The Trump EO on Grant Payments

Hope It Is A Quick Review

Cities and states are panicking over the Trump Executive Order on payments. I am seeing a wide range of breathless, fear-inducing articles about it. How will states fund their budgets?

Yesterday, government employees received an email. If they want to resign, they just reply to the email with “resign”. They get 8 months of severance. Show me the private company that does that consistently.

I know a little about grants. I invested in Streamlink Software way back in 2013 because they were solving the problems in grant processes. Believe me when I tell you it is screwed up.

Governor Jelly Belly of Illinois was out in front of a microphone lying as usual. He wants to be President of the US so bad he can taste it, like a fast food french fry. What he doesn’t understand is why he is in the position he is in. He thinks he is popular. The truth is Democrats just want the money he inherited from his grandfather’s efforts. If he didn’t have it, he’d be cast aside.

I don’t think there is much to fear about Trump ending the mother’s milk of cash from the government. There will be a bit of disruption. I do think Trump needed to put a halt to all cash flow out of the Federal Government. So much of it is bunk.

Already it is calculated that $DOGE, Elon Musk’s effort, is saving us $1B per day. Investor James Chanos disputes that number. Chanos makes a fair point and I haven’t delved deeply into either claim to see who is correct.

However, the trend is in the right direction. We are finally attacking undisciplined government spending and people who profit from undisciplined government spending are going to squawk loud and hard about it.

When I was a little kid, Senator William Proxmire of Wisconsin used to make a big deal out of the “Golden Fleece Award”. It was awarded to federal pork barrel projects meant to buy votes and nothing less. Today, each December we revel and laugh in Senator Rand Paul’s Festivus rants on X that show the stupid projects federal dollars went to.

In both cases, all the wasted money was approved by Congress. But, their rants never stopped the flow of money from the government to cronies.

There is no doubt much of that money is political favoritism. If you are on X, follow Data Republican. He built an AI tracker that can follow government money to non-government organizations. It is amazing. It’s also amazing to see who those NGOs give taxpayer dollars to.

Essentially, it is a gigantic grift web for left-wing political causes. You pay for that. Billions and billions of dollars. More dollars were wasted than Carl Sagan saw stars in the galaxies beyond ours.

This isn’t money going to non-profit charities like my friends, who do a lot of great things for people on 100% private donations. These are NGOs that try to solve global warming. Often they attack unsolvable luxury problems. Don’t think altrusim, instead think about all the shady stuff from the fictional rapidly becoming reality television series House of Cards.

But wait, there is more. As Data Republican uncovered:

After spending too much time on the award search tool, I’m starting to wonder if we’ve had a UBI system all along for one political party—just disguised as grants.

It was already known that 13.4% of Americans work directly for the government. But it turns out a huge number of the 12.8M non-profit workers are also subsisting entirely off government grants, so the real total could be 24%…. and that doesn’t even include fake consultants/contractors for stuff like DEI, development aid, etc that are “for-profit” but only have a single client

Federal + State spending is roughly 50% of GDP We are a 50% planned economy where money is stolen from the productive 50% and given to the unproductive 50%.

That 13.4% doesn’t include state, county, municipal, township, and other government employees. Remember, most of them all get guaranteed benefit pensions too!

Economist Gary Becker at his Becker-Posner Blog once wrote that the GDP multiplier effect of government spending was 0, or possibly even negative. Economist John Cochrane always challenges Keynesian economists who prize government spending as an engine of growth with the question, “Where’d you get that dollar to spend?”

They have never had a good answer because if you can do basic math, you understand how Keynesian economics is a zero-sum game. That’s why followers of Keynes see things as fixed pies. You can never grow the pie. You can only cut smaller and smaller slices of pie.

If you aren’t a crony, you get crumbs.

It’s more than maddening if you are a person who works for a living and pays taxes. It’s especially maddening if you are a self-employed person or take a lot of risk for a living.

Hey startup people/Hey trader people! You are working without a net, and your taxes are subsidizing a bunch of people who aren’t additive to anything. Many of them are selected because they are cronies of the people who do the “redistribution”.

The next time you lionize an elected official, maybe think again.

In his thread on X, Senator Chuck Schumer tried to demonize Trump by saying that “Meals on Wheels” is threatened by his quest to stop government spending. However, the data tracker shows that only $5MM of government money went to Meals on Wheels, while $5B went to “refugee services.” Caught in another lie. I love transparency and the fact that X has it in spades.

That should make you choke.

My investment portfolio is not unscathed by this executive action. If anyone invested in a medical startup, there is a larger than 90% chance that the startup applied for government grant money. That money comes through the National Health Institute (NIH).

The path to get to the finish line in startups is arduous. The path to get to the finish line in medical startups is exponentially harder.

Theoretically, the government has a stake in spending money (not investing, governments can only spend) on companies that look like they will raise living standards through medical breakthroughs. Sometimes these are devices. Sometimes these are drugs. Sometimes it is basic research.

A while ago, I invested in a company called Schedule One Therapeutics. They have created a patented compound that cures migraine headaches. A close friend of mine was involved with the company, and I have done quite a few things with him, so we trust each other. I wrote a small check. It is the only medical investment I have ever made, and I don’t understand much about medical startups.

I am not investing anymore. Please don’t send me startup deals though I will talk to startups and try and help them, short of writing a check.

Trump’s EO stopped Schedule One from getting the grant funding they spent hours going through the process of getting. It’s maddening and frustrating for them. They were already approved. The funding was going to get them through Stage 1 trials. Trials in medicine are not cheap. The FDA process is expensive and arduous. In some cases, too arduous.

You can understand why the segment of medical entrepreneurs and investors might be royally upset with Trump today.

In our case, Stage 1 success would have made fundraising for Stage 2 a snap. In addition, we might qualify for more grant money. Success at Stage 2 would mean a Stage 3 trial and there is a good chance before that trial some big Pharma company would swoop in and buy Schedule One for a pretty penny given the market size of what they are doing.

It still can happen. But, it’s going to be delayed, and the road will be more uncertain.

I am all for getting rid of graft and grift. I am all for the government getting out of the entire funding process for everything.

Enable the private sector to do it and give them 0% income tax or even negative income tax to incentivize it. Why aren’t schools with big endowments using them to fund research at their institution? With the FairTax, there might be even more incentives. Ease the FDA approval process. Make mergers and acquisitions great again and stop all this antitrust bullshit. Muzzle people like Elizabeth Warren who don’t know what business is even like. Make it cheaper for startup companies to do an IPO to bring in more cash rather than incentivize private capital markets. Incentivizing private capital markets rewards the rich at the expense of the middle class and poor.

But, today, the system is not set up to accomplish that goal. It’s going to take time to change.

Hence, Trump ought to let funding go to things like Schedule One Therapeutics. Sift through the graft as soon as possible. As soon as you identify projects that aren’t grift and graft, approve them and let the money flow while you continue to run down the list. We could see lots and lots of startups who were trying to accomplish some pretty cool things and raise our standards of living go out of business.

For certain, things in medical startup land will slow down until there is some certainty.