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‘No one thinks the right outcome is zero’
Treasury Secretary Steven Mnuchin says “there is more work to be done” to help the U.S. economy recover from its pandemic-induced recession. But he and Democrats disagree on the scale of the problem, and the scope of the solution, making it hard to predict when — or if — lawmakers will strike a deal on another economic stimulus package.
Mr. Mnuchin and House Democrats painted different pictures of the economy at a congressional hearing yesterday:
• The Treasury secretary emphasized that the economy was “doing great” relative to the worst-case pandemic situations. He said that some of the job losses were due to “certain states are not opening up.”
• The House majority whip, Jim Clyburn, Democrat of South Carolina, warned of a “K-shaped” recovery, in which the wealthy bounce back and the rest lag behind. “There’s one Wall Street and there’s thousands of Main Streets not doing well,” he said.
Who’s right? A number of economic reports are due this week that could shed some light on the course of the recovery. Today, the Congressional Budget Office will release an update to its 10-year economic projections. Tomorrow, weekly jobless claims are expected to show a large decline, due mostly to methodological changes. On Friday, the monthly report on jobs is predicted to show the unemployment rate falling to single digits for the first time during the pandemic, to a level roughly equal to the peak reached during the global financial crisis.
• The weekly “recovery tracker” assembled by Oxford Economics, which mashes together a wide range of high-frequency statistics, reckons that the U.S. economy is now operating around 80 percent of normal, with muted improvement in recent weeks.
Is help on the way? Mr. Mnuchin told the House Select Subcommittee on the Coronavirus Crisis that he would call House Speaker Nancy Pelosi “right after the hearing” to discuss the next stimulus bill. They spoke for more than 30 minutes, but Ms. Pelosi said afterward that there were “serious differences understanding the gravity of the situation” between the White House and Democrats.
Talks remain stalled over the size of the stimulus, with Democrats initially pushing for more than $3 trillion while Republicans are coalescing around a $500 billion proposal. “No one thinks the right outcome is zero,” Mr. Mnuchin said. Beyond that topline disagreement, the parties still diverge on many of the details:
• Funding for state and local governments: The White House chief of staff, Mark Meadows, told CNBC that the $1 trillion that Democrats are seeking for municipalities is “not based in reality.”
• Extra unemployment assistance: Some Republicans are worried that a significant extension of the payments could deter people from working. A new Gallup poll suggests otherwise.
• Industry bailouts: Targeted aid for sectors like airlines, which warn of layoffs if Congress does not extend grants offered in the first relief package, remains controversial.
In the interim, White House executive actions are filling the void, with short-term measures on things like unemployment checks and evictions. A payroll tax deferral also went into effect this week, which will apply to one million federal workers but probably not many private-sector employees, with companies wary of hitting their workers with smaller-than-usual checks next year when the tax comes due.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.
Here’s what’s happening
The TikTok deal talks have hit a snag over algorithms. Potential buyers of the social network’s U.S. operations are reportedly concerned that the code underlying the app’s recommendations to users — the most valuable part of the business — may not be included in a transaction because of new Chinese tech export laws, The Wall Street Journal reports.
Credit Suisse may be punished over a surveillance scandal. Switzerland’s financial regulator said today that it has opened enforcement proceedings against the bank over its spying on several executives, including a former star banker who defected to UBS. The scandal eventually led to the ouster of Tidjane Thiam as Credit Suisse’s C.E.O.
Australia fell into recession for the first time since 1991. Data released today confirmed a two-quarter decline in G.D.P., with the 7 percent drop in the second quarter the worst performance since records began. “Covid-19 has wrecked havoc on our economy and our lives like nothing we have ever experienced before,” said Josh Frydenberg, the country’s treasurer.
Tesla plans to sell up to $5 billion in new shares. The planned stock sales follow the electric carmaker’s five-for-one stock split this week, which for some reason pushed the company’s share price even higher. That said, fewer than a fifth of the analysts who cover Tesla currently recommend buying its turbocharged stock, which has gained more than 400 percent so far this year.
Mark Zuckerberg and Priscilla Chan are donating $300 million to protect the U.S. elections. The donation is one of the couple’s biggest ever, with the bulk going to a nonprofit that will focus on recruiting poll workers, buying protective equipment and setting up drive-through voting. It’s almost as much as the amount Congress allocated to election security in the CARES Act.
Facebook and Twitter warn of more Russian meddling
The social networks say that a Kremlin-backed group is again trying to interfere in a U.S. presidential election.
The group, the Internet Research Agency, is using sham accounts and a fake left-wing news site to spread disinformation, Facebook and Twitter announced yesterday. The initiative hasn’t reached as large an audience as in 2016, but this time the Russian-backed group hired real Americans to write for the website and mixed in articles about pop culture and activism to disguise its origins.
Both companies want to rebut criticism that they responded too slowly in 2016 by taking down several accounts associated with the latest effort. But they are up against moves by the White House to play down the Russian threat. Earlier this week, the director of national intelligence, John Ratcliffe, asserted that China is the bigger electoral threat, something that sources told The Times does not appear to be true. And Facebook is bracing for potential efforts by President Trump to use its platform to dispute the 2020 election results, depending how they go.
Amazon’s latest run-ins with organized labor
The e-commerce titan has confronted accusations in recent years that it is hostile to workers’ efforts to organize. New reports add fuel to that criticism.
Amazon reportedly monitors private Facebook groups for delivery drivers, keeping tabs on “planning for any strike or protest against Amazon,” Motherboard reports, citing internal documents. Posts are scrutinized by the “advocacy operations social listening team,” according to the report. Amazon appears to acknowledge that the effort could cause P.R. problems: One document says that unauthorized sharing of the information “will have a detrimental effect if it falls within the reach of any of our Delivery partners.” The company didn’t comment on the article.
The report follows the unearthing of Amazon job postings for tracking “labor organizing threats.” Motherboard reported earlier this week that the company was recruiting intelligence analysts for its global security operations team, with an emphasis on “organized labor.” After that article was published, Amazon deleted the listings and said the descriptions were inaccurate.
Meanwhile, Amazon drivers in Chicago highlighted the tough nature of gig work for the company. Bloomberg reports that they have taken to hanging smartphones from trees near a dispatch station, hoping to get a tiny jump on securing package delivery jobs. The practice violates Amazon rules, but an unnamed driver said, “Amazon knows about it but does nothing.” (The company said it is investigating the matter.)
The Chamber of Commerce is expected to endorse a lot more Democrats
The influential and typically pro-Republican business lobbying group is preparing to break with past practice by endorsing 23 first-term House Democrats, The Times’s Nicholas Fandos reports.
Vulnerable Democratic candidates in traditionally Republican districts could get a boost. Many of the representatives slated to get the chamber’s backing eked out victories in 2018’s “blue wave” election:
• Joe Cunningham of South Carolina (50.6 percent of the vote in 2018)
• Antonio Delgado of New York (51.4 percent)
• Abby Finkenauer of Iowa (51 percent)
• Kendra Horn of Oklahoma (50.7 percent)
• Elaine Luria (51.1 percent) and Abigail Spanberger (50.4 percent) of Virginia
• Xochitl Torres Small of New Mexico (50.9 percent)
It’s a sign of how some reliably Republican-leaning groups are breaking ranks with the president. The chamber revamped how it rates political candidates last year, aiming to promote bipartisanship and support for immigration, free trade and other policies that have fallen out of favor in the Trump administration. The lobby group has supported some Democrats in the past, but not in the numbers it is expected to endorse in the coming weeks. It is also expected to support 29 freshman House Republicans.
Critics say the Democratic endorsements will put the 2017 corporate tax cuts at risk. The chamber, which has spent $100 million backing Republican candidates over the past decade, according to Politico, is an “active and willing ally” in threatening “the most hard-fought victory for free enterprise in the last 15 years,” Brad Todd, a prominent Republican strategist working on congressional campaigns this fall, told The Times.
The speed read
• Shares in Kodak jumped as much as 65 percent after the hedge fund D.E. Shaw disclosed that it had bought a 5 percent stake. (Business Insider)
• The dating app Bumble is reportedly preparing for an I.P.O. that could value it at more than $6 billion. (Bloomberg)
• A group of institutional investors is trying to block the N.Y.S.E. from allowing companies go public via direct listings that raise capital. (WSJ)
Politics and policy
• A panel of federal appeals court judges temporarily blocked the Manhattan district attorney’s efforts to obtain President Trump’s tax returns. (NYT)
• The Trump administration said it won’t join an international coronavirus vaccine coalition because of its involvement with the W.H.O. (WaPo)
• Twitter plans to add context to trending topics on its social network, in an effort to clean up a feature often used to amplify hate and disinformation. (NYT)
• A new effort for Joe Biden’s campaign: virtual lawn signs in Nintendo’s Animal Crossing video game. (The Verge)
Best of the rest
• The ad industry’s response to the pandemic: a flood of pitches for meditation apps, stress-relieving gumdrops and other anti-anxiety products. (NYT)
• Oil-rich Kuwait is running out of cash. (Bloomberg)
• Cities like Buffalo could serve as havens for people uprooted by climate change. (Quartz)
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