News brief: Inflation data, U.S.-India summit, Elon Musk and Twitter
A MARTÍNEZ, HOST:
President Biden heads to Iowa today to promote his economic relief plan amid record-high inflation numbers.
LEILA FADEL, HOST:
The federal government releases the March inflation report today. The White House has been working at managing expectations and warning people of, quote, "extraordinarily elevated numbers" before blaming the increase on Russia's war in Ukraine. No one likes paying more for things, from haircuts to hamburgers, but not everyone feels inflation the same way. It's a particular hardship for people with little to no extra money to spare.
MARTÍNEZ: With us now to talk about all this is NPR's chief economic correspondent Scott Horsley. Scott, the Labor Department reports this morning on how much prices rose last month. Should we shield our eyes in terms of what we're expecting to see?
SCOTT HORSLEY, BYLINE: You may want to do that, A. You know, inflation was already at a four-decade high in February, close to 8%, and the March number is likely to be well above that. We know that gasoline prices hit a record high last month following Russia's invasion of Ukraine. The war has also rattled global food markets. Both Russia and Ukraine are big wheat producers, and Ukraine also produces a lot of cooking oil. So this just aggravates an inflation picture that was already pretty ugly.
MARTÍNEZ: And especially ugly for people whose income is really stretched thin to start with. How is inflation affecting families in the lower end of the income ladder?
HORSLEY: Yeah, it's particularly challenging, A. Lower-income families spend more on necessities like food and gasoline, which has seen the biggest price increases, and they just have less fat in their budgets to trim to start with. You know, if you're buying name-brand groceries and the price goes up, you can switch to a cheaper store brand, but if your food budget is already stripped bare, then something's got to come out of the shopping cart. While the Labor Department puts out a single number, there isn't really just one inflation rate. Everybody has their personal pain threshold. For Laura Kemp in Muldrow, Okla., it's the electric heating bill that really hurts.
LAURA KEMP: I live in a two-bedroom mobile home, and last year it was $125. Last month, I got a bill for $306 for my electric.
HORSLEY: That's about a third of Kemp's overall income, so she's been forced to make some painful decisions. She's cut back on driving. She's visiting the local food pantry more. She says even the cost of a Big Mac is now out of reach.
MARTÍNEZ: Is there anything the Federal Reserve could do to counter these anticipated high numbers?
HORSLEY: March may turn out to be the high watermark for inflation, but even if it comes down in the months to come, it's still going to be way above the Fed's target of 2% inflation. So the central bank has started raising interest rates in an effort to tamp down demand. The Fed started slowly last month. It raised rates by a quarter percentage point. Markets now anticipate we'll see a half-point increase at the next Fed meeting in early May. And we could see borrowing costs climb significantly higher in the months to come, as the central bank tries to bring demand down, more in balance with supply, and get prices back under control.
MARTÍNEZ: I mentioned the president is set to promote his economic plans to help rural families. What can we expect for him to say today?
HORSLEY: President Biden is going to Iowa. He's expected to highlight the bipartisan infrastructure law that was enacted that includes money for things like improved internet access. Biden's also going to be speaking at an ethanol plant, so there is anticipation that he's going to announce some kind of tweaks to ethanol-blending rules. He will be billing that as a way to lower gasoline prices and boost energy independence. We should note, gasoline prices have already come down about 23 cents a gallon from their peak just over a month ago, although with gas prices still nearly $4.10 on average nationwide, they're still pretty high.
MARTÍNEZ: NPR's Scott Horsley. Scott, thanks a lot.
HORSLEY: You're welcome.
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MARTÍNEZ: India is the world's biggest democracy, but so far, it has not condemned the invasion of a sovereign country - Ukraine.
FADEL: The Biden administration wants that to change. President Biden held a virtual summit yesterday with Indian Prime Minister Narendra Modi. Secretary of State Blinken met his Indian counterpart. So did Defense Secretary Austin. The elephant in the room for all those meetings was Russia.
MARTÍNEZ: We turn now to NPR's India correspondent, Lauren Frayer, who's at our bureau in Mumbai. Lauren, so why hasn't India condemned Russia's war in Ukraine?
LAUREN FRAYER, BYLINE: Yeah, Prime Minister Modi yesterday condemned the civilian killings in Ukraine but didn't say who was responsible and hasn't condemned Russia's invasion. I mean, on the one hand, India shares democratic values with the U.S. On the other hand, India doesn't always trust the West. India has a colonial past. It was nonaligned during the Cold War. It wants to make its own decisions. And it also buys a lot of weapons, fertilizer and oil from Russia. And India also has another concern, which is China. It worries that if it alienates Russia, it could push Russia closer to China.
MARTÍNEZ: So what is the Biden administration, then, doing to try and get India to change its stance?
FRAYER: Well, a U.S. deputy national security adviser visited India a couple weeks ago and warned of consequences for countries that circumvent Western sanctions on Russia. But the White House is also careful to say, you know, it respects India's decisions. It doesn't want to tell India what to do. And yesterday in their public comments, President Biden and Prime Minister Modi talked about shared values and friendship. But a White House official told us afterward that in their private meeting, Biden asked Modi not to accelerate purchases of Russian oil. So the U.S. isn't asking India to go cold turkey and cut off Russian oil completely; it just doesn't want it to accelerate buying it.
MARTÍNEZ: Not accelerate. So what did India say?
FRAYER: India listened and made no promises. You know, as Western countries boycott Russian oil, it's getting cheaper for countries like India that have huge energy demands. And India, by the way, has really bristled at this topic because Europe actually buys way more Russian oil and gas than India does. And so here's what India's external affairs minister, S. Jaishankar, said at a news conference yesterday when he was asked about this.
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S JAISHANKAR: Probably, our total purchases for the month would be less than what Europe does in an afternoon. So you might want to think about it.
FRAYER: You might want to think about that, he says. I mean, from his perspective, this oil issue has been way overblown, and it's totally overshadowed lots of other really important things in the U.S.-India relationship.
MARTÍNEZ: Other things - so what are those other things? And did they manage to talk about them? Or was these meetings really just dominated by Ukraine?
FRAYER: Yeah. Prime Minister Modi and President Biden talked about defense cooperation. They also talked about what they called really robust U.S.-India trade. And they're meeting again next month in Tokyo to talk about countering China. And those meetings are a Quad summit with other countries - Japan and Australia. But, you know, at the end of the day, the U.S. would love to hear India condemn Russia, but the U.S. also really needs India's help on China. So it may have to pick its battles.
MARTÍNEZ: That's NPR's Lauren Frayer in Mumbai. Lauren, thanks a lot.
FRAYER: You're welcome.
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MARTÍNEZ: All right. Typically, when you want a sense of what's on Elon Musk's mind, you read his tweets.
FADEL: But in recent days, it's been hard to keep up with America's most unpredictable billionaire. Musk revealed that he's purchased enough shares to give him a 9.2% stake in Twitter, making him the company's largest single shareholder. The social media giant initially announced that he would take a seat on the Twitter board, but then came the announcement that he will not be joining - all this after a weekend spent by Musk trolling Twitter management.
MARTÍNEZ: With us now to help us sort everything out is Will Oremus, tech correspondent for The Washington Post. Will, so what is, if possible, Elon Musk up to? Can you figure it out for us?
WILL OREMUS: I don't know that anybody can figure out exactly what he's up to. But this is the world's richest person. He's also a person who, when he looks at something, tends to start thinking about what he would change if he were in charge, how much better it would be. He spends a lot of time on Twitter. Over the years, we know from his tweets. And I guess he has some notes for how he would change the company. And he decided, well, he has a net worth of $274 billion. Twitter, the company, is only worth about $35 billion. Might as well just buy a big chunk of it and see if he can shake things up.
MARTÍNEZ: Now, he's decided to take an active stockholder position instead of a seat on the board. What's the difference?
OREMUS: That's right. When he first started buying up shares of the company, he filed to take a passive investor position, meaning that he wouldn't try to make dramatic changes to the corporate structure or anything like that. The company offered him a seat on the board at some point so that he would have a formal role in running it. However, that board seat would have also constrained Musk. It would have kept him from buying up more than 15% of the company. It limited what he could say about the company publicly, just like the board member of any publicly traded company. And that part seems to have been the deal-breaker, whether for Musk, who doesn't like to have his speech constrained, or for Twitter, which didn't like what he was saying about the company. One way or the other, he is out of the board seat, and now he has taken on an active investor role. That means he is unconstrained. He can go and try to buy up more of the company. He could try a hostile takeover if he wanted to. And perhaps most importantly from Musk's perspective, he can say whatever he wants.
MARTÍNEZ: That seems like it fits Musk a little bit better, I think, for him. You know, and he's got himself in trouble with the Securities and Exchange Commission in the past. Do Musk's moves on Twitter pass the SEC's muster?
OREMUS: Well, we haven't heard from the SEC. What we do know from my colleagues' reporting at The Post is that Musk was slow to disclose the fact that he was buying up shares of Twitter. You're supposed to tell the SEC when you take more than 5% of a company. He did not tell them. And in the meantime, he was able to acquire 9% quietly, and then when he disclosed it, the stock rocketed upwards. If he had disclosed it at the time he was supposed to, the stock would have gone up earlier, and he would have had to buy it at a higher price. So he actually - by delaying his filing, we calculated that he actually made $156 million (laughter) more from the purchase.
MARTÍNEZ: Now, I know Twitter canceled an Ask Me Anything today with Musk. But does that mean that, really, there are no more questions surrounding his involvement with Twitter? I mean, is, like, the edit button - is that still happening?
OREMUS: (Laughter) I mean, the questions around Musk's role in Twitter are not going away. You might say they're just beginning. Twitter had said soon after Musk was announced as a board member that it was working on an edit button, something he had loudly called for. I guess now we'll find out whether it was just doing that because of him or whether it was serious about it.
MARTÍNEZ: Will Oremus, tech correspondent for The Washington Post. Will, thanks.
OREMUS: Thank you. Transcript provided by NPR, Copyright NPR.