Morning Wire XX
[0] Elon Musk offered to buy Twitter has hit a roadblock.
[1] What's holding up the deal, and can Musk legally back out of the purchase?
[2] I'm John Bickley with Georgia Howell.
[3] It's Friday, May 20th, and this is Morning Wire.
[4] Migrants crossing the southern border hit an all -time record level in April, and more are expected as Title 42 is set to expire.
[5] We have the latest on the growing crisis at the border.
[6] And after trillions in federal spending on COVID relief, the U .S. is suffering from the worst inflation in decades.
[7] We speak to an economist about how COVID spending is now hurting the U .S. economy and what can be done to fix the problem.
[8] Really, the inflation is just one part of the bigger problem that we're going to see in the economy, and that's going to result in slower growth for years to come.
[9] Thanks for waking up with Morning Wire.
[10] Stay tuned.
[11] We have the news you need to know.
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[20] Weeks after Elon Musk shocked the world with his $44 billion offer to buy Twitter, new questions regarding the number of inauthentic bot accounts on the platform, have seemingly brought the deal to a standstill.
[21] Here with the latest on what's at stake and how Twitter is responding to the news is Daily Wire Senior Editor Cabot Phillips.
[22] So Cabot, first, walk us through this new information that's caused this deal to stall.
[23] Yeah, on Tuesday, Elon Musk tweeted that the deal to purchase Twitter, quote, cannot move forward until the company offers public proof regarding the legitimacy of their user base.
[24] Remember, a key aspect of this deal is just how many active users are on Twitter.
[25] The more users, the more money.
[26] Now, Musk says his $44 billion offer was based on Twitter's SEC filings, where they claimed, among other things, that fewer than 5 % of the accounts on their platform were fake.
[27] But now there's growing speculation that the real number is actually far higher.
[28] He claimed in a tweet that 20 % of accounts are spam or fake.
[29] Now, people, again, had known for some time that larger accounts did have a lot of spam followers.
[30] For example, one audit of Joe Biden's account found that 49 % of his 20 million followers were bots.
[31] A similar report showed that nearly 25 % of...
[32] of Musk's followers were also spam accounts.
[33] But overall, proof that the problem was pervasive across the entire platform would be huge.
[34] So what happens if they're not able to prove that that number is accurate?
[35] Well, according to Musk, it would fundamentally change the deal because obviously if 20 % of their reported users are fake, the actual size of the company is much smaller.
[36] Right now, it seems like Musk is going to try and use that leverage to restructure a deal at a lower cost.
[37] On that note, I talked to Peter Rex, entrepreneur and tech CEO.
[38] If it turns out that the amount of users on the platform that are real are about 20 to 15 % less.
[39] Well, he should get a 20 to 15 % discount.
[40] Now, if they told him it was about 5 % less than what appears, as in 5 % are bots, then fine.
[41] If there's 20 % that are actually bots, then he should get a 20 % minus 5 % discount.
[42] So that means a 15 % discount off the price, period.
[43] And that's just fair business, right?
[44] And I think that's what he's got to be thinking about.
[45] And how has Twitter responded?
[46] They're going to try and force this thing through as quickly as possible.
[47] They issued a statement saying, quote, the board and Mr. Musk agreed to a transaction at $54 .20 per share.
[48] We believe this agreement is in the best interest of all shareholders.
[49] We intend to close the transaction and enforce the merger agreement.
[50] So they're saying nothing has changed on their end, but obviously they have an incentive to get this done as quickly as possible before potentially more damaging information comes out.
[51] Now, it is worth pointing out, Twitter does have some advantage here already been signed.
[52] There have been previous cases like this where a buyer tried to back out after purchasing a company, and they were either blocked in court from doing so or forced to pay a substantial termination fee.
[53] So on Musk's end, he's hoping for public proof that the company lied to its shareholders about their product, and that could open up an avenue for him to get a lower price.
[54] So what sort of legal pressure would they be under if that's proven?
[55] Yeah, at that point, the question would really become whether they intentionally lied to cover up the number of bought accounts on the platform or whether it was simply an honest error on their part.
[56] And depending upon that answer, according to Peter Rex, Twitter could find itself liable to shareholders.
[57] I would say from a security standpoint is I do think there's liability here.
[58] If it turns out there's something like 20 % bots, that's a gross level of incompetence.
[59] And I think they would be regardless of what happens with this Musk deal, subject to liability as a result of that gross mismanagement of the company from shareholders.
[60] So just when things seemed like they were a done deal when it came to Twitter.
[61] Yet another wrinkle appears.
[62] All right.
[63] Well, definitely fascinating to keep an eye on.
[64] Cabot, thanks for reporting.
[65] Anytime.
[66] That's Daily Wire Senior Editor, Cabot Phillips.
[67] Coming up, illegal border crossings hit record levels.
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[78] The immigration crisis at the southern border continues to worsen, hitting an all -time record in April.
[79] Border agents intercepted 234 ,000 migrants last month, and those numbers may increase as Title 42 comes to an end.
[80] DailyWire's Tim Pierce is looking into the problems at the border and is here to tell us more.
[81] So, Tim, what's the latest on the border?
[82] Hey, John.
[83] Well, in short, the immigration crisis is as bad as it's ever been.
[84] In the last year alone, we've had more than 1 .5 million migrants into the United States.
[85] And many lawmakers and experts say that the Biden administration is about to make it worse by repealing Title 42.
[86] To give you a rough idea of Title 42's impact, of those 234 ,000 interactions with border agents, nearly 97 ,000 migrants were expelled due to the policy.
[87] About 118 ,000 were allowed into the U .S. Yeah, we saw those numbers in their eye -opening.
[88] They are.
[89] Now, the CDC set a deadline of May 23rd to end the policy, but several states challenged the decision, and U .S. District Judge Robert Summerhays issued a temporary restraining order.
[90] He says he'll issue a ruling before the May 23rd deadline.
[91] On top of the legal challenge, the president is also facing pushback in Congress from Republicans and moderate Democrats.
[92] Morning Warner spoke to former Department of Homeland Security attorney Mike Howell about Title 42's future.
[93] So I think we're looking at a situation where Title 42 won't be lifted in practice for a little while.
[94] But the administration is absolutely committed to getting rid of it at one point or another.
[95] I think the senators who will have to take a vote on, this, and we're looking at a pairing of a Title 42 vote with the COVID package, may get to, you know, breathe the sigh of relief because a judge may do their work for them.
[96] Now, there's a lot of focus here on Title 42.
[97] Why is that?
[98] What's going on with immigration enforcement generally?
[99] Well, according to Howell, it's almost non -existent without Title 42.
[100] He says the Biden administration has practically shut down immigration enforcement.
[101] They absolutely are not enforcing the laws on the books.
[102] I mean, this is, most apparent in the context of immigration removal.
[103] So immigration and customs enforcement, they basically shut down the removal agency.
[104] They aren't deporting anybody.
[105] Everyone knew what was going to happen when you lifted the policies.
[106] But now when we talk about the people actually put their life on the line, immigration and customs enforcement, one individual told us they can't remove people, they can't deport people.
[107] And so they've shut down an agency and you're basically telling all advice, we don't think your job matters.
[108] What you've dedicated your life and your career to no longer is a priority of this country.
[109] What about Border Patrol agents?
[110] Do we know what the agents on the ground think of all this?
[111] Yeah, we do have some signals.
[112] We actually asked Howell about that since he worked in DHS.
[113] He says that the morale of immigration enforcement officers has plummeted.
[114] They're sent to basically be Uber drivers and daycare providers and just facilitators for processing.
[115] The people they want to be catching, their job now is to move them into the interior.
[116] and that's absolutely humiliating for them.
[117] And it's why morale is terrible.
[118] What about Homeland Security Secretary Alejandro Mayorkas?
[119] He has been under a lot of pressure with these rising numbers, correct?
[120] Majorcas did visit the border last week.
[121] He downplayed the impact of ending Title 42.
[122] While, of course, we are preparing for the end of Title 42, based on the Centers for Disease Control and Prevention's decision, that it will end on May 23rd.
[123] that does not mean that the border is open beginning on May 23rd.
[124] We continue to enforce the laws of this country.
[125] We continue to remove individuals who do not qualify for relief under the laws of this country.
[126] So the secretary is saying that the elimination of Title 42 is not going to make a big difference.
[127] Yeah, that's what he says.
[128] Tim, thanks for reporting.
[129] Thanks for having me. That was Daily Wires, Tim Pierce.
[130] In an attempt to protect Americans during COVID, the federal government pumped trillions of dollars into the U .S. economy.
[131] Now, the U .S. is suffering from record inflation.
[132] Here to discuss is Joel Griffith, research fellow at the Rowe Institute.
[133] Now, Joel, you noted in a recent piece that the Fed increased spending from nearly $5 trillion in 2019 to almost $7 trillion in 2020 and 2021.
[134] Did this record spending lead to record inflation?
[135] Yes, well, one famous economist Milton Friedman once said, inflation everywhere and always is a monetary phenomenon.
[136] And what that simply means is that when you inject dollars into an economy, if the supply of goods and services are not keeping up with those new dollars, you end up with inflation.
[137] You have more dollars chasing those goods.
[138] And what we saw over the past two years of enormous COVID spending, we saw the central government spend $6 trillion or so in COVID spending, well, that wasn't taxed.
[139] We borrowed the money, and we actually borrowed it, courtesy of the Federal Reserve, printing all those dollars and buying up those government bonds, and all of those dollars now have flooded into the economy.
[140] And that is in large part why we see prices rising at the fastest pace in more than 40 years.
[141] Now, a recent article in Bloomberg detailed where some of that $6 trillion in COVID relief funds were spent.
[142] It was legal, but some say frivolous.
[143] that included horse tracks in Arizona, social media influencers in Alaska, and NASCAR speedways and walking trails in North Carolina.
[144] The question is, have these relief funds been used properly?
[145] Well, there's two components of this.
[146] On the one hand, a lot of the COVID relief funds across the country were used lawfully and properly, but they were still enormously destructive.
[147] And I'm talking about the stimulus checks that were passed, the paycheck protection program, the big unemployment benefits, the buying of corporate bonds, the buying of mortgage back securities, all of that was done lawfully, legally, and resulted in a lot of inflation.
[148] Now, a lot of what we see on the state level, the money in Arizona going to horse tracks and Alaska going to promote seafood, this has just been a colossal waste of money above and beyond what we saw with all the stimulus spending.
[149] And it's especially absurd that we see this type of spending.
[150] and most states are now seeing record tax revenue.
[151] A lot of experts, not myself, but a lot of experts predicted states would have revenue declines for years to come.
[152] No, states are flush with cash.
[153] California has running a nearly $100 billion surplus, tax surplus, this year.
[154] So these states are flush with cash.
[155] And then on top of it, you have our federal government supplying them with more cash to engage in a lot of wasteful spending.
[156] but wasteful spending that actually finds its way to people and businesses that are political allies of the leadership in these states.
[157] Last question.
[158] What can the Fed or Congress do now to fix the economy?
[159] Well, the Federal Reserve is in a really tough spot.
[160] There's no easy way out of the problem that we've created.
[161] We've spent trillions of dollars.
[162] We've printed trillions of dollars and we either end up with higher inflation if the Fed continues to allow all those dollars to float through the economy.
[163] And if the Federal Reserve tries to reel those dollars back in by increasing interest rates, you're likely to have a severe economic slowdown, at least in parts of the economy.
[164] There's no easy way out of this.
[165] And this really underscores the importance of Congress doing two really big things.
[166] Number one, they need to get the spending under control because they've been working hand in hand with the Fed. They pass these big spending bills, the Fed prints the money to fund it.
[167] So Congress has a big responsibility here to not just put the blame on the central bank, but to actually get the spending of control.
[168] We'll see if the government takes any of those actions.
[169] Joel, thank you so much for talking with us.
[170] That was the Roe Institute's Joel Griffith.
[171] Other stories were tracking this week.
[172] Gas prices hit another all -time high on Wednesday.
[173] Triple A's gas price tracker showed the national average cost for gas rising to $4 .57.
[174] The average price for gas is now over $4 in every state in the country.
[175] The U .S. Senate voted 86 to 11 Thursday to approve $40 billion in additional aid to Ukraine.
[176] Most of the money goes toward military and security and with the rest going to economic and humanitarian aid.
[177] This comes in addition to nearly $14 billion already approved in March.
[178] Thanks for listening to Morning Wire.
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[181] That's all the time we've got this morning.
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[183] We'll be back tomorrow with the news you need to know.