The Lever - ✈️ The day Southwest died

🔥 Today’s Lever story: Superyachts, luxury cars, mansions & wined-and-dined sheriffs — a legal war is exposing the big business of profiting off prisoners & taxpayers.  

👇 Spend four minutes reading this 996-word newsletter to learn about: 

• Who killed Southwest.
• How the makers of Ozempic are courting MAGA.
• Democrats’ chance to finally obstruct Trump’s agenda.
• How wealthy landowners are siphoning the nation’s flood insurance fund.

✈️ Southwest once bragged that “bags fly free” — not anymore. The airline just announced the end of its free checked bag policy amid pressure from infamous private equity investor Elliott Investment Management. Since Elliott’s 2024 investment in the airline, Southwest has upped ticket prices and — for the first time in 50 years — laid off staff. The company’s transformation reflects a consolidated industry with few competitive incentives to court customers with low prices or quality service. Meanwhile, airlines are generating more revenue than ever.

• In September, Southwest officials admitted that while the company could reap up to $1.5 billion in new checked bag fees, the move would likely result in a $1.8 billion loss of market share.

💊 Big Pharma is swamping the drain. As part of its multimillion-dollar lobbying assault, the Danish maker of Ozempic just hired two former Trump aides as lobbyists, one of whom oversaw federal health policy. The hirings come as Republicans are pushing to repeal the Medicare program that could lower the weight-loss medicine’s price. The Lever recently reported that the federal government spent more than $6 billion of taxpayer money to develop Ozempic’s active ingredient — but the price Americans pay is up to 11 times more than the world market price. 

📃 Will Democrats sign DOGE’s blank check? Yesterday, House Republicans passed a spending bill to temporarily fund the government — and Trump’s agenda — through the year. As The American Prospect notes, the measure would give a congressional thumbs up to Trump’s power grab. Now it heads to the Senate, where Republicans have said they can push the measure through on their own. However, the GOP will need a few Democratic votes to clear the Senate’s 60-vote filibuster and avoid a shutdown Friday night. 

🚀 A space race to the bottom. The same week that NASA okayed roughly $300 million in new contracts with Elon Musk’s SpaceX, the agency began terminating scientists and closing offices. A Lever investigation last month found that since the inauguration, Musk’s rocket company has earned roughly $2 million daily from federal contracts.

🔍 Check our work — we link to all our sources in the web version of this newsletter.

A tale of two presidencies. (Source: Nick Timiraos/ The Wall Street Journal)

👍 Free tax filing for all? The Trump administration is now championing the Biden-created free tax filing system that congressional Republicans have been trying to kill. Trump’s Internal Revenue Service this week touted the Direct File system as “a free, fast and easy way to file” your taxes. Tax prep companies hate the wildly popular program because it threatens their profits — so GOP lawmakers raking in industry campaign cash have been trying to kill it. 

But they’re at odds with Trump’s Department of Government Efficiency. Tearing a recommendation out of Sirota’s recent job application for the agency, DOGE officials are pressing to “significantly increase the number of Americans who file their taxes free on a government website” and they’ve “expressed interest in dramatically expanding” Direct File, according to the Washington Post.

Water floods a damaged trailer park in Fort Myers, Fla. after Hurricane Ian.

How flood insurance became a bailout for Mar-a-Lago and vacation mansions. Lawmakers are facing a deadline to reauthorize the federal program providing insurance to homeowners when private insurers abandon their climate-battered locales. The 56-year-old program holds nearly five million policies and more than $22 billion in liabilities. It was envisioned as a stopgap measure for the working class — but the wealthy are now exploiting the program at the expense of low-income homeowners. That includes Trump’s Mar-a-Lago estate.

Low-income homeowners are subsidizing the rich. A 2020 study by the insurance consultancy Poulton Associates found that the program “provides a substantial subsidy to upper-income groups.” How? By charging lower-income households higher premiums than high-income households — even though the latter’s properties are generating far higher loss ratios (i.e. the difference between premiums paid in and claims paid out).

• Key finding: As flooding has become the most common and costly disaster in the era of climate chaos, the study found that “almost all of the excess (flood) losses are in the highest income segments” because “insufficient premium is collected from the higher income groups.” In other words, “Buyers that can most afford the premium are not paying their proper rate.”

Incentivizing rich people’s bad behavior. A decade ago, NBC News reported that the government “remapped waterfront properties from the highest-risk flood zone, saving the owners as much as 97 percent” on their premiums. The Poulton Associates report concluded that the program “continues to incentivize unsustainable development in low-lying areas where excessive losses are certain… while lower income homeowners pay higher rates and receive reduced benefits.”

Rand Paul’s standoff and an impending deadline. Facing the program’s March 14 expiration, lawmakers have been trying again to greenlight it with few reforms (despite federal auditors’ insolvency warnings). But Sen. Rand Paul (R-Ky.) recently gummed up the works with amendments barring the program from insuring second homes and placing a cap on eligible home values. “Is there some level of rich person’s mansion that maybe the average ordinary taxpayer should not have to subsidize their insurance?” Paul asked. If the program expires, low-income households could be left with few options, and conservatives could get a boost in their push for full privatization.

😫 At some point, everyone thinks they suck. A good summary of the creative process.

🍴 Wine and dine like a Senator. And during your next trip to DC, drop in on these Congressional haunts.

🧐 Who is Lovette Dobson? Apparently, she’s one of the most prolific corporate officials in the United States.

Please stop trying to make Rahm Emanuel happen.

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