Bond crisis looming? GOP abandons DOGE, Google disrupts Search with AI, OpenAI buys Jony Ive's IO

**Jason Calacanis** (0:00)
All right, everybody, welcome back to the number one podcast in the world, the All-In Podcast. Today, the original squad is back. No guests, just full contact Sacks is back. We're going to break down a number of topics today, including chaos in the bond market. As Republicans seemingly have abandoned the DOGE agenda, and we're going to debate the big, beautiful bill, which is going to add trillions to our national debt. And it's a new era for Google as they released an AI first search product. OpenAI has acquired Jony Ive's company, IO, to make some sort of gadget. They've paid over $6 billion. Is this the real deal or not? You're going to find out today. And is energy the solution to every problem we have? One besties got a very interesting take. All that and more on the number one podcast in the world. Stick with us. For the fourth year in a row, we're going to do the All-In Summit. If you guys remember, four years ago, I decided, hey, let's do a summit. And then these three besties were like, no, we don't want to do a summit. Now it's become a big thing and everybody loves it. September 7th to 9th in Los Angeles. I do give you credit for that, Jay Cal. Yeah, after you gave me hell for a year. Okay.
It sounds like an apology, but okay, sure. I'm sorry. You're wonderful. And I appreciate what you created. Thank you very much. Wow. Finally, some credit. Okay. We all know the goal of the summit is to have the world's most important conversations, and this year will be no different, yada, yada, yada. allin.com/summit, if you would like to apply to come.

**Chamath Palihapitiya** (1:27)
Why do you say the most important conversation and then say yada, yada, yada as a way to dismiss it? Do you think that that increases your salesmanship and effectiveness?

**Jason Calacanis** (1:36)
I don't want to be getting grand pronouncements here, but these have been important conversations we've had, and it's been pretty great.

**Chamath Palihapitiya** (1:41)
Yada, yada, yada.

**Jason Calacanis** (1:44)
No, it's just like they put like 18 things in the plugs now, and I don't want to do too many plugs.

**Chamath Palihapitiya** (1:47)
Why don't you do a modicum of work before you get on camera and actually edit it?

**Jason Calacanis** (1:52)
Here we go. I get one compliment, and then here he comes.

**Chamath Palihapitiya** (1:54)
That's exactly it.

**David Sacks** (1:55)
He doesn't do the homework, so he runs out of work. He's like, we got the biggest names to come to our summit. The vice president came. He said, yada, yada, yada.

**Jason Calacanis** (2:05)
Elon Musk showed up in person, yada, yada, yada. There was an astronaut. Friedberg lost his mind. Yada, yada, yada. Yada, yada, yada. But this year will be no different. We'll have incredible parties, blah, blah, blah, and let's get to work. Okay.

**David Sacks** (2:18)
The president did a trip to the Middle East, yada, yada, yada.

**Jason Calacanis** (2:21)
Maybe world peace, a whole new framework for how we don't interfere.

**Chamath Palihapitiya** (2:25)
Yada, yada, yada.

**Jason Calacanis** (2:26)
World's greatest moderator, yada, yada, yada.

**Chamath Palihapitiya** (2:27)
Blah, blah, blah.

**Jason Calacanis** (2:28)
Executive producer for life, deal with it. Friedberg. Okay. It's in the contract.

**David Sacks** (2:41)
And it's said we open source it to the fans, and they've just gone crazy with it.

**Jason Calacanis** (2:49)
All right, let's get to work here. The bond market is the captain, apparently. Treasury Department sold $16 billion worth of newly issued 20-year bonds on Wednesday afternoon. And there was weak demand. This pushed yields higher across the board. The 10-year, which Besant has said to focus on, because it's the benchmark rate for most borrowing costs, you know, mortgages and stuff like that, it spiked. And here it is. And it actually hit a five-handle at one point. A lot of people were hand-wringing about this, and the S&P dropped 1.5% in about 30 minutes. Here's that chart as well. And the three major indices were all down between 1.5 and 2% on the day. Obviously, in related news, the house passed the big, beautiful bill at the 11th hour last night. This makes the TCGA tax cuts permanent. And it's estimated to increase long-run GDP by 60 basis points. That's if all the cuts were implemented. It's also going to reduce tax revenue by 4 trillion over 10 years, is the estimate, and it's going to add between 3 and 5 trillion to the national debt over 10 years. Friedberg, what's your take on the BBB and the bond, weak bond market, all of it? I just want to take a quick primer on how the government gets funded. I know we assume everyone understands it, but I think it's important for folks to really grok it. For the federal government to make payments to employees and contractors and buy stuff, they need to put money in their bank accounts. And the way they put money in their bank accounts is they issue bonds. These are treasury bonds. So they'll sell treasury bonds to the public, and individuals buy it, companies buy it, banks buy it, and foreign governments buy US treasuries. And they transfer or wire cash into the federal government's bank accounts, which they can then use to pay for stuff. And then the Treasury Department needs to continuously sell treasuries to raise cash to fund the government. When folks don't show up to buy treasuries, that's a bad thing. And that means that the government needs to increase the interest rate that they're paying on those bonds. So what we saw on Wednesday was a really weak demand signal for treasuries on this, you know, modest treasury auction selling $16 billion of bonds is not a lot. There's hundreds of billions being sold each quarter. And so this was not a big number, but there was no buyer. The market was really dry. And so everyone that participates in financial markets saw this and freaked out. And the big motivation, the big understanding of the relationship here is to your point, that this big tax bill and spending bill is passing out of the house. And that bill, as we talked about last week, has a high deficit and that'll run up US debt over time, which makes it more difficult for the US government to pay its bills because it has to issue more debt, interest payments have to be paid every year and so on. Now, if you just pull up this one slide, this is something I thought was really worth sharing. The CBO estimates, which is what you referenced, Jason, are estimates of what the cost is going to be over time. And this is from Jessica Riedel, a Riedel out of the Manhattan Institute, put this chart together. Congressional Budget Office. Yeah, so the Congressional Budget Office, the CBO, creates an estimate of the budget, the spending, the deficit, and ultimately the incremental debt that the US government will need to issue to fund its obligations over time. This is a chart that was put together that the expectation on a baseline basis is that over the next 30 years or so, US debt to GDP will climb to 203 percent. But what a lot of people don't know and don't talk about is that in the CBO estimates, they assume in all of their models that interest rates are at 3.6 percent.