OA532: OK I'll Bite What is the Debt Ceiling

Transcript

This transcript was generated automatically and may contain errors — the audio is the record.

0:01:17 Thomas: Hello, and welcome to Opening Arguments. This is episode 532. I'm Thomas, and that over there is the birthday boy! Happy birthday, Andrew Torrez!

0:01:24 Andrew: Thank you, Thomas. I appreciate it.

0:01:29 Thomas: Make a. How are you doing today, sir?

0:01:30 Andrew: It is a fantastic birthday. As you know, I am here in Spain, and this was a lovely day. I got to go to the Guggenheim in Bilbao and look at modern art, and then have a lovely, like, three-hour-long lunch of bizarre fishes. Is. So, you know, for me, that's how I enjoy spending my birthday.

0:01:52 Thomas: Yeah, yeah. Did you eat any squid legs or shark phalluses or whatever? I don't know what you're eating over there. The pictures I've seen, it's adventurous. I don't know that I could do it, but seems like you're enjoying it. So that's, what's important.

0:02:08 Andrew: Am enjoying it. So you know

0:02:10 Thomas: You're eating like the light bulb on that fish that, uh, what's that fish? It has a little light bulb in front of it.

0:02:15 Andrew: The angler fish with the light bulb back up. I'm pretty Pretty sure that's toxic. Yeah.

0:02:17 Thomas: Yeah. The light bulb of angler fish. Yeah, it's just crunchy.

0:02:23 Andrew: Mmm. Bioluminescent.

0:02:25 Thomas: Know, there's also another birthday and this makes me wonder, you now, we haven't, have I ever seen you and and Morgan in the same room? Cause you have almost, was hers yesterday? Yeah. Like the same birthday. It's today.

0:02:36 Andrew: Oh, no. It's today. Happy birthday to Ace Associate Pop Law extraordinaire Morgan Stringer.

0:02:42 Thomas: Oh, I got mixed up. Cause I wasn't sure if you were like a day ahead when I saw the, you know, cause where you are anyway. No. Okay. So now I'm sure of it. You guys are the same person. So that's. I think it's a Jekyll and Hyde situation, actually.

0:02:45 Andrew: Yep. Yep. Yeah. I am definitely not the before picture. That's all. That's what we've got to say, yeah.

0:02:57 Thomas: Happy birthday also to Ace Associate Morgan Stringer. It's a, well, that'll make office birthday parties in the future simpler for you guys. Was

0:03:05 Andrew: Yeah. Oh, man. If I ever forget her birthday, like I'm in a lot of trouble.

0:03:11 Thomas: That today? Yes, it's the same day. Yeah, that would be funny. Also, one more quick note before we get into it. I wanted to share that I'm going to be a part of California Free Thought Day and it's coming right up. It's this weekend. I think the main event is Sunday. It is something I have done a few times now and I love it.

It was great event, but we were forced to go online because we didn't think it was quite ready to do an in-person event. So, Free Thought day is online. That means anybody can share. And also, if you want to see some other friends of the show, some people I know that our audience loves. Ross and Carrie are also going to be involved. So if you want more information, just search California Free Thought Day on Facebook. I'll of course put a link in the show notes or freethoughtday2021.eventbrite.com is where you can get the tickets. But come hang out, please do. It's going to Be a lot of fun. And some part of it will be me. Some part of It will be Ross and Kerry. Some other very great guests, fantastic people. People. So, please tune in to that if you can. Let's get to the exciting talk about the debt ceiling.

0:04:23 Clip: Down the law, down the law.

0:04:27 Thomas: As always, recording is a moment in time and these things change quickly, but as of right Right now, what's going on with the debt limit extension, the deal? There have been many false starts here. There have be things we thought were going to happen, and then the deal fell through because of two Democrats, mainly. There are two Democrats. Again, as 96% of Democrats are on board here, please don't say the entire party is a failure because of people who are definitely frustrating. Anyway, what is going on in the debt ceiling?

0:04:27 Andrew: Uh-huh. Yeah.

0:04:58 Andrew: Well, so I thought I would make this kind of a good background explainer because as we go to press, right, that is on Thursday, October 7th, my birthday, the afternoon where you You are, actually the evening where I am, because I'm six hours in the future, right? We are still awaiting a deal that depends on Mitch McConnell. So, yeah, so that could not happen. But it's important to understand kind of everything that goes into the background here. And I thought we'd start off kind of with first principles, right, like why we have a debt ceiling, whether we have to have a death ceiling. Spoiler, we don't.

0:05:21 Thomas: Oh, geez. Yeah.

0:05:38 Andrew: Also do a little bit of like preemptive Uncle Franking on why the U.S. borrows money. Right. So I thought we'd start off with imagine the easiest way I think to get here is like imagine you're a municipality, right? You're a town and and you want to build a museum and a public park. Right.

0:05:45 Thomas: Yeah. Yeah. Sure. I imagine that every day. Uh-huh.

0:06:00 Andrew: There are really four ways that you could go about doing that. Right. The first is you could just not. You can say, you know what? That's right. Screw public and civic life. I recommend, I heartily recommend a libertarian walks into a bear. We've talked about that on the show. Like we have seen the real world empirical consequences when localities say, yeah, we're going to prioritize reducing local property taxes over, you know, building amenities, public amenities and places for people to gather. We know the consequence of that. People flee from those communities in droves.

0:06:08 Thomas: Sure. Yeah. Yeah. Yeah. Yeah. Bears. Bears are the

0:06:39 Andrew: Yeah.

0:06:39 Thomas: Consequence.

0:06:39 Andrew: And bears take over. That is correct. Right. OK, so, let's let's, let's leave out, you don't the hardcore libertarian position. You could have what is almost the full hardcore libertorian position, which is let's have the community a budget surplus every year and save some money. And I don't know, maybe put it in a little piggy bank or something and and then wait until we have enough money to pay for the park and then break open the piggy bank and pay for the park. And it seems ridiculous when I put it to you that way.

0:07:10 Andrew: But there are a very real number of Republicans that have argued that federal government should do just that.

0:07:18 Thomas: It is. Now that we're on a financial topic, I get to rail against it. Um, what I love is how they're always like, we should run things like a business, and then they show that they have no effing idea how businesses work. Like businesses take out debt all the time. It is a good thing for a business to be leveraging their debt. There's something called a debt to income ratio, you know, there's... there's uh, that's a measure that you look at in accounting, and it's one way, I'll say, then, okay, you've got too much debt and that can threaten your business. Of course, you don't want to have too much death, obviously. But if it is the other way and you are not utilizing your debt enough, then prospective investors, shareholders, they are going to be like, hey, you could be doing more. You could could be expanding your business. You could be building things. Imagine if you had to wait 30 years of saving to buy a house, like you had To save the whole

0:07:19 Andrew: Yeah. Yeah, that's right. Yes.

0:07:45 Andrew: Yeah. Right.

0:08:09 Thomas: Amount to buy a house. It's silly way to do things. Debt makes a lot of sense. It is actually a good thing of course, like anything else in the right amounts, but it is a great thing and allows us to gain access to something like a park, whatever you're talking about up building as we pay it off. And then you get the benefit of it rather than having to wait 30 years to save or something.

0:08:10 Andrew: Yeah, yeah, yeah.

0:08:31 Andrew: And that's particularly acute when you were talking about a democratic citizenry versus a single person, right? So yeah, if you decided that you were going to save for 30 years and put it away in a savings account until you finally got enough money to live in a house, you know, that would, it's up to you if you want to do that. Those are your life choices.

0:08:38 Thomas: Yeah.

0:08:57 Andrew: Of course it is, right? But those only affect you. When a municipality does that, what it's essentially saying is we're going to extract extra taxes for the next 30 years. Now, mind you, you won't get the benefit of the park, but your grandkids are going to love this park when we build it in, you know, 2057.

0:08:56 Thomas: It's terrible financial decision, but yes, it is up to you. Yeah.

0:09:12 Thomas: Yeah, by the way, assuming nothing happens to like intervene in that process, like they don't need the money for something else. They don't, you know, all that stuff. We've seen the, uh, the high-speed rail in California. That's going great. Someday we'll have all of 10 miles from like Fresno to other parts of Fresno as the high speed rail. I don't know why we can't get it built.

0:09:19 Andrew: Right. Right?

0:09:37 Andrew: Yeah. Okay. All right. So maybe those two were kind of straw man positions. But again, there are serious politicians that argue every day that levels of government should not have debt. Suppose we've persuaded you, okay, you should have have some kind of debt. There's really, and again, these are, the reality at the local level is that both of these kinds of devices come into play. The first is what you might consider to be the more Republican-oriented of the devices, and that is partner with a private company and kind of have them do it. And how do you incentivize a private country to do it? You give them a ton of tax You say, yeah, we will exempt you from property taxes for the next 20 years.

0:10:18 Thomas: Yeah. Yeah.

0:10:27 Andrew: We'll let you do X, Y, and Z. That's sort of been the, quote, Republican approach.

0:10:34 Thomas: Yeah. Also, it's my brother in law who owns the company or something, whatever. That's the Republican version.

0:10:37 Andrew: Well, I'm not saying that those are immune from corruption. Corruption, what you might consider the classical democratic, the one we, we were waiting until the end because, you know, this is uh, oh, those big spending liberals are at it again, the classic democratic response, which is, um, have the municipality issue a bond, right? Raise a bunch of revenue, uh, get that all up front, uh, and then the bond is backed by the power of the government and then is paid back over time, right? That's the way that the bond is, really the way in which you do this thing, right? You build the museum, you build the park. And the important thing is that the rationale for the bond and the rationale for the Republican tax breaks are exactly the same. The idea is I want a thing now. I think that will grow our community and produce larger revenues in the future.

0:10:58 Thomas: Yeah. Yeah.

0:11:34 Andrew: And so I'm willing to forego some future revenue in order to make that happen. Right. That's it. Now, that is not to say that sometimes localities don't guess drastically wrong, Right? They do. And it doesn't always pay off. But the important part is the ratio you've described, right, the debt-to-income ratio, does not get worse so long as the amount that you are paying back in the future is exceeded by the capital growth of the community itself, right?

0:12:11 Andrew: Right. And taking into account that that likelihood for capital growth is how professional bond rating institutions like Moody's, Standard & Poor's go about rating your bonds. Right.

0:11:46 Thomas: Yeah. Mm hmm. Mm

0:12:24 Andrew: If the project looks like an enormous boondoggle and does not have quality financials backing it up, it gets a lower rating from bonding industries. It attracts a different class of investor. Classic example, way too many sub-issues to get into, but we talked about some of the corruption in connection with the Ark Park in Kentucky. And that wasn't because – I mean, you're talking about – and again, we're talking about Republicans in bond-rating institutions evaluating a Republican project going like, all right, man, we love Jesus as much as you, but this is just not going to happen. But like you're expecting this to outdraw Disneyland in five years. And we're not.

0:12:25 Thomas: Hmm, you're telling me that was not a good idea for the community.

0:13:15 Thomas: Yeah.

0:13:15 Andrew: And so my point is that all of this, everything we've described is functions without government intervention due to the operation of the market. It right, it does not require like a strong political right, like every level of figuring out that calculation is a thing that that economic professionals have figured out how to do

0:13:15 Thomas: Yeah.

0:13:43 Thomas: Well, you know, just as I'm thinking about it, there's sort of an interesting connection between people like conservatives who think they might know something about finances or business, this um, there's also like an interesting Christian component. I'm thinking of Dave Ramsey, for example, you know, who's, as much as uh, maybe there are some people who need his particular advice, I'm sure some people have had success. It's sort of like the uh Christian health share ministry. I'm I'm

0:13:45 Andrew: Oh he's plugged, he has plugged them, shocker.

0:14:14 Thomas: Sure, right. Yeah, yeah, and but but he has like this radical no debt approach approach. And again, like, like I want to make very clear, maybe some people have problems with accumulating too much debt and maybe his advice helps them or something. But the idea, he has this ideology that you need to clear all your debt, get rid of it, have no debt. And a lot of people have that mindset and they think, I think they think it's like smart, sensible finance, but it's actually the opposite of that. Like it's bad finance. It's, it's not the right thing to do to have zero debt. And I see a kind of a connection there in this approach, which is funny because Republicans are supposed to be like the party of business and run the government like a business. But it's such bad business advice. It's really interesting.

0:14:14 Andrew: Yeah.

0:14:57 Andrew: It really is, and there is, you can understand, right, when we live in a country where structural poverty has it such that, you know, 50% of families are one $500 bill from being wiped out, then like, yeah, um, the advice that says don't max out your credit cards is a great is is great advice, yeah.

0:15:15 Thomas: Yeah, predatory lenders. Yeah, of course. Like there's all kinds of bad debt that people should avoid. Of course, I didn't I didn't trying to issue every caveat. It'S kind of difficult, but yeah.

0:15:19 Andrew: Oh my gosh right no no no yep I know, I believe me, I know, you are, it's why, it's what I said it that way, but the idea that there is some kind of theoretical maximum that a government shouldn't borrow is just silly for the reasons that we're about to explain. Let's, okay.

0:15:40 Thomas: Okay sorry I get excited about finance.

0:15:43 Andrew: Oh me too, this is great, so we're, we're in, we're at a mutual wheelhouse, we get to play pickleball back and forth. We're, you batting the ball back to each other. So let's zoom out from community to the U.S. government. Same thing. Now, the numbers are going to be way, way bigger because the U.S. is way, way bigger than a town, When right? The United States government needs a major capital expenditure, like, I don't know, fixing crumbling roads, roads, bridges, you know, the fact that pipes carrying water to school children are filled with lead.

0:15:43 Thomas: Yeah yeah getting getting us out of this groundhog day of infrastructure week, every day is infrastructure week. For the last 50 years we never actually get any infrastructure.

0:16:15 Andrew: Yeah, yeah. And infrastructure is expensive? And so the way in which the federal government pays for that is the exact same thing. The Department of the Treasury issues bonds. Well, they actually issue a whole bunch of different securities, they right, can issue bills, bills, notes, treasury bonds, um, I am not a uh, not an expert on this, and and b, as far as I can tell, please feel free to write in, maybe I'll do an answer was wrong segment, maybe I won't, as far as I kan tell, the biggest difference is maturation date, so right, some, some bonds, like literally float a few days into the future, right, that's not gonna pay you very much, um, others are redeemable, you know, 30 years in the future.

0:17:06 Thomas: I remember the T-bill, 30-year T- bills is like the generic currency of bonds in my recollection. You kind of almost measure everything else by that because as someone who's investing, you can compare that to your baseline. Like, okay, if I just put all my money in 30-year T-bills, here's how much I would make. It's a small amount because the trade-off is usually risk and reward. So they're very, very low risk, risk, hopefully, until, they're thought to be very low risk, so it's low return. And you can compare that to other investments, which might be higher risk, but give you higher return. I don't remember them issuing T-bills that are that short? Do they issue ones that are days old? I could be wrong as well. It's been a few years, obviously.

0:17:49 Andrew: I days I went to the Department of Treasury website. So,

0:17:54 Thomas: Oh, okay. What I was going to ask is, is it just people reselling T-bills that, you know, because once a bill has a maturation date, you know, it's obviously resold.

0:18:01 Andrew: Yep, there's a secondary market. Yeah, this is, as far as I can tell, this is not a secondary market. I throw it out there, so I think there are some super short-term notes. In any event, I love the way you just put that because my, Thomas, follow-up question to you would be why is it that a promise to pay you back in 30 years from the U.S. Department of Treasury, why would that be something that international investors consider to be a very safe investment if anything that you've heard Republicans say about the budget deficit over the past month is true, right?

0:18:03 Thomas: OK, yeah. OK. Yeah. Yeah.

0:18:42 Andrew: I mean, think about that for a fraction of a second, right. Like, you just matter-of-factly said that in finance, and again, this is all true, 30-year T-bills carry a low rate of interest because they are an incredibly safe investment. Well, how are they an incredibly safe investment? Because the idea is the U.S. government will have money to pay you back in 30 years. Well, if the U.S. government will have money to pay you back in thirty years, then all of this dire predictions can't possibly be correct,

0:18:45 Thomas: Yeah. Yeah. And the only thing that would threaten that is this Republican idiotic idea that we ought to have a debt ceiling. Like, that's honestly the only think that would cause a financial collapse, and this is why.

0:19:26 Andrew: It That is exactly right, so let's take a step back. There is nothing inherent about the way in which money works that that that prevents the Treasury Department from just issuing securities every time they run out of money. Right. So, you know, just kind of look at, OK, how much has been authorized to the Treasury Department to pay the bills of the United States? Oh, funds are getting pretty low. Let's do the same thing that municipality did. Let's issue a new order of bonds. If right, this, by the way, has been the case for virtually all of the nation's history. If Congress just did nothing, passed right, a general budget resolution and authorized the Treasury Department to use whatever means necessary to pay the bills of the United States, this literally would not be a problem.

0:20:17 Thomas: Oh, Yeah.

0:20:17 Andrew: Would be no debt ceiling, no debt limit, no net nothing. But, as you know, we have, dating back to the agrarian origins of our economy, we have a system in which the legislative branch, Congress, has the power to tax and spend. But the executive branch agency, the Department of the Treasury, is the agency that is tasked with actually cashing those checks, Actually right? Paying those, I said cashing, but do cash, but they also write the checks, right, like they're the ones balancing the checkbook, so to speak, and right, because that's an executive branch agency, they only have the powers that are explicitly authorized by Congress, and so Congress can do stupid things like Pass 31 U.S.C.

0:21:10 Andrew: 3101. And I'm going to read subsection B. I'm going to read this to you in its entirety. The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the U.S. government, except guaranteed obligations held by the Secretary of the Treasury, and that principally relates to Social Security, by the way, may not be more than $14,294,000,000 outstanding at any one time, subject to changes periodically made to that amount as provided by law through the congressional budget process described in rule XLIX of the rules of the House of Representatives or as provided by section 3101A or otherwise.

0:21:49 Thomas: My first thought was, I wonder if this is a stupid enough law to have an actual dollar amount or I already know the law is stupid, but, or did they do some percentage of GDP or something? You know, they, did they do it like that to account for inflation, uh, or anything else like that? But no, it sounds like they actually have a specific dollar amount that we can't go above.

0:21:55 Andrew: Yep, they just picked a number and stuck it in And you might be thinking this is one of those where you're like, wait, I know I have read reports that it is twenty eight point four trillion dollars and not fourteen point three. That is 100 percent correct. But it's because of those periodic changes that that reflects. Like. So rather than directly amending 3101, they will then issue a report through reconciliation or pass a different law. And so, yes, as somebody who was tasked with figuring out exactly where the debt limit is codified in the U.S. Code, that was a fun rabbit trail full of research. So Congress can increase that number. And literally, this crisis that we are in is 100 percent the function of what I've just described, which is Congress can go to war with with the president say, hey, we're going to take away the power of the Treasury to actually pay the obligations that we, the Congress, incur by setting an arbitrary number.

0:22:14 Thomas: Oh, my God. OK.

0:23:27 Andrew: And if you then, if we, Congress, don't come back and either increase or disregard that number, then I don't know what happens. You figure it out. That's literally the scenario in which we're in. And so a couple of months ago, Treasury Secretary Janet Yellen and I should add, Steve Mnuchin did the exact same thing two years ago. Right. Like it is it is the job of the of the secretary of the Treasury to then write letters to Congress that says, hey, we're the Treasury. We pay your bills. Remember us? We're getting really, really close to the time where we can't pay your bill. Can you do something about that so that we can pay your bills?

0:24:16 Andrew: And if that sounds like a little opening argument, see, for example, is the September 28th letter from Janet Yellen, which says, you know, to the Honorable Nancy Pelosi, dear Madam Speaker, I'm writing to follow up on my previous letters regarding the debt limit and to provide additional information on the Department of the Treasury's ability to continue to finance the operations of the U.S. government. Um, sidebar, um, we have not talked about the extraordinary measures that that are possible. I made a reference to it, it's that section 3101a, but basically once the Treasury starts running out of money, um, there are a couple of things that are built in, uh, that are called extraordinary measures. Some of them are are ways in which cash is accounted for, um, some of of them are sort of other kind of similar ways to like not pay into X particular fund or what have you.

0:25:10 Andrew: That is designed in an emergency to allow the government to continue functioning while presumably you get Congress back and increase or waive the debt limit. They've been doing those heroic measures. And Janet Yellen's estimate now is as of October 18, so 11 days from this recording, 10 days from when you hear it, the Treasury will not just have no money, but will have exhausted all of its extraordinary measures by within 11 days of when we record this show. OK. And when that happens, that means all of a sudden, let's go back to, you know, household, book balancing. Right. What that means is you're looking at six different past due bills and you have to decide which one of those you're going to pay. Right? And which ones you're not going to to pay.

0:26:01 Thomas: Just I was trying to think of an analogy myself. It's imagine if someone made a rule that you can only pay a total amount of your bills, but you actually have the money. You could just pay them all off. Right. In this analogy. But it's like, well, I have an arbitrary rule that says I can only play, you know, in a given, in, let's say a month or something. I can only pay this amount. It's like, well, we, you have more expenditures to pay. You have the money to pay it. That would all be fine except for this arbitrary rule. And because of this arbitrary rule, you aren't going to be able to pay one of those bills. And then what happens? You'll go into collection. You'll get, you know, your credit will be hurt for no reason. You Have the money, the money's there. It'S okay. But it's just the arbitrary rule?

0:26:10 Andrew: Yeah, yeah.

0:26:41 Andrew: And the way in which I might tighten that analogy is let's

0:26:44 Thomas: Sure. I love when you tighten my analogies. Tighten away, sir.

0:26:46 Andrew: Imagine you have inherited an art gallery full of Picassos, right? So, yes, your regular income isn't sufficient to cover these bills, right? But you literally have a gallery full of priceless artwork and banks all over themselves to loan you money with the artwork as collateral.

0:26:56 Thomas: Yeah, sure. Sure. Sure.

0:27:09 Thomas: With that as collateral, right? Yeah.

0:27:11 Andrew: Yeah, that's what we're talking about.

0:27:12 Thomas: Excellent tightening of my analogy. I love it. But what will happen, again, I want to direct attention to the absurdity of the rule. So they're saying you can't do that. You can't leverage any more Picasso. It's like, I've got all of them. I've collected them all. They're like, Pokemon, I'm going to use Picasso. But they're like nope, even though you have this vast resource, you can't use it above an arbitrary amount. And therefore, even though you're sitting on a fortune of Picassos, you're about to have your credit destroyed, essentially. Right.

0:27:42 Andrew: Yes, no, that is absolutely correct. Let And me add that the only time in American history in which U.S. bond ratings were degraded occurred because of precisely this level of shenanigans, right? This was 2011. This was the last, well, I don't want to say the last major budget, because they're all major budget impasses, but this was when Congress actually allowed a governmental shutdown and held the line on not raising the debt ceiling, and Standard & Poor's reduced the United States government from AAA to AA+. And now, you know, I know bond ratings are weird and you're sitting there thinking like, oh, well, all right, like, you already had an A+++, but you're going to... But that is incredibly significant. The thing to say is that the major bond rating institutions said that literally the gold standard for how we compare investments, yeah, is now the silver standard. That's exactly right.

0:28:06 Thomas: Yeah. Yeah, yeah. Is like the silver standard. Yeah yeah. Well, and I believe I don't know if this happened, but I believe that the eventual knock on effects of that is it could cost us more to raise money. Like we wouldn't, if we got degraded in our, you know, in our rating, we would actually have to pay, you know, a little more return, a lot more interest or whatever on our debt. Eventually, hypothetically, that would be the result of that. And then it would make us less powerful, isn't it? We'd be less able to leverage our money.

0:29:02 Andrew: Yes.

0:29:18 Andrew: That is exactly right, and so there – there's a theoretical responsible debate to be held about government programs and about balancing future debt against future growth, right? I do not mean to suggest, right, that the U.S. government could do anything it wants and simply, like, spend an infinite amount of money and just print an infinite number of, you know, treasury bills, notes, and other securities, Right. Like it's why when we talk about things like, oh, say, you know, the never ending war in Iraq and Afghanistan, that the fact that those have real costs, right, are a thing about which we can debate. Be.

And as a Democrat, I am prepared robustly to debate the benefits as opposed to the costs of programs like universal health care, of programs like a universal basic income that we talked about on the show would pay for itself within a decade. So it isn't to say that we shouldn't have debates over how to finance the government. What it is to say is having the brinkmanship of, oh, we don't care if we go over the debt limit, that constrains your ability to have that very argument in the first place. It is the most irresponsible, socially irresponsible thing that you can possibly do.

0:30:46 Andrew: I

0:30:45 Thomas: Absolutely. I mean, a very complicated topic, obviously. I think macroeconomics might be one of most complicated things in the entire human endeavor. Isn't. And so it's unclear like what level of just constantly borrowing the U.S. government is able to do. But one thing's for sure, the point is it should not be constrained by an arbitrary law that wrote down a dollar amount in a given time. That makes no sense. Like it should be constrained by something and it may be something that's above our pay grades to figure out exactly. You know, I think Janet Yellen probably has a better idea than we do, but it shouldn't be constrained by this ridiculous limit that just jeopardizes, honestly, jeopardizes the the financial health of the country for no reason.

0:31:28 Andrew: Agree 100%.

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0:35:54 Andrew: So now, where we are is at the expiration of the Bipartisan Budget Act of 2019. And what that Bipartisan Budget Act of 2019 did was two things, right? The first was it suspended the debt limit. This is a thing that we can continue to do. Suspending the debt limit means that number that is in 31 USC 3101 B doesn't matter, right? That number is effectively disregarded. You do no comparisons. And as we've been saying throughout this entire show, that remains a viable option for the United States Congress to just repeal 31 USC 3101 or indefinitely say, yeah, we're going to set that number equal to X, right. And then And there's nothing that exceeds X. so it suspended the operation of that number until July 31st of 2021. you might be asking yourself, why would Congress do that?

Well, that is very clearly Congress hedging on the idea that perhaps, that is a Republican Congress, hedging on the idea that perhaps a Republican president might not get reelected. And knowing, by the way, that this is the dynamics of the way that it happens, when a Republican president wants to spend money, the Democratic Congress does not hold the federal budget hostage hostage to the debt ceiling. Now, do they engage in political negotiations? Sure, they do, right? But they do not threaten to shut down the government and to just simply say, nope, we're done. You're not going to spend any more money because it's grotesquely irresponsible. So Republicans know that they can get a waiver or a suspension or increase of the debt sealing when their guy is in office, and if they preserve it as an issue, they also know that they can

0:36:32 Thomas: Mm hmm. Yeah. Yeah,

0:37:57 Andrew: Raise it again as a threat when a Democrat's in office.

0:37:58 Thomas: But but just to clarify something, it's not as though this is the debt ceiling limit on Joe Biden's budget. It's not that it right. I mean, this is our ability to pay like operations for stuff that's already happened. So this is essentially paying for what Trump already did, isn't it? And I just want to make that clear Because when when Republicans are using this and holding the country hostage, it's not even to stop Joe Biden spending, blah, blah, blah. It's just a grenade that's going to explode the government.

And they're playing the game of, hey, Democrats, you care about, you know, things and like government and stuff like, okay, we're going to explore this grenade unless you cave to our demands. When in a healthy country, both parties would be like, oh my god, there's a grenade in here, like, why do we have a grenade in the government, like, get that out of here, why did we arm this grenade? Yeah, it's not as though this is some limit on Joe Biden's budget. Joe Biden could still pat right, he could still pass his budget, and that would be kind of unrelated to, or unless there's some statutory reason why it's linked, but isn't, isn't that right? I mean, isn't this

0:38:20 Andrew: Yeah, Why did we build that in the first place?

0:39:08 Thomas: The, go ahead, um,

0:39:08 Andrew: So, Yes and no. Let me give the Republican version of the argument, because I think I, you have encapsulated the Democratic version of the argument rather well. And I think, by the way, the fact that that's a much better argument is why Mitch McConnell has switched, as far as we can tell, has shifted strategies. So the Democratic argument is, yeah, all of this stuff was racked up before I got here. And so essentially what you're saying is you want to have voted for years of costly spending under Trump and then have the government default under Biden. And that seems kind of ridiculous and unfair. And that message, I think, resonates really, really well with, you know, the, the increasingly diminishing number of centrist voters.

0:39:59 Andrew: That's right, something that I can imagine sitting around with my, you pro-business Republicans, uh, and having them go, yeah, no, that that's a fair point. The Republican counter argument, uh, to that argument has been, okay, point, uh, but you're about to go into reconciliation and add 3.5 trillion in new spending that's going to require increasing that, uh, budget debt ceiling, uh, and so let's not pretend like you, yeah, you know, both parties have contributed to us getting to here, but you're going to need that number to go up, and we don't want that number to grow up, and by the way, you're locking us out of the reconciliation process, right?

0:40:40 Thomas: Counterpoint, I'm pretty sure, sure, that the $3.5 trillion, for one, it's over 10 years, right? Don't we always do this where we give the number as though it's like tomorrow they're going to have to come up with $3,500,000,000 in quarters, you know, dollars and quarters to spend, but it's Over 10 years. And also, I don't know what version is going to actually get passed, but that may be entirely paid for by taxes, right, depending on what passes.

0:41:02 Thomas: Yeah, like so that's going to add nothing to this, right.

0:41:01 Andrew: It yes and yes, yep yep Well, Uh, it could, so something could be paid for in taxes, but still increase the debt limit, right based on timing coming in right So as far as we can tell, and I know that was that's just a perfect segue to the, the best information that we have right now. And that is negotiations between Mitch McConnell and Chuck Schumer. The idea is that they will agree to a suspension of the debt limit until December, right? Whether that's going to be December 1, or some later point in time, again, not clear. But basically, a two-month suspension of the debt limit. And then it will click back in at its previous levels,

0:41:12 Thomas: But they pay for it ahead of. Yeah, sure. Sure yeah yeah so Well, that does that mean we'll be like over the limit and we'd have to try to like get back down or something?

0:41:54 Andrew: It means that we would be over the limit, but it would all of of the emergency procedures and measures that I've talked about. Again, those are not a lot. They don't buy you a ton of time. It buys you some negotiating time once the limit kicks back in. And then the second component, and this is the, you know, if you want to, I don't want to say tip your cap because we're playing constitutional hardball here, but if you You want to admire the political strategy of Mitch McConnell, what he said was, and we will expedite to the best of our abilities. Now, you know, again, I don't know what a promise to expedite for Mitch McConnell means, but you guys using the to raise the debt ceiling by a specific number. And then so long as you come out and you guys agree on a specific number, then that tracks that rule XLIX from from the legislation.

0:42:02 Thomas: Hmm

0:42:55 Andrew: But even then, there's been some talk about using normal means. So long as the Democrats pick a number, we're not going to object to that number other than we're going to then vote against the overall bill because we're opposed to government spending. So the idea is this is supposed to defang the Democratic argument of, no, no, no, this is the spending your guy wanted, and we just want to pay your bills. And the reason that it is kind of diabolically clever is, as you alluded to from the very, very beginning of the show, puts the spotlight on Democratic Democratic intra-party fratricide with largely Kyrsten Sinema at this point and also Joe Manchin, who have said, you know, well, we're not sure we're going to go along with the tax increases.

0:43:45 Andrew: He says, we're not sure we're going to go along with this high level of spending, whatever, by forcing the Democrats to pick a number in reconciliation and knowing that if they lose even a single vote in the Senate, and if they lose more than eight votes in the House, which again, not a big number in the house of representatives, there is a chance that the Democrats just screw it up on their own, right? And so that's what they're taking the chance on right now. It's a really, really smart political ploy. I expect I mean, like I said, you know, this is all hypothetical as of the time of this recording. I expect Chuck Schumer to take it right again because Democrats are fiscally responsible with your money. We're not going to let the country, you know, begin defaulting on its debt obligations and further jeopardize our potential credit rating because, you we're worried about the long-term politics of convincing Kyrsten Sinema. But the second we take this deal, we now have two months to worry about convincing Kirsten Sinema, so

0:44:02 Thomas: Yeah, yeah, could off So what does it take to get rid of this idiotic thing? Is it just a bill, so

0:44:57 Andrew: You have to do is repeal.

0:44:57 Thomas: We need 60 or could you do it in reconciliation for 50, or no, okay right

0:44:58 Andrew: No. Yeah. Yeah, no, you would have to pass it as a law. You would need 60 votes or you would need not to have a filibuster.

0:45:08 Thomas: It was sort of a weird meta budget. Because I was like, well, it is a budget thing, but I guess it's, you know, outside of the budget. It's like a constraint on the budget, so it doesn't count in reconciliation, I guess.

0:45:20 Andrew: Well, again, you can increase the limit by a specific number, right? Made in that amount as provided by law through the congressional budget process described in rule XLIX. Yeah

0:45:29 Thomas: Yeah, I'm trying to differentiate what we need 50 votes for. So you're saying, I mean, does that mean we could increase it by 10, 11 to bazillion trillion made up number? I mean.

0:45:37 Andrew: You Could in that reconciliation process, but, but the, but again, the problem with doing so is that then you put, you know, you would, there the biggest problem would not be losing Sinema and Manchin, but would be losing eight congressional House members because the ads would run in their district of even voted to limit the ceiling to $11 quintillion, right? You know, it's, That's really where the political pressure comes in. But there is nothing to stop you, right? That is, if you had enough Democrats, you could go through that rule process and you could set the number at a number that kicks the can way down the road, right, absolutely plausible, plausible. And then just make the case to your constituents of, yeah, it's a big number.

It's a big number because I have watched the last decade of what Republicans do, and that is the minute we get close to the number, if their president is in office, they behave responsibly. When a Democrat's in office they behave like children and threaten to shut down or default the government on its obligations and I don't want them to do that anymore. The way that's uh, that's free campaigning advice to our Democratic legislators listening to the show, um.

0:46:04 Thomas: Yeah.

0:46:54 Thomas: We have made them get rid of it in the Trump years? Could we have been? I mean, I know it's always the whole thing of like, well, Democrats aren't going to use the government as a hostage and that kind of thing. But could we have said, fine, you know, we're under Trump, we'll pay your, ridiculous you tax cut that you did. But you have to get rid of this debt ceiling. I wonder if that would have flown. Loan.

0:47:15 Andrew: We could, the Democrats up a 100 to a person, uh, opposed the the tax cut that was that was uh rammed through entirely through reconciliation and was revenue neutral yeah with respect to the, oh, go ahead, sorry. Sorry.

0:47:25 Thomas: No, I know. But this is a different thing. This happened after that. I mean, we know because we lifted the debt ceiling after that, not as I'm not talking about as a part of passing that tax bill. I'm talking about later on. There was a time I think it was only a couple of years ago when we had this, you know, we hit the debt ceiling and Democrats agreed to, you Know, I think people wanted them to play hardball and use it as leverage, you don't don't I think they did to some extent. But in that process, could we I wonder if it would have been a winning argument or to just say, yeah, sure. Let's just get rid of the debt ceiling. And then, you know, President Trump, under his watch, we're able you're still able to spend as much as you want.

0:47:38 Andrew: Okay.

0:48:06 Andrew: That certainly could have been a proposal Democrats made in 2019 in connection with that budget. That was not the path ultimately that they chose to go down. That's what led to the bipartisan act that said, yeah, we're going to suspend this for two years and then kick it in at a higher level, which shocker, turns out not to be an appropriate level after your guy has spent for two years. Years is, I think, kind of the maximum time horizon for a great many members of Congress, sadly.

0:48:16 Thomas: Yeah. Yeah. Yeah.

0:48:40 Andrew: So, are correct. Do think it would have been a challenge ultimately if the Republicans had said, had taken a McConnell position, right? And, and, and by that I mean one that is inherently hypocritical and proud of it, right, and said, basically, you could imagine Mitch Mcdonnell, let me craft the speech for him, right here. Yeah, the, Republicans are the party of budget restraint, so we're not concerned with having this, we agree with, with, you know, let's get rid of it when, you know, when a Republican's in office, but we absolutely will not remove this as a check on future Democrat presidents.

0:48:55 Thomas: Yeah. Uh huh. Yeah. Yeah.

0:49:15 Andrew: That are, you and just basically like said, you know, no, we're not, you're either going to have to lift it only for us or, you know, go screw yourself. Yeah.

0:49:15 Thomas: Yeah. Yeah. They might they probably wouldn't have gone for it. Yeah. Yeah. And I think the biggest the challenge here is that it sounds like a thing. You know, the problem is it sounds Like a Thing. Oh, lift the debt. So you get what we spend infinite money and then it sounds like a Thing that people think is bad where it's like, well, no, the government shouldn't spend infinite Money. That doesn't mean and then it's just too hard to as with a lot of things in politics. It's the The Democratic argument is more more complicated, but true. And it's harder to get across in stump speeches. It just seems like, right?

0:49:33 Andrew: Right. Yeah. That's exactly right.

0:49:56 Thomas: Well, so as of now, we don't know, again, to wrap up, we We don't know if there's still deals in the works. We don'T know what will happen, but this thing shouldn't exist. And I hope someday we can get rid of the debt ceiling. All right, Andrew, just in a... birthday. You know what? I was going to say no time for the wild card, but it's your birthday. So have a wild card on me

0:50:09 Clip: WOAH-

0:50:18 Andrew: Hey, And this is another one where, you know, the uh, the celebration may be short-lived, uh, but we have covered Texas SB8 at length, obviously, beginning in episode 522. Uh, we covered the um, not very good arguments made by Lawrence Tribe, uh, that it was unconstitutional. We covered uh, the U.S. Department of Justice petition for injunctive relief blocking SB8. I want to tell you, Thomas, yesterday that court, U.S. District Court in Texas, issued a temporary injunction, uh, blocking, uh, SB8 from continuing to go into effect. Um, Texas has has already immediately appealed that court's decision, as you might suspect. And so as we record this, it is going up to the Fifth Circuit.

0:51:07 Andrew: The Fifth Circuit may weigh in on that injunction. They may, put in a stay of that court'S injunctive relief from going into effect, which would return us to the status quo. If that happens, then what will happen is the U.S. Department of Justice will appeal that to the Supreme Court, and it will put squarely the issue before the Supreme Courts about which, by the way, Samuel Alito has been publicly giving speeches lying over the past month or so, but you may or may not have seen this, but we called out in that episode 522 that the Supreme court was using the shadow docket, that their decision in this case does not cite to Planned Parenthood versus Casey or to Roe v. Wade was just on bizarre technical procedural grounds effectively invalidate a person's right have to an abortion in the entire state of Texas.

0:52:02 Andrew: Supreme Court has to face a shadow docket question, whether to affirm a hypothetical Fifth Circuit's decision to block this injunction from going into effect, that will continue to make the argument that we, that Sheldon Whitehouse and others have have been making about this sort of nakedly political Supreme Court. Walk you through all of that because, look, this is an area where, I'm going to tell you the only interesting legal thing here, but this is An area where the Supreme Court has long since pretended, you know, stopped pretending that it is interested in an originalist evaluation. They aren't, right? What the Supreme Court is interested in doing is returning us to a pre Roe v.

0:52:52 Andrew: Wade world in which states are free to ban abortions. And that's truly terrifying for all the reasons we've talked about on the show. So all of that as the like immediate term, what will what will happen over the next week? Right. After you listen to the show, the next couple of developments, I want to tell you This is a really good, well-reasoned opinion. By the way, it's one that I also, I can enjoy the reasoning in the opinion because I happen to be right on it.

0:53:22 Andrew: It does not cite to the Grendel's Den case at all. As I told you, it wouldn't. I Told you there was not going to be like one weird trick on what happens when you decide to essentially outsource government functions to vigilantes. And what I told you was that court will always have the inherent equitable power to restrain the legislature and to say, yeah, we're going to step in here regardless of these procedural shenanigans. Well, you can read that for yourself starting on page 39 of the opinion, which we'll link in the show notes, which says, "No cause of action created by Congress is necessary to sustain the United States' action here. Rather, traditional principles of equity allow the United State to seek an injunction to protect its sovereign rights and the fundamental rights of its citizens under the circumstances present here. This case strikes at the core function of the equitable cause of action," as, and then this is an internal quote to a case from 1930,

0:53:28 Thomas: To have

0:54:20 Andrew: "Whether acting through its judiciary or through its legislature, a state may not deprive a person of all existing remedies for the enforcement of a right which the state has no power to destroy unless there is or was afforded to him some real opportunity to protect it," end of quote. So yeah, this is exactly what I expected a sensible district court applying the law to do, and that is to say, oh, if something is unconstitutional for the government to do, it is unconstitutional for government to delegate to vigilantes. Yeah.

0:54:56 Thomas: Somebody else do. Yeah, silly.

0:54:58 Andrew: And you don't need Grendel's den. You don't procedural shenanigans. You just need the inherent equitable power of the United States to go into court to vindicate the rights of its citizens.

0:55:07 Thomas: Yeah. You don't need one weird trick. You need one very basic thing. That's not a trick. So how long is this short term? Yeah. Thing going to help.

0:55:14 Andrew: Exactly right. Yeah, I mean, it's as of now, it is in effect. It has been immediately appealed to the Fifth Circuit, which will, hear expedited briefing and, you you know, will face the question of whether to enjoy, you know—whether to stay the effect of this district court's injunction. If it does, right, which I think is highly likely, right? We've talked about the Fifth Circuit as just sort of nakedly partisan on abortion issues. That's how we got all of these cases that were teed up in the first place, they do, then that restores the status quo. And again, that status quo as of today is that SB8 is allowed to go into effect, again, because of the inaction of the U.S.

0:56:06 Andrew: Supreme Court. So, once again, I just want to make sure because, you it is super easy for us and doubly easy for me as a lawyer who loves getting into the minutia to say, like, well, you know, there wasn't a decision on the merits overturning Roe v. Wade. No, there weren't, right? But what there was was a Supreme Court that allowed a law that plainly violates Planned Parenthood v. Casey and Roe v. Wade to go into effect without staying that because they were somehow confused about the vigilante portion.

0:56:40 Thomas: Yeah.

0:56:40 Andrew: Well, now we're going to have that vigilante proportion explicitly teed up first for the Fifth Circuit and then for the Supreme Court, and we will be awaiting to see what they do. I And would point out, right, the chaos has already occurred, if right? You are a pregnant person in Texas, you can celebrate this ruling today, but you have no idea. If you're a clinic in Texas. Right. I don't know that you could reopen. Right?

0:57:04 Thomas: Well, I was going to ask, I mean, as much as this is a short term thingy, I was going to say that maybe it's, I suppose, a minor bit of good news that if you're a pregnant person needing an abortion this minute, you know, or in the next however many days or weeks, like maybe you'd be able to get one because of this temporary ruling.

0:57:05 Andrew: Maybe, right?

0:57:23 Thomas: Maybe.

0:57:24 Andrew: That will depend upon the risk aversion of the doctor and the clinic, right? Because remember, we read all of those terrible affirmative defense preempts that are contained in SB 8. And if there is subsequent judicial action that invalidates this particular stay, right, that works to eliminate the affirmative defense of this was permitted and protected by law, right? So in other words, again, I say this as somebody who who is paid on a daily basis to advise businesses as to their legal risks, right, and their legal rights. If you were a clinic based in Texas and you gave me a call and said, hey, guarantee I'm not going to get sued? Or can you tell me that there's a low likelihood that I'll get sued as a result of this decision?

0:57:29 Thomas: Mm-hmm. Yeah.

0:58:20 Andrew: I wouldn't be able to say that to you. You know, know, I would say as of right now, right, that law is not in effect and no one can bring a lawsuit. But there was a tremendous amount of uncertainty around it. And that's just the reality of the situation.

0:58:36 Thomas: All right. Well, obviously, we'll keep an eye on all that. But there you go. So Texas SB8 enjoined a very, very short-term minor victory, exactly as Andrew called it.

0:58:47 Clip: Oh, no associate of this firm has ever failed the bar exam. No kidding.

0:58:53 Thomas: And now it's time for T3BE. This is, of course, for anyone who, I don't know, a new listener. Each and every week, I try to answer a bar question as a non-lawyer, and right around 55%, right? Usually something like that, 54, whatever. But yeah, here we go. Another edition of T3B.

0:59:06 Andrew: Yeah. All right, Thomas, a man lives in a remote area in the upper peninsula of State A. I like that. Is there any other state besides Michigan that has an upper peninsula? Anyway, Anyway, since he lives so far from town, he prefers to make one large trip to the local convenience store each month to purchase all of his supplies.

0:59:19 Thomas: Interesting.

0:59:30 Thomas: Okay.

0:59:30 Andrew: During the winter, area gets so much snow that the roads are often unpassable by vehicle. Thus, the man decided he

0:59:30 Thomas: Okay. Already as a test taker lawyer, if I were in this real bar exam, I'd be so mad about all these details. Like, come on. God, you're just stalling. Test. You're trying to slow me down. Don't tell me about this town and the peninsula. I don't care.

0:59:45 Andrew: Wanted to purchase a state-of-the-art snowmobile that would allow him to transport his supplies back and forth from town. And I got to tell you, I kind of want a state-of-the-art snowmobile now.

1:00:00 Thomas: Yeah. I Don't want any of these old snowmobiles that don't perform as well as the state of the art.

1:00:04 Andrew: No. Since the best deals are during the summer, the man went to purchase a snowmobil in July. He asked the salesperson to show him the best snowmobile you've got. Took him over to a large snowmobyl with red and white stripes. Stripes. Okay, now I'm with you, but this is just the bar exam. Screwing with you. I feel very confident that the red and white stripes are not going to play a role here in this question. Anyway, the salesperson said, I think this is exactly what you're looking for. The box advertised that the snowmobile could carry up to 200 pounds.

1:00:16 Thomas: That's It, yeah.

1:00:39 Andrew: Impressed, the man replied, I'll take one, but But can I get one with black and blue stripes? The salesperson readily agreed and said it would be delivered within a week. The correct model snowmobile with the blue and black stripes was indeed delivered on time the next week.The man was very happy and accepted the snowmobiles. When the first snowfall hit in November, the man tried to take it to the store to purchase his supplies. On his way back with 100 pounds of supplies in the snowmobil, the the snowmobile kept stalling due to the weight of the supplies. He had to call for help because the snow mobile could not get him home. When he called the store, he was told that there was a problem with the bearings in that model that prevented it from operating correctly when carrying heavy loads. However, it still works properly in every other scenario. The man asked for his money back.

1:01:29 Thomas: Geez, okay.

1:01:30 Andrew: So, will he get his money back? A. Yes, because the man can sue under the theory of implied warranty of fitness for a particular purpose. B, yes, because the man properly revoked his acceptance of the snowmobile. C, no, because a perfect tender delivery was made and the man did not properly reject the snow mobile. Or D, no because the man is still able to use the snow-mobile, he simply cannot carry supplies on it.

1:01:43 Thomas: Oh.

1:02:01 Thomas: Seriously, if I was just taking this test for real and I actually want to ask you a serious question, not if you're taking this tests, and the time limit does seem to be pretty, pretty big factor in here because you only get like, what, a couple minutes on average per question. If you see a giant block of text like this, can you just be like, like, all right, I'll move on and maybe come back to that? Do you do that as a strategy or no?

1:02:21 Andrew: You could, except that almost every question has a big wall of text

1:02:25 Thomas: They're not this long. No, this is, I'm okay. If these tests, yeah,

1:02:28 Andrew: This is this is longer than usual. Yeah, I agree with you.

1:02:31 Thomas: I mean, It's ridiculous. But anyway, just that aside, I was a little confused because I don't, it sounds like we're ignoring the weight of a person on here. I don't think that, I guess it doesn't matter. I think we're to assume it can carry any weight of person and that doesn't mater, but the supplies portion of the snowmobile, the supplies carrying portion, can only carry up to 200 allegedly and then fails at 100 pounds. I guess I was gonna say 200 pounds, that's barely a me, like, but I think it means forget the person, it's just 200 pounds of extra stuff, like, I guess, um, so the, okay, we got some very exact quotes that I'm sure we, we got through deposition or something. The best snowmobile you've got, salesperson took him over large snow, but, uh, I think this is what you're looking for, I mean, I don't know if that matters, box advertised, so the box is, where is key here, the box advertised that the snowmobil could carry up to 200 pounds, and then he does it, and 100 pounds fails.

1:03:32 Thomas: He, we called the store, he was told there was a problem with the bearings in that model that prevented it from operating correctly when carrying heavy loads. However, however, it still works properly in every other scenario. Man asks for his money back. So he asks for his money back. All right. Will he get it? That's missing, but is that what it, just will he get it?

1:03:50 Andrew: Yeah. Well, Is he likely to recover the full purchase price of the snowmobile? Yeah.

1:03:54 Thomas: Is the man likely to recover the full purchase price, which I think is interesting because that's, you know, there are many ways you could recover the full purchase price. And I just am noticing here that the answers are slightly different. So in A, yes, because the man can sue under the theory of implied warranty of fitness for a particular purpose. That's a lot different in my mind. Maybe I'm wrong here, but that's different than like I'm returning it to the salesperson where I could see a world in which the sales person, the manufacturer, different things. So like maybe some of these answers would be like, like, yeah, you can't return it to the salesperson. You have to deal because the box says that it could carry 200 pounds and it can't. Whereas the sales person said, here's a snowmobile. Basically, I think this will work for you.

1:04:41 Thomas: This is what you're looking for, you which doesn't in my mind, ignoring the box. I don't think you'd be able to return it or anything like that because basically all the, all the salesman promised was it'll, you Know, it's what you are looking for. And the fact that it can only carry up to maybe 100 pounds or a little bit less than that, I don't think it would violate that thingy. But because the box says it can Only Carry Up to 200 Pounds, I'm wondering if he's going to end up being able to sue the manufacturer. So under the question, is the man likely to recover the full purchase price of the snowmobile? I'm going to go through the answers here and see. A, yes, because the man can sue under the theory of implied warranty of fitness for a particular purpose. Here's what worries me about that answer. It's not really implied because the box advertises explicitly that the snowmobile can carry up to 200 pounds.

1:05:33 Thomas: So that worries me. Um, implied warranty of fitness for a particular purpose. I guess I could see it's still making sense in a loose way. Like you're implying that you can put 200 pounds on it and you can't like, you literally can't. Um. So I could see a, cause it says yes, because the man can sue. So maybe that in a, the man is suing the manufacturer possibly. Maybe he's not not even suing the salesperson. And the other answers, B, C, and D look more salesman oriented or store like the actual store. And I'm not even sure based on this question, if I'm supposed to be drawing that distinction, you know, I, it doesn't say, I don't know if I can assume, you Know, in this day and age, the store never is the almost never as the manufacturer of the thing. Um, the storage is, you knows, sells the box kind So, but I don't know if that matters. I don't know if I'm supposed to assume that or not.

1:06:20 Thomas: B is yes, because the man properly revoked his acceptance of the snowmobile. I have a hard time believing it would be B because it's been months. Like the guy had the snow mobile for months and then used it and then is like, hey, this doesn't work. I feel like properly revoking your acceptance. I dunno, maybe this is just store policy type thing, but I'm pretty sure you can't have it for months. And then be be like, nah, it doesn't work for me, but I could be wrong. C, no, because a perfect tender delivery was made. The man did not properly reject the snowmobile. C is a very good candidate answer under the theory of like, can't get any money back from the store because the store, in terms of the store and the salesman, the they did what they said. You know, they said, here's snowmobil.

1:07:05 Thomas: I think it'll work for you. Here it is. And it's really just a problem with the box and the advertising and the store delivered on its promise. And the man did not reject that delivery. And I think I'm remembering from the question we had where something was damaged on route. Um, that, that was a very confusing answer. I should refresh myself on what the heck happened there because it was very counterintuitive. Um I think you had to completely reject delivery. Like you couldn't even open it or look at it or something. I think so. And he didn't do that. D, no, because the man is still able to use the snowmobile. He simply cannot carry supplies on it. Maybe my second favorite. Well, that might be my second favorite answer, but I don't know. So this is very confusing, but I think since the wording is, is the man likely to recover the full purchase price?

1:07:56 Thomas: I think I'm just gonna go with A, because, because he can sue the manufacturer. I think it's as straightforward as it gets in my mind that if you buy something that says clearly on the box that can carry up to 200 pounds and then you try to do that and it can't, you're going to get your money back, I would hope. So it's got to be a yes answer, I think. There's a little bit of trickery in that I don't know who's liable.

And I think A is the only one that really makes me feel like the manufacturer, you'd get the money back from the manufacturer, and that's what I would think, you know, like it's almost, I know often the theory on the show is sue everybody and figure it out, and maybe you would sue everybody. Actually, maybe A is still the man can sue, so the man would sue. I, I have no idea, this one, I, I could see an argument for every single answer.

It seems like it should be a straightforward one. I think I'm just gonna go with A because of the wording, and maybe there's a chance you can't actually return it to the store because they did what they said they should do.

1:08:51 Thomas: And that's why you might be able to eliminate the other answers. So I'm going with A. I think my second best answer answer C. I'll go between A and C and then I'll see what the coin thinks. The coin disagrees. So the coin is going to say C and I say A, final answer.

1:09:05 Andrew: All right. And if you'd like to play against Thomas and the coin, you know how to do that. Just share out this episode on social media. Include the hashtag T3BE. Include your guess, your reasons. Therefore, we will pick a winner and shower that winner with never-ending fame and fortune. Fame and fortune not guaranteed.

1:09:20 Clip: And thank you, Let's go!

1:09:21 Thomas: Now it's time to thank our new patrons at patreon.com/law. Every, enjoying that ad-free show, each and every episode, uh, other goodies, on the Tuesday show. I rearranged the hall of famers and the T3BE answer for convenience, all kinds of good stuff over there. Extra posts, uh. Early content, all that stuff. Patreon.com/law. Andrew, why don't you start us off with our new patrons?

1:09:44 Andrew: And thank you to Thrawn, a new live-action Star Wars fan film is raising funds on Indiegogo and they need your support. To James Guenther, to Yaaaaaas, Queen!, to Carol Stopa, Kelly Burke, Two Fabulous Thespians from Dakota Territory, and Hans Maverick. Thank you so much.

1:10:04 Thomas: And thank you to Kelly, Monkboon Wildcat, Sue McCue, Robert Muse, Mark Wiese, Laura Patterson, Thomas Williams, and Franklin Everhart. Thank you so much, new patrons. Hope you enjoy all the content. We appreciate your support. And that's our show, Andrew. Another big happy birthday to you. Go eat a squid nose or whatever weird seafood you're eating. I look forward to the pictures and hope it's happy one. And Morgan Stringer as well. Eat a squid knows too, both of you, or whatever you want to eat.

1:10:24 Andrew: Thank you. Much!

1:10:39 Thomas: Thanks so much for listening everybody we'll see you next time

1:10:42 Clip: I move for a bad court thingy. You mean a mistrial? Yeah, that's why you're the judge and I'm the law talking guy.

1:11:15 Clip: www.openargs.com. Be sure to join the Facebook group at facebook.com slash groups slash Yodel Mountain and follow us on Twitter at OpenArgs. This podcast is a production of Opening Arguments Media LLC, all rights reserved. It is produced with the assistance of transcriptionist Heather Leverage, production assistant Ashley Smith, and additional contributions from Morgan Stringer and Debra Smith. Special thanks to Teresa Gomez, who runs our live shows and heads up the OA Wiki, follow at OA Wiki on Twitter. Additional thanks to the moderators of the Opening Arguments Facebook community, Emily Waters, Alicia Cook, Eric Brewer, Natalie Newell, Brian Ziegenhagen, and Teresa. And finally, thanks to Thomas Smith, who edits the show and created the fabulous theme music, which was used with permission.