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Telegraph
5 days ago
- Business
- Telegraph
Maga's plot to restore Cold War era patriotism to ‘woke' Hollywood
In her 1957 novel Atlas Shrugged, Ayn Rand expounds her individualist philosophy by portraying a dystopian society in which titans of industry fight back against burdensome bureaucracy. Though widely panned by critics, the book has remained a cult favourite of the libertarian Right. Paul Ryan, the former Republican speaker of the House of Representatives, gave out copies to staff members as Christmas presents. Donald Trump, not widely known as a reader, has named Rand as his favourite author. It is perhaps unsurprising, then, that an adaptation of Atlas Shrugged is among a handful of projects proposed by Founders Films, a new Right-wing production company aimed at restoring patriotism to Hollywood. The planned venture, which is being pitched to potential investors, comes amid a broader shift to the Right across the US media industry as the return of Trumpian politics triggers a war on 'woke'. '[Founders Films] goes against everything that we know about Hollywood, which is that traditionally it is quite Left-liberal, it is quite compassionate, it is rarely associated with blood and thunder narratives,' says media analyst Alex DeGroote. 'It's a real punch in the face for woke.' Founders Films is being launched by a handful of figures linked to the Silicon Valley data giant Palantir, including chief technology officer Shyam Sankar, early employee Ryan Podolsky and investor Christian Garrett. The company's name is a play on Founders Fund, the tech-focused venture capital fund launched by Palantir founder Peter Thiel. Documents seen by the US news website Semafor outline the tech executives' vision for the project, with the ethos described as: 'Say yes to projects about American exceptionalism, name America's enemies, back artists unconditionally, take risk on novel IP [intellectual property].' In a post on Substack late last year, Sankar wrote nostalgically about all-American blockbusters of yesteryear including Red Dawn, Top Gun, Rocky IV, and The Hunt for Red October. He argued that the US had lost the ability to leverage its film industry as soft power and called for the resurrection of the 'American Cinematic Universe' largely, it seems, by portraying Chinese communists as baddies on screen. 'Breaking out of our cultural malaise will require the studios to wake up and choose America,' he added. Cultural warfare In many ways, it is a rekindling of cinema as cultural warfare in a way not seen since the Cold War. Alongside Atlas Shrugged, other slated projects include films about the evacuation of the World Trade Center on 9/11 and the assassination of Iran's Gen Qasem Soleimani, as well as The Greatest Game, a thriller spy series that 'lays bare China's plans to replace the United States as the dominant global power'. Sankar points to examples of Chinese-ordered censorship and the fact that Disney's Mulan was filmed in Xinjiang as evidence of Beijing's growing sway over Hollywood. 'The statement is that Hollywood's been captured by a foreign adversary and there's some good evidence there,' says Dr Dominic Lees, associate professor of film-making at Reading University. Another strain of the Founders Films philosophy is rooted in the culture wars. The new studio wants to bring an injection of unashamedly conservative thinking to an industry that has long been dominated by liberals. 'What they are taking a punt on is that there is a movie-going market for films that counter what they're calling a Left-wing agenda,' adds Lees. It builds on growing criticism of Hollywood from the Right, with criticism levelled at studios for introducing heavy-handed progressive politics into films or removing anything deemed offensive. Disney has found itself at the centre of this controversy, with critics blaming the House of Mouse's political leanings for a string of recent flops, including this year's live-action reboot of Snow White, starring Rachel Zegler. Disney itself has admitted that there might be a potential 'misalignment' between the films it is making and what consumers want after splurging almost $1bn (£740m) on a string of box office failures in 2023, while boss Bob Iger has outlined plans to cut the studio's output and refocus on quality. Meanwhile, Gina Carano, the actress who was dropped from Star Wars series The Mandalorian in 2021 over her political posts on social media, is suing Disney and Lucasfilm for wrongful termination and discrimination in a lawsuit backed by Elon Musk. Carano was sacked for a post on Instagram that equated the persecution of Jews by the Nazis to the persecution of Republicans in the US. Tinsel Town takeover There are already signs that conservative ideology is gaining commercial traction in Hollywood. Am I Racist?, a Borat-style mockumentary lampooning the diversity, equity and inclusion (DEI) movement, became the highest-grossing documentary of 2024 after pulling in more than $12m at the box office on a budget of just $3m. Reagan, a biopic starring Dennis Quaid as the former US president, grossed $30m last year despite scathing reviews from critics. The streaming era has also opened up an opportunity for what once would have been niche sub-genres to break out and find their audience. Christian cinema, for example, has made something of a resurgence at the US box office in recent years thanks to hits such as The King of Kings and The Chosen, a multi-series drama about the life of Jesus. In one week earlier this year, three of the top 10 US box office spots were faith-based titles. Tinsel Town's rightward shift is just one part of a broader assault on the US media heralded by Trump, who earlier this year appointed Sylvester Stallone, Mel Gibson and Jon Voight as 'special ambassadors' to Hollywood, tasked with reversing what he deems to have been a period of decline. Meanwhile, controversy is growing around an $8bn takeover of Hollywood giant Paramount by Skydance, the US media group run by David Ellison, which was approved this week. Paramount's recent decision to reach a $16m settlement with Trump for a lawsuit filed against its broadcaster CBS has been widely condemned as an effort to make concessions to the president. This disquiet was fuelled by CBS's shock decision last week to cancel The Late Show With Stephen Colbert, just days after the long-serving host branded the settlement a 'big, fat bribe'. Trump has since poured more fuel on the fire after claiming Skydance had promised to give him $20m worth of free advertising and programming in a side deal. Democrat senators have opened an investigation into potential corruption. The president's sway over the Paramount deal suggests he could exert pressure over the studio's output too. It is fuelling concerns about the threat to freedom of expression across the Atlantic. DeGroote describes Trump as 'lacerating the bit of the media universe which he doesn't like', adding: 'It's a dual pincer movement. You're going after the politicians, but you're also going after the media platforms.' Patrick Spence, the TV producer behind Mr Bates vs The Post Office and The Hack, an upcoming drama about the phone hacking scandal, says: 'It feels like we're living in a Batman movie because the villains are so cartoon-like. But the trouble is it's real. It's actually happening in front of us.' Ultimately, however, a Right-wing takeover of Hollywood will depend on making hits. Lees casts doubt on whether the gun-toting style of propaganda film-making proposed by Founders Films will be effective. 'My sense is that these guys at the moment are not very culturally sophisticated,' Lees says. 'If they want to really make an impact it's going to be how they subvert the different existing genres.'
The Advertiser
11-07-2025
- Business
- The Advertiser
Deficit is a worry and right-wing governments aren't going to fix it
The ridiculously named "big beautiful bill" recently passed in the US warrants close attention from Australian policymakers. The focus should not just be on the items in the bill, but on how the US political landscape has shifted and what that might mean for Australian political parties on both sides. Although numerous contested claims have been made about the bill's benefits, it seems clear that it will add to the (already enormous) US deficit. For example, the Congressional Budget Office projects it will add $3.4 trillion to the federal deficit over the next 10 years. Trump, of course, has form on the debt and deficit front. ProPublica calculated that national debt increased by almost $7.8 trillion in his first term. The Republicans have shifted a long way from 2012, when vice-presidential candidate Paul Ryan proposed a radical new fiscal program that would have cut the budget deficit by 75 per cent or more within 10 years. This shift should worry Australian politicians for two reasons. The first is that debt and deficits are not nearly as benign as the public seems to believe. Second, it suggests some closely held political truisms may no longer hold true. The CIS has been warning about the risks of debt and deficits for some time. For example, a recent CIS publication by Robert Carling, Gene Tunny and Peter Tulip laid out the fiscal challenges facing the government. As Robert states "the federal government's finances [will not] cope well with more economic or other shocks to the system - and there are even bigger debt problems in some states and territories." However, the political economy effects of shifting attitudes to debt and deficit are more subtle. It was traditionally taken for granted that the right cared more for debt and deficits than the left. Right-wing politicians used to grumble that the public would elect right-wing governments to do the hard work of balancing the books, and then they would immediately elect a left-wing government to unbalance them again. There was a positive element of this, too, though. John Howard convinced the public that fiscal prudence was the best measure of the competence of a government. This millstone hung heavily around the neck of the Rudd - Gillard - Rudd Labor government that followed. This millstone is gone, or at least greatly diminished. It seems clear that voters no longer consider a budget surplus the sign of success, or a large deficit that of failure. The main measure of a good budget now seems to be how much cash is shovelled out the door. Certainly, the lack of alarm over the deterioration in the fiscal position in the recent budget suggests Labor isn't very worried about debt and deficits. Some on the left believe that voters ignoring on budget surpluses is an unalloyed good for the party - and they aren't entirely wrong. The conventional wisdom suggests that in any contest between left and right over who can hand out the most money, the voters will prefer the real deal on the left over those Johnny-come-lately spendthrifts on the right. But Trump's example shows that this wisdom only holds as long as the status quo holds on the right. To put it bluntly, if the right abandons fiscal responsibility to the same extent as the left, then not only can the right compete with the left on spending, they can win the fight. Why? Because in so many areas, the left is now tied to vested interests in a way that the right simply isn't. The left is compelled to launder their spending through the priorities of quasi-government institutions, not-for-profits and unions because these groups represent key constituencies for left-wing political parties across the globe. These bodies - which range from the well-meaning to the borderline corrupt - have their own weaknesses. Even those who interests align relatively well with voters will take a cut from any funding. Many are preoccupied with policy solutions that don't work very well. Take teachers unions for example. In Australia, Labor's Gonski spending explosion was heavily influenced by what the unions thought the money should be spent on (such as reducing class sizes). This spending was largely ineffective in terms of improving results. Another example is childcare. Voters might well feel good about recent moves to subsidise higher wages for childcare workers, but if given a meaningful choice would they prefer the government to spend that same money on greater subsidies and more flexible care options instead? Labor might retort that they have done both, but what if the Coalition promised to overhaul the whole system and give voters the option to keep the same subsidy and spend it on any type of care they want? Another, rather crude, example: do you think there are more votes in increasing the age pension or in boosting unemployment benefits? And that is before you get into ideological crusades - which many of the left-wing institutions are obsessed with - that the public has little patience for. A populist, big-spending right would be unencumbered by the baggage that hamstrings these bodies. They could cut out the middlemen and just bribe the voters directly. To be clear, the Australian right adopting big government populism would be terrible for the country, as it undoubtedly will be for the US. The extent to which US politicians have abandoned their responsibilities is scandalous. READ MORE SIMON COWAN: In the same way that the recent inflation crisis put paid to the nonsense economics of modern monetary theory, the US is on the path for a potentially disastrous fiscal reckoning that will force US politics to focus on debt and deficits again. Australia would be ill-served to follow the same path. However, it is far from a foregone conclusion that a more positive direction will be taken. The populist alternative remains alluring, especially in the short term where the consequences can be deferred into the future. Australia would be far better off if politicians and voters cared more about fiscal responsibility. But the onus lies on both sides of politics to prevent this from happening; not just the right. The ridiculously named "big beautiful bill" recently passed in the US warrants close attention from Australian policymakers. The focus should not just be on the items in the bill, but on how the US political landscape has shifted and what that might mean for Australian political parties on both sides. Although numerous contested claims have been made about the bill's benefits, it seems clear that it will add to the (already enormous) US deficit. For example, the Congressional Budget Office projects it will add $3.4 trillion to the federal deficit over the next 10 years. Trump, of course, has form on the debt and deficit front. ProPublica calculated that national debt increased by almost $7.8 trillion in his first term. The Republicans have shifted a long way from 2012, when vice-presidential candidate Paul Ryan proposed a radical new fiscal program that would have cut the budget deficit by 75 per cent or more within 10 years. This shift should worry Australian politicians for two reasons. The first is that debt and deficits are not nearly as benign as the public seems to believe. Second, it suggests some closely held political truisms may no longer hold true. The CIS has been warning about the risks of debt and deficits for some time. For example, a recent CIS publication by Robert Carling, Gene Tunny and Peter Tulip laid out the fiscal challenges facing the government. As Robert states "the federal government's finances [will not] cope well with more economic or other shocks to the system - and there are even bigger debt problems in some states and territories." However, the political economy effects of shifting attitudes to debt and deficit are more subtle. It was traditionally taken for granted that the right cared more for debt and deficits than the left. Right-wing politicians used to grumble that the public would elect right-wing governments to do the hard work of balancing the books, and then they would immediately elect a left-wing government to unbalance them again. There was a positive element of this, too, though. John Howard convinced the public that fiscal prudence was the best measure of the competence of a government. This millstone hung heavily around the neck of the Rudd - Gillard - Rudd Labor government that followed. This millstone is gone, or at least greatly diminished. It seems clear that voters no longer consider a budget surplus the sign of success, or a large deficit that of failure. The main measure of a good budget now seems to be how much cash is shovelled out the door. Certainly, the lack of alarm over the deterioration in the fiscal position in the recent budget suggests Labor isn't very worried about debt and deficits. Some on the left believe that voters ignoring on budget surpluses is an unalloyed good for the party - and they aren't entirely wrong. The conventional wisdom suggests that in any contest between left and right over who can hand out the most money, the voters will prefer the real deal on the left over those Johnny-come-lately spendthrifts on the right. But Trump's example shows that this wisdom only holds as long as the status quo holds on the right. To put it bluntly, if the right abandons fiscal responsibility to the same extent as the left, then not only can the right compete with the left on spending, they can win the fight. Why? Because in so many areas, the left is now tied to vested interests in a way that the right simply isn't. The left is compelled to launder their spending through the priorities of quasi-government institutions, not-for-profits and unions because these groups represent key constituencies for left-wing political parties across the globe. These bodies - which range from the well-meaning to the borderline corrupt - have their own weaknesses. Even those who interests align relatively well with voters will take a cut from any funding. Many are preoccupied with policy solutions that don't work very well. Take teachers unions for example. In Australia, Labor's Gonski spending explosion was heavily influenced by what the unions thought the money should be spent on (such as reducing class sizes). This spending was largely ineffective in terms of improving results. Another example is childcare. Voters might well feel good about recent moves to subsidise higher wages for childcare workers, but if given a meaningful choice would they prefer the government to spend that same money on greater subsidies and more flexible care options instead? Labor might retort that they have done both, but what if the Coalition promised to overhaul the whole system and give voters the option to keep the same subsidy and spend it on any type of care they want? Another, rather crude, example: do you think there are more votes in increasing the age pension or in boosting unemployment benefits? And that is before you get into ideological crusades - which many of the left-wing institutions are obsessed with - that the public has little patience for. A populist, big-spending right would be unencumbered by the baggage that hamstrings these bodies. They could cut out the middlemen and just bribe the voters directly. To be clear, the Australian right adopting big government populism would be terrible for the country, as it undoubtedly will be for the US. The extent to which US politicians have abandoned their responsibilities is scandalous. READ MORE SIMON COWAN: In the same way that the recent inflation crisis put paid to the nonsense economics of modern monetary theory, the US is on the path for a potentially disastrous fiscal reckoning that will force US politics to focus on debt and deficits again. Australia would be ill-served to follow the same path. However, it is far from a foregone conclusion that a more positive direction will be taken. The populist alternative remains alluring, especially in the short term where the consequences can be deferred into the future. Australia would be far better off if politicians and voters cared more about fiscal responsibility. But the onus lies on both sides of politics to prevent this from happening; not just the right. The ridiculously named "big beautiful bill" recently passed in the US warrants close attention from Australian policymakers. The focus should not just be on the items in the bill, but on how the US political landscape has shifted and what that might mean for Australian political parties on both sides. Although numerous contested claims have been made about the bill's benefits, it seems clear that it will add to the (already enormous) US deficit. For example, the Congressional Budget Office projects it will add $3.4 trillion to the federal deficit over the next 10 years. Trump, of course, has form on the debt and deficit front. ProPublica calculated that national debt increased by almost $7.8 trillion in his first term. The Republicans have shifted a long way from 2012, when vice-presidential candidate Paul Ryan proposed a radical new fiscal program that would have cut the budget deficit by 75 per cent or more within 10 years. This shift should worry Australian politicians for two reasons. The first is that debt and deficits are not nearly as benign as the public seems to believe. Second, it suggests some closely held political truisms may no longer hold true. The CIS has been warning about the risks of debt and deficits for some time. For example, a recent CIS publication by Robert Carling, Gene Tunny and Peter Tulip laid out the fiscal challenges facing the government. As Robert states "the federal government's finances [will not] cope well with more economic or other shocks to the system - and there are even bigger debt problems in some states and territories." However, the political economy effects of shifting attitudes to debt and deficit are more subtle. It was traditionally taken for granted that the right cared more for debt and deficits than the left. Right-wing politicians used to grumble that the public would elect right-wing governments to do the hard work of balancing the books, and then they would immediately elect a left-wing government to unbalance them again. There was a positive element of this, too, though. John Howard convinced the public that fiscal prudence was the best measure of the competence of a government. This millstone hung heavily around the neck of the Rudd - Gillard - Rudd Labor government that followed. This millstone is gone, or at least greatly diminished. It seems clear that voters no longer consider a budget surplus the sign of success, or a large deficit that of failure. The main measure of a good budget now seems to be how much cash is shovelled out the door. Certainly, the lack of alarm over the deterioration in the fiscal position in the recent budget suggests Labor isn't very worried about debt and deficits. Some on the left believe that voters ignoring on budget surpluses is an unalloyed good for the party - and they aren't entirely wrong. The conventional wisdom suggests that in any contest between left and right over who can hand out the most money, the voters will prefer the real deal on the left over those Johnny-come-lately spendthrifts on the right. But Trump's example shows that this wisdom only holds as long as the status quo holds on the right. To put it bluntly, if the right abandons fiscal responsibility to the same extent as the left, then not only can the right compete with the left on spending, they can win the fight. Why? Because in so many areas, the left is now tied to vested interests in a way that the right simply isn't. The left is compelled to launder their spending through the priorities of quasi-government institutions, not-for-profits and unions because these groups represent key constituencies for left-wing political parties across the globe. These bodies - which range from the well-meaning to the borderline corrupt - have their own weaknesses. Even those who interests align relatively well with voters will take a cut from any funding. Many are preoccupied with policy solutions that don't work very well. Take teachers unions for example. In Australia, Labor's Gonski spending explosion was heavily influenced by what the unions thought the money should be spent on (such as reducing class sizes). This spending was largely ineffective in terms of improving results. Another example is childcare. Voters might well feel good about recent moves to subsidise higher wages for childcare workers, but if given a meaningful choice would they prefer the government to spend that same money on greater subsidies and more flexible care options instead? Labor might retort that they have done both, but what if the Coalition promised to overhaul the whole system and give voters the option to keep the same subsidy and spend it on any type of care they want? Another, rather crude, example: do you think there are more votes in increasing the age pension or in boosting unemployment benefits? And that is before you get into ideological crusades - which many of the left-wing institutions are obsessed with - that the public has little patience for. A populist, big-spending right would be unencumbered by the baggage that hamstrings these bodies. They could cut out the middlemen and just bribe the voters directly. To be clear, the Australian right adopting big government populism would be terrible for the country, as it undoubtedly will be for the US. The extent to which US politicians have abandoned their responsibilities is scandalous. READ MORE SIMON COWAN: In the same way that the recent inflation crisis put paid to the nonsense economics of modern monetary theory, the US is on the path for a potentially disastrous fiscal reckoning that will force US politics to focus on debt and deficits again. Australia would be ill-served to follow the same path. However, it is far from a foregone conclusion that a more positive direction will be taken. The populist alternative remains alluring, especially in the short term where the consequences can be deferred into the future. Australia would be far better off if politicians and voters cared more about fiscal responsibility. But the onus lies on both sides of politics to prevent this from happening; not just the right. The ridiculously named "big beautiful bill" recently passed in the US warrants close attention from Australian policymakers. The focus should not just be on the items in the bill, but on how the US political landscape has shifted and what that might mean for Australian political parties on both sides. Although numerous contested claims have been made about the bill's benefits, it seems clear that it will add to the (already enormous) US deficit. For example, the Congressional Budget Office projects it will add $3.4 trillion to the federal deficit over the next 10 years. Trump, of course, has form on the debt and deficit front. ProPublica calculated that national debt increased by almost $7.8 trillion in his first term. The Republicans have shifted a long way from 2012, when vice-presidential candidate Paul Ryan proposed a radical new fiscal program that would have cut the budget deficit by 75 per cent or more within 10 years. This shift should worry Australian politicians for two reasons. The first is that debt and deficits are not nearly as benign as the public seems to believe. Second, it suggests some closely held political truisms may no longer hold true. The CIS has been warning about the risks of debt and deficits for some time. For example, a recent CIS publication by Robert Carling, Gene Tunny and Peter Tulip laid out the fiscal challenges facing the government. As Robert states "the federal government's finances [will not] cope well with more economic or other shocks to the system - and there are even bigger debt problems in some states and territories." However, the political economy effects of shifting attitudes to debt and deficit are more subtle. It was traditionally taken for granted that the right cared more for debt and deficits than the left. Right-wing politicians used to grumble that the public would elect right-wing governments to do the hard work of balancing the books, and then they would immediately elect a left-wing government to unbalance them again. There was a positive element of this, too, though. John Howard convinced the public that fiscal prudence was the best measure of the competence of a government. This millstone hung heavily around the neck of the Rudd - Gillard - Rudd Labor government that followed. This millstone is gone, or at least greatly diminished. It seems clear that voters no longer consider a budget surplus the sign of success, or a large deficit that of failure. The main measure of a good budget now seems to be how much cash is shovelled out the door. Certainly, the lack of alarm over the deterioration in the fiscal position in the recent budget suggests Labor isn't very worried about debt and deficits. Some on the left believe that voters ignoring on budget surpluses is an unalloyed good for the party - and they aren't entirely wrong. The conventional wisdom suggests that in any contest between left and right over who can hand out the most money, the voters will prefer the real deal on the left over those Johnny-come-lately spendthrifts on the right. But Trump's example shows that this wisdom only holds as long as the status quo holds on the right. To put it bluntly, if the right abandons fiscal responsibility to the same extent as the left, then not only can the right compete with the left on spending, they can win the fight. Why? Because in so many areas, the left is now tied to vested interests in a way that the right simply isn't. The left is compelled to launder their spending through the priorities of quasi-government institutions, not-for-profits and unions because these groups represent key constituencies for left-wing political parties across the globe. These bodies - which range from the well-meaning to the borderline corrupt - have their own weaknesses. Even those who interests align relatively well with voters will take a cut from any funding. Many are preoccupied with policy solutions that don't work very well. Take teachers unions for example. In Australia, Labor's Gonski spending explosion was heavily influenced by what the unions thought the money should be spent on (such as reducing class sizes). This spending was largely ineffective in terms of improving results. Another example is childcare. Voters might well feel good about recent moves to subsidise higher wages for childcare workers, but if given a meaningful choice would they prefer the government to spend that same money on greater subsidies and more flexible care options instead? Labor might retort that they have done both, but what if the Coalition promised to overhaul the whole system and give voters the option to keep the same subsidy and spend it on any type of care they want? Another, rather crude, example: do you think there are more votes in increasing the age pension or in boosting unemployment benefits? And that is before you get into ideological crusades - which many of the left-wing institutions are obsessed with - that the public has little patience for. A populist, big-spending right would be unencumbered by the baggage that hamstrings these bodies. They could cut out the middlemen and just bribe the voters directly. To be clear, the Australian right adopting big government populism would be terrible for the country, as it undoubtedly will be for the US. The extent to which US politicians have abandoned their responsibilities is scandalous. READ MORE SIMON COWAN: In the same way that the recent inflation crisis put paid to the nonsense economics of modern monetary theory, the US is on the path for a potentially disastrous fiscal reckoning that will force US politics to focus on debt and deficits again. Australia would be ill-served to follow the same path. However, it is far from a foregone conclusion that a more positive direction will be taken. The populist alternative remains alluring, especially in the short term where the consequences can be deferred into the future. Australia would be far better off if politicians and voters cared more about fiscal responsibility. But the onus lies on both sides of politics to prevent this from happening; not just the right.
Politico
05-07-2025
- Business
- Politico
How Trump's Very MAGA Tax Cuts Break with GOP Tradition
For decades, Republicans have extolled the virtues of removing loopholes and carveouts from the tax code, arguing it would make the system fairer and more efficient, while allowing for lower overall tax rates. 'The tax code is littered with hundreds of preferences and subsidies that pick winners and losers and create complexity,' House Republicans led by then-Speaker Paul Ryan and then-Rep. Kevin Brady, said in their 2016 tax plan. 'Instead of free-market competition that rewards success, our tax code directs resources to politically favored interests, creating a drag on economic growth and job creation.' Fast forward to the present day, and one thing is for sure: President Donald Trump's One Big Beautiful Bill is not an exercise in tax simplification. Instead, it began with a push to extend the party's 2017 tax cuts — which despite some streamlining also introduced some complexity — and piled more on top, in line with a slew of presidential campaign promises. Add in a heavy dose of congressional politics, and the result was a sprawling and quirky piece of legislation that is distinctively Trumpy: lower taxes and a bigger pile of tax breaks. 'It's certainly a departure from what Republicans were trying to do in 2017 and broadly a departure from what Republicans have been arguing for decades about tax reform,' Kyle Pomerleau, a senior fellow at the conservative-leaning American Enterprise Institute, told me. The question, though, is not just whether doing your taxes is complicated and annoying. It's whether that complexity serves a particular purpose. For example, a provision in the GOP bill allows businesses to deduct expenditures on machinery and equipment entirely from their taxes, which could both encourage investment and support Trump's reindustrialization goals. For other key parts of the bill, several economists I spoke with worried it is the worst of all combinations: increasing the debt to pay for tax breaks that lead to neither growth nor other economically useful outcomes. 'I don't want to say it's vote-buying because that's probably a normative statement that is outside of my wheelhouse, but … there's not a lot of pro-growth stuff,' said Kent Smetters, a University of Pennsylvania business professor who serves as the faculty director of the Penn Wharton Budget Model. Take, for example, Trump's popular campaign promises of no tax on tips and no tax on overtime. In some cases, those provisions simply reward people for their existing lifestyle. In others, it might lead businesses to restructure how they pay their employees. It's obviously great news either way for the employees who benefit. It's just unclear why the government is choosing to reward these particular subsets of workers over others. (It is presumably not an accident that Trump promised this tax perk to voters as he was pushing in the last election to win Nevada, a state where many hospitality and gaming industry workers rely on tipped income.) And cutting taxes without finding some way to offset the lost revenue — either by closing loopholes to broaden the scope of people and businesses that are taxed, like in 1986, or through some other method — leads to increased debt that can itself be a drag on growth. After all, investors are lending the money to the U.S. government rather than doing something else with it. And even after spending cuts, the new GOP tax law is still expected to add trillions to deficits over the next decade. 'The money has to come from somewhere,' said Alan Auerbach, a professor at the University of California at Berkeley. In that sense, the tax cuts under President George W. Bush weren't the ideal way to structure policy either, as they mostly just lowered rates while increasing the debt. But this bill? 'It's worse than the Bush tax cuts because the scale is so much bigger, and there's a lot more weird stuff in it,' Auerbach said. The gargantuan scale and eccentricity of the tax package is a reflection, above all, of the president who propelled it into law, and it reveals how much the Republican Party has changed under his leadership. In the 2016 GOP policy document, under Ryan and Brady's direction, the party cited tax reform legislation passed in 1986 — which decreased the number of tax brackets, slashed deductions and lowered rates — as a guiding light, saying the party's goal was to 'replicate and build upon this achievement.' But this is now the party of Donald Trump, not Ronald Reagan. Trump, ina 1999 Wall Street Journal op-ed, referred to the bipartisan 1986 law as 'an offense against the working man,' decrying the removal of certain deductions as 'predictably disastrous.' Now the Trump administration needs to defend the law and all its peculiarities. Joe Lavorgna, who works at the Treasury Department as a counselor to Secretary Scott Bessent, said many critiques of the new law miss the point. A critical priority for Trump, he said, was avoiding the expiration of the 2017 tax cuts, which would have led to higher tax rates and therefore slower growth. He said language that allows people to deduct the interest they pay on auto loans for American-made cars, for example, will help boost the goal of having a 'vibrant, healthy' domestic car industry. Lavorgna also said the provision removing taxes on overtime will lead to more output. 'Anything that incentivizes people to work an extra hour because they're not going to be taxed on it or be taxed at the same rate' creates benefits for the economy, he said. 'It's not a giveaway. They're creating something.' As for no tax on tips? That will 'help people who have been under significant cost of living pressure,' he said. Ultimately, what's clear is that cutting taxes is still the centerpiece of the Republican Party — the rallying cry that could bring together a fractious governing coalition. But tax reform? That conservative dream seems to have died quietly.
Yahoo
02-07-2025
- Business
- Yahoo
SPACs are back: This year's crop of blank check companies lack celebrity sponsors, and that's likely a good thing
Special purpose acquisition companies, or SPACs, were big business in 2021 when everyone from lifestyle mogul Martha Stewart to politicians like Paul Ryan was investing in them. Also known as blank check companies, SPACs offered firms a back door route to becoming a public company by getting acquired by a shell company. But the 2021 trend didn't last long as more than 60% of blank check companies from that year couldn't complete a merger and had to return money to investors, giving SPACs a dodgy name in the process. Now, blank check companies have returned, but this year's crop is a different breed. The celebrities are gone, the buzz has faded, and many SPACs are coming from serial sponsors who are, well, just a little dull. So far in 2025, 61 blank check companies have gone public, raising $12.4 billion as of June 26, though it's hard to assess their success since it typically takes months for a SPAC to complete an acquisition. This compares to just 16 SPACs for the same period last year that collected $2.5 billion, according to Dealogic. So far none of this year's deals have found a merger partner. The $12.4 billion is the most raised by blank check companies since 2021, when the SPAC market was on fire. That year, a record 613 blank check companies went public, raising about $162.6 billion in proceeds. SPACs are enjoying 'a bit of a revival,' said Ben Kwasnick, founder of SPAC Research. Blank check companies are on track this year to raise $25 billion, a nearly 85% drop from 2021, but a total Kwasnick thinks is more sustainable. 'There's still huge demand for the SPAC market,' he said. A closer look shows that SPACs never really left. But their disappointing outcome cast a pall on the sector and drove many investors away. Blank check companies typically have between 18 to 24 months to buy a company, or they must return the money to investors. Roughly 39% of the Class of 2021 was able to complete a merger, or de-SPAC, according to SPAC Research. This led to many deals that initially traded well but then crashed. One of the more famous was BuzzFeed's combination with a blank check company in December 2021. BuzzFeed initially spiked to $14.77 from $10 a share and ended its first day as a public company down 11%. The stock currently trades at $2 a share. Still, some investors of 2021 SPACs were able to get their money back. There were many blank check companies in 2021 chasing a small number of acquisitions, said Stephen Ashley, a partner with law firm Pillsbury Winthrop Shaw Pittman. When they couldn't complete a merger before their deadline, the SPACs were forced to liquidate. Some investors also redeemed their shares before the blank check company completed a merger. Both groups got their money back, Ashley said. 'A large number of these investors may be willing to consider investments in another round of SPACs with more seasoned sponsors,' he said. Of course, some 2021 investors held onto their shares after a SPAC completed its merger with a business and ended up owning stock in the surviving entity, though many of them likely lost money. Most deals that closed in 2021 are trading below $10, the price that SPACs typically price at, said Kwasnick of SPAC Research. 'These investors will be more wary,' Pillsbury's Ashley said. In 2024, the SEC adopted new rules for SPACs, requiring them to provide more disclosure about items including conflicts of interest, sponsor compensation, and dilution. They also limited the use of forward-looking statements by SPACs. 'The SEC clearly had concerns about the performance of SPACs for a while leading up to the rule changes, and the final rules they settled on will probably focus market participants on better and more grounded disclosure,' Ashley said. SPACs, as we know them, have been around since at least the early 1990s. This year's class is coming from executives who are very experienced. Instead of Jay-Z pitching a cannabis blank check company or Colin Kaepernick's social justice SPAC, there's Michael Klein, a former Citigroup banker, who launched his tenth blank check company, Churchill Capital X, earlier this year. Or Gores Holdings X, the latest SPAC from private equity firm The Gores Group, which raised nearly $360 million in May. Some of this year's SPAC crop, though, are connected to prominent individuals. This includes Renatus Tactical Acquisition, which raised $241.5 million in May and has ties to Trump Media & Technology Group. Eric Swider, CEO of Renatus, is the former head of Digital World Acquisition, the SPAC that merged with Trump Media, the parent of Truth Social, in 2024. Devin Nunes, Renatus's chairman, is a former Republican congressman and the current CEO of Trump Media. (After completing its SPAC merger in September 2024, Trump Media, during its debut, peaked at $79.38, then experienced volatility and is trading at about $18 a share.) 'It's encouraging to see serial sponsors doing most of this year's IPOs, as they're likely more realistic about their prospects than first-time sponsors are,' said Kwasnick. The banks underwriting this year's SPACs are another big change. In 2021, bulge bracket firms like Goldman Sachs and Morgan Stanley worked on many of the blank check offerings but have largely left the sector. Citi and UBS were No. 1 and No. 2 in terms of SPAC underwriters in 2021. Neither bank completely exited the SPAC market, but both pulled back significantly. Citi worked on 113 deals in 2021, giving it bragging rights as the top SPAC banker. This year, Citi has only two SPACs to its credit. UBS has worked on one or two blank check transactions every year since 2021 when it underwrote 92 transactions. This year, UBS has only worked on one SPAC. These rankings might still change. Goldman is wading back into the market for SPACs and is open to underwriting new deals for SPAC companies, Bloomberg reported on June 17. Goldman declined to comment. Without the bulge bracket firms, lesser-known banks have emerged to take their place. This year's lead underwriter so far is Cantor Fitzgerald, the financial services firm formerly led by U.S. Commerce Secretary Howard Lutnick. Cantor has worked on 14 deals valued at around $3.6 billion. BTIG, the broker backed by Goldman and Blackstone, ranked second with a dozen SPAC deals valued at $2.6 billion. And in third place is Santander, the Spanish bank, which has worked on five deals this year, totaling $1.3 billion. Not everyone is happy with the revival. 'I hate SPACs,' said one fintech banker, who has worked on mergers involving blank check companies. They pointed to payments companies like Repay, Payoneer Global, and Paysafe. Each used SPACs as a way to go public and two of the three are trading below $10. All three companies have experienced volatility with their stock prices, and all three have been up for sale recently. 'They're just not performing well,' the banker said of the payments companies. 'I've made money off [of SPACs] but I don't really understand their purpose.' This story was originally featured on
Yahoo
01-06-2025
- Business
- Yahoo
Don't be fooled, Idaho. GOP's working-class rebranding is nonsense
In the last decade or so, the Republican Party has attempted to rebrand itself. Mitt Romney and Paul Ryan campaigned on cutting taxes, especially on the rich, and balancing the budget by slashing entitlements. It was time for the makers to get their due, and for the takers to get put in their place. This proved to be a horribly unpopular platform, which sent President Barack Obama back for a second term. Now the party has been taken over by President Donald Trump, who all but banished Romney and Ryan from the party and claimed he would set a course of reviving American manufacturing jobs. Trump picked 'Hillbilly Elegy' author J.D. Vance as his vice president, proof that he was embracing a departure from the GOP's old embrace of the rich, in favor of a white working class that had been culturally marginalized — Vance's Yale law degree notwithstanding. 'The image of the Republicans as the party of the Scrooge-like CEO, the basis of Obama's 2012 campaign against Mitt Romney, has been defanged by Trump, the self-styled billionaire who benefited from a rigged system and convinced his voters that only he could un-rig it on their behalf,' Republican pollster Patrick Ruffini wrote in 2023. How's the unrigging going? Don't trust what people — especially politicians — say. Believe what they do. As a recent report from the Idaho Center for Fiscal Policy makes clear, the sum of the last five years of a steady rightward shift in the Idaho Legislature has been massive tax cuts benefiting mainly the rich, coupled with waning support for programs that help the poor and middle class. Middle-class Idaho families have been left out. If the Legislature doesn't act before the end of next legislative session, taxes will rise on many Idaho families with children. Those families who make between about $56,00 and $146,000 will see their taxes rise, as the 2018 child tax credit will sunset at the end of this year. The end result, the report notes, will be that middle-class Idaho families wind up with a net tax increase. So too will the very poorest Idahoans. Refusing the obvious, and wildly popular, option of eliminating the sales tax on groceries, lawmakers opted to increase the grocery tax credit. One consequence of this decision is that there will be no benefit for people who don't file income taxes, overwhelmingly very poor people. They continue to pay the full sales tax on food, with no access to the tax credit. Meanwhile, owners of physical gold bricks and coins will pay no capital gains tax on those assets — a specialized giveaway contained in House Bill 40, which also slashed income taxes for the richest people in Idaho. It will be a good year for Scrooge McDuck. Not so much for Bob Cratchit and Tiny Tim. In the Idaho GOP's rebuilt tax code, if you are poor — if your family has to survive on less than $31,000 per year — you can expect to pay more than 9% of your income in state taxes. But if your family makes more than $738,000, you'll pay about 6%. These are the policy changes Idaho lawmakers passed as they first tried to end Medicaid expansion, and when that was blocked in the Senate, sought to implement work requirements that, if approved by the feds, are expected to result in tens of thousands of working Idahoans losing their health insurance — because it's one thing to work, but another thing to repeatedly file all the paperwork to prove to a bureaucracy that you work. This is a precise mirror of federal policy under unified Republican control of government. Idaho's delegation has unanimously supported extending massive tax cuts that disproportionately help the rich, exploding the federal debt and, at the same time, ensuring that there will be more hungry children by cutting food aid and more people dying from lack of healthcare by slashing Medicaid. The GOP has shown you what the core priority is: Soak the poor. The current incarnation of the Republican Party has not transfigured itself into the party of the working class. Neither is it the party of fiscal responsibility. It is the party that transfers wealth from the poor to the rich. Statesman editorials are the opinion of the Idaho Statesman's editorial board. Board members are opinion editor Scott McIntosh, opinion writer Bryan Clark, editor Chadd Cripe, newsroom editors Dana Oland and Jim Keyser and community members Greg Lanting, Terri Schorzman and Garry Wenske.
