As you’ve no doubt heard by now, Donald Trump announced Wednesday night that he will be launching his own social media network, the embarrassingly named TRUTH Social. For those of you scratching your heads and wondering, But wait, didn’t Trump already launch a new social media company? you are likely thinking of (1) one of the right-wing networks tangentially associated with the ex-president, like Gab, Parler, or Gettr, or (2) something called “From the Desk of Donald J. Trump,” the blog that published Trump’s comments and was shut down after just a month because it had almost no readers.

Obviously, the lack of readers was upsetting to the former president, who spent much of the last decade tweeting every deranged thought that came into his head, from “I would like to extend my best wishes to all, even the haters and losers, on this special date, September 11th” to “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE” to “An ‘extremely credible source’ has called my office and told me that @BarackObama’s birth certificate is a fraud.” Unfortunately for Trump, his ban from Twitter, on account of inciting an insurrection, remains in effect. Hence, TRUTH Social.

Like most Trump initiatives, TRUTH Social is incredibly cringeworthy and embarrassing. For one thing, before it even launched, per The Washington Post, patriotic pranksters were able to find a seemingly unreleased version and post “a picture of a defecating pig to the  ‘donaldjtrump’ account,” causing it to be pulled offline. For another, the network’s terms of service dictate that users must refrain from “excessive use of capital letters,” i.e., the only way Donald Trump knows how to type. Then there’s also the fact that TRUTH Social, billed as a vehicle for “stand[ing] up to the tyranny of Big Tech,” which conservatives claim hates free speech, prohibits users from saying anything to “disparage, tarnish, or otherwise harm, in our opinion, us and/or the Site.” Meanwhile, the whole thing is basically a crappier version of Twitter. Per the Post:

The site looks almost entirely like a Twitter clone: A user can post Truths, which are like tweets, or Re-Truths, which are retweets. There’s also a news feed, called the Truth Feed, a notification system so users can know “who’s interacting with your TRUTH’s,” the social network’s App Store profile states.

So yes, the whole thing already looks like a big flop that will no doubt have very few users, and Trump himself will probably get bored of the app and only post there sporadically. But in this case, it doesn‘t actually matter, and Trump might have actually figured out a way to make millions despite the product being a joke. How? We’re glad you asked!

TRUTH Social is being formed through a merger of a new company set up by Trump, the Trump Media & Technology Group, and a special purpose acquisition company, a.k.a. a SPAC. SPACs, which are all the rage these days for reasons that will soon become clear, are shell companies that are listed on exchanges like the NYSE or the Nasdaq and exist for the one and only purpose of merging with companies that want to go public—like the Trump Media & Technology Group. In this case, the SPAC TMTG will merge with is called Digital World Acquisition Corp., which is run by a guy named Patrick Orlando, a former investment banker who once cofounded a sugar-trading company. As Axios’s Dan Primack tweeted this morning, “Trump social media SPAC thing filed SEC paperwork this morning, but it’s basically just the press release again. Nothing of substance, including management, etc. So far, this is a shell buying a shell.” Normally, this would be pretty embarrassing for a company, but in this case, due to the SPAC of it all, plus Trump’s uniquely gullible supporters, it doesn’t matter.

As Bloomberg’s Matt Levine writes:

I am not going to pretend to make a business case for [a Trump social media network]—there is a long history of hilarious failure in the “social media for Trump” category—but maybe you can. It is not a sure thing, in any case. Maybe it would work, maybe it wouldn’t. When Twitter Inc. went public, it had never been profitable, and it was, you know, a real social network that people used. Maybe Twitter But Trump would immediately be profitable, but boy, I have some doubts. On the other hand, if Donald Trump launched a company that was like, “I am going to start a social media platform for Trump fans,” could he get people to buy the stock? I think that two fundamental lessons of the last few years are:

1. You can get people to buy any stock; and
2. Donald Trump can get people to buy anything.

So if Donald Trump announced, “Hey, I’m gonna do a social media company, buy some stock,” people would buy some stock. And then he’d get a lot of money. And then if the social media platform did not end up being profitable—as I cannot imagine it would be!—then he would, uh, still have that money? And if the social media platform did not end up being launched—if Trump and his crack team of technologists just couldn’t actually build a well-functioning online social network—then he would, uh, still have that money? And if there was no crack team of technologists at all, if nobody even tried to build the social media platform—then you see where I am going with this, right?

The point is that if you launch a company with the goal of making it profitable, you have to, like, have a workable business plan and execute on it and deal with a million different operational complexities. If you launch a company with the goal of selling a lot of stock, you have to get people to trust you and give you their money. There is some overlap between those things! But they are different things!

As Levine notes, and as we’ve learned from other SPACs over the last few years, “if you go public by merging your private company with a special purpose acquisition company, then you can just make up whatever you want and no one will check.“ Is that actually the law? No, but in practice, it’s basically how SPACs work and is obviously incredibly appealing to Team Trump. Basically, they can get rich without actually having a profitable or even functioning social media network.

Here’s Levine again:

Traditionally, SPAC deals are often announced with PIPEs, private investments in public equity, in which institutional or strategic investors commit hundreds of millions of dollars of their own money alongside the SPAC investment. Here, there is no PIPE; no institutional investors seem to be involved. Trump Very Tech Company Group is raising its money only from public investors in the SPAC.

Ordinarily, that would be risky: The SPAC investors have withdrawal rights—they can take back their $10 per share in cash, plus a little interest, instead of leaving it in the pot for the merger—so the company might not get any money. Here, it is not risky. The reason it is not risky is that people who like Trump will buy the stock. (Also: People who think “people who like Trump will buy the stock” will buy the stock; the Keynesian beauty contest applies here too.) Yesterday, before this announcement, DWAC’s stock closed at $9.96, a bit below the approximately $10.20 per share that it has in its trust, sort of a standard price for a SPAC with no deal yet. At 11 a.m. today it was trading at about $19.38, implying a valuation for Trump Thing of something like $1.7 billion. If you think Trump Thing is worth $19.38 per share, you are not going to take your $10 back; you’re going to keep the stock and let Trump have your $10. He will definitely get all $293 million.

Want proof? Here’s some depressing news from CNBC:

The stock price of SPAC company Digital World Acquisition Corp. skyrocketed on extremely heavy trading volume Thursday after news of a merger that would launch former president Donald Trump’s planned social media platform. DWAC’s stock surged 356.8% to close at $35.54 per share. Trading in the SPAC was halted multiple times due to volatility. At one point the stock was up more than 400% to hit a high of $52.

Digital World Acquisition was the single most actively traded stock on the Fidelity platform Thursday, and was by far the most traded name on the consolidated tape of New York Stock Exchange and Nasdaq listings. More than 470 million shares of DWAC changed hands during Thursday’s session, according to FactSet. In comparison, SPY, the exchange-traded fund that tracks the S&P 500, only traded about 32 million shares.

So yeah, TRUTH Social appears to be just as much of a joke as “From the Desk of Donald J. Trump,” but in this case, Donald J. Trump might actually make some real money off of it, which he definitely needs considering he’s reportedly in debt for $1 billion.

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Joe Manchin says Dems are unlikely to reach an agreement on social safety net programs “anytime soon”

Conveniently, the senator from West Virginia left out the part about how he is the one leading the charge to scale back initiatives that might actually help people, many of whom are children. Per Reuters:

Democrats have spent months arguing about the size and scope of what was initially proposed as a $3.5 trillion plan to expand the social safety net and fight climate change, which Democratic leaders have agreed this week will be cut to well below $2 trillion. Manchin—who along with fellow moderate Senator Kyrsten Sinema has been pushing for a smaller package—had said earlier he believed Democratic negotiators could settle on a final figure by Friday. That would resolve a key sticking point, although progressives and moderates would still have to sort out the substance of the bill, including what programs to keep, what to cut, and how long to fund them.

Fellow Democratic Senator Ben Cardin said he expected Democrats would agree on a total price tag within the next few days, leaving lawmakers to fill in the details. “I think they've got to stay in over the weekend to try to get this resolved,” he said. Biden told lawmakers on Tuesday he thought he could get Manchin and Sinema to agree to a figure in the range of $1.75 trillion to $1.9 trillion, according to a source familiar with the talks, who spoke on condition of anonymity.

Getting to that number would mean giving up priorities, including a plan to offer all Americans the opportunity to attend two years of free community college, and scaling back others such as a child tax credit and funds for affordable housing.

Manchin has been adamant that child tax credits must include work requirements, which, among other things, would penalize households in which children are being raised by their grandparents. He has also explained to protesters that he doesn‘t support the expansion of Medicare from the deck of his yacht.

Don’t be coming at Republicans with facts!

Elsewhere!

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Democrats Look for Tax Options If They Have to Ditch Rate Hikes (Bloomberg)

Texas targets Roe v. Wade, urges U.S. Supreme Court to maintain abortion ban (Reuters)

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Prosecutors urge conviction of Giuliani associate (Politico)

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Accused Burglar Said Motive Was Desire to “See His Imaginary Girlfriend Emma” (TSG)

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