Department of Transportation opens investigation into Delta over flight disruptions
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(WASHINGTON) — The U.S. Department of Transportation has opened an investigation into Delta Airlines over recent flight disruptions, Transportation Secretary Pete Buttigieg said on Tuesday in a post on X.
“All airline passengers have the right to be treated fairly, and I will make sure that right is upheld,” Buttigieg said.
The airline is struggling to resume normal service five days after a global IT outage at cybersecurity firm CrowdStrike. Delta canceled more than 400 flights on Tuesday morning, according to flight tracking site FlightAware. The airline with the second-most cancellations on Tuesday has nixed only 55 flights, FlightAware says.
The outage at CrowdStrike on Friday hindered services at airlines and hospitals in the U.S., banks in Europe and a media company in Canada.
Thousands of flights were cancelled across a host of airlines on Friday, but many companies have limited disruptions over the days since.
Buttigieg requested that Delta passengers share information with the Department of Transportation.
“While you should first try to resolve issues directly with the airline, we want to hear from passengers who believe that Delta has not complied with USDOT-enforced passenger protection requirements during the recent travel disruptions,” Buttigieg said.
(NEW YORK) — Former President Donald Trump recently said the president should have a role in setting interest rates that determine costs for everything from mortgages to credit card loans.
The proposal would mark a major shift from the longstanding norm of political independence at the Federal Reserve, which currently retains control over interest rate policy. The nation’s central bank is in the midst of a yearslong fight to dial back inflation.
“I feel the president should have at least [a] say in there,” Trump said during a press conference at his Mar-a-Lago resort in Florida last week. “I feel that strongly. I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than, in many cases, people that would be on the Federal Reserve or the chairman.”
The policy idea elicited opposition from both liberal and conservative economists who spoke to ABC News.
They warned that any president, including Trump, would likely seek low interest rates in an effort to improve the nation’s short-term economic growth. That approach would risk runaway inflation that could wreak significant economic damage long after a given president has left office, they added.
“It’s an absolutely bad idea,” George Selgin, senior fellow and director emeritus of the Center for Monetary and Financial Alternatives at the libertarian Cato Institute, told ABC News.
“Presidents are known to be very shortsighted when it comes to monetary policy,” Selgin added. “They’re happy to try and take advantage of a temporary boost that easy money can give to economic activity and downplay or overlook the longer-run consequences, which can include inflation getting out of control.”
Paul Wachtel, a professor of economics at New York University who studies monetary policy, echoed that rebuke.
“I can’t think of anything that economists across the spectrum agree upon more than the importance of central bank independence,” Wachtel told ABC News.
In response to a request for comment from the Trump campaign, a representative of the Republican National Committee (RNC) faulted the Biden administration for a rise in inflation in recent years that prompted the Fed to raise interest rates.
“The president’s policies already affect interest rates — the failed Harris-Biden economic agenda has led to the fastest increase in mortgage rates since 1981,” RNC spokesperson Anna Kelly told ABC News. “As the deciding vote on the so-called ‘Inflation Reduction Act’ that actually spiked prices and made housing unaffordable for families across the country, Kamala Harris co-owns the disastrous impact of Bidenomics, and no one can afford another four years.”
The proposal from Trump arrives at a time when the Fed has held interest rates at their highest level in more than two decades. The central bank has helped bring inflation down significantly from its peak, but elevated interest rates risk tipping the U.S. into a recession.
Scrutiny over the Fed’s role in a potential economic downturn reached a fever pitch earlier this month when a weaker-than-expected jobs report showed that the economy may be slowing faster than previously known.
“It’s one of those occasions when people can second-guess the Fed and wonder whether Trump would’ve made a better decision, but one can’t just base a decision on who should govern monetary policy on a single event,” said Selgin.
Critics of an expanded role for the president point to a bout of high inflation in the 1970s and 1980s. Before the inflation took hold, President Richard Nixon had urged Fed Chair Arthur Burns to cut rates in the run-up to the 1972 presidential election.
Nixon’s advocacy is widely viewed as a contributing factor for lower-than-necessary interest rates that enabled inflation to get out of control, Mark Zandi, chief economist at Moody’s Analytics, told ABC News.
“Allowing the president, any president, to help set monetary policy would eventually wreck the U.S. economy,” Zandi said.
To be sure, the Fed does retain direct ties to the federal government. The Fed chair is appointed to a four-year term by the president and must receive confirmation from the Senate. Further, the general guidelines for interest rate policy are rooted in legislation approved by Congress.
Selgin, of the Cato Institute, acknowledged that the Fed doesn’t retain full political independence.
“The Fed’s independence is far from absolute,” Selgin said. “Precisely because it’s so limited, it’s important to keep as much of that independence as exists.”
Vice President Kamala Harris, the Democratic presidential nominee, said on Friday that she disagreed with the proposal voiced by Trump.
“The Fed is an independent entity and as president I would never interfere in the decisions that the Fed makes,” Harris told reporters in Phoenix, Arizona.
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, low interest rates help stimulate economic activity and boost employment; high interest rates slow economic performance and ease inflation.
The chances of an interest rate cut at the Fed’s next meeting in September are all but certain, according to the CME FedWatch Tool, a measure of market sentiment. Market observers are split roughly down the middle about whether the Fed will impose its typical cut of a quarter of a percentage point or opt for a larger half-point cut.
An interest rate cut in September would arrive during the final months of the presidential campaign.
Last month, Fed Chair Jerome Powell said coming rate decisions would depend solely on economic conditions.
“Congress has, we believe, ordered us to conduct our business in a nonpolitical way at all times, not just some of the time,” Powell said at a press conference in Washington, D.C., last month.
“We never use our tools to support or oppose a political party, a politician, or any political outcome. The bottom line is, if we do our very best to do our part and we stick to our part, that will benefit all Americans,” Powell added.
(NEW YORK) — United Airlines flight attendants, represented by the Association of Flight Attendants, moved closer to a strike Wednesday after the union announced that 99.99% of service members voted in favor of strike authorization.
The vote included 90% of the United Airlines flight attendant staff.
Among the strike requests, flight attendants are demanding significant double-digit base pay increases, being compensated for time at work outside of flights, schedule flexibility and work rule improvements, job security, retirement and more, according to the union.
The historic vote marked the first time in 20 years that United flight attendants have authorized a strike, since the airline’s 2005 bankruptcy negotiations.
However, a strike will not occur immediately and despite the vote, there will be no immediate disruptions to airline operations.
Experts say it’s highly unlikely United flight attendants will actually walk off the job. There are a number of steps that must happen before a strike can take place and the president and Congress have the power to stall or stop an airline strike.
“To be clear, there is no work stoppage or labor disruption,” United told ABC News in a statement Wednesday. “Off-duty flight attendants are simply exercising their right to conduct an informational picket.”
The results of the strike authorization vote were announced as nearly 20 informational picket lines were seen at airports across the country.
“We deserve an industry-leading contract. Our strike vote shows we’re ready to do whatever it takes to reach the contract we deserve,” Ken Diaz, president of the United chapter of the Association of Flight Attendants, said in a statement Wednesday.
“We are the face of United Airlines and planes don’t take off without us. As Labor Day travel begins, United management is reminded what’s at stake if we don’t get this done,” he added.
After this week, the union walked away from federally mandated negotiations. The union will now ask the National Mediation Board to release them into a 30-day “cooling-off” period, which would set a potential strike deadline.
“The United management team gives themselves massive compensation increases while Flight Attendants struggle to pay basic bills,” Diaz continued. “The 99.99% yes vote is a clear reminder that we are unified in the fight against corporate greed and ready to fight for our fair share of the profits we create.”
Similar strike authorization votes have been cast at competing airlines including American, Alaska, Southwest, and more.
(WASHINGTON) — Vice President Kamala Harris has unveiled a comprehensive agenda focused on cooling inflation, but many economists consider the fight against price increases to be nearly finished.
Inflation stands below 3% for the first time since 2021, U.S. government data earlier this month showed. The Federal Reserve is widely expected to cut interest rates at a meeting in September, suggesting that the central bank could retreat from its yearslong battle to slow prices.
Still, consumer prices have climbed more than 20% over the last three years, demoralizing shoppers and straining household budgets. Inflation continues to top lists of voter concerns.
Economists who spoke with ABC News described current price levels as an unfortunate reality that would be nearly impossible to undo, since an outright lowering of prices typically accompanies economic hardship that would require medicine more painful than the ailment.
However, some economists said Harris’ proposals could reduce prices for some essential goods, like food, while slowing inflation for items such as housing that are still seeing rapid price increases. Other economists said the measures amount to a solution for a problem that no longer exists, saying the tardy legislative fixes could stunt economic activity.
“We can’t unwind prices back to a certain place,” Catherine Pakaluk, a professor of economics at the Busch School of Business at Catholic University, told ABC News.
Since overall prices depend on a worldwide tug of war between supply and demand, general cost reductions would demand a significant economic shock to send that balance askew, Pakaluk added.
“All prices are linked together,” Pakaluk said. “We all have a sense, ‘If only we could reset prices back to where they were three years ago.’ But there’s no mechanism for that.”
In response to ABC News’ request for comment, the Harris campaign pointed to a speech that she delivered on Friday.
“When I am elected president, I will make it a top priority to bring down costs and increase economic security for all Americans. As president, I will take on the high costs that matter most to most Americans, like the cost of food,” Harris said.
“We all know that prices went up during the pandemic when the supply chains shut down and failed, but our supply chains have now improved and prices are still too high,” Harris added.
While acknowledging the difficulty of achieving overall price decreases, some economists noted a potential for price reductions in certain industries, especially the food and grocery sector targeted by Harris’ proposals.
Harris points to the market power of large corporations in the grocery industry as a key cause of rapid price increases for food, saying companies use their outsized role to raise prices without fear of a competitor offering a comparable product at a more affordable price. Consumers, the Harris campaign says, are left with nowhere to turn.
“Extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills,” the campaign said in a statement on Friday.
Dan Scheitrum, a professor of agribusiness at California Polytechnic State University, San Luis Obispo, said Harris’ plan to crack down on potential anti-competitive practices within the food sector could end up lowering prices for some household staples.
“If price fixing is taking place and it gets addressed, I expect that could undo some of the price increases,” Scheitrum said.
While general inflation has moderated, price increases for housing remain highly elevated. Housing prices climbed 5.1% over the year ending in July, soaring at a pace more than twice as fast as the overall inflation rate.
The Harris campaign proposed restoring affordability through a combination of boosting home supply and easing the price pressures for some homebuyers.
Economists who spoke with ABC News largely applauded Harris’ efforts to boost the housing supply but offered mixed opinions about a potential $25,000 subsidy for first-time homebuyers.
“We as economists commonly disagree, but the question of housing supply is something we kind of all agree about,” Pakaluk said
On the other hand, a $25,000 subsidy for some homebuyers could allow them to increase their bids and send prices higher, Pakaluk added. “It might have the opposite effect on price than they want,” Pakaluk said.
Peter Morici, a professor emeritus at the University of Maryland’s School of Business, warned against the economic consequences of any attempt to cool prices when they’re well on their way to normal levels.
“The price increases that we’ve seen are very difficult to reverse,” Morici told ABC News. “It can’t be solved, except with draconian measures.”
Other economists indicated that a wide-ranging effort to address inflation could play an important preventative role, safeguarding the economy against a price spike in the event of an emergency, such as another pandemic.
“Even if you’re back to being on budget rather than on edge, you’re still scared. You’ve had a really terrible experience from no fault of your own,” Isabella Weber, an economics professor at the University of Massachusetts Amherst who studies price controls, told ABC News.
“We have to prepare for the next shock,” Weber added.
