WSJ What’s News - Congress Stares Down a Pre-Election Spending Fight

Episode Date: September 9, 2024

A.M. Edition for Sep. 9. Lawmakers come back from summer recess and prepare to tackle a deadline to keep the government funded so they can head back on the campaign trail. The WSJ’s Siobhan Hughes previews what’s likely to be a supercharged few weeks. Plus, Apple prepares to unveil its iPhone 16 lineup, hoping new artificial intelligence features boost sales. And fresh data out of China raises the specter of deflation. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

The DOJ's antitrust case against Google's ad tech practices goes to trial. Plus, Apple prepares to unveil new AI-equipped iPhones. And Congress stares down a deadline to fund the government with election differences looming large. Lawmakers universally want to get out of Washington and get back on the campaign trail. But don't forget that the Capitol becomes a venue essentially for the campaign trail. And so you should expect to see the whole bailiwick of supercharged issues that get discussed around the country concentrated under that big white Capitol dome. It's Monday, September 9th.

I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today. The Justice Department's blockbuster antitrust case against Google kicks off today. In what is the second monopoly case Google faces in less than a year, the DOJ will try to prove that the tech giant has an unlawful grip on the market for software used to buy and sell digital ads. Google says its success is due to a long record of innovation and has criticized the DOJ as being out of touch with market realities. The trial in Northern Virginia is expected to last four weeks and comes a month after

a federal judge in Washington, D.C. ruled that Google was using illegal tactics to preserve its dominance in search. Back-to-back blows against the company could crimp its revenue at a time it's pouring money into A.I. Meanwhile, Apple is holding its annual fall product launch today where it is expected to unveil its newest generation of iPhones. The iPhone 16 lineup will be the first to incorporate Apple's new AI technology called

Apple Intelligence, something the company hopes will revive sales momentum for its flagship product. However, journal tech columnist Dan Gallagher told our tech news briefing podcast that so far Wall Street is keeping its expectations in check. On device AI has not yet proven to be a huge reason to sell hardware but part of what complicates it here is because when they launch these new phones and they typically go on sale in later September Apple intelligence which is their AI tool isn't going to be available yet that doesn't launch until October and not all the capabilities they've been showing off or launching with it. So you're

going to have kind of a limited AI capability early in this particular iPhone cycle. So I think it's actually going to take time and Wall Street's estimates indicate that. Boeing has agreed to increase wages by 25% for its largest union in a four-year pact aimed at preventing a looming strike that would add to the plane maker's manufacturing challenges. Union leaders yesterday, who had sought a 40 percent pay rise over the same period, recommended voting in favor of the deal. However, the union's 33,000 members could still opt to reject it this week.

And if two-thirds vote to strike, workers could walk out at midnight on Friday. We are exclusively reporting that Elon Musk's AI startup, XAI, has discussed a deal where it would get some Tesla revenue in exchange for giving the carmaker access to its technology and resources. Under a proposed arrangement, as described to investors, Tesla would license the startup's AI models in order to help power its driver assistant software and share some of that revenue with XAI. XAI would also help to develop other features for Tesla, including a voice assistant inside its cars, as well as

software to power its humanoid robot Optimus. After our story published on wsj.com, Musk replied on X to a user's summary of the piece by saying, quote, haven't read the article, but the above is not accurate, end quote, and adding that there was no need to license anything from XAI. end quote, and adding that there was no need to license anything from XAI. Let's turn to the Chinese economy now. After fresh inflation readings today came in below expectations, and Beijing announced that it was reducing the number of industries off limits to foreign investors. I asked journal Asia economics reporter Jason Douglas what that tells us about the situation in the world's second largest economy.

So consumer prices in China rose 0.6 percent, which isn't very much. And in fact, when you look under the hood, if you like, the picture is a lot bleaker. So the rise in inflation is mostly caused by some bad weather, which affected agricultural production and pushed up the price of some vegetables. And then you look at things like core inflation, that's sunk to a multi-year low, right? Producer prices, the prices the companies charge, fell again. They've been falling for almost two years now. So the overall picture is there's still a lot of anxiety about deflation in China. These measures of inflation are still bumping around zero and they don't appear to be getting

any higher. And I think this is the kind of thing that started to cause a bit of, you know, a bit of worry in Beijing. And Jason remind us why that is. For one thing, it's very difficult to get out of whenever prices start to fall and people kind of expect prices to keep falling. And that causes them in many cases to slow down spending and the anticipation of getting a better deal tomorrow.

The other big problem is debt. So if you have debts and you have deflation, the real value of your debts gets bigger. And so people then tend to allocate more of their income to servicing these debts. Falling prices also implies things like falling wages. So it's a very difficult economic problem and one that central bankers try very hard to avoid. Might that then help us understand this weekend announcement from Beijing that it's removing some restrictions on the manufacturing sector as well as allowing for foreign investment in the Chinese health sector, an attempt maybe to revive some growth?

That's the goal. I think the more immediate goal is to revive foreign direct investment, which has been terrible for the last few quarters for sure. New companies setting up operations in China, people moving into China, which was a force that propelled its economy for decades, has basically completely stopped. So removing these restrictions is welcome as a good thing, and it may well encourage more companies to look at China's investment destination. It is, though, an open question about whether or not it would work, given the gloom around China's economy and the gloom around important things like China's relationship with the United States and the West. That was Journal Asia economics reporter Jason Douglas.

Turning to markets now, Chinese appliance giant Maidea says it's taking orders from investors for an initial public offering that could be Hong Kong's biggest this year. Maidea, which was the world's largest appliance company by sales last year, plans to raise up to $3.5 billion. And later today we'll get earnings from cloud software company Oracle, whose shares are up about 14% so far this year. Coming up with a government shutdown looming and the election right around the corner, lawmakers are getting ready for a tense few weeks. We've got that story and more after the break. insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business. Contact a licensed TD

insurance advisor to learn more. Syria has accused Israel of launching missile strikes that killed 16 people as tensions rise between the two countries amid an Israeli campaign to disrupt Iranian arm shipments to Hezbollah in Lebanon. The Iran-backed Syrian regime said the strikes hit multiple areas last night, wounding 36 people and damaging residential buildings. There was no immediate comment on the strikes from the Israeli military, which has carried out hundreds of strikes on targets within Syria in recent years, though it rarely acknowledges

them. Venezuelan opposition leader Edmundo Gonzalez, who the U.S. says won the July presidential election against Nicolas Madurouro has fled the country. The 75-year-old retired diplomat arrived in Spain yesterday and plans to seek political asylum there. As Maduro's regime continues to crack down on the opposition after asserting he won the election without making ballot data public. Experts say Gonzalez's exit is a major setback for the country's

democratic opposition movement. And summer recess is over for lawmakers in D.C. that is. Members of the House and Senate are back in session today for a short, around two week long stretch before they head back home to campaign for re-election. And while that's a short stretch of work, it's one that Journal Congressional reporter Siobhan Hughes, who joins us now out and about on the streets of Washington, D.C., is here to explain, actually has a lot riding on it. Siobhan, the big priority for lawmakers is going to be funding the government, because without new legislation, the government is set to partially shut down on October 1st.

We are seeing some movement now though. So Republican House Speaker Mike Johnson on Friday unveiled a continuing resolution that would fund the government through March and he paired this with legislation called the SAVE Act. Tell us about that. Sure, yeah. So it would require proof of citizenship, a passport, a birth certificate, even some types of real ID driver's licenses would qualify in order to register to vote. And it would also require states to weed out

non-citizens from voting rolls. This passed in July, but it flew a bit under the radar because it was in the aftermath of President Biden's debate performance. And so much attention was focused on what was going to happen at the top of the Democratic ticket that this issue really snuck in. And it's only now that Congress is going to have a chance to focus on this in ways that are deeply meaningful

in a lot of Republican races across the country. Nat. Got it. Is this a bill that is likely to get bipartisan support? Jennifer. Democrats really generally don't like this bill, but I will say when the bill passed in July, five Democrats did join Republicans to support it. Five Democrats in very tough races and another 10 Democrats refrained altogether from voting on the bill, including some names that I noticed were also some swing state Democrats. And so there is a possibility that the government shuts down over this issue, or at least that Congress is forced to stay in town in October when they'd really rather be out on the campaign trail. But again, we are in an uncertain situation. That desire you mentioned to get back out on the campaign trail in what we should notice a very supercharged partisan environment ahead of the election. That could add some uncertainty to what happens in Congress now.

Absolutely unmistakably. Don't forget that the Capitol becomes a venue essentially for the campaign trail. And so you should expect to see the whole bailiwick of supercharged issues that get discussed around the country concentrated under that big white Capitol dome things like Project 2025, the Republican-backed plan to overhaul the executive branch of the government. You would expect to see that come up. You would expect to see Republicans bring up the issue of impeachment and the credibility of Joe Biden. All of this into a potentially lethal and supercharged stew right before Congress heads out for those final weeks of

campaigning ahead of the election day. I've been speaking to Journal Congressional reporter Siobhan Hughes. Siobhan, thanks so much. Thank you. And that's it for What's News for Monday morning. Today's show was produced by Kate Bulevent and Daniel Bach with supervising producer Christina Rocca and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.