WSJ What’s News - House Republicans Are Split On How Much To Cut Government Spending

Episode Date: February 4, 2025

P.M. Edition for Feb. 4. While some Republican members of the House want to make deep cuts to government spending, others are more hesitant. U.S. tax policy reporter Richard Rubin explains why it is crucial for Republicans to reach a consensus. Plus, new data from the Labor Department show that fewer Americans are quitting their jobs. WSJ economics reporter Matt Grossman tells us why. And the U.S. sends its first flight of migrants to Guantanamo Bay. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

The U.S. begins sending migrants to Guantanamo Bay. Plus, House Republicans don't agree about how much government spending to cut. If there were two camps, this would be a lot easier. But there are 217, 218 camps. Each House member is his own or her own self. And bye-bye quitters. New data shows more American workers are staying put. It's Tuesday, February 4th.

I'm Alex Osila for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. The US has begun sending migrants to Guantanamo Bay. According to people familiar with the matter, a flight departed this afternoon from Fort Bliss in Texas to Guantanamo with roughly a dozen migrants on board.

The White House confirmed the flight. The Homeland Security Department didn't immediately respond to a request for more information on the migrants and whether they had a criminal record. It's the initial phase of expanding a small migrant detention center on the U.S. base in Guantanamo. Right now, the base is equipped to hold 120 migrants, and the Trump administration has said that it would expand operations there to hold up to 30,000. According to a defense official, roughly 200 Marines have been sent to Guantanamo in recent

days and that number is expected to rise to 500 in the coming days in order to help set up the infrastructure and increase the site's capacity. Meanwhile, back in Washington, two members of President Trump's cabinet have cleared key hurdles for their confirmation. The Senate Finance Committee voted to forward Robert F. Kennedy Jr.'s nomination for health secretary to the full Senate, likely clearing his path to confirmation. That full Senate vote hasn't been scheduled yet, but could come as soon as next week. And in a closed-door vote, the Senate Intelligence Committee narrowly advanced Tulsi Gabbard's

nomination to oversee the nation's intelligence agencies. It's another step in President Trump's effort to stock his second administration with loyal but sometimes unconventional cabinet appointments. It wasn't long ago that workers were switching jobs at a rapid clip. Well, those days seem largely behind us. According to data from the Labor Department out today, Americans quit about 40 million jobs last year, down 22% from a recent peak in 2022 and hitting their lowest level since 2020.

We'll get more insight into the job market on Friday when the Labor Department releases new job numbers. But in the meantime, Matt Grossman, who covers economics for The Wall Street Journal, joins me now. Matt, why are workers staying put in their jobs? The biggest difference is that there are just fewer opportunities out there to change and do something new. Right after the pandemic, there was a big squeeze. A lot of employers were trying to find talent, and so workers could make a lot of demands, like the chance to work from home

or to take on more responsibility or things like that. Today, companies are much more staffed up. The economy's slowing down a little bit, and so there are far fewer opportunities out there for people looking to move, and so people just wind up staying put in the jobs they have longer. What does this tell us about the health of the labor market?

So the labor market is still in pretty good shape. The headline numbers are still decent. Unemployment's been steady at 4.1 percent. Economists are expecting it to stay that way on Friday. And the overall economy is still creating between 1 and 250,000 new jobs every month. But under the surface, it's become a lot harder to find a job if you don't have one. There's less wage growth. And we're moving from a very potentially overheated labor market to something that's a little

bit cooler, a little bit more stable. Are there certain industries or types of jobs that are seeing fewer and fewer workers quitting? Some of the weakest areas of the labor market have been in the highest paying jobs. If you're in more kind of hands-on services work or in certain manufacturing sectors, if you work in a hospital or in a restaurant or in a hotel or working with your hands making something in a factory, it's probably felt like less of a drastic change and there are probably still more opportunities out there. That was WSJ Reporter Matt Grossman.

Thanks so much, Matt. Thank you. During the pandemic, many workers got used to having at least a few days a week to work remotely. For me, I'm a big fan of skipping the commute every once in a while and instead cooking a slow, luxurious breakfast. Well, for lots of workers, chances are those work-from-home days are numbered. A growing number of companies, and now the federal government, are requiring employees to be back in the office five days per week. In a 2024 KPMG survey, nearly 80% of 400 CEOs said they expect employees

to be in offices full time within the next three years. But that back to office rule doesn't apply to everyone. I'm joined now by Ray Smith, who covers workplace issues for the Wall Street Journal. So Ray, census data shows that remote workers are more likely to be white, older, and wealthier. But what else is different about them? These people are quote unquote special. So Ray, census data shows that remote workers are more likely to be white, older, and wealthier. But what else is different about them?

These people are quote unquote special. They happen to be stars either because they have met or exceeded performance goals. They bring in a lot of sales or revenue or they perform on average higher or better than their colleagues. They're usually people who have a proven track record of exceeding performance quotas, for instance, or who have like really popular or attractive personal brands. So their brains and their brand make them a hot target for competitors to poach. So those would be considered like your star employees who get perks that the rest don't.

And for the people who do have to come in five days a week, I mean, what does this mean for them? This can lead to resentment and some griping and some tension within workplaces. You have to really think about how much hybrid work meant to people post-pandemic. They really feel like that should be a universal right, not just for a privileged few.

And looking ahead a little bit for people who do want to keep their hybrid schedule but maybe they aren't one of those star special employees, what are their options? Their options are really limited at this point because we're looking at some job numbers data from people like ZipRecruiter and Indeed where it's really showing that it's really rarer for you to find a remote job listing or a hybrid job listing. There are fewer of those than there were even a year ago. That was WSJ Reporter Rae Smith. Thanks, Rae. Thank you.

Coming up, House Republicans want to cut federal spending. All they have to do is agree on it. That's after the break. Republicans have a problem. Over the next decade, the U.S. government is expected to collect about $68 trillion in taxes. But it's projected to spend a little under $90 trillion. That would send publicly held debt as a share of gross domestic product to record levels. Implementing Trump's tax ideas, including extending his tax cuts, would subtract another $5 trillion from the government's revenue.

Now House Republicans are sharply divided over how much government spending they should cut. Richard Rubin, who covers U.S. tax policy for the Journal, is in the Capitol and is joining us now. Richard, how are Republican camps split on this? Look, if there were two camps, this would be a lot easier, but there are 217, 218 camps. Each House member is his own or her own self. Broadly, they've got the core of Republicans who want to do some spending cuts but are wary about significantly committing to a lot

of those up front. And then you've got the House Freedom Caucus, sort of very, very conservative members who want to guarantee trillions of dollars in spending cuts. And then you've got others who are kind of deficit hawks who would do spending cuts, but would also maybe have smaller tax cuts or other kinds of changes. They're really trying to limit the impact on the deficit,

even if it's not on the spending side. And so they're in a place where house leaders are trying to come up with something that can satisfy everyone, and they haven't gotten there yet. So as we've discussed before on the show, Trump is really setting the Republican agenda, and he's pushing for tax cuts and he's got new ideas like not taxing tips, but he also doesn't want lawmakers to touch Medicare. So if he gets his way, where does that leave the government's balance sheet? You can't really do social security or address social security in this procedure. Regular

agency spending is dealt with separately. So this really is what we call mandatory spending. And if Medicare's off the table, it puts a lot of focus on some other programs, but largely on Medicaid, which is the federal state health insurance program for low income households. And there certainly are ways you can reduce federal Medicaid costs, but each of them is going to have some consequences on states or patients or providers or all three. And so I think that's going to be the focus of a lot of attention right now is how much money do they think they can get out of Medicaid. House Speaker Mike Johnson had said that a budget vote would happen this week, though

yesterday his aides said there would be a delay. So what happens between now and a vote? I mean, they've got to get at least as a first measure House Budget Committee Republicans and that committee has members from all factions on it, all together on something. The work they're trying to do right now is figure go back to committees that are in charge of say Medicaid and say, okay, like, how much money do you think you could get in savings? What would it take to get there? And can we get everyone to agree to that? And unlike say government shutdown kind of thing, there's no deadline

here, right? It's a self imposed deadline. They want to try to get this certainly the real deadline is the tax cuts expiring at the end of this year. But that's a long way off. So that's really one of the challenges they have is there's not any real consequence for this being next week as opposed to this week or a couple weeks after that as opposed to this week. And so they've got to find that agreement. That was WSJ reporter Richard Rubin. Thanks so much, Richard.

Sure. Thanks for having me. US markets bounce back today, with investors seemingly unfazed by new tariffs against China that went into effect this morning. The Dow was up 0.3%, the S&P 500 added roughly three quarters of a percent, and the Nasdaq ended the day about 1.4% higher. Google has recorded a slowdown in revenue growth in its most recent quarter, sending its shares tumbling in after-hours trading. Parent company Alphabet reported about $97 billion in revenue for the three months ending in December, an increase of 12% from the same period a year earlier.

Alphabet hasn't reported a growth rate that low since 2023. Alphabet reported about $27 billion of net income for the quarter, an increase of about 28% from a year earlier. Finally, President Trump and Israeli Prime Minister Benjamin Netanyahu are meeting in the Oval Office today, and the future of the precarious Gaza ceasefire is likely to dominate much of the closed-door discussion. Getting Netanyahu to extend the ceasefire, or even end the war, would give Trump a big diplomatic win. But doing so could be politically complicated for Netanyahu, whose government is divided on whether to continue the conflict.

And that's what's news for this Tuesday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Kosmides. I'm Alex Osola for The Wall Street Journal. We'll be back with the new show tomorrow morning. Thanks for listening.