Shutdown Nears Record as Crucial Week Begins

Summary

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WSJ What's News – Shutdown Nears Record as Crucial Week Begins

Date: November 3, 2025
Host: Caitlin McCabe
Guests: Sen. Tim Kaine, Mike Johnson, Heather Gillers, Chelsea Delaney

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Episode Overview

This episode centers on the looming U.S. government shutdown surpassing record length, political standoffs in Washington, scrutiny over the Trump administration’s military actions abroad, and shifting economic realities in both the U.S. and Europe. Key discussions include calls for presidential intervention in budget talks, legal controversy over anti-drug strikes, Warren Buffett's succession at Berkshire Hathaway, and why fiscally disciplined northern European countries now face mounting debt issues.

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Key Discussion Points & Insights

1. Government Shutdown Approaches Record Length

• Nears 35 days—on track for the longest ever.

• Main sticking point: Democrats demand a health care deal as a condition for reopening the government.

• Democratic senators urge President Trump to personally engage to resolve the impasse.

• Sen. Tim Kaine (D-VA):

  • Urges Trump to join negotiations.
  • Emphasizes that agreement could come "within hours" if the President is involved.

    "A record if the president engages, we will find a deal, I think within hours." (00:45 – Tim Kaine)

  • Highlights priority: stabilizing health care costs for Americans.

• Republican Strategy:

  • Trump suggested changing Senate rules to bypass Democratic opposition, potentially disrupting bipartisan negotiations.
  • The White House maintains silence on the president's direct involvement.

2. Military Strikes and War Powers Debate

• Controversy: Ongoing U.S. lethal strikes against suspected drug smugglers in the Caribbean and Pacific, conducted without explicit congressional authorization.

• The administration claims the strikes do not qualify as “hostilities” under the War Powers Resolution.

• Bipartisan frustration: Lawmakers from both parties demand legal justification.

• Sen. Mark Warner (D-VA), Senate Intelligence Committee:

  • Criticizes secretive briefings and lack of transparency.

    "How do I answer the families of those sailors about whether this operation is even legal? This document needs to be shared with every member of the Senate this week... so that as we get into this discussion about war powers, we've got the basis of how the administration is claiming that it's legal." (03:05 – Tim Kaine quoting Warner)

• GOP House Speaker Mike Johnson:

  • Defends administration, states both parties were briefed.
  • Asserts strikes are "protecting the homeland" and insists info is reliable, though mostly classified.

    "We have exquisite intelligence about these strikes... what the president and the administration are doing is protecting the homeland." (03:31 – Mike Johnson)

• Impact: Around 65 people killed in 15 airstrikes.

3. Global Flashpoint: U.S. Threatens Action in Nigeria

• Trump warns of possible U.S. military intervention and aid suspension over escalating violence against Christians by Boko Haram.
• Nigeria’s president rebuffs the U.S. concerns, stating religious freedom remains a national principle.
• Context: Over 43,000 deaths in Nigeria tied to Boko Haram since 2009.

4. Berkshire Hathaway Succession and Earnings

• Quarterly earnings up 17% due to strong insurance business results.
• Investor uncertainty: Stock lags S&P 500 amid Warren Buffett's coming retirement; Greg Abel to take over.
• Heather Gillers (WSJ):
  • Notes Berkshire’s unique, opaque style may not succeed under new leadership.
  • Raises questions about investor trust and possible need for transparency changes.

    "So one question going into this change in leadership is will those [opaque] practices change? And if they don't change, will investors be just as content with someone new in charge?" (05:17 – Heather Gillers)

5. U.S. Housing Market Pressures and Risky Loans

• High home prices and mortgage rates drive surge in adjustable rate mortgage (ARM) applications (10% of purchases – highest since 2023).
• Many expect rates to drop, though rising rates could increase payments for ARM holders.
• Context: A reminder of risky loan practices reminiscent of those causing the 2008 financial crisis.

6. Europe’s “Role Reversal”: Southern Stability, Northern Strains

Southern Europe’s Comeback

• Former crisis countries (Portugal, Italy, Greece, Spain) now exhibiting fiscal health and robust growth.
• Chelsea Delaney (WSJ):

  "15 years ago these southern European economies... almost broke apart the Eurozone when they had these debt crisis and now they’re doing actually really well." (08:08 – Chelsea Delaney)

  • Southern economies forced into painful but ultimately beneficial reforms during the debt crisis (austerity, labor reform, privatizations).
  • Tourism and new high-value sectors (tech, finance, media) drive expansion.

Northern Europe’s Fiscal Challenges

• Shift: Germany, France, and the UK now struggle with rising debt and slow growth.
• Key factors:
  • German manufacturing and exports hurt by tariffs and competition from China.
  • Impact from Russia’s war in Ukraine—higher energy costs damage industry.
  • Aging populations and large welfare states strain budgets.

    "You have just the size of the welfare states in some of these countries are getting quite large, populations are aging. And so the spending requirements are starting to really weigh on countries like France..." (10:01 – Chelsea Delaney)

Political Obstacles to Reform

• Attempts at raising pension ages or cutting welfare meet strong public resistance.
• Leaders forced to roll back reforms, turn instead to tax increases—fuels political fragmentation.

  "The other option is raise taxes. And I think that's what we're seeing in the UK and France. But it's contributing to the political fragmentation that we're seeing..." (11:14 – Chelsea Delaney)

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Notable Quotes & Memorable Moments

• Tim Kaine on urgency:

  "We can find a budget deal that puts us on a path to a health care fix. I don't need all the I's dotted and t's crossed. I just want to be on a path so that people's bills don't spike and I want the president to agree. Stop the wrecking ball." (01:43 – Tim Kaine)

• Mike Johnson on national security:

  "What the president and the administration are doing is protecting the homeland." (03:31 – Mike Johnson)

• Chelsea Delaney on southern Europe’s turnaround:

  "Spain was one of the fastest growing economies in the developed world last year... these are actually really big numbers. So on a growth perspective, they're doing really well." (08:08 – Chelsea Delaney)

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Timestamps for Important Segments

• 00:33 – Episode headlines: Shutdown and EU fiscal issues preview
• 01:43 – Sen. Tim Kaine urges President Trump to join shutdown talks
• 02:02 – Trump’s military strikes, admin legal arguments, Sen. Warner’s critique
• 03:31 – House Speaker Mike Johnson defense of administration’s transparency
• 05:17 – Berkshire Hathaway earnings, leadership uncertainty (Heather Gillers)
• 06:00 – U.S. housing market and risky loans resurgence
• 08:08 – Chelsea Delaney on role reversal in European economies
• 10:01 – Problems facing Germany, France, UK explained
• 11:14 – Political resistance to reform and implications for European stability

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Tone & Style

• Concise, direct, and neutral reporting in the Wall Street Journal’s signature style.
• Exchanges between host Caitlin McCabe and expert guests keep the tone informative and conversational.

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Summary Takeaways

• U.S. shutdown remains unresolved; chances of movement hinge on presidential involvement.
• War powers controversy deepens with bipartisan calls for transparency about military strikes.
• Berkshire’s transition to Greg Abel faces market skepticism.
• U.S. homebuyers are assuming more post-2008 style loan risks as affordability wanes.
• Europe’s south enjoys newfound financial stability after painful reforms, but northern stalwarts now face heavy debt, stagnant growth, and mounting political challenges to fiscal reform.

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Transcript

[Morgan Stanley Announcer]

This episode is sponsored by Morgan Stanley's Thoughts on the Market. Today's financial markets move fast. Morgan Stanley moves faster with their daily podcast, Thoughts on the Market. Thoughts on the Market covers daily trends across the global investment landscape with actionable insights from Morgan Stanley's leading economists and strategists. And with most episodes under five minutes long, staying informed has never been easier. Listen and subscribe to Thoughts on the Market wherever you get your podcasts.

[Caitlin McCabe]

Congressional scrutiny over the Trump administration's lethal strikes on alleged drug smugglers heats up. Plus, Democratic senators call for the president to join talks as the shutdown nears.

[Tim Kaine]

A record if the president engages, we will find a deal, I think within hours.

[Caitlin McCabe]

And we take a look at why the countries once praised for their fiscal discipline are now becoming Europe's new problem cases. It's Monday, November 3rd. I'm Caitlin McKee for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world today. We begin in D.C. where Democratic senators are urging President Trump to engage directly in talks to end the government shutdown, which is nearing a record 35 days, the longest lapse ever. Lawmakers last week made progress on talks to reopen the government with a possible deal on health care, which is the main condition for Democrats to vote on end the shutdown. Democratic senators came out in force over the weekend urging the president to get involved. Here's Virginia Senator TIM KAINE On ABC's this Week.

[Tim Kaine]

We're asking the president to simply sit down and do what all presidents do. We can find a budget deal that puts us on a path to a health care fix. I don't need all the I's dotted and t's crossed. I just want to be on a path so that people's bills don't spike and I want the president to agree. Stop the wrecking ball.

[Caitlin McCabe]

Trump in recent days has urged Republicans to change Senate rules to bypass Democrats, potentially upsetting the delicate negotiations. The White House gave no indication Sunday that Trump would jump into the talks. Meanwhile, we're reporting that the White House believes it can continue its lethal strikes on alleged drug trafficking boats without congressional authorization, even as lawmakers from both parties grow increasingly frustrated by the lack of legal justification for the attacks. A senior official says the administration doesn't believe these strikes count as hostilities under the War Powers resolution. That's the 1973 law requiring presidents to end any military action after 60 days unless Congress approves it. But the ranking Democrat on the Senate Intelligence Committee, Mark Warner, isn't convinced. Appearing on CBS's Face the Nation over the weekend, he criticized the administration for only briefing Republicans on the strike.

[Tim Kaine]

I got an aircraft carrier from Norfolk that's in the Caribbean right now. How do I answer the families of those sailors about whether this operation is even legal? This document needs to be shared with every member of the Senate this week so that as we get into this discussion about war powers, we've got the basis of how the administration is claiming that it's legal.

[Caitlin McCabe]

GOP House Speaker Mike Johnson pushed back on that assertion on Fox News Sunday.

[Mike Johnson]

We had a Gang of Eight briefing with the secretary of state himself about a week and a half ago. And you had Republicans and Democrats there, the top leaders on both sides in intelligence and in elected leadership. We have exquisite intelligence about these strikes, and I can't get into the classified parts. But that information is well known and it is very reliable. And what the president and the administration are doing is protecting the homeland.

[Caitlin McCabe]

The US military has killed roughly 65 people in 15 airstrikes in the Caribbean Sea and eastern Pacific Ocean so far. And President Trump is threatening potential military action in Nigeria as well as halting aid, citing the perceived targeting of Christians by Islamist terrorists. Violence against Christians has escalated in Africa's most populous country, with Islamist extremist group Boko Haram responsible for 43,000 deaths between 2009 and 2021, according to a Nigerian nonprofit Posting on social media over the weekend, Trump said the US could go in, quote, guns a blazing with the goal of WIP out Islamist militants in the country. Nigeria's president pushed back in a post on X, rejecting claims of religious intolerance and stating religious freedom is a core national principle. Warren Buffett's Berkshire Hathaway reported quarterly results over the weekend, including a 17% increase in earnings thanks to a pickup in its insurance business. But as the Journal's Heather Gillers explains, it's unlikely to boost Berkshire stock, which has trailed the S&P 500. As shareholders have wrestled with the news that Buffett will be stepping down as CEO at the end of the year, handing the reins to his successor, Greg Abel.

[Heather Gillers]

We did see KBW lower their verdict on Berkshire Hathaway to underperform. They see some business headwinds ahead. And then they also are raising this question about whether investors are going to be willing to put as much trust in Greg Abel as they have in Buffett. Berkshire doesn't hold quarterly calls. It doesn't issue funds, financial guidance. So that's a little less transparent than other companies. And that historically hasn't been much of a problem for Berkshire because Warren Buffett just has such a loyal following. So one question going into this change in leadership is will those practices change? And if they don't change, will investors be just as content with someone new in charge?

[Caitlin McCabe]

The unaffordable housing market in the US Is causing a growing number of buyers to take on riskier loans to cut their borrowing costs. According to the Mortgage bankers association, about 10% of purchase mortgage applications were for adjustable rate mortgages in the week ended October 3rd, the highest rate since 2023. Adjustable rate mortgages initially offer cheaper rates compared with a fixed rate mortgage, but they can reset, potentially leaving borrowers saddled with higher monthly payments if mortgage rates have risen over time. Despite the risks, many buyers are betting that mortgage rates will fall in the coming years, especially if the Federal Reserve continues to lower interest rates. However, the Fed' decisions have been complicated by the ongoing government shutdown and lack of economic data releases coming up. Risky loans are something we last encountered during the 2008 financial crisis and which reverberated through Europe too. But seven years on from the debt crisis that swept the continent, Europe's economic powerhouses are faltering. More on that story after the break. You don't have time to wait on data you need. Just ask. I want from Paycom. Get real time employee data instantly at your command. Learn [e-mail] when you think back to the European debt crisis of the early 2010s, you might remember there was a lot of focus on southern Europe. The countries of Portugal, Italy, Greece and Spain were seen as the continents spendthrift troublemakers with big debt problems. But as the Journal's Chelsea Delaney writes, those countries have emerged as a rare bright spot for European growth. While Europe's northern countries are now the ones facing a problem, countries like France and the UK have rising budget deficits and debt. Even famously frugal countries like Germany are taking on debt too, albeit from lower levels. Chelsea, seems like we're getting a bit of a role reversal here.

[Chelsea Delaney]

Yeah, definitely. I mean, 15 years ago these southern European economies, there was a lot of concern over their finances. They almost broke apart the Eurozone when they had these debt crisis and now they're doing actually really well. So Spain was one of the fastest growing economies in the developed world last year grew 3.5%, Portugal, Greece all growing around 2%. These are actually really big numbers. So on a growth perspective, they're doing really well. And also from the budget perspective, they've really gotten their finances in check and they're not running huge deficits anymore and they're bringing down their debt levels.

[Caitlin McCabe]

Is there something in particular that they're doing that's driving this outperformance?

[Chelsea Delaney]

Well, one part of it is sort of the measures they were forced to take during the eurozone debt crisis as part of these bailout packages. So countries like Greece, Spain, Portugal, they were forced to do austerity. And that was really painful. There's still really long lasting scars from that. But they did a lot of things that set them up to grow later on. So they slashed bureaucracy, they reformed their labor laws, they privatized a lot of businesses. So I think that sort of planted the seeds. But there have also been some idiosyncratic factors over the past couple of years. One is tourism has been a huge boost for these economies in the past couple of years since the pandemic. But there also have been more structural changes to the economic makeup of these countries. So you have Barcelona and Seville and in Lisbon and Milan there are these big tech and finance and media hubs these days. So we've seen a shift in the makeup of the economies as well. So it's no longer that these are just tourism, like hotel, like low pay, low skill jobs that are driving these economies now. They do have these high value sectors that are starting to become a bigger part of the economy.

[Caitlin McCabe]

And so then what's the issue facing Europe's core countries now?

[Chelsea Delaney]

Yeah, the core of Europe is having a lot of problems right now. If you think of Germany, which has been the growth engine for the European economy for a long time, it's facing threats on many, many fronts. The economy is basically stagnating. Its economic model, which was based around high value manufacturing, around exports, around free trade, that's all been really challenged by not just the tariffs we've seen this year, but the rise of China as a big competitor. Volkswagen and German automakers are just having their lunch eaten by China. You also had Russia's invasion of Ukraine. It caused a lot of problems for industrial sectors and Europe because energy prices just went through the roof. And cheap Russian energy had been a key reason why these industries had been quite competitive. So that's a big part of it as well. You have just the size of the welfare states in some of these countries are getting quite large, populations are aging. And so the spending requirements are starting to really weigh on countries like France, where welfare spending is a big part of the economy.

[Caitlin McCabe]

And it seems like one issue here is that governments that have tried to tackle this have faced resistance We've seen that in the uk, we've seen it in France. Where does this leave these countries? Is there a way out of this?

[Chelsea Delaney]

It's hard to see a way out of this. The only way out of this is really to cut spending or raise taxes. And if you look at France, if you look at the uk, it's really difficult. We've seen Emmanuel Macron has tried to raise the pension age in the uk. Keir Starmer tried this year to roll back disability benefits. Not all. And both of those things have been quite politically toxic. So Keir Starmer had to roll those back. And then just recently, as part of the political chaos in France, the French Prime Minister has rolled back some of Macron's pensions reform. So it's really politically difficult. And so the other option is raise taxes. And I think that's what we're seeing in the UK and France. But it's contributing to the political fragmentation that we're seeing across Europe, the fact that they cannot get their budgets in order and that there's no consensus on how to address spending problems.

[Caitlin McCabe]

That's Journal finance reporter Chelsea Delaney. Chelsea, thanks for joining us.

[Chelsea Delaney]

Thanks for having me.

[Caitlin McCabe]

And that's it for what's news for this Monday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Sandra Kilhoff. And I'm Caitlin McCabe for the Wall Street Journal. We'll be back tonight with the new show. Until then, thanks for listening.

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