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News Brief: GDP Preview, Federal Agents Step Back In Portland, Big Tech Hearing

STEVE INSKEEP, HOST:

Today we get one measurement of just how much this country suffered as the pandemic spread.

DAVID GREENE, HOST:

Right. The government releases figures for economic growth in April, May and June. Though, growth might not be the best word to describe this. The second quarter number comes out as the economy appears in jeopardy again. Now, Congress is discussing another relief package. Republicans released a bill two months after Democrats did the same. These proposals differ. And the president does not appear to be pushing for a deal. He told reporters, quote, "we're so far apart we don't care."

INSKEEP: So what are the prospects for American families on the edge? NPR chief economics correspondent Scott Horsley is with us once again. Scott, good morning.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: The second quarter numbers give us a chance to look back. So what are they likely to show about the spring?

HORSLEY: They expect to show the sharpest contraction in modern American history. Nariman Behravesh is chief economist at the forecasting firm IHS Markit. He thinks the economy shrank in the second quarter at an annual rate of about 35%.

INSKEEP: Wow.

HORSLEY: Steve, that would be four times the drop we saw during the worst quarter of the Great Recession.

NARIMAN BEHRAVESH: It's going to be horrific. We've never seen anything quite like it.

HORSLEY: As sharp as the downturn was, though, Behravesh says, it was also very short. By the end of the second quarter, we began to see a resumption of economic activity. Although, to be sure, the recovery so far is both fragile and incomplete.

INSKEEP: Oh, sure. By June, people were reopening. And now we're in the third quarter, which is July, August and September. Are we doing that much better?

HORSLEY: No. We're doing better. But, of course, a lot depends on what happens with the pandemic. Some businesses are more vulnerable. Others are more resilient. Behravesh describes a kind of two-speed recovery. And I've been hearing that from businesspeople I've been talking with this week. Restaurant owner Cameron Mitchell likens the pandemic to a hurricane. And he says what appeared to be a business rebound in June turned out to be merely the eye of the storm. Now he's being buffeted again by gale-force winds.

CAMERON MITCHELL: It's the most prolonged, difficult operating environment I've ever been a leader in. And I've been in this business for 40 years.

HORSLEY: Mitchell operates restaurants in more than a dozen states. His outlets in Florida, for example, were almost back to normal in early June. But as infections there took off, business dropped again. And we've seen that in a lot of businesses that depend on consumer traffic, especially in larger groups. Now, other industries are enjoying a more durable recovery. But few are back to where they were, say, in February. Factories and construction crews are picking up steam. But Americans still aren't spending like they used to. And that is keeping a lid on economic activity.

Looking back, though, Steve, the slowdown this spring might have been even worse had it not been for the trillions of dollars the federal government pumped into the economy. At a time when we had tens of millions of people suddenly thrown out of work, wages and salaries were offset, in a way, by those $1,200 relief payments and the supplemental unemployment benefits of $600 a week. Federal Reserve Chairman Jerome Powell said yesterday those payments have been an important lifeline keeping the economy afloat.

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JEROME POWELL: In a broad sense, it's been well-spent. It's kept people in their homes. It's kept businesses in business. And that's all a good thing.

HORSLEY: Of course, those supplemental unemployment benefits are expiring at the end of the week. And now Congress is debating what kinds of additional support families might need to keep the economy from sliding backwards.

INSKEEP: Well, what possible relief is in those competing bills before Congress?

HORSLEY: Well, there's another round of business loans under consideration, maybe some targeted help for hard-hit industries. Restaurant owner Cameron Mitchell told me that's important, or else you're going to see a lot of bankruptcies in the months to come.

INSKEEP: But again, no deal yet in Congress or with the White House. Scott, thanks very much.

HORSLEY: You're welcome.

INSKEEP: NPR's Scott Horsley.

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INSKEEP: What happens now that federal agents are stepping back in Portland?

GREENE: Right. That's the question now as Oregon's governor says these agents will come off the streets after many days of confrontations with protesters. Officers from various agencies were ordered to protect a federal building from protesters. But their actions appear to intensify long-running protests over racial justice. Now, the plan is for Oregon State Police to take over in hopes of de-escalating.

INSKEEP: How's this supposed to work? Oregon Public Broadcasting's Conrad Wilson is on the line. Good morning.

CONRAD WILSON, BYLINE: Hi, Steve.

INSKEEP: What's the plan?

WILSON: Well, under the deal, Oregon State Police will take over defending the federal courthouse. They said that they're going to work with federal law enforcement and the Portland police. The idea is to get federal law enforcement to leave while also ensuring the safety of the courthouse and those who work there.

INSKEEP: Sure.

WILSON: You know, these federal officers don't generally do crowd control. I mean, they've made some missteps that have really energized what, prior to their arrival, were some pretty small protests - I mean, at times, you know, fewer than 100 people. For instance, a U.S. marshal shot a peaceful protester in the head with a crowd control device, putting the person in the hospital. And Oregon Public Broadcasting reported on homeland security officers in military-style uniforms using unmarked vehicles to arrest protesters. And, you know, all of this escalated what were fairly small protests into thousands of people we saw marching in recent days.

INSKEEP: It also had people questioning the motives of the administration. What was the president doing? How did the administration end up agreeing to back off?

WILSON: Well, this week, Governor Brown spoke with Vice President Mike Pence. And the governor pitched Pence on this plan. Pence got the Department of Homeland Security involved. There were a number of high-ranking officials in Portland this week, including the deputy director of the FBI, before this agreement came together and was announced yesterday.

INSKEEP: I have to note that I heard first of this federal drawback from these state officials, from the governor. What are federal officials saying about what they will actually do?

WILSON: Well, acting Homeland Security Secretary Chad Wolf says the surge of federal officers President Trump sent to Portland is going to stay and see how things unfold. The difference is they're not going to be out there on the street unless state police can't protect the courthouse. Wolf pointed out in a news conference that many federal officers have been injured during the protests. The government has said that they have at least 114 federal officers guarding the courthouse. And in conversations my colleagues and I have had with law enforcement and the governor's staff, they say the idea is to return things to the normal level of federal law enforcement in the city.

INSKEEP: Conrad, you've noted that the federal presence on the streets appeared to intensify the protests. Is it possible to see what might happen as they back off?

WILSON: You know, this is really new. We don't know how protesters are going to react to this. I mean, that's been discussed conceptually. No one's seen it in action. And tonight is really - you know, we're going to see how this federal drawdown plays out.

INSKEEP: And the administration has been playing up this kind of conflict, as we mentioned. I mean, do we know how this might change the rhetoric on either side?

WILSON: Well, the Trump administration has put forward this narrative of Portland as a city under siege from protesters. I mean, Trump tweeted that if he hadn't deployed federal law enforcement, quote, "there would be no Portland - it would be burned and beaten to the ground." In reality, the protests have mainly taken place in an area downtown. The vast majority of protesters have been peaceful and focused on racial injustice and police violence. The hope is that federal agents stepping back will de-escalate things and return things to the conversations between community, police and the mayor.

INSKEEP: Oregon Public Broadcasting's Conrad Wilson. Thanks so much.

WILSON: You're welcome.

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INSKEEP: All right. One of the lawmakers at a House hearing yesterday left no doubt how he views the tech industry. David Cicilline of Rhode Island referred to the American Revolution.

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DAVID CICILLINE: Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.

GREENE: That is how the House Democrat referred to four tech CEOs who were on screens at the hearing. Amazon's Jeff Bezos, Apple's Tim Cook, Facebook's Mark Zuckerberg and Google's Sundar Pichai spent almost six hours fielding questions. We just want to note here that all of these companies are among NPR's financial supporters.

INSKEEP: NPR's Alina Selyukh was listening to the hours of questions with the reputed emperors of the economy. Hey there, Alina.

ALINA SELYUKH, BYLINE: Good morning.

INSKEEP: What'd you learn?

SELYUKH: Right. So the House lawmakers who called the hearing have been investigating these companies for over a year now. So what we got was a bit of a first taste of what it is that they've learned from all the interviews and documents and emails that they've collected. The hearing was pretty adversarial. But in a way, it was a tale of two hearings. One was the key focus, how these tech companies may have grown at the expense of others. For example, lawmakers grilled Facebook about how it buys or replicates rivals that threaten to lure away its users, like Instagram. Washington Democrat Pramila Jayapal read off emails between Zuckerberg and other executives.

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PRAMILA JAYAPAL: Do you copy your competitors?

MARK ZUCKERBERG: Congresswoman, we've certainly adapted features that others have led in, as have others copied and adapted features that we have...

JAYAPAL: I'm not concerned about others. I'm just asking you, Mr. Zuckerberg.

SELYUKH: Similarly, Google has been accused by Yelp and others of stealing restaurant reviews and other content. Some small sellers on Amazon have complained about feeling trapped and dealing with confusing, ever-changing rules. App developers have accused Apple of unfairly charging them different fees. All four CEOs face different versions of the same question about how they throw their weight around to push competitors out of the way.

INSKEEP: Well, you said this is a tale of two hearings. You've just described one. What was the other?

SELYUKH: So the point of this hearing was how tech companies deal with competition. But a big chunk had nothing to do with that. Several Republicans, particularly the firebrand Jim Jordan from Ohio, probed the CEOs for anti-conservative bias.

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JIM JORDAN: Mr. Cook, is the cancel culture mob dangerous?

SELYUKH: Jordan demanded neutrality from Google in the upcoming election and asked if all the CEOs supported diversity of opinions, which actually prompted a bit of an interesting moment. Bezos took a dig at discourse on social media, calling social networks nuanced destruction machines. I wish we could see Zuckerberg's face at that moment. But the video stream did not show him.

INSKEEP: How much did the CEOs really have to say for themselves?

SELYUKH: They had to say a lot. But they also rejected the premise of the hearing, that they're being big bullies. They played up their humble beginnings, especially Bezos, the world's richest person. They highlighted how much people value their products and how they still face plenty of competition. Overall, the four CEOs essentially argued that any bad episodes were outliers and that their entire goal is to make their users, consumers happy. And now we wait to see what the committee thinks when they release the final findings of their investigation.

INSKEEP: Yeah. And they're talking of regulation here at some point. Alina, thank you very much.

SELYUKH: Thank you.

INSKEEP: NPR's Alina Selyukh. Transcript provided by NPR, Copyright NPR.

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