Follow our latest coverage of business, markets and economy.
President Biden met on Wednesday with top executives from Microsoft, the Walt Disney Company, Kaiser Permanente and other companies that have endorsed vaccine mandates, days after he announced a federal effort to require employees of large companies to be vaccinated against the coronavirus or be tested regularly.
The administration sought to use the meeting to show that vaccine mandates are good for the economy while spotlighting employers that have mandates for workers or have praised Mr. Biden’s order. The meeting was meant to rally more business support for mandates.
“It’s about saving lives — that’s what this is all about,” said Mr. Biden, who was flanked by Treasury Secretary Janet Yellen and Jeffrey D. Zients, the White House pandemic coordinator.
“Vaccinations mean fewer infections, hospitalizations and deaths, and in turn it means a stronger economy,” he added.
One of the invitees to the meeting, Tim Boyle, the chief executive of Columbia Sportswear, said in an interview on Wednesday that his company had drafted a policy mandating vaccines months ago. But it had held off carrying it out until Mr. Biden announced last week that he was directing the Labor Department to issue an emergency safety declaration that would effectively function as a vaccine mandate for tens of millions of workers. Columbia Sportswear told its workers that it will put a vaccine requirement in place next week.
Mr. Boyle said Columbia was concerned that by acting alone it would risk losing as many as half of its workers in distribution centers and retail stores. Mr. Biden’s order, he said, reduced the risk that workers who don’t want to get vaccinated would quit to work elsewhere.
“There’s much less opportunity for people to go somewhere they don’t need to be vaccinated,” he said.
Mr. Boyle said vaccinations had divided Columbia’s work force. Managers in its Portland, Ore., headquarters have largely embraced the shots, he said, but retail and warehouse workers throughout the country have been more reluctant. He said that hesitancy had hurt the company, with infections and the threat of infection forcing closures and cleanings of locations.
“Those operations are predicated on people working together closely,” he said. Having unvaccinated workers is “highly disruptive.”
Several of the business leaders who met with Mr. Biden have installed mandates already, for at least part of their work force, including Disney, Walgreens and Children’s Hospital of Philadelphia.
— Jim Tankersley and Zolan Kanno-Youngs
Ford Motor and its autonomous driving affiliate, Argo AI, have teamed up with Walmart to begin testing the home delivery of groceries and other items by self-driving cars in three cities this year.
The service will start in Miami, Washington and Austin, Texas, and will be limited to specific areas but is intended to expand over time, Argo said in a statement on Wednesday. The service will start operating with a half dozen vehicles equipped with Argo’s technology, although two trained test drivers will be in the car for safety.
“Our focus on the testing and development of self-driving technology that operates in urban areas where customer demand is high really comes to life with this collaboration,” Argo’s founder and chief executive, Bryan Salesky, said. “Working together with Walmart and Ford across three markets, we’re showing the potential for autonomous vehicle delivery services at scale.”
Ford and Argo, which also counts Volkswagen as an investor and a partner, have also formed an alliance with Lyft to begin offering rides in self-driving cars. They aim to start the service in Miami this year and expand to Austin next year. Argo has been testing about 150 autonomous vehicles in six U.S. cities.
Waymo, the autonomous-driving company owned by Google’s parent, Alphabet, has been testing a limited driverless ride-hailing service in Phoenix for several years.
Just a few years ago, automakers and technology companies expected self-driving cars to take off quickly, but found that developing the technology was more complex and difficult than they had thought.
In 2019, Elon Musk, the chief executive of Tesla, said his company would have one million self-driving taxis on the road by 2020. But it has yet to demonstrate vehicles that can pilot themselves without humans behind steering wheels.
— Neal E. Boudette
A fire in a cable connecting the British and French power systems sent already overheated British electricity rates soaring Wednesday.
National Grid, the British electric power company, said that the fire had occurred at a facility in Sellindge, near the English Channel, and that the cable would be out of service for about six months.
The cause of the fire was said to be under investigation.
The Kent Fire and Rescue Service said Wednesday morning that it was fighting the blaze with as many as 12 fire engines and making “progress,” though firefighters were expected to remain on the scene for hours.
News of the outage jolted the markets. A measure of wholesale electricity, British day-ahead power prices, reached as high as 481.88 pounds per megawatt-hour, according to Epex Spot, a trading platform. That level is several times what is normal, though prices had been soaring in recent days.
Another strand of the cable, known as an interconnector, is down for maintenance until Sept. 25. Together, the two outages involve enough electricity to power two million homes, according to National Grid.
A National Grid spokesman said the company had arranged sufficient backup power to get through the peak evening period on Wednesday.
Britain normally imports 3 gigawatts of power from France, enough to supply three million homes, the spokesman said.
The bizarre events on Wednesday illustrate how electric power systems are under pressure from the closing of conventional plants powered by coal and nuclear, and the growing reliance on renewable energy like wind and solar, whose output can vary according to the breeze and the sun.
These factors, and the increasing demand for energy as the economy recovers from the pandemic, have left Britain with slim spare capacity in electric power generation.
Adding to the uncertainty, breezes of late have been feeble, cutting the production of electricity from Britain’s many offshore wind turbines.
Losing the cable will further squeeze the power grid at an inopportune time, analysts say. Prices of natural gas, the fuel for plants that provide power during times of peak demand, are already at very high levels. Part of the reason is that Europe has not built up reserve storage of gas for the winter, because of high consumption in China and elsewhere.
Natural gas futures rose more than 6 percent on Wednesday.
“This incident has put more pressure and reliance on flexible generation sources, such as coal, gas and batteries, to ensure the lights are kept on,” said Catherine Newman, chief executive of Limejump, a company that manages large-scale batteries and other devices used to balance the power system.
The situation means that National Grid, the British grid operator, needs to press standby sources of generation, like high-polluting coal-fired plants, into service, often paying high prices.
As a result, energy prices are likely to rise further for consumers in Britain and elsewhere in Europe, where the effects of high natural gas prices are being felt. Britain’s energy regulatory agency, Ofgem, has already notified consumers that ceilings on some standard energy rates will be raised 12 percent.
Industry is being squeezed as well. Gareth Stace, director of UK Steel, a trade body, said in a statement on Wednesday that “extortionate prices are forcing some U.K. steelmakers to suspend their operations” during periods when prices soar. The high prices are signs of an “unhealthy” energy market, he said.
Consumers all over Europe are being squeezed by high energy prices. On Tuesday, Spain’s government, facing political pressure, announced measures to protect angry consumers.
In addition, the incident is a reminder that despite having left the European Union, Britain remains dependent on member countries in many ways, including for imports of energy.
The British power system is linked to France, Ireland and other European countries through large-capacity undersea cables. The idea is to send power back and forth between grids to balance the systems.
Of late, analysts say, the flow from France has been mostly one way, as Britain takes advantage of relatively inexpensive nuclear power generated elsewhere.
— Stanley Reed
A report released on Tuesday that examined poverty in the United States has invited comparisons of the effectiveness of government stimulus in response to the two most recent economic emergencies: the 2009 financial crisis and the 2020 coronavirus pandemic.
Despite the pandemic, the share of people living in poverty in the United States fell to a record low last year — a finding that economists and policymakers across the political spectrum have hailed as a sign that the emergency stimulus program worked.
Robert Reich, the Berkeley economics professor who served as labor secretary under President Clinton, tweeted that the data proved government aid was effective in fighting poverty. Douglas Holtz-Eakin, head of the conservative American Action Forum and a former adviser to Senator John McCain, told the DealBook newsletter that the recent stimulus was “the best policy response to a recession the U.S. has ever seen.”
But there is still room for interpretation. According to the report, a measure of the poverty rate that accounts for the impact of government programs fell to 9.1 percent of the population last year, from 11.8 percent in 2019. But the official rate, which was devised in 1963 by a Polish immigrant and Social Security administrator, Mollie Orshansky, is based almost entirely on the cost of food and leaves out some major aid programs, rose last year to 11.4 percent. (The difference between poverty measures was once a plotline in “The West Wing.”)
So, was the pandemic stimulus the “best” emergency response? One thing it has going for it is a seemingly flattering comparison to the government’s efforts in the financial crisis in 2009.
As David Leonhardt of The Morning newsletter recently wrote, President Obama’s 2009 economic aid package has long been seen as a failure, even though the economy began growing again within a few months of its passage and it likely helped stave off an even deeper downturn. Government benefits and tax changes lifted 53 million Americans out of poverty last year, more in absolute and relative terms than in 2009, according to calculations from the liberal-leaning Center on Budget and Policy Priorities.
But consider the other side of the ledger. In 2009, the government spent $810 billion on its stimulus. Last year’s increase in government aid was some $1.8 trillion. That translates, very roughly, to around $35,000 per person lifted out of poverty versus $20,000 in 2009, though not all the money in either package went to lower-income Americans.
The debate over cost and efficiency will influence whether the government should spend trillions more, as President Biden and many Democrats now want, to fund more permanent government aid programs. Detractors, including many Republicans, can point to data showing a seeming drop in the benefit per dollar spent as a reason to be cautious.
But Arloc Sherman, an economist at the Center for Budget and Policy Priorities, said spending now could save money later.
“I would not say the 2020 stimulus was a less effective stimulus,” he said. “But it could have been more efficient and effective if we had a comprehensive and well-designed security system in the first place.”
— Stephen Gandel
This report confirms what millions of American families know and experience every day. Child care remains too expensive and out of reach for far too many working families in our country. This report confirms we need to bring costs down with a significant public investment in our child care industry. The report the Treasury is releasing today finds that most parents need child care at the exact moment when they can least afford it, at the beginning of their career when their income is lowest. To get quality child care, the average family would have to spend 13 percent of their income, more than they spend on food. But even this spending isn’t enough to ensure an adequate supply of child care. The United States has a severe child care shortage. Roughly half of Americans live in child care deserts, areas where there’s only one day care spot for every three kids. The child care centers that do exist are often in disrepair, operating on razor-thin margins with workers whose wages keep them at the edge of poverty. The free market works well in many different sectors, but child care is not one of them. It does not work for the caregivers. It does not work for the parents. It does not work for the kids. And because it does not work for them, it does not work for the country.
The Biden administration is trying to build support for proposals to overhaul the nation’s rickety child care system as it pushes Congress to embrace a $3.5 trillion plan to expand social safety programs and looks for ways to combat ongoing labor shortages.
In a new report released on Wednesday, the Treasury Department painted a dire picture of child care in America, outlining what it called failures by the private sector to provide high-quality care at affordable prices and making the case that the federal government must do more to help families care for their children.
“This is not just happenstance — sound economic principles explain why relying on private money to provide child care is bound to come up short,” the report said.
The Biden administration has already disbursed nearly $40 billion to help child care providers and day care centers through funds that were approved in the American Rescue Plan, which Congress passed earlier this year. The Treasury Department has also been distributing monthly advance child tax credit payments to families with children.
On Wednesday afternoon, Vice President Kamala Harris visited the Treasury Department to make the case for more child care funding and described the lack of quality care in the country a national emergency.
“Childcare remains too expensive and out of reach for far too many working families in our country,” Ms. Harris said, adding that other advanced economies invest more in child care than the United States. “We need to bring costs down with a significant investment in our child care industry.”
Ms. Yellen made the case for bold investments in both personal and economic terms. She recalled that 40 years ago when she was returning to work after her son was born, she placed an advertisement in a local newspaper offering a few dollars more than the standard wage for a babysitter because the work was so important. She reflected on the fact that she was fortunate enough to be able to pay a higher wage and said that if she had not been able to find quality care at that time in her career, she might not be Treasury Secretary today.
Ms. Yellen lamented that most families must bear the cost of child care when they are young and their earnings are low. She said that public investment is needed because of all of the economic benefits that come when parents have access to quality care for their children.
“The free market works well in many different sectors, but child care is not one of them,” Ms. Yellen said. “Child care is a textbook example of a broken market.”
Mr. Biden’s plan includes child care subsidies for low- and middle-income families, universal prekindergarten for children who are 3 and 4 years old and a permanent expansion of the child and dependent care tax credits.
The Treasury report argues that families are currently spending about 13 percent of their income to pay for child care costs for a child under the age of 5. Despite the high costs, child care providers tend to be poorly compensated.
The patchwork nature of the child care system often creates incentives for a parent to leave the labor force, losing access to health insurance and retirement benefits. The United States is currently grappling with a labor shortage, and the Biden administration views bolstering access to child care as a way to get people back to work.
“In basic economic terms, the president’s proposals will expand both demand for and supply of child care,” the report said. “With expanded demand, more children will have access to the rich early experiences and more parents will be able to choose to remain in the labor force.”
— Alan Rappeport
Treasury Secretary Janet L. Yellen is pressing Representative Richard Neal, the Democratic chairman of the Ways and Means Committee, to include the Biden administration’s full proposal for bolstering the Internal Revenue Service in its $3.5 trillion spending package, arguing that more resources and greater powers to catch tax evaders are crucial for reducing the “tax gap.”
In a letter to Mr. Neal, Ms. Yellen urged lawmakers not to water down a central piece of the proposal, which would give the Internal Revenue Service visibility into the financial accounts of taxpayers through more robust reporting requirements. Treasury officials say that will enable the agency to better crack down on rich people and companies who are not paying what they owe.
Legislation released by House Democrats earlier this week included the $80 billion in additional funding for the I.R.S. that the Biden administration had proposed to help expand staffing and enforcement capacity. However, a separate proposal to enact an “information reporting” regime was absent from the bill.
“As you consider specific policy choices in designing an information reporting regime, it is important to ensure that the reporting regime is sufficiently comprehensive, so that tax evaders are not able to structure financial accounts to avoid it,” Ms. Yellen wrote. “Any suggestion that instead this reporting regime will be used to target enforcement efforts on ordinary Americans is wholly misguided.”
Critics of the proposal have argued that giving the I.R.S. more power to peer into taxpayer financial information represents an invasion of privacy and have said it could lead to frivolous audits for political reasons. The Biden administration insists that audit rates will not rise for taxpayers who earn less than $400,000.
In an addendum to the letter, Mark J. Mazur, Treasury’s acting assistant secretary for tax policy, reiterated Treasury’s estimates that the investment in enforcement staff and new information reporting powers could generate $700 billion in government revenue over a decade. He suggested that Congress might be considering including a more modest reporting mechanism and warned that doing so would be less effective.
“Clearly, this will lower the estimated revenue raised from the proposed reporting regime relative to earlier administration estimates,” Mr. Mazur wrote.
At a hearing on Wednesday, Mr. Neal said he had received the letters and underscored the importance of strengthening tax enforcement without adding new burdens to small businesses.
“We are in conversations with the administration on reporting proposals that target sophisticated tax avoidance and evasion without impacting middle-class and working Americans,” Mr. Neal said.
— Alan Rappeport
Canadian Pacific has emerged as the winner in a long-running battle to acquire Kansas City Southern, putting it in position to become the first railroad operator whose network extends from Canada to Mexico.
Its rival in the bidding, Canadian National, said on Wednesday that it had received notice from Kansas City Southern that it was terminating a merger agreement they signed in May.
“The decision not to pursue our proposed merger with KCS any further is the right decision for CN as responsible fiduciaries of our shareholders’ interests,” Jean-Jacques Ruest, the chief executive of Canadian National, said in a statement.
At stake was possibly the last major acquisition of a major railroad; mergers have consolidated the industry to seven railways from more than 100. The key component of the deal is access to Mexico, as railroads look to capitalize on trade flows across North America on the heels of the United States-Mexico-Canada Agreement, which was signed into law last year.
“Timing, relative to what’s occurring in the marketplace, has never been more ideal,” said Keith Creel, the chief executive of Canadian Pacific. “With the U.S.M.C.A., with the nearshoring that’s occurring with many companies that are trying to stabilize their supply chain — this will become the backbone to enable that to occur.”
Canadian Pacific first put forward its $29 billion bid for Kansas City Southern in March, before being topped by a $33.7 billion offer from Canadian National in April. But the Canadian National deal hit a regulatory challenge last month. In response, Kansas City Southern said on Sunday that it had chosen Canadian Pacific as a superior suitor.
Canadian Pacific sweetened its cash-and-stock offer in August, valuing Kansas City at about $31 billion. The key was “to avoid a bidding war,” Mr. Creel said. Canadian Pacific’s winning bid was higher than its original offer but still lower than Canadian National’s.
“I knew that our best play was to keep our powder dry, wait for the right opportunity and then make our last best offer,” he said.
To fund its deal, Canadian Pacific raised the value it prescribed to Kansas City Southern shares and increased its debt financing to $9.5 billion from $8.6 billion.
Shares of Canadian Pacific were up a little over 1 percent on Wednesday, while shares of Canadian National were up more than 3 percent. Shares of Kansas City Southern were up less than 1 percent.
Canadian National pulled out as it wrestled with investors unhappy with its role in the takeover tussle. TCI Fund Management, a longtime railroad investor that owns more than 5 percent of Canadian National’s shares, started a proxy battle to oust Mr. Ruest, angered in part over what it called a “reckless bid” for Kansas City Southern.
TCI demanded that Canadian National stop pursuing the acquisition and overhaul its board. It is also the largest shareholder in Canadian Pacific, with an 8 percent stake.
Kansas City Southern will pay Canadian National a $700 million breakup fee, as well as refund a fee worth another $700 million that Canadian National had paid to end the railroad’s original deal with Canadian Pacific.
The turning point in the deal was a ruling by the regulator overseeing rail deals, the Surface Transportation Board, which decided unanimously against the companies’ use of a voting trust, a common but controversial structure in such deals.
The ruling was the first real test of guidelines put in place in 2001 to increase competition in deals that involve the largest railroads. Canadian Pacific, which has a proposed voting trust that regulators have not blocked, successfully argued for its deal with Kansas City Southern to be evaluated outside those guidelines, given its smaller size.
Still, that was before President Biden’s executive order in July aimed at anti-competition maneuvers in the railroad industry and a host of others. The Surface Transportation Board must still approve the Kansas City Southern and Canadian Pacific deal with this new scrutiny in the backdrop. Regulators in Mexico and shareholders must approve it as well.
The executive order “makes me more firmly convinced of our ability to get this deal approved,” said Mr. Creel, who extolled the deal’s ability to bring trucks off the road at a time when the Biden administration is keenly focused on carbon emissions. The deal is the only combination of the largest railroads to have no overlap, he said.
— Lauren Hirsch
SAN JOSE, Calif. — A key whistle-blower against Theranos, the blood testing start-up that collapsed under scandal in 2018, testified on Tuesday in the fraud trial of the company’s founder, Elizabeth Holmes.
The whistle-blower, Erika Cheung, worked as a lab assistant at Theranos for six months in 2013 and 2014 before reporting lab testing problems at the company to federal agents at the Centers for Medicare & Medicaid Services in 2015. Her first day of testimony revealed to a jury what those following the Theranos saga most likely already knew: The company’s celebrated blood testing technology did not work.