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Attention Holiday Shoppers: UPS To Add Delivery Surcharges

A UPS driver takes his truck on a delivery route last month in New York.

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The first day of summer doesn’t begin until Wednesday but United Parcel Service already is looking ahead to the colder seasons with plans to charge retailers an extra fee for orders placed around Black Friday and Christmas.

And consumers could end up carrying that extra weight if retailers decide to pass on the cost by raising shipping fees.

Online shopping has become so successful that UPS and other delivery services are a fundamental service that keeps the retail season moving. On a normal daily average, UPS handles 19 million packages. During the peak holiday season, that number jumps to more than 30 million packages a day.

UPS says to meet demand, it’s had to add planes, trucks and thousands of employees. The company claims the surcharges are necessary to offset the additional cost of delivering all those holiday packages.

Between Nov. 19 and Dec. 2 this year, UPS says it will add a 27-cent charge on all ground packages sent to homes. Those dates include Black Friday, which is Nov. 24, and Cyber Monday, which is Nov. 27.

Consumers then get a two week reprieve from the additional charge but the fee makes a comeback to usher in the final holiday rush.

UPS says from Dec. 17 to Dec. 23, it will charge an extra 27 cents for each ground shipment, 81 cents for next-day air and 97 cents for two- or three-day delivery.

The delivery fee could backfire on UPS, as The Wall Street Journal reports:

“Patrick Gill, chief executive of the high-end fishing gear site TackleDirect.com, said news of the surcharge was frustrating since it is going to be applied when his site needs lower rates to compete against Amazon.com , Wal-Mart Stores and others.

“This will add up to be another unaccounted for expense during the holiday season,” Mr. Gill said. “It will force us to push some product away from UPS in some cases.”

A possible way around the surcharge could be the ship-to-store option. Because businesses generally receive more deliveries, the cost per package is typically lower.

The holiday season will be here in no time. Why not start that shopping list now? Surely someone you know needs a tacky summer vacation souvenir.

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Wal-Mart To Buy Bonobos In Challenge To Amazon

Wal-Mart is purchasing men’s clothing seller Bonobos as the giant retailer looks to stay competitive with Amazon.

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There’s a head-to-head going on right now between Wal-Mart and Amazon for the future of retail. This week, online giant Amazon announced it’s buying Whole Foods the same day Wal-Mart announced it’s spending $310 million to buy Bonobos, a small upscale e-commerce retailer. NPR’s Sam Sanders looks at what the Bonobos deal says about where this big retail battle could be headed.

SAM SANDERS, BYLINE: Forty-five-year-old Chris Marino has been a loyal Bonobos customer for a while.

CHRIS MARINO: I have been wearing pretty much exclusively Bonobos for the last five years.

SANDERS: And when you’re shopping Bonobos, it’s not cheap.

MARINO: Five pairs of their, you know, $185 wool dress pants. And I probably have a dozen or so dress shirts.

SANDERS: For instance, right now on Bonobos’ website, a pair of their upscale men’s sweatpants cost $118. So when the first rumors came out a few weeks ago that Wal-Mart was going to buy Bonobos, it raised some eyebrows. Marino even tweeted about it. You said, @walmart most disappointing news all year, exclamation point. Time to find another brand. #ImNotYourClientele #downstream #bonobos.

Talk about what made you want to write that tweet.

MARINO: Yeah, so actually it came…

SANDERS: Marino had a pretty long answer, but he ended up saying this.

MARINO: The initial comment was a knee-jerk reaction to Wal-Mart socks.

SANDERS: He and other customers think the company will tarnish Bonobos’ high-quality brand. So why did Bonobos say yes to this? Shelly Banjo is a columnist at Bloomberg. She covers retail and consumer goods. She has two guesses.

SHELLY BANJO: For Bonobos, they’re looking for some financial muscle. When it comes to Wal-Mart, they’ve been buying up a number of these smaller brands that they hope will help them kind of gain a better foothold to fight against Amazon.

SANDERS: For some time now, Amazon has been leading a retail revolution. People are shopping online more than ever before. And that’s hurting big brick-and-mortar retailers like Wal-Mart, which is all making for a big fight. Wal-Mart is the country’s biggest grocer. But now Amazon is stepping in that lane by buying Whole Foods. And Amazon is the country’s biggest online retailer. Wal-Mart is trying to get in that market by buying web-first companies like Bonobos.

BANJO: Bonobos has been super creative when it comes to pushing the boundaries on how people shop.

SANDERS: Bonobos began in 2007 online only. Years later, they began to open brick-and-mortar stores. You can try things on in the stores, but you still got to order online. They’re flipping retail on its head. Wal-Mart could use that expertise. The question for these more upscale brands being bought up is how much they’ll be forced to change. Andy Dunn is the CEO of Bonobos, and he says the company will remain autonomous.

ANDY DUNN: We’ve got no plans to sell Bonobos at Wal-Mart or on walmart.com

SANDERS: But he did say Bonobos will be sold on jet.com very soon. That’s another online retailer that Wal-Mart recently acquired. I also asked Dunn about customers who were mad about the Wal-Mart deal.

DUNN: I saw that tweet. And…

SANDERS: Really?

DUNN: …I saw you tweet back at him. I would’ve tweeted back and said let’s get lunch. I totally empathize with his perspective.

SANDERS: Dunn says he couldn’t tweet anything until the deal was public. And he says he also had his own doubts about Wal-Mart. But as a deal came together, the company pleasantly surprised him. And, Dunn says, even after weeks of rumors about the Wal-Mart deal, Bonobos sales – they haven’t dropped yet. Sam Sanders, NPR News.

(SOUNDBITE OF JOHN SCOFIELD’S “THE LOW ROAD”)

Copyright © 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Tourism Industry Disappointed In New Cuba Policies

President Trump’s plan to roll back diplomatic and trade openings to Cuba has some business leaders upset. They had positioned their businesses to benefit; now strict limitations are back in place.

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And for American entrepreneurs who looked at Cuba and saw an untapped market of more than 11 million people, Trump’s new policy is disappointing. Charles Lane from member station WSHU reports.

CHARLES LANE, BYLINE: Academics estimated that U.S. companies would’ve grossed about $4.5 billion over the next four years in trade and tourism with Cuba. Most of that is tourism, which is likely to decrease now that Americans can only travel with groups. Augusto Maxwell is a lawyer who advises companies doing business in Cuba. He says American travelers like their freedom.

AUGUSTO MAXWELL: They’re going to be upset that they now have to go with a tour group that is going to control their agenda – versus their ability to go there, stay at an Airbnb and go to a private restaurant and make their own conclusions.

LANE: Six hundred thousand Americans traveled to Cuba last year, the same number who travelled to Australia. Maxwell predicts the number of flights will drop. But the number of cruise-ship passengers will likely remain the same. That’s because cruise-ship passengers often travel in groups.

The big crunch will be on where to sleep. Havana’s official hotel sites are all over-capacity, which opened the door to the room-renting site, Airbnb. They book about 10,000 a year to Americans. Regulators still have to write the rules. So right now it’s unclear how the new policy will be enforced.

What’s also unclear is if the multimillion-dollar hotel deal between the Cuban military and Starwood, which is owned by Marriott, is still viable. The White House said all previously inked deals are still valid. But they also said Americans will not be permitted to stay at military-owned hotels. Overall, Maxwell says the mood in the tourism industry is down.

MAXWELL: In order to promote freedom in Cuba, they’re denying Americans the freedom to travel. And I think that that’s controversial.

LANE: The Trump administration says that America’s long-term partner is the Cuban people, not the Cuban government, which the administration criticizes as oppressive and anti-American. Richard Feinberg says that’s true. He is a professor of international political economy at UC, San Diego. He says even though the current embargo allows for American telecom companies to do business, the Cuban government has been reluctant.

RICHARD FEINBERG: Google actually went down there and said to the Cubans, hey, we will wire the whole island, and we’ll do it free of charge. And the Cubans said, no thanks. We’re scared that an American firm might compromise our security. And we prefer to deal with the Chinese at this point.

LANE: For American entrepreneurs, this is frustrating. Right now we only export about $200 million a year in commodities and humanitarian products. Feinberg says it could be so much more. Trump’s rollback, he says, cedes the head-start advantages to other countries. But just because the U.S. is pulling out, that doesn’t necessarily mean foreign companies will rush into Cuba. Risa Grais-Targow is an analyst at the Eurasia Group.

RISA GRAIS-TARGOW: Because the Helms-Burton Act of 1996 actually allows for the U.S. to punish third parties that do business with Cuba, we’ve actually seen a pretty limited amount of foreign companies doing business on the island.

LANE: Grais-Targow says that when U.S. restrictions were first eased, there was growing excitement from across the global business community to make investments in Cuba. But now she expects that excitement to wane. For NPR News, I’m Charles Lane.

Copyright © 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Southern Lawmakers Push For Easement Of Trade Barriers With Cuba

Lawmakers in southern states are pushing hard to lift remaining trade barriers with Cuba, so they can sell crops like rice, corn and soybeans to the island. NPR’s Audie Cornish talks with Louisiana Agriculture Commissioner Mike Strain about U.S. exports to Cuba and whether President Trump’s new Cuba policy will be a setback.

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As we just heard, President Trump faced a lot of pressure from the GOP southern Florida delegation to tighten restrictions on travel and trade with Cuba. But not all Republicans want stricter relations with Cuba. Some officials in southern agriculture states have pushed to open trade with the country and embrace the Obama-era thaw in relations.

Mike Strain is one of those Republicans. He’s actually the agriculture commissioner for the state of Louisiana. It’s an elected position. Welcome to the program.

MIKE STRAIN: Thank you.

CORNISH: So talk about why for your state closer ties with Cuba make sense.

STRAIN: Well, when you look at the trade opportunities with Cuba, in 2014, Cuba imported over $6 billion worth of products. Cuba imports 80 percent of their food. And when you look at what’s going on, we can have product there, high-quality agricultural products, at a very competitive price in two days. When they buy rice from Vietnam, they’re buying a lower-quality product. It takes 30 days to get it there.

CORNISH: How will the president’s announced policies today change your relationship with Cuba?

STRAIN: We are being told through our – you know, our different – our conversations with Washington that this will have a minimal impact on the current status of agricultural trade. Now, there are a number of bills going through the Congress in the House and the Senate which would further work to normalize the agricultural sector of trade. And we’re going to be watching those very, very intensely because what it means for my state – if you’re looking at $2 billion in agricultural trade, we fully expect that Louisiana’s share could be over $500 million of that trade. America’s trade could be over a billion dollars of that within a five-year period.

CORNISH: So we hear these big numbers, and we have a good picture here of what this could mean for Louisiana. But as we mentioned, you’re in an elected position. You’re a Republican. What’s it like trying to make this case to those in your party – right? – who say that, no, we should not be dealing with Cuba?

STRAIN: But the issue is, we are wanting to sell them food, not give them food, not give them anything but sell them products. And when you talk about – you know, and I talked to my fellow Republicans and others. This year, Cuban-Americans will send to Cuba, to their relatives $1.8 billion in American cash. That $1.8 billion is being used to buy food products from other areas of the world. Well, that $1.8 billion should be used to buy or be available to buy food from America. If not, there will be other foreign countries there. Specifically, China will be there and others. So when you look at that, you know, if you want to take a strict, hard line – and then you’d have a total embargo – you wouldn’t be sending any assets there.

CORNISH: At the same time, when it comes to politics and the American policy towards Cuba, it hasn’t always been just about economics, right? People have also talked about documented human rights abuses there. What is your reply to that, to people who have concern with doing business with that government?

STRAIN: Well, the thing of it is, if we do business with them, if we can bring them internet, if we can bring them the ability to have cellphones and information – also, if we have Americans that are going there, then that will open up the dialogue and the discussion. I mean we’ve tried isolation since the 1960s. There as isolated as they can get. They’re as poor as they can get. It’s time to have a different approach. And by doing that, I think you will see, you know, a shift in their politics.

CORNISH: Mike Strain is the agricultural commissioner for the state of Louisiana. Mr. Strain, thank you so much for speaking with us.

STRAIN: Thank you.

Copyright © 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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The Investor Who Took On Uber, And Silicon Valley

Freada Kapor Klein stands on a staircase at the Kapor Center for Social Impact in Oakland, Calif. She is a high profile investor, who invested early on with Uber. She has used her voice and her money in a decades-long effort to promote more diversity in Silicon Valley.

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Uber is a mess — the “bad boy” ethos shattered, a nervous breakdown in its place. This week, the CEO announced he is taking a sudden leave of absence. A former U.S. attorney general released a brutal audit of the startup’s culture. It’s a terrifying moment for many investors who want that $70 billion unicorn to make them rich or richer — not implode.

But there is one Uber investor who stands out for how she decided to speak up. It was not very Silicon Valley-like of her, but Freada Kapor Klein wanted to turn the crisis into a teachable moment. And while this week’s events could lead her to say “I told you so,” she has a different takeaway.

Let’s rewind a few months. Kapor Klein decided to write an open letter to Uber — which she published with her husband — after a young woman shared an explosive account of sexual harassment at Uber headquarters.

Kapor Klein is a venture capitalist, or a VC. That means she makes money by betting on technology startups. Uber is one of those startups. She has committed to “impact investment” — businesses that can turn a profit while also making the world a better place. For too many years, she says, critics would question her on Uber, and she stayed silent. She tried to influence the company from the inside, though she didn’t see a real will among leadership to change. While “Silicon Valley prides itself on pattern recognition,” the letter said, Uber had “toxic patterns” that needed to stop.

Kapor Klein thought she was just saying what insiders knew: This is not a one-off. Turns out, her peers didn’t like that and wanted her to pay for it.

“I could imagine that they wouldn’t love the Uber letter,” Kapor Klein says in an interview with NPR in mid-March. “But then that they would decide the next step they ought to go, is go after our high growth, hot startups and try to get them away from us!”

Anthony Heckman, an associate at Kapor Capital, speaks with Kapor Klein. She wrote an open letter to Uber after an engineer shared an instance of sexual harassment at the ride-hailing startup.

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She’s just learned that other VCs are trying to poach one of her hottest investments, and they’re citing the Uber letter to do it, basically saying: this investor throws her own people under the bus.

“I mean, it’s one thing to go pitch them. It’s another to say, ‘Get away from Kapor. See, they’re going to do this to you,’ ” she says.

It may be counterintuitive, but in Silicon Valley, the land that created tweeting, there is a code of silence among the rich. People are here to make money, not to agitate. She violated that code.

But she won’t back down. She tells me I should call a shortlist of her most powerful peers and demand they respond on the record. “Go to Sequoia, go to Benchmark, go to Kleiner, go to Accel, go to Andreessen, go to Khosla,” she names the kings of much-storied Sand Hill Road in Menlo Park, Calif.

She’s sitting inside the Kapor Center for Social Impact — a name that spells out the intent of the place. Kapor Klein and her husband bought this four-story building in central Oakland — what’s become the edge of Silicon Valley as tech expands beyond Cupertino, Mountain View and San Francisco — and it houses an investment arm, research and philanthropic projects.

Kapor Klein is 64 years old, petite with jet black eyes and curly hair to match. She is tense as she recounts the blowback, her folded hands resting on a conference table made of reclaimed wood. Meanwhile her dog is napping by her feet, sprawled on a gray carpet made of recycled fishing nets. (She designed the building to be green.)

Dudley’s snoring breaks her concentration, and she lets out a laugh. He’s a rescue dog, but sometimes she claims he’s a therapy dog. “You can see why. Doesn’t he make you feel better?”

She wakes him up and the two go in search of her husband and business partner, Mitch Kapor. When they find him, he happens to be meeting with the president of Silicon Valley Bank — who is trying to not get in the middle of the couple’s conversation. But Kapor Klein reels him in, telling him about the letter and the response. Greg Becker politely offers his take: “Yeah, people compete … anyway they can, right? That’s — unfortunately it’s human nature … .”

Kapor Klein points to her dog, who is now rubbing his enormous cream coat against the banker’s leg, and she teases: “I thought it was just dogs that did that. Dogs, not humans.” Her husband ends the conversation by saying: “It’s a dog-eat-dog world.”

This is his way of acting as her buffer — she, the one who pushes; he, the one who moderates.

Kapor Klein talks with her husband Mitch Kapor in their shared office space. He founded Lotus, the database company, and is a legend in Silicon Valley.

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Mitch Kapor is a bit of a legend, by the way. In the 1980s he founded Lotus, the famous spreadsheet maker. Some compare him to Steve Jobs and Bill Gates.

He pulled Kapor Klein into the tech world when he hired her to fix Lotus’ culture in 1984, to make it the most progressive employer in the U.S. Quite the job description. She would lecture her boss about how he carries himself at work, how he should be “more sensitive” about his power, how he could make or break an employee’s day just with eye contact.

The couple didn’t get together until years later, when she sought him out for career advice; and his first marriage fell apart. He asked her out on a date. He had a son. She was 43 and didn’t have kids. She assumed it was a summer fling and warned him, date two, that she’s not “stepmom material.”

Turns out, it wasn’t a fling.

Her life’s work is to change the culture of Silicon Valley — a place she feels has gone backward in time. There are far fewer women in computer science today than in the 1980s. Blacks and Latinos are missing too. Kapor Klein faults the investor class, which holds on to the myth of meritocracy, that they are the hyper-rational conduits of capital and it so just happens that white men are the most worthy.

She shares a hokey saying she’s heard one too many times: “We don’t care if you’re orange or blue; the only color we care about is green.”

Kapor Klein talks with communications manager Ashleigh Richelle (left) and the summer associates at the Kapor Center for Social Impact. Kapor Klein’s life work is to change the culture of Silicon Valley.

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If all Kapor Klein did was critique, she’d be irrelevant here. This place values people who build things. And that is what she is doing. The building feels like an alternate universe — one where tech somehow looks like the rest of America.

On one floor, there’s the investment team. Their portfolio includes Genius Plaza — the hot startup that others now want to poach. It’s an online education platform founded by Ana Roca Castro, a woman from the Dominican Republic (which is exotic in these parts). She’s landed major contracts with national agencies throughout Latin America, and is working to get into more U.S. schools.

Castro, who is based in Albany, N.Y., describes Kapor Klein as “protective,” an early investor who tries to shoo away others who don’t share their values. Asked if that could mean possessive, the tech founder disagrees. “When someone is territorial they want nobody around,” but in multiple instances, Kapor Klein has opened doors she didn’t know to knock. “She’ll be the first to push me, saying, ‘Don’t be afraid.’ “

Kapor Klein keeps an eclectic inner circle. It includes a former head of the NAACP; the woman who filed (and lost) a high-profile sexual harassment lawsuit against a leading venture capital fund; and Ulili Onovakpuri. The 32-year-old advises the health care portfolio, deciding which startups get money. But their relationship started when she was a teenager. Her now long-time mentor gave her a scholarship to UC Berkeley. (Kapor Klein launched the IDEAL Scholars Fund, for high-achieving minority students, after California ended affirmative action in schools.)

Pictures of Kapor Klein’s SMASH scholars and which college they will attend are on display in the office.

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Round the corner, social scientists are running data on why people leave tech, looking for holes in the leaky pipeline, so to speak. (They later published this study.)

Downstairs, Gabriel Chaparro — who ran the center’s SMASH math and science program for students of color at Stanford — shares the lesson he wants to drill into young minds.

“You’re going to step into places where there’s a line of people and none of them look like you. But you’ve earned your space. So get in that line, push them aside,” he says. “You can’t just look at that line and say I don’t fit in there. Make your fit.”

It’s a very Silicon Valley way of being. It’s how Uber CEO Travis Kalanick broke the yellow cab industry in city after city.

In some ways, Kapor Klein wants young people who grew up poor to channel Silicon Valley’s sense of entitlement — the idea that it’s OK to fail; that failure is necessary; and that one deserves support anyway. She herself doesn’t come from money. She grew up on a U.S. Air Force base in Biloxi, Miss., and one of her earliest memories was seeing, at age 3, her 7-year-old brother bloodied, beaten for being a Jew. She knew then the world isn’t fair.

The Uber row isn’t her first in Silicon Valley. To some extent, she’s used to it. She is rich (she won’t disclose how rich) and travels in wealthy circles, where people have strong feelings about money. She remembers a billionaire who suggested she’s spending too much on her do-gooder education programs. She recollects telling him, “Well, you probably write a check that’s somewhere between five and 10 times that amount of money for private kindergarten for your child.”

She’s quick to point out, though, that she jabbed because she was asking him to donate. If there wasn’t a specific ask, a concrete step she was advocating, she said she would hold back.

Kapor Klein sits with her rescue dog, Dudley. He acts as the office’s therapy dog and follows her throughout the day.

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NPR did approach leading investors (as Kapor Klein suggested) to get their take on Uber, her letter, and what’s the real problem. One was willing to go on the record.

“If you are a shareholder in a company and a stakeholder in a company, you would want to speak with one voice and you would want to work on the problem primarily,” says Jason Calacanis. “To kind of blindside a company with a post like that means now the company not only has to solve the problem, they have to react to that position publicly.”

Calacanis is an influential angel investor, and author of a new book on how to invest. While he respects Kapor Klein’s work with the underprivileged (he’s invited her to speak about it to his startups), he says that the way she spoke out created a “negative atmosphere” — a media circus.

And, Calacanis adds, it takes a hard-charging CEO to build the Uber empire. Soft questions around culture, an inclusive culture — those come later. “After you’ve won, or won a decent amount of market share or won the early fights, I think you have to shift gears a bit. And I think that’s what Uber’s going through.”

Kapor Klein disagrees — and Uber’s monumental meltdown is arguably proof she was right. But when I sit down with her in April, as the drama continues to unfold, she’s become hesitant. Uber reached out to her for help, after her letter. Now, as I ask questions about it, she’s being tight-lipped.

Asked if she is uncomfortable, she says she is, “because my goal now is to help Uber and any other company that really genuinely wants to change. I don’t know what snippets you might use, how they might hear that, and whether that’s going to hamper the efforts.”

Kapor Klein wants the world to understand: Yes, she spoke out when others would not. But no, Uber isn’t the only problem child in Silicon Valley. They just happened to get caught. This week she and her husband issued a statement to that effect, saying “the company deserves some room” to work on itself.

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Federal Reserve Raises Benchmark Interest Rate

As expected, the central bank voted to increase the rate a quarter point, following its two-day meeting. Though rates are still historically low, the hike means higher borrowing costs for consumers.

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The Federal Reserve raised its benchmark interest rate by a quarter point today. That part didn’t surprise anyone. But the Fed also laid out a plan to reduce the overall size of its balance sheet. It swelled in the years after the financial crisis and has stayed big ever since. NPR’s Yuki Noguchi reports.

YUKI NOGUCHI, BYLINE: Today marked the fourth time the Fed has raised interest rates since December of 2015 when it deemed the economy finally healthy enough to withstand an interest rate higher than near-zero. The Fed has kept its key interest rate at unprecedented low levels for years in an effort to help the economy recover from the Great Recession.

Today’s move sets the federal funds rate between 1 and 1-and-a-quarter percent, still extremely low by historical standards. Now the economy is far better off. The jobless rate stands at 4.3 percent and is expected to fall further. Fed Chair Janet Yellen stated her view in a press conference that the economy appears strong enough to withstand additional rate hikes, barring new indications of economic weakness.

(SOUNDBITE OF PRESS CONFERENCE)

JANET YELLEN: We anticipate further increases this year and next year for the federal funds rate.

NOGUCHI: Fed officials raised interest rates today despite the fact that the latest readings on inflation show that it is not picking up steam. Inflation did rise a bit earlier this year and managed to hit the Fed’s goal of 2 percent a year but has since fallen back. Yellen said she and other Fed officials are very much aware of this and remain confident inflation is just taking a breather.

Another big issue on the Fed’s agenda is doing something to unwind other measures it put in place during and after the financial crisis when bank lending dried up. To support the economy, the Fed had taken the extraordinary step of buying up trillions of dollars’ worth of bonds, government agency debt, a move that helped lower the cost of borrowing throughout the economy. The amount of securities the Fed held on its balance sheet ballooned from less than a trillion dollars before the crisis to roughly $4-and-a-half trillion. Starting sometime this year, Yellen says the Fed will start gradually reducing those holdings by as much as $600 billion a year.

(SOUNDBITE OF PRESS CONFERENCE)

YELLEN: The balance sheet is not intended to be an active tool for monetary policy in normal times.

NOGUCHI: Greg McBride, an analyst with consumer financial site bankrate.com, says taken together, the Fed’s moves have caused home equity and car loan rates to increase about 1 percent over the last two years.

GREG MCBRIDE: The combination of rising debt burdens and rising interest rates is starting to strain some households. And we’re seeing delinquencies pick up from recent lows.

NOGUCHI: But overall, McBride says he shares the Fed’s relatively upbeat take on the economy. Yuki Noguchi, NPR News, Washington.

Copyright © 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Democratic Lawmakers Sue Trump, Handing The President Another Legal Challenge

Sen. Richard Blumenthal, D-Conn., is among more than 190 Democrats who are suing President Trump over his business deals involving foreign governments.

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More than 190 Democrats in Congress have joined together to sue President Trump on Wednesday in U.S. District Court in Washington, D.C.

They say Trump is violating the U.S. Constitution by profiting from business deals involving foreign governments — and doing so without congressional consent. And they want the court to make it stop.

Trump has “repeatedly and flagrantly violated” the Constitution’s Emoluments Clause, Sen. Richard Blumenthal, D-Conn., told reporters on a conference call.

The clause says that “without the Consent of the Congress,” the president can’t accept benefits “of any kind whatever from any King, Prince, or foreign State.”

Blumenthal said Trump “has never sought the consent of Congress” for the profits from deals in the more than 20 countries where he has business operations.

Just one example he offered: Trump has sought — and obtained — valuable trademarks from China’s government, but did not clear those transactions with Congress.

Blumenthal, who sits on the Senate Judiciary Committee, said it took “a lot of research” involving legal experts to determine who would have legal standing to successfully sue the president. “We have standing that no one else has” because the Constitution makes it clear “the consent of Congress is absolutely essential,” he said.

The Democrats believe that Trump “must either sell his vast holdings … or he must tell us and disclose now” all of the benefits he gets from foreign governments, he said. They want to see the president’s tax returns and business records.

This suit is just the latest in a series of legal efforts to force Trump to fully separate himself from this business interests. Other suits have been filed by a public-interest group representing private businesses and the attorneys general of Maryland and the District of Columbia representing their jurisdictions.

That means Trump is now facing a triple threat in court, with plaintiffs coming at him from 1) the private sector, 2) the state level and 3) Congress. Each group must try to convince a court that it has the legal standing to challenge a president.

The private businesses say they are being harmed because Trump’s D.C. hotel is presenting unfair competition, i.e., foreign officials take their business to Trump to win his favor. And Maryland’s attorney general says that state’s National Harbor resort — just across the river from Washington — also faces unfair competition.

But the Democratic lawmakers are focused on what they call the harm being done by being stripped of the consent power granted by the Constitution.

Trump has stepped back from daily management of the Trump Organization, but he has moved the assets into a trust, headed by his two oldest sons and a business associate. Trump is the sole beneficiary of the trust, and his son Eric Trump has said the president gets regular updates on profits.

On Monday, White House press secretary Sean Spicer was asked about the attorneys general lawsuit, and he replied that Trump’s business interests “do not violate the Emoluments Clause.”

Spicer noted that the lawsuits are being brought by Democrats. “It’s not hard to conclude that partisan politics may be one of the motivations” for filing suit, Spicer said.

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Trump Expected To Restrict Trade, Travel With Cuba

An American classic car is seen parked in front of the Capitol building in Havana. President Trump’s expected changes in policy toward Cuba could make it more difficult for Americans to visit the island and for U.S. companies to do business there.

Javier Galeano/AP

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Javier Galeano/AP

Updated at 8:19 p.m. ET

President Trump is preparing to announce changes in U.S. policy toward Cuba, possibly tightening restrictions on travel and trade that were loosened under former President Barack Obama.

Trump is expected to announce the changes in Miami on Friday.

The move was confirmed by a congressional source with direct knowledge of the situation.

Sen. Marco Rubio, R-Fla., has been leading the push for a more restrictive policy, along with his fellow Cuban-American, Rep. Mario Diaz-Balart, R-Fla.

The changes could make it more difficult for Americans to visit the island and for U.S. companies to do business there. The Obama administration ended decades of economic and diplomatic isolation of Cuba, in hopes that renewed engagement would lead to reforms in the communist country.

The White House declined to discuss the pending changes.

“When we have an announcement on the president’s schedule, we’ll let you know,” said spokesman Sean Spicer. “But just stay tuned.”

Advocates for greater engagement with Cuba warn the administration’s changes could be costly.

“This is the opposite of ‘America First.’ This is America last,” said James Williams, who leads the nonpartisan lobbying group Engage Cuba.

He warns that reduced travel and trade with Cuba could cost thousands of American jobs.

Travel to the island is already limited to visitors in 12 authorized categories, but there is little enforcement. And with renewed commercial air service, visits to Cuba have soared.

The administration is considering stepped up policing to discourage pleasure travel and limiting visitors to one trip per year.

Williams says that would be especially hard on Cuban-Americans with relatives on the island.

“Imagine, your mother is sick in Cuba,” Williams said. “You might have to decide between going to see her in the hospital bed before she dies or going to the funeral. And that is just tragic.”

Polls suggest a majority of Americans support greater engagement with Cuba. Last month, 55 senators sponsored legislation that would further relax travel restrictions.

The opening has also led to modest changes in Cuba, with increased revenue for small-business owners and Internet hot spots in Havana.

“I think Cubans in Cuba will be terribly disheartened” by the renewed restrictions, said Carlos Gutierrez, who served as commerce secretary under former President George W. Bush. “This decision will not play well anywhere, except for in those very cloistered spots in South Florida where Sen. Rubio and Mario Diaz-Balart have constituents.”

Shortly before Trump’s inauguration, Rubio said in a statement that he was heartened the new administration would reverse “the failed Cuba policy of the last two years.”

When the Obama administration policy was first rolled out in late 2014, Rubio blasted the move.

“Just as when President Eisenhower severed diplomatic relations with Cuba, the Castro family still controls the country, the economy and all levers of power. This administration’s attempts to loosen restrictions on travel in recent years have only served to benefit the regime,” he said in a statement. “But most importantly, the regime’s brutal treatment of the Cuban people has continued unabated. Dissidents are harassed, imprisoned and even killed.”

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Words You'll Hear: Dodd-Frank

This week NPR’s Lakshmi Singh speaks with Raj Date, former Deputy Director of the U.S. Consumer Financial Protection Bureau about the House bill to scale back Dodd-Frank financial regulations.

LAKSHMI SINGH, HOST:

We’re going to head back to the U.S. now for Words You’ll Hear. That’s where we try to understand stories in the news by parsing words connected to it. Today, the words are Dodd-Frank. That’s the 2010 law that gave Wall Street new rules of the road to prevent another recession.

Last week, the House passed a Republican bill rolling back large parts of Dodd-Frank. While that bill isn’t expected to go far in the Senate, the move could build momentum for other changes. To find out more, we reached Raj Date. He’s a former deputy director of the U.S. Consumer Financial Protection Bureau and, now, runs a small investment firm called Fenway Summer. I began by asking him to remind us what Dodd-Frank does.

RAJ DATE: Let me just clear up the first confusion that people might have. Like, what is a Dodd, and what is a Frank? It’s the name of the big Wall Street reform package, named after the head of the Senate Banking Committee at the time and the head of the House Financial Services Committee at the time, Chris Dodd and Barney Frank. If you think back – and, hopefully, people can still remember – the sort of calamitous financial crisis that faced the United States – and, indeed, the world – back in 2007, 2008, 2009. Unemployment doubled. Millions of people lost their homes.

It was bad on pretty much every way in which you would evaluate the performance of the financial system. We had terrible decisions that were made. We had firms that were close to bankruptcy and insolvency as a result. We had a system that allowed one firm’s problems to metastasize and affect other firms. And then, finally, we had regulators that seemed to be one or two steps behind every step of the way. And so what Dodd-Frank essentially tried to do is take a universal approach to changing Wall Street and banking regulation that would fix each of those problems.

SINGH: So what’s your take on the House bill to undo parts of Dodd-Frank?

DATE: Number one, it suffers from mischaracterizing the impact of Dodd-Frank. The bank systems bigger, it’s more profitable, better capitalized. Oh, and by the way, consumers have better credit scores than they ever have. Household balance sheets have improved. Unemployment is low. So it rests on a series of premises that are not exactly true. And then, it systematically dismantles some of the most important bulwarks put in place by Dodd-Frank.

So, for example, Dodd-Frank sought to create standards to prevent really bad decisions from being made. Well, the Consumer Financial Protection Bureau is something that was meant to look out for actual households and actual consumers and protect them from some of the most scandalously terrible ideas in the pre-crisis mortgage market. Well, this bill, the Choice Act, eviscerates the authority of the Consumer Financial Protection Bureau. Dodd-Frank was meant to create more resilient banks through things like stress tests and the so-called Volcker Rule. The Choice Act eviscerates those things.

SINGH: The debate that’s underway on the fate of Dodd-Frank – as an average person, what do I stand to lose, and what do I stand to gain under any changes that occur to Dodd-Frank under this House bill or any potential compromise?

DATE: So the biggest thing that households have to lose is to have a very large, very important financial sector to once again get completely unmoored from what are sensible ways to structure products and offer them to customers. Remember at ground zero of the financial crisis, were individual mortgages made to individual households that never had a prayer of being repaid. These should be worried, as average households, about whether or not that set of practices and that kind of thinking left unrestricted will return.

The best thing to gain is if we can reintroduce sensible risk taking into a bank sector that, in some areas, appears to have withdrawn from it. By that, I mean, the banking system is meant to take risks. When you make a loan to a small business – we’re investors in platforms that make loans to small businesses – that’s risky. Small businesses are – what’s the word? – small. And it’s – they are not especially resilient to recessions. But you should want them to be able to borrow money to be able to build their franchises to be able to hire people to be able to put more work into the communities in which they serve.

SINGH: That’s Raj Date. He’s the former deputy director of the U.S. Consumer Financial Protection Bureau. He joined us in studio. Raj, thank you so much.

DATE: Thank you for having me.

Copyright © 2017 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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Town That Helped Power Northwest Feels Left Behind In Shift Away From Coal

The Colstrip Generating Station near Colstrip, Mont., is the second-largest coal-fired power plant in the West. Two of its four units are scheduled to close by 2022, if not sooner.

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Colstrip, Mont., is about 750 miles away from Seattle, as the crow flies. Politically, the two places may be even further apart. And yet, they’re connected.

If you’re turning the lights on in the Pacific Northwest, some of that electricity may be coming from Colstrip. And if you’re in Colstrip, wondering how long your own lights will stay on, you’re likely looking west.

America’s energy system is a web, connecting inland to coast and urban to rural. And as that system shifts, people are starting to ask: What — if any — support should a town like Colstrip get from places like Seattle or the federal government as the town enters an uncertain future?

Despite the recent promises from the Trump administration to bring the coal industry back, America’s energy system is shifting increasingly toward natural gas, wind and solar. Economics are driving the change. But so are politics.

In the week since President Trump announced that he would withdraw the U.S. from the Paris climate agreement, a broad coalition of cities, states, businesses and universities have promised to uphold the agreement and reduce their carbon emissions. “We’re still in,” is their motto. Washington state was already in. It has a commitment to use less coal.

Colstrip is a coal town. And even though the challenges it’s facing existed long before Trump’s announcement, people there are angry about the push to change America’s energy demands. They feel like they don’t have a say. And they fear they’ll be left behind.

A town built on coal

Colstrip is a company town that’s built on coal — coal that’s scraped from beneath the surrounding sage-covered hills and trucked or transported past tree-lined streets and idle train cars, to a towering four-unit power plant at the heart of this tidy, tucked-away town. It’s there — at the second-largest coal-fired power plant in the West — that the coal is burnt, heating water to steam, generating 2,094 megawatts of electricity that travels by wire across Montana to the greater Pacific Northwest.

“That’s who we are,” says Lu Shomate, the director of the town’s historical center. “If it wasn’t for the coal, and then the generation of course, none of us would be here.”

“Colstrip United” banners, posters and car stickers can be seen all around Colstrip, Mont. The group aims to elevate pro-coal voices in the larger debate about energy.

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And what’s here, she says, is good. Colstrip isn’t some dusty, dreary, down-and-out town.

There’s an 18-hole golf course, a 32,000-square-foot recreation center and 32 parks that are all free to the town’s 2,300 residents. The streets are wide and clean. The estimated median household income in Colstrip is $84,145. In Montana overall, it’s $47,169.

But recently, things have started to change. A lawsuit filed by two environmental groups alleged that the Colstrip Generating Station hadn’t updated its technology to meet air quality requirements. A couple of the utilities that own the plant settled, agreeing to close the older two of the plant’s four units by 2022. There have since been indications it could happen sooner.

On top of that, the two biggest customers for Colstrip’s power — Washington and Oregon — announced long-term commitments to get off coal.

The combined uncertainty has sent real estate values in Colstrip plummeting, leaving people in sunken mortgages. Kerri Kerzmann, who helps run the town’s before-school programs for coal workers’ children, says her house has gone from being worth “a couple hundred thousand dollars,” to maybe $60,000 or $70,000 now.

Lori Shaw, the co-founder of Colstrip United, tries to elevate pro-coal voices in the wider energy debate and show the human side of America’s transitioning energy systems. “We are people out here,” she says.

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Resident and activist Lori Shaw says a “crisis fatigue” has set in.

“You’re so used to being on the edge for so long,” she says, “It’s almost like you forget to panic anymore, even though it is panic-worthy. It’s like, yeah, I know we might lose everything next month. What’s new?”

Shomate says the same thing that’s happened in Appalachia and other parts of blue-collar America is starting to happen here: “The middle class is being ripped apart.”

Shomate, Kerzmann and others in Colstrip want a plan to help the town now and as it transitions into an uncertain future. All say that coal should be part of that plan, but they know it can’t be the only part.

“We know there are better ways of doing things, so let’s work on that together,” Shomate says. “But we’re not getting that support. It’s just: shut it down, dirty, filthy coal.”

Planning for an uncertain future

A plan for a town like Colstrip requires resources. It needs money. And if you ask people here where that money should come from, they’ll point west.

“There would be no Facebook. There would be no Bill Gates. None of that would be in Seattle without low-cost, reliable power that comes from Colstrip, Mont.,” says Duane Ankney, a state senator who represents the town in the state legislature.

The reality is a bit more complex. Hydroelectric power provides the bulk of Washington’s energy. But coal has historically played a role there as well.

The construction of the power plant in Colstrip, which began operating in 1970s, was actually spurred by power companies in the Pacific Northwest that wanted another source of electricity for the region’s fast-growing energy demands. Before that, it was the Northern Pacific Railroad that turned this coal-rich patch of prairie into a company town to provide coal for the rails.

Colstrip’s history is laid out in old photos that line the walls of the town’s historical center. “That’s who we are,” says Lu Shomate, the center’s director. “If it wasn’t for the coal and then the generation [of electricity], of course, none of this would be here.”

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Today, Washington-based Puget Sound Energy owns one-third of Colstrip’s electric output, enough to power 500,000 homes in western Washington.

That history is well-known in Colstrip and it factors largely into the local sentiment that outsiders should be partly responsible for the town’s future.

At Alison’s Pantry, a coffee shop in town, Hugh Mannix and a group of older men who call themselves the “Rusty Zippers” sneer when they talk about Washington’s efforts to get off coal.

“So we can put up with all the pollution and they get the gravy,” Mannix says. “And that’s gone on for 40 years. And we took it. We run with it. We made it successful and now these prima donnas out there can just walk away? Well, no. Pay your way out of it now.”

Ankney, the state senator, proposed a bill in Montana’s legislature earlier this year that would require utilities to do just that.

There are six utilities that have ownership in Colstrip’s plant. All are based out of state.

Ankney’s bill would have required them to help pay for the social costs of decommissioning the plant, by making them have “a plan in place for the workers,” he says. That plan would include money for lost real estate values, tax revenues and to help re-train the workers.

The bill, Ankney says, was about accountability to the state of Montana and to the workers who made the utilities what they are.

“I think that would go a long ways, to cop a phrase, to make America great again. It’s when you have corporate responsibility,” says Ankney, a Republican and retired coal mine superintendent.

The bill failed in Montana’s legislature. It was fought by utilities and environmental groups, who feared that it would scare away future investment in Montana from renewable energy companies.

A related bill, which required that the utilities have a plan and money set aside for environmental remediation at the plant site, passed.

Shaw, the community activist, says it seems like there’s more interest in helping “grass and dirt” than people.

A federal plan

At the union hall in Colstrip, Rex Rogers shares some of the same frustrations as Shaw and others.

Rogers is the business manager for the local chapter of the International Brotherhood of Electrical Workers. He represents about 250 workers at Colstrip’s power plant. And he too wants to see a plan in place to help those workers when parts of the plant start to close down.

The irony is that there was a plan: President Barack Obama’s Clean Power Plan.

Rogers keeps a copy of it at the union hall. He lifts it — all 1,560 pages — from a wood side table and plops it down on a table in the middle of the room.

“I wouldn’t have printed it, if I’d known how big it was going to be,” he says.

Rex Rogers keeps a copy of the Clean Power Plan at the union hall in Colstrip. As the business manager for the local chapter of the International Brotherhood of Electrical Workers, he represents about 250 workers at the town’s power plant.

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The Clean Power Plan was Obama’s biggest effort to combat climate change. It would have required that states like Montana reduce their carbon emissions. Rogers was on Montana’s team that studied how that would play out on the ground. The expectation, he says, is that it would have forced the closure of the two older units at the town’s power plant.

Put another way: “The impact on Colstrip would have been exactly what we’re seeing now,” he says.

Only now, the Clean Power Plan is gone. Montana was one of dozens of states that successfully sued to stop the plan. Trump has ordered that it be repealed.

“Well the concern with that is, built into the Clean Power Plan was [a section] about transitioning, taking care of the workers and those parts of it,” Rogers says.

Rogers is referring to Obama’s Power+ Plan, which aimed to give resources to “assist communities and workers that have been affected by job losses in coal mining, coal power plant operations, and coal-related supply chain industries due to the changing economics of America’s energy sector.”

It was the Obama administration’s way of saying: We know the market is changing; here’s our plan to help cushion the fall.

Now, Rogers says, the cushion is gone and there’s nothing being proffered by the new administration to replace it.

“Even though we won the ‘war on coal,’ it doesn’t appear that there was anything in that for the workers,” he says.

Colstrip Mayor John Williams knows there are challenges ahead, but he’s hopeful that the Trump administration can help the community by repealing regulations on the coal industry.

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Rogers’ opinion of the Clean Power Plan is not widely shared in Colstrip. Most people in the town are happy to see it, and other Obama-era regulations on the coal industry, gone or on their way out.

“With Trump in there doing some of the things that he’s doing to eliminate some of those needless regulations, I think it’s going to make a positive impact here,” says Colstrip Mayor John Williams.

If nothing else, he says, it’s nice to have a president who supports coal.

A difficult question

While Trump’s never-say-die approach to the coal industry is refreshing to some, it’s worrisome to others.

“It appears that that comes with a price of: then let’s pretend that the transition isn’t happening,” says Julia Haggerty, a professor at Montana State University. “That, I think, does not do a service to the places that are experiencing the transition.”

Haggerty studies efforts to help struggling coal towns. She’s spent a lot of time in Colstrip and other coal towns in the Mountain West. And she knows how hard it is to even have a discussion about transitions in those places.

“These are purpose-built energy towns,” she says. “So it’s pretty tricky, I think, to ask ‘what comes next?’ That’s often a painful conversation to have because what comes next in a remote, isolated energy-producing town is really a very difficult thing to know.”

She says it’s important that these conversations happen though; that plans are made for the future as the nation moves further away from coal.

Those conversations, Haggerty says, need to include places like Colstrip that have historically provided energy and places like Seattle who no longer want it.

As a professor, she sees students who have very little understanding of where energy comes from and where it’s traditionally come from. That lack of recognition, she says, “to the places and resources that have created enormous wealth for the region, I think, really contributes to the bitterness and the difficulty of these conversations.”

And, she says, it’s contributing to the divisions that exist in America today.

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