The latest presidential debate vividly captured how the 2008 financial crisis has reshaped the Republican Party by unleashing a potent populist strain that could further scramble an already unpredictable primary contest.
Candidates vying for the 2016 GOP nomination have grown distinctly more leery of big banks, corporations and international trade deals, and outright hostile toward the Federal Reserve.
Some of these impulses gave rise to the tea-party movement in 2009 and flared in the 2012 GOP primary contest, but they faded with the nomination of former Massachusetts Gov. Mitt Romney, a private-equity executive.
The debate in Milwaukee didn’t appear to fundamentally alter the state of the race. But with candidates heading off to Iowa and New Hampshire on Wednesday, it showed how their jockeying to carry the populist banner could intensify in the run-up to those states’ early nominating contests next February.
Candidates who have made full-on appeals for the antiestablishment mantle—businessman Donald Trump, former neurosurgeon Ben Carson and Texas Sen. Ted Cruz—are looking to consolidate that support as the field eventually narrows. Others, such as former Florida Gov. Jeb Bush, Ohio Gov. John Kasich and Florida Sen. Marco Rubio, are walking a finer balancing act to maintain broader appeal.
The populist undercurrent has upended the Democratic field as well, where Vermont Sen. Bernie Sanders, the self-described democratic socialist, has filled arenas while raising millions from small donors. Progressive party leaders have pushed front-runner Hillary Clinton to adopt more liberal proposals on everything from higher minimum wages to making Social Security benefits more generous.
“A nasty—and ignorant—anti-Wall Street climate prevails in both parties, and it’s something our industry has to worry about,” said Greg Valliere, chief global strategist at Horizon Investments, in a client note Wednesday.
The fourth GOP debate, sponsored by The Wall Street Journal and Fox Business Network, illustrated how Republicans are competing to bridge their populist message with the party’s traditional support for lower taxes and less regulation. Candidates castigated crony capitalism, questioned the value of a Pacific trade pact and bashed the Fed as a cause of the financial crisis and a tool of the Obama administration.
Carly Fiorina, the former chief executive of Hewlett-Packard, criticized President Barack Obama’s health-care overhaul for prolonging a “cozy little game between regulators and health-insurance companies.” She called on the government to require every health-care provider to publish “its costs, its prices, its outcomes, because as patients we don’t know what we’re buying.”
Mr. Cruz said his flat-tax proposal would end preferential treatment of the rich and well-connected. “No longer do you have hedge-fund billionaires paying a lower tax rate than their secretaries,” he said. “Giant corporations with armies of accountants regularly are paying little to no taxes while small businesses are getting hammered.”
Mr. Rubio found himself defending a proposal to boost child-care tax credits as a way to support low- and middle-income Americans against charges from Kentucky Sen. Rand Paul that it would run up big deficits and create a new entitlement program.
One notable exchange came when candidates were asked how they would handle failing banks during a hypothetical rerun of the 2008 financial crisis. During a back and forth with Mr. Cruz, Mr. Kasich chided candidates for issuing “philosophical” platitudes.
“When you are faced, in the last financial crisis, with banks going under and people who put their life savings in there, you got to deal with it,” Mr. Kasich said, who was booed by the audience at one point.
Mr. Cruz initially said he would “absolutely not” support bailing out big banks but later said there was a role for the Fed to serve as a “lender of last resort.”
The exchange “seemed yet one more example of how the wounds from the financial crisis have yet to heal, and those who try to talk rationally about it are disadvantaged against populists,” said Charles Gabriel, a financial-industry policy analyst at Capital Alpha Partners in Washington.
Candidates voiced concerns about the power of big banks, even as they promised to sweep away new regulations, including the Dodd-Frank financial overhaul that requires the biggest banks to raise more capital to withstand financial crises. They also heaped criticism on the Federal Reserve, which has taken unprecedented steps to spur growth in the seven years following the financial crisis—but has also consistently overestimated growth rates in its forecasts.
Mr. Paul said the Fed’s policies had hurt the poor by leading to higher prices and lower currency values. But inflation has remained under the Fed’s 2% target for more than three years with many economists concerned more recently about deflation. Also, the dollar has strengthened this year as U.S. economic growth looks comparatively better than in the rest of the world.
Mr. Cruz said the Fed had become “a series of philosopher-kings trying to guess what’s happening with the economy.” To manage inflation, he advocated a return to the gold standard, an idea widely dismissed by mainstream economists.
Milton Friedman, the late Nobel laureate who championed free-market policies, urged President Richard Nixon to abandon the system of fixed currency-exchange rates that emerged after World War II shortly before Mr. Nixon took office in 1968. Mr. Nixon scrapped the peg in 1971.
In Tuesday evening’s first debate, New Jersey Gov. Chris Christie criticized the Fed for keeping rates artificially low to support Mr. Obama. He then warned that rates were too low to revive the economy should it slide back into recession. “The Fed should stop playing politics with our money supply,” he said.
White House officials have rejected outright the idea that they would seek to influence monetary policy. Some analysts said the criticism of the Fed distracted from Republicans’ opportunities to offer more concrete pocketbook proposals.
“The most dismaying element” of Tuesday’s debate was that “none of the candidates appear to have read, much less absorbed, the innovative ideas” of “reform-minded conservative economists,” said Norm Ornstein of the American Enterprise Institute, a conservative think tank that has advocated many of those policies. “Instead, they all promoted ideas that appealed to the antediluvian base.”
Write to Nick Timiraos at firstname.lastname@example.org
When she bought her car, Tinker Martin-Bowen signed a contract with an arbitration clause that took away her right to a jury trial. Only later did she realize just what she had given up.
Deborah L. Pierce, an emergency room doctor in Philadelphia, was optimistic when she brought a sex discrimination claim against the medical group that had dismissed her. Respected by colleagues, she said she had a stack of glowing evaluations and evidence that the practice had a pattern of denying women partnerships.
She began to worry, though, once she was blocked from court and forced into private arbitration.
Presiding over the case was not a judge but a corporate lawyer, Vasilios J. Kalogredis, who also handled arbitrations. When Dr. Pierce showed up one day for a hearing, she said she noticed Mr. Kalogredis having a friendly coffee with the head of the medical group she was suing.
During the proceedings, the practice withheld crucial evidence, including audiotapes it destroyed, according to interviews and documents. Dr. Pierce thought things could not get any worse until a doctor reversed testimony she had given in Dr. Pierce’s favor. The reason: Male colleagues had “clarified” her memory.
When Mr. Kalogredis ultimately ruled against Dr. Pierce, his decision contained passages pulled, verbatim, from legal briefs prepared by lawyers for the medical practice, according to documents.
“It took away my faith in a fair and honorable legal system,” said Dr. Pierce, who is still paying off $200,000 in legal costs seven years later.
If the case had been heard in civil court, Dr. Pierce would have been able to appeal, raising questions about testimony, destruction of evidence and potential conflicts of interest.
But arbitration, an investigation by The New York Times has found, often bears little resemblance to court.
Over the last 10 years, thousands of businesses across the country — from big corporations to storefront shops — have used arbitration to create an alternate system of justice. There, rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients, The Times found.
The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right: their day in court.
“This amounts to the whole-scale privatization of the justice system,” said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law. “Americans are actively being deprived of their rights.”
Apple has recorded the biggest annual profit in corporate history, with record sales of the iPhone helping it to make $53.4bn (£35bn) in the last 12 months.
However, Apple warned that growth is likely to slow down significantly in the crucial Christmas period, and sales of the iPad fell by a fifth to their lowest level since 2011.
The company predicted that sales in the current quarter would be between $75.5bn and $77.5bn – as little as 1pc up on the same period last year – partially due to a strong dollar.
Apple has been facing questions about its ability to maintain the tremendous growth that propelled it to a $750bn value this year, as China’s economic troubles raise fears about customer demand for its pricey devices.
Analysts have also suggested that the Apple Watch, the company’s first new product category since Steve Jobs’ death four years’ ago, has got off to a slow start since launching earlier this year.
Nonetheless, Apple said revenue increased by 22pc to $51.5bn in the three months to September 26, the final quarter of its fiscal year. The company sold 48m iPhones, an 22pc increase, during the quarter, which included the first two days that its new 6s and 6s Plus models went on sale.
Android users are switching to the iPhone at a record rate, the company said.
Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending.
From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn.
“The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co. , told investors and analysts earlier this month. A third of the top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10% and nearly a fifth by more than 25%, Mr. Florness said.
Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co. , whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7% of its total, as sales growth sagged for a wide range of wares.
The weakness is overshadowing pockets of growth in sectors such as aerospace and technology.
Industrial companies are being buffeted on multiple fronts. The slump in energy prices has gutted demand for drilling equipment and supplies. Economic expansion is slowing in China and major emerging markets such as Brazil, which U.S. companies have relied on for sales growth. And the dollar’s strength also has eroded overseas profits.
The drag on earnings and sluggish growth projections for next year come as the Federal Reserve considers raising interest rates for the first time in nine years, and could add momentum to those in favor of postponing any rate increase until next year.
Profit and revenue are falling in tandem for the first time in six years, with a third of S&P 500 companies reporting so far. Analysts expect the index’s companies to book a 2.8% decline in per-share earnings from last year’s third quarter, according to Thomson Reuters.
You may need to change the way you think about Amazon. It’s no longer just an e-commerce giant. It’s the world’s largest retailer. Period. And at the same time, it runs the world’s most successful cloud computing business.
On Thursday, Amazon posted its third quarter earnings report, and for the second quarter in a row, the Seattle company—know for shunning profits in favor of growth—is profitable. Both its Amazon Web Services cloud business and its North American retail sales were strong performers for the company.
But AWS was the real winner. The cloud business’s operating income in the third quarter ($521 million), was almost as much as Amazon’s whole North America e-commerce business ($528 million). Amazon says its operating margins were 3 percent and 25 percent for its North America e-commerce business and AWS, respectively. All of which just means: Its cloud business is still killing it. And it adds, in a big way, to Amazon’s new profitability.
The growth numbers are also impressive, to be sure: AWS third quarter revenue grew 78 percent year over year—specifically, generating $2.1 billion in revenue versus $1.17 billion in Q3 2014—which is only slightly slower than the 82 percent growth that Amazon saw in the second quarter.
Bosses are turning to a new way of convincing employees to save more: make them do it.
Some are setting aside as much as 10% of their workers’ money or automatically increasing the amounts by 1% a year unless employees opt out. But not all are matching the increased savings with company contributions.
The moves are the latest attempt by companies to transfer the burden of retirement costs to workers. Millions of Americans aren’t putting enough money aside, despite reforms designed to bulk up nest eggs and encourage employees to sock away more.
There are incentives for companies to urge more-aggressive savings. They want to ensure they can make room for younger employees and aren’t left with an aging workforce that doesn’t have enough money “to retire and move on,” said Douglas Fisher, Fidelity Investments’ head of policy development on workplace retirement.
Houston oil producer Apache was among the companies to test out higher rates. It boosted its automatic employee contribution to 8% in 2012 as it tried to attract new workers. Its 401(k) costs have increased by between $4 million and $5 million annually as Apache matched the full amount for employees, executives say, but roughly 97% of its employees now participate.
“If I put in less than 8%, I’m throwing money away,” said Chris Lurix, a 44-year-old Apache systems analyst in Houston, who cited the company’s willingness to match the higher savings rate as a partial reason why he took a job there three years ago.
About 40% of working households with those aged between 25 and 64 have no retirement savings, according to a study released last spring by the nonprofit National Institute on Retirement Security. For those that do, the median balance for households with workers approaching retirement age is $104,000, a rate that experts say is one-fifth of an ideal balance, based on a retirement age of 67.
“The typical American household has almost nothing saved for retirement,” said Nari Rhee, manager of the retirement-security program at the Institute for Research on Labor and Employment.
Many employers in recent decades shed costly retirement obligations by eliminating traditional pensions that guarantee a set payout for life and replacing them with tax-deferred 401(k) plans where employees are largely responsible for saving and investment choices.