|Some libertarians will cheer the fact that the House is effectively on pause until these leadership decisions get sorted out. But the stopgap funding bill runs out roughly a month from now, and this distraction makes it more likely that legislators will again pass an omnibus at the last possible minute—if they manage to meet their deadline at all. Bear in mind that government shutdowns don’t actually really save much money, and—frustratingly—don’t even really shut down much of the government. So it’s not clear that this gridlock would help on those fronts.
Meanwhile, “the yields on U.S. Treasury bonds are now hitting levels not seen in decades,” writes Reason‘s Eric Boehm, and “much of the U.S. government’s debt is tied up in short-term bonds which periodically ‘roll over’ into new bonds with updated interest rates. As a result, higher interest rates mean higher interest payments—and those funds come directly out of the federal budget, leaving less revenue for everything else the government might aspire to do.”
In a better Washington, with a less “poisonous atmosphere,” the impending debt crisis would be considered a gigantic problem. In the one we have, it’s unlikely to be fixed. Let’s hope the next speaker of the House sees it as a priority.
Sam Bankman-Fried goes to trial: The trial of former FTX crypto exchange boss Sam Bankman-Fried started yesterday. Bankman-Fried faces seven criminal counts, including money laundering, securities fraud, and wire fraud; the trial is expected to last roughly six weeks. Prosecutors are arguing, in The New York Times‘ words, that Bankman-Fried “effectively looted billions of dollars in customer money to buy lavish properties, donate to political campaigns and invest in other companies.”
One key component of the case will be Bankman-Fried’s intentions—whether he was deliberately defrauding those he worked with or whether he acted “in good faith,” as his lawyer claims.
No more right-to-shelter rule in NYC? Mayor Eric Adams has asked a judge to let him suspend New York City’s right-to-shelter mandate (also called the Callahan consent decree) under an influx of migrants. Adams is arguing that the spike in migrants expecting public services constitutes an emergency, which warrants suspending the policy.
“With more than 122,700 asylum seekers having come through our intake system since the spring of 2022, and projected costs of over $12 billion for three years, it is abundantly clear that the status quo cannot continue,” Adams declared in a statement.
“With approximately 10,000 asylum seekers still arriving each month, the city estimates this mounting crisis will cost taxpayers $12 billion over three fiscal years—an amount that will continue to grow without federal and state intervention and support,” Adams argued last month. “Because the city has been forced to bear most costs of the asylum seeker humanitarian crisis at a time when revenue growth is slowing and COVID-19 stimulus funding is sunsetting, the city faces substantial fiscal disruption if circumstances do not change.”
This was predictable. New York City actually achieved a balanced budget in fiscal year 2024 (due mostly to better-than-projected revenue), but it expects a $5.1 billion budget shortfall by fiscal year 2025. It’s essential for the city to keep its finances under control. Expedited work authorization for asylum seekers who have come to the city would be one way out of this mess; Adams started prioritizing this in mid-September, and Gov. Kathy Hochul has announced a similar initiative within the last few days. Still, that’s mostly in the hands of federal immigration authorities, who ought to be more permissive in letting people work. The best way out of this is to move migrants away from dependence on social services and toward gainful employment.