WSJ What’s News - NYC Mayor Indicted on Federal Charges

Episode Date: September 26, 2024

A.M. Edition for Sept. 26. Eric Adams says he has no plans to resign as federal prosecutors in Manhattan prepare to announce details of the case. Plus, OpenAI looks to become a for-profit enterprise, in part to appeal to investors, and parts ways with Chief Technology Officer Mira Murati. And, as Donald Trump and Kamala Harris talk economic policy this week, the WSJ’s Richard Rubin explains why the federal deficit remains the multi-trillion-dollar elephant in the room. Luke Vargas hosts.  Sign up for the WSJ’s free What’s News newsletter. Correction: Israeli Prime Minister Benjamin Netanyahu is due to speak at the U.N. General Assembly on Friday. An earlier version of this podcast incorrectly said he was due to speak there on Thursday. (Corrected on Sept. 26) Learn more about your ad choices. Visit megaphone.fm/adchoices

Looking for a collaborator for your career? A strong ally to support your next level success? You will find it at York University School of Continuing Studies, where we offer career programs purpose-built for you. Visit continue.yorku.ca. New York City Mayor Eric Adams is indicted on federal charges. Plus, OpenAI plans a big shift in its mission and parts ways with top executives. And despite the U.S. federal debt being at historic levels and growing, we'll look at

why neither Kamala Harris nor Donald Trump are likely to reverse that trend if elected. It's just not been an issue that politicians have focused on, in part because you don't get a lot of reward for it. Right now, for every dollar that the U.S. government takes in, it's spending, even aside from interest, a dollar and 21. So we're getting government basically at a discount. It's Thursday, September 26th. I'm Luke Vargas for The Wall Street Journal and here is the AM edition of What's News, the top headlines and business stories moving your world today. We are reporting that New York City Mayor Eric Adams has been indicted on federal criminal charges, the details of which are expected to become public today.

A spokesman for the U.S. Attorney's Office in Manhattan declined to comment. The New York Times earlier reported the charges, which mark a stunning blow to the leader of America's largest city who's been dogged by a series of probes involving his associates, with one investigation examining whether foreign money was funneled into his campaign through illegal donations. Last night, Representative Alexandria Ocasio-Cortez, who represents parts of Queens and the Bronx, became the highest ranking Democrat to call for Adams to step down, but in a defiant video message, he pledged to stay put, saying

that any charges against him would be based on lies. Make no mistake, you elected me to lead this city and lead it I will. In recent weeks, Adams Police Commissioner, Schools Chancellor, Health Commissioner, and Chief Counsel have all either resigned or announced their plans to step down. The House and Senate have approved a short-term spending bill that will avoid the risk of a government shutdown until after the election. Journal congressional reporter Katie Stetch has more on the deal that overwhelmingly passed

both chambers last night in spite of some continued grumbling from rank-and-file Republicans over the lack of spending cuts. Heading into this process, both Democrats and Republicans acknowledged that during a heated political season, a presidential election, nobody wanted to shut down. So they negotiated a deal that's a pretty clean cut three month extension. One thing that both sides could agree on is about $231 million in additional funding for the Secret Service to get through the rest of the political season.

We don't expect any major lasting political consequences. House Speaker Mike Johnson emerged pretty much unscathed, quite a stark contrast from last year when Kevin McCarthy was ousted by frustrated Republicans who did not approve of how he had handled both the government funding process and other things during his very brief tenure as leader of the House. The spending bill will now go to President Biden's desk for his expected signature. Well, also at the White House, Ukrainian President Volodymyr Zelensky is set to brief Biden's desk for his expected signature. Well, also at the White House, Ukrainian President Vladimir Zelensky

is set to brief Biden today on the specifics of his long anticipated plan for winning the war against Russia as he seeks to drum up support for his country. However, according to US officials, the outlines of Ukraine's proposal have left the Biden administration concerned that Zelensky's

plan is little more than a repackage request for more weapons and the lifting of restrictions on Kiev's use of long-range missiles, a limitation that Biden has for months refused to budge on. Meanwhile, a day after Zelensky spoke at the UN General Assembly in New York, Palestinian leader Mahmoud Abbas and Lebanon's foreign minister are set to address the gathering today. The speeches come as the increasingly likely prospect of a full-scale war in Lebanon has prompted the US and France to call for a three-week ceasefire.

Israel and Hezbollah haven't confirmed their acceptance of the proposed deal, but senior Biden administration officials strongly suggested last night that they eventually would. Despite a growing buildup of troops along the Lebanon border, US officials say they don't believe Israel wants a wider war and that Hezbollah also wants breathing room after being dealt several blows by Israel. The US officials acknowledge, however, that the window of opportunity to avert a war is narrowing. OpenAI is planning to convert from a non-profit organization to a for-profit enterprise, a

monumental shift for the company which was founded in 2015 to develop artificial intelligence, quote, to benefit humanity as a whole, unconstrained by a need to generate financial return. The transition, which is expected to be complex and could take years to complete, is designed in part to make OpenAI more attractive to investors. The company, whose products include ChatGPT, is currently attempting to close a funding round of up to $6.5 billion. And unlike prior investors in OpenAI, those who put money into this round wouldn't have a cap on the profits they can earn.

The restructuring comes as Chief Technology Officer Miru Morati abruptly resigned yesterday, as did two other executives. And in other markets news, Chinese stock indexes are pushing higher after the country's top leaders convened a surprise meeting to discuss stimulus measures. According to state media, senior leaders at the Politburo gathering, including President Xi Jinping, acknowledged new challenges facing the economy but vowed to meet the country's growth target and indicated that more measures to help the troubled property sector are on the way. And on tap today are earnings from wholesale retailer Costco, Accenture, and CarMax, along

with the Labor Department's report on weekly jobless claims due at 8.30 a.m. Eastern. Coming up with Trump and Harris' economic policies in focus this week will look at the $1.9 trillion elephant in the room, federal debt, after the break. How do stop losses work on Kraken? Let's say I have a birthday party on Wednesday night, but an important meeting Thursday morning. So sensible me pre-books a taxi for 10 p.m. with alerts. Voila, I won't be getting carried away and staying out till 2. That's Stop Loss Orders on Kraken, an easy way to plan ahead.

Go to kraken.com and see what crypto can be. U-Dash disclaimer for info on crack and center takings you're registering in Canada. This year's U.S. budget deficit is on pace to exceed $1.9 trillion, a figure that amounts to more than 6% of economic output, a threshold only reached around World War II, the 08 financial crisis, and the COVID pandemic. But the journal's tax policy reporter Richard Rubin says the federal debt is not a topic that Donald Trump or Kamala Harris are talking about this election, let alone one that they're

putting forward serious plans to address. And Richard joins me now with more. Richard, there is a bit of a shift, one you think is noticeable, between how U.S. politicians have traditionally messaged around the deficit and how it's being talked about in this campaign. Tell us more about that. Yeah, look, if you go back 30 years, in particular into the 90s, the deficit was an incredibly large issue. Deficits as a share of the economy were actually smaller in the late 80s and early 90s, but

it actually dominated our politics. And the concern was that interest rates were going to get too high, that that was going to crowd out private investment. And so it was really, really important to get the country on a more sound fiscal footing. That's not where we are right now. It's just not been an issue that politicians have focused on, in part because you don't get a lot of reward for it. The public, if you think about it, right now, for every dollar that the US government takes in,

it's spending, even aside from interest, $1.21. So we're getting government basically at a discount. People still aren't always happy with the government they're getting, but they definitely like the idea of government on a discount. I mean, as you note, both Harris and Trump were part of administrations that helped produce the deficits we now have, and both are promising,

essentially, to protect the biggest drivers of rising spending, right? Yeah, look, Social Security and Medicare are the two of the biggest federal programs and because of the aging the population they're expected to consume more money in the next 15 to 20 years. Both of them say they want to protect those programs. Harris has a bunch of programs she wants to implement. The biggest one that she's been talking about is the expanded child tax credit. And she has a whole bunch of tax increases on high income households and corporations

that she wants to put in to pay for that, whether she can get that through Congress is quite uncertain. On the Trump side, he has a lot of tax cuts. He wants to extend all his tax cuts from 2017 that are expiring at the end of next year, and then cut taxes further on tipped workers, Social Security beneficiaries, overtime pay corporations. And then he's talked about repealing some renewable energy tax credits and also these tariffs that would raise some money,

but not enough to cover all of the promises that he's made. I mean, now that we are in this environment where polls show the public is concerned about the deficit, but they also like it when politicians put forth tax cut plans, they like stimulus checks and when you've got the candidates sort of telling them they can have it all, where does that leave us? Can politicians take this position on the campaign trail and then actually govern on the basis of that? And even if they can, in theory, will markets allow it to happen? Right, that's the big unknown is what, if anything, is the mechanism that forces US lawmakers to change course. We can't be sure. There are two big fiscal moments coming up.

One is another debt limit fight in early to mid 2025, and then the expiration of much of the 2017 tax law at the end of 2025. So we'll see, depending on who wins, depending on the configuration of Congress, depending on what the economy looks like next year, what the mood will be. You cite in your reporting that there have been

some downgrades from credit rating agencies. We've seen occasionally weaker demand at treasury auctions, rising borrowing costs. And yet does this prompt an immediate reckoning? At least you heard from an expert who said, well, more likely this is just gonna get kicked down the road again. Yeah, and in some ways that's a reflection of the strength of the US economy in the world, right?

So you can have these downgrades, but everyone kind of knows that the US economy is strong. The US government is big. The US government is powerful. It's gonna pay its debt. That sureness is what has helped keep this borrowing going because bond borrowers are confident in the US in a way that they may not be confident in other places. How long that lasts at the level it does is basically the, I would say the million dollar

question, but it's kind of like a multi-trillion dollar question. I've been speaking to the Wall Street Journal's tax policy reporter, Richard Rubin. Richard, thank you so much. Sure, thank you. And finally, speaking of potential long-term challenges for the U.S., Americans are having fewer babies, a trend that's become an issue for politicians and policy makers.

And we'd like to know what questions you have about America's falling birth rate and what it means for politics and the economy. To weigh in, send a voice memo to wnpod at wsj.com or leave a voicemail with your name and location at 212-416-4328. We just might use it on the show. And before we go, we need to make a correction because an earlier version of this episode incorrectly said that Israeli Prime Minister Benjamin Netanyahu was due to speak at the UN General Assembly today.

Instead, he's scheduled to speak there tomorrow. And that's it for What's News for Thursday morning. Today's show was produced by Kate Bulevant with supervising producer Christina Rocca and I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show and until then, thanks for listening.