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California Gov. Gavin Newsom. Photo: Scott Varley/MediaNews Group/Daily Breeze via Getty Images

The Transportation Department said Tuesday it intends to cancel $929 million in federal grant funds for California's scaled-back high-speed rail network, and that it is "actively exploring every legal option" to take back $2.5 billion in funds already given to the state for the project.

The big picture: Last week, California's newly elected Gov. Gavin Newsom disputed Trump's claim that California owes the federal government $3.5 billion for scaling back its plans to build an estimated $77 billion high-speed train from San Francisco to Los Angeles, saying the money was allocated by Congress. In a new statement, Newsom said: "This is clear political retribution by President Trump, and we won’t sit idly by. This is California’s money, and we are going to fight for it.”

  • Newsom also noted: "It’s no coincidence that the Administration’s threat comes 24 hours after California led 16 states in challenging the President’s farcical ‘national emergency.’"

Go deeper: California's $77 billion derailment

Go deeper

11 mins ago - World

Netanyahu and Israel reluctantly adjust to a post-Trump Washington

Netanyahu (R) and Biden in 2010. Photo: Avi Ohayon/GPO via Getty

Prime Minister Benjamin Netanyahu and his close aides are very nervous about the transition to a new U.S. administration after a four-year honeymoon with Donald Trump. One Israeli official told me it felt like going through detox.

What he's saying: Netanyahu congratulated Biden minutes after he was sworn in, saying in a statement that he looked forward to working together to "continue expanding peace between Israel and the Arab world and to confront common challenges, chief among them the threat posed by Iran."

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. State of play: New coronavirus cases down, but more bad news ahead.
  2. Politics: Biden set to immediately ramp up federal pandemic response with 10 executive actions — Scoop: Joe Biden's COVID-19 bubble.
  3. World: Biden will order U.S. to rejoin World Health OrganizationBiden to bring U.S. into global COVAX initiative for equitable vaccine access.
  4. Vaccine: Amazon offers to help Biden administration with COVID vaccine efforts.
Dion Rabouin, author of Markets
3 hours ago - Economy & Business

First glimpse of the Biden market

Photo: Jonathan Ernst-Pool/Getty Images

Investors made clear what companies they think will be winners and which will be losers in President Joe Biden's economy on Wednesday, selling out of gun makers, pot purveyors, private prison operators and payday lenders, and buying up gambling, gaming, beer stocks and Big Tech.

What happened: Private prison operator CoreCivic and private prison REIT Geo fell by 7.8% and 4.1%, respectively, while marijuana ETF MJ dropped 2% and payday lenders World Acceptance and EZCorp each fell by more than 1%.