The Wall Street Journal - USA (2020-12-01)

A2| Tuesday, December 1, 2020 ** THE WALL STREET JOURNAL.

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Wyoming’s general fund had a shortfall of $451.1 million in October, about 15% of the state’s $2.98 billion pro- jected total appropriations for fiscal years 2021 and 2022, statedatashow.AU.S.News article Saturday about possible state cuts to Medicaid benefits incorrectly said the shortfall was 15% of the state’s total expenditure of $4.7 billion in fiscal 2019.

In some editionsMonday, California Gov. Gavin Newsom’s last name was mis- spelled as Newson in a U.S.

Watch article about his block- ing parole for one of Charles Manson’s followers.

Fuel cells converthydro- gen into energy. A Markets & Finance article Monday about platinum incorrectly said that fuel cells store hydrogen.

Notice to readers Wall Street Journal staff members are working remotely during the pandemic. For the foreseeable future, please send reader comments only by email or phone, using the con- tacts below, not via U.S. Mail.

Readers can alert The Wall Street Journal to any errors in news articles by [email protected] by calling 888-410-2667.

CORRECTIONSAMPLIFICATIONS

eted companies to collaborate on various parts of its business, some analysts said. “GM essentially no longer wants to be tied to Nikola’s longer-term output,” Emmanuel Rosner, an analyst at Deutsche Bank, wrote in a note Monday. Nikola revealed the revised deal with GM a day ahead of a lockup period expiring for some early investors who got shares as part of the startup’s June listing. Starting Tuesday, those investors can start sell- ing off around 161 million shares—the majority of which are owned by founder and re- cently departed Executive

Chairman Trevor Milton. A spokesman for Mr. Milton declined to comment. While Nikola has yet to sell a single vehicle, its plans to revolutionize the trucking industry with electric and fuel- cell technology have excited Wall Street investors. In June, Nikola’s market value briefly surpassed that of Ford Motor Co., after Mr. Milton tweeted that the company would begin taking reservations on the Badger and show a working truck by the end of 2020. The stock jumped again in September on the news of the GM partnership but was slammed days later after a report from short seller Hinden- burg Research alleged Mr. Mil- ton had made exaggerated claims about Nikola’s technology. Mr. Milton, who has said he would defend himself against the report’s allegations, stepped down in September. Nikola in November dis- closed it had received subpoe- nas from the Securities and Exchange Commission and U.S. Justice Department in Sep- tember regarding its business. Nikola has said it is cooper- ating with the investigations. The SEC and Justice Depart- ment declined to comment. At the start of the year, the Badger had existed as little more than concept sketches, two current Nikola employees said. But Mr. Milton’s desire to make a consumer-oriented pickup truck that could com- pete with Ford and Tesla Inc. led Nikola to pursue a more ex- pansive deal with GM, people familiar with his thinking said. GM executives were recep- tive to the idea of making a truck powered by hydrogen fuel cells, a concept it had de- veloped for the military, people familiar with the talks said. The Badger eventually be- came core to discussions between Nikola and GM, along with plans for GM to supply hydrogen fuel cells and batter- ies to Nikola for its commercial trucks, the people said. In early September, Nikola said it would give GM an 11% equity stake and pay it $ million to develop and manu- facture the Badger. That was two days before Hindenburg released its report criticizing Nikola. The report put GM ex-

ecutives on the defensive, leading them to respond to questions about why the car company hadn’t done more due diligence on the startup. The controversy irritated GM Chief Executive Mary Barra, people familiar with her thinking said. On a phone call in late September, Steve Girsky, Nikola’s new chairman and a former GM executive, explained to Ms. Barra that the board was taking the allegations seri- ously and conducting its own internal investigation, a person with knowledge of the call said. When both companies re- turned to talks, it was clear Nikola executives had cooled on the Badger, the people familiar with the discussions said. Nikola CEO Mark Russell has said he is determined to refocus the business on bigger commercial trucks and semis. The companies also said on Monday they would explore the use of GM’s electric-vehicle battery technology, called Ultium, in future commercial trucks. If the agreement outlined this week comes to fruition, it would mark the first commercial use of GM’s hydrogen fuel cells, a technology it began de- veloping in the 1960s. The technology uses onboard fuel cells to mix hydrogen and oxygen to produce electricity, which drives the vehicle’s electric mo- tors, emitting only water vapor. Nikola’s core business aims to build and lease hydrogen and battery-powered heavy trucks to commercial custom- ers such as Anheuser-Busch In- Bev SA that are looking to cut down on the tailpipe emissions of their logistics fleets. Nikola plans to provide not only the trucks, but also the refueling stations and hydrogen fuel necessary to power them. The company has teamed up with other more-estab- lished and well-capitalized companies to collaborate on core parts of the business, such as German auto-supply giant Robert Bosch GmbH and European heavy-truck maker CNH Industrial NV. Nikola had also been in talks with companies including oil company BP PLC to jointly build hydrogen fuel stations, but those talks also stalled in September, The Wall Street Journal has reported.

many planned GM models. Nikola shares closed down 27% on Monday. GM shares shed about 2.7%. The scaled-back deal with GM is a blow to Nikola, whose strategy involves striking alli- ances with other deep-pock-

Continued from Page One

GM Won’t

Take Stake

In Nikola

U.S. NEWS

are normally not eligible for them has underpaid recipients in most states. As a result, the average weekly payout under what is called the Pandemic Unemployment Assistance program, which is available to gig- economy workers and the self- employed, is below the poverty line in 70% of states that reported data. “The majority of states have been paying PUA claimants the minimum allowable benefit in- stead of the amount they are eligible for based on prior earnings,” the GAO said. While states are obligated to pay out the full amount that is owed “with the greatest promptness that is administratively feasi- ble,” Labor Department offi- cials told the GAO they didn’t know how many states had be- gun working to do so. “States count and report the compensable weeks claimed;

typically this closely approxi- mates the number of individuals filing initial or continued claims,” a Labor Department spokeswoman said. “However, given the unique challenges of the COVID virus, multiple weeks of retroactivity in the new CARES Act UI programs, and the states’ large backlogs across all programs, this ap- proximation was less accurate than before.” The spokeswoman said the agency was beginning to address two GAO recommenda- tions. It agreed “to revise the weekly news release to clarify the numbers don’t represent unique individuals filing claims, and to pursue options to secure state reports of the unique number of individuals filing claims.” The Labor De- partment doesn’t anticipate any changes to how claims are counted, she added.

The GAO report said much of the inaccurate data in the department’s weekly jobless- claims reports—which have in- cluded both overestimates and underestimates at various times—stemmed from incon- sistent reporting from states, many of which have been over- whelmed by processing backlogs of claims. Thomas Costa, acting direc- tor of the GAO’s education, workforce and income-security team, said the office didn’t have exact estimates of the magnitude of the inaccuracies in Labor Department data or for the total number of PUA claimants who have been underpaid. He said the latter fig- ure is likely in the millions. The GAO report comes as two key coronavirus-relief programs—the PUA and an extended availability of regular unemployment-insurance to 39

weeks from the usual 26—are set to expire at the end of De- cember. Negotiations between Democrats, Republicans and the White House over another round of coronavirus relief have been stalled for months. Ever since lockdowns to contain Covid-19 caused economic activity to collapse in March, the Labor Department’s weekly jobless-claims numbers have been one of the most im- portant economic data points tracked by policy makers and investors. But the Labor Department report for the entire U.S. relies on incoming data from state unemployment offices, which were swamped with applications for benefits in the early months of the pandemic. As a result, claims were initially un- derreported as state offices struggled with a huge backlog of applications.

Because the department uses the total count of weeks claimed as a proxy for the number of people claiming benefits, a laid-off worker who had to wait a month to file her claim could have been counted as four people once the application went through. In such cases, jobless claims have also been overestimated at times. In California, for instance, the state unemployment office reported a backlog of nearly 600,000 individuals who had applied for benefits as of Sept. 16 whose claims hadn’t been processed for more than 21 days. Nevertheless, Mr. Costa said it’s possible that the cu- mulative number of jobless claims reported by the Labor Department during the pandemic continue to understate the legions of unemployed.

WASHINGTON—The nation’s system for providing unemployment benefits to jobless workers has consistently pro- duced inaccurate data and lower-than-appropriate payouts to millions of workers amid the Covid-19 pandemic, a government watchdog said Monday. The Labor Department’s weekly reports on jobless claims have published “flawed estimates of the number of individuals receiving benefits each week throughout the pandemic,” the Government Ac- countability Office said in a pe- riodic report, warning that the inaccuracies could hinder policy makers’ ability to effectively respond to the economic fallout. In addition, a program cre- ated by Congress to provide jobless benefits to workers who

BYPAULKIERNAN ANDSARAHCHANEYCAMBON

Jobless Data Were Flawed, Watchdog Says

proved in March. Mr. Mnuchin says the programs are no longer needed because markets have healed. Second, he says he lacks the authority to extend the programs because he believes the Cares Act doesn’t allow for the programs to continue. Third, Mr. Mnuchin says the money would be better spent on other relief measures for which Congress can’t agree on funding. Earlier Monday, the Fed said it had extended through next March four backstop lending programs that helped to stabilize short-term funding markets when the coronavirus pandemic hit this past spring. The extensions were widely expected and don’t apply to any of the lending programs that Mr. Mnuchin declined to renew. Mr. Mnuchin had indicated he would agree to extend four programs, including the Pay- check Protection Program Li- quidity Facility, which made it more attractive for small banks to fund PPP loans this past spring. The Fed agreed to extend that program on Monday. The Fed also extended the Commercial Paper Funding Fa- cility, which backed a critical market for short-term corporate IOUs that seized up this past March, and the Money Market Fund Liquidity Facility, which had likewise curtailed potential runs on money-market mutual funds. The fourth program extended is the Primary Dealer Credit Facility, which allows Wall Street banks the ability to pledge a broader range of collateral to the Fed.

Federal Reserve Chairman Jerome Powell said the central bank’s actions to backstop a range of credit markets after the coronavirus convulsed Wall Street this past spring had unlocked almost $2 trillion to support businesses, cit- ies and states. In testimony prepared for delivery at a congressional hearing Tuesday, Mr. Powell said the Fed’s unprecedented steps to stabilize financial markets had largely succeeded in restoring the flow of credit from private lenders. Treasury Secretary Steven Mnuchin on Nov. 19 told Mr. Powell that he would not grant extensions for five lending programs that have back- stopped markets for corporate and municipal debt and to purchase loans made to small businesses and nonprofits when those programs expire on Dec. 31. Mr. Powell didn’t elaborate in his testimony, released on Monday afternoon, about the central bank’s disagreement with Mr. Mnuchin’s decision. The Fed had earlier said it would have preferred the lending programs had stayed open. Mr. Mnuchin is slated to testify alongside Mr. Powell at Tuesday’s hearing and didn’t address the conflict in his prepared testimony. Mr. Mnuchin’s decision to allow the programs to expire on Dec. 31 intensified a parti- san divide over the Fed’s lending activities, which both par- ties supported as part of the $2 trillion stimulus package known as the Cares Act ap-

BYNICKTIMIRAOS

Fed’s Actions Let

$2 Trillion Flow

Nikola’s plans to revolutionize the trucking industry with electric and fuel-cell technology have excited Wall Street investors.

NIKOLA/ABACA/REUTERS

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