WSJ What’s News: World Leaders Face Tough Budget Choices in 2025
Release Date: December 24, 2024
Host: The Wall Street Journal

Overview

In the December 24, 2024 episode of WSJ What’s News, The Wall Street Journal delves into the pressing fiscal challenges facing world leaders as they navigate complex budgetary landscapes heading into 2025. The episode covers a range of topics from airline disruptions and international mergers to humanitarian crises and advancements in artificial intelligence. Central to the discussion is the exploration of how political leaders in industrialized democracies are grappling with stagnant economies, voter dissatisfaction, and the intricate balance of fiscal policies.

Key News Stories

1. American Airlines Technical Outage

The episode opens with a report on a technical issue that temporarily grounded all American Airlines flights for about an hour on Christmas Eve.

• Alison Seider (Aviation Reporter) [01:04]:
  “So it seems like a big Christmas Eve crisis has kind of been averted. There are a lot of flights that got off to a late start and some delays have been mounting as the airline works through it.”
  [01:37]

Despite initial concerns, the outage did not lead to mass cancellations. Alison notes ongoing delays due to the technical hurdles and weather-related challenges, including thunderstorms in Dallas Fort Worth and icy conditions on the East Coast. Although American Airlines saw a drop in shares early in the day, losses were partially recovered as operations stabilized.

2. US Steel's Potential Takeover by Nippon Steel

President Biden faces a critical decision regarding Nippon Steel's bid to acquire U.S. Steel, a move under intense scrutiny for its national security implications.

• Deepa Sitharaman (Journalist) [02:43]:
  “The president has been saying for months that he felt that U.S. steel should be domestically owned, domestically operated. The expectation has been that he's against the deal.”
  [02:43]

Nippon Steel maintains confidence in the approval of their acquisition, emphasizing strategic economic security benefits and partnerships to counter Chinese competition. Conversely, US Steel argues that the merger would bolster the U.S. steel industry's resilience. The government panel reviewing the deal failed to reach a consensus, leaving the final decision to President Biden.

3. Famine Crisis in Sudan

A dire humanitarian situation unfolds in Sudan, where famine is rapidly spreading amidst ongoing conflict.

The International Panel of Experts on the Sudan (IPC) reports that over 600,000 people are now enduring catastrophic hunger. The United Nations and aid organizations accuse Sudan's military factions of obstructing essential humanitarian aid. In response, Sudan's Agriculture Ministry, controlled by the military, has suspended its participation in the IPC system, complicating efforts to monitor and address the crisis effectively.

4. AI Advancement: China vs. OpenAI

The episode highlights significant strides by Chinese startups in artificial intelligence, positioning themselves competitively against American counterparts.

Chinese companies like Deepseek, backed by prominent hedge fund managers, and Moonshot AI, supported by Alibaba and Tencent, claim their AI models rival OpenAI's GPT-1 reasoning model introduced in September. Despite challenges in evaluating these claims, U.S. specialists acknowledge the impressive progress made by these Chinese entities, particularly in optimizing AI training with limited computing resources.

Conversely, OpenAI faces delays with the anticipated GPT-5 model. According to Deepa Sitharaman, the development has stalled due to a shortage of high-quality training data, necessitating the use of synthetic data—an approach fraught with risks such as model collapse.

• Ryan Reynolds (AI Specialist) [05:09]:
  “There's a lot of data on the Internet, but everything good has pretty much been scraped. And so OpenAI and the researchers have had to figure out how do you fill that data gap.”
  [05:09]

Main Discussion: Global Budget Challenges in 2025

The heart of the episode features an in-depth discussion with Wall Street Journal reporters David Luno (UK Bureau Chief) and Juan Ferrero (South America Bureau Chief) on the fiscal predicaments confronting leaders of industrialized democracies.

a. Global Budget Fights and Voter Dissatisfaction

David Luno provides a comprehensive analysis of the economic stagnation plaguing many developed nations. He attributes the rising budgetary conflicts to minimal economic growth, aging populations increasing governmental expenditure on pensions, and static tax revenues. This economic strain is compounded by widespread voter dissatisfaction with established political parties, leading to a surge in support for anti-establishment and far-right movements.

• David Luno [07:47]:
  “Economies in a lot of these places really aren't growing enough. Coming after the pandemic where economies fell sharply, inflation went through the roof. A lot of ordinary people are feeling poorer after that.”
  [07:47]

b. Case Studies

• Germany and France: Both nations are experiencing political instability. In Germany, conflicting budget priorities between the center-left and center-right parties have led to difficulties in passing budgets, while France grapples with frequent changes in its prime ministerial leadership, complicating fiscal policymaking.

• United Kingdom: Despite having a stable political majority, the UK's Labour Party faces backlash over unpopular budget proposals, including tax increases and subsidy cuts, leading to public unrest and political fatigue.

• Argentina: Contrastingly, Argentina under President Javier Milei showcases a different trajectory. Milei's aggressive economic reforms, including significant regulatory cuts and austerity measures, have begun to yield positive outcomes such as reduced inflation and a budget surplus. However, his administration seeks an IMF loan to sustain these reforms and foster economic growth through increased foreign investment.

c. Insights from Reporters

• Juan Ferrero [10:30]:
  “Argentina is one place where economic pain has weighed very heavily on politics and where the leader, Javier Milei, seems to have taken quite a different approach.”
  [11:30]

• David Luno [10:30]:
  “In the UK, the Labour party won about 34% of the vote. So they came in and very soon thereafter they had to propose a new budget and people didn't like what was proposed.”
  [10:30]

• Daniel Bok:
  “In Argentina, Milei had inherited a pretty disastrous situation... inflation has now fallen quite dramatically. There's now a budget surplus and Milei is talking about trying to get an IMF loan.”
  [11:30]

The discussion emphasizes the universal challenges of balancing economic growth with fiscal responsibility, the rising influence of non-traditional political forces, and the diverse strategies leaders employ to address economic crises.

Notable Quotes

• David Luno [07:47]:
  “Economies in a lot of these places really aren't growing enough... Populations are getting older and that means more money from the government needs to be allocated for things like pensions.”

• Ryan Reynolds [05:09]:
  “There's a lot of data on the Internet, but everything good has pretty much been scraped... It's also a source of risk if the wrong type of data is introduced.”

• Deepa Sitharaman [02:43]:
  “The president has been saying for months that he felt that U.S. steel should be domestically owned, domestically operated.”

• Daniel Bok [11:30]:
  “Inflation has now fallen quite dramatically. There's now a budget surplus and Milei is talking about trying to get an IMF loan.”

Conclusion

As 2025 looms, world leaders must navigate a complex web of economic stagnation, demographic shifts, and political volatility. The WSJ What’s News episode underscores the critical fiscal decisions ahead and the potential for significant political repercussions based on how these challenges are addressed. From Germany and France grappling with internal political conflicts to Argentina's bold economic reforms, the global landscape is poised for transformative shifts as nations strive to stabilize and grow amidst adversity.

Produced by Daniel Bach with supervising producer Christina Rocca. Reporting by David Luno and Juan Ferrero. For more detailed analysis, listeners are encouraged to access previous episodes and related reports.