Transcript: Obama's economic speech and the Two Santa Claus Theory rant, 08 January 2009

Thom comments on Barack Obama's economic speech today and explains how the Republicans deliberately have played the Two Santa Claus Theory - spending government money and giving away tax cuts, bankrupting the country in the process.

Thom Hartmann on Obama's Economic Speech and the Two Santa Claus Theory, 08 January 2009

Barack Obama gave a, knocked it out of the ball park today and here's what you're going to get on this program that you're not going to get on any other talk radio show, except perhaps those that follow this to the extent that this show becomes show prep for other shows, and that's the back story.

Why are we here? It's not, this is not just Republican irresponsibility, this is not just the failure of ideology, this mess that we are in, it's not just Phil Gramm doing away with Glass Steagall, it's not just, you know, there's a whole bunch, it's not just the Savings and Loan crisis, it's not just unregulated bankers and all that kind of thing.

In fact, in a very, very real way those are all symptoms of the real cause. And the real cause goes back to the mid '70s with conservative and Republican thinkers, plotters, schemers, people who hate America, at least the way that it was conceived by our founders, planning on how they could gain power, in their mind ideally even permanent power, but at least the majority of the power over the short term and over the long term so that they could make themselves wealthy, (a), but perhaps most important, (b), so that they could have America in the vision that it has been held since conservatives, well, since the very early days, since John Adams with the Alien and Sedition Acts; our first conservative president, the second president of the United States

, the guy who shut down twenty newspapers. He put Benjamin Franklin Bache, Ben Franklin's grandson in prison, 'cause Ben Franklin's grandson dared to write that President John Adams was 'old, toothless, balding and querulous' - combative. For this he put him in prison. Okay.

The conservatives from the founding of this country have believed that if the majority of the people participate in governance, it's a bad thing. The conservative world view is that you must have a small governing elite. It must be the good people, the few good people. And how do you define the good people? Well, they're the rich ones, because riches, just ask John Calvin, right? The founder of Calvinism, the Calvinist church. This was a very, very popular notion for hundreds of, it still is. The way that you know the good people, they're the ones that God blessed. And how do you know that God blessed them? 'Cause they're rich.

So this was the goal: to strip America of small 'd' democracy and replace it with an autocracy. How to go about doing it? How do you achieve maximum power in a nation where the vast majority of the people would really rather not have a small group have maximum power? You do it with the Two Santa Claus Theory.

I mentioned this yesterday, Jude Wanniski, just in passing, I have the details for you now. I was just running off memory, I've done my homework since then. This is where it all began

and I want to lay this out for you as we go through this hour and through this program today.


But first, Barack Obama and his comments:

"Nearly two million jobs have been now lost, and on Friday we are likely to learn that we lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs. Manufacturing has hit a twenty-eight year low."

Now, now let's see, twenty-eight years ago, what was going on? Oh yeah, that was Ronald Reagan, twenty-eight years ago, what a surprise. Yeah, so he's identified the problem, that we have a job loss that we haven't seen since the Great Depression, the last Republican Great Depression. And, you know, Barack Obama is such a nice guy. It really helped him during the election; he didn't call out John McCain, he didn't point out the horrible things that were being done, he called it 'silliness', things like that. But there comes a time, in my humble opinion, when it's useful for a politician to actually call these guys out. Now hopefully that time will, or maybe he'll have attack dogs who'll do it. But this was Barack Obama identifying, broadly speaking, the issue. He continued:

"This crisis did not happen solely by some accident of history or normal turn of the business cycle."

See, and this, this is such an important point. This was not a normal turn of the business cycle and it was not an accident of history. This was intentional. Now, what he doesn't tell you in the speech is what I'm going to tell you, which is how this thing was planned going all the way back to the 1970s, and how it came about. Obama continues:

"And we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC."

And, frankly, it went beyond that. I mean, that's where it ended up, but it started with a group of conservatives saying, you know, 'how can we do this? What can we, let's make this thing happen'. As I said, I'll tell you the details in a minute.

"Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve."

Okay, and that gets to the heart of it. That gets right to the heart of it. This goes back to a guy named Jude Wanniski who, back in the 70s, laid out the blueprint for this whole thing, for the theft of American government.

He and Grover Norquist were the guys who really put this thing together. Jude Wanniski invented the term "supply side economics". It was a revolutionary thing.

As Robert Novak, yes, that guy, you know, 'the dark prince' is the phrase he likes to use referring to himself. He's not the guy who coined it, but he loves it when people call him that. As Robert Novak wrote in 2005 in Real Clear Politics, his column, his nationally syndicated column, he says, "The late supply-side pioneer Jude Wanniski wrote about two governmental Santa Clauses -- one bestowing spending increases and the other tax cuts. For 50 years until the supply-side revolution in the late 1970s, Republicans rejected both Santa Clauses and cemented their minority political status."

You get this? Historically, Republicans were opposed tax cuts. They thought that a balanced budget was a good thing. And historically the Republicans were opposed to government spending. Now, what Jude Wanniski did is, he came along and he said, 'you can, Republicans, you can now be in favor of tax cuts. You can be a Santa Claus to the American people, because we've invented this thing called the Laffer curve, and we've come up with this idea called 'supply side economics' that says if you cut taxes you're actually going to raise revenue.

It was a lie then, it's a lie now. It has never worked although it still has it's apologists out there. But this was one of the most despicable and intentional lies of the conservatives and the Republicans to gain power. I'll share the second one right after this break.


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On a warm summer's evening on a train bound for nowhere
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Your radio support group for we the people. Thom Hartmann here with you. Yeah, you need to know when to hold them and when to fold them and this is the time that Obama needs to be holding them, and pushing it forward.

Jude Wanniski died in 2005 and wrote several books, the guy who invented supply side economics. His partner in crime was Grover Norquist. Cato Institute president Ed Crane in an article about Wanniski titled, "The GOP: Slouching towards Irrelevance" talked about how this guy gave it to the Republicans. He said, "When [U.S. Representatives]", now this was a decade or more ago he wrote this. "When [U.S. Representatives] Jack Kemp, New Gingrich, Vin Weber, Connie Mack and the rest discovered Jude Wanniski and Art Laffer, they thought they’d died and gone to heaven. In supply-side economics they found a philosophy that gave them a free pass out of the debate over the proper role of government. Just cut taxes and grow the economy... That’s why you rarely, if ever, heard Kemp or Gingrich call for spending cuts, much less the elimination of programs and departments."

Pretty straightforward stuff,, David Warsh, the proprietor, writing, you know, his article, "Wanniski-ism, RIP", says George W. Bush cut taxes, he "embraced to Second Santa Theory and rammed still more tax cuts through an all-too-willing Congress in the name of stimulating growth". Instead what it did, obviously, was explode the budget deficit.

"Meanwhile", he says, "Bush played a little traditional Santa, shepherding through Congress the addition of an expensive pharmaceutical benefit to the national retirement medical system.". That would be Medicaid Part D.

Now, let's keep in mind who these, who Obama is going to be facing. First of all, Barack Obama, being very optimistic, good on him for this:

"Our problems are rooted in past mistakes, not our capacity for future greatness."

And he announces the American Recovery and Reinvestment Plan, ARRP, which sounds a little bit like, you know, the retirement organization, but here it is:

"I have moved quickly to work with my economic team and leaders of both parties on an American Recovery and Reinvestment Plan that will immediately jumpstart job creation and long-term growth. It’s a plan that represents not just new policy, but a whole new approach to meeting our most urgent challenges."

There you go. So this is the essence of what Barack Obama talked about this morning. He suggested that 2 million jobs have been lost, 2.8 million part time jobs, manufacturing's at a 28 year low, that this isn't an accident of history or a normal turn of the business cycle, this was created.

Now, he all but came out and said this was created intentionally. I'll say it: this was created intentionally. What the Republicans did is they said, "Okay, when we are in power we are going to spend like crazy and thus buy the loyalty of the American people while we accuse the Democrats of the same. But instead of paying for that spending in the traditional way that both parties have done, which is raising taxes so that you don't have a huge deficit, we're going to simply borrow it from our children and grandchildren."

And this is why this year, if you are an average tax payer in the United States, if you're making in the neighborhood of $45-50,000, about a thousand bucks of your federal tax bill is going to pay the interest on the money that Ronald Reagan borrowed following Jude Wanniski's and Grover Norquist's advice.

About another $2,000 of the taxes that you're paying this year is going to pay the interest on the money that George Herbert Walker Bush, the first couple of years of the Clinton administration and George W Bush in particular borrowed, following the advice of Grover Norquist and Jude Wanniski.

If we don't understand how this happened, we can't fix it.

Grover Norquist; some of his most famous quotes, the greatest hits of Grover Norquist: "Bipartisanship", he said, now keep in mind, this is what Obama is calling for. And keep in mind, Grover Norquist runs the organization that sponsored the Republican, the RNC meeting last week. Grover Norquist put that thing together. Grover Norquist, here's a couple of quotes. "Bipartisanship", he said, "is another name for date rape", and "We are trying to change the tones in the state capitals -- and turn them toward bitter nastiness and partisanship".

If Barack Obama thinks that he's going to get a free pass on this thing because he speaks well, he's got another think coming. I'm telling you, the right wing talk shows today, already, right now, are going to be yelling and screaming it's socialism and they are going to be falling back on the Two Santa Claus Theory without ever telling their poor duped listeners who think of themselves as conservatives who don't realize that they are voting and playing into the hands of the über rich in America, the corporations in America, the people who hate American democracy, small 'd' democracy, and believe in a kleptocracy, an aristocracy, of the very wealthy.

So we've had 28 years of the Republicans playing both Santa Clauses; spending like crazy, and giving tax cuts, and now we have a disaster.


So here's the question: how's he going to do it? I mean, I'm telling you, the right wing web sites, Drudge for example, top headline, "We're Going to Spend Our Way Out Of This". Second headline, "Let's Print More Money!" The Republicans are going to go hysterical about this. They're going to absolutely go hysterical about this because, 'Oh my God, it's government spending money'. This after 28 years of Republicans spending money like drunken sailors. As I said the other day, no offence to drunken sailors. I've known a few in my life and living on the water I've gotten to know more recently. Some of them are fine people. But I lack a better metaphor.

Barack Obama says that we can actually make something here in the United States and not have the jobs outsourced. This was the one part of his entire speech that really caused me to raise an eyebrow. This little moment right here:

"In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced".

Can't be outsourced?

"Jobs building solar panels and wind turbines."

Now, wait a minute. The wind turbines are from Vestas; we import them from Denmark. The solar panels are from four different manufacturers in China, by and large. In fact, the French company that we used to get solar panels from was bought by the Chinese, they dismantled the factory in Paris, shipped it to China and rebuilt it. Is he announcing a change in trade policy?

"Constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain."

OK, this is the one place where I'm having a little skeptical moment. We invented the transistor. Who made transistor radios? Japan. We invented the Integrated Circuit. Who's making IC-based computers and TVs and radios? Taiwan, Korea, Japan, Malaysia. We're not making them here. Try and buy a TV set made in the United States. I dare you. Try to buy a computer that's actually made in the United States. I know there's a couple of manufacturers who say, 'yeah, we make them in the United States'. They bring in the circuit boards, they bring in the case, and they assemble them in the United States.

So how are you going to do that, Mr. Obama? I, well, time will tell. We will see.

But I'm telling you, this, the two Santa Clauses have worked. The Republicans in the late 70s, Jude Wanniski, who invented supply side economics; invented the word, the phrase, and Grover Norquist sat down with Newt Gingrich and as Norquist writes, "Newt Gingrich thought he had died and gone to heaven". What, you mean we can be the Santa Claus who gives out tax breaks and tax cuts and we can be the Santa Claus who spends money? Yeah. All you have to do is bankrupt the government.

And then David Stockman comes along, remember, Ronald Reagan's Director of the Office of Management and Budget, former 35 year old Congressman, or, he was a young guy, Congressman, with no economic background whatsoever. And he says, "yeah, this is the 'starve the beast' theory. We're going to starve the beast, the government, of revenue, and we're going to throw it so far in debt that when the Democrats do come back into power they won't be able to spend any money". And you are seeing that played out right now. The plan that Wanniski and Norquist laid out in the late 70s, that Ronald Reagan ran with, everybody looked at, even George Herbert Walker Bush initially looked at this plan and said, 'this is crazy, this is voodoo economics, this is going to bankrupt our country, this isn't the best thing for America'. He changed his tune very quickly when Ronald Reagan picked him as Vice President.

And the Republicans have been hewing to this line ever since. And they have destroyed this country. And they have destroyed the economy in this country. And they have done it for purely political purposes and for a few million bucks in the pockets of their buddies and a few billion bucks in the pockets of their buddies.

And now Barack Obama has to pick up the pieces and they are going to go after him with a ferocity that you cannot imagine.

Back in the '30s when Franklin Roosevelt tried to do something like this, they called him a socialist, they called him a communist, there was a coup attempt; some of the nation's largest bankers, the Morgans and the Bushes, got together and they tried to hire the most famous, Smedley Butler, the most famous marine general in American history to lead a coup against Franklin Roosevelt. Butler blew the whistle or we would have had a coup in 1935.

I'm telling you, it's going to get ugly, and it's starting today.

[Thom Hartmann]: 866-303-2270 our telephone number. Ray in Vancouver, hey Ray -- what's up?

[Ray]: Yes, Thom. I was just -- I have been listening to you and I was thinking to myself and I'm going, you know, there is not a senator when they are in the Senate, they say that they are to pass legislation, to do everything they can to protect the country, and if so we have two wars. So we now have two wars that we've been going on and it's war time for the United States and we have a political party that we have proof that has passed policies knowing that it was going to not help the United States, strengthen it, but tear it down. Can't that be considered treason and that party be held accountable? And so, as far as I am concerned, I advocate sending all Republicans to Alaska where they love Palin so much.

[Thom Hartmann]: Good plan, Ray.

[Ray]: Let ‘em just go there and succeed.

[Thom Hartmann]: [laughter] There you go! Good, good plan, Ray. It's a great one. You know, I would not use the word treason. I think that hyperbole doesn't suit us well right now. I think that calling them anti-American is absolutely accurate. They do not believe in the ideals on which this country was founded. This country was founded by the children of the Enlightenment. Jefferson, Madison, Franklin, Washington -- these guys believed in life, and you want the right to life, you have to have a national healthcare program -- liberty and the pursuit of happiness. They were the original -- George Washington -- "I hope I shall ever see America as a more liberal nation at the forefront of liberality…" was the exact quote. These guys proudly called themselves liberals.

James, in Hondo, Texas. Hey James.

[James]: Hi! good afternoon. How are you today?

[Thom Hartmann]: Just great! But I'll get better. What's up?

[James]: All right, I'm trying to find out if I got this straight. The Republicans are bad for spending a whole bunch and then tax-cutting. And then Obama's plan is good for massive spending and tax cutting.

[Thom Hartmann]: Yeah. It does seem like a bit of a non sequitur, doesn't it, James? Here's the thing…

[James]: It is.

[Thom Hartmann]: Well. Yes and no. The Republicans tax cuts were primarily targeted at millionaires and billionaires. So they …

[James]: Well that's not true, but okay.

[Thom Hartmann]: Well, it actually is true. And therefore --

[James]: No it's not.

[Thom Hartmann]: [slight laughter]—Okay. So we're going to do this. I'll tell you, for example, in the state of Oregon right now, this from the Oregon Center for Public Policy, just published these statistics, in the state of Oregon poorest families paid the largest percentage of their income in taxes. That's 9.9%. While the richest families paid the smallest share -- that’s 6%. For example.

So anyhow, Bush lowers the tax rate. The maximum amount of money that you make if you make your living sitting on your butt around the pool waiting for the dividend check to arrive in the mail, or capital gains, the maximum income tax rate you pay is 15%. That's the Bush tax cut.

So the tax cuts that the Republicans have been promoting have been tax cuts that are designed to starve the Treasury of revenue and to increase -- massively increase -- the wealth of the very wealthiest. In the last five years the four hundred richest families of America, The Fortune 400 richest families, have gone from a combined net worth of $600 billion to $1.2 trillion. It's absolutely unprecedented. The last time we saw this kind of an explosion of wealth was in the late 1920s when Herbert Hoover and Coolidge were doing the exact same thing. Now as to the spending…

[James]: Talk about Obama then.

[Thom Hartmann]: Pardon? What Obama is talking about doing is cutting -- first of all, let me be on record here, James, I don't agree with Obama on the tax end of this. I don't think that cutting taxes is a structural way to solve the problem. Although I will give him that maybe for a year it will help somewhat. But history shows that when you cut taxes on working people, over time their wages go down.

[James]: Because the increase goes to the government.

[Thom Hartmann]: No, because the employers know that if someone is willing to work for whatever they are willing to work for, and you cut their taxes so they ended up with more their pocket, the employers can get away with cutting their wages and take them back to where they're netting out the exact same they were before.

And just back over the last 20 years, James, you're probably old enough to remember this, every time taxes went up, wages went up. When Clinton raised taxes wages went up. Every time taxes on working people went down, Reagan's tax cuts and Bush's tax cuts, even though they were heavily skewed towards the rich, they did reduce taxes, you're right, on working people, wages went down.

So I would submit to you that the solution is not to cut taxes. Maybe over the short term. What he is going to do is to give all of the working people of thousand bucks. Great. They're going to spend some money. That's a short-term stimulus.

[James]: Yeah that's called welfare. Though. That's called welfare.

[Thom Hartmann]: No it's not. Well, then your tax cuts for millionaires and billionaires is welfare. Your 15% maximum tax rate for people on capital gains is welfare.

[James]: No. They're actually paying income tax and the people that you're talking about aren't paying income tax.

[Thom Hartmann]: Well I'm talking about people who are paying income tax. If you want to talk about tax credit, that's not welfare either. Those people are paying taxes. They're paying a higher percentage of their income in taxes. Most of it is payroll tax rather than income tax, and then sales taxes and property taxes. But they are paying a higher percentage of their income in taxes, I guarantee you, than is Bill Gates, or than are any of the millionaires and billionaires in this country. And this is not rocket science, James, you can easily find it out.

That's the tax side. On the spending side the Republicans have been spending money on things like the Bridge to Nowhere, a $1 trillion military budget, wars that are insane. We now have more than 700 military bases outside the United States. Only 10% of our defense budget is actually spent defending the United States of America. 90% of it is spent defending shipping lanes for oil and other countries. Tell me that makes sense. That's the Republican way. $3 trillion for Star Wars. That's crazy. Let's build some bridges.


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[Thom Hartmann]: Oh, Joe the Plumber's song.

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[Thom Hartmann]: Welcome come back! 9 1/2 minutes before the hour. Thom Hartmann here with you, the place where progressive come to party.

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[Thom Hartmann]: Well, we got a variety of e-mails and posts and posts on our blog, our homepage at, our blog at Just a couple of interesting ones. Let's see, “Drunken sailors two days in a row. Yeah very hilarious.” Okay. You know, what could I say?

Here's another one. Oh, do you have the pigeon one, Sean? I've lost the piece of paper. Anyhow, somebody sent us a photo of a hawk taking out a pigeon and said, "Looks to me like this is a real hawk and a real pigeon. Therefore the pigeons can't be robots." No. That's just how good they are! Those aliens from the planet Xenu paint those robots to look so much like real birds that they even fool hawks.

And finally, Richard sends a note, he says, "Thom -- Dear Mr. Hartmann", actually, that's, I guess, my father. Anyhow, he says, "I listen to you every day. You are brilliant. Why do you not contact someone in government and inform them of the history you reveal on your show and educate them. I realize these are ignorant politicians who think they know everything. However, Republicans have destroyed this country. Obama needs a lot of help. Your lessons are valuable. Thank you. Richard."

Richard -- thank you very much for your kind words and let me tell you, it's your responsibility now. Sorry to pass the buck but my job is to do a talk radio show. You know, I tell Bernie what I think, and there's a couple of politicians I know that I talk with from time to time.

But by and large my job, the way I see it, in the books I've written and in doing this show, is to share what I know with you so that you, the somewhere between 2 and 4 million people who listen to this show, depending on whose numbers you’re using -- we having the most listened to progressive radio show in all of America -- you who are listening to this show go out and educate the politicians, and actually the way to do it isn't so much, okay you calling up a politician and educating them, although I'm all in favor of that It's that you tell 10 friends and ask those 10 friends to tell 10 friends and by the time we've gone down what, 2, 3, 4, 5 steps on that, everybody in America has figured it out.

And this is what conservatives have been doing for 20 years, with conservative talk radio. You know Limbaugh doesn't call up the right-wing politicians and say, "Hey, here's a meme for you." No, he puts it out on the air and it just spreads around. And that's what I'm doing. I'm putting this out on the air and it is spreading around, hopefully. And so, anyhow.

Dave, in Port Clinton, Ohio. Hey Dave, what's up?

[Dave]: Hi, Thom! You and I are on the same page. I have always thought that supply side was delusional, but when I hear the supply-siders on the radio, they always cite what they call like mathematical proof. They'll go back to Kennedy and they'll say when rates went down, the revenues came flooding in. And I wonder how you refute their examples.

[Thom Hartmann]: Oh, it's very simple. First of all, if you'd simply look at the historical record year by year, and we've done this on this show, although it makes for kind of boring radio, where you say, "Okay -- 1961, 1962" Anyhow, you look at the historical record and what you see is that tax revenues always go up. Other than the Great Depression, every single year tax revenues have gone up. And GDP has gone up.

It's the nature of inflation and it's the nature of a growing economy that is adding 1.5 million people every year, or every month, rather, to its population, and so they say, “Look at this -- we cut taxes and revenue went up." Well of course revenue went up. But when you increase taxes, revenue also goes up. And it goes up more. They just fail to mention that. They consistently fail to mention that. Number one.

Number two. They love to quote John Kennedy. Kennedy didn't actually raise taxes. He died before he had a chance to do that. It was Lyndon Johnson who did it in ‘64. And Kennedy proposed -- and I've played that audio on this program many, many times -- not going to do it again right now, but many times in the debates with Richard Nixon, Kennedy said that he wanted to increase taxes on the wealthy, that he was one of the wealthy -- I mean he didn't say it in these words. Maybe I should play the audio a little later on in the program. But he said basically that there are all these loopholes and nobody is paying that 91% tax rate.

And so what he wanted to do was close the loopholes, reduce the top rate to 74%, close the loopholes, and he said, and here I am giving you a verbatim quote, "This will increase revenue." In other words they're going to increase taxes and what Lyndon Johnson did in ‘64 when he did that was he actually increased taxes on the most wealthy in the United States. And yeah, that led to an increase in revenues.

But when Reagan cut taxes in ‘82, if you look at the arc of revenue coming into the government, tax revenue, it actually dipped. It didn't drop into negative but it dipped. And we have been in debt ever since.

And a more important number to look at than tax revenues or even GDP, is the national debt, and every time these guys cut taxes it drives up the national debt which is their goal, by the way. So that's -- Dave, there is your answer.

And again, you go back and look at the numbers and they're irrefutable. These guys just lie. I mean they just plain old flat-out lie. They lay this stuff out because it's the only way they can do it. It's just like the great lie -- "You know, liberals hate America." How many times have you heard that?

George Washington was a liberal. Thomas Jefferson was a liberal. Abraham Lincoln at that time for a brief 20 year period, the Republican party when it was first founded in Flint, Michigan in 1856 through about 1866, 1867, well arguably 1877, was a reform party. These guys were liberals. The liberals are the ones who built America.

I defy you to find any good dimension of American life -- the five-day work week, the 40 hour work week, Social Security, vacation, you know -- paid vacations, clean food, safe drugs, Workman's Compensation, unemployment benefits -- I defy you to find one benefit that the Republicans have brought us, that the conservatives have brought us. They don't exist.

Transcribed by Sue Nethercott and Caleb Burns.

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