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    Meta, Facebook’s Parent, to Lay Off Another 10,000 Workers

    It would be the tech company’s second round of cuts since November. Mark Zuckerberg, its chief executive, has declared 2023 the “year of efficiency.”Meta, the owner of Facebook and Instagram, said on Tuesday that it planned to lay off about 10,000 employees, or roughly 13 percent of its work force, the latest move to hew to what the company’s founder, Mark Zuckerberg, has called a “year of efficiency.”The layoffs will affect Meta’s recruiting team this week, with a restructuring of its tech and business groups to come in April and May, Mr. Zuckerberg said in a memo posted on the company’s website. The announcement is the company’s second round of cuts within the past half year. In November, Meta laid off more than 11,000 people, or about 13 percent of its work force at the time.Meta also plans to close about 5,000 job postings that have yet to be filled, Mr. Zuckerberg said in the memo. Other restructuring efforts include a plan to wrap up this summer an analysis of Meta’s hybrid return-to-office model, which it began testing last March.“This will be tough and there’s no way around that,” he wrote.Meta’s stock rose more than 7 percent by the close of trading on Tuesday.Mr. Zuckerberg is culling employees after years of hiring at a breakneck pace. His company gobbled up workers as its family of apps, which also includes WhatsApp, became popular worldwide. The coronavirus pandemic also supercharged the use of mobile apps, leading to more growth. At its peak last year, Meta had 87,000 full-time employees.But as the global economy soured, and digital advertising markets contracted last year, Mr. Zuckerberg began putting an end to unchecked growth. Meta trimmed employee perks. And after the layoffs in November, which largely affected the business divisions and recruiting teams, Mr. Zuckerberg hinted at further cuts.On an earnings call in February, the chief executive said he did not want the company to be overstuffed with a layer of middle management, or “managers managing managers.” He said he took responsibility for last year’s layoffs, blaming his zeal for staffing up on the surge of use early in the pandemic.Meta’s layoffs are part of a wave of job cuts from the biggest tech companies. In recent months, Amazon, Google, Microsoft, Salesforce and others have also said they are trimming their ranks, and some of the companies have increased the number of people they are letting go after initial announcements. Many of the companies have cited a challenging global economic environment for their actions.But even beyond the macroeconomic conditions, Meta is dealing with many challenges. It is grappling not only with a digital advertising slowdown but also with Apple’s privacy changes to its mobile operating system, which have restricted Meta’s ability to collect data on iPhone users to help target ads. It also faces steep competition from TikTok, which has soared in popularity over the past few years. And regulators have stepped up efforts to rein in the company by pushing for new laws that would limit Meta’s data collection abilities.Meta is also in the midst of a tricky transition to become a “metaverse” company, connecting people to an immersive digital world through virtual-reality headsets and applications. Mr. Zuckerberg sees the metaverse as the next-generation computing platform, so Meta has been spending billions of dollars on the effort and reallocating workers to its Reality Labs division, which is focused on products for the metaverse.Yet it’s unclear if people will want to use metaverse products. In recent months, the public has instead gravitated to chatbots, which are built on artificial intelligence. Meta has invested in A.I. for years but lately has not been at the center of the conversation about the technology.Employees have been bracing for more layoffs for months, watching with anxiety as Mr. Zuckerberg embarked on a quest to dial back what he felt was no longer necessary to run the company, according to current and former employees. But the expectation was that he would take a light touch to his favored project of the metaverse.Some Meta employees who were affected by Tuesday’s announcement of layoffs — especially in the recruiting division — felt “gut-punched,” according to current and former employees who have spoken with those in the organization.“People are entering a job market that is the worst I’ve ever seen,” said Erin Sumner, a global director of human resources at DeleteMe, who was laid off from Facebook in November. She said the staggered nature of Meta’s cuts over the next two months was adding to employee anxiety.“There’s a lot of uncertainty,” Ms. Sumner said. “There’s a lot of anger, and there’s the question many folks are asking: ‘How do you expect me to do work for the next two months while wondering if I will still have a job?’”In his announcement on Tuesday, Mr. Zuckerberg laid out a vision for streamlining the company by removing layers of management, ending lower-priority projects and rebalancing product teams with a focus on engineering.To that end, Mr. Zuckerberg wound down efforts on building NFTs, or nonfungible tokens, a cryptocurrency-based initiative that has dropped out of favor in recent months. Many of Mr. Zuckerberg’s crypto initiatives in general have fallen by the wayside over the past nine months as the public has grown more skeptical of the market after the implosion of FTX, the cryptocurrency exchange.In his note, Mr. Zuckerberg added that the moves were a response to global conditions, including increased regulation, geopolitical instability, higher interest rates and a cooling economy.“The world economy changed, competitive pressures grew and our growth slowed considerably,” he said. “We should prepare ourselves for the possibility that this new economic reality will continue for many years.”Gregory Schmidt More

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    Inflation gauge increased 0.4% in February, as expected and up 6% from a year ago

    The consumer price index rose 0.4% in February and 6% from a year ago, in line with market expectations.
    A drop in energy prices helped keep inflation in check, while shelter costs increased sharply.
    The probability that the Fed would raise benchmark interest rates a quarter percentage point next week increased following the report.

    Inflation rose in February but was in line with expectations, likely keeping the Federal Reserve on track for another interest rate hike next week despite recent banking industry turmoil.
    The consumer price index increased 0.4% for the month, putting the annual inflation rate at 6%, the Labor Department reported Tuesday. Both readings were exactly in line with Dow Jones estimates.

    Excluding volatile food and energy prices, core CPI increased 0.5% in February and 5.5% on a 12-month basis. The monthly reading was slightly ahead of the 0.4% estimate, but the annual level was in line.

    Markets were volatile following the release, with futures tied to the Dow Jones Industrial Average pointing to a positive open.
    Heading into the release, markets had widely expected the Fed to approve another 0.25 percentage point increase to its benchmark federal funds rate. That probability increased following the CPI report, with traders now pricing in about an 85% chance that the Fed will increase the rate by a quarter point.
    “Even amid current banking scares, the Fed will still prioritize price stability over growth and likely hike rates by 0.25% at the upcoming meeting,” said Jeffrey Roach, chief U.S. economist at LPL Financial.
    A decrease in energy costs helped keep the headline CPI reading in check. The sector fell 0.6% for the month, bringing the year-over-year increase down to 5.2%. A 7.9% decline in fuel oil prices was the biggest mover for energy.

    Food prices rose 0.4% and 9.5% respectively. Meat, poultry, fish and egg prices decreased 0.1% for the month, the first time that index has retreated since December 2021. Eggs in particular tumbled 6.7%, though they were still up 55.4% from a year ago.
    Shelter costs, which make up about one-third of the index’s weighting, jumped 0.8%, bringing the annual gain up to 8.1%. Fed officials largely expect housing and related costs such as rent to slow over the course of the year.
    “Housing costs are a key driver of the inflation figures, but they are also a lagging indicator,” said Lisa Sturtevant, chief economist at Bright MLS. “It typically takes six months for new rent data to be reflected in the CPI. The quirk in how housing cost data are collected contributes to overstating current inflation.”
    Because of the housing expectations, Fed officials have turned to “super-core” inflation as part of their toolkit. That entails core services inflation minus housing, cohort that increased 0.2% in February and 3.7% from a year ago, according to CNBC calculations. The Fed targets inflation at 2%.
    Used vehicle prices, a key component when inflation first began surging in 2021, fell 2.8% in February and are now down 13.6% on a 12-month basis. Apparel rose 0.8% while medical care services costs decreased 0.7% for the month.
    CPI measures a broad basket of goods and services and is one of several key measures the Fed uses when formulating monetary policy. The report along with Wednesday’s producer price index will be the last inflation-related data points policymakers will see before they meet March 21-22.
    Banking sector turmoil in recent days has kindled speculation that the central bank could signal that it soon will halt the rate hikes as officials observe the impact that a series of tightening measures have had over the past year.
    Markets Tuesday morning were pricing a peak, or terminal, rate of about 4.95%, which implies the upcoming increase would be the last. Futures pricing is volatile, though, and unexpectedly strong inflation reports this week likely would cause a repricing.
    Either way, market sentiment has shifted dramatically.
    Fed Chairman Jerome Powell last week told two congressional committees that the central bank is prepared to push rates higher than expected if inflation does not come down. That set off a wave of speculation that the Fed could be teeing up a 0.5 percentage point hike next week.
    However, the collapse of Silicon Valley Bank and Signature Bank over the past several days paved the way for a more restrained view for monetary policy.
    —CNBC’s Gina Francolla contributed to this report.

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    Don’t Call It a Bailout: Washington Is Haunted by the 2008 Financial Crisis

    The colossal bailouts after the 2008 collapse arguably saved the global economy, but they also provoked a ferocious popular backlash.WASHINGTON — On that summer day in 2010 when he signed new legislation regulating the banks after the worst financial crash in generations, President Barack Obama declared, “There will be no more tax-funded bailouts. Period.” Standing over his right shoulder just inches away and clapping was his vice president, Joseph R. Biden Jr.Nearly 13 years later, Mr. Biden, now himself a president facing a banking crisis, appeared before television cameras on Monday to make clear that he remembered that moment even as he guaranteed depositors at failing institutions. “This is an important point: No losses will be borne by the taxpayers,” he vowed. “Let me repeat that: No losses will be borne by the taxpayers.”He could not even bring himself to utter the word “bailout.”Washington remains haunted by the specter of government intervention after the banking sector collapse that triggered the Great Recession, leaving leaders of both parties determined to avoid any repeat of that painful period. The colossal bailouts initiated under President George W. Bush and continued under Mr. Obama arguably saved the global economy but also provoked such a ferocious popular backlash that they transformed American politics to this day.The notion that “fat-cat bankers,” as Mr. Obama once called them, should be rescued by the government even as everyday Americans lost their jobs, their homes and their life savings so rankled the public that it gave birth to the Tea Party and Occupy Wall Street movements and undermined the establishment across the political spectrum. In some ways, that popular revolt empowered populists like Donald J. Trump and Bernie Sanders, ultimately helping Mr. Trump to win the presidency.“Today’s populism is firmly rooted in 2008,” said Brendan Buck, a top adviser to two Republican House speakers, John A. Boehner and Paul D. Ryan, who were both eventually targeted by Tea Party rebels within their own party. “The bailouts not only fostered distrust of corporations, but cemented the notion that elites always do well while regular people pay the price. Bailouts were also followed by a large expansion of government, and while it all may have prevented much worse calamity, the recovery was slow.”Mr. Biden, of course, knows all that intimately. He saw it up close, watching the public uprising from his office in the West Wing while counseling Mr. Obama on how to respond. Even the separate economic stimulus package that Mr. Obama assigned Mr. Biden to manage came to be tainted because many Americans confused it with the bank bailouts.And so now, as he endeavors to head off a crisis of confidence after the failure of three financial institutions in recent days, Mr. Biden wants to avoid not just a run on the banks but a run on his credibility.“The term and the idea of bailouts are still highly toxic,” said Robert Gibbs, Mr. Obama’s first White House press secretary. He said Mr. Biden rightly focused on accountability for those responsible and sparing taxpayers the cost. “Those are two important lessons learned from 15 years ago. Emphasizing that the ones being helped are instead innocent bystanders who just had money in the bank is why a backlash on this action is less likely.”But Republicans were quick to pin both the crisis and potential resolution on Mr. Biden, accusing him of fostering economic troubles by stoking inflation with big spending and labeling government efforts to head off escalation of the crisis the Biden bailout.“Politically, if you ask me what’s the impact of bailing out rich techies in California — which is exactly how this will be played — then the answer is Donald Trump’s likelihood of re-election just went up three to four points,” said Mick Mulvaney, who came to Congress as a Tea Party champion and later served as Mr. Trump’s acting White House chief of staff.In repeating that taxpayers will not bear the cost of bailing out depositors at the failed banks, Mr. Biden noted that the cost will be financed by fees paid by other banks into the Federal Deposit Insurance Corporation, or F.D.I.C. What he did not mention was that a separate loan program that the Federal Reserve has opened to help keep money flowing through the banking system will be backed by taxpayer money. In a statement on Sunday, the Fed said it “does not anticipate that it will be necessary to draw on these backstop funds.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The nuances did not matter to Mr. Biden’s critics. “Joe Biden is pretending this isn’t a bailout. It is,” Nikki Haley, the former ambassador to the United Nations now running for the Republican presidential nomination, said in a statement. “Now depositors at healthy banks are forced to subsidize Silicon Valley Bank’s mismanagement. When the Deposit Insurance Fund runs dry, all bank customers are on the hook. That’s a public bailout.”Other conservatives argued that a government rescue, however it is formulated, warps private markets and eliminates disincentives for financial institutions taking reckless risks because they can assume they too will eventually be saved, a concept called “moral hazard.”“Organizations that can’t manage risk should be allowed to fail, and taxpayers should not be forced to bailout the well-connected and wealthy because a bank prioritized woke causes above smart investing,” David M. McIntosh, a former Republican congressman from Indiana and president of the Club for Growth, a conservative advocacy organization, wrote on Twitter.But the White House adamantly rejected the comparison to the bailouts of the past, noting that the government is protecting depositors, not investors, while firing bank managers responsible for the trouble. “This is very different than what we saw in 2008,” Karine Jean-Pierre, the White House press secretary, told reporters.Michael Kikukawa, another White House spokesman, later said in a statement: “The president’s direction from the outset has been to respond in a way that protects hardworking Americans and small businesses, keeps our banking system strong and resilient, and ensures those responsible are held accountable. That’s exactly what his administration’s actions have done.”Mr. Biden, for his part, blamed Mr. Trump for the current crisis, saying “the last administration rolled back some of these requirements” in the Dodd-Frank law that Mr. Obama signed in 2010. Mr. Trump signed legislation passed by lawmakers in both parties in 2018 freeing thousands of small and medium-sized banks from some of the strict rules in the earlier law.The bailouts back then came in response to a banking crisis that seemed far more dangerous than what is currently evident. Some of the country’s most storied investment houses were collapsing in 2008 under the weight of risky mortgage-based securities, starting with Bear Stearns and later Lehman Brothers.Mr. Bush was warned that a cascade of failures could propel the country into another Great Depression. “If we’re really looking at another Great Depression,” he told aides, “you can be damn sure I’m going to be Roosevelt, not Hoover.”Casting aside his longstanding free-market philosophy, Mr. Bush asked Congress to authorize $700 billion for the Troubled Asset Relief Program, or TARP, to prop up the banks. Aghast at the request just weeks before an election, the House rejected the plan, led by Mr. Bush’s fellow Republicans, sending the Dow Jones industrial average down 777 points, the largest single-day point drop in history to that point. Alarmed by the reaction, the House soon reversed course and approved a barely revised version of the plan.Mr. Obama and his running mate, Mr. Biden, both voted for the program and went on to win the election. Taking office in January 2009, they then inherited the bailout. In the end, about $443 billion of the $700 billion authorized was actually used to bolster banks, automakers and a giant insurance firm. As unpopular as it was, the injection of funds helped stabilize the economy.The ultimate cost of the bailouts of that period remains in dispute. Mr. Obama and others who were involved often say that they were all ultimately paid back by the companies that benefited from the funds. ProPublica, the nonprofit investigative news organization, calculated in 2019 that after repayments the federal government actually made a profit of $109 billion.But it depends on how you count the costs. Deborah J. Lucas, a professor at the Massachusetts Institute of Technology, calculated that same year that the TARP program cost $90 billion in the end, a far cry from the original $700 billion. But other bailouts, most notably to Fannie Mae and Freddie Mac, the federally backed home mortgage companies, brought the total cost of various bailouts to $498 billion in her estimation.Either way, critics on the left and right felt aggrieved. As recently as 2020, Mr. Sanders cited the issue in running against Mr. Biden for the Democratic nomination. “Joe bailed out the crooks on Wall Street that nearly destroyed our economy 12 years ago,” he said at a town hall.Mr. Biden stood by the decisions, maintaining they worked. “Had those banks all gone under, all those people Bernie says he cares about would be in deep trouble,” he said during a debate, adding, “This was about saving an economy, and it did save the economy.”The issue was not enough to cost Mr. Biden the nomination, but that did not mean voters remember the bailouts of the past fondly. “To many, it didn’t feel like it ‘worked,’ and that made it very easy to demagogue,” said Mr. Buck. “A long period of economic malaise also leads to people looking for something or someone to blame, which is the basis for populism. I firmly believe we don’t get Trump without the devastation of 2008.” More

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    Was This a Bailout? Skeptics Descend on Silicon Valley Bank Response.

    The government took drastic action to shore up the banking system and make depositors of two failed banks whole. It quickly drew blowback.WASHINGTON — A sweeping package aimed at containing damage to the financial system in the wake of high-profile failures has prompted questions about whether the federal government is again bailing out Wall Street.And while many economists and analysts agreed that the government’s response should not be considered a “bailout” in key ways — investors in the banks’ stock will lose their money, and the banks have been closed — many said it should lead to scrutiny of how the banking system is regulated and supervised.The reckoning came after the Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced Sunday that they would make sure that all depositors in two large failed banks, Silicon Valley Bank and Signature Bank, were repaid in full. The Fed also announced that it would offer banks loans against their Treasuries and many other asset holdings, treating the securities as though they were worth their original value — even though higher interest rates have eroded the market price of such bonds.The actions were meant to send a message to America: There is no reason to pull your money out of the banking system, because your deposits are safe and funding is plentiful. The point was to avert a bank run that could tank the financial system and broader economy.It was unclear on Monday whether the plan would succeed. Regional bank stocks tumbled, and nervous investors snapped up safe assets. But even before the verdict was in, lawmakers, policy researchers and academics had begun debating whether the government had made the correct move, whether it would encourage future risk-taking in the financial system and why it was necessary in the first place.“The Fed has basically just written insurance on interest-rate risk for the whole banking system,” said Steven Kelly, senior research associate at Yale’s program on financial stability. And that, he said, could stoke future risk-taking by implying that the Fed will step in if things go awry.“I’ll call it a bailout of the system,” Mr. Kelly said. “It lowers the threshold for the expectation of where emergency steps kick in.”While the definition of “bailout” is ill defined, it is typically applied when an institution or investor is saved by government intervention from the consequences of reckless risk-taking. The term became a swear word in the wake of the 2008 financial crisis, after the government engineered a rescue of big banks and other financial firms using taxpayer money, with little to no consequences for the executives who made bad bets that brought the financial system close to the abyss.President Biden, speaking from the White House on Monday, tried to make clear that he did not consider what the government was doing to be a bailout in the traditional sense, given that investors would lose their money and taxpayers would not be on the hook for any losses.“Investors in the banks will not be protected,” Mr. Biden said. “They knowingly took a risk, and when the risk didn’t pay off, investors lose their money. That’s how capitalism works.”The Downfall of Silicon Valley BankOne of the most prominent lenders in the world of technology start-ups collapsed on March 10, forcing the U.S. government to step in.A Rapid Fall: The collapse of Silicon Valley Bank, the biggest U.S. bank failure since the 2008 financial crisis, was caused by a run on the bank. But will the turmoil prove to be fleeting — or turn into a true crisis?The Fallout: The bank’s implosion rattled a start-up industry already on edge, and some of the worst casualties of the collapse were companies developing solutions for the climate crisis.Signature Bank: The New York financial institution closed its doors abruptly after regulators said it could threaten the entire financial system. To some extent, it is a victim of the panic around Silicon Valley Bank.The Fed’s Next Move: The Federal Reserve has been rapidly raising interest rates to fight inflation, but making big moves could be trickier after Silicon Valley Bank’s blowup.He added, “No losses will be borne by the taxpayers. Let me repeat that: No losses will be borne by the taxpayers.”But some Republican lawmakers were unconvinced.Senator Josh Hawley of Missouri said on Monday that he was introducing legislation to protect customers and community banks from new “special assessment fees” that the Fed said would be imposed to cover any losses to the Federal Deposit Insurance Corporation’s Deposit Insurance Fund, which is being used to protect depositors from losses.“What’s basically happened with these ‘special assessments’ to cover SVB is the Biden administration has found a way to make taxpayers pay for a bailout without taking a vote,” Mr. Hawley said in a statement.President Biden said Monday that he would ask Congress and banking regulators to consider rule changes “to make it less likely that this kind of bank failure would happen again.”Doug Mills/The New York TimesMonday’s action by the government was a clear rescue of a range of financial players. Banks that took on interest-rate risk, and potentially their big depositors, were being protected against losses — which some observers said constituted a bailout.“It’s hard to say that isn’t a bailout,” said Dennis Kelleher, a co-founder of Better Markets, a prominent financial reform advocacy group. “Merely because taxpayers aren’t on the hook so far doesn’t mean something isn’t a bailout.”But many academics agreed that the plan was more about preventing a broad and destabilizing bank run than saving any one business or group of depositors.“Big picture, this was the right thing to do,” said Christina Parajon Skinner, an expert on central banking and financial regulation at the University of Pennsylvania. But she added that it could still encourage financial betting by reinforcing the idea that the government would step in to clean up the mess if the financial system faced trouble.“There are questions about moral hazard,” she said.One of the signals the rescue sent was to depositors: If you hold a large bank account, the moves suggested that the government would step in to protect you in a crisis. That might be desirable — several experts on Monday said it might be smart to revise deposit insurance to cover accounts bigger than $250,000.But it could give big depositors less incentive to pull their money out if their banks take big risks, which could in turn give the financial institutions a green light to be less careful.That could merit new safeguards to guard against future danger, said William English, a former director of the monetary affairs division at the Fed who is now at Yale. He thinks that bank runs in 2008 and recent days have illustrated that a system of partial deposit insurance doesn’t really work, he said.An official with the F.D.I.C., center, explained to clients of Silicon Valley Bank in Santa Clara, Calif., the procedure for entering the bank and making transactions.Jim Wilson/The New York Times“Market discipline doesn’t really happen until it’s too late, and then it’s too sharp,” he said. “But if you don’t have that, what is limiting the risk-tanking of banks?”It wasn’t just the side effects of the rescue stoking concern on Monday: Many onlookers suggested that the failure of the banks, and particularly of Silicon Valley Bank, indicated that bank supervisors might not have been monitoring vulnerabilities closely enough. The bank had grown very quickly. It had a lot of clients in one volatile industry — technology — and did not appear to have managed its exposure to rising interest rates carefully.“The Silicon Valley Bank situation is a massive failure of regulation and supervision,” said Simon Johnson, an economist at the Massachusetts Institute of Technology.The Fed responded to that concern on Monday, announcing that it would conduct a review of Silicon Valley Bank’s oversight. The Federal Reserve Bank of San Francisco was responsible for supervising the failed bank. The results will be released publicly on May 1, the central bank said.“The events surrounding Silicon Valley Bank demand a thorough, transparent and swift review,” Jerome H. Powell, the Fed chair, said in a statement.Mr. Kelleher said the Department of Justice and the Securities and Exchange Commission should be looking into potential wrongdoing by Silicon Valley Bank’s executives.“Crises don’t just happen — they’re not like the Immaculate Conception,” Mr. Kelleher said. “People take actions that range from stupid to reckless to illegal to criminal that cause banks to fail and cause financial crises, and they should be held accountable whether they are bank executives, board directors, venture capitalists or anyone else.”One big looming question is whether the federal government will prevent bank executives from getting big compensation packages, often known as “golden parachutes,” which tend to be written into contracts.Treasury and the F.D.I.C. had no comment on whether those payouts would be restricted.Uninsured depositors at Silicon Valley Bank and Signature Bank, who had accounts exceeding $250,000, will be paid back.David Dee Delgado/ReutersMany experts said the reality that problems at Silicon Valley Bank could imperil the financial system — and require such a big response — suggested a need for more stringent regulation.While the regional banks that are now struggling are not large enough to face the most intense level of regulatory scrutiny, they were deemed important enough to the financial system to warrant an aggressive government intervention.“At the end of the day, what has been shown is that the explicit guarantee extended to the globally systemic banks is now extended to everyone,” said Renita Marcellin, legislative and advocacy director at Americans for Financial Reform. “We have this implicit guarantee for everyone, but not the rules and regulations that should be paired with these guarantees.”Daniel Tarullo, a former Fed governor who was instrumental in setting up and carrying out financial regulation after the 2008 crisis, said the situation meant that “concerns about moral hazard, and concerns about who the system is protecting, are front and center again.” More

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    SVB Collapse Upsets Expectations for Federal Reserve’s Rate Decision

    Listen to This ArticleThe Federal Reserve’s hotly anticipated March 22 interest rate decision is just a week and a half away, and the drama that swept the banking and financial sector over the weekend is drastically shaking up expectations for what the central bank will deliver.The Fed had been raising interest rates rapidly to try to contain the most painful burst of inflation since the 1980s, lifting them to above 4.5 percent from near zero a year ago. Concern about rapid inflation prompted the central bank to make four consecutive 0.75-point increases last year before slowing to a half point in December and a quarter point in February.Before this weekend, investors believed there was a substantial chance that the Fed would make a half-point increase at its meeting next week. That step up was seen as an option because job growth and consumer spending have proved surprisingly resilient to higher rates — prompting Jerome H. Powell, the Fed chair, to signal just last week that the Fed would consider a bigger move.But investors and economists no longer see that as a likely possibility.Three notable banks have failed in the past week alone as Fed interest rate increases ricochet through the technology sector and cryptocurrency markets and upend even usually staid bank business models.Regulators unveiled a sweeping intervention on Sunday evening to try to prevent panic from coursing across the broader financial system, with the Treasury, Federal Deposit Insurance Corporation and Fed saying depositors at the failed banks will be paid back in full. The Fed announced an emergency lending program to help funnel cash to banks facing steep losses on their holdings because of the change in interest rates.The Downfall of Silicon Valley BankOne of the most prominent lenders in the world of technology start-ups collapsed on March 10, forcing the U.S. government to step in.A Rapid Fall: The collapse of Silicon Valley Bank, the biggest U.S. bank failure since the 2008 financial crisis, was caused by a run on the bank. But will the turmoil prove to be fleeting — or turn into a true crisis?The Fallout: The bank’s implosion rattled a start-up industry already on edge, and some of the worst casualties of the collapse were companies developing solutions for the climate crisis.Signature Bank: The New York financial institution closed its doors abruptly after regulators said it could threaten the entire financial system. To some extent, it is a victim of the panic around Silicon Valley Bank.The Fed’s Next Move: The Federal Reserve has been rapidly raising interest rates to fight inflation, but making big moves could be trickier after Silicon Valley Bank’s blowup.The tumult — and the risks that it exposed — could make the central bank more cautious as it pushes forward.Investors have abruptly downgraded how many interest rate moves they expect this year. After Mr. Powell’s speech last week opened the door to a large rate change at the next meeting, investors had sharply marked up their 2023 forecasts, even penciling in a tiny chance that rates would rise above 6 percent this year. But after the wild weekend in finance, they see just a small move this month and expect the Fed to cut rates to just above 4.25 percent by the end of the year.Economists at J.P. Morgan said the situation bolstered the case for a smaller, quarter-point move this month.“I don’t hold that view with tons of confidence,” said Michael Feroli, chief U.S. economist at J.P. Morgan, explaining that a move this month was conditional on the banking system’s functioning smoothly. “We’ll see if these backstops have been enough to quell concerns. If they are successful, I think the Fed wants to continue on the path to tightening policy.”Goldman Sachs economists no longer expect a rate move at all. While Goldman analysts still think the Fed will raise rates to above 5.25 percent this year, they wrote on Sunday evening that they “see considerable uncertainty” about the path.“I think the Fed is going to want to wait awhile to see how this plays out,” said William English, a former director of the monetary affairs division at the Fed who is now at Yale. He explained that tremors in the banking system could spook lenders, consumers and businesses — slowing the economy and meaning that the Fed had to do less to cool the economy and lower inflation.“If it were me, I’d be inclined to pause,” Mr. English said.Other economists went even further: Nomura, saying it was unclear whether the government’s relief program was enough to stop problems in the banking sector, is now calling for a quarter-point rate cut at the coming meeting.The Fed will receive fresh information on inflation on Tuesday, when the Consumer Price Index is released. That measure is likely to have climbed 6 percent over the year through February, economists in a Bloomberg forecast expected. That would be down slightly from 6.4 percent in a previous reading.But economists expected prices to climb 0.4 percent from January after food and fuel prices, which jump around a lot, are stripped out. That pace would be quick enough to suggest that inflation pressures were still unusually stubborn — which would typically argue for a forceful Fed response.The data could underline why this moment poses a major challenge for the Fed. The central bank is in charge of fostering stable inflation, which is why it has been raising interest rates to slow spending and business expansions, hoping to rein in growth and cool price increases.But it also charged with maintaining financial system stability, and higher interest rates can reveal weaknesses in the financial system — as the blowup of Silicon Valley Bank on Friday and the towering risks for the rest of the banking sector illustrated. That means those goals can come into conflict.Subadra Rajappa, head of U.S. rates strategy at Société Générale, said on Sunday afternoon that she thought the unfolding banking situation would be a caution against moving rates quickly and drastically — and she said instability in banking would make the Fed’s task “trickier,” forcing it to balance the two jobs.“On the one hand, they are going to have to raise rates: That’s the only tool they have at their disposal” to control inflation, she said. On the other, “it’s going to expose the frailty of the system.”Ms. Rajappa likened it to the old saying about the beach at low tide: “You’re going to see, when the tide runs out, who has been swimming naked.”Some saw the Fed’s new lending program — which will allow banks that are suffering in the high-rate environment to temporarily move to the Fed a chunk of the risk they are facing from higher interest rates — as a sort of insurance policy that could allow the central bank to continue raising rates without causing further ruptures.“The Fed has basically just written insurance on interest-rate risk for the whole banking system,” said Steven Kelly, senior research associate at Yale’s program on financial stability. “They’ve basically underwritten the banking system, and that gives them more room to tighten monetary policy.”Joe Rennison More

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    Colleges Have Been a Small-Town Lifeline. What Happens as They Shrink?

    For decades, institutions of higher education provided steady, well-paid jobs in small towns where the industrial base was waning. But the tide of young people finishing high school is now also starting to recede, creating a stark new reality for colleges and universities — and the communities that grew up around them.As Americans have fewer children and a diminishing share of young adults pursue a degree, the once-burgeoning market for college slots has kicked into reverse. Although undergraduate enrollment stabilized somewhat in 2022, it’s still down about 7.6 percent since 2019.“It looks like the future is declining numbers of young people likely to attend college, even in growing areas like the Mountain West,” said Nathan Grawe, an economics professor at Carleton College in Minnesota who studies the demand for postsecondary education. “We’ll start to have some tough stories.”Evidence of a shrinking student body is everywhere in the western Pennsylvania borough of Clarion, population 3,880, which has taken immense pride in the graceful campus of Clarion University since the institution was founded as a seminary 156 years ago.Since 2009, when it had 7,346 students, the university has shrunk by nearly half. With the drop in enrollment has come the loss of nearly 200 staff members, mostly through attrition. Last year, the school even lost its name, as it was merged with two of the 13 other universities in the Pennsylvania State System of Higher Education, creating a multicampus university called PennWest.Tracy Becker, who looks out on Main Street from her broad desk at the city’s chamber of commerce, says there aren’t as many young volunteers for community events like the annual Autumn Leaf Festival, which has been held during homecoming weekend since 1953.“Ideally, I would love to see the university stay and thrive,” said Kaitlyn Nevel, a cafe owner, “but you just have to try and have however many backup plans.”Ross Mantle for The New York TimesKaitlyn Nevel’s cafe used to be staffed mostly with university students; now she has one such employee. As foot traffic lightened, she branched into catering. “Ideally, I would love to see the university stay and thrive, but you just have to try and have however many backup plans,” Ms. Nevel said.As Ms. Nevel’s resigned optimism suggests, declining enrollment doesn’t necessarily spell doom for college towns. Despite the lower student head count, few empty storefronts mar Clarion’s downtown. It has even attracted new businesses like Mechanistic Brewing, which Chelsea Alexander started with her husband in 2019 after moving back from Washington, D.C.Ms. Alexander is one of 28 people in her family to attend the local university. Since 1905, her family has run a clothing shop in town, which sells a line of T-shirts that trade on alumni nostalgia for favorite eateries that have long since closed and for towering dorms that have been demolished. But as graduating classes shrink, even alumni visits will taper off.The State of Jobs in the United StatesThe labor market continues to display strength, as the Federal Reserve tries to engineer a slowdown and tame inflation.Mislabeling Managers: New evidence shows that many employers are mislabeling rank-and-file workers as managers to avoid paying them overtime.Energy Sector: Solar, wind, geothermal, battery and other alternative-energy businesses are snapping up workers from fossil fuel companies, where employment has fallen.Elite Hedge Funds: As workers around the country negotiate severance packages, employees in a tiny and influential corner of Wall Street are being promised some of their biggest paydays ever.Immigration: The flow of immigrants and refugees into the United States has ramped up, helping to replenish the American labor force. But visa backlogs are still posing challenges.Ms. Alexander’s father, Jim Crooks, operates the store, and he has organized local merchants to spruce up the compact main street and market their businesses to potential visitors who may have no such connection to the town.“For many years, the university was carrying a lot of the businesses,” said Mr. Crooks, who has also converted four apartments above the shop from student housing into Airbnb lodgings. “Everybody’s just saying, ‘We can’t depend on the university.’”F.L. Crooks & Company, a family-owned clothing store, has served Clarion since 1905. Two apartments above it have been converted from student housing to Airbnb lodgings.Ross Mantle for The New York TimesAlthough Pennsylvania’s university system had been shrinking for a decade, along with the rest of higher education, it experienced a sudden shock when students disappeared during the pandemic. Among those who noticed: the leaders at the Federal Reserve Bank of Philadelphia, whose territory across Pennsylvania, New Jersey and Delaware has a higher density of colleges and universities than most.Along with large hospital systems, which are often affiliated with universities, educational institutions make up a substantial share of local economies that used to be dominated by manufacturing, logging and mining. Patrick T. Harker, the president of the Philadelphia Fed, wanted to find out how big that share was — since the education and medical sectors were starting to show cracks as well.“Traditionally, ‘eds and meds’ have been thought of as recession-proof,” Dr. Harker said. “This pandemic showed that is not true.”Not all of those institutions are equally vulnerable, however. Rural hospitals have been drying up even as large health care chains build new facilities in fast-growing suburbs, while the dwindling pool of students flocks to state flagships. “They’re stronger than ever, while the regional systems are really struggling,” said Deborah Diamond, a staff economist at the Philadelphia Fed.Dr. Diamond put together a tool that showed how much different regions depended on health care and higher education. The places at the top of the dependence list were predictable, like the Durham-Chapel Hill area of North Carolina, with two powerhouse universities. But they also included smaller areas, like the one surrounding Bloomsburg, Pa., two and a half hours east of Clarion on Interstate 80. There, institutions including Geisinger Health and Bloomsburg University — another state-owned school — make up 21.9 percent of local employment and 18.3 percent of regional income.“As we’ve seen some declines in manufacturing employment, their economic relevance is higher than it’s ever been,” said Fred Gaffney, the president of the area’s chamber of commerce.A local merchant is encouraging others to market to customers without a connection to the town’s university.Ross Mantle for The New York TimesClarion Hospital is the second-largest employer in the county.Ross Mantle for The New York TimesA similar set of factors is evident in Clarion County, where the university is still the largest employer, followed by Clarion Hospital. Walmart comes next, and then a few plants making building materials and prefabricated housing, several social service organizations and the county government. The county used to have more manufacturing, including a large glass plant that closed in 2010. As that receded, so did the county’s population; its labor force dropped to 16,000 in 2022, from about 21,000 in 2008.In the same period, Clarion University’s enrollment began to fall, as did state funding, raising the price of attendance. In 2021, Daniel Greenstein, the chancellor of the State System of Higher Education, proposed forming two clusters of three schools each, to consolidate operations and offer more classes across campuses.“We had to align our costs with our new enrollment numbers,” Dr. Greenstein said in an interview. “We were built out as if we were still having 120,000 students when we had 85,000. You just can’t do that. Like every American family, you have to live within your means.”At the same time, Mr. Greenstein requested more money from the State Legislature to enable the system to freeze tuition and offer more scholarships, which he said was critical to arresting the slide in enrollment. The state increased the system’s base funding by 15 percent in 2022 and threw in $125 million from a federal stimulus measure. The freshman class grew slightly last fall, but not enough to offset another overall drop in enrollment.For the merged schools, swooning enrollment underestimates the degree to which student presence has faded on campus. To bolster their course catalogs, the schools are offering more of their classes online. That allows some students to show up in person only a few days a week — a trend that may accelerate as the system pursues more adult students, some of whom just need to finish degrees or complete shorter certificate programs.Jennifer Fulmer Vinson, Clarion’s mayor, operates an antiques shop in a century-old house reclaimed from a long-gone fraternity.Ross Mantle for The New York TimesClarion’s mayor, Jennifer Fulmer Vinson — another Clarion graduate — sees that as a loss for the borough. History classes come less often to her antiques shop, which sits in a century-old house reclaimed from a long-gone fraternity, stuffed with curios including an old Coke machine and a cabinet full of war medals.“Why are students going to come pay to live on campus when they never leave their room?” Ms. Vinson said. “It’s become more of a ghost town.” (The university says that the first-year student experience is meant to be campus-centered and that most courses will remain in person.)About an hour’s drive west on Interstate 80 from Bloomsburg, the town of Lock Haven also has a university that last year merged with two others in the state-owned system. As the school has shrunk and well-paid staff members have moved away, the state’s substantial tax-free land holdings have started to grate on local residents.Gregory Wilson, the city manager, has created a handout showing what the median property owner pays in taxes to subsidize Lock Haven University: $186 annually.“I think the hope has always been that the investment they’re making to have the university here is somehow returned to them,” Mr. Wilson said. “But that becomes a harder sell as the university becomes smaller.”The contraction has come alongside another recent and unwelcome development: The local hospital, which the sprawling University of Pittsburgh Medical Center bought in 2017, announced in January that it would shutter its inpatient operations, forcing residents to travel at least a half an hour for serious care.All of it has been profoundly frustrating for Angela Harding, a Clinton County commissioner, who says that while she values the hospital and the university, drawing new residents to Lock Haven becomes harder as those economic anchors lose their grip.“I’m sick and tired of having to fight for every single crumb that we get,” Ms. Harding said.Colleges and the towns they occupy can do little about demographic currents. But they should, experts say, reinforce each other — the university can offer space for community functions and support for small businesses, for example, while the town can throw events for prospective students and their parents. Vacant student housing could be converted into homes for new residents who might be able to work remotely or want a quiet place to retire.Tracy Becker, of Clarion’s chamber of commerce, says there are fewer young volunteers for community events than in the past.Ross Mantle for The New York TimesMatthew Wagner, the director of programs for Main Street America, a group dedicated to the development of small downtowns, says he sees less town-gown tension now that municipalities and schools understand their shared fates.“Much like if you had a manufacturer that was facing headwinds, we need to think of the university as an economic development retention program, and direct our assets and resources that way,” Dr. Wagner said.Lock Haven has taken that idea to heart. Its main street is vibrant, with several new boutiques interspersed with longstanding local restaurants. Fabre Sanders, whose father runs a window-treatment store, moved back from Boston a few years ago to start a candy and gift shop. During the pandemic, she said, residents did everything they could to keep the shops alive.“They looked around and said, ‘If we don’t support the local we have, we’re going to have nothing,’” Ms. Sanders said. More

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    In Budget Talks, Biden Rejects Hard Choices of the Past

    The president has met Republican demands for debt reduction with a plan to trim deficits by taxing companies and the rich. Months after losing control of the House in 2010, President Barack Obama and his vice president, Joseph R. Biden Jr., released a budget proposal that bowed to Republican warnings about the need to rein in spending by promising a freeze in popular programs like education.Now president, Mr. Biden is confronting the same equation, with an emboldened new Republican majority in the House demanding deep spending cuts. But this time, Mr. Biden has made a sharp break from the past.His proposed budget does contain new steps to reduce deficits, but instead of talking about hard choices and freezing spending, Mr. Biden has pledged to defend popular federal programs from Republican attacks and instead rely almost exclusively on taxing corporations and high earners as the way to reduce the growth in the deficit by nearly $3 trillion over the next decade.The shifting strategy by Mr. Biden is rooted in his determination not to repeat political and economic mistakes from the Obama era, administration officials say privately. Economists now say economic mistakes from the Obama era slowed the recovery from the 2008 financial crisis. And publicly, officials point to polls to contend that voters side with the president on how to reduce deficits.“The American people are absolutely right that having the super-wealthy and special interests pay their fair share is the right way to reduce the deficit,” said Jesse Lee, a senior communications adviser to Mr. Biden’s National Economic Council.The budget fight is expected to drag out for months as both sides attempt to pin the blame on the other. Mr. Biden is attempting a different sort of budget triangulation from Mr. Obama’s plan, as he nods to concerns over the $31.4 trillion national debt but seeks to redefine the issue and turn conservatives’ longstanding antipathy toward tax increases into a negotiating and electoral weapon.“The Republicans have taken off the table making the wealthy and the well connected pay a little more to help reduce the national debt — that means they’re not really serious about the national debt,” Senator Elizabeth Warren, Democrat of Massachusetts, said in an interview.Understand Biden’s Budget ProposalPresident Biden proposed a $6.8 trillion budget that sought to increase spending on the military and social programs while also reducing future budget deficits.Recapturing a Centrist Identity: As he unveiled his proposal, Mr. Biden made curbing the budget gap one of his centerpiece promises. The move is part of a wider shift that sees the president speaking more to the concerns of the political middle.A Missing Plan for Social Security: Like the president’s previous budgets, his new proposal makes no mention of the program, which he promised to shore up during his 2020 campaign.N.Y. Transit Projects: President Biden’s budget plan routes about $1.2 billion to two of the biggest transit projects in New York City: the Second Avenue Subway extension and new train tunnels under the Hudson River.“Higher taxes aimed at billionaires and giant corporations that are hiding their money overseas would have very little effect on our economy, other than the ability to reduce the national debt or to invest more,” she said.House Republicans are refusing to raise a cap on the amount of debt the United States can have outstanding unless Mr. Biden agrees to large federal spending cuts, which could include slashing antipoverty programs and new measures meant to fight climate change. They say the current national debt load and new spending programs approved by the president are weighing on economic growth, partly by driving up borrowing costs for private businesses.They are trying to assemble their own budget proposal that can pass the House, likely centered on cuts to housing assistance, health care programs and other aid to the poor. In a caucus that fractures on key issues like how much to spend on the military and whether to raise retirement ages for Social Security and Medicare, members have found common purpose in skewering Mr. Biden’s fiscal plans.“After two years of economic failures, the American people desperately want results,” Representative Jason Smith of Missouri, the chairman of the Ways and Means Committee, said at the start of a hearing on Mr. Biden’s budget on Friday. “The budget before us today calls for $4.7 trillion in new taxes and sinks $6.9 trillion in new spending during a staggering debt crisis.”Mr. Biden has refused to negotiate directly over raising the debt limit but says he welcomes a conversation on the nation’s finances — on his own, populist terms.“What are they going to cut?” Mr. Biden mused to an audience in Philadelphia on Thursday, as he formally unveiled his budget and called on Republicans to follow suit..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“What about Medicaid? What about the Affordable Care Act? What about veterans’ benefits? What about law enforcement? What about aid to rural communities? What about support for our military?” he asked. “What will they make — how will they make these numbers add up?”This debate is happening in an economic moment that is very different from 2011, when Mr. Obama issued his budget for the 2012 fiscal year.At that time, the gross national debt was about $15.5 trillion, or just under three-quarters of what was the annual output of the American economy. But the economy was nowhere close to recovering from the 2009 recession. The unemployment rate was 9 percent. The economy was running well below what economists call its potential — the amount of goods and services it would be producing at what you might call optimal performance.Then-President Barack Obama speaking about his budget proposal in 2009, with Mr. Biden, his vice president. Mr. Obama bowed to Republican demands to reduce deficits.Doug Mills/The New York TimesProgressive economists pushed Mr. Obama to take advantage of low interest rates to continue running large deficits and pump more money into the economy. After losing the House, though, he bowed to Republican demands to reduce deficits and pivoted the other way. His budget proposed caps on government spending and urged Congress “to act now to secure and strengthen Social Security for future generations” by taking steps to shore up its finances.A bout of brinkmanship later in 2011 between House Republicans and Mr. Obama nearly ended with the United States defaulting on its debt, before Mr. Obama agreed to a set of caps on future spending increases in exchange for lifting the limit. That deal helped cut the deficit by nearly two-thirds before Mr. Obama left office.Many economists have concluded that those measures dragged out the time it took for the economy to finally run hot enough to generate sustained wage gains for workers.Today’s economy has run so hot that the Federal Reserve is trying to cool it down to tame high inflation. Unemployment is 3.6 percent, and companies are having trouble finding workers. Republicans blame Mr. Biden’s spending policies for stoking inflation and say his tax proposals would further burden people and business owners already struggling with high prices.Progressive economists disagree — increasingly saying there is little threat to growth from large tax increases on companies and high earners.Even with his proposed savings, Mr. Biden’s budget still foresees the gross national debt increasing by about $18 trillion through 2033, to just above $50 trillion, or 128 percent of gross domestic product. It projects deficits to average about 1.5 percent more, as a share of the economy, than Mr. Obama projected in his 2012 budget. Yet administration economists say that under their plans, “the economic burden of debt would remain low.”Some progressive groups criticized Mr. Biden last week for focusing at all on deficit reduction in the budget. Others welcomed his emphasis on raising taxes for businesses and people earning more than $400,000.Budget hawks urged Mr. Biden last week to propose more — and more immediate — deficit reduction. Such reductions would pull consumer spending power out of the economy faster by raising taxes or reducing federal expenditures, or both. Advocates of deficit reduction said that could help ease price growth in the economy.Jerome H. Powell, the Fed chairman, told lawmakers in the House and Senate last week that federal tax and spending policy was “not contributing to inflation” today. He was pressed on that view by Senator John Kennedy of Louisiana, a Republican on the Budget Committee.“It’s undeniable that the only way we’re going to get this sticky inflation down is to attack it on the monetary side, which you’re doing, and on the fiscal side, which means Congress has got to reduce the rate of growth of spending and reduce — reduce the rate of growth of debt accumulation,” Mr. Kennedy said.“Now I get that you don’t want to get in the middle of that fight,” he added. “But the more we help on the fiscal side, the fewer people you’re going to have to put out of work. Isn’t that a fact?”“It could work out that way,” Mr. Powell replied. More

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    Can the United Farm Workers of California Rise Again?

    Veronica Mota marched under the sweltering sun, hoisting a cloth banner of Our Lady of Guadalupe above her head for miles.“Sí, se puede,” she chanted in unison with dozens of other farmworkers, who waved U.S. and Mexican flags as they walked along two-lane roads lined by dense orange groves in the Central Valley of California.The banner, flags and rallying cry — “Yes, we can” — echoed back more than half a century to when Cesar Chavez, a co-founder of the United Farm Workers union, led agricultural workers on a pilgrimage along a similar route to meet lawmakers in Sacramento.“We are a legacy of Cesar Chavez,” said Ms. Mota, 47, who, when blisters began to form on her feet during the 24-day trek in August, gathered strength by thinking of how the march in the 1960s led to groundbreaking farmworker reforms and propelled the U.F.W. to national prominence.“We can achieve what we want,” Ms. Mota said.What the farmworkers wanted last summer was for Gov. Gavin Newsom to sign into law a bill that they argued would make it easier and less intimidating for workers to vote in union elections — a key step, they believed, in rebuilding the size and influence of a now far less prolific U.F.W. But changing a rule is not the same as changing the game. The question now is whether the U.F.W. can show it has not irretrievably lost its organizing touch and can regain the ability to mobilize public opinion on its behalf as it did under Mr. Chavez.The union is a shadow of what it was decades ago. Membership hovers around 5,500 farmworkers, less than 2 percent of the state’s agricultural work force, compared with 60,000 in the 1970s. In the same period, the number of growers covered by U.F.W. contracts has fallen to 22 from about 150. The march last summer stood as a reckoning of sorts for a union desperate to regain its relevance.California’s fields provide about half of the produce grown in the United States for domestic consumption.Mark Abramson for The New York TimesFarmworkers at an orange grove outside Fresno.Mark Abramson for The New York TimesU.F.W. officials say they have secured contracts focusing on health coverage.Mark Abramson for The New York TimesLabor organizing has rebounded nationwide in the last few years, with unions winning elections at an Amazon warehouse on Staten Island and at least 275 Starbucks stores, and among white-collar workers in the tech and media industries. But in California’s fields, which supply about half of the produce grown in the United States for the domestic market, such efforts have found little traction.It has been more than five years since the U.F.W. mounted an organizing drive and election petition in the state — at Premiere Raspberries in Watsonville. The U.F.W. unionization vote succeeded, but the company refused to negotiate a contract and in 2020 announced plans to shut down and lay off more than 300 workers.Ms. Mota, who has worked seasonal jobs around the state for two decades, has seen her wages drop by about $6,000 over the last several years. She is now earning around $15,000 a year. She said that on farms without union contracts, bosses sometimes make veiled threats about cutting hours, refuse to give workers breaks in 100-plus degree weather and turn a blind eye to dangerous conditions.“Where we do not have a union contract, there is no respect,” she said in Spanish on a recent morning from her ranch-style home in the farming town of Madera.But the bill backed by Ms. Mota, which Mr. Newsom signed into law after the marchers arrived in Sacramento, has fueled a cautious optimism. Backers say the ability to more freely organize will help them gain more influence.“There is new energy, new legislation and attention from the public in terms of workers’ rights,” said Christian Paiz, a professor of ethnic studies at the University of California, Berkeley, who has researched farm labor in the state. “We could be on the front lines of a renaissance.”The Shadow of Cesar ChavezFarmworkers have, for generations and by design, existed on the fringes of the American work force.The National Labor Relations Act of 1935 excluded farm and domestic workers from federal protections — a decision, rooted in racism, that ensured that the Black, Latino and Asian people whose work opportunities were largely limited to those two industries were not covered.But by the 1960s, momentum for change was building.Farm workers on their march from Delano to Sacramento in 1966.Jon Lewis/Beinecke Rare Book and Manuscript Library, Yale UniversityMr. Chavez, who was a farm laborer picking avocados and peas before becoming a grass-roots organizer, teamed up with Dolores Huerta, a young workers’ rights activist from the Central Valley, and in 1962 they founded the National Farm Workers Association. It became the U.F.W.Labor Organizing and Union DrivesA New Inquiry?: A committee led by Senator Bernie Sanders will hold a vote to open an investigation into federal labor law violations by major corporations and subpoena Howard Schultz, the chief executive of Starbucks, as the first witness.Whitney Museum: After more than a year of bargaining, the cultural institution and its employees are moving forward with a deal that will significantly raise pay and improve job security.Mining Strike: Hundreds of coal miners in Alabama have been told by their union that they can start returning to work before a contract deal has been reached, bringing an end to one of the longest mining strikes in U.S. history.Gag Rules: The National Labor Relations Board has ruled that it is generally illegal for companies to offer severance agreements that require confidentiality and nondisparagement.Three years later, it was a key force behind the Delano grape workers’ strike, in which thousands of Mexican and Filipino farmworkers walked off their jobs, demanding raises from $1.25 to $1.40 an hour, as well as elections that could pave the way for unionization.As the striking farmworkers made their way along the 335-mile trek in 1966, which started in Delano, the group grew steadily, and other unions began to pledge their support.In the Bay Area, longshoremen had refused to load shipments of grapes that hadn’t been picked by unionized workers and, before long, a statewide pressure campaign had become a national one.Weeks after the march began, a lawyer for Schenley Industries, a large Central Valley grape grower that was a target of the boycott, contacted Mr. Chavez, and the company soon agreed to negotiate a contract. It officially recognized the U.F.W., making it the first major corporation to acknowledge a farm union.The grape workers’ strike stretched into the summer of 1970, when widespread consumer boycotts forced major growers to sign on to collective bargaining agreements between the union and several thousand workers.In the years that followed, Mr. Chavez forged a relationship with Gov. Jerry Brown, a Democrat, and helped champion the California Agricultural Labor Relations Act of 1975, which established the right to collective bargaining for farmworkers and created a board to enforce the act and arbitrate labor fights between workers and growers. It was the first law in the country guaranteeing protections to farm workers.Cesar Chavez, center, leader of the National Farm Workers Association, outside a farm in 1966, with supporters bearing signs proclaiming “Strike.” The association was a predecessor of the United Farm Workers.Paul Fusco/Magnum PhotosBut the union’s gains soon began to erode. Mr. Brown’s Republican successor, George Deukmejian, and his appointees made changes to the farm labor board in the 1980s and cut funding, arguing that the adjustments were necessary to correct an “easily perceived bias” in favor of farm workers and the U.F.W. and against growers. And even when the union has won elections, it has often faced legal challenges from growers that can drag on for years.The law that Mr. Newsom signed last year, Assembly Bill 2183, was the union’s biggest legislative victory in years. It paved the way for farmworkers to vote in union elections without in-person election sites. For years, U.F.W. officials argued that dwindling membership numbers stemmed from fears about voting in person at sites often held on properties owned by the growers.The bill faced opposition from growers, who contended that the measure would allow union organizers to unfairly influence the process. Mr. Newsom initially voiced reticence, but signed the measure into law after then-House Speaker Nancy Pelosi and President Biden publicly pushed him to do so.“In the state with the largest population of farmworkers, the least we owe them is an easier path to make a free and fair choice to organize a union,” Mr. Biden said at the time.Supporters of the measure highlight how the demographics of farmworkers have changed over the years. In the 1970s, under Mr. Chavez, many farmworkers were U.S. citizens, but migration from Mexico and Central America in the decades that followed created a work force composed primarily of undocumented workers. Because they lack immigration papers, supporters say, they are especially vulnerable. (Undocumented workers can be covered by labor agreements.)In signing the measure, Mr. Newsom and the U.F.W. agreed to support follow-up compromise legislation that would guard farmworker confidentiality during elections and place limits on card-check voting, a method in which employees sign cards in favor of unionizing.‘We Are Ignored’Last summer, as she marched past vineyards and groves of mandarin oranges, Ms. Mota thought of the harvest cycle that has defined much of her life.She reflected on the dormant season, in December and January, when she prunes pistachio and almond trees, and the rainy months, when it’s sometimes hard to find work. But then comes the prosperous citrus and grape harvests, through the spring and the fall, which always make her think of the families who will eventually toast with wine squeezed from the fruit she plucked from the vine.“I love for my hands to harvest a fruit and then seeing those fruits and vegetables in the restaurant,” Ms. Mota said.U.F.W. supporters marched last year to urge Gov. Gavin Newsom to sign a bill that would make it easier for workers to vote in union elections.Jessica Christian/San Francisco Chronicle, via Associated PressShe thought, too, about the invisibility and dangers of her work — the tiny teeth marks etched into her leather boot by a snake bite, the molehill where she badly sprained her ankle, the co-worker airlifted to San Francisco with injuries.“We are ignored,” she said.Still, she didn’t feel that way during the march, where in many towns people greeted them with snacks, Gatorade and full meals. While the group was in Stockton, an inland port city, Ms. Huerta, now 92, stood before the crowd wearing a baseball cap emblazoned with the words, “Sí se puede.”“You all have made me so proud,” she told them.Ms. Huerta, who helped negotiate the first farmworker contract with Schenley, left U.F.W. leadership more than two decades ago to pursue other causes. But in an interview, she said the need for unionization remained as high as it was when she helped start the union.“Farmworkers wanted the support and still want the support,” said Ms. Huerta, who attributed the dearth of contracts to a refusal by growers to bargain in good faith.Despite setbacks in recent decades, U.F.W. officials say they have continued to secure contracts that focus on health care benefits, wage increases and cultivating a respectful culture between farmworkers and employees. At Monterey Mushrooms, which has operated under a contract since the 1980s, U.F.W. officials say the average annual income for a mushroom picker is $45,000 and includes vacation time and a pension. (The statewide average for farmworkers is between $20,000 and $25,000 a year, according to the U.S. Labor Department.)“With a union contract, workers are educated about their rights and empowered to defend them,” said Teresa Romero, the union’s president.Issues might vary from farm to farm, Ms. Romero said. “In one workplace it may be low wages, in another it may be unsafe conditions, in still another it may be the workplace culture — having to pay bribes or endure sexual harassment to get work or having a particular supervisor who is racist or cruel,” she said. “We understand the immense risks that workers are taking when speaking up on the job; it takes courage for workers to form their union.”Dolores Huerta, a founder of the U.F.W., at a rally in the 1970s.Cathy Murphy/Getty ImagesMs. Romero said she was confident that the new state law — along with a streamlined federal process to protect workers involved in labor disputes surrounding immigration threats from employers — would translate into more bargaining power and more contracts.A Question of StrategySome labor watchers are skeptical of the union’s ability to reinvigorate itself.Miriam Pawel, an author who has written extensively about the union and Mr. Chavez, said the U.F.W.’s decline reflected a shortfall in organizing efforts in the communities where farmworkers live.“It’s evolved more into an advocacy organization and walked away from the more difficult work of organizing,” Ms. Pawel said. Referring to the 1975 labor relations act, she added, “They have the most favorable labor law in the country and have barely taken advantage.”Ms. Pawel cited a 2016 state law mandating that agricultural employers pay overtime if people worked more than eight hours in a day. The union lobbied for the measure, but growers warned that they couldn’t afford to pay overtime and would adjust schedules to avoid doing so. The new overtime rule has been phased in over the years, and some farmworkers have voiced anger about losing hours.“If the union were stronger in the fields, and at organizing, it could have won elections and demanded better overtime provisions in contracts,” Ms. Pawel said.Ms. Romero pushed back against such criticism, arguing that, until Mr. Newsom signed A.B. 2183 in September, many farmworkers had justified fears that, if they sought unionization, their bosses would fire them or even try to get them deported.Indeed, a report by the University of California, Merced, Community and Labor Center found that 36 percent of farmworkers said they would not file a report against their employer for failing to comply with workplace safety rules and that 64 percent cited fear of employer retaliation or job loss.And since the bill’s passage, the Farm Employers Labor Service, a trade group that staunchly opposed the law, has placed advertisements on Spanish-language radio stations, warning about what it means to be in a union. In one ad, a man shouts: “Signing a union petition can lead to the union stealing 3 percent of your salary! Do not let them!”Those messages deeply concern Ms. Romero.“Filing for an election when workers are not protected from genuine risks of retaliation will only lead already poor people into further hardship,” she said. “This is the implicit threat that the growers’ power depends on.”‘They Just Want to Work’Joe Del Bosque at his melon farm in Firebaugh, Calif. He has never had a union contract and plans to keep it that way.Mark Abramson for The New York TimesMany California growers say they can be better bosses without unions.On a recent afternoon off Interstate 5 in the small city of Firebaugh, Joe Del Bosque stared out at bare fields on the melon farm he has owned since 1985. A thick fog hung over the area, and the ground was puddled from rain water. It was the quiet season on the farm, where he employs more than 100 farmworkers annually.Mr. Del Bosque said that when he was a boy, his parents, legal U.S. residents, traveled from a town near the California-Mexico border to the Central Valley to pick melons every summer. As a farm owner, he has never had a union contract, and aims to keep it that way.He provides his employees with good conditions and fair wages, he said, without their having to pay union dues. “From my experience, workers who are moving around from season to season do not want the extra hands involved,” he said of the union. “They just want to work.”He said he had little trouble finding field hands, including migrants who move from farm to farm with each season. And he noted that in the Salinas Valley — closer to the coast, where housing is more expensive — many growers rely on H-2A visas, which let them bring workers, often from Mexico, for just a few months of the year.That impermanence, he said, works against the U.F.W. “If the workers are here only a few months a year and then leave the state, how are you going to organize?” he said.Mr. Del Bosque said that he respected the U.F.W.’s history and the groundwork of Mr. Chavez and Ms. Huerta, but that he opposed A.B. 2183. The law, he contends, will allow the U.F.W. to unfairly sway farmworkers at their kitchen tables and behind closed doors.“That’s the intimidation factor,” Mr. Del Bosque said.A New Spirit of ActivismAsuncion Ponce began harvesting grapes in the late 1980s. He says bosses on unionized farms “don’t mess with you.”Mark Abramson for The New York TimesWhile the impact of the law remains unclear, it has buoyed the spirits of some farmworkers.Asuncion Ponce started harvesting grapes along the rolling green hills of the Central Valley in the late 1980s. Through the decades, Mr. Ponce has worked on several farms with U.F.W. contracts. Bosses on those farms, he said, seemed aware that if they harassed or mistreated workers, the union would step in.“They don’t mess with you any more,” he said, “because they think there could be problems.”Even so, he has seen his financial security decline. He averaged $20,000 a year in the 1990s and 2000s, he said, but these days he brings in around $10,000 a year picking grapes and pruning pistachio trees. His eight-hour shifts are no longer supplemented by overtime, as growers have cut hours — partly as a result of the overtime bill U.F.W. leaders supported.Occasionally, Mr. Ponce said, he relied on third-party contractors, who growers sometimes employ, to find him available work. But he said he was optimistic that with the new legislation he would land a full-time job on a union farm.On a recent evening, the 66-year-old sipped coffee and decompressed after a shift at a farm outside of Fresno. His feet ached and his flannel shirt was stained with fertilizer, but he is happy that his job lets him spend all day outdoors — a passion born in his hometown in the Mexican state of Puebla, where he harvested corn and anise.He smiled softly under his white mustache as he spoke about the legacy of Mr. Chavez, which inspired him to join for several legs of the pilgrimage last summer.“I marched for many reasons,” he said in Spanish. “So we are not as harassed and mistreated as we are now in the fields, so benefits and better treatment come our way.”For Ms. Mota, joining the march helped awaken a new spirit of activism.Over the years, she said, she felt afraid to talk about unionizing at work, but now she tells any colleagues who will listen about the advantages she sees: the ability to negotiate a better salary, benefits and a respect for seniority.Her viewpoint was shaped in her early years as a farmworker. “Throughout the years I have realized that we are marginalized,” she said. “They don’t value us.”Once, she said, she watched as a farmer grabbed a knife used to harvest cantaloupe and put it to the cheek of another worker. He glared into the farmworker’s eyes, she said, and called the workers his slaves.“You feel humiliated,” she said, fighting back tears.She is convinced that having a strong union is the only answer. “We deserve a dignified life in this country,” she said.“Throughout the years I have realized that we are marginalized,” Veronica Mota said.Mark Abramson for The New York Times More