Jeb Bush has won the first primary of the 2016 campaign – the money primary. In just 16 days as a candidate, he brought in $11.4 million, while his Super Pac, for which he raised money before entering, netted $103 million. The total – $114 million – is more than double that raised by the next closest competitor, Ted Cruz. One long-time GOP fundraiser tells me he has never seen it so easy to raise money for a candidate.
The reason is clear. In a campaign so far dominated by Bernie Sanders and Donald Trump, Bush is the candidate for practical business people – “the establishment.” He has put economic growth at the center of his campaign, and has staked out business-friendly terrain on hot-button GOP issues like immigration and education standards.
History shows the Republican primary favors the establishment candidate. But to get the prize, Bush still has to navigate the brutal shoals of a long and over-contested primary without making a fatal gaffe – and he came painfully close yesterday. Here’s what he said to the Manchester Union Leader:
“My aspiration for the country, and I believe we can achieve it, is 4 percent growth as far as the eye can see. Which means we have to be a lot more productive. Workforce participation has to rise from all-time modern lows. It means that people need to work longer hours and through their productivity gain more income for their families. That’s the only way we are going to get out of the rut we are in.”
As a matter of economics, Bush’s comment is fine. Economic growth = labor force growth + productivity growth. But it was a politically sloppy comment, seeming to suggest the answer to our economic problems is for hard working people to work even harder. It’s not surprising Democrats jumped all over it. Moreover, at some point Bush needs to explain why the historic link between productivity growth and wage growth has been broken, and what can be done to fix it.
But in politics, there’s always tomorrow — as Greek Prime Minister Tsipras proved yesterday, adopting most of the austerity measures that he urged his country to reject on Sunday.
Enjoy the day.
• Greek proposal looks promising
A new proposal by Greece for economic policy overhauls and budget cuts appears to have moved closer to creditors’ demands on some of the most divisive issues, though there weren’t any indications yet if it would be enough to unlock a new bailout package. The plan, submitted Thursday night, will likely determine the nation’s future in Europe’s currency union.
WSJ (registration required)
• Data breach worse than feared
A massive data breach that targeted the U.S. Office of Personnel Management’s security clearance system compromised the sensitive information of 21.5 million people, much higher than a disclosed breach last month that only reportedly affected 4.2 million. The second breach began in May 2014 and was not discovered until a year later. Many are blaming Chinese attackers, though that remains unconfirmed.
• Chinese shares rally again on Friday
China’s shares enjoyed a two-day rally to end the week on a high note, as investors angled to assess if a recovery in the nation’s stocks would prove sustainable. But just under half of all stocks remained suspended on Friday, limiting the joy after steep declines wiped out trillions in value from Chinese equities over the past four weeks. “I doubt the market will enjoy a sustained rally,” said a Bank of America Merrill Lynch banker.
• Uber maneuvers around drivers
Uber has filed a motion to oppose the certification of a class action lawsuit that challenges the ride-hailing company’s classification of its drivers as contractors instead of employees. The lawsuit, filed in California, could endanger Uber’s entire business as the startup would need to pay payroll taxes, expenses and benefits if it lost the case.
• Global growth is accelerating
While the headlines out of Greece and China have suggested doom and gloom for a while now, banks are still predicting the global economy is continuing to run fairly smoothly despite those blips. Morgan Stanley predicted global expansion of nearly 4% in the second half of the year, accelerating from the 2.9% growth in the first six months. The woes in Greece and China for now look solidly contained to those regions, so they aren’t affecting the broader global economy.
Around the Water Cooler
• Google’s mobile world challenge
Here’s a scary stat for Google executives: the company claimed 68% of mobile search revenue in the U.S. last year, which is down from 81% just two years earlier. That’s because mobile apps are occupying more of people’s time, resulting in less time for the search business that Google built its business on. And while new search start-ups don’t pose a huge threat just yet, Apple’s move to beta test a search engine for music, apps and local services is more problematic.
New York Times (subscription required)
• Shake Shack shares continue to slide
Two major banks this week downgraded Shake Shack’s shares, putting more pressure on a stock that has now tumbled more than 45% from its peak in May. The market value of Shake Shack, a New York-based fast-casual restaurant chain, has ebbed from $3.37 billion to around $1.8 billion currently. The banks aren’t worried about the business model: they mostly expressed concern that shares trade at a level that is too rich to justify the potential near-term rewards.
• Facebook runs afoul of Putin aide
Senior officials in Russia have urged domestic citizens to abandon Facebook and instead defect to a Russian social media site, which they claim offers greater freedom of speech. The problems first started to arise after Facebook decided to delete a string of posts that contained a slang Russian term for Ukrainians.