Business

By Katie Paul and Paresh Dave

(Reuters) – Meta Platforms Inc Chief Executive Mark Zuckerberg told staffers the world’s biggest social media company had planned for growth too optimistically, mistakenly expecting that a bump in usage and revenue growth during COVID-19 lockdowns would be sustained.

Zuckerberg, responding to an employee question at a company-wide meeting on Thursday, said he had hired too aggressively and failed to account for the possibility of an economic downturn, according to a person who heard the remarks.

The employee had asked about mistakes Zuckerberg had made, the person said.

Meta declined to comment.

The comments were more pointed than those Zuckerberg had delivered during an investor call the prior day, after Facebook-owner Meta recorded its first ever quarterly drop in revenue and forecast another fall to come in the third quarter.

On the investor call, Zuckerberg said he believed the economy was entering a downturn that would have a “broad impact” on the digital advertising business.

“It’s always hard to predict how deep or how long these cycles will be, but I’d say that the situation seems worse than it did a quarter ago,” he said.

He told investors the company planned to “steadily reduce headcount growth” over the next year.

At the company meeting on Thursday, another employee asked Zuckerberg if senior managers at Meta had been “coasting,” referencing an ongoing debate over the term since an executive this month told managers to “move to exit” any employees who were “coasting” or performing poorly.

Zuckerberg responded by discussing Meta’s performance reviews generally, according to the person who heard him speak, as well as another briefed on the response.

The employee who raised the question then took to the comments section of an internal discussion board, writing that in his view Zuckerberg had not answered his question.

The exchanges come as Zuckerberg is battling intensifying morale issues at Meta, on top of economic woes and business challenges from Apple Inc and ByteDance’s TikTok.

At a tense company-wide meeting last month, Zuckerberg told employees he expected them to work with more “intensity,” as he cut hiring targets and cranked up performance standards that were relaxed during the pandemic.

Meta staffers, who like many tech employees are paid partly in stock units, saw their compensation effectively slashed this year as the stock price tumbled on news of stalling growth.

(Reporting by Katie Paul and Paresh Dave; Editing by Peter Henderson and Chris Reese)

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By Mike Spector and Dietrich Knauth

(Reuters) -The parent of far-right conspiracy website InfoWars filed for U.S. bankruptcy protection on Friday as the company and its founder Alex Jones face up to $150 million in damages in a trial over longstanding falsehoods he perpetuated about the Sandy Hook elementary school massacre.

The bankruptcy filing by the InfoWars parent, Free Speech Systems LLC, would normally result in the trial and related litigation being halted. But Free Speech plans to ask a bankruptcy judge to allow the trial currently underway in Texas to continue and is seeking an emergency hearing on Monday, according to a court filing.

Nevertheless, Jones and his company could later attempt to use the bankruptcy proceedings, commenced in another Texas court, to limit the size of any damages a jury awards.

A bankruptcy filing by three other InfoWars entities in April proposed $10 million to resolve the litigation, far less than what the Sandy Hook families are seeking. The proposal contemplated legal releases shielding Jones and his company from the lawsuits in exchange for the payment.

The entities that previously declared bankruptcy – InfoW, IW Health and Prison Planet – voluntarily ended their cases in June after the Sandy Hook families dropped them as defendants in the defamation litigation.

Jones was found liable last year in lawsuits Sandy Hook families filed after he falsely claimed that the 2012 school massacre was a hoax.

The unusual judgments occurred after Jones defied court orders to turn over documents in the litigation. The cases were then teed up for trials to determine damages, with the first one now underway in an Austin, Texas courtroom.

Jones claimed the shooting, in which 20 children and six school employees were shot dead at the school in Newtown, Connecticut, was fabricated by gun-control advocates and mainstream media. Jones has since acknowledged the shooting happened.

Free Speech Systems believes it is in its best interests to continue the current damages trial because substantial resources have been spent on both sides, and the Sandy Hook plaintiffs would likely fight to keep the trial going despite the bankruptcy filing, W. Marc Schwartz, the company’s restructuring advisor, said in a court filing.

The Sandy Hook families had opposed the previous April bankruptcy filing as a “sinister” attempt by Jones to shield his assets from liability.

Explaining the current bankruptcy filing, Schwartz said the Sandy Hook litigation resulted in InfoWars being shunned by significant internet, social media and financial institutions. The company’s business suffered as a result, he said.

Mark Bankston, a lawyer representing Sandy Hook families, said he looked forward to continuing to put on his case for jurors, which is expected to include testimony as soon as Monday from the parents of one of the children murdered at Sandy Hook Elementary.

“Our clients are pleased that despite the bankruptcy, their trial will continue and that the jury will return a verdict,” Bankston told Reuters in a text message. “Now, InfoWars is heading directly for its long awaited, reckoning.”

(Reporting by Mike Spector, Dietrich Knauth, and Jack Queen; Editing by Chris Reese and Stephen Coates)

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WASHINGTON (Reuters) – The U.S. Federal Aviation Administration (FAA) on Friday approved Boeing’s inspection and modification plan to resume deliveries of 787 Dreamliners, two sources briefed on the matter told Reuters.

The FAA approved Boeing’s plan after lengthy discussions, a move that should allow Boeing to resume deliveries in August after it halted them in May 2021, sources said.

(Reporting by David Shepardson; Editing by Sandra Maler)

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By Lisa Pauline Mattackal, Divya Chowdhury and Nishara Karuvalli Pathikkal

(Reuters) – Central banks and markets may have dropped the narrative that inflation is “transitory,” but there is a strong chance that current spikes in prices are temporary and will soon begin to trend downward, economists and former central bank policymakers told the Reuters Global Markets Forum (GMF).

“I’ll confess I’m still in team transitory,” said Stephen Poloz, former governor of the Bank of Canada, referring to the rises in consumer prices.

Central banks around the world have revised earlier views that inflationary pressures were temporary and have embarked on a series of rapid interest-rate hikes. Poloz, however, said that while price rises have lasted longer than markets anticipated due to external shocks, they have likely peaked.

“The exogenous increase in commodity prices took over a year to peak, which means ‘transitory’ gets defined as at least 24 months,” he said.

Several economists saw the combination of central banks tightening rates, the increasing likelihood of an economic recession, and commodity prices giving up gains made in the wake of Russia’s invasion of Ukraine, as contributing factors to declining price pressures.

“The current sharp increase of interest rates by many central banks may eventually undermine the economy and cause that weaker demand,” said Takahide Kiuchi, former Bank of Japan policy board member.

Recession fears are looming globally including in the United States, the eurozone and the United Kingdom, leaving policymakers faced with the dilemma of tightening policy even as risks grow.

The steep growth in money supply in the wake of the COVID-19 economic fallout drove U.S. inflation higher, but “the money growth has come to a complete halt,” said Timothy Congdon, founder of the Institute of International Monetary Research.

“I think that we can restore the stability of the prices at the expense of deterioration of the economy,” said Kiuchi.

Other factors such as growing technology advances are also likely to structurally keep inflation in check, Poloz said.

(Join GMF, a chat room hosted on Refinitiv Messenger: https://refini.tv/33uoFoQ)

(Reporting by Lisa Pauline Mattackal and Nishara Pathikkal in Bengaluru and; Divya Chowdhury and Savio Shetty in Mumbai; Editing by Matthew Lewis)

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By Karen Brettell

(Reuters) – The U.S. Treasury Department is likely to announce that it will continue to cut some of its issuance of coupon-bearing Treasury debt when it announces its funding plans for the coming quarter on Wednesday, on expectations of a shrinking deficit.

It may also offer hope that Treasury bill issuance will increase as the Federal Reserve pares back its balance sheet, as short-term investors struggle with a dearth of short-term debt supply.

The Treasury has been cutting the size of its Treasury debt auctions since late last year, after ramping them up to unprecedented sizes in 2020 to pay for COVID-19 related spending.

“Expected deficits have come down, Treasury needs to reduce the pace of issuance accordingly,” said Jonathan Cohn, head of rates trading strategy at Credit Suisse in New York.

Analysts are divided on how many maturities are likely to be cut for the third quarter, with some seeing cuts across the Treasury curve, while others expect reductions only in longer-dated and/or the seven-year and 20-year maturities.

The seven-year and 20-year Treasuries trade with relatively higher yields, which has caused some dislocations in the Treasury yield curve. Twenty-year bond yields, for example, are higher than those on 30-year bonds, while seven-year yields trade above those on 10-year debt.

Graphic: Yield Curve, https://fingfx.thomsonreuters.com/gfx/mkt/zgvomxodevd/Yield%20Curve.JPG

Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York, said that the Treasury Borrowing Advisory Committee (TBAC), which releases a presentation along with the refunding announcement on Wednesday, is likely to focus on demand for the 20-year bonds.

He noted, however, that issues around the maturity relate to trading in the secondary market, with demand for the bonds solid at auctions. Lyngen expects 20-year yields to remain higher than 30-year bonds until the Fed begins cutting rates, which would resteepen the yield curve, but he added that this is unlikely in the near-term.

Meanwhile, the Treasury is likely to indicate that it will ramp up Treasury bill issuance in the coming months as it makes up for declining purchases by the Fed, which is letting more bonds roll off its balance sheet as part of its efforts to normalize monetary policy.

After beginning quantitative tightening in June and slowly ramping up in size, the Fed will let $95 billion in bonds mature in September, which will include $60 billion in Treasuries and $35 billion in mortgage-backed debt.

More Treasury bill supply should help ease an imbalance that has left money markets investors struggling with a lack of safe, short-term assets to buy.

“Bill supply should start to pick up in the next few months,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York, noting that this should also reduce demand for the Fed’s reverse repurchase agreement facility, which is seeing daily demand of more than $2 trillion.

TD expects net Treasury bill issuance to increase by $525 billion in fiscal year 2023, which begins in October, following a $173 billion decline in 2022 and a $1.32 trillion drop in 2021.

That compares to expectations that net coupon issuance will grow by $1.08 trillion in fiscal year 2023, after increasing by $1.87 trillion in 2022, and by $2.73 trillion in 2021.

Graphic: Auction Sizes, https://fingfx.thomsonreuters.com/gfx/mkt/xmpjodawlvr/Auction%20Sizes.JPG

Credit Suisse’s Cohn noted that an increase in bill issuance, and cuts to coupon-bearing debt, should also help to rebalance the Treasury’s debt mix to be more in line with recommendations by the TBAC, which advises the government on its borrowing strategy.

Treasury bills outstanding have fallen to the low end of the TBAC’s recommended 15-20% of total debt, he said. “In increasing bill supply Treasury would be more thoughtfully distributing the supply burden as QT unfolds across investor bases with appropriate liquidity,” Cohn said.

(Reporting By Karen Brettell; Editing by Alden Bentley and Nick Zieminski)

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By Simon Lewis and David Brunnstrom

WASHINGTON (Reuters) – Long-time allies the United States and Japan launched a new high-level economic dialogue on Friday aimed at pushing back against China and countering the disruption caused by Russia’s invasion of Ukraine.

The two countries agreed to establish a new joint research center for next-generation semiconductors during the so-called economic “two-plus-two” ministerial meeting in Washington, Japanese Trade Minister Koichi Hagiuda said.

U.S. Secretary of State Antony Blinken, U.S. Commerce Secretary Gina Raimondo, Japan’s Foreign Minister Yoshimasa Hayashi and Hagiuda also discussed energy and food security, the officials said in a press briefing.

“As the world’s first- and third- largest economies, it is critical that we work together to defend the rules-based economic order, one in which all countries can participate, compete and prosper,” Blinken told the opening session.

Blinken said recent world events, including COVID-19 and the war in Ukraine, had shown the vulnerability of critical supply chains, while a growing number of countries were struggling with debt burdens due to unsustainable and non-transparent lending practices.

“The coercive and retaliatory economic practices of the People’s Republic of China force countries into choices that compromise their security, their intellectual property, their economic independence,” he said.

Japan’s Hayashi called Russia’s invasion of Ukraine a serious challenge to the international order and – in an apparent reference to China, though he did not name it directly – referred to attempts “to use economic influence unfairly and opaquely to realize… strategic interests and to modify the existing international order”.

SEMI-CONDUCTORS

Hagiuda said “Japan will quickly move to action” on next generation semiconductor research and said Washington and Tokyo had agreed to launch a “new R&D organization” to establish a secure source of the vital components.

The research hub would be open for other “like minded” countries to participate in, he said.

The two countries did not immediately release additional details of the plan, but Japan’s Nikkei Shimbun newspaper earlier said it would be set up in Japan by the end of this year to research 2-nanometer semiconductor chips. It will include a prototype production line and should begin producing semiconductors by 2025, the newspaper said.

“As we discussed today, semiconductors are the lynchpin of our economic and national security,” said Raimondo, adding that the ministers had said the ministers discussed collaboration on semiconductors, “especially with respect to advanced semiconductors.”

Taiwan now makes a vast majority of semiconductors under 10-nanometers, used in products such as smart phones, and there is concern about stability of supply should trouble arise involving Taiwan and China, which views the island as a renegade province.

Friday’s meeting came at a time of heightened tensions over Taiwan.

On Thursday, Chinese leader Xi Jinping warned in a call with U.S. President Joe Biden against playing with fire over Taiwan, highlighting Beijing’s concerns about a possible visit to the Chinese-claimed island by U.S. House of Representatives Speaker Nancy Pelosi.

The House passed sweeping legislation on Thursday to subsidize the domestic semiconductor industry as it competes with Chinese and other foreign manufacturers.

(Reporting by Simon Lewis, David Brunnstrom, Christopher Gallagher and David Shepardson in Washington and by Elaine Lies in Tokyo; Editing by Gareth Jones)

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By Paresh Dave and Nivedita Balu

(Reuters) -Apple Inc on Thursday said parts shortages are easing and that demand for iPhones is unceasing despite consumers tightening other spending, helping it top Wall Street expectations and forecast faster sales growth ahead.

The Silicon Valley giant’s shares rose 3.5% after hours following the release of the results.

Though macroeconomic indicators around the world are turning negative, Chief Financial Officer Luca Maestri told Reuters there had been no slowdown in demand for iPhones, the company’s biggest source of revenue.

Phone sales in the fiscal third quarter rose 3% to $40.7 billion, when Wall Street had braced for a 3% decline. By contrast, the overall global smartphone market dropped 9% during the just-ended quarter, according to Canalys data.

Apple’s loyal and relatively affluent customer base has enabled it to weather consumer spending dips better than other brands in the past, and the company’s latest quarterly results suggest a similar pattern emerging.

Canalys Research analyst Runar Bjorhovde said, “Apple in that sense has a certain robustness that will allow it to be impacted less than a lot of its competitors.”

Apple offered some caution.

The slumping economy is hurting sales of advertising, accessories and home products, Apple’s Maestri said in an interview, calling the units “pockets of weakness.”

“Fortunately, we have a very broad portfolio, so we know we’re going to be able to navigate that,” he added.

The results show Apple’s advertising business, which includes selling ads alongside news articles and app store search results, is vulnerable to marketing cuts just the same as rivals Snap Inc and Meta Platforms Inc.

Parts shortages will continue to hamper Mac and iPad sales, Maestri said, though the impact has been easing. They cost Apple under $4 billion in sales in the quarter ended June 25, less than it had forecast. Maestri said the company expects the hit to diminish further in the current quarter.

But Apple risks joining rivals in amassing an unsellable stockpile of tablets and PCs if more customers than expected hold off purchases due to rising inflation and interest rates.

“In terms of testing the demand, you can’t really test the demand unless you have the supply,” Apple Chief Executive Tim Cook told analysts on Thursday. “And we were so far from that last quarter that we have an estimate of what we believe demand was. But it is an estimate.”

Citing the economic uncertainty, Apple said it was not providing specific revenue guidance. But it said sales compared to a year ago should rise faster in the current quarter than 2% growth it posted in the just-ended quarter.

‘MORE DELIBERATE’

Overall, Apple said quarterly sales and profit were $83.0 billion and $1.20 per share, above estimates of $82.8 billion and $1.16 per share, according to Refinitiv data.

The rising U.S. dollar has hit many companies such as Apple that generate substantial foreign revenue and are getting less cash back when they convert it. Apple said currency fluctuations slashed sales by 3% in the June quarter and would crimp them by 6% in the current quarter.

Shuttering its business in Russia earlier this year due to the war also has hurt sales.

Apple, like many of its tech industry peers, is slowing hiring and cutting costs given the tough economic climate. Cook said Thursday that Apple was “being more deliberate in (hiring) in recognition of the realities of the environment.”

The most recent economic woes include supply chain disruptions that have hit production of some Apple products such as iPads and Macs whose assembly locations were clustered near regions of China that went into COVID lockdowns.

While sales of iPhones and iPads topped expectations, revenue from services, Mac computers and accessories missed Wall Street targets and sales in the crucial China market fell 1% as consumers being on lockdown there limited sales.

Apple also is confronting slow overall economic growth in China, where its fiscal third-quarter sales were $14.6 billion.

Growth in the company’s services business, which has provided a boost to sales and profits in recent years, was 12%, below the previous year’s 33% rate and resulting in $19.6 billion in revenue, below estimates of $19.7 billion.

Apple said it now has 860 million paying subscribers to its services, up from the previous quarter’s 825 million.

Sales of iPads and Macs were $7.2 billion and $7.4 billion, compared with estimates of $6.9 billion and $8.7 billion. Mac sales represented a 10% contraction, after record sales since 2020, first from a work-from-home boost and then from Apple’s new proprietary processor chips.

Its shares closed Thursday down about 11% so far this year, slightly less than the broader S&P 500 index and also less than other consumer hardware makers such as Sonos Inc and Samsung Electronics Co, the only company that sells more smartphones than Apple.

(Reporting by Stephen Nellis, Nivedita Balu and Paresh Dave; Editing by Peter Henderson and Lisa Shumaker)

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TOKYO (Reuters) – Several Asian central banks must raise interest rates rapidly, because inflationary pressures are rising due to a global surge in food and fuel costs caused by the war in Ukraine, said a senior International Monetary Fund (IMF) official.

“Asia’s growing inflation pressures remain more moderate compared with other regions, but price increases in many countries have been moving above central bank targets,” Krishna Srinivasan, director of the IMF’s Asia and Pacific Department, wrote in a blog published on Thursday.

“Several economies will need to raise rates rapidly as inflation is broadening to core prices, which exclude the more volatile food and energy categories, to prevent an upward spiral of inflation expectations and wages that would later require larger hikes to address if left unchecked,” he said.

Most emerging Asian economies had experienced capital outflows comparable to those in 2013, when global bond yields spiked on hints by the U.S. Federal Reserve that it might taper bond buying sooner than expected, Srinivasan said.

Outflows had been especially large for India, which had seen $23 billion move out since Russia’s invasion of Ukraine, he wrote. Outflows had also been seen in such economies as South Korea and Taiwan.

Tightening monetary conditions would strain already worsening finances in some Asian economies, and limit the scope for policymakers to cushion the economic blow from the pandemic with fiscal spending.

Asia’s share of total global debt had increased from 25% before the global financial crisis to 38% post-COVID, raising the region’s susceptibility to changes in global financial conditions, Srinivasan said.

Some Asian countries might need to tap measures such as foreign exchange interventions and capital controls to combat any sharp outflow of funds, he added.

(Reporting by Leika Kihara; Editing by Bradley Perrett)

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By Cynthia Kim

SEOUL (Reuters) – South Korea’s property market has abruptly gone from sizzling hot to floundering, piling pressure on some of the world’s most debt-saddled consumers as the sector experiences the fastest interest rate hikes on record.

Prices of Seoul apartments last week reported their sharpest decline in 26 months, while transaction volumes in the capital dropped 73% in June from a year earlier.

The 2.6 quadrillion won ($1.97 trillion) debt tied to the property market faces a major test as borrowing costs rise, with a slump and higher mortgage repayments likely to result in weaker consumption.

With nearly three quarters of household wealth tied to real estate, policymakers worry higher mortgage rates could increase defaults and take the economy closer to a financial crisis.

Ordinary Koreans are already feeling the squeeze – for Jane Jeon, a 36-year-old mother of a six-month old in central Seoul, growing mortgage stress means she has had to make some hard choices.

“My husband’s pay now isn’t enough to cover our monthly repayment so I need to cut my maternity leave short and return to work,” said Jeon, who had initially planned to take 15 months off.

Her family now pays 720,000 won more each month than last year for their 500 million won mortgage, which her broker said will probably rise further by year-end, bringing their total monthly repayment to almost 4 million won, or 70% of her husband’s pay.

Financial regulators expect the number of people that could default on their loans to rise by half a million to 1.9 million once the average mortgage rate reaches 7% from current 5-6%.

With services and commodities consumption from construction investment accounting for about 15% of economic activity, a property slump, combined with dwindling exports, would pose a big drag on growth.

“South Korea’s financial system is one of the most vulnerable in the world to interest rate hikes, as the debt increase over the pandemic has been one of the highest,” said Seo Young-soo, an analyst at Kiwoom Securities.

“Those that had recently taken out both a mortgage and credit loans on top of that (for investment) face the most trouble.”

PLENTY OF DOWNSIDE

The Bank of Korea has raised interest rates by 1.75 percentage points since August last year, including an unprecedented 50 basis point hike this month.

The policy rate [KROCRT=ECI] is widely seen peaking by year-end at 2.75% from 2.25% currently, which will squeeze indebted families further as local mortgage rates rise from current nine-year highs.

Over the past five years, Seoul home prices more than doubled in what began as a stimulus-fueled search for homes and turned into a national pastime, even as heavier loan restrictions threw many millennials into financial distress.

South Korea had one of the world’s highest household debt-to-GDP ratios at 104.3% in the first quarter, data of 36 major economies from the Institute of International Finance shows.

Regulators have sought to mitigate the impact of any household debt on the wider financial system by offering borrowers a chance to refinance loans at a fixed rate. That relief came just two weeks after the BOK’s supersized rate hike this month.

“We will improve the structure of household debt in a swift manner,” finance minister Choo Kyung-ho said earlier this week. “When the planned refinance package takes off, the proportion of household debt on variable interest rates should fall by up to 5 percentage points, to under 73% from 78%.”

The debt to disposable income ratio reached 206% at the end of last year, meaning household debt is now double what they have for living expenses.

“Our apartment is everything we have so we’re going to make it work,” said Jeon. “I’d hate to move out of Seoul.”

($1 = 1,316.1100 won)

(Reporting by Cynthia Kim; Editing by Sam Holmes)

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By Richard Cowan

WASHINGTON (Reuters) – U.S. Senate Democrats huddled on Thursday to weigh a breakthrough $430 billion drugs and energy bill agreed to by Majority Leader Chuck Schumer and maverick Democrat Joe Manchin which they say will help fight the nation’s inflation problem.

But with Congress set to begin a summer recess by the end of next week, Schumer faces a tricky road to quick passage for the bill, which would be a win for Democratic President Joe Biden.

Schumer first must persuade every one of the 50 Democratic and independent senators who make up his caucus to stick together in the face of what is expected to be a solid wall of Republican opposition.

Democratic Senator Kyrsten Sinema, who, like Manchin, has blocked her party’s legislative priorities in the past, has not weighed in on the proposal. But she has in the past supported the idea of a 15% minimum tax on the most profitable U.S. companies.

The new deal revealed late Wednesday contains a 15% corporate minimum tax to help finance the $430 billion in new spending on energy, electric vehicle credits and health insurance.

With a spate of COVID-19 cases already slowing the Senate’s business over the past week, Schumer also will have to hope that his 50 senators stay well enough to cast their votes on this massive bill. A win could boost Democratic lawmakers’ election prospects in November, giving them a better chance of retaining control of Congress.

The No. 2 Senate Democrat, Dick Durbin, on Thursday said he has COVID. Schumer and some other Democrats, including Manchin himself, recently recovered from the virus.

Schumer intends to pass the bill, which would provide about $370 billion over a decade to boost alternative energy and energy security, through a process known as reconciliation. The procedure enables passage with just Democrats’ simple majority support, instead of the 60 votes needed in the 100-member chamber to advance most bills, making some Republican backing necessary.

The Schumer-Manchin deal, negotiated in secret over months, won praise from a White House spokesperson as “an enormous step forward.”

Republicans and some environmental groups attacked it.

Senator John Barrasso, a member of the Senate’s Republican leadership, criticized the 15% corporate minimum tax and new spending, which he called “reckless” at a time of high inflation.

Meanwhile, new incentives for drilling for fossil fuels have some environmental groups fuming.

“This is a climate suicide pact. It’s self-defeating to handcuff renewable energy development to massive new oil and gas extraction,” said Brett Hartl, government affairs director at the Center for Biological Diversity, an advocacy group based in Tucson, Arizona.

But the $370 billion, down from Democrats’ earlier call for $555 billion, would cut U.S. carbon emissions blamed for climate change by 40% by 2030. Leah Stokes, a professor of climate and energy policy at the University of California, Santa Barbara, called the legislation “absolutely transformative.”

A separate component of the package would allow Medicare, the government-run healthcare program for the elderly and disabled, to negotiate prescription drug prices. It is an idea voters embrace as a way of lowering medical costs that contribute to inflation. It also caps out-of-pocket costs for seniors at $2,000 annually.

The measure also includes heavy investments in electric vehicles in an effort to put a large dent in carbon emissions. The legislation would help lower the price of used EVs and provide incentives to manufacturers to increase their production.

Republicans have attacked such investments, arguing that most Americans cannot afford EVs, with an estimated average price of around $60,000. There are a few vehicles that retail for under $30,000, and the administration is pressing for new tax credits to make EVs more cost-competitive.

Instead, they want Biden to encourage more domestic oil and natural gas production to lower gasoline prices, even though that would boost emissions of carbon and other pollutants.

“Let’s not hear any more talk about EVs when we have a solution right in front of us,” said Republican Senator Joni Ernst, referring to domestic drilling.

(Reporting by Richard Cowan, David Morgan, Moira Warburton, Timothy Gardner, Susan Heavey and Rose Horowitch; Editing by Scott Malone and Jonathan Oatis)

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