Can Musk kill the budget bill?
Elon Musk hasn’t stopped criticizing the budget bill that he has called a “disgusting abomination.” In fact, he appears to be just getting started.
The debate in Washington now is how far Musk will go to try to defeat a bill that — by the assessment of Musk, several Republicans and now nonpartisan watchdogs — will vastly add to the federal debt.
“KILL THE BILL,” Musk posted on X on Wednesday, a message he urged followers to press with members of Congress. He has turned a majority of his feed into a stream of reposts of content criticizing the legislation and denouncing its effect on the nation’s $36 trillion debt load.
A string of assessments suggest that the bill will add to the debt. The most consequential, the nonpartisan Congressional Budget Office, estimated that the House version of the plan would add $2.4 trillion over the next decade, given both the roughly $3.8 trillion tax cut at its core and additional spending. (Other estimates are even higher, including the Penn Wharton Budget Model’s: $2.8 trillion.)
A Republican counter: Attack the messenger. The Trump administration advanced hard-to-believe claims about C.B.O. staff members’ partisanship, and arguments that its analysis ignores projected economic growth.
That said, a previous nonpartisan analysis of the House bill found that the tax cuts would generate nearly no additional economic growth, and even conservatives found the budget office’s analysis credible. “When all the models are in unison,” Erica York, the vice president for federal tax policy at the Tax Foundation, told The Times, “it really doesn’t make sense to triple down on the strategy to blame the scorekeeper.”
The rift between Musk and Trump is seemingly real — and growing. Despite cordial relations in public, there is strain in the relationship, already heightened partly because of the White House’s withdrawal of a Musk ally’s nomination to lead NASA. Beyond pique over the debt-busting nature of the bill, Musk is also annoyed at how the legislation could hurt Tesla via the ending of electric vehicle subsidies.
On the other side, Trump is annoyed by Musk’s actions, according to The Wall Street Journal, especially given how closely the two worked together for four months. The president is “not delighted that Elon did a 180,” Speaker Mike Johnson said on Wednesday.
What happens next? Musk hasn’t singled out specific lawmakers for attacks. But many Republicans are worried about crossing him, The Times reports. Musk’s super PAC, America PAC, which has millions at its disposal, suggested on Wednesday that it might whir into action.
On the other hand, Trump has a lot on the line. “This is Donald Trump’s signature achievement,” Representative Dusty Johnson, Republican of South Dakota, told The Journal, adding, “Members had better think three or four times before they decide to get in the way of this victory.”
HERE’S WHAT’S HAPPENING
President Trump introduces a new travel ban. This one targets 12 countries primarily in the Middle East and Africa and goes into effect on Monday; limitations are also being placed on other nations, like Cuba, Laos and Venezuela. The crackdown comes amid forecasts for a big hit to America’s tourism sector. Another measure signed on Wednesday orders an investigation into Joe Biden and his staff meant to further stoke conspiracy theories about his predecessor.
Trump escalates his attacks on Harvard and Columbia. The president vowed to prevent Harvard’s international students from entering the country and called on Secretary of State Marco Rubio to consider revoking visas for existing Harvard students. The administration also said that Columbia had failed to meet accreditation standards, key to the school’s ability to receive federal student aid.
With the European Central Bank expected to cut rates, Trump goes after the Fed. Investors expect to see the bank cut its benchmark lending rate again on Thursday; noting that, Trump chided Jay Powell, the Fed chair, Wednesday to do the same. That comes as pressure mounts on the White House to strike trade deals — it has promised 90, but has landed only one so far — as big global investors pull money out of the U.S. and some high-powered Republicans grow frustrated about the lack of clarity over tariffs.
Trust the data?
Government economic data is the lifeblood of the financial markets and key to economic policy. It’s used to set interest rates, craft economic policy and power Wall Street trading models.
But the trustworthiness of some of that data took a hit after the Bureau of Labor Statistics said on Wednesday that it would cut back on collecting data on consumer prices “in areas across the country.”
That comes just as inflation concerns grow over President Trump’s escalating trade war.
The agency did not specify why it had made such changes, which include stopping the collection of data from Buffalo; Lincoln, Neb.; and Provo, Utah. But the agency had reportedly informed economists that a hiring freeze was forcing it to limit use of outside businesses to collect pricing information needed to compile the key Consumer Price Index survey, according to The Wall Street Journal.
Last month’s C.P.I. report resorted to a less precise methodology for gauging price swings, The Journal added.
The government tried to play down the matter. The cuts, officials said, would have “minimal impact” on overall inflation rate estimates. That said, they warned of a potential increase in “the volatility” of price rise measures in individual categories or regions.
Government data has faced tougher scrutiny recently. That was true even before Trump returned to office. Last year, the American Statistical Association warned that several factors, including budget shortfalls, declining survey response rates and the potential for political interference, could jeopardize the reliability of economic data and other government statistics.
That said, economists still consider the government data reliable. Current and former employees at the Bureau of Labor Statistics and other agencies say they have seen no evidence of political interference in government statistics, The Times reports.
But some worry that the methodology isn’t as robust as before. One concern about C.P.I.: Statisticians are increasingly forced to settle for pricing data on proximate product categories when they can’t track down the real thing.
“They’re having to turn to less effective methods to fill in the blanks,” Omair Sharif, an economist at Inflation Insights, told The Journal. He added that he had heard from traders who have grown anxious about the data’s accuracy.
Where are the jobs for recent graduates?
Investors and central bankers will be closely watching Friday’s jobs report for signs of how the labor market is holding up amid President Trump’s trade war.
Economists surveyed by FactSet estimate that the economy added 125,000 jobs in May, below the 177,000 added in April. That’s solid growth, but it comes as companies move to pause hiring over uncertainty around economic growth and the fallout from tariffs.
Recent college graduates have been hit especially hard. Unemployment for those ages 22 to 27 rose to 5.8 percent in March, a four-year high, according to the New York Fed. Researchers attributed some of the difficulty finding jobs to larger societal shifts.
“While some of it is related to a normalization after the post-pandemic surge,” the report noted, “there are signs that entry-level positions are being displaced by artificial intelligence at higher rates.”
A data point to watch: Recent grads make up only 5 percent of the total work force, but they account for 12 percent of the 85 percent increase in the overall unemployment rate since mid-2023, according to a recent report by Oxford Economics.
Layoffs are still relatively low, Allison Shrivastava, an economist at the Indeed Hiring Lab, told DealBook. “But,” she added: “if you’re trying to get into the labor market right now, that’s where you’re really facing challenges. And that’s where new grads are facing challenges.”
It depends on the sector. For recent grads, jobs are more scarce in the finance and tech sectors, including software development, Shrivastava said.
On Wednesday, research from the payroll company ADP reported that hiring in May slowed to its lowest level in more than two years. That said, the so-called JOLTS data from the Bureau of Labor Statistics showed an unexpected increase in job openings in April, and an uptick in hiring.
A trade war wrinkle in the housing market
President Trump’s trade war is complicating the outlook for an already battered housing market. Home builders are bracing for a big blow from tariffs on steel and aluminum imports, which the Trump administration on Wednesday doubled to 50 percent.
Economists say the levies threaten to disrupt an inventory rebound, Danielle Kaye reports.
It’s a tough time for buyers. Mortgage rates and home prices remain stubbornly high. Tariffs risk reigniting inflation, which could push the Fed to keep interest rates higher for longer. That’s on top of broader economic anxiety, which is dampening consumer sentiment and might discourage demand.
One glimmer of hope for buyers: Redfin data published last week shows that there are 34 percent more sellers in the market than buyers. Housing inventory has climbed almost 21 percent from a year ago, according to data from the National Association of Realtors.
“It has been a good amount of time since we’ve seen buyers have this much power,” Chen Zhao, Redfin’s head of economics research, told DealBook.
It’s a sign that homeowners are willing to give up cheap mortgages. Those who locked in rates within the 3 percent range early in the coronavirus pandemic had been hesitant, especially with the average rate on a 30-year fixed-rate mortgage near 7 percent. Even at those high rates, “a lot of sellers have accepted that this is the reality,” Hannah Jones, a senior economic research analyst at Realtor.com, told DealBook.
On its own, more listings could bring down home prices: Redfin forecasts a 1 percent drop by the end of the year.
But tariffs could threaten that trend. Builders rely on steel and aluminum. Tariffs on those materials risk messing with construction plans and the wider market. “Whether that’s enough to offset this mismatch between sellers and buyers we’re seeing now, I’m not sure,” said Julia Fonseca, a professor of finance at the University of Illinois Urbana-Champaign.
Builders will most likely pass on higher construction costs, at least to some extent. “President Trump’s move to double steel and aluminum tariffs will have a negative impact on housing affordability by further disrupting building material supply chains and fueling business uncertainty,” Buddy Hughes, chairman of the National Association of Home Builders, said in a statement.
THE SPEED READ
Deals
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London not calling: Cobalt Holdings has dropped plans to list there, and the British fintech giant Wise will move its primary listing to New York. (FT)
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Elon Musk’s xAI is said to be in talks to sign up TPG Angelo Gordon as an anchor investor for a $5 billion debt package. (Bloomberg)
Technology and artificial intelligence
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“Apple and Alibaba’s A.I. rollout in China delayed by Donald Trump’s trade war” (FT)
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Reddit is suing Anthropic, accusing the A.I. startup of using data from its discussion forums without permission despite saying it had stopped. (WSJ)
Best of the rest
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Procter & Gamble plans to cut 7,000 jobs over the next two years as it braces for lower consumer demand and higher costs associated with Trump’s tariffs. (Reuters)
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“Jeffrey Epstein Invested With Peter Thiel, and His Estate Is Reaping Millions” (NYT)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times business reporter and a 2024 David Carr Fellow, a program for journalists early in their careers.
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