1) A Trump and Big Tech Alliance Alas

For too many years big tech giants in Silicon Valley and conservatives have treated each other like enemy combatants.  We've made the case at UP for years to both sides that this hostility never made much sense.  After all, it was laissez-faire free market policies that allowed the U.S. to globally dominate the internet age and spawn at least five multi-trillion dollar American companies - the mightiest on the planet.

So we were thrilled to read this headline from the Wall Street Journal yesterday:

The lead tells it all: "The Trump administration is using its global trade wars to advance the interests of the U.S. technology industry, seeking to prevent foreign countries from targeting American internet firms."

It was the Biden Justice Department that tried to break up big tech and slow their investment in AI.

Hopefully, the tech companies have figured out who their real friends are.  Several of the Magnificent Seven tech companies saw their stocks hit all-time highs yesterday.

2) Do Tariffs Raise Prices? Yes

Trump continues to rack up wins at the trade negotiation table with our trading partners.  But there's still a spirited debate that needs to be resolved on whether the Trump tariffs have increased prices.  We think the answer is yes, at the margin. But it's complicated.  

We're a little queasy about the Trump argument that tariffs don't filter down like sand in an hourglass to consumer prices. Sure, some of the cost will be borne by the importers. But businesses with thin profit margins can't eat the whole extra cost of taxes imposed on them.

A study published in May by Fed economists found that tariffs on Chinese imports in February and March had already affected consumer prices.  The chart shows that import prices rose more rapidly than the prices of domestic goods.

Sorry, there is no tariff free lunch.

The latest Treasury Inspector General for Tax Administration (TIGTA) report brings this very welcome news for taxpayers:

That would dial the IRS back to its lowest head count since... 2020.

4) Want More Affordable Housing? Try the Free Market

Everyone says they want to tackle the housing affordability crisis. But in the top 65 metro areas, we're already seeing some cities where rental costs are falling dramatically.  

Data from Five Star Cash Offer, a real estate investment firm, shows cities that have recently enacted pro-housing policies are seeing significant year-over-year decline in rental prices.

Sarasota, Florida has seen a 43% drop (from $3,290 to $1,886) in average rent during 2024.  This came after the city eased restrictions on mixed-use and higher-density developments in 2022.

Providence, Rhode Island saw a 19% drop in monthly rent, from $2,513 to $2,030, during 2024.  The year before, the state streamlined permitting for land use and eased restrictions on converting existing structures into housing.

Allowing more multifamily housing units also drove rents down significantly in cities from Austin, Texas, to Cape Coral, Florida.

All this demonstrates that the best short-term move to ease the affordability crisis in housing is a simple one: let developers build new residential buildings, and then never, ever impose rent controls.

5) Newsom’s Gerrymandering Scheme Could Cost GOP House Majority

The redistricting of U.S. House seats is supposed to be a once-a-decade event. But the super-tight partisan margins in the House have broken that norm. Right now, Republicans have a 219-to-212 majority, with four vacancies.

Texas is debating a new map that could create more GOP seats from the Lone Star State. Republicans now hold 25 of the 38 congressional districts.

Now, California Governor Gavin Newsom is threatening to call a special legislative session to pass an "urgency measure" to draw a new Congressional map. The goal would be to squeeze out two to five of the state's last nine GOP House incumbents.

In 2010, California voters gave the power to draw congressional districts to an independent redistricting commission. Though Democrats dominate California, the commission is made up of five Democrats, five Republicans, and four commissioners who are unaffiliated.

Newsom has another scheme to allow the legislature to create its own maps and ignore the existence of the commission.

Even some Democrats say that's a Magic Marker they can't touch.  "I understand we want to recapture the House," Bay Area Assemblyman Alex Lee says. "I don't believe cheating the elections and making elections a sham is the right way to go."

6) A Better Way to Fund PBS

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