Politicizing intelligence

And a few headlines of note as we jump into summer.

Note at the top: Two headlines from the past 36 hours that matter (ignoring the floated Apple and EU tariffs, since those come and go with the wind)…

Harvard suit: Continuing its fight with America’s universities, the Department of Homeland Security upped the ante by banning Harvard from accepting foreign students (who account for ~25% of Harvard’s degree-seeking population). Harvard subsequently sued the government over this action, citing free speech and due process. Only a few hours later, a judge quickly moved to temporarily block the government’s order.

A judge may have stayed the order, and the Supreme Court may eventually rule it unconstitutional, but the tenor and message sent by the order will undoubtedly have a chilling effect to international students previously interested in studying in the US.

GOP budget: On Thursday morning the Republican’s budget reconciliation bill — the real name of which is, and I am not joking, ‘One Big Beautiful Bill Act’ — passed the House now sits with the Senate. The OBBBA would:

• Permanently extend Trump’s 2017 tax cuts (originally set to expire at the end of 2025) at a cost of $3.7tn over the next decade

• Reduce spending on Medicaid by $700bn through new work requirement (potentially resulting in nearly 8mn newly uninsured Americans)

• Reduce spending by 30% ($286bn over the next ten years) on food assistance programs that support 40mn people

• According to the non-partisan Congressional Budget Office, reduce the resources of the poorest 10% of Americans by 2% in 2027, moving up to 4% in 2029 (predominantly because of the cuts to Medicaid and food assistance), while increase the household resources for the richest 10% (mainly because of the tax cuts).

Source: CBO

• Phase out clean energy tax credits enacted as part of Biden’s Inflation Reduction Act (despite over a dozen House Republicans expressing support for the tax credits earlier this month), ultimately pushing up emissions.

Overall, the new budget is expected to increase America’s debt to GDP ratio from ~98% today to 125%. This new debt is going to require the Treasury to issue more bonds, at rates much higher than before, because the fiscal profligacy of the House budget is increasingly spooking bond markets.

Long-term Treasury rates are currently above 5%.

Source: CNBC

Already the US spent $880bn servicing its debt in 2024, more than Medicare or Defense. And that was when foreign investors were still scooping up US debt because it was viewed as a safe asset. Now? That is very much of up for debate. An auction of newly issued 20-year Treasuries this past week was met with tepid demand. China, previously the second-largest holder of US debt, has started to slowly unwind its position. Japan, the largest foreign holder of US debt, is going through its own domestic bond turmoil and could hold back.

Let’s see what the Senate does over the next few weeks. But right now, it’s looking like the US might be headed off the fiscal cliff, for no discernible reason.

Enjoy your Memorial Day Weekend everybody!

Now let’s move to the main thrust of today’s holiday weekend post, the politicization of intelligence!

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Is the Venezuelan government directing a Tren de Aragua invasion of the United States?