Crewcial Partners Quarterly Commentary · Q3 2026

REVENGE OF THE LIBS

On borrowed time and architecture

The Ghosts in the Machine

In the Star Wars prequels, by the end of Revenge of the Sith, a democratic Republic has spent years handing its elected chancellor emergency wartime powers, crisis by crisis, to fight a war that conveniently keeps evolving and never quite ends. Eventually this chancellor, Palpatine, stands before the full Senate and declares the Republic reorganized into essentially a Galactic Empire, with himself in permanent charge as emperor, ‘for a safe and secure society.’ The chamber rises in applause. One senator watching from the gallery, Padmé Amidala, a former queen whose no-confidence motion first put him in power, observes “so this is how liberty dies…with thunderous applause.” Nobody reaches for a weapon. Only hours earlier, the Jedi, the order charged with guarding the Republic against exactly this kind of threat, were cut down by the troopers who had served under them as generals, a betrayal almost none of them saw coming. In the same speech, Palpatine tells the Senate his purge put down a Jedi rebellion; the Senate believes him. And hanging over the whole sequence, under construction the entire time in the background, is the Death Star, a battle station built large enough to be mistaken for a moon and designed to erase a planet in a single shot.

The films take the better part of seven hours to stage a republic's collapse into empire, but the final transfer of legitimate power itself doesn’t involve a proverbial mustache-twirling (or hooded and dark-robed) villain seizing anything by out-and-out force in the room where it happens. However, the force at play is both real and enormous; outside the halls of power, an entire order of peacekeepers has been liquidated in a single coordinated night, and nobody applauding in the Senate chamber has to watch or answer for it. What looks like consent is what's left over once the only group capable of safeguarding it are already gone.

Plenty of that maps onto our own moment, but what the films never quite say outright is a more fundamental point underneath it. A machine built to wield that kind of power doesn't care whose hand ends up on the controls, only that a hand is there at all.

History's Ur-Lesson

A long time ago, though in a galaxy considerably closer to home, the instinct might be to reach for Julius Caesar; he is the one everyone remembers crossing a certain river with an army behind him. But Caesar is a culmination, not the mechanism or apparatus itself, which starts a generation earlier with a general named Marius, who did something merely administrative by comparison. He professionalized the Roman legions and in doing so quietly rewired where a soldier's loyalty pointed: not with the state anymore, but with the man who paid him and promised him land when the fighting was over.

That is the first crack in the foundation. Fast forward some years, an elected official pushes a law through the assembly stripping another general and Marius' protégé, Sulla, of his command against a foreign enemy, along with the fortune and glory that war would have paid out, and hands it over to Marius instead. It is exactly the kind of personal defeat the old system was built to absorb, a political loss, bitter to swallow but gentlemanly settled inside the system and left there. Except Sulla does not leave it there. He goes to the legions waiting to sail east, men who by Marius's own reform owe their loyalty to whoever pays and promises them land, and asks them to follow him back into the city instead. They do. Sulla becomes the first Roman general ever to march on his own capital, retake it by force, and have the offending official killed, before finally sailing east to fight the war he was stripped of. The personally loyal legion turns, for the first time, against the thing it was built to defend.

There is civil war, and he wins decisively.

Dictatorship enters the picture. The office itself is nothing new; it’s a real constitutional post, reserved for genuine emergencies and bound by custom to a six-month term, after which that specific dictator is expected to step down, goals achieved or not. Nobody has held it in over a century. However, with Sulla's rivals dead or scattered, Rome itself divided in insoluble factions, and his legions occupying the city, the Senate appoints a subcommittee that ultimately appoints Sulla emergency dictator indefinitely, though not just to handle one crisis, but legibus scribundis et rei publicae constituendae, for the writing of laws and the reconstitution of the republic. Nothing about the vote breaks the letter of the constitution; the whole progression reflected a real legal process, working exactly as flexibly as designed while leading to an outcome it was never intended to produce.

What he did echoes forward two thousand years. He published proscriptions (kill lists with bounties attached—property seized and no trial required, an entire class of named enemies put outside the law by decree). He packed the Senate with roughly three hundred new loyalists, nearly doubling its size, and he gutted the singular office of tribunate of the plebians, stripping away the one recourse the non-noble working classes had used for centuries to check or veto the aristocracy's excesses. Three separate levers, each aimed at a separate check, each one again operating entirely within the letter of the law.

Then he does the thing that makes him as interesting as he was brutal. Believing the old order restored, Sulla resigned the dictatorship a few years later and retired to private life, dying within the year a private citizen. By most accounts it was a sincere, if imperfect, gesture from a man who had every means to keep that power. It didn’t matter. Within a few decades, the tools he built, the precedent that Rome could be taken by force for legally defensible reasons, a hollowed tribunate, and a compromised Senate still sat available to anyone with the nerve to co-opt them; that turned out to be Caesar, originally aligned with the faction opposing Sulla, who in turn led to Augustus, the first emperor. Sulla's actual legacy was never the restoration he thought he had secured, but a proof of concept that legal tools with no politics of their own simply wait for the next hand willing to pick it up. Rome would not see its republic again.

Two millennia later, a different kind of ending got declared for a different kind of politics. In 1989, watching the Cold War conclude, the political scientist Francis Fukuyama published an essay titled "The End of History?", expanded three years later into The End of History and the Last Man, arguing that liberal democracy had not just outlasted its ideological rivals but had settled the underlying argument for good: humanity had reached, in the Hegelian sense, the end of History with a capital “H,” the culmination of the process of human political development. Lower-case history, the actual record of events, would keep looping regardless, elections and wars and scandals, but only as noise on top of a settled signal.

Except Rome ran the same experiment first. Its republic looked, to plenty of Romans living through it, like its own settled and final form, a capital-H terminus nobody expected to need defending again. It wasn't, because a constitutional structure doesn't enforce itself; it only ever describes what a given generation is willing to do with the tools sitting inside it. What actually decided the outcome wasn't some deeper current pulling toward a final form. It was lower-case history and the specific, contingent record of Marius professionalizing an army, Sulla marching on his own capital, Caesar picking up what Sulla left lying around. The capital-H argument didn't get refuted. It got outvoted. The Senate applauds the victor.

The capital-H argument didn't get refuted. It got outvoted.

Plot that same sequence onto the present and the roles assign themselves. Whatever 2026, 2028, and beyond turn out to be, and whatever comes from the results, they will get decided the same way (albeit hopefully and likely less dramatically).

The current Republican administration, building out emergency and removal-power precedent case by case, is constructing the toolkit, testing how far each piece of it stretches, becoming the case study rather than the exception. Whoever eventually succeeds it—a potential backlash leading to a rising Democratic coalition very much included—would inherit that architecture the way Caesar inherited Sulla's, simply by being the next hand willing to pick up tools that already exist and are already legal. Caesar didn’t need to be better or worse than Sulla for the outcome to hold; he only needed to be next. That coalition is not merely theoretical; NBC's own polling now has 43% of voters calling their midterm vote a direct signal of opposition to Trump, the highest that figure has run in 20 years of the same question, per NBC News.

The Mechanisms & Architecture

A sampling of five 2025–2026 precedents map onto an updated version of Sulla's toolkit directly:

  • The legions personally loyal to a general:the now-routine federalization of National Guard units for politically charged deployments, tried in California, Illinois, and Oregon since mid-2025, with courts pushing back unevenly in all three.
  • The dictatorship's emergency justification:IEEPA's national-emergency authority stretched into routine tariff policy. Learning Resources v. Trump struck it down in February 2026; the administration simply moved to a second emergency-tariff statute, then a third, while a fourth, older authority ran the whole time, per Holland & Knight and Grant Thornton.
  • Proscriptions:pressure on named institutions' tax-exempt status, led by the Harvard fight, plus funding and contracts leveraged against other targets. The IRS can't yet revoke exemption by decree, but the bill that would let it has surfaced twice, most recently in 2025's tax bill.
  • Senate-packing:Schedule F, now filed as Schedule Policy-Career, reclassifies career civil servants as at-will appointees. Biden reversed it once; Trump has reinstated it.
  • The tribunate:Trump v. Slaughter overturned the 90-year-old Humphrey's Executor precedent, letting Trump remove an FTC commissioner without cause and reaching other independent agencies built the same way, a genuine turning point per SCOTUSblog and CBS News, delivered by a bench instead of an army.

A newer category runs alongside the five: unelected private operators controlling who keeps a federal job and who touches federal data. Musk's DOGE pitched two trillion dollars in savings, delivered a real 271,000-position cut, per Cato, then dissolved within a year, its claimed $110 billion in savings called unreliable by a GAO review. The authority behind it, the power to strip civil-service protections and fire people at will, didn't go anywhere. Thiel's Palantir built ICE's ImmigrationOS under a roughly $30 million contract, per the Washington Post, work that needs no legal precedent reversed, only a new administrator with the password.

While Musk and Thiel are this administration's version of the type, the left already has one of its own; Lina Khan, who ran the FTC's antitrust enforcement under Biden, is right now advising multiple 2028 Democratic hopefuls, per CNN.

None of this has gone unchecked. Courts blocked the National Guard deployments in Portland and Chicago outright and forced Los Angeles's down eventually; the IEEPA tariffs got struck down too. The midterm cycle is a reliable release valve; the president's party almost always loses ground in a midterm, and current forecasts, per Nate Silver's model and the 270toWin House map, read November 2026 the same way. A September 2026 House vote to lock the Supreme Court permanently at nine justices failed, falling well short of the two-thirds a constitutional amendment needs, but the Court doesn't need a constitutional amendment to redraw the boundaries of executive power; it's already doing that case by case. The Supreme Court's ruling in Trump v. Slaughter let Trump remove an FTC commissioner without cause, but the same opinion protected the Fed by name, because the Fed sets interest rates and monetary policy in a way that moves markets directly; the SEC has no comparable protection, which is why its independence looks weaker after Slaughter in comparison.

A legitimately elected administration is entitled to govern with whatever lawful instruments exist; unilateral restraint just cements the other side's advantage. And these tools don't stay static once they exist. Schedule F's rescind-reinstate cycle didn't restore an old norm; it transformed a particular tool into a partisan football able to be thrown harder each cycle. DOGE is a starker example, dissolved and discredited entirely while the authority behind and empowering it stays fully intact for whoever's next.

Caesar didn’t need to be better or worse than Sulla for the outcome to hold; he only needed to be next.

The Confession

In perhaps the most iconic Star Wars line of all time, “No, I am your father” plays, on first watch, as a shocking family twist. Read it instead as a confession of authorship, an admission that the generation doing the confronting is structurally indebted to the very system it opposes, in the same way Augustus was structurally indebted to Caesar even as he built something Caesar never managed to make permanent.

The real-world anchor here is almost too on the nose to need dressing up. Project 2029 is the Democratic Party's own explicit governing blueprint for a future administration, led by Chad Maisel, who describes Project 2025, verbatim, as “a deeply sinister effort, very much shrouded in secrecy, and... really focused on tearing down government and advancing a pretty far-right agenda.” Asked how Project 2029 differs, his on-record answer is four words: “We are not that.” He does define the project's actual purpose directly, not to “move the party to the center or move the party to the left,” but “to solve problems at the scale that is required.”

Run the tools forward under different management and each has an obvious progressive use already sitting on the shelf:

  • The legions personally loyal to a general:National Guard federalization built to police protest can just as easily enforce a federal abortion-access order or a gun-buyback against a resistant governor. Same paperwork, different mandate.
  • The dictatorship's emergency justification:emergency economic powers built for tariffs work just as well for a climate-emergency declaration or sanctions on carbon-heavy imports that never have to clear Congress.
  • Proscriptions:tax-exempt status pressure aimed at Harvard from the right points just as easily at a conservative think tank, a politically active church, or an anti-abortion advocacy network from the left.
  • Senate-packing:Schedule F stops being a threat to career staff and becomes a hiring free-for-all for an administration in a hurry, political appointees who won't slow-walk a climate rule the way career staff sometimes does.
  • The tribunate:Trump v. Slaughter's removal power lets a Democratic president fire an FTC or FCC chair who won't move fast enough on antitrust, no new legal theory required.
  • The architects:Palantir's data infrastructure, built to track immigrants for ICE, tracks whoever the next administration's mandate says to find: tax cheats, sanctions violators, polluters, etc.

None of this is a prediction that a Democratic administration will do any of it, just an inventory of what becomes available the moment the apparatus changes hands.

By the end of the original trilogy, it is Vader himself who kills the Emperor, hurling his own master to his death to save his son. It does not fix anything, as the latest sequels show, when a new order seizes the same apparatus of power, and Rome proved that first. Taking down the man at the top was never the hardest part. Brutus and Cassius managed exactly that with Caesar, which made everything worse for them. The Death Star (Schedule F, the removal-power precedent, impoundment authority, the emergency-powers muscle memory built up over the last decade) survives regime change intact, available to whoever governs next, unless somebody chooses to decommission it. Nobody in our story has managed the equivalent of that or intimated any intent in doing so yet. The wider record isn't encouraging, as crisis-era powers, once granted, are a part of government that reliably doesn't shrink back down.

Three Potential Outcomes

Three scenarios cover the realistic range of a paradigm shift across the 2026 and 2028 elections: continued gridlock, continued Republican control, and a Democratic sweep that itself splits depending on what the winning side does with what it inherits.

  1. Scenario one, divided government:Democrats retake the House in November 2026, the modal outcome across current forecasts. Polling and markets converge on it: Marquette's national survey has Democrats ahead by eight points on the generic ballot among registered voters, per Marquette Law School, while Kalshi's prediction market had Democratic control of the House priced at roughly 81% as of late August. Investigation and oversight resume, but none of the mechanisms named earlier get legislatively reversed. Gridlock preserves the architecture by default, its own kind of answer to who checks the check. Call it the New Republic scenario; the war ends, the victors disband what they can reach, and the deeper infrastructure is left standing because nobody with the authority to dismantle it stays in power long enough, or has enough power, to finish the job. Years or even decades later (the latter more relevant for institutions intended to operate in perpetuity) none of it needs rebuilding from scratch, just a new coalition willing to pick the pieces back up.
  2. Scenario two, unified Republican government continues:entrenchment deepens, and the underlying problem, who checks the check, worsens before anyone tests an alternative. Call it the Death Star script running to its second act; the apparatus grows more capable and more visible at once, while visibility eventually produces its own opposition, the way one planet's destruction recruited more for the Rebellion than a decade of quiet grievance and smaller-scale aggression ever managed. That kind of turn can take a long time to arrive.
  3. Scenario three, a 2028 Democratic sweep,splits in two:
    • Branch one:stated intent holds. Project 2029's own framing, solving problems at the scale required rather than an ideological repositioning, actually shapes governance, and the tools get narrowed or retired rather than repointed at new targets. This is the one moment in the entire saga where someone with total, undisputed access to the machine chooses to break it rather than keep it running; Vader, with the Emperor a few feet away and every reason to simply take his place, throws him down the reactor shaft instead. It is a single choice, less a concerted policy, and it costs him his life to make it. The evidence for this branch is thin; Maisel's own language describes scope, not restraint, and the one concrete legislative test so far, on the Supreme Court's size, went the other way.
    • Branch two:the tools prove too tempting. The Revenge of the Libs. The inherited authorities, removal power, Schedule F, impoundment, etc., get redirected rather than dismantled, because unilateral disarmament while the other side keeps rebuilding is a losing move in practice, whatever it looks like on a campaign platform. The machine gets kept on the promise that this time it answers to someone better, then points at new targets next time. Congress's own recent history backs that reading: the Senate's nuclear-option precedent, invoked by Harry Reid in 2013 and again by Mitch McConnell in 2017, has never been rolled back by either party, and in September 2026 House Democrats voted down a constitutional amendment that would have locked the Supreme Court at nine justices, keeping their own option to expand it on the table rather than closing it off. The clearest present-tense evidence outside Congress sits in the private sector: government equity stakes in companies, an idea once associated with the left, got normalized by Trump's "golden share" arrangement in US Steel, and a Roosevelt Institute report this summer already maps out how the next administration could use that same lever to sit on corporate boards and push decisions on labor, sourcing, and buybacks.

But What Does This Mean For Institutional Investors?

Not every check on these tools is the same kind of check. Some rest on explicit statute or tested judicial precedent, others on nothing sturdier than the fact that no administration has pushed on them yet; that difference, beyond the tools themselves, is what actually determines how durable a given risk is for a portfolio:

  • SEC independence. Trump v. Slaughter is a direct holding about the FTC, not the SEC, but legal commentary reads its separation-of-powers reasoning as extending naturally to the SEC's own commissioners, whose removal protections were never as clearly codified as the FTC's in the first place. Holland & Knight put it carefully: "though SEC commissioners have historically enjoyed some removal protections, the decision calls those protections into question." That is an inference, not settled law. The Fed, by contrast, has an explicit statutory carve-out the FTC and SEC never had, which is the structural asymmetry.
  • Tax-exempt status as a lever, not just a label. The Harvard fight is the visible case, but the underlying tool, administration pressure on 501(c)(3) status, is generic and reusable against any nonprofit a future administration disfavors, which cuts across the full ideological range of such institutions rather than sitting neatly on one side of it. An endowment or foundation that assumes this tool only ever points in one direction is making a bet about who wins elections, whether it means to or not.
  • The endowment excise tax has its own ratchet. Once granted, an authority like this tends to persist regardless of who holds power next, because rolling it back is politically harder than expanding it was. The One Big Beautiful Bill Act ("OBBBA") replaced the old flat 1.4% excise tax on net investment income with a three-tier structure: 1.4% for endowments between 500,000 and 750,000 dollars per student, 4% between $750,000 and $2 million per student, and 8% above that, while also raising the institution-size threshold from 500 to 3,000 tuition-paying students, effective January 1, 2026, per Foley & Lardner and the Tax Foundation. The specific rates can move up or down depending on who controls Congress next. What doesn't move back is the precedent itself; taxing large tax-advantaged capital pools in graduated tiers is now normalized machinery, available to the next Congress to adjust rather than invent from scratch, regardless of which party does the adjusting. Institutions currently below the thresholds should not automatically assume they stay there.
  • ESG and proxy-voting whiplash, plus a distinct delegitimization risk. Two different things are happening here, and they call for different responses. The whiplash: the DOL's 2020 rule discouraged ERISA fiduciaries from weighing ESG factors in proxy votes, its 2022 rule reversed that and explicitly allowed it, and in May 2025 the DOL abandoned the 2022 rule and signaled a return to the 2020 position, per Mercer and Goodwin, three flips across three administrations on the same underlying question. Whoever holds the regulatory pen decides which version counts as neutral guidance and which counts as political overreach, which makes it genuinely difficult to build manager selection or proxy policy on a rule that reverses on a more or less predictable political clock. The delegitimization risk is separate: instead of changing the rule, it recasts a neutral institution as a political actor. When Institutional Shareholder Services ("ISS") recommended Tesla shareholders reject Musk's proposed one trillion dollar pay package in October 2025, Musk called ISS and the other firms that agreed "corporate terrorists," per Forbes, treating a routine fiduciary recommendation as an ideological attack rather than the ordinary process work it actually was. Whiplash calls for policy language that doesn't name a specific rule, so it survives the rule changing under it. Delegitimization calls for someone willing to say publicly that the referee is still neutral, since silence is what lets the mischaracterization stick.
  • Concentration risk as political risk. Most institutional portfolios hold a concentrated position in a small handful of mega-cap technology names, whether they intend to or not, simply by tracking a market-cap-weighted index. Those same names carry the heaviest political exposure of anything discussed in this section: antitrust revival under a Khan-advised future administration, artificial intelligence regulation that swings between hands-off and mandatory testing depending on who occupies the White House, and data-infrastructure contracts, Palantir chief among them, that turn a specific company's stock into a direct bet on which party wins the next election. A standard risk model sorts these holdings by sector or factor and calls the exposure diversified. It isn't. Concentration risk and political risk are, functionally, the same risk here: a portfolio that hasn't mapped which of its largest positions move with an election outcome hasn't actually measured its own concentration, whatever the sector breakdown says.

An endowment or foundation that assumes this tool only ever points in one direction is making a bet about who wins elections, whether it means to or not.

All of this points to a governance posture beyond any single trade:

  • A manager platform diversified enough that no single sector or political outcome carries outsized weight. We made the underlying case in The Ties That Bind, that diversification has to mean deliberate exposure management across geopolitical and political scenarios, not just statistical correlation, and the concentration named above (antitrust-exposed platforms, politically sensitive AI regulation, government-contract-dependent names) is exactly the kind of underpriced, narrative-sustained risk that piece describes.
  • An Investment Policy Statement written in language durable enough to survive a change in administration without triggering a full rewrite, tested specifically against each mechanism above rather than assumed to already cover them. We've argued for the discipline that makes this possible in The Three Risks Your IPS Doesn't Name: a document reviewed at least annually and adapted deliberately rather than left static, the same habit that keeps it durable against a regulatory shift beyond simply a market one, and a risk taxonomy, reputational, volatility, downside, that the SEC and tax-exempt points above already fit inside without requiring an invented category.
  • A spending policy that is documented and stakeholder-approved rather than run informally, per the discipline we outlined on endowment spending: distinguishing stated policy from effective spending rate, so budget pressure created by a shifting tax or regulatory backdrop gets absorbed deliberately rather than through reactive draws that erode principal.
  • A proxy-voting framework built on the same fiduciary grounds we argued in The Proxy Paradox, defending ISS and Glass Lewis against Musk's attack on ISS over Tesla's pay proposal as neutral fiduciary infrastructure rather than an ESG agenda in disguise, so the framework does not need to be re-litigated on a four-year political clock.
  • A periodic review of tax-exposure assumptions, including where the institution sits relative to the OBBBA thresholds today and how much room exists before the next tier applies.
  • Ongoing monitoring of the SEC independence litigation and any resulting shifts in examination or disclosure posture, flagged for Compliance/CCO review as developments occur rather than assessed once and set aside.

Importantly, this is not a claim that either party's policies are de facto better or worse for endowments, although a regime shift could at least temporarily favor such community-focused, mission-forward organizations. Portfolios built on decade-plus horizons are sitting under a regulatory backdrop that now flips more sharply across a single election than it has in generations. That volatility is exactly what the governance considerations above are built to withstand; an institution that has already built that kind of resilience into its own governance documents is simply less exposed to whichever branch above happens, while remaining better primed to opportunistically take advantage of any scenario favoring its values. One still setting policy and allocation on the assumption that the current rules are permanent is making an unhedged bet on an election outcome, whether or not it thinks of itself that way.

The Farmer Who Went Home

Cincinnatus is almost certainly myth in the details, a farmer-politician handed absolute dictatorial power who gave it back unasked without changing the rules of the game for his benefit. Rome's own telling has the Senate finding him behind his plow during an invasion, given the same six-month emergency office Sulla would later hold indefinitely, and Cincinnatus breaking the siege in sixteen days, resigning with five and a half months still on the clock to go back to tending his crops. The republic continued unabated and stronger than before. Whether it happened is beside the point; aspirationally, Rome needed such a story.

Sulla walked away for real and it didn't matter; the tools he left behind outlived his late-game sincerity, dormant for exactly as long as it took someone else to pick them up. In our case, the someone else may be a rising Democratic tide in the next election cycle, which is potentially positioned where Caesar and Augustus stood, heir to a legal apparatus it never had to justify building in the first place. A system still leaning on this much loosely bounded, ad hoc, and leveraged emergency architecture hasn't closed the argument; nobody currently holding or aspiring to any of these tools, on either side of the aisle, has proposed retiring the precedent or the authority behind it. What remains to be seen is how exactly it’s used by the next ones on the podium. If the Democrats are anything like the Republicans, that could easily be revenge. That might not be such a bad thing for responsibly allocated long-term-oriented portfolios; in fact, it might be very good.

But revenge, in the end, is not what the apparatus was built for; it is, however, something the architecture is primed to deliver should that path be chosen. The Death Star doesn't neutralize itself when the flag over it changes; it only waits for the next hand willing to pull the trigger. Which is to say, no need to make a bet on what actually happens, a responsible committee already has all the tools at its own disposal to prepare accordingly for any reasonably considered eventuality. But prepare it should. That’s fiduciary responsibility. Everyone has heard ‘carpe diem,’ seize the day, but fewer know that’s only half the phrase, which ends ‘quam minimum credula postero,’ trust the future as little as possible.

quam minimum credula postero

 

This commentary is provided for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. All investments involve risk. Crewcial Partners LLC is a Securities and Exchange Commission registered investment advisor.