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Amazon Puts Its Own “Brands” First Above Better-Rated Products

The online giant gives a leg up to hundreds of house brand and exclusive products that most people don’t know are connected to Amazon

It took Robert Gomez about five months to get his Kaffe coffee grinder to the big leagues in e-commerce: among the first three search results for “coffee grinder” on Amazon.com.

Gomez, founder of Atlanta-based consumer goods startup 4Q Brands, said he obsessively refined his photos and description, amassed reviews from happy customers, and paid Amazon $40,000 a month on advertising to boost sales, one of the elements Amazon tells sellers will increase search ranking.

Then Amazon introduced a competitor from house brand Amazon Basics and another from a brand that sells exclusively on Amazon, DR Mills.

“They ranked well right away,” Gomez said, each of them appearing among the top-three results for “coffee grinder” searches immediately. The reason, he said, was clear: “Their search ranking is high because they’re an Amazon brand.”

An investigation by The Markup found that Amazon places products from its house brands and products exclusive to the site ahead of those from competitors—even competitors with higher customer ratings and more sales, judging from the volume of reviews.

We found that knowing only whether a product was an Amazon brand or exclusive could predict in seven out of every 10 cases whether Amazon would place it first in search results. These listings are not visibly marked as “sponsored” and they are part of a grid that Amazon identifies as “search results” in the site’s source code. (We only analyzed products in that grid, ignoring modules that are strictly for advertising.)  

When we analyzed star ratings and number of reviews, neither could predict much better than a coin toss which product Amazon placed first in search results. 

Amazon told Congress in 2019 that its search results do not take into account whether a product is an Amazon-owned brand.

Sellers say it doesn’t seem that way to them. Gomez said Amazon’s brands have “unfair advantages” that make it harder for small merchants like him to compete” on its open marketplace. “Who bears the cost are those entrepreneurs and small businesses that don’t have the means to fight.”

The Markup found Amazon placed its Happy Belly Cinnamon Crunch cereal, with four stars and 1,010 reviews, in the number one spot ahead of cereals with better and more reviews including Cap’n Crunch (five stars, 14,069 reviews), Honey Bunches of Oats (five stars, 5,205 reviews), and Honey Nut Cheerios (five stars, 11,702 reviews). A vacuum cleaner from Amazon’s exclusive Noisz brand was placed on top, ahead of models from Bissell, Eureka, and Hoover with higher ratings and more reviews. And the Amazon-exclusive Concept 3sneaker from Skechers placed number one, four spots ahead of a similar but not exclusive to Amazon Skechers sneaker with the same star rating but 77 times more reviews.

A former Amazon employee told The Markup that the company used to give its new house brand products an unearned place at the top of search rankings when they first launched. He said the practice has since stopped.

However, we found that Amazon brands and exclusive products overall received an outsized portion of the top spot on search results, one that was far out of line with their proportion of the sample.

That’s not what shoppers expect.

In a national survey we commissioned from YouGov, only 17 percent of respondents said they assumed Amazon put its own products first. Half said they expected the first nonsponsored product on Amazon’s search results page to be the cheapest, highest rated, or bestselling.

By giving its brands top billing, Amazon is giving itself a significant leg up in sales. The first three items on the search results page get 64 percent of clicks, according to one ex-Amazon-employee-turned-consultant.

In a short, written statement, Amazon spokesperson Nell Rona said that the company does not favor its brands in search results and declined to answer any of the dozens of specific questions posed by The Markup.

She said the company identified its brands to shoppers by adding “Amazon brand” to the list of product features on the product page and sometimes to the listing title as well. We only found this to be the case in 23 percent of products in our sample that were Amazon-owned brands. She said brands that are exclusive to Amazon would not carry the disclosure because they are not owned by the company.

Invisible Tags

A signal, invisible to the public but coded into the listings, suggests that most of the Amazon brand and exclusive products that were listed first were ads. In 87 percent of cases, the listing’s source code identified them as “sponsored”—though that label isn’t shown to the public. Instead, Amazon labels the products “featured from our brands.”

Rona, the Amazon spokesperson, said the company considers “featured from our brands” listings “merchandising placements” and not “search results,” despite their presence in the search results grid. She also said they are not ads, despite the “sponsored” label in the source code. Rona said they are “clearly labeled to distinguish them from search results” but did not respond to questions about whether the company believes such disclosures were clear enough under Federal Trade Commission requirements.

Mary Engle, who retired as the FTC advertising practices associate director last year, said that what Amazon calls “merchandising” is actually advertising.

“Amazon’s placement of its own products on its own site is advertising, whether or not money changes hands,” she said. She said it would require an investigation to determine whether “featured from our brands” is sufficient disclosure under the FTC’s rules. 

Bill Baer, a former assistant attorney general in charge of the antitrust division of the U.S. Department of Justice and former director of the Bureau of Competition at the FTC, said if consumers expect Amazon’s product search results to be neutral, but they are not, and the site is essentially a monopoly, that could be a violation of the FTC Act of 1914, which prohibits unfair competition and unfair or deceptive practices in commerce, or the U.S. Sherman Antirust Act, which prohibits monopolies from using their market power to harm competition.

“If basically you’ve got somebody with market power that is restraining competition both in terms of site access or where things appear on the site,” he said, “that is potentially problematic.”

Amazon’s online marketplace garners more than five times more sales than its closest online competitor, Walmart, which also allows third-party sales.

Congress is considering a package of anti-monopoly bills aimed at big tech, including the Ending Platform Monopolies Act, which would make the practice of platforms giving their brands a leg up explicitly illegal.

Amazon refers to its own brands and brands developed by others that sell exclusively on Amazon as “our brands.” They peddle everything from snack chips and vitamins to fashion and furniture.

Using public records from the U.S. Patent and Trademark Office and Amazon’s own statements, we identified more than 150 brands registered by or owned by Amazon. These include both brands with an obvious connection, such as Amazon Basics and Amazon Commercial, and those that are generally known to be owned by the company, including Kindle and Zappos. But they also include dozens more, such as Happy Belly, Daily Ritual, and Society New York, where the connection to the company is not obvious. Those are in addition to the estimated hundreds of third-party brands that are exclusive to the site.

We analyzed search results on Amazon for 3,492 popular internet product queries in January 2021 and looked closely at what Amazon placed in the first spot. In 60 percent of cases, Amazon sold this spot to an advertiser and added a public label indicating the listing was “sponsored.” Of the rest, Amazon gave half to its own brands and brands exclusive to the site, and the other half to competing brands. But Amazon brands and exclusives made up only 6 percent of all products in the sample, and competitors made up 77 percent. In short, Amazon was hogging the top spot.

In more than a quarter of searches in which Amazon gave its brands the top spot, it placed its products above competitors that had both better ratings and more reviews than the Amazon brand or exclusive product.

‘They Would Shut Us Down’

Sellers said there’s no mistaking the effect on sales of Amazon’s choices in search results.

“If the customers are not seeing [our products] in the top five offers, then it makes it really hard for us to reach customers,” said Gabriela Mekler, a Miami mom who co-founded the organizational products company Mumi in 2014.

Mumi’s top product—a set of color-coded packing cubes—struggles for visibility on Amazon, even after more than two years on the site. She said the coronavirus pandemic decimated her sales—they dropped by more than 68 percent—costing the company a hard-won “Amazon’s Choice” badge on its packing cubes.

Mumi has not placed on the first page of our search results for “packing cubes” for months. At the time of this writing, Amazon Basics took up eight spots on the first page; one was labeled “featured from our brands.” None were visibly marked “sponsored.”

“Their product will always show before yours,” Mekler said.

One Mumi product has still been selling well despite the pandemic, she said: reusable pill pouches. For now, there is no Amazon Basics pill pouch, and Mekler hopes there won’t be anytime soon.

“We’re a small company,” she said. “They would shut us down.”

The National Association of Wholesaler-Distributors, which represents more than 30,000 distributors, submitted a letter to members of Congress in July 2020, complaining that Amazon “abuses its position” to give preferential treatment to its house brands.

But when The Markup asked to speak to some of the sellers the group had quoted anonymously, NAW’s vice president of government relations, Blake Adami, demurred.

“Our members are still very hesitant to speak out against Amazon for fear of retaliation,” he said in an email, “even anonymously.”

Many sellers whose products we found were placed below Amazon products with fewer sales or ratings also declined a reporter’s request to be interviewed for this article, saying they were concerned it would negatively affect their livelihoods.

“Everybody’s so scared of Amazon,” said Paul Rafelson, executive director of the Online Merchants Guild, which represents Amazon sellers. “Their whole livelihood relies on them.”

‘This Was a Knockoff’

Some of Amazon’s competitors have accused the company of knocking off their products to sell under its house brands.

Williams Sonoma settled a lawsuit that included the claim that Amazon was copying West Elm furniture and selling it under the Amazon house brand Rivet. Allbirds co-CEO Joey Zwillinger wrote an open letter to Jeff Bezos when Amazon’s 206 Collective brand copied his company’s wool sneaker, urging Amazon to adopt Allbirds’ sustainability practices in addition to its design.

In March, Amazon Basics started selling the Everyday Sling, a camera bag with a similar design, the same name but a much lower price than a product from Peak Design.

“It wasn’t like they took some styling cues from it. This was a knockoff,” CEO Peter Dering said in an interview. The smaller company produced a parody video that now has 4.6 million views on YouTube. Within hours, Amazon changed the product’s name.

Dering said he wasn’t worried about losing sales because Peak Design mainly targets wholesalers and customers who want a high-end brand. Still, he said he found the move “highly distasteful.”

Rona, the Amazon spokesperson, said the company “did not infringe” on Allbirds’ or Peak Design’s “design rights” and “strictly prohibit[s] our employees from using nonpublic, seller-specific data to determine which store brand products to launch.”

Hard to Spot

Identifying all of Amazon’s brands and brand exclusives to the site for this investigation was cumbersome. The company does not provide a complete list. The Markup’s reporting team used various filters on the site, reviewed the U.S. Patent and Trademark Office records, and reviewed Amazon bestseller lists—but even then we likely missed some.

Consumers would have an even harder time. We found Amazon does not consistently label its brands and exclusives.

Of the products in our sample that Amazon considered “our brands,” about two in five were not labeled as such in search results nor did they carry a name that many people would understand was connected to the company, such as Amazon Basics, Kindle, or Whole Foods.

Inconsistent labeling, combined with an almost endless stream of its own private brands, leaves customers in the dark to decide whether Amazon highly ranked a particular product because it was a good buy or because it benefited the company’s bottom line.

Nine in 10 respondents to the national survey The Markup commissioned in July didn’t know that Amazon’s highest-selling house brands, apart from Amazon Basics, were owned by the company.

Even there, 24 percent of respondents could not identify Amazon Basics as an Amazon brand, and half didn’t know Amazon owned Whole Foods.

Alex Harman, competition policy advocate at Public Citizen who has studied Amazon’s marketplace, said that to him, the strategy of creating a stream of brands without a clear affiliation to Amazon feels “deceptive.”

Large brick-and-mortar retailers also have house brands. Costco has Kirkland Signature. Target has Up&Up, among others. Historically, he said, when large stores create brands they have been clearly affiliated with the store.

And Amazon’s search results are different from a store shelf.

“Unlike a retail store where you see everything on the shelf, the platform may be in a position to elevate its goods in a way that is harder to do in a retail outlet,” said Baer, the former FTC official and assistant attorney general at the Justice Department.

By creating more than a hundred trademarked brands, most without an obvious connection to the company, Amazon can preserve its reputation if one of its homegrown products flops. This happened in 2015 when customer reviews for its newly launched Amazon Elements diapers included complaints about leaks and “sagginess.” Amazon pulled the products after just seven weeks to make “design improvements.”

Stacy Mitchell, co-director of the small business advocacy group Institute for Local Self-Reliance, and a frequent Amazon critic, said that as Amazon’s brands squeeze competitors, those competitors have less money to spend on innovation—and consumers lose.

“Consumers don’t even know what’s missing,” she said.

Case in point: Brandon Fuhrmann, who runs the New York Amazon Seller Meetup. He was considering expanding his kitchenware brand into a new type of dishware. While checking trademark registrations and U.S. import logs for sellers with similar products, he realized that the majority of his competition would come from Amazon brands.

“When that happened, we realized we couldn’t even compete,” he said. He decided not to launch the product.

Rise of Amazon Brands

Amazon has continually set its sights on dizzying growth.

It launched in 1995, with the goal of becoming “Earth’s Biggest Bookstore.” Four years later, it declared its intention to become “Earth’s Biggest Selection.”

It’s nearly there: People now spend more money on Amazon than at Walmart, making it the world’s largest retail seller outside of China.

To reach this point, it took a page from rival eBay’s playbook, inviting individuals and business owners to list rare, used, and collectible items—which quickly transitioned to third parties selling mainstream, new wares on Amazon.

In 2003, Jason Boyce got a call from Amazon asking him to list his company’s basketball products on the nascent marketplace.

“We’re like, what are you talking about? You guys sell books,” he said. “What do you mean you’re selling sporting goods?”

Boyce took the plunge and his company’s basketball sales took off on Amazon.

By 2018, third-party sellers like Boyce were responsible for 58 percent of physical goods sales on Amazon. They helped boost Amazon’s North American sales by more than an order of magnitude, from $24.5 billion in 2009 to $386.1 billion in 2018.

The volume created fortunes for small businesses across the world. It also created a deep reliance on Amazon. A 2021 report by JungleScout, which provides software for Amazon sellers, found that Amazon was the only source of income for 22 percent of Amazon’s third-party sellers.

“Within two years of getting on Amazon, most of my clients, whether they want to or not, it becomes their single biggest sales channel,” said James Thomson, who was a manager at Amazon from 2007 to 2012 and now works at the e-commerce consulting firm Buy Box Experts.

And these new third-party sellers had lots of competition, eventually from Amazon itself.

Boyce said Amazon started undercutting his business, selling the same sporting goods—Spalding basketballs, for example—for less.

Unable to compete with Amazon on price for brand-name products, Boyce and his brothers launched their own brand, Harvil, in 2007, to sell sporting goods and home recreation equipment on Amazon. They figured Amazon couldn’t undercut their prices if he and his brothers owned the brand.

They had no idea Amazon was also beginning to launch its own brands and to enter into deals with companies to develop brands exclusive to the platform.

Among the first Amazon brands was Pinzon (a likely nod to the first conquistador to stumble across the Amazon River), which Amazon registered as a trademark in 2007 to sell bedding. Then came Denali for tools, and Amazon Basics for a slew of products, including household appliances and office supplies.

Sometime in 2017, Boyce was searching keywords related to his products on Amazon—”bocce ball,” “air hockey table”—when he noticed a new brand, Rally and Roar, peddling very similar products to his own. They showed up at the top of search results.

Rally and Roar is exclusive to Amazon, labeled as “our brands.” The company was moving in on his territory, again.

The speed of Amazon’s expansion of its own brands has been accelerating, according to several e-commerce and retail research firms. TJI Research counted 598 Amazon-exclusive brands in 2019. Coresight Research said Amazon brand products on the site tripled in the two years between 2018 and 2020 alone.

Amazon invites companies and individuals to join its “our brands” family through programs like Amazon Accelerator, which promises increased exposure for products sold exclusively on Amazon in exchange for extra fees, and sets a sales price if Amazon chooses to later buy the brand.

Boyce and his brothers had already been talking about getting off Amazon’s platform when they noticed Rally and Roar pop up. That settled it.

“We’re like, we’re not going to sit around and wait for Amazon to knock off the rest of our private-label products as well,” he said.

They sold the business.

A Leg Up

For years, Amazon gave items from its own brands multiple advantages when they first launched, said JT Meng, a former house brand manager at Amazon—though he said the practice has since stopped.

Employees manually applied the Amazon’s Choice label to a new Amazon brand product, even if it didn’t meet the usual criteria, he said.

And instead of starting from scratch in search results with zero reviews, sales, and stars, Meng said employees used a tactic called “search seeding” for new products, “cloning” a competing product’s search ranking and allowing the new Amazon product to appear immediately below that competitor in search results.

“We would use that for all of our products from the get-go for the first six months or longer,” he said.

Meng worked on the launch for Amazon Elements baby wipes, which he said were seeded against similar products from Huggies, Pampers, and others.

Sales spiked so quickly that his team had to stop promoting the Amazon Elements wipes so they didn’t take too much market share, he said.

Once a new house brand product was established, Meng said employees would turn off search seeding. “Without fail, your product would drop in ranking,” he said, “but the hope was that it would drop a small amount.”

By the time Meng left Amazon in 2016, he said search seeding and adding the Amazon’s Choice label to new Amazon brand products were no longer allowed.

Sellers who do try to compete with Amazon brands today said they feel compelled to pay for sponsored listings in order to get a higher result for nonsponsored listings on Amazon. On its Seller Central site, Amazon underlines to sellers how important sales are, stating that “better-selling products tend to list towards the beginning of search” and that as sales increase “so does your placement.”

“You can’t not advertise anymore,” said Boyce, who after selling his sporting goods line founded a consulting firm, Avenue7Media, which advises companies and individuals who want to sell on Amazon.

“You turn off the ads and you lose organic rank within days,” Boyce said. “It’s pay to play.”

Lots of companies are paying.

We found that inside the search results alone, 17 percent of products were paid listings. That doesn’t include entire rows of sponsored products that appear as special modules on about a third of search result pages. (Including those would roughly double the ad percentage on the first results page.)

Amazon is the third-largest seller of online advertising in the U.S., after Google and Facebook, and is growing fast. “Other” revenue, which the company says “primarily includes sales of advertising services,” jumped 52 percent from 2019 to 2020, to $21.4 billion a year.

Struggling for Visibility

“If you’re willing to spend a ton of money, you can sell a ton of product,” said Evan Patterson, vice president of business development at California-based Linco, which is one of Boyce’s clients.

The 47-year-old family-owned institution makes casters, the small wheels that attach to office chairs and industrial gear—and has a solid reputation in the offline world for premium products. It competes against a product from Amazon Commercial, among others.

It’s so well known in industrial circles that Linco’s competitors advertise against its name within Amazon’s search results, Patterson said.

Still, Linco hasn’t consistently listed on the first page of search results for “caster wheels,” despite selling on Amazon for years. It will appear on the first page for Patterson, but did not in repeated searches by The Markup.

The only thing that seems to help Linco’s search ranking, Patterson said, is to spend more money for paid listings on Amazon. The company now pays about $10,000 a month for advertising.

“Our search ranking has improved dramatically,” Patterson said.

But it still has a ways to go. When The Markup searched for “caster wheels” at the time of writing, Linco appeared in the middle of the fifth page.

This article was originally published on The Markup by Adrianne Jeffries and Leon Yinand was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license (CC BY-NC-ND 4.0).

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Climate Solutions, News, Observation, Politics

Over 70,000 March in Brussels to Demand Green New Deal, Urgent Climate Action

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“What do we do when we destroy the planet?” asked one demonstrator. “We have nothing else.”

Tens of thousands of people marched through the streets of Brussels on Sunday to demand Belgium’s elected leaders and others from around the world finally dispense with proclamations, broken promises, and half-measures and instead “act” on the climate emergency.

“We need a Belgian Green New Deal and we propose more than 100 concrete solutions to make it happen.”

With U.N. climate conference (COP26) set for next month in Glasgow, the estimated 70,000 or more people who took part in the march offered a dramatic show of force for the nation’s climate movement.

Zanna Vanrenterghem of Greenpeace Belgium told The Brussels Times on Sunday that her government’s climate pledges so far “are not ambitious enough,” but that words are no longer enough. “It is one thing to talk about climate,” she said, “and another to take concrete action.”

Ahead of the march, Vanrenterghem said the message from the Klimaatcoalitie (Climate Coalition), which she co-chairs and that organized the march, was a simple one: “We demand ambitious, solidarity-based and coherent measures. We need a Belgian Green New Deal and we propose more than 100 concrete solutions to make it happen.”

According to the Associated Press:

Thousands of people and 80 organizations took part in the protest, aiming for the biggest such event in the European Union’s capital since the start of the coronavirus pandemic, which stopped the climate movement’s weekly marches in its tracks.

Cyclists, families with children and white-haired demonstrators filled city streets, chanting slogans demanding climate justice and waving banners in English, French and Dutch. One carried a stuffed polar bear on her head, and others were dressed as animals endangered by human-caused climate change.

The crowds was large—with the march often stretching further than the eye could see—and participants each sharing their various reasons for attending. Signs and banners said things like “Destroy the System/Not the Planet”; “Walk the Talk”; and “Protect What You Love.”

Lucien Dewanaga, a marcher who spoke with AP, asked the question: “What do we do when we destroy the planet? We have nothing else. Human beings have to live in this world. And there is only one world.”

According to Vanrenterghem, extreme weather within Belgium and elsewhere in the world over the past year have offered only more reasons for leaders to turn lofty rhetoric into the concrete policies that scientists say are necessary to stave off the worst impacts. 

“The tough climate actions of the past few years have put the climate crisis high on the political agenda,” she said. “Now is the time for politicians to turn their promises into concrete action.”

Originally published on Common Dreams by COMMON DREAMS STAFF and republished under a Creative Commons License (CC BY-NC-ND 3.0).

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Climate Solutions, News, Observation, Politics

A Quarter of All ‘Critical’ US Infrastructure at Risk From Flooding: Report

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“Our nation’s infrastructure is not built to a standard that protects against the level of flood risk we face today, let alone how those risks will grow over the next 30 years as the climate changes,” said one expert.

Underscoring the need to slash greenhouse gas emissions and invest in public goods to better prepare communities across the United States for escalating extreme weather, a new report released Monday finds that one-quarter of the nation’s “critical” infrastructure is already susceptible to flooding that renders it inaccessible, with risks projected to increase in the coming decades.

Described as the first-ever nationwide evaluation of community-level vulnerability to flooding, the report—Infrastructure on the Brink, compiled by the First Street Foundation, a nonprofit research group that specializes in environmental risk assessment—highlights localities where housing, commercial real estate, transportation networks, schools, hospitals, power plants, and other pieces of infrastructure face operational flood risk in 2021.

The analysis also explores how spatial patterns of flood risk are expected to change over the next 30 years, as the fossil fuel-driven climate emergency exacerbates sea-level rise and extreme rainfall events, which pose direct and indirect threats to the safety and well-being of people throughout the U.S.

“It is clear, now more than ever,” the report states, “that the ways and places in which we live are likely to continue to be impacted by our changing environment. One of the most important implications in this development is the vulnerability of our national infrastructure.”

Using a unique national database that contains parcel-level flood risk information—combining hazards, exposure, and vulnerability—as well as over 20,000 flood adaptation measures, the report maps Americans’ current and future flood risks based on their proximity to coasts and flood plains plus the estimated impacts of flood-damaged infrastructure at the broader scales of neighborhoods, zip codes, cities, and counties.

As the authors note, “Individuals whose homes were spared the impact of a particular flood event are increasingly likely to find their local roads, businesses, critical infrastructure, utilities, or emergency services affected.”

The report assesses risk to (1) residential properties; (2) roads; (3) commercial properties; (4) critical infrastructure (airports, fire stations, hospitals, police stations, ports, power stations, superfund/hazardous waste sites, water outfalls, and wastewater treatment facilities); and (5) social infrastructure (government buildings, historic buildings, houses of worship, museums, and schools).

Defining risk as “the unique level of flooding for each infrastructure type relative to operational thresholds,” the report finds:

  • Risk to residential properties is expected to increase by 10% over the next 30 years with 12.4 million properties at risk today (14%) and 13.6 million at risk of flooding in 2051 (16%);
  • Two million miles of road (25%) are at risk today and that is expected to increase to 2.2 million miles of road (26%) over the next 30 years (a 3% increase over the next 30 years);
  • Commercial properties are expected to see a 7% increase in risk of flooding from 2021 to 2051, with 918,540 at risk today (20%) and 984,591 at risk of flooding in 30 years (21%);
  • Currently, 35,776 critical infrastructure facilities are at risk today (25%), increasing to 37,786 facilities by 2051 (26%), a 6% increase in risk; and
  • Compounding that risk, 71,717 pieces of social infrastructure facilities are at risk today (17%), increasing to 77,843 by 2051 (19%), an increase of 9% over that time period.

The report comes in the wake of several highly destructive flooding events that affected various parts of the U.S. this summer, including one in Tennessee in August as well as the inundation of New York City’s subway system in July and again in September during Hurricane Ida—deadly and costly disasters that exposed how ill-prepared the country is to reduce extreme weather-related infrastructure damage and the ensuing consequences.

The new analysis also points to earlier catastrophes, such as Hurricane Sandy, which hit the New York City metropolitan area in 2012 and “flooded hospitals, crippled electrical substations, overwhelmed wastewater treatment centers, and shut down power and water to tens of millions of people.”

“Our nation’s infrastructure is not built to a standard that protects against the level of flood risk we face today, let alone how those risks will grow over the next 30 years as the climate changes,” Matthew Eby, founder and executive director of the First Street Foundation, said in a statement.

“This report highlights the cities and counties whose vital infrastructure are most at risk today and will help inform where investment dollars should flow in order to best mitigate against that risk,” Edy added.

According to the report:

There are significant differences at the county and city level in the amount of risk that exists today and into the future. Most importantly, there are a group of counties and cities that have persistent patterns of vulnerability across multiple dimensions of physical risk from flooding. These areas tend to be in regions with well-established flood risk, such as coastal flood plains along the Gulf and Southeastern coasts of the U.S., but also in less well-known flood zones, such as in the Appalachian Mountain regions of West Virginia and Kentucky.

To that point, 17 of the top 20 counties in the U.S. which are most at risk (85%) are in the states of Louisiana, Florida, West Virginia, and Kentucky. Additionally, the top cities at risk of flooding persistently show up in the states of Louisiana, Florida, Texas, and South Carolina. The analysis further uncovered a high degree of vulnerability in some of the major population centers in the U.S., including New Orleans, Miami, Tampa, Charleston, Chicago, and Los Angeles.

Even as extreme storms and material insecurity become more common and severe—rendering continued inaction far more expensive than prevention—congressional Republicans and a handful of conservative Democratic lawmakers swimming in corporate cash continue to fight against the Build Back Better Act, a President Joe Biden-endorsed proposal to invest trillions in strengthening climate action and expanding the nation’s relatively underdeveloped welfare state.

Opposition to greening the nation’s physical infrastructure and improving its social infrastructure increases disaster vulnerabilities and worsens impacts, particularly in marginalized communities, experts say, although the inverse—simultaneously addressing the intensifying crises of climate and inequality—is also possible.

“The decarbonization question, the infrastructure question, and the inequalities question are the same question,” Daniel Aldana Cohen, assistant professor of sociology at the University of California, Berkeley, tweeted last week. “Only an epic struggle from the left, combining mass organization, mobilization, and technical expertise—across borders—can provide a good answer in the 2020s.”

Originally published on Common Dreams by KENNY STANCIL and republished under a Creative Commons license  (CC BY-NC-ND 3.0).

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Climate Solutions, News, Observation

To Avert ‘Uncontrollable Climate Chaos,’ Scientists Tell Biden to Stop Backing Fossil Fuels

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“When scientists across the U.S. are imploring the president to get the country off fossil fuels, it’s time to listen.”

With an open letter expressing “the utmost alarm about the state of our climate system,” over 330 scientists on Thursday urged President Joe Biden to declare a climate emergency and swiftly put an end to a fossil fuel-based energy system.

“When scientists across the U.S. are imploring the president to get the country off fossil fuels,” said Dr. Shaye Wolf, climate science director at the Center for Biological Diversity, “it’s time to listen.”

The letter—an effort organized by biologist Dr. Sandra Steingraber and climate scientist Dr. Peter Kalmus along with advocacy groups Center for Biological Diversity and Food & Water Watch—frames the current moment as a “time of peril” that must be met with “emergency action.”

Other initial signatories include Dr. Robert Bullard, known as the father of environmental justice, and climate scientist Michael Mann, director of the Earth System Science Center at Pennsylvania State University.

A three-step action plan is presented in the letter, beginning with a full ban on any new fossil fuel leasing and extraction on public lands and waters; no future permits for related infrastructure; and ending fossil fuel exports and subsidies.

Biden must also declare a climate emergency, the letter says, through which a chunk of the nation’s vast military spending would instead be directed to fund renewable energy projects and the crude oil export ban would be reinstated.

As a third key step, the president needs to reject fossil fuel industry schemes, such as carbon capture and storage, that the scientists frame as “delay tactics” that ultimately “impede the rapid transition to renewable energy.”

The first two in the trio of demands mirror those set out by the People Vs. Fossil Fuels mobilization, which is set to kick off next week.

“U.S. scientists are done speaking calmly in the face of inaction,” Steingraber said in a statement in which she expressed solidarity with the upcoming mobilization.

She also urged the president to follow through on a key campaign vow that his support for pipelines like the Dakota Access and Line 3 has betrayed.

“President Biden,” said Steingraber, “listening to science means acting on science. It means stopping new fossil fuel projects, opposing industry delay tactics, and declaring a national climate emergency.”

The scientists warned that “our chances for avoiding irreversible and uncontrollable climate chaos diminish daily.”

“We implore you, on behalf of and for the love of all life on Earth,” they added, “to respond to the greatest threat ever to face our species and lead the transition away from fossil fuels that humanity desperately needs.”

Originally published on Common Dreams by ANDREA GERMANOS and republished under a Creative Commons License (CC BY-NC-ND 3.0).

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Coronavirus, News, Observation

We’re Losing Our Humanity, and the Pandemic Is to Blame

Above: Collage by Lynxotic, Original Photo on Unsplash

Kurt Thigpen clenched his hands around the edge of the table because if he couldn’t feel the sharp edges digging into his palms, he would have to think about how hard his heart was beating. He was grateful that his mask hid his expression. He hoped that no one could see him sweat.

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A woman approached the lectern in the center aisle, a thick American flag scarf looped around her neck.

“Do you realize the mask, the CDC said it’s only 2% effective?” she demanded. “You’re failing our children, you’re failing our country, you’re failing our students’ future ….”

Thigpen fixed his eyes on a spot in the back of the blue-and-green auditorium. He let the person speaking at the lectern fade. It will be over soon, he told himself.

A dark-haired woman in a red vest removed her face shield as she moved to take her turn at the mic. As she began to speak, the school board employee responsible for queuing up public commenters interrupted: “Ma’am, I’m gonna have to ask you to please keep your shield on —”

“No, you’re not the boss of me, you work for us, I can’t breathe with it on —”

“Ma’am —”

“Don’t you dare cut my microphone —”

The crowd cheered. Thigpen focused on his breathing.

It will end soon, he told himself. It must. His sweat turned cold under his suit.

“The science isn’t there, take the kids outta the masks and let’s move on.”

It was March 2021, Thigpen’s second month as a school board trustee in Washoe County, Nevada. He had planned his campaign around local issues like improving the district’s diversity and equity policies and fixing an intersection where 20 students had been injured in traffic.

Public comment periods at school board meetings felt endless. Parents’ angers — over masking, over politics, over the “LGBTQ agenda” — fed off each other.

“I came here to speak about your fascist propaganda and ideology …”

He concentrated on making it to the next break period. His thoughts had begun to turn toxic. Why am I not good enough? Why am I the one struggling? They would turn darker. I don’t want to be here anymore. If something happened to me today, that would be fine.

“We will work tirelessly to remove you if you don’t focus on what’s important ….”

When the eight-hour meeting finally ended, he would drive home and pull off the suit and rip off his shirt. He would only take care with his rainbow tie, resting it gently in the closet. It still hangs there today. He would close the door, lay down on his bed, and let himself cry.

The stories of cruel, seemingly irrational and sometimes-violent conflicts over coronavirus regulations have become lingering symptoms of the pandemic as it drags through its second year. Two men on a Mesa-to-Provo flight got into a cross-aisle fight after one refused to wear a mask. A Tennessee teenager asking his school board to impose a mask mandate in honor of his grandmother who died of COVID-19 got jeered by the crowd. A California parent angered by the requirement that his child wear a mask allegedly beat up a teacher so badly that the teacher had to go to the emergency room. An Arizona father showed up to an elementary school with zip ties, allegedly intending to make a “citizen’s arrest” over COVID-19 rules. A Missouri medical center has distributed panic buttons to about 400 employees after an increase in assaults on health care workers by people frustrated over coronavirus-induced visitation restrictions and long wait times.

Many of the altercations have begun over masking because, unlike your vaccination status, a mask is right there on your face. Depending on your point of view, the mask can symbolize an erosion of personal freedoms or a willingness to protect others, a society that accepts tyranny or one that embraces science. A person’s reaction to a mask — or the absence of one — can be driven by an entire network of beliefs and emotions that have little to do with the face covering itself.

“What the hell is happening?” said Rachel Patterson, who owns a hair salon in Huntsville, Alabama, and who has been screamed at, cussed out and walked out on for asking clients to don a mask. “Like, I feel like we are living on another planet. Like I don’t — I don’t recognize anyone anymore.”

On Julie Simanksi’s first day of teaching for the fall 2021 semester, she tried to get her students to wear masks using the only method she was allowed: an emotional appeal. Simanski teaches at Des Moines Area Community College in Iowa. By state university policy, she can’t instruct her students to wear masks. Almost none did.

Simanksi told her students about her 20-year-old daughter, Olivia, who has a neuromuscular condition and requires 24-hour care. She didn’t know how Olivia’s body would cope with the virus. She was scared.

That night she sent an all-class email. She attached a picture of Olivia, smiling to her gums in blue sunglasses.

“I cannot mandate you to wear a mask in my class,” she wrote. “However, for the sake of my daughter and potentially others, I will make a continual plea to wear one.”

Simanksi brought a box of paper masks and put them in the back of the room. Some students took them. In each of her two sections, she has a group of four or five students who will not put one on.

“I’m surprised and I’m disappointed and a little bit angry that they just didn’t have the compassion to wear a mask for 55 minutes,” she said.

People’s pandemic views aren’t just preferences. They’ve evolved to fundamental beliefs. And when that happens, social psychologists say, people are more likely to accept incivility to achieve what they want.

“When people feel that their attitudes reflect strong moral convictions, that gives them permission to dehumanize those who oppose them,” said Linda Skitka, a psychology professor at the University of Illinois at Chicago who’s researching ideological divides. “And it doesn’t take a lot for the shift into perceptions of good and evil. So if the other side is basically evil, it’s not a far stretch to say it’s OK to yell at them.”

Courtney, a 29-year-old office worker living in Virginia who has asked that her last name not be shared for fear that she might lose her job if she’s identified, sat up on a medical bed surrounded by portraits of expectant mothers and their babies. In one, a brown-haired woman smiled at her 32-week mark, hands cupping her round belly. In another, the woman’s 6-day-old baby lay swaddled in a blue-and-white quilt, eyes closed. Courtney had just listened to her unborn child’s heartbeat. It was Aug. 17, two months out from her due date, and she had never before gotten so far along in a pregnancy without a miscarriage.

Courtney said her doctor went through the standard questions about her physical condition. Then the doctor asked if Courtney was working from home. No, she said. She had to go in twice a week.

Courtney looked at the pictures of the happy mothers. She’d undergone fertility treatment and had two miscarriages in less than a year. Both times, she’d asked herself: Was it my fault?

She knew that, even though she’d been fully vaccinated since May, a severe breakthrough infection could mean a ventilator for her and premature birth or death for her baby. She walked out of the office with a doctor’s note: Either everyone had to wear a mask around her, or she needed to work from home.

She saved a copy of the note on her phone and brought it with her the next time she went to the office. She recalls that as she sat at her desk, a colleague she considered a friend walked through her open door and sat down across from her. The colleague had just returned from a weeklong vacation and hoped Courtney could catch her up on what she’d missed.

The woman wasn’t wearing a mask.

“I actually have this note,” Courtney recalls saying. She pulled it up on her phone and held it out. “Do you mind wearing a mask?”

Her colleague didn’t look at the phone. She didn’t need to mask, the woman said. She had antibodies.

Courtney tried again. She told her colleague she was worried about what the virus could do to her baby. Even if there was no damage, she said, they might have to take the baby after birth to isolate her.

Courtney said that her colleague looked at her across the desk and said: “I’m not worried about it.”

She sat across from Courtney unmasked for the next 30 minutes.

Two weeks later, Courtney’s doctor wrote her another, sterner note: “It is my professional opinion that due to the lack of support for CDC recommended mask wearing indoors, please allow Courtney to work from home for the remainder of her pregnancy.”

Courtney forwarded it to her boss. He replied that he would remind the colleague who had sat in her office unmasked to follow the policy. But she still had to come in to work. They needed staff consistency.

She is due within the month.

If it looks like we’ve forgotten each other’s humanity, it’s because we’ve evolved to do so.

Humans are tribal creatures, and our responses to the pandemic have been tribalized almost since the beginning: A Pew Research poll from June 2020 found support for masking divided along partisan lines. Almost a year after the Pew poll, Fox News host Tucker Carlson urged his supporters toconfront people wearing masks.

Because the mask has become so polarizing, the extreme reactions aren’t really about being asked to wear one for an hour. It’s about communicating what side you’re on.

David Chester, a psychology professor at Virginia Commonwealth University who studies aggression, puts it this way: If you see members of the opposing group as human like you, you’ve failed as a tribalist.

“It really makes adaptive sense to treat out-group members not like people, because then it’s much easier to hurt them and to act against them,” he said. “One central piece of intergroup conflict is a switch in viewing your enemies from full-blown humans to dehumanized entities that you do not ascribe all the things that you typically ascribe to a person. That makes conflict so much easier.”

Seeing someone else wear a mask in a grocery store becomes what Chester calls “a threatening proposition from an out-group member.” It triggers anger. And giving in to anger can feel good — especially after months of frustration.

In a viral incident from June 2020, a woman who has cancer was shopping in a Florida Pier 1 when she had a confrontation with another shopper, later identified as Debra Jo Hunter. The incident culminated in Hunter, maskless,coughing in the woman’s face. In a virtual sentencing hearing nine months later, as Jacksonville’s First Coast News reported, Hunter submitted 23 pages of threats that she and her family had received. Hog from hell. I hope your whole family gets COVID and suffers immensely, then dies. Kill yourself.

Hunter’s husband testified on her behalf. It had been a hard couple months leading up to the incident, he said. They’d had a house fire and lost most of their possessions. A family member had been in a boating accident.

No one from the family responded to requests for comment.

“It was like air being inflated into a balloon, and it finally got to the point where she couldn’t handle any more air,” Hunter’s husband testified. “And then she finally rubbed up against something and just popped.”

In a treatise on tempering strong reactions, a prominent intellectual wrote: “I thought the first step was to free a man from his passions.”

The paper was written sometime around the turn of the third century. The author was philosopher-slash-medical writer Claudius Galenus, known today as Galen.

Two millennia later, the fundamental idea holds true. It’s one of the main tools in modern-day cognitive behavioral therapy: Learn how to pull yourself back from getting swept away by strong feelings, and then evaluate the situation with your rational side.

“There’s a lot of research that says that if people think about injustice from a first-person perspective, they’re more likely to respond aggressively,” said Tracy Vaillancourt, a professor at the University of Ottawa specializing in children’s mental health and violence prevention. “If they think about injustice from a third-person perspective, they’re less likely to be aggressive. And it’s because, in a sense, now they pulled back and are able to take the perspective of both parties that are involved.”

On a societal scale, one of the fastest ways for two deeply entrenched, opposing groups to start seeing each other as fellow humans again is to give them something bigger to fight against together. It’s an “Independence Day” sort of scenario, Chester, the Virginia Commonwealth University professor, said: If aliens invaded, countries who hate each other in normal times would suddenly work together against an external threat.

But the external threat with the potential to unite a deeply polarized country, he said, should have been the pandemic. And it didn’t happen.

“I think fundamentally, it’s because we have different perceptions of this pandemic,” he said. “It’s really hard now that it’s so entrenched, that masks are viewed as this group symbol. It’s really hard to get people out of that.”

It’s possible that signals from authority figures — at least the ones you already trust — could sway individual behavior, Chester said. Then again, former President Donald Trump got booed at an August rally in Alabama after suggesting that his followers get vaccinated.

When Skitka, with the University of Illinois at Chicago, saw Trump get booed, she thought it might be too late for even political leaders to temper their constituents’ passions. “We’re still trying to figure out what will work,” she said.

Kurt Thigpen resigned from the Washoe County School District on May 24, citing medical reasons. Later, he wrote an op-ed explaining what he really meant. The anxiety and the panic that had been triggered by the school board meetings had mutated into passive suicidal ideation. Even when the board transitioned to virtual meetings, he could barely get out of bed and make himself presentable for Zoom. He wished he could stop existing. No job was worth that.

“I thought I had things handled,” he wrote, “but my coping skills were no match for the events of the last seven months.”

He had sought therapy and worked with a psychiatrist to find medication. He got diagnosed with ADHD. He learned new coping mechanisms.

The initial reaction was positive. People were angry on his behalf. They wished him well. They thanked him for his openness.

And then the op-ed was mentioned in anAssociated Press article on toxic school board meetings around the country. Thigpen had no idea until a friend on the city council texted him. His original op-ed got reshared on Facebook. The commenters rushed in.

“What a whiney person,” someone wrote.

“Where do these woke zombies come from?”

“I have a lot to say to this young fragile individual.”

“Perfect example of a PACB= Professional Adult Cry Baby”

“You have no idea how badly I wanted to stop reading that article, but he is such a trainwreck of an individual I couldn’t stop,” one woman posted. She added: “You know, upon re-reading my post, I apologize for being so cruel. Clearly this man is severely mentally disabled and belongs in an institution.”

No one, Thigpen said, has reached out to apologize.

Originally published on ProPublica by Sarah Smith and republished under a Creative Commons License (CC BY-NC-ND 3.0)

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Breaking News, News, Observation, Politics

US Denounced as ‘Biggest Peddler of Financial Secrecy’ After Pandora Papers Leak

Above:Photo Collage / Lynxotic / Original Image by ICIJ

“U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”

The leak of an enormous trove of tax haven files over the weekend offered a further glimpse into the secretive world of offshore finance—a system facilitated by the U.S. and other rich nations—and prompted calls for immediate changes to global rules that let the powerful hide their wealth, skirt their obligations, and starve governments of crucial revenue.

“This is where our missing hospitals are,” Susana Ruiz, the tax policy lead at Oxfam International, said in a statement. “This is where the pay-packets sit of all the extra teachers and firefighters and public servants we need. Whenever a politician or business leader claims there is ‘no money’ to pay for climate damage and innovation, for more and better jobs, for a fair post-Covid recovery, for more overseas aid, they know where to look.”

“Tax havens cost governments around the world $427 billion each year,” Ruiz added. “That is the equivalent of a nurse’s yearly salary every second of every hour, every day. Ordinary taxpayers have to pick up the pieces. Developing countries are being hardest hit, proportionately. Corporations and the wealthiest individuals that use tax havens are out-competing those who don’t. Tax havens also help crime and corruption to flourish.”

Like the 2016 Panama Papers, the International Consortium of Investigative Journalists’ (ICIJ) Pandora Papers shine additional light on the functioning of a “shadow economy” that world leaders, celebrities, and billionaire business moguls—including some accused of egregious crimes—are exploiting to shield trillions of dollars in assets from transparency and taxation.

The 11.9 million files obtained, analyzed, and leaked by the ICIJ reveal the closely-guarded financial maneuverings of more than 330 politicians and top public officials from nearly 100 countries and territories, including dozens of current national leaders.

“The secret documents expose offshore dealings of the King of Jordan, the presidents of Ukraine, Kenya, and Ecuador, the prime minister of the Czech Republic, and former British Prime Minister Tony Blair,” ICIJ notes in a summary of its sprawling cache of documents. “The files also detail financial activities of Russian President Vladimir Putin’s ‘unofficial minister of propaganda’ and more than 130 billionaires from Russia, the United States, Turkey, and other nations.”

The trove also links prominent athletes, models, and artists to offshore assets, including India’s famous cricketer Sachin Tendulkar, pop music star Shakira, and supermodel Claudia Schiffer.

But Alex Cobham, chief executive of the Tax Justice Network, cautioned that a narrow focus on the individuals who have made use of an international tax system rigged in their favor diverts attention from the institutions and countries that have done the rigging.

“These personal actions are shameful and will no doubt come under great scrutiny in the coming days, but it’s important that we don’t lose sight of one crucial fact: few of the individuals had any role in turning the global tax system into an ATM for the superrich,” Cobham wrote in a blog post on Sunday. “That honor goes to the professional enablers—banks, law firms, and accountants—and the countries that facilitate them.”

Cobham observed that the Pandora Papers—the product of a nearly two-year investigation by more than 600 journalists in 117 countries and territories—confirm that the United States is “the world’s biggest peddler of financial secrecy.”

“The biggest blockers to transparency are the U.S. … and the U.K., the leader of the world’s biggest tax haven network,” Cobham wrote. “We need full transparency so we can hold tax abusers accountable, especially when our politicians are among them. U.S. President Biden must match his own rhetoric on shutting down global illicit finance, and start with the biggest offender—his own country.”

As the ICIJ notes, the new files show in some detail “how the United States, in particular, has become an increasingly attractive destination for hidden wealth, although the U.S. and its Western allies condemn smaller countries for allowing the flow of money and assets tied to corruption and crime.”

“The Pandora Papers include documents from 206 U.S. trusts in 15 states and Washington, D.C., and 22 U.S. trustee companies,” the ICIJ points out. “The documents provide details about the movement of hundreds of millions of dollars from offshore havens in the Caribbean and Europe into South Dakota, a sparsely populated American state that has become a major destination for foreign money.”

“We in the U.S. should be embarrassed that we’ve become a magnet for kleptocratic funds,” said Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies.

Conspicuously absent from the Pandora Papers is any mention of the wealthiest people in the U.S., including Bill Gates, Elon Musk, Warren Buffett, and Jeff Bezos—the richest man in the world. But as the Washington Post explains, that could be because “the uber-rich in the United States tend to pay such low tax rates that they have less incentive to seek offshore havens.”

In response to the Pandora Papers revelations, Oxfam called on world governments to crack down on tax havens by taking a number of steps, including:

  1. Ending tax secrecy on individuals, offshores, and multinational corporations. Set up a public register on the real owners of bank accounts, trusts, shell companies, and assets. Require multinational corporations to publicly report their accounts where they do business, country-by-country.
  2. Increasing the use of automatic exchange, allowing revenue authorities access to information they need to track the money.
  3. Ending corporate profit shifting to tax havens via new rules, and by setting a global minimum tax under the OECD’s BEPS deal, ideally of around 25%.
  4. Agreeing a global blacklist of tax havens and taking counter measures, including sanctions, to limit their use.
  5. Setting a new global agenda on taxing wealth and capital fairly; addressing tax competition between countries on high-net-worth-individuals, either on income or wealth, against agreed standards.

“Governments’ promises to end tax havens are still a long way from being realized,” said Ruiz. “We cannot allow tax havens to continue to stretch global inequality to breaking point while the world experiences the largest increase in extreme poverty in decades.”

Originally published on Common Dreams by JAKE JOHNSON and republished under a Creative Commons License (CC BY-NC-ND 3.0).

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Apps, Breaking News, Business, News, Observation, Tech

In Scathing Senate Testimony, Whistleblower Warns Facebook a Threat to Children and Democracy

Above: Photo Collage / Lynxotic

Frances Haugen said the company’s leaders know how to make their platforms safer, “but won’t make the necessary changes because they have put their astronomical profits before people.

Two days after a bombshell “60 Minutes” interview in which she accused Facebook of knowingly failing to stop the spread of dangerous lies andhateful content, whistleblower Frances Haugen testified Tuesday before U.S. senators, imploring Congress to hold the company and its CEO accountable for the many harms they cause.

Haugen—a former Facebook product manager—told the senators she went to work at the social media giant because she believed in its “potential to bring out the best in us.”

“But I’m here today because I believe Facebook’s products harm children, stoke division, and weaken our democracy,” she said during her opening testimony. “The company’s leadership knows how to make Facebook and Instagram safer, but won’t make the necessary changes because they have put their astronomical profits before people.”

“The documents I have provided to Congress prove that Facebook has repeatedly misled the public about what its own research reveals about the safety of children, the efficacy of its artificial intelligence systems, and its role in spreading divisive and extreme messages,” she continued. “I came forward because I believe that every human being deserves the dignity of truth.”

“I saw Facebook repeatedly encounter conflicts between its own profits and our safety,” Haugen added. “Facebook consistently resolved its conflicts in favor of its own profits.”

“In some cases, this dangerous online talk has led to actual violence that harms and even kills people,” she said.

Addressing Monday’s worldwide Facebook outage, Haugen said that “for more than five hours, Facebook wasn’t used to deepen divides, destabilize democracies, and make young girls and women feel bad about their bodies.”

“It also means that millions of small businesses weren’t able to reach potential customers, and countless photos of new babies weren’t joyously celebrated by family and friends around the world,” she added. “I believe in the potential of Facebook. We can have social media we enjoy that connects us without tearing apart our democracy, putting our children in danger, and sowing ethnic violence around the world. We can do better.”

Doing better will require Congress to act, because Facebook “won’t solve this crisis without your help,” Haugen told the senators, echoing experts and activists who continue to call for breaking up tech giants, banning the surveillance capitalist business model, and protecting rights and democracy online.

She added that “there is nobody currently holding Zuckerberg accountable but himself,” referring to Facebook co-founder and CEO Mark Zuckerberg.

Sen. Richard Blumenthal (D-Conn.)—chair of the Senate Consumer Protection, Product Safety, and Data Security Subcommittee—called on Zuckerberg to testify before the panel.

“Mark Zuckerberg ought to be looking at himself in the mirror today and yet rather than taking responsibility, and showing leadership, Mr. Zuckerberg is going sailing,” he said.

“Big Tech now faces a Big Tobacco, jaw-dropping moment of truth. It is documented proof that Facebook knows its products can be addictive and toxic to children,” Blumenthal continued.

“The damage to self-interest and self-worth inflicted by Facebook today will haunt a generation,” he added. “Feelings of inadequacy and insecurity, rejection, and self-hatred will impact this generation for years to come. Our children are the ones who are victims.”

Originally published on Common Dreams by BRETT WILKINSand republished under Creative Commons (CC BY-NC-ND 3.0).

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Business, Observation, Tech

There’s a Multibillion-Dollar Market for Your Phone’s Location Data

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A huge but little-known industry has cropped up around monetizing people’s movements

Companies that you likely have never heard of are hawking access to the location history on your mobile phone. An estimated $12 billion market, the location data industry has many players: collectors, aggregators, marketplaces, and location intelligence firms, all of which boast about the scale and precision of the data that they’ve amassed.

Location firm Near describes itself as “The World’s Largest Dataset of People’s Behavior in the Real-World,” with data representing “1.6B people across 44 countries.” Mobilewalla boasts “40+ Countries, 1.9B+ Devices, 50B Mobile Signals Daily, 5+ Years of Data.” X-Mode’s website claims its data covers “25%+ of the Adult U.S. population monthly.”

In an effort to shed light on this little-monitored industry, The Markup has identified 47 companies that harvest, sell, or trade in mobile phone location data. While hardly comprehensive, the list begins to paint a picture of the interconnected players that do everything from providing code to app developers to monetize user data to offering analytics from “1.9 billion devices” and access to datasets on hundreds of millions of people. Six companies claimed more than a billion devices in their data, and at least four claimed their data was the “most accurate” in the industry.

The Location Data Industry: Collectors, Buyers, Sellers, and Aggregators

The Markup identified 47 players in the location data industry

Created by Joel Eastwood and Gabe Hongsdusit. Source: The Markup. (See our data, including extended company responses, here.)

“There isn’t a lot of transparency and there is a really, really complex shadowy web of interactions between these companies that’s hard to untangle,” Justin Sherman, a cyber policy fellow at the Duke Tech Policy Lab, said. “They operate on the fact that the general public and people in Washington and other regulatory centers aren’t paying attention to what they’re doing.” 

Occasionally, stories illuminate just how invasive this industry can be. In 2020, Motherboard reported that X-Mode, a company that collects location data through apps, was collecting data from Muslim prayer apps and selling it to military contractors. The Wall Street Journal also reported in 2020 that Venntel, a location data provider, was selling location data to federal agencies for immigration enforcement. 

A Catholic news outlet also used location data from a data vendor to out a priest who had frequented gay bars, though it’s still unknown what company sold that information. 

Many firms promise that privacy is at the center of their businesses and that they’re careful to never sell information that can be traced back to a person. But researchers studying anonymized location data have shown just how misleading that claim can be. 

The truth is, it’s hard to know all the ways in which your movements are being tracked and traded. Companies often reveal little about what apps serve as the sources of data they collect, what exactly that data consists of, and how far it travels. To piece together a picture of the ecosystem, The Markup reviewed the websites and marketing language of each of the 47 companies we identified as operating in the location data industry, as well as any information they revealed about how the data got to them. (See our methodology here.)

How the Data Leaves Your Phone

Most times, the location data pipeline starts off in your hands, when an app sends a notification asking for permission to access your location data. 

Apps have all kinds of reasons for using your location. Map apps need to know where you are in order to give you directions to where you’re going. A weather, waves, or wind app checks your location to give you relevant meteorological information. A video streaming app checks where you are to ensure you’re in a country where it’s licensed to stream certain shows. 

But unbeknownst to most users, some of those apps sell or share location data about their users with companies that analyze the data and sell their insights, like Advan Research. Other companies, like Adsquare, buy or obtain location data from apps for the purpose of aggregating it with other data sources. Companies like real estate firms, hedge funds and retail businesses might then turn and use the data for their own advertising, analytics, investment strategy, or marketing purposes. 

Serge Egelman, a researcher at UC Berkeley’s ​​International Computer Science Institute and CTO of AppCensus, who has researched sensitive data permissions on mobile apps, said it’s hard to tell which apps on your phone simply use the data for their own functional purposes and which ones release your data into the economic ether.

“When the app asks for location, in the moment, because maybe you click the button to find stuff near you and you get a permission dialog, you might reasonably infer that ‘Oh, that’s to service that request to provide that functionality,’ but there’s no guarantee of that,” Egelman said. “And there’s certainly usually never a disclosure that says that the data is going to be limited to that purpose.”

Companies that trade in this data are reluctant to share which apps they get data from. 

The Markup asked spokespeople from all the companies on our list where they get the location data they obtain. 

Companies like Adsquare and Cuebiq told The Markup that they don’t publicly disclose what apps they get location data from to keep a competitive advantage but maintained that their process of obtaining location data was transparent and with clear consent from app users. 

“It is all extremely transparent,” said Bill Daddi, a spokesperson for Cuebiq.

He added that consumers must know what the apps are doing with their data because so few consent to share it. “The opt-in rates clearly confirm that the users are fully aware of what is happening because the opt-in rates can be as low as less than 20%, depending on the app,” Daddi said in an email. 

Yiannis Tsiounis, the CEO of the location analytics firm Advan Research, said his company buys from location data aggregators, who collect the data from thousands of apps—but would not say which ones. Tsiounis said the apps he works with do explicitly say that they share location data with third parties somewhere in the privacy policies, though he acknowledged that most people don’t read privacy policies. 

“There’s only so much you can squeeze into the notification message. You get one line, right? So you can’t say all of that in the notification message,” Tsiounis said. “You only get to explain to the user, ‘I need your location data for X, Y, and Z.’ What you have to do is, there has to be a link to the privacy policy.”  

Only one company spokesperson, Foursquare’s Ashley Dawkins, actually named any specific apps—Foursquare’s own products, like Swarm, CityGuide, and Rewards—as sources for its location data trove. 

But Foursquare also produces a free software development kit (SDK)—a set of prebuilt tools developers can use in their own apps—that can potentially track location through any app that uses it. Foursquare’s Pilgrim SDK is used in apps like GasBuddy, a service that compares prices at nearby gas stations, Flipp, a shopping app for coupons, and Checkout 51, another location-based discount app. 

GasBuddy, Flipp, and Checkout 51 didn’t respond to requests for comment.

A search on Mighty Signal, a site that analyzes and tracks SDKs in apps, found Foursquare’s Pilgrim SDK in 26 Android apps. 

While not every app with Foursquare’s SDK sends location data back to the company, the privacy policies for Flipp, Checkout 51, and GasBuddy all disclose that they share location data with the company.

Foursquare’s method of obtaining location data through an embedded SDK is a common practice. Of the 47 companies that The Markup identified, 12 of them advertised SDKs to app developers that could send them location data in exchange for money or services.

Placer.ai says in its marketing that it does foot traffic analysis and that its SDK is installed in more than 500 apps and has insights on more than 20 million devices. 

“We partner with mobile apps providing location services and receive anonymized aggregated data. Very critically, all data is anonymized and stripped of personal identifiers before it reaches us,” Ethan Chernofsky, Placer.ai’s vice president of marketing, said in an email. 

Into the Location Data Marketplace 

Once a person’s location data has been collected from an app and it has entered the location data marketplace, it can be sold over and over again, from the data providers to an aggregator that resells data from multiple sources. It could end up in the hands of a “location intelligence” firm that uses the raw data to analyze foot traffic for retail shopping areas and the demographics associated with its visitors. Or with a hedge fund that wants insights on how many people are going to a certain store.

“There are the data aggregators that collect the data from multiple applications and sell in bulk. And then there are analytics companies which buy data either from aggregators or from applications and perform the analytics,” said Tsiounis of Advan Research. “And everybody sells to everybody else.” 

Some data marketplaces are part of well-known companies, like Amazon’s AWS Data Exchange, or Oracle’s Data Marketplace, which sell all types of data, not just location data. Oracle boasts its listing as the “world’s largest third-party data marketplace” for targeted advertising, while Amazon claims to “make it easy to find, subscribe to, and use third-party data in the cloud.” Both marketplaces feature listings for several of the location data companies that we examined.

Amazon spokesperson Claude Shy said that data providers have to explain how they gain consent for data and how they monitor people using the data they purchase.

“Only qualified data providers will have access to the AWS Data Exchange. Potential data providers are put through a rigorous application process,” Shy said. 

Oracle declined to comment.

Other companies, like Narrative, say they are simply connecting data buyers and sellers by providing a platform. Narrative’s website, for instance, lists location data providers like SafeGraph and Complementics among its 17 providers with more than two billion mobile advertising IDs to buy from. 

But Narrative CEO Nick Jordan said the company doesn’t even look at the data itself. 

“There’s a number of companies that are using our platform to acquire and/or monetize geolocation data, but we actually don’t have any rights to the data,” he said. “We’re not buying it, we’re not selling it.” 

To give a sense of how massive the industry is, Amass Insights has 320 location data providers listed on its directory, Jordan Hauer, the company’s CEO, said. While the company doesn’t directly collect or sell any of the data, hedge funds will pay it to guide them through the myriad of location data companies, he said.

“The most inefficient part of the whole process is actually not delivering the data,” Hauer said. “It’s actually finding what you’re looking for and making sure that it’s compliant, making sure that it has value and that it is exactly what the provider says it is.”

Oh, the Places Your Data Will Go

There are a whole slew of potential buyers for location data: investors looking for intel on market trends or what their competitors are up to, political campaigns, stores keeping tabs on customers, and law enforcement agencies, among others.

Data from location intelligence firm Thasos Group has been used to measure the number of workers pulling extra shifts at Tesla plants. Political campaigns on both sides of the aisle have also used location data from people who were at rallies for targeted advertising.

Fast food restaurants and other businesses have been known to buy location data for advertising purposes down to a person’s steps. For example, in 2018, Burger King ran a promotion in which, if a customer’s phone was within 600 feet of a McDonalds, the Burger King app would let the user buy a Whopper for one cent.

The Wall Street Journal and Motherboard have also written extensively about how federal agencies including the Internal Revenue Service, Customs and Border Protection, and the U.S. military bought location data from companies tracking phones. 

Of the location data firms The Markup examined, the offerings are diverse. 

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Advan Research, for instance, uses historical location data to tell its customers, largely retail businesses or their private equity firm owners, where their visitors came from, and makes guesses about their income, race, and interests based on where they’ve been. 

“For example, we know that the average income in this neighborhood by census data is $50,000. But then there are two devices—one went to Dollar General, McDonald’s, and Walmart, and the other went to a BMW dealer and Tiffany’s … so they probably make more money,” Advan Research’s Tsiounis said.

Others combine the location data they obtain with other pieces of data gathered from your online activities. Complementics, which boasts data on “more than a billion mobile device IDs,” offers location data in tandem with cross-device data for mobile ad targeting.

The prices can be steep. 

Outlogic (formerly known as X-Mode) offers a license for a location dataset titled “Cyber Security Location data” on Datarade for $240,000 per year. The listing says “Outlogic’s accurate and granular location data is collected directly from a mobile device’s GPS.” 

At the moment, there are few if any rules limiting who can buy your data. 

Sherman, of the Duke Tech Policy Lab, published a report in August finding that data brokers were advertising location information on people based on their political beliefs, as well as data on U.S. government employees and military personnel. 

“There is virtually nothing in U.S. law preventing an American company from selling data on two million service members, let’s say, to some Russian company that’s just a front for the Russian government,” Sherman said. 

Existing privacy laws in the U.S., like California’s Consumer Privacy Act, do not limit who can purchase data, though California residents can request that their data not be “sold”—which can be a tricky definition. Instead, the law focuses on allowing people to opt out of sharing their location in the first place. 

​​The European Union’s General Data Protection Regulation has stricter requirements for notifying users when their data is being processed or transferred. 

But Ashkan Soltani, a privacy expert and former chief technologist for the Federal Trade Commission, said it’s unrealistic to expect customers to hunt down companies and insist they delete their personal data.

 “We know in practice that consumers don’t take action,” he said. “It’s incredibly taxing to opt out of hundreds of data brokers you’ve never even heard of.”  

Companies like Apple and Google, who control access to the app stores, are in the best position to control the location data market, AppCensus’s Egelman said. 

“The real danger is the app gets booted from the Google Play store or the iOS app store,” he said.” As a result, your company loses money.” 

Google and Apple both recently banned app developers from using location reporting SDKs from several data companies.  

Researchers found, however, that the companies’ SDKs were still making their way into Google’s app store. 

Apple didn’t respond to a request for comment. 

“The Google Play team is always working to strengthen privacy protections through both product and policy improvements. When we find apps or SDK providers that violate our policies, we take action,” Google spokesperson Scott Westover said in an email.

Digital privacy has been a key policy issue for U.S. senator Ron Wyden, a Democrat from Oregon, who told The Markup that the big app stores needed to do more. 

“This is the right move by Google, but they and Apple need to do more than play whack-a-mole with apps that sell Americans’ location information. These companies need a real plan to protect users’ privacy and safety from these malicious apps,” Wyden said in an email. 

This article was originally published on The Markup and written by By: Jon Keegan and Alfred Ng was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license (CC BY-NC-ND 4.0).

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Finance, News, Observation, Politics

Recent White House Study on Taxes Shows the Wealthy Pay a Lower Rate Than Everybody Else

Above: Photo / Lynxotic

Recent White House Study on Taxes Shows the Wealthy Pay a Lower Rate Than Everybody Else

A decade ago, in an essay for The New York Times, Warren Buffett disclosed that he had paid nearly $7 million in federal taxes in 2010. “That sounds like a lot of money,” he wrote. “But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

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The words “taxable income” are doing a lot of work in that sentence.

Buffett owns a substantial number of shares in Berkshire Hathaway, the fabulously successful holding company he founded decades ago. As the company’s shares have soared nearly every year, his wealth has grown by billions. Under the U.S. tax code, none of that is taxed until he sells shares at a profit.

A little math shows that Buffett’s 17.4% rate meant he reported roughly $40.2 million in income in a year where Forbes said his wealth grew by $3 billion. His revelation made it possible to compare how much he was paying the government to the increase in the size of his fortune.

No one did so, and Buffett became something of a folk hero for calling for any increase in taxes.

When we obtained access to a trove of tax data on the richest Americans, it quickly became clear to our reporters that Buffett’s comparison of his own tax rate to his employees’ vastly understates the inequity of our tax system. Buffett is far from unique; the documents showed that the amount of money people like Michael Bloomberg, Jeff Bezos or Elon Musk reported to the IRS as income was infinitesimal when measured against their annual gains in wealth.

And so the first story in our “Secret IRS Files” series set out a new concept that makes more sense in our 21st century Gilded Age; we called it “the true tax rate.” We compared the annual taxes paid by the ultrarich to their wealth gains to give readers a sense of how the system really works.

From 2014 to 2018, we pointed out, Buffett paid $125 million in federal taxes. As he said, that sounds like a lot. But according to Forbes, his riches rose $24.3 billion during that period, making his true tax rate 0.1%. In a detailed written response, Buffett defended his practices but did not directly address ProPublica’s true tax rate calculation.

When we published this story, howls of rage rang out from the freewheeling corners of Twitter to the ornate offices on Wall Street. Some of the most irate critics wrote to me directly and demanded to know whether I was so @#$!@ stupid that I didn’t understand the meaning of the word “income tax.”

“This story, sadly, reeks with ‘class envy,’” one angry reader wrote. “If this was intended to get clicks, you made your money.” We’re a nonprofit and our revenue from advertising adds almost nothing to our annual budget, but I understand this reader’s larger point, which we noted in the story: The ultrarich are doing only what the current tax code invites them to do.

The debate intensified, and the White House-backed proposals on taxes advanced by congressional Democrats largely followed the traditional approach of raising rates on income. A separate bill introduced by Sens. Elizabeth Warren and Bernie Sanders to impose a 3% tax on all wealth above $1 billion is seen as having little chance of passing.

The reluctance to embrace a wealth tax is deeply rooted. The biggest donors to both parties would be hit hard by such a law. And as we pointed out in our initial story, the complexities of taxing wealth are not trivial. Several countries have tried and struggled to figure out a fair way to tax stock gains. Does an entrepreneur whose stock skyrockets in one year, and pays a big tax, deserve a rebate if his company’s shares plummet the next year?

All of that said, we took note when White House economists issued a study that used publicly available data to estimate “the average Federal individual income tax rate paid by the 400 wealthiest American families’ in recent years, determined using a more comprehensive measure of income.” Their methodology was similar to ours, and their findings — that those families gained $1.8 trillion from 2010 to 2018 and paid 8.2% in taxes — are in line with what we found in the tax data.

The authors say their findings are evidence in support of President Joe Biden’s plan for tweaking the existing system; the words “wealth tax” are not mentioned. They point to the administration’s proposal to impose higher tax rates on stock dividends and on capital gains, the profit an investor reaps when selling a stock whose value has risen.

(The Biden administration has proposed getting rid of a provision in the tax code that shields heirs who inherit stock from paying capital gains tax on the growth in value that occurred before the shares were transferred.)

None of the proposed changes come close to addressing the biggest hole in the system, which is that an ultrarich person can live comfortably off gains in wealth while never selling a single share. As our initial story pointed out, the Buffetts and Bezos of the world can borrow against the value of their considerable holdings and live comfortably without selling stock or receiving any income from dividends, which new companies like Tesla and Amazon don’t pay.

The strategy, known as “buy, borrow and die,” allows the wealthy to amass fast fortunes, pay no taxes on those gains and pass on much of the wealth to their descendants.

Herb and Marion Sandler, the founders of ProPublica, made it clear from the outset that they hoped our journalism would spur real-world change. They were not particularly interested in stories whose biggest effect was that they had “started a conversation.”

We still measure our success by tangible effects. But over the years, we have seen that the road to impact on very complex issues can begin by changing the conversation.

Lawmakers have said that some of the most egregious tax loopholes we’ve exposed, notably multibillion-dollar Roth IRA accounts, will be scrutinized as Congress takes up tax legislation in coming months.

There’s no telling where the larger conversation about taxing wealth will lead. As the White House paper suggests, a new way of thinking about equality and taxation has taken center stage. Whether that ultimately results in change remains very much an open question.

Originally published on ProPublica by Stephen Engelberg and republished under a Creative Commons License (CC BY-NC-ND 3.0)

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News, Observation, Politics

The Government Gave Free PPP Money to Public Companies Despite Warning Them Not to Apply

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As Congress launched a historic bailout to keep businesses afloat at the outset of the pandemic, government officials stressed that the loans were for mom-and-pop operations that didn’t have another easily available lifeline.

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“This was a program designed for small businesses,” then-Treasury Secretary Steven Mnuchin said, as companies like Shake Shack and Potbelly made headlines for grabbing millions from the newly created Paycheck Protection Program. “It was not a program that was designed for public companies that had liquidity.”

House Minority Leader Kevin McCarthy was even clearer. “We will go after those big companies that cheat the system,” he told Fox News that spring.

But the tough talk hasn’t translated into action. Instead, a ProPublica review has found, the government gave out generous loans to companies that may not have needed them. And it has often forgiven the loans, despite having said that publicly traded companies would be unlikely to merit such generous treatment.

Take Lazydays Holdings, a publicly traded collection of RV dealerships that got a nearly $9 million loan. The company had $31 million in cash on hand at the end of 2019, and then prospered as Americans turned to RVs for socially distanced vacations. Lazydays’ stock price has shot up more than 500% during the pandemic. (Lazydays did not respond to requests for comment.) The government has forgiven nearly all of it, allowing Lazydays to keep the money.

The ProPublica analysis of Securities and Exchange Commission filings found at least 120 publicly traded companies that received loans of more than $500,000, grew their revenues last year and have been allowed to keep the money.

In addition, at least 30 companies announced plans to go public after receiving their loans, bringing in truckloads of investor cash that they often used to pay off other debts — but not the ones they owed to the federal government, all of which were forgiven.

Overall, ProPublica found at least $250 million that went to publicly traded companies with growing revenues and that has already been forgiven by the government. That’s just a sliver of the $800 billion PPP program. But it’s also almost certainly a significant undercount of the amount of taxpayer dollars that went to well-heeled companies. The count, for instance, doesn’t include any of the billions of dollars that went to firms backed by giant private equity funds. Their finances are not publicly disclosed.

The government had no rules requiring companies to pay back loans if it turned out they didn’t need the money.

Instead, the government had one modest requirement particularly relevant to publicly traded companies: It made all applicants for loans attest that pandemic-related uncertainty made the loan “necessary.” And it warned in a follow-up advisory that having access to cash elsewhere — as public companies usually do via investors — would make it difficult to take that pledge in good faith.

But the government has rarely followed up. The Small Business Administration, which oversees the PPP, discarded a questionnaire it had begun sending companies to quiz them on their financial situations.

In response to questions from ProPublica, the SBA said that it is examining all forgiveness applications to make sure they comply with the rules. “We are continuously aware of our role in the stewardship of federal funds to ensure the integrity of our programs, and we have rigorous processes in place to ensure appropriate oversight of loans of all sizes,” spokesperson Christalyn Solomon said.

But the SBA declined to provide evidence of how it is evaluating whether public applicants were honest when they said their loans were “necessary.” Experts say that’s because lawmakers offered no specifics on what they meant by “necessary” from the outset, leaving the program’s administrators with no objective basis on which to demand repayment.

“Congress needed to say to the SBA, ‘This is what constitutes need,’” said Liz Hempowicz, director of public policy at the nonprofit Project on Government Oversight. “If you have access to excess capital in any form, that absolutely should’ve been baked into the program from the beginning.”

By many metrics, the federal government’s response to the pandemic succeeded in alleviating the worst effects of the most abrupt pause in economic activity America has ever experienced. Unlike most safety net programs, it did so by erring on the side of generosity. The government’s supplemental unemployment insurance and stimulus checks were enough to actually lower poverty last year.

The same philosophy applied to relief for businesses. The government kept the PPP application simple to encourage companies to participate, and banks were paid to move the loans along without asking many questions. While the program was built on the chassis of the SBA’s standard loan program, it dispensed with many of its rules, such as a requirement that applicants demonstrate they couldn’t obtain reasonably priced credit elsewhere.

In the first round of the bailout, which was quickly depleted, companies did not have to prove that they had actually been impacted by COVID-19.

Instead, the application required them to certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” Facing confusion from corporate lawyers who said the language was vague, the SBA released further guidance in late April 2020.

The clarification specifically warned public companies that they probably wouldn’t meet the threshold. “Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity,” the agency wrote. “It is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith.”

That admonition had some effect. According to a study forthcoming in the Review of Corporate Finance Studies, half of all public companies qualified for the loans, but only 42% of those eligible chose to take them. That compared to 87% of all eligible private companies. (The PPP generally excluded companies with more than 500 employees.) On average, the 812 public firms that took loans had less cash and more debt than those that didn’t borrow. The public companies collectively borrowed $2.2 billion, but 13.5% of them repaid their loans, mostly soon after the SBA’s April guidance.

But because Congress didn’t impose any actual requirements to return the money, many companies didn’t. Some even shrugged off congressional pressure to do so.

In May 2020, a House oversight subcommittee sent letters asking five large public companies to return their $10 million loans. One of them did. The other four refused, and they eventually all received forgiveness (with one asking for slightly less than the whole amount).

They included a contractor for the U.S. Postal Service called EVO Transportation and Energy Services, which hasn’t filed financial reports for all of 2020 after discovering problems with its 2019 disclosures.

The company didn’t respond to a request for comment.

The SBA began processing forgiveness applications after the first round of PPP loans was exhausted in August 2020. It decided that all borrowers of less than $2 million would automatically be “deemed” truthful in their pledges that their loans were necessary.

For those who borrowed more, it issued a nine-page “loan necessity questionnaire” that asked about the recipient’s ownership structure, cash on hand pre-pandemic, revenues during the time when the loan was supposed to be used and access to other capital.

That didn’t go over well.

Last December, a construction industry trade group sued, saying the SBA questionnaire violated the original guidance that implied forgiveness would be determined by what companies knew at the time they applied, without regard to what happened later. In July, the agency stopped using the questionnaire, saying that the form was burdensome for borrowers and a drain on auditing resources.

Without companies’ answers, the SBA has developed a machine-learning algorithm that flags loans for signs of potential fraud, such as payroll numbers that don’t add up. As of last month, agency data showed, investigators had reviewed 65,000 loans, 8,000 of which, totaling $2.7 billion, were referred for further analysis. Of those, only 300 loans were for more than $2 million.

The agency declined to say how many forgiveness applications have been rejected after going through this process, or how, without using the discontinued questionnaire, it has evaluated whether the loans were necessary.

The Securities and Exchange Commission also issued inquiries to some companies about their representations to investors, but a spokesperson declined to say whether any enforcement actions had been taken as a result.

A former finance manager at one company that received millions in PPP money and hasn’t paid it back said that he’d hoped the government would more closely examine his employer’s finances.

“I remember that questionnaire coming out, and we were thinking, ‘This might not get forgiven,’ because our cash position was a lot better at the end of the year,” the employee said. Since the questionnaire has been thrown out, he figures, companies that didn’t need the cash will end up keeping it. “The only reason to give it back is public sentiment. At that point, it’s free money.”

Waste is inevitable in any economic rescue mission. But some of it is avoidable. Experts say Congress could have created a threshold of financial health at which PPP loans would have to be repaid — without denying the lifeline many firms needed.

“We’re talking about a ridiculously low interest rate,” Hempowicz said. “There is a benefit either way, especially for bigger companies, to have received these loans, even if they aren’t then converted into grants.”

All PPP loans were forgivable if the cash was mostly spent on payroll. If a company was still seeing steady business, it could use that freed-up income for other priorities, like paying off debt and buying other companies.

That’s the happy outcome for many companies that performed well in 2020, often profiting from the very pandemic that they said put them in the position of needing a taxpayer bailout.

A chain of powersports dealers called RideNow collectively received $19 million, despite nearly tripling its net income from 2019 to 2020 as interest in motorbikes and all-terrain vehicles skyrocketed. In March 2021, the publicly traded online motorcycle sales platform RumbleOn announced it would acquire RideNow to create what it called the “only omnichannel customer experience in powersports and the largest publicly traded powersports dealership platform.” RideNow’s loans were fully forgiven in June, and RumbleOn’s forgiveness application for its original $5.1 million loan is pending.

Other examples abound. Acme United Corporation saw its sales increase 15% in 2020 because of strong demand for first-aid supplies. Its $3.5 million loan was fully forgiven. So was the $2.7 million borrowed by Conifer Holdings, an insurance company that attributed revenue growth to lower claims by businesses that were temporarily shuttered but maintained their policies — which explicitly did not cover business interruption due to infectious diseases. And the ammunition manufacturer Ammo Inc. kept $1 million after seeing its revenues triple to $62.5 million in 2020, fueled by increased consumer demand for bullets. None of those companies returned requests for comment.

Public companies aren’t the only borrowers that took more than they likely needed. Securities and Exchange Commission filings are also a window into privately held companies that have raised money in the public markets or later listed themselves on an exchange.

The venture-capital-backed person-to-person lending marketplace Prosper files earnings statements because it sells its loans to investors. The company had $64 million in unrestricted cash on hand at the end of 2019, but it still suspended its 401(k) match and cut salaries above $100,000 across the board in early 2020 — a collective reduction in compensation almost equal to the $8.4 million PPP loan it received. The pay cut also applied to the C-suite, but they had already received up to 10% base salary bumps in March 2020, so it hurt less.

In November, the company instituted a retroactive two-year bonus plan for executives — potentially totaling $3 million for five people.

Prosper did not respond to a request for comment, and its forgiveness request is still pending.

Some companies did pay the money back. At least 27 companies decided to do so while in the process of going public, since the sale of stock often generates large amounts of cash.

Luminar Technologies, an autonomous driving technology startup, gave back its $7.8 million before its Nasdaq debut.

“We decided to return the PPP loan as soon as we realized we didn’t need it anymore,” said Anthony Cooke, Luminar’s vice president for policy and regulation. “We decided to apply for a PPP loan because it gave us the flexibility to withstand uncertain times while protecting our employees. We were able to protect employees, grow our business and take it public in 2020, and we repaid our PPP loan as soon as it was feasible.”

Other companies kept the taxpayer money, even while paying off other debts.

That’s what another company in the autonomous driving business did. A Ford-backed designer of sensors called Velodyne Lidar got $10 million in government money, which a spokesperson said was “used to support our employees during a time of uncertainty.”

The company went public in September of last year, giving it $222 million in cash. The government forgave Velodyne’s loan this June.

Battery-powered bus maker Proterra got $10 million. Its revenues increased last year, and it went public this year. The company decided to keep the money, which spokesperson Shane Levy said “supported our ability to maintain a full workforce as we’ve navigated the uncertainty caused by the COVID-19 pandemic.” A Volkswagen- and UPS-backed self-driving truck company called TuSimple kept its $4.1 million after going public in a deal that generated about $1 billion; a spokesperson didn’t respond to a request for comment.

Several companies hadn’t yet had any income at all — they had been funded by investors through their entire existence, suggesting that they probably had access to other credit.

A pre-revenue electric vehicle maker called Faraday Future got $9.2 million. This past July, it launched a public offering that generated $1 billion; its loan forgiveness request is still pending. A spokesperson told ProPublica that the investor proceeds will be “budgeted to produce vehicles,” not to pay back taxpayers. Space launch services company Astra took $4.9 million in government money. As it applied for forgiveness in June, it told investors that COVID-19 “has not materially affected our future growth outlook” and ​​that it had seen “some signs of positive effects for its long-term business prospects and partnerships as a result of the pandemic.” Astra’s Nasdaq debut in July generated $463 million, and its PPP loan was forgiven last month. A spokesperson didn’t respond to a request for comment.

Another category of large PPP recipients consisted of clinical and early commercial-stage medical device and pharmaceutical companies, which are heavily investor-backed and which sometimes profited from COVID-related activity. A biotech company called PolarityTE, which makes regenerative tissue products, cut staff by 47% in 2020 and raised revenues by 79% by serving as a COVID-19 testing lab. It received $3.6 million, which was forgiven; the company didn’t respond to a request for comment.

Anything having to do with residential real estate also did well.

Fast-growing homebuilder Dream Finders Homes saw 52% earnings growth in 2020, which it attributed in part to pandemic-induced migration to suburban developments. It went public in January 2021, generating $134 million, and was granted full forgiveness on its $7.2 million loan. The company didn’t respond to a request for comment.

The home improvement services platform Porch told investors that spiking home sales in late 2020 helped it rebound from a spring business dip. It applied for forgiveness for its $8.1 million PPP loan in December, the same month it debuted on Nasdaq. With $122 million of the proceeds from its IPO, it bought four other companies; it hasn’t paid back the PPP loan, which was forgiven in June. A spokesperson declined to comment.

Finally, the type of companies that arranged the capital for all these public offerings and funding rounds — investment advisory firms — also dipped into the PPP.

Cohen & Company, a financial services firm with $2.8 billion under management, got $2.2 million. The firm saw dramatically higher income last year. Nearly all of its loan was forgiven. Another asset manager and investment banking firm, JMP Group, had $3.8 million forgiven despite having $50 million in cash at the end of 2019 and 15% revenue growth in 2020. Neither firm responded to a request for comment.

Some investment advisory firms may have used inflated claims. One study found that at least 6% of the $590 million granted to those firms was more than they could have justified given their payroll, which has to be reported to the SEC.

Writing laws is often a balancing act. One approach draws bright lines that lay out exactly what’s required, which companies often figure out a way to game. The other leaves rules more vague, relying on the regulated party to abide by the program’s intent. That eases the process for beneficiaries who really need help, but runs the risk the others will also benefit.

The PPP leaned toward the latter approach. It told companies that they probably shouldn’t apply if they had other resources at their disposal, but gave them a window to do so if they wanted. In order to make that work, there would need to be a credible threat of enforcement, or at least public shaming if they took advantage of funds meant for the truly disadvantaged.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said the SBA should have held public companies to a higher standard of need and then audited them to ensure they’d been truthful.

“If I ran the SBA, I would say, ‘You certified that this loan request was necessary — walk us through that. You had this much cash, or you had this much loan facility open or you had no trouble raising this money,’” Gordon said.

Of course, if you don’t want public companies to apply, you could just bar them from applying. That’s what Congress did when it created a second round of the PPP in December 2020. That time around, companies were also required to demonstrate that their revenues had declined substantially in at least one quarter in order to qualify.

Sam Rosen, a finance professor at Temple University who co-authored the study on public firm participation in the PPP, said it isn’t that complicated. “If we were in a similar situation in the future, do we want public firms to have access to this?” he said. “I think it’s just about being clear up front.”

Originally published on ProPublica by Lydia DePillis and republished under a Creative Commons License (CC BY-NC-ND 3.0)

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Business, Climate Solutions, Earth and Ecology, News, Observation, Politics

Six-Month Sentence for Lawyer Who Took on Chevron Denounced as ‘International Outrage’

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Conviction of Steven Donziger, said one critic, “perfectly encapsulates how corporate power has twisted the U.S. justice system to protect corporate interests and punish their enemies.”

Environmental justice advocates and other progressives on Friday condemned a federal judge’s decision Friday to sentence human rights lawyer Steven Donziger to six months in prison—following more than two years of house arrest related to a lawsuit he filed decades ago against oil giant Chevron.

The sentence, delivered by U.S. District Judge Loretta Preska in New York City, represents “an international outrage,” tweeted journalist Emma Vigeland following its announcement.

Donziger’s sentence came a day after the United Nations Working Group on Arbitrary Detention said it was “appalled” by the U.S. legal system’s treatment of the former environmental lawyer and demanded the U.S. government “remedy the situation of Mr. Steven Donziger without delay and bring it in conformity with the relevant international norms” by immediately releasing him.

Donziger represented a group of farmers and Indigenous people in the Lago Agrio region of Ecuador in the 1990s in a lawsuit against Texaco—since acquired by Chevron—in which the company was accused of contaminating soil and water with its “deliberate dumping of billions of gallons of cancer-causing waste into the Amazon.”

An Ecuadorian court awarded the plaintiffs a $9.5 billion judgment in 2011—a decision upheld by multiple courts in Ecuador—only to have a U.S. judge reject the ruling, accusing Donziger of bribery and evidence tampering. Chevron also countersued Donziger in 2011. 

In 2019, U.S. District Judge Lewis A. Kaplan of the Southern District of New York—a former corporate lawyer with investments in Chevron—held Donziger in contempt of court after he refused to disclose privileged information about his clients to the fossil fuel industry. Kaplan placed Donziger under house arrest, where he has remained under strict court monitoring for 787 days.

In addition to Kaplan’s own connections to Chevron, the judge appointed private attorneys to prosecute the case, including one who had worked for a firm that represented the oil giant.

Preska, who found Donziger guilty of the contempt charges in July, is a leader of the right-wing Federalist Society, which counts Chevron among its financial backers.

“As I face sentencing on Day 787 of house arrest, never forget what this case is really about,” tweeted Donziger on Friday morning, as he awaited the sentencing. “Chevron caused a mass industrial poisoning in the Amazon that crushed the lives of Indigenous peoples. Six courts and 28 appellate judges found the company guilty.”

https://twitter.com/SDonziger/status/1443900016859430916?s=20

Donziger indicated Friday afternoon that he plans to appeal the sentence.

“Stay strong,” he tweeted along with a photo from a rally attended by his supporters Friday.

350.org co-founder and author Bill McKibben said on social media that Donziger “deserves our thanks and support” for “daring to point out that Big Oil had poisoned the rainforest.”Rick Claypool, research director for Public Citizen, tweeted that Donziger’s case “perfectly encapsulates how corporate power has twisted the U.S. justice system to protect corporate interests and punish their enemies”—noting that as Donziger is ordered to prison for six months, members of the Sackler family recently won immunity from opioid lawsuits targeting their private company, Purdue Pharma.

“This ruling was done to deter ANYONE from crossing corporate special interests,” said progressive former congressional candidate Jen Perelman.

Originally published on Common Dreams by JULIA CONLEY and republished under a Creative Commons License (CC BY-NC-ND 3.0).

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Climate Solutions, LA Local

40 Million People Rely on the Colorado River. It’s Drying Up Fast.

Photo Credit: Nate Foong / Unsplash

One of the country’s most important sources of fresh water is in peril, the latest victim of the accelerating climate crisis.

On a 110-degree day several years ago, surrounded by piles of sand and rock in the desert outside of Las Vegas, I stepped into a yellow cage large enough to fit three standing adults and was lowered 600 feet through a black hole into the ground. There, at the bottom, amid pooling water and dripping rock, was an enormous machine driving a cone-shaped drill bit into the earth. The machine was carving a cavernous, 3-mile tunnel beneath the bottom of the nation’s largest freshwater reservoir, Lake Mead.

Lake Mead, a reservoir formed by the construction of the Hoover Dam in the 1930s, is one of the most important pieces of infrastructure on the Colorado River, supplying fresh water to Nevada, California, Arizona and Mexico. The reservoir hasn’t been full since 1983. In 2000, it began a steady decline caused by epochal drought. On my visit in 2015, the lake was just about 40% full. A chalky ring on the surrounding cliffs marked where the waterline once reached, like the residue on an empty bathtub. The tunnel far below represented Nevada’s latest salvo in a simmering water war: the construction of a $1.4 billion drainage hole to ensure that if the lake ever ran dry, Las Vegas could get the very last drop.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: Killing the Colorado The Water Crisis in the West

For years, experts in the American West have predicted that, unless the steady overuse of water was brought under control, the Colorado River would no longer be able to support all of the 40 million people who depend on it. Over the past two decades, Western states took incremental steps to save water, signed agreements to share what was left and then, like Las Vegas, did what they could to protect themselves. But they believed the tipping point was still a long way off.

Like the record-breaking heat waves and the ceaseless mega-fires, the decline of the Colorado River has been faster than expected. This year, even though rainfall and snowpack high up in the Rocky Mountains were at near-normal levels, the parched soils and plants stricken by intense heat absorbed much of the water, and inflows to Lake Powell were around one-fourth of their usual amount. The Colorado’s flow has already declined by nearly 20%, on average, from its flow throughout the 1900s, and if the current rate of warming continues, the loss could well be 50% by the end of this century.

Earlier this month, federal officials declared an emergency water shortage on the Colorado River for the first time. The shortage declaration forces reductions in water deliveries to specific states, beginning with the abrupt cutoff of nearly one-fifth of Arizona’s supply from the river, and modest cuts for Nevada and Mexico, with more negotiations and cuts to follow. But it also sounded an alarm: one of the country’s most important sources of fresh water is in peril, another victim of the accelerating climate crisis.

Americans are about to face all sorts of difficult choices about how and where to live as the climate continues to heat up. States will be forced to choose which coastlines to abandon as sea levels rise, which wildfire-prone suburbs to retreat from and which small towns cannot afford new infrastructure to protect against floods or heat. What to do in the parts of the country that are losing their essential supply of water may turn out to be the first among those choices.

The Colorado River’s enormous significance extends well beyond the American West. In addition to providing water for the people of seven states, 29 federally recognized tribes and northern Mexico, its water is used to grow everything from the carrots stacked on supermarket shelves in New Jersey to the beef in a hamburger served at a Massachusetts diner. The power generated by its two biggest dams — the Hoover and Glen Canyon — is marketed across an electricity grid that reaches from Arizona to Wyoming.

The formal declaration of the water crisis arrived days after the Census Bureau released numbers showing that, even as the drought worsened over recent decades, hundreds of thousands more people have moved to the regions that depend on the Colorado.

Phoenix expanded more over the past 10 years than any other large American city, while smaller urban areas across Arizona, Nevada, Utah and California each ranked among the fastest-growing places in the country. The river’s water supports roughly 15 million more people today than it did when Bill Clinton was elected president in 1992. These statistics suggest that the climate crisis and explosive development in the West are on a collision course. And it raises the question: What happens next?

Since about 70% of water delivered from the Colorado River goes to growing crops, not to people in cities, the next step will likely be to demand large-scale reductions for farmers and ranchers across millions of acres of land, forcing wrenching choices about which crops to grow and for whom — an omen that many of America’s food-generating regions might ultimately have to shift someplace else as the climate warms.

California, so far shielded from major cuts, has already agreed to reductions that will take effect if the drought worsens. But it may be asked to do more. Its enormous share of the river, which it uses to irrigate crops across the Imperial Valley and for Los Angeles and other cities, will be in the crosshairs when negotiations over a diminished Colorado begin again. The Imperial Irrigation District there is the largest single water rights holder from the entire basin and has been especially resistant to compromise over the river. It did not sign the drought contingency plan laying out cuts that other big players on the Colorado system agreed to in 2019.

New Mexico, Colorado, Utah and Wyoming — states in the river’s Upper Basin — will most likely also face pressure to use less water. Should that happen, places like Utah that hoped to one day support faster development and economic growth with their share of the river may have to surrender their ambition.

The negotiations that led to the region being even minimally prepared for this latest shortage were agonizing, but they were merely a warm-up for the pain-inflicting cuts and sacrifices that almost certainly will be required if the water shortages persist over the coming decades. The region’s leaders, for all their efforts to compromise, have long avoided these more difficult conversations. One way or another, farms will have to surrender their water, and cities will have to live with less of it. Time has run out for other options.

Western states arrived at this crucible in large part because of their own doing. The original multistate compact that governs the use of the Colorado, which was signed in 1922, was exuberantly optimistic: The states agreed to divide up an estimated total amount of water that turned out to be much more than what would actually flow. Nevertheless, with the building of the Hoover Dam to collect and store river water, and the development of the Colorado’s plumbing system of canals and pipelines to deliver it, the West was able to open a savings account to fund its extraordinary economic growth. Over the years since, those states have overdrawn the river’s average deposits. It should be no surprise that even without the pressures of climate change, such a plan would lead to bankruptcy.

Making a bad situation worse, leaders in Western states have allowed wasteful practices to continue that add to the material threat facing the region. A majority of the water used by farms — and thus much of the river — goes to growing nonessential crops like alfalfa and other grasses that feed cattle for meat production. Much of those grasses are also exported to feed animals in the Middle East and Asia. Short of regulating which types of crops are allowed, which state authorities may not even have the authority to do, it may fall to consumers to drive change. Water usage data suggests that if Americans avoid meat one day each week they could save an amount of water equivalent to the entire flow of the Colorado each year, more than enough water to alleviate the region’s shortages.

Water is also being wasted because of flaws in the laws. The rights to take water from the river are generally distributed — like deeds to property — based on seniority. It is very difficult to take rights away from existing stakeholders, whether cities or individual ranchers, so long as they use the water allocated to them. That system creates a perverse incentive: Across the basin, ranchers often take their maximum allocation each year, even if just to spill it on the ground, for fear that, if they don’t, they could lose the right to take that water in the future. Changes in the laws that remove the threat of penalties for not exercising water rights, or that expand rewards for ranchers who conserve water, could be an easy remedy.

A breathtaking amount of the water from the Colorado — about 10% of the river’s recent total flow — simply evaporates off the sprawling surfaces of large reservoirs as they bake in the sun. Last year, evaporative losses from Lake Mead and Lake Powell alone added up to almost a million acre feet of water — or nearly twice what Arizona will be forced to give up now as a result of this month’s shortage declaration. These losses are increasing as the climate warms. Yet federal officials have so far discounted technological fixes — like covering the water surface to reduce the losses — and they continue to maintain both reservoirs, even though both of them are only around a third full. If the two were combined, some experts argue, much of those losses could be avoided.

For all the hard-won progress made at the negotiating table, it remains to be seen whether the stakeholders can tackle the looming challenges that come next. Over the years, Western states and tribes have agreed on voluntary cuts, which defused much of the political chaos that would otherwise have resulted from this month’s shortage declaration, but they remain disparate and self-interested parties hoping they can miraculously agree on a way to manage the river without truly changing their ways. For all their wishful thinking, climate science suggests there is no future in the region that does not include serious disruptions to its economy, growth trajectory and perhaps even quality of life.

The uncomfortable truth is that difficult and unpopular decisions are now unavoidable. Prohibiting some water uses as unacceptable — long eschewed as antithetical to personal freedoms and the rules of capitalism — is now what’s needed most.

The laws that determine who gets water in the West, and how much of it, are based on the principle of “beneficial use” — generally the idea that resources should further economic advancement. But whose economic advancement? Do we support the farmers in Arizona who grow alfalfa to feed cows in the United Arab Emirates? Or do we ensure the survival of the Colorado River, which supports some 8% of the nation’s GDP?

Earlier this month, the Bureau of Reclamation released lesser-noticed projections for water levels, and they are sobering. The figures include an estimate for what the bureau calls “minimum probable in flow” — or the low end of expectations. Water levels in Lake Mead could drop by another 40 vertical feet by the middle 2023, ultimately reaching just 1,026 feet above sea level — an elevation that further threatens Lake Mead’s hydroelectric power generation for about 1.3 million people in Arizona, California and Nevada. At 895 feet, the reservoir would become what’s called a “dead pool”; water would no longer be able to flow downstream.

The bureau’s projections mean we are close to uncharted territory. The current shortage agreement, negotiated between the states in 2007, only addresses shortages down to a lake elevation of 1,025 feet. After that, the rules become murky, and there is greater potential for fraught legal conflicts. Northern states in the region, for example, are likely to ask why the vast evaporation losses from Lake Mead, which stores water for the southern states, have never been counted as a part of the water those southern states use. Fantastical and expensive solutions that have previously been dismissed by the federal government — like the desalinization of seawater, towing icebergs from the Arctic or pumping water from the Mississippi River through a pipeline — are likely to be seriously considered. None of this, however, will be enough to solve the problem unless it’s accompanied by serious efforts to lower carbon dioxide emissions, which are ultimately responsible for driving changes to the climate.

Meanwhile, population growth in Arizona and elsewhere in the basin is likely to continue, at least for now, because short-term fixes so far have obscured the seriousness of the risks to the region. Water is still cheap, thanks to the federal subsidies for all those dams and canals that make it seem plentiful. The myth persists that technology can always outrun nature, that the American West holds endless possibility. It may be the region’s undoing. As the author Wallace Stegner once wrote: “One cannot be pessimistic about the West. This is the native home of hope.”

Originally published on ProPublica by Abrahm Lustgarten via Creative Commons. This article is co-published with The New York Times.

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Business, Climate Solutions

Young PR and Ad Professionals Demand Industry Ditch Fossil Fuel Clients

Photo Credit/ Ehimetalor Akhere Unuabona / Unsplash

“You had a future, and so should we.”

That’s the first line of an open letter released Tuesday by 71 young professionals and students in the advertising and public relations industry calling for an end to contracts with fossil fuel companies, given their significant contributions to the climate emergency.

“The biggest threat to our future is climate change,” they write. “The world’s 20 biggest polluters are fossil fuel companies, with the entire energy sector responsible for creating 75% of carbon emissions. They are blocking necessary and urgently needed climate action.”

“And our industry is helping them do it,” the young professionals continue. “We’re angry. We’re afraid. And we refuse to sit back and watch it happen.”

The letter is clear in its demand:

“We, tomorrow’s leaders, call on all agencies, from the holding companies to the independent shops, to stop working with fossil fuel clients. This means oil giants as well as the alphabet soup of trade associations and front groups.”

– 71 Young Professionals

“No more marketing climate denial and disinformation” or “setting up fake front groups,” the letter adds, further calling for an end to “amplifying lies about how action will hurt the economy” and “greenwashing oil, gas, and coal companies, aiding them in their attempts to dodge pollution safeguards and block meaningful change.”

The signatories urge everyone in the industry—especially agency heads, founders, and leadership teams—to take a stand against continuing to work with polluters, emphasizing that the climate emergency is already taking a toll.

“We won’t be able to reduce, reuse, recycle our way out of tomorrow’s catastrophe—because it is already happening today,” says the letter, which is open for new signatories through the end of the week. “Over the last few years, we’ve seen the devastating impacts of climate-related disasters, like record-breaking wildfires, droughts, heatwaves, and hurricanes. Bold action is needed, at all levels and segments of society. The time has come for our industry to do its part.”

Fires are devouring swaths of the Western United States, forcing evacuations and shutting down every national forest in California. On Sunday, Hurricane Ida, a “poster child for a climate change-driven disaster,” slammed into the Gulf Coast as a Category 4 storm, killing at least four people, leaving more than a million without power amid widespread destruction, and sparking calls for President Joe Biden to declare a climate emergency.

“At some point in the recent past, climate change was something that was happening in some distant future, and maybe of little concern to most people. Well, that distant future is now today—everyone will experience climate change as a series of horrific front-page photos and videos until they themselves are taking those photos and videos. It’s no longer some abstract threat,” letter leader Joe Cole toldCommon Dreams.

Cole is strategist working with Clean Creatives, a campaign supported by Fossil Free Media that pressures ad and PR agencies to drop fossil fuel accounts.

The letter comes as the New York Times is under fire for allowing fossil fuel industry advertising, thanks to a new campaign and reporting by climate journalist Emily Atkin in her newsletter HEATED.

As Atkin reported Monday:

[A] new activist campaign to pressure the Times to stop creating and running fossil fuel ads is launching today. Called Ads Not Fit to Print, the campaign argues that fossil fuel advertisements endanger Times readers’ health in the same way now-banned cigarette ads did—and likely, even more.

“What the Times is doing right now is shameful,” said Genevieve Guenther, whose group End Climate Silence is spearheading the campaign. “On one hand, they’re trying to seem like part of the reality-based community who acknowledges the climate crisis and wants to solve it. On the other, they’re doing everything they can to keep the fossil fuel economy going because it is one of the sources of their own power and they believe in it.”

Activists aren’t the only ones taking issue with this practice, either. In conversations with HEATED over the last week, several current and former Times newsroom employees expressed concerns about the paper’s practice of creating and running fossil fuel ads. Their concerns ranged from undermining the Times‘ own climate reporting, to harming Times readers’ health, to aiding industry attempts to mislead the public about the deadly effects of fossil fuels.

Cole highlighted energy giants’ contributions to planet-heating pollution and told Common Dreams that “these clients are represented by some of the most storied ad agencies in the world like BBDO, Edelman, Ogilvy, and WundermanThompson.”

“These ads go on to be featured in some of the most prominent real estate around the world, from billboards to the NYT,” he said. “Although the tobacco industry was and is responsible for a personal health crisis, the fossil fuel industry is killing the entire planet.”

Praising Times journalists’ work on the climate emergency, Fossil Free Media director Jamie Henn tweeted that “the paper should stop doing them—and all of us—a disservice by continuing to make and run ads for fossil fuel corporations.”

In a statement about the letter Tuesday, Cole said that “any time our industry starts to change for the better, it is through a combination of outside and internal pressure. I believe in the power of young professionals in our industry—the leaders of tomorrow—to hasten the necessary transition away from fossil fuel clients.”

The strategist pointed to recent findings that July 2021 was the hottest month ever recorded and asserted that “it’s no longer acceptable for agency executives to ignore the damage their work with fossil fuel clients is doing to the planet.”

He argued that “even a single contract with a client like BP, Shell, or Exxon can wipe out the impact of an agency’s sustainability pledge. If agencies are serious about not only protecting the future of their young staff, but recruiting them in the first place they need to begin by transitioning away from fossil fuel work and rejecting new contracts.”

“The people signing this letter truly are the leaders of tomorrow,” Cole added, “and if agencies want to remain relevant, and attractive places to work for top young talent, they need to end their work for the worst polluters on the planet.”

Originally published by JESSICA CORBETT on Common Dreams via Creative Commons

This post has been updated with additional comment from Joe Cole.

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Finance, Observation, Politics

The Only Real Socialism in the US is Corporate Welfare

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Image by hafteh7 from Pixabay 

We do have socialism in this country—but it’s not Democrats’ policies. The real socialism is corporate welfare.

You may have heard Republicans in Congress rail about how the Democrats’ agenda is chock-full of scary “socialist” policies. 

We do have socialism in this country—but it’s not Democrats’ policies. The real socialism is corporate welfare. 

Thousands of big American corporations rake in billions each year in government subsidies, bailouts, and tax loopholes—all funded on the taxpayer dime, and all contributing to higher stock prices for the richest 1 percent who own half of the stock market, as well as CEOs and other top executives who are paid largely in shares of stock. 

Big Tech, Big Oil, Big Pharma, defense contractors, and big banks are the biggest beneficiaries of corporate welfare.

How? Follow the money. These corporations and their trade groups spend hundreds of millions each year on lobbying and campaign contributions. Their influence-peddling pays off. The return on these political investments is huge. It’s institutionalized bribery. 

An even more insidious example is corporations that don’t pay their workers a living wage. As a result, their workers have to rely on programs like Medicaid, public housing, food stamps and other safety nets. Which means you and I and other taxpayers indirectly subsidize these corporations, allowing them to enjoy even higher profits and share prices for their wealthy investors and executives.

Not only does corporate welfare take money away from us as taxpayers. It also harms smaller businesses that have a harder time competing with big businesses that get these subsidies. Everyone loses except those at the top. 

It’s more socialism for the rich, harsh capitalism for the rest. 

It should be ended.

I’m as sensitive as anyone to the sufferings of Afghans now, but I’ve had it with the sanctimony of journalists and pundits who haven’t thought about Afghanistan for 20 years—many of whom urged we get out—but who are now filling the August news hole with overwrought stories about Biden’s botched exit and Taliban atrocities. 

Yes, the exit could have been better planned and executed. Yes, it’s all horribly sad. But can we get a grip? The sudden all-consuming focus on Afghanistan is distracting us from hugely important stuff that’s coming to a head at home:

(1) Republican politicians and right-wing media worsening the surging Delta variant of COVID by fighting masks and vaccinations, as cities and school systems struggle to decide what to do;

(2) wildfires and floods consuming much of America, as House Democrats absurdly threaten to oppose Biden’s $3.5 trillion budget blueprint containing important measures to slow climate change;

(3) Texas on the verge of passing the nation’s most anti-democracy voting restrictions, adding to voter suppression measures in 24 other states, at the same time the “For the People Act” and the “John Lewis Voting Rights Act”—which would remedy these horrendous laws—languish in the Senate because Joe Manchin and Krysten Sinema refuse to do anything about the filibuster. 

Enough sanctimony over Afghanistan. Enough about Biden’s falling approval ratings. We’ve had enough wall-to-wall coverage of the Olympics and then Andrew Cuomo and now the airport in Kabul. Can we please focus on the biggest things that need and deserve our attention right now? The window of opportunity to do anything about them will close sooner than we expect. 

If we don’t take action now on COVID and the critical importance of vaccinations and masks, on climate change and Biden’s $3.5 trillion package, and on voter suppression and the necessity of the For the People and the John Lewis Voting Rights Acts, we may never. 

Originally published By ROBERT REICH on Common Dreams via Creative Commons

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Business, News, Observation

‘A Big Win’: USPS Must Turn Over Docs About DeJoy’s Potential Conflicts of Interest

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“The stench of corruption wafting up from Louis DeJoy’s office is so thick seagulls are flying in from the Jersey Shore and circling overhead.”

A leading government ethics watchdog on Wednesday cheered a federal judge’s ruling ordering the United States Postal Service to hand over documents concerning potential conflicts of interest involving embattled Postmaster General Louis DeJoy.

U.S. District Judge John D. Bates on Tuesday granted Citizens for Responsibility and Ethics in Washington (CREW) a full summary judgment (pdf) and orderedthe United States Postal Service (USPS) to give the advocacy group seven documents it requested under the Freedom of Information Act (FOIA).

USPS claimed the documents were FOIA-exempt. According to Law & Crime, “Four of the documents concerned a request for a certificate of divestiture from DeJoy and the remaining three concern his recusal from matters where he may have a conflict of interest.”

As CREW explained Wednesday:

Over the past seven years, the USPS has reportedly paid approximately $286 million to XPO Logistics, DeJoy’s ex-employer, and has “ramped up its business” with the company since DeJoy’s appointment as postmaster general. After his appointment, DeJoy continued to hold financial interests in XPO totaling between $30 and $75 million. DeJoy also held a significant amount of stock in Amazon, a major USPS competitor.

Earlier this month, Common Dreams reported on growing calls to fire DeJoy following the revelation by The Washington Post that USPS will pay XPO Logistics $120 million over the next five years. Rep. Gerry Connolly (D-Va.) responded to the Post report by calling DeJoy a “walking conflict of interest.”

Last Friday, a Post report that DeJoy had purchased hundreds of thousands of dollars worth of publicly traded bonds from Brookfield Asset Management—where USPS Board of Governors Chair Ron Bloom is a managing partner—fueled further calls for DeJoy’s termination, with Connolly calling Bloom and the postmaster general “bandits” whose “conflicts of interest do nothing but harm the Postal Service and the American people.”

CREW communications director Jordan Libowitz called Bates’ order “a big win not just for CREW, but for transparency advocates everywhere.”

“DeJoy’s decision-making as postmaster general has raised some serious ethical questions—now we should finally get some answers,” Libowitz added.

Rep. Bill Pascrell (D-N.J.) on Monday sent President Joe Biden a letter urging him to sack everyone former President Donald Trump appointed to the USPS board. Pascrell welcomed the Tuesday court order and reiterated his call for Biden to fire Trump appointees and “show DeJoy the door now before it’s too late.”

DeJoy and six of the nine USPS governors, including Bloom, were appointed by Trump; the rest are Biden appointees.

In addition to the alleged conflicts of interest in connection with XPO Logistics and Brookfield Asset Management, CREW, in advocating DeJoy’s ouster, notes that:

  • DeJoy and his wife, a former U.S. ambassador to Canada, got their jobs after contributing $2 million to Trump’s campaign coffers;
  • DeJoy is the first person in decades to lead the USPS without any previous experience in the agency;
  • DeJoy is under federal investigation for allegedly operating a scheme where he asked employees of his former company to make campaign contributions, then arranged for bonus payments to reimburse the employees; and
  • DeJoy apparently violated federal criminal laws by commanding the USPS to make policy changes at the agency that would depress or delay voting by mail in the 2020 election.

“Bottom line: Louis DeJoy has overseen an attack on the Postal Service and on American democracy itself,” CREW tweeted Wednesday. “The USPS Board of Governors must fire him before it’s too late.”

By BRETT WILKINS originally published on Common Dreams via Creative Commons.

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News, Observation, Politics

One Year of Afghanistan War Spending Could Fund Resettlement of 1.2 Million Refugees

Image by Amber Clay from Pixabay 

“We’ve spent billions on war. Now, let’s spend to bring Afghans to safety.”

As the Biden administration faces criticism for not doing enough to assist those fleeing Afghanistan, an analysis released Monday showed that the roughly $19 billion the Pentagon budgeted for the U.S. occupation of the country in 2020 alone could cover initial resettlement costs for 1.2 million refugees.

“We have a duty to save lives—and to do so, we must welcome many, many more refugees as quickly as possible.”

—Rep. Cori Bush

Lindsay Koshgarian of the National Priorities Project estimated that the $18.6 billion the Pentagon allocated for its 2020 operations in Afghanistan—where the Taliban is in the process of retaking powerafter two decades of deadly U.S. occupation—could pay up-front refugee relocation costs of $15,148 for the more than “250,000 Afghans displaced since the end of May (and growing)” and “a significant chunk of the 3.5 million Afghans who were internally displaced as of July.”

“Refugees typically receive some assistance after their arrival, but even if we expanded to cover an additional four years of the approximately $4,600 in annualized social service aid that refugees typically receive, we could still resettle more than half a million people, for just one year’s worth of the cost of fighting,” Koshgarian noted. “We’d face even lower costs to help resettle Afghans in countries closer to home—all the more reason after 20 years of war to step up with some serious resources and get it done.”

“After twenty years,” she added, “we owe the Afghan people at least that much.”

The analysis came as progressive lawmakers in the U.S. and global humanitarian organizations implored the Biden administration to open the U.S. to vulnerable Afghans attempting to escape a growing humanitarian crisis and Taliban rule. According to the United Nations Refugee Agency, 80% of those currently trying to flee Afghanistan are women and children.

In a speech on Monday, U.S. President Joe Biden said that “in the coming days, the U.S. military will provide assistance to move more [Special Immigrant Visa]-eligible Afghans and their families out of Afghanistan.” The Pentagon confirmedMonday that it is planning to house up to 22,000 Afghans at two U.S. bases—Fort Bliss in Texas and Fort McCoy in Wisconsin.

“We’re also expanding refugee access to cover other vulnerable Afghans who worked for our embassy: U.S. non-governmental agencies—or the U.S. non-governmental organizations; and Afghans who otherwise are at great risk; and U.S. news agencies,” the president added.

Following his remarks, Biden directed the U.S. State Department to use up to $500 million from the nation’s Emergency Refugee and Migration Assistance Fund to meet “unexpected urgent refugee and migration needs of refugees, victims of conflict, and other persons at risk as a result of the situation in Afghanistan, including applicants for Special Immigrant Visas.”

But critics have accused the Biden administration of failing to adequately plan for the rapid collapse of the Afghan government that followed the ongoing withdrawal of U.S. forces from the country—a still-deteriorating situation that has left countless people in limbo as they seek safety for themselves and their families.

In his speech Monday, Biden claimed the administration didn’t begin evacuating at-risk civilians sooner “because the Afghan government and its supporters discouraged us from organizing a mass exodus to avoid triggering, as they said, ‘a crisis of confidence.'”

Earlier this month, the U.S. State Department expanded eligibility for the Special Immigrant Visa (SIV) program, opening it to tens of thousands of Afghans who worked for U.S. government contractors, U.S.-based media outlets, and U.S.-based non-governmental organizations. The families of eligible Afghans also have access to the program, whose application process consists of an arduous 14 steps.

And as the Wall Street Journal observed on Monday, the program excludes the poorest Afghans by design. “To claim refugee status,” the Journal noted, “the Afghans must enter through a third country and cover the costs of travel and lodging on their own—a hurdle that is nearly impossible to surmount under the current, chaotic circumstances.”

In a letter to Biden on Monday, the advocacy organization Refugees International called on the administration to “express its willingness initially to resettle up to 200,000 Afghan refugees, as part of an international responsibility-sharing effort to rescue and resettle Afghans at risk.”

“While most would be resettled from countries of asylum,” the group wrote, “a program ultimately could involve direct resettlement from Afghanistan, akin to the Orderly Departure program that resulted in the resettlement of many hundreds of thousands of Vietnamese directly from their country of origin.”

Rep. Cori Bush (D-Mo.), part of a chorus of progressive lawmakers pushing Biden to do more to welcome refugees—in addition to ending the interventionist foreign policy approach that creates such humanitarian crises—noted in a tweetMonday that the U.S. “welcomed 120,000 refugees in a single year” in the aftermath of the Vietnam War.

“Yet the United States has only taken in ~2,000 Afghan refugees thus far,” Bush wrote. “We have a duty to save lives—and to do so, we must welcome many, many more refugees as quickly as possible.”

By JAKE JOHNSON originally published on Common Dreams via Creative Commons.

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Business, Economics, Observation

Secret IRS Files Reveal How Much the Ultrawealthy Gained by Shaping Trump’s “Big, Beautiful Tax Cut”

Above: Photo Collage / Lynxotic

In November 2017, with the administration of President Donald Trump rushing to get a massive tax overhaul through Congress, Sen. Ron Johnson stunned his colleagues by announcing he would vote “no.”

Making the rounds on cable TV, the Wisconsin Republican became the first GOP senator to declare his opposition, spooking Senate leaders who were pushing to quickly pass the tax bill with their thin majority. “If they can pass it without me, let them,” Johnson declared.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: The Secret IRS Files Inside the Tax Records of the .001%

Johnson’s demand was simple: In exchange for his vote, the bill must sweeten the tax break for a class of companies that are known as pass-throughs, since profits pass through to their owners. Johnson praised such companies as “engines of innovation.” Behind the scenes, the senator pressed top Treasury Department officials on the issue, emails and the officials’ calendars show.

Within two weeks, Johnson’s ultimatum produced results. Trump personally called the senator to beg for his support, and the bill’s authors fattened the tax cut for these businesses. Johnson flipped to a “yes” and claimed credit for the change. The bill passed.

The Trump administration championed the pass-through provision as tax relief for “small businesses.”

Confidential tax records, however, reveal that Johnson’s last-minute maneuver benefited two families more than almost any others in the country — both worth billions and both among the senator’s biggest donors.

Dick and Liz Uihlein of packaging giant Uline, along with roofing magnate Diane Hendricks, together had contributed around $20 million to groups backing Johnson’s 2016 reelection campaign.

The expanded tax break Johnson muscled through netted them $215 million in deductions in 2018 alone, drastically reducing the income they owed taxes on. At that rate, the cut could deliver more than half a billion in tax savings for Hendricks and the Uihleins over its eight-year life.

But the tax break did more than just give a lucrative, and legal, perk to Johnson’s donors. In the first year after Trump signed the legislation, just 82 ultrawealthy households collectively walked away with more than $1 billion in total savings, an analysis of confidential tax records shows. Republican and Democratic tycoons alike saw their tax bills chopped by tens of millions, among them: media magnate and former Democratic presidential candidate Michael Bloomberg; the Bechtel family, owners of the engineering firm that bears their name; and the heirs of the late Houston pipeline billionaire Dan Duncan.

Usually the scale of the riches doled out by opaque tax legislation — and the beneficiaries — remain shielded from the public. But ProPublica has obtained a trove of IRS records covering thousands of the wealthiest Americans. The records have enabled reporters this year to explore the diverse menu of options the tax code affords the ultrawealthy to avoid paying taxes.

The drafting of the Trump law offers a unique opportunity to examine how the billionaire class is able to shape the code to its advantage, building in new ways to sidestep taxes.

The Tax Cuts and Jobs Act was the biggest rewrite of the code in decades and arguably the most consequential legislative achievement of the one-term president. Crafted largely in secret by a handful of Trump administration officials and members of Congress, the bill was rushed through the legislative process.

As draft language of the bill made its way through Congress, lawmakers friendly to billionaires and their lobbyists were able to nip and tuck and stretch the bill to accommodate a variety of special groups. The flurry of midnight deals and last-minute insertions of language resulted in a vast redistribution of wealth into the pockets of a select set of families, siphoning away billions in tax revenue from the nation’s coffers. This story is based on lobbying and campaign finance disclosures, Treasury Department emails and calendars obtained through a Freedom of Information Act lawsuit, and confidential tax records.

For those who benefited from the bill’s modifications, the collective millions spent on campaign donations and lobbying were minuscule compared with locking in years of enormous tax savings.

A spokesperson for the Uihleins declined to comment. Representatives for Hendricks didn’t respond to questions. In response to emailed questions, Johnson did not address whether he had discussed the expanded tax break with Hendricks or the Uihleins. Instead, he wrote in a statement that his advocacy was driven by his belief that the tax code “needs to be simplified and rationalized.”

“My support for ‘pass-through’ entities — that represent over 90% of all businesses — was guided by the necessity to keep them competitive with C-corporations and had nothing to do with any donor or discussions with them,” he wrote.

By the summer of 2017, it was clear that Trump’s first major legislative initiative, to “repeal and replace” Obamacare, had gone up in flames, taking a marquee campaign promise with it. Looking for a win, the administration turned to tax reform.

“Getting closer and closer on the Tax Cut Bill. Shaping up even better than projected,” Trump tweeted. “House and Senate working very hard and smart. End result will be not only important, but SPECIAL!”

At the top of the Republican wishlist was a deep tax cut for corporations. There was little doubt that such a cut would make it into the final legislation. But because of the complexity of the tax code, slashing the corporate tax rate doesn’t actually affect most U.S. businesses.

Corporate taxes are paid by what are known in tax lingo as C corporations, which include large publicly traded firms like AT&T or Coca-Cola. Most businesses in the United States aren’t C corporations, they’re pass-throughs. The name comes from the fact that when one of these businesses makes money, the profits are not subject to corporate taxes. Instead, they “pass through” directly to the owners, who pay taxes on the profits on their personal returns. Unlike major shareholders in companies like Amazon, who can avoid taking income by not selling their stock, owners of successful pass-throughs typically can’t avoid it.

Pass-throughs include the full gamut of American business, from small barbershops to law firms to, in the case of Uline, a packaging distributor with thousands of employees.

So alongside the corporate rate cut for the AT&Ts of the world, the Trump tax bill included a separate tax break for pass-through companies. For budgetary reasons, the tax break is not permanent, sunsetting after eight years.

Proponents touted it as boosting “small business” and “Main Street,” and it’s true that many small businesses got a modest tax break. But a recent study by Treasury economists found that the top 1% of Americans by income have reaped nearly 60% of the billions in tax savings created by the provision. And most of that amount went to the top 0.1%. That’s because even though there are many small pass-through businesses, most of the pass-through profits in the country flow to the wealthy owners of a limited group of large companies.

Tax records show that in 2018, Bloomberg, whom Forbes ranks as the 20th wealthiest person in the world, got the largest known deduction from the new provision, slashing his tax bill by nearly $68 million. (When he briefly ran for president in 2020, Bloomberg’s tax plan proposed ending the deduction, though his plan was generally friendlier to the wealthy than those of his rivals.) A spokesperson for Bloomberg declined to comment.

Johnson’s intervention in November 2017 was designed to boost the bill’s already generous tax break for pass-through companies. The bill had allowed for business owners to deduct up to 17.4% of their profits. Thanks to Johnson holding out, that figure was ultimately boosted to 20%.

That might seem like a small increase, but even a few extra percentage points can translate into tens of millions of dollars in extra deductions in one year alone for an ultrawealthy family.

The mechanics are complicated but, for the rich, it generally means that a business owner gets to keep an extra 7 cents on every dollar of profit. To understand the windfall, take the case of the Uihlein family.

Dick, the great-grandson of a beer magnate, and his wife, Liz, own and operate packaging giant Uline. The logo of the Pleasant Prairie, Wisconsin, firm is stamped on the bottom of countless paper bags. Uline produced nearly $1 billion in profits in 2018, according to ProPublica’s analysis of tax records. Dick and Liz Uihlein, who own a majority of the company, reported more than $700 million in income that year. But they were able to slash what they owed the IRS with a $118 million deduction generated by the new tax break.

Liz Uihlein, who serves as president of Uline, has criticized high taxes in her company newsletter. The year before the tax overhaul, the couple gave generously to support Trump’s 2016 presidential campaign. That same year, when Johnson faced long odds in his reelection bid against former Sen. Russ Feingold, the Uihleins gave more than $8 million to a series of political committees that blanketed the state with pro-Johnson and anti-Feingold ads. That blitz led the Milwaukee Journal Sentinel to dub the Uihleins “the Koch brothers of Wisconsin politics.”

Johnson’s campaign also got a boost from Hendricks, Wisconsin’s richest woman and owner of roofing wholesaler ABC Supply Co. The Beloit-based billionaire has publicly pushed for tax breaks and said she wants to stop the U.S. from becoming “a socialistic ideological nation.”

Hendricks has said Johnson won her over after she grilled him at a brunch meeting six years earlier. She gave about $12 million to a pair of political committees, the Reform America Fund and the Freedom Partners Action Fund, that bought ads attacking Feingold.

In the first year of the pass-through tax break, Hendricks got a $97 million deduction on income of $502 million. By reducing the income she owed taxes on, that deduction saved her around $36 million.

Even after Johnson won the expansion of the pass-through break in late 2017, the final text of the tax overhaul wasn’t settled. A congressional conference committee had to iron out the differences between the Senate and House versions of the bill.

Sometime during this process, eight words that had been in neither the House nor the Senate bill were inserted: “applied without regard to the words ‘engineering, architecture.’”

With that wonky bit of legalese, Congress smiled on the Bechtel clan.

The Bechtels’ engineering and construction company is one of the largest and most politically connected private firms in the country. With surgical precision, the new language guaranteed the Bechtels a massive tax cut. In previous versions of the bill, construction would have been given a tax break, but engineering was one of the industries excluded from the pass-through deduction for reasons that remain murky.

When the bill, with its eight added words, took effect in 2018, three great-great-grandchildren of the company’s founder, CEO Brendan Bechtel and his siblings Darren and Katherine, together netted deductions of $111 million on $679 million in income, tax records show.

And that’s just one generation of Bechtels. The heirs’ father, Riley, also holds a piece of the firm, as does a group of nonfamily executives and board members. In all, Bechtel Corporation produced around $2.3 billion of profit in 2018 alone — the vast majority of which appears to be eligible for the 20% deduction.

Who wrote the phrase — and which lawmaker inserted it — has been a much-discussed mystery in the tax policy world. ProPublica found that a lobbyist who worked for both Bechtel and an industry trade group has claimed credit for the alteration.

In the months leading up to the bill’s passage in 2017, Bechtel had executed a full-court press in Washington, meeting with Trump administration officials and spending more than $1 million lobbying on tax issues.

Marc Gerson, of the Washington law firm Miller & Chevalier, was paid to lobby on the tax bill by both Bechtel and the American Council of Engineering Companies, of which Bechtel is a member. At a presentation for the trade group’s members a few weeks after Trump signed the bill into law, Gerson credited his efforts for the pass-through tax break, calling it a “major legislative victory for the engineering industry.” Gerson did not respond to a request for comment.

Bechtel’s push was part of a long history of lobbying for tax breaks by the company. Two decades ago, it even hired a former IRS commissioner as part of a successful bid to get “engineering and architectural services” included in one of President George W. Bush’s tax cuts.

The company’s lobbying on the Trump tax bill, and the tax break it received, highlight a paradox at the core of Bechtel: The family has for years showered money on anti-tax candidates even though, as The New Yorker’s Jane Mayer has written, Bechtel “owed almost its entire existence to government patronage.” Most famous for being one of the companies that built the Hoover Dam, in recent years it has bid on and won marquee federal projects. Among them: a healthy share of the billions spent by American taxpayers to rebuild Iraq after the war. The firm recently moved its longtime headquarters from San Francisco to Reston, Virginia, a hub for federal contractors just outside the Beltway.

A spokesperson for Bechtel Corporation didn’t respond to questions about the company’s lobbying. The spokesperson, as well as a representative of the family’s investment office, didn’t respond to requests to accept questions about the family’s tax records.

Brendan Bechtel has emerged this year as a vocal critic of President Joe Biden’s proposal to pay for new infrastructure with tax hikes.

“It’s unfair to ask business to shoulder or cover all the additional costs of this public infrastructure investment,” he said on a recent CNBC appearance.

As the landmark tax overhaul sped through the legislative process, other prosperous groups of business owners worried they would be left out. With the help of lobbyists, and sometimes after direct contact with lawmakers, they, too, were invited into what Trump dubbed his “big, beautiful tax cut.”

Among the biggest winners during the final push were real estate developers.

The Senate bill included a formula that restricted the size of the new deduction based on how much a pass-through business paid in wages. Congressional Republicans framed the provision as rewarding businesses that create jobs. In effect, it meant a highly profitable business with few employees — like a real estate developer — wouldn’t be able to benefit much from the break.

Developers weren’t happy. Several marshaled lobbyists and prodded friendly lawmakers to turn things around.

At least two of them turned to Johnson.

“Dear Ron,” Ted Kellner, a Wisconsin developer, and a colleague wrote in a letter to Johnson. “I’m concerned that the goal of a fair, efficient and growth oriented tax overhaul will not be achieved, especially for private real estate pass-through entities.”

Johnson forwarded the letter from Kellner, a political donor of his, to top Republicans in the House and Senate: “All, Yesterday, I received this letter from very smart and successful businessmen in Milwaukee,” adding that the legislation as it stood gave pass-throughs “widely disparate, grossly unfair” treatment.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, responded with a promise to do more: “Senator — I strongly agree we should continue to improve the pass-through provisions at every step. You are a great champion for this.” Congress is not subject to the Freedom of Information Act, but Treasury officials were copied on the email exchange. ProPublica obtained the exchange after suing the Treasury Department.

Kellner got his wish. In the final days of the legislative process, real estate investors were given a side door to access the full deduction. Language was added to the final legislation that allowed them to qualify if they had a large portfolio of buildings, even if they had small payrolls.

With that, some of the richest real estate developers in the country were welcomed into the fold.

The tax records obtained by ProPublica show that one of the top real estate industry winners was Donald Bren, sole owner of the Southern California-based Irvine Company and one of the wealthiest developers in the United States.

In 2018 alone, Bren personally enjoyed a deduction of $22 million because of the tax break. Bren’s representatives did not respond to emails and calls from ProPublica.

His company had hired Wes Coulam, a prominent Washington lobbyist with Ernst & Young, to advocate for its interests as the bill was being hammered out. Before Coulam became a lobbyist, he worked on Capitol Hill as a tax policy adviser for Utah Sen. Orrin Hatch.

Hatch, then the Republican chair of the Senate Finance Committee, publicly took credit for the final draft of the new deduction, amid questions about the real estate carveout. Hatch’s representatives did not respond to questions from ProPublica about how the carveout was added.

ProPublica’s records show that other big real estate winners include Adam Portnoy, head of commercial real estate giant the RMR Group, who got a $14 million deduction in 2018. Donald Sterling, the real estate developer and disgraced former owner of the Los Angeles Clippers, won an $11 million deduction. Representatives for Portnoy and Sterling did not respond to questions from ProPublica.

Another gift to the real estate industry in the bill was a tax deduction of up to 20% on dividends from real estate investment trusts, more commonly known as REITs. These companies are essentially bundles of various real estate assets, which investors can buy chunks of. REITs make money by collecting rent from tenants and interest from loans used to finance real estate deals.

The tax cut for these investment vehicles was pushed by both the Real Estate Roundtable, a trade group for the entire industry, and the National Association of Real Estate Investment Trusts. The latter, a trade group specifically for REITs, spent more than $5 million lobbying in Washington the year the tax bill was drafted, more than it had in any year in its history.

Steven Roth, the founder of Vornado Realty Trust, a prominent REIT, is a regular donor to both groups’ political committees.

Roth had close ties to the Trump administration, including advising on infrastructure and doing business with Jared Kushner’s family. He became one of the biggest winners from the REIT provision in the Trump tax law.

Roth earned more than $27 million in REIT dividends in the two years after the bill passed, potentially allowing him a tax deduction of about $5 million, tax records show. Roth did not respond to requests for comment, and his representatives did not accept questions from ProPublica on his behalf.

Another carveout benefited investors of publicly traded pipeline businesses. Sen. John Cornyn, a Texas Republican, added an amendment for them to the Senate version of the bill just before it was voted on.

Without his amendment, investors who made under a certain income would have received the deduction anyway, experts told ProPublica. But for higher-income investors, a slate of restrictions kicked in. In order to qualify, they would have needed the businesses they’re invested in to pay out significant wages, and these oil and gas businesses, like real estate developers, typically do not.

Cornyn’s amendment cleared the way.

The trade group for these companies and one of its top members, Enterprise Products Partners, a Houston-based natural gas and crude oil pipeline company, had both lobbied on the bill. Enterprise was founded by Dan Duncan, who died in 2010.

The Trump tax bill delivered a win to Duncan’s heirs. ProPublica’s data shows his four children, who own stakes in the company, together claimed more than $150 million in deductions in 2018 alone. The tax provision for “small businesses” had delivered a windfall to the family Forbes ranked as the 11th richest in the country.

In a statement, an Enterprise spokesperson wrote: “The Duncan family abides by all applicable tax laws and will not comment on individual tax returns, which are a private matter.” Cornyn’s office did not respond to questions about the senator’s amendment.

The tax break is due to expire after 2025, and a gulf has opened in Congress about the future of the provision.

In July, Senate Finance Chair Ron Wyden, D-Ore., proposed legislation that would end the tax cut early for the ultrawealthy. In fact, anyone making over $500,000 per year would no longer get the deduction. But it would be extended to the business owners below that threshold who are currently excluded because of their industry. The bill would “make the policy more fair and less complex for middle-class business owners, while also raising billions for priorities like child care, education, and health care,” Wyden said in a statement.

Meanwhile, dozens of trade groups, including the Chamber of Commerce, are pushing to make the pass-through tax cut permanent. This year, a bipartisan bill called the Main Street Tax Certainty Act was introduced in both houses of Congress to do just that.

One of the bill’s sponsors, Rep. Henry Cuellar, D-Texas, pitched the legislation this way: “I am committed to delivering critical relief for our nation’s small businesses and the communities they serve.”

Originally published on ProPublica by Justin Elliott and Robert Faturechi

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Climate Solutions, Earth and Ecology, Observation

‘Unimaginably Catastrophic’: Researchers Fear Gulf Stream System Could Collapse

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Above: Gulf Stream Sea Surface Currents & Temperatures / Photo / NASA

“Scientists say we cannot allow this to happen. People in power stand in our way.”

Originally published on Common Dreams via Creative Commons

While heatwaves, fires, and floods produce warnings that “we are living in a climate emergency, here and now,” a scientific study suggested Thursday that a crucial Atlantic Ocean current system could collapse, which “would have severe impacts on the global climate system.”

“The likelihood of this extremely high-impact event happening increases with every gram of CO2 that we put into the atmosphere.”
—Niklas Boers, PIK

The study, published in the journal Nature Climate Change, focuses on the Atlantic Meridional Overturning Circulation (AMOC), which includes the Gulf Stream. As the United Kingdom’s Met Office explains, it is “a large system of ocean currents that carry warm water from the tropics northwards into the North Atlantic,” like a conveyor belt.

Previous research has shown AMOC weakening in recent centuries. The author of the new study, Niklas Boers of the Potsdam Institute of Climate Impact Research (PIK), found that this is likely related to a loss of stability.

“The Atlantic Meridional Overturning is one of our planet’s key circulation systems,” Boers, who is also affiliated with universities in the U.K. and Germany, said in a statement.

“We already know from some computer simulations and from data from Earth’s past, so-called paleoclimate proxy records, that the AMOC can exhibit—in addition to the currently attained strong mode—an alternative, substantially weaker mode of operation,” he continued. “This bi-stability implies that abrupt transitions between the two circulation modes are in principle possible.”

In the absence of long-term data on the current system’s strength, Boers looked at its “fingerprints,” sea-surface temperature and salinity patterns. He said that “a detailed analysis of these fingerprints in eight independent indices now suggests that the AMOC weakening during the last century is indeed likely to be associated with a loss of stability.”

“The findings support the assessment that the AMOC decline is not just a fluctuation or a linear response to increasing temperatures,” he continued, “but likely means the approaching of a critical threshold beyond which the circulation system could collapse.”

As The Guardian‘s Damian Carrington reports, the collapse of “one of the planet’s main potential tipping points” would be devastating on a global scale:

Such an event would have catastrophic consequences around the world, severely disrupting the rains that billions of people depend on for food in India, South America, and West Africa; increasing storms and lowering temperatures in Europe; and pushing up the sea level in the eastern U.S. It would also further endanger the Amazon rainforest and Antarctic ice sheets.

The complexity of the AMOC system and uncertainty over levels of future global heating make it impossible to forecast the date of any collapse for now. It could be within a decade or two, or several centuries away. But the colossal impact it would have means it must never be allowed to happen, the scientists said.

“The signs of destabilization being visible already is something that I wouldn’t have expected and that I find scary,” Boers told the newspaper. “It’s something you just can’t [allow to] happen.”

It is unclear what level of global heating would cause a collapse, “so the only thing to do is keep emissions as low as possible,” he added. “The likelihood of this extremely high-impact event happening increases with every gram of CO2 that we put into the atmosphere.”

Some climate action advocates responded to the study by highlighting a science fiction movie that, as famed film critic Roger Ebert wrote nearly two decades ago, “is ridiculous, yes, but sublimely ridiculous—and the special effects are stupendous.”

“We all laughed at The Day After Tomorrow, back in 2004,” said Guy Shrubsole, policy and campaigns coordinator at Rewilding Britain. “Turned out it was a documentary.”

The environmental advocacy group 350 Tacoma responded to the findings with a call to action.

“There are warning signs that the Gulf Stream could collapse, an unimaginably catastrophic (and irreversible) impact of fossil fuel-caused climate breakdown,” the group tweeted. “Scientists say we cannot allow this to happen. People in power stand in our way.”

The study comes ahead of a United Nations climate summit in Glasgow set to begin October 31. Last month, U.N. Secretary-General António Guterres noted the upcoming event and reminded leaders of wealthy countries that “the world urgently needs a clear and unambiguous commitment to the 1.5-degree goal of the Paris agreement,” and “we are way off track.”

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Business, Economics, Finance

Why You Can’t Turn Your Roth IRA Into a Billion-Dollar Tax Shelter

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The Secret IRS Files

Inside the Tax Records of the .001%

Last week, ProPublica published the story of how PayPal co-founder and tech investor Peter Thiel was able to turn a Roth IRA initially worth around $2,000 into a jaw-dropping $5 billion tax-free retirement stash in just 20 years.

Originally published by ProPublica ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

The story is even more remarkable because Congress created the Roth IRA in 1997 to encourage middle-class Americans to save for their golden years. Most Americans have struggled to do even that; the average account was worth about $39,000 in 2018. But Thiel and other billionaires have managed to turn their mundane Roths into giant onshore tax shelters.

Thiel was able to launch his Roth into the stratosphere through a complicated strategy involving the purchase of nonpublic stock at bargain prices — the kind of deal most people can’t access. Experts say it risked running afoul of rules designed to prevent IRAs from becoming illegal tax shelters. (Thiel’s spokesman didn’t respond to questions.)

Other ultrawealthy Americans have used different means to build Roths worth tens or hundreds of millions of dollars. Senate Finance Chairman Ron Wyden is now looking at how to end the use of the Roth as “yet another tax dodge that allows mega millionaires and billionaires to avoid paying taxes.”

How are they able to do it while you can’t? Check out our explainer of one way the Roth works for the ultrawealthy and not for you.

by Nadia Sussman, Sherene Strausberg and Justin Elliott for ProPublica and published via Creative Commons

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Business, Economics, Finance

The Number of People With IRAs Worth $5 Million or More Has Tripled, Congress Says

Photo Credit / Morgan Housel / Unsplash

The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.

The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.

Originally published by ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: The Secret IRS Files Inside the Tax Records of the .001%

The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.

The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica’s story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.

In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country’s inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers,” Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level.”

Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.

But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they’ve done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.

Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.

The latest numbers come from analysts at Congress’ nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.

The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.

Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation.” Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited.”

For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority.” Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.

Wyden and Neal’s push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.

by Justin Elliott, James Bandler and Patricia Callahan for ProPublica and published via Creative Commons License

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