
Fulop takes it to the limit
Presented by
Good Friday morning!
There's one month left in the gubernatorial primary, and Steven Fulop says he's not going to bust the $8.7 million spending cap for publicly-financed candidates.
But he's cutting it really close. Fulop has spent about $8 million just on TV and digital advertising, according to AdImpact. That's not including various other campaign expenses, like staff, polling and event space rental that aren't among the few exceptions to the spending cap. And he had already spent about $530,000 on those costs as of January. .
That leaves Fulop very little wiggle room on how to spend through next month, even with a skeleton campaign staff of four.
'Our campaign has been structured differently from the beginning,' Fulop said in a statement. 'Unlike the others, we don't have paid consultants, we don't have a campaign manager or field director or finance director or social media advisors or offices, and instead we have more than 1,500 volunteers that pitch in on every aspect of the campaign. This unique ground up structure that is based on volunteers impacted our spending decisions to front load TV.'
Fulop's burn rate had been raised as a concern in 2023, when he kicked off his campaign more than two years before the primary. But of course, it doesn't mean the same as it used to. He's also got two super PACs behind him, one of which has already spent millions on his campaign but likely has millions more in the bank. But I don't want to constantly repeat myself about how super PACs have made so many campaign finance rules obsolete. So I won't. I didn't just then.
FEEDBACK? Reach me at mfriedman@politico.com
WHERE'S MURPHY? In Newark at 10 a.m. for a park ribbon cutting ceremony
QUOTE OF THE DAY: 'If I was trying to bribe someone, do you think I would put that (out) into the public? Do you think I would openly make that suggestion?' — Developer and former professional football player Kevin Johnson on offering $1 million to Bordentown schools if the town expedites approvals on two of his development projects
HAPPY BIRTHDAY — Cassandra Gatelein, Barry Kaufman, Tom Wilson. Saturday for Ravi Bhalla, Nicole Sutterley, Jeremy Julis. Sunday for Brian Rumpf, Shannon Natale.
WHAT TRENTON MADE
TRUMP'S EARLY BUMP — President Donald Trump on Thursday gave his 'Complete and Total Endorsement' of Tom Kean Jr. for reelection. Kean represents New Jersey's only competitive district, the 7th, which also includes Trump's Bedminster golf club. Already a handful of Democrats have lined up to challenge Kean. On Truth Social, Trump called Kean a 'Tremendous Advocate of our America First Agenda' who 'is working tirelessly to Secure the Border, Stop Crime, Grow our Economy, Cut Taxes, Champion Small Business, Unleash American Energy DOMINANCE, Support our Brave Military and Veterans, and Protect and Defend our always under siege Second Amendment.' On X, Kean thanked Trump:'I am working every day to build a stronger America and a stronger New Jersey. We are making life more affordable for every family, safeguarding our communities, and working to achieve peace across the world. Thank you for your leadership, Mr. President. I will continue to deliver for a better future.' — Dustin Racioppi
PAINTING A PICTURE FOR THE CANVASS — New Jersey's gov hopefuls signal for outside help in final weeks of primary, by POLITICO's Madison Fernandez: Democrats running for governor of New Jersey are posting guidance for voter outreach on their campaign websites — an increasingly common campaign tactic that can serve as a signal to outside groups of how to spend their resources in the leadup to the June primary. In a Thursday memo to 'interested parties,' Rep. Mikie Sherrill campaign manager Alex Ball wrote that the 'key factor down the stretch of this race will be face-to-face contact with voters' and outlined who the campaign views as its 'top targets.' That includes Hispanic and Asian voters, as well as white women, on the vote-by-mail list who voted in at least three of the last four Democratic primary elections. The Sherrill campaign's 'next targets' are Asian and white voters who haven't voted or voted one or two times out of the last four Democratic primary elections. The campaign even lists where these voters could be found, broken down by county and municipality. These public instructions come from a page accessed on Sherrill's campaign website found by clicking a tab at the bottom of the site called 'media.' … .
Super PACs have an outsized role in the race for governor, giving candidates who have spending limits due to the state's public matching funds program an edge. Any outreach is critical in the closing days of the election, especially considering a large swath of the electorate has not even tuned in. A Rutgers-Eagleton poll released on Friday found that when respondents were asked when the next election in New Jersey will take place, 4 percent answered the June 10 primary, 20 percent said some time in June, while more than one-third said November.
SOCKET TO ME — Speaker Coughlin on the 'real fight' over energy rates, by POLITICO's Ry Rivard: Assembly Speaker Craig Coughlin has been paying a lot of attention to energy issues ahead of summer rate increases that will cause skyrocketing bills. 'It's a real fight because it's a big deal for so many people,' he said in an interview this week with POLITICO. To the Democratic speaker, the energy issues are the same kinds of affordability challenges he's been trying to solve by helping boost funding for senior property tax cuts and passing ANCHOR rebates for homeowners and renters. The rate hikes themselves are the result of a 'pretty simple economic problem,' Coughlin said. There's more demand for energy than supply. The solution isn't so easy. He said the state can't instantly create more supply. Instead, his immediate focus is on various kinds of rate relief, including money that Gov. Phil Murphy has set aside for rate assistance and plans the Board of Public Utilities asked utilities to come up with to help defer some of the higher prices.
—'New Jersey taking a new look at nuclear power as electric rates soar and voters grumble'
HE DIDN'T HAVE ENOUGH IN HIS CAMPAIGN FUND — 'Gottheimer spent more than 10% of public-funded office budget on ads days after announcing run for New Jersey governor,' by Will Bredderman for The Jersey Vindicator: 'U.S. Rep. Josh Gottheimer followed up his New Jersey gubernatorial campaign launch last fall with a massive digital ad buy from his congressional office — a payment to a vendor linked to his political operation that Washington watchdogs say looks like a flagrant use of public funds to advance the Democrat's political ambitions. Days after Gottheimer kicked off his bid for Drumthwacket on Nov. 15, his House office paid $180,225.92 for 'advertisements' to an Iowa-based firm called Pinpoint Digital LLC, congressional disbursement records show. The figure vastly outstrips the amount any other representative spent on ads in the same period — and exceeds even the combined advertising expenditures of all 11 other members of the New Jersey delegation.'
MON SOLO AND THE REBEL ALLIANCE — 'James Solomon backs Bhalla and Brennan for Assembly,' by New Jersey Globe's David Wildstein: 'James Soloman, the downtown Jersey City councilman and mayoral candidate who wields considerable influence among progressive voters, is taking sides in the 32nd district Democratic primary and endorsing Hoboken Mayor Ravi Bhalla and former Murphy administration official Katie Brennan for State Assembly. 'Katie and Ravi are proven leaders who will shake up Trenton. They're running to serve the people, not the party bosses,' Soliman stated … With the Jersey City non-partisan election not until November, Solomon pledged to put his own political organization behind the two Assembly candidates in the June 10 Democratic primary. That allows him to test his grassroots group five months before he needs them to perform. Solomon said that Bhalla's eight years as mayor of Hoboken is a model for a mayor who's not part of the Hudson Democratic clubhouse.'
TEENS BEHAVING BADLY — 'Governor sends bill targeting pop-up parties back to lawmakers, citing constitutional concerns,' by New Jersey Monitor's Nikita Biryukov: 'Gov. Phil Murphy, citing First Amendment concerns, has conditionally vetoed legislation intended to deter disruptive pop-up parties that have harried shore towns in recent summers. Murphy on Thursday said he supports the bill's intent but worries its language could chill free speech and peaceful protest, and he warned provisions could criminalize lawful mask wearing. Civil rights advocates had urged Murphy to veto the bill … The bill, which won unanimous votes in both legislative chambers in March, would have created new criminal charges of inciting a public brawl for those who 'engage' or 'promote' at least four others to engage in disorderly conduct. Murphy's conditional veto suggests lawmakers change the bill to say those who 'incite' or attempt to incite at least four others to such conduct could be charged with inciting a public brawl … The bill's chief Senate sponsor [Paul Moriarty] said legislators would take up the changes, which he viewed as largely technical.'
—'As primary for governor's race nears, candidates share details of their finances'
—'How would New Jersey's candidates for governor tackle affordability?'
—'New Jersey may prohibit sweepstakes casinos, saying they are illegal gambling'
TRUMP ERA
KUSHNER IS QUALIFIED TO SEE FRANCE BECAUSE A HIDDEN CAMERA HELPED HIM SEE UNDERPANTS — 'Acknowledging 'very serious mistake,' Charles Kushner greenlit for ambassadorship by Senate committee,' by New Jersey Globe's Joey Fox: 'Charles Kushner – a New Jersey real estate titan whose conviction on federal charges in 2005 became an enduring New Jersey political scandal and helped facilitate Chris Christie's rise to prominence – is one step closer to a U.S. ambassadorship. Kushner, who is also the father of President Donald Trump's son-in-law Jared Kushner, was approved by the Senate Foreign Relations Committee today to be U.S. Ambassador to France and Monaco after being nominated by Trump for the role last year. He and several other ambassador nominees cleared the committee on a 12-0 vote, with only Republicans in attendance; every committee Democrat, among them Senator Cory Booker, skipped the meeting for reasons that weren't immediately clear.'
—Trump ramps up plans for 2026 World Cup amid friction with neighbors: 'Tensions are a good thing'
—'Trump cuts hit Morris County: Children's theater loses $10,000 federal grant'
—'Trump's DEI cuts spark concern among students, faculty at N.J. universities'
—'SALT caucus rejects tax-writing panel's offer of $30,000 deduction cap'
—"Donald Norcross released from rehab facility'
LOCAL
TOMS RIVEN — 'This feud between Ocean County GOP boss, Toms River mayor is roiling local politics,' by The Asbury Park Press' Jean Mikle: 'Nine candidates are competing for four Township Council seats in Toms River's GOP primary, but the biggest fight in this election is between Mayor Daniel Rodrick and his former ally — but current rival — Ocean County Republican Chairman George R. Gilmore. To hear Rodrick tell it, the dispute centers on Gilmore's attempts to exert control over Toms River, New Jersey's largest municipality where Republicans hold all positions on the governing body. Gilmore instead says that Rodrick 'follows a slash-and-burn response,' attacking other Republicans when he does not get his way. Since taking over as mayor, Rodrick has engaged in public disputes with the police chief, closed the township animal shelter, and most recently proposed using eminent domain to knock down a church applying to add a homeless shelter and replace it with a park.'
BOXER'S BRIEFS — 'Lakewood Schools paid its attorney $6 million. Plus hundreds of thousands more to outside firms,' by The Asbury Park Press' Joe Strupp: 'While the Lakewood Board of Education has paid board attorney Michael Inzelbuch more than $6 million since 2017, the district has also shelled out hundreds of thousands of dollars in additional legal work during the same period, an Asbury Park Press investigation has revealed. More than $600,000 of added legal work was farmed out to seven other attorneys, according to a review of documents and invoices obtained by the Press through an Open Public Records Act request. Among those lawyers is the high-profile criminal investigative attorney Matthew Boxer of Lowenstein Sadler, who charged $880 per hour for a stint in 2022. Boxer, a former federal prosecutor and, coincidentally a Lakewood High School graduate … It is unclear why Lakewood Schools required the expertise of such a high-priced lawyer, or what work he performed for the total cost of $47,656 over several weeks. Boxer and Lakewood School officials did not respond to repeated requests for comment and clarification.'
SLAPP HAPPY KRANJAC — 'This N.J. town has to pay more than $200,000 for suing its own lawyers,' by The Record's Colleen Murphy: 'The New Jersey Supreme Court has ruled that municipalities are not exempt from sanctions for frivolous litigation, ordering Englewood Cliffs to pay over $200,000 in penalties. This decision comes after the court agreed with lower court rulings that Englewood Cliffs acted in bad faith when it filed a lawsuit against its former attorneys. Englewood Cliffs hired Thomas J. Trautner, Albert Wunsch, and Jeffrey R. Surenian to handle a legal matter related to affordable housing requirements. Despite the fact that the attorneys advised the town to settle due to the weaknesses in their case, Englewood Cliffs chose to go to trial and ultimately lost, according to court documents. A builder, 800 Sylvan Avenue, disagreed and wanted to build more. After losing that case, the borough settled with the builder. However, after political control of the borough changed hands, Englewood Cliffs filed a second lawsuit against their former attorneys and the builder. The court found that the borough had no valid reason for filing the lawsuit, determining that it was filed with malicious intent.'
—''Serious event': Expect road closures during Mahwah Sheraton Crossroads hotel demolition'
—'Wayne school district outsources after care program. Families to pay higher fees'
—'N.J. student set Chromebook on fire for viral TikTok challenge, cops say'
—'6 former students claim they were sexually abused by [Cherry Hill] teacher, and district didn't stop it'
—'Andrew Washington's family rallies over no charges for [Jersey City] cop who fatally shot him'
—'[Jersey City] school bus crash sends 4 students to hospital with minor injuries, officials say'
EVERYTHING ELSE
THE SECOND SEE — ''We never expected an American': NJ Catholics joyful for Pope Leo XIV's election,' by The Record's Deena Yellin: 'Shock and excitement reverberated around New Jersey and the country Thursday afternoon with the news that the cardinals had chosen an American to lead the Roman Catholic Church. Pope Leo XIV, the former Cardinal Robert Francis Prevost, was elected by the college of cardinals on Thursday in Vatican City. A native of Chicago whose ministry took him to Peru and then to the Vatican, Prevost is a 1977 graduate of Villanova University … When Prevost came out on the balcony, Yates was overjoyed. Prevost, she knew, was born in Chicago, although he spent much of his career overseas. But his name wasn't on any short list. 'We never expected an American — we assumed that was out of the picture,' she said, adding that everyone she knows is thrilled with the choice .. Dugan McGinley, a professor of religion at Rutgers University said it's significant that the new pope chose the name Leo, because the last pontiff to take that name, Leo XIII, who was pope from 1878 to 1903, is considered one of the main figures in the modern Catholic social justice movement.'
HUGIN'S HEROES — 'The price of remission,' by ProPublica's David Armstrong: 'A few hours after arriving at the emergency room, I heard my name. A doctor asked me to follow him to a private area, where he told me a scan had uncovered something 'concerning.' There were lesions, areas of bone destruction, on top of both of my hip bones and on my sternum. These were hallmarks of multiple myeloma. 'Cancer,' he said … That drug I take is called Revlimid. It is a derivative of thalidomide, a slightly tweaked version of the parent compound. Revlimid is now one of the bestselling pharmaceutical products of all time, with total sales of more than $100 billion. It has extended tens of thousands of lives — including my own. But Revlimid is also, I soon learned, extraordinarily expensive, costing nearly $1,000 for each daily pill. (Although, I later discovered, a capsule costs just 25 cents to make.) … I wanted to know how this drug came to cost so much — and why the price keeps going up. The price of Revlimid has been hiked 26 times since it launched. Some of what happened was reported at the time. But no one has pieced together the full account of what the drugmaker Celgene did, how federal regulators failed to rein it in and what the story reveals about unrestrained drug pricing in America. What I discovered astonished even me.'
—'Here's where the Atlantic City casinos' money comes from (and half of it's not from gambling)'
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

Associated Press
7 minutes ago
- Associated Press
Louisiana lawmakers reject adding exceptions for some rape cases to abortion ban
BATON ROUGE, La. (AP) — For the third consecutive year, Louisiana lawmakers rejected a bill that would have allowed young victims of rape to get an abortion. In an emotional and religious-laced legislative committee meeting on Tuesday legislators objected to adding rape, in cases where the girl is under the age of 17 and impregnated as a result of the sexual offense, to the narrow list of exceptions for one of the strictest abortion bans in the country. 'If we're truly pro-life, we should also be fighting for the life of those children who are raped and molested,' said the author of the bill, Democratic Rep. Delisha Boyd, who argued that under Louisiana's current law young victims of rape are forced to carry babies to term. Among those who opposed the proposed exception was Democratic Rep. Patricia Moore, who spoke publicly about being conceived after her mother was raped as a young teenager. While speaking against the bill, Moore discussed her religious beliefs and said she has struggled with her decision on the measure. Even ahead of the meeting she said she asked God to 'show me something in the Bible that can address this.' Moore said in the area of Louisiana that she represents, she is aware of a nine-year-old who is pregnant; 'I'm struggling because life and death, according to our Heavenly Father it's in his hands. I'm like, 'God are you wanting this child... to have a baby? What good can come out of this?'' 'I know we got to protect our children, but to this point right now, I cannot vote 'Yes' because I'm constantly hearing that God would take a bad situation and turn it into good,' Moore said. Like Moore, Boyd has publicly shared that she was born after her mother was raped as a teen. Boyd was born in 1969, four years before abortion became legal under the U.S. Supreme Court's landmark Roe v. Wade ruling. More than five decades later, rape survivors in Louisiana who become pregnant find themselves in a similar situation to Boyd's mother: forced to carry the baby to term in a state that has one of the country's highest maternal mortality rates, or to travel to another state where abortion is still legal. Boyd said while she is grateful to be here, her mother and Moore's mother did not a have a choice to get an abortion in Louisiana. 'I know the Bible. But I also know God gives people the ability to do right and wrong,' Boyd said, urging her lawmakers to give victims of rape and their families the ability to choose if they get an abortion in Louisiana. The bill failed 3-9, with two Democrats siding with Republicans on the committee. In the reliably red state of Louisiana, which is firmly ensconced in the Bible Belt and where even some Democrats oppose abortions, adding exceptions to the near-total abortion ban has been an ongoing battle for advocates — with similar measures failing the last few years. Currently, of the 12 states enforcing abortion bans at all stages of pregnancy, four have exceptions in cases of rape. A study released by the Journal of the American Medical Association found that between July 2022 and January 2024, there were more than 64,000 pregnancies resulting from rape in states where abortion has been banned in all or most cases. Louisiana's abortion law went into effect in 2022 following the U.S. Supreme Court ruling that overturned Roe v. Wade, ending a half-century of the nationwide right to abortion. The only exceptions to the ban are if there is substantial risk of death or impairment to the mother if she continues the pregnancy or in the case of 'medically futile' pregnancies — when the fetus has a fatal abnormality.


Time Magazine
8 minutes ago
- Time Magazine
The American Tradition of Trying to Address Anxiety with Parks
As summer approaches, America's national parks are bracing for an influx of visitors, even as deep federal cuts to park services likely mean fewer camp employees, closed campgrounds, long lines, and cancelled programs. Travelers have been warned away from some national parks by experts, urged to reschedule for next year. But millions are still opting to go. Last summer, a record 332 million people visited America's 63 national parks. Based on yearly upward trends, the estimates for this summer are even higher. In a 'hold-your-breath year' for national park tourism, Americans are still turning en masse to the natural environment as respite from the stresses of modern life. The frenzy shouldn't surprise us. With festering worries related to economic uncertainty, inflated costs, and federal policy whiplash, the popularity of park vacations is no coincidence. Rather, the rush to escape to these beautiful sanctuaries echoes a long history of Americans turning to nature for relief from anxiety, particularly during moments of sudden and widely felt changes. In the 1870s, the United States was in the midst of the most spectacular transformations yet in its history. The end of the American Civil War brought an end to slavery and the emancipation of some 4 million Black people, while a slew of new innovations brought irreversible changes to the day-to-day lives of all Americans. New machinery brought advanced manufacturing, jobs, speedier production of goods, and lower costs for consumers. Hundreds of thousands of miles of telegraph cable delivered information at break-neck speed, forever reshaping how Americans accessed news, communicated, conducted business, and envisioned the world. And the completion of a continent-crossing railroad in 1869 revolutionized travel, making it possible to move people and cargo across vast distances in hours, rather than weeks or months. Spurred by monumental developments in technology, industry, and travel, more Americans than ever before—including new immigrants—made their way to growing cities, seeking work, education, entertainment, and exposure to new people, ideas, and possibilities. Sudden and rapid change fired up excitement about the future. But it also stirred anxieties. During this time, American doctors noticed more and more seemingly healthy patients with a range of complaints about hard-to-explain medical issues, including digestive problems, hair loss, sexual dysfunction, aches and pains without identifiable injuries, and profound exhaustion without obvious cause. In response, a widely respected neurologist named George Miller Beard offered a theory. Americans, he said, were suffering from a malady called 'neurasthenia.' Writing in The Boston Medical and Surgical Journal, Beard borrowed an old term used to describe 'weakness of the nerves' and reintroduced it to the medical community as a 'morbid condition' afflicting Americans at a worrisome rate. In his 1881 book American Nervousness, Beard also pinpointed the key culprit: modern change. For instance, new communication technology delivered shocking news of faraway crime, disaster, and war; mechanization in industry brought extreme economic volatility and labor strife; speedy railroad travel introduced the real possibility of horrific accidents involving ' wholesale killings.' Even the invention of the pocket watch, a simple hand-held timepiece, fostered a maniacal obsession with punctuality. Americans were 'under constant strain,' Beard warned, 'to get somewhere or to do something at some definite moment.' Constant strain was a big problem, according to Beard and his contemporaries. Victorian-era neurologists theorized that the body functioned like an electrical machine, powered by energy distributed through the nervous system. When Americans spent too much energy navigating the extreme shifts and new worries in their modern lives, they experienced aches, pains, exhaustion, irritability, and malaise. Doctors also theorized that urban life only made such conditions worse by further taxing and weakening the body. In response, a range of popular remedies and medical treatments for neurasthenia emerged. Some doctors recommended that women suffering symptoms should halt all physical and intellectual activity. Colloquially known as the 'rest cure,' this treatment—famously recounted in 'The Yellow Wallpaper,' a horror novella written by Charlotte Perkins Gilman—involved isolation in the home, bed rest for weeks, and an embargo on reading, writing, drawing, socializing, and exercising. Women patients and doctors, including New York City physician Grace Peckham, successfully argued that the rest cure was not only quack medicine but more harmful to patients than the nervous sickness itself. Thus, it didn't stick. What did catch on was the ' West cure,' a different kind of treatment originally reserved for men. Neurologists worried that the urban environment, factory work and office jobs, and other modern pressures were making men tired, indecisive, and physically weak. On doctor's orders, male patients ventured into the western wilderness, where, it was thought, the natural environment would inspire the mind and reinvigorate the body. Prescriptions emphasized physical exercise, including hiking and horseback riding. The legacies of this are notable. In the 1880s, Theodore Roosevelt, a young, well-to-do New Yorker at the time, suffered from a range of neurasthenic conditions including asthma, and he sought treatment. Roosevelt was so inspired by his own privileged experience of the West cure, and its restorative outcomes, that later, as president, he built upon state park preservation and forest protection acts to dramatically expand federal support for public access to park lands, including National Parks. Most famously, in 1903, Roosevelt partnered with naturalist John Muir —also diagnosed as neurasthenic—to expand federal protection for Yosemite in the Sierra Nevada mountain range in California. Initially, it was urban elite white men, like Roosevelt, who were most likely to have the means to travel and to pay for the therapy of riding horses, hunting game, and sleeping under the stars. But the notion of the natural world as an antidote for the stresses of modern life appealed broadly, across lines of class, race, and gender. Although few Americans had access to medical care in the late 19th and early 20th centuries, the idea that the body could be recharged through outdoor physical activity caught on thanks to the low-cost medical pamphlets, ads for over-the-counter remedies, advice columns, and simple word of mouth. The media-fueled desire to fend off neurasthenia drove a booming market in exercise equipment, including bicycles, and participation in cheap outdoor sports, like baseball and pedestrianism, a competitive walking trend. By the end of the 19th century, city planners, imagining more healthful, walkable, livable urban environments, also incorporated green spaces for urban residents to enjoy for free. From small picnic areas and playgrounds to sprawling urban parks designed to feel like the bucolic countryside, American cities began providing West cure benefits without the steep price tag or the need to travel. Camping became another popular, and more affordable, option for vacations from modernity. Working people could purchase a simple tent, one-burner stove, and a few other provisions, load up the horse and buggy and head to a park or campground just outside the city. This cheap and accessible alternative to West cure travel ballooned in popularity in the early 20th century, with the proliferation of camping guides and camping clubs, the growth of the National Park Service, and the introduction of the car. Enthusiasm for camping and national park tourism as affordable restorative activities endured through the 20th century. And they remain as popular as ever today. Neurasthenia as a diagnostic category, has not endured. It disappeared in the early 20th century, thanks mainly to the rise of psychoanalysis and expanding knowledge about mental health and conditions like chronic fatigue, anxiety disorders, phobias, and depression. But its most popular remedy—particularly exercise, outdoor recreation, and reflection in nature—has proved truly beneficial for both mental and physical health. Amid unsettling changes, Americans touted the curative powers of the natural world, fueling the call for outdoor exercise and recreation, and laying the groundwork for the astounding growth of national and state park tourism. Today, with so much to worry about, it is important to remember how national and state parks, and the workers who run and sustain them, have long played a healing role in American society. As we head off to America's many majestic park destinations—our favorite 'mental health escapes' and ' calmcation ' getaways—may this history reinforce the need to preserve, protect, and invest in them, especially in uncertain times. Felicia Angeja Viator is associate professor of history at San Francisco State University, a culture writer, and curator for the GRAMMY Museum.
Yahoo
9 minutes ago
- Yahoo
Commentary: What America's default risk is costing you
For decades, investors thought the risk of the US government defaulting on its debt was essentially zero. It was nice while it lasted. There's still a low chance the US government will fail to pay principal or interest on nearly $30 trillion worth of Treasury securities circulating around the world. But global investors think US debt is getting riskier, and they also think US policymakers in Congress and the Trump administration are doing nothing about it. That rising risk is likely pushing interest costs higher for every American borrowing to finance a home, a car, or a business investment. A new paper published by the Federal Reserve Bank of Chicago uses an arcane security known as a credit default swap, or CDS, to estimate the risk of the US Treasury defaulting on a payment. The analysis highlights not just the damage caused by 15 years of political squabbling in Congress over budget issues but also the startling decline in market assessments of US creditworthiness. Congress may soon make this worse by passing a tax-cut bill that makes America's fiscal position even shakier. There are two basic market concerns with America's creditworthiness. One is the sheer amount of borrowing the US government must do to finance annual deficits that are now routinely close to $2 trillion. The total national debt is $36.2 trillion, and the amount of US debt in circulation now equals about 100% of GDP, a record for peacetime. That's only going higher. The other issue is the US debt ceiling, which puts a limit on the total amount of federal borrowing the Treasury is allowed to do. The debt limit itself isn't problematic. But Congress's handling of it is. Three times — in 2011, 2013, and 2023 — Congress has refused to raise the borrowing limit until the Treasury Department was dangerously close to running out of money. If the Treasury missed even a single payment it owed, it would constitute a default and roil the global trillion-dollar market for Treasury securities, the world's most widely traded assets. In January, the Treasury hit the debt limit once again. Since then, it has been relying on 'extraordinary measures' — basically, moving money around — to pay its bills. Congress must soon raise the debt limit once again, with the Treasury likely to run out of maneuvering room sometime between mid and late summer. Credit-default swaps are private contracts that work like an insurance policy, with one party agreeing to cover losses for a second party if the issuer of a given security defaults. The market for CDS contracts on government debt has been most active during debt crises in countries such as Argentina, Brazil, Mexico, Russia, Turkey, Greece, and Italy. The market for CDSs guaranteeing US debt is often dormant. But it springs to life around the time that the US debt ceiling needs to be raised, because Congress could trigger a default by waiting too long. The Chicago Fed research uses data on CDS pricing to estimate the market's perception of the risk of US default going back 14 years. In 2011, the United States came within a few days of default before Democrats and Republicans sparring in Congress agreed to raise the debt ceiling. That standoff led S&P to downgrade the US credit rating for the first time ever. The Chicago Fed paper estimates that the risk of default in 2011 peaked at more than than 6%. During debt-ceiling showdowns in 2013 and 2023, CDS pricing suggests the risk of default peaked at around 4%. CDS pricing today suggests the risk of a US default is around 1%. It's lower now than in prior standoffs because Republicans have unified control of Congress and don't need to negotiate with the opposition party to raise the borrowing limit. That 1% risk could also go higher as the Treasury comes closer to the "X date" when it runs out of money.A 1% risk of default might seem inconsequential. But it's not. 'Everyone says the US will never default,' David Kotok, co-founder of investing firm Cumberland Advisors, told Yahoo Finance. 'Somebody is saying, we don't believe you. The CDS market is saying the risk is greater than zero.' Kotok estimates that the higher perceived risk of default pushes the interest rate on a typical mortgage up by about three-tenths of a percentage point. That's because investors demand higher interest rates on riskier securities, such as the 10-year Treasury note, which is the benchmark for most interest rates paid on business and consumer loans. Read more: What is the 10-year Treasury note, and how does it affect your finances? On a 30-year mortgage for a median-priced house, lowering the interest rate by three-tenths of a point would lower the monthly payment by about $66. That's $792 per year or $23,769 over the course of the loan. Not a fortune, maybe, but shrewd investors welcome every marginal gain. Congress could eliminate the debt limit altogether by repealing the 1917 law that was supposed to simplify government borrowing, rather than creating a default mechanism. Back then, the executive branch needed congressional approval for every unique instance of borrowing. The debt limit was supposed to let the Treasury borrow freely up to a certain limit. That worked more or less as intended until 2011, when Republicans, who controlled the House of Representatives, used the debt ceiling as leverage to negotiate spending cuts with Democrats, who controlled the Senate and the White House. Repealing the debt limit might wipe out the market for credit default swaps on US debt, since debt limit deadlines are the very thing creating the default risk. Nobody would complain about that. Kotok estimates that the 30-basis-point premium on US interest rates would disappear. Then the US government would only face one debt problem: the vast amount of it. Markets have been jeering the mushrooming national debt this year, with investors showing unprecedented reluctance to buy some US assets. That has been another factor pushing US interest rates higher, when in normal market action, they'd be holding steady or falling. JPMorgan Chase (JPM) CEO Jamie Dimon is the latest voice of alarm on the US debt, warning that a 'crack' in the bond market could signal coming market turmoil. That would most likely occur as more investors shunned US assets, including Treasurys, sending rates even higher. Treasury Secretary Scott Bessent says Dimon is overreacting, giving cover to Republicans working up the big tax-cut bill that could add another $3 trillion or $4 trillion to the national debt. Moody's downgraded US debt for the first time in May following Fitch's first-ever downgrade in 2023. Like S&P in 2011, both rating agencies cited political dysfunction and huge annual deficits. The rumble of discontent with America's fiscal recklessness is growing louder. Eventually, they'll start to hear it in Washington, D.C. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices.