Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (2024)

Wall Street rebounds from a four-day slump as the Fed signals its next move.

By Coral Murphy Marcos and Matt Phillips

Stocks rallied on Wednesday, rebounding after four straight days of losses, as several of Wall Street’s recent concerns seemed to ease.

Though stocks had been higher since the start of trading, the rally picked up steam for a while after the Federal Reserve issued a policy statement that was broadly in line with investors expectations. The central bank signaled that it would begin to wind down its purchases of government bonds soon, but left itself room to maneuver on future interest rate increases if the economy shows signs of weakness.

Stocks were up roughly 0.9 percent shortly before the before the Fed issued its statement, but soon after the S&P 500 pushed to a gain of nearly 1.4 percent. The index ended 0.95 percent higher, its best daily gain since late July.

The yield on the 10-year Treasury note declined slightly to 1.30 percent, suggesting that investors didn’t see the Fed’s latest announcement as a reason to radically change their expectations for interest rates.

Much of the market’s strength had little to do with the Fed’s decision, however. Investors were relieved after the heavily indebted developer China Evergrande said it reached an arrangement with Chinese investors to make a payment due Thursday. On Monday, as investors worried that a default by Evergrande would ripple across global markets, the S&P 500 dropped 1.7 percent, its sharpest fall since May.

Evergrande’s announcement Wednesday also set off a rally in commodities markets, which have been jittery about the state of the Chinese economy. Copper and energy prices jumped, helping to lift the share prices of commodity producers. Oil prices rose more than 2 percent, and energy stocks were the best-performing sector of the market.

Stocks that stand to benefit from another round of federal spending saw strong gains, as hopes for the passage of an infrastructure spending bill were lifted after the Democratically controlled House of Representatives voted late Tuesday to suspend the debt limit and keep the government funded.

European stock indexes also rose Wednesday, with the Stoxx Europe 600 up 1 percent.

James Mattis, a Theranos board member, ‘didn’t know what to believe,’ he says in Elizabeth Holmes trial.

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By Erin Griffith

[Follow live news coverage on the trial of Elizabeth Holmes.]

James Mattis, the retired four-star Marine Corps general and former defense secretary, testified on Wednesday at the fraud trial of Elizabeth Holmes, the founder of the blood testing start-up Theranos, that she misinformed him before and during his time on the company’s board of directors.

Mr. Mattis, who served on the board for several years, said he had supported the start-up’s mission of cheap, fast and easily accessible blood tests but lost faith after The Wall Street Journal exposed major issues with the technology in 2015. It became clear to him, he said, that Ms. Holmes had not been forthcoming with Theranos’s directors about the problems.

“We were unable to help her on the fundamental issues that she was grappling with if we only saw them in the rearview mirror,” Mr. Mattis said. He resigned from the board in late 2016 after President Donald J. Trump tapped him to become defense secretary.

Two years later, Theranos collapsed amid lawsuits, fines and financial troubles, and federal prosecutors charged Ms. Holmes and her business partner, Ramesh Balwani, with a dozen counts of fraud and conspiracy to commit wire fraud. Both have pleaded not guilty. If convicted, they face up to 20 years in jail.

Mr. Mattis is the most prominent person to take the stand thus far in the high-profile jury trial, which began in August. Other potential witnesses include Rupert Murdoch, the media mogul, who invested in Theranos; David Boies, who was the company’s outside lawyer; and Bill Frist, a former senator and Theranos board member.

As Mr. Mattis spoke, Ms. Holmes sat upright in her seat and stared in his direction.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (2)

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (3)

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, was found guilty of four of 11 charges of fraud.

Here are some key figures in the case →

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (4)

Holmes founded Theranos in 2003 as a 19-year-old Stanford dropout. She raised $945 million and was crowned the world’s youngest billionaire, but was accused of lying about how well Theranos’s technology worked. She pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (5)

Ramesh Balwani, known as Sunny, was Theranos’s president and chief operating officer from 2009 through 2016 and was in a romantic relationship with Holmes. He has been accused of fraud and may stand trial next year. He has pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (6)

David Boies, a prominent litigator, represented Theranos as its lawyer and served on its board.

He tried to shut down whistle-blowers and reporters who questioned the company’s business practices.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (7)

The journalist John Carreyrou wrote stories exposing fraudulent practices at Theranos.

His coverage for The Wall Street Journal helped lead to the implosion of Theranos.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (8)

Tyler Shultz and Erika Cheung are former Theranos employees and were whistle-blowers. They worked at the start-up in 2013 and 2014. Shultz is a grandson of George Shultz, a former secretary of state who was on the Theranos board.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (9)

James Mattis, a retired four-star general, was a member of Theranos’s board.

He went on to serve as President Donald J. Trump’s secretary of defense.

Who’s Who in the Elizabeth Holmes Trial

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (10)

Edward Davila, a federal judge for the Northern District of California, will oversee the case.

Kevin Downey, a partner at the Washington law firm Williams & Connolly, is the lead lawyer for Holmes.

Robert Leach, an assistant United States attorney for the Northern District of California, will lead the prosecution for the government, along with other prosecutors from the U.S. attorney’s office.

Jerome Powell says the Fed is reviewing its trading rules.

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (13)

By Jeanna Smialek

The Federal Reserve chair, Jerome H. Powell, said on Wednesday that the central bank’s rules governing the types of assets that Fed officials can invest in would need to be updated, noting that the rules are “clearly seen as not adequate to the task of really sustaining the public’s trust in us.”

His comments, at a news conference after the Fed’s two-day policy meeting, addressed concerns about securities trading that two of Mr. Powell’s colleagues — Robert Kaplan, president of the Federal Reserve Bank of Dallas, and Eric Rosengren, president of the Federal Reserve Bank of Boston — engaged in last year, when the Fed was carrying out a sweeping market rescue in response to the coronavirus pandemic.

“We will make changes,” Mr. Powell said, adding that “no one is happy.”

“This is an important moment for the Fed,” he said, “and I am determined that we will rise to the moment. We need to do better, and we will.”

According to a Dallas Fed spokesperson, along with disclosures from the Boston Fed, the notable trades did not happen in late March or April, when the central bank was particularly active in markets. Yet even the possibility that Fed policymakers could make financial decisions informed by their privileged knowledge of central bank deliberations has drawn outrage and calls for changes to the rules.

“To even have to ask the question whether these critically important Fed guardians of the economy are profiteering off their official knowledge, expertise and activity is devastating to the public confidence,” said Norman Eisen, a senior fellow at the Brookings Institution who was an ethics adviser to former President Barack Obama.

Mr. Powell has asked the Fed’s staff to review ethics rules around what senior officials are allowed to invest in and buy or sell, a spokesperson for the central bank said last week. And Mr. Kaplan and Mr. Rosengren have pledged to sell their individual security holdings and to invest in broad indexes and cash instead.

But outside groups are calling for more, saying those changes are an inadequate response to the deficiencies the episode laid bare.

The trading by the officials “reveals how grossly deficient their ethical standards and the code of conduct are,” Dennis Kelleher, president and chief executive at Better Markets, wrote in a letter to Mr. Powell this week, calling for external investigations of what happened. “This requires you to take immediate, concrete and meaningful action, not just P.R. pronouncements of internal investigations and an internal review of the ethics code.”

Mr. Kaplan bought and sold millions of dollars in individual stocks and invested in stock futures, which can allow investors to make bets on whether the market will go up or down, according to his 2020 financial disclosures. Mr. Rosengren traded in financial products tied to real estate, during a year in which he regularly warned the public about risks to that sector. Both said in statements that their investments had complied with Fed ethics rules.

A Fed spokesperson said the Fed’s ethics rules were consistent with what most government agencies followed and in some cases more stringent. But given the special role the Fed plays in finance, many have questioned whether it should have stricter requirements.

Fed officials tend to be sophisticated economists and bankers themselves, and their comments can have an outsize impact on financial markets. The central bank has also taken on an increasingly expansive role: Last year, it rescued or aided the short-term corporate debt market, the long-term corporate debt market, the municipal bond market and money market mutual funds.

That raises questions about what sort of securities its officials should be allowed to own. Mr. Powell, for instance, was heavily invested in index funds and municipal debt last year, based on his own disclosures. His municipal bond holdings had not been widely criticized in years past, but they have received negative attention in recent days because the Fed helped that market for the first time last year.

Mr. Powell said he had cleared all of his holdings with the Fed’s ethics officials.

“Munis were always thought to be a safe place for a Fed official to invest,” Mr. Powell said, noting that the idea was that the Fed would never buy munis. He added that the Office of Government Ethics had checked his muni holdings and said he did not have a conflict.

All this poses a conundrum for the Fed, which must weigh what its officials can reasonably invest in, given that its actions influence everything from home prices to the broad stock market.

While there are examples of very high-level officials in government who have put their savings into blind trusts — in which independent money managers buy and sell securities without communicating with the beneficiary about the details of the transactions — those are typically discouraged by the Office of Government Ethics, which calls them “highly restrictive and usually burdensome.” Ethicists tend to instead recommend divesting from individual asset holdings and investing in mutual funds or other broad-based funds.

Many Fed officials, but clearly not all, already do that.

“The system is foolish in the leeway that it gives,” said Mr. Eisen, the former ethics adviser. “The trust system is a recipe for eventual scandal.”

California governor signs bill that could push Amazon to change labor practices.

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By Noam Scheiber

Gov. Gavin Newsom of California on Wednesday signed a bill that restricts warehouse employers from setting productivity quotas that prevent workers from taking breaks or following health and safety laws. The new law could alter Amazon’s labor practices.

The bill, known as A.B. 701, also requires employers to disclose productivity quotas to workers and regulators and allows workers to sue employers to eliminate problematic targets. Starting on Jan. 1, employers will have 30 days to give workers their productivity quotas.

“The hardworking warehouse employees who have helped sustain us during these unprecedented times should not have to risk injury or face punishment as a result of exploitative quotas that violate basic health and safety,” Mr. Newsom, a Democrat, said.

Amazon largely avoided commenting on the measure while state lawmakers debated it, other than to point out that the company bases its productivity targets for individual employees on their performance over time. The company also said fewer than 1 percent of workers were fired for underperformance.

But business groups strongly opposed the bill, arguing that it would lead to an explosion of litigation and hamper the distribution of goods.

“We are disappointed Governor Newsom signed A.B. 701, which will exacerbate our current supply chain issues, increase the cost of living for all Californians and eliminate good-paying jobs,” Rachel Michelin, the president of the California Retailers Association, said in a statement.

Ms. Michelin previously expressed concern that the bill would effectively punish an entire industry for the purported excesses of one company.

Two separate studies, including one by a group backed by labor unions, have shown that the rate at which Amazon workers suffer serious injuries was nearly double that of the rest of the warehousing industry last year.

Industry analysts have said reining in productivity quotas at Amazon is more likely to affect its costs than its famously rapid delivery times, pointing out that the company could simply hire more workers to make up for somewhat lower productivity per employee.

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A low-carbon economy is cheaper than the costs of climate change, a report says.

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By Eshe Nelson

After a summer of extreme heat, wildfires and floods in Europe, the costs of climate change — human and financial — have become increasingly stark. And a new report by the European Central Bank has reaffirmed the severe consequences of delays or inaction on climate change.

Banks and companies in the eurozone risk economic loss and financial instability, the central bank said Wednesday as it published the results of its first economywide climate stress test, part of a major effort by policymakers to support the transition to a net-zero carbon world.

By the end of the century, more frequent and severe natural disasters could shrink the region’s economy by 10 percent if no new policies to mitigate climate change are introduced, the report said. By comparison, the costs of transition would be no more than 2 percent of gross domestic product.

“The short-term costs of transition pale in comparison with the costs of unfettered climate change in the medium to long term,” the report published on Wednesday said.

The European Central Bank used data from 2.3 million companies and 1,600 banks in the eurozone to analyze the impact of three outcomes on the economy. In the first, there is an orderly transition that contains global warming to 1.5 degrees Celsius compared with the preindustrial era. Then there is a “disorderly transition,” in which countries delay taking action until 2030 and then have to make abrupt and costly policy changes to contain warming to 2 degrees Celsius. The third result, a so-called hot house world, involves no more actions to mitigate climate change and the costs from natural catastrophes are “extremely high.”

European Union countries have already agreed to cut their collective greenhouse gas emissions by 55 percent from 1990 levels by 2030, on a path to be carbon neutral by 2050.

The European Central Bank has made climate change one of its central focuses, which will influence monetary policy and financial regulation. But it is still a hotly contested subject whether central banks should take an active approach to tackle climate change through actions such as changing the composition of asset purchases to exclude oil companies.

In July, the European Central Bank justified incorporating climate change into its monetary policy framework by arguing that “climate change and the transition towards a more sustainable economy affect the outlook for price stability.”

Under the orderly transition path, the average eurozone company would have slightly more leverage, less profitability and higher risk of default over the next four or five years because of the cost of complying with green policies such as carbon taxes and replacing technologies. But then the benefits of the transition would kick in.

By comparison, in a disorderly transition, the company’s profitability would drop more than 20 percent by 2050 and its probability of default would rise more than 2 percent. In the hot house world where no climate actions are taken, profitability would slump 40 percent and probability of default would be 6 percent higher.

Banks across the eurozone have a similar exposure to the costs of transition, but their exposure to physical risks vary greatly, the report said. In countries in southern Europe, such as Greece, Portugal and Spain, where there is a higher risk of extreme heat waves and wildfires, climate change is “a major source of systemic risk,” the central bank said.

Wildfires are expected to create more damage than floods and rising sea levels, which will affect northern countries more. For example, in Greece, more than 90 percent of bank loans are classified as being associated with high physical risks from climate change. In Germany, the share of bank loans is less than 10 percent.

The European Central Bank intends to use the results of this study to inform the climate stress tests it will do on eurozone banks next year.

The Fed signals that its close to withdrawing some economic support.

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (16)

By Jeanna Smialek

Federal Reserve officials indicated on Wednesday that they expected to soon slow the asset purchases they have been using to support the economy and predicted that they might raise interest rates next year, signs that policymakers are preparing to pivot away from full-blast monetary help as the business environment snaps back from the pandemic shock.

“If progress continues broadly as expected, the committee judges that a moderation in the pace of asset purchases may soon be warranted,” the policy-setting Federal Open Market Committee said in its September statement, released Wednesday.

The new phrasing eliminated wording that had promised to assess progress over “coming meetings,” suggesting that a formal announcement of the slowdown could come as early as the central bank’s next gathering in November.

Fed officials confront a complicated backdrop nearly 20 months after the pandemic first shook the American economy. Business has rebounded as consumers spend strongly, helped along by repeated government stimulus checks and other benefits.

Where the Fed Stands on Future Interest Rates

Current rate projections

What Federal Reserve officials think

rates should be in the next two years.

0.5%

1.5%

END OF 2022

Each box represents one F.O.M.C. member’s judgment

END OF 2023

CURRENT

RATE*

Previous projections

What Federal Reserve officials thought in June

rates should be in the next two years.

0.5%

1.5%

END OF 2022

END OF 2023

Current rate projections

What Federal Reserve officials think rates should be in the next two years.

0.5%

1.5%

2.5%

END OF

2022

Each square represents one

F.O.M.C. member’s judgment

END OF

2023

CURRENT

RATE*

Previous projections

What Federal Reserve officials thought in June rates should be in the next two years.

0.5%

1.5%

2.5%

END OF

2022

END OF

2023

But the virus persists and many adults remain unvaccinated, preventing a full return to normal. External threats also loom, including tremors in China’s real estate market that have put financial markets on edge. In the United States, partisan wrangling could imperil future government spending plans or even cause a destabilizing delay to a needed debt ceiling increase.

The Fed chair, Jerome H. Powell, and his colleagues are navigating those crosscurrents at a time when inflation is coming in high and the labor market, while healing, remains far from full strength. They are weighing when and how to reduce their monetary policy support, hoping to prevent an economic or financial market overheating while keeping the recovery on track.

“The sectors most adversely affected by the pandemic have improved in recent months, but the rise in Covid-19 cases has slowed their recovery,” the Fed said in its Wednesday statement.

The Fed has been holding interest rates at rock bottom since March 2020 and is buying $120 billion in government-backed bonds each month, policies that work together to keep many types of borrowing cheap. That has fueled lending and spending and raised economic growth. Officials have signaled that slowing bond purchases will be their first step toward a more normal policy setting.

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Volkswagen’s truck unit warns that the chip crisis will undercut sales.

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By Jack Ewing

Volkswagen’s truck unit is facing “severe difficulties” in buying semiconductors that are weighing on sales at a time when demand is rising, the company warned on Wednesday, offering the latest sign of how a global chip shortage is holding back economic growth.

Traton, the maker of Scania, MAN and Navistar trucks, said it was also suffering from shortages of other critical components.

The shortages come as the global economy is slowly rebounding as new coronavirus cases decline and consumers spend money saved during pandemic lockdowns. To meet demand, the company is cannibalizing parts from finished but unsold vehicles and installing them in trucks for which there are firm orders.

As a result, sales from July through September will be “significantly lower than planned” even though customers are clamoring for trucks, Traton said. “Supply chain difficulties will have a stronger impact than expected.” Volkswagen owns 90 percent of the truck maker, which has a separate listing on the stock market.

Raw materials like steel and aluminum have also become scarcer, in part because manufacturers did not expect demand to bounce back so quickly. The shortages are preventing the global economy from recovering from the pandemic as fast as it could otherwise.

“It is not just the semiconductor issues stretching global supply chains at the moment — it is also the shortage of numerous other products,” Matthias Gründler, the chief executive of Traton, said in a statement. He said he expected the shortages to continue into 2022.

Trucks increasingly come with autonomous driving features and other sophisticated electronics that require semiconductors. Chip makers were not prepared for the increased demand from vehicle manufacturers, and have struggled to maintain production in the face of lockdowns in places like Malaysia, an important semiconductor producer.

A top executive at Daimler’s truck unit said this week that it, too, was suffering. “The situation has become more challenging for us” in the third quarter, Karin Radstrom, the head of Mercedes-Benz brand trucks, said during an online news conference on Tuesday.

“We are currently really fighting for every truck to get it out of the gate,” Ms. Radstrom said, “because the customer demand is very, very good.”

The latest: Fortnite is ‘blacklisted’ from Apple’s App Store, its developer says.

Apple declined to return Fortnite, the wildly popular game from Epic Games, to its App Store, Epic’s chief executive, Tim Sweeney, wrote on Twitter on Wednesday.
Epic sued Apple last year over its App Store policies, which allow Apple to collect a commission of as much as 30 percent on in-app purchases. A federal judge stopped short of declaring that Apple was a monopoly, but she ruled this month that Apple had violated California’s laws against unfair competition by barring app developers from directing customers to other ways to pay for their services. Apple is expected to ask a judge to keep the order from going into effect. Epic is appealing the ruling.
Epic’s request to have Fortnite reinstated on the App Store was rebuffed, Mr. Sweeney said. “Apple informed Epic that Fortnite will be blacklisted from the Apple ecosystem until the exhaustion of all court appeals, which could be as long as a 5-year process,” Mr. Sweeney wrote on Wednesday.
Netflix announced on Wednesday that it had acquired the Roald Dahl Story Company, which manages the rights to Dahl’s characters and stories including “Charlie and the Chocolate Factory” and “Matilda.” Dahl’s books have been translated into 63 languages and have sold more than 300 million copies worldwide. “This acquisition builds on the partnership we started three years ago to create a slate of animated TV series,” Netflix said in a statement, adding that it was seeking to build a “unique universe” across multiple platforms. Financial details were not disclosed.
China Evergrande Group, the real estate giant, said it could repay at least some of its debts, noting in a vaguely worded stock market filing on Wednesday that it had reached an arrangement with Chinese investors to make a payment due the following day, without offering details. It did not mention an $83.5 million payment due Thursday to foreign bondholders. The company, which owes creditors $300 billion, could miss other payments this week, with prospects for a bailout unclear.
Macy’s said on Tuesday that it planned to hire 76,000 full- and part-time employees at its stores, call centers and distribution and fulfillment centers during the holidays, with more than a third of those jobs expected to continue beyond the season.
The Justice Department filed an antitrust suit on Tuesday against American Airlines and JetBlue, saying a growing alliance between the two carriers had created a “de facto merger” in the New York and Boston markets, reducing competition and hurting consumers. The suit said the arrangement between the airlines reduced the incentive for them to compete in the Northeast and elsewhere and would “cause hundreds of millions of dollars in harm to air passengers across the country through higher fares and reduced choice.”

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How the car rental industry reflects the economy’s long, strange trip.

Nationally, car rentals have fallen 40 percent from their summer peaks

Average daily rate

Note: Excludes taxes, fees and insurance. Source: Hopper

Few markets better crystallize the topsy-turvy nature of the American economy during the pandemic than the rental car business.

The industry shows how economic decisions made in 2020 keep having serious implications in 2021, Quoctrung Bui and Neil Irwin report for The New York Times. Other industries have experienced less severe swings, but the same basic dynamics explain why inflation and product shortages jumped earlier in the year — and why they are starting to abate but are not yet close to prepandemic norms.

In the spring and summer of 2020, the industry was in a state of collapse as people stopped traveling. With a glut of cars, prices plummeted. Major rental car companies sold off hundreds of thousands of vehicles, and Hertz went bankrupt.

Fast-forward a year, and Americans were ready to travel again — but the rental car industry was stuck with its diminished fleets. And it faced challenges replenishing those fleets quickly, because automakers were facing supply constraints of their own.

“In the spring of 2020, nobody really knew what to expect,” said Neil Abrams, president of Abrams Consulting Group and a former Hertz executive. “I’ve seen cycles, recessions, peaks and valleys, but nothing quite like this.”

With demand surging and the supply of cars still depressed, rental car companies raised prices. But high prices have a funny way of fixing themselves, at least to some degree:

Those considering renting will toy around with different modes of transport if rental cars become very expensive.
Some may decide to optimize their itinerary by using a mix of Uber or public transit to get around.
Others may turn toward alternatives like Turo or even U-Haul for a car.

Mr. Abrams expects some of the shifts that have taken place in the industry — including higher prices — to be lasting.

“The industry has learned how to do business a different way, and I think the customer is going to get used to this paradigm shift in how cars are rented and how they’re priced,” he said.

In a day of meetings with Democrats, Biden seeks to bridge party chasms over his economic agenda.

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By Emily Cochrane and Jonathan Weisman

President Biden hosted a series of meetings on Wednesday with Democratic lawmakers, including party leaders, as he worked to smooth over deep divisions within his party about his multi-trillion-dollar domestic agenda.

In a series of Oval Office meetings that continued throughout the afternoon, Mr. Biden huddled with the two top Democrats, Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the majority leader, and separately with nearly two dozen lawmakers from across the ideological range of his party.

The flurry of meetings came as both pieces of his economic agenda — a $1 trillion bipartisan infrastructure bill and a second, expansive $3.5 trillion social safety net package that supporters intend to push through with only Democratic votes — appear to be on a collision course, with moderate and liberal Democrats jockeying for leverage in a narrowly divided Congress.

In essence, Mr. Biden’s entire agenda faces a make-or-break moment, with an array of policy disagreements — over how large the domestic policy package should be and how to pay for and structure the programs it funds — standing in the way of action on any of it.

Speaking at her daily news conference, Jen Psaki, the White House press secretary, said that as the voting on the economic legislation neared, “there needs to be a deeper engagement by the president. That’s what you’re seeing happen today.”

Mr. Biden, she said, “sees his role as uniting and as working to bring together people over common agreement and on a path forward.”

The lawmakers invited to negotiate with Mr. Biden in the Oval Office on Wednesday included centrist Representatives Josh Gottheimer of New Jersey, Mike Thompson of California and Stephanie Murphy of Florida, as well as Representative Pramila Jayapal, the chairwoman of the Congressional Progressive Caucus.

Senator Bernie Sanders, the liberal independent from Vermont who chairs the Budget Committee; Ron Wyden of Oregon, the chairman of the Finance Committee; and Patty Murray of Washington, a member of Democratic leadership, were also slated to head to the White House, as were Senators Jon Tester, from conservative-leaning Montana, and Mark Warner of Virginia.

Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, centrists who have balked at the price tag of the social safety net plan, also planned to attend, according to their offices.

“We’ve got to do some negotiating moving forward,” Mr. Tester said on Wednesday. “I don’t think that’s a big secret.”

Liberal Democrats in the House remain adamant that they will withhold their votes for the infrastructure bill, which passed the Senate earlier this year, until that chamber approves the $3.5 trillion package. Without the Liberals backing, Democrats are almost certain to fall short of the votes they need to win approval of the infrastructure measure in the House, where Ms. Pelosi has committed to bringing it up by Monday.

Returning to the Capitol after meeting with Mr. Biden, neither Ms. Pelosi nor Mr. Schumer shared many details about the discussions, although they projected confidence that Congress would be able to deliver the measures.

“We are on schedule — that’s all I will say,” Ms. Pelosi told reporters. “We’re calm, and everybody’s good and our work’s almost done.”

Representative Ro Khanna, Democrat of California, said Wednesday morning that liberals could not negotiate a final package if more conservative Democrats would not present a counteroffer to the $3.5 trillion measure they have agreed to.

At the very least, he said, Democrats of all stripes need an ironclad, public agreement on a total spending number over 10 years and some core elements that would be in the package, such as an expanded, permanent child care tax credit, a per-child tax credit, and some aggressive climate change provisions, such as a clean energy standard.

Ms. Jayapal is preparing to make the case to Mr. Biden that linking the infrastructure bill to the social policy measure is not a matter of political horse-trading, but a substantive demand.

Liberal lawmakers, she argues, would not have agreed to a traditional infrastructure package funding roads, bridges and tunnels that will promote fossil fuel usage unless they knew a substantial climate change measure would also be enacted, to ensure the vehicles on those new highways would be electric, with a bolstered electricity infrastructure to support them.

For weeks, progressives have insisted that their support for the infrastructure package was contingent on the scope and success of the larger package, which carries most of their ambitions. Democrats plan to push through that bill under a fast-track budget process known as reconciliation that shields it from a filibuster, but because of their slim margins of control in the House and Senate, it can only pass if virtually every member of their party supports it.

With Ms. Sinema and Mr. Manchin warning that they will not back a package so large, and moderates in the House reluctant to vote on a measure that will not become law, Ms. Pelosi has said she will not proceed with infrastructure bill until it is clear what the Senate can pass.

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Today in On Tech: These apps deliver food and misery.

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Today in the On Tech newsletter, Shira Ovide writes that many of the delivery businesses that have sprung up in the last few years make no financial sense and may be turning us into monsters.

Wall Street rebounds from a four-day slump as the Fed signals its next move. (Published 2021) (2024)