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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.
Fox News
29-05-2025
- Business
- Fox News
GUY BENSON SHOW: Live From the Reagan Library, Day One (Featuring Paul Ryan, Larry Kudlow, Peter Doocy, Jason Rantz, David Trulio)
Today on the Guy Benson Show, we broadcasted the program LIVE from the Ronald Reagan Presidential Library. On today's program, we featured interviews with David Trulio, Paul Ryan, Jason Rantz, Peter Doocy, and Larry Kudlow. Check out the full podcast episode and the interviews from today's program below! Listen to the full podcast: Paul Ryan, 54th Speaker of the House Paul Ryan, 54th Speaker of the House, Trustee of the Ronald Reagan Institute, and Partner at Solamere Capital, joined The Guy Benson Show today to break down Trump's Big Beautiful Bill, explaining why it echoes the 2017 tax cuts he helped pass and why Democrats were wrong about those cuts then, just as they're wrong now. Ryan also praised Speaker Mike Johnson's leadership and made the case for passing the bill swiftly to avoid devastating tax hikes on American families across the board, and you can listen to the full interview below! Listen to the full interview below: Ryan had this to say on Mike Johnson's leadership as Speaker of the House: 'Absolutely impressive. He has a harder job than I did. I had a much better vote margin than he has. We wrote the original bill, the Tax Cuts and Jobs Act here, and I lost 'salty' people. I call them 'salty' people, I lost some votes from New York and California, these high tax states, because of SALT. He had zero margin and he was able to put this thing together and get it out. I'm really impressed with his leadership and its results and he's delivering results with a razor thin majority so honestly everybody in this country should be grateful uh… To Mike Johnson and his leadership skills.' Larry Kudlow, host of Kudlow on the Fox Business Network Larry Kudlow, host of Kudlow on Fox Business Network (weekdays at 4pm ET) and a Fox News Contributor, associate director for economics and planning at the Office of Management and Budget during the Reagan administration, and author of 'JFK and the Reagan Revolution: A Secret History of American Prosperity,' joined the Guy Benson Show today to discuss the legacy of former President Ronald Reagan and his impact on the U.S. economy, and Kudlow also shared his personal relationship with Reagan while working in his administration. Kudlow and Guy also discussed the latest on Trump's tariff plan and Big Beautiful Bill. Listen to the full interview below! Listen to the full interview below: Peter Doocy, Fox News Channel's Senior White House Correspondent Peter Doocy, Fox News Channel's Senior White House Correspondent, joined us on the Guy Benson Show today to discuss the media's sudden and suspicious coverage of Joe Biden's decline while he was president. Doocy recently brought evidence of his probing on social media, while many other reporters and TV personalities have apologized for their failure to cover the story. Listen to the full interview below. Listen to the full interview below: Jason Rantz, Host of the Jason Rantz Show and Author of 'What's Killing America' Jason Rantz, host of The Jason Rantz Show on KTTH 770AM/94.5 FM in Seattle/Tacoma and author of What's Killing America , joined The Guy Benson Show today to discuss the latest violent outburst by radical leftists in Seattle, this time targeting a group of peaceful Christian worshippers gathered in public. Rantz raised concerns about the city's leadership possibly using protest risks as an excuse to block permits for future Christian events, and why such blockages would lead to an instant lawsuit. Listen to the full interview below. Listen to the full interview below: David Trulio, President and CEO of the Ronald Reagan Presidential Foundation On today's Guy Benson Show, David Trulio, President and Chief Executive Officer of the Ronald Reagan Presidential Foundation and Institute (RRPFI), joined us to discuss the latest events and initiatives offered by the Ronald Reagan Presidential Foundation. Trulio and Guy discussed the latest event at the foundation, the Reagan Economic Forum, and how it came to be. Guy and David also promoted the library Listen to the full interview below:
