The World and Everything in It - November 29, 2021

MARY REICHARD, HOST: Good morning!

Today on Legal Docket, the results of the first decision of the Supreme Court term in an argued case.

NICK EICHER, HOST: And we have coverage of two oral arguments as well.

Also today the Monday Moneybeat: President Biden stays the course on the Federal Reserve, which is to say, in part, keeping the Fed front and center in the economy of the country. I’ll talk with economist David Bahnsen about the downside of that.

Plus the WORLD History Book. 20 years ago this week, an unprecedented financial scandal.

REICHARD: It’s Monday, November 29th. This is The World and Everything in It from listener-supported WORLD Radio. I’m Mary Reichard.

EICHER: And I’m Nick Eicher. Good morning!

REICHARD: Up next, Kent Covington with today’s news.

KENT COVINGTON, NEWS ANCHOR: U.S. enacts South Africa travel ban as concern grows over omicron » The United States is imposing a new travel ban today on most travelers from South Africa. That in response to a worrisome new COVID-19 variant discovered in the country.

The World Health Organization named it the omicron variant and designated it as a variant of concern.

National Institutes of Health Director Dr. Francis Collins said the big question is this…

COLLINS: If you’ve raised antibodies against that by previously being infected or being vaccinated, the question is will those antibodies still stick to this version of the spike protein or will it evade that protection? We need to find that out. To be honest, though, that’s going to take two or three weeks.

But Dr. Scott Gottlieb is a former FDA commissioner, who now serves on Pfizer’s board of directors. He told CBS’ Face the Nation…

GOTTLIEB: People who are working on the vaccine, they have a pretty good degree of confidence that a boosted vaccine, so three full doses of the vaccine, is going to be fairly protective against this new variant.

Pfizer and Moderna are already working to create Omicron-specific vaccine shots, in case they’re needed. But it would likely be early next year before they could make those shots widely available.

Experts believe omicron is highly infectious, perhaps even more contagious than the delta variant, but that remains unclear. It is also not yet known if omicron poses a greater or lesser risk of severe infection than delta.

Officials in the United States and a growing list of other countries are hoping a South Africa travel ban will buy time as authorities try to answer those questions.

And President Biden’s top medical adviser, Dr. Anthony Fauci, said officials are taking precautions.

FAUCI: The positive effect is to get us better prepared to rev up on the vaccination to be really ready for something that may not actually be a big deal, but we want to make sure that we’re prepared for the worst.

The U.S. government praised South African officials for quickly identifying the variant and sharing the information with the rest of the world.

Holiday travelers flood airports, highways » Holiday travelers flooded airports at almost pre-pandemic levels over the weekend.

The rush started before Thanksgiving, with 2.3 million passengers screened on Wednesday and that carried right on through the weekend.

The highways were also packed. AAA estimates that more than 53 million people hit the road over the weekend. That despite high gas prices. The current average is $3.39 per gallon, virtually unchanged from a week ago.

Biden administration announces stricture drilling policy on heels of oil release » Mohamed El-Erian is a former Obama adviser, now chief economic officer of Allianz. He said oil supply has not yet caught up to demand, and that has elevated gas prices. But he said that will change eventually.

EL-ERIAN: In the meantime, the administration is trying to lessen it, not only by releasing supplies, but also asking other countries to do the same. And that’s what we saw last week. It will have a marginal impact. It won’t have a permanent impact, but it’s a very important signaling.

But critics say President Biden is sending mixed signals. Just before Thanksgiving, he announced the release of 50 million barrels of oil from the nation's emergency supplies.

But the day after Thanksgiving, the Biden administration recommended an overhaul of the nation's oil and gas leasing program. The changes would make it tougher for oil and gas companies to drill on public land and underwater, raising costs on energy companies, while making some areas off limits altogether.

Interior Secretary Deb Haaland said the changes would mitigate the worsening effects of climate change while—quote—“staying steadfast in the pursuit of environmental justice.”

Chinese aircraft breaches Taiwan airspace » Taiwan said 27 Chinese aircraft, including fighter jets and bombers, entered its air defense buffer zone on Sunday.

The Defense Ministry said Taiwan scrambled combat aircraft to “warn” the Chinese planes to leave. It also deployed missile systems to monitor them.

It was just the latest instance of Beijing encroaching on Taiwan’s airspace. Those incursions have increased over the past year.

The Chinese communist government claims democratically ruled Taiwan as its own territory, to be brought under its control by force if necessary.

Encanto leads strong holiday weekend for recovering theater industry » Disney’s Encanto charmed the weekend box office.

TRAILER: Many years ago, this candle blessed our family with a miracle...

The animated musical took in an estimated $43 million over the four-day weekend.

The R-rated crime-drama House of Gucci finished second with about $22 million.

Overall, it was a strong holiday weekend at the box office with about $142 million in ticket sales, according to Comscore. That was far from pre-pandemic levels, but a significant step forward for the recovering theater industry.

I’m Kent Covington. Straight ahead: a legal fight over disability payments.

Plus, the collapse of Enron.

This is The World and Everything in It.

MARY REICHARD, HOST: It’s Monday morning, the start of a new work week for The World and Everything in It. Today is the 29th of November, 2021. Good morning to you, I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher. Welcome back! Hope you had a terrific Thanksgiving!

REICHARD: Well, same to you! It’s my favorite holiday, really! Just wonderful and thankful to God for a full and happy household.

EICHER: Well, same here. Full house, happy people. Great holiday!

Before we get going, I want to say again what we said last week about a special offer from WORLD—two special offers, to be precise. First, special pricing on WORLD Watch, that’s our daily TV news for students, a great resource for homeschool families, really all families with students in their teens and even younger to help teach news literacy, critical thinking skills, and Biblical discernment around the news of the day. Really excellent resource. WORLD Watch: six months for just $20 and you can take advantage of that the rest of the day, extending that offer beyond Black Friday into what they call “Cyber Monday.” You can claim that offer today only at worldwatch.news.

REICHARD: The second offer is for WORLD Magazine. It’s been a popular offering to discount the price of gift subscriptions to WORLD and this is a deep discount: You can give three gift subscriptions for just $99. So just like that, you can take care of three people on your Christmas list and that’s also a Cyber Monday offer we’ve extended beyond Black Friday.

You can claim that today only, so time’s running out. Just go to wng.org/BlackFriday.

EICHER: All right, well, it’s time for Legal Docket.

Last week, the US Supreme Court handed down a unanimous 9-0 decision that rejected the state of Mississippi’s claim that Tennessee was stealing its water.

Mississippi claimed Tennessee violated state sovereignty by pumping groundwater from their shared aquifer to use across the border in Memphis. Mississippi claimed an absolute ownership right to all groundwater under its land and it wanted $600 million to square things up.

REICHARD: The court disagreed with that. The justices noted that by Mississippi’s reasoning, any state that sits upstream could completely cut off the water supply of a downstream state. They applied the same judicial remedy as they do to interstate rivers, streams, groundwater, and migratory fish.

The remedy of equitable apportionment means the aquifer will be allocated in a fair way among the states, with each state having an equal right to reasonable use of shared water resources.

EICHER: The justices did allow for Mississippi to file a separate legal action under that theory. So there may be more to come.

Alright, now for two oral arguments the justices heard a few weeks ago.

First, a case involving the Supplemental Security Income program—SSI—which helps to meet the basic needs of elderly, blind, or disabled people with little-to-no income. The case asks whether Congress violated the Constitution by excluding Puerto Rico from the SSI program.

That program applies to all 50 states, the District of Columbia, and the Northern Mariana Islands, but not Puerto Rico. Although Puerto Ricans are U.S. citizens by birth, they have no voting rights, but they also don’t have to pay many forms of federal taxes.

REICHARD: The named party in this case is Jose Luis Vaello-Madero, who was born in Puerto Rico. He moved to the mainland United States as an adult, while in his 30s. Decades later, he lost the ability to work and began in the year 2012 to receive SSI benefits.

Legal correspondent Jenny Rough takes it from here.

JENNY ROUGH, REPORTER: In 2013, the year after starting to receive SSI, Vaello-Madero moved back to Puerto Rico. He continued to collect disability benefits —until the U.S. government found out and stopped it.

And now the United States wants the money back, about $28,000.

Vaello-Madaro argues that to deny him disability benefits solely because he lives in Puerto Rico violates the equal protection clause in the Fifth Amendment.

The United States argues that so long as it has a rational basis for that differential treatment, it’s fine. Here’s Deputy Solicitor General Curtis Gannon arguing on behalf of the federal government:

CURTIS GANNON: Congress has expressly exempted them from the obligations to pay many forms of federal taxes, including federal income tax in most instances, excise taxes, gift taxes, and estate taxes, which means that much of the revenue that would have flowed into the federal treasury can instead be tapped by territorial government, which therefore has greater leeway to make different fiscal or economic choices consistent with its distinctive status as a self-governing commonwealth. Congress could reasonably take those considerations into account when deciding that Puerto Rico's residents would receive some federal benefits but not others.

In other words, a balance between federal benefits and federal burdens. Less goes in? Less goes out.

Several justices asked about where to draw the line. Why do some people get benefits while others don’t?

Listen to Justice Sonia Sotomayor, who was born to Puerto Rican parents, in this condensed exchange with Gannon, for the government:

JUSTICE SONIA SOTOMAYOR: If Congress said, Vermont, you have too many needy people, the cost is going to be too great to us, we're not going to pass this law on to Vermont, would that pass equal protection? Most of the SSI recipients, if not all of them, don't pay taxes. Puerto Ricans are citizens, and the Constitution applies to them. Their needy people are being treated different than the needy people in the 50 states, the District of Columbia, and the Northern Mariana Islands. So explain how those people, none of whom pay taxes to the federal government, how are they different?

GANNON: The primary reason why they are different is because they live in a community, in a locality where there is less tax money being taken by the federal government out of that community to being taken into the general revenues at the federal level, which is then distributed through various federal benefit programs.

Justice Sotomayor pointed out that this case involves race, a suspect class. That means a stricter standard of review is required, more stringent than mere rational basis of review.

SOTOMAYOR: Puerto Ricans are Puerto Ricans. They're Hispanic, and they are routinely denied a political voice. They're powerless politically. All you have to do is, well, listen to some of the rhetoric about Puerto Rico and you know there has been discrimination shown. Why shouldn't that add to the scrutiny?

GANNON: Well, this statute classifies on the basis of location, not ethnicity or race that’s why Respondent was able to get these benefits while he was living in New York.

Lawyer for Vaello-Madero, Hermann Ferre, argued that poor and disabled individuals on the mainland also pay less in federal taxes.

HERMANN FERRE: But it is also simply irrational to treat Mr. Vaello-Madero differently just because he's now in Puerto Rico. For all relevant purposes, he is the same as similarly situated individuals in the states and the Northern Mariana Islands. Tax status is irrelevant. Those poor enough to qualify for SSI pay no federal tax, and they don't have to to qualify.

Even so, Justice Brett Kavanaugh pointed out that among state residents, the Constitution itself provides for unequal treatment.

JUSTICE BRETT KAVANAUGH: You made compelling policy arguments, but there are parts of the Constitution's structure that people would want to change. The two senators per state discriminates against people in larger states. Many in some of those larger states have more minority population. The Electoral College gives you a slight, just a slight, but a slight advantage if you're in a smaller state. Delaware and Rhode Island, your vote for president counts a little more than your vote if you live in New York or California, for example. And Article IV is similar.

It’s Congress’ job to make changes to the SSI program, he said.

Justice Elena Kagan noted that the Territories clause in the Constitution gives Congress broad powers.

JUSTICE ELENA KAGAN: It does seem as though that clause goes pretty far towards authorizing Congress to make rules about the territories, which inevitably means or may inevitably mean to make distinctions between the territories and other parts of the United States. So why shouldn't we understand the clause essentially to resolve this matter?

Either way, Kagan also pointed out Congress is considering legislation right now that would extend the benefits to Puerto Rico. It would only affect this case, however, if it applies retroactively.

This last case today is a copyright dispute between two clothing companies, Unicolors and H & M. Unicolors sued H & M over a jacket that it claimed copied its copyright for a fabric design. H & M countered that Unicolors gained that copyright registration through fraud. That’s what an appeals court found- that the copyright application Unicolors made wasn’t accurate and it knew so when it applied.

The legal question is what is required to invalidate a copyright—must the inaccuracy include the intent to defraud? Oral argument centered on the line between honest mistake, willful blindness, and the intent to deceive.

Here’s an exchange between Justice Kavanaugh and H&M’s attorney Peter Stris that indicates those lines aren’t always black and white.

JUSTICE KAVANAUGH: If you know that there's a material misstatement of law in an application you're submitting to the office, how do you not have an intent to deceive?

PETER STRIS: You may not believe it's material. In other words, you include something that's wrong. It is material, but you don't think so. Turns out it was material.

I’m Jenny Rough. And that’s this week’s Legal Docket.

NICK EICHER, HOST: There are many ways to fail a driver’s license test, but officials in Bergheim, Germany say, this is a new one for them.

Technically, the unidentified man didn’t fail his driving test because he never got to take it.

The examiner called it off immediately after the man arrived for his test, didn’t even give him a chance. But, to be fair it wasn’t just “that” he arrived, it was “how” he arrived, because he arrived behind the wheel of his car.

He told police officers who were called to the scene that he had a reason! He had only driven because he wanted to make sure to get to the test on time.

Police politely pointed out that it is always illegal to drive without a license, and there is no exception for driving to your driving test.

It’s The World and Everything in It.

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: Time now for our weekly conversation and commentary on business, markets, and the economy. Financial analyst and adviser David Bahnsen joins us. David, good morning.

DAVID BAHNSEN, GUEST: Well, good morning, Nick. Good to be with you.

EICHER: President Biden’s staying the course on the Federal Reserve, choosing to renominate the Trump-appointed Fed chairman Jay Powell, instead of the more politically liberal Fed governor Lael Brainard to replace Powell. Clearly that’s the top story. David, what do you make of it?

BAHNSEN: I mean, I don't think it was big news, there was a slight chance that he was looking in the direction of Lael Brainard as an appeasement to some of the more progressive members of the Senate, but he kind of split the baby by moving Brainard into a vice chairman role and re appointed Jay Powell, who it really isn't a very political appointment. You know, Powell is a Republican, he was appointed by President Trump. But President Trump was at odds with him most of the time he was serving and so I don't think anyone thought of Powell as this big, you know, Trump affiliated character.

The disruption of would have represented would have been somewhat problematic. But at the end of the day, Powell, Brainerd or anybody else, there's no Fed chair right now, who is not going to be in the same vein as the last few Fed chairs we've had, which is very accommodative to risk assets, very much in favor of easy monetary policy, meaning low rates, high liquidity. And the Fed views themself as having a very large role in the economy. And I think that the government has asked the Fed to - and in a lot of ways the citizenry has asked the Fed - to play a very large role in the economy. And so there wasn't much of a response to the news, because I think it was reasonably expected.

EICHER: Well, about that notion of the Fed’s playing such a large role in the economy, you don’t like that.

BAHNSEN: Well, it's not only that I don't like the Fed having a large role in the economy, it's because I believe it is distortive I believe that people make decisions that they otherwise wouldn't make. You want the ability for economic actors, to have good clarity, to the prices in the economy that help inform the decisions that they're making. And there's an economic school of thought that I hold to very deeply that says that prices are signals, they contain information. When prices are distorted, that information gets distorted. And therefore, the decisions that come out of that economic calculation can be bad decisions. So if interest rates, for example, are held artificially low for an extended period of time, someone who might not be able to afford a house, but gets the impression that they can or sees prices going higher and higher, and decides to jump into the home purchase, right in time for 2007-2008. To come along. You know, that's a simple, but yet historical example. But of course, it's more complicated than that, you get all sorts of decisions up and down the economic food chain that are dependent upon the price of money.

And so the Fed's large role is both distortive to the price of money, but now it's distortive to the risk/reward calculation people are making, because people believe the Fed’s gonna be there to make sure any decision they make, it doesn't have negative consequences. And it really does hold down economic growth. And you say, ‘Well, how could it hurt growth for them to kind of help out risk takers?’ Because it leaves alive, companies that maybe otherwise shouldn't be left alive. And so what I mean by that is, there's something called zombie companies that really don't make enough money, they don't have enough cash flow to flourish. And if it weren't for the low cost of debt that they can keep rolling over, they wouldn't even be able to meet their debt obligations. And yet, because the Fed helps keep those companies alive, then that's capital that stays deployed in these zombie companies that otherwise would be deployed into a better and more efficient use, and that is really damaging to long-term economic growth.

EICHER: Before I let you go, David, I’d like your thoughts on the news around the rough trading day for stocks on Friday, with the Dow Jones Industrial Average down 2-1/2 percent, the other two major indexes off just over 2 percent as well with big financial press headlines calling it the worst day of the year—biggest one-day percentage drop since October 2020.

BAHNSEN: Yeah, I don't think that the news was even so much about the stock market, it's about the positioning of yet another variant of COVID. So there is apparently a new COVID strain. We knew more mutations were still out there, and that's the way these viruses go. We have no reason to believe that the vaccines are not efficacious against the new strain, we have no reason to believe this has more severity. I do believe the vast majority of the population doesn't care. And it most certainly shouldn't care about higher cases, as long as the treatments are there to hold down severity, to hold down mortality. And I believe those treatments are there. So, you know, the market having one day - and it's kind of a fake day, because Friday was a half day in the market the day after a holiday and you had an awful lot of traders not at their desk and a lot of the, you know, best and brightest and engaged in institutional trading, not really participating. So all that to say the market could go down 1000s of points for any reason. But I think this COVID strain thing was is really bizarre. And unfortunately, I fully expect the media to have a field day with this.

EICHER: All right! David Bahnsen, financial analyst and adviser. He writes at dividendcafe.com. Sign up there for his daily email newsletter. Thank you David.

BAHNSEN: Well, thanks so much, Nick.

EICHER: Well, we are down to our last two days of our November New Donor Drive. We’re getting close, but I did check with our office and we’re not there yet. The goal is to reach that $40,000 mark to take full advantage of the matching gift that will double all new gifts. So if you’ve never given before, I hope you’ll do that today and we have an added incentive. Another friend offered to kick in a $10,000 bonus if we can hit that goal. So please, if you would visit wng.org/donate and make a first-time gift today. wng.org/donate and thanks!

NICK EICHER, HOST: Today is Monday, November 29th. Good morning! This is The World and Everything in It from listener-supported WORLD Radio. I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard. Next up: The WORLD History Book. 

Today, an energy giant’s collapse fuels concern, a musical foursome makes headlines, and the birth of a sideshow sensation. Here’s senior correspondent Katie Gaultney.

SONG: Jacques Duphly, Pieces de Clavecin

KATIE GAULTNEY, SENIOR CORRESPONDENT: People-watching: Observing others while we wait at airports, in lines, or on a park bench. It’s a pastime falling by the wayside in the age of the smartphone. But, 260 years ago, the birth of someone who redefined people-watching: “Madame” Marie Tussaud. She was born on December 1st, 1761.

Anna Maria Grosholtz was born in France, on the border with Germany, but at age 6, she moved to Switzerland. There, she learned wax modeling from the local physician. She moved to Paris as a child, still dabbling in wax portraiture. She made a figure of Voltaire when she was about 15. Her skill earned her favor with the French royal family. She married Francois Tussaud, and together they had three children.

SOUND: Execution scene from the 1989 film, "La Révolution française”

But, the French Revolution dawned, and she found herself on the outs with revolutionaries. They called her a royal sympathizer and forced her to make models of the victims of the guillotine.

Those models were then put on pikes and displayed to further the cause of the Republic. From the YouTube channel Trending Stories:

NARRATOR: The mannequins acted as a kind of real-time political commentary, and it was always Marie’s job to make the death masks of the recently deceased.

After those events, in 1802, Madame Tussaud decided to make a new life. She moved to England and set up a traveling waxwork museum. Juliet Simpkins worked in publicity for Madame Tussaud’s in London when she spoke to CSPAN in 1994.

SIMPKINS: There was no public transport, so if you were to be entertained, entertainment would come to you. So, Madame Tussaud spent 33 years traveling to the main cities and towns all over Britain…

Some of her waxwork molds still exist, with figures on display even today. Eventually, she set up a permanent museum location on Baker Street in London. That flagship museum remains in its original location, with nearly 30 other locations around the world.

And from art to music. Sixty-five years ago, on December 4th, 1956, the so-called Million Dollar Quartet got together and jammed at Sun Studio in Memphis, Tennessee.

MUSIC: Jam session with the Million Dollar Quartet

The quartet included superstars Elvis Presley and Johnny Cash, along with Carl Perkins of “Blue Suede Shoes” fame. Newcomer Jerry Lee Lewis joined too, singing and playing piano. The session was impromptu; Perkins and Lewis were there to record their own projects, but Cash and Pressley just happened to drop in.

They riffed on the kind of gospel music they all grew up on, laying down a few tracks before parting ways. The local paper wrote an item on it, dubbing the foursome the “Million Dollar Quartet.”

Sun Studios didn’t release the tracks to the public until 25 years later, in 1981. It was a sort of musical lightning in a bottle, the first and last time the foursome would record together.

MUSIC: Jam session with the Million Dollar Quartet

And from pressing piano keys to pushing paper.

KPRC NEWS: Yeah, everybody’s concerned about their job./ As it is right now, I think everyone’s a little in shock./ People don’t know if they’ll be getting their paychecks on Friday.

Houston-based energy company Enron began 2001 apparently strong. It had annual revenues of $100 billion, and 30,000 employees. But by December, they had stunned the business world with the largest bankruptcy ever, at the time. That unfortunate milestone came 20 years ago, on December 2nd, 2001. One former Enron employee told documentary filmmakers about the sinking feeling of that day.

EMPLOYEE: We all felt like we were on the Titanic and the last lifeboats had long gone, and we were just now on the sinking ship.

That clip from the 2005 movie, “Enron: The Smartest Guys in the Room.” Besides the massive bankruptcy reorganization, Enron’s demise also signaled the greatest audit failure of all time. CEO Kenneth Lay had, over the course of many years, assembled an executive team that leaned on accounting loopholes and other questionable financial practices. They concealed billions of dollars of debt resulting from mismanagement, deceiving the company’s board of directors and urging its long-time accounting firm, Arthur Anderson, to turn a blind eye.

Investment banks had a part in prolonging the deception, propping up hundreds of special purpose entities, or shell companies. Michigan Senator Carl Levin, at the 2002 Senate hearing over Enron’s financial improprieties, pointed to Wall Street’s complicity in the scandal.

LEVIN: As disturbing as Enron’s own misconduct is the growing evidence that leading U.S. financial institutions not only took part in Enron’s deceptive practices, but at times designed, advanced, and profited from them.

As seismic as Enron’s unscrupulous dealings were, the company didn’t hold the title of “largest corporate bankruptcy in U.S. history” for long. The WorldCom scandal eclipsed it the following year.

SONG: Grace Jones, “White Collar Crime”

That’s this week’s History Book. I’m Katie Gaultney.

NICK EICHER, HOST: Tomorrow: consumer price inflation. We’ll talk to ministries about how higher prices are making it harder for them to serve those in need.

And, abortion at the Supreme Court. We’ll give you a preview of one of the most important pro-life cases since Roe v. Wade.

That and more tomorrow.

I’m Nick Eicher.

MARY REICHARD, HOST: And I’m Mary Reichard.

The World and Everything in It comes to you from WORLD Radio.

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The Bible says: May the God of hope fill you with all joy and peace in believing, that you may abound in hope by the power of the Holy Spirit.

Go now in grace and peace.

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.