Displaced when housing is already strained

Summary

Marketplace Podcast Summary: "Displaced when housing is already strained" Released January 11, 2025

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Economic Resilience Highlighted by December Jobs Report

Timestamp: 00:31 – 03:32

Host Amy Scott opens the episode by discussing the significant December jobs report, which revealed that employers added over 250,000 jobs, surpassing analysts' expectations by approximately 100,000. The unemployment rate also decreased to 4.1%, signaling strong economic resilience.

Heather Long from The Washington Post remarks:

"It felt like a bounce back month... a pretty darn good year with 2.2 million jobs added, similar to 2018. However, most of this growth was concentrated in healthcare and government, leaving sectors like tech and manufacturing struggling to hire."
(01:32)

Sudi Brady of Politico adds:

"This is an incredibly healthy labor market, especially given all the concerns over the past two years... it's a remarkable achievement."
(02:46)

Despite the positive numbers, Brady notes potential future uncertainties:

"We are on the cusp of another bout of uncertainty over the labor market, wages, inflation, product prices, and tariffs."
(03:32)

Federal Reserve's Monetary Policy and Market Reactions

Timestamp: 03:32 – 07:40

The robust jobs report has led to negative market reactions, primarily due to diminished expectations for interest rate cuts by the Federal Reserve.

Heather Long explains:

"Good news can sometimes be bad news in a market context because it suggests that rate cuts are not imminent, possibly not until June or later."
(03:52)

Sudi Brady comments on investor sentiment:

"Investors, especially bond investors, are anticipating higher inflation, which is pushing yields up globally. This puts the Fed in a difficult position as higher interest rates could impact the housing market and other sensitive sectors."
(05:02)

Housing Market Struggles Amid Climate Disasters

Timestamp: 11:58 – 14:02

The discussion shifts to the housing crisis exacerbated by recent wildfires in Los Angeles County, which have displaced over 150,000 people and destroyed up to 10,000 buildings.

Heather Long emphasizes the urgent need for reimagining housing:

"We need to build safer homes that can withstand climate-related risks and address affordability challenges for younger generations. This requires creative thinking and diverse housing solutions like high-rises and duplexes."
(06:33)

Jay Liebik from CoStar adds:

"In a metro area like LA, which already has one of the lowest multifamily vacancy rates, disasters like these can lead to significant rent increases, potentially jumping 6-7% or higher."
(13:12)

The struggle to rebuild is highlighted by Darryl Fairweather:

"Most victims will still live nearby, but rebuilding takes time. For example, previous California fires showed it takes at least two years to rebuild due to labor and contractor shortages."
(12:44)

Labor Market Indicators and Future Outlook

Timestamp: 07:40 – 11:58

Stephanie Hughes from Marketplace explores the decline in individuals who want jobs but are not actively seeking them, which fell by three percent to five and a half million in December.

Harry Holzer, Georgetown University Professor and former Chief Economist at the Department of Labor, interprets this as:

"A sign of solidity in the labor market, indicating fewer people are in limbo about seeking employment."
(10:08)

Contrastingly, Ron Hetrick of Lightcast expresses concern:

"The number is higher than before the pandemic, suggesting we might be weaker than perceived."
(10:50)

Brady summarizes the implications:

"If this downward trend in non-active job seekers continues into next year, it would generally be viewed positively, indicating a warming labor market."
(11:16)

Impacts on Financial Markets and Consumer Behavior

Timestamp: 14:41 – 19:58

The episode delves into Wall Street's reaction to the jobs report, noting significant drops in major indices:

• Dow Jones Industrial Average: Fell 696 points (−1.6%) to 41,938
• Nasdaq: Dropped 317 points (−1.6%) to 19,161
• S&P 500: Lost 91 points (−1.5%) to 5,827, with weekly declines as well.

Amy Scott discusses:

"Despite better-than-expected earnings from companies like Walgreens and Delta, the overall market sentiment remains negative due to fears of sustained high interest rates."
(09:38)

Air Travel Boom and Corporate Travel Recovery

Timestamp: 16:32 – 18:24

The holiday travel season broke records, boosting airline profits, particularly for Delta, which saw a surge in both leisure and business travel.

Edward Russell, aviation journalist, notes:

"Business travelers traditionally paid higher fares and booked last-minute, which airlines are eager to capitalize on as return-to-office mandates increase demand."
(16:32)

Robert Mann, industry analyst, adds:

"With more companies enforcing in-office work, business travel volumes may rebound to pre-pandemic levels."
(16:51)

Samuel Engel from ICF points out:

"While corporate travel is improving, it's still below pre-pandemic levels. Airlines are compensating by increasing capacity to leisure destinations and upselling premium services."
(17:56)

Policy and Government Spending Cuts Debate

Timestamp: 18:59 – 24:29

The conversation shifts to proposed federal spending cuts by the incoming administration, led by a new Department of Government Efficiency (Doge), headed by Elon Musk and Vivek Ramaswamy.

Stacey Vanek Smith reports on the ambitious goals:

"Initial proposals aimed to cut $2 trillion from the federal budget, though later adjustments suggest a target of $500 billion. However, experts argue these cuts are unrealistic and may focus on the wrong areas."
(19:35 – 21:36)

Douglas Holtz Akin, economic advisor, criticizes the approach:

"Targeting federal employment and specific departments won't significantly impact the $6.5 trillion budget. Real savings would require addressing major programs like Social Security, Medicare, and Medicaid."
(21:09 – 22:13)

Louise Shaner from the Brookings Institution concurs:

"Cutting departments like Education and Agriculture would have minimal fiscal impact while disrupting essential services. The focus should be on major budget areas, though political challenges make this difficult."
(22:23 – 23:18)

Climate Change and Record-Breaking Temperatures

Timestamp: 25:11

The episode concludes with alarming climate news:

"2024 was the hottest year on record, with global temperatures averaging nearly 1.5°C higher than pre-industrial levels. This surpasses the Paris Agreement goal of limiting warming to 1.5°C, indicating urgent need for climate action."
(25:11)

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Notable Quotes:

• Heather Long on job growth concentration:
  "2/3 of those jobs were in healthcare and government."
  (01:32)

• Sudi Brady on labor market resilience:
  "This is an incredibly healthy labor market... a remarkable achievement."
  (02:46)

• Heather Long on housing needs post-wildfires:
  "We pretty much totally need to reimagine housing in America right now."
  (06:33)

• Jay Liebik on rental impacts:
  "Rents could jump 6, 7% or even higher."
  (13:19)

• Stacey Vanek Smith on budget cuts:
  "It's totally possible with a varied approach, but the major impediment is politics."
  (23:18)

---

This episode of Marketplace provides a comprehensive analysis of the current economic landscape, highlighting the interplay between robust job growth, strained housing markets exacerbated by climate disasters, fluctuating financial markets, and the contentious debate over federal budget cuts. Additionally, it underscores the pressing reality of climate change and its tangible impacts on both the economy and daily lives.

Transcript

[Guy Berger]

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[Harry Holzer]

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[Guy Berger]

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[Amy Scott]

So much for lower interest rates, huh? From American Public Media, this is Marketplace in Baltimore. I'm Amy Scott in for Kai Rysdal. It is Friday, January 10th. Good to have you with us. The December jobs report made waves today. The Bureau of Labor Statistics says employers added more than 250,000 jobs last month, about 100,000 more than analysts had expected, while the unemployment rate ticked down to 4.1%. Great news for job seekers. Not so much though for those pining for lower interest rates. Joining me to discuss are Heather Long with the Washington Post and Sudi Brady at Politico. Thanks for being here.

[Sudi Brady]

Hi Amy.

[Amy Scott]

So Heather, it was a pretty good jobs report. What does that tell you about the resilience of this economy?

[Heather Long]

Yeah, it really felt like a bounce back month. We'd had a couple of months since the summer of either weak hiring or people were out on strike or weird weather events. And so this really felt great to see a big beat with that 256,000 and then seen unemployment rate fall a little bit to 4.1% and for the right reasons because we had more people getting employed, fewer people unemployed, stronger labor force. So you just kind of walk through all of the different parts of this report and it felt pretty good, which is a great way to end the year. I will say if you step back for overall into 2024, there were 2.2 million jobs added, which is a pretty darn good year. Pretty similar to like a 2018 PA, but 2/3 of those jobs were in healthcare and government. So it was a pretty highly concentrated year of job growth. And that's why you still see people like in the tech sector or manufacturing sector who talk about how hard it is to get hired right now.

[Amy Scott]

Right. Some people are still calling it a tough job market. Sudeep, what's your takeaway? Wages also continued to increase.

[Sudi Brady]

Yeah. And this is an incredibly healthy labor market, especially given all the concerns we've had over the last two years. We've had extraordinarily high interest rates. Obviously they've come down quite a bit. We've had a lot of pressure in the labor market on and that has been good for people who are trying to keep up with inflation. But we are obviously on the cusp of another bout of uncertainty over the labor market, over wages, over inflation, through product prices and tariffs. But right now, to be sitting in this position, for all of the doubts we've had over the last two years about the resiliency of the labor market is a remarkable, absolutely remarkable achievement.

[Amy Scott]

Okay. And yet the market reaction has been pretty negative. And that seems to be because hopes have dimmed even further for interest rate cuts. Several banks are now projecting fewer or later cuts from the Fed this year here. Heather, why is the report causing such a stir?

[Heather Long]

Well, because as Sudeep was saying, this is a pretty darn good economy. I think a few months ago this summer there seemed to be cracks. We were, we were worried if maybe there was starting to be a little bit of a downward spiral in the labor market. And a lot of those fears have gone away. Obviously the Fed now is going to have to refocus on inflation. We saw those Fed minutes come out this week where they're clearly starting to worry and talk more about what could happen with the Trump tariffs or with if there's a lot more spending for these tax cuts in the Trump administration. And then there's also just the reality that inflation is stuck around 2.7% and we want to see it more like 2%. So I think those realities are very much starting to hit the Fed and starting to hit the markets. Unfortunately, good news can sometimes be bad news in a market context because that doesn't look like any rate cuts are coming, maybe not until June and maybe not until later than that.

[Amy Scott]

Right. And Sudeep, we've already been seeing the bond market expecting higher inflation. We've been seeing yields go up long term. What does that tell us about what investors are thinking?

[Sudi Brady]

Investors don't want to take any chances, especially bond investors don't want to take any chances when they realize that the, the slowdown is not around the corner from a labor market perspective, from an economic growth perspective. And so that naturally forces up yields. Yields have gone up in other advanced economies as well. This is a global phenomenon in many ways with the developed world. And this is going to really put the Fed in a difficult position of deciding once again how far do they want to take this. There's a natural feedback loop. When interest rates go up, it's going to dent the housing market, it's going to dent construction hiring. Other interest rate sensitive sectors are going to get hit but the Fed cannot be in a position to lose the inflation battle this time around. And so that's why they indicated in the Fed minutes that they're watching warily. There's a lot of debate and dissent within the Fed about how much tariffs are going to actually hit and raise overall inflation. And it's going to be an interesting first few months of the year for them.

[Amy Scott]

You mentioned the housing market this week, Heather. The average for a 30 year mortgage according to Freddie Mac was back up near 7% to a six month high. I think a lot of people, myself included, were hoping that rates would come down some in time for the spring market. Maybe not.

[Heather Long]

It sure doesn't look that way. We're back near 7% and it doesn't look like a lot of relief. Soon as we've just been mentioning. I'll just say, Amy, I know you also cover housing a lot. I've been thinking about it a lot lately. You just look at those horrible LA wildfires this week and then you look at these 7% mortgage rates and it's just screaming to me that we pretty much totally need to reimagine housing in America right now. We need it to be safer against all of these climate related risks, whether it's the wildfires or the hurricanes or whatnot. We're going to have to build a lot differently and rebuild a lot differently going forward. And then there's the ongoing affordability challenges for Gen Z and millennials in particular. And that's also going to take a lot of creative thinking. A lot of different types of housing, like more high rises and townhomes and duplexes and all that sorts of stuff. Homes that are closer together on smaller lots. I know you've written and spoken a lot about all of this, so I really just look at this week and see that housing is going to have to look a lot different going forward. What we think of as an ideal home.

[Amy Scott]

Yeah. And we have a story later in the show about what happens when a climate catastrophe runs headlong into a housing crisis, an ongoing housing crisis. So before I let you go, Sudeep, we've got retail sales and inflation numbers next week. What are you going to be looking for?

[Sudi Brady]

The inflation report is going to be absolutely critical. It's going to really set the tone for what comes after that. Consumers are uncertain right now. We got some consumer sentiment data this morning that has an inflation projection in it. A lot of this gets to be colored by politics. Democrats are fearing more inflation. Republicans are expecting less inflation ahead. But this is really going to be the thing that that sets the direction for the inflation story, for the stock market story, for the start of a new presidency, for the impact of tariffs and reducing the pool of immigrant labor. All of that plays into this big report coming next week.

[Amy Scott]

All right, Sudeep Reddy, Politico Heather Long with the Washington Post, thank you both so much and have a good weekend.

[Sudi Brady]

Thanks, Amy.

[Heather Long]

Take care.

[Amy Scott]

As I mentioned, Wall street was not happy. We'll have the details when we do the numbers. If you page through that December jobs report, as we around here are want to do, you'll see a line item near the top of Table A.1 persons who currently want a job is the official wording, but are not in the labor force. These are folks who aren't working currently and haven't actively looked for a job in the past four weeks, but who say they would like to work. In December, that number stood at five and a half million, three percent lower than a year ago. Marketplace's Stephanie Hughes looks at what's going.

[Guy Berger]

On there, reasons why someone might want a job but not look for one. They're taking care of their kids or elderly parents. They decided to go back to school, or they just got tired of the.

[Darryl Fairweather]

Job search because they're discouraged. They just don't think it's worth looking.

[Guy Berger]

Guy Berger is director of economic research at the Burning Glass Institute. He says generally there are fewer people in this situation when the labor market.

[Darryl Fairweather]

Is doing well, probably what's happening is that when it goes down, these will actually start actively looking and then hopefully.

[Harry Holzer]

They find a job.

[Guy Berger]

You could look at this little drop as a sign of solidity in the labor market, says Harry Holzer, a professor of public policy at Georgetown.

[Darryl Fairweather]

It indicates fewer people, not by a huge amount, but slightly fewer people are in that limbo situation.

[Guy Berger]

Holzer is also a former chief economist at the US Department of Labor, and he says while some people might choose to get back into the job market, others might decide to stop looking for work and lean full time into maybe being a caregiver or a student.

[Darryl Fairweather]

Whichever of those paths are chosen, it kind of reflects a greater stability, I think, of where we are, less uncertainty.

[Guy Berger]

However, Ron Hetrick, a senior economist at Lightcast, thinks this number should be way lower than it is right now.

[Sudi Brady]

I'm actually a little perplexed as to why this number isn't really shrinking.

[Guy Berger]

Hetrick points out this number's higher than it was right before the pandemic and that with a combination of job growth and baby boomers retiring since then there should be fewer people left on the sidelines wanting to work.

[Sudi Brady]

I think it suggests maybe we're a little bit weaker than we think we are.

[Guy Berger]

The measure ticking down over the past year is something to watch, says Guy Berger at the Burning Glass Institute.

[Darryl Fairweather]

You know, essentially, yeah, it's improving, but it's like on the scale of squiggles, right?

[Guy Berger]

So not a straight line down.

[Darryl Fairweather]

But certainly if it's a sustained downtrend that sticks into next year, I think in general I would tend to view.

[Harry Holzer]

That as like a good sign, a.

[Guy Berger]

Sign that the labor market, which had been cool ish, is getting warmer. I'm Stephanie Hughes for Marketplace.

[Amy Scott]

At last count, the fires burning in Los Angeles County Heather was talking about have forced more than 150,000 people to evacuate and as many as 10,000 buildings have been destroyed. And that means a lot of displaced people are now looking for a temporary or permanent place to live. It's happening in a metro area where there weren't enough available homes to begin with. Marketplace's Kaylee Wells has more.

[Jay Liebik]

The people displaced in the LA fires won't get to move back to their neighborhoods anytime soon.

[Heather Long]

I think the real restriction is just on labor and getting all that work done.

[Jay Liebik]

Chief economist Darryl Fairweather says her company Redfin, analyzed other California fires and she says it takes most people at least two years to rebuild.

[Heather Long]

You can't scale up the number of contractors, the number of builders.

[Jay Liebik]

Immediately, most of the victims will still live nearby. Jay Liebik directs multifamily analytics at CoStar, and he says a disaster like this in any metro area would be horrible.

[Sudi Brady]

But given that LA is one of.

[Harry Holzer]

The most under housed metros in the.

[Jay Liebik]

Country, it makes things even worse, liebik says. In particular, LA has one of the lowest multifamily vacancy rates in the country.

[Harry Holzer]

The big question now is what's going to happen to rents?

[Sudi Brady]

This is the to me, the 800.

[Darryl Fairweather]

Pound gorilla in the room.

[Jay Liebik]

Liebig says rents could jump 6, 7% or even higher. In the longer term, these homes will get rebuilt, and Daniel Cabrera believes there will be plenty of demand for them. He founded a company called Fire Damage House Buyer. He buys damaged property as is if owners don't want to move back.

[Darryl Fairweather]

We've bought I can't even tell you how many fire damage properties in the past and we've sold every single one, he says.

[Jay Liebik]

That's especially true for the Pacific Palisades, where wealthier residents can afford the higher insurance premiums that come with the fire risk.

[Darryl Fairweather]

I don't think their property values even with these wildfires are going to go anywhere. I think they're going to remain right where they're at and they're going to continue to rise because it's just such a sought after market and the state.

[Jay Liebik]

Is facilitating that, too. California has prohibited insurance companies from canceling policies on homes near the fire to make sure victims get payouts to move or rebuild. I'm Kayleigh Welz for Marketplace.

[Amy Scott]

Coming up.

[Darryl Fairweather]

You know, maybe I'm just a beaten down Washington swamp dweller, but you know, I, I'll believe it when I see it.

[Amy Scott]

A good policy in Washington. But first, let's do the numbers. The Dow Jones Industrial Average lost 696 points, 1, 6. 10% to close at 41,938. The Nasdaq fell 317 points, also 1 and 6, 10% to finish at 19,161. And the S&P 500 shed 91 points, 1 1/2%. And at 5,827 for the week, the Dow lost 11 10%. The Nasdaq shed 6. 10%. The S&P 500 fell 7. 10%. Walgreens announced better than expected earnings today, more than $39.5 billion in revenue, up 7% year over year. Walgreens Boots alliance stepped up 27.5%. Bonds fell. The yield on the 10 year T note rose to 4.76%. You're listening to Marketplace. This is Marketplace. I'm Amy Scott. The holiday air travel season that just wrapped up was the busiest on record, says the Transportation Security Administration. That boosted profits at Delta, which posted better than expected results for its fourth quarter today. It's not just vacations and family visits driving more passengers to airlines. Delta said business travel picked up, too, and could improve further this year. Corporate travel has been slower to rebound since pandemic lockdowns first pushed more people to work from home marketplaces. Henry Epp has more on what's bringing.

[Harry Holzer]

Business travel back in the before times, selling lots of tickets to business travelers was the way major airlines made a lot of their money because those passengers are willing to pay more, says Edward Russell, a freelance aviation journalist.

[Darryl Fairweather]

You know, if they're not booking day of, they're booking a day or two before and they're paying top dollar to get where they need to go and get to their meetings.

[Harry Holzer]

And he says airlines would sign big contracts with major corporations to lock up most of a company's travel business. The pandemic put a to all that once Things opened back up. People flocked back to airports to go on vacations. But a lot of business meetings stayed on zoom. Now, five years later, with more return to office mandates in effect, the volume of business travel may be close to where it was in 2019, says Robert Mann, an industry analyst.

[Darryl Fairweather]

What we've seen is just a slow.

[Sudi Brady]

Steady uptick in corporate travel activity, which.

[Darryl Fairweather]

Is to say bookings through recognized corporate travel agencies.

[Harry Holzer]

And he says airlines once again are competing for those big corporate travel contracts. Companies like Delta have emphasized the recent growth in that part of their business. But says Samuel Engel with the consultancy firm icf, when you're in the dark.

[Darryl Fairweather]

A small ray of sun looks especially bright.

[Harry Holzer]

Meaning while it's improved, business travel is below where it would have been without the pandemic. So to keep revenues up, airlines have had to compensate. Engel says they've adapted their network and.

[Darryl Fairweather]

Where they fly to make sure that.

[Harry Holzer]

They'Re putting more capacity into leisure destinations. And says Edward Russell, the aviation reporter.

[Darryl Fairweather]

Airlines have gotten really good at the.

[Harry Holzer]

Upsell, as in charging more for premium offers, even to individual business travelers whose company may have paid for their ticket.

[Darryl Fairweather]

He says there's a big trend towards people willing to pay their own dollar for sitting in nice receipts, premium seats, whether that's extra legroom or first class on domestic flights.

[Harry Holzer]

So even if the number of business travelers isn't exactly booming, airlines are finding ways to make more money off those who are getting on board. I'm Henry AP for Marketplace.

[Amy Scott]

Did you make any New Year's resolutions this year? How's that going? A lot of us have financial goals. Maybe save more, pay down some debt. The federal government has some big resolutions, too. President elect Donald Trump, who will be sworn back into office in just over a week, has vowed to cut wasteful spending with help from a new Department of Government Efficiency, AKA Doge, headed by Elon Musk and Vivek Ramaswamy. But as we well know in our personal lives, resolutions can be tricky. As Stacey Vanek Smith reports, personally, I've.

[Stacey Vanek Smith]

Got a whole set of resolutions for 2025. I'm gonna cook all my meals, no more ordering in, and I'm gonna go to the gym at least five days a week. Doge had some pretty lofty resolutions, too, about cuts to the $6.5 trillion US budget. Here's Elon Musk.

[Darryl Fairweather]

Well, I think we can do at least 2 trillion.

[Heather Long]

Yeah.

[Amy Scott]

Yes, 2 trillion.

[Stacey Vanek Smith]

$2 trillion is like a third of the budget. But you know what? It is resolution season. Go big or go Home. Of course, a few weeks later, reality seems to have set in. Here's a clip from Yahoo. Finance.

[Amy Scott]

This week, in an op ed, Elon.

[Heather Long]

Musk and Vivek Ramaswamy laid out their plans to target $500 billion in annual spending under their new Department of Government efficiency.

[Stacey Vanek Smith]

I mean, 500 billion is still a lot. It's not 2 trillion. But I get it. That initial resolution enthusiasm gets tempered by real life, right? I mean, you know, like five days a week at the gym is just a lot of days not trying to be a bodybuilder.

[Darryl Fairweather]

And then my thought was, well, good luck.

[Stacey Vanek Smith]

This is Douglas Holtz Akin, and he is not talking about my gym ambitions. He is talking about Doge Holtz Aiken served as an economic advisor for George H.W. bush and headed the Congressional Budget Office in 2003. He says Musk and Ramaswamy can make all the resolutions they want.

[Darryl Fairweather]

They are successful, prominent people. I get all that. But DOGE itself has no authority.

[Stacey Vanek Smith]

It's Congress that passes spending bills, not doge.

[Darryl Fairweather]

So they get to think hard and make recommendations. They're a think tank and I run a think tank. So I know just how ineffective think tanks can be.

[Stacey Vanek Smith]

Holtz Aiken's think tank, the American Action Forum, has looked at the federal budget a lot over the years, and he worries Doge is looking for cuts in all the wrong places. Take this clip where reporter John Stossel asks Vivek Ramaswamy about his DOGE plans.

[Sudi Brady]

You've said you would fire over half of the government's workers.

[Amy Scott]

That's correct.

[Darryl Fairweather]

Yeah. So big cuts?

[Heather Long]

Yes.

[Stacey Vanek Smith]

So 1.5 million jobs, to be exact. Is it dramatic? Yes. Does it make a statement? Yes. But even if Congress were able to do that, would it make a difference to the budget? Holz Aiken says, not so much.

[Darryl Fairweather]

That's not where the money is. The money is not in federal employment.

[Stacey Vanek Smith]

In fact, compensation for all federal workers totals about $300 billion. That's not even 5% of the federal budget. Of course, Ramaswamy proposed other cuts as well.

[Harry Holzer]

Yeah, I would shut down the US Department of Education.

[Stacey Vanek Smith]

Louise Shaner is an economist specializing in fiscal and monetary policy at the Brookings Institution. It doesn't really make a big difference.

[Amy Scott]

In the long run.

[Guy Berger]

Fiscal challenges.

[Darryl Fairweather]

If you eliminate the Department of Education.

[Stacey Vanek Smith]

Shaina points out the Departments of Education, Agriculture, Transportation and Law Enforcement all put don't even make up 15% of the budget. And she says those departments do a lot.

[Amy Scott]

You be decimating these programs and that.

[Guy Berger]

Would be a huge mistake because they.

[Stacey Vanek Smith]

Produce a lot of value. So where should Doge cut? Well, defense makes up about 15% of our budget. Another 10ish percent goes to paying interest on our debt. But fully half of the US Budget is made up of just three programs, Social Security, Medicare and Medicaid. Together Those cost the US about $3 trillion a year. Sheener says getting the budget under control, it is totally possible with a varied approach, the combination of tax increases and.

[Amy Scott]

Some modifications to Medicare, Medicaid and Social Security.

[Stacey Vanek Smith]

And the major impediment is politics. Politics. Douglas Holtz Akin says after spending years trying to reform the US Budget, the issue always comes down to this. You really want to deal with the budget. You have to look at Social Security and Medicare. But politicians do not want to look at Social Security and Medicare because those are beloved programs and the people who use them vote right now.

[Darryl Fairweather]

If you go to the town hall said, like to reform Social Security, you might as well just walk out and start working at the dairy clean.

[Stacey Vanek Smith]

Holz Aiken says it is absolutely possible to modify and trim down Medicare and Social Security spending, but it requires politicians to communicate with voters, ask them to come together and tighten their belts for a better future. It would also require Congress to join forces across the aisle. That is what Team Doge is really up against.

[Darryl Fairweather]

I don't think this Congress is gonna be the one that holds hands and jumps and I don't see this president as providing the leadership. Okay, so, you know, maybe I'm just a beaten down Washington swamp dweller, but you know, I, I'll believe it when I say it.

[Stacey Vanek Smith]

After all, resolutions can be hard. Like I was all set to go to the gym today, but it is like 21 degrees out and I'm kind of getting over this cold still. I'm feeling really good about tomorrow though. In New York, I'm Stacey Vanek Smith for Marketplace.

[Amy Scott]

This final note on the way out today, more consensus is coming in that 2024 was in fact the hottest year on record. Today. NASA and the national oceanic and Atmospheric Administration said global temperatures averaged nearly 1.5 degrees Celsius, higher last year than pre industrial levels, joining a similar finding from Europe's Copernicus Climate Change Service. If that number 1.5 sounds familiar, the Paris Climate Agreement, which President Elect Donald Trump is expected to abandon again when he takes office, had set a goal of limiting warming to no more than one and a half degrees to avoid even worse climate catastrophe. Our theme music was composed by BJ Lederman. We had engineering help today from Jess Berg Marketplace's executive producer is Nancy Fargali. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. And I'm Amy Scott. We'll be back on Monday. This is apn.