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Politics

Companies are shelling out big $$$ on lobbying

While every election cycle has its fair share of money tossed around, this one brings in some new players. According to a report by The Daily Upside, while the typical players are gradually raising their lobbying spending, some relatively new sectors are joining the game, based on data on political lobbying gathered by OpenSecrets.

Call it a comeback

Federal lobbying has shot up to a record-breaking $2.2 billion in the first half of this year, which is part of a larger trend in the past half-decade of companies increasingly wanting to influence policy.

A senior researcher at OpenSecrets told The Daily Upside that as policy issues arise that pertain to a particular industry, they typically start shelling out more cash… which is expected. An example of this can be seen in the tech industry:

• Social media regulation has been a hot topic this year, with most of the efforts on the Hill regarding children’s safety on online platforms, tech companies have increased their spending as a result.

• Meta sits at the number one spot among all individual companies in the amount spent on lobbying this year, per OpenSecrets data.

New players

Meta spending a lot on lobbying isn’t a surprise, but some lesser-known players (especially fintech) are starting to get in on the action, too.

• Cashapp and Zelle’s parent companies, along with PayPal, have spent the biggest amount of money they have in their history on lobbying in the first half of this year, according to OpenSecrets data.

  • Dan Auble, a senior researcher at OpenSecrets, said half a decade ago most fintech companies didn’t spend a penny on lobbying.

Another sector starting to open its wallets is the vacation rental space. As cities around the globe are pulling the plug on short-term rentals, some in the US have followed suit, like New York and Santa Monica.

• So far, in the second half of this year, vacation rental companies in total have spent over 13% more than they did the same time a year prior.

• Expedia in particular started dropping stacks. It spent 58% more on lobbying than last year.

  • A rather interesting exception to this trend is Airbnb (which has increasingly been targeted in New York and California), as its spending has gone down almost 30% since last year.

Following the lead: Since big tech companies continue to spend on lobbying, related industries have taken notice and upped their expenditures in recent years. Auble told the Daily Upside that the most amount of spending usually comes after elections, not before, so it’s anyone’s guess as to how much will be shelled out at the beginning of winter.

Economy

The jobs report came back and the results are… meh

With the Fed’s rate cut on the horizon, everyone was highly anticipating the jobs report, and well, it was okay. Data released from the Bureau of Labor Statistics (BLS) on Friday showed that hiring rose in August but fell the prior two months, missing expectations.

This is the last major economic indicator the Fed will get before it decides how much to cut interest rates and it will likely stir further debate on the number before it happens later this month.

Report: C-

Less than projected, the Labor Department said that the economy added 142,000 jobs in August. This dropped the three-month average of job growth to its lowest level since the middle of the pandemic.

• This comes after the number of jobs added this summer was revised down by 86,000.

  • The BLS also revised the number of jobs added in the past year in mid-August, saying the country added 818,000 fewer jobs than previously thought.

• Although, the unemployment rate fell to 4.2%, marking its first drop in five months.

After the report dropped, Christopher Waller, the Fed Governor, said the latest pile of numbers “requires action,” and that he’s “open-minded” regarding a larger rate cut later this month, per Bloomberg.

The big question

The question isn’t if rate cuts will happen, but how big the cut will be. Waller said “If the data suggests the need for larger cuts, then I will support that,” echoing the sentiment of other Fed officials.

Investors appear to think that the most recent employment overview has increased the likelihood of a lower cut of 0.25%, despite some analysts believing that the slow labor market could open the door for a more aggressive 0.5% cut this month.

Government

Does a sovereign wealth fund make sense?

Russia, Saudi Arabia, China, Iran. Why wouldn’t America want to take an idea from them? Drafts of a US sovereign wealth fund have been floating around the White House, per Bloomberg. The US is already an amalgam of a plethora of other countries’ ideas, people, and cultures, so why not take a financial one?

According to Bloomberg, the Biden administration has been covertly developing a proposal for a wealth fund over the past few months, and former President Trump approved of the idea in a speech outlining his economic policy program for a second term.

What is it?

A sovereign wealth fund (SWF) is basically an investment fund owned and operated by the government. Much like a typical hedge fund, the government has a pool of cash it would use to invest in real estate, stocks, bonds, and whatever else.

• It’s mostly made up of government-generated capital, frequently taken from the surplus reserves of the nation with returns that go back to the country.

Foreign countries have used SWF to finance projects at home and become their own international investors. For example:

• As of last month, the Government Pension Fund of Norway, which was established in 1990 to invest excess oil money, held 1.5% of all listed companies globally.

• The $925 billion Public Investment Fund of Saudi Arabia has made significant overseas investments, such as a 5% share in Uber.

  • In addition, Saudi Arabia also has ~66% of its funds reinvested in domestic projects to support infrastructure and local initiatives.

However, an American SWF might look a bit different than these two.

It’s all about the logistics

Partially because White House officials still don’t know the direction they’d want to take it in. Sources told Bloomberg that the “structure, funding model, and investment strategy,” of the SWF is still up in the air.

• This is similar to Trump’s supposed plan, as he said that a US SWF should support “great national endeavors,” at the New York Economic Club last week.

Some have their doubts: Larry Summers, a Harvard economist and former Treasury secretary, told Bloomberg TV that the US trade deficit (which was at a solid $79 billion this summer) may prove to be a hurdle.

He also noted, like many other economists, that other countries with a SWF share a common link:

They’ve made scads of money selling oil and piled up budget surpluses, while the US, which has a total debt of over $35 trillion, has spent more money than it’s made every year since I was born (2001). Overall, critics just don’t think the US is in a financial position to push for an SWF.

Grab Bag

Hunter Biden found guilty on all nine charges

At least he was able to enjoy an upscale lunch in Malibou the day after he was charged. Hunter Biden pleaded guilty to tax fraud charges in his tax evasion case Thursday, switching his plea as the trial was about to go underway. The president’s son faces 17 years in prison and up to $1.7 million in fines, with the sentencing scheduled on December 16th.

The charges

Prosecutors accused Biden of owing over $1 million in unpaid federal taxes on nine of the tax evasion charges he faced last year. Among other things, the prosecution alleges he claimed rent, his children's tuition, and trips to strip clubs as company costs.

• Biden was also found guilty of several felonies involving firearms, for which his sentencing is set for November 13.

  • Biden faces up to 25 years of prison for the firearms case.

Will he do time? The BBC reported that former federal prosecutor Manny Medrano, who practices criminal defense law in Los Angeles, believes Biden will likely be imprisoned.

• This is partially because the amount of money unpaid was $1.4 million and the crime took place over four years.

  • Medrano expects him to serve two to four years.

Concurrent cases: Through his attorney, former President Donald Trump entered a not-guilty plea on Thursday for new allegations of interfering in the 2020 election. After the US president was found to have partial immunity from criminal prosecution by the Supreme Court, the indictment was rewritten to concentrate on his conduct as a private citizen.

Teens are vaping a lot less (so they say)

Let’s keep in mind we were asking the kids to snitch on themselves (albeit anonymously). A yearly online survey of roughly 30,000 6th through 12th graders around the US showed that the number of teens ditching the nic sticks increased, with usage hitting a decade low.

• Less than 6% of students in middle and high school admitted to vaping this year, which is the lowest it has been in ten years.

  • The percentage is down from 7.7% the previous year.

• High school students, whose e-cigarette consumption peaked at 27% in 2019, were mostly responsible for the fall.

• Among students who currently use e-cigarettes, about 26% said they vape daily.

More than 1.6 million students reported vaping in the past month, one-third the number in 2019. However, the number of middle schoolers who use e-cigarettes remained the same, at around 3.5% of students.

The decrease in vaping didn’t directly correlate to a rise in the use of other tobacco products, like nicotine pouches or cigarettes, per the FDA.

Kicking the habit

The decline follows years of intense enforcement of shops and suppliers, including Chinese vaping companies that have been selling their e-cigarettes illegally in the United States for years, and public health campaigns warning children about the risks of vaping.

• Elf Bar, the most widely used e-cigarette among teenagers, had a 36% decrease in use after the FDA sent warning letters to shops and manufacturers.

Chinese vape manufacturers, which own most of the market share, are continuing to flood the US with e-cigarettes despite FDA bans, as they have managed to workaround regulations.

Always an alternative: The manufacturer of Zyn, Philip Morris, recently revealed that it will construct a $600 million Colorado facility to meet the soaring demand, even though less than 2% of teenagers reported using nicotine pouches this year (I’m willing to bet it's higher).

Fast Facts

Cheese Consumers: According to Bloomberg, the average American consumes more cheese per year—about 42 pounds—than butter, ice cream, and yogurt combined.

Hard Hiding: A murder suspect in Tennessee, Deario Wilkerson, was hiding from police when he, quite literally, fell into the investigation. Wilkerson was in the attic when the floor collapsed and he landed directly in police custody.

Bad Vibes: A school district in Silicon Valley had an almost $200,000 contract with an “energy healer” that will not be renewed this year because parents thought it was too extravagant. I don’t see where they got that.

Prehistoric Path: A series of 120 million-year-old dinosaur footprints found in Africa and South America by paleontologists indicates that there once was a prehistoric road that connected what is now Cameroon and Brazil via a dried-up river. 

Monster Mishap: Monster Energy’s alcoholic spin-off brand, The Beast Unleashed, saw its net sales drop 32% over the past year. I guess not everyone is looking for a weaker rip-off of Four Loko.