America’s Income Inequality Crisis: How Did We Get Here?
Move over, first class passengers on the Titanic! America has a new class of doomed elites! Extreme income inequality threatens our democracy and the security of the world, but unions are fighting back, showing our path forward for the safety of everyone.
C.E.O.s and billionaires celebrate record-breaking profits, but for everyday workers, wages have remained stagnant, not keeping pace with the rising cost of living. The result? The American Dream is increasingly resembling a Neoliberal Ponzi Scheme, where the promise of prosperity seems to be reserved for nepo-babies.
Beyond the obvious moral implications, income inequality has profound consequences for our society. It undermines trust in institutions, worsens political instability, and contributes to declining life expectancy—a stark reality in America today. When the rich get richer and the rest of us get left behind, it doesn’t just create social rifts; it destabilizes the United States, and therefore the world.
How do we overcome this crisis? The renaissance of unions will strengthen our economy for all and protect our democracy. This week’s guest Michael Podhorzer has been on the frontlines of this fight for decades, as the former longtime political director of the AFL-CIO – the largest federation of unions in the United States. Podhorzer is a senior fellow at the Center for American Progress, the chair of the Analyst Institute, the Research Collaborative and the Defend Democracy Project, and writes the Substack Weekend Reading.
A 2021 TIME article described Podhorzer as the architect of a broad movement that helped protect the integrity of our vote in the 2020 election. This week’s bonus show, available to subscribers at the Truth-teller level ($5/month) and higher, includes Podhorzer’s insights on how to protect the 2024 election, in an excerpt available to all. Exclusive to our Patreon supporters, this week’s bonus show also includes a deep-dive examination of the recent arrest of Telegram’s C.E.O. Pavel Durov and what that might mean for Russia’s global war on democracy. Subscribe today at Patreon.com/Gaslit to help support our independent journalism!
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Show Notes:
Opening clip: https://www.youtube.com/watch?v=ckxmXjRuBik
As Go Unions, So Goes America Power concedes nothing but to collective action. https://www.weekendreading.net/p/as-go-unions-so-goes-america
Listen to our interview with Starbucks union organizer Jasmine Leli on how to start a union https://www.gaslitnationpod.com/episodes-transcripts-20/2023/11/08/end-human-sacrifice-union-j asmine-leli
Kamala Harris (00:02):
For generations in Detroit and across our nation, the brothers and sisters of labor have stood together to righteously demand fair pay, better benefits and safe working conditions. And let me say, every person in our nation has benefited from that work. Everywhere I go, I tell people, look, you may not be a union member. You better thank a union member for the five day work week. You better thank a union member for sick leave. You better Thank a union member for paid leave. You better thank a union member for vacation time
(00:55):
Because
(00:56):
What we know is when union wages go up, everybody's wages go up. When union workplaces are safer, every workplace is safer. When unions are strong, America is strong.
Andrea Chalupa (01:26):
Our opening clip was Vice President Kamala Harris speaking at a campaign stop in Detroit, Michigan. Find out why in this week's episode, Harris and Biden are pro-union compared to other recent democratic administrations and why that matters greatly for our economy and our democracy. I'm Andrea Chalupa, a journalist and filmmaker and the writer and producer of the journalistic thriller, Mr. Jones, about Stalin's genocide famine in Ukraine. A history repeating today under Putin. There are just 62 days until election day on November 5th, 2024, a pivotal moment that will decide if democracy or dictatorship leads the White House and Congress, feeling overwhelmed by the election we've got you covered. Join our new weekly political salon on Mondays at 4:00 PM Eastern via Zoom. This is your space to vent, ask questions, seek support, and help shape our discussions here on the broader show. Everyone's welcome and no, this isn't about replacing patriarchy with a matriarchy.
(02:40):
We're aiming for coalition and collective healing to build a sustainable future for all. Starting next Monday, our salons will be recorded and shared on Patreon to support others in our community facing similar challenges. If you find these sessions valuable, we might keep them going post-election. To join, support us at the truther level on Patreon at patreon.com/gaslit. We'll post the zoom link there every Monday afternoon. See you at 4:00 PM Eastern starting this Monday. Today's guest has been fighting for our democracy for decades and was called by Time Magazine as an architect of a broad coalition that worked tirelessly to protect the integrity of the 2020 election. Michael Podhorzer is the former longtime political director of the A-F-L-C-I-O, the largest federation of unions in the United States. Podhorzer is a senior fellow at the Center for American Progress, the chair of the Analyst Institute, the Research Collaborative and the Defend Democracy Project. And he writes, the Substack Weakened Reading will link to his latest piece in the show notes. Let's get to it. So obviously we're living in times of historic income inequality. How did we get here?
Michael Podhorzer (04:05):
Sure. The way we got here was by forgetting everything we learned the last time we had the same amount of inequality before the New Deal. Right at that point there were the robber barons, the Gilded Age. What laissez-faire capitalism was even more running amuck than it is today. If you can believe that Andrew Mellon was the Secretary of Treasury. And that didn't seem odd. It was just assumed that the purpose of government was to protect the already rich from the rest of us. That was still an era where people who went on strike could be shot. The United States before the New Deal had the most state violence against it, the union movement of any of the Western industrialized nations. And it took longest to get to the point where the kind of union we now take for granted was actually legalized, which really didn't happen until the early thirties after Roosevelt came in.
(05:25):
And in so many ways in that moment, there was an actual sense of class conflict that we weren't living in a world where what was good for business was good for everybody else, or that that was the way we just had to take it for granted. And as a result, we kicked off a period in which working people had much more agency than they have since. And where what is true in any capitalist system is that it will run amok. It will crash everything. It will make this kind of inequality if there isn't a countervailing power. And that was explicitly the purpose of the Wagner Act and the Early New Deal legislation was to give working people the power to contest GM or US Steel or the big companies at the time. And it worked right, it created a shared prosperity, especially coming out of World War II that really was unrivaled before since in terms of a large nation experiencing that much growth and sharing it as equally, of course at the beginning, there's a really important exception in America, which is that it was not well distributed racially, it was still coming out of Jim Crow.
(07:04):
And of course in terms of gender, but that prosperity and the fact that it wasn't just reigning from heaven, but the product of a very movement that had 30% of the working force in it meant that it created the conditions for the legislation. We saw in the 1960s, the Civil Rights Act, the Voting Rights Act, and equal pay and all of those things that had the power. And then by the mid seventies, the combination of many factors gave the business community, which had never really wanted to accept this new order, just enough opening to begin to unravel all of this. And I'm sure I've heard on your show and other places, it's called the Neoliberal Revolution or Counter-Revolution. But a really, in addition to the things that usually get mentioned about that, which were all important, one of the most important is really the dismantling of worker power.
(08:20):
That unless worker working people can aggregate themselves and act collectively in an institutional way, voting is a thin protection against what the capitalist can do. And it coincided with a kind of decision by the business community that because of divisions within the two party system, there were many things
on their wishlist that Republican presidents couldn't get done. And so in that period, they began to support Democrats so that by 1976 and pretty much on until the Biden administration, you had a Democratic party that wasn't out to destroy unions explicitly in the way the Republican party was, but was all too ready to embrace policies like NAFTA or all the pro business or banking deregulation or all the deregulations of the Clinton era and Obama era. All things that if Republican presidents had proposed democratic congresses would've rejected. And so the combination like in that period from 76 really till pretty recently was predicated on this or the market rationalism, that whose real aim was to destroy union power. And that's pretty much how we got here. That's sort of to me both frustrating and exhausting thing is it's you hear people today, oh, if we only had a solution for an income inequality or oh, if we only had ways for everybody to have pensions or good healthcare or people to have more power in the democracy, the people saying it don't realize that we had that and threw most of it away and it's still working where it exists. And so that's the path forward is just remembering that you can't have a democracy without unions.
Andrea Chalupa (10:46):
Absolutely. And I think it's so important that you point out that the Democrats got paid off too by this intentional corporate strategy. We have the Powell memo, which came out the Powell memo where you could probably talk more about that, but where a letter was sent out rallying all the business leaders of, I believe it was in the 1970s to set
Michael Podhorzer (11:08):
Up 1971. Yeah,
Andrea Chalupa (11:10):
1971 to set up shop in Washington DC to lobby the government to basically attack the new deal and roll back regulations, reduce taxes, and just declare all at war on workers. And then part of that strategy eventually led to buying off the Democratic party establishment as well. And Biden surprisingly has been pro-Union given his upbringing, it runs in his family. So even though he's been in the establishment for so long, what would you say about his, was there a, he's always been the democratic party establishment, but then as president, where did his change come from, would you say? Why has he been so surprising and refreshing and joining a union march? What do you think that came from?
Michael Podhorzer (11:57):
So one thing I want to suggest, which is a sort of different story of what happened to the Democratic party that hopefully will ring more true and make sort of clear what was going on and what has been going on, which is that there wasn't a democratic party to be bought off. People who said, I used to think unions were important, but now that I got this pile of cash, I'm going to change sides. What happened instead was that business poured huge amount of resources in replacing the Democrats who were on our side with Democrats, who in their truest sense agreed with business on these things. It wasn't like a quid quid pro quo process. It was support. It was throwing huge amounts of support to Democrats who had no ties to the labor movement to be successful. And we saw how comfortable those democratic presidents were bringing along people from Wall Street and Larry Summers and all of those
Andrea Chalupa (13:17):
Under Obama, Larry Summers
Michael Podhorzer (13:20):
And Walton, they were bending their consciences. They believed it, and that was why business was willing to stake them in their efforts to become the democratic establishment. And a big difference, if you put that question about Biden, a big difference between Carter, Clinton and Obama and Biden and Harris on the other side is that the first three all rose to their perch to run for president without ever having to work with unions to get their support in Arkansas and Georgia, right to work states. So you become governor of those states and your political education doesn't expose you to working people in that way. You find a way to succeed by appealing to the business community. And Obama, even though Illinois is a union state, remember I went from state legislator to Senator because he was running against Alan Keyes to president
Andrea Chalupa (14:43):
Very quick
Michael Podhorzer (14:44):
And without having to go to a lot of Union Hall first to get there without getting into his DNA. What life for working people really is Delaware, Pennsylvania, California, places where there's still substantial
union power. And so in order to be a successful politician in those states, you do have to take the time to go to union halls, to picnics, to meeting with constituents or have it who are just plain working people in a way those three other presidents didn't as they were rising. And so I think Biden especially understands personally a lot more of this stuff, and that was reflected in a lot of what he did.
Andrea Chalupa (15:35):
There's reports that Kamala Harris is being pressured by mega donors to roll back the Biden Harris administration plan to tax the rich, which we desperately need now, especially with climate crisis. And we need to build climate sustainability and so much more. So we need the rich to pay their share in taxes. So do you think she's going to be pressured by that just to get elected? Do you think her administration will succumb to that pressure? What's your forecast on that and what would you advise her?
Michael Podhorzer (16:06):
Well, I think that few things, they wouldn't be billionaires if they didn't want to not pay taxes, right? I mean, right. That's how you become a billionaire partly. And so there's nothing, especially after Citizens United that is a curse that our democracy has to suffer, that the voice of those mega donors becomes more important and is not going away tomorrow. So will she be discouraged from raising taxes on them? Of course. Right. That's politics. Will she succumb to it is the more important question. And at a different level, and I don't want to be a sound pessimistic here, but realistic, are there even yet the votes in Congress to do it? Because even if those donors you're referring to can't convince her, they'll just go to work on the 200 whatever rep democratic representatives and the 50 Democratic senators and then go to the Supreme Court. So if you, as I do want to see tax rates go much higher the way they were when America was working for working people, we have to take in a task that's broader than making sure that just Harris doesn't succumb.
Andrea Chalupa (17:44):
What could she do to combat the crisis of income inequality in America by executive orders or anything she could do if she gets four years just executive order not having to deal with Congress.
Michael Podhorzer (17:57):
I think that one of the things that Biden did that was so almost invisibly important in this area was walking the picket line with UAW because beyond that strike, it sent a signal to all business that the United States government was going aside with working people and start enforcing the labor laws we have. And so that's not even an executive order, that's just doing your job seriously. And I'm reasonably confident that will continue, although remains to be seen. But sustaining an environment where working people feel safe trying to form unions or to ask for more from their employers is actually a pretty big deal as we've seen over the last couple of years. And then in terms of executive orders and such, like the list of things that Biden has put into the regulatory process for notice of rulemaking and all those things will
hopefully also continue the appointment she makes to the NLRB and other relevant boards will be pro worker and all those things will be important.
(19:24):
Will it be enough for a new deal scale revival? No, because that also required a much greater in the new. It wasn't like Roosevelt came in saying, I'm going to bless working people now with these powers. It's because working people were literally risking their lives. They were sit down strikes, they were doing the things that demanded that response. Right? And until all of us, even if we're have good jobs or aren't in unions until we just understand that our democracy and freedoms depend on there being strong unions, we won't get the really ambitious reforms that are necessary to recreate that world.
Andrea Chalupa (20:16):
How did the Reagan revolution contribute to the income inequality crisis that we're in now? Michael Podhorzer (20:23):
It accelerated it, right? It was the opening salvo of reducing taxes on the rich and sort purveying this idea of trickle down. And yeah, I now get to be old person, but I came to DC and started doing this work in 1976, and I can attest that until he was elected, people just laughed at that idea. I mean, literally laughed, oh my God, you're going to lower taxes on the rich and were all going to be better off because it's obviously laughable except people believe what it's in their interest to believe. And it suddenly became irrefutable and that kind of twist from people generally taking us the conventional wisdom that America should be a pluralistic country to one in which we just needed to make sure there was a good business environment and was immense and it was snowballing downhill from there.
Andrea Chalupa (21:48):
How did this recent renaissance of labor unions come to be?
Michael Podhorzer (21:53):
Well, as I said, part of it is that the fact that the Biden administration was so aggressive in signaling that a change in direction was going on. But the other thing, and I'm actually publishing in an hour or so a piece about this as name an institution in America. And since 2009, people's confidence in that institution, whether it's the presidency or the Supreme Court or the police or the military or big business, has gone down to really low levels. The only exception has been labor unions, which even though you don't hear about them in the mainstream media anymore, their actions, their successes have actually increased how much people approve of them and how much they think America would be better off if unions had more power not making this up. This is Gallup, and not only does it contradict the general trend of people being less and less supportive of the basic institutions in this country, that increase since 2009 happened among Republican voters as well.
(23:26):
It's literally the only thing that has partisan inflection. Most people know Democrats or unions are kind of democratic capital D, and yet approval of unions and belief that unions should be more powerful actually went up in that period. And I think it's because, and I picked 2009 for obvious reasons because that's the crash. And after the crash, all of the institutions that working people should have been looking to for assistance in that crisis let them down utterly. The one institution that didn't was the one that they had agency in unions, because unions are the working people who are there, pay the dues democratically elect the leaders and are completely unburdened by having to believe in trickle down economics and understand that this is all about either the boss gets rich or we get what we deserve. And when other people who feel utter helplessness in this work environment see other work people succeeding at that, then that is where the Renaissance coming from.
Andrea Chalupa (24:50):
In what ways does our government subsidize the rich?
Michael Podhorzer (24:54):
Sorry. I mean until really the new deal in the United States, the baseline assumption about what the purpose of government was was to protect the rich and powerful from us from the pitchforks. Basically the sort of notion that we actually control the government and the right thing for it to do was to make sure we all had prosperous lives. You'd sort of be seen as alien from outer space for talking that way because it just wasn't what the government did. And by that point, in most of the rest of the industrializing world, labor Union had succeeded in creating labor parties and which created a kind of variation on that where you understood conservatives won the election, then ferment would work on behalf of business. If labor won the election, it would work on behalf of labor. And here in the New Deal era, that kind of happened for a little while, but it created this myth that really hasn't been that true since, which is that the purpose of government is first and foremost to protect us and to level the playing field.
(26:28):
And so it's hard to say how they're subsidized in enormous ways, right? There's still fossil fuel subsidies, but in some ways I think a better way, a broader way to think of government subsidizes business is how it's rewritten laws to protect business. Think of the way in which it's almost impossible to bring a class action suit. Now that is a business subsidy. Look at the way it's even harder to get jury trials when you go up against corporations. That's a subsidy for business deciding that gig worker should be treated as independent contractors so they can't have a union that's a subsidy to Uber and Lyft and all of the gig companies. And in terms of people's everyday lives, some of those actions are much more consequential than the dollar subsidies that it is giving business free reign. That's the biggest subsidy.
Andrea Chalupa (27:43):
So how can we continue this union renaissance and fight back and have hopefully a president who is pro-union like Kamala Harris, hopefully when we are up against Trump's judges rolling back and blocking our progress.
Michael Podhorzer (27:59):
And it's not surprising in terms of the judges because up until the very first things that the New Deal tried to do, really basic things like minimum wage and other things, the Supreme Court at the time kept striking down again in almost its entire history. The Supreme Court has really been there to be the last line of defense against democracy. That it's like if there's too much democracy breaking out in Congress that they can clean it up afterwards. It's kind of similar to the quote democracy, although it's uncomfortable to see it this way in Iran, right? Where they have a democratic legislature, but they have a guardian council to make sure that whatever that Congress passes doesn't violate those principles. And it's kind of the same thing here that for a long time we knocked ourself out passing environmental regulations and then we get Chevron.
(29:14):
And if you think about what the Roberts Court, which is really there as a project of the coalition of revanchist capitalists and theocrats accomplished what the final agenda items that could never happen through a multi democratic process, right? Can you imagine someone in Congress introducing a bill that says, let's let billionaires spend as much as they want in elections, or let's repeal the Voting Rights Act, or let's not get in the way of politicians, gerrymandering or any of those things. There's no way that that could happen in a democratic fashion. And that's what the Supreme Court's there for and that's why the capture by the Federalist Society Project has been so devastating to us. But it's also important to remember that popular reaction overcame that earlier court called the Lochner Court, that there is still enough democracy in this country when we all get to together to make it too costly to do those things for business. And that's what we have to do Again, again, it's like if when you heard about the UAW being on strike and you thought you go UAWI hope you get what you deserve. Well good for you. But if you thought for me, for my life to flourish, for us to have a richer democracy, they have to win my faith's linked up with those working people. And when we again understand that, that's when action can start again. So
Andrea Chalupa (31:16):
The way we overcome the Supreme Court of today is we unionize, we support our unions. What are some other practical steps that people can take?
Michael Podhorzer (31:28):
Well, I mean one thing that about the Supreme Court at this point is that we also have to make clear to capital D Democrats that the way they have been rolled for the last 15 years by the Supreme Court is no longer acceptable. And we've kind of given them a pass on it. And that's an important part of it too, is
that in the same way in which for decades the Democratic Party didn't embrace abortion rights in any kind of full-throated way in the same way that when Kavanaugh Gorsuch were or any of them were up for confirmation, Democrats didn't walk out. They didn't make it clear what putting them on the court
would actually mean for people. But our reaction to the Dobbs decision and they've done a 180 and that's like we have to be in that place.
Andrea Chalupa (32:50):
Do you think pushing Democrats, pushing hopefully a President Kamala Harris to expand the court, do you think that should be part of a collective action?
Michael Podhorzer (33:00):
I think that I would be for even more ambitious reform than that. And I think in terms of conceptualizing it the way you were just talking about expanding the court, which is a really good idea because it's kind of crazy where we are now, right?
Andrea Chalupa (33:19):
And FDR tried it,
Michael Podhorzer (33:21):
Right? But it's also that our thinking about has to be about unpacking the courts that we are in this situation because they successfully packed the courts and we have to not just expand the court but be ambitious and intentional about how to reduce the power of the interests that have hacked that, that have attacked the Republican Congress that are across the board. Because if you think about just like Supreme court reform, again, not against it, but if you think about it from looking at the Supreme Court end of the telescope, instead of the Koch end of this telescope,
Andrea Chalupa (34:15):
Go after the dark money funders go after the Koch politically tax them,
Michael Podhorzer (34:20):
Right? Because that money is fluid, right? You cut 'em off at this pass and we have such and a constitution that makes it so easy to hack. If you have those kinds of resources that we have to understand, the coax are the problem, not the number of people on the Supreme Court. And if we are just thinking about solving this through process rather than rebalancing power, then we may win something, but it won't matter as much as we think it will because they'll just find a different way to do the influence.
Andrea Chalupa (35:06):
Do you think the US is an oligarchy? Why or why not?
Michael Podhorzer (35:11):
I think I'm surprised. You gave me a why not option, but actually don't think it's an oligarchy. I think that it is a competitive plutocracy.
Andrea Chalupa (35:22):
Isn't that the same thing?
Michael Podhorzer (35:24):
No, because think what's underappreciated by many who are justifiably appalled by the power of capitalists in this country that we may not see the way in which other than making our lives miserable, they have very different interests and are really two pretty solid factions that are represented in the Democratic and Republican parties right now, the Republican party is the party of the fossil fuel and other extractive industries and of wanting a red state low wage economy. The Democrats are captured by tech and finance and by the companies that need knowledge workers and innovation and international commerce and beyond sort of what, when they're just looking at say, tax cuts, those are real big differences where they both can't get everything they want. And so I call it a competitive plutocracy because there isn't just like a single oligarchy here. What's going on is that the two tectonic forces that more or less line up along what was the Mason Dixon line and is now the Dobbs line, have different visions of the capitalist future they want this country to be. And when you think about how large we are, 330 million people, it is I think with such diversity from the oil fields to the tech centers that it's tractable to a single oligarchy seems like overly ambitious. And so the way in which much of that competition gets worked out is through our voting for one or the other. So that's my rephrasing of your oligarchy or not. I mean, we live in a competitive plutocracy in which we have some ability to veto the worst.
Andrea Chalupa (37:55):
What would you say to the parents out there listening, working maybe extra jobs and they're concerned about their kids' future? Will their kids get a chance at a job? Given the rise of AI given corporate greed and given this law warfare stranglehold on our democracy with the federal society and the court capture and so on, what would you say to the parents listening about whether their children have a future of being able to thrive in America?
Michael Podhorzer (38:25):
I would say that their kids' best shot at having the future is then engaging now in working to create that country. I've said some things that might sound, that could be interpreted or heard as a gloom and doom, right? But
Andrea Chalupa (38:50):
No, you're just calling it like you see it like so many out there,
Michael Podhorzer (38:53):
Right? Exactly. And doing that means remembering how far we've come and honoring that this was a country born by enslaving people and then by Jim Crow. It was a country in which the women had no rights until ridiculously recently and people believed in that future. You're asking about for today's parents' kids. And so it has been done, it can be done, but I don't believe the universe has a moral arc that's bending to justice. I think it's always been just a tug of war between the privileged and the rest of us going back to through the beginning of societies. And so in that metaphor, unless all of us are willing to grab our end of the rope and pull, we'll keep losing. But if we hold onto it and pull and institutionalize it, which is why I keep coming back to why unions are important, then we have a fighting chance.
Andrea Chalupa (40:19):
Our discussion continues. And you can get access to that by signing up at the truth level and higher on patreon@patreon.com slash it's go time. We have a lot of events gearing up for the election. Join our new Monday political salons held over Zoom every Monday through the election at 4:00 PM Eastern. Join the discussion and help shape the show by sharing what's on your mind. Sign up by subscribing at the truth teller level or higher on patreon.com/gaslit. On September 10th. Join the Gaslit Nation Debate Watch Party in the victory chat on Patreon. It's going to be a debate between democracy versus dictatorship, featuring a convicted felon who belongs in prison, not on a debate stage on September 16th at 7:00 PM Eastern. If you're in New York, join our in-person live taping at the Ukrainian Institute of America in New York City. Celebrate the release of In the Shadow of Stalin, the graphic novel adaptation of my film, Mr. Jones, directed by the great Agnieszka Holland Gaslit Nation, Patreon supporters get in free.