The Archive

THE VAULT LOOKAHEAD

New Washington, old problems

HUD Secretary Turner on the Trump housing agenda

Brad Garlinghouse talks politics and crypto

The Vault Power Matrix

R&D’s tango with the tax bill

THE TOP

New Washington, old problems

Welcome back to The Vault.

It’s a whole new era of financial deregulation, tax cuts and trade wars in Washington with President Donald Trump back in the White House.

To take you inside the new Trump administration’s plans, we have an exclusive interview with Housing and Urban Development Secretary Scott Turner.

We hate to deploy a cliche, but Turner may actually have one of the toughest jobs in Washington. The former football player, Texas legislator and White House official has been tasked with addressing the United States’ decade-plus housing crisis. We talk about that at length.

And with Trump’s return, few industries got as big of a boost as crypto — and they shelled out big to get here.

We interviewed one of the core backers of that effort — Ripple CEO Brad Garlinghouse — to talk about Fairshake, Sen. Elizabeth Warren (D-Mass.), stablecoin legislation and what’s next for the White House’s stockpile-slash-reserve(s) of digital assets.

As Republicans rush to put together their tax bill, we also took a moment to dig into what’s going on with R&D. Republicans are big fans of the full, up-front deductions for businesses. And it’s a huge priority for corporate America.

But nothing’s that simple when it comes to taxes, is it? We’ve got your primer on the good, the bad and the ugly for fans of the deduction.

Plus, we’ve got your latest Vault Power Matrix. Which tax and banking power players find themselves rising or falling? Scroll on down.

– Brendan Pedersen and Laura Weiss

THE INTERVIEW

HUD Secretary Turner on the Trump housing agenda

We can say this much about Housing and Urban Development Secretary Scott Turner: He’s enthusiastic about his new job.

Start with “Opportunity Zones.” While working at the White House under the first Trump administration, Turner helped execute the idea with Sen. Tim Scott (R-S.C.) as it became law through the prior round of Trump tax cuts.

Less than a decade later, both Turner and Scott say they want to expand opportunity zones in a big way. They’re approaching that task now with considerable bumps in seniority – Scott as the Senate Banking Committee Chair and Turner as a cabinet secretary.

“I’m very excited about that work with Tim Scott and his ROAD to Housing Act, with his team, to not only continue opportunity zones,” Turner told us. “But man, to unleash the potential in our country, from an investment standpoint, from a building standpoint – so yeah, if you can’t tell, I’m really excited about that.”

The program has its critics, who contend it’s been more of a boon for wealthy investors than low income communities. A 2023 Treasury report found it was “too soon to reach conclusions” about the tax credit’s effectiveness. Turner and Scott, however, remain enthusiastic.

There are serious political and policy risks facing Turner and his tenure at HUD. The department’s portfolio covers some of the most sensitive shelter services and programs for all kinds of at-risk populations. His approach – including a new taskforce to use federal land for affordable housing development – is still coming into focus, but housing professionals have reported disruptions across a variety of federal programs.

Just this week, Congressional Democrats accused Turner of improperly cutting back fair housing initiatives – a charge HUD has denied.

Turner acknowledges the stakes. “We serve the most vulnerable population in our country,” the HUD secretary said. But that doesn’t mean he doesn’t have significant changes in the works. More than once during our interview, Turner said it was time for a “paradigm shift” in federal housing programs.

“Public housing is not supposed to be permanent,” Turner said. “Public housing is a trampoline, if you will, to help the most vulnerable of our society. It was never meant to be a hammock.”

Deregulation nation: Turner, along with the rest of the Trump administration, has made clear that torching regulation is the order of the day.

“The federal government, from my point, has literally lost its focus through the years. The federal government has focused on getting bigger, instead of serving the American people,” Turner said.

The deregulation push has, in theory, some bipartisan support. But the details will be critical. We won’t know many of them for a while, as Turner continues to take “inventory of all programs here at HUD that deal with housing,” he said.

But some focuses are clear and have a role for Congress to play. Turner backs one reform tucked inside Scott’s ROAD to Housing Act: modifying the policy that requires a steel frame, or “chassis,” to run through the foundation of a manufactured housing unit in order to meet HUD standards. Developers have complained that the requirement, required by statute, is obsolete and has limited the design of units.

“We need to work with Congress to address the permanent chassis requirement, to unleash more creativity, to bring in more development of manufactured homes,” Turner said.

Funding fears: Like the rest of the Trump administration, Turner is talking about reducing federal spending. There’s a lot of it in the housing space, and Democrats like Rep. Maxine Waters (D-Calif.) have spent years pushing for greater levels of investment.

That is not Turner’s objective. But we wanted to press the HUD secretary – did he see any role for federal funding in housing, or is every dollar a mistake?

Again, Turner acknowledged that HUD’s programs were for “most vulnerable” in the country. Then, he said:

How he’ll do that remains to be seen. One option, Turner said, is work requirements.

Another target for Turner’s HUD: The formulas that determine the allocations of key programs managed by the department. Turner identified the Community Development Block Grant program as one example.

“We’re responsible for the CDBG fund. That, and other formulas at HUD programs, haven’t been looked at since the 70s. Really, a lot of the formulas for funding have been on autopilot,” Turner said. With help from Congress, he added, HUD needs to evaluate each formula “so that we don’t have to rewrite the rules every time a disaster hits.”

Crypto? In my HUD? The nonprofit newsroom ProPublica published a story earlier this month that suggested the department was considering an “experiment” involving blockchain and HUD grants.

We asked Turner if there was anything there, or if he had any announcements to make in digital asset policy.

“No sir,” Turner replied. “There’s no merit to it.” Fair enough.

– Brendan Pedersen

CRYPTO CORNER

Brad Garlinghouse talks politics and crypto

Brad Garlinghouse was one of a handful of crypto executives who made a big bet on the 2024 elections. Now, as that investment appears to be paying off, he’s ready to talk shop.

Garlinghouse, CEO of Ripple, has made significant inroads with the Trump administration just as Washington prepares to remake the legal and regulatory landscape for the crypto industry.

Ripple launched its own stablecoin late last year. We asked Garlinghouse how lawmakers were doing, especially since the Senate Banking Committee advanced the GENIUS Act to regulate stablecoins, and he said he likes what he’s seeing from Congress.

“I don’t know if A-plus is the right thing, but certainly, somewhere between A-minus and an A,” Garlinghouse said. Then, talking about GENIUS later in the conversation, he corrected himself.

“It protects the dual-federal state banking dynamic, ensures one-to-one reserves, you’ve got independent third-party auditing – so I think maybe I should give an A-plus,” Garlinghouse added. “Maybe I was too hard of a grader.”

Fairshake: Garlinghouse is happy to keep litigating crypto’s mammoth campaign spending run in 2024. The Fairshake super PAC network spent around $139 million on congressional races, including $40 million spent against former Sen. Sherrod Brown (D-Ohio). Ripple has been one of the main three corporate contributors to that effort, along with Coinbase and a16z.

Like other crypto execs, Garlinghouse talks a lot about a “war” on his industry under the Biden administration. And though Sen. Elizabeth Warren (D-Mass.) has never said anything publicly about building an “anti-crypto army”— as far as we can tell — her Senate reelection campaign shared a Politico headline with that phrase in early 2023. It struck a nerve.

“If someone’s upset about what happened,” Garlinghouse said, “it was fully a reaction to Gary Gensler, Elizabeth Warren. Elizabeth Warren announces she’s raising an ‘anti-crypto army.’ If you’re telling us you’re raising an army to attack us, maybe we want to do something.”

Warren now serves as the top Democrat on the Senate Banking Committee and has said she wants to work with Republicans on crypto this Congress. But the industry doesn’t believe she retains as much power over the party as she once did. “I think her chokehold on some of these pieces has atrophied over time,” Garlinghouse said.

We’re all friends here: The Ripple CEO occupies a funny place in crypto politics – a sort of internal bogeyman. The Wall Street Journal described Garlinghouse as “polarizing” earlier this month. The grumbling intensified after President Donald Trump hailed Ripple’s XRP by name in a Truth Social post announcing a U.S. “stockpile” for certain crypto assets seized by the government.

Garlinghouse said he isn’t really an I-welcome-the-fight guy. “I’m about bringing this industry together. I stand by this,” Garlinghouse told us. Crypto’s “tribalism,” he added, “has been damaging to the industry.”

And as far as future government stockpiles-and-or-reserves go, Garlinghouse said he’d prefer the Feds refrain from picking “winners and losers.”

A lot of crypto advocates point to the U.S. government’s hands-off policy to the 1990s’ internet as a model for digital assets. Garlinghouse prefers going back further.

“In the 1970s, when the microchip industry was nascent, Intel had dominant market share. If the U.S. government said, ‘we’re only gonna use Intel microchips,’ would we have the chip industry we have today? Would Nvidia exist? Would AMD exist?” Garlinghouse said. “It doesn’t make sense to me, as a U.S. citizen.”

One last thing: We asked the Ripple CEO what he’s thinking about beyond the industry’s current policy priorities.

“The ability to manage identity on blockchains, I think, is important,” Garlinghouse said. “I don’t think we’re going to see anything legislatively or Washington-based, but I think it’s just a big category that we as an industry need to advance on.”

– Brendan Pedersen

PRESENTING…

The Vault Power Matrix

– Laura Weiss and Brendan Pedersen

THE TAX FIGHT

R&D’s tango with the tax bill

One of companies’ biggest goals in Republicans’ tax bill is reviving the full, upfront deduction for research and development spending — finally.

The multiyear wait to bring back the expired R&D boost has shown the risks when Congress lets popular tax cuts expire to save on costs. The R&D benefit has wide support on Capitol Hill, but it’s been off the books since 2022. Broader political headwinds got in the way of a revival, until now.

Republicans plan to bring back the lucrative deduction in their filibuster-proof reconciliation package. The question is how big will they go.

The positive for R&D backers: There’s a lot of interest in the GOP in bringing back some of the big business tax breaks retroactively, even though companies won’t get all the lost years back.

President Donald Trump said he wanted to revive another business incentive — full 100% expensing for buying short-term assets like machinery and equipment — back to Jan. 20. That is, of course, Inauguration Day. That sort of thinking is at play for R&D too.

Republicans want to juice more economic growth from their tax package, so pieces like R&D are critical to building that case and encouraging more corporate investments.

R&D’s challenge: Money — it’s tight. With pressure from House GOP deficit hawks, extensions of the 2017 tax cuts, every one of Trump’s tax priorities and anything else Republicans want to add are competing for space.

Using a “current policy baseline” to calculate the deficit impact of extending tax cuts that expire this year would slash their cost because it would treat them as an extension of current law, not new policy. But R&D is already gone, so it would still have a price tag under that scoring method, making it harder to make it permanent in that scenario.

Still, some backers are optimistic that the baseline would give them more room to push for more on R&D.

When Republicans were trying to keep the cost of the 2017 tax cuts down, it made sense to make bipartisan tax breaks expire over more partisan ones. In theory, Democrats would easily partner with Republicans to keep the R&D treatment going some years down the line. But we just saw a divide over the child tax credit get in the way for several years.

As we’ve pointed out, there are tough trade-offs ahead for Republicans in figuring out how much they can fit in their tax bill and how much it’s worth it to dig into offsets.

We asked Sen. Roger Marshall (R-Kan.) about prioritizing R&D in the bill against other tax cuts, he summed up the mood pretty well:

“I mean, it’s like asking which one of your children is your favorite,” he said. “But it is huge, and it’ll be a great investment.”

– Laura Weiss