News Brief: Boeing 737 Max, Spending Bill, Purdue Pharma Bankruptcy
DAVID GREENE, HOST:
Boeing says it will temporarily suspend production of its troubled 737 Max passenger jet beginning next month.
STEVE INSKEEP, HOST:
Yeah. All the Max series aircraft have been grounded for the past nine months. That already happened following two crashes that killed 346 people in Indonesia and Ethiopia.
GREENE: And let's bring in NPR's David Schaper in Chicago, who's been following this story. Hi there, David.
DAVID SCHAPER, BYLINE: Morning.
GREENE: So what's the reasoning behind Boeing's decision here?
SCHAPER: Well, Boeing was facing a couple of hard realities. First is that the Federal Aviation Administration, an agency once accused of being too cozy with Boeing, is now sternly warning Boeing's CEO to stop with the unrealistic expectations for when this plane could be allowed back into service. The agency safety experts will be taking all the time that they need to get their evaluation and analysis done right. And the FAA's head says he won't be rushed into making a decision. And I'm hearing that that means that the plane will likely remain grounded until at least February or March.
The second hard reality is that Boeing has been burning through cash at a rate of, according to some estimates, about $2 billion a month. The company did slow production a bit back in April, reducing the number of planes produced from 52 a month to 42. But it now has about 400 finished jets just sitting in storage. And it cannot deliver them to customers to get final payment. Richard Aboulafia is an aerospace industry analyst for the Teal Group.
RICHARD ABOULAFIA: It's been really painful for Boeing. They've been maintaining production and not bringing in any revenue. This is very painful from a balance sheet perspective.
GREENE: OK. Painful for the company. What about the people who work for the company? I mean, the 737 Max is built at a plant outside Seattle. There are, like, 12,000 employees working there..
GREENE: Are they going to be laid off, furloughed? What's going to happen?
SCHAPER: Well, Boeing says no at this point. So the company says it doesn't expect any layoffs for workers at this time anyway. The statement announcing the decision to suspend production says the company plans to have the affected workers continue 737-related work or be temporarily assigned to other plants in the area.
But there's still a fair amount of anxiety in and around the plant. We had Ashley Gross of our member station KNKX ask around about the impact. And she talked to Veronica Medina, who, with her family, owns a Mexican restaurant called Torero's at a strip mall called the Landing across the street from the huge 737 plant in Renton.
VERONICA MEDINA: Well, obviously being right here at the Landing, it's very significant. We get a lot of lunch crowds. We get, you know - Renton in general very dependent on Boeing's well-being.
SCHAPER: Medina says that even if Boeing employees aren't laid off, if they aren't going in and out of that factory across the street, her business may suffer.
GREENE: But, David, I mean, the reality here is there can be a ripple effect in the economy from a decision like this. I mean, there's a whole supply chain that feeds the production of the Boeing 737 Max, right? I mean, could this have a big economic impact overall?
SCHAPER: Yeah. This is where the shutdown could be felt more deeply. And it won't be so much in Seattle but in places like Wichita, Kan., where Boeing supplier Spirit AeroSystems makes the fuselage and other parts for the 737 Max and in Evendale, Ohio, where CFM International makes the engines for the planes.
There are hundreds of companies that supply parts to the 737. And Boeing may do something to help soften the blow for them a little bit. But those companies still may be forced to lay off workers. Here again is Richard Aboulafia of the Teal Group.
ABOULAFIA: It depends how long it lasts. If we're talking about just a few weeks or a month or two, it's not going to be the end of the world. If this is a three-month stoppage or conceivably even longer, yeah, the broader economy would very definitely feel some pain.
GREENE: So a lot of question about timing here. And you said this could, go, like February, March? Or does anyone really know?
SCHAPER: Yeah, or even longer. It all depends on when the plane is recertified by the FAA. And the FAA wants to work with its counterparts around the world to time the putting the plane back into service.
GREENE: All right. Big decision from Boeing. And our reporting this morning from NPR's David Schaper. David, thanks.
SCHAPER: My pleasure.
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GREENE: All right. So there's border security funding. There is research to address gun violence, a 3.1% pay raise for people serving in the military and for federal workers. These are just a few of the items that make up this massive $1.3 trillion spending package that Congress has agreed to.
INSKEEP: Lawmakers released details of the deal yesterday and are expected to vote on it today in the House. Both Democrats and Republicans are claiming victory after months of stalled negotiations.
GREENE: And we have NPR congressional correspondent Kelsey Snell in our Washington, D.C., studio. Hey, Kelsey.
KELSEY SNELL, BYLINE: Good morning.
GREENE: OK. So impeachment seems to be dominating a lot of what's happening in Congress. But this bill that they agreed to is really important.
SNELL: Yeah. It's actually two bills. It's two huge packages. And it's the result of months of work. It's based on a spending deal that you may remember that they struck way back in July. And this is actually kind of a really big deal because it would fund the government through the end of September next year. You know, it is one of Congress's core responsibilities to do this. But if you'll remember, they kind of have trouble with it year after year after year (laughter).
SNELL: This is more than a thousand pages. And they're going through it really, really quickly. But if you talk to the Appropriations Committee chairwoman, Nita Lowey, she's kind of taking this all in the typical spending negotiator stride of saying, it's just their job.
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NITA LOWEY: The Appropriations Committee is charged with one of Congress's most awesome responsibilities, the power of the purse. I'm proud that we have used that power to make investments that will give every American a better chance at a better life.
SNELL: Now, it's important to remember that the House and Senate still have to pass this. And that's not always been easy in the past. But I'm assured that both sides think that they will be able to get it done. And this was negotiated with Treasury Secretary Steven Mnuchin. And people in Congress tell me they believe they have the White House's blessing.
GREENE: OK. But there have been moments of surprise at the last minute...
SNELL: (Laughter) That's true.
GREENE: ...Moments like this in recent years. But for the moment, at least, I mean, you have both parties declaring victory. So let's talk that through. Let's start with Democrats. What are they happy about in this?
SNELL: Well, actually, I think it's important to look at some of these bipartisan things, one of which is raising the age for buying tobacco to 21. And that was negotiated by Democrats and Republicans, including Senate Majority Leader Mitch McConnell and Dick Durbin, one of the top Democrats in the Senate. And they're also repealing three taxes meant to support Obamacare but had been widely panned by both parties.
Democrats, though, are getting funding - $25 million for gun violence research. And they're saying that this is the first time in 20 years that's happened. And they're also getting $425 million in election security and a big boost in funding for the EPA and opioid response.
GREENE: Now, what are Republicans most excited about?
SNELL: Republicans are celebrating the fact that they got $1.375 billion for border fence funding. That is pretty much even with the amount of money that they have right now. Plus, they get the flexibility to move money around for detention beds for a surge.
GREENE: And then we've got another important vote this week. And that's an annual defense authorization bill, which is going to the Senate. What's happening there?
SNELL: Yeah. This is a really big bill - again, really massive, thousands of pages. And it has some major policy initiatives, including 12 weeks of paid parental leave, which is not necessarily something you'd expect to see in a defense bill, but it's something that both sides are really excited about.
GREENE: OK. NPR congressional correspondent Kelsey Snell covering a lot for us. Thank you, Kelsey.
SNELL: You bet.
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GREENE: So we're learning more this morning about profits earned by the Sackler family from the sale of OxyContin. That's the controversial opioid drug marketed by their privately owned company, Purdue Pharma.
INSKEEP: The company filed for bankruptcy earlier this year, as we've been reporting. But before bankruptcy, the Sacklers withdrew more than $12 billion into their personal accounts.
GREENE: And let's bring in North Country Public Radio's Brian Mann, who follows opioid litigation for NPR. Hey there, Brian.
BRIAN MANN, BYLINE: Morning, David.
GREENE: So it looks like OxyContin made the Sacklers very, very rich. Remind us just the context here. Why is that so controversial?
MANN: Well, it happened at a time when a lot of Americans were dying as the prescription opioid epidemic was going viral across the United States, ravaging communities. The company, of course, faces thousands of civil lawsuits tied to its alleged role spurring this addiction crisis, legal blowback so big it forced the company into this bankruptcy. But as you said, the Sacklers had already pocketed billions of dollars. And in the end, a lot of that money may not ever be forfeited as part of any settlement.
GREENE: And what's new here is some details that we're learning from a new audit of the company. So what exactly is this?
MANN: Yeah. The data submitted to the bankruptcy court on Monday shows that, in all, members of the family withdrew roughly $12.2 billion from their company. And a review by The New York Times found that this really accelerated. The Sacklers began pulling more and more cash out of the company beginning in 2008 - hundreds of millions of dollars every year. Some of that went to pay taxes, but it also went into their personal trusts. And this is drawing particular scrutiny, David - some of it went into offshore accounts.
GREENE: OK. So they have all of this money, it seems. The family has offered to pay something like $3 billion of this personal wealth to settle opioid claims against Purdue Pharma. But state attorneys general are saying that's simply not enough. Is that right?
MANN: Yeah. That is right. The Sacklers have consistently denied any wrongdoing. But they have offered this bankruptcy deal that would mean them paying out billions of dollars of their cash and giving up control of Purdue Pharma. As part of that, they've asked the bankruptcy court to essentially halt all personal lawsuits against them. They would be out of the opioid business but still one of the richest families in the country because of OxyContin.
And the coalition of states are pushing back. They're saying that the Sacklers should first give a full accounting of all their personal holdings, even stuff that's offshore in foreign accounts. And those attorneys general want to claw back more of that cash. And this audit is adding fuel to that argument. New York's Attorney General Letitia James issued a statement last night demanding more detailed financial records. She said she wants full transparency into their total assets.
GREENE: OK. And on its face, this doesn't look very good, either. You have this other part of the bankruptcy process - Purdue Pharma's decision to pay out these big bonuses to executives in the company. I mean, what is the court saying about that? Are they going to allow that to happen?
MANN: They are. Judge Robert Drain agreed earlier this month to let the company pay roughly $35 million in bonuses this year to employees. The argument from Purdue Pharma that the court accepted is that key staff, you know, people in the company, needed to keep the firm operating during this turbulent time. Those folks just won't stay on if they're not well-compensated. But, of course, David, that money that's being paid out is money that will never be paid to victims or to communities.
GREENE: Brian Mann covers opioid litigation for NPR. Brian, we appreciate it, as always. Thanks a lot.
MANN: You bet, David.
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