Make Big Tech Help Fund the Three Percent Solution
Andrew Ross Sorkin of the New York Times in a recent DealBook post recently highlighted activity by Ray Dalio. He reports Mr. Dalio, Chief Investment Officer of Bridgewater Associates, has been making the rounds in Washington talking about the budget deficit.
Dalio has been discussing what he calls the “Three Percent Solution.” Simply put, the goal is to reduce the deficit to Gross Domestic Product (GPR) ratio to 3%. This can be done by 1) cutting spending, 2) raising tax revenue and 3) lowering interest rates.
Sorkin adds, “A fiscally responsible budget would ease volatility in the bond market. Any economic slowdown caused by reduced spending could be offset by lower interest rates, which is what a heavily indebted nation needs most.”
He follows by saying “All three levers need to work in tandem.”
ANALYSIS
In my opinion, the three percent solution idea makes sense.
Spending by Congress is something I cannot control, nor do I have any quick fix ways to do this.
SOLUTION
There is an idea to raise revenue: place an acquisition tax on the Big Tech firms (Google, Amazon, Microsoft, Apple, Facebook) for every company they have acquired.
Since they have all have over 80 acquisitions each, why not tax them on it, per acquisition, and make them pay for creating this situation. Make it an annual tax so they would pay it every year.
Big Tech seems to be averse to paying fines, both here in the United States and in Europe. They seem to complain more about being broken up. Well, if federal efforts at breaking them up do not work, why not at least profit from the status quo?
It would then need to be determined how much per acquisition they would have to pay. It could also be applied to companies in other industries such as Big Pharma. It would be based on the number of acquisitions made at the current moment. It could also apply to future acquisitions. It could also be graded, such as paying a higher rate the larger number of acquisitions or the price. The more the merrier.
Such a tax, no matter how widespread, is not a “solution” to the deficit problem. But it would be additional source of revenue. Yes it is a tax increase. However, it is not an income tax increase to the average citizen.
But what about if Big Tech threatens to raise prices to offset this tax? Well, to paraphrase President Trump:
Proposal would bring anti-trust action under Justice Department
In the May 1 edition of the Washington Post, writers Julian Mark and Will Oremus wrote of a proposal by House Representative Jim Jordan (R-OH) to move anti-trust pursuits solely under the Justice Department.
Elon Musk has taken a Washington Chainsaw Massacre approach to reducing Federal departments. I disagree with his premise that there is rampant “waste, fraud and abuse” throughout the Federal bureaucracy. There may be duplication, turf wars, and actions in isolation of others which can and should be addressed.
Complementary Goals
Mark and Oremus state that the Federal Trade Commission and Justice Department may have complementary goals:
“Proponents of Jordan’s proposal say that the dual antitrust roles of the FTC and the Justice Department have led to inefficiencies and turf wars, and that consolidating antitrust under the Justice Department would streamline enforcement. The two agencies, for example, have divided cases taking on large tech companies, with the FTC arguing in court to break up Meta as the Justice Department argues for breaking up Google.”
History
However, there is one major difference.
They state that historically the Federal Trade Commission was created in 1914, “as a result of dissatisfaction over limits the courts had placed on the Sherman Act, which until then had been enforced by the Justice Department.” They add that the FTC possesses broader powers to go beyond simple anti-trust issues. Also, the FTC does not have a direct line to the President, like the Justice Department does. It is targeting this element of independence is why they feel the Republicans are moving in this direction.
Analysis
I am not opposed to Federal government consolidation if it will tackle duplication, turf wars, or operations in isolation. Consolidation in the Federal government can be a good thing. Businesses consolidate locations to streamline operations and bring employees physically closer together.
IMO, in this case it may be better to explore having the anti-trust cases consolidated under the FTC instead of the Justice Department. If the FTC has greater authority and has a successful track record, why not let them take it on solely? It would even give the potential monopolists an easier time figuring out how to plan their strategy. What do you think?
A chess match with big players and high stakes, but employees may suffer.
The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.
Paramount is owned by the parent company National Amusement, of which Sheri Redstone owns a majority percentage of voting stock. They operate such networks as BET, MTV, Nickelodeon and Paramount Films. It is also the parent of the CBS television network, which includes CBS News. Skydance was founded in 2010 by David Ellison. Its claims to fame have been producing “Top Gun: Maverick” and “Mission Impossible—Ghost Protocol.”
The Skydance-Paramount deal, with an enterprise value pegged at $28 billion, promises a major shakeup in the media landscape. Skydance Media, LLC, valued at $4.75 billion in the merger, brings its production heft—think Mission: Impossible—to Paramount’s storied assets, including CBS and the Paramount film studio. National Amusements Inc. (NAI) shareholders, led by Redstone, will pocket $1.75 billion plus the assumption of NAI’s $650 million debt, totaling a $2.4 billion enterprise value. Paramount’s Class B common shareholders are set to receive $15 per share. Funding comes largely from the Ellison family—Oracle founder Larry Ellison is contributing $6 billion—alongside $2 billion from RedBird Capital Partners. An October filing clarified that Skydance CEO David Ellison, not Larry, will hold 100% of the family’s voting interests in the merged entity.
This merger was first proposed in 2024. Talks originated, then were apparently cancelled by National Amusements, Inc. They resumed shortly thereafter. By July, 2024 the current deal was presented.
ROADBLOCKS
There have been several hurdles to overcome. In February 2025, Paramount Global and Skydance Media, LLC, received approval from the Securities and Exchange Commission. The deal soon after received approval from the European Commission, saying it presented “no significant competition concerns within the European market.”
It also needs approval from the U.S. Federal Communications Commission, which is still in play. Here is where it gets interesting. The FCC is currently headed by Brendan Carr, a recent Trump employee. Trump has been pressuring acquiring companies to back off/do away with Diversity, Equity and Inclusion (DEI) programs. Paramount recently announced they were doing just that. Mr. Trump had also filed a $20 Billion lawsuit against CBS News, claiming they edited an interview with Vice President Kamala Harris he claims was biased towards her and from him.
To add to the drama, Bill Owens, Executive Producer of 60 Minutes abruptly resigned last week. In The Last Minute segment of the April 27 broadcast of 60 Minutes, host Scott Pelley addressed his resignation. Mr. Pelley summed up his message by saying, “Bill felt he lost the independence that honest journalism requires.” There has been consolidation in the news media, along with the entertainment industry and the publishing industry. This consolidation will be addressed in a later article.
ANALYSIS
Consolidation in the entertainment industry is not as “crucial” as it is, say, with health care, insurance, groceries, housing. Indeed, there is competition with such companies as Netflix, Disney, Apple, Amazon, as well as network television, movies, theatre, concerts. However, what all companies involved in consolidation have in common is that there are both employees and customers whose livelihood is impacted, in different ways. Company working culture may significantly change for the worse. Customers may be faced with poor/indifferent customer service or continually rising prices.
SOLUTIONS
The proposed acquisition between Skydance and National Amusements Inc., the parent company of Paramount, is a boardroom chess match with multiple players and multiple outcomes.
Paramount seeks a buyer because it is hemorrhaging money, mainly due to cable cutters who are now streamers. They were slow to adjust to changing market conditions. They made some strategic mistakes. If Paramount is sold, Shari Redstone will come out well, as do some owners in the aftermath of blunders. If it is finally approved, the big continue to get bigger—in this case it would be Skydance Media, LLC. If it fails, National Amusements Inc. may have to sell off assets or face bankruptcy sometime down the road.
With all the drama, this would make for a good movie, wouldn’t it? I doubt if people who lost their jobs or faced a negative company culture would ever see it. What do you think?
