Shutdown Pain Spreads Across America

Summary

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WSJ What’s News: "Shutdown Pain Spreads Across America"

Date: October 8, 2025
Host: Caitlin McCabe

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Episode Overview

This episode unpacks the escalating impact of the ongoing U.S. government shutdown, with a focus on threatened back pay for furloughed workers, disruptions across industries (especially aviation), and ripple effects felt by small businesses and farmers. The episode also explores Milan’s transformation into a haven for the ultra-rich due to favorable tax policies and touches on political developments in France and the tech sector.

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Key Discussion Points & Insights

1. Growing Strains of the U.S. Government Shutdown

• Furloughed Workers Face Uncertainty

  • The shutdown has now lasted a week, with uncertainty brewing over whether furloughed workers will receive back pay once the government reopens.
  • New White House Memo: A memo argues the administration isn’t obligated to pay furloughed employees under the 2019 law previously guaranteeing back pay.
  • Presidential Remarks:
    • Donald Trump, when asked about worker pay:

      “I would say it depends on who we’re talking about. I can tell you this, the Democrats have put a lot of people in great risk and jeopardy, but it really depends on who you’re talking about. But for the most part, we’re going to take care of our people. There are some people that really don’t deserve to be taken care of, and we’ll take care of them in a different way.”
      — Donald Trump [02:09]

• Aviation System Under Pressure

  • Over 9,000 flights were delayed in two days, partly due to an increase in air traffic control workers calling out sick—a direct response to missed paychecks.
  • Essential Workers: TSA and FAA staff, deemed essential, are working without pay.
  • On Worker Hardship:

    “These are folks who, many of whom work paycheck to paycheck, live paycheck to paycheck. And so as they continue to work without receiving compensation, that is creating a major toll. And so as a result, you are starting to see some workers choosing to call out sick in response.”
    — Jacob Passi, WSJ travel reporter [03:19]

  • Affected airports: Chicago O’Hare, Nashville International, and Hollywood Burbank.

• Broader Economic Ripples

  • Small businesses and entrepreneurs tied to federal contracts or regulatory approvals face mounting frustration and uncertainty.
  • Economic Impact: Oxford Economics forecasts a 0.2 percentage point annual GDP loss for each week the shutdown continues.
  • Jobs Market Concerns: Federal data delays mean markets rely on alternative data, which now suggests slowing job growth, higher unemployment, and fewer companies hiring.
  • Notable Data Points:
    • Bank of America sees rising unemployment among customers.
    • Goldman Sachs’s labor market tightness index has fallen back to 2015 levels.

2. Trade Tensions, Farmers, and Geopolitical Fallout

• Soybean Farmers' Predicament

  • China, the largest buyer of U.S. soybeans, has ceased purchases as the harvest looms, using soy as leverage in the trade war.
  • Farmers scramble to find new markets in Vietnam and the Philippines.
  • The Trump administration considers $10–14 billion in farmer aid, likely using tariff revenue.
  • President Trump to decide with Agriculture Secretary Brooke Rollins on the aid mechanism.

• Legal and Social Developments

  • The Supreme Court debates the constitutionality of state bans on conversion therapy for minors, with psychiatric associations backing the ban as legitimate therapeutic policy.

3. Milan’s Metamorphosis: New Capital for the Ultra-Rich

[07:20 – 10:53]

• Rising Appeal & Urban Renewal
  • Milan is attracting the global ultra-wealthy by combining fashion, finance, a cosmopolitan vibe, and significant tax incentives.
  • London’s loss of “non-dom” tax privileges has benefitted Milan as high-net-worth individuals relocate.
  • Urban Transformation:
    • Skyscrapers, new metro lines, improved parks, bicycle lanes, and a boom in upscale restaurants, art galleries, and real estate.
  • Tax Incentives Explained:

    “Italy introduced a series of tax breaks, some of them aimed at high net worth individuals… anyone who moves to Italy… gets to pay a lump sum tax… either €100,000 or €200,000 on all foreign income… basically no inheritance tax in Italy.”
    — Margarita Stancati, WSJ Rome correspondent [09:18]

  • Lifestyle Attraction:

    “Some people compared Milan to London, Paris and New York, but without the chaos. Someone said, you know, it’s as though you put all those cities in a shrinking machine and you get Milan.”
    — Margarita Stancati [10:12]

4. Global Business and European Politics

[10:59 – End]

• Tech Sector News

  • Swiss tech giant ABB selling its robotics business to Japan’s SoftBank for over $5 billion, bolstering SoftBank's AI and robotics ambitions.

• French Political Instability

  • French President Emmanuel Macron faces deepening isolation after the abrupt resignation of a fourth prime minister in just over a year.
  • Macron’s struggle to govern without a majority and refusal to step down is fueling constitutional stress and warnings from former allies.
  • Host’s Reflection:

    “For a president once hailed as France’s great modernizer, the question now is whether Macron’s determination to stay in power is a source of even greater instability for France.”
    — Caitlin McCabe [12:31]

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Notable Quotes & Memorable Moments

• “There are some people that really don’t deserve to be taken care of, and we’ll take care of them in a different way.”
  — Donald Trump [02:09] (on back pay for federal workers)
• “You are starting to see some workers choosing to call out sick in response.”
  — Jacob Passi [03:19] (on the aviation impact)
• “It’s as though you put all those cities [London, Paris, New York] in a shrinking machine and you get Milan.”
  — Margarita Stancati [10:12] (on Milan’s livability)

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Key Segment Timestamps

• 00:44 — Main news headlines introduction
• 01:16 — Shutdown enters its second week; pay uncertainty for federal workers
• 02:09 — Donald Trump on which federal workers deserve back pay
• 03:19 — Aviation and travel woes; reporter Jacob Passi on worker stress
• 04:37 — Economic impacts and farmer fallout from China trade tensions
• 07:20 — Milan’s makeover and the global ultra-rich migration (interview with Margarita Stancati)
• 10:59 — SoftBank-ABB tech deal, Macron’s political crises

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Summary

This episode expertly weaves together the social, economic, and political threads tying the current U.S. government shutdown to broader global developments. It offers a human lens into the struggles of American workers and businesses, the international reverberation of trade wars, and dynamic shifts in global wealth havens and political authority. The tone is urgent, informative, and grounded in on-the-ground reporting, with well-chosen voices and analysis anchoring the key stories of the day.

Transcript

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[Caitlin McCabe]

The Trump administration puts furloughed workers back pay in doubt as shutdown pain spreads across America. Plus, American soybean farmers are in panic mode as China scales back its purchases, there's a new place the ultra rich are calling home.

[Margarita Stancati]

Milan had the reputation among Italians of being very functional. A bit gloomy, but Milan has sort of transformed. People now actually want to go to Milan because they like the lifestyle that Milan has to offer.

[Caitlin McCabe]

It's Wednesday, October 8th. I'm Caitlin McCabe for the Wall Street Journal, and here's the AM edition of what's News, the top headlines and business stories moving your world today. The federal government is officially now one week into its shutdown, and signs of strain are starting to ripple across the U.S. fresh uncertainty has emerged as to whether furloughed employees will receive back pay once the government reopens after the Trump administration floated the idea of denying it in a new memo yesterday. The memo, prepared by the Office of Management and Budget, asserts that the administration isn't obligated to pay furloughed employees under a 2019 law that was designed to guarantee back pay after a shutdown ends. President Trump himself signed the law during his first term, but seemed to backtrack yesterday when asked if such workers should be paid.

[Donald Trump]

I would say it depends on who we're talking about. I can tell you this, the Democrats have put a lot of people in great risk and jeopardy, but it really depends on who you're talking about. But for the most part, we're going to take care of our people. There are some people that really don't deserve to be taken care of, and we'll take care of them in a different way.

[Caitlin McCabe]

The threat to federal workers pay comes as lawmakers are locked in a standstill over negotiations to reopen the government, with neither side giving much ground. In the meantime, cracks are starting to show up in other ways, from the friendly skies to businesses on the ground that rely on federal contracts or regulatory approvals in order to do their work. One of the most evident signs of pain so far has been within the US aviation system. On Monday and Tuesday, more than 9,000 flights in and out of US airports were delayed, with the Federal Aviation Administration seeing a, quote, slight tick up in air traffic control workers requesting sick leave. Staffers within that unit and TSA or the Transportation Security Administration are essential workers and must continue working even as they face the prospect of missing their next paychecks as the shutdown lingers.

[Jacob Passi]

These are folks who, many of whom work paycheck to paycheck, live paycheck to paycheck. And so as they continue to work without receiving compensation, that is creating a major toll. And so as a result, you are starting to see some workers choosing to call out sick in response.

[Caitlin McCabe]

That's Wall Street Journal travel reporter Jacob Passi. He says Chicago o', Hare, Nashville International and Hollywood Burbank or among the airports that have seen issues this week. Outside aviation, frustration is trickling out. Too many entrepreneurs and small businesses that rely on the federal government are facing massive uncertainty. Some economists worry the pain could spread to the broader economy if the stalemate stretches into weeks. The consulting firm Oxford Economics estimates the shutdown could cut annual economic growth by as much as 0.2 percentage point for every week it lasts. It continues to be an unsettled time for the jobs market as the government shutdown keeps the lights off. At the Bureau of Labor Statistics last week we reported how the delays in federal data releases, including the September jobs report, were causing economists and investors to closely watch non government data. And now unofficial numbers are starting to come in from Wall street and they're pointing to the US labor market losing steam. This week. Bank of America said it is seeing signs of rising unemployment and slowing job growth in its customers data. Meanwhile, Goldman Sachs said its measure of labor market tightness fell last month back to levels seen in 2015, indicating a tough landscape for job seekers. These alternative data sources do have their drawbacks. They often only cover a small share of the labor force, and using them to estimate the state of the broader job market can be tricky. However, the non government numbers are indicating a broader trend of a cooling job market where few companies are hiring. Alarm bells are ringing for American soybean farmers over the loss of their biggest customer, China, as they anticipate a bumper harvest. China hasn't booked any US Soybean purchases for months, making the oilseed a potent weapon in Beijing's trade fight with Washington. In a bid to reduce their reliance on China, many US Farmers are seeking new markets in other countries, including Vietnam and the Philipp Philippines. We've reported that the Trump administration is considering allocating 10 to $14 billion more to farmers to help mitigate fallout from this year's trade battles. President Trump and his team are considering the use of tariff revenue to fund much of the aid, according to a White House official. The president is expected to meet with Agriculture Secretary Brooke Rollins to make a final determination of where the money for a farmer bailout should come from. And Supreme Court justices have voiced skepticism that states can ban counseling that aims to change a young patient' sexual orientation or gender identity. Colorado's 2019 law prohibits licensed mental health providers from using conversion therapy with patients under 18. The restrictions were challenged by a licensed professional counselor arguing that Colorado was violating the Constitution's guarantee of free speech by stopping her from counseling young people who wanted guidance informed by Christian convictions. The American Psychological association and American Psychiatric association support Colorado stating conversion efforts are not legitimate therapeutic treatment treatment. Coming up, a look at how Milan became the place to be for the globe trotting rich and French President Emmanuel Macron faces a political crisis. Those stories and more after the break.

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[Caitlin McCabe]

The City of Milan is known for its finance and fashion and now also as a home for the globetrotting rich. The Italian city is in the midst of a renaissance, thanks in part to enticing tax breaks that have lured high net worth individuals from all around the world. One Italian law firm that specializes in tax law estimates that the new tax policy has been used by around 5,000 people who have moved to Italy. The shift comes as another global city, London has gone in the opposite direction, scrapping a benefit that allowed foreigners living in the UK to pay tax only on what they earn domestically. The Journal's Rome correspondent Margarita Stancati says that's benefiting Milan. Margarita, your story mentions that Milan was historically thought of as the place where people came to work, not enjoy life. But seems like that's changing now.

[Margarita Stancati]

Yes, absolutely. I mean, Milan had the reputation among Italians of being very functional but a bit gloomy and not somewhere where people went to have fun, but where people went to work. And it always had for decades. Fashion industry, design industry and finance. But it's become much more livable, much more cosmopolitan, and it's undergone something of a makeover.

[Caitlin McCabe]

Your story mentions new high end restaurants. Real estate seems to be booming. What Is it like there now?

[Margarita Stancati]

So there's been a period of kind of urban renewal. We've seen new skyscrapers rising, new metro lines, better public areas, including parks and bicycle lanes. And as more people came to Milan, both Italians and foreigners, the city has adapted to this demographic change. And many of these people are higher net worth individuals. So we're seeing more and glitzier restaurants opening, more art galleries opening, and also real estate prices going up.

[Caitlin McCabe]

And so seems like a big driver of this renewal is tax breaks, is that right?

[Margarita Stancati]

Absolutely. So Italy introduced a series of tax breaks, some of them aimed at high net worth individuals. Basically, anyone who moves to Italy, whether they're foreign or Italian, but who's a new resident to Italy, gets to pay a lump sum tax, which has succeeded in luring many millionaires, many of them who previously lived in London. So depending on the year of arrival, the tax is either €100,000 or €200,000 on all foreign income. So any income that is made in Italy will still be taxed. It's similar to the nom dom regime that was in place in the UK until a few months ago. And also, there's basically no inheritance tax in Italy, which is another, another aspect that makes Italy kind of fiscally attractive.

[Caitlin McCabe]

And obviously, Margarita, it's not just all about taxes here, it's about lifestyle too. What is the lifestyle like?

[Margarita Stancati]

100%. I mean, some of the people we spoke to compared Milan to London, Paris and New York, but without the chaos. Someone said, you know, it's as though you put all those cities in a shrinking machine and you get Milan. So people like Milan because it has this global feel. There's a lot going on, but also it's much smaller, it's easier to move around within the city, and it's also very easy to get out of the city. So one of the draws of Milan is that it has so many weekend getaway options, whether it's Portofino or the Dolomites or, you know, a train ride from Venice, there's just so many options.

[Caitlin McCabe]

Well, seems like Milan is the place to be right now. Margarita, thank you for joining us.

[Margarita Stancati]

Thank you for having me.

[Caitlin McCabe]

Staying in Europe, Swiss tech giant ABB is set to sell off its robotics business to Japan's SoftBank in a deal that values it at just over $5 billion. SoftBank said today that the acquisition of the division would significantly strengthen its artificial intelligence robotics operations, aligning with its broader strategy of investing in the technology, including OpenAI AI chips and data centers. And it would appear France's Emmanuel Macron is running out of moves and and allies. After the resignation of his fourth prime minister in just over a year, Macron finds himself increasingly isolated, battling to govern without a parliamentary majority. His latest appointee, Sebastian Lecournu, quit barely a month into the job, unable to unite lawmakers around a plan to shrink France's deficit. Macron, still refusing to step down before his term ends in 2027, is now testing the limits of the Fifth Republic's constitution. Former allies, including his one time premier, Edouard Philippe, warn the system itself is starting to crack under the strain for a president once hailed as France's great modernizer. The question now is whether Macron's determination to stay in power is a source of even greater instability for France. And that's it for what's news for this Wednesday morning. Today's show is produced by Kate Bullivant. Our supervising producer is Pierce lynch, 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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