WSJ What’s News - Musk, Ramaswamy to Lead Government Efficiency Drive

Episode Date: November 13, 2024

A.M. Edition for Nov. 13. Donald Trump says the Department of Government Efficiency, or DOGE, will work to streamline bureaucracy as the president-elect makes a flurry of other appointments. Plus, the WSJ’s Katy Stech Ferek says leadership votes by House and Senate Republicans are set to be a test of Trump’s dominance—and his ability to implement his agenda. And Spirit Airlines prepares a bankruptcy filing after merger talks with rival Frontier break down. Luke Vargas hosts. 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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brokerage services provided by FREC Securities LLC, member FINRA SIPC and advisory services provided by affiliate. Frac Advisors LLC. An SEC registered investment advisor. Trump officially taps Elon Musk to cut government spending. Plus, House Republicans prepare to vote on their pick for speaker. Any sort of lack of unity that we see with the voting could be a sign that it will be difficult for Republicans to unify under the new Congress when President Trump is in the

White House. And spirits merger talks with Frontier fall apart, taking the airline one step closer to a bankruptcy filing. It's Wednesday, November 13th. 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. President-elect Donald Trump has tapped biotech founder Vivek Ramaswamy and Tesla CEO Elon Musk to lead what is being called

the Department of Government Efficiency, or DOGE, in order to cut spending, eliminate regulation, and restructure federal agencies. DOGE will sit outside of the federal government, and Musk, the world's wealthiest person, isn't expected to become an official government employee, meaning he likely won't be required to divest from his business empire. Journal reporter Andrew Rastuscia has more on what could be in store. Musk has previously said that he wants to cut federal spending by at least $2 trillion in fiscal year 2024.

For example, the government spent roughly $6.8 trillion. Exactly how they would carry this out is a little bit unclear at the moment. But we do have some hints broadly at what Trump on the campaign trail promised. He promised, for example, for every one new regulation to cut 10 existing regulations. And he has talked about making sweeping changes to civil service protections for government employees, essentially making it easier to fire them and potentially even eliminating some federal agencies. As a presidential candidate, Rameswamy called for eliminating the Education Department,

the FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Nuclear Regulatory Commission. In another potential staffing move, we are exclusively reporting that Trump has told his allies he'd like former U.S. Trade Representative Robert Lighthizer to serve as his administration's trade czar, a role that would Representative Robert Lighthizer to serve as his administration's trade czar, a role that would likely give Lighthizer oversight of policy at the Commerce Department and the office of the U.S. Trade Representative. Given that the position wouldn't

require Senate confirmation, he could begin implementing Trump's tariff proposal shortly after the inauguration. Lighthizer and a spokeswoman for Trump's transition didn't respond to a request for comment. And later in the show, we'll hear about the potential changes coming to the Securities and Exchange Commission ahead of the expected departure of Chair Gary Gensler. Meanwhile, Trump's push to staff formal government roles is steaming ahead with the selection of Army veteran and Fox News host Pete Hegseth as Secretary of Defense.

If confirmed by the Senate, Hegseth would take over the federal government's biggest department with a budget that reached $850 billion last year and oversees nearly 3 million civilian workers and military service members. Separately, Trump has chosen former House lawmaker John Ratcliffe to lead the Central Intelligence Agency. Ratcliffe briefly served as the Director of National Intelligence toward the end of Trump's first term, and his nomination is likely to be greeted with some relief by intelligence officials who had feared a more radical nominee.

And on Capitol Hill today, Republican lawmakers are set to vote for a new Senate leader in a secret ballot for a new Senate leader in a secret ballot for a job that's open for the first time in nearly two decades. Senators John Thune of South Dakota and John Cornyn of Texas are considered frontrunners, while Florida's Rick Scott is closest to Trump, though all support the president-elect's plans. And in the House, Republicans will also be voting to nominate their pick for speaker, along with other leadership positions, with current House Speaker Mike Johnson expected to

easily win today's vote. With the count for seats in the House still ongoing, Johnson acknowledged yesterday that while Republicans are likely to win a majority, it will be a thin one. President Trump fully understands and appreciates the math here, and it's just a numbers game. You know, we believe we're going to have a larger majority than we had last time. It's too early to handicap it, but we're optimistic about that. But every single vote will count, because if someone gets ill or has a car accident or a late flight on their plane, that it affects the votes on the floor. Journal congressional reporter Katie Stachfarek says the tight numbers game

in the House is already setting up to test Republicans' ability to deliver on Trump's key priorities. Some of the things that Trump wants to do are expensive and the House is full of Republican lawmakers who have a range of thoughts when it comes to spending. Some of them are big deficit hawks. It's one of the first moments we'll get to see how calibrated House Republicans are with Trump and how unified we think they'll be next Congress. The reason that this is such a curiosity is because under Speaker Johnson and under the

previous speaker that was ousted, Kevin McCarthy, House Republicans have been really a mess on trying to get together behind conservative priorities. So we're really curious to see whether or not House Republicans will be able to calibrate with Trump quickly to get things passed soon in Congress that he wants. Republicans have so far clinched 216 seats in the House, two short of a majority, with 12 seats still to be called. The U.S. Bureau of Labor Statistics is set to release the latest reading of the Consumer Price Index this morning, and Journal Economics reporter Justin Layhart told us that the inflation

update is expected to support another quarter percentage point rate cut by the Fed when it holds its final meeting of the year next month. Economists think that overall prices were 2.6% higher than a year earlier in October. That's a tick up from September when they're up 2.4%. The overall story is still one where inflation is cooling, albeit more gradual than people would like. But as it stands, economists expect there to continue to be this cooling trend. So does the Fed. That's why the Fed has been comfortable cutting rates and expects to continue to cut rates

through next year. And in other news, moving markets today, we're exclusively reporting that Spirit Airlines is preparing to file for bankruptcy protection after merger talks with rival Frontier Airlines broke down. Frontier declined to comment, while Florida-based Spirit said late yesterday that it was in constructive discussions to restructure debt. Spirit's shares are down more than 60 percent in off-hours trading. And Klarna has filed paperwork for a U.S. IPO. No financial details were disclosed about the

listing, but the Swedish buy-now-pay-later company has significantly cut its valuation to fund its expansion in recent years. The journal previously reported Clarna had discussed the possibility of timing an IPO next summer. Coming up, we'll look at the potential changes coming to the SEC under Donald Trump. We've got that story after the break. Think about something you're good at. Now think about how you got there. Chances are, you had someone to help you get started. If you're thinking about starting to invest, Questrade's award-winning support team is here to help you learn how to become a better investor. From placing your first trade to setting up customized stock alerts, we're always by your side.

Just a few of the reasons why we are Canada's number one rated online broker by MoneySense. Get started today at Questrade.com. Since taking over as the chair of the Securities and Exchange Commission in 2021, Gary Gensler has pursued a packed agenda, including regulating the budding crypto industry and pushing for new climate and ESG disclosure rules. But as the journal's Richard Vandervoord reports, the signature elements of Gensler's term atop the commission could be quickly unwound when Donald Trump takes office. And Richard joins me now with more.

Richard, before we get to Gary Gensler's legacy, just very quickly, is it certain that come January he's going to be out? Yes, Trump has said to an audience of appreciative crypto industry people that he would fire Gensler on day one to a round of applause. It's unclear whether Trump has the authority to do that. There's some questions about that, but every time he's been speaking in public lately, especially close to the election, Gensler said, the president gets to choose the SEC chair. I like democracy. I think elections are a good thing. So all indications are that

he's ready to depart on his own. Nat. Assuming that happens, what then is to become of the various efforts he's spearheaded? There are a number of them we've covered on the podcast throughout the last few years. Yeah. So Gensler has had a really ambitious term as chair of the SEC. One big initiative has been climate disclosure, getting big public companies to disclose their climate risks and even some of their emissions. My understanding is that's just dead in the water. It's been challenged in court, but it's going to die one way or another.

Gensler has also been an aggressive enforcer on the topic of crypto. Also he was the, I would say, the first cop on the beat for the SEC when generative AI was exploding in a big way with commercial uses. And so he's had to come out there and give some guidance on what the agency's expectations are. And do we expect any changes there around AI? Yeah, on that topic of AI, there might be some different details of the enforcement approach they might take, but a lot of things aren't going to change.

The SEC is a very active law enforcement agency. Acting enforcement head Sanjay Wadhwa recently said they have more than 1,500 active investigations happening right now. Most things that the commission does actually are done unanimously with the Republican and the Democratic commissioners voting in favor. So that kind of basic investor protection enforcement agenda is likely to just keep on going. There's a lot of staff who don't turn over who keep that work moving.

And finally, Richard, should Trump part ways with Gensler? It sounds like change is likely coming for the crypto industry. What are they expecting? So one criticism of Gensler has been that they're applying like a very old legal framework to regulating crypto. And Gensler says, you know, that's fine. We have a legal framework that was set up to regulate securities generally. And crypto, in many cases, is a security. And crypto people say, you know, it just doesn't work well. The tests that are established there don't work well.

So the SEC should maybe be a bit hands off or take more input from the industry or there's various solutions put forward that would sort of instead of treating it as something that's most often leading to fraud, try to regulate it and bring it into the norm of financial instruments. All right. Something else to watch as Trump's cabinet and administration take shape. I've been speaking to Wall Street Journal reporter Richard Vanderford. Richard, thanks so much. Thanks for having me.

And before we go, what are your money plans for 2025? Are you looking to invest more, save more, or maybe pay off debt? Email us a voice note about your goals to ymb at WSJ.com and you could be featured in an upcoming episode of the Your Money Briefing podcast that will be focused on providing strategies to put those goals within reach. Again, that email is ymb at WSJ.com. And that's it for What's News for Wednesday 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.