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Biden calls on Congress to intervene in rail dispute

Yahoo Finance’s Rick Newman joins the Live show to discuss President Biden calling on Congress to take action to avoid a looming rail strike.

Video transcript

BRAD SMITH: President Biden is demanding Congress take action to avoid a looming rail shutdown that he says would devastate the US economy. For more, let's bring in Yahoo Finance's Rick Newman. Rick, what's the latest on this that we know so far?

RICK NEWMAN: Right, as you pointed out, it looks like they cannot come to an agreement of the 12 unions. Several have said they're not going to sign it if-- and if one of them says they're not going to sign it, they will all not sign in solidarity. Congress has the authority to step in here because rail workers historically are considered essential to the functioning of the US economy.

And I think that remains true. 40% of all freight travels by rail, which has been through devastating supply chain problems coming out of COVID. Those are finally getting wrinkled-- ironed out. So this is the wrong time to have a rail strike that messes everything up again.

So if they cannot come to an agreement, the deadline is now December 9. And if they can't come to agreement, Congress has the authority to step in and say-- they can do a number of things to resolve it. They can say this deal that's on the table, we're ordering everybody-- both sides to accept the deal. They can refer it to other arbitrators. They can delay it until a further date. So they could do any of those things.

But the odds are that if it comes to this, that Congress will actually do this quickly, because this is not really political. Neither party, neither Democrats or Republicans, I think, sees anything to gain from not getting this over with so that we can just move on to the other political fights that both parties want to have.

JULIE HYMAN: But at the same time, while Biden, in his statement, says over and over again, I'm pro-union, I'm a supporter of unions, the unions would be not terribly happy if Congress forced them to accept the deal. I mean, I think the sticking point seems to be sick leave, right? That they don't have paid sick leave?

RICK NEWMAN: They don't have enough paid sick leave. And the unions argue that this actually forces people to go to work when they're sick because the system is just inflexible, and it does not allow them what, I think, a lot of us would consider to be genuine sick time. And there's some other work-life balance issues there. It's not pay. They actually seem to be OK with the pay package.

But so Biden is not facing an imminent election, let's keep that in mind. A month ago, he was facing the midterm elections. That's not an issue right now. So I think the most important thing to Biden politically, even more important than the appearance of a pro-union stance is keep this economy moving. Do not let anything happen that's going to mess up the economy, which is actually kind of fragile right now.

I mean, growth is clearly slowing. A lot of economists are saying we're headed for a recession in 2023. And this would be the kind of thing, if we do have a rail strike, that disrupts shipping. That would be the kind of thing that makes everything worse at a very fragile moment.

BRIAN SOZZI: Or at the least, it would be deflationary, right?

RICK NEWMAN: No, it wouldn't because, suddenly, you can't-- we're just starting to see goods inflation come down. We're seeing disinflation in goods. And we're going to see deflation. If suddenly you can't get the goods, we go back to where we were before.

BRIAN SOZZI: Good point, Rick Newman. Thanks so much. Appreciate it.