Wednesday, May 24, 2017

Monday, May 22, 2017

Lack of Workers, Not Work, Weighs on the Nation’s Economy

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Juan Guerrero, right, and Joseph Waseme securing materials on a truck bed at a Roofers Supply lot in Salt Lake City. The company needs at least 15 more drivers to meet demand, but has had trouble finding workers. Credit Kim Raff for The New York Times
SALT LAKE CITY — Stephanie Pappas and her brothers built their roofing supply company in this fast-growing region by promising next-day delivery, but lately they’ve been forced to tell some customers that tomorrow is impossible.
Their company, Roofers Supply, employs 28 drivers across Utah, and Ms. Pappas said she would need at least 15 more to meet the exploding demand for shingles and tiles. The company has raised its starting wage by 10 percent since the beginning of the year to $17.50 an hour, but it’s not enough.
“We never want to have to say, ‘We can’t do it,’ but we need people,” Ms. Pappas said.
After eight years of steady growth, the main economic concern in Utah and a growing number of other states is no longer a lack of jobs, but a lack of workers. The unemployment rate here fell to 3.1 percent in March, among the lowest figures in the nation. Nearly a third of the 388 metropolitan areas tracked by the Bureau of Labor Statistics have an unemployment rate below 4 percent, well below the level that economists consider “full employment,” the normal churn of people quitting to find new jobs. The rate in some cities, like Ames, Iowa, and Boulder, Colo., is even lower, at 2 percent.
That’s good news for workers, who are reaping wage increases and moving to better jobs after years of stagnating pay that, for many, was stuck at a low level. Daniel Edlund, a 21-year-old call center worker in Provo, Utah, learned Monday that his hours were changing. On Wednesday, he had his first interview for a new job.
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“I’m trying to find a company that treats you well,” he said.
But labor shortages are weighing on overall economic growth, slowing the pace of expansion in northern Utah and other fast-growing regions even as unemployment remains stubbornly high in Rust Belt cities like Cleveland and in regions still recovering from the 2008 recession, like inland California.
To Todd Bingham, the president of the Utah Manufacturers Association, “3.1 percent unemployment is fabulous unless you’re looking to hire people.”
“Our companies are saying, ‘We could grow faster, we could produce more product, if we had the workers,’” he said. “Is it holding the economy back? I think it definitely is.”
President Trump continues to promise that he will accelerate job growth by cutting taxes and regulations. But the accumulating evidence that workers are getting harder to find, and that wages are rising more quickly, has convinced many economists that significantly faster growth is unlikely. The Federal Reserve has cited the trend as its reason for moving to wind down its own economic stimulus campaign. The Fed may raise interest rates again at its next meeting in June.
Qualtrics, which conducts online market research, is a prime example of the rapid growth of the Utah economy — and the sense that Utah is straining at the limits of its growth potential. Scott Smith started the company with his son, Ryan, and a college classmate in his Provo home in 2002. Qualtrics now employs 1,300 people, including about 800 in a new headquarters building opened in August at the mouth of Provo Canyon. And it is bringing workers to Utah as fast as it can.
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Griffin Miller, a Qualtrics employee, at the company’s new headquarters in Provo, Utah. Credit Kim Raff for The New York Times
Each Monday, the company ties red balloons to the desks of that week’s batch of new employees. Last week, there were several dozen of those balloons. The parking lot outside the new headquarters building is already overstuffed, including many cars that still have out-of-state plates.
Ryan Smith, now the chief executive, said Qualtrics had hired about three dozen graduates from the University of Michigan alone last year. The company estimates that new arrivals bought 100 homes in Provo last year.
Utah’s tech scene is growing alongside the company. More local university students are studying engineering; more start-ups are popping up in the region, which boosters would very much like everyone to call “Silicon Slopes.” But by the end of the year, Mr. Smith said, he expects the company will have more employees outside Utah than in its home state. It is growing where it finds workers.
Companies in Utah, as in the rest of the country, were slow to raise wages in recent years. At first there were plenty of available workers. But by the end of 2015, a report by Utah’s Department of Workforce Services concluded that inadequate wages had become a key reason companies were struggling to find employees.
“It was as if employers hadn’t adjusted their approach to the labor market” as the economy recovered, said Carrie Mayne, the department’s chief economist.
Now there are signs the logjam is breaking. Adam Himoff, the president of Xemplar Skilled Workforce Solutions, a recruiting firm hired by Roofers Supply to find drivers, said he had seen an increase this year in the willingness of clients to raise wages.
“Labor has become the constraint on their growth goals, and they’re recognizing that they’re going to have to increase wages to achieve what they want to achieve,” he said.
Ms. Mayne said the state also saw signs of what she described as a broad-based acceleration in wages in the most recent data, through the end of last year.
But the share of Utah adults who have withdrawn from the labor force remains higher than before the recession. Last year, 31.7 percent of adults in Utah were neither working nor looking for work, up from 28.2 percent in 2006. That is part of a broad national trend.
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Leo Tapia operating the milking machine at Gibson’s Green Acres Dairy in Ogden, Utah. In less lucrative industries such as agriculture, labor shortages may remain an intractable problem. Credit Kim Raff for The New York Times
And a 3.1 percent unemployment rate still means that about 50,000 people in Utah were trying to find jobs in March.
Some, like Monica Von Strahl, expect to find work quickly. Ms. Von Strahl, 44, moved to Utah from Oregon in April for family reasons. She left a job as a caregiver for adults with disabilities that paid $16 an hour; so far, the most she has been offered in Utah is $10 an hour. She plans to keep looking a little longer. (Scholars at M.I.T. estimate that a living wage in Utah for a single person is $10.71 an hour.)
But even in a red-hot market, some of the people who are looking for work struggle to find the right fit. Noel Nampijja, 42, left her job as a nurse’s aide two months ago because the work of moving patients was hurting her back. She just completed training as a phlebotomist, a medical assistant who draws blood.
“I’m hoping to find a job that won’t hurt as much,” she said.
In less lucrative industries, labor shortages may remain an intractable problem.
Ron Gibson, a fifth-generation dairy farmer, tends 1,500 cows on family land outside Ogden. Last month, he placed an ad in local papers seeking three workers at wages starting around $12 an hour. It did not draw any responses.
Mr. Gibson cannot afford to chase workers by raising wages. The price of milk, adjusted for inflation, is lower now than in the 1980s. Instead, he is producing less milk. Each cow is milked three times a day; only 15 percent get a fourth milking.
He also laughed at the idea that Americans might move from other states to milk cows in Utah. He relies primarily on immigrant labor, communicating with his two dozen workers in the Spanish he learned as a young Mormon missionary in Argentina. And since Mr. Trump’s election, he said, workers are harder to find.
“We are either going to import workers or we are going to import milk,” Mr. Gibson said.
The work “is dirty, stinky and hard,” he added. “It’s not what we teach our young people to do.”
But there is another solution on the horizon: automation. Last year, Mr. Gibson and his son visited a farm in upstate New York where robots milk cows. The cows learn to approach the machines when their udders are full.
Mr. Gibson is not yet ready to make the jump. Each machine costs half a million dollars, and the New York farmer spends about as much on mechanics as he spent on farmhands. But Mr. Gibson said he expected his children would use robots to milk cows.

White House Moves to Block Ethics Inquiry Into Ex-Lobbyists on Payroll

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Walter M. Shaub Jr., the head of the Office of Government Ethics, in January. The White House has challenged Mr. Shaub’s authority to demand information on former lobbyists now working for the government. Credit J. Scott Applewhite/Associated Press
The Trump administration, in a significant escalation of its clash with the government’s top ethics watchdog, has moved to block an effort to disclose any ethics waivers granted to former lobbyists who have work in the White House or federal agencies.
The latest conflict came in recent days when the White House, in a highly unusual move, sent a letter to Walter M. Shaub Jr., the head of the Office of Government Ethics, asking him to withdraw a request he had sent to every federal agency for copies of the waivers. In the letter, the administration challenged his legal authority to demand the information.
Dozens of former lobbyists and industry lawyers are working in the Trump administration, which has hired them at a much higher rate than the previous administration. Keeping the waivers confidential would make it impossible to know whether any such officials are violating federal ethics rules or have been given a pass to ignore them.
Mr. Shaub, who is in the final year of a five-year term after being appointed by President Barack Obama, said he had no intention of backing down. “It is an extraordinary thing,” Mr. Shaub said of the White House request. “I have never seen anything like it.”
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Marilyn L. Glynn, who served as general counsel and acting director of the agency during the George W. Bush administration, called the move by the Trump White House “unprecedented and extremely troubling.”
“It challenges the very authority of the director of the agency and his ability to carry out the functions of the office,” she said.
In a statement issued Sunday evening, the Office of Management and Budget rejected the criticism and instead blamed Mr. Shaub, saying his call for the information, issued in late April, was motivated by politics. The office said it remained committed to upholding ethical standards in the federal government.
“This request, in both its expansive scope and breathless timetable, demanded that we seek further legal guidance,” the statement said. “The very fact that this internal discussion was leaked implies that the data being sought is not being collected to satisfy our mutual high standard of ethics.”
President Trump signed an executive order in late January — echoing language first endorsed by Mr. Obama — that prohibited lobbyists and lawyers hired as political appointees from working for two years on “particular” government matters that involved their former clients. In the case of former lobbyists, they could not work on the same regulatory issues they had been involved in.
Both Mr. Trump and Mr. Obama reserved the right to issue waivers to this ban. Mr. Obama, unlike Mr. Trump, automatically made any such waivers public, offering detailed explanations. The exceptions were typically granted for people with special skills, or when the overlap between the new federal work and a prior job was minor.
Ms. Glynn, who worked in the office of government ethics for nearly two decades, said she had never heard of a move by any previous White House to block a request like Mr. Shaub’s. She recalled how the Bush White House had intervened with a federal agency during her tenure to get information that she needed.
Ethics watchdogs, as well as Democrats in Congress, have expressed concern at the number of former lobbyists taking high-ranking political jobs in the Trump administration. In many cases, they appear to be working on the exact topics they had previously handled on behalf of private-sector clients — including oil and gas companies and Wall Street banks — as recently as January.

Document

Letter to Office of Government Ethics

The White House, in an extremely unusual move, asked the Office of Government Ethics to hold off on its investigation into ethics waivers granted to ex-lobbyists and industry lawyers.
OPEN Document
Mr. Shaub, in an effort to find out just how widespread such waivers have become, asked every federal agency and the White House to give him a copy by June 1 of every waiver it had issued. He intends to make the documents public.
Federal law gives the Office of Government Ethics, which was created in the aftermath of the Watergate scandal, clear legal authority to issue such a “data request” to the ethics officers at federal agencies. This is the main power the office has to oversee compliance with federal ethics standards.
It is less clear whether it has the power to demand such information from the White House. Historically, there has been some debate over whether the White House is a “federal agency” or, as it calls itself, the “executive office of the president.” Such an office might not be subject to oversight.
The White House, however, tried on Wednesday to stop the process across the entire federal government, even before most agencies had responded to Mr. Shaub’s April 28 request.
“This data call appears to raise legal questions regarding the scope of O.G.E.’s authorities,” said the letter, which was sent to Mr. Shaub by Mick Mulvaney, the head of the Office of Management and Budget. It continued, “I therefore request that you stay the data call until these questions are resolved.”
The letter, which was obtained by The New York Times after a Freedom of Information request, created confusion among federal agency heads about whether they should honor the request from the ethics office.
Norman Eisen, the top White House ethics lawyer in the first years of the Obama administration, said he believed that the Trump administration was trying to intimidate federal ethics officers, who are career appointees, without actually ordering them to ignore the directive from the ethics chief.
“It is yet another demonstration of disrespect for the rule of law and for ethics and transparency coming from the White House,” Mr. Eisen said.
Mr. Shaub, in a conference call with federal government ethics officers on Thursday, told them that he had the clear authority to make such a request and that they were still obligated under federal law to provide the requested information, according to a federal official who participated in the call.
The Office of Government Ethics, however, does not have the power to take enforcement action directly against the agencies if they do not respond. Traditionally, if it has trouble getting the information it needs, it turns to the White House to get compliance, Ms. Glynn said.
“The agency is more or less dependent on the good graces of the party that is in power,” she said.
Tensions between Mr. Trump and Mr. Shaub first started to grow in late November, when the Office of Government Ethics sent out an unusual series of Twitter messages urging Mr. Trump to limit potential conflicts of interest by selling off his real estate assets. Mr. Shaub then gave a speech in January, after Mr. Trump announced that he would not take such a step, which was highly critical of the incoming president, provoking speculation that Mr. Shaub might be fired before his term ended.
“One of the things that make America truly great is its system for preventing public corruption,” Mr. Shaub said during that speech. “Our executive branch ethics program is considered the gold standard internationally and has served as a model for the world. But that program starts with the office of the president. The president-elect must show those in government — and those coming into government after his inauguration — that ethics matters.”

China and India Make Big Strides on Climate Change

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Credit Tim Peacock
Until recently, China and India have been cast as obstacles, at the very least reluctant conscripts, in the battle against climate change. That reputation looks very much out-of-date now that both countries have greatly accelerated their investments in cost-effective renewable energy sources — and reduced their reliance on fossil fuels. It’s America — Donald Trump’s America — that now looks like the laggard.
According to research released last week at a United Nations climate meeting in Germany, China and India should easily exceed the targets they set for themselves in the 2015 Paris Agreement signed by more than 190 countries. China’s emissions of carbon dioxide appear to have peaked more than 10 years sooner than its government had said they would. And India is now expected to obtain 40 percent of its electricity from non-fossil fuel sources by 2022, eight years ahead of schedule.
Every one of the Paris signatories will have to reduce emissions to ward off the worst consequences of global warming — devastating droughts, melting glaciers and unstoppable sea level rise. But the tangible progress by the world’s number one producer of greenhouse gases (China) and its number three (India) are astonishing nonetheless, and worth celebrating.
There is also a lesson here for the United States. Piece by piece, agency by agency, the Trump administration seems determined to destroy or undermine every initiative on which President Obama based his pledge in Paris to substantially reduce America’s greenhouse gases: his plan to close old, coal-fired power plants, his proposals to reduce methane emissions from oil and gas wells, his mandates for more fuel-efficient vehicles. The excuse given in every case is that these rules would cost jobs and damage the economy — the same bogus argument once used by Vice President Dick Cheney to persuade President George W. Bush to renege on his campaign promise to combat global warming.
China and India are finding that doing right by the planet need not carry a big economic cost and can actually be beneficial. By investing heavily in solar and wind, they and others like Germany have helped drive down the cost of those technologies to a point where, in many places, renewable sources can generate electricity more cheaply than dirtier sources of energy like coal. In a recent auction in India, developers of solar farms offered to sell electricity to the grid for 2.44 rupees per kilowatt-hour (or 3.79 cents). That is about 50 percent less than what solar farms bid a year earlier and about 24 percent less than the average price for energy generated by coal-fired power plants.
The shift from fossil fuels has thus been much faster and more pronounced than most experts expected. China has reduced coal use for three years in a row and recently scrapped plans to build more than 100 coal power plants. Indian officials have estimated that country might no longer need to build new coal plants beyond those that are already under construction. One other heartening fact: Electric vehicle sales in China jumped 70 percent last year, thanks in large part to generous government incentives. India is much further behind in this area, but the country’s minister of power said last month that all cars sold in the country should be electric by 2030.
China and India’s enthusiasm for cleaner energy arises in part from a wish to reduce the terrible air pollution that afflicts cities like Beijing and New Delhi; any move away from coal would make a big difference in public health. Investments in cutting-edge energy and transportation technologies would also bolster the economy as a whole.
There are, of course, formidable challenges, not least developing batteries to store the excess electricity generated by solar farms on sunny days and wind farms on windy days. And there are emissions from industry and agriculture to worry about. Still, Beijing and New Delhi — not, embarrassingly enough, Washington — are showing the way forward.

Sunday, May 21, 2017

Gunmen Kill Prominent Mexican Journalist Who Covered Drug Cartels

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The journalist Javier Valdez in Mexico. On Monday, Mr. Valdez was killed by gunmen in his home state of Sinaloa. Credit Riodoce, via Associated Press
MEXICO CITY — A veteran journalist who had chronicled the bloody conflicts among rival drug cartels in his home state, Sinaloa, and the culture of violence they inflicted on the broader society, was killed by gunmen on Monday near the newspaper that he had co-founded, the authorities said.
The journalist, Javier Valdez Cárdenas, 50, was in his car when he was intercepted by the killers, according to Ríodoce, a weekly he founded with Ismael Bojórquez in the city of Culiacán in 2003.
At least 104 journalists have been murdered in Mexico since 2000, while 25 others have disappeared, according to the press freedom organization Article 19.
The death of Mr. Valdez, who had shared prizes from Columbia University and the Committee to Protect Journalists, raises pressure on the government of President Enrique Peña Nieto to address the killings more forcefully.
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All but a handful of the killings and abductions remain unsolved. That is true of most such crimes in Mexico, but press advocates say pervasive corruption and impunity have helped make the country one of the most dangerous places in the world to be a journalist.
Mr. Peña Nieto condemned the killing on Twitter and the attorney general’s office said its special prosecutor for crimes against freedom of expression would investigate. Mr. Peña Nieto replaced the special prosecutor this month because of the office’s abysmal record in solving cases.
Mr. Valdez, who also worked for the Mexico City daily La Jornada, became the sixth journalist killed this year. The murders are often believed to be the work of drug gangs, or of corrupt politicians who may be allied with the gangs or involved in other criminal activities.
“This comes as a huge surprise; we are all very angry and appalled,” said Adrian López, general director of Noroeste, another independent newspaper in Culiacán, which like Ríodoce has been the target of frequent attacks.
“However shocking, we know it is impunity that allows this violence and all these murders to happen, because there is no cost to killing here, and killing journalists even less so,” he said.
Ríodoce had built a reputation over the years for its coverage of the drug war from its front lines in Sinaloa. From there the cartel leader Joaquín Guzmán Loera, known as El Chapo, ran what was the world’s most powerful narcotics racket. Mr. Guzmán is being held in New York awaiting trial.
After word of Mr. Valdez’s murder spread, his Twitter message about the death of a La Jornada colleague, Miroslava Breach, who was fatally shot in front of her teenage son in the northern state of Chihuahua on March 23, was repeated many times.
“Let them kill us all, if the sentence for covering this hell is death,” he wrote. “No to silence.”

Saturday, May 20, 2017

Belts, Roads, and Strategic Trade Policy


May 20, 2017 10:59 am
Look, I’m as obsessed with the Trump disaster as anyone else. But I’m trying to think about other things. And there does appear to be some big stuff happening, or potentially happening, on the global trade front, via China’s “belts and roads” transportation initiative. This is obviously an attempt to expand China’s political influence, and help find markets for Chinese exports. The magnitude of the effects is going to take some work to estimate. But is there anything else that’s interesting on an analytical level?
Well, I find myself thinking about some of my old work on economic geography, inspired in part by William Cronon’s wonderful Nature’s Metropolis, about the rise of Chicago.
What I took from Cronon was the importance of being a transportation hub. Thanks to the network of railroads spreading out from Chicago (partly dictated by the Great Lakes), virtually any two places in the “Great West” were effectively closer to Chicago than they were to each other.
Think of any economic activity characterized by strong economies of scale. There is a clear incentive to centralize this activity, and serve multiple markets from one location. But which location? In Figure 1 I show three locations with basically comparable transport links, shown by the dotted lines; in this case no one location has an obvious advantage, unless there are big differences in either costs or local market size.

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Credit
But suppose that two of those transport links are greatly improved, as shown by the solid lines in Figure 2. Then location C gets a leg up: other things equal, you will want to locate stuff in C to serve markets in A and B as well.

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Credit
Right now, China looks more like A or B than C: stuff goes mainly by ship, whether to Europe, America, or various developing countries. Good highways across central Asia and down to South Asia could change that, giving China a new centrality in the world’s economic geography; you might almost call it the Middle Kingdom.
How big a deal would this be? I have no idea. But you can definitely see Belts and Roads as a bit of a strategic trade policy as well as being a strategic, well, strategic policy.
NYT

Scandal in Brazil Raises Fear of Turmoil’s Return

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President Michel Temer of Brazil spoke in Brasília, the capital, on Thursday. The Supreme Court has released testimony accusing him of taking $4.6 million in illegal campaign contributions in 2014. Credit Ueslei Marcelino/Reuters
RIO DE JANEIRO — Just a few days ago, Brazil seemed to be turning a corner. The stock market was soaring. Bankers were cheering. The nation’s cutthroat lawmakers were lining up to curb spending. Inflation had been tamed.
Brazil, it appeared, was finally on the mend.
Then, in a matter of hours, it all started falling apart. President Michel Temer, long embroiled in graft scandals, suddenly became tangled in a new one, accused of taking millions of dollars in illicit payments and caught on tape discussing how to obstruct an anticorruption drive.
The allegations — including testimony released Friday in which executives at one of the world’s largest food companies accused him of taking about $4.6 million in illegal campaign contributions — have ignited broad calls for Mr. Temer’s resignation, sent markets whipsawing and set off fears that Brazil will slide back into the political and economic turmoil that has rattled it for the last two years.
The testimony, released by the Supreme Court, also described tens of millions of dollars in illicit payments into offshore accounts intended to benefit his impeached predecessor, Dilma Rousseff, and her mentor, former President Luiz Inácio Lula da Silva, both of whom have denied any wrongdoing in the matter.
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The bombshell made it clear that the political and economic upheaval in Latin America’s largest country is far from over. Mr. Temer, who took over after Ms. Rousseff’s ouster only a year ago, is facing the biggest crisis of his already rocky presidency. Mr. da Silva, who has been angling for a comeback, was facing multiple corruption investigations even before the allegations were revealed on Friday.
On top of that, the politicians in line to take over if Mr. Temer falls — including the speaker of the house and the leader of the Senate — are also embroiled in corruption investigations, raising deep concerns over the nation’s leadership and future.
“The damage done to our institutions and to rule of law needs to be stanched,” Paulo Sérgio Pinheiro, a former secretary of human rights, wrote in the newspaper Folha de S.Paulo, describing the latest crisis as a “unique and tragic moment in our history.”
“We’ve arrived at the end of the line,” he said.
Beyond the torrent and staggering scale of the accusations, many Brazilians have been shocked that the latest scandal became public because Mr. Temer, a veteran of Brazil’s Machiavellian politics, stepped into a trap that has ensnared him before: He was caught on tape by someone he trusted.
“It’s stunning that this isn’t even the first time Temer has been recorded and betrayed in recent months,” said Mauricio Santoro, a political scientist at the State University of Rio de Janeiro. “You’d think a Brazilian president would be less careless.”
Mr. Temer called it “appalling” the last time a secret recording of him came out, late last year. One of his own ministers had captured their conversation, accusing the president of pressuring him to help an ally in a property deal.
Even then, the double crossing should not have come as a surprise. At each turn in Brazil’s long-simmering political crisis, secret recordings have produced one revelation after another, tripping up some powerful politicians.
Now, Mr. Temer is on tape again, this time caught by one of Brazil’s richest men.
The latest scandal involves Joesley Batista, 44, an heir to JBS, a food empire with operations across Brazil and the United States. The secret recording is not only raising anxiety over what Mr. Temer did, but also his susceptibility to subterfuge in a political system where leaders often rush to inform on one another.
Mr. Temer, 76, “wound up getting ambushed by a billionaire one March night in Brasília,” the capital, said José Casado, a columnist for the newspaper O Globo.
In a move worthy of a plot twist in a thriller, Mr. Batista handed over the recording to investigators as part of a plea deal. The tape caused jaws to drop over Mr. Batista’s description of moves that seem to crudely refer to buying off a prosecutor and judges, as well as bribing Eduardo Cunha, the jailed politician who helped to orchestrate the impeachment of Ms. Rousseff.
“I’m good with Eduardo, O.K.?” Mr. Batista is heard telling Mr. Temer on the recording, emphasizing that he had “paid up” his obligations to Mr. Cunha.
“You need to keep that up, got it?” Mr. Temer replied.
At other points in their conversation, which occurred at Mr. Temer’s official residence, Mr. Batista described “taking care” of two unnamed judges and counting on a prosecutor who had informed him about a fraud investigation at Brazil’s largest pension funds.
Mr. Temer insists that he did nothing wrong and is rejecting calls to resign. But the recording offers a glimpse into how one of Brazil’s richest men bragged about obstructing justice to the nation’s president.
Critics of Mr. Temer argue that he should never have met in the first place with Mr. Batista, who is the target of a graft investigation. Mr. Temer’s growing chorus of opponents is also asking why the president took no legal action upon being told by Mr. Batista about an array of illicit activities.
Mr. Temer was already struggling with dismal approval ratings as he sought approval for cutting pension benefits and curbing the influence of unions. Now a new phase in Brazil’s instability seems to have started — just when it appeared Brazil was turning the page on political upheaval.
“The government’s popularity was already low, but now it’s even lower,” said Carlos Melo, a political scientist at Insper, a business school in São Paulo. “It will be difficult for the government to approve unpopular reforms.”
Mr. Temer has governed under a cloud of scandal since taking office a year ago. Ministers in his cabinet have resigned amid claims of trying to stymie corruption inquiries. Mr. Temer also faces accusations that he negotiated a $40 million bribe for his party in 2010, a claim he denies.
Marcos Troyjo, who teaches international relations at Columbia University, said the latest scandal could severely damage the view that Mr. Temer was “getting the economic agenda going.”
After being gripped by panic selling on Thursday, Brazilian markets stabilized somewhat on Friday as investors tried to gauge how Mr. Temer’s refusal to step down would affect Brazil’s economy. Unions were already marshaling resistance to the austerity measures he has proposed.
“I don’t even have a job yet and they want us to work until we die,” said Julia Canedo, 21, a university student who expressed disgust with Mr. Temer’s proposed overhaul of the pension system, which allows many Brazilians to retire in their 50s. “Everyone is lost and can barely follow what’s going on because it’s so crazy and unstable. I want him to leave.”
In addition to the secret recording, executives at JBS, Mr. Batista’s company, said that they paid about $4.6 million in illegal campaign contributions to Mr. Temer in 2014, some of which he pocketed himself, according to the court testimony released Friday.
It also described deposits of tens of millions of dollars into offshore accounts to benefit Ms. Rousseff and Mr. da Silva, both of the leftist Workers’ Party.
The JBS executives recounted a remarkably ambitious effort to get public loans for the company’s global expansion into markets like the United States. They described efforts to influence officials across Brazil’s public bureaucracy, regardless of their party affiliation.
The calls for Mr. Temer to resign have come from many sides, including an editorial Friday in O Globo, part of Brazil’s most powerful media group.
“If he doesn’t go,” the newspaper warned, “he’ll drag Brazil through an even more profound political crisis.”
Stepping down, however, could also expose Mr. Temer to an array of legal battles: He would lose the privileged legal standing that senior officials enjoy in Brazil, often allowing them to avoid prison.
If Mr. Temer resigns, “he can be tried and convicted,” said Daniel Vargas, a law professor at Fundação Getúlio Vargas, a university in Rio.

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