RFK Jr. Faces Combative Questioning Over CDC Turmoil, Vaccines

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at Schwab.com slash Washington Wise. Robert F. Kennedy Jr.. faces questions about turmoil at the CDC during a contentious Senate hearing. Plus, the Justice Department opens a criminal investigation into Fed Governor Lisa Cook. And why a growing number of companies are deciding it's time to break up. If these consumer companies aren't getting that love on Wall Street, then they're forced to really sit down with their bankers and financial advisors and draw up kind of other plans to ignite growth on their own. It's Thursday, September 4th. I'm Alex Jon Ossoff for the Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

Health Secretary Robert F. Kennedy Jr..'s expansive moves to remake American health care were dissected by a skeptical Senate committee today. Republicans and Democrats alike questioned his firing of experts on a key immunization panel and the cancellation of $500 million of government contracts to develop messenger RNA vaccines to prepare for pandemics. They also questioned him over last week's ouster of Centers for Disease Control and Prevention Director Susan Menares. In his opening statement, Robert F. Kennedy Jr. defended his actions. Finally, I would like to address the reason Jacob said CDC. These changes were absolutely necessary adjustments to restore the agency to its role as the world's gold standard public health agency. Robert F. Kennedy Jr. is aiming to radically remake the nation's top public health agency, while some Senate Democrats, as well as current and former CDC employees, have called on him to resign. Sabrina Siddiqui, who covers national politics for the journal, joins me now. Sabrina, what was the tone of this hearing? This was a pretty combative hearing, and I think it was expected that Robert F. Kennedy Jr. would face a lot of questions about the turmoil at the CDC, especially after the firing of its director, resignations from senior staff. But he drew criticism from Democrats and Republicans alike. So the fact that he was getting heat from Republicans too over the changes at the agency and also his efforts to remake vaccine policy, that is what stood out to me. since we haven't seen a lot of criticism from Republicans of the Trump administration. Yeah, let's talk about the recent aster of the CDC head. Did the hearing illuminate anything about how all of that happened and about Robert F. Kennedy Jr.'s thinking about it? Well, You have two separate narratives around how it happened. Dr. Susan Menares wrote in a Wall Street Journal op-ed that she essentially was fired because she was insisting that all CDC recommendations be based on credible data, not on ideology or preordained outcomes, essentially that she refused to sign off on some of the changes that Robert F. Kennedy Jr. wants to make to immunization practices. and advisors. That is what we had heard in our own reporting when talking to people inside and outside of the CDC as well. But Robert F. Kennedy Jr., essentially. called her a liar. He said that she is not telling the truth. When he was asked if he pressured Monaris to give blanket approval to vaccine recommendations from these handpicked members of the immunization committee, there's a lot of concern from CDC employees current and former who I've spoken with about the direction of the agency and whether the vaccine recommendations moving forward are going to be based on science or based on politics.

What are the implications from this hearing? There are a couple of key questions. One is the Trump administration has expressed confidence in Robert F. Kennedy Jr.. They've stood by him amid all the criticism. But 12 of the 13 Democrats on this committee at the hearing today have called on him to resign. Now, Democrats calling on a Trump cabinet official to resign is not likely to do anything. But the Republican criticism, the Republican concern about potentially changing childhood vaccine guidelines or taking other steps. to undermine confidence in public health and science. Where do those criticisms go? Do Republicans who, for the first time, I think in a meaningful way, demonstrate that they're wary about Robert F. Kennedy Jr. join calls for his resignation? Do they pressure the Trump administration to do something about it to stop Robert F. Kennedy Jr. from remaking the nation's top public health agency? That was WSJ reporter, Sabrina Siddiqui. Thanks, Sabrina. Thank you.

The District of Columbia's Attorney General said today that he was suing to end the deployment of National Guard troops in Washington. The suit, which comes two days after a federal judge ruled the Trump administration's use of the National Guard in Los Angeles had been unlawful, alleges that the presence of troops in D.C. violates the Posse Comitatis Act, a 19th century law prohibiting the use of federal forces for domestic law enforcement. White House spokeswoman Abigail Jackson said that President Trump is within his authority to deploy the National Guard in the nation's capital, quote, to protect federal assets and assist law enforcement with specific tasks. We're exclusively reporting that the Justice Department has opened a criminal investigation into Federal Reserve Governor Lisa Cook, issuing subpoenas as part of an inquiry into whether she submitted fraudulent information on mortgage applications. That's according to U.S. officials familiar with the matter. In a recent court filing, Cook denied she had ever committed mortgage fraud. White House Economic Policy reporter Brian Schwartz is here to discuss. Brian, tell us a little bit more about this investigation. What is the Justice Department looking into here? Well, the Justice Department probe and Talisa Cook started after the housing director, Bill Pulte, sent two criminal referrals to the Justice Department claiming that Cook conducted a mortgage fraud on a variety of different properties, something that her attorney is vehemently denying. But nevertheless, those referrals have led to a Justice Department. investigation in different parts of the country. One element is in Michigan. Another is in Atlanta. These are locations of two of her properties. The Justice Department is kind of honing in on those regions. They kind of get to the bottom of if there was any wrongdoing. And there have been subpoenas sent out as well. Where does the investigation go from here? To prove mortgage fraud, it's a really high bar. You're going to have to get some details potentially from the mortgage lending companies because there is possibly only so much you can learn from the mortgage forms itself. There's not always direct evidence that can be proven in court for wrongdoing. Some of that stuff may not be so clear cut for investigators. My judgment on this is for them to go to the level of subpoenaing anyone associated with these mortgage. shows that they're still looking for a wrongdoing, that this isn't just at the moment a slam-dunk case for that. We've been talking on the show quite a bit about Lisa Cook in the past couple of weeks. This Justice Department probe follows accusations from President Trump about her committing mortgage fraud as a rationale to fire her for cause. Cook, in response, has filed a lawsuit alleging Trump's move to fire her was unlawful. What does this investigation mean for everything swirling around Cook? This latest move by the Justice Department is a major escalation and comes amid this illegal fight that Cook is initiating against the president arguing that she should not have been terminated, that they had no standing for cause to terminate her from the board of the Federal Reserve. But it also mirrors this battle that the president has had with the Fed board for months.

particularly with Fed Chair Jerome Powell. While that's been going on, the president and his team have already been looking for replacements for Jerome Powell, despite the fact that his term doesn't end as chair until next year. That was WSJ reporter, Brian Schwartz. Thanks, Brian. Thank you. Separately, Stephen Myron, Trump's pick to fill a vacancy for Fed governor, testified in front of the Senate Banking Committee today. Myron told the committee that, if confirmed, he would, quote, act independently as the Federal Reserve always does. He also indicated he would consider returning to his post at the White House next year after concluding a short stint at the central bank, an arrangement that hasn't been attempted in the decades since Congress sought to separate the executive branch from the central bank. Democrats at the hearing said such a scheme would call into question whether Myron could exercise the independent judgment that he pledged he would provide. One Republican senator later told reporters he was surprised by the proposal, but no GOP lawmakers signaled that it would lead them to oppose Myron's confirmation. Coming up, is this the year of the corporate breakup? More on that after the break. Access to affordable credit helps me pay my employees, but I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durban Marshall credit card bill. See, banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. while increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durban Marshall money grab for corporate megastores. Paid for it by the Electronic Payments Coalition.

It's been a busy year for deals, and some of the biggest of the year involve dismantling mega mergers from years past. Kraft Jim Himes, which we talked about earlier this week, is the latest corporate breakup, but it's far from the only one. Warner Brothers Discovery and Kurek Dr. Pepper also announced splits. For more, I'm joined by WSJ lead deals reporter, Lauren Thomas. Lauren, we recently had you on an episode of What's New Sunday talking about how we were in our merger era. There are so many mergers going on. But now also these breakups are happening. So how could it be both? It's a great point that you make and both can be true at the same time because it has been a particularly big summer for deal making. Many have also been thinking on the flip side of breaking up and especially these bigger conglomerates, some of which you just mentioned like Kraft Jim Himes. We've been in a kind of a cycle and at this point in the year, especially where there's been a lot of investor pressure. Investors are seeking clarity and oftentimes you'll hear this phrase corporate clarity. They want to put their money into companies that they understand. And maybe they prefer Coca-Cola rather than Pepsi because Pepsi's got drinks and snacks, but Coca-Cola is a pure play beverage bet. Are there any industries where we're seeing a lot of this breakup activity? Yes, Kraft Jim Himes is one example, and that's a consumer food and beverage company. And we have seen a lot of this in the consumer sector lately. The consumer sector has just become kind of this unloved sector relative to other industries like tech, for example, and everyone loves invidia, but they don't necessarily love Unilever. And so a lot of these are household names, but the valuations have just kind of plummeted. And so as a result, if these consumer companies aren't getting that. love on Wall Street, then they're forced to really sit down with their bankers and financial advisors and draw up kind of other plans to ignite growth on their own. Historically, when companies break up, do they achieve these goals? I'm sure all these companies are asking themselves that as they pursue these breakups. Honeywell is kind of going through that process right now. In some ways, the verdict is still out. You have GE, which just a couple years ago finalized this big breakup. GE's aerospace division, the stock is trading at a great multiple and it unlocks all this value, and suddenly that business is worth more than GE even was on its own. And so you see in the short term this value unlocked. Over the long term, though, it's a little bit of wait and see. I think in an ironic way, a lot of these companies will then go on to probably do their own M&A and buy up other companies and then maybe reach a point where they're suddenly too big and need to break up or carve something out. That was WSJ reporter Lauren Thomas. Thanks, Lauren. Thank you. Major U.S. indexes rose today.

The NASDAQ led the gains, adding about 1%. The Dow and the SNP 500 were both up about 0.8%. And finally, want to buy some foundation with your jeans? This fall, Gap's Old Navy stores will be rolling out a wider assortment of beauty products, including some sold under the Old Navy brand. Items will range from skin care and makeup to hair products and nail polish, with most priced under $25. The plan is a change in strategy for Gap, signaling that it is willing to look beyond its core apparel business for growth. Its Gap branded stores will add beauty products next year, starting with fragrances. And that's what's news for this Thursday afternoon. Today's show is produced by Charlotte Gartenberg and Rodney Davis. Our supervising producer was Matthew Wals. I'm Alex Oslov for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at Schwab.com slash Washington Wise. Access to affordable credit helps me pay my employees that I don't really need it. Infliction is killing me. But who cares? Big retailers are making record profits. That's why we support the Durban Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it. Don't they? Tell Congress, stop the Durban Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.