Wednesday Edition

The national debt is reaching crisis levels, but it doesn’t seem like a priority for either Joe Biden or Donald Trump, one of whom will likely be our next president. (The Economist)

The situation:

• America's net debt has grown from 46% of GDP in 1992 to 96% of GDP today.

• The Congressional Budget Office projects that the debt-to-GDP ratio will increase to about 166% over the next 30 years.

• Roughly 1/3 of the U.S. federal deficit is due to interest payments. However, over the next 20 years, the CBO predicts interest will account for 2/3 of the deficit.

The Economist: “Although Messrs Biden and Trump both tut-tut about the dire fiscal outlook from time to time, neither has made improving it a centrepiece of his campaign. On the contrary, both would in all likelihood add to America’s debts, by spending more in Mr Biden’s case and by taxing less in Mr Trump’s. Neither candidate dares breathe a word about trimming spending on health care and pensions for the elderly, which account for the biggest share of the federal budget and are set to grow still bigger as the population ages.”

The debt rose by $7.8 trillion on Trump’s watch (granted, a good chunk of that was pandemic relief), and Biden’s tenure will add a projected $7.9 trillion.

• Over the past five years, the federal deficit has averaged 9% of GDP each year, first during Trump's term and continuing under Biden.

Although the GOP is typically the party pushing debt and deficit reduction, don't expect them to curb Trump's spending if he gets a second term.

Bubba’s Two Cents: I think two things are happening here —

1) The debt isn’t a sexy issue: It can be wonky, and consequences can be deferred by kicking the can down the road.

2) It’s bad timing: “Tax cuts and limited government” Republicans have kind of fallen out of favor in the GOP, and those were the guys who were pushing this issue the loudest.

A new Daily Beast review of campaign finance records highlights the major fundraising gap between Speaker Mike Johnson and his predecessor, Kevin McCarthy. (The Daily Beast)

McCarthy raised over $400,000 for GOP members most at risk of losing their seats. In contrast, Johnson raised only a fraction of that amount.

• Rep. Juan Ciscomani, Ariz.: $14,000 quarterly under Johnson. $145,000 quarterly under McCarthy.

• Rep. Marc Molinaro, N.Y.: $28,000 quarterly under Johnson. $193,000 quarterly under McCarthy.

• Rep. Michelle Steel, Calif.: $17,000 quarterly under Johnson. $147,000 quarterly under McCarthy.

• Rep. Maria Elvira Salazar, Fla.: $32,000 quarterly under Johnson. $4,000 quarterly under McCarthy.

Daily Beast reporter Mini Racker on McCarthy’s fundraising chops: “The longtime GOP politician spent more than a decade and a half building a political machine that hauled in millions from big donors. His critics used this fact as ammunition against him, portraying him as a swampy corporate hack who would sell his principles to anyone paying top dollar. But his money engine unquestionably helped power Republicans to the House majority in 2022.”

Campaign cash is a huge deal in politics, as the candidate who spends the most money almost always wins.

The latest: Rep. Marjorie Taylor Greene, R-Ga., has apparently backed off her threat to try to remove Johnson from the speaker role.

• Still, it’s a sign of how many Republicans are having second thoughts about ousting McCarthy in October.

• Infighting and dysfunction are rampant in the House GOP, and Johnson has failed to live up to the expectations of the Trump-y conservatives who once dubbed him “MAGA” Mike.

Bubba’s Two Cents: The congressmen who ousted McCarthy see themselves as rebels first, and Republicans second. They don’t really care all that much whether he delivered concrete, tangible wins for the GOP. “Shaking up the system” is far more important.

The latest sign that the current U.S. immigration system is overwhelmed is a major change in the demographics of people crossing the border. (NBC News)

The shift: In 2023, for the first time ever, 50% of illegal border crossers came from countries other than Mexico, Guatemala, Honduras and El Salvador.

• Prior to the pandemic, those four countries alone accounted for approximately 90% of illegal border crossings.

Where are they coming from now?

• The number of Colombian migrants, for example, surged from 400 in 2019 to 154,080 in 2023.

• From 2019 to 2023, Chinese migration increased 1,000%.

• Over the same period, migrants from India spiked 400%.

NBC News reporter Daniel Noriega: “Experts and U.S. government officials attribute this explosive growth in large part to the pandemic, which provoked mass migration around the world, adding serious challenges to an immigration system already beleaguered by a decade of severe backlogs. Another major factor is the massive expansion of transcontinental smuggling networks, itself fueled by widespread digital technology.”

Bubba’s Two Cents: So what’s troubling about the shift is that U.S. immigration issues seem to have gone from a mostly regional problem to a global one. Our system is already buckling under the pressure, and this is just going to introduce more political and practical challenges.

Income inequality is a common theme in today’s politics, and worker pay is often at the center of it. (The Guardian)

From 2001 to 2024, workers’ share of the national income dropped from 64.1% to 55.8%, per new Bureau of Labor Statistics estimates.

• CEO compensation soared 1,209.2% from 1978 to 2022, while typical workers' wages rose only 15.3%.

• Over the same period, wages for the top 1% of earners in the U.S. rose by 171.1%, compared to a 32.9% increase for the bottom 90% of earners.

Calling for increases to the minimum wage has become a common response to rising income inequality.

• In 2024, the minimum wage increased in 22 states and 43 cities and counties.

• Last year, congressional Democrats introduced a bill that would establish a $17 national minimum wage by 2028.

Bubba’s Two Cents: Concerns that the rich are getting richer and poor are getting poorer have exploded in recent years (and it’s not just coming from the left). One big question is what role the government should play in tackling the issue, especially given the mixed results of policies like minimum wage increases.