The New York Times - USA (2020-10-17)

THE NEW YORK TIMES BUSINESSSATURDAY, OCTOBER 17, 2020 Y B3

SOCIAL MEDIA | ECONOMY

pleted its about-face on Friday by
lifting the ban on the New York
Post story altogether, as the arti-
cle has spread widely across the
internet.
Twitter’s flip-flop followed a
spate of changes from Facebook,
which over the past few weeks has
said it would ban Holocaust denial
content, ban more QAnon conspir-
acy pages and groups, ban anti-
vaccination ads and suspend po-
litical advertising for an unspeci-
fied length of time after the elec-
tion. All of those things had previ-
ously been allowed — until they
weren’t.
The rapid-fire changes have
made Twitter and Facebook the
butt of jokes and invigorated ef-
forts to regulate them. On Friday,
Senator Josh Hawley, Republican
of Missouri, said he wanted to sub-
poena Mark Zuckerberg, Face-
book’s chief executive, to testify
over the “censorship” of the New
York Post article since the social
network had also reduced the visi-
bility of the piece. Kayleigh McE-
nany, the White House press sec-
retary, said that Twitter was
“against us.” And President
Trump shared a satirical article on
Twitter that mocked the compa-
ny’s policies.
“Policies are a guide for action,
but the platforms are not standing
behind their policies,” said Joan
Donovan, research director of the
Shorenstein Center on Media,
Politics and Public Policy at Har-
vard’s Kennedy School. “They are
merely reacting to public pressure
and therefore will be susceptible
to politician influence for some
time to come.”
A Twitter spokesman con-
firmed that the company would
now allow the link to the New York
Post article to be shared because
the information had spread across
the internet and could no longer
be considered private. He de-
clined further comment.
A Facebook spokesman, Andy
Stone, said: “Meaningful events
in the world have led us to change
some of our policies, but not our
principles.”
For nearly four years, the social
media companies have had time
to develop content policies to be
ready for the 2020 election, espe-

cially after Russian operatives

were found to have used the sites

to sow discord in the 2016 election.

But even with all the prepara-

tions, the volume of last-minute

changes by Twitter and Facebook

suggests that they still do not

have a handle on the content flow-

ing on their networks.

That raises questions, election

experts said, about how Twitter

and Facebook would deal with any

interference on Election Day and

in the days after. The race be-

tween Mr. Trump and his Demo-

cratic challenger, Joseph R. Biden

Jr., has been unusually bitter, and

the social media sites are set to

play a significant role on Nov. 3 as

distributors of information. Some

people are already using the sites

to call for election violence.

Alex Stamos, director of the

Stanford Internet Observatory

and a former Facebook executive,

noted that after Mr. Trump re-

cently made comments to his sup-

porters to “go into the polls and

watch very carefully,” some com-

panies — like Facebook — created

new policies that forbid a political

candidate from using their plat-

forms to call for that action. The

companies also prohibited candi-

dates from claiming an election

victory early, he said.

“These potential abuses were

always covered by very broad

policies, but I think it’s smart to

commit themselves to specific ac-

tions,” Mr. Stamos said.

From the start, the New York

Post article that Twitter blocked

was problematic. The article fea-

tured purported emails from

Hunter Biden, a son of Joe Biden,

and discussed business in the

Ukraine. But the provenance of

the emails was unclear, and the

timing of their discovery so close

to the election appeared suspi-

cious.

So on Wednesday Twitter

blocked links to the article hours

after it had been published. The

company said sharing the article

violated its policy that prohibits

users from spreading hacked in-

formation. It also said the emails

in the story contained private in-

formation, so sharing the piece

would violate its privacy policies.

But after blocking the article,

Twitter was blasted by Republi-

cans for censorship. Many conser-

vatives — including Representa-

tive Jim Jordan of Ohio and Ms.

McEnany — reposted the piece to

bait the company into taking

down their tweets or locking their

accounts.

Twitter soon said it could have

done more to explain its decision.

Jack Dorsey, Twitter’s chief exec-

utive, said late Wednesday that

the company had not provided

enough context to users when

they were prevented from posting

the links.

His reaction set off a scramble

internally at Twitter. By late

Thursday, Vijaya Gadde, Twitter’s

top legal and policy official, said

the policy against sharing hacked

materials would change and the

content would no longer be

blocked unless it was clearly

shared by the hackers or individu-

als working in concert with them.

Instead, information gleaned

from hacks would be marked with

a warning label about its prov-

enance, Ms. Gadde said.

The internal discussions contin-

ued. On Friday, Twitter users

could freely post links to the New

York Post article. The company

has not added labels to tweets

with the article as it said it would.

At Facebook, the recent policy

changes have grabbed attention

partly because the company said

on Sept. 3 that it did not plan to

make changes to its site until after

the election. “To ensure there are

clear and consistent rules, we are

not planning to make further

changes to our election-related

policies between now and the offi-

cial declaration of the result,” Mr.

Zuckerberg wrote in a blog post at

the time.

Yet just a few weeks later, the

changes started coming rapidly.

On Oct. 6, Facebook expanded its

takedown of the QAnon conspir-

acy group. A day later, it said it

would ban political advertising af-

ter the polls closed on Election

Day, with the ban lasting an unde-

termined length of time.

Days later, Mr. Zuckerberg also

said Facebook would no longer al-

low Holocaust deniers to post

their views to the site. And less

than 24 hours after that, the com-

pany said it would disallow adver-

tising related to anti-vaccination

theories.

Facebook’s Mr. Stone posi-

tioned the changes as a natural re-

sponse to what it called “a historic

election,” as well as the coronavi-

rus pandemic and Black Lives

Matter protests.

“We remain committed to free

expression while also recognizing

the current environment requires

clearer guardrails to minimize

harm,” he said.

But there is one change Face-

book hasn’t made. After reducing

visibility of the New York Post ar-

ticle on its site on Wednesday and

saying the article needed to be

fact checked, the social network

has continued to stick by that deci-

sion.

Social Platforms Flip-Flop on Election Policies

FROM FIRST BUSINESS PAGE

Twitter, led by Jack Dorsey, on Friday began letting users share links

to an unsubstantiated New York Post article about Hunter Biden.

PRAKASH SINGH/AGENCE FRANCE-PRESSE — GETTY IMAGES

WASHINGTON — The federal budg-
et deficit soared to a record $3.1
trillion in the 2020 fiscal year, offi-
cial figures showed on Friday, as
the coronavirus pandemic fueled
a surge in spending and a drop in
tax receipts brought by house-
holds and businesses struggling
with economic shutdowns.
The federal government spent
$6.55 trillion in 2020, while tax re-
ceipts and other revenue trailed at
$3.42 trillion. Much of the spend-
ing came from the $2.2 trillion eco-
nomic relief package that Con-
gress passed in March, which was
financed by government borrow-
ing. Total debt held by the public
topped $21 trillion at the end of
September, a record level.
The shortfall underscores the
long-term economic challenge
facing the United States as it tries
to emerge from the sharpest
downturn since the Great Depres-
sion. Interest rates are low —
meaning it costs less for the gov-
ernment to borrow money — but
the ballooning deficit is already
complicating policy choices as Re-
publicans resist another large
stimulus package, citing concerns
about the U.S. debt burden.
The deficit — the gap between
what the U.S. spends and what it
earns through tax receipts and
other revenue — was $2 trillion
more than what the White House’s
budget forecast in February. It
was also three times as large as
the 2019 deficit of $984 billion.
According to the nonpartisan
Committee for a Responsible Fed-
eral Budget, the nation’s debt has
now surpassed the size of the
economy, amounting to 102 per-
cent of gross domestic product.
“It is hard to believe we now
owe a full year’s worth of output,”
said Maya MacGuineas, president
of the committee. “We weren’t
supposed to cross this threshold
for over a decade, but here we
are.”
Ms. MacGuineas noted that the
last time America’s debt exceeded
the size of the economy was at the
end of World War II, and that it
took years of balanced budgets to
bring it down.
The annual deficit was the larg-
est since 2009, when the United
States recorded a $1.4 trillion
shortfall during the financial cri-
sis.

In a statement accompanying

the annual budget report, Treas-

ury Secretary Steven Mnuchin

highlighted the extraordinary lev-

el of money that has been pumped

into the economy this year to com-

bat the recession and prop up the

economy. Russell T. Vought, the

director of the Office of Manage-

ment and Budget, said that as the

recovery continued, the fiscal pic-

ture would improve as companies

hired back workers and people be-

gan spending more money.

Federal agencies including the

Treasury Department, the Small

Business Administration, the De-

partment of Agriculture and the

Department of Health and Human

Services saw their spending soar

as they funneled loans to small

businesses, subsidized farmers

and provided funding for hospi-

tals. Much of the money also went

to households through stimulus

checks and enhanced unemploy-

ment benefits that gave workers

an extra $600 per week.

That spending was crucial to

preventing families from falling

into poverty and keeping busi-

nesses afloat. New research from

the Federal Reserve released this

week showed that Americans

used one-time stimulus checks to

save money and pay off debt.

Households spent just 29 per-

cent of the money they received

earlier this year, the Federal Re-

serve Bank of New York said in a

post on its website, citing its Sur-

vey of Consumer Expectations,

conducted in June and August.

Another 36 percent of the cash

was saved, while 35 percent was

used to pay down debt.

Even the most ardent deficit

hawks agreed that the virus,

which shut down large swaths of

the economy and tossed millions

out of work, necessitated a huge

fiscal response.

But with Election Day ap-

proaching, Republican lawmak-

ers have shown little appetite for

more spending, despite the fact

that millions remain unemployed

and previous aid has largely dried

up. While the White House and

Democrats want to bankroll an-

other $1 trillion-plus aid package,

Senate Republicans are preparing

a $500 billion bill to vote on later

this month. Speaker Nancy Pelosi

and House Democrats support a

$2.2 trillion package, while Presi-

dent Trump has endorsed going

higher than the $1.8 trillion pro-

posal the White House previously

proposed.

On Thursday, he told Mr.

Mnuchin, who is leading the nego-

tiations, to make a bigger offer

and said, “go big or go home.”

The Treasury secretary ac-

knowledged this week that the

deficit is a long-term concern but

said now is not the time to worry

about bringing it down. Given low

interest rates and the severe na-

ture of a health crisis that has

stalled so many parts of the econ-

omy, he said the deficit was not an

immediate priority.

“When you’re in a war — and

we’re in a war against Covid —

you spend what it takes to get rid

of it,” Mr. Mnuchin said on

Wednesday at the Milken Insti-

tute conference. “And that’s what

we’ve done.”

Treasury officials had no esti-

mate for next year’s deficit, but it

is likely to be smaller unless an-

other aid package is approved.

It appears unlikely that either

Mr. Trump or his Democratic op-

ponent, Joseph R. Biden Jr., would

make significant progress in re-

ducing the debt. While Mr. Trump

has promised to tackle the deficit

in a second term, he has also

pledged to continue cutting taxes

for individuals and corporations,

while offering few details about

how those would be paid for.

Mr. Biden wants to raise taxes

on corporations and the wealthi-

est Americans to help pay for ad-

ditional spending on health care,

infrastructure and education. But

those tax increases, while esti-

mated to raise about $4.3 trillion,

would not completely cover the

costs of his spending proposals,

according to the Committee for a

Responsible Federal Budget.

The nation’s debt has

surpassed the size

of the economy.

Russell T. Vought, the director of the Office of Management and Budget, printed the budget proposal in February.

SAMUEL CORUM/GETTY IMAGES

Spending Surge

Increases

Federal Deficit

To $3.1 Trillion

By ALAN RAPPEPORT

Eight million Americans have

slipped into poverty since May,

and there are 11 million fewer jobs

than before the pandemic. And

yet, for the fifth straight month,

people continued to pull out their

wallets and spend more on cars,

sporting goods and clothing.

Consumer spending rose 1.9

percent in September, the Com-

merce Department said on Friday,

more than twice the rate of in-

crease that most economists had

predicted. Retail sales have fully

recovered to pre-pandemic levels

and “jump started,” according to

one economist, a “nascent eco-

nomic recovery.”

“We thought we would see neg-

ative impacts on spending by now,

but these are surprisingly strong

sales gains,” said Scott Anderson,

an economist at Bank of the West.

“We thought catastrophic jobless-

ness would weigh more on confi-

dence, but it has risen.”

These seemingly contradictory

trends — recovering consumer

spending on the one hand and

worsening poverty on the other —

partly reflect the inequalities in

the American economy that have

existed for years, but have been

amplified by the pandemic.

While millions of Americans

have lost their jobs and are strug-

gling to pay their rent and utilities

bills, millions of others continue to

work remotely, enjoying rising

stock market investments, strong

home values and low interest

rates that are making big pur-

chases like a new car easier.

“It is a two-tiered world,” Beth

Ann Bovino, chief U.S. economist

at S&P Global, said.

The spending power of lower-

income Americans had been

boosted by the trillions of dollars

of stimulus that the federal gov-

ernment has pumped into the

economy, increasing household

incomes. But economists have

been warning for months that

most of that money, which came in

the form of checks this spring and

$600 a week in additional unem-

ployment benefits, has already

been spent.

“Lower-income households

don’t have the spending power

that they once had,” Mr. Anderson

said. “A lot of them, unfortunately,

are getting lost in the shuffle, and

it is partly what you are seeing in

this data.”

Strong auto sales were the larg-

est factor behind the spending in-

crease in September. Vehicle sales

rose 3.6 percent from August, as

more Americans who are forsak-

ing air travel during the pandemic

have upgraded their automobiles,

or bought a car for the first time.

Gasoline sales also increased

slightly, suggesting that more

people were venturing out as

schools, offices and businesses re-

opened.

There were other signs in the

data that, even as cases of the co-

ronavirus began to surge across

the country last month, people’s

shopping habits were returning to

some level of normalcy.

Sales at clothing and depart-

ment stores rose 11 percent, which

some economists attributed to

back-to-school spending, which

typically happens earlier in the

summer. Sales of health and

beauty products, which seemed

less necessary in the heart of the

lockdowns this spring, increased

1.5 percent.

At grocery stores, which had

experienced record sales and

profits fueled by panic buying at

the start of the pandemic, sales

were mostly flat.

The early weeks of the pan-

demic were disastrous for retail

sales, which dropped 8.3 percent

in March and then fell 16.4 percent

in April. Sales bounced back

strongly in May and June, when

stores reopened after lockdowns,

but growth has since slowed.

Sales rose 0.6 percent in August,

after a 0.9 percent gain in July.

In a research note on Friday, Ian

Shepherdson, chief economist at

Pantheon Macroeconomics, said

the September sales increase was

a “welcome” sign for the health of

the economy.

“The problem is the virus,” he

wrote. “Cases are rising at only a

modest pace in the more populous

states, but we can’t be sure that

will continue, and the message

from states where cases have ris-

en to very high levels is that eco-

nomic activity begins to suffer

very quickly.”

Mr. Shepherdson and other

economists say sustaining sales

growth through the holidays and

into early next year could be chal-

lenging, unless Congress can pass

another round of stimulus. Even-

tually, they say, the high unem-

ployment rate in the service in-

dustry will begin to weigh on

spending and eventually on

white-collar sectors of the econ-

omy like finance and tech.

“The permanent scarring of the

economy will go beyond airlines

and small business owners,” Mr.

Anderson said. “No one will be un-

touched by this.”

Monthly Retail Sales

Source: Commerce Department THE NEW YORK TIMES

Note: Seasonally adjusted advance monthly sales for retail and food services

$ 600 billion

400

200

0

$549.3

billion

’06 ’08 ’10 ’12 ’14 ’16 ’18 ’20

RECESSIONS

in Sept.

The baking aisle of a Kroger grocery store in West Chester, Ohio.

ANDREW SPEAR FOR THE NEW YORK TIMES

Consumer Sales Are Rising

As More Sink Into Poverty

By MICHAEL CORKERY

and SAPNA MAHESHWARI

Sustaining growth

through the holidays

could be challenging.

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