Mark Meadows, the White House chief of staff, said on Wednesday that a call by Democrats for hundreds of billions of dollars in federal aid for states and cities and their resistance to a liability shield for businesses remained the toughest obstacles to a stimulus deal.
“The biggest issue remains state and local assistance,” Mr. Meadows said on the Fox Business Network. “That remains a stumbling block.”
His remarks came hours before Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were scheduled to continue talks on a broad pandemic relief package in hopes of reaching a deal this week, even as congressional Republicans fought to prevent such a compromise from materializing before Election Day.
Mr. Mnuchin, who is returning from a trip to the Middle East, and Ms. Pelosi planned to speak later on Wednesday. The two sides have been trying to reach an agreement on another round of economic aid that could be enacted before Nov. 3. But Senator Mitch McConnell, Republican of Kentucky and the majority leader, has told the White House to abandon its efforts, concerned about the political fallout for Republicans.
Mr. Meadows suggested that progress was being made, but said he feared that politics could get in the way. Ms. Pelosi on Tuesday signaled that Democrats were preparing counteroffers on both liability protections for businesses that are seeking to reopen and state and local funding.
The White House has proposed providing $250 billion to states and municipalities, Mr. Meadows said, while House Democrats have called for double that. He also said that the liability protections were a crucial priority for Republicans, and he chided Ms. Pelosi for resisting them, saying she was being “disingenuous” if she believed that his party would agree to any deal without them.
Even as Republicans resisted a compromise, pressure was mounting from rank-and-file lawmakers in both parties to reach one. A bipartisan group of House lawmakers on Wednesday wrote to congressional leaders and Mr. Trump urging a resolution before the November elections.
“We know there may be remaining issues to be resolved between the negotiators, but it appears those issues are certainly solvable,” the group, known as the Problem Solvers Caucus, wrote. “Our families, businesses, and local communities don’t have the luxury of time so Washington can continue its partisan games. We must do our job and do it now.”
Across the Capitol, in an effort to put pressure on Democrats, who have largely resisted narrow aid packages, Senate Republicans planned to try to advance a targeted $500 billion plan that would revive lapsed federal unemployment benefits and a popular federal loan program for small businesses, as well as provide additional money for testing.
It was expected to be opposed by most Democrats, who have argued it falls far short of the level of aid needed, and fail to clear the 60-vote threshold required to move forward.
Lael Brainard, a Federal Reserve governor who is seen as a possible future Treasury secretary if former Vice President Joseph R. Biden Jr. wins the election, warned in a speech Wednesday that “the easiest improvements” in the labor market “are likely behind us.”
Ms. Brainard pointed out that the share of permanent layoffs is rising — bad news because it takes longer to rehire those workers than people who have temporarily lost their jobs — and that unemployment insurance claims have ticked up. She also noted that participation rates for women in their prime working years have fallen.
That decline “could have longer-term implications for household incomes and potential growth,” she said.
A shortfall in government support could pose a major risk to the pace of the economic rebound, Ms. Brainard said, especially if additional help comes after hard-hit households burn through the savings they built up earlier in the crisis.
“Apart from the course of the virus itself, the most significant downside risk to my outlook would be the failure of additional fiscal support to materialize,” she said.
Economists often refer to the economic rebound underway as K-shaped, meaning that it is sharply divided. Some people have held onto their jobs, watched their savings rise and maintained basically normal consumption patterns despite some pandemic-spurred modifications. But another broad segment of workers has lost jobs and seen its labor income dry up. While many such households are now living off savings from earlier government support, those funds will not last forever. Likewise, many big businesses are doing well, even as smaller companies and those in hard-hit sectors struggle.
“Further targeted fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery,” Ms. Brainard said. “The most important message is simply that we will have a much better, stronger, more inclusive recovery if we do continue to see that targeted fiscal support” alongside Fed policy.
There’s a new gorilla in the bond market.
The European Union issued debt in a big way for the first time this week to finance pandemic relief programs, generating huge demand from investors eager for an alternative to the United States Treasuries that dominate the government bond market.
The bloc has issued debt before, for example to help Greece recover from a financial crisis, but never on the scale seen Tuesday. The European Commission sold 27 billion euros ($32 billion) in 10-year and 20-year bonds, the first of a series of issues that will raise a total of €900 million during the next five years.
Previously, national governments were responsible for almost all of their own financing. Countries like Germany and the Netherlands were against issuing common debt, but the pandemic changed their views.
“We have done it before, but we are entering a new level,” Johannes Hahn, the European commissioner in charge of budget and administration, told reporters at a news conference in Brussels Wednesday to announce the results of the sale.
Demand for the bonds, which had interest rates near zero, was 13 times the supply, a sign that investors have grown uneasy about having too much of their money in Treasuries, analysts said. Investors are worried about soaring government spending by the United States government, a widening trade deficit and falling interest rates, George Saravelos, a bond strategist at Deutsche Bank, said in a research report.
The sale is “a vote of confidence on the euro as a reserve asset, particularly at a time when the dollar’s dominant role is being questioned,” Mr. Saravelos said.
The money is earmarked for relief programs such as subsidized furloughs for workers in industries hard hit by the pandemic. But the funds will take a while to reach European citizens because of a political impasse in Brussels.
The European Parliament is demanding that money be withheld from Hungary and Poland because of their increasingly authoritarian governments and violations of European Union rules. European leaders like Angela Merkel, the German chancellor, are against withholding the money.
Purdue Pharma, the maker of OxyContin, has agreed to plead guilty to criminal charges of defrauding federal health agencies and violating anti-kickback laws, and faces penalties of roughly $8.3 billion, the Justice Department announced on Wednesday.
The company’s owners, members of the wealthy Sackler family, will pay $225 million in civil penalties.
Wednesday’s announcement does not conclude the extensive litigation against Purdue, but it does represent a significant advance in the long legal march by states, cities and counties to compel the most prominent defendant in the opioid epidemic to help pay for the public health crisis that has resulted in the deaths of more than 450,000 Americans since 1999, according to the Centers for Disease Control and Prevention.
Still, it is unlikely the company will end up paying anything close to the $8 billion negotiated in the settlement deal. That is because it is in bankruptcy court and the federal government will have to take its place in a long line of creditors. Typically, creditors end up collecting pennies on the dollar.
One of the fronts in the Justice Department’s case against Google is a 13-year-old agreement between Apple and Google that has evolved into a multibillion-dollar deal with enormous consequences for both companies and many of their rivals.
When Apple introduced the iPhone in 2007, Google was the device’s default search engine. In return, Google paid Apple a chunk of the ad revenue it collected from the millions of Google searches conducted on iPhones.
Today that arrangement covers all Apple devices, which now account for nearly half of all Google search traffic, according to the Justice Department’s lawsuit. As a result, Google pays Apple an estimated $8 billion to $12 billion a year, according to the suit. That has made Apple and Google hugely reliant on one another, while edging out other search engines and, according to the U.S. government, protecting Google’s monopoly.
“By paying Apple a portion of the monopoly rents extracted from advertisers, Google has aligned Apple’s financial incentives with its own and set the price of bidding for distribution extraordinarily high — in the billions,” the Justice Department said in its lawsuit.
With billions of dollars on the line, the partnership is critical to both companies.
With billions of dollars on the line, the partnership is critical to both companies. Inside Google, losing its pole position on iPhones is considered a “Code Red” scenario, according to the lawsuit. At Apple, Google’s payments account for roughly 15 percent to 20 percent of Apple’s profits.
Google officials said they weren’t aware of the Justice Department’s “Code Red” allegation and that the company’s deal with Apple is no different than Coca-Cola paying a supermarket for prominent shelf space.
Apple did not immediately respond to a request for comment.
A federal judge appointed by President Barack Obama will preside over the Justice Department’s antitrust lawsuit against Google, according to a note posted to the case’s docket on Wednesday.
Judge Amit P. Mehta of the U.S. District Court for the District of Columbia was appointed to the bench in late 2014. He spent much of his career in private practice and worked a public defender in the early 2000s.
He did not immediately respond to a call seeking comment on Wednesday.
The Justice Department lawsuit filed on Tuesday argues that Google obtained a monopoly over online search services — and the ads that run on them — and then used contracts with phone makers like Apple to protect that power. Google has said that the lawsuit is groundless and denies it engages in anti-competitive behavior. The company expects it will be at least a year before the lawsuit goes to trial.
The Department of Justice’s lawsuit against Google is big, complicated and could take years to resolve. Today’s DealBook newsletter addresses five questions that arise from the government’s action:
Why now? A better question might be, “This again?” The Federal Trade Commission conducted a two-year antitrust investigation into Google under President Barack Obama, which went nowhere. Bill Barr, the attorney general, pushed hard to bring this new case before the Nov. 3 presidential election, but even if Democrats take the White House, experts say that it is unlikely to be withdrawn.
How long will it take? “This legal case is going to be loud, confusing and will most likely drag on for years,” writes The Times’s Shira Ovide. And a bipartisan coalition of attorneys general from states including New York, Colorado and Iowa said yesterday that they would conclude their own probe into Google “in the coming weeks.” European antitrust regulators sued Google in 2015 based on similar facts, and settled in 2018. The U.S. Justice Department’s landmark antitrust case against Microsoft was filed in 1998 and settled in 2001.
Is this like the Microsoft case? Yes, but not exactly. Google is charged with monopolizing search by using restrictive and exclusive deals, like Microsoft’s bundling of software programs with its operating system. Google says that other companies, including Microsoft, control prime mobile and desktop space, so it negotiates for “eye-level shelf space” to place its products like a cereal brand would with supermarkets.
Will Google get broken up? “Nothing is off the table,” said the associate deputy attorney general Ryan Shores. A trial judge initially ordered a breakup in the Microsoft case, but the Justice Department eventually settled the case. The E.U. has generally eschewed breakups — it settled its antitrust case against Google for abusing its power in the mobile phone market with a fine and behavioral changes. Whatever the outcome, investors don’t seem worried: Shares in Google’s parent, Alphabet, rose yesterday, and are also up in premarket trading today.
Could Google just pay to make this go away? With more than $120 billion in cash and an army of lawyers, it has the power to drag this out for a long time if it wants to. Or it could dip into the funds to settle the case with a fine and some promises to behave differently. State attorneys general fear this sort of anticlimactic ending, which is part of why they’re filing separate suits, giving them leverage to move independently if they think the Justice Department might settle too soon or too leniently.
The Justice Department accused Google on Tuesday of illegally protecting its monopoly over search and search advertising. The agency accused Google of locking up deals with giant partners like Apple and throttling competition through exclusive business contracts and agreements.
The lawsuit, which may stretch on for years, could set off a cascade of other antitrust lawsuits from state attorneys general. About four dozen states and jurisdictions, including New York and Texas, have conducted parallel investigations and some of them are expected to bring separate complaints against the company’s grip on technology for online advertising. Eleven state attorneys generals, all Republicans, signed on to support the federal lawsuit.
The New York Times is covering developments between the government and Google. Read more about what’s been going on:
U.S. Accuses Google of Illegally Protecting Monopoly
A victory for the government could remake one of America’s most recognizable companies and the internet economy that it has helped define, Cecilia Kang, David McCabe and Daisuke Wakabayashi report.
It’s Google’s World. We Just Live in It.
Googling something was all we once did with Google. Now we spend hours a day using its maps, videos, security cameras, email, smartphones and more, our personal technology columnist Brian X. Chen writes.
Google Up Against Laws That Thwarted Microsoft (and Others Since 1890)
The Justice Department’s antitrust case points to restrictive contracts, a focus that a professor said “is as old as the Sherman Act,” Steve Lohr reports.
What Is Happening With the Antitrust Suit Against Google?
Steve also put together a primer on the case, explaining what the government hopes to achieve and how Google might defend itself.
Google Antitrust Fight Thrusts Low-Key C.E.O. Into the Line of Fire
Sundar Pichai, chief executive of Google’s parent company for less than a year, already faces the internet giant’s biggest threat in its 22 years, Daisuke explains.
Tesla on Wednesday is expected to report a profit for the fifth consecutive quarter, putting it on track to report its only annual profit since its founding in 2003.
But the company will also face questions about whether the strong sales growth it has enjoyed over the last few years is tapering off.
Analysts believe Tesla’s sales in the United States have already slowed, and they have said it may be suffering from sluggishness in other parts of the world. In China, Tesla has cut prices several times this year and sales of the Model 3 sedans it makes in Shanghai declined slightly in September compared with August and July. In Europe, the company faces growing competition from traditional automakers.
“Tesla is losing ground in Europe to fierce competitors” that have offered more affordable electric models, Vicki Bryan, the chief executive of Bond Angle, a research firm, said in a report. Ms. Bryan also said Tesla’s Model Y hatchback seemed to be taking sales away from the Model 3 rather than adding to the company’s sales.
Tesla said this month that it delivered 139,000 cars in the third quarter. That was about a 50 percent increase from the second quarter, when sales and production were severely hampered by the coronavirus pandemic.
The company’s chief executive, Elon Musk, last month appeared to temper expectations when he forecast that sales would rise 30 to 40 percent this year, implying a range of 482,000 to 514,000 cars.
Tesla would have to sell 182,000 cars in the fourth quarter to sell more than 500,000 cars for the year. Most analysts expect sales for the full year to fall short of that mark, however. In the fourth quarter of 2019, the company delivered 112,000 cars.
Analysts expect Tesla to report earnings of 55 cents a share for the third quarter, according to a consensus compiled by FactSet. The company earned 50 cents a share in the second quarter, and 78 cents a share in the third quarter of last year.
Tesla’s profits have often been helped by the sale of credits to other automakers who need them to meet environmental regulations. In the second quarter, the company reported $428 million in credit revenue.
While several automakers have introduced electric vehicles, Tesla so far has faced little serious competition. But that could change over the next year or so.
On Tuesday evening, General Motors offered a preview of a battery-powered and technology-packed Hummer pickup truck that it plans to begin selling in about 12 months. The Hummer EV is supposed to go 350 miles or more on a single charge — in line with Tesla’s top models. Cameras embedded all around the truck allow drivers 18 different views of where the vehicle is going and what it is driving over. All four wheels will have the ability to turn, allowing it to drive diagonally, a feature G.M. is calling “Crabwalk.” G.M. promises the truck will be able to charge enough to travel 100 miles in just 10 minutes.
The first edition will start at $112,595. Other editions due in 2022 and later will be available under $100,000.
The Hummer EV is meant to compete with Tesla’s pickup, the Cybertruck, which is supposed to go into production late next year.
U.S. stocks climbed on Wednesday, while Europe’s benchmark stock indexes headed lower as the region’s central bank warned of the risk to Europe’s economy from a second wave of the pandemic.
The S&P 500 was barely higher. Stocks in Europe fell, with major indexes down 1 to 2 percent as coronavirus cases continued to rise.
Netflix shares were lower in premarket trading after the company reported Tuesday that it had signed up fewer new subscribers last quarter than expected. Stock in Snap, the parent company of Snapchat, surged on its report that it had recorded a big increase in users.
On Tuesday, stocks were whipsawed by conflicting comments about the state of the stimulus talks, but ended the day up half a percent. Speaker Nancy Pelosi said she was “optimistic” a deal could be reached with the Trump administration in the coming days, comments that were followed a few hours later by Senator Mitch McConnell, the majority leader, telling Republicans that he had advised the White House not to strike a deal. Later still, Ms. Pelosi’s spokesman said in talks between her and Steven Mnuchin, the Treasury secretary, they had found “common ground as they move closer to an agreement.”
On Wednesday, Mark Meadows, the White House chief of staff, said that a call by Democrats for hundreds of billions of dollars in federal aid for states and cities and their resistance to a liability shield for businesses remained the toughest obstacles to a stimulus deal.
Late on Wednesday, Christine Lagarde, the president of the European Central Bank, said that the surprisingly early resurgence of the virus in Europe, before the winter months, was “not a good omen” and a “clear risk” to the economic outlook.
Netflix attracted 2.2 million new subscribers for the third quarter, about one million lower than what investors were expecting and short of the 2.5 million Netflix itself had forecast, the company reported Tuesday. Consumer interest in Netflix accelerated earlier in the year as households in lockdown streamed films and shows more than usual, giving the company a record number of new subscribers.
Britain’s postal service, Royal Mail, announced it would start to pick up parcels from residential houses as the country sees a surge in online shopping. It will cost 72 pence per package, or nearly $1, for the service.
Pioneer Natural Resources, a leading shale oil producer, said on Tuesday that it would buy Parsley Energy for $4.5 billion to expand its operations in the Permian Basin, the oil field that straddles West Texas and New Mexico. A day earlier, ConocoPhillips announced that it was acquiring Concho Resources, another Permian producer, for $9.7 billion. These and other acquisitions signal that oil and gas companies are looking for ways to cut costs because they do not anticipate a quick recovery in demand for their products, which tumbled this spring when the pandemic took hold.
Snap, the parent company of Snapchat, said revenue for the third quarter was $678 million, up 52 percent from a year ago, exceeding analysts’ estimates of $559 million. While some analysts had predicted that Snap’s growth would tail off as people returned to school, its number of daily active users rose 18 percent to 249 million. But the company posted a net loss of nearly $200 million in the quarter, narrower than the loss of $227 million a year ago. The company’s stock jumped on the news.
Michael Roth, the longtime chief executive and chairman of the Interpublic Group of Companies, one of the world’s largest advertising companies, said on Wednesday that he would step down from his job at the end of the year.
He will be replaced, as has long been expected, by the current chief operating officer, Philippe Krakowsky, an 18-year IPG veteran and the architect of its $2.3 billion acquisition of the data company Acxiom in 2018. The change goes into effect Jan. 1. Mr. Roth, 74, who has been chairman of IPG since 2004 and chief executive since 2005, will become executive chairman. IPG’s internal guidelines encourage board members not to stand for re-election after age 74.
Before Mr. Krakowsky, 58, takes over, Mr. Roth must lead the company through the fourth quarter, always the most important of the year for advertising companies — the “crucial holiday shopping season,” he said on a conference call with analysts on Wednesday.
Coronavirus cases are surging around the world, unemployment remains high and the status of government stimulus programs is unclear, especially in the United States. “All this makes client decision-making for the fourth quarter difficult to forecast,” Mr. Roth said.
In the third quarter, which ended on Sept. 30, IPG’s net revenue sank 5.2 percent, to $1.95 billion, as clients in the automotive, transportation and industrial sectors suffered. The company slashed its head count by 7 percent from a year earlier, to 50,500 people. It also cut back its substantial travel and entertainment costs and said it plans to trim its real estate budget by exiting more leases. “The workplace environment is going to be different,” Mr. Roth said on the call.