Good morning. Andrew here. President Trump’s State of the Union address last night included a number of remarks — and guests in the audience — that will probably pique your interest about how he plans to approach business and policy going forward. We’ve put together a cheat sheet on everything he said, and didn’t say. We’re also focused on the Pentagon’s pressure campaign on Anthropic. PayPal may be up for sale. And Benjamin Weiser has an exclusive on a big move in Big Law. (Was this newsletter forwarded to you? Sign up here.)
The big speechPresident Trump sought to accomplish a lot in his State of the Union address last night, notably trying to bolster his sagging poll numbers before the midterm elections in the fall. In his record-breaking 107-minute speech, he repeatedly played up the economy’s gains and what he called a “winning” country, as well as his usual taking shots at perceived enemies and airing grievances about issues like diversity initiatives. But he played down the severity of the affordability crunch — an omission that Gov. Abigail Spanberger of Virginia seized on in the Democrats’ rebuttal address. What to know: Trump’s address was full of exaggerations and outright whoppers, including his claims about inflation, the labor market and billions of dollars in investment flowing into the U.S., according to fact-checkers at The Times and elsewhere. He also didn’t talk much about Iran, despite previously threatening potential military action over its nuclear program. Here were some of the notable focuses of the speech: Tariffs: The president vigorously defended a central pillar of his economic policy, which has upended global trade (and is deeply unpopular with voters). Trump called levies a revenue driver that could one day “substantially replace” the income tax, something many economists say is unlikely. He also argued that businesses support tariffs, despite a wave of companies seeking refunds. Worth watching: Trump said that “congressional action will not be necessary” for his levies, which appeared to run counter to arguments that lawmakers’ approval was needed for some new tariffs — but which could spare Republicans from an unpopular vote before the midterms. Inflation: Last night, Trump described it as “plummeting,” pointing to the prices of rent, eggs and gasoline. “It’s like another big tax cut,” he said. Government data last week showed consumer prices that were still rising above the Fed’s 2 percent target. This is another Achilles’ heel for the president, as it was for his predecessor. Congressional stock trading. He urged lawmakers to pass the Stop Insider Trading Act, legislation that would put some stock-trading limits on lawmakers and their families. Trump punctuated the moment by calling out Representative Nancy Pelosi, Democrat of California, whose husband’s prolific trading was frequently criticized. Retirement plans: Trump suggested that those who don’t have an employer-sponsored retirement plan like a 401(k) would be eligible to join a retirement plan akin to the kind “offered to every federal worker.” Electricity and artificial intelligence: Tapping into a growing consumer concern, the president said that a new “ratepayer protection pledge” would shield households from utility bill increases caused by tech giants’ build-out of data centers in their regions. Real estate: Trump doubled down on a vow to “ban large Wall Street investment firms from buying up” single-family homes, a move that seems aimed at the private equity sector. That initiative has drawn a muted reception in Congress.
Warner Bros. Discovery signals it may leave Netflix for Paramount. A new offer from Paramount, worth $31 a share and that includes sweeteners like a $7 billion breakup fee if it were blocked on regulatory grounds, could lead to a “superior proposal” to its current agreement with Netflix, Warner Bros. Discovery said. If Paramount’s offer were deemed superior, Netflix would have four days to make a counteroffer. Banks reportedly could be required to record their customers’ citizenship status. The Trump administration is considering an executive order that would require financial institutions to collect citizenship information from people who want to hold bank accounts in the U.S., according to The Wall Street Journal. Banks have lobbied against the rules and questioned the legality of the proposal, The Journal reported. Stripe is said to weigh a bid for PayPal. The potential move, reported by Bloomberg, would combine PayPal Holdings, a struggling pioneer in the digital payment processing industry, with Stripe, a younger, fast-growing rival. It comes amid a recent management shake-up at PayPal and a slowdown in its payment business. Here’s the latest on the Epstein files. Bill Gates apologized to the staff of the Gates Foundation over his ties to Jeffrey Epstein, who developed a tight bond with Microsoft executives over more than two decades. And the Justice Department’s latest release of the Epstein files shows that Deutsche Bank offered the convicted sex offender preferential treatment after JPMorgan Chase cut ties with him in 2013. Putting safety-first A.I. to the testAnthropic has long depicted itself as the top safety-focused artificial intelligence start-up, promising not to work on models that could eventually do dangerous things. The question is how committed the start-up is to that pledge in the face of a threat from Defense Secretary Pete Hegseth — and growing competition from less-encumbered rivals. Hegseth gave Anthropic until Friday to remove guardrails on its A.I. model. The start-up doesn’t allow Claude Gov, the only A.I. model operating on classified military systems, to be used on mass surveillance of Americans or autonomous weapons without human intervention. But the Pentagon says it wants to use Claude for all lawful use. And in a meeting yesterday with Dario Amodei, Anthropic’s C.E.O., Hegseth threatened to invoke the Defense Production Act to essentially make Claude available for free to the military, and to label Anthropic a supply chain risk. (Some critics have argued that the threats are contradictory.) The stakes are high. The Pentagon’s current contract with Anthropic is fairly modest, at about $200 million. But overall, the U.S. government is expected to be a major customer for A.I. companies. At the same time, designating Anthropic a supply chain risk would require other companies to certify that they don’t use Anthropic in their military work. And even Defense Department officials concede that Claude is considered superior to several competitors: “The only reason we’re still talking to these people is we need them and we need them now,” a department official told Axios. A.I. rivals are watching closely. Elon Musk’s xAI has signed an agreement with the Pentagon for its Grok model to be used in classified applications, and Musk — who isn’t a fan of Anthropic’s pro-A.I.-regulation policy — has taken to needling his rival on X. (Musk is already a major government contractor via SpaceX.) The Pentagon is also reportedly close to signing a deal with Google. Axios reports that xAI has agreed to the Pentagon’s “lawful use” criteria for use at any classification level. Will Anthropic yield on its safety-first stance? Reuters reports, citing an unnamed source, that the company won’t ease restrictions for military applications despite Hegseth’s ultimatum. Amodei also told Hegseth that the limits wouldn’t hinder the Pentagon’s current operations. But yesterday, company officials told Time that they were dropping a central pledge of its operations: that it categorically wouldn’t train models above a certain capability level if it couldn’t guarantee robust safety measures. “We didn’t really feel, with the rapid advance of A.I., that it made sense for us to make unilateral commitments” if rivals were “blazing ahead,” Jared Kaplan, Anthropic’s chief science officer, told Time. Kaplan argued that the move wasn’t tied to market incentives, and the new policy calls for transparency on safety limits. But Anthropic has become a darling of the tech world because of its rapidly advancing (and market-moving) A.I. tools — and its rivals aren’t standing still.
Who was at the State of the UnionPresident Trump’s State of the Union address was notable not just for what he said, but also for who was in the room, including industry titans and newly minted Olympic heroes. Here are some of the notable guests:
Exclusive: Maurene Comey’s new gigMaurene Comey, the veteran federal prosecutor in Manhattan who was abruptly fired by the Trump administration in July without being given a reason, has joined the New York law firm Patterson Belknap Webb & Tyler as a partner in its litigation department, Benjamin Weiser is first to report for The Times. Comey, 37, who helped to prosecute Jeffrey Epstein, Ghislaine Maxwell, Sean Combs and other high-profile defendants, is the daughter of James Comey, the former F.B.I. director whom President Trump has long considered an adversary. In a lawsuit that Comey filed challenging her dismissal, she argued that no plausible explanation existed for her firing other than she is Comey’s daughter, or “because of her perceived political affiliation and beliefs, or both.” For nearly a decade in the U.S. attorney’s office for the Southern District of New York, Maurene Comey handled 11 jury trials and also served as co-chief of the unit that investigates violent and organized crime, and later a unit that pursues public corruption offenses. Comey told The Times on Monday that she had felt privileged to represent the United States in court. But, she added, “what we’ve seen over the last year is a complete destruction of the space between politics and the Department of Justice.” She said a series of “norm-shattering events” in the department had “made all the clearer just how important a robust defense bar is to stand up to government overreach, and I feel privileged to be able to join that bar with my partners at Patterson Belknap.” Prosecutor purge: Comey did not specify the events she was referring to. But in addition to her own dismissal, the Trump administration has fired other federal prosecutors in Manhattan, Washington and elsewhere; and Trump has ordered Attorney General Pam Bondi to investigate his perceived enemies, including Letitia James, New York’s attorney general, and Comey’s father. At Patterson Belknap, which has about 200 lawyers in a single office in Midtown Manhattan, Comey will focus her practice on high-stakes, white-collar defense and investigations, as well as on complex civil litigation. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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