okay. But for the one or two or three of you out there that are actual billionaires —

BUCK: Can I have some coffee please and some slippers, please, billionaires?

CLAY: Yeah, why don’t you go buy a bunch of coffee and cover all our ad nut here for the entire year?

BREAK TRANSCRIPT

CLAY: So I wanted to hit you with this. The billionaire tax — ’cause it’s gonna be labeled as if, “Oh, it only impacts the billionaires.” And we talked about in the last segment why taxing unrealized capital gains is a radical idea even if… It may not even be constitutional, by the way. That would remain to be seen because it’s not a tangible property in your possession and the value…

As anybody who checks stock prices knows, the value of a stock every single day, it changes. Sometimes it can go up, sometimes it can go down. But I just want to hit you guys with this fact which I saw. This from the Wall Street Journal this morning, Buck. The income tax. In 1913, a little bit over a hundred years ago, the income tax was 7%.

You heard Buck talking about the size of the federal budget in 1982 with Ronald Reagan. What was it, $695 billion? It’s now up to 5.8 trillion. Seven percent top rate on taxpayers, and only taxpayers who made more than $500,000 a year had to pay that tax rate. That, by the way, $500,000 in 1913 would be the equivalent of $14.5 million today.

The Alternative Minimum Tax was created in 1969 as a flat 10% tax, but now many people in the middle class are hit by it. What am I using those examples for? They always start taxes by telling you, “This is only for the rich.” But to Buck’s point, in order to have the money that they want to have to spend, it ain’t enough just to tax the rich.

They are the toe in the water to test whether or not they can get it passed. Once it’s passed, you’re not a billionaire, but they are coming for you. Maybe they start to say, Buck, “Hey, we’re gonna tax the unrealized gains on your homes,” right? You may never sell your home, but if you own it for a long time, hopefully the price is going to increase; you don’t ever have to pass taxes until you sell it.

BUCK: Ask farmers about what it means when their lands are assessed at some multimillionaire value, and they have to pay tax on land. That means their farm is gonna.

CLAY: That’s a hundred percent right.