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So Snerdley walks into me.
I went out to get my cookie during the top of the hour break.
A cookie followed by a cigar.
Cigar is enhanced.
I've studied this extensively.
Has me to write kind of cookie.
Can't be some little sissy cookie.
It's got to be a real cookie.
It's got to be strong on the taste buds and palate so that it helps bring out every flavor in the cigar.
But anyway, Snerdley walks up to me, says, you know, this Hillary stuff, I know you're bored by it, and I love the way you're playing it, ignoring her and all that kind of stuff.
But I got to tell you, I'm seeing more negative coverage of Hillary.
It wasn't like this the first time.
It wasn't like this in 2008.
I looked at him and I just, I said, we keep looking in all the wrong places for evidence that Mrs. Clinton is vulnerable.
All the wrong places.
Yeah, I got a New York Times here story where they're critical of Mrs. Clinton and talk about things she's doing they don't like.
It doesn't mean anything.
Let me, folks, let me see if I can illustrate my point of view this way.
There is no possibility.
I need to put an asterisk by this because Elizabeth Warren is lurking out there.
And I recognize that.
But there is no possibility that the Democrat voting base is going to abandon Hillary Clinton because the New York Times might write something negative or because she has been shown to be a hypocrite.
Mrs. Clinton, I'm just going to tell you, Mrs. Clinton could announce today that she is reversing her opinion on gay marriage.
She could announce that she's rethinking it.
It would not hurt her, other than Elizabeth Warren being, if there were no Elizabeth Warren, the point I want to make is she and every other Democrat will be allowed a wide berth.
Whatever it takes to beat Republicans will be permitted.
Hypocrisy will not sour support for her.
Mrs. Clinton being a hypocrite, phony baloney, plastic banana, none of that matters.
Now, we will disqualify our own candidates on that basis, but the Democrats, they don't care.
They have a singular objective, and that's beating conservatives and Republicans, and in fact, humiliating them.
And the more they can do that, the more any candidate can do that, the more support that candidate is going to have.
And they don't care whether the candidate is honest.
They don't care whether the candidate is dishonest.
They'll take it on faith that their candidate is going to be a liberal.
I mean, there are limits.
Mrs. Clinton couldn't announce that she's become a Republican and get their support.
Don't misunderstand.
But the traditional things that you might think might damage Mrs. Clinton in the left-wing media, they're not going to damage her.
As long as she is seen as being able to beat whoever the Republicans nominate, it won't matter how she does it.
It won't matter what her policies are.
If the announced policies of Mrs. Clinton seem at variance with liberalism, it'll be done with a wink and a nod.
A wink to the base.
Look, you know I have to say this to win, but I don't really mean it.
And they'll accept it and move on.
So looking for the campaign of Mrs. Clinton to crumble by virtue of analyzing media coverage of her and seeing that they're not quite as supportive as they once were, if you can find that, I don't think means anything.
I think it's a sucker's game to look at that.
You cannot hope to beat whoever they nominate.
I don't care if it's Elizabeth Warren or Biden or Hillary or whoever.
You can't beat them if your primary objective is to hope their base doesn't vote for them.
You're going to have to beat them by exciting more people to vote for you.
You can't do it hoping that there is boredom, disappointment, lack of turnout for the Democrat presidential candidate because that's not going to happen.
They're going to get their base out.
They'll play the race card.
They'll play the gender card.
They'll play whatever card they've got.
And they're going to have all this money.
That's not.
It's this experience talking here.
I've seen too many times people get all excited about, wow, we got Mrs. Clinton on hypocrisy.
Look what she says here.
That's not going to matter to her voters.
Only if she does something that makes them question whether or not she can win.
Then there might be a problem.
But even then, because they're in there to support her to win, they don't care what her faults are.
They don't care.
She can be phony as a day as long.
They have an entirely different criteria.
And they don't have nearly the honor system that they think they do.
They're focused on one thing.
Remember, to them, the Republican Party/slash conservatives, biggest enemy they've got, not Iran, not ISIS, not Al-Qaeda.
None of that.
That's not that chump change.
We can deal with that.
The Republicans, because they pose the greatest immediate threat to power.
And that's why they're always going to be enemy number one.
Dan Price is the founder of a company called Gravity Payments in Seattle.
He has 120 employees.
And he has decided he's going to raise the minimum wage at his company to $70,000.
And he's going to slash his own salary to $70,000.
It's going to happen in the next three years.
And he's also going to require himself to plow up to 80% of the $2.2 million in profits back into salaries.
If there are profits, they will go to salaries, not growth of the business, not research and development, none of that.
It'll go right.
80% of the profits will go to salaries.
He says he was inspired to make this step after reading that happiness increases dramatically for people earning over $70,000 a year.
Again, his name is Dan Price, CEO of Gravity Payments, slashing his own salary 93%.
The Seattle startup has instituted a $70,000 minimum wage at his credit card processing company.
That's what the business is.
Credit card processing company.
And he is paying for it by slashing his $1 million salary to the same as his lowest paid worker.
And 80% of the firm's $2.2 million in profit, expected profit, expected, projected.
They haven't earned it yet.
80% of the $2.2 million on paper profit is going to be plowed back into staff salaries.
Over the next three years, Gravity Payments will offer at least a $70,000 salary to every one of its 120 employees, even the most junior customer service representatives and clerks.
Found this in the New York Times this week.
Is anyone else freaking out right now?
I'm kind of freaking out, he told his cheering employees at a meeting on Monday afternoon.
The policy will raise the wages for 70 of the company's workers, more than half the staff.
New York Times was present for the announcement.
And they say, even if the $70,000 minimum wage is a publicity stunt, it's one that will cost him big time because he's having to slash his own salary 93% to make this happen.
And again, he read that people's happiness increases dramatically for people when they are earning at least $70,000 a year.
Now, I hope that this company in future years, what are you shaking your head at in there?
Well, you don't think it's going to work?
Well, I know.
No, he doesn't know the Thanksgiving story.
He doesn't know the, he obviously doesn't.
He is a good liberal and he has read that people are happy at 70 grand.
What he doesn't understand is happiness does not equal productive.
Happiness equals comfort.
70 grand?
Well, I can stop working hard is what that means.
Anyway, he's not tying this to anything other than employment.
He's not tying it to performance.
He's not tying it to sales.
This is pure unadulterated socialism, which has never worked.
That's why I hope this company is a case study in MBA programs on how socialism does not work because it's going to fail.
My guess is that just like when Solendra went south, there will not be a story on gravity payments succumbing to gravity and going under.
Now, if you look, somebody sent me a note on this story.
It says, I was reading some of the comments under this story at Facebook, and I was stunned at the vast majority of comments on Facebook who think this guy is just great and has such a big heart.
And thank God there's a nice CEO left in America.
And I say, why are people surprised?
Why are you surprised that that would be a reaction in a country that's moving towards socialism?
It makes all the sense in the world that people commenting on Facebook would think this is great and want to get in on it.
The surprising thing to me, I wish it were true, would be if a whole bunch of commenters started posting reasons why this is doomed, why it can't possibly work.
And remember, it's a startup.
They haven't made any profit yet.
It's all projected.
And he's chosen $70,000 as an arbitrary salary because he read that's where people are happy.
And he's going to find out it's going to take long.
It isn't going to take long because once everybody figures out they're all making the same, no matter what they do, the slackers are going to surface.
Human nature.
William Bradford found out during the early pilgrim days in this country.
The slackers, the first thing they do is slack off when they find out that everybody's being paid the same.
And then if the guy sets up an incentive program where some people start to make more, that's the beginning of his troubles because he has set this up as everybody's going to be the same.
So if somebody gets a $10,000 raise, everybody better, or there's going to be hell to pay.
And if he ever makes more than $70,000 himself, all these people praising him to the end of the world on Twitter and Facebook are going to come for him with the long knives, accusing him of being a hypocrite.
Probably a publicity stunt here, even though everybody involved is denying that.
But the idea that people would not think this is a great thing in this country, this day and age, the way things are trending, particularly on social media, makes perfect sense.
Remember V. Stiviano?
V. Stiviano, who V. Dot.
V. Dot Stiviano, right?
What was that helmet she wore after this story broke and she's coming the visor, like a fireman's visor or something she was wearing to protect her identity, try to be anonymous coming out of Sterling's house.
You remember this, babe.
She's the one that moved in with Donald Sterling, the worst human being in America for a time, who also for a time owned the Los Angeles Clippers until they took it away from him because he was a racist.
Anyway, a Los Angeles judge yesterday ruled that V.Stiviano will have to pay $2.6 million to Sterling's wife.
Judge Richard Fruin awarded Shelly Sterling most of the nearly $3 million that she had sought.
She claimed that the money used to buy V. Stiviano a house, luxury cars, and stocks, was her community property because she was the wife in the marriage.
V.Stiviano's lawyer had argued the gifts were made when Donald and Shelly Sterling were separated and that Shelley Sterling could not seek them from a third party.
The ruling comes nearly a year after V. Stiviano's recording of Sterling made racially offensive remarks, bounced him from the NBA, cost him the ownership of the team.
Shelly Sterling's lawyers used other recordings to show that he bought Stiviano a house, a Ferrari, and other things.
And in the recordings on Stiviano's phone, she and the 80-year-old billionaire are heard discussing how to shield gifts from his wife.
The truth is that everything I have, you've given me from your heart without me begging or asking or throwing myself all over you, Stiviano said in a snippet played in court, which sounds like she knew it was going to be played in court someday.
It sounds like she was like, I sign emails now.
If I ever put anything controversial, if I ever rip somebody in an email, I'm saying an email back and forth with a Catherine or with a friend, and I happen to rip somebody in the email, I put an asterisk right after the complaint.
The end of the email, the asterisk is defined as, if this email ever goes public, I didn't say what it says above.
If this email is ever subpoenaed or part of a subpoena is released, I didn't say that.
I didn't know it when I put some qualifier in there.
Everybody now preparing for whatever you write, whatever you say, to eventually be made public sometime, somewhere, somehow.
Quick time out, back with more.
We'll get to your phone calls when we come back, so don't go away.
Okay, let's get to the phone since we haven't been there yet.
We're almost halfway into things today, so we'll start in Portland, Oregon with Jim.
Thank you for waiting, Jim, and welcome to the program.
Hi.
Hi, sir.
How are you today?
Very well.
Thank you.
I got a statement.
Well, actually, first I want to say I love your books, and so do my grandkids.
But anyway, getting back to Harry Reid this morning.
Wouldn't it be interesting that if he had really fallen, as per se he said he did, with an accident for the machine, there would have been a lawsuit by now against the company that made that machine?
Well, you know, I've heard that bandied about.
I don't know for sure that that's something that you could say with ontological certitude.
Well, I've never heard of anybody ever getting hurt like that, ever, on a machine like that.
Well, that's the point.
But when's the last time you heard of a U.S. Senator member of Congress suing somebody on a liability claim?
They just raise taxes on them.
They punish them some other way.
They go out and get a campaign donation from them or some such thing.
They threaten them or whatever.
But suing them is not something that they generally do.
Oh, okay.
So it's not, I wouldn't take that, the fact he didn't sue anybody as evidence that the machine didn't beat him up.
You don't need any evidence.
Machines don't do what happened to Harry Reid.
Oh, well, I didn't told him that, but, you know, he lies anyway.
But I mean, you know, if he was a machine, you'd think there'd be a lawsuit or something or heard about it.
But you're right.
Well, if there was, let's say that the machine did screw, let's say the machine beat up Harry Reid.
Let's just take his word verbatim.
He's on an exercise machine, and it bloodied his eye and ruined his right eyesight, gave him a black eye.
It broke his hip, broke his arm, whatever happened, the machine did it, and it kept doing it until he couldn't walk anymore for a while.
Okay?
What would happen in that case is whoever manufactured the machine will get a private phone call from somebody representing Dingy Harry saying, do you know what your machine did to me?
And just the fact that it's a United States Senator on the phone would send the chills of fear up the spine of whoever got the call of the manufacturing company.
And then if proper restitution wasn't made, if damages weren't paid in private, then Dingy Harry would threaten all kinds of legislation either favoring the machine makers' competitors or legislation punishing the machine.
It all happened behind the scenes and nobody would ever know about it.
And then if Harry Reid ever ran for re-election, the manufacturing company, the machine, would be among the leading donors for his re-election.
But we don't need any of that to know that a machine did not do what happened to Harry Reid.
What?
Do you think it?
What, what?
One machine, yeah, in his bathroom.
Something involving an elastic band that was attached to the shower door that somehow came loose and gave him like a elastic band just because it stretched too tight and the shower door got ripped off its hinges and the shower door rammed right into Harry Reid's face and gave him a bloody IR1.
The machine did it.
Whatever the hell the story is.
It's phantom.
And if the machine could do that, somebody would put the machine out of business.
Or it would get hired as an enforcer.
By the way, Harry Reid wasn't even using a machine.
It's not really an exercise machine.
It's an elastic band.
It's a resistance band.
And I've got the website and I've seen this thing.
It's a gigantic resistance band that for the upper back and the thoracic area and so forth.
And the elastic band that's on this snapped somehow, and Dingy Harry was so strong.
He was putting so much stress, so much strength and so much force on this band.
The band, he's strapped into the machine.
The band's got him lassoed in there.
And the thing you do is you just, you work against the pressure of the band.
The band snapped.
And Dingy Harry's motion, there was nothing to stop him.
He's urging.
He's trying to move forward.
The band's restraining him.
He went barreling into the shower door, which somehow then came off its hinges and fell on top of him.
And some of the handle ended up in his eye or something.
So it's a convoluted, impossible story.
But it's not even a band.
Okay, we've got soundbites in the CEO.
If you're on hold, hang on, be patient.
Coming right back to you.
Dan Price was on the Fox Business Network this afternoon with Stuart Varney.
This is the guy that has established a new minimum wage of $70,000 for every employee.
Stuart Varney, the business is in Seattle.
Varney says, first soundbite, are you a socialist?
I'm not a socialist.
What I really want to do, I want to have purpose, right?
What I love about my work is I have a purpose every day.
I'm passionate about independent businesses, saving them money, giving them good payment processing services, and my team members are too.
But sometimes if you're a little bit below what it takes to scrape by, that can be distracting from that passion, from that purpose that you have for what you do.
And so I'm all about achieving at the maximum amount, but I want to remove those distractions and basically help people move forward.
Okay, let me tell you what he's doing here.
I know exactly what this guy is doing, and that's why I know exactly what's going to happen.
The key to this soundbite, if you're a little bit below what it takes to scrape by, that can be distracting from your passion.
So he's assigning the same passion to his employees that he has.
But they don't make enough money.
He's read that $70,000 is that liberating magic number where you become happy.
And he wants people to be able to focus on the work, not on they can't pay the light bill.
They can't pay whatever bill.
So he's going to pay them $70,000 so they don't have to worry about making their payments, don't have to worry about being in debt, and they can focus on their passion, which is his business.
And you can do that with one or two.
Not every employee is the same.
You can do that now and then.
That can work for a time.
But I think what the guy's doing is trying to buy love.
Myself, I think the guy's trying to buy respect, trying to buy affection.
That never works, by the way.
Here's the next bite.
Stuart Varney's terrific idea.
You know, I think you're an extremely generous person.
You make a million dollars a year, so you're going to take a pay cut down to $70,000 a year.
And you're taking some money from your profits, and you're going to chuck it all into the big pot so that everybody makes $70,000 minimum.
You're going to take some of that profit and you're going to turn it back into salaries, not growth of the business.
And you think you're going to get a good return on your investment.
Absolutely.
And I actually think that the way we look at it is about trust and it's about values.
So when you take care of people, they tend to take care of you.
And about a year and a half ago, we instituted unlimited vacation for all of our team.
And sure enough, you know, productivity went up.
Paid time off, even though it was unlimited, didn't really go up.
When you trust people, they really take care of you.
There is also a moral imperative of us as leaders to try to do the best we can for everybody.
And I think if we step up and take these problems seriously, there will be less need for politics to be involved.
Okay.
Okay.
Now, let me translate this for you.
It's about trust and values.
When you take care of people, they tend to take care of you.
For a while, that will be true.
For a while.
Don't know how long depends on the individuals.
It's going to be different for every employee.
For a while, they're all going to appreciate it.
But it isn't going to take long before the appreciation dries up and the expectation settles in.
And it isn't, it doesn't take long at all for the appreciation to vanish.
Not long at all.
He is going to learn that he is not going to be the beneficiary of a lot of appreciation for a very long time, if that's what he's trying to buy.
And then he talks about this.
I read about this: Unlimited Vacation.
They set up unlimited vacation time for everybody.
And you were on your own, whenever you wanted to go on a vacation, for however long, go do it.
You know what they found?
Nobody took vacation.
They were afraid of being singled out as not being hardworking.
They were afraid somebody else would come in.
I don't know if it was at this company per se, but I've seen this in other companies where they instituted this policy of no defined vacation time, no defined sick days, total honor system.
You take your time.
You want to go on a month vacation, you do it.
There weren't any limits.
You need to take the next two days off because you've got a sick pet.
You go right ahead and do it.
And they found that people took hardly any sick days.
And the number of days people took for vacation fell dramatically.
Now, some said that was good.
It added to productivity because people take way too much time off anyway and they don't need that much time off.
And this was good.
Whatever it was that kept them on the job, whether it was guilt or fear that they would lose the job, somebody else would come in and do their job while they were gone and it would be demonstrated they weren't needed, whatever it was, they didn't take their vacation.
Then, of course, the human resources people started speaking and said, that's not fear.
You are being mean to your employees.
You think you're treating them well by telling them they're on the honor system, but look at them.
They're not taking any time off and you end up running a sweatshop.
And so the pressure was then brought to bear to reinstitute a very specific vacation and sick day policy so that people would indeed get some time off because left to their own devices, they wouldn't.
In other words, honor system vacation, take as much whenever you want.
Just give us a couple days' notice and you're free to go.
Same thing with sick days.
It did not lead to more productivity.
It led to people being scared.
It led to people being afraid.
It did not liberate people.
It imprisoned them.
Attitudinally.
It's kind of like in the NFL during organized team activities, the OTAs in the spring, they're voluntary.
Except if you don't show up, you hear about it.
If you don't show up, you may not start.
If you don't show up, they're voluntary by terms of the collective bargaining agreement.
But everybody expects you to be there.
So voluntary is just thrown in to make it look good, but everybody knows the game.
There's nothing voluntary about it.
If you really want to stay on this team, if you really want to stay in the good graces of the coach and everybody, you will show up.
That's how you prove that you care by volunteering to be here when you don't have to be.
And that's sort of a takeoff on this.
Now, there's another aspect, one more thing here before we go to the break.
When you trust people, they really take care of you.
See, there's a moral imperative of us as leaders to try to do the best we can for everybody.
Now, one sense, you could say this guy is trying something different like Obama is in American foreign policy.
50 years we've had a policy with the Middle East peace process, so he's going to do something different.
50 years we've been trying to keep Cuba, Cuba, and our policy with Cuba being specifically defined, and Obama's eyes hasn't worked, hasn't accomplished anything in his eyes, so we're going to change it.
And virtually everything about America that has been a tradition, Obama said, we've been sticking with this.
Various tax cuts here and various policies over here, and it didn't work.
So I'm just going to shake it up.
I'm going to do everything differently.
You see where we are.
This guy is suggesting here, you know what?
I don't have to run my company the way the book says, and I don't have to run my company the way everybody else says it should be.
And I don't have to run my company the way experience has taught other managers to run theirs.
I'm going to do it a different way.
I'm going to try it.
What have I got to lose?
It's my company.
So applaud him for that.
That's fine and dandy.
I just, I think that he's going to learn that there are certain characteristics of human nature that are going to happen here.
And he's going to pay, listen to why he's paying people 70 grand.
He's not paying them 70 grand specifically because they've earned it.
He's paying them 70 grand because that's what he read will make them happy.
What if it doesn't?
He's also decided that since they don't make 70, they've got a bunch of distractions because of their financial circumstances.
They can't maybe pay the phone bill or the credit card debt is monumental and escalating or whatever.
And he wants to rid those distractions so that people can focus on their work.
That's an admirable trait, by the way, that would be wonderful if it worked.
But then at some point, basic human nature 101 is going to appear.
And if you decide to pay people because you want them to appreciate you, they will for a time, but it'll vanish.
And after a while, 70 grand isn't going to be enough.
And I'll even make a prediction that after a while, some of these employees are going to say that this was a trick to get them locked into 70 and no more.
He's going to find all kinds of reactions to this.
He's hoping that every employee is profoundly impressed and blown away by the generosity and has never-ending appreciation and therefore will work themselves as hard as it takes to get the job done.
And for a while, that'll happen.
But then it won't take long before that naturally goes away.
You can't spend the rest of your life appreciating somebody.
It doesn't happen.
It'd be nice if we did, but we don't.
After a while, you take it for granted.
After a while, it becomes an expectation.
And then it becomes an entitlement.
And then it becomes not enough.
And then it maybe is a trick to keep us from ever having to earn $100.
$70,000 is where he's heard we're going to be happy.
He gave us $70,000.
That's supposed to solve all of our problems.
But a year or two from now through, what if I want 75?
Nope, 70 is the magic number.
You're going to have all kinds of theories about from his own employees.
Human nature is what it is.
And I'm just here to tell him that the mass appreciation that he hopes, that he wants, is not going to be what he remembers as the result of his little experiment here.
We will take a break and be back after this.
Don't go away.
Let me give you a couple other examples.
What's going to happen to Dan Price, the CEO of this company, Gravity Payments.
He's paying everybody 70.
Theory being, that's what he heard is the number that makes everybody happy.
It ain't going to make everybody happy.
Some people, 70 grand isn't going to cut it.
Since he said that the purpose is he wants people free from distraction, he's going to have some people come to him on the sly, say, look, I really need 80, man.
And he's going to say no, because everybody's getting the same 70, and they're going to have a disgruntled employee.
You said it was, I need that to avoid the distractions you were talking about.
I need that to pay the bills that I've got.
Sorry, man.
Everybody, 70, including me.
Bye-bye, appreciation.
And hello, anger.
Because now he wasn't being truthful.
He said he's paying them this money so they would be liberated from distractions.
Well, my distractions cost me $90,000 a year.
I need 90.
I can't work with the spirit in Fremont.
Sorry, man.
70 is it.
That'll take in one, maybe a couple of weeks.
But let's say that he did pay the guy 90.
Let's say one employee comes to you and makes the case, look, man, I need 90.
I know you're paying everybody.
I need 90.
And he gives this sob story, maybe about divorced kids, what is thought, and the CEO false.
Okay, okay, I'll give you 90.
He thinks he's really bought some appreciation now.
Nope.
Next year, the same guy will be back wanting another 20.
It's never enough, no matter what.
No appreciation, never enough.
There's always going to be one person on his staff.
It's going to be that way.
Because people are different.
And when that starts to happen, if people get wind, if he does give somebody more than 70 and people get wind of it, hello fallout.
So if none of this is merit-based, that's the beginning of the problem here.
And it sounds like it's appreciation-based and all that.
Here, let me grab a call because I promised we'd get to it before the segment ends.
It's Ed in Massachusetts, in Situate Massachusetts.
Great to have you on the program.
Hello.
Hi, Rush.
Nice to talk to you again.
You bet, sir.
When was the last time we spoke?
We spoke, geez, it's got to be four years or so now.
Four years ago.
Okay, cool.
Thank you.
But before that, I've spoken with you, but Snurdy won't let me bring that up.
The AA meeting that you talked about with Mr. Reid or Mr. Reed's brother-in-law.
Right.
No, no, brother.
No, it's his brother.
Guy they think is his brother.
Okay.
I've been to a bunch of those meetings over the years.
You know, maybe not hundreds, but maybe even a thousand or more.
And you're not allowed really in the meeting if you smell of alcohol.
If you're intoxicated, you know, they really pull you aside and go and talk to you to see if they can be of any immediate assistance to you.
Right.
But to get to the podium and be able to address other AA members and have be in any kind of a state of intoxication.
When I'm not certain he actually shared.
I'm not sure what he did was a share.
He spoke to somebody there.
This is a story we got from the source.
He came in.
Well, that's likely that they would pull him aside and say, hey, look at what's going on.
Can we be of assistance to you?
The gentleman is probably obviously in some difficulty.
Doesn't matter.
I took to it that he was actually addressing an AA meeting, which really would make the story that you heard from the gentleman probably not plausible.
Okay.
But it is plausible.
It is possible.
But it probably didn't happen, but it's possible.
So there you have it.
Harry Reid's machine did beat him up.
And thank you, Ed.
We'll be back after this.
Now, the source that John Hinderocker and I spoke to, Easton Elliott, did not say that the guy who came in they later recognized as the Harry Reid's brother.
He didn't share.
He didn't go to the podium and share.
He talked in a group of people in there, and they had meetings every hour.
It's New Year's Eve.
They're letting anybody come in to try to help them on that day.