Evelyn Reynolds

The hours leading up to the meeting have highlighted the differences between the White House and the Republicans who now control the House.WASHINGTON — President Biden will meet with Speaker Kevin McCarthy at the White House on Wednesday afternoon for a discussion that carries high stakes: the need to raise the nation’s borrowing limit in order to avoid a financial crisis.The meeting will be the first between the two leaders since Republicans assumed control of the House and conveyed the speaker title on Mr. McCarthy after a protracted fight.Republicans have refused to raise the statutory debt limit unless Mr. Biden accepts deep cuts in federal spending. The president has said repeatedly that he expects Congress to raise the borrowing cap with no strings attached — and that he will not negotiate conditions for an increase.Wednesday’s meeting will take place behind closed doors, but the hours leading up to it have highlighted the differences between the White House and the Republicans who now control the House. On Tuesday, Mr. Biden and Mr. McCarthy blamed each other for the impasse in raising the debt ceiling. The president called the speaker a “decent man” who had caved to extremists in his party to take power.He made “commitments that are just absolutely off the wall for a speaker of the House to make,” Mr. Biden told reporters on Tuesday.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

A proposal for a corn mill, which had been welcomed as an economic development success, reflects just how much things have changed with Chinese investment proposals in the U.S.After more than a year of debate about whether a Chinese company’s plan to build a corn mill in North Dakota was an economic boon or a geopolitical risk, an assistant secretary of the Air Force has weighed in with a warning that the “project presents a significant threat to national security.”The letter from Assistant Secretary Andrew P. Hunter, released publicly on Tuesday by North Dakota’s senators, noted the proximity of Grand Forks Air Force Base to the proposed mill and said the project raised “near- and long-term risks of significant impacts to our operations in the area.”The debate over Fufeng USA’s plan to build a giant milling facility on the edge of Grand Forks, less than 15 miles from the Air Force base, divided the Republican power structure in North Dakota and showed just how swiftly the economic relationship between the United States and China had changed.Though the Air Force letter did not name specific threats, residents had voiced numerous concerns. Some in town said it was unwise to deepen economic ties with China, while others speculated that the mill could be used for spying on the Air Force, which the company denied.The city’s Republican mayor, Brandon Bochenski, a former supporter of the project, said on Tuesday that because of the federal guidance, he would move to block construction by trying to deny building permits and by refusing to connect city infrastructure to the building site.More on U.S. Armed ForcesKorean War Wall of Remembrance: Many names of American service members who died in the conflict are misspelled or missing from the new memorial wall in Washington, relatives and researchers say.Parental Leave: The Pentagon announced a new policy that would double the amount of leave that is available to military service members.Defense Bill: Congress passed a $858 billion defense bill that would rescind the coronavirus vaccine mandate for troops and increase the defense budget $45 billion over President Biden’s request.A Boost for the N.R.A.: Instructors in military-sponsored J.R.O.T.C. classes have offered to promote the gun rights organization in high schools in exchange for money for their marksmanship programs.“The Air Force left ambiguity off the table,” the state’s two senators, John Hoeven and Kevin Cramer, both Republicans, said in a joint statement that called for Grand Forks officials to work with them “to find an American company to develop the agriculture project.”The corn mill was the sort of job-creating opportunity that cities have long fought over, and one that just a few years ago would have been seen by most as an unambiguous win. Both Mr. Bochenski and North Dakota’s Republican governor, Doug Burgum, celebrated in late 2021 when Grand Forks landed the project, which would have been the city’s largest economic development project in recent history.But within months after Fufeng chose Grand Forks, a college and military city with 59,000 residents, many in town began speaking out against the project. While some of the opposition focused on property rights and water use, the company’s ties to China and the perceived national security risks became the focus of pushback. Still, the city moved forward, annexing the field where the mill would be built and entering into a development agreement with the company.Mr. Bochenski, a first-term mayor and a former professional hockey player, said in an interview last year that the shifting geopolitical winds had been a challenge for the city. “Are we going to be the first one to basically say no to globalism?” he asked at the time.But on Tuesday, in light of the Air Force’s letter, Mr. Bochenski said he would seek the City Council’s help to block construction, though he noted that Fufeng USA, the American subsidiary of a Chinese company, would still own the land where it had hoped to build.Work on the project had been paused in recent months while the federal government’s Committee on Foreign Investment in the United States reviewed the company’s plans. That committee ultimately decided that it did not have jurisdiction.“The response from the federal government during this process can only be viewed as slow and contradictory,” Mr. Bochenski said. “This directive leaves open the question of other entities with Chinese connections across the nation,” he added, including a Chinese-owned aviation company in Grand Forks “and Chinese students and professors at the University of North Dakota.”Mr. Burgum, who once called the Fufeng mill a “huge opportunity” for his state, said in a statement that he supported the mayor’s decision to stop cooperating with the company given the concerns voiced by the Air Force.The turnabout in North Dakota comes as the United States rethinks its longstanding trade relationship with China, and as politicians in both parties have come to view the country more as a threat than as an attractive economic partner. Several states are considering bills this year that would limit or ban Chinese land ownership.Eric Chutorash, Fufeng USA’s chief operating officer, has repeatedly denied that the mill would be used to spy on or harm the United States. He did not immediately respond to requests for comment about the Air Force’s letter. China’s embassy in Washington declined to comment. More

The ruling, on charges brought by the National Labor Relations Board, involved actions at two Staten Island warehouses before union votes last year.Amazon violated labor law in advance of unionization elections last year at two warehouses on Staten Island, a federal administrative judge has ruled.The judge, who hears cases for the National Labor Relations Board, ruled on Monday that Amazon supervisors had illegally threatened to withhold wage and benefit increases from employees at the warehouses if they voted to unionize. The judge, Benjamin W. Green, also ruled that Amazon had illegally removed posts on a digital message board from an employee inviting co-workers to sign a petition being circulated by the Amazon Labor Union. The union sought to represent workers at both warehouses.The ruling ordered Amazon to stop the unfair labor practices and to post a notice saying it would not engage in them.In the same ruling, the judge dismissed several accusations brought in a complaint by the labor board’s prosecutors, including charges that Amazon indicated take-home pay would fall if workers unionized; that Amazon promised improvements in a program that subsidizes workers’ educational expenses if they chose not to unionize; and that Amazon indicated that workers would be fired if they unionized and failed to pay union dues.The judge found that these accusations were either overstated or, in the final instance, that the action was not illegal.Amazon can appeal the ruling to the labor board in Washington.“We’re glad that the judge dismissed 19 — nearly all — of the allegations in this case,” Mary Kate Paradis, an Amazon spokeswoman, said in a statement, adding: “The facts continue to show that the teams in our buildings work hard to do the right thing.”The union declined to comment.The violations occurred at a vast Amazon warehouse known as JFK8, where workers voted to unionize in an election whose results were announced in April, and at a smaller, nearby warehouse known as LDJ5, where workers voted down a union the next month.In the weeks before the elections, Amazon summoned employees at the warehouses to dozens of anti-union meetings at which supervisors questioned the credibility of the Amazon Labor Union, emphasized the costliness of union dues and warned that workers could end up worse off under a union.The judge’s ruling set aside a broader question brought by labor board prosecutors: whether employers can force workers to attend such meetings.The meetings are legal under labor board precedent and common among employers facing union campaigns. But the board’s general counsel, Jennifer Abruzzo, has argued that the precedent is in tension with federal labor law and had sought to challenge it.Judge Green concluded that he lacked the authority to overturn the precedent. “I am required to apply current law,” he wrote. Ms. Abruzzo’s office can file an appeal asking the labor board in Washington to overturn the precedent. More

American and Indian officials are working toward new partnerships in defense technology, advanced telecom and semiconductors.Officials from the United States and India agreed on Tuesday to expand cooperation on advanced weaponry, supercomputing, semiconductors and other high-tech fields, as the Biden administration looks to strengthen its connections with Asian allies and offset China’s dominance of cutting-edge technologies.The agreements followed two days of high-level meetings in Washington between government officials and executives from dozens of companies, the first under a new dialogue about critical and emerging technologies that President Biden and India’s prime minister, Narendra Modi, announced in Tokyo in May.Jake Sullivan, the U.S. national security adviser, told reporters on Tuesday that the goal was for technological partnerships to be “the next big milestone” in the U.S.-Indian relationship after a 2016 agreement on nuclear power cooperation. He described the effort as a “big foundational piece of an overall strategy to put the entire democratic world in the Indo-Pacific in a position of strength.”The agreements will be a test of whether the Biden administration can realize its proposal for “friendshoring” by shifting the manufacturing of certain critical components to friendly countries. Biden officials have expressed concerns about the United States’ continued heavy reliance on China for semiconductors, telecommunications parts and other important goods. In recent months they have clamped down on the sale of advanced semiconductor technology to China, in an effort to stymie an industry that the White House says could give China a military advantage.Many companies have found it difficult to obtain the factory space and skilled workers they would need to move their supply chains out of China. India has a highly skilled work force and a government that wants to attract more international investment, but multinational companies seeking to operate there continue to complain of onerous regulations, inadequate infrastructure and other barriers.Our Coverage of the Investment WorldThe decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.2023 Predictions: There are plenty of forecasts coming for where the S&P 500 will be at the end of the year. Should you be paying attention to them?May I Speak to a Human?: Younger investors who are navigating market volatility and trying to save for retirement are finding that digital investment platforms lack the personal touch.Tips for Investors: When you invest and where matters for taxes. But a few rules of thumb can stave off some nasty surprises.Both Mr. Biden and Mr. Modi are also propelling closer U.S.-Indian cooperation in efforts to build out the industrial and innovation bases of their countries, Mr. Sullivan said.The partnerships announced on Tuesday include an agreement between the U.S. and Indian national science agencies to cooperate on artificial intelligence and advanced wireless technology, as well as in other areas.The countries also pledged to speed up their efforts to jointly produce and develop certain defense technologies, including jet engines, artillery systems and armored infantry vehicles. The United States said it would look to quickly review a new proposal by General Electric to produce a jet engine with India.Officials also said they would work together to facilitate the build-out of an advanced mobile network in India and look for new cooperation in semiconductor production, including efforts to help India bolster chip research and production that would complement major investments in the industry in the United States.The new dialogue would include efforts to work through regulatory barriers, as well as visa restrictions that have prevented talented Indians from working in the United States, the countries said.But experts said India would need to continue to reform its permitting and tax system to lure more foreign manufacturing companies. And the United States would need to reform restrictions on transferring defense-related technology outside the country, they said, if it hopes to work with India to produce jet engines and other advanced weapons.Analysts also noted that many of the technology partnerships would hinge on new connections between the countries’ private sectors, meaning that the agreements could go only so far.India’s frequent purchases of Russian military equipment and close ties with Russia also present another wrinkle to the planned partnership. But Biden officials said they believed that the cooperation could accelerate India’s move away from Russia, to the benefit of its relationship with the United States.On Monday, Mr. Sullivan, Commerce Secretary Gina Raimondo and India’s national security adviser, Ajit Doval, met with more than 40 company executives, university presidents and others, including executives from Lockheed Martin, Tata, Adani Defense and Aerospace, and Micron Technology.A semiconductor event last year in Bengaluru, India. A technology partnership “has the potential to take U.S.-India ties to the next level,” Tanvi Madan of the Brookings Institution said.Munsif VengattilReuters“It has the potential to take U.S.-India ties to the next level,” Tanvi Madan, a senior fellow at the Brookings Institution, said of the initiative. The trick, she added, will be “getting from potential and promises to outcomes.”“Many of the decisions to collaborate or not will be made in the private sector, and companies will be assessing the business case as much as, if not more than, the strategic case,” Ms. Madan said.India has traditionally been known as a difficult partner for the United States in trade negotiations. In the talks that the Biden administration is currently carrying out in Asia, known as the Indo-Pacific Economic Forum, India bowed out of the trade portion of the deal, though it has continued to negotiate in areas like clean energy, supply chains and labor standards.But analysts said the Indian government was far more motivated on national security matters, and particularly tempted by the prospects of working with the United States to cultivate cutting-edge tech industries.“We both have a common purpose here, which is the fear that China is going to eat our lunch in all the sectors unless we find areas to cooperate and collaborate,” said Richard M. Rossow, a senior adviser at the Center for Strategic and International Studies. More

Ahead of a meeting at the White House on Wednesday, administration officials demanded that Republicans commit to avoiding a default on federal debt.WASHINGTON — President Biden will ask Speaker Kevin McCarthy, Republican of California, on Wednesday for details on what budget cuts his party is demanding in order to raise the federal debt limit and for assurances that Mr. McCarthy will not accept an economically debilitating government default, White House officials said.The demands, outlined in a memo that the White House released on Tuesday, are an attempt by Mr. Biden to force Republicans to engage in a debate over taxes, spending and debt on terms that are more favorable to the president than to newly empowered conservatives on Capitol Hill.Mr. Biden is seeking to force Mr. McCarthy to specify which programs he would cut — a list that most likely includes some spending that is popular with the public — and to calculate how much Republicans would add to the debt with additional tax cuts.In the memo, Brian Deese, the director of the National Economic Council, and Shalanda Young, the director of the Office of Management and Budget, said the president would release his annual budget on March 9 and asked when Mr. McCarthy would do the same.“It is essential that Speaker McCarthy likewise commit to releasing a budget, so that the American people can see how House Republicans plan to reduce the deficit — whether through Social Security cuts; cuts to Medicare, Medicaid and Affordable Care Act health coverage; and/or cuts to research, education and public safety — as well as how much their budget will add to the deficit with tax cuts for the wealthiest Americans and large corporations,” Ms. Young and Mr. Deese wrote.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

The divorce between Britain and the European Union has become the dark thread that, to many, explains why Britain is suffering more than its neighbors.LONDON — The third anniversary of Britain’s departure from the European Union passed without fanfare on Tuesday, and why not? Brexit has faded from the political forefront, unmentioned by politicians who don’t want to touch it and overlooked by a public that cares more about the country’s economic crisis.The severity of that crisis was underscored by the International Monetary Fund, which forecast this week that Britain will be the world’s only major economy to contract in 2023, performing even worse than heavily blacklisted Russia.The I.M.F. only indirectly attributed some of Britain’s woes to Brexit, noting that it suffered from a very tight labor market, which had constrained output. Brexit has aggravated those shortages by choking off the pipeline of workers from the European Union — whether waiters in London restaurants or fruit and vegetable pickers in fields.The effects of Brexit run through Britain’s last-in-class economy because they also run through its divided, exhausted politics. In a country grappling with the same energy shocks and inflation pressures that afflict the rest of Europe, Brexit is the dark thread that, to some critics, explains why Britain is suffering more than its neighbors.“One of the reasons for our current economic weakness is Brexit,” said Anand Menon, a professor of West European politics at King’s College London. “It’s not the main reason. But everything has become so politicized that the economic debate is carried out through political shibboleths.”Years of debate over Brexit, he said, had contributed to a kind of policy paralysis. “If you look at it, it is astounding how little actual governing has happened since 2016,” Professor Menon said. “It has been seven years, and virtually nothing has been done on a governmental level to fix the country’s problems.”Inflation, though it has eased slightly, continues to run at a double-digit rate.Neil Hall/EPA, via ShutterstockThose problems continue to proliferate. Inflation, though it has eased slightly, continues to run at a double-digit rate. Britain’s National Health Service is facing the gravest crisis in its history, with overcrowded hospitals and hourslong waits for ambulances. On Wednesday, Britain will face its largest coordinated strikes in a decade, with teachers, railway workers and civil servants walking off the job.Not all these problems are wholly, or even principally, a result of Brexit. But tackling any of them, experts said, will require bolder solutions than the government of Prime Minister Rishi Sunak has yet proposed. Owing largely to Brexit, Mr. Sunak’s Conservative Party remains torn by factions that thwart action on issues from urban planning to a new relationship with the European Union.Part of the problem, experts said, is that the neither the government nor the opposition Labour Party is prepared to acknowledge the negative effects Brexit has had on the economy. The government may not ring the bell of Big Ben to celebrate the anniversary, as it did on Brexit day in 2020. But to the extent that Mr. Sunak refers to Brexit, he still portrays it as an undiluted boon to the country.“In the three years since leaving the E.U., we’ve made huge strides in harnessing the freedoms unlocked by Brexit,” Mr. Sunak said in a statement marking the anniversary. “Whether leading Europe’s fastest vaccine rollout, striking trade deals with over 70 countries or taking back control of our borders, we’ve forged a path as an independent nation with confidence.”A protest on Monday against a proposed bill to limit strikes outside Downing Street in London.Andy Rain/EPA, via ShutterstockHis predecessor, Boris Johnson, also cited the early authorization and rapid deployment of a coronavirus vaccine as proof of Brexit’s value — never mind that health experts said Britain would have had the authority to approve a vaccine before its neighbors, even if it had been part of the European Union.“Let’s shrug off all this negativity and gloom-mongering that I hear about Brexit,” Mr. Johnson said in a video posted on Twitter on Tuesday afternoon. “Let’s remember the opportunities that lie ahead, and the vaccine rollout proves it.”There is little evidence that Mr. Sunak and Mr. Johnson are convincing many people. Public opinion has turned sharply against Brexit: Fifty-six percent of those surveyed thought leaving the European Union was a mistake, according to a poll in November by the firm YouGov, while only 32 percent thought it was a good idea.And the sense of disillusion is nationwide. In all but three of Britain’s 632 parliamentary constituencies, more people now agree than disagree with the statement, “Britain was wrong to leave the E.U,” according to a poll released Monday by the news website, UnHerd, and the research firm, Focaldata.The three holdouts are agricultural areas around Boston and Skegness on the country’s eastern coastline, where immigration is still a resonant issue. And even in these places, public opinion about Brexit is finely balanced.At the same time, few people express a desire to open a debate over whether to rejoin the European Union. The prospects of doing that on terms that would be remotely acceptable to either side are, for the moment, far-fetched. The Labour leader, Keir Starmer, prefers to frame his party’s message as “Making Brexit Work,” having lost an election to the Tories in 2019, whose slogan was “Get Brexit Done.”The chief executive of the N.H.S., Amanda Pritchard, from left, with Prime Minister Rishi Sunak of Britain. They were visiting the University Hospital of North Tees in Stockton-on-Tees.Pool photo by Phil NobleBritain’s problems are exacerbated by the fact that the one leader who proposed radical remedies, Liz Truss, triggered such a backlash in the financial markets that she was forced out of office in 45 days. To restore the country’s reputation with investors, Mr. Sunak has scrapped her tax cuts and adopted a fiscally austere program of higher taxes and spending cuts that the I.M.F. says will curb growth.“Although we no longer have lunatics running the asylum, we have essentially a lame-duck government that doesn’t have any semblance of a plan to restore economic growth,” said Jonathan Portes, a professor of economics at King’s College London.The trouble is that the bitter squabbling over Brexit has made obvious responses politically perilous for the prime minister. Even the I.M.F.’s projection for Britain’s growth ignited a storm of commentary on social media about whether it would help the cause of “Remainers” or reopen the Brexit debate.The fund’s assessment was not completely gloomy despite its prediction of contraction in 2023. Britain, it estimated, grew faster than Germany or France last year. After inflation cools and the burden of higher taxes eases, it said, Britain should return to modest growth in 2024.Professor Portes said that there were policies Mr. Sunak could pursue, from liberalizing planning laws to overhauling immigration rules to ease the labor shortage, that would stimulate growth. “If you put all those together,” he said, “there is a reasonable, feasible strategy that could make the next 10 years better than the last.”But he added, “Any coherent strategy involves repairing the economic relationship with Europe, and that will depend on the political dynamic.” More

The Employment Cost Index, which Federal Reserve officials watch closely as a gauge of pay trends, is picking up more slowly.A measure of pay and benefits that the Federal Reserve has been watching closely amid a strong labor market rose less than expected at the end of 2022, fresh data showed Tuesday.The Employment Cost Index climbed 1 percent in the final quarter of 2022 versus the prior three months, more slowly than the 1.1 percent that economists expected and a slowdown from the previous 1.2 percent reading.The data will probably reaffirm to central bankers that the economy and labor market are cooling, which could help inflation return to normal over time. While wage gains are still faster than normal, the moderation could help central bankers feel comfortable as they adjust interest rates less aggressively than they did throughout 2022.The employment cost measure picked up by 5.1 percent on a yearly basis, close to the 5 percent reading in the previous quarter’s report. In the decade leading up to the pandemic, the index averaged 2.2 percent yearly gains, underscoring the continued rapidness of today’s pace. But a measure of private-sector wages not including benefits, which economists see as a particularly good indicator of labor market tightness, slowed slightly.Fed officials are closely watching the labor market — and wages in particular — as they try to gauge how much further they have to go in their campaign against stubbornly high inflation. While goods price increases that are tied to supply chain snarls are beginning to fade, central bankers are worried that rapid pay gains could keep services costs rising rapidly. Labor is a big expense for service companies, like hotels and restaurants, and firms might pass higher wage costs on to customers in the form of higher prices. Bigger paychecks could also help sustain consumer demand, keeping pressure on prices.The Fed’s next interest-rate decision will be announced on Wednesday. Central bankers are widely expected to raise rates by a quarter of a percentage point, after raising them by three-quarters of a point per meeting for much of 2022 and by half a point at their last gathering, in December.The new adjustment would push rates up to a range of 4.5 to 4.75 percent. The question now is how many more moves the Fed will make — and how long policymakers will hold interest rates at a high level.Steeper borrowing costs deter consumers from making big purchases and businesses from expanding, which can slow the economy and weaken the labor market. Fed officials are hoping that they can cool the economy by just enough to allow supply and demand to come back into balance — causing inflation to moderate — without causing a punishing recession. But they have been clear that they are willing to accept some pain to bring price increases back under control.And they have underlined that they think the labor market needs to slow down to put inflation on a more sustainable path.“We want strong wage increases,” Jerome H. Powell, the Fed chair, said at his last news conference in December. “We just want them to be at a level that’s consistent with 2 percent inflation,” he said, referring to the Fed’s target inflation rate.For now, America’s rate of price increases remains much faster, at 5 percent.Mr. Powell will give another news conference on Wednesday, after the release of the Fed’s rate decision at 2 p.m. Eastern time. More

The employment cost index increased 1% in the fourth quarter, less than the 1.1% expectation and slower than the third quarter, the Labor Department reported Tuesday.
Fed officials consider the ECI an important inflation gauge as it adjusts for various labor market conditions.

Employment costs increased at a slower than expected pace in the fourth quarter, indicating that inflation pressures on business owners are at least leveling off.
The employment cost index, a barometer the Federal Reserve watches closely for inflation signs, increased 1% in the October-to-December period, the Labor Department reported Tuesday. That was a bit below the 1.1% Dow Jones estimate and less the 1.2% reading in the third quarter. It also was the lowest quarterly gain in a year.

Wages and salaries for the period also rose 1%, down 0.3 percentage point, while the cost of benefits increased just 0.8%, down from 1% in the previous period.
Compensation for government workers grew at a much slower pace comparatively in the quarter, slowing to a 1% gain from 1.9% in Q3.
Fed officials consider the ECI an important inflation gauge because it adjusts for occupations that are in higher demand and for outsized wage gains in particular industries, such as those that were most affected by the pandemic.
The Q4 reading comes the same day the interest rate-setting Federal Open Market Committee begins its two-day policy meeting. Markets have assigned a near-certainty to the FOMC approving a 0.25 percentage point rate hike before it adjourns Wednesday.
But the greater focus will be on what officials signal about the future of monetary policy.

Markets are anticipating one more quarter-point hike in March, followed by a pause and then one or two cuts before the end of the year. Fed officials have pushed back on the notion of any policy easing in 2023, though they could change their minds if inflation readings continue to abate.
“The Fed is still likely to keep raising interest rates at the next couple of meetings, but we expect a further slowdown in wage growth over the coming months to convince officials to pause the tightening cycle after the March meeting,” wrote Andrew Hunter, senior U.S. economist at Capital Economics.
The next big data point comes Friday, when the Labor Department releases its monthly nonfarm payrolls report.
Economists expect that payrolls increased by 187,000 in January, while average hourly earnings were projected to grow 0.3% monthly and 4.3% year over year, after increasing 4.6% at the end of 2022.

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