Welcome to the Deep Dive. You sent us a really
interesting stack of sources, articles, reports,
some analysis, all giving us this snapshot of,
well, right now, May 2025. Yeah, quite a moment.
And we're going to unpack these together, pull
out the key bits, see how they connect. Exactly.
It gets you quickly informed on what's happening
and maybe why it's happening. Right. And the
sources, they mainly look at the US government.
Big challenges there. Budget, debt. policy debates
in Washington. But also some other political
things bubbling up. One report called them not
normal. That's the phrase they use. So yeah,
a lot to dig into. OK, mission is clear. Makes
sense of this material. Connect the dots for
you. Let's just jump right in. OK, let's do it.
So first thing that jumps out from one analysis,
it's veteran analyst Jeff Bush. He's warning
about what he calls a perfect fiscal policy storm
brewing. A storm. OK, that sounds. Pretty serious.
What are the ingredients here? He sees three
main things converging. You've got interest costs
on the national debt just shooting up. Then there's
the sheer size of the debt itself already massive.
Right. And on top of that, these really aggressive
tax cut proposals that are being pushed, all
hitting at once. And the numbers in these sources,
they really drive home the scale, don't they?
They absolutely do. I mean, just look back at
2024. The government spent What, $6 .8 trillion?
Yeah. But revenue is only about $5 trillion.
So that's a $1 .83 trillion deficit in one year.
Which just gets added to the pile. The total
federal bet now pushing $37 trillion. $37 trillion.
And Bush made a really interesting point about
that number. What was that? just how incredibly
hard it is for anyone, even financial pros, to
really wrap their head around what $37 trillion
mean. That's almost an abstract concept at that
scale. Exactly. And he suggested maybe a bit
cynically that the government kind of relies
on it being this nonsensical number that people
just glaze over. But the source stressed, look,
if you have financial knowledge, you need to
understand this debt. Absolutely critical. And
this is where Bush got really blunt, you know,
hitting both sides of the aisle. He just flat
out said. There's not one Democrat, there's not
one Republican that has a plan to pay off a dime's
worth of debt. Not one of them. Wow. No punches
pulled there. None. He used that old phrase,
drinkin' sailors spend like drunkin' sailors.
Said it applies to everyone in charge, basically.
And he put the debt in historical context too,
right? Yeah. comparing it to World War II. Yeah,
as a share of the economy, he said, we're roughly
on par with where we were at the height of World
War II. But the big difference, the analysis
points out, is that after the war, there was
a real push to pay down that debt. Now, crickets.
No plan. No plan. And speaking of plans, or lack
thereof, Bush mentioned this idea of a sovereign
wealth fund. He did, but the reports immediately
flagged the obvious problem. Where does the money
come from? Exactly. With deficits like these,
Most countries set those up with budget surpluses.
We don't have those. OK, so this massive debt,
these ongoing deficits, that's the backdrop for
everything happening in Washington right now.
It absolutely shapes the landscape. And even
though the president's been busy with executive
orders, hundreds of them, apparently. Right.
Jeff Bush's analysis stressed that you still
need Congress to get a lot of that work done.
Legislation is key. And Congress? Well, it has
its own hurdles. The Senate filibuster being
the big one. Yeah, that 60 -vote requirement.
Republicans have a majority, but they'd need
seven Democrats to join them for most things.
Which Bush thought was unlikely. Didn't see it
happening easily, you know. But there's the exception.
Reconciliation. For budget and tax stuff. Exactly.
That's the workaround. Simple majority needed
their 50 votes plus the VP. And the analysis
you sent suggests that's the main path for the
administration's agenda. Seems to be. The source
said the lion's share of what Donald Trump is
trying to accomplish falls under that reconciliation
umbrella. OK. But even within the Republican
Party, the material flagged some, let's say,
friction. Mentioned Senate leader John Thune.
Right. Bush described Thune as not a traditional
magic A type of Republican. And this feeds into
one of Bush's axioms. Axiom hashtag one. That's
the one. He says when one party controls everything,
White House, Congress. All those little cracks
within that party's ideology start to split wide
open. And we're seeing that now with the tax
bill. Apparently so. Hints of it earlier this
year with the budget bill, but now with taxes,
the source says we're really seeing those cracks
split wide open. And the prime example is that
salt cap debate, right? state and local tax deduction.
Perfect example. You've got Republicans from
low tax red states versus Republicans from high
tax blue states. Totally different views on what
to do there. Meanwhile, while the Republicans
are dealing with their internal splits, Bush
had a take on the Democrats too. He did. Called
them leaderless and messageless. Said it fits
his axiom number two. Which is? Basically, the
worst place for a party to be is irrelevant.
And he felt that's where the Democrats were at
that moment. But he also thought this tax bill
might actually give them something to unite against.
Yeah, could be the impetus, he said. And speaking
of the bill, the process in the House sounds
frantic. That's putting it mildly based on the
report's breakneck speed. Totally. Speaker Mike
Johnson, apparently pushing super hard, wanted
a big, beautiful bill passed by Friday before
they went on recess. Get it done before they
have to face voters back home. Seems like it.
Led to this marathon 22 -hour session in the
rules committee just to hash out the details.
22 hours. And the bill itself is huge. Over a
thousand pages, yeah. Described as cobbled together,
lots of last minute changes. One source even
said it was hard to know exactly what got tucked
away inside. But the reports did manage to pull
out some specifics that seemed to be in there.
Quite a collection. It's definitely a mix. Lifting
the salt cap to $40 ,000. Adding work requirements
for Medicaid, though maybe delayed past the midterms.
Changes to food stamps, SNA benefits. Right.
No federal tax on tips. or gun silencers, but
keeping the tax on tanning beds, apparently.
OK. Also phasing out some of the Biden era green
energy credits, but boosting support for nuclear
power and a new kind of retirement account. Trump
accounts. That was mentioned. Yeah. Along with
a rule against federal payments for ACA plans
covering abortions and the big ticket items,
the overall tax cuts and the debt ceiling. Tax
cuts totaling around $3 .8 trillion, mostly extending
the 2017 cuts. And because of that, needing a
$4 trillion increase in the debt ceiling to cover
it. So with all that packed in, what were the
odds in the House? Well, the report said moderates
and conservatives were definitely grumbling.
But not necessarily voting no. Most weren't saying
they would no, except Thomas Massey, but he's
described as pretty much always a no vote. So
thinking was Johnson might just squeak it through.
And if he does. it lands squarely in the Senate's
lap. Yep. Message to Leader Thune is basically,
here it is, take it or leave it. And there was
still a lot of uncertainty among Senate Republicans.
Didn't some senators already raise issues? Murkowski
and Collins? Yeah, they specifically mentioned
concerns about the Medicaid changes in the House
bill, so definitely hurdles ahead in the Senate.
Okay, so fiscal storm clouds, chaotic tax bill
process. How are the financial markets taking
all this? Well, they're definitely watching.
We saw that bond market sell off recently. Yields
on the 10 -year treasury, the 30 -year bond.
They jumped. Highest in months, right? Yeah,
10 -year highest since February, 30 -year highest
since last October. Pretty significant moves.
And the timing seemed directly linked to news
mentioned in the sources. Absolutely. It really
picked up steam right after Moody's downgraded
the U .S. credit rating. They were the last major
agency holding out with a perfect score. And
it coincided with this House tax bill moving
forward. Exactly. That combination seemed to
really unnerve investors. There was that one
specific bond auction mentioned too, the 20 year
bond. Right. May 21st. The treasury auction investors
demanded a much higher rate 5 .047 percent compared
to what. The average of the previous six auctions
for that same bond was 4 .613 percent. So, yeah,
almost half a percent higher borrowing costs
for the government just like that. And the analysis
tied that jump directly to the Moody's downgrade
and maybe the GOP budget plans. Or both. Yeah.
And that specific result, that higher rate, apparently
spooked Wall Street. Stock markets dropped pretty
sharply that day, 1 .4 percent to 2 percent.
OK, let's unpack this a bit for you, the listener.
Why do higher bond yields actually matter? Well,
two main things. For the government, it means
paying more interest on all that debt, nearly
$29 trillion held by the public. Which squeezes
the budget for everything else. Right. Down the
line, it could mean higher taxes or cuts to services.
And for people personally. It usually makes borrowing
more expensive for big things. Think mortgages,
car loans. Lots of consumer and business loan
rates are linked to these treasury yields. So
if rates go up for the government, they tend
to go up for everyone else too. Generally, yes.
And the analysis pointed out, look, if this tax
bill adds to the deficit, the government has
to issue even more bonds. Which pushes rates
even higher. Could lead to sustained higher rates.
That was the phrase used. Now, the counter argument
from the administration and supporters in Congress
is that other policies like tariffs or deregulation
will spark enough economic growth to pay for
the tax cuts. That growth will generate more
revenue. But the economists quoted in the material
you sent were skeptical. Yeah, Douglas Holtzikin,
former CBO director, called parts of the tax
bill junk, said there's a real chance this does
nothing or makes the problem worse, not exactly
a ringing endorsement. and the overall market
sentiment, according to the analysis. It wasn't
just about this one bill. It was the bigger picture,
this lack of any sustained efforts to bring spending
and revenue into closer balance. One expert predicted
extremely large deficits as far as the eye can
see. Grim outlook. Even the real estate industry
chimed in. Yeah, a commercial real estate CEO
worried that higher borrowing costs could just
wipe out any benefit from lower taxes, could
even hurt property values. Interestingly, He
thought the president understood that trade -off
perfectly. He did. And another analyst was quoted
saying there's basically no chance Congress changes
course even if the 10 -year yield stays up around
5%. They seem locked in. Remember that Department
of Government efficiency idea with Elon Musk?
Oh yeah, DOGE. The consensus from a policy conference
mentioned in the sources. A nothing burger. Not
going to deliver any real budget savings. So
it all feeds into this feeling that despite the
red ink, there's just no real push to tackle
the big drivers of spending. Seems that way.
The analysis said Trump has no appetite to tackle
entitlement programs, and Republicans generally
seem less worried about deficits now than in
the past, even though the situation is objectively
worse. OK, so with all this pressure on the budget,
people naturally start wondering about programs
like Social Security and Medicare. Jeff Bush
mentioned hearing this a lot. Yeah, he travels
around, talks to clients, said they're absolutely
paranoid about benefits being cut. Even though
the president campaigned on no cuts to Medicare
or Social Security? Right. Now, Bush himself
wasn't predicting Social Security would go bankrupt
overnight, but he did point to the projections.
The trust fund's running out of money around
2035. Roughly, yeah. He expects some kind of
reform will have to happen, probably around 2033.
But could recent changes maybe speed up that
timeline? That's a concern raised in the material,
like the Social Security Fairness Act passed
earlier. It expanded benefits to more people,
but didn't add new revenue to pay for it. And
the idea of eliminating the tax on Social Security
benefits. That's a big one. Because that tax
funds Social Security. If you get rid of it,
you have to find the money somewhere else. Bush
suggested maybe higher corporate taxes could
fill the gap. What about Medicaid? Bush expected
changes there. Yeah, he saw a lot of change coming
from Medicaid, specifically cuts, and a continued
push towards Medicare Advantage plans. Why Medicare
Advantage? Because the analysis noted it's seen
as more cost -effective for the federal government.
And potential Medicaid cuts. How do they ripple
outwards? It's not just people directly on Medicaid
who are affected, right? No, absolutely not.
The point was made that even wealthier clients
might be impacted indirectly. Maybe they're helping
support parents in long -term care facilities.
Rely heavily on Medicaid funding. Exactly. If
that funding gets cut, nursing homes, other providers,
they have to make up the shortfall somehow. So
it gets more expensive for everyone who is paying
directly or through their long -term care policy?
Precisely. costs get shifted. Were there specific
concerns about Medicaid for people with disabilities?
The sources didn't indicate immediate major cuts
targeted specifically there, but they did raise
a point about the definition of disabled. It's
a huge spectrum. So the question becomes, are
different levels treated differently? Could there
be a bifurcation of those types of services?
It wasn't clear, but it was a question raised.
And the state -based nature of Medicaid adds
another layer of complexity. Huge layer. Federal
money, but state rules. So any changes will play
out differently across all 50 states. Leading
to potentially even more inconsistency. That
was the worry. It could exasperate the already
disparate experiences depending on what side
of a river you live on. One source lamented this
wasn't the original idea of the U .S. system
where best ideas would bubble up. OK, let's shift
gears a bit. That second major source you sent
framed several recent events under the heading,
this is not normal, adds more context to the
political climate. Yeah, some quite striking
examples. First one involved defying a judge.
What happened there? A US district judge issued
an order, a temporary injunction, saying, do
not deport these eight people anywhere but their
home country until I can rule. Pretty clear instruction.
The report says the administration deported them
anyway, not to their home country, directly violating
the order. How did the judge react? Called it
unquestionably violative of this court's order.
The White House apparently insisted they follow
directives, but the analysis noted, this kind
of standoff raises questions about how courts
respond to defiance. There was also mention of
a pattern in dealing with foreign leaders, something
involving South Africa's president. Yeah. Following
a meeting with Zelensky that got attention, this
one was with President Ramaphosa of South Africa.
The report said President Trump showed a video
alleging genocide against white South Africans,
then lectured Ramaphosa about it. How did Ramaphosa
respond? Pushed back hard. Called the claims
a lie. And the source offered theories on why
this happened. Two main ones. One, possible influence
from Elon Musk may be tied to his own issues
or views regarding South Africa. Two, maybe just
political theater for the base, perhaps with
Stephen Miller involved. Playing to a certain
audience. Right. The analysis speculated this
ambush stick might wear thin, though, as foreign
leaders maybe learn to anticipate it. Another
major shift highlighted was at the Department
of Justice, specifically regarding police oversight.
Yeah, the previous administration used consent
decrees quite a bit, agreements with police departments
like Minneapolis, Louisville, to force reforms
after findings of misconduct, mandated training,
accountability, data collection. And the current
DOJ. The source described the Civil Rights Division
canceling eight ongoing investigations, throwing
out two completed ones, and just tearing up those
existing agreements with Minneapolis and Louisville.
And the source used strong language to describe
this. Yeah, very strong. called the action overtly
racist, even compared it to the Woodrow Wilson
era. That was the framing and material provided.
OK. The sources also flagged a couple of incidents
framed as potential corruption. The first involved
a plane from Qatar. Right. Apparently, the defense
secretary accepted Qatar's offer to donate a
plane. Sort of a replacement Air Force One. The
catch. The U .S. Air Force pays for the upgrades.
And the angle? according to the analysis, was
that this might be a way around the foreign emoluments
clause. That's the constitutional ban on officials
taking gifts from foreign powers. How would this
get around it? By having the Defense Department
accept the gift, not the president directly as
an officeholder, a potential loophole. And skepticism
about whether he'd use it after leaving office.
Yeah, the source was doubtful about that claim.
Their take on the motivation was simpler. He
wants nicer plane, likes deals, and maybe feels
immune to political fallout. The analysis called
this manna from heaven for the Democrats. Uh
-huh. Because it's a relatively cleaner example
of corrupt behavior to explain compared to more
complex financial dealings. Raising the question
of whether Republicans in Congress would defend
it. Right. Could this be his Thomas Nast moment,
like the cartoonist who exposed Boss Tweed's
corruption by making it simple and visual? Interesting
comparison. Then there was the crypto story.
Less noticed, but potentially significant. Yeah,
involving the Trump meme coin and family ventures.
Reports suggested a possible pump and dump, but
the specific event highlighted was a contest.
A contest. Top holders of the Trump P coin got
invited to a dinner and a White House tour. And
the president attended. He did, claiming it was
as a private citizen. The analysis basically
said that's ridiculous. People were clearly buying
FaceTime and influence. And the value involved
exceeded campaign finance limits. By a huge margin.
But the biggest red flag raised was who attended.
Exactly. 73 % of the dinner guests, most tour
participants, were foreign nationals. That's
potentially illegal foreign influence buying
access. And hard to trace because they used online
handles. Very hard. The source used the example.
One attendee, PW21, held seven million dollars
in the coin. Could be anyone. Could be Putin,
they speculated. And only he and Trump would
know. That's quite the image. The concern being
untraceable foreign money potentially influencing
U .S. policy or contracts. That's the core worry.
Selling access for potentially vast anonymous
sums from foreign sources. But the analysis thought
this was less likely to blow up politically than
the plane. Why? Too complicated, basically. Too
complicated to communicate easily. Too many moving
parts. Crypto is confusing for many. And frankly,
a lot of politicians are already influenced by
the crypto lobby anyway. Back to that boss tweet
idea, complexity as a shield. Seems to be the
thinking. Multiple smaller, complex things are
harder to pin down than one big, simple one.
OK, just a couple more quick items from the sources
before we wrap up. Right. The passing of Congressman
Jerry Connolly of Virginia. Yeah. Sad news. Long
career. Worked with Biden way back. His passing
at 75 did slightly tighten the House majority
for Republicans, now 220 -212. Means a tie vote,
216 -216, would now kill a bill. But his seat
is safe Democratic. Expected to be filled in
a special election alongside the general this
year. The source noted a classy statement from
Republican James Comer about him. And a brief
observation about recent deaths in Congress.
Just noting that Democrats seem to be disproportionately
affected recently. And finally, the election
in Portugal. Third snap election in three years
there. The center -right government failed to
get a majority. Center -left lost seats. But
the far -right populist party, Chiga, saw significant
gains. Dominant issues were familiar. Inflation,
housing, immigration. Yeah. And the analysis
drew a broader conclusion. Seeing a trend. What
trend? Voters reacting to rapid changes in inflation,
immigration that feel like problems governments
can't easily fix. So politicians get elected
promising change. But they're almost bound to
fail because the root causes are complex and
often beyond their immediate control. The source
hinted at exploring this theme more, maybe using
the idea of walls. Wow. OK, we have certainly
covered a lot of ground pulling all that from
the sources you sent from that looming perfect
fiscal storm and the debt. To the frantic tax
bill debate, the internal party cracks and how
it all plays out in the bond markets, potentially
affecting your own finances. And then weaving
in these other political threads, the judicial
defiance. the interactions with foreign leaders,
the DOJ shifts, those potential corruption examples
with the plane and the crypto access. It really
shows how all these pieces, even if they seem
separate, connect. A bond auction, a line in
a tax bill, a dinner party. They're all part
of this bigger picture. And hopefully this deep
dive drawing directly on that material gives
you some specific details and perspectives to
cut through the noise. Yeah, getting you quickly
informed on the key dynamics at play. So. Thinking
about everything we've walked through, the debt
warnings, the political pressures, the seeming
lack of easy answers, here's a final thought
rooted in the analysis we discussed. If, as the
analysts suggest, neither party really has a
plan for the debt, and politicians avoid tough
entitlement choices until there's a crisis, well,
how might these forces we've talked about, the
debt, the rising rates, the political gridlock,
actually force those hard choices Jeff Bush warned
about? What could that crisis, that breaking
point, actually look like? Definitely something
to keep watching and thinking about.