Wall Street Tells Google to Break Itself Up

Today’s piece is brief, but notable. This morning, Apple’s Senior Vice President of Services, Eddy Cue, testified in the Google remedy antitrust case. And he made two observations about the consequences of the case, which led Google’s stock to crater 7.5%, or $150 billion in value. Here’s the Google stock chart.

You can see the timing of when Cue went on the stand, but what’s interesting is that the stock drifted down for another two hours, which means that analysts were taking time to internalize what he had said and growing more pessimistic as the full ramifications of his comments sunk in.

So what did Cue say? Well, first, he said Apple is considering a revamp of the search experience on its iPhone. Right now, Google pays Apple more than $20 billion a year to be the search default, which is a key to the search company’s monopoly and the heart of the antitrust case. It’s essentially a shared search rent split between Google and Apple. In 2020 when the case was first filed, Apple considered creating its own search engine, fearing the loss of that revenue stream and looking for ways to replace it. Now it seems like something along that strategy is likely. Cue says that Apple might revamp its Safari browser to incorporate AI-powered search engines, which is a polite way of saying the company knows the game is soon up on selling the lucrative default position in Safari to Google.

The second thing he said is that Google search volume declined last month on the iPhone for the first time ever, presumably because people are beginning to use generative AI tools instead of ordinary search. This change is also a consequence of the antitrust case. Apple has already integrated OpenAI into its Apple Intelligence feature set; it did not choose Google, and one likely factor was the antitrust risk. Perplexity testified in the Google antitrust case, arguing that Google is blocking its distribution. Immediately after, it cut a deal with Motorola for distribution.

In other words, Google’s search monopoly may be starting to crack, which will put significant pressure on the company and force its cash cow ad business to be disciplined by competition. There are parts of Google that do compete, like its cloud business and office suite, but it has a money printing machine that might get taken away.

Wall Street seemed pretty stunned, not just by this legal development, but also Apple’s brutal loss in its unfair competition case against Epic Games, which will also hit the phone giant. I watched a half an hour long CNBC panel talk about Google and Apple and their antitrust problems. Panelists debated whether Google’s monopoly is cooked, how badly Apple’s services revenues are going to be hit, and possible strategies going forward. And that’s without evening mentioning yet another legal development yesterday, which is that the Antitrust Division asked, in a totally different antitrust case that Google lost, to split apart the company’s advertising software division.

There are broader implications here. Most institutional investors have piled into seven big stocks - Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla - such that the name the “Magnificent 7” is now shorthand among investors for this basket. But now that whole world might be ending, and Google and Apple will have to, as a panelist put it, “reinvent itself.” A different commentator went further. "Maybe the best thing ultimately is that Alphabet is split up,” he said. “Maybe that's the best outcome for you as a shareholder."

One of the very first pieces I wrote for BIG, six years ago, was titled Break-ups and stock prices, and in it, I described why investors do well during break-ups.

The granddaddy of all monopolies and break-ups is Standard Oil, John D. Rockefeller’s oil monopoly at the turn of the century that structured the most important business of the era. In 1911, the Supreme Court broke his company into 34 components, many of which went on to be some of the most powerful companies in the world, such as Exxon, Mobil Pennzoil, Conoco, Chevron, and so forth. Shareholders did fantastically well in the break-up, with Rockefeller quintupling his wealth.

Why did Standard Oil’s component parts do so well? And was the break-up responsible for higher stock prices? The answer is that the older monopolistic business structure was inefficient, and breaking up the company helped unleash technological innovation in the industry by enabling the use of a relatively unimportant part of Standard’s portfolio: gasoline.

In 1909, a Standard-employed chemist named William Burton invented “thermal cracking,” which was a way to vastly improve the process of turning oil into gasoline. The Indiana branch applied to headquarters to put $1 million into developing the process, but HQ said no. The company primarily sold kerosene, and while cars were increasing demand for gasoline - what was then seen as a relatively useless byproduct of oil refining - such an investment was simply too risky to what had become a lazy, slothful monopoly. After the break-up, Standard Oil of Indiana simply went ahead and began using thermal cracking, and eventually the whole industry was licensing patents from the company. While stockholders did fantastically well, Indiana shareholders did even better. The era of cheap gas came, or at least was accelerated dramatically, by the break-up.

As with Standard Oil, Google’s model is to leverage its market power across its various lines of business, to self-preference its own properties. There’s a lot of upside here in terms of retaining monopoly profits, but there is also a downside, which is that those lines of business, were they independent, would be more innovative and engage in profitable partnerships with firms outside the Google empire. As antitrust reduces the upside for collusion among Google subsidies, the cost of monopoly goes up. On the flip side, if YouTube, Search, Gmail, Cloud, Play, and Chrome became separate businesses, they’d be among the biggest companies in the world, and likely far more profitable than they are jammed together. 

by Matt Stollar, BIG |  Read more:

Image: NASDAQ

[ed. Interesting times. See also: If Google is forced to give up Chrome, what happens next? (The Register):]

***

What about Firefox developer Mozilla? It has its own worries. The last thing Mozilla wants is for Google to be fully spanked by the Dept of Justice. What's that you say? Isn't Firefox Chrome's arch-enemy? Please. Stop with the fanboi nonsense.

As well as demanding a Chrome sell-off, American prosecutors also hope to ban Google from paying other browser makers – including Moz – to be the default for web search. Mozilla can't survive without the cash it gets from Google search.

Don't believe me? Would you believe Mark Surman, President of Mozilla? In a blog post, giving Mozilla's response to DoJ's demands on Google, Surman said, "The big unintended consequence here is the handing of power from one dominant player to another. So, from Google Search to Microsoft, or Bing for example – while shutting out the smaller, independent challengers that actually drive browser innovation and offer web users privacy and choice.”

Without this money, Mozilla feels it couldn't develop and maintain Gecko, Firefox's web browser engine. That, in turn, means, Surman claimed, "it's game over for an open, independent web. Look, Microsoft — a $3 trillion company — already gave up its browser engine in 2019, and Opera gave up theirs in 2013. If Mozilla is forced out, Google's Chromium becomes the only cross-platform browser engine left."

Michael Kenna, Two Leaning Trees, Study 3, Kussharo Lake, Hokkaido, 2020; Red Crown Crane Feeding, Tsurui, Hokkaido, 2005
via:

Al Boardman, The Path to Totalitarianism
via:

[ed. New one to me - Motion Designer]

Harrison Ford and the Origin of Western Civilization

TED:

So what do want to talk about today?

INTERVIEWER:

Today I want you to stop acting so elitist—that’s why we’re going to talk about action films. What’s your favorite?

TED:

I’m not as elitist as you think. I’ve written hundreds of essays about science fiction, horror stories, locked-room mysteries, TV westerns, and other types of popular entertainment.

By the way, I love action movies of all sorts—I even have a Jackie Chan poster on my bedroom wall.

INTERVIEWER:

Is that true?

TED:

No, I just made that up.

But I do enjoy Jackie Chan’s movies, especially the early ones. I would consider putting a Jackie Chan poster on the wall, but Tara would veto that.

She already made me take down my autographed photo of Jake LaMotta—she said it clashed with the decor.

INTERVIEWER:

She is probably right. But let’s go back to my original question. What’s your favorite action film?

TED:

That’s hard to answer. There was a very good movie about LaMotta…

INTERVIEWER:

That doesn’t count. It wasn’t a real action movie. Pick another one.

TED:

Huh? There were plenty of fight scenes in it. But I’ll take you at your word, and choose another movie

[Ted stops and thinks.]

Okay, I’ve got an answer for you. The action movie I’ve seen most often is The Fugitive—starring Harrison Ford and Tommy Lee Jones. I’ve watched it so many times, I’ve lost count.

INTERVIEWER:

What do you like about it.

TED:

:

For a start, it’s the exact counterpart of Homer’s Odyssey….

INTERVIEWER:

Gimme a break, you’re doing it again. I said no elitist stuff today. So you’re not allowed to talk about Homer and ancient epic poetry.

TED:

Hey, hear me out. Homer’s Odyssey is also an adventure story—and not for elites. This story has entertained youngsters for thousands of years.

And it’s my favorite kind of adventure story.

INTERVIEWER:

Why is that?

TED:

The Odyssey was the first adventure story in Western culture about a hero who prevails through intelligence and reasoning, not fighting and bloodshed.

That’s a big deal. It signals the moment when the West emerged from savagery—assuming that we have emerged from savagery.

Odysseus is not a brave solider—if you’ve read Pseudo-Apollodorus, you will know that he tried to avoid fighting in the Trojan War by pretending to be crazy.

INTERVIEWER:

Sudoku app adores us? What the devil are you talking about?

TED:

Don’t worry about Sudoku. I’m trying to explain that Odysseus was the first adventurer who hates adventure. There’s a postmodern concept for you. He doesn’t even like fighting—he prefers to use his wiles and cunning.

This is the greatest turning point in Western culture. We finally have an alternative to the reciprocal violence that dominates so much of human history. The worst mistakes we’ve made in the West have taken place when we have forgotten that alternative.

But, of course, it’s also a breakthrough in storytelling.

Homer’s previous epic, the Iliad, is all about bravery and violence on the battlefield. Some 240 battlefield deaths are described during the course of that brutal poem—frequently related in grisly detail.

But the Odyssey is totally different. The hero is actually portrayed as a coward.

Homer drops a hint when he says the Odysseus places his ship in the exact middle of all the Greeks boats on the shore of Troy—that’s the safest place in the event of a surprise attack by the Trojans. Homer doesn’t say it explicitly, but he implies that Odysseus always had an escape plan, and needed to ensure that his ship was available for a hasty retreat.

INTERVIEWER:

What does this have to do with Harrison Ford and The Fugitive.

TED:

It has everything to with it. In The Fugitive, Harrison Ford succeeds through cunning and intelligence. There’s that great scene when Ford’s colleague tells Tommy Lee Jones: “You will never find him. He is too smart.”

Just as the Odyssey represents a shift away from the obsessive violence of the Iliad, Harrison turns his back on the constant battling of his previous manifestations in Star Wars and Indiana Jones.

In the movie poster for The Fugitive, Ford is actually running away from the fight—much like Odysseus tried to do.

So this is a great moment in Hollywood action movies. There’s actually very little fighting in The Fugitive. Ford even risks capture at one point by saving a person’s life. And that makes perfect sense because he is playing Dr. Richard Kimble, who—like all doctors—has taken a Hippocratic oath to avoid harm and do good.

That’s why The Fugitive is so satisfying to watch. We finally have a hero who really does good deeds and avoids reciprocal violence. And when he must engage in conflict, he out-thinks his opponent—instead of fighting and killing.

In fact, the entire point of the film is that Dr. Kimble is an innocent man. He has been falsely accused (of murdering his wife), and his only goal in this movie is to prove his innocence and his commitment to doing good.

I won’t give away spoilers. But in the final minutes of the film, he applies that Hippocratic Oath to do good through medicine and healing in a very unexpected way. You might even say that he saves thousands of people—in addition to himself.

But there are many other similarities between The Fugitive and Homer’s great epic the Odyssey.

INTERVIEWER:

What other similarities?

TED:

Like all great epic poets, Homer starts the Odyssey in the middle of the story—literary critics call this in medias res. Homer may even have invented this storytelling technique.

The Fugitive follows the same pattern. The movie begins after our hero Dr. Richard Kimble has been falsely accused and convicted of his wife’s murder. So (as in the Odyssey) we must learn about these incidents through flashbacks.

In the case of the Odyssey, our hero must battle a one-eyed monster—the Cyclops!—in order to survive and prevail. The same thing happens in The Fugitive, except that Dr. Kimble needs to deal with a one-armed monster who murdered his wife.

INTERVIEWER:

This is just coincidence. Stop playing games with me…

TED:

You’re totally wrong about that.

Let me ask you a question now. What’s the name of the one-armed man in The Fugitive?

INTERVIEWER:

I have no idea.

TED:

The character’s name is Sykes. This reference to the Cyclops would be obvious to any classicist in the audience.

Can’t you see that the filmmaker wants to remind us of the Odyssey?

INTERVIEWER:

You’re blowing my mind. Is that for real?

TED:

Go ahead, check it out for yourself.

But let me go on. There’s a whole web of connections here.

I’m not even going to talk about the obvious ones—for example, Homer frequently refers to Odysseus as “great-hearted” while Dr. Kimble is an actual heart surgeon. And Odysseus’s troubles began with Helen of Troy, while Dr. Kimble’s problems begin with his wife Helen—both victims of fighting men who intrude into their peaceful lives.

Those are just tiny details. The plot is the main source of my interest here.

In the Odyssey, our hero must survive a ship wreck—and later must escape from captivity on an island, where Calypso wants to hold him for the rest of his life. In The Fugitive, Harrison Ford needs to survive a train wreck—which allows him to escape from captivity as a prisoner on death row, where he would otherwise spend the rest of his life.

In the Odyssey, our hero eventually returns unexpectedly to his native land—the island of Ithaca—where he faces his final and greatest challenges. In The Fugitive, the US Marshalls are shocked when Dr. Kimble returns to—can you guess it?—his home town of Chicago.

That’s the last thing they expected from a runaway fugitive. “Sonofabitch,” declares Tommy Lee Jones, “our boy came home.”

But, of course, a homecoming is necessary in this type of adventure story. These heroes must return home to resolve all the dangers and obstacles they face. And in that familiar terrain, both heroes prevail against heavy odds.

By the way, both the Odyssey and The Fugitive culminate with an unexpected confrontation in a crowded banquet hall in that same home town. The parallelism is now completed.

And this brings me to my favorite part of the story.

by Ted Gioia, The Honest Broker |  Read more:

Images: Ted Gioia and The Fugitive

[ed. Interesting take, even though The Fugitive was initially produced for tv in 1963 (starring David Janssen), and as far as I know had none of these themes/connections.]

David Attenborough at 99: ‘I Will Not See How the Story Ends’

I have been fortunate enough to live for nearly 100 years. During this time we have discovered more about our ocean than in any other span of human history. Marine science has revealed natural wonders a young boy in the 1930s could never have imagined. New technology has allowed us to film wildlife behaviour I could only have dreamt of recording in the early stages of my career, and we have changed the ocean so profoundly that the next 100 years could either witness a mass extinction of ocean life or a spectacular recovery.

To date we have done such a good job of telling the stories of demise and collapse that many of us can all too easily picture a future ocean of bleached reefs, turtles choking on plastic, sewage plumes, jellyfish swarms and ghost towns where fishing villages were once full of life. There may be much to fear in the near future, yet it could also be the most exciting time to be alive.

We know already that the ocean can recover. Mangroves and kelp forests can regrow, whales can return and dying coastal communities can flourish once again.

We now understand how to fix many of the biggest problems we face as a species, and we have centuries of progress to draw on for inspiration. Indeed, in the past 100 years alone we have dramatically reduced infant mortality, suppressed many of our most feared diseases, increased access to education and healthcare, acquired scientific knowledge that has transformed our understanding of the world and co-operated on global issues to a degree never seen before.

Young children playing on a beach today will live through perhaps the most consequential time for the human species in the past 10,000 years. They will grow up to see how this story ends, to see how our choices play out. If we use our great discoveries, apply our unique minds and direct our unparalleled communication and problem-solving skills to restoring our ocean, then those children will bring their own into a world where the biggest challenges our species has ever faced have already been navigated. (...)

I will not see how that story ends but, after a lifetime of exploring our planet, I remain convinced that the more people enjoy and understand the natural world, the greater our hope of saving both it and ourselves becomes. With that in mind, here are some of my favourite ocean experiences, which I hope will inspire you to look beyond the shore and beneath the waves.

by David Attenborough, The Times |  Read more:

Image: Conor McDonnell

Topography of the contiguous United States

via:

Armed Madhouse – U.S. Defense Racketeering

As the Trump administration prepares to increase the enormous U.S. defense budget to over one trillion dollars, it is an appropriate time to describe how the U.S. arms industry participates in a structure of normalized corruption that I call defense racketeering. The Military-Industrial Complex that President Eisenhower warned against in 1961 has grown and evolved in ways that are grossly wasteful, promote armed conflict, and weaken national defense. I will describe this pernicious system of grifting and offer some recommendations for ending it.

A few years ago, I made the diagram shown below depicting the financial circulatory system of the U.S. Military-Industrial Complex (aka, The Blob). Eisenhower originally intended to describe it as the Military-Industrial-Congressional Complex, and this would have been a more accurate term because the defense budget funding committees of the U.S. Congress are the beating heart of the Blob.

It is not generally understood how few people direct the flow of the hundreds of billions the U.S. spends every year on defense. The senators and representatives on the Armed Services and Appropriations committees of the Congress are easy targets for the lobbyists of the defense corporations. The weapons makers spend about $70 million a year on lobbying in Washington, and they donate generously to members of the key committees that control the defense budget.

The committee staffers responsible for advising on defense budget items are out-gunned by the industry lobbyists, who earn considerably more, and are proficient in the arts of persuasion. As of 2023 there were 708 active Washington lobbyists working for defense corporations. Most of these lobbyists have gone through the “revolving door” of military or government jobs and are intimately familiar with the political terrain.

The goals of the lobbyists are two-fold: promote the growth of the overall defense budget and defend the the weapons programs of their employers. There are enormous sums at stake. Although in recent years the U.S. defense budget has consumed about an eighth of the total Federal budget, it has been roughly half of the discretionary budget. The discretionary budget is all outlays that are not legally obligated, and thus directly under congressional control each year.

If Trump’s proposed cuts to domestic programs and defense budget increase to $1 trillion are passed, the U.S. will be spending even more of the discretionary budget on weapons and war, pushing the defense share to over 60%.

How does the U.S. defense industry run such a successful racket? I have already mentioned their potent lobbying capability. Now let us examine some tools of their trade.

Threat Inflation

A massive defense budget must be justified by threats to the United States. If legitimate threats do not exist, imaginary ones can easily be conjured up. Working with think tanks, media contacts, and bellicose politicians, almost any foreign entity can be puffed up to a serious threat to U.S. “interests” by defense industry lobbyists. At various times, Cuba, Nicaragua, Afghanistan, Iraq, and Libya were considered military threats. For 20 years, Islamic terrorism was the threat justifying huge U.S. military budgets. With the revival of cold war confrontation with Russia and China, we have returned to a tried and true national security threat. The costumes change, but the show goes on.

Gold Plating

It is an article of faith in the U.S. defense community that advanced, highly-complex weaponry can overcome the presumably inferior weaponry of potential adversaries. This bias toward ambitious application of leading-edge technologies is beneficial to arms makers because it raises the costs of weapons programs and justifies delays and difficulties in completing projects. The result is a process of over-specification of weapons designs and disappointing results in the deployed system.

An example of this approach is the M777 howitzer. This field gun was designed to be highly transportable, incorporating titanium parts and other lightweight components. On the battlefield in Ukraine the M777 has suffered from short barrel life, and replacement of barrels and other worn parts has become a logistical problem. The B2 Stealth Bomber, at a cost of $2 billion per aircraft, had the rare distinction of costing more than its weight in gold until 2008. Gold prices have risen since then, but production of the B2 was halted in 2001 and only 20 are operational. Other examples of gold-plated projects are the Gerald Ford aircraft carriers, the Zumwalt destroyer, and the Osprey tilt-rotor transport aircraft.

Non-Competition

The magic of the marketplace has not been working in favor of U.S. taxpayers, as defense corporations have consolidated into five behemoths that manage the biggest weapons projects, such as the F35, nuclear submarines, ICBMs, and the Patriot missile system.

Moreover, some of the contract bidding has become single-source. The $13 billion contract for replacing the U.S. ground launched Minuteman ICBM force was awarded to Northrop Grumman without any competitive bid. What could go wrong?

Deferred Bribery

Dangling the prospect of lucrative future employment is not considered bribery if there is no explicit offer. A senior military officer in the U.S. can retire after 20 years and receive a pension of about 50% of military salary, then take a lobbying job in the defense sector earning double the former military salary. This process is what makes the revolving door spin, and it results in most of Washington defense lobbyists having prior military or government careers. Even retired congressional representatives can cash in on lobbying employment if they have influence with the key funding committees. Thus, decisions on military expenditures are in the hands of people who stand to benefit from actions friendly to potential future employers, and it is all perfectly legal.

Moving Goalposts

When developing complex, highly-sophisticated weapons systems, delays and cost overruns frequently occur. Defense contractors are seldom punished for failures to meet schedule and cost requirements. Instead, project timetables are extended and supplemental funding is awarded. The F35 fighter program has been delayed by more than 8 years and has exceeded original cost expectations by $165 billion.

Lowering the Net

When a big weapons program gets into trouble, performance specifications are sometimes relaxed to allow the program to continue. The F35’s maneuverability, acceleration, and combat radius requirements were all relaxed in the course of the program. A general reduction of weapons testing requirements has also been underway in recent years, much to the liking of the defense contractors.

The Secrecy Shield

If no one knows what you are doing, no one knows what you are doing wrong, and this maxim applies to the “black budget” programs of the U.S. Defense Department. Considering the embarrassing failures of defense projects that are publicly accountable, one can only imagine what malfeasance lies behind the cloak of secrecy surrounding programs considered too sensitive for public disclosure. The black budget of undisclosed secret programs has grown to well over $50 billion.

What Can Be Done

Although it is unlikely that the U.S. Congress will resist the lobbying power of the defense industry, there are several measures that should be taken to reduce the abuses of defense racketeering:

by Haig Hovaness, Naked Capitalism | Read more:
Images: uncredited

[ed. I wouldn't hold my breath. With this president and congress it's onward to infinity (below). See also: Elon Musk Set to Win Big With Trump’s Trillion-Dollar Pentagon Budget (The Intercept).]

"Senate Appropriations Chair Susan Collins (R-Maine) publicly objected to the administration’s request to keep the military funded at about $893 billion, while criticizing Trump’s proposed cuts to biomedical research, education support programs for low-income households and subsidies to help the poorest Americans cover the cost of heating and cooling their homes.

Noting that the budget was “late” and lacks “key details,” Collins voiced “serious objections to the proposed freeze in our defense funding given the security challenges we face,” as well as the White House’s proposed cuts “and in some cases elimination” of non-defense programs.

Former Senate Republican Leader Mitch McConnell, who is now chair of the Senate’s defense funding panel, slammed the White House budget office for asking Congress to keep defense spending static for the upcoming fiscal year, saying in a statement that the extra cash Republican leaders are hoping to pour on through the tax and spending megabill they are hoping to enact this summer is “not a substitute for full-year appropriations."

“OMB accounting gimmicks may well convince Administration officials and spokesmen that they’re doing enough to counter the growing, coordinated challenges we face from China, Russia, Iran, North Korea, and radical terrorists. But they won’t fool Congress,” McConnell said.

The White House’s request would be “a cut in real terms” for the military, said Senate Armed Services Chair Roger Wicker (R-Miss.) in a statement, agreeing with McConnell that the additional $150 billion in military funding GOP leaders want to pass through their separate party-line package was not meant “to paper over” the White House budget office’s “intent to shred to the bone our military capabilities and our support to service members.”

Terry Fan, Moby Dick
via:

DOGE Shit

As recently as March 27, Elon Musk was still confident that the Department of Government Efficiency (DOGE), the cost-cutting initiative he unofficially headed, could reduce annual federal spending by $1 trillion. But during a Cabinet meeting two weeks later, Musk projected that the savings in FY 2026, when DOGE sunsets, would be more like $150 billion.

Even the latter, much smaller number cannot be trusted, because DOGE has been vague about most of its purported cuts and has repeatedly exaggerated the ones it has specified. And last week, as he shifted his focus from DOGE back to his businesses, Musk acknowledged a reality that should have been obvious from the outset: Any serious attempt to address the country's looming fiscal crisis will require hard choices and congressional action.

Shortly before last year's presidential election, Musk breezily estimated that DOGE could cut annual federal spending by "at least" $2 trillion, which was about the size of the budget deficit in FY 2024. At a press conference in February, he reduced that target by 50 percent, saying DOGE could "cut the budget deficit in half" by insisting on "competence and caring."

That goal was always improbable, since it would require eliminating something like 63 percent of discretionary spending. And although Musk said DOGE would be "as transparent as possible," the project's documentation of its work has fallen far short of that promise.

As of Tuesday, DOGE's website claimed $165 billion in "estimated savings" from "asset sales, contract/lease cancellations and renegotiations, fraud and improper payment deletion, grant cancellations, interest savings, programmatic changes, regulatory savings, and workforce reductions." But DOGE's "Wall of Receipts" described just $69 billion in spending reductions, accounting for 42 percent of the purported total.

News organizations have identified many problems with those "receipts." The errors include contracts that were not actually canceled, contracts that were terminated during the Biden administration, iffy estimates of savings on contracts that had not been awarded yet, contracts that were counted multiple times, conflation of contract caps with actual spending, the inclusion of past spending in estimates of future savings, and overvaluation of contracts and grants.

DOGE's hyperbole is so pervasive that Manhattan Institute budget expert Jessica Riedl describes its work as "government spending-cut theater," saying "most of what is claimed to be spending cuts are just accounting errors." Somewhat more generously, Nat Malkus, a senior fellow at the American Enterprise Institute, estimates that DOGE's actual cuts amount to about half of the total it claims.

"They're just spinning their wheels, citing in many cases overstated or fake savings," Romina Boccia, director of budget and entitlement policy at the Cato Institute, told The New York Times last month. "What's most frustrating is that we agree with their goals. But we're watching them flail at achieving them."

DOGE's numbers do not distinguish between one-time savings and recurring savings or between total savings and annual savings. Some of its categories, such as "workforce reductions" and "programmatic changes," are plausible but vague, while others, such as "asset sales" and "regulatory savings," do not seem to imply any spending reductions at all. (...)

"If we don't do something about this deficit," Musk warned in February, "the country's going bankrupt." Back then, he implied that DOGE was up to that challenge. More recently, he has been singing a different tune.

"It's really difficult," Musk conceded last week. The question, he said, is whether there is "sufficient political will in Congress and elsewhere." Now he tells us. 

by Jacob Sullum, Reason |  Read more:

Image: Brian Merchant/How federal workers can organize to stop DOGE
[ed. 'Political will' for what? Actually doing something positive instead of giving more billions to the military and tax cuts to the rich? Musk might be out the limelight for now but his minions are still burrowed in like termites. See also: this Profile in Cowardice: Will Republican senator Susan Collins stay on the sidelines or take on Trump? (Guardian); and, DOGE Is Obliterating American Industry (American Prospect):]

***

One of the hidden gems of American government is a small division of the Department of Energy called the Loan Programs Office. This is a government bank that hands out loans to companies with business plans that go beyond the technological frontier, with ideas nobody has tried before. Commercial banks will generally not loan to such companies—as a rule, private bankers want something that is already proven to work—so the LPO helps such entrepreneurs get from the drawing board to producing and selling an actual product.

The LPO has funded thousands of successful projects, from renewable-energy installations, to solar and battery factories, to new low-emission industrial processes, to power grid upgrades, to the first new nuclear power plant in decades, to domestic EV companies, and much more in that vein. It has virtually no overhead, with just a few hundred staffers running a fund of more than $400 billion. Almost all of these projects are successfully paying back their loans. For any government—and especially the American one, with its underfunded and sclerotic agencies—this counts as a smashing success.

But not for much longer. The LPO is being gutted by Elon Musk—who got an LPO loan himself just 15 years ago—and his DOGE goons. New loans have been frozen, it seems permanently. Worse, a reported 60 percent of LPO staff has already accepted DOGE buyouts, with more to come. Even existing loans are under threat; the California utility PG&E recently requested a rate hike in part because its $15 billion LPO loan faces “substantial uncertainty.” One battery company has canceled a planned LPO-funded factory in Arizona, while another has canceled its planned LPO-funded factory in Georgia and moved it to China. (America First!) ...

The main difference between this and similar efforts to destroy, say, the Consumer Financial Protection Bureau—in this supposed cost-cutting exercise—is that the LPO makes a fair bit of money. The estimated $500 billion in additional federal debt brought about by DOGE gutting the IRS will only get bigger by taking the LPO off the board.

A more interesting question concerns Elon Musk himself. His company, Tesla, was saved from certain bankruptcy in 2010 by a $465 million LPO loan, which provided critical funding while the company was struggling to get its Model S to market. It is, of course, absolutely maddening that a man who benefited from immense government largesse—the LPO loan is only a tiny fraction of the $38 billion in subsidies Musk has collected over the years—is pulling the ladder up behind him, all while he gives himself government contracts to build a completely pointless missile defense shield and drain even more from the taxpayer.

The New Stadium Scam Is a Server Farm

La Porte, Indiana, is a small city between South Bend, Indiana, and Chicago, Illinois. The recent announcement that Microsoft is investing over a billion dollars into a vast new data center campus in La Porte is expected to be transformational for the town of 22,000 people.

Microsoft was given a 40-year tax abatement on equipment, a renewable state sales tax exemption through 2068, and just $2.5 million of payments in lieu of taxes (PILOT) over four years—roughly 30 percent of what it would normally owe. After that? Nothing. Local utilities would cover the infrastructure.

Indiana's levy system is designed to reward growth with lower taxes. But when the biggest newcomer isn't taxed, the reward goes with them, the burden stays with the taxpayers, and the scales get tilted by bureaucrats.

Just 60 miles up the toll road sits Soldier Field, home of the Chicago Bears. The stadium's 2002 post-modern renovation cost $587 million, $387 million of which was shouldered by taxpayers. Two decades and two dozen quarterbacks later, Chicago only has $640 million (thanks to $256 million in interest) left to pay (oh, and the Bears are now threatening to leave.)

Cities have long bankrolled stadiums for billionaire team owners, while promising taxpayers jobs, tourism, civic pride—maybe even a Super Bowl. The results? Almost uniformly dismal. The Cincinnati Bengals deal left Hamilton County, Ohio, buried in debt and obligated to fund high-tech upgrades just to keep pace. Miami, Florida, spent $500 million in public funds on a baseball stadium for the Marlins, only to see attendance collapse and the team gutted. St. Louis is still paying off the Edward Jones Dome, even after the Rams skipped town for sunnier Los Angeles. Charlotte, North Carolina, is the latest addition to this hall of shame after handing over $650 million in tourism taxes to renovate Bank of America Stadium, earning them the "Worst Economic Development Deal of the Year" distinction from the Center for Economic Accountability.

Today's stadium boondoggle is a server farm: shinier, techier, but often just as bad for taxpayers. Small towns (and not a few big ones) are bending over backward to lure data centers. Local economic development officials tilt the scales, suspend the rules, and give away the farm. The sales pitch is nearly identical to the stadium era: "It'll create jobs. It'll put us on the map. It's worth the investment."

But once the banners come down and the golden shovels are back in the closet, what's left is a trail of lopsided deals, and taxpayers stuck holding the bag. (...)

Analysts project that data center capacity will more than triple by 2030 and estimate the U.S. will need to reach 35 gigawatts of capacity by then—double today's total. The surge is largely driven by artificial intelligence (AI), which alone could account for 70 percent of all data center demand by 2030. These facilities already draw more electricity than some nations, and Goldman Sachs projects they'll consume up to 9 percent of U.S. power by decade's end. New builds are booming—yet much of that construction is being underwritten, piece by piece, by state and local governments chasing the illusion of growth.

by Marc Oestreich, Reason | Read more:
Image:Wirestock|Dreamstime.com

Is This the Worst-Ever Era of American Pop Culture?

Last year, I visited the music historian Ted Gioia to talk about the death of civilization.

He welcomed me into his suburban-Texas home and showed me to a sunlit library. At the center of the room, arranged neatly on a countertop, stood 41 books. These, he said, were the books I needed to read.

The display included all seven volumes of Edward Gibbon’s 18th-century opus, The Decline and Fall of the Roman Empire ; both volumes of Oswald Spengler’s World War I–era tract, The Decline of the West ; and a 2,500-year-old account of the Peloponnesian War by Thucydides, who “was the first historian to look at his own culture, Greece, and say, I’m going to tell you the story of how stupid we were,” Gioia explained.

Gioia’s contributions to this lineage of doomsaying have made him into something of an internet celebrity. For most of his career, he was best-known for writing about jazz. But with his Substack newsletter, The Honest Broker, he’s attracted a large and avid readership by taking on contemporary culture—and arguing that it’s terrible. America’s “creative energy” has been sapped, he told me, and the results can be seen in the diminished quality of arts and entertainment, with knock-on effects to the country’s happiness and even its political stability.

He’s not alone in fearing that we’ve entered a cultural dark age. According to a recent YouGov poll, Americans rate the 2020s as the worst decade in a century for music, movies, fashion, TV, and sports. A 2023 story in The New York Times Magazine declared that we’re in the “least innovative, least transformative, least pioneering century for culture since the invention of the printing press.” An art critic for The Guardian recently proclaimed that “the avant garde is dead.”

What’s so jarring about these declarations of malaise is that we should, logically, be in a renaissance. The internet has caused a Cambrian explosion of creative expression by allowing artists to execute and distribute their visions with unprecedented ease. More than 500 scripted TV shows get made every year; streaming services reportedly add about 100,000 songs every day. We have podcasts that cater to every niche passion and video games of novelistic sophistication. Technology companies like to say that they’ve democratized the arts, enabling exciting collisions of ideas from unlikely talents. Yet no one seems very happy about the results.

To a certain extent, such negativity may simply reflect an innate human tendency to fret about decline. Some of the most liberating developments in history have first triggered fears of social stultification. The advent of the printing press caused 15th-century thinkers to complain of mass distraction. In 1964, The Atlantic published an essay predicting, not unpersuasively, that rock and roll would only foster conformity and consumerism in young Americans.

For as long as I have been a critic at this magazine, I’ve tried to cut against the declinist impulse. The year I started the job, 2011, was a turning point of sorts: Spotify launched in America that July; Netflix debuted its first original series soon after. The brainy rock bands that I’d grown up loving—Radiohead, Wilco—were starting to fade in importance, but pop, hip-hop, and electronic music were cross-pollinating in fascinating ways. Understanding change, and appreciating how human creativity flourishes anew in each era, always seemed to be the point of the job.

Yet the 2020s have tested my optimism. The chaos of TikTok, the disruption of the pandemic, and the threat of AI have destabilized any coherent story of progress driving the arts forward. In its place, a narrative of decay has taken hold, evangelized by critics such as Gioia. They’re citing very real problems: Hollywood’s regurgitation of intellectual property; partisan culture wars hijacking actual culture; unsustainable economic conditions for artists; the addicting, distracting effects of modern technology.

I wanted to meet with some of the most articulate pessimists to test the validity of their ideas, and to see whether a story other than decline might yet be told. Previous periods of change have yielded great artistic breakthroughs: Industrialization begat Romanticism; World War I awakened the modernists. Either something similar is happening now and we’re not yet able to see it, or we really have, at last, slid into the wasteland. (....)

Stagnation

Cyniscism

Acceleration

by Spencer Kornhaber, The Atlantic | Read more:
Image: Javier Jaén

It Must Be Nice to Be a West Village Girl

One afternoon this spring, I went to the West Village to meet a West Village Girl.

When I arrived at the whitewashed wine bar she chose, just two blocks from the brownstone stoop Carrie Bradshaw made famous, Miranda McKeon was journaling in her notebook and sipping a cup of green tea. She wore crimson leggings, a stack of candy-colored beaded necklaces, and a black sweatshirt that read SELF-EMPLOYED because she is a full-time influencer — or “creator,” as it is more polite to say in this part of town.

Online, the blonde, rosy-cheeked 23-year-old from New Jersey has over a million followers across TikTok and Instagram. She posts a lot, most often about her charmed life in the West Village: sweating it out at Pilates, treating herself to weeknight Froyo, drinking espresso martinis with her girlfriends. Over a photo of herself walking down the street, she wrote this past fall, “Life is too short. Wear the sparkly skirt!!!! Post the content!!!!! Text the boy!!!!! Leave your number on the table!!!!! Ask that girl to get coffee!!!! Wear cowboy boots year round if you love them!!!! Try! Fail! Love! Lose! Try again! Be embarrassing! Take a risk! Feel it alllllll while you’re here!!!!!”

McKeon knew she wanted to rent in the West Village long before she moved to New York. In college at the University of Southern California, she started hearing from high-school friends, girls who had migrated here before her, that it was the place to live — a cobblestoned paradise where a young woman like herself could live an entire life within a block. During her final semester, last year, McKeon started obsessively combing StreetEasy for the perfect postgrad apartment and, to prepare for the move, watched Sex and the City for the first time. (She identifies as a Carrie with some of Miranda’s “girlboss energy”; she majored in entrepreneurship.) Now eight months in, she likes that the neighborhood reminds her of being back on campus insofar as she is constantly running into people she knows, though instead of classmates, they are girls she follows or who follow her. “I feel like a freshman in New York,” she said.

In person, McKeon seems, just as she does online, to be a remarkably well-adjusted and unjaded New Yorker. On weekends, she likes going out for what she calls a “three-drinker” (a nice dinner with her girlfriends with a self-imposed three-cocktail minimum). She knows the names of the important restaurants (the Corner Store, American Bar, Dante), a couple of age-appropriate bars (Bandits, Bayard’s, the Spaniard), and even some of her neighbors. “I went out to dinner with two girls last night, both of whom live on my street,” she told me. “We met through social media. It’s nice.” (...)

“There’s a cult mentality” to the neighborhood, McKeon continued. It’s true that many of the young women passing by the bar looked like her clones. They move through the neighborhood in packs, wearing the local uniform: a white tank, light-wash jeans, and Sambas, an iced matcha latte in hand, and hair slicked back into a tight ponytail. It was chilly, so several of them, McKeon cheekily pointed out through the window, were also wearing Aritzia Super Puffs, as she was, in the color matte pearl. “I feel like everyone else here in some way,” McKeon told me. “That’s the point of it, I guess.”

The neighborhood has, in recent years, transformed into a fabulous theme park for young women of some privilege to live out their Sex and the City fantasies, posting and spending their mid-20s away. They all seem to keep impressive workout routines (“Hot this and hot that,” McKeon said), have no shortage of girlfriends, and juggle busy heterosexual dating schedules. (The boys they consort with tend to be of the fratty variety.) They work in finance, marketing, publicity, tech — often with active social-media accounts on the side. They have seemingly endless disposable income. They are, by all conventional standards, beautiful. Occasionally, they are brunettes. Whatever their political beliefs, their lives seem fairly apolitical; as one 27-year-old lawyer on a walk with her best friend, both wearing identical puffer jackets, succinctly put their collective interests to me one day in April, “Brunches, coffees, dinners, drinks with your girlfriends — that type of energy.” (They may be more political than they appear: “You can have a Cartier Love bracelet and still care about immigrant rights,” said one person who lives in the neighborhood.)

This isn’t the first time a generation of socially ambitious young women has descended on the West Village and, as one fashion executive explained to me with just a hint of an eye roll, “made the neighborhood their whole personality,” fundamentally changing it along the way. If Sex and the City washed out the last of the neighborhood’s bohemians two decades ago and turned the West Village into a celebrity playground where real adults with real incomes live, the pandemic turned it into something else entirely: a bustling sorority house. “Everyone has the same mind-set. We’re here, we’re young, we’re single. Let’s go out and have fun and be ourselves. Work hard. Play hard,” said a new arrival from Texas with blonde highlights while polishing off a bottle of rosé with her girlfriends one afternoon. They’re basic, they told me proudly. “Basic isn’t a bad thing,” a crew of Cosmo drinkers at Anton’s, just down the street, elaborated. “There’s a reason everyone wants to be like that.” (There’s a sense lately that the entire city, or at least much of downtown Manhattan and the trendier parts of Brooklyn, is going the way of the West Village. “They’re everywhere,” almost everyone I talked to for this story told me.) (...)

The young women who follow Kerrigan and Keenan — fellow New Yorkers and transplants alike — soon flooded the neighborhood. So many that it became a memeable stereotype: “the West Village Girl.” In a post last September, a TikToker named Kayla Trivieri summed up the type under the caption “POV: you’re on a date with a girl from the west village.” The monologue went like this: “So what are you into?” “Pilates, Cartier bracelets, Blank Street, Hugo spritzes, Reformation, and my dachshund …” “What kind of music do you like?” “Sabrina Carpenter, Taylor Swift, and Morgan Wallen once in a while.” When I asked Trivieri about the send-up recently, the native Canadian told me she became familiar with the type before she even moved to the States. “She was the cultural Zeitgeist on TikTok,” Trivieri said. “It became this almost idealized persona. I felt like people in Toronto were even dressing like that in head-to-toe Pilates gear.” (The influencer Tinx sells a $75 crewneck that reads RICH MOM WEST VILLAGE.) To put New York youth culture into high-school terms, Kerrigan said the West Village Girls are “the Plastics, the Mean Girls without the meanness.”

Now, years after she started posting from the neighborhood, Keenan said, she often has to wait on line to get coffee at her favorite shop, Fellini. “I’m thinking about how that’s kind of my fault,” she added. “I’ve recommended it a million times. But it’s a beautiful sharing of information, so I can’t be annoyed.” (The lines, she said, are a good place to meet friends.) Kerrigan said the West Village is now filled with “young powerhouse women with vision boards,” ambitious zoomers who idolize Alex Cooper and Carrie Bradshaw in equal measure. The appeal is “the main-character energy you get when you’re in the West Village,” which feels, she said, like a “movie set.” The irony, of course, is that when everyone’s a main character, is anyone? (...)

The original West Village Girls — those who have remained in the neighborhood and didn’t jet off to Greenwich or to a classic six uptown — aren’t entirely pleased with their new neighbors.

One Tuesday in April, I met Kim Vernon, a former Calvin Klein executive who bought a loft in the neighborhood in 1997. “I don’t want to be an old-lady bitch, but this is the pinnacle of what happened to this fucking neighborhood,” she said when we sat down at Bar Pisellino, which even at 2 p.m. was packed with young women ordering spritzes and pastries. “I see less gay men and, more than anything, groups of four or five girls,” she added. “They’re always talking at a high, high pitch. It is so intolerable. It’s so unpleasant.” Not to mention it’s impossible to get a table at I Sodi or Via Carota these days, two once-neighborly Italian restaurants that were tumbled through the TikTok recommendation machine and came out nearly unrecognizable with lines of day-trippers waiting down the block at all hours of the day. “I used to go to I Sodi when they had an answering machine. Someone would call you back. It wasn’t super-popular,” said Vernon. The last time she tried to have dinner with a friend, she was quoted a three-hour wait. (...)

The old bars and restaurants are also adjusting to the new whims and tastes. “I have regulars who come in all the time and say, ‘What happened?’ It’s just an army of Levi’s and white tank tops,” a bartender at Bayard’s, a newly popping but long-standing Irish pub on Hudson Street, told me. (Behind the bar, she showed me a box of lost phones and another box of abandoned clothes, which she lugs to Housing Works once a month.) In the fall of 2023, the restaurant and bar Cowgirl decided to convert one of its margarita machines into one for frozen espresso martinis, “the new cocaine,” the owner joked to me. “You can see the new group coming in. I don’t know where they’re getting their money from, but they have money,” she said. “Especially on the weekends, everyone’s 27. That magic number. We never had demand like this.” The Spaniard, a cocktail bar by day and a shockingly rowdy hookup spot by night, had to hire an entire security team after what one manager described as a “mass exodus” of the older, tamer clientele. (Its top-three sellers now are spicy margaritas, espresso martinis, and Aperol spritzes, which are pre-batched into kegs.) At L’Artusi, a high-end Italian restaurant, the owner, Kevin Garry, told me he’s selling less expensive wine post-pandemic. “Previously, the crowd was kind of that classic West Village type. Late 30s, early 40s, Masters of the Universe with good jobs and no kids,” he said. “A $150 bottle of wine doesn’t compare to a vodka-soda.” As a waitress at La Bonbonniere, an old-school diner that has been around since the 1930s, said bluntly, “The old people? They die. Now it’s young people with the social media. After corona, pew! The internet!”

Needless to say, no one would go on the record getting too snarky about any of this; it all makes for good business. And some former West Village Girls admitted eventually that in their descendants they could see their younger selves. “I think they’re probably doing what I did when I was 20. This is where they want to go around and get drinks and run into people and look cool,” said Hruska MacPherson. “It’s like Disneyland for them. Let’s let them be young and have fun, even if we cringe at it. Let’s let them have their Aperol spritzes. We were also discovering ourselves.” Annelise Peterson echoed this thought: “We were discovering ourselves. I stayed down there until my ex-husband told me it was time to move to the Upper East Side. Things change; things never stay the same. What the West Village will be in 20 years might be something very different. The influencer is fickle.”

It’s easy to get reflective after a few brunchtime cocktails. “Was I one of these little fuckers?” Savannah Engel wondered aloud to me one Sunday after Bloody Marys at Cafe Cluny. The question seemed to stump her. Two girls hauled yoga mats past us, and she said, “I like to kick them out of the way.”

by Brock Colyar, The Cut | Read more:
Image: Dina Litovsky
[ed. Living the dream. Trust funds, inheritances, nepo connections, rich partners. It's easy.]

As for the apartments the businesses were shipping to, the average one-bedroom in the neighborhood is now $5,995 a month, though apartments often cost much more. A dingy one-bedroom can easily go for $7,500 (expensive but doable on a finance salary or with help from parents).

The Shadow

"Everyone carries a shadow, and the less it is embodied in the individual's conscious life, the blacker and denser it is." - Carl Jung," Psychology and Alchemy," published in 1944.

Jung's concept of the shadow is rooted in the idea that individuals have parts of themselves that they consciously suppress or deny because they find them unacceptable, shameful, or incompatible with their self-image.

However, Jung argued that ignoring or suppressing these aspects doesn't make them disappear; instead, they become part of the unconscious mind and can manifest in various ways, such as projections onto others or in dreams. If left unacknowledged, the shadow can exert a powerful influence on behavior, often leading to destructive patterns or conflicts.

Jung believed that embracing and integrating these shadow aspects into consciousness is crucial for personal growth and individuation. By recognizing and accepting these hidden parts of ourselves, individuals can achieve a greater sense of wholeness and balance, leading to a more authentic and fulfilling life. This process often involves self-reflection, introspection, and a willingness to confront uncomfortable truths about oneself.

***

“There is no generally effective technique for assimilating the shadow. It is more like diplomacy or statesmanship and it is always an individual matter. First one has to accept and take seriously the existence of the shadow. Second, one has to become aware of its qualities and intentions. This happens through conscientious attention to moods, fantasies and impulses. Third, a long process of negotiation is unavoidable.” - Carl Jung

***

“Unless you learn to face your own shadows, you will continue to see them in others, because the world outside of you is only a reflection of the world inside you.” - Carl Jung

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Image: uncredited

[ed. See also: Carl Jung and the Shadow: a Guide to the Dark Side of the Mind; and, Darkness Within: The Dangers of a Non-Integrated Shadow (Arts of Thought).]

Bear cam
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[ed. One of the things I loved about living in Alaska. Every time you went out you could run into one of these guys. Looks like Cambell Creek trail in Anchorage.]

The Sam Brownback Playbook

[ed. We're not in Kansas anymore (it's much, much worse).]

A newly elected Republican chief executive, backed by a cadre of right-wing economists and think tanks, rides a populist wave to victory. Despite inheriting a relatively healthy economy, he unleashes a radical economic policy agenda and defunds government agencies, promising that his actions will usher in a new era of prosperity.

Instead, the economy slows. Budgets collapse. Investors are spooked. Core services erode. Even allies defect. By the end, voters—many of whom once cheered the project—recoil, and a Democrat wins back power.

 

That’s a version of the scenario Democrats are praying plays out in response to Donald Trump’s second-term agenda—and one Republicans are quietly fearing.

But it is an equally accurate description of what’s happened in Kansas over the past decade and a half. In 2012, after riding a Tea Party wave to victory two years earlier, Kansas Governor Sam Brownback launched what he called “a real live experiment” in conservative governance, slashing income taxes, starving the state budget, and insisting that a burst of economic growth would follow to pay for it all.

But that growth, and fresh tax revenue, never came. To fill his ballooning budget holes, Brownback squandered the state’s surplus, drained the rainy-day fund, fully privatized Medicaid, raided the state’s highway funds, decimated state agencies, and cut public education funding. When the service cutbacks started affecting people’s lives, even Brownback’s own supporters started to notice. Roads fell apart. Class sizes grew. And Brownback’s approval rating sank from 55 percent in his first month in office to 22 percent in 2016. Rather than finish out his second term, he took a job with the first Trump administration in 2017. The following year, Laura Kelly, a Democratic state legislative leader with a clear record of opposing Brownback’s reforms, won the governorship. Four years later, she was reelected, in part by tying her opponent to Brownback. To this day, she is one of the most popular governors in the country.

No political parallel is perfect, of course. Brownback didn’t have the cult following Trump does. On the other hand, the chaos Brownback’s policies caused didn’t kick in for several years, whereas Trump’s shock-and-awe actions have already rattled the country and the world.

We can’t predict the future. But we can look at Kansas. Brownback’s story offers Republicans a warning—and Democrats a possible path to victory.

A lawyer who grew up on a family farm in eastern Kansas, Brownback ran for Congress as a moderate in 1994 but quickly became one of the most radical members of Newt Gingrich’s revolution—so radical, in fact, that he refused to sign the Contract with America because it wasn’t conservative enough. As ambitious as he was ideological, he ran for the Senate two years later, won, and was reelected in 2004, both times with heavy financial support from the Wichita-based Koch brothers. In the 2008 cycle, he entered the GOP presidential primaries as a favorite of the religious right (he had grown up Methodist but converted to Catholicism during his first term in the Senate), didn’t catch fire, and soon set his sights on the Kansas governorship, which he won in 2010 with a plan to make Kansas a model for small-government revival.

In a Republican Party increasingly drawn to theatrics, Brownback was something rarer: a radical ideologue who followed through on his bluster. Whether campaigning for religious freedom abroad—he once emerged as a leading voice in Congress against the genocide in Darfur—or slashing taxes at home, Brownback brought the zeal of a missionary to every cause he took up. His theory for Kansas wasn’t new. It was the old supply-side catechism—cut taxes, shrink government, and wait for growth to swell the coffers and supercharge the economy. What distinguished Brownback was the scale of his ambition and his indifference to evidence.

Brownback went all in on that spring day in 2012. He signed a law that slashed income tax rates, eliminated taxes on pass-through business income, and made no serious effort to offset the losses. Moderate Republicans had hoped to negotiate a more tempered version of the plan in conference committee. They didn’t. Brownback got everything he wanted. His tax regime would go into effect starting New Year’s Day, 2013.

Conservative think tanks cheered the law on. Arthur Laffer—he of the infamous napkin diagram—had helped create the law. Grover Norquist gave his blessing. The Wall Street Journal trumpeted a Cato Institute report giving Brownback an A grade for “the biggest tax cut of any state in recent years relative to the size of its economy.”

The laboratory was well chosen. Kansas was—and remains—deep red. Since 1940, it has voted for every Republican presidential nominee with the exception of Lyndon Johnson. Much like the libertarian bend in the American psyche, if you tell Kansans you are going to lower their taxes, cut government expenses, and make programs more efficient, they’ll give you a great deal of leeway.

But beneath Kansas’s right-wing surface lies a persistent ideological split. The state’s Republican electorate includes both hard-line religious conservatives and a sizable bloc of moderates. That tension helps explain why Kansas has a long tradition of electing centrist Republicans—and even the occasional Democrat—to the governor’s mansion.

“Kansas is Republican,” one former state Republican politician told me, “but it’s not crazy.”

Almost immediately after the cuts went into effect, state revenues plunged. By June 2013, just six months into the new tax regime, Kansas was $338 million short of its revenue projections. Within a year, the state had lost nearly $700 million—an 11 percent drop in revenue. Credit downgrades followed. But the administration continued to insist that growth was coming. Brownback dismissed economists’ warnings and suppressed internal projections that contradicted the party line.

Job growth didn’t materialize. Brownback had promised 100,000 new private-sector jobs. By 2014, a year into the “experiment,” the state had added fewer than 20,000—well behind national trends and trailing neighboring Missouri and Colorado. According to the Center on Budget and Policy Priorities, the year the cuts took effect, the Kansas economy shrank, even as the national economy grew. Then, in 2014, the state’s economy grew but still lagged the national average. By 2015, Kansas’s real GDP was growing at half the rate of the national economy. According to the CBPP, five of the previous six years before the tax cut, Kansas’s economy had grown faster than the nation’s as a whole.

What did expand—quickly and predictably—was income tax avoidance. Pass-through entities multiplied practically overnight as doctors, lawyers, and accountants restructured to avoid paying state income taxes. “I’m making out like a bandit,” one attorney told The Kansas City Star. “And it’s completely unfair,” he complained, because his secretary, like most Kansans, still paid full freight.

Before a critical mass of voters caught on, Brownback’s administration was able to paper over the fiscal collapse with budget chicanery. It drained the state’s budget surplus, moved money from the highway fund, cut the state’s pension fund contributions, and tightened eligibility requirements for programs assisting the poor.

The result was a slow bleed: Agencies were hollowed out gradually, and the most vulnerable Kansans suffered, but the daily lives of most voters hadn’t yet been directly affected by the time the 2014 elections rolled around. As Ashley All, a veteran Democratic operative in Kansas, told me, “They were able to conceal the scale of the crisis just long enough.” Brownback squeaked by to reelection, aided in part by a well-timed reminder that his opponent had visited a strip club 16 years earlier.

It wasn’t until after the election that Brownback was forced to take actions that shocked average voters. Two weeks into his second term, another round of credit rating downgrades further raised the state’s borrowing costs and led to more budget cuts in education and infrastructure. Brownback slashed $45 million from school budgets to fill the growing hole. That forced some school districts, already cash strapped from the governor’s previous cuts, to begin sending students home at two p.m. Others canceled classes on Fridays or started summer vacation early. Working parents, left in a lurch, had to scramble to find child care. “We felt we didn’t have a choice,” said Janet Neufeld, superintendent of the Twin Valley School District, which then served 590 students in eastern Kansas. The district ended its academic year 12 days early that year. “It’s not good for kids, it’s not good for families,” Neufeld told Bloomberg. “There have been times when things were tight, but this is the absolute worst I’ve ever seen it,” Mike Sanders, superintendent of the Skyline School District, said at the time. Even parents in districts that didn’t impose such drastic service cuts read or heard about them in the media and worried that their schools would be next.

Meanwhile, the governor shelved 24 highway expansion and modernization projects, including ones he’d campaigned on, such as a $29 million widening of a dangerous 24-mile stretch of K-177 known for rollover accidents and blind curves. During Brownback’s first term, almost 50 percent of all highway fatalities recorded in Kansas occurred on roads like K-177: two-lane highways with no controlled access. “New Budget Deal Postpones Upgrades on Lethal Two-Lane Roads, Harrowing Intersections,” read a Topeka Capital-Journal headline. Republican legislators joined Democrats in blasting the broken promise.

And then came the great irony. Having promised sweeping tax relief, but facing a $400 million shortfall and another credit downgrade, Brownback signed the largest tax increase in Kansas history. Yet rather than place the burden on high-income individuals who had benefited from his first-term reductions, the new law raised the state sales tax, including on groceries, and hiked cigarette taxes, disproportionately penalizing middle- and lower-income Kansans. Conservative lawmakers wept as they voted affirmatively. (Cue the world’s smallest violin.) Brownback insisted that it wasn’t a tax hike—“Look at the totality,” he said. “Overall, it’s still a net tax cut.” But even Grover Norquist called it what it was: a violation of his “Never raise taxes” mandate, and one that particularly punished the poor.

“It wasn’t abstract anymore,” Ashley All, who served as communications director for Laura Kelly’s 2018 campaign, told me. “Parents were paying extra at the grocery store and seeing 30 kids in a classroom. People were noticing delays on roads. You didn’t need to follow politics whatsoever to understand something had gone very wrong.”

The experiment had obviously failed. But the governor wasn’t done defending it. He blamed “media elitists,” “leftists,” and “liberal outside groups” for misleading the public. “Some at the local Missouri-based paper in Kansas,” he warned in bold-faced type in one fund-raising letter, had “even taken to openly rooting for the Kansas economy to fail.”

by Nate Weisberg, Washington Monthly | Read more:
Image: AP
[ed. The real story is that people keep falling for the same old scams.]

A Little Help From Your Friends

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Hartley Lin
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