WSJ What’s News - Senators Press Hegseth in Tense Confirmation Hearing

Episode Date: January 14, 2025

P.M. Edition for Jan. 14. Pete Hegseth, President-elect Donald Trump’s pick for defense secretary, faced questions over his past behavior and qualifications to lead the Pentagon. WSJ national security reporter Nancy Youssef gives us her read of the room, and what the hearing signals about Trump’s other cabinet picks. And in his first days in office, Trump plans to sign executive orders that would boost the U.S. fossil fuel industry. Plus, though the labor market appears strong, power is shifting from employees to employers. WSJ economics reporter Konrad Putzier tells us the more subtle ways that companies are flexing that power today. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Donald Trump plans to sign executive orders to boost the American fossil fuel industry shortly after he's sworn in as president next week. And Trump's nominee to lead the Pentagon sat for a contentious confirmation hearing in front of a Senate committee. It was really striking as someone who covers the Pentagon to hear two just very vastly different descriptions of what the Pentagon should be. You could really sort of see the partisan divide and the questions. It was such a visible display of the divide in this country.

Plus, power in the job market shifts away from workers, giving companies the upper hand. It's Tuesday, January 14th. I'm Alex Osola 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. We're exclusively reporting that President-elect Donald Trump is preparing executive orders seeking to boost American fossil fuels. It's a move that would undo President Biden's push for the U.S. to adopt electric vehicles.

Oil lobbyists told the Journal that, following his inauguration on Monday, Trump is expected to instruct agencies to begin unwinding his predecessor's limits on drilling offshore and on federal land. He's also planning to resume approvals for plants that export U.S. natural gas. To press his agenda, Trump will order big changes at the Environmental Protection Agency and at the Energy and Interior Departments. Some of his moves will likely be challenged in court, and Trump might need Republican lawmakers to take a swing at overturning Biden's rules through the Congressional Review Act.

Trump is expected to sign dozens of executive orders during his first days in office, which would make big changes to US policies on energy, immigration, education, and other constants of American life. Pete Hagseth, Donald Trump's pick for Secretary of Defense, sat for a contentious confirmation hearing in front of the Senate Armed Services Committee.

Hegseth vowed to restore the U.S. military's quote, warrior culture. We are not Republicans. We are not Democrats. We are American warriors. Our standards will be high and they will be equal, not equitable. That's a very different word.

Senate Democrats press the nominee about his lack of experience and allegations related to his treatment of women and excessive drinking. Hegseth has denied wrongdoing. Illinois Senator Tammy Duckworth was one of several Democrats who questioned whether Hegseth was qualified to lead the Pentagon. You have not earned your place as Secretary of Defense. You say you care about keeping

our armed forces strong and that you like that armed forces are meritocracy, then that's not lower the standards for you. You, sir, are a no-go at this station. WSJ National Security correspondent Nancy Youssef joins me now from the Capitol. So Nancy, you were at the hearings today. Some of the exchanges seem to get a little bit heated between Hegseth and some of the senators on the committee. How did he handle himself? NANCY YOUSSEF, WSJ National Security Correspondent, NAM-SY-YOU-SEF, Relatively well in that he didn't lose his temper. He at times was interrupting senators or talking over them, but was defiant at times. he didn't answer questions directly, most notably when

Senator Kelly asked him about a series of accusations whether they were true or false. He kept calling them smear campaigns and sort of declined answering whether they were true or false. But he basically oscillated between saying he had made mistakes in the past, that he had learned from those mistakes, that he had grown from them, and then at the same time at other points suggesting that he was being held to an unfair standard. And so I think that's what made it sort of interesting. Some of the senators who questioned his suitability, did it seem like they were convinced by his answers? That wasn't my impression. In fact, several said that they weren't convinced.

Several of them said that they wouldn't vote for him, that he hadn't earned their vote. Some made reference to the seriousness of the job and how, while Hegseth didn't maybe have all the qualifications, and that nobody really does for such an awesome job, that perhaps he didn't have enough of them. And some told him that directly.

These were primarily Democratic legislators who suggested that he wasn't qualified for the job. You mentioned that a lot of the skepticism came from Democrats, but I'm curious how Republicans received Hexeth. I think there was an effort to at times maybe recognize that he might have had mistakes in the past, that he was going to go after what they saw as fundamental problems in the military, what they described as sort of a culture of wokeness and too much focus on issues like diversity training, that because he had been a junior officer, he brought a level of experience

that was needed in the Pentagon, that his unconventional resume could be an advantage, and ultimately that President-elect Trump had the right to pick the people he wanted around him. Hexeth was arguably one of Trump's more contentious or controversial nominees, and it seems like, at least again at this early stage, a lot of Republicans have towed the party line. What kind of indication does this give us about what some of his other potential cabinet members might face? It's a great question. We've heard that others like Tulsi Gabbard could also face a contentious hearing. What we took from this hearing is that there is a path for even those who have faced a lot of criticism to potentially get through, that the responsibility is on them to sort of keep their cool

and make their points assertively and confidently, and that if there isn't any major mistakes, that there's a likelihood that candidates will get through. That was National Security correspondent Nancy Youssef. Thanks so much, Nancy. Thank you. Coming up, how bosses are back in command in the U.S. job market. That's after the break.

On the surface, the job market may look strong, but in practice, the balance of power has shifted away from workers and towards bosses. That shift is looking more subtle than it has in the past. Instead of layoffs and wage cuts, employers are asserting their power through changes in working conditions. Conrad Puzier covers economics for the Wall Street Journal. So, Konrad, what are some of the ways companies are showing that they're more in control? The obvious sign for labor market weakening in the past has always been layoffs. If there's a huge spike in unemployment, that's when you know things have changed.

We really haven't seen that so far, and the labor market overall is pretty strong, but there are these subtle signs of weakness that you can notice. And the biggest one really is what's going on with benefits and work from home. So bosses are basically saying we're not cutting jobs, we're not laying people off, we're not cutting salaries, but what we are doing is we're telling people to come back to the office and commute to work. We're telling people that they're cutting their health care maybe and reducing benefits on that end. For example, Netflix sort of slowly walked back its unlimited parental leave. So those are all subtle ways in which bosses are basically sending the message.

Things in the labor market have changed. It's not like it was two years ago. So why is this happening now? Things are still pretty good in the labor market. But what's really changed is that we've gone from this unusual labor market of the pandemic back to something that's closer to normal. So remember, at 21, 22, there were these massive labor shortages caused by the pandemic, and everyone was just quitting their job left and right because you could just easily find another one.

That's really changed, and you can really see that in the quits rate, which has really gone down to what is the lowest level since mid-2020. You can see that the balance of power has shifted back to bosses, and that workers are now actually worried that if they quit, they're not gonna find a new job. And what that means is if their boss makes a change, for example, to work from home policy

that they might not like, they might just have to suck it up because they don't know that if they quit, they'll find something else. So for things like these back to office directives, what's the impact that companies are hoping for? Why do this? So there's a couple things going on.

One is simply cultural, right? There's a lot of bosses who are older, who grew up, so to speak, working in an office. That's how they made their career, and they just like it, and they want the rest of the company be that way too. But on a more practical level, there is the idea that this increases your productivity, right? That if you work from home completely, you're not as productive as you would be in the office, there's less innovation because you don't talk to your colleagues

as much and it just becomes harder to do your job well. And there was a lot of research that actually backs that up. Where it gets a little complicated is the question of, is it actually better to do full-time five days a week in the office as opposed to three days a week? And some economists actually argue that there is no benefit and that it might even harm companies to force people to come back five days a week. Because if you're in the office three days a week, you already see your colleagues.

You get that sort of fortuitous exchange of information that leads to innovation. But on the flip side, you still have a day a week where you can do quiet work at home that maybe is easier done where you can concentrate. And if you're forced back to the office, you lose that. So it could in some cases actually make companies less productive. That was Wall Street Journal reporter, Conrad Putsier. Thanks Conrad. Thanks for having me.

One place where layoffs are happening? Metta. The company announced today that it plans to cut 5% of its workers next month. CEO Mark Zuckerberg said the cuts would be based on performance in an effort to quote, raise the bar. The job cuts are the latest in an array of moves from Zuckerberg, who is leading his company through another transition as the second Trump presidency is set to begin. In U.S. markets, the Nasdaq fell for the fifth straight session today,

dragged lower by continued weakness in technology shares, closing 0.2% down. The S&P 500 rose 0.1% while the Dow gained 0.5%. According to the Labor Department, the producer price index, a gauge of wholesale inflation, rose 0.2% in December from November. Investors will get more important inflation data tomorrow when the Labor Department releases consumer price index data. There will also be a slew of bank earnings with Citigroup, Goldman Sachs, JP Morgan, and Wells Fargo all set to report their quarterly earnings.

And finally, the people distilling bourbon and American whiskey are worried. They fear that the tariffs on foreign goods promised by President-elect Donald Trump will hurt exports and that American whiskey that can't be sold abroad will find its way back home. That would add to an existing glut of barrels left by overproduction. My colleague Pierre Bienneme spoke with Sabira Chowdhury, who covers the consumer goods industry for the Wall Street Journal, about the headwinds facing American distillers. Everyone in the bourbon industry is kind of nervous about it, and it's a bit broader than bourbon, actually. It's all American whiskey. There's a stat from the Kentucky

Distillers Association which says that actually retaliatory tariffs from the EU and other places have cost Kentucky Bourbon about $500 million in exports since 2018. And there's a secondary issue, which is Canada, Mexico, and China, all big trading partners of the US, Trump has said he could look to slap tariffs on goods coming in from those places. So that could raise things like the cost of glass bottles, closures, labels, which actually makes a big difference to these distillers in terms of what happens to their bottom lines. And tariffs aside, what's been the market like domestically for bourbon in the US?

Yeah, so bourbon has been really hot for about two decades now. But then as COVID has wound down, people have pulled back on spending. And this has come at a time when there's more competition from cannabis, there's pressure from these weight loss drugs, which don't just suppress cravings for food, they also suppress cravings for alcohol. You have what some people think is a long-term decline in younger people choosing not to drink. So there's sort of lots of different headwinds that the alcohol industry is facing. That was reporter Sabara Chowdhury speaking with my colleague Pierre Bienamé.

And that's What's News for this Tuesday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienamé with supervising producer Michael Kazmitis. I'm Alex Osoloff for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.