The Fed Looks In The Mirror

Yesterday the Federal Reserve issued an interesting report on the collapse of the Silicon Valley Bank. The most interesting part of the report is its conclusion that the Fed, itself, was partly to blame for the bank’s failure.

To be sure, the report concluded that the primary cause of the downfall of SVB was mismanagement by the bank. SVB had an increasing amount of uninsured deposits–which made it especially prone to the panicky, social media-driven bank run that brought the bank down–and inadequate safeguards against a sudden change in interest rates. The report noted that executive compensation at the bank was tied too closely to short-term profits and the SVB stock price, whereas there were no pay incentives tied to sound risk management and the bank had no chief risk officer during a period when the bank was growing quickly.

But the Fed report also determined that it was partly to blame, too. The report noted that regulators were slow to recognize the problems at SVB and, once those problems were identified, did not effectively press SVB management to change its approach to the issues and lower the bank’s risk profile. A separate report by the FDIC similarly noted that its oversight was not as rigorous as it should have been. According to the Fed report, the passive approach was due in part to recent efforts to loosen regulation of banks, like SVB, with assets of less than $250 billion. As the news article linked above demonstrates, the report is sure to touch off a renewed banking regulation/deregulation debate.

While that never-ending debate rages, the key question to be addressed at this point is: who will be held accountable for the losses sustained by the taxpayer in insuring accounts above the previously identified $250,000 limit and otherwise addressing the rotten fruits of SVB’s mismanagement? The compensation of SVB’s executives soared during the years immediately before the collapse, as the bank followed its risky course, and the bank’s CEO also made millions in SVB stock sales over the past few years. Wil bank officers be required to contribute to cover the losses? And will the regulators who didn’t vigorously push for changes in bank practices after identifying problems keep their jobs?

Leaky Nation

Over the weekend, U.S. defense and intelligence officials dealt with the fallout of a huge intelligence leak. An array of highly classified documents that had been posted on-line exposed details about a number of different American intelligence-gathering activities and analyses, ranging from tactical information about the fighting in Ukraine to more specific–and potentially damaging, long-term–information about U.S. recruitment of human agents in foreign countries, the penetration of Russian military leadership, U.S. eavesdropping abilities, and the U.S. satellite surveillance program, including a new form of technology that may not have been publicly acknowledged before.

U.S. officials fear that the leak might allow the targets of the American intelligence efforts revealed by the leak, like Russia, to track down sources of information and thwart future intelligence-gathering efforts. Ukrainian officials are concerned that the leak discloses damaging information about obviously sensitive topics such as Ukrainian ammunition shortages and the possibility that Ukrainian air defense systems might become depleted.

According to an article about the leak from the Washington Post, many of the documents appear to be summaries or briefing documents, many of which look to have been prepared for the Chairman of the Joint Chiefs of Staff and other military officials. The Post reports that the documents had been sitting, largely unnoticed, on a gaming chat platform since being posted on February 28 and March 2 before the New York Times reported the leak last week. The U.S. responded to the leak by clamping down on access to intelligence reports–a development that concerns some American allies, who want to share in our information-gathering activities.

The Post article notes that the Department of Justice has opened an investigation into the leak, and Reuters is reporting that the focus of U.S. efforts to track down the source of the leak is internal, as many of the documents were limited in distribution to Americans only. The Reuters article notes that the investigation is considering whether the damaging leak may have come from “pro-Russian elements”–even though the range of documents encompasses not only the war between Russia and the Ukraine, but also U.S. intelligence and diplomatic activities in other countries, such as South Korea and Israel.

The leak is viewed as the most significant since the Wikileaks leak 10 years ago–but it is also weird. Why post a cache of confidential U.S. documents on a gaming platform, where they apparently sat unnoticed for weeks? Why would “pro-Russian elements” want to broadly leak information about other U.S. activities–unless of course they hoped by doing so, they would direct attention away from themselves? As always seems to be the case when dealing with intelligence activities, normal people can’t appreciate the personal and political motivations, the paranoia, or the skullduggery of those directly involved.

It will be interesting to see where the investigation of this leak leads–if we ever find out.

Bailouts/Non-Bailouts

As the fallout continues from the abrupt collapse of the Silicon Valley Bank and the closure of Signature Bank, the federal government’s response to those developments raises some serious questions.

Over the weekend, the Federal Reserve, the Treasury Department, and the Federal Deposit Insurance Corporation announced that all of the depositors in SVB and Signature Bank will be repaid in full, even if they kept more than the $250,000 federal deposit insurance limit in their bank accounts. In addition, the Fed announced that it would offer banks loans against the face value of their Treasury bills and notes and other holdings, even if inflation has eroded the actual worth of those investments.

The government contends that these actions don’t represent a “bailout,” technically, because the banks have been closed and those who owned stock in the banks will lose the value of those investments–but the actions sure smell like a bailout to many people. Some will praise the government for acting swiftly to avoid a potential panic and runs on other banks, but others will wonder about where we now draw the line on the full faith and credit of the U.S. government being employed in the wake of a bank collapse and whether the government’s action was motivated, even in part, by the fact that powerful people in California and elsewhere apparently had relationships with the banks.

President Biden, quoted in the Times article linked above, made an important point when he said that investors in the two banks “knowingly took a risk, and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.” That is unquestionably true, but those who kept more than $250,000 in the banks also took a risk, because $250,000 is the limit for federal deposit insurance. Why should those people and entities be protected against what was a known, avoidable risk? And if the U.S. government is making every depositor whole, what is the point of having an announced limit for federal deposit insurance? Does this mean that, from now on, every depositor will be protected in full, irrespective of how much they have in their accounts? If not, what’s the distinction? And doesn’t this decision encourage risky practices by depositors and banks?

Left unsaid at this point is how the federal government is going to pay for acting as a backstop–again–for troubled banks. Banks have to be permitted to fail, and depositors have to understand that there is risk in going over announced deposit insurance limits. Otherwise, there is no point to having announced limits, and we are left in the untenable position of the federal government insuring every dollar deposited in a bank.

The Power Of The Crime Issue

Chicago’s incumbent mayor lost in her bid for reelection last night. Mayor Lori Lightfoot finished third behind two challengers, garnering only 16.89 percent of the vote.

The consensus view is that the outcome-determinative issue in the Chicago mayoral race was crime. The Windy City experienced a 41 percent increase in overall crime from 2021 to 2022, and the candidate who received the most votes in yesterday’s election, Paul Vallas, campaigned on the theme that crime in Chicago is out of control. Vallas, who is backed by Chicago’s police union, ran on a law-and-order platform and calls for adding hundreds of new officers to the city police force.

Interestingly, the second place candidate, Brandon Johnson, takes a sharply different approach, arguing that Chicago doesn’t need more money for police, but instead should increase funding for mental health care, education, jobs and affordable housing. Other candidates, including Lightfoot, accused Johnson of wanting to “defund the police.” It therefore looks like Chicago voters will be presented with starkly different approaches to the crime issue as the candidates move toward the final runoff election on April 4.

Mayor Lightfoot’s loss in the Chicago mayoral race shows, once again, that crime is an immensely powerful political issue, especially on the local level. If voters don’t feel personally secure as they go about their lives, they aren’t going to pay a lot of attention to other matters. In American cities, that’s a lesson from Municipal Politics 101.

Primary Shifts

Over the weekend the Democratic National Committee voted to make some dramatic changes to the party’s primary election calendar for 2024. It will mean a significant shift for those of us who expect to see the first battles in the Iowa caucuses and the New Hampshire primary, but there are still some issues to be addressed.

Under the new schedule, the Iowa caucuses would be replaced by South Carolina, which would have the first primary on February 3–so instead of wintry scenes in Iowa, we may see a Palmetto State scene like the one shown above. The calendar for the rest of February would feature New Hampshire and Nevada on February 6, followed by Georgia on February 13 and Michigan on February 27. The changes–which were was approved over the vigorous protests of Democrats in Iowa and New Hampshire–were a conscious effort to move up the primaries in states that are more reflective of America’s diversity. They also are viewed as helpful to the renomination of President Biden, should he decide to run again.

The new plan will be revisited as the expected primary dates draw nearer, and will face some hurdles. New Hampshire Democrats say the timing of their primary is controlled by state law and New Hampshire Republicans, and the state will probably hold its first in the nation primary whether the DNC likes it or not. The DNC responds that, if New Hampshire tries to jump the line, it will be subject to punishments, like the loss of delegates. In addition, candidates would be barred from campaigning there–raising the question of “what if they gave a presidential primary election and nobody came?” Another challenge is that the Republican primary calendar currently will follow the old model, with the Iowa caucuses first, followed by New Hampshire primary–thereby raising the concern that some states may have to pay for two different primary elections on two different dates.

The DNC’s changes to the primary calendar make a lot of sense to me; I never understood why Iowa, with its weird caucus system, had such a prominent role in the presidential election process in the first place. I’m particularly glad to see that the plan would move up voting in Georgia and Michigan, which have become important “battleground” states in the recent elections. Why not have early primaries in states that the candidates will actually visit when the general election rolls around?

Not surprisingly, the decisions about where and when to hold the first primaries are about politics–and also money, with states jockeying for early positions because they know it will produce radio and television ad buys, hotel reservations, and media attention for their states. But there is no reason the order of primaries should be set in stone. Taking a fresh look every once in a while is a good idea.

A Temporary Stay Of Execution

I’ve written before–see here, and here–about the deep concerns the people of Stonington, Maine have had about impending federal regulations that would drastically affect the lobster fishing that is a crucial pillar of the local economy. Those working in the lobster trade were convinced that regulations designed to protect the endangered North Atlantic right whale would make lobster fishing practically and economically impossible.

Those concerns have been deferred by recent actions by Congress and President Biden. As is often the case with Congress these days, the $1.7 trillion spending bill that was passed and then signed into law on December 29 included an array of additional provisions–including one that delays the implementation of the right whale regulations for six years. The bill also allocated $55 million to try to accomplish two tasks related to the regulations. First, some of the money will be spent to develop workable ropeless lobster fishing gear and techniques, since the right whale regulations will require an end to the traditional rope-and-buoy system that have been a foundation of Maine lobster fishing for decades. Second, the money will fund research to determine if the North Atlantic right whale is in fact found in the Gulf of Maine, and if so where and when.

An article in the Island Ad-Vantages, the local newspaper for Deer Isle, Maine, reports on the legislation and the reaction to it here. Basically, those in the lobster trade are relieved at the delay in the regulations–which they no doubt view as a kind of stay of execution of their industry–but, as the article’s apt headline states: “And now the work begins.” There are a lot of details to work out, as those involved in the lobster fishing industry need to create a process for making and responding to right whale sightings and figure out how to spend millions, including money to be allocated in future years, to create the ropeless fishing technology. That last task is a crucial one, because the concern underlying the delayed regulations is that the the endangered right whales become ensnared in the ropes that link the lobster traps on the ocean floor to the buoys on the surface. If workable ropeless technology can’t be developed, the reprieve won’t provide long-term relief.

It’s frustrating that our government can’t seem to function at a deliberate, thoughtful pace and address issues through single-focus legislation, and instead can only act through colossal, last-minute spending bills that become Christmas trees for all kinds of unrelated provisions. In this case, however, that process helped out–temporarily, at least–a beleaguered industry and local communities that are dependent on it.

Leaving The U.S. of A.

Every election seems to feature some group of people–often celebrities–who swear that they will leave the country if one candidate or another is elected. It’s become a kind of American election tradition. But how many people actually follow through on their promises to hit the road and live abroad due to election results?

The Washington Post recently published an interesting article that tried to reach conclusions about American expatriates by crunching through some actual data. It found that, to be sure, there have been big spikes in Google searches about moving to Canada in connection with elections and, more recently, the Supreme Court’s decision to overrule Roe v. Wade. There was an especially big spike in such searches in 2016, when Donald Trump was elected, that constitutes the all-time peak in such search requests.

The Post article also notes, however, that only a tiny fraction of Americans actually leave the U.S.A., and an even smaller number do it for political reasons. In fact, the United States is the number one destination for immigrants, by a considerable margin, but only 26th in the number of emigrants. Americans are far less likely to emigrate than citizens of some other countries–but because of our size, that still means millions of Americans have moved overseas. Data from the United Nations and the World Bank indicates that about 2.8 million Americans now live abroad, although there is some dispute about exactly who to count in that category. The data analysis also shows that Americans who do emigrate go to a lot of different countries, with the top ten list being Mexico, Canada, the United Kingdom, Germany, Australia, Israel, South Korea, Japan, France, and Italy.

The data also suggest that very few Americans leave because of election results. Instead, there are a range of reasons for the departures. For example, Mexico is number one on the list of relocations because many of the Americans who relocate to Mexico are children who were born in America and then returned to Mexico with their parents. For other emigrants, ending up in another country often is just the result of a series of circumstances that the article describes as emigration by accident, with a typical scenario being an American who goes abroad to study or work, meets and marries a native of the country of their destination, and ends up staying there. For those Americans who are making conscious decisions to move abroad, the other big reasons include retirement and a simple desire to explore.

In short, there really aren’t many “political emigrants” from the U.S., despite the fervent promises that we hear during election season–probably because promises made during the heat of the moment end up going by the wayside when passions cool, careful analysis of possible destinations occurs, and Americans realize that staying here beats the alternative for a lot of reasons. But if you do go abroad and become one of those accidental emigrants, you’ll probably find a community of other accidental American emigrants wherever you go.

The Beltway And The Twitterverse

If, like me, you don’t tweet or retweet anything, and you don’t pay much attention to the tweets or retweets of others, Elon Musk’s purchase of Twitter for tens of billions of dollars has not had much of an impact on your world. For some people who are serious Twitter users, however, Musk’s takeover has been an earth-shattering event–and they can’t quite figure out how to deal with it.

NBC has an interesting story about how “liberal Washington” hates Elon Musk, and doesn’t like what he’s doing with Twitter, but just can’t cut the cord and stop tweeting. They give lots of reasons for their inability to achieve separation: Twitter is a great information resource; it’s how they get a lot of their news; it’s easy to use and smartphone-based; it’s how they communicate their thoughts to their thousands of devoted “followers,” and it’s how they think many of the people outside Washington, D.C. get their news, and they don’t want to deprive their constituents of that news source.

And, lurking in the background of those rationalizations is another reality: there really is no viable alternative. If you’ve gotten used to tweeting your “hot takes” about Donald Trump at all hours–or even become a kind of “Twitter addict,” as some Beltway insiders put it–there is nowhere else to go. So you can harrumph about Elon Musk acting like a jerk, but you just can’t bring yourself to quit him. He’s like the toxic high school boyfriend or girlfriend who never quite gets dumped because you don’t want to sit around at home on Friday nights.

One of the people interviewed for the story is a Congressman whose staff has convinced him that he can’t quit Twitter because “social media is where many of his constituents get their news, so leaving could cut them off from critical information.” I find it hard to believe that many people outside of Washington, D.C. or New York City actually get their news from Twitter. Other than one person who tweets as part of their job, I don’t know anyone who pays much attention to Twitter. There are reasons for that: as much as Twitter tries to get ordinary people to engage with it, there are some seriously off-putting aspects about the service that make many of us cringe: it’s often snotty and mean, with its tantalizing one-word retweets (like the overused “Wow!”) it’s consciously designed to make you click and click, and it just doesn’t bear much resemblance to the real world–fortunately!

As I read the NBC article, which identifies the number of followers of the people quoted and even designates some people as Twitter “pseudo-celebrities” and “power couples” based on such data, I felt like the real reason people inside the Beltway don’t quit Twitter is that they like the idea of having thousands of “followers” hanging on their every tweet. Never mind how many of those “followers” are bots, and how many are like-minded insiders who are creating their own little echo chamber. Having thousands of “followers” is a tangible sign of relevance and self-worth. If you crave the very idea of being someone who influences policy and is a “player,” giving up those followers would be a very hard call.

The First Democracy

It’s Election Day in America. It’s time to head to the polls, exercise our franchise, and foolishly hope that the results will be accepted by all and will quash the bitterness that seems to accumulate, election after election, at every point on the political spectrum.

We’ve got the ancient Athenians to thank for all of this, of course. To be sure, during the ancient tribal times there might have been an election or two among members of the tribe to choose a new leader–although the strongest or cleverest member of the clan might have had something to say about that–but the Greeks were the first group to institutionalize democracy as a mechanism to govern a political state, at some time during the fifth century B.C.E. The Greeks believed that all citizens (a category limited to adult males that excluded women, children, and slaves) should participate in governance of the state. The word “democracy” comes from the combination of the Greek words demos (the people) and kratos (rule). Citizens had the ability to serve in an assembly and vote on new laws.

So, were the Greek elections friendly exercises that were less negative than our modern American version? Not really. In fact, the Athenians had a formal process called ostracism–the basis for the modern word “ostracize”–that allowed voters to vote to expel leaders from the city-state for 10 years, and they could do it for dishonesty, misrule, or just general dislike. (Imagine if the modern American system had such a process!) And the Greeks (and Romans, too) weren’t shy about attempting assassination of tyrants, either.

In reality, democracy, either in its pure or republican form, has always been a bit messy, with heated feelings, negativity, and vigorous denunciations of purported tyrants and fools–but it sure is a lot better than the authoritarian alternatives. Today, I hope Americans of every political persuasion get out and vote, so the demos can kratos.

Big Money

We can be sure of two things about every election for federal offices in America. First, politicians from both parties will tell the voters that the upcoming election is the most important election in history, with the future of the country hanging in the balance. And second, the election will be the most expensive election in history . . so far.

Both things have happened in this election cycle. The Hill reports that spending on political activities in the 2022 midterm election is projected to reach a staggering $16.7 billion, obliterating the prior record, which was established in the last midterm election. As of Tuesday, spending reported to the Federal Election Commission, which tallies the numbers for the federal side of the election, is already at $7.5 billion–surpassing the paltry $7.1 billion spent in 2018–and we’ve still got days of additional ads, commercials, and events before Election Day rolls around next Tuesday.

Spending on the contests for federal offices is projected to reach $8.9 billion this year, and state elections are expected to cost an additional $7.8 billion. Pennsylvania, Georgia, Arizona, Nevada, and Wisconsin are leading the spending boom, and congressional “super PACs” from both parties are providing a lot of the cash.

Here’s a trivia question: who did George Washington beat in the first U.S. presidential election? The answer is no one; he was unopposed and was elected unanimously. Those days are long gone. Now, we seem to have an endless appetite for “the most important election in history” and are willing to dig deeper and deeper to fund them.

Football Season Is Political Ad Season

Yesterday, when we watched the Buckeyes game with Penn State at JT’s Pizza and Pub, the vast majority of the TV commercials during the game were for political candidates. The campaign strategists know that, in Ohio, virtually everyone drops everything to watch the Buckeyes on the gridiron, so it is prime time to deliver a message to a captive, very focused, every sense on heightened alert audience. It undoubtedly costs the campaigns a boatload to buy the ad slots, but they figure it is worth it–which is why Buckeye fans were seeing so many political ads rather than the standard in-game car, tire, or “remember to ask your doctor about Altavlid” commercials.

Fortunately, they had the sound off at JT’s, and we couldn’t have heard the voice over of the commercials in any event, over the din of football analysis and “OH-IO” chants. But you don’t really need to have the sound on to follow the political ads. Basically, they fall into two categories: the scary ads and the “humanize the candidate” ads. And it’s immediately clear which category a political commercial falls into, because every ad in either category shares obvious common characteristics. In fact, the touchstones are so commonplace that both Democrats and Republicans use them, and if you run a Google search you’ll find that the British and Canadian political wizards use the same techniques, as the Canadian ad above demonstrates.

Scary ads: Dark, grainy, blurry footage, with quick cuts from one troubling scene to another. Opposing candidate depicted in unflattering poses in slow motion or with some kind of color filter to give him or her a more devilish, unsettling appearance. Children in peril or worried people sitting around their kitchen tables. Messages in large type that appear on the screen like shotgun blasts that usually include the words “we can’t afford.”

Humanize the candidate ads: Candidate is shown in a bulky, woolen, Mr. Rogers-type sweater, carrying a cup of coffee and sitting on the family sofa with their spouse. Candidate makes breakfast or kicks a soccer ball or throws a football with kids. Lots of warm hues and sunshine. Candidate is shown gesturing forcefully to smiling, nodding blue-collar workers, who are deeply absorbed in everything the candidate is saying.

I’ll be glad when November 8 finally arrives and we can go back to watching the Buckeyes, the tire ads, and those helpful spots about the latest miracle drug.

Backfire Protests

The primary objective of protests is to call attention to your cause–and to do so in a way that makes people sympathetic to your position. The lunch counter sit-ins and freedom marches of the ’50s and ’60s to protest racism and segregation in the American South, in which peaceful protesters were attacked and manhandled by bigoted authorities and police dogs, were examples of protests that successfully turned public opinion.

The recent protests in which climate activists hurl food at famous paintings and then glue their hands to walls, in contrast, seem ill-suited to achieving that basic goal.

Monet’s magnificent Les Meules, shown above, is the latest painting to endure the indignity of being the target of thrown food, in the form of mashed potatoes. The mashed spuds were tossed by members of “Last Generation,” a group that wants the German government to stop using fossil fuels. The incident followed a similar escapade by members of “Just Stop Oil,” who splattered tomato soup on one of Vincent Van Gogh’s Sunflower paintings in the National Gallery in London. In both instances, the food tossers then glued their hands to the walls holding the paintings. Fortunately, both the Monet and the Van Gogh were covered by glass, so no permanent damage was done.

There’s no doubt that the protests got media attention, and some people on the political spectrum have dutifully argued that the food-throwing protesters are “totally justified” in their actions due to concerns about climate change. I suspect, however, that a far larger number of people object to converting beautiful works of art into props for acts of political theater and turning quiet art museums into turbulent protest zones. It just seems wrong to throw things at artwork–especially when the paintings have nothing to do with the fossil fuels or climate change that are supposed to be the whole point of the protest. Committing assaults on paintings of flowers and haystacks doesn’t exactly drive home a point about global warming.

Gluing your hands to walls and floors doesn’t make much sense, either. Either the palms of the protesters are going to be painfully de-skinned when police arrive, or they are going to risk being left glued down in the dark overnight, without access to food, water, or the facilities–an unhappy fate which happened to protestors who glued themselves to the floor of a Volkswagen facility recently. Either way, it doesn’t exactly send a message that the protestors have intelligently thought through the potential consequences of their actions.

We’ll see whether the food-tossing, hand-gluing approach to protesting causes a shift in public opinion in a way that favors the protesters cause–or whether it has the opposite effect. People in Europe, and elsewhere, might not be receptive to the intended message as they approach a winter in which there are significant concerns that people won’t have enough fuel to heat their homes.

Regulatory Insiders

The Wall Street Journal published an exhaustive piece of investigatory journalism this week about stock trading by senior officials and employees of federal regulatory agencies, You can see the full WSJ article here, and a summary of six “takeaways” from the reporting here. It’s a classic example of old-fashioned shoe leather reporting, but on a big scale. One of the six takeaways describes what the Journal team did:

“The Journal obtained and analyzed more than 31,000 financial-disclosure forms for about 12,000 senior career employees, political staff and presidential appointees. The review spans 2016 through 2021 and includes data on about 850,000 financial assets and more than 315,000 trades reported in stocks, bonds and funds by the officials, their spouses or dependent children.”

The fruits of the investigation justify this enormous amount of work by the reporting team, because the analysis found that thousands of federal administrative officials trade stocks in companies their agencies are actively regulating. The full article is worth reading, but let’s focus today on five of the takeaways.

First, more than 2,600 federal agency officials owned millions of dollars in stocks in companies that were lobbying their agencies. Second, officials directly owned stocks in companies whose businesses obviously would be affected by decisions made by their regulatory agencies, including Defense Department officials owning stocks in aerospace and defense companies, an EPA official owning stock in an oil and gas company, and an FDA official investing in food and drug company stocks that were supposed to be off limits. Even more amazing, some Defense Department officials owned stocks in Chinese companies that the U.S. was considering for blacklisting.

Third, The Journal investigation found dozens of examples of officials trading in stocks of companies shortly before their agencies announced enforcement actions against those companies. Fourth, 1,800 officials owned stock in Facebook, Amazon, Apple, or Google. And fifth, about 70 officials engaged in trading that most normal investors don’t even consider, like options trading or short selling, including some individual trades of between $5 million and $25 million.

The ability of regulatory officials to buy or sell stocks in companies that are under the oversight of their agencies is obviously a gaping hole in federal law. Administrative officials are supposed to be objective and dispassionate in their decisionmaking. When such officials are directly investing in companies they are regulating, often under circumstances–like trades made shortly before regulatory actions are to be announced–such conduct gives rise to reasonable suspicions that insider information might have influenced the buy or sell decision. The potential conflicts of interest are even greater when regulatory officials engage in especially risky trading tactics, such as short selling, or large-money trades. And, perhaps most concerning, the agencies in question apparently had rules prohibiting much of this conduct, but waived the rules so the trades could be made.

It’s time for members of Congress to get off their duffs, stop the constant fundraising, skip another appearance on CNN, MSNBC, or Fox News, and take a good look at the conflict of interest and stock trading rules applicable to the administrative state. A statute that requires officials to avoid any direct ownership of stocks during their service in regulatory agencies–and instead participate solely in mutual funds managed by others–seems like a good start. Given the increasing role of federal agencies in making decisions that affect our lives in countless ways, we’re entitled to some meaningful assurance that those decisions aren’t influenced by the regulators’ personal financial interests.

Retiree Political Contributions

If, like me, you sometimes shake your head at how much money federal congressional campaigns raise and wonder where all of that cash comes from, an interesting article from the Business Insider has a partial answer: retirees. The Insider reviewed congressional campaign contribution records from the 2000 election to the present and found that people who identify as retired are an extremely potent fundraising source, both in terms of number of contributions and total dollars contributed.

The data is pretty amazing. In the 2019-2020 election cycle, for example, more than 1 million retirees made a contribution of $200 or more (the contribution level that triggers reporting requirements) to congressional campaigns and political committees. The amount of money retirees are donating is increasing, too. For years, retirees contributed about one-tenth of campaign funds, but since 2016 that number has grown, and by 2020 seniors had given more than 20 percent of all contributions–shelling out a whopping $378 million to campaigns and PACs. Because only donations of $200 or more are reported, it’s possible that if you counted small-money contributions, the total amount bankrolled by retirees would be even greater. And in case you’re wondering, the retirement funding is a bipartisan phenomenon, with candidates in both parties receiving increasing amounts of contributions.

Not surprisingly, political campaigns have responded by targeting potential retiree donors with direct mail, phone calls, and texts. Political campaigns can always be expected to follow the same line of thinking employed by famed thief Willie Sutton, who when asked why he robbed banks responded: “Because that’s where the money is.” The contribution record of retirees makes it pretty clear that their retirement funds are a ready source of cash.

The rising role of retirees in political campaigns is intriguing. People who have carefully saved for their retirement obviously have money at hand during their golden years, but I wouldn’t have predicted that they would be spending it on politics–rather than gifting family members, taking those retirement trips they hoped to enjoy, or just guarding their nest egg to make absolutely sure they’ve got enough to live on. And it isn’t exactly clear why retiree donations are increasing. One source quoted in the article speculated that the increasing rancor and heightened levels of scare-mongering in American politics might have prompted more contributions from older Americans, but no one knows for sure.

I find myself wondering whether retirees are more susceptible to negative ads and over-the-top claims in fundraising appeals–just as they are more susceptible to being cheated by fraudsters claiming to be grandkids needing money. Are the senior citizens who are giving more money just more engaged in American politics than ever before, or are they being tricked by scary ads and misleading appeals into giving away their savings?

When (And How) Is A Candidate’s Health Fair Game?

There is a very interesting Senate race underway in Pennsylvania. The race promised to be unconventional from the beginning, with tall, bald, goateed, tattooed, sweatshirt-wearing Lieutenant Governor John Fetterman taking on TV celebrity and political neophyte Mehmet Oz. But the race really took a turn when Fetterman suffered a stroke in May–an apparently severe stroke that Fetterman now says almost killed him–causing “Dr. Oz” to go on the attack about whether his opponent is healthy enough to do the job.

There are lots of issues that candidates for a Pennsylvania Senate seat would logically address, but Fetterman’s health became a focus after his campaign limited his appearances and he has had obvious problems with halting speech when he has participated in rallies. The Oz campaign, which has been trailing in the polls, has tried to capitalize on the issue by pressing for a debate. And, because modern politics can’t resist the gutter, the Oz campaign has done so in cheap and mean-spirited ways–such as by promising that it would pay for any medical personnel Fetterman might need to have on standby during a debate.

The Oz campaign tactics have been sharply criticized, but the Pittsburgh Post-Gazette and others have increasingly recognized that Fetterman’s fitness to serve is a legitimate issue. As the PPG editorial put it: “If Mr. Fetterman’s communication skills have not yet recovered sufficiently to effectively debate his opponent, many voters will have concerns about his ability to represent them effectively in Washington.” The editorial also noted that the Fetterman campaign was unduly optimistic about his condition and his prognosis, and that recovery in the aftermath of a stroke is “notoriously unpredictable.”

Yesterday the press reported that the Fetterman campaign has agreed to a debate on October 25–two weeks before Election Day. The parties are still wrangling about details, but one of the conditions that has been agreed upon is that Fetterman will be able to watch a closed captioning device during the debate to deal with his acknowledged auditory processing issues, and that debate viewers will be told about that. With a debate now on the schedule, the PPG has called upon the Oz campaign to stop the attacks that, in the newspaper’s words, has turned the race into “an exercise in insult comedy rather than a serious contest on the merits of the candidates as potential U.S. Senators.”

Anyone who has known a stroke victim, as many of us have, will recoil at a political system in which an opponent thinks it is appropriate to disrespect and make fun of someone struggling with post-stroke limitations. Even by modern political standards, that’s low. At the same time, strokes clearly can be debilitating, and it is reasonable to question, with decency and respect, whether someone recovering from a stroke and experiencing impaired auditory processing can actually perform the duties required of a U.S. Senator. I expect that many curious Pennsylvania voters will tune in on October 25, wondering what they might see.