The fall of Silicon Valley Bank (SVB) generated several different media narratives. All seem to agree that SVB failed because it was dependent on low-yield long-term US treasury bonds. These bonds were safe in the years following the global financial crisis of 2008, but they lost value when interest rates increased in 2022. The disagreements are over what this fact means.
Read the rest of this entry »As the midterm elections approach, the political class is working very hard to increase voter turnout. President Biden has given a big speech accusing the Republicans of posing a grave threat to democracy. We are inundated with political ads in which the Democrats accuse the Republicans of plotting to ban abortion and the Republicans accuse the Democrats of causing inflation. None of the arguments offered by either side have much to do with reality, and it is increasingly difficult to find anyone who will even make a sincere effort to discuss what’s going on without incorporating distorted partisan messaging. If we look at the issues, it’s clear that the composition of Congress is not going to make much difference over the next two years.
Read the rest of this entry »As the midterms approach, the Biden administration is looking to pass some part of its Build Back Better plan. Biden managed to fund $550 billion in new traditional infrastructure spending. But the American Society of Civil Engineers argues that we have an infrastructure funding gap of $2.59 trillion. The bipartisan infrastructure bill barely makes a dent in that. The rest of the administration’s proposals have continually run aground. Various senators threaten to withdraw their support all too quickly, and this has caused the administration to water down its proposals over and over again. Now there is a new version of the human infrastructure bill, called the Inflation Reduction Act. This bill claims to raise over $700 billion in new revenue in an effort to fight inflation, reduce the deficit, and fund new investments in energy. It sounds like a significant achievement, but it’s not. Here’s why.
Read the rest of this entry »A leaked draft opinion is circulating indicating that the Supreme Court may plan to overturn Roe v. Wade, the decision that protects abortion rights. The draft opinion is not an official ruling, and it’s still possible that the Supreme Court may issue a different opinion. Draft opinions are not usually leaked. Many on the right think that the draft was leaked by a liberal staffer to subject the court to political pressure. But it’s also possible that a conservative leaked the draft as a way of politically testing the waters for a highly controversial version of the decision. By leaking a highly extreme opinion, more political space is potentially created for a less extreme, but still very controversial decision. Supreme Court justices do worry about the political legitimacy of the court. They do worry that if they push things too far, congress may seek to impeach some of the justices of pack the court. That brings me to the position I want to put in front of you today–if Donald Trump were president, the Supreme Court might be more skittish about touching Roe. That may sound like a bizarre view. Give me a chance to explain.
Read the rest of this entry »Remember the Biden administration’s proposal to spend $2 trillion on infrastructure? Traditional infrastructure spending accounted for roughly half of that proposal. It was less than half of what the American Society of Civil Engineers believes we need. According to them, the US faces a $2.59 trillion infrastructure shortfall over the next 10 years. Now a bipartisan deal has been announced which limits new spending to just $579 billion. That’s less than a quarter of what our civil engineers believe we need. To make matters worse, the administration has agreed to fund much of the spending with public/private partnerships. Many essential infrastructure projects can’t generate a profit–they require huge up-front investments and continuous maintenance. The more an infrastructure package depends on private funding, the more limited that package is in the kinds of projects it can fund. How did it come to this? Let’s run through some of the reasons why the infrastructure plan was so completely butchered.
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Benjamin Studebaker 