[10/24/19] WASHINGTON — President Trump announced on Wednesday that Turkey had agreed to a permanent cease-fire in northeast Syria, claiming that the United States was bringing peace to the region after decades of failed efforts.
Pushing back against criticism that he upended American policy in the Middle East by enabling a Turkish offensive against Kurdish fighters that has empowered Russia and Iran, the president insisted that his approach had defused a historically dangerous situation even as he washed his hands of it.
“Turkey, Syria and all forms of the Kurds have been fighting for centuries,” Mr. Trump said from the Diplomatic Room at the White House. “We have done them a great service and we’ve done a great job for all of them. And now, we’re getting out.”
“Let someone else fight over this long bloodstained sand,” he added.
By all but ending America’s modest troop presence in northeast Syria, Mr. Trump effectively surrendered Washington’s influence in territory that three weeks ago was essentially a United States protectorate to Russia, Iran and President Bashar al-Assad of Syria.
With threats of economic sanctions and diplomatic demands, the Trump administration has scrambled to end the fighting between Turkish forces and Kurdish fighters that ensued, and that last week sent Vice President Mike Pence to Ankara to negotiate a pause in the fighting.
Crucial to the cease-fire was the agreement struck a day earlier between Turkey and Russia to jointly police a border zone in northern Syria and rid it of Kurdish fighters. But Mr. Trump claimed full credit.
[10/17/19] After an hours-long meeting, Vice President Mike Pence announced on Thursday afternoon that Turkish President Recep Tayyip Erdogan has agreed to a ceasefire in northern Syria.
The vice president said Turkey would pause its invasion for 120 hours in order to allow Kurdish allies to withdraw from the safe zone of the border region. Pence said the leaders committed to defeating ISIS and renewed an agreement to "coordinate efforts on detention facilities and internally displaced persons in formerly ISIS-controlled areas."
The U.S. agreed not to put new sanctions in place and to end the current sanctions if the ceasefire holds.
[10/16/19] WASHINGTON >> Washing his hands of Syria, President Donald Trump declared today the U.S. has no stake in defending the Kurdish fighters who died by the thousands as America’s partners against IS extremists.
Hours later, House Speaker Nancy Pelosi and other top Democrats walked out of a meeting at the White House, accusing him of having a “meltdown,” calling her a “third-rate politician” and having no plan to deal with a potentially revived Islamic State group.
Condemnation of Trump’s stance on Turkey, Syria and the Kurds was quick and severe during the day, not only from Democrats but from Republicans who have been staunch supporters on virtually all issues.
The House, bitterly divided over the Trump impeachment inquiry, banded together for an overwhelming 354-60 denunciation of the U.S. troop withdrawal. Many lawmakers expressed worry that it may lead to revival of IS as well as Russian presence and influence in the area — in addition to the slaughter of many Kurds.
At the White House, Trump said the U.S. has no business in the region — and not to worry about the Kurdish fighters.
“They know how to fight,” he said. “And by the way, they’re no angels.”
[10/14/19] President Donald Trump on Monday said he would authorize sanctions against Turkish officials, stop negotiating with Turkey on a $100 billion trade deal, and boost tariffs on the country’s steel to 50 percent over Ankara’s incursion into northeast Syria.
Turkey launched the cross-border assault on Kurdish YPG militia on Wednesday after Trump withdrew some U.S. troops from the region, drawing sharp criticism from fellow Republicans who accused him abandoning allies who fought against Islamic State.
“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” Trump said.
[10/13/19] AKCAKALE, Turkey (AP) — Syria’s Kurds said Syrian government forces agreed Sunday to help them fend off Turkey’s invasion — a major shift in alliances that came after President Donald Trump ordered all U.S. troops withdrawn from the northern border area amid the rapidly deepening chaos.
The shift could lead to clashes between Turkey and Syria and raises the specter of a resurgent Islamic State group as the U.S. relinquishes any remaining influence in northern Syria to President Bashar Assad and his chief backer, Russia.
Adding to the turmoil Sunday, hundreds of Islamic State families and supporters escaped from a holding camp in Syria amid the fighting between Turkish forces and the Kurds.
The fast-deteriorating situation was set in motion last week, when Trump ordered U.S. troops in northern Syria to step aside, clearing the way for an attack by Turkey, which regards the Kurds as terrorists. Since 2014, the Kurds have fought alongside the U.S. in defeating the Islamic State in Syria, and Trump’s move was decried at home and abroad as a betrayal of an ally.
[10/9/19] AKCAKALE, Turkey (Reuters) - Turkish troops and their Syrian rebel allies attacked Kurdish militia in northeast Syria on Wednesday, pounding them with air strikes and artillery before launching a cross-border ground operation that could transform an eight-year-old war.
The assault began days after U.S. President Donald Trump pulled American troops out of the way, prompting denunciations from senior members of his own Republican Party who say he abandoned the Kurds, loyal allies of Washington.
The assault on the Kurds - for years Washington’s main allies on the ground in Syria - is potentially one of the biggest shifts in years in an eight-year war that has drawn in global and regional powers. The Kurds played a leading role in capturing territory from Islamic State, and now hold the largest swathe of Syria outside of Bashar al-Assad’s government’s hands.
Trump’s decision to pull forces out of the way was denounced by some Kurds as a “stab in the back”.
Trump called the Turkish assault a “bad idea” and said he did not endorse it. He expected Turkey to protect civilians and religious minorities and prevent a humanitarian crisis, he said.
But one of Trump’s closest allies, Senator Lindsey Graham, said failing to support the Kurds would be “the biggest mistake of his presidency”.
Representative Liz Cheney, a Republican hawk, said: “The U.S. is abandoning our ally the Kurds, who fought ISIS (Islamic State) on the ground and helped protect the U.S. homeland. This decision aids America’s adversaries, Russia, Iran, and Turkey, and paves the way for a resurgence of ISIS.”
Thursday, October 24, 2019
how's the economy?
WASHINGTON (Reuters) - The performance of the U.S. economy has been a solid clue to the outcome of past presidential elections.
The upcoming campaign may be different, according to results of a new “big data” survey of consumers showing that views about the economy have split along partisan lines, associated with whether an individual approves or disapproves of President Donald Trump, watches Fox News or MSNBC, or identifies as conservative or liberal.
The online poll, by data firm Morning Consult, asks the same five core questions as the University of Michigan’s well-known consumer sentiment survey, and for nearly two years has been collecting about 210,000 responses a month, compared to 500 or so each month for the Michigan survey.
It also includes questions about the respondents’ political leanings, and an initial set of results released Wednesday showed a stark division that may make it hard to interpret how the economy’s performance will play out in 2020 presidential voting.
American voters face the same set of economic facts, from low unemployment to the risks from a trade war, but the survey’s index of overall sentiment - at 108 just above the 100 line that separates positive from negative impressions of the economic outlook - masked the huge divide between those who approve of Trump, whose views measured a far rosier 136, and those who disapprove of the president, with a reading of 88.
The results, weighted by factors like age, race and sex, to be nationally representative, were similarly skewed based on media consumption. Viewers of conservative-leaning Fox News registered 139 for current sentiment about the economy; viewers of MSNBC, an outlet often critical of Trump, registered 89. Readers of the New York Times sat in the middle at 107, near those who get their news from Facebook (110) and Twitter (112).
The upcoming campaign may be different, according to results of a new “big data” survey of consumers showing that views about the economy have split along partisan lines, associated with whether an individual approves or disapproves of President Donald Trump, watches Fox News or MSNBC, or identifies as conservative or liberal.
The online poll, by data firm Morning Consult, asks the same five core questions as the University of Michigan’s well-known consumer sentiment survey, and for nearly two years has been collecting about 210,000 responses a month, compared to 500 or so each month for the Michigan survey.
It also includes questions about the respondents’ political leanings, and an initial set of results released Wednesday showed a stark division that may make it hard to interpret how the economy’s performance will play out in 2020 presidential voting.
American voters face the same set of economic facts, from low unemployment to the risks from a trade war, but the survey’s index of overall sentiment - at 108 just above the 100 line that separates positive from negative impressions of the economic outlook - masked the huge divide between those who approve of Trump, whose views measured a far rosier 136, and those who disapprove of the president, with a reading of 88.
The results, weighted by factors like age, race and sex, to be nationally representative, were similarly skewed based on media consumption. Viewers of conservative-leaning Fox News registered 139 for current sentiment about the economy; viewers of MSNBC, an outlet often critical of Trump, registered 89. Readers of the New York Times sat in the middle at 107, near those who get their news from Facebook (110) and Twitter (112).
Wednesday, October 16, 2019
Trump's tax returns show inconsistencies
[10/16/19] Documents obtained by ProPublica show stark differences in how Donald Trump’s businesses reported some expenses, profits and occupancy figures for two Manhattan buildings, giving a lender different figures than they provided to New York City tax authorities. The discrepancies made the buildings appear more profitable to the lender — and less profitable to the officials who set the buildings’ property tax.
For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.
Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.
A dozen real estate professionals told ProPublica they saw no clear explanation for multiple inconsistencies in the documents. The discrepancies are “versions of fraud,” said Nancy Wallace, a professor of finance and real estate at the Haas School of Business at the University of California-Berkeley. “This kind of stuff is not OK.”
For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.
Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.
A dozen real estate professionals told ProPublica they saw no clear explanation for multiple inconsistencies in the documents. The discrepancies are “versions of fraud,” said Nancy Wallace, a professor of finance and real estate at the Haas School of Business at the University of California-Berkeley. “This kind of stuff is not OK.”
Wednesday, October 09, 2019
President Elizabeth Warren: remaking capitalism
For the past generation, Democratic presidential candidates have mostly talked of redistributing the rewards of American capitalism while leaving its basic structure intact.
Elizabeth Warren promises to break that mold. The Massachusetts senator, who has moved to the front ranks of the field, talks of remaking capitalism from the ground up. As president, she would drastically cut back the size and influence of big business, push private companies from parts of the economy altogether, and shift power to government and to labor.
Businesses are meeting the rising prospect of a Warren presidency with a combination of concern, skepticism and, for a few, a sense of opportunity.
Companies are used to Democrats criticizing business, whether John Kerry, the 2004 nominee, for outsourcing jobs or President Obama, for causing the financial crisis. But no front-runner has issued so comprehensive an indictment as Ms. Warren, who has blamed business for, among other things stagnant wages, high student debt, global warming, gun violence, the prison population, high medical bills, and the shortage of affordable housing and child care.
And no front-runner has proposed such sweeping changes to how businesses operate. A President Warren would seek to regulate big tech companies as utilities, break up big banks and split them from securities dealers, ban fracking of oil and gas, phase out carbon emission from buildings, cars and power plants in eight to 15 years, require big companies to appoint worker representatives to at least 40% of board seats, ban private health insurance and, effectively, for-profit college, and negotiate down drug prices.
Her policies would directly affect companies with sales of nearly $5 trillion and stock-market value of more than $8 trillion, a third of the S&P 500 stock index. Taxes on the wealthy and corporations would rise sharply.
That, in turn, has led to nervousness among some executives. “She could create an environment where it is next to impossible to function” for health insurers, said Vicky Gregg, a former chief executive of BlueCross BlueShield of Tennessee and now partner in a private-equity firm. “There’s no question that keeps you up at night if you’re a health-plan executive.”
Others, particularly in Silicon Valley, are enthusiastic supporters of Ms. Warren despite, or for some because of, her plans to break up big tech companies. Some economists predict her plans could boost growth and that business warnings about the harm of her policies should be taken with a grain of salt.
“Businesses have cried wolf far too many times for that to be taken at face value during a presidential campaign,” said Austan Goolsbee, a University of Chicago economist who served under Mr. Obama.
When Ms. Warren first proposed companies should be responsible to all stakeholders, not just shareholders, some called it socialism, he noted. A year later, “the Business Roundtable announced something very much in the spirit of what Elizabeth Warren said.”
Some executives express the hope that her plans are so disruptive she would need to water them down significantly. A fracking ban “would decimate our industry,” said Scott Sheffield, CEO of Pioneer Natural Resources Co., one of the largest U.S. shale companies. “We understand candidates for the presidential nomination often run to the extremes during the campaign and moderate their positions once they are responsible for governing.”
Still, there is no sign of such moderation from Ms. Warren, and political analysts warn not to expect any: Presidential candidates of late, including Donald Trump, have governed much as they campaigned.
By arguing that the growth of corporate power over the last 35 years is at the root of many problems in the U.S., she would make the place of business in society a central theme of the election.
Ms. Warren, in laying out her case, has said she is “a capitalist to my bones,” whereas fellow candidate Sen. Bernie Sanders calls himself a “democratic socialist.”
“I love what markets can do, I love what functioning economies can do. They are what make us rich, they are what create opportunity,” Ms. Warren said on CNBC last year. “But only fair markets, markets with rules. Markets without rules is about the rich take it all, it’s about the powerful get all of it. And that’s what’s gone wrong in America.”
Supporters say her proposals wouldn’t displace capitalism but align it with the what prevailed in the 1950s and 1960s and still does in many other Western countries.
Ms. Warren would impose a 2% to 3% tax on wealth above $50 million, repeal President Trump’s tax cuts for corporations and the wealthy, impose a new 7% tax on big company profits and a 14.8% tax on incomes above $250,000 to finance expanded Social Security benefits.
Many economists say high tax rates discourage investment and work, and thus slow economic growth. Gabriel Zucman, a professor of economics at the University of California, Berkeley who advised Ms. Warren on the wealth tax, said it depends on how the money is spent. “If it’s spent on child care, and that increases women’s labor force participation, then you get an increase in income for part of the population.” He noted the wealthy paid 91% rates on incomes and 77% on estates in the 1950s and 1960s and “there’s no evidence it killed innovation or growth.”
Mark Zandi, economist at Moody’s Analytics, wrote in a series of reports that the taxes required to pay for Ms. Warren’s proposals would damp investment and work by the wealthy, but that effect would also be more than offset by increased spending by lower-income people, such as child-care workers.
Supporters note almost every advanced capitalist economy has single-payer health care, and in Germany, big companies have worker representatives on their boards. “It has not killed German capitalism,” said Mr. Zucman. “They have some pretty strong corporations.”
If each Warren proposal has some precedent in U.S. or foreign experience, in its totality her program would be a sharp break with capitalism as American companies know it.
A senior executive at a Washington-based trade group who works closely with top CEOs said of the distinction often drawn between Ms. Warren’s capitalism and Mr. Sanders’ socialism: “I don’t know if business is buying that distinction. From a policy standpoint there doesn’t seem to be a great deal of difference.” (Mr. Sanders sought the nomination in 2016 but unlike Ms. Warren now, never led the Real Clear Politics polling average or online prediction markets.)
A common refrain among business is that Ms. Warren seems to thrive on attacking them, indeed considers it part of her brand. She retweets articles about their criticism with: “I approve this message.”
The rancor is most acute among financiers Ms. Warren regularly casts as villains, even after a decade of postcrisis reforms that have made banks safer, less profitable and their treatment of consumers more tightly regulated. She called her capital-gains-tax proposal, introduced this summer, the Stop Wall Street Looting Act. Some still stew over her blocking investment banker Antonio Weiss from a Treasury job under Mr. Obama in 2015, despite his Democratic credentials, because he worked on deals that moved some companies’ domiciles abroad.
Few, however, will say so publicly, fearful of the damage she can do to their companies and share prices. Two weeks ago, she knocked 3% off the shares of the two big bond-rating agencies by challenging the impartiality of their ratings in a letter to regulators. When the chief executive of UnitedHealth Group Inc., parent of the country’s largest health insurer, briefly addressed the impact of Medicare for All in an earnings call, it was blamed for driving down the entire sector’s share prices.
UnitedHealth says it “welcomes the renewed national discussion on how to achieve universal coverage.”
In July, Facebook Inc. CEO Mark Zuckerberg, referring to Ms. Warren’s plan to break up Facebook, said in remarks to employees reported by The Verge, a technology-news site: “If she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge,” adding that “at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”
Ms. Warren shot back on Twitter that Facebook has “a lot of power—and [faces] little competition or accountability.”
Last week, Mr. Zuckerberg held another employee Q&A, which was publicly livestreamed. Asked about Ms. Warren’s plans and how Facebook’s platform would remain unbiased toward her, he joked he would “try not to antagonize her further,” then added employees needed to be neutral and empathetic to a wide range of opinions. “The value that we care about is giving people a voice and allowing people to express themselves,” he said. “We obviously try not to be biased.”
The consensus among business leaders is that few of Ms. Warren’s big initiatives will be enacted, because she will tack toward the center if she secures the nomination or the White House, or because Congress and the courts won’t let her. An antitrust lawsuit against a big tech company would take a decade or longer and probably fail, Barclays analysts said in a July note.
Medicare for All “would destroy” private insurers, said Matthew Borsch, an analyst with BMO Capital Markets. But, he said, an executive of a major health insurer, in a recent private meeting, put the odds of such a plan passing at “10,000 to one.”
Many business leaders have no problem with Ms. Warren’s goals, but do with the speed and means by which she means to reach them. Minneapolis-based electric utility Xcel Energy, which serves eight states, in December pledged to slash its carbon emissions 80% by 2030 and 100% 2050. That’s not good enough for Ms. Warren, who has targeted 100% by 2035.
The problem, said CEO Ben Fowke, is that getting from 80% to 100% depends on as-yet-unproven advances in storage, carbon capture, and nuclear and hydrogen generation. Ms. Warren “would set up some unrealistic expectations.”
Automobile manufacturers are rolling out electric models, but none has yet found a way to make such a car affordable to mainstream consumers and profitable. “The current market is 1% electric vehicles. All of those, 100%, are sold at a loss. The industry isn’t here as a non-profit,” said one auto executive. The economics will improve, yet Ms. Warren’s plan to make all new cars emissions-free by 2030 “is, simply put, preposterous.”
The Trump administration is already mulling action on drug prices. Ms. Warren would go much further, letting Medicare negotiate prices with suppliers, permitting imports of cheaper foreign medicines and having the federal government manufacture scarce generics.
Ron Cohen, CEO of biotech drugmaker Acorda Therapeutics said there are legitimate concerns about drug costs and some price increases have been excessive. But her proposals won’t work, he said: Patients could lose access to vital drugs if Medicare and manufacturers can’t agree on a price, and it would be more efficient for the federal government to offer existing manufacturers incentives such as tax breaks to make scarce generics.
Ms. Warren’s sympathizers aren’t surprised by the blowback. They see big-company CEOs as preoccupied with their own welfare rather than that of the economy as a whole. Small banks, they argue, would benefit from breaking up big banks, and startup technology companies would benefit from breaking the grip of big tech companies on internet search, social media and e-commerce.
“Breaking up big tech is pro-growth and pro-innovation,” said Bharat Ramamurti, who heads Ms. Warren’s economic policy team. “In the 90s, Microsoft was threatening to corner the internet via Internet Explorer and Windows, and federal government antitrust action helped pave the way for companies like Google and Facebook to emerge in the first place. And now Google and Facebook dominate that space, and smaller tech companies are run out of business or snapped up—undermining innovation and dynamism.”
Some private analysts agree: “If Warren does break up the big tech giants, we will see more competitors and innovation,” said Jonathan Tepper, head of a financial markets advisory firm Variant Perception, who has been critical of the companies. “The telecoms and tech boom happened after AT&T no longer had a stranglehold on U.S. telecoms. Likewise, breaking IBM’s hold of hardware and software led to the software boom of the 1980s and 1990s.”
Ms. Warren does draw business support, in particular in Silicon Valley, because some agree with her plans for business, don’t think they’ll happen or simply consider the rest of her agenda more important. Venture capitalist and liberal donor Chris Sacca called her wealth tax “*extremely* and *radically*... reasonable” on Twitter.
In June, venture capitalist and former Facebook executive Chamath Palihapitiya tweeted: “I don’t agree with many of her proposals but I donated to Elizabeth Warren because SHE IS THE ONLY MAJOR CANDIDATE WITH STUFF WRITTEN DOWN.” In an email, Mr. Palihapitiya predicted big tech wouldn’t ultimately be one of the issues Ms. Warren prioritizes.
In response to concerns that phasing out fossil fuels would kill jobs, Ms. Warren has said her green energy and climate adaptation plans will create millions of even better paying jobs.
Businesses have a history of adapting to, and ultimately profiting from, expanded government. Accountants vehemently opposed being regulated under the 2002 Sarbanes-Oxley Act, then made a fortune advising companies on the law’s provisions, notes one former Democratic staffer who worked on the law.
Some health-insurance executives hope Ms. Warren’s push for Medicare for All will fall short and, to win over moderate legislators, she will instead expand coverage in a way that would bring them more customers—as Mr. Obama’s Affordable Care Act did.
And for many business leaders, Mr. Trump, given his attacks on free trade, immigration and companies that cross him, isn’t an overly appetizing alternative. Thus, uneasy as they at the prospect of a Warren presidency, few would act actively work to re-elect Mr. Trump, the Washington trade executive speculated.
Elizabeth Warren promises to break that mold. The Massachusetts senator, who has moved to the front ranks of the field, talks of remaking capitalism from the ground up. As president, she would drastically cut back the size and influence of big business, push private companies from parts of the economy altogether, and shift power to government and to labor.
Businesses are meeting the rising prospect of a Warren presidency with a combination of concern, skepticism and, for a few, a sense of opportunity.
Companies are used to Democrats criticizing business, whether John Kerry, the 2004 nominee, for outsourcing jobs or President Obama, for causing the financial crisis. But no front-runner has issued so comprehensive an indictment as Ms. Warren, who has blamed business for, among other things stagnant wages, high student debt, global warming, gun violence, the prison population, high medical bills, and the shortage of affordable housing and child care.
And no front-runner has proposed such sweeping changes to how businesses operate. A President Warren would seek to regulate big tech companies as utilities, break up big banks and split them from securities dealers, ban fracking of oil and gas, phase out carbon emission from buildings, cars and power plants in eight to 15 years, require big companies to appoint worker representatives to at least 40% of board seats, ban private health insurance and, effectively, for-profit college, and negotiate down drug prices.
Her policies would directly affect companies with sales of nearly $5 trillion and stock-market value of more than $8 trillion, a third of the S&P 500 stock index. Taxes on the wealthy and corporations would rise sharply.
That, in turn, has led to nervousness among some executives. “She could create an environment where it is next to impossible to function” for health insurers, said Vicky Gregg, a former chief executive of BlueCross BlueShield of Tennessee and now partner in a private-equity firm. “There’s no question that keeps you up at night if you’re a health-plan executive.”
Others, particularly in Silicon Valley, are enthusiastic supporters of Ms. Warren despite, or for some because of, her plans to break up big tech companies. Some economists predict her plans could boost growth and that business warnings about the harm of her policies should be taken with a grain of salt.
“Businesses have cried wolf far too many times for that to be taken at face value during a presidential campaign,” said Austan Goolsbee, a University of Chicago economist who served under Mr. Obama.
When Ms. Warren first proposed companies should be responsible to all stakeholders, not just shareholders, some called it socialism, he noted. A year later, “the Business Roundtable announced something very much in the spirit of what Elizabeth Warren said.”
Some executives express the hope that her plans are so disruptive she would need to water them down significantly. A fracking ban “would decimate our industry,” said Scott Sheffield, CEO of Pioneer Natural Resources Co., one of the largest U.S. shale companies. “We understand candidates for the presidential nomination often run to the extremes during the campaign and moderate their positions once they are responsible for governing.”
Still, there is no sign of such moderation from Ms. Warren, and political analysts warn not to expect any: Presidential candidates of late, including Donald Trump, have governed much as they campaigned.
By arguing that the growth of corporate power over the last 35 years is at the root of many problems in the U.S., she would make the place of business in society a central theme of the election.
Ms. Warren, in laying out her case, has said she is “a capitalist to my bones,” whereas fellow candidate Sen. Bernie Sanders calls himself a “democratic socialist.”
“I love what markets can do, I love what functioning economies can do. They are what make us rich, they are what create opportunity,” Ms. Warren said on CNBC last year. “But only fair markets, markets with rules. Markets without rules is about the rich take it all, it’s about the powerful get all of it. And that’s what’s gone wrong in America.”
Supporters say her proposals wouldn’t displace capitalism but align it with the what prevailed in the 1950s and 1960s and still does in many other Western countries.
Ms. Warren would impose a 2% to 3% tax on wealth above $50 million, repeal President Trump’s tax cuts for corporations and the wealthy, impose a new 7% tax on big company profits and a 14.8% tax on incomes above $250,000 to finance expanded Social Security benefits.
Many economists say high tax rates discourage investment and work, and thus slow economic growth. Gabriel Zucman, a professor of economics at the University of California, Berkeley who advised Ms. Warren on the wealth tax, said it depends on how the money is spent. “If it’s spent on child care, and that increases women’s labor force participation, then you get an increase in income for part of the population.” He noted the wealthy paid 91% rates on incomes and 77% on estates in the 1950s and 1960s and “there’s no evidence it killed innovation or growth.”
Mark Zandi, economist at Moody’s Analytics, wrote in a series of reports that the taxes required to pay for Ms. Warren’s proposals would damp investment and work by the wealthy, but that effect would also be more than offset by increased spending by lower-income people, such as child-care workers.
Supporters note almost every advanced capitalist economy has single-payer health care, and in Germany, big companies have worker representatives on their boards. “It has not killed German capitalism,” said Mr. Zucman. “They have some pretty strong corporations.”
If each Warren proposal has some precedent in U.S. or foreign experience, in its totality her program would be a sharp break with capitalism as American companies know it.
A senior executive at a Washington-based trade group who works closely with top CEOs said of the distinction often drawn between Ms. Warren’s capitalism and Mr. Sanders’ socialism: “I don’t know if business is buying that distinction. From a policy standpoint there doesn’t seem to be a great deal of difference.” (Mr. Sanders sought the nomination in 2016 but unlike Ms. Warren now, never led the Real Clear Politics polling average or online prediction markets.)
A common refrain among business is that Ms. Warren seems to thrive on attacking them, indeed considers it part of her brand. She retweets articles about their criticism with: “I approve this message.”
The rancor is most acute among financiers Ms. Warren regularly casts as villains, even after a decade of postcrisis reforms that have made banks safer, less profitable and their treatment of consumers more tightly regulated. She called her capital-gains-tax proposal, introduced this summer, the Stop Wall Street Looting Act. Some still stew over her blocking investment banker Antonio Weiss from a Treasury job under Mr. Obama in 2015, despite his Democratic credentials, because he worked on deals that moved some companies’ domiciles abroad.
Few, however, will say so publicly, fearful of the damage she can do to their companies and share prices. Two weeks ago, she knocked 3% off the shares of the two big bond-rating agencies by challenging the impartiality of their ratings in a letter to regulators. When the chief executive of UnitedHealth Group Inc., parent of the country’s largest health insurer, briefly addressed the impact of Medicare for All in an earnings call, it was blamed for driving down the entire sector’s share prices.
UnitedHealth says it “welcomes the renewed national discussion on how to achieve universal coverage.”
In July, Facebook Inc. CEO Mark Zuckerberg, referring to Ms. Warren’s plan to break up Facebook, said in remarks to employees reported by The Verge, a technology-news site: “If she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge,” adding that “at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”
Ms. Warren shot back on Twitter that Facebook has “a lot of power—and [faces] little competition or accountability.”
Last week, Mr. Zuckerberg held another employee Q&A, which was publicly livestreamed. Asked about Ms. Warren’s plans and how Facebook’s platform would remain unbiased toward her, he joked he would “try not to antagonize her further,” then added employees needed to be neutral and empathetic to a wide range of opinions. “The value that we care about is giving people a voice and allowing people to express themselves,” he said. “We obviously try not to be biased.”
The consensus among business leaders is that few of Ms. Warren’s big initiatives will be enacted, because she will tack toward the center if she secures the nomination or the White House, or because Congress and the courts won’t let her. An antitrust lawsuit against a big tech company would take a decade or longer and probably fail, Barclays analysts said in a July note.
Medicare for All “would destroy” private insurers, said Matthew Borsch, an analyst with BMO Capital Markets. But, he said, an executive of a major health insurer, in a recent private meeting, put the odds of such a plan passing at “10,000 to one.”
Many business leaders have no problem with Ms. Warren’s goals, but do with the speed and means by which she means to reach them. Minneapolis-based electric utility Xcel Energy, which serves eight states, in December pledged to slash its carbon emissions 80% by 2030 and 100% 2050. That’s not good enough for Ms. Warren, who has targeted 100% by 2035.
The problem, said CEO Ben Fowke, is that getting from 80% to 100% depends on as-yet-unproven advances in storage, carbon capture, and nuclear and hydrogen generation. Ms. Warren “would set up some unrealistic expectations.”
Automobile manufacturers are rolling out electric models, but none has yet found a way to make such a car affordable to mainstream consumers and profitable. “The current market is 1% electric vehicles. All of those, 100%, are sold at a loss. The industry isn’t here as a non-profit,” said one auto executive. The economics will improve, yet Ms. Warren’s plan to make all new cars emissions-free by 2030 “is, simply put, preposterous.”
The Trump administration is already mulling action on drug prices. Ms. Warren would go much further, letting Medicare negotiate prices with suppliers, permitting imports of cheaper foreign medicines and having the federal government manufacture scarce generics.
Ron Cohen, CEO of biotech drugmaker Acorda Therapeutics said there are legitimate concerns about drug costs and some price increases have been excessive. But her proposals won’t work, he said: Patients could lose access to vital drugs if Medicare and manufacturers can’t agree on a price, and it would be more efficient for the federal government to offer existing manufacturers incentives such as tax breaks to make scarce generics.
Ms. Warren’s sympathizers aren’t surprised by the blowback. They see big-company CEOs as preoccupied with their own welfare rather than that of the economy as a whole. Small banks, they argue, would benefit from breaking up big banks, and startup technology companies would benefit from breaking the grip of big tech companies on internet search, social media and e-commerce.
“Breaking up big tech is pro-growth and pro-innovation,” said Bharat Ramamurti, who heads Ms. Warren’s economic policy team. “In the 90s, Microsoft was threatening to corner the internet via Internet Explorer and Windows, and federal government antitrust action helped pave the way for companies like Google and Facebook to emerge in the first place. And now Google and Facebook dominate that space, and smaller tech companies are run out of business or snapped up—undermining innovation and dynamism.”
Some private analysts agree: “If Warren does break up the big tech giants, we will see more competitors and innovation,” said Jonathan Tepper, head of a financial markets advisory firm Variant Perception, who has been critical of the companies. “The telecoms and tech boom happened after AT&T no longer had a stranglehold on U.S. telecoms. Likewise, breaking IBM’s hold of hardware and software led to the software boom of the 1980s and 1990s.”
Ms. Warren does draw business support, in particular in Silicon Valley, because some agree with her plans for business, don’t think they’ll happen or simply consider the rest of her agenda more important. Venture capitalist and liberal donor Chris Sacca called her wealth tax “*extremely* and *radically*... reasonable” on Twitter.
In June, venture capitalist and former Facebook executive Chamath Palihapitiya tweeted: “I don’t agree with many of her proposals but I donated to Elizabeth Warren because SHE IS THE ONLY MAJOR CANDIDATE WITH STUFF WRITTEN DOWN.” In an email, Mr. Palihapitiya predicted big tech wouldn’t ultimately be one of the issues Ms. Warren prioritizes.
In response to concerns that phasing out fossil fuels would kill jobs, Ms. Warren has said her green energy and climate adaptation plans will create millions of even better paying jobs.
Businesses have a history of adapting to, and ultimately profiting from, expanded government. Accountants vehemently opposed being regulated under the 2002 Sarbanes-Oxley Act, then made a fortune advising companies on the law’s provisions, notes one former Democratic staffer who worked on the law.
Some health-insurance executives hope Ms. Warren’s push for Medicare for All will fall short and, to win over moderate legislators, she will instead expand coverage in a way that would bring them more customers—as Mr. Obama’s Affordable Care Act did.
And for many business leaders, Mr. Trump, given his attacks on free trade, immigration and companies that cross him, isn’t an overly appetizing alternative. Thus, uneasy as they at the prospect of a Warren presidency, few would act actively work to re-elect Mr. Trump, the Washington trade executive speculated.
Tuesday, October 01, 2019
TMT protest
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