Business

(WASHINGTON) — Federal Reserve Chair Jerome Powell on Tuesday warned of potentially devastating consequences of a U.S. debt default and called on Congress to raise the debt ceiling.

Speaking to the Senate banking committee, Powell said a potential U.S. debt default could be “extraordinarily adverse and do longstanding harm.”

“At the end of the day, there is only one solution to this problem and that is Congress,” he added. “Congress really needs to raise the debt ceiling. That’s the only way out.”

The U.S. risks defaulting on its debts as early as July unless the borrowing limit is raised, the nonpartisan Congressional Budget Office said in a report last month.

The federal government on Jan. 19 reached its approximately $31.4 trillion debt ceiling — which legally caps how much the U.S. can borrow to pay for what tax and other revenue doesn’t cover — and the Treasury Department has since been using “extraordinary measures” along with its current cash flow to keep the government’s obligations paid.

Failure to raise the debt limit and the ensuing default on U.S. debt — which have never happened before — would all but ensure a U.S. recession that could put millions out of work, economists and budget analysts previously told ABC News.

The remarks from Powell add urgency to an ongoing political dispute in Congress over the debt ceiling.

Some Republicans in the House have resisted an increase of the debt limit unless Democrats agree to spending cuts. The Biden administration, however, has repeatedly said that it will not negotiate over the debt ceiling and that a discussion over spending should occur separately.

When asked whether the current uncertainty about a debt ceiling increase has damaged the economy, Powell said, “In principle, it could.”

“I think markets tend and observers tend to watch this and tend to think that it will work out and it has in the past worked out,” he added. “And it needs to work out this time, too.”

Mark Zandi, chief economist at Moody’s Analytics, was set to testify to a separate Senate committee on Tuesday on the risk posed by a debt default.

“The Treasury debt limit is an immediate threat to any optimism the economy can skirt recession in the coming year and poses a long-term threat to the nation’s finances and economic growth,” Zandi will tell senators, according to his prepared remarks. “Financial markets and the economy would be hit hard.”

In addition to comments about the debt ceiling, Powell spoke at length about inflation, which has fallen significantly from a summer peak but is more than triple the Fed’s target of 2%.

The inflation fight “has a long way to go and is likely to be bumpy,” Powell said.

The Fed last month imposed the latest in an aggressive string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession.

In all, the Federal Reserve has raised interest rates 4.5% over the past year.

Citing elevated inflation and a tight jobs market, Powell said the central bank expects “ongoing increases” to its benchmark interest rate and a sustained period of elevated rates before a change in policy.

Powell has repeatedly said that the Fed will keep its benchmark interest rate elevated until inflation reaches the central bank’s 2% target. That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.

“We will stay the course until the job is done,” Powell said on Tuesday.

Despite heightened borrowing costs, the economy has largely defied an anticipated slowdown.

The economy added a staggering 517,000 jobs in January, well above the breakneck pace of some 400,000 monthly jobs added on average last year, according to government data released last month.

Fresh retail sales data last month blew past economist expectations, suggesting resilient consumer spending, the lifeblood of the U.S. economy.

The combination of easing inflation and sustained economic growth have rasied hope among some of a “soft landing,” in which the Fed slows the economy and brings down inflation while preventing the U.S. from entering a recession.

The hot economy could cause inflation to rise, however, prompting the Fed to raise rates further and risk a deeper and more prolonged economic slowdown.

A survey conducted last month by the National Association for Business Economics found that 58% of economists expect a recession in 2023.

Some Democratic senators have raised fears that continued rate hikes could cause an economic downturn that hurts low- and middle-income Americans.

“Raising interest rates can’t rebuild our supply chains and fix demand imbalances from the pandemic,” said Sen. Sherrod Brown. “Raising interest rates won’t end Russia’s brutal invasion of Ukraine.”

“Not only will higher interest rates not solve it,” the Ohio Democrat added. “If they’re overdone, they’ll make it worse.”

In response, Powell acknowledged the complex reasons for heightened inflation but reaffirmed the role of the Fed in addressing price increases.

“We’re well aware that this particular situation involves a mix of forces, not all of which our tools can affect,” Powell said. “But there is a job here for us to do.”

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — The Justice Department on Tuesday filed a lawsuit to stop the proposed merger between JetBlue and Spirit Airlines.

The $3.8 billion merger would create the nation’s fifth largest airline, and would be the first U.S. airline merger since 2016 when Alaska Airways bought Virgin Atlantic.

In anticipation of a DOJ lawsuit, JetBlue said a merger with Spirit would bring down costs for customers.

“The Big Four airlines have a lock on about 80% of the market,” the company said in a statement. “JetBlue’s combination with Spirit allows it to create a compelling national challenger to these dominant airlines, while also ensuring [ultra low cost carrier] options remain available in overlap markets.”

The company said it’s already made changes ahead of the merger and their routes do not overlap.

“JetBlue’s unique combination of low fares and great service is a competitive force that keeps the legacy carriers on their toes and results in lower fares,” the company said.

In the lawsuit filed in Massachusetts federal court, the Justice Department said that allowing the merger to go through would eliminate Spirit as the “the largest and fastest-growing ultra-low-cost carrier in the United States.”

Spirit, the Justice Department said, is allowing cost-conscious Americans the option to travel, and by eliminating this business model, it hurts competition for consumers.

“If the acquisition is approved, JetBlue plans to abandon Spirit’s business model, remove seats from Spirit’s planes, and charge Spirit’s customers higher prices,” the lawsuit says. “JetBlue’s plan would eliminate the unique competition that Spirit provides — and about half of all ultra-low-cost airline seats in the industry—and leave tens of millions of travelers to face higher fares and fewer options. Spirit itself put it simply: “A JetBlue acquisition of Spirit will have lasting negative impacts on consumers.”

Spirit’s model of unbundling certain services like carry-on baggage allows for consumers to chose what they want to pay for, which is their “secret weapon.”

“The rest of the industry — including JetBlue –has been forced to respond to Spirit’s innovations and low prices. Spirit estimates that when it starts flying a route, average fares fall by 17%; JetBlue estimates that when Spirit stops flying a route, average fares go up by 30%,” the lawsuit says. “Spirit’s success — and other airlines’ response to it—has led to the “Spirit Effect”: when Spirit enters a new route, prices for consumers across all airlines tend to fall and demand for air travel goes up.”

DOJ contends that Spirit serves a different population — families traveling for a vacation and not those traveling for work or something else.

“JetBlue’s acquisition would also dampen competition with other airlines,” the suit says. “Airlines do not always compete as aggressively as they could. Sometimes they take advantage of opportunities to soften competition through coordinated actions—like “follow-the-leader” price increases—that lead to higher fares or reduced capacity. Spirit has recognized it has “no obligation” to “follow the herd” when it comes to collective industry price increases. By contrast, JetBlue has already demonstrated its willingness to follow along with some of those opportunities to coordinate and would have increased incentives to do so if the acquisition goes through.”

The acquisition would dampen Spirit’s growth and reduce the number of seats on Spirit’s planes, according to DOJ. The department says that when JetBlue came into the market it was the disrupter, but now has transitioned to a “close ally” of the big four airline carriers.

“Spirit’s strategy of focusing on cost-conscious travelers has prompted other airlines to follow suit by introducing their own fare options to better compete,” the suit says.

The Justice Department notes that JetBlue has attempted to buy Spirit before – unsuccessfully in 2017 and 2019.

This is a developing story. Please check back for updates.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Electric carmaker Tesla slashed the prices of its two most expensive cars in the U.S., the automaker’s website showed on Monday.

The price cuts affected the performance version of the Model S and the more expensive Model X.

The move follows a previous cut in January that brought down prices worldwide as much as 20%.

Later that month, CEO Elon Musk said the discounts had significantly boosted car orders following the announcement.

“Price really matters,” Musk said on an earnings call. “I think there’s just a vast number of people that want to buy a Tesla car but can’t afford it.”

The move aims to further bolster demand as Tesla faces slowing sales and heightened competition.

At the outset of this year, Tesla reported disappointing sales for the last three months of 2022, which fell short of Wall Street expectations. Tesla delivered 405,000 vehicles from October through December; analysts anticipated 420,000 deliveries.

The news sent the company’s stock tumbling 12% in a single day.

In all, Tesla stock has fallen nearly 30% over the past year. Shares fell almost 2% in early trading on Monday after the price cut.

Tesla did not immediately respond to a request for comment.

Dan Ives, a longtime Tesla bull and managing director of equity research at Wedbush, applauded the price cuts on Monday.

“Tesla cutting Model S and X prices another smart strategic move by Musk & Co.,” Ives said on Twitter. “Lower price points have resonated well and spurred considerable demand.”

Musk, who acquired Twitter in late October, has drawn scrutiny over his apparent focus on the social media platform. Musk said in December that he would resign as head of Twitter when the company identifies a successor.

Previously, Musk has attributed Tesla’s falling stock price to rising interest rates, which typically hurt stockholders and benefit savers, who stand to gain from an uptick in the interest yielded by accounts held at banks.

The price cuts mark the third such announcement in recent months. The company said in December that it would offer $7,500 discounts on Model 3 and Model Y vehicles delivered in the U.S. that month.

Tesla remains the top seller of EVs in the U.S. but its lead has slipped in recent months as competitors offer a host of affordable alternatives, a S&P Global Mobility report showed in November.

The company held a 65% market share of newly registered electric vehicles in the U.S. through the third quarter 2022, a drop from 71% in 2021 and 79% in 2020, the report found.

“It’s always been our goal at Tesla to make cars that are affordable to as many people as possible,” Musk said on the earnings call in January. “So I think it’s a good thing, all things considered.”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Anna Gifty Opoku-Agyeman, a graduate student studying economics and public policy at Harvard Kennedy School, who is Black, said she never would have entered the field if she hadn’t met Lisa Cook.

In 2017, then an undergraduate math major with little familiarity with economics, Opoku-Agyeman attended a seminar led by Cook, also Black, who at the time was an economics professor at Michigan State University.

“She was wonderful,” Opoku-Agyeman told ABC News. “I walked up to her and said, ‘Hey, can you be my mentor?'”

After graduation, Opoku-Agyeman spent a summer studying at Michigan State, where the relationship with Cook deepened from a formal mentorship to a friendship.

“She has looked out for me in this space,” Opoku-Agyeman said. ​​”I don’t think I would be here if she didn’t take me under her wing and usher me through some of the most difficult challenges.”

In May, Cook became a Federal Reserve governor, making her the first Black woman to hold that key position, which helps set central bank policy at a high-stakes moment when policymakers are trying to bring down inflation without causing a recession.

She is one in a series of women recently elevated to senior leadership posts in U.S. economic policymaking, including the appointment last month of Lael Brainard to lead the National Economic Council.

The rise of women at the top of economics shows how far the profession has come from a previous era when few women entered the field, economists told ABC News.

However, women continue to make up a fraction of students in the discipline, who ultimately set the course for its professional ranks; and a severe lack of minority women remains a dire concern, they said.

Esther George, the first woman to become President of the Kansas City Federal Reserve, who stepped down in January, told ABC News that the current group of women atop economic policymaking marks a major accomplishment but more progress awaits.

“It’s great,” she said, later adding: “We’re always looking at who’s graduating out of school with Ph.D.’s in economics, and notice right away there are fewer women, fewer still people of color. It really requires thinking about why that is.”

In all, two of the top three economic policymaking posts in the Biden administration are currently occupied by women, including Treasury Secretary Janet Yellen.

This year, a record number of women serve on the boards of the Federal Reserve’s 12 regional banks, a Reuters analysis last month found. Out of 108 spots on the 12 Fed bank boards, 44% are occupied by women, the analysis showed.

By contrast, women hold 28% of board seats on the Russell 3000 index of publicly traded companies, according to a report released in September by the advocacy group 50/50 Women on Boards, which drew on data from research firm Equilar.

The surge of women atop economic policymaking has coincided with a heightened focus on gender diversity at key institutions like the Federal Reserve, a shift driven in large part by women, economists said.

For example, George, the former President of the Kansas City Federal Reserve, helped women colleagues advance their careers through her position as host of a prestigious annual three-day symposium on central bank policy in Jackson Hole, Wyoming.

In 2011, George launched a group called “Women of Jackson Hole” that aimed to improve the representation of women attendees and speakers at the conference.

When she began the initiative, women made up a handful of conference attendees, George said. Last year, nearly 30% of the symposium participants and more than 40 percent of the speakers were women, the symposium said.

“At first, all of us women could sit around a table for five,” George said. “When I left, we had a whole patio.”

“There’s a point at which you realize, and this was true for me: I can’t solve everything, but I ought to solve what I can.”

Stephanie Kelton, an economic professor at Stony Brook University and former economic advisor to the presidential campaigns of Sen. Bernie Sanders, applauded the rise of women at the top of the field but stressed the importance of evaluating them based on how they carry out the job.

“It’s certainly affirming and it’s overdue, and you love to see women succeed in climbing the ranks,” Kelton told ABC News. “But it also matters who these people are and what they’re going to fight for and how they understand the working of the economy.”

Despite progress in representation of women at the top of the field, men far outnumber women at the undergraduate and graduate level, leaving the profession as a whole out of balance, economists said.

Last year, the share of women granted Ph.D. degrees stood at about 34%, slightly lower than it was in 2020; while the proportion of women among undergraduate economics major degree recipients stood at nearly 36%, roughly one percentage point higher than 2020, according to an annual report from the American Economic Association, or AEA.

Women make up less than 18% of full professors in economics departments with doctoral programs, the AEA report found.

In recent years, as the field has reckoned with the lack of overall gender representation in its ranks, prominent women economists have come forward with stories of sexual harassment in the workplace, prompting a #MeToo moment for the profession.

“I fortunately didn’t have any of those kinds of experiences that seem so commonplace within our discipline, and I don’t know if we’re uniquely bad in economics, but it sure seems to be something that needs to be addressed,” Kelton said.

Anne Owen, a professor of economics and public policy at Hamilton College who formerly worked at the Fed, said the lack of women in the field makes it harder for female students to establish a “sense of belonging” that can ease challenges posed by the profession.

“Going to graduate school in economics is very difficult and you have to persevere,” she added. “It might have been easier to find a reason to persevere if there were other women pursuing the same thing I was.”

The disparity in representation is even more pronounced among minority women. In 2016, minority women received 5.1% of all economics degrees conferred that year, an AEA report found.

Opoku-Agyeman, the graduate student at Harvard Kennedy School, said the lack of diversity in economics exposes her to moments of subtle but harmful forms of disrespect, such as people questioning her ability. Further, the status quo leads to policy outcomes that fail to fully consider the perspectives of minority groups, she added.

“We’re not doing ourselves any favors when we have a homogeneous looking group of people overseeing policymaking and how our economy functions,” she said. “Because the policies being enacted are being enacted on folks who don’t look like one group.”

Still, she said she draws encouragement from the rise of women in leadership positions, especially Cook.

“For me, it shows it can be done,” she said.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Amazon has paused construction on its second headquarters in Virginia, known as “HQ2,” the company said Friday.

The first phase of the HQ2 campus, called Met Park, will open in June for 8,000 employees, an Amazon spokesperson said. The company delayed completion of the second phase but it still intends to ultimately bring 25,000 jobs to the headquarters, the spokesperson added.

“We’re always evaluating space plans to make sure they fit our business needs and to create a great experience for employees,” John Schoettler, vice president of Global Real Estate and Facilities at Amazon, told ABC News in a statement.

“Our second headquarters has always been a multi-year project, and we remain committed to Arlington, Virginia, and the greater Capital Region,” he added.

Amazon has faced a challenging business environment after strong performance during the pandemic, when customers stuck at home came to rely on delivery services.

In early January, Amazon announced plans to eliminate just over 18,000 roles, including impending layoffs announced in November.

The news was first reported by Bloomberg.

Shares of Amazon have fallen about 38% over the last year. In early trading after the announcement on Friday, the share price increased about 2%.

The final timing of construction on HQ2 is still being determined, but the company expects the resumption later this year of pre-construction work, such as applying for permits, an Amazon spokesperson said.

In 2018, Amazon announced the selection of New York City and northern Virginia as sites for a second headquarters divided between the two locations. However, the company withdrew its plans from New York City the following year, leaving Virginia as the sole site of its second headquarters.

The company said it remains committed to investing in affordable housing, computer science education and nonprofit groups in the Arlington area.

“We appreciate the support of all our partners and neighbors, and look forward to continuing to work together in the years ahead,” said Schoettler.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Growing recession alarm at the outset of this year warned of a coming business slowdown and significant job losses — until a government report last month showed that unemployment stands at its lowest level in more than 50 years.

A couple weeks later, in mid-February, fresh retail sales data blew past economist expectations, suggesting resilient consumer spending, the lifeblood of the U.S. economy.

The blockbuster economic performance boosted hopes that the economy would avoid a recession altogether.

Treasury Secretary Janet Yellen, speaking to ABC News’ Good Morning America last month, rejected concern about a downturn, saying the economy remains “strong and resilient.” Goldman Sachs cut its odds of a recession in the next 12 months to 25%.

The U.S. economy is humming, at least in some key metrics, but most economists say that the nation remains on a crash course toward a likely recession within the next year. A survey conducted last month by the National Association for Business Economics found that 58% of economists expect a recession in 2023.

An aggressive series of interest rate hikes at the Federal Reserve is expected to continue cooling the economy, economists told ABC News, noting the decline of personal savings that previously fueled the pandemic recovery.

To be sure, economists often err in their forecasts and some told ABC News that the path of averting a downturn is still possible.

Jeffrey Roach, chief economist at LPL Financial, called the coexistence of strong economic data and persistent recession fears a “conundrum.”

“There’s so much flux in the market,” he added, acknowledging the mixed signals sent by the economy in recent weeks. “The economy is still in this massive retooling from the pandemic.”

The high prices that weigh on the economy trace back to the pandemic-induced supply bottlenecks that made it harder to access a slew of goods, including essentials like gas and food.

Meanwhile, COVID forced billions worldwide indoors, shifting demand away from concert tickets and restaurant meals and toward the exact goods in short supply. The Russia-Ukraine war has exacerbated the shortages and sent prices even higher.

The Federal Reserve has imposed a string of aggressive rate hikes since last year that aim to lower inflation by cooling the economy and choking off demand. The approach, however, risks tipping the U.S. into a recession and putting millions out of work.

The Fed’s rate hikes have helped bring inflation down significantly from a summer peak. However, the policy has failed to slow the overall economy, as evidenced by the recent strong economic data, economists told ABC News.

The combination of easing inflation and sustained economic growth have driven hope among some of a “soft landing,” in which the Fed slows the economy and brings down inflation, while preventing the U.S. from entering a recession.

But a slowdown brought about by the Fed typically lags months behind a given rate hike, Nancy Lazar, chief global economist at Piper Sandler, told ABC News.

“Just because the economy is doing OK today doesn’t mean the economy won’t go into recession,” she said. “It’s happening slowly.”

Some parts of the economy have shown signs of a slowdown. Home sales fell for the 12th consecutive month in January, reaching their lowest rate since November 2010, according to the National Association of Realtors.

The personal savings rate fell to an all-time low in December, suggesting that U.S. consumers have spent down much of their pandemic reserves.

Tina Quigley, president and CEO of the Las Vegas Global Economic Alliance, a group tasked with attracting and boosting economic activity, said the city thrived last year as leisure and travel bounced back from a pandemic lull.

By the end of last year, the average nightly rate for a hotel room in Las Vegas stood at $165, well above the pre-pandemic high of $127, she said. The Las Vegas airport saw 52.6 million passengers pass through its doors last year; a jump from 51.5 million in 2019.

“I don’t want to paint a picture of everything being sunshine and rainbows but certainly 2022 was a very good year,” she said.

Still, the organization assisted far fewer companies in establishing locations in Las Vegas last year compared to the year prior, suggesting recession fears had curtailed business plans and may foretell a further slowdown, Quigley said. The group helped 11 companies locate in Las Vegas last year, a sharp decline from 39 a year prior, it said.

“That pipeline has slowed down,” Quigley said. “We’re preparing for a recession, but not overreacting to it.”

Roach, of LPL Financial, said he expects a recession but recent strong economic indicators raise the likelihood of a mild downturn.

“Recessions are often necessary to break the back of inflation,” Roach said. “But given the fact that there’s so much fundamental stability in the economy, that recession won’t be as bad as your average recession.”

Zweli’s, a chain of three Zimbabwean restaurants in Durham, North Carolina, has enjoyed an uptick in business in recent months, said co-owner Leonardo Willliams, who runs the company with his wife.

Whereas last year a restaurant had about one or two tables occupied at a given time; now it’s four or five, he said. The company plans to hire 10 workers over the next month, increasing its workforce by 40%, he added.

“Business is slowly creeping back up,” he said.

However, rising costs have eaten away at the company’s profits, since major food purveyors charge twice as much for some products as they did before the pandemic, he said. And he fears that a recession would force corporate clients to cut back on catering, which accounts for 70% of the company’s revenue.

“It’s scary,” he said. “As small businesses, we’re equipped to be problem solvers but how much can one take?”

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Social media platform TikTok will set a default 60-minute screen time limit for users below age 18, the company announced on Wednesday.

When the one-hour limit expires, young users will be prompted to enter a password that allows them to continue viewing the app, the company said.

Young users can opt out of the daily 60-minute screen limit, but some high-usage viewers will be asked to set a daily screen time limit of their choice, said TikTok, which is owned by the Chinese company ByteDance.

“We believe digital experiences should bring joy and play a positive role in how people express themselves, discover ideas, and connect,” Cormac Keenan, TikTok’s Head of Trust and Safety, said in a statement.

TikTok, which has more than 100 million monthly active users in the U.S., has faced growing scrutiny from state and federal officials over fears that American data could fall into the possession of the Chinese government.

The app has also encountered sharp criticism over the risks it may pose to the mental health of young people.

Republican Rep. Michael Gallagher, of Wisconsin, who chairs a House select committee on China, told NBC’s “Meet the Press” last month that he considers TikTok “digital fentanyl.”

“It’s highly addictive and destructive and we’re seeing troubling data about the corrosive impact of constant social media use, particularly on young men and women here in America,” he added.

Last year, a bipartisan group of state attorneys general launched a nationwide investigation into the mental health effects of TikTok for young users.

Scrutiny over the harmful effects of content on social media, especially for young people, intensified after leaks from whistleblower Frances Haugen in 2021 revealed that an internal Facebook study had shown damaging mental health effects of Instagram for teen girls.

The Centers for Disease Control and Prevention released a study last month that showed elevated rates of poor mental health in young people, especially young girls.

In 2021, nearly 60% of high school girls experienced a persistent feeling of sadness or hopelessness over the previous year, the study found, adding that almost 25% of high school girls made a suicide plan over that period.

In July, TikTok announced plans for a rating system aimed at protecting young users from inappropriate content.

Wisconsin Sen. Tammy Baldwin and Minnesota Sen. Amy Klobuchar, both Democrats, last February sent a letter to TikTok saying its “algorithm of ‘nonstop stream of videos’ increases the likelihood that viewers will encounter harmful content even without seeking it out.”

The letter followed an investigation from The Wall Street Journal that found the platform surfaced tens of thousands of weight loss videos to a dozen automated accounts registered as 13 year olds within a few weeks of their joining the app.

Other social media platforms have also faced criticism over their effect on young people’s mental health. In September 2021, Facebook suspended plans to offer a version of Instagram for kids.

The following month, officials from Snapchat, TikTok and YouTube told lawmakers they would work with them on proposals to help protect young users from harmful content on their platforms.

TikTok CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee in March on the company’s data security practices, the committee said last month.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Eli Lilly will cut the price of its most commonly prescribed insulin products by 70% and expand a program that caps patient costs at $35 per month, the company said on Wednesday.

“While the current healthcare system provides access to insulin for most people with diabetes, it still does not provide affordable insulin for everyone and that needs to change,” David Ricks, chair and CEO of Eli Lilly, said in a statement.

“The aggressive price cuts we’re announcing today should make a real difference for Americans with diabetes,” he added.

The Indianapolis-based drugmaker faced a bipartisan pressure campaign from members of Congress, which included a two-year Senate probe of insulin prices that concluded in 2021.

The Inflation Reduction Act, enacted in August, set a $35 price cap on insulin products for Medicare recipients.

During his State of the Union Address last month, President Joe Biden called on Congress to extend the $35 price cap on insulin products for all patients.

The price of Humalog, Eli Lilly’s most frequently prescribed insulin drug, will drop 70% beginning at the end of this year, the company said. The discount affects a slew of Humalog products, including Humalog U-100, Humalog Mix 50/50 and Humalog Mix 75/25.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — When Alyn Carroll received information that her Supplemental Nutrition Assistance Program (SNAP) will soon be substantially decreased, her emotions almost overtook her.

“I wanted to cry,” Carroll, 56, told ABC News. “I wanted to cry because I just started feeling comfortable where I could budget every week a certain amount of money to spend and I did OK with that. But now, they taking that back? It’s like, what is a person to do?”

Carroll, who lives in Baltimore, has been using SNAP to buy food for around seven years and said it is a crucial part of her grocery budget as a person with diabetes. The remaining SNAP emergency allotments that were expanded during the COVID-19 pandemic are set to expire, however — and Carroll’s monthly SNAP check will go from $283 to just $56, she said.

“You can’t survive off of $56 a week, let alone four weeks,” she said. “That extra money helped. I mean, it didn’t fix the problem, but it helped greatly. With them taking those funds back, it’s going to be terrible because we already didn’t have enough money to feed our families.”

While nearly 30 million Americans could see reduced payments when the expanded SNAP benefits expire, Black and Latino communities may be pushed back below the poverty line without the support of the emergency allotments, which were temporarily extended during a time of financial and economic hardship from the pandemic.

According to a study from the Urban Institute, SNAP’s benefits kept 4.2 million people out of poverty since the fourth quarter of 2021, with the largest poverty reduction from the program for Black and Hispanic people.

The emergency allotments reduced poverty by 10% and child poverty by 14% in their states, according to the study.

Eighteen states have already ended the extra SNAP benefits, impacting some 12 million Americans. The remaining 32 states and the jurisdictions of Washington, D.C., Guam and the U.S. Virgin Islands follow suit on Wednesday.

“It’s important to know that communities of color have a higher rate of poverty at a national and statewide level than their white counterparts. Because of that, they’re already at a disadvantage in terms of access to benefits,” said Gina Plata-Nino, Food Research and Action Center (FRAC) deputy director for SNAP.

The FRAC prioritizes improving the nutrition, health and well-being of people struggling against poverty-related hunger in the U.S. through advocacy, partnerships, and by advancing bold and equitable policy solutions, according to its website.

According to the U.S. Census Household Pulse Survey data, food insufficiency — or “sometimes” or “often” not having enough to eat — continues to be over twice as high for Black and Latino adults compared to white adults.

“SNAP is able to protect people. It pushes them out of the poverty hole. It allows them to have enough resources to be able to feed their kiddos and I think it’s important to know that while this is the Supplemental Nutrition Assistance Program for many of these families, it is also their one sole income to feed their families,” Plata-Nino said.

While Carroll is solely responsible for finding food for herself, she expressed empathy for those in her community with families who will struggle because of the end of SNAP’s emergency benefits.

She said she also worries how food banks will be able to pivot during a time of record inflation, with food prices up 10.1% in January, compared with a year ago, according to the U.S. Bureau of Labor Statistics.

President and CEO of the Atlanta Community Food Bank Kevin Waide told ABC News that his organization currently spends around $2 million just for food purchases, a record-breaking number for the facility.

“Food banks are sourcing food from donations from federal commodity support and food that we buy, and for every dollar of food resources that are taken out of the SNAP program, we have to find a way to make up for that,” Waide said.

“And so that means we’ve got to go raise more money, buy more food donations, buy more food. And at the scale that we’re talking about, that’s just a very challenging proposition right now in our food bank. … And even now, we are not meeting the food needs in our community. I don’t think, given the level of demand that’s out there,” he said.

The bank serves 600,000 people in 29 counties across Georgia, one of the states that discontinued SNAP’s emergency allotments after May 2022. Since then, Waide said, his food bank saw a 30% increase in visits.

Georgia Gov. Brian Kemp’s office has pointed to low unemployment and other positive economic news in the state, in light of the reduced benefits, but said last year: “If any Georgian or Georgia families are experiencing food insecurity, we have many other statewide programs to help support them.”

“The state made its decision for a variety of reasons, not just because they didn’t want to extend benefits, but there are other factors that went into that decision,” Waide said.

That had real consequences, he told ABC News.

“So many families across our community are facing significant financial pressure right now, and losing $100 a month really puts them in harm’s way,” he said. “We hear that every day from our neighbors that we’re serving, that that additional money has helped them keep food on the table as food prices have continued to increase and as they’re trying to recover from the long-term effects of the pandemic.”

Although some households may see around $95 or less gone in their budget for groceries, according to the Center on Budget and Policy Priorities, a left-leaning think tank, factors such as family size and income can result in some families losing hundreds of dollars each month.

From butter’s price recently rising an average of 31% to bread being up 15%, year over year, according to inflation data, SNAP users like Carroll look to the legislators to help those in the community who need it most.

“I’m just hoping that the government can find a way to give people some funds back that they’ve taken away to help our community survive,” she said. “Because we’re not surviving right now. We’re just barely existing. We want to do better, but we need help.”

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — The backlash against China-owned TikTok in the U.S. and other Western countries escalated in recent days, as some U.S lawmakers pushed to give President Joe Biden the authority to impose a ban on the app for all users.

Canada banned TikTok on government-issued mobile devices on Monday, following a similar ban from the European Union last week.

TikTok, which has more than 100 million monthly active users in the U.S., has faced growing scrutiny from government officials over fears that user data could fall into the possession of the Chinese government and the app could ultimately be weaponized by China to spread misinformation.

However, the fight to ban TikTok risks imposing undue limits on free speech and private business, mimicking the type of censorship for which some Western countries have faulted China, according to some experts and civil liberties advocates.

Here’s what to know about why TikTok is being banned, and whether government officials would eventually prevent everyday users from accessing the app:

Why is TikTok being banned?

The primary concern raised by officials banning TikTok centers on data security, especially fears that user information could end up in the hands of the Chinese government.

Such concerns focus both on potential risks posed to U.S. national security, as well as business advantages afforded to Chinese companies that may gain access to the information, Aynne Kokas, professor of media studies and the director of the East Asia Center at the University of Virginia, told ABC News.

“There are significant national security concerns about Chinese firms that are gathering data in the U.S. and what they can do with that,” Kokas said. “TikTok has a lot of users.”

Companies that operate in China must comply with laws that require them to share data with the government, Deputy Attorney General Lisa Monaco said at a panel event earlier this month.

“The bottom line is China has been quite clear that they are trying to mold and put forward the use and norms around technologies that privilege their interests,” she said. “There’s a reason we need to be very concerned.”

In addition, some officials have raised alarm that the Chinese government could use TikTok to spread false information, possibly influencing political discourse and election outcomes.

“There are concerns about the lack of algorithmic transparency on TikTok, and the potential for mis- and disinformation,” Kokas said.

Which countries have banned TikTok?

A slew of countries have imposed restrictions on TikTok.

In 2020, India imposed a full ban on TikTok and dozens of other Chinese apps, citing data privacy and national security concerns. TikTok has faced temporary bans for all users in Indonesia, Bangladesh and Pakistan over the spread of content deemed inappropriate by government officials.

Some countries have joined the U.S. in banning TikTok on government-issued devices. Canada and the European Union imposed such measures in recent days. Taiwan also banned the app from government devices last year.

In response to the government-device bans, TikTok told ABC News in a statement: “We appreciate that some governments have wisely chosen not to implement such bans due to a lack of evidence that there is any such need, but it’s disappointing to see that other government bodies and institutions are banning TikTok on employee devices with no deliberation or evidence.”

“We share a common goal with governments that are concerned about user privacy, but these bans are misguided and do nothing to further privacy or security,” the company added.

Will the U.S. ban TikTok entirely?

So far, restrictions of TikTok in the U.S. at the state and federal level have solely focused on banning the app from government-issued devices and currently no further bans have been put in place.

“There’s a huge amount of logic for government-device bans,” Kokas said. “It doesn’t fall victim to the same conversations about free speech because these are government-owned devices.”

The Biden administration said on Monday that it is giving federal agencies 30 days to guarantee they do not have TikTok on any federal devices.

“We’ll continue to look at other actions that we can take,” Olivia Dalton, the White House principal deputy press secretary, told reporters on Tuesday. “That includes how to work with Congress on this issue further.”

In response to the U.S. ban of the app on government-issue devices, TikTok told ABC News: “The ban of TikTok on federal devices was passed in December without any deliberation, and unfortunately that approach has served as a blueprint for other world governments. These bans are little more than political theater.”

“We hope that when it comes to addressing national security concerns about TikTok beyond government devices, Congress will explore solutions that won’t have the effect of censoring the voices of millions of Americans,” the company added.

TikTok CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee in March about the company’s data security practices, the committee said last month.

More than half of U.S. states have taken steps toward a partial or full ban of TikTok on government devices.

Some lawmakers and advocates, however, have sought to extend the ban to all U.S. users. The House Foreign Affairs Committee is weighing a measure that would grant Biden new authority to ban TikTok.

TikTok has undergone a yearslong review by the ​​Committee on Foreign Investment in the United States, which could result in a ban of the app or a forced sale of the company’s U.S. operation.

Despite momentum among lawmakers for a full U.S. ban, the likelihood of such a move remains low, experts told ABC News. citing the dramatic intervention into the private sector that it would require. Moreover, if such a move did take place, it would face a challenge in the courts, they added.

“I’m skeptical that a ban would survive constitutional scrutiny in the U.S.,” Anupam Chander, a professor of law and technology at Georgetown University, told ABC News. “Because we have a First Amendment right to receive information, even information from adversary countries.”

In a letter to federal lawmakers on Monday, the American Civil Liberties Union voiced opposition to a full ban of TikTok.

“Congress must not censor entire platforms and strip Americans of their constitutional right to freedom of speech and expression,” said Jenna Leventoff, senior policy counsel at the ACLU.

Copyright © 2023, ABC Audio. All rights reserved.