WSJ What’s News - Kamala Harris's Headache With Progressive Grassroots

Episode Date: August 20, 2024

P.M. Edition for Aug. 20. As progressive leaders line up behind Kamala Harris, their supporters could cause headaches for Democrats. And how $13 billion in loans to help Elon Musk buy Twitter became the worst deal for several banks since the 2008-09 financial crisis. Plus, Italian officials say three top figures from tech, banking and law are presumed dead along with members of their families after a luxury yacht sank in Italy on Monday. Luke Vargas hosts from the floor of the Democratic convention. Danny Lewis hosts from New York City. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Benefits vary by card, other conditions apply. As progressive leaders line up behind Kamala Harris, the grassroots could keep causing headaches for Democrats. They still are gonna have this issue of a very loud, frustrated group of largely young folks that they need to mobilize if they want to have big volunteer power in swing states. Plus how lending to Elon Musk to buy Twitter became the worst deal since the financial crisis for seven banks, and three top figures from tech, banking and law are among those presumed

dead after a luxury yacht sank in Italy. It's Tuesday, August 20th. I'm Luke Vargas for the Wall Street Journal at the Democratic Convention in Chicago. And this is the PM edition of What's News, the top headlines and business stories that move the world today. Among the measures of a successful political convention are enthusiasm and unity. Last night's DNC kickoff had enthusiasm in spades. Polls show that Kamala Harris replacing Joe Biden atop the ticket has boosted Democrats' chance of winning in November, a fact that has lifted spirits among party faithful here

who had been fretting about their odds of victory just a month ago. True unity, on the other hand, especially among those not attending as delegates or invited guests, can be more elusive. During the Spring's primary campaign, Biden had to battle a protest movement in states like Michigan that was fueled by anger over his support for Israel's war in Gaza and even as progressive leaders like Alexandria Ocasio-Cortez enthusiastically threw their support behind Kamala Harris on stage yesterday. In Kamala Harris, we have a chance to elect a president who is for the middle class

because she is from the middle class. Protesters were making their voices known in the streets of Chicago. Not another nickel, not another dime. No more money, more fascist crime. No more money, more fascist crime. What's going on now in Gaza, I don't think there's any rational person or any feeling person who could say it isn't horrific.

Enough is enough and we want to hold the Democrats accountable and say you can't be leftist and progressive and support a genocide. We've been protesting war for many years and this is one of the most atrocious things that we've ever seen in our line government supporting this. We're so mad, frustrated, embarrassed by what's going on. We just should march in protest and end this genocide. But does that anger matter as we look ahead to November? Journal politics reporter Natalie Andrews has been crisscrossing the convention fence this week, speaking to members of the progressive grassroots as well as their leaders. Natalie, you heard some clips there of sound that was gathered by our colleagues at protests

yesterday. What are we actually seeing so far? We are seeing groups of people who are frustrated. Many of them are newly entering into politics. They are voters who, if in tight states, could make a difference. And the party seems to be noticing them. We heard from President Biden actually last night acknowledging protests in his speech. And let's play a clip of that. Those protests, those protesters out in the street, they have a point. A lot of innocent people are being killed on both sides. Natalie, is that representative of how party leaders, A lot of innocent people are being killed on both sides.

Natalie, is that representative of how party leaders, especially including progressive leaders are responding to what we're hearing on the streets? We have seen more and more Democrats talk critically of Israel, especially Netanyahu's government. And that's been kind of where Senate Majority Leader Schumer has been able to kind of draw a line saying, I support Israel, but I don't support Netanyahu's government. He's called for reelection. And that's kind of where a lot of them have tried to thread a needle.

And then you have people who were more on the left who have simply said there needs to be a ceasefire. I thought it was fascinating that Representative Ocasio-Cortez said Harris was working for a ceasefire in Gaza right from the Democratic stage. It really, you know, kind of tells the protesters, hey, come on board with this ticket. Don't go looking elsewhere. One thing progressive leaders don't seem to be doing

is throwing Harris under the bus, or trashing Biden, we should know. We went to an event with Vermont Senator Bernie Sanders yesterday, and he was actually really complimentary of the president. When Biden was elected or after, during the campaign, he said he wants to be the most progressive president since FDR. And you know what? In many respects, he kept his word.

And leaders like him, I mean, generally do seem to be sort of playing down any daylight between them and the party ticket. I do want to know the beyond Gaza. What is the sort of wishlist at this point? You and I also sat down with California representative Ro Khanna yesterday, a member of the Progressive Caucus. And you were pushing him on this issue of Harris's healthcare plan,

notably her lack of backing for Medicare for All, something that she had backed four years ago. Well, I think she's going to sit down and continue, as she said, articulating her views. I think a lot depends on how this campaign unfolds in the next 80 days. Natalie, that's kind of telling, isn't it? We're not seeing progressive leaders forcing a purity test of Harris right now.

They aren't instituting litmus tests on say Medicare for all and support for certain policies. Instead they're okay with kind of inch by inch gains, seeing that that could in years to come help them expand health care access. Natali, another thought leader among progressives that you spoke to actually earlier this morning was Pramila Jayapal, a representative and the chair of the Congressional Progressive Caucus. And she told you something I thought was actually quite illuminating.

Republicans will put other titles on some of the plans that progressives want. They'll use the word socialist, and they try to do that to, you know, push voters who are undecided toward their camp. Well, that's why I always talk about the most popular and populist because I do think they try to weaponize that word. Natalie, there is a level of calculation here among progressives that maybe feels a bit mainstream, dare I say? Up until recently, there were a lot of progressives who were also in some of the more moderate caucuses in the Democratic Party. So they there were many that would kind of straddle both

sides of the party. We don't see that as much because the Progressive Caucus has really strengthened their roots and tried to push the party forward. But yeah, I mean, they feel like they've been influential in getting text into the Democratic policy platform. And so they feel like they've made it into a progressive platform. Right. This is maybe around calls for a dramatic increase in the supply of affordable housing, support for state and local measures to freeze rent increases and evictions. But just to bring this all home in our final seconds, where does this leave us? The week isn't over. Maybe we'll see more protests. But is it fair to say that the Democratic tickets issues with progressives that we were talking about so much earlier in the year or maybe becoming less of an issue, at least as it pertains to potential electoral stakes come November?

Democratic policy wise you're saying progressives come on board they still are gonna have this issue of a very loud frustrated group of largely young folks that they need to mobilize if they want to have big volunteer power in swing states if they want to be able to harness that to get out the vote they're gonna want to win them over but I think there's also an acknowledgement that they might not be able to harness that to get out the vote, they're going to want to win them over. But I think there's also an acknowledgement that they might not be able to. I've been speaking to politics reporter Natalie Andrews. Natalie, thank you so much.

Thank you. And before all eyes turn to Barack Obama, who will take the stage tonight, Vice President Kamala Harris has begun preparing to form a presidential transition team. It will be led by Johannes Abraham, who led President Biden's 2020 transition operation. Abraham is currently ambassador to the Association of Southeast Asian Nations. The transition team will be tasked with preparing for the changeover from Biden to Harris if the vice president wins in November and will also vet and help select personnel from cabinet secretaries

to White House staff. Coming up, why Elon Musk's Twitter takeover is one of the worst deals for banks in years and the rest of today's my colleague Danny Lewis has been keeping tabs on the rest of the day's news. And here's Danny starting with an update on yesterday's yacht sinking in Sicily. Three leading figures in the worlds of tech, banking, and law are presumed dead along with members of their families after a luxury yacht sank off the coast of Sicily. Italian Coast Guard officials say tech entrepreneur Mike Lynch, Morgan Stanley International chairman

Jonathan Blumer, and Clifford Chance lawyer Chris Morvelo are among those unaccounted for after the yacht was hit by a sudden thunderstorm. Officials say rescuers are reassessing how to access the ship's wreckage after the first inspection was blocked by debris. Authorities say the body of a seventh victim, the yacht's cook, has been recovered. A total of 22 people were aboard the vessel when it went down early yesterday morning. Morgan Stanley Bank of America Barclays These are just a few of the seven banks that are still on the hook for $13 billion in loans to help Elon Musk buy Twitter, now named X, two years ago.

And while banks typically sell off debt like this to investors. According to Pitchbook LCD, these loans have been hung longer than every single unsold deal since the 2008-2009 financial crisis. Alexander Saidi covers banking and finance for the Wall Street Journal. Alex, why have Musk's loans hung for so long? The biggest factor is that X as a company has underperformed from what some of the banks had expected when Musk bought the company in 2022. The main reason for that is because the company's had a tough time retaining and attracting new advertisers. There are a lot of concerns from some parts of the advertising world about the safety of their brands on X, the type of content that

will be featured next to their ads on X. Another factor for why the banks can't sell the debt is that interest rates went up. The banks had pledged to underwrite the deal at a certain interest rate that was capped and rates had risen essentially well above the market rate that they had agreed to in the past. So in order to sell the debt, they would have had to incur losses. So between higher rates and a weak advertising environment for the company, it's just been tough to sell a positive picture about where the company's finances are going.

That is necessary when you sell billions of dollars of debt to investors. So then why did the banks agree to this loan? The bank's rationale at the time, I think, was twofold. One was, say, more of a grand strategic ambition, which is to bank the world's richest man, bank his companies, and also in Musk's case, to bank him personally, to invest his wealth, hoping to sort of increase that relationship over time. Another factor too was that technically the banks have around 30 billion of equity

cushion beneath them in case anything were to go wrong at the company. So if they had, if the company had tons of losses needed to restructure, the company would essentially have to take all of its losses in the equity portion of the company, which Musk and other investors hold, before they would take losses. WSJ banking and finance reporter Alexander Saidi. Thanks for joining us. Thank you. And in the US markets, all three major indexes declined slightly, ending their recent hot streak. The S&P 500 crept lower, weighed down by energy stocks, losing a twentieth of a percent. The Dow Jones Industrial Index fell 0.15 percent, or about 61.5 points. And the

NASDAQ gave up about a third of a percent. And that's once news for this Tuesday afternoon. Today's show was produced by Pierre Bienneme, Anthony Bansi, and Ariana Asparu, with supervising producer Michael Kosmides. And I'm Luke Vargas for The Wall Street Journal at the Democratic Convention in Chicago, and Danny Lewis is at our New York office. We will be back with a brand new show tomorrow morning. And until then, thanks for listening. I'll be sure.