Welcome back to the deep dive. We're really tearing
into a huge pile of sources today. It's complicated
stuff, high stakes politics, post -election analysis,
big economic shifts, even institutional conflicts.
Let's try to unpack this. The goal today, cut
through the noise. We want to figure out why
that government shutdown really ended. What was
actually driving those recent election results?
you know, where the economic anxiety is hitting
hardest from the gas pump all the way to Wall
Street. Exactly. We're synthesizing these really
complex interconnected stories. We're looking
at like the tiny details of Senate votes, but
also these huge shifts in how consumers feel
and even corporate tax strategy, trying to figure
out why it all matters right now. Right. And
how it all connects. OK, let's dive straight
into that political poker game. Our sources use
that great line. You got to know when to hold
them, know when to fold them. There was this
Senate breakthrough deal, right? secured a 60
-40 cloture vote. That's right. So what were
the immediate, tangible things in that deal?
What actually stopped the crisis? Well, the immediate
relief was keeping the government funded through
January 30. And critically, getting most federal
workers back on the job, including about 4 ,000
who'd been let go. And they get back pay. OK,
back pay, too. That's important. Definitely.
The sort of political core was the longer term
funding promise through September next year for
some key areas, military construction, the VA,
FDA, and significantly SMA, UPTAI. SNAP, food
stamps. That feels like where the real human
leverage was, wasn't it? Yeah. Cutting off that
aid would have caused immediate visible suffering.
Exactly. That risk, you know, Americans going
hungry, that was the ticking clock. But there
was also this fascinating institutional bit.
tucked in there, protection for the government
accountability office, the GAO. The GAO. What's
the significance there? They're like Congress's
auditor, right? Yeah, basically Congress's nonpartisan
watchdog, making sure money's spent right, holding
the executive branch accountable. So why protect
them? Well, what's really interesting here, according
to the sources, is that this wasn't a Democratic
demand. It came from moderate Republican senators.
Yeah. It kind of suggests this deep mistrust
of executive spending, maybe even within their
own party. Or at least some Republicans wanting
to flex their oversight muscles against the White
House. Okay, let's talk political maneuvering.
The vote itself, 60 -40, sounds very precise,
highly structured. Oh, absolutely. It looks like
it was managed to hit exactly 40 nay votes. And
the yay votes. There were eight Democrats plus
Rand Paul. Was there a pattern there? Yep. Those
Democrats mostly fell into two camps. Either
retiring, like Dick Durbin or Gene Shaheen, so
kind of immune to political fallout. Right. Or
they represent purple states. Think Cortez Masto,
Federman, Hassan, Kaine, Rosen, King. And Kaine,
of course, has tons of federal workers in Virginia.
Makes sense. But hang on. If the Democrats were
seen as winning the shutdown, public opinion
-wise, Why cash out now? Didn't they lose leverage
to force concessions on the big spending bills
they actually care about? That's the million
dollar question, isn't it? Look, they folded
because the risk was that the real world pain
was about to get, well, really bad, unpalatable.
Think about airport chaos right before Thanksgiving.
Federal workers digging deeper into debt? that
kind of suffering. It could have easily flipped
public opinion against the Democrats. They look
like they were prioritizing politics over people
hurting. Ah, gotcha. So they traded that short
-term leverage for what? A long -game play. Exactly.
The big prize, or potential prize, was the promised
vote on ACA subsidies. Right. The Affordable
Care Act subsidies. Yeah. And politically, Democrats
kind of win either way there. If the subsidies
get restored, great. If Republicans vote them
down, well, that gives the Democrats a huge issue,
a real club to use in the 2026 elections. See,
they voted against health care help. Or if the
majority leader just refuses to hold the vote.
Same outcome, politically. It paints the Republicans
as blocking help. It's a classic political setup.
And it puts pressure on Speaker Johnson to reopen
the House, which has its own knock -on effects.
OK, so while Congress folded on the shutdown,
we're seeing the executive branch maybe grabbing
power elsewhere, specifically rewriting tax rules
through regulation. Sounds like a big backdoor
corporate tax cut. Yeah, this is a really significant
power shift we need to watch. The Trump administration
seems to be using regulatory changes to basically
weaken the Inflation Reduction Act's 15 % corporate
alternative minimum tax, the CAMT. That was the
tax designed to make sure huge corporations paid
something, right? Exactly. But the Treasury is
changing the rules on how deductions work against
it. And the beneficiaries look like big players,
private equity, crypto firms, foreign real estate
investors. So what's the impact? Has this got
the whole point of the... Pretty much. The estimates
are that most of the $222 billion the CMT was
supposed to bring in over 10 years. Gone. Wiped
out. And without a single vote in Congress. Wow.
Billion. $222 billion. And it's drawing criticism
even from, you know, right -leaning tax experts.
Kyle Palmerlow at AEI basically said, Treasury
is stepping on Congress's constitutional toes
here. Congress is supposed to write tax law,
not the executive branch through regulation.
But isn't some regulatory tweaking normal? Where's
the line between, like, fine -tuning and just
rewriting the law? Well, that's the core debate,
isn't it? Fine tuning is one thing. But when
the regulations seem to completely reverse the
financial impact and, arguably, the intent of
the law wiping out $222 billion, critics say
that's effectively legislating from the Treasury
Department. It bypasses the whole messy public
debate in Congress. OK, shifting gears a bit,
but still on institutional risk. There's this
Reported anxiety among Republican senators about
a potential indictment of a Democrat, Adam Schiff.
Why would Republicans be worried about their
rival getting indicted? Seems counterintuitive.
It does, on the surface, but it's about precedent.
The potential charge against Schiff involves
claiming two homes, one in California, one in
Maryland, as primary residences on mortgages.
Apparently, that's a pretty common situation
for members of Congress who have to live in two
places. OK. So the fear is if Trump indicts Schiff
on what some see as, let's say, shaky or politically
motivated charges. charges. Well, that sets a
really dangerous precedent. What stops a future
Democratic administration from using similar,
maybe questionable charges against Republicans
in the exact same boat? It's about weaponizing
the legal system, mutually assured destruction
almost. Kind of. It's an institutional self -preservation
instinct kicking in. They don't want that door
opened. Right. And speaking of accountability
and legal battles, there was that big judicial
ruling against Operation Midway Blitzes in Illinois.
Judge Sarah Ellis. Yeah, that was a pretty significant
smackdown for federal law enforcement there.
Judge Ellis put a stop to certain tactics like
tear gas, pepperball strikes on nonviolent people
because of excessive violence. And didn't she
find that the commander lied? Crucially, yes.
She found the Border Patrol commander Gregory
Avino repeatedly lied to the court specifically
about being hit with a rock before he threw gas.
She basically said the government's evidence
just wasn't credible. Wow. So the courts are
stepping in hard there. They are. The order now
requires things like body cams during certain
actions, warnings before using chemical weapons,
no riot gear against peaceful protesters. It's
a clear case of the judiciary acting as a check
when there are concerns the executive branch
overstepped. OK. Let's shift from DC power plays
to what voters are actually thinking. We saw
election analysis from G. Eliot Morris pointing
to this widespread blue shift across key states,
Georgia, Pennsylvania, Virginia, New Jersey.
What's the big takeaway there? The really critical
finding was that the Democratic margin grew compared
to 2024 in almost all counties they looked at.
Doesn't matter if the county was deep red, swing
or deep blue. So a broad trend, not just isolated
wins. Exactly. It signals something widespread,
either growing popularity for Democrats or maybe
just widespread dislike of the current Republican
brand or message. The analysis suggests the GOP
needs to seriously rethink, maybe shift resources
away from the national culture war stuff and
back to local economic kitchen tables. issues
before 2026. And the failure of the anti -trans
messaging in those governor races seems to really
back that up, right? Earl Sears in Virginia,
Seattirelli in New Jersey, they leaned into it
hard. And they both lost big, got almost identical
vote shares, around 42. something percent. The
analysis was pretty clear. That issue just wasn't
a top concern for most voters. It ranked way
below the economy, health care, immigration,
education. So feelings might not care about facts,
but voters definitely care about their wallets
first. Seems that way. When people are struggling
economically, that's priority number one. Culture
war stuff just doesn't land the same way. And
the Democrats who won. like Spanberger in Virginia,
they didn't just ignore the attacks. No, that's
key. Spanberger, for instance, ran ads hitting
it head on, but reframing it around her own values,
being a mom, kids in public schools, former law
enforcement wanting to improve schools. She met
the attack, but pivoted back to her own ground,
not just sticking to, say, purely progressive
talking points, meeting voters where they are.
Interesting. We also saw some media reactions,
specifically the Washington Post getting hammered
by readers for that editorial on NYC. see Mayor
-elect Zoran Momdani. Yeah, that editorial calling
him General Isamo and accusing him of like class
warfare instead of focusing on growth. Readers
really push back, seeing it as the paper kind
of shilling for the billionaire class, prioritizing
elite growth over actual economic fairness for
working people. And that ties into this internal
democratic puzzle, doesn't it? You win big, but
who do you prioritize now? The young progressive
energy like Mom Donnie and NYC or the moderate
model that worked in Virginia and Jersey? That's
the big internal fight shaping up. And you'll
see it tested in the 2026 Senate primaries, think
Maine. Michigan, Massachusetts, Minnesota. Right,
like in Minnesota you've got LT Gov Peggy Flanagan,
who's a Native American woman from the White
Earth nation, potentially running against rep.
Angie Craig, who's a lesbian woman, both breaking
barriers, but representing different wings, maybe
different identities within the party. Exactly.
It's a major test of which blend of ideology
and identity politics resonates most with Democratic
primary voters moving forward. And one quick
side effect of all this political shuffling,
Elise Stefanik is running for governor of New
York now. Yep, she announced. And apparently,
House Democrats are kind of quietly cheering.
Cheering? Why? They think her very Trumpy profile
could actually hurt the whole GOP ticket in New
York, potentially making it easier for Democrats
to flip maybe three competitive House seats there.
Which, if that happened, could cost Mike Johnson
his speaker's gavel. Politics make strange bedfellas,
huh? But underlying all this political maneuvering,
as we said, is the economy. That University of
Michigan survey, consumers view of current economic
conditions, it hit an all -time low. An all -time
low. Not just bad, but historically bad in terms
of how people feel right now. Yeah. What are
the numbers driving that? What costs are really
hitting people since 2020? The increases are
just staggering. U .S. grocery prices up 29 percent.
Wow. Transportation services like getting around
up 36 percent. Eating out up 33 percent. And
total credit card debt. This one's wild. Jumped
50 percent since 2020. Hold on. 50 percent? Yeah.
A 50 percent jump in credit card? debt. That's
massive. Is that just people spending more or
are they borrowing to survive? It strongly suggests
people are relying on high interest debt just
to cover essentials. Look at housing. One in
four US households are spending over half their
income just on rent. Half their income on rent.
Yeah. And the overall purchasing power of the
US dollar. eroded by over 20%. These aren't abstract
numbers. This is the pain people feel. And it
helps explain why maybe those culture war messages
fell so flat. People are worried about basics.
You see that kind of fragility reflected in the
markets too, right? Especially crypto. Bitcoin
took a big hit. The whole market shed like $750
billion since October. What's going on there?
Well, according to Keith McCullough at Hedgeye,
the problem isn't necessarily the technology
itself. It's the leverage. It's how much debt
and speculation got layered on top, especially
as institutions got involved. Leverage, meaning
borrowed money magnifying bets. Exactly. And
exhibit A is MicroStrategy, MSTR. It's still
trading at like a 2 .4x premium to the actual
Bitcoin it holds. Wait, explain that. It means
the market values the stock of MicroStrategy
at more than double the value of the Bitcoin
the company owns. To justify that stock price,
Bitcoin would need to basically more than double,
maybe hit $250 ,000 or something. It just shows
the extreme level of leverage and frankly, speculation
baked into the system. It looks like a bubble
built on borrowed money, not necessarily fundamental
value, a potential disaster waiting to happen.
OK, so let's try to tie this all together. It's
really interesting. We've seen these strategic
retreats, like the shutdown deal may be driven
by avoiding human suffering. We've seen the executive
branch using regulation, these sort of backdoor
power plays on taxes and clear signals from voters
rejecting culture wars, demanding focus on kitchen
table economics. Right. And if you connect those
dots, it looks like the whole political system
is scrambling, sometimes clumsily, to react to
these deep, really painful economic realities
people are facing. The big question is, will
the parties actually pivot to address those core
issues, inflation, debt, housing, or just keep
fighting the last war. The battle's voters seem
to be tuning out. So what does this all mean
for you? Listening. It means you're navigating
this world where the rules feel like they're
changing constantly. And often it's not happening
through a big debate in Congress, but through
these regulatory shifts or court decisions that
fly into the radar but have huge impacts. And
here's maybe a final thought to chew on. The
Democrats, sources suggest, cashed out on the
shutdown, partly because things were about to
get really grim for vulnerable people, folks
on SNMP, veterans. If that's true, and voters
are pushing back on ideological fights, does
that mean the most reliable leverage in politics
today isn't really about principles or party
lines anymore, but about the immediate, measurable
pain of real people? or maybe the clear -cut
rulings from judges. Kind of raises a question.
When political calculation only seems to break
under the weight of human suffering or judicial
force, what happens to the art of persuasion
or finding common ground? Something to think
about until our next deep dive.