<Music> Welcome to Party Politics, where we prepare you for your next political conversation.

I'm Jeronimo Cortina, political science professor at the University of Houston.

And I'm Brandon Rottinghaus, also a political science professor here at the University of Houston.

Thanks for hanging out with us.

And talk a little politics.

Kind of an exciting week.

Politically, we've had kind of ups and downs from the white House.

There's also been, at least from the governor's mansion.

Kind of a big win for Greg Abbott.

Dan Patrick continues to get bills passed out of the Senate.

What's now some film incentives?

Maybe we'll see some, you know, TV production in our backyard.

Maybe you, too, could be a star.

I know a bigger star.

I know.

Well, let's talk about the very top issue.

And that has been the kind of fluctuation of the market.

Obviously, this has been a subject of much conversation the last month or so since Liberation Day, according to Donald Trump.

But markets have not responded well to the liberation of the nation.

right Vis-a-vis the tariffs.

The S&P 500 has tumbled more than 14% since Donald Trump took office.

You know, I guess everyone knows, the Dow Industrial, Dow Jones Industrial Average has shed almost a thousand points early in the week.

The dollar's down.

University of Houston, colleague Ed Hirs is predicting that the city will be in recession.

Things are not going in the right direction here.

Partly, it's because of this concern that essentially the market instability, because of, in this case, the president's war with the fed chair, Jerome Powell has created this consternation about how the central banks are going to handle inflation, how they're going to deal with tariffs, and just generally state of the economy.

So he said he wanted to have him fired in no uncertain terms.

Then he backtracked and said, I didn't mean that the media blew it up out of proportion.

It's obvious he said what he said.

But the reason we know that is because the markets reacted to what he said.

So he is trying to kind of whitewash a lot of this, which I want to make a point on in a minute.

But I want to ask you first, and that is whether you not you think this is going to create a kind of continuous fluctuation in the economy for the entirety of Donald Trump's term?

Oh, absolutely.

100%.

And why is that?

Because look, for for the US economy, trade represents around 25% of our GDP.

And then what formerly was known as gross domestic investment is around 6 trillion.

The well represents these gross capital formation around $28 trillion.

So what does that mean is that capital is going to look for places where there is certainty.

And so the US yes it's huge.

It's around $6 trillion.

Yeah China is around 7.5 trillion.

And then you have the rest of the world that can potentially absorb if the right conditions are ripe, for investments to go to different countries, Europe, Latin America, they can go to Brazil, they can go to Chile, they can go to Mexico, they can go to India.

They can even go to China.

Yeah.

So that what happens is create an environment where capital is very, very nervous and say, you know what, we're going to pass on these.

Yeah.

Like a place where your chief executive is not fighting with the head of your central bank.

Exactly.

You sounded just like a total, like finance, bro.

I'm going to get you a like a puffer vest.

Like a bear.

Oh, yeah.

Yeah, I love that.

Monogrammed that everything.

Oh, really?

Because you sound like.

Exactly the part.

And I think you're totally right.

There is this concern that because there's been this fluctuation that the US sort of is not an investable property, and that has long term implications for the state of the economy.

There's already like declining consumer confidence in the fact that there's so much fluctuation here means that this that churn is going to be a political problem for Donald Trump and for the Republicans who are going to have to defend this in the next election, which will be here before you know it.

But to me, the other issue is that, like we're used to seeing presidents and federal like reserve chair fight, this happened during the H.W.

Bush administration.

In fact, George H.W.

Bush blamed Alan Greenspan, and his right on his for his loss, saying, you know, he didn't reduce interest rates fast enough.

So that the economy didn't recover as it eventually kind of did.

But a reason it did is because Clinton cut a deal with Greenspan, and that was sort of effective for them to be able to find some common ground to reduce the deficit and then to have the interest rates lower.

So there is a kind of give and take here.

But for the Trump administration, it feels like all take, all right, right.

One of the way that they want it until it's the case that they don't.

And markets say you've made a mistake.

Trump met with a bunch of big box CEOs this week.

And they told him in no uncertain terms that they are going to see scarcity, not just that, but also the prices for what is left on the shelves will be higher.

And that obviously was a big moment for the white House to say, oh, this is something we're going to have to fix.

So really two big issues here.

One is sort of Trump's economic plan that keeps going back and forth.

Right.

It's sort of tariffs one week.

Right.

No tariffs.

The next were a trade war with China today.

Tomorrow we're friends.

We're going to make a deal.

It's unclear what is happening here.

And I don't know that the American people are along with him for this ride.

In fact we know the polling suggests that he basically is under water when it comes to economic policy for the very first time in his entire political career.

So the one advantage he had over Democrats that was universal was that.

And it's now basically gone.

So, right.

That's a definite issue.

And he also is a creating this kind of illusion that he's doing well.

For instance, last week he talked about that there are gas prices in some places were $1.89.

Right.

They haven't been a $1.89 like the early 2000s.

And there's no place in the country where the prices are that low.

So he's trying to creates artificial reality in a moment where people are just not believing it.

They're not getting the relief that they wanted.

Right.

And and in the international arena, you know, yeah.

Foreign presidents have, I guess, understood how Donald Trump operates.

So, you know, for example, this week, Japan and Mexico, suggested that they were in no rush, to any concessions.

The Trump administration wanted.

And why would they be right to wait for a week?

It'll be gone and.

Then create more pressure on the White House.

And, you know, President Trump is saying that everyone wants, to negotiate, everyone wants to negotiate.

But, okay.

Yes, everyone wants to negotiate, but with the right conditions.

And I think that pushing them, with these, significant pressure.

Yeah, he's not going to bring them to the table and have something, you know, that everyone can benefit.

So true.

Yeah.

And, you know, the only thing that is going well is that the shares, and use of signal is increased by a 13%.

Oh, partly because now people know what signal is thanks to.

Thanks.

Yes.

Who is back in the news?

Obviously the Secretary of Defense has had a pretty bad week.

Yeah, a bunch of things happened that obviously make DoD look like it's not functioning well.

Number one is that there's a major upheaval inside the Pentagon, even among Hegseth's hand selected staff.

They're either being put on leave because they are leakers.

And I'm putting that in quotes.

The white House is not offering any additional evidence on that.

Or it was the case that the chief spokesperson, who was also a colleague and friend of Pete Hegseth, has left the department and wrote a scathing op ed in Politico saying that the department is totally dysfunctional with Hegseth at the head and by the way, he also potentially leaked additional secretive documents on Signal.

How do you read the way that this is happening?

The president came to his defense saying nothing to see here.

I've support Pete Hegseth in this, but privately, there are these concerns.

NPR reported that there are looking for ways to get out of this and to find a new secretary of defense is the should we get a?

Lettuce head and have it be like the countdown to see which last longer the lettuce head or Pete Hegseth?

well, or is he just going to survive this?

I mean, the you know, the Defense Department is not the Department of Defense is not the place right where you can have someone that is hesitant, or when you can have someone that doesn't have the right leadership credentials to implement the policy.

Pete Hegseth doesn't have that experience.

And it's not a place where you can afford to make those kinds.

Of mistakes, absolutely no.

And he simply doesn't have the experience.

I mean, sorry.

Yeah.

Yeah.

Why?

Because he has never been in, in in at that level.

He has never had a career in which he was prepared to take the helm at the Department of Defense.

And in addition to these, you have Elon Musk circling around like shark.

With his chainsaw.

Or something that they want to cut around 200,000 jobs, from the Pentagon's civilian workforce, of around 750,000.

Yeah, that could cripple the mission of, defense in, in in, here, here in the in the US.

Yeah.

So it is rather complicated, right?

Internationally, he has given, speeches at NATO and, and some other places that people are like, wait, what?

Like what?

It's confusing.

And the Trump foreign policy is a little bit wonky, and it's a at least directionally pretty obvious.

Right?

They want to kind of return out of all of its energy to U.S. base interests.

And so there are obvious.

Implications.

For this, but it's still a delicate balance.

Right.

And to try to, like, kind of disassociate yourself with all these different international organizations or countries can be very kind of diplomatically challenging.

Yeah.

And that's where we are right now.

Right?

Yeah.

That's where Pete Hegseth finds himself.

And so far, I mean, by the time this actually comes out, right.

We record this days before it actually comes out, that Pete Hegseth could be gone.

But at least we see now a kind of reification of this basic thesis that I've been promoting for a long time.

And that's that scandals are still important because they're still highlighting these things.

Right.

And they're good because it does give us a sense that there are these kind of liabilities, but it's also the case that Hegseth has survived way longer than we've likely seen.

This happened in the past.

So it's maybe not the case that he'll survive forever, but he's definitely holding on for longer.

And part of the reason is because the president's backing him.

This reminds me of the moment when, after Katrina, the FEMA director had basically kind of bungled it.

It was a tough situation, but like the FEMA did not do well to kind of organize the aftermath of Katrina.

And George W Bush flew there and said the following words that he definitely regrets.

And that's that brownie.

You're doing a heck of a job, right?

He was not doing a heck of a job.

So this kind of phrase is just become the sort of catch word for, the kind of difficulty of a member of the cabinet in getting their job done.

So I think Hegseth is doing a heck of a job.

Yeah, right.

And that's a real liability for the white House.

And we'll see if this kind of classic scandal defense holds up or not.

Let's talk about Texas because there's lots going on.

We're still in the thick of the legislative session.

The biggest thing to happen this week was, of course, that vouchers was passed.

Dan Patrick and the Senate have agreed to the House changes.

They still have to kind of formally put this all to paper, but basically it's a done deal.

Before that, though, one of the interesting things that happened was that the local and consent calendar, which is not a calendar, most people think a lot about it, tends to be bills that are not controversial.

It's going to be local bills, maybe kind of local taxation bills.

And because of the way the Constitution structured, sometimes these things just have to be passed by the lege.

But it's also ripe as a killing ground for people who want to see government slow down, or who just want to make basically a stink of things.

That this week it was the Freedom Caucus.

They had serious objections to the Democrats resolution, which was to honor Cecile Richards.

Cecile Richards, of course, is the daughter of Ann Richards, the granddaughter of Ann Richards.

But she also, was the former CEO of Planned Parenthood.

So these conservative Republicans say, why are we, acknowledging this?

It's a kind of liability.

It's a moral question.

They pushed back the Democrats, returned fire and said, this shouldn't be controversial.

None of these are.

And as a result, you know, we're having friction where there shouldn't be any.

But by the insurgents more or less killed the calendar for that day.

That is all the bills that were up to be debated on more or less just kind of up, down where their rapid fire oh gabbling them through all got killed.

So this to me kind of begs the question, what the Freedom Caucus is up to this, legislative session?

Have they been successful at doing things other than just kind of killing the calendar for a day, or making these ceremonial stands?

Well, I don't know.

I mean, it depends how you look at it.

And one, I guess, point of view is, looking at it from a, they have been very efficient.

Right.

For example, if you that we're going to talk about in just a second about vouchers.

Right.

But vouchers in reality was, the doing of the governor.

Right.

It's hand selected candidates that were going to vote on that particular stand in, end of story.

Yeah.

In terms of, being really important in terms of pushing policy and pushing their agenda, I would say the other point of view is that they haven't done a lot.

Right.

Speaker Burrows is right.

There still speakers.

Right?

Democrats are base chairs still there.

Democrats have, you know, perhaps have had some, success in terms of, pointing their, their views, out there.

Yeah.

So and amending legislation ways that they might like.

Yeah.

And the Freedom Caucus has done this too, right?

They've been successful at changing some of these laws or especially on budget issues, effective at trying to sort of shape the, kind of conference discussion.

Yeah, in a way that they might like.

For instance, they have essentially instructed the conferees to work with the Senate to do things like increase property tax relief, which they're sort of doing, and to try to find ways to essentially eliminate property taxes to require state funded hospitals and jails, to report how much undocumented immigrants are costing to defund the lottery.

Now, the, kind of instructions to conferees are really just to suggestion.

It's like asking my kids to put away their laundry, like they might do it right, but they're probably going to have to be reminded or maybe even forced to do it right.

So it's not like a guaranteed policy outcome or like a legislative win, but they have been successful kind of at the margins.

And I actually think, too, that even though this kind of stunt to kill the calendar wasn't necessarily that successful, they are growing a number and they are being effective.

It could make that kind of version of the Republican Party more known.

And look, I mean, the fact that Burrows is still speaker, of course, is, kind of a sort of a loss for them, I guess you'd say.

But Dade Phelan's not speaker, and that's a win for them.

Right?

So you have to think about the kind of big picture here about what it all looks like.

And I feel like they've been pretty successful at getting most of what they wanted.

So of course this is an evolution.

It's not going to happen all in one session.

But over time we could definitely see some of that influence.

And we saw some of that influence when it came to the voucher fight, which is really the battle royale for the governor.

He has been talking about this for.

Signing.

Dollars.

Yeah.

Like I said, you know, Dan Patrick has signed on to the house version.

There were amendments that were put into place.

Republicans were reluctant to join the governor on this without some conditions.

So some of the conditions made the Republican who were on the fence more likely to side with the governor.

For instance, annual audits of programs and vendors, state aligned testing requirements for private schools, tight residency requirements, crackdowns on fly by night schools so that you can't just kind of open a school and get this money from the state, you have to have an accreditation for a couple years, hard caps on funds for who can get these vouchers.

So it really is, I think, kind of fixed in and more accommodating for what the concerns were for Republicans.

But the way Abbott got there to me is the interesting thing.

And that's that really it's by force.

And I describe it like this.

What Rick Perry got by finesse, Greg Abbott got by force.

He was able to basically break the Republican Party, rebuild it, and then essentially create it in his own image, especially for this voucher fight, which is really a signature win for him.

So give me your thoughts about vouchers, like, how did this come about and what does it mean for the rest of the session, but also for public ed?

Well, I mean, this vote comes after, the chamber also approved $7.7 billion for school funding.

Worth noting, too.

Yeah.

So that might have been one condition for putting.

So that might have been one condition for putting.

Cream in your coffee.

Exactly.

Not so bitter.

Exactly.

So, okay, here's some sugar, here's some cream, and then pass this thing, I mean, it's, I guess from a public policy perspective, without the politics that you just went through the politics.

I agree with you.

I think it's going to be an interesting experiment.

Right.

And the first one is you're going to cap it, $1 billion, and then you're going to see what's going to be the demand of these, services.

The real issue here is to really test if there's going to be any differences in terms of these kids that go there, for, you know, use, ESA's or go directly to public, to public schools.

And the real question here is if that's going to happen, I think that's going to have a significant in terms of human capital formation.

And if kids are going to be better prepared and not prepared, etc., etc., and what's going to be the metrics are you going to use if you're going to have separate metrics for public schools, they that all you have to do.

They start times.

But if you're in private school you don't have to.

It's Okay.

Like no.

We know students are struggling through star testing right now.

I know, I know, looking at.

My kids, taking his star tests, right now and then defining, for example, you know, students with disabilities, right.

Special education and obviously have these things in terms of your receiving public money.

Yeah.

Right.

Then you have to be accountable because you're using, Texans' taxes.

Yeah.

So that's going to be something that we're going to see eventually how this policy, evolves.

That's a great point.

And I think to one concern is the fiscal note on the bill basically says this could balloon up to like much bigger, up to $4 billion.

And you also have to have new staff to be able to accommodate.

That's another kind of cost driver.

So there's a lot of potential for this to blow up financially.

The other thing I'm thinking about is that the state has devoted so much money to these fixed costs, things like property tax relief, things.

Like there's a. Voucher program.

Yeah, you can have up to 20% and maybe even 30% of your budget.

That's just the state side of the budget.

That's just the general revenue side of the budget devoted to stuff that you cannot change.

That puts a real pinch in terms of other future needs that might come.

So that's to be interesting.

The other thing, just politically speaking, I think it's worth noting, is that the implications for the governor on this are interesting.

And that's that he essentially has broken it and now he owns it.

So it's a good thing because if you are a governor, you want to get your agenda right.

You need your party to be on board.

Now, he basically has that.

He's threatened them.

He's persuaded them.

He's done all the things you need to do to make this happen.

So that has been effective for him.

But it also means that any liability that comes in the form of not getting something passed means it's at your doorstep.

So yeah, the governor will be blamed for these things if it doesn't go well.

And that could create some political problems if things don't work that as they're supposed to, but also to me, it's funny because like Dan Patrick controls the Senate and what Dan Patrick did to the Senate, Abbott has done to the House.

He controls the House in a way that Patrick controls the Senate.

So setting up these inner chamber differences could be really interesting.

We'll talk about film incentives in a minute because the Senate wants it and the House is like, not sure.

So that could be one of those issues where you could see a kind of exacerbation of tensions between Greg Abbott and Dan Patrick.

But very few governors get to have these kinds of big signature wins.

And when you do, it definitely is noteworthy.

So this is all really to the kind of kudos for, for Greg Abbott, who has really remade this in a way that he wanted to.

Let's talk about film incentives.

The Senate wants it.

Like I said, they passed a pretty significant chunk, about $500 million over the course of the next two years.

In a bipartisan fashion.

Even Houston's own Carol Alvarado voted in favor of it, saying she didn't want to miss out on the next filming of what will likely be the next Selena documentary, of which there are dozens.

Yeah, some really good ones, some good podcasts, too.

Versus the house.

Who wants to spend about $68 million a healthy sum, but not as much as the Senate wants to.

But some interesting ramifications to this include, the fact that about 2% of the additional bump for people getting those incentives will go to faith based productions.

Dan Patrick is very clear.

He wants to export Texas values.

The question was, what does that look like?

Well, one thing it doesn't look like for sure, according to Paul Bettencourt, is swearing he watched Land man, as many of us did, and found, of course, Billy Bob Thornton swearing all the time.

Right.

And that was not going to be qualifying for qualification for getting this money.

So what do you make of this?

Is this two kind of big brother where it's like we're going to give you civil incentives, but we're going to dictate what you say in these films and other productions.

Sure.

And it's one of these, I guess, things that I do not really understand sometimes, in the sense of, the government should not intervene in private, interesting.

You know, enterprises.

And Republicans have said the same.

Yeah.

Well, yeah, I that's, you know, the Republicans are saying I remember, right.

It's like, let business do whatever it is that they do because that's the law of the market.

Yeah.

But then on the other hand, is, Well, but I'm going to tell you what you can do and you cannot do.

Right.

That's one thing.

But then on the other hand, is this issue about oversight and this issue about accountability.

So for example, these new, Senate bill, it means that the grants are going to be only awarded after completion.

But once again, you give uncertainty.

It's like, okay, but if I do this thing and then you don't like it because someone swore in the in the movie or the document, I'm not going to get it right.

It's like, wait, what you can do?

Yeah, Billy Bob Thornton like, had too many buttons open in there, like on his shirt.

And you're like, no, exactly.

That's not Texas.

Values.

That is a problem, right?

Yeah.

And the governor's office, according to this bill, may reject any applications for whatever reason.

So I think is this thing of.

Yeah, let private enterprise, bloom and do what we're best at doing.

But then on the other hand, yes, but you cannot do this, that and that.

And if I don't like, I'm not going to give you the money that you already invested.

So, yeah, at the end, if it passes this way also the film industry.

Right.

Like a new finance bro that I am is not.

Going to be thinking about new deals.

Right.

Well he's not going to have the, the certainty and the, the the certainty in order to make these big, huge productions because they're going to say, maybe we get it, maybe we don't get it.

Let's go to Georgia.

Great point.

Yeah.

No, no worries.

That's a great point.

Additional big money concerns this week include that the director of the Texas Lottery is out cashed up.

Yep.

Scratch out didn't pay off right?

Ryan Mendel is out.

He effective immediately is resigning.

He is only been in this job about a year.

The prior executive director, also under a lot of scrutiny, decided to leave.

The lottery Commission has fallen on some hard times.

They are currently under sunset, which is a like legislative process where the Lege reviews whether or not your agency could continue or should be transferred to other kinds of agencies.

The House is zeroed out their budget.

They are under two different investigations from the Texas Rangers, from the Department of Public Safety and Paxton's office.

Civil lawsuits, meanwhile, have spurred, because of the Lottery commission's willingness to let Mega-corporations buy all the tickets and then cash out, leaving people like you who I know love scratch off without an option to win.

What do you make of the lottery commission sort of current standing, and whether or not we're going to be able to have lottery and other six months?

I mean, it makes sense, obviously, this is something that was going to happen sooner or later.

The real question here from, you know, legislative perspective is you cannot just, get rid of the lottery here, right?

I mean, it's something we.

Still have a lot of revenue that they generate that goes to public schools and some to veteran services.

They can't just say, we're not having this anymore.

So they're going to have to find some mechanism to control exactly the money and to administrate, administer the.

it's just close the loopholes, have someone that is competent and you have to revamp the whole commission.

Yeah, right.

Is it a bluff for the Lege to say, like, we're going to really push hard on this to make sure you're following what we want and then and, you know, kind of ensure they do feels like that's what's going on.

I mean, yes, but it's within their prerogatives one way or the other.

And I think that if they get it clear and have more oversight in terms of, you know, this is has to do like one, two, three, four, five, six.

Yeah.

Then he's going to be all gotcha.

Last thing is week as a City of Houston issue.

And that's that John Whitmire has made a deal with the plaintiffs in the drainage lawsuit to basically put a bunch of money towards the drainage fee.

This is a long legal fight we can't get into.

But the bottom line is that the city's going to save a lot of money.

Otherwise going to have to spend on this, which it desperately needs, right?

Yeah.

There's huge kind of cost drivers going on right now.

Some potential cost savings include, you know, the fact that the Ernst and Young has come up with this plan to try to trim the budget, and there are buyouts happening at the, the police department for some of the civilian individuals.

So, that's all pretty good news for the mayor.

Do you think this is going to make a dent in the city's fiscal issues?

I mean, you know, already make a dent, from 330 million deficit, it one down to 220 million.

still, the mayor has a huge.

Yeah, I guess, field to walk in a huge, deficit.

Too narrow.

Still lots of fingernail chewing to go.

Yep, yep.

But at still.

But it's better than it was.

Oh, yes, it's better than it was.

I think it's in a better position.

And I think that those efficiencies eventually will have to come up with something.

Okay.

But certainly that's going to be something that we're going to be, taking a look in the next couple of weeks.

I'm Jeronimo Cortina.

And I'm Brandon Rottinghaus.

The conversation keeps up next week.

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