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  • White House launches last ditch effort to dissuade OPEC from cutting oil production to avoid a ‘total disaster’ | CNN Politics

    White House launches last ditch effort to dissuade OPEC from cutting oil production to avoid a ‘total disaster’ | CNN Politics

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    Washington
    CNN
     — 

    The Biden administration has launched a full-scale pressure campaign in a last-ditch effort to dissuade Middle Eastern allies from dramatically cutting oil production, according to multiple sources familiar with the matter.

    The push comes ahead of Wednesday’s crucial meeting of OPEC+, the international cartel of oil producers that is widely expected to announce a significant cut to output in an effort to raise oil prices. That in turn would cause US gasoline prices to rise at a precarious time for the Biden administration, just five weeks before the midterm elections.

    For the past several days, President Joe Biden’s senior-most energy, economic and foreign policy officials have been enlisted to lobby their foreign counterparts in Middle Eastern allied countries including Kuwait, Saudi Arabia, and the UAE to vote against cutting oil production.

    Members of the Saudi-led oil cartel and its allies including Russia, known as OPEC+, are expected to announce production cuts potentially up to more than one million barrels per day. That would be the largest cut since the beginning of the pandemic and could lead to a dramatic spike in oil prices.

    Some of the draft talking points circulated by the White House to the Treasury Department on Monday that were obtained by CNN framed the prospect of a production cut as a “total disaster” and warned that it could be taken as a “hostile act.”

    “It’s important everyone is aware of just how high the stakes are,” said a US official of what was framed as a broad administration effort that is expected to continue in the lead up to the Wednesday OPEC+ meeting.

    The White House is “having a spasm and panicking,” another US official said, describing this latest administration effort as “taking the gloves off.” According to a White House official, the talking points were being drafted and exchanged by staffers and not approved by White House leadership or used with foreign partners.

    In a statement to CNN, National Security Council spokesperson Adrienne Watson said, “We’ve been clear that energy supply should meet demand to support economic growth and lower prices for consumers around the world and we will continue to talk with our partners about that.”

    For Biden, a dramatic cut in oil production could not come at a worse time. The administration has for months engaged in an intensive domestic and foreign policy effort to mitigate soaring energy prices in the wake of Russia’s invasion of Ukraine. That work appeared to pay off, with US gasoline prices falling for almost 100 days in a row.

    But with just a month to go before the critical midterm elections, US gasoline prices have begun to creep up again, posing a political risk the White House is desperately trying to avoid. As US officials have moved to gauge potential domestic options to head off gradual increases over the last several weeks, the news of major OPEC+ action presents a particularly acute challenge.

    Watson, the NSC spokesperson declined to comment on the midterms, saying instead, “Thanks to the President’s efforts, energy prices have declined sharply from their highs and American consumers are paying far less at the pump.”

    Amos Hochstein, Biden’s top energy envoy, has played a leading role in the lobbying effort, which has been far more extensive than previously reported amid extreme concern in the White House over the potential cut. Hochstein, along with top national security official Brett McGurk and the administration’s special envoy to Yemen Tim Lenderking, traveled to Jeddah late last month to discuss a range of energy and security issues as a follow up to Biden’s high-profile visit to Saudi Arabia in July.

    Officials across the administration’s economic and foreign policy teams have also been involved with reaching out to OPEC governments as part of the latest effort to stave off a production cut.

    The White House has asked Treasury Secretary Janet Yellen to make the case personally to some Gulf state finance ministers, including from Kuwait and the UAE, and try to convince them that a production cut would be extremely damaging to the global economy. The US has argued that in the long-run a cut in oil production would create more downward pressure on prices – the opposite of what a significant cut would be designed to accomplish. Their logic is that “cutting right now would increase risks of inflation,” lead to higher interest rates and ultimately a greater risk of recession.

    “There is great political risk to your reputation and relations with the United States and the west if you move forward,” the White House draft talking points suggested Yellen communicate to her foreign counterparts.

    A senior US official acknowledged that the administration has been lobbying the Saudi-led coalition for weeks to try to convince them not to cut oil production.

    It comes less than three months after President Joe Biden traveled to Saudi Arabia and met with Crown Prince Mohammed bin Salman on a trip that was driven in part by a desire to convince Saudi Arabia, the de facto leader of OPEC, to increase oil production which would help bring down the then-skyrocketing gas prices.

    President Joe Biden (L) and Saudi Crown Prince Mohammed bin Salman (R) arrive for the family photo during the Jeddah Security and Development Summit (GCC+3) at a hotel in Saudi Arabia's Red Sea coastal city of Jeddah on July 16, 2022.

    When OPEC+ agreed a few weeks later to a modest 100,000 barrel increase in production, critics argued Biden had gotten little out of the trip.

    The trip was billed as a meeting with regional leaders about issues critical to US national security, including Iran, Israel and Yemen. It was criticized for its lack of results and for rehabbing the image of the crown prince who had been directly blamed by Biden for orchestrating the killing of Washington Post columnist Jamal Khashoggi.

    In the months leading up to the meeting, Biden’s top aides for the Middle East and energy, McGurk and Hochstein, shuttled between Washington and Saudi Arabia planning and coordinating the visit.

    One diplomatic official in the region described the US campaign to block production cuts as less of a hard sell, and more of an effort to underscore a critical international moment given the economic fragility and ongoing war in Ukraine. Though another source familiar with the discussions told CNN it was described by a diplomat from one of the countries approached as “desperate.”

    A source familiar with the outreach says a call was planned with the UAE but the effort was rebuffed by Kuwait. Kuwait’s embassy in Washington did not immediately respond to a request for comment. Neither did Saudi Arabia’s. The UAE embassy declined to comment.

    Publicly, the White House has cautiously avoided weighing in on the possibility of a dramatic oil production cut.

    “We are not members of OPEC+, and so I don’t want to get ahead of what could potentially come out of that meeting,” White House press secretary Karine Jean-Pierre told reporters Monday. The US focus, Jean-Pierre said, remains “taking every step to ensure markets are sufficiently supplied to meet demand for a growing global economy.”

    OPEC+ members are weighing a more dramatic cut due to what has been a precipitous decline in prices, which have dropped sharply to below $90 per barrel in recent months.

    Hanging over Wednesday’s OPEC+ meeting in Vienna will also be the looming oil price cap that European nations intend to impose on Russian oil exports as punishment for Russia’s invasion of Ukraine. Many OPEC+ members, not only Russia, have expressed unhappiness with the prospect of a price cap because of the precedent it could set for consumers, rather than the market, to dictate the price of oil.

    Included in the White House talking points to Treasury was a US proposal that if OPEC+ decides against a cut this week the US will announce a buyback of up to 200 million barrels to refill its Strategic Petroleum Reserve (SPR), an emergency stockpile of petroleum that the US has been tapping into this year to help lower oil prices.

    The administration has made it clear to OPEC+ for months, the senior US official said, that the US is willing to buy OPEC’s oil to replenish the SPR. The idea has been to convey to OPEC+ that the US “won’t leave them hanging dry” if they invest money in production, the official said, and therefore, that prices won’t collapse if global demand decreases.

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  • Dow rallies more than 1,000 points in two days as fear begins to fade | CNN Business

    Dow rallies more than 1,000 points in two days as fear begins to fade | CNN Business

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    New York
    CNN Business
     — 

    Is the worst really over on Wall Street? It’s too soon to say. But stocks rose sharply again Tuesday morning following Monday’s big rally.

    The Dow surged more than 700 points, or 2.4% shortly after the opening bell. The Dow has soared nearly 1,500 points in the past two days. It is now back above the key 30,000 milestone and is about 19% off its record high, meaning that is no longer in a bear market.

    The S&P 500 and Nasdaq gained 2.7% and 3.1% respectively. But both of those indexes remain in bear territory, at more than 20% off their all-time highs.

    It appears that the market bears may be going into hibernation, at least temporarily. Not even the news of North Korea firing a missile over Japan was enough to stop the bulls from celebrating.

    The market’s mood has improved due to renewed hopes that banking giant Credit Suisse

    (CS)     will be able to avoid a financial meltdown similar to Wall Street firm Lehman Brothers 14 years ago.

    There have been growing fears that Credit Suisse is in serious trouble. But the bank’s stock price has rebounded in the past two days and the cost to insure Credit Suisse’s bonds fell too. That’s a sign that investor anxiety about the bank’s future has subsided somewhat.

    Major European stock exchanges have rallied in the past few days as well as jittery investors relax a bit. One fund manager noted that there are more companies that look attractive lately given the large pullback in global markets so far this year.

    “There are opportunities within Europe. There are some companies we have admired from afar that are getting interesting,” said Louis Florentin-Lee, a manager with the Lazard International Quality Growth Portfolio.

    A smaller than expected interest rate hike by the The Reserve Bank of Australia also is lifting spirits on Wall Street. Central banks around the world are boosting rates to fight inflation. But economic and market uncertainty could lead the Federal Reserve and other banks to slow the pace of rate increases.

    The worry is that overly aggressive rate hikes could lead to a significant recession. CEOs surveyed by KPMG US are predicting a downturn in the next 12 months and they are worried that it won’t be mild or short.

    But bond investors are now starting to price in the possibility that the Fed will pull back on its rate hiking spree. The benchmark 10-year US Treasury yield, which briefly spiked to 4% and hit its highest level since 2008 last week, has since tumbled and is now back around 3.6%.

    Investors no longer seem as nervous about the future as they did just a week ago either. The VIX

    (VIX)    , a key indicator of volatility on Wall Street, fell about 5% Tuesday. The CNN Business Fear & Greed Index, which looks at the VIX

    (VIX)     and six other measures of market sentiment, moved out of Extreme Fear territory as well. But it remains at Fear levels.

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  • Wages are the most important number to watch in the jobs report | CNN Business

    Wages are the most important number to watch in the jobs report | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN Business
     — 

    Investors, economists and members of the Federal Reserve will be poring over the September jobs report on Friday morning for clues about the health of the economy. But one figure may matter more than most…and it’s not the number of jobs added or the unemployment rate. It’s wage growth.

    Inflation is not just a function of the price of oil and other commodities and production costs like manufacturing and shipping. How much workers take home in their paychecks is also a big part of the inflation picture.

    When people have more money in their wallets (virtual or good old-fashioned leather ones), they tend to be more willing to spend it. That gives companies additional flexibility to raise prices.

    Average hourly wages rose 5.2% over the past 12 months according to the August jobs report. That’s down from a 2022 peak growth rate of 5.6% in March.

    So how aggressively will the Fed need to raise rates going forward? A lot will depend on whether wage growth continues to slow.

    Companies can’t raise prices as much if workers are making less or they risk big destruction in demand.

    The problem is that wage growth above 5% is still historically high. Before the pandemic, wages typically rose just 3% year-over-year. But labor shortages, due to Covid-19 and people dropping out of the workforce, shifted power from employers to employees when it came to worker pay.

    That’s another reason why companies have continued to raise prices: To offset rising costs.

    The government reported Friday that its preferred inflation metric, personal consumption expenditures (PCE), rose 6.2% from a year ago in August. That was lower than July’s reading.

    But the so-called core PCE figure, which excludes food and energy prices, rose 4.9% through August, up from a 4.7% increase in July.

    What’s more, the Fed typically is looking for just a 2% growth rate in the headline PCE number as a sign of price stability. That’s not going to happen anytime soon. In fact, the Fed’s latest forecasts suggest that the central bank thinks PCE will rise 5.4% this year, up from projections of 5.2% in June.

    “I don’t see anything in the near-term to give the Fed tons of comfort that inflation is on the trajectory to 2%,” said David Petrosinelli, senior trader with InspireX. “Wages will remain elevated and that will keep the Fed in a pickle.”

    But there’s another concern. Wages, while still rising, are not actually keeping pace with the increase in consumer prices. You don’t need to be a math genius to realize that 5.2% is less than 6.2%.

    “Wages are a real pain point. People are paying more but not making more,” said Marta Norton, chief investment officer of the Americas with Morningstar Investment Management. With that in mind, Norton said there is a “higher probability of stagflation.”

    Stagflation is the nasty economic combination of stagnant growth and persistent inflation.

    Retail sales have held up relatively well despite inflation pressures, but Norton warns that can’t last forever. American shoppers would eventually reach their breaking point and just start buying essentials. A slowdown in consumption will inevitably lead to lower prices…but also slower economic growth.

    “Inflation is its own cure. Consumers have the power to spend or not spend,” she said.

    The third quarter is mercifully over. It’s been another doozy for the market. September in particular was bleak. It was the worst month for the Dow since the start of the pandemic in March 2020.

    But even though we’re seemingly in a bear market for everything as bonds, gold and bitcoin have all tumbled this year as well, there are some hopeful signs for the next few months.

    The fourth quarter is typically a festive time on Wall Street. Investors tend to buy stocks in anticipation of robust consumer shopping during the holidays. Businesses typically spend more as well to flush out those yearly budgets. And major companies also often give rosy guidance in October about earnings expectations for the coming year.

    “October has been a turnaround month—a ‘bear killer’ if you will,” said Jeff Hirsch, editor-in-chief of the Stock Trader’s Almanac, in a recent blog post.

    Hirsch added that a dozen bear markets since World War II have ended in the month of October. And of those twelve, seven market bottoms happened during midterm election years.

    Traders will definitely be keeping close tabs on Washington this fall to see if Republicans gain control of the House. That could lead to more gridlock in DC, which investors tend to like.

    Whether or not Corporate America and investors are going to be so bullish this October is up for debate given the concerns about inflation, interest rates and the global economy. After all, October is also famous for huge crashes, most recently in 2008 but also in 1987 and, of course, 1929.

    So stocks definitely could take another turn for the worse. But experts are hopeful that the end of the bear market is in sight.

    “We’re nearer to a bottom,” said Christopher Wolfe, chief investment officer of First Republic Private Wealth Management. “A lot of quality companies are on sale. It’s a time to be patient and reposition.”

    Monday: US ISM manufacturing; China stock markets closed all week

    Tuesday: US job openings and labor turnover (JOLTS); Japan inflation; Australia interest rate decision

    Wednesday: US ADP private sector jobs; US ISM services; OPEC+ meeting

    Thursday: US weekly jobless claims; earnings from ConAgra

    (CAG)    , Constellation Brands

    (STZ)    , McCormick

    (MKC)     and Levi Strauss

    (LEVI)

    Friday: US jobs report; Germany industrial production; earnings from Tilray

    (TLRY)

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  • Opinion: A piece of paradise lost | CNN

    Opinion: A piece of paradise lost | CNN

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    Editor’s Note: Sign up to get this weekly column as a newsletter. We’re looking back at the strongest, smartest opinion takes of the week from CNN and other outlets.



    CNN
     — 

    “Buy land,” the saying goes, “they’re not making it anymore.”

    Variously attributed to Mark Twain and Will Rogers, the advice fits well with the national fixation on real estate, home values and location, location, location. The scarcity of land that can be developed – and surging demand for desirable locations – drove US median home prices over $400,000 for the first time last quarter before interest rate hikes started cooling the market.

    In Florida, a warm climate, expansive coastline and low taxes helped fuel a long-term boom, making it the third most populous state. As Hurricane Ian carved an awful path of destruction through the center of the state last week, the damage to people and property was severe. At least 66 people died, homes and businesses were destroyed and for many people, power may be out for weeks.

    Florida tightened its building standards after the devastation wrought by Hurricane Andrew in 1992 but even with stronger structures, there’s little chance of avoiding catastrophic damage when 150 mph winds, torrential rain and steep storm surges hit a populated area.

    “The simple fact is that when more people are exposed to a natural hazard such as a hurricane,” wrote Stephen Strader, an associate professor of geography and the environment at Villanova University, “the odds for a major disaster to occur are greater. As our population and built environment grows and expands, we are more readily placing ourselves in harm’s way. The wetlands and mangroves that once acted as natural ‘buffers’ to the rising waters and waves that come with hurricanes are now shrinking or gone. They have been replaced by subdivisions.”

    Strader traces Florida’s boom back to the early 1910s, when “a man named Carl Fisher (best known as the automobile magnate responsible for building the Indianapolis Motor Speedway) decided to take a vacation on what is now known as Miami Beach.”

    “He quickly realized the moneymaking opportunity at hand, buying, clearing and filling in thousands of acres of swamps and mangroves to make way for new waterfront property where investors would line up for the foreseeable future to build homes and hotels for those seeking a piece of paradise,” wrote Strader.

    Clay Jones/CNN

    “There are very few things that test political leaders like natural disasters,” Julian Zelizer pointed out. “When mother nature wreaks havoc, presidents, governors, and legislators are forced to deploy resources to address the dire needs of those affected….”

    “At the federal level, President Joe Biden needs to demonstrate he has the leadership and rigorous governing skills that are necessary to help Florida out of this mess,” Zelizer added. “At the state level, Gov. Ron DeSantis, who is billed as a potential Republican presidential nominee for 2024, needs to show that he can achieve more than political stunts like the one he orchestrated earlier this month when he sent migrants from Texas to Martha’s Vineyard.”

    As Jack Shafer, writing for Politico, noted, DeSantis sounded a different tone this week, promising to work with the Biden administration to help his battered state recover. “In throttling back on the vitriol, DeSantis proves himself a wiser politician than (former President Donald) Trump, the man who reset politics in 2016 to establish senseless fight-picking and name-calling as part of the normal political arsenal and allowing somebody like DeSantis to rise. Trump, unlike DeSantis, never figured out how to turn off the meshugana theatrics, even when it could have benefited him. Imagine if, for example, Trump had approached the Covid crisis with the reassuring cool of Barack Obama instead of roasting the issue in a bonfire every time he called a presser. He might still be president today.”

    Puerto Rico is still recovering from Hurricane Fiona, which was cited as a factor in at least 25 deaths, according to the island’s health department.

    “Nearly five years to the day since Maria slammed our island, on September 18 of this year, Hurricane Fiona delivered yet another knockout punch,” wrote Brenda Rivera-García, senior director of Latin America and Caribbean programs for Americares.

    “With Maria, we thought we experienced a 100-year flood. But, after only a half-decade later, it seems another century of water has enveloped us: Maria dumped more than three dozen inches of rain in some parts of the island over two days and last week Hurricane Fiona drowned us with 31 inches in a 72-hour period. A week after the storm, nearly 20% of the island was still without potable water, and nearly 60% still had no power, according to Puerto Rico’s government data. Once again, our air is filled with a familiar lullaby — the hum of generators.”

    “More and more,” Rivera-Garcia added, “I hear from family, friends, neighbors and people on the street saying, ‘I’m tired. It’s one crisis after another. I can’t take it anymore.’ With multiple generations often living together, family members have always been each other’s rock. But what happens when that rock is shattered?”

    05 opinion column 1001

    Drew Sheneman/Tribune Content Agency

    06 opinion column 1001

    Lisa Benson/GoComics.com

    After conducting a series of votes widely viewed as a sham, Russia is moving to annex regions of eastern Ukraine, and President Vladimir Putin is warning that attacks on these territories would be viewed as an assault on Russia itself. He’s raised the fearsome prospect that tactical nuclear weapons could be used to defend what he now claims is part of the homeland.

    That poses the huge question of how NATO should react. Hamish De Bretton-Gordon, former commander of the UK & NATO Chemical, Biological, Radiological and Nuclear (CBRN) Forces, said that “the West must make it absolutely clear to Putin that any use of nuclear, or chemical or biological weapons is a real redline issue. That said, I don’t think all-out nuclear war is at all likely.”

    “NATO must direct that it will take out Russia’s tactical nuclear weapons if they move out of their current locations to a position where they could threaten Ukraine, and must also make clear that any deliberate attacks on nuclear power stations will exact an equal and greater response from NATO.”

    “This is the time to call Putin’s bluff. He’s hanging on by his fingertips, and we must give him no chances to regain his hold. Russia’s forces are now so degraded that they are no match for NATO and we should now negotiate, with this in mind, from this position of strength.”

    The UK’s new prime minister, Liz Truss, and the Chancellor of the Exchequer Kwasi Kwarteng played starring roles in a week of market turmoil around the globe.

    As Frida Ghitis observed, “In the midst of a wave of inflation that is battering the world and prompting central banks to raise interest rates in hopes of cooling inflationary pressures, Truss’ plan to slash taxes, especially for the wealthiest, amounted to opening a firehose filled with gasoline into that raging economic fire.” The pound tumbled, nearly reaching parity with the dollar, and the Bank of England had to announce it would buy bonds to restore confidence.

    “Economists and politicians left and right largely agreed that, if not the policy itself, the abrupt rollout and the timing could not have been worse…”

    “They came at a moment when the world – and the West – stands on a knife’s edge, with Russian President Vladimir Putin annexing large pieces of Ukraine and hinting at using nuclear weapons as his invasion falters. With mysterious explosions causing leaks in the Nordstream pipeline applying further anxiety just ahead of a dreaded winter with gas supply shortages across Europe, all of this is happening when democracy finds itself under pressure the world over.”

    The prime minister’s policy is far from the only thing unsettling investors, as central banks around the world aim to tame inflation with rising interest rates, a strategy that risks choking off economic growth.

    02 opinion column 1001

    Bill Bramhall/Tribune Content Agency

    Bill Carter has a confession to make: he has not read all the books about Donald Trump.

    “I can’t even remember all the books about Donald Trump,” he wrote.

    “I know Bob Woodward has written three. So has Michael Wolff. Sean Spicer wrote one (or was it two?). “Mooch” – that is, Anthony Scaramucci, Trump’s White House communications director ever so briefly – wrote one. So did Omarosa, for heaven’s sake.”

    “This week marks the release of yet another: New York Times journalist Maggie Haberman’s ‘Confidence Man: The Making of Donald Trump and the Breaking of America.’” Carter cited a New York Times reference to an analysis by NPD BookScan, which found more than 1,200 titles about Trump were released over four years – not including the avalanche of books published since the 2020 election.

    “The robust sales for many of these books attest to the hunger among readers to hear every gobsmacking detail about a real-life character who is beyond the imagination of most fever-dreaming fiction writers.”

    “But even ravenous levels of hunger can be sated – eventually. After seven or eight – or 12 – courses, a bit of bloat is likely to set in … Every book seems to contain a sufficient number of ‘bombshell revelations’ to drum up media coverage, along with some combination of amusing, enraging or revolting personal details (previously unreported, of course, and almost always disputed by the former president)…”

    But do they have an impact anymore? A “defining aspect of the collected works on Trump,” Carter concluded, “is that virtually nothing in any of them – none of the ‘bombshells’ or details about his character – seems to have substantially changed people’s minds about him. That may be because Trump acolytes don’t tend to read critical accounts about him – and his opponents aren’t likely to read the hagiographies.”

    SE Cupp noted a Vanity Fair report that lifted the curtain on the rivalry between DeSantis and Trump, which included this description of Trump attributed to the governor: “A TV personality and a moron, who has no business running for president.”

    “The love loss seems to go both ways. According to reporting by Maggie Haberman, Trump has called DeSantis ‘fat,’ ‘phony,’ and ‘whiny.’”

    “As is often the case,” Cupp observed, “the courage to criticize Trump – even among Republicans who might want to run against him – is almost always reserved for private conversations. When will DeSantis get the spine to attack Trump frontally?”

    As the Supreme Court begins its new term Monday, the reverberations of its June decision on abortion are still playing out. As Fareed Zakaria wrote, “The Court has been growing more ideologically predictable – that is, politically partisan – in recent years. Judges appointed by Republicans now almost always rule in ways that Republicans want them to. Ditto for judges appointed by Democrats. It is all part of the hyper-polarization of American life.”

    “But it is also partly because of the strange way in which America’s highest court is structured,” observed Zakaria, who noted that “no other major democracy gives members of its highest court life tenure.”

    The court “has moved in a direction that has weakened its own legitimacy. It might be an occasion to begin a national conversation about what reforms could be put in place to make it less partisan, less divisive and more trusted by the vast majority of citizens. After all, that is the only way its rulings will be truly accepted in a diverse democracy of more than 330 million people.” (Watch Fareed Zakaria’s special report Sunday at 8 p.m. ET and PT: “Supreme Power: Inside the Highest Court in the Land.”)

    For more:

    Jill Filipovic: This Texas Republican in full sprint is a metaphor for the GOP’s stance on abortion

    Steve Vladeck: America’s most powerful court owes the public an explanation

    dusa eric adams

    One morning in 2016, Eric Adams, a former police officer turned politician – and now New York’s mayor – couldn’t see the numbers on his alarm clock.

    “I went to the doctor, who diagnosed me with Type 2 diabetes. He told me I might have my driver’s license revoked due to vision loss, and I might have permanent nerve damage in my fingers and toes.”

    After googling “reversing diabetes,” he connected with “Dr. Caldwell Esselstyn at the Cleveland Clinic, who told me I could treat my diabetes with lifestyle changes, including overhauling my diet and exercising.

    “I was skeptical at first. But reducing meat and dairy consumption in favor of fresh produce and grains made an immediate difference in my health … Within three months, I lost significant weight, lowered my cholesterol, restored my vision and reversed my diabetes.” But not everyone has the resources to get expert medical advice and turn their health around so dramatically.

    “The disproportionate effect of Covid-19 on Black and brown communities was tragically compounded by existing diet-driven health disparities. While higher-income neighborhoods have overwhelming options when it comes to fresh fruits and vegetables, low-income communities of color often live in nutritional deserts with fewer grocery stores and a higher concentration of processed foods, sugary drinks, and shelf-stable products…”

    “Now is the time for our country to make the shift from treatment to prevention, from feeding the illness to giving people the tools to build sustainable lifestyles and healthier, stronger communities.”

    04 opinion column 1001

    Dana Summers/Tribune Content Agency

    Michael Fanone: What my January 6 assailant deserves

    Ruth Ben Ghiat: Casting doubt on Brazil’s election, Bolsonaro follows Trump’s lead

    Matthew Bossons: My 5-year-old just confirmed our decision to leave China

    Peter Bergen: The British Empire – A legacy of violence?

    AND…

    01 opinion column 1001

    Bill Bramhall/Tribune Content Agency

    To fans of the New York Yankees, there’s an almost mystical connection uniting the team’s pantheon of heroes – including Babe Ruth, Lou Gehrig, Joe DiMaggio, Mickey Mantle, Roger Maris and Derek Jeter. And now by hitting 61 homers in a single season – tying Maris, who bested Ruth’s record of 60 home runs – Aaron Judge has arguably joined those ranks.

    As Billy Crystal’s 2001 movie, “61*” made clear, though, those ties have long been frayed – Mantle and DiMaggio had a frosty relationship and there were tensions between Mantle and Maris. But if you widen the lens beyond the Yankees and look at the entire history of Major League Baseball, as Jeff Pearlman wrote, the picture surrounding Judge’s achievement is even more clouded.

    “By allowing rampant steroid and human growth hormone usage throughout the 1990s and early 2000s,” Pearlman observed, “Major League Baseball ruined and disgraced its own record book, and Judge’s shot merely (yawn) tied the American League home run mark.”

    “When, in 2001, San Francisco’s Barry Bonds broke (Mark) McGwire’s record with 73 homers, we all knew it was nonsense. Not some of us – all of us. Here was a man, at age 36, with muscles growing atop muscles and a skull size that – as I reported in my Bonds biography, “Love Me Hate Me” – had actually increased in recent years (this is physically impossible without the help of HGH). I was in San Francisco the night Bonds passed McGwire, and it was…stupid. Just so damn stupid. The local fans stood and cheered, but it felt flat and meaningless and a bit embarrassing. Like spotting a magician’s fake thumb.”

    “All the while, Major League Baseball and the Major League Baseball Players Association did … nothing. Home runs were great business, so team owners shrugged off PED suspicions while the union made clear it would refuse to have its players be tested in any sort of methodical, impactful manner. The result was temporary long ball excitement, followed by the quiet-yet-crushing realization (by most involved in the game) that the record book had been rendered meaningless.” Eventually, baseball woke up and instituted testing for performance enhancing drugs.

    As for Aaron Judge, according to Pearlman, “the 30-year-old slugger has had a season for the ages – he’s all but locked up the AL MVP award, and at this moment is in line to become the Yankees’ first triple crown winner since Mickey Mantle in 1956.

    “This should be an historic time for baseball.

    “This should be an historic time for Aaron Judge.

    “Instead, greed destroyed baseball – and took its history with it.”

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  • UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

    UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

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    London
    CNN
     — 

    British Prime Minister Liz Truss admitted mistakes had been made with her government’s controversial “mini-budget” announced last week – which sent the pound to historic lows and sparked market chaos – but stood by her policies.

    Speaking to the BBC’s Laura Kuenssberg on Sunday morning Truss said: “I do accept we should have laid the ground better and I’ve learned from that, and I’ll make sure I’ll do a better job of laying the ground in the future.”

    She said that she wanted “to tell people I understand their worries about what happened this week and I stand by the package we announced and I stand by the fact we announced it quickly.”

    Last week, Truss’ government announced that they would cut taxes by £45 billion ($48 billion) in a bid to get the UK economy moving again, with a package that includes scrapping the highest rate of income tax for top earners from 45% to 40% and a big increase in government borrowing to slash energy prices for millions of households and businesses this winter.

    Many leading economists described the unorthodox measures as a reckless gamble, noting that the measures came a day after the Bank of England warned that the country was already likely in a recession.

    Truss said the reforms were not agreed by her cabinet, but were a decision made by Chancellor Kwasi Kwarteng. “It was a decision the chancellor made,” she told the BBC.

    She doubled down on that decision however, saying that her government made the “right decision to borrow more this winter to face the extraordinary consequences we face,” referring to the energy crisis caused by the war in Ukraine. She claimed that the alternative would be for people to pay up to £6,000 in energy bills, and that inflation would be 5% higher.

    “We’re not living in a perfect world, we are living in a very difficult world, where governments around the world are taking tough decisions,” Truss said.

    Regarding the rising cost of living in the UK, namely the rise of mortgage rates, Truss said that is mostly driven by interest rates and is “a matter for the independent Bank of England.”

    The Bank of England said Wednesday it would buy UK government debt “on whatever scale is necessary” in an emergency intervention to halt a bond market crash that it warned could threaten financial stability.

    Meanwhile, Credit Suisse said that UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check.

    The fallout could make it harder for people to get approved for mortgages, and encourage prospective buyers to delay their purchases. A drop in demand would lead to falling prices.

    Truss defended her government’s policies to the BBC as the Conservative party’s annual conference kicked off in in Birmingham.

    The party is bitterly divided, with its poll ratings sinking lower than they were even under the disgraced leadership of Boris Johnson.

    On Sunday, that chill was evident, as Nadine Dorries, the former culture secretary who backed Truss to be prime minister, accused Truss of throwing Chancellor Kwasi Kwarteng “under a bus” in her BBC interview, when she said the tax cut decision were made by him and not the Cabinet.

    “One of @BorisJohnson faults was that he could sometimes be too loyal and he got that. However, there is a balance and throwing your Chancellor under a bus on the first day of conference really isn’t it. [Hope] things improve and settle down from now,” Dorries said on Twitter.

    Conservative members of parliament fear the combination of tax cuts along with huge public spending to help people cope with energy bills, rising inflation, rising interest rates and a falling pound are going to make winning the next general election impossible.

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  • Why the ghost of 2008 still haunts us in 2022 | CNN Business

    Why the ghost of 2008 still haunts us in 2022 | CNN Business

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    This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN Business
     — 

    All week, there have events in the news that have come in under of the banner of “this hasn’t happened since 2007/2008.”

    Yields on the 10-year Treasury briefly surpassed 4%, a level not seen since 2008. That movement helped push mortgage rates to their highest level, 6.7%, since — wait for it — July 2007. Across the pond, where the UK bond market crashed earlier this week, one seemingly frazzled London banker told the Financial Times: “At some point this morning I was worried this was the beginning of the end. It was not quite a Lehman moment. But it got close.”

    The timing of all these events is indeed a bit spooky: Today, September 29, marks 14 years to the day that stock markets around the world cratered, ushering in the worst global financial crisis since the Great Depression.

    With all that gloom, it’s natural to wonder whether history is about to repeat itself.

    To be clear: The market ended up recovering completely — though it took years. And in so many ways, the economic and financial angst playing out around the world is absolutely not a repeat of the run-up to the Great Recession. It’s a whole different beast now.

    But it is precisely because of those 2008 scars, still potent memories for many, that economists and analysts become nervous when things go as haywire as they have in recent weeks.

    Right now, the prevailing mood is fear. Economies hobbled by inflation and soaring borrowing costs are vulnerable to economic shocks — whether those shocks come from a catastrophic hurricane, or a superpower declaring war on a neighbor, or a radical unfunded tax scheme. Or, heaven forbid, a resurgent pandemic.

    All of that means there aren’t many good places for investors to put their money right now. Stocks and bonds are both in bear territory, and many analysts say the market could remain volatile until inflation gets under control (which, if we crash into a recession, could happen pretty soon… not a great silver lining, I know.)

    If there’s a lesson to hold onto from the Great Recession, it’s not to panic. Per my colleague Jeanne Sahadi:

    Let’s say you’d invested $10,000 at the start of 1981 in the S&P 500. That money would have grown to nearly $1.1 million by the end of March 2021. But had you missed just the five best trading days during those 40 years, it would only have grown to roughly $676,000.

    In other words: Hold on tight, friends, and try to avoid looking at your 401(k) balance for the foreseeable future.

    Stocks fell Thursday, giving up Wednesday’s big gains and plunging the Dow back into a bear market.

    The S&P 500, one of the broadest measures of the health of Corporate America, fell 2.1%, hitting a new low for the year. The Dow and S&P 500 are once again not far from their lowest levels since November 2020.

    Heckuva way to wrap up the third quarter, eh? The stock market actually had a promising start to the quarter in July. But fears about inflation, rate hikes, rising bond yields and recession returned with a vengeance in August and September.

    Continuing a grand tradition of Corporate Rebranding Nonsense, Johnson & Johnson is putting all of its consumer health products under a newly formed parent company.

    Soon, Band-Aid, Tylenol, Benadryl and Johnson’s baby powder will all be sold under the umbrella brand identity “Kenvue.”

    That’s pronounced “Ken,” like the doll, “view.”

    Here’s the deal: Johnson & Johnson, the owner of these labels, is in the process of splitting into two companies — one focused on medical devices and medications, the other on consumer health products, my colleague Nathaniel Meyersohn reports.

    J&J is keeping its recognizable name for its larger pharmaceutical business, but it needed something new for the smaller consumer arm.

    The company said Wednesday that it landed on Kenvue, a combination of “Ken,” an English word for knowledge primarily used in Scotland, and “vue,” a reference to sight.

    “Kenvue” is the winning moniker that a small team from J&J, working with a naming agency, landed on. The goal was to be memorable. And, crucially, to clear trademarks in more than 100 markets and “pass linguistic and cultural screenings in 89 languages and dialects.”

    The company also released Kenvue’s new logo — white letters against a green background, the limbs of the letter “K” resembling a sideways heart.

    What does it mean? Absolutely nothing, and that is the point.

    Corporations gravitate to names that are squeaky clean. There’s no possibility for a negative connotation, because it’s a made-up word. It doesn’t, as far as I can tell, sound like it might resemble a swear word in some other language. Kenvue is inoffensive. Bloodless. It is the tofu of corporate branding.

    “It’s really just a holding company behind all these other brands,” one expert told Nathaniel. “They want a name that will disappear in the background and the brands will stick out.”

    (Mission accomplished. I’ve already forgotten the new name and I just typed it 40 seconds ago.)

    MY TWO CENTS

    The best review I can give of the new brand is that it’s forgettable. Other companies have famously (infamously?) failed to stick the landing with new names.

    Netflix, back in 2011, quickly backtracked after trying to rechristen its DVD mailing service as “Qwikster.” More recently, Fiat Chrysler and PSA Group merged in 2020 under the collective name “Stellantis,” which is still the company’s name, but I still think it sounds like something you should ask your doctor about if you have signs of seasonal depression.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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  • The UK is gripped by an economic crisis of its own making | CNN Business

    The UK is gripped by an economic crisis of its own making | CNN Business

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    London
    CNN Business
     — 

    A week ago, the Bank of England took a stab in the dark. It raised interest rates by a relatively modest half a percentage point to tackle inflation. It couldn’t know the scale of the storm that was about to break.

    Less than 24 hours later, the government of new UK Prime Minister Liz Truss unveiled its plan for the biggest tax cuts in 50 years, going all out for economic growth but blowing a huge hole in the nation’s finances and its credibility with investors.

    The pound crashed to a record low against the US dollar on Monday after UK finance minister Kwasi Kwarteng doubled-down on his bet by hinting at more tax cuts to come without explaining how to pay for them. Bond prices collapsed, sending borrowing costs soaring, sparking mayhem in the mortgage market and pushing pension funds to the brink of insolvency.

    Financial markets were already in a febrile state because of the rising risk of a global recession and the gyrations caused by three outsized rate increases from a US central bank on the warpath against inflation. Into that “pressure cooker” stumbled the new UK government.

    “You need to have strong, credible policies, and any policy missteps are punished,” said Chris Turner, global head of markets at ING.

    After verbal assurances by the UK Treasury and Bank of England failed to calm the panic — and the International Monetary Fund delivered a rare rebuke — the UK central bank pulled out its bazooka, saying Wednesday it would print £65 billion ($70 billion) to buy government bonds between now and October 14 — essentially protecting the economy from the fallout of the Truss’ growth plan.

    “While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position,” said Paul Dales, chief UK economist at Capital Economics, commenting on the bank’s intervention.

    The emergency first aid stopped the bleeding. Bond prices recovered sharply and the pound steadied Wednesday against the dollar. But the wound hasn’t healed.

    The pound tumbled 1%, falling back below $1.08 early Thursday. UK government bonds were under pressure again, with the yield on 10-year debt climbing to 4.16%. UK stocks fell 2%.

    “It wouldn’t be a huge surprise if another problem in the financial markets popped up before long,” Dales added.

    The next few weeks will be critical. Mohamed El-Erian, who once helped run the world’s biggest bond fund and now advises Allianz

    (ALIZF)    , said that the central bank had bought some time but would need to act again quickly to restore stability.

    “The Band-Aid may stop the bleeding, but the infection and the bleeding will get worse if they do not do more,” he told CNN’s Julia Chatterley.

    The Bank of England should announce an emergency rate hike of a full percentage point before its next scheduled meeting on November 3. The UK government should also postpone its tax cuts, El-Erian said.

    “It is doable, the window is there, but if they wait too long, that window is going to close,” he added.

    The UK government has previewed rolling announcements in the coming weeks about how it plans to change immigration policy and make it easier to build big infrastructure and energy projects to boost growth, culminating in a budget on November 23 at which it has promised to publish a detailed plan for reducing debt over the medium term.

    But it shows no sign of backing away from the fundamental policy choice of borrowing heavily to fund tax cuts that will mainly benefit the rich at a time of high inflation. And the UK Treasury says it won’t bring forward the November announcement.

    Truss, speaking publicly for the first time since the crisis erupted, blamed global market turmoil and the energy price shock from Russia’s invasion of Ukraine for this week’s chaos.

    “This is the right plan that we’ve set out,” she told local radio on Thursday.

    One big problem identified by investors, former central bankers and many leading economists is that her government only set out half a plan at best. It went ahead without an independent assessment from the country’s budget watchdog of the assumptions underlying the £45 billion ($48 billion) annual tax cuts, and their longer term impact on the economy. It fired the top Treasury civil servant earlier this month.

    Charlie Bean, former deputy governor at the Bank of England, told CNN Business that the government was guilty of “really stupid” decisions. His former boss at the bank, Mark Carney, accused the government of “undercutting” UK economic institutions, saying that had contributed to the “big knock” suffered by the country’s financial system this week.

    “This is an economic crisis. It is a crisis… that can be addressed by policymakers if they choose to address it,” he told the BBC.

    British newspapers have started to speculate that Truss will have to fire Kwarteng, her close friend and political soulmate, if she wants to regain the political initiative and prevent her government’s dire poll ratings from plunging even further.

    “Every single problem we have now is self-inflicted. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN.

    But for now she’s trying to tough it out, and cling onto the Reaganite experiment.

    “Raising, postponing, or abandoning tax cuts will be avoided by Truss at all costs as such a reversal would be humiliating and could leave her looking like a lame duck prime minister,” wrote Mujtaba Rahman and Jens Larson at political risk consultancy Eurasia Group.

    The only alternative left to balance the books would be to slash government spending, and that would prove equally politically difficult as the country enters a recession with its public services under enormous strain and a restive workforce that has shown it’s ready to strike in large numbers over pay.

    “Truss and Kwarteng are now facing a severe economic crisis as the world’s financial markets wait for them to make policy changes that they and the Conservative party will find unpalatable,” the Eurasia analysts wrote.

    The foreign investors who keep the British economy solvent are left scratching their heads for another eight weeks, leaving plenty of time for doubts to surface again about the UK government’s commitment to responsible fiscal policymaking.

    “The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs,” Carney said.

    That leaves the Bank of England in a tight spot. A week ago it was pressing the brakes on the economy to take the heat out of price increases, even as the government tried to juice growth. The task got even harder this week when it was forced to dust off its crisis playbook and bail out the government.

    It may not be long before it has to intervene again, this time with an emergency rate hike.

    “[Wednesday’s] intervention is designed to stabilize UK government bond prices, keep the bond market liquid and prevent financial instability but that won’t necessarily stop sterling falling further, with its attendant inflationary consequences,” Bean, the former central banker, told CNN Business.

    “I think there is still a good chance they will need to act ahead of the November meeting,” he added.

    — Julia Horowitz, Luke McGee, Anna Cooban, Rob North, Livvy Doherty and Morgan Povey contributed to this article.

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  • There’s a 98% chance of a global recession, research firm warns | CNN Business

    There’s a 98% chance of a global recession, research firm warns | CNN Business

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    New York
    CNN Business
     — 

    Warning lights are flashing in the global economy as high inflation, drastic rate hikes and the war in Ukraine take their toll.

    There is currently a 98.1% chance of a global recession, according to a probability model run by Ned Davis Research.

    The only other times that recession model was this high has been during severe economic downturns, most recently in 2020 and during the global financial crisis of 2008 and 2009.

    “This indicates that the risk of a severe global recession is rising for some time in 2023,” economists at Ned Davis Research wrote in a report last Friday.

    As central banks ramp up their efforts to get inflation under control, economists and investors are growing gloomier.

    Seven out of 10 economists surveyed by the World Economic Forum consider a global recession at least somewhat likely, according to a report published Wednesday. Economists dialed back their forecasts for growth and expect inflation-adjusted wages to keep falling the rest of this year and next.

    Given surging food and energy prices, there are concerns that the high cost of living could lead to pockets of unrest. Seventy-nine percent of the economists surveyed by the World Economic Forum expect rising prices to trigger social unrest in low-income countries, compared to a 20% expectation in high-income economies.

    Investors are also getting more concerned, with the Dow Jones Industrial Average sinking into a bear market Monday for the first time since March 2020.

    “Our central case is a hard landing by the end of ’23,” billionaire investor Stanley Druckenmiller said at the CNBC Delivering Alpha Investor Summit Wednesday. “I will be stunned if we don’t have a recession in ’23.”

    Even Federal Reserve officials have conceded there is a growing risk of a downturn.

    Still, there are clearly bright spots, especially in the United States, the world’s largest economy.

    The US jobs market remains historically strong, with the unemployment rate sitting near the lowest levels since 1969. Consumers continue to spend money and corporate profits are sturdy.

    There are also hopes that the worst US inflation in 40 years will cool off in the coming months as supply catches up with demand.

    The Ned Davis researchers said that although recession risks are rising, its US recession probability model is “still at rock-bottom levels.”

    “We do not have conclusive evidence that the US is currently in recession,” the researchers wrote in the report.

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  • The Supreme Court just handed Joe Biden a series of setbacks. It may have also given Democrats new motivation to reelect him | CNN Politics

    The Supreme Court just handed Joe Biden a series of setbacks. It may have also given Democrats new motivation to reelect him | CNN Politics

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    CNN
     — 

    President Joe Biden wasn’t planning to take questions on Thursday. His helicopter was waiting outside on the White House’s South Lawn.

    But after a 10-minute statement on the Supreme Court’s affirmative action ruling, a CNN reporter called out, “Is this a rogue court?” The president stopped in his tracks.

    Pausing to think a moment, he looked over his shoulder. “This is not a normal court,” he said before leaving.

    This week’s monumental rulings – striking down affirmative action in college admissions and unraveling Biden’s student debt relief plan among them – amount to serious setbacks for a president who promised as a candidate to advance racial equity and erase student debt.

    They are also an urgent reminder to Democrats of the enduring consequences of elections at a moment Biden’s advisers are searching for ways to inject enthusiasm into his bid for another term.

    What impact that will have on the coming election remains unknown. But Biden and his team have already begun assigning blame on Republicans for dismantling programs that have benefited young, college-educated and minority voters – all critical components of the Democratic coalition Biden will need to mobilize if he hopes to win reelection.

    That three justices within the court’s conservative majority were appointed by President Donald Trump – both Biden’s predecessor and, according to polls, his most likely opponent next year – creates even more of an impetus for Biden to use the rulings as a political cudgel as his campaign heats up.

    “The excesses of the Supreme Court are going to backfire,” said Rep. Ritchie Torres, a New York Democrat. “You know, the Supreme Court’s decision to overturn Roe versus Wade reduced what was supposed to be a red wave in the 2022 election cycle to nothing more than a red trickle. So not only is the Supreme Court’s decision bad law, it’s also bad politics and it’s going to come back to haunt the Republican Party.”

    Speaking to a group of Democratic donors in New York City on Thursday evening, Biden sought to underscore the stakes of the court’s new supermajority, a preview of how he’ll frame the issue over the coming year.

    “The Supreme Court is becoming not just conservative, but almost – it’s like a throwback. It’s like a throwback, some of the decisions they’re making,” Biden told donors in a private dining room inside the Seagram Building. “Did you ever think we’d be in a position, after 50 years of acknowledging the right of privacy in the Constitution, suggesting that there’s no such thing as the right to privacy?”

    Despite his criticism of the court, Biden has rejected some liberal suggestions on reforming the panel. He opposes expanding the number of justices that sit on the court and hasn’t embraced term limits.

    “If we start the process of trying to expand the court, we’re going to politicize it, maybe forever, in a way that is not healthy,” Biden said during a friendly interview on MSNBC shortly after Thursday’s decision on affirmative action.

    Biden’s student loan plan, which came about last year after months of agonizing internal debate over its costs and eligibility criteria, was intended to free low- and middle-income Americans from crippling debt.

    Throughout the process, Biden expressed concern at being seen as offering a handout to the wealthy. Eventually, pressure to fulfill one of his top campaign promises led to the plan to forgive up to $20,000 in student loan debt for certain borrowers.

    For months the White House publicly said there was no alternative plan if the Supreme Court struck down the student debt relief program. But behind the scenes, top White House officials were working for several weeks to fulfill a simple directive from the president to “be ready in the event the Supreme Court did not do the right thing,” White House officials said.

    The president’s charge to his team was described as this: “If the court ruled against the program, find other ways to deliver relief for as many working and middle-class borrowers as possible, accounting for all the legal issues.”

    For the past few weeks, White House chief of staff Jeff Zients gathered his team for weekly meetings to map out all scenarios for the Supreme Court’s ruling and explore all legal avenues available to them after the president told his team to build a “fully developed response” to all possible rulings, officials said.

    Zient’s office – led by deputy chief of staff Natalie Quillian, the Domestic Policy Council, National Economic Council and White House Counsel’s Office – worked with the Department of Education and the Department of Justice to come up with options the administration could take if the ruling was not in their favor.

    “All of these meetings were structured around one question – how would we be able to deliver relief to as many borrowers as we could, as quickly as possible under any possible outcome of the Supreme Court,” official said.

    The White House also stayed in touch with and fielded suggestions for next steps from debt relief advocate groups and congressional allies throughout the process. Lawyers from the White House, Justice Department and Education Department examined all of the recommendations, including administration action and the legal authorities available to the administration, and ultimately crafted responses for multiple scenarios.

    Inside the White House, some officials had held out hope the court would uphold Biden’s student debt program, pointing to some surprising decisions over the past weeks that saw some conservative justices joining liberals on issues of voting rights and congressional redistricting.

    But even Biden acknowledged after the court’s oral arguments in February he wasn’t certain the ruling would go his way.

    “I’m confident we’re on the right side of the law,” Biden told CNN in March when asked if he was confident the administration would prevail in the case. “I’m not confident of the outcome of the decision yet.”

    His instinct was correct. The president was in the Oval Office on Friday morning when he was informed of the Supreme Court’s decision by his senior aides and then engaged in meetings stretching into the afternoon to fine-tune their response after the ruling was not in their favor.

    Ultimately, the president directed his team to move forward with a new plan, which includes pursuing a new path for debt relief through the authorities in the Higher Education Act of 1965, which was promoted by some debt relief advocate groups and progressive lawmakers, as well as creating a temporary 12-month “on-ramp repayment” program for federal student loan borrowers when payments resume in October.

    A day earlier, Biden was watching the news on television when the affirmative action decision was handed down by the court, according to an official. A team from the White House counsel’s office came to brief him on the ruling.

    “In our conversations with the White House about why student debt cancelation was needed, it’s about reducing the racial wealth gap,” said Wisdom Cole, national director of the Youth & College division at the NAACP. “If the administration is committed to diversity, equity, and inclusion, they must use every tool in their toolkit. Every legal authority to ensure that we see relief happen.”

    Demonstrating urgency in responding to the court’s actions was a key objective as the White House prepared for both rulings, according to people familiar with the matter.

    Looming over the preparations was the impression left after last year’s Supreme Court term that the Biden administration was unprepared for the decision striking down the nationwide right to abortion, despite a leaked court opinion months ahead of time indicating the justices were prepared to overturn Roe v. Wade.

    The White House has strongly denied it was caught flat-footed on abortion and has pointed to actions taken in the months after the decision to expand access, including to medication abortion.

    The issue proved galvanizing to Democratic voters in November’s midterm elections and has propelled Democratic victories even in traditionally Republican districts.

    Whether the court’s ruling on student debt relief and affirmative action can have a similar effect will prove critical over the coming year, as Biden works to convince voters he is still fighting to fulfill his promises. Initial reaction from progressive Democrats was positive.

    “It was not a foregone conclusion that the President would act so swiftly today. But he announced an alternative path to student debt cancellation by using his Higher Education Act authority given by Congress – and that deserves praise,” said Adam Green, co-founder of the Progressive Change Institute.

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  • 5 ways a debt default could affect you | CNN Politics

    5 ways a debt default could affect you | CNN Politics

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    CNN
     — 

    President Joe Biden and House Republicans may have as little as a month to prevent the US from defaulting on its debt, which would impact millions of Americans and unleash economic and fiscal chaos here and around the world.

    Treasury Secretary Janet Yellen warned Monday that the government may not be able to pay all of its bills in full and on time as soon as June 1. However, the forecast was uncertain, and the default date might come several weeks later, she said. The US hit its $31.4 trillion debt ceiling in January, and Treasury has been using cash and “extraordinary measures” to satisfy obligations since then.

    Just what would happen if the nation defaults on its debt is unknown since it’s never actually happened before. A close call in 2011 roiled the financial markets and prompted Standard & Poor’s to downgrade the US’ credit rating to AA+ from AAA.

    Yellen gave a sense of the turmoil it would cause in her letter to House Speaker Kevin McCarthy on Monday.

    “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote.

    To be clear, a debt default doesn’t mean all payments would stop and people would permanently lose out on money they are owed. Treasury would have the funds to satisfy some obligations, but it’s not certain how the agency would handle the disbursements. Much would also depend on how long it takes Congress to address the borrowing cap.

    “Tens of millions of people across the country who expect payments from the federal government may not get them on time,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

    Here are five ways that Americans could be affected by debt default:

    About 66 million retirees, disabled workers and others receive monthly Social Security benefits. The average payment for retired workers is $1,827 a month in 2023.

    Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.

    These payments could be delayed in a debt default scenario, though it’s possible Treasury could continue making on-time payments because of the entitlement program’s trust fund, Akabas said.

    The benefits are disbursed four times a month, on the third day of the month and on three Wednesdays. Roughly $25 billion a week is sent out, according to the Congressional Budget Office.

    “Even a short delay in the payment of Social Security benefits would be a burden for the millions of Americans who rely on their earned benefits to pay for out-of-pocket health care expenses, food, rent and utilities,” Max Richtman, the committee’s CEO, said in a statement.

    Many other government payments could also be affected, including funding for food stamps; federal grants to states and municipalities for Medicaid, highways, education and other programs; and Medicare payments to hospitals, doctors and health insurance plans.

    More than 2 million federal civilian workers and around 1.4 million active-duty military members could see their paychecks delayed. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers.

    Also, certain veterans benefits, including disability payments and pensions for some low-income veterans and their surviving families, could be affected.

    “Such calamity would place further stress on our servicemembers, retirees, and veterans, as well as their families, caregivers, and survivors,” Rene Campos, senior director of government relations for the Military Officers Association of America, said in a blog post. “Though life in uniform is not always predictable, those who serve or have served their country expect their country to honor their commitment to service.”

    About $25 billion in pay or benefits for active-duty members of the military, civil service and military retirees, veterans and recipients of Supplemental Security Income is sent out on the first day of the month, according to the CBO.

    Americans’ investments would take a direct hit. Case in point: Markets had what was then their worst week since the financial crisis during the 2011 debt ceiling standoff after the Standard & Poor’s downgrade.

    Even if the debt ceiling impasse is resolved soon after a default, stocks could shed as much as a third of their value. That would wipe out around $12 trillion in household wealth, according to Moody’s Analytics.

    If a default occurs, yields on US Treasuries will inevitably rise to compensate for the increased risk that bondholders won’t receive the money they’re owed from the government.

    Since interest rates on loans, credit cards and mortgages are often based on Treasury yields, the cost of borrowing money and paying off debt would rise. That’s on top of the increased costs Americans are already facing from the Federal Reserve rate hikes.

    Families and businesses would also have a tougher time getting approved for lines of credit since banks would have to be more selective about to whom they loan money. That’s because their costs of borrowing money will also rise, which limits the amount of money they can lend out.

    A debt default could trigger an economic downturn, which would prompt a spike in unemployment. It would come at a particularly fragile time – when the nation is already dealing with rising interest rates and stubbornly high inflation.

    How much damage would be done would depend on how long the crisis continues. If the default lasts for about a week, then close to 1 million jobs would be lost, including in the financial sector, which would be hard hit by the stock market declines. Also, the unemployment rate would jump to about 5% and the economy would contract by nearly half a percent, according to Moody’s.

    But if the impasse dragged on for six weeks, then more than 7 million jobs would be lost, the unemployment rate would soar above 8% and the economy would decline by more than 4%, according to Moody’s. The effects would still be felt a decade from now.

    “It would be a body blow to the economy, and it would be a manufactured crisis,” said Bernard Yaros, an economist at Moody’s.

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  • Biden has already canceled $66 billion in student loans. Here’s how 3 people received debt relief | CNN Politics

    Biden has already canceled $66 billion in student loans. Here’s how 3 people received debt relief | CNN Politics

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    Washington
    CNN
     — 

    Even though the Supreme Court struck down President Joe Biden’s student loan forgiveness program, more debt will be canceled during his time in office than under any other president.

    The Biden administration has already canceled a record $66 billion in student loan debt for nearly 2.2 million borrowers.

    While his one-time student loan forgiveness program would have been far reaching, promising up to $20,000 of debt cancellation for eligible borrowers and wiping out roughly $400 billion overall, the Department of Education has made some lesser-known changes to existing student loan forgiveness programs.

    The administration has made it easier for people to qualify for the Public Service Loan Forgiveness program, which grants relief for public sector workers after they’ve made 10 years of qualifying payments.

    It has also made more people eligible for the borrower defense to repayment program that cancels student loan debt for borrowers who attended a school that may have misled them or violated certain state laws, as well as made loan discharges automatic for more borrowers who are permanently disabled.

    Here’s how three people received student loan forgiveness due to the changes the Biden administration has made to existing federal programs.

    Margo Myles, 52, got a letter from the Department of Education in late March saying that nearly $25,000 of her federal student loan debt had been canceled.

    Myles had borrowed the money in the early 2000s to earn an associate degree in paralegal studies, but the education didn’t pay off. She found work in the legal field a few years after finishing school but was earning just $9 an hour – not enough to pay her bills and her student loans.

    “I was trying to reorganize my life. For me, and for so many other students, this should have been a door,” Myles said of her degree program.

    Instead, she defaulted on her student loans. The default dinged her credit and resulted in the garnishment of her federal tax refunds. Myles said she wasn’t allowed to request her academic transcript while her loans were in default, preventing her from enrolling elsewhere.

    The Department of Education later found that schools owned by the now-defunct Corinthian Colleges – which include Myles’ alma mater, known at the time as Florida Metropolitan University – engaged in “widespread and pervasive misrepresentations” about students’ employment prospects, including guarantees they would find a job as well as the ability to transfer credits.

    Under the borrower defense program, borrowers can apply for debt relief if they were misled by their college. Last June, the Department of Education announced that any student who attended a Corinthian-owned college would automatically qualify for the benefit. The move made 560,000 more borrowers eligible.

    About nine months later, Myles learned that she was one of the qualifying borrowers and her debt was discharged. The Department of Education said it would request credit reporting agencies to repair her credit within 45 days, according to the letter she received.

    Myles, who now lives in Cheyenne, Wyoming, and works in insurance, plans to continue her education by pursuing a bachelor’s degree and then a law degree.

    “I’ve always wanted to go back to school. I don’t care if I’m 60 when I finish,” she said.

    Paige Vass recently qualified for the Public Service Loan Forgiveness program.

    Applying for the Public Service Loan Forgiveness program was a yearslong, frustrating process for Paige Vass, a special education teacher in Virginia.

    The PSLF program cancels remaining federal student loan debt for eligible government and nonprofit workers after they have made 120 qualifying monthly payments, which takes at least 10 years.

    But the program has been riddled with problems. Many people reached 10 years of repayment believing they qualified for cancellation of their remaining debt, but instead found out that they had the wrong kind of loan or were making payments in the wrong kind of repayment plan.

    Vass applied after teaching for more than 10 years, but her paperwork was returned several times, for things like having an incorrect date or a signature in the wrong place.

    She decided to try applying one more time last year after the Biden administration temporarily expanded eligibility for the program with a one-year waiver.

    “My fingers were crossed, but I also thought I might be chasing a unicorn,” Vass, 47, said.

    “But I was like, I’ve got to try. This is a huge debt and a huge weight on our family,” she added. She and her husband, who is also an educator, have two children.

    This spring, not only did Vass find out that she qualified for more than $30,000 in debt relief, but she is also set to receive a refund of about $5,000 because she had overpaid. Under the rules of the temporary waiver, she had made more payments than the 120 required for debt forgiveness.

    The debt relief means she may be able to spend more time with her kids. In the past, when she’s owed hundreds of dollars for her student debt each month, she’s worked summer school, taught skiing and worked for the on-demand delivery company DoorDash for some extra cash.

    “There’s been so many changes and so many hardships for teachers over the last three years. To me (the loan forgiveness) felt like a statement on behalf of our country’s administration that says, ‘You are valuable and we appreciate what you do, and you do make a difference,’” Vass said.

    Charles Goldenberg saw more than $340,000 of his debt canceled.

    Last year, Charles Goldenberg, a radiologist in New York City, got an email notifying him that his more than $340,000 in federal student loan debt had been canceled because he qualified for the PSLF program.

    While in training, and making little money, Goldenberg was paying off his loans through an income-driven repayment plan, which lowered his monthly payments. But those payments hardly covered the interest accumulation, and his balance ballooned before the pandemic pause went into effect in 2020.

    Now, at 42, Goldenberg said the student debt cancellation gives him the opportunity to move on with his life.

    “And I think that’s the whole point of the PSLF program. You spend years of training and schooling above and beyond college, making less money than you would when you’re out of training. It’s not without sacrifice. It’s because you work for eligible employers … where you’re not going to be making the kind of money that I make now,” he added.

    Goldenberg had been paying off some his loans for 19 years, but not every payment had counted toward the PSLF program until he consolidated his loans about two years ago.

    Thanks to the one-year waiver put in place by the Biden administration, some payments he made earlier became eligible.

    Applying for the relief had also been a long process for Goldenberg. His loan servicer had difficulty verifying that one of his employers, a nonprofit hospital in Miami, qualified for the program. He eventually found proof on the Department of Education’s website that the hospital did qualify.

    Now that Goldenberg is done with training and is earning more money, his student loan payments would be much higher when the pandemic-related pause ends later this year than they were three years ago. He expects they would be $2,500 or more a month if not for the debt relief.

    “Now I can use the money that I make for myself, for a mortgage, for family, for other expenses, for retirement. So it really opened up my financial future in a big way,” he said.

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  • AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

    AI chip boom sends Nvidia’s stock surging after whopper of a quarter | CNN Business

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    New York
    CNN
     — 

    The AI boom is here, and Nvidia is reaping all the benefits.

    Shares of Nvidia

    (NVDA)     exploded 28% higher Thursday after reporting earnings and sales that surged well above Wall Street’s already lofty expectations. That was enough to make investors temporarily forget about America’s dangerous debt ceiling standoff, sending the broader stock market higher — even after credit rating agency Fitch warned late Wednesday that America could soon lose its sterling AAA debt rating.

    Nvidia makes chips that power generative AI, a type of artificial intelligence that can create new content, such as text and images, in response to user prompts. That’s the kind of AI underlying ChatGPT, Google’s Bard, Dall-E and many of the other new AI technologies.

    “The computer industry is going through two simultaneous transitions — accelerated computing and generative AI,” said Jensen Huang, Nvidia’s CEO, in a statement. “A trillion dollars of installed global data center infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process.”

    Huang said Nvidia is increasing supply of its entire suite of data center products to meet “surging demand” for them.

    Last quarter, Nvidia’s profit surged 26% to $2 billion, and sales rose 19% to $7.2 billion, each easily surpassing Wall Street analysts’ forecasts. Nvidia’s outlook for the current quarter was also significantly — about 50% — higher than analysts’ predictions.

    Nvidia’s stock is up nearly 110% this year.

    “There is not one better indicator around underlying AI demand going on … than the foundational Nvidia story,” said Dan Ives, analyst at Wedbush. “We view Nvidia at the core hearts and lungs of the AI revolution.”

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  • Why there won’t be a backlash against the Supreme Court this time | CNN Politics

    Why there won’t be a backlash against the Supreme Court this time | CNN Politics

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    CNN
     — 

    The Supreme Court handed down several key rulings this past week that dismayed liberals. Chief among them was the court’s decision to disallow colleges and universities from using race or ethnicity as a specific factor in admissions. The court also found that President Joe Biden’s student debt forgiveness plan was unconstitutional and that a Colorado web designer could refuse to create websites that celebrate same-sex weddings over religious objections.

    Unlike last year, when the Supreme Court greatly upset liberals by overturning Roe v. Wade, this year’s big rulings by the justices are unlikely to spark a major backlash from the public at large.

    This is well reflected in the public polling. Roe v. Wade, the 1973 decision that legalized abortion nationwide, had become massively popular.

    Right before the decision to overturn Roe leaked in May 2022, a Fox News poll found that 63% of registered voters were opposed to such a move while 27% supported it. An ABC News/Washington Post poll put the split at 54% wanting the court to uphold Roe and 28% wanting the decision overturned.

    This majority of Americans who wanted abortion to be legal nationally have maintained their stance since the Supreme Court officially struck down Roe in June 2022. Since that time, abortion supporters have won every related measure placed on the ballot across the country – from deep-blue states like California to ruby-red ones like Kentucky.

    California is an important state to note because voters there faced a 2020 ballot measure to consider the use of race, sex or ethnicity in government institutions (such as education). A clear majority, 57%, voted against allowing state and local entities to consider such factors in public education, employment and contracting decisions.

    When a state that voted for Biden by nearly 30 points is against affirmative action, it shouldn’t be surprising that the nation as a whole is.

    A Pew Research Center poll released last month found that 50% of Americans disapproved of certain colleges and universities taking race and ethnicity into account in admissions decisions to increase diversity. Only 33% approved of the practice.

    This Pew poll is no outlier. An ABC News/Ipsos poll conducted after the court decided its case showed that 52% of Americans approved of the decision, while 32% were opposed.

    Some polling before the ruling had shown even more opposition: 70% of Americans in a recent CBS News/YouGov survey indicated that the Supreme Court should not allow colleges to consider race and ethnicity in admissions.

    But perhaps what’s most interesting isn’t how many people are for or against considering race in college admissions. Rather, it’s how many people simply didn’t care enough to pay close attention to the affirmative action case before the Supreme Court.

    When explicitly given the option, a majority (55%) said in a May Marquette University Law School poll that they hadn’t heard enough to form an opinion about the case. (Those who had heard enough were against allowing colleges to use race in admissions.)

    This is quite different from March 2022, when just 30% of Americans hadn’t heard enough to form an opinion about the court potentially overturning Roe v. Wade, when asked the same question by Marquette but about the abortion case. (A plurality of those who had heard enough didn’t want the court to overturn Roe.)

    It’s hard for an issue to galvanize voters when they aren’t paying attention to it.

    The same holds true for Biden’s student loan forgiveness plan that the court blocked. A USA Today/Ipsos poll from April indicated that 52% of Americans were familiar with the case and a mere 16% were very familiar with it. (Those who had student loans were more familiar at 71%, though that’s a fairly low percentage for something that could affect them directly.)

    Possibly because of that low familiarity, the percentage of Americans who favor or oppose canceling certain student debt differs greatly depending on how the question is worded. When Marquette didn’t mention Biden or the government specifically in its May poll, a majority (63%) said they favored forgiveness of up to $20,000. It was a much lower 47% in the Ipsos poll.

    Surveys that did identify the proposal as Biden’s plan tend to be in the same ballpark, with a split public and a sizable percentage unsure.

    The ABC News/Ipsos poll showed that 45% approved of the court striking down Biden’s student debt plan, with 40% disapproving. About a sixth (16%) of the public was undecided.

    This jibes with polling before the court’s decision was announced. An NBC News poll from last year showed that 43% said Biden’s plan was a good idea compared with 44%, who said it was a bad idea. Just over 10% had no opinion.

    The USA Today/Ipsos survey found that 43% of Americans wanted the Supreme Court to allow the government’s student loan forgiveness plan to move forward, while 40% did not. Another 17% had no opinion.

    (I should point out that those with student debt were more likely to want government forgiveness in all these surveys, though about 80% of Americans don’t have student loan debt.)

    The public was similarly split about the court ruling in favor of the Colorado web designer who refuses to make wedding websites for same-sex couples over religious objections. According to the ABC News/Ipsos poll, 43% of Americans agreed with the court’s decision, 42% disagreed and 14% were undecided.

    There was limited polling on this case before the ruling, though none of it indicated massive opposition. A majority (60%) in a Pew poll that specifically mentioned “wedding websites” and “same-sex marriages” indicated they believed business owners should be allowed to refuse services if it violated their religious or personal beliefs.

    The polling on Roe v. Wade didn’t look anything like this last year. There were no close splits in opinion. People were consistently against overturning Roe, and they cared a lot about it. This led to a historically strong performance for the party in the White House during the 2022 midterm elections and a major backlash against the Supreme Court.

    The current polling on affirmative action in college admissions, Biden’s student loan forgiveness plan and allowing people to opt out of certain services to married LGBTQ couples if they believe it goes against their religion suggests that court’s opinions on those issues aren’t likely to have a similar impact.

    This story has been updated with additional information.

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  • Amazon is ‘investing heavily’ in the technology behind ChatGPT | CNN Business

    Amazon is ‘investing heavily’ in the technology behind ChatGPT | CNN Business

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    CNN
     — 

    Amazon wants investors to know it won’t be left behind in the latest Big Tech arms race over artificial intelligence.

    In a letter to shareholders Thursday, Amazon

    (AMZN)     CEO Andy Jassy said the company is “investing heavily” in large language models (LLMs) and generative AI, the same technology that underpins ChatGPT and other similar AI chatbots.

    “We have been working on our own LLMs for a while now, believe it will transform and improve virtually every customer experience, and will continue to invest substantially in these models across all of our consumer, seller, brand, and creator experiences,” Jassy wrote in his letter to shareholders.

    The remarks, which were part of Jassy’s second annual letter to shareholder since taking over as CEO, hint at the pressure that many tech companies feel to explain how they can tap into the rapidly evolving marketplace for AI products. Since ChatGPT was released to the public in late November, Google

    (GOOG)    , Facebook

    (FB)     and Microsoft

    (MSFT)     have all talked up their growing focus on generative AI technology, which can create compelling essays, stories and visuals in response to user prompts.

    Amazon’s goal, according to Jassy, is to offer less costly machine learning chips so that “small and large companies can afford to train and run their LLMs in production.” Large language models are trained on vast troves of data in order to generate responses to user prompts.

    “Most companies want to use these large language models, but the really good ones take billions of dollars to train and many years, most companies don’t want to go through that,” Jassy said in an interview with CNBC on Thursday morning.

    “What they want to do is they want to work off of a foundational model that’s big and great already, and then have the ability to customize it for their own purposes,” Jassy told CNBC.

    With that in mind, Amazon on Thursday unveiled a new service called Bedrock. It essentially makes foundation models (large models that are pre-trained on vast amounts of data) from AI21 Labs, Anthropic, Stability AI and Amazon accessible to clients via an API, Amazon said in a blog post.

    Jassy told CNBC he thinks Bedrock “will change the game for people.”

    In his letter to shareholders, Jassy also touted AWS’s CodeWhisperer, another AI-powered tool which he said “revolutionizes developer productivity by generating code suggestions in real time.”

    “I could write an entire letter on LLMs and Generative AI as I think they will be that transformative, but I’ll leave that for a future letter,” Jassy wrote. “Let’s just say that LLMs and Generative AI are going to be a big deal for customers, our shareholders, and Amazon.”

    In the letter, Jassy also reflected on leading Amazon through “one of the harder macroeconomic years in recent memory,” as the e-commerce giant cut some 27,000 jobs as part of a major bid to rein in costs in recent months.

    “There were an unusual number of simultaneous challenges this past year,” Jassy said in the letter, before outlining steps Amazon took to rethink certain free shipping options, abandon some of its physical store concepts and significantly reduce overall headcount.

    Amazon disclosed in a securities filing Thursday that Jassy’s pay package last year was valued at some $1.3 million, and that the CEO did not receive any new stock awards in 2022. (When Jassy took over as CEO in 2021, he was awarded a pay package mostly comprised of stock awards that valued his total compensation package at some $212 million.)

    Despite the challenges at Amazon, however, Jassy said in his letter that he finds himself “optimistic and energized by what lies ahead.” Jassy added: “I strongly believe that our best days are in front of us.”

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  • States have been on a tax-cutting spree, but revenues are now weakening | CNN Politics

    States have been on a tax-cutting spree, but revenues are now weakening | CNN Politics

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    CNN
     — 

    Fueled by surging revenues, states have been slashing taxes for individuals and businesses for the past three years.

    But the party is expected to come to an end in the coming fiscal year, which started on Saturday in 46 states. Revenue is projected to decline by 0.7% in fiscal 2024, based on forecasts used in governors’ budgets, after an estimated 0.3% dip this fiscal year, according to a recently released National Association of State Budget Officers survey.

    This reversal comes after double-digit percentage increases for the prior two fiscal years. It reflects the impact of slower economic growth, a weaker stock market and a slew of recent tax cuts.

    Some 25 states have cut individual income tax rates since 2021, according to the right-leaning Tax Foundation. This includes 22 states that reduced their top marginal rates.

    “Most states are viewing tax reform and relief as a chance to, first and foremost, return some of their excess revenue to taxpayers, but to also do that in a way that is simultaneously improving the structure of their tax cuts and make it more conducive to long-term economic growth,” said Katherine Loughead, senior policy analyst at the foundation.

    States are also seeking to make themselves more attractive to business investment, as well as to remote and traditional workers, she continued.

    In 2023 alone, at least eight states approved rate reductions, according to the Tax Foundation. Arkansas, for instance, is trimming its top individual income tax rate to 4.7%, retroactive to January 1, after reducing it from 5.5% to 4.9% last year.

    Likewise, Montana lawmakers approved deepening cuts enacted in 2021. Starting in 2024, the top marginal income tax rate will be 5.9%, instead of 6.5% as originally planned. It was 6.9% in 2021.

    In addition, previously scheduled or triggered income tax rate reductions took effect this year in Arizona, Idaho, Iowa, Missouri and North Carolina, as well as for interest and dividend income in New Hampshire, according to the Tax Foundation.

    Aside from individual income tax cuts, states have also lowered the levies on purchases and for businesses over the past three years. Two states cut sales tax rates, while 13 reduced corporate income tax rates and others made additional tax changes that benefited companies.

    In 2023, Nebraska and Utah adopted corporate income tax rate reductions. The former will phase down its top rate to 3.99% in 2027, accelerating an earlier law’s timetable. If fully implemented as planned, Nebraska will slash its top marginal corporate income tax rate nearly in half over six years, according to the Tax Foundation.

    Utah also further reduced its corporate income tax rate to 4.65%, retroactive to January 1. A law passed last year had cut it to 4.85% for 2022, down from 4.95%.

    The tax cuts, along with stock market declines and the shaky economy, have taken their toll on states’ revenues, however.

    State tax revenue fell in 37 states, after adjusting for inflation, between July 2022 and May 2023, according to Lucy Dadayan, principal research associate at the nonpartisan Tax Policy Center. Some 19 states saw declines before taking inflation into account.

    Revenue dropped nearly 12% over the period on an inflation-adjusted basis. All major sources of revenue – personal income, sales and corporate income taxes – declined, though the extent varies widely by state and source. Individual income taxes were the weakest, plummeting more than 22%.

    States are in trouble, though there won’t be an immediate crisis, she said. Much depends on factors that remain unknown, such as whether the nation will fall into a recession or whether states will face natural disasters.

    The robust revenue of recent years was “artificially boosted” by federal Covid-19 pandemic relief funds and the strong stock market in 2021, she said.

    “We knew this is temporary,” Dadayan said. “It would have been better if the states wouldn’t jump and do tax cuts and be more cautious.”

    Still, revenues in fiscal 2023 are coming in stronger than initially expected. The current estimates are outperforming earlier forecasts by 6.5%, according to the National Association of State Budget Officers. Most states have also built up big reserves in their rainy day funds in recent years.

    Whether states will continue cutting taxes in the coming fiscal year will depend on what happens with revenues.

    “A lot of states have done what they can already,” Loughead said. “They will continue to look at how revenues come in and how the rates measure up. If they still are experiencing strong surpluses, I do think they might tweak those rates down even more.”

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  • Chinese star banker Bao Fan detained by country’s top anti-graft body, state media says | CNN Business

    Chinese star banker Bao Fan detained by country’s top anti-graft body, state media says | CNN Business

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    Hong Kong
    CNN
     — 

    One of China’s top tech bankers, who went missing in February, has been in the custody of the country’s top anti-graft watchdog since his disappearance and has had his detention extended, according to a state media report.

    The Economic Observer, a well regarded financial publication, reported that Bao Fan — founder and CEO of Hong Kong-listed China Renaissance, a boutique investment bank -— was taken away on February 7 by officials from the Central Commission for Discipline Inspection (CCDI) in an investigation into suspected corporate bribery.

    It said, citing an unnamed source, that his detention was extended on May 7 for three months.

    The mysterious disappearance of Bao has sent a chill through financial markets and China’s tech sector. Shares in China Renaissance had plunged more than 20% until they were suspended from trading in early April. The company also delayed the release of its annual results, because its auditors were unable to reach Bao.

    China Renaissance, which was responsible for a string of major Chinese tech deals since it was founded in 2005, didn’t immediately respond to a CNN request for comment.

    The CCDI is the top anti-graft body of the ruling Communist Party and is responsible for investigating corruption.

    China Renaissance had previously revealed only that Bao was “cooperating in an investigation” being carried out by certain authorities in the country. But it gave no other details.

    Bao is known as a veteran dealmaker who worked closely with top tech companies in China. He helped broker the 2015 merger between two of the country’s leading food delivery services, Meituan and Dianping. Today, the combined company’s “super app” platform is ubiquitous in China.

    His February disappearance coincided with a sweeping anti-corruption crackdown launched by the ruling Communist Party into the financial sector, which has ensnared more than a dozen senior executives at China’s biggest financial institutions.

    Analysts believe the crackdown is a new wave of leader Xi Jinping’s existing anti-graft campaign, through which he is believed to be further consolidating his power amid domestic and external challenges.

    The specific agencies handling Bao’s case include the CCDI’s international cooperation bureau and Beijing’s municipal anti-graft authorities, the Economic Observer said.

    Bao’s detention was related to another case involving Cong Lin, a former executive at his company, who had previously worked for China’s largest state owned bank for more than two decades, the newspaper added.

    Cong Lin, who became president of China Renaissance in July 2020, had previously served in a variety of executive roles at the Industrial and Commercial Bank of China, according to public company records.

    Cong has been detained by anti-corruption authorities since September for matters related to his tenure at ICBC Financial Leasing, the Economic Observer said. The details of Cong’s detention were previously reported by several Chinese media outlets.

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  • Google-parent stock drops on fears it could lose search market share to AI-powered rivals | CNN Business

    Google-parent stock drops on fears it could lose search market share to AI-powered rivals | CNN Business

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    CNN
     — 

    Shares of Google-parent Alphabet fell more than 3% in early trading Monday after a report sparked concerns that its core search engine could lose market share to AI-powered rivals, including Microsoft’s Bing.

    Last month, Google employees learned that Samsung was weighing making Bing the default search engine on its devices instead of Google’s search engine, prompting a “panic” inside the company, according to a report from the New York Times, citing internal messages and documents. (CNN has not reviewed the material.)

    In an effort to address the heightened competition, Google is said to be developing a new AI-powered search engine called Project “Magi,” according to the Times. The company, which reportedly has about 160 people working on the project, aims to change the way results appear in Google Search and will include an AI chat tool available to answer questions. The project is expected to be unveiled to the public next month, according to the report.

    In a statement sent to CNN, Google spokesperson Lara Levin said the company has been using AI for years to “improve the quality of our results” and “offer entirely new ways to search,” including with a feature rolled out last year that lets users search by combining images and words.

    “We’ve done so in a responsible and helpful way that maintains the high bar we set for delivering quality information,” Levin said. “Not every brainstorm deck or product idea leads to a launch, but as we’ve said before, we’re excited about bringing new AI-powered features to Search, and will share more details soon.”

    Samsung did not immediately respond to a request for comment.

    Google’s search engine has dominated the market for two decades. But the viral success of ChatGPT, which can generate compelling written responses to user prompts, appeared to put Google on defense for the first time in years.

    In March, Google began opening up access to Bard, its new AI chatbot tool that directly competes with ChatGPT and promises to help users outline and write essay drafts, plan a friend’s baby shower, and get lunch ideas based on what’s in the fridge.

    At an event in February, a Google executive also said the company will bring “the magic of generative AI” directly into its core search product and use artificial intelligence to pave the way for the “next frontier of our information products.”

    Microsoft, meanwhile, has invested in and partnered with OpenAI, the company behind ChatGPT, to deploy similar technology in Bing and other productivity tools. Other tech companies, including Meta, Baidu and IBM, as well as a slew of startups, are racing to develop and deploy AI-powered tools.

    But tech companies face risks in embracing this technology, which is known to make mistakes and “hallucinate” responses. That’s particularly true when it comes to search engines, a product that many use to find accurate and reliable information.

    Google was called out after a demo of Bard provided an inaccurate response to a question about a telescope. Shares of Google’s parent company Alphabet fell 7.7% that day, wiping $100 billion off its market value.

    Microsoft’s Bing AI demo was also called out for several errors, including an apparent failure to differentiate between the types of vacuums and even made up information about certain products.

    In an interview with 60 Minutes that aired on Sunday, Google and Alphabet CEO Sundar Pichai stressed the need for companies to “be responsible in each step along the way” as they build and release AI tools.

    For Google, he said, that means allowing time for “user feedback” and making sure the company “can develop more robust safety layers before we build, before we deploy more capable models.”

    He also expressed his belief that these AI tools will ultimately have broad impacts on businesses, professions and society.

    “This is going to impact every product across every company and so that’s, that’s why I think it’s a very, very profound technology,” he said. “And so, we are just in early days.”

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  • Lyft stock plunges nearly 15% on weaker than expected revenue forecast | CNN Business

    Lyft stock plunges nearly 15% on weaker than expected revenue forecast | CNN Business

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    CNN
     — 

    Lyft may have a bumpy road ahead to recovery.

    The ride-hailing company reported revenue of $1 billion for the quarter ending in March, marking a 14% year-over-year increase and beating Wall Street estimate’s. But the company forecast weaker-than-expected revenue for the current quarter, which was enough to jitter investors.

    Shares of Lyft plunged nearly 15% in after-hours trading Thursday following the earnings results.

    The latest earnings report comes on the heels of Lyft shaking up its the C-suite and announcing plans to cut 26% of its employees as it fights for market share and profitability.

    David Risher, who previously worked at Amazon and Microsoft, recently took over as CEO of Lyft and the company’s two co-founders stepped down from their management positions at the company. Risher has been a member of the Lyft board since 2021.

    On a conference call with analysts on Thursday to discuss the results, Risher said Lyft is currently at “an inflection point” as people return to pre-pandemic social habits.

    “I am very aware of our current levels of growth and profitability are not acceptable,” Risher said on the call, his first as CEO. “I am committed to growing Lyft into a large, durable, profitable business, that our riders, drivers and shareholders love, and I look forward to keeping you informed on our progress.”

    Compared to its chief rival Uber, Lyft has so far struggled to bounce back from the pandemic’s hit to its business. While Uber diversified its business beyond ride-hailing by delivering meals and grocery items during the health crises, Lyft never did. Uber also was able to attract drivers back to the platform better than Lyft as pandemic restrictions eased in the U.S.

    Earlier this week, Uber said in its quarterly earnings report that revenue was up 29%, as demand for its rideshare and delivery services held firm despite lingering recession fears.

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  • Golf’s new Saudi deal presents questionable political, business and sporting realities | CNN Politics

    Golf’s new Saudi deal presents questionable political, business and sporting realities | CNN Politics

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    CNN
     — 

    The PGA Tour once advertised its brightest stars with the catch phrase “These guys are good.” A better slogan might now be “These guys are even richer.”

    In a bombshell announcement so staggering that many golf fans thought it was fake at first, the venerable PGA Tour unveiled a partnership Tuesday with Saudi Arabia’s public investment fund, the financier of its sworn rival LIV Golf – a breakaway circuit that split the sport and seeded feuds among its top players.

    The deal means that the PGA Tour – built on the image of quintessentially American Arnold Palmer, who epitomized post World War II US values – will now rest atop a pile of money put up by the regime that the US blamed for the murdering and dismemberment of Washington Post columnist Jamal Khashoggi, that was home to 15 of the 19 hijackers of September 11, 2001, attack, and that has frequently been condemned by Washington for infringing women’s rights.

    It is beyond doubt that the new reality of pro-golf will mean a better spectacle for fans since it will end the split between the two rival tours and will also fold in the DP World Tour (formerly known as the European tour) and mean the brightest stars will play one another more often.

    For many sports fans in the US and elsewhere, that’s just fine. They like to plop down on the couch and watch their favorite golfer on the back nine on Sunday or their Gulf-owned Premier League team on TV. Who can begrudge them one oasis free from bitter, tribal modern politics?

    And the deal is also undeniably a great piece of business, assuming PGA Tour players accept it. Global golfers stand to win a lot more money, various tours will be invigorated and Saudi Arabia’s government and its ruthless leader, Crown Prince Mohammed bin Salman (MBS), get to be associated with one of the planet’s most prestigious year-round sporting properties. And all pending litigation between LIV Golf and the PGA Tour was also mutually ended under the new agreement.

    But for others, Tuesday’s peace deal on the links raises painful moral issues. It also exposes top PGA leaders – who had blasted golfers who defected to LIV – to accusations of hypocrisy and reflects the way modern professional sports are hostage to the highest bidders. This can only pose uncomfortable questions to fans whose values and history clash with those of distant and sometimes politically dicey entities who effectively own their teams and top stars.

    PGA Tour Commissioner Jay Monahan, for instance, had some explaining to do – not least to the tour’s players gathered at the Canadian Open this week after many tweeted that they had no advance notice of the deal. Monahan had played the 9/11 card last year at the same event, saying that two families that were close to him had lost loved ones in the worst terror attack on American soil, adding, “I would ask any player that has left, or any player that would ever consider leaving, have you ever had to apologize for being a member of the PGA Tour?”

    Now Monahan stands to be the effective supremo of global golf, save for the four majors – the sport’s most prestigious tournaments – aided by a gusher of Saudi cash.

    9/11 Families United effectively accused Monahan of using the tragedy as leverage in a business deal to reunite golf. He “co-opted the 9/11 community last year in the PGA’s unequivocal agreement that the Saudi LIV project was nothing more than sports washing of Saudi Arabia’s reputation,” the group said in a statement. “But now the PGA and Monahan appear to have become just more paid Saudi shills, taking billions of dollars to cleanse the Saudi reputation so that Americans and the world will forget how the Kingdom spent their billions of dollars before 9/11 to fund terrorism, spread their vitriolic hatred of Americans, and finance al Qaeda and the murder of our loved ones.”

    Monahan was asked about his reversal after what he said was a “heated” meeting with PGA Tour players on Tuesday.

    “I recognize that people are going to call me a hypocrite,” he said. “Anytime I said anything, I said it with the information that I had at that moment, and I said it based on someone that’s trying to compete for the PGA TOUR and our players.”

    Major champions who jumped to the rival circuit last year like Dustin Johnson, Phil Mickelson, Patrick Reed and Cam Smith might also now wonder whether their PGA tour brethren will face the same grilling over human rights that they had to endure at the time.

    One very famous golfer was delighted by the deal and seemed keen to claim some reflected credit – former President Donald Trump. The current front-runner for the 2024 GOP nomination associated himself with LIV after the PGA Tour and other golf governing bodies distanced themselves from him over his radioactive political reputation. Trump has hosted several tournaments at his courses for LIV – a circuit that sits well with his record of refusing to sever links with the Saudis over the murder of Khashoggi in 2018, reasoning that the Saudis were great customers of the US.

    “A big, beautiful, and glamorous deal for the wonderful world of golf. Congrats to all!!!” Trump wrote in block capital letters on his Truth Social platform.

    Some defenders of LIV golfers have pointed out that the players were only making a choice to prioritize personal interests over moral ones in partnering with the Saudis – a calculus that mirrored decades of US foreign policy. Indeed, President Joe Biden had called on the 2020 campaign trail for the kingdom to be treated as a “pariah” because of Khashoggi’s murder only to travel to the kingdom as president to fist-bump MBS when he needed a spike in oil price production to bring down American gas prices.

    On Tuesday, after the LIV/PGA partnership was announced, US Secretary of State Antony Blinken sat down for talks with the Crown Prince in Riyadh.

    The idea that politics and sport shouldn’t mix has always been quaint. The Olympics and the World Cup are two of the planet’s most political spectacles after all. And modern sport has long run on money as monster TV rights contracts translate into huge salaries for top soccer players, Formula One Drivers, NBA stars and the top names in other sports.

    But Tuesday’s LIV/PGA Tour agreement lays bare questions of morality so starkly precisely because of the way golf has sold itself. In a sport where players call penalties on themselves, and commentators idolize top players in whispered tones as paragons of gentlemanly conduct, patriotism and family values, the origin of the sport’s new financial lifeline is glaring.

    The PGA Tour and Saudi partnership may be the most prominent example yet of the phenomenon known as sports washing, whereby an authoritarian nation seeking to buff up its image – despite serious criticism over its political system and human rights performance – woos the world’s top sporting stars. China was accused of such an agenda with its 2008 and 2022 Summer and Winter Olympics, where attempts at political activism largely fizzled under its repressive rule. The Qatar World Cup last year was another example of a nation that used its financial muscle to present a new image to the world. Various controversies during the tournament over LGBTQ rights and the plight of workers who built the stadiums undercut global governing body FIFA’s pretensions to inclusion.

    The Saudis, Qataris and others are using their oil wealth to buy themselves a foothold among the world’s most powerful nations and to create tourism, entertainment and sporting legacies to sustain them when their reserves of carbon energy are depleted.

    This mirrors a global shift in power and especially financial muscle – from the capitals of Western Europe to new epicenters in the emerging economies of the Middle East, India and China. Soccer, like golf, is taking its share of the cash. Traditional working class football clubs knitted into their communities for decades in the UK, for example, now suddenly find themselves owned by foreign energy magnates. Premier League giant Manchester City was bought by a United Arab Emirates-led group. And Newcastle United is owned by a Saudi Arabia-led consortium, forcing fans to consider (or not) the ethical dimensions of their support for their hometown clubs. And global cricket has been transformed by the Indian Premier League, which pays lavish salaries in a shortened form of the game.

    One of the top names in soccer, Cristiano Ronaldo, is playing out the twilight of a glorious career spent at Europe’s top clubs in the up-and-coming Saudi league for a massive salary. And on Tuesday, Saudi team Al-Ittihad announced the signing of Real Madrid and French forward Karim Benzema, completing a sporting double whammy for the kingdom.

    There are as many sporting questions about the PGA Tour/LIV Golf partnership that remain unanswered. The partnership combines the Saudi Public Investment Fund’s golf-related commercial businesses and rights (including LIV Golf) with the commercial businesses and rights of the PGA Tour and DP World Tour into a new, collectively owned, for-profit entity. A spokesman for the PGA tour told CNN that the deal is not a merger.

    “After two years of disruption and distraction, this is a historic day for the game we all know and love,” Monahan said, describing a “transformational partnership” that would “benefit golf’s players, commercial and charitable partners and fans.”

    Yasir Al-Rumayyan, governor of the Saudi Public Investment Fund, told CNBC he expected the partnership to be finalized within weeks and revealed, in a stunning move, that he had told LIV figurehead and Hall of Famer Greg Norman about the deal only moments before going on air.

    LIV lured some of the PGA Tour’s top stars with massive signing bonuses and huge purses at substantially fewer events than the PGA tour, prompting the premier US circuit to unveil its own select “designated events” with upped prize money. The two sides were locked in bitter legal battles that have now been resolved.

    It remains unclear, however, what steps LIV stars will have to take to potentially be able to return to events like The Players Championship, currently hosted on the PGA tour from which they were banned.

    Then there is the question of how current PGA Tour members will respond.

    Former British Open Champion Collin Morikawa tweeted, “I love finding out morning news on Twitter.”

    The sudden announcement also did not specify what would happen to LIV tour events, which have struggled to draw a strong TV audience, beyond this season. Monahan’s announcement did hint that the new entity was committed to the new format of team events that has been introduced by LIV, to compliment golf’s traditional reliance on individual tournaments.

    The golfer with the widest smile on Tuesday was probably Mickelson. The three-time Masters champion took the most heat for deserting the PGA tour for a reported massive payday, and was one of the most outspoken supporters of LIV – a breakaway he argued was a way to revolutionize the structure of professional golf and to secure more rewards for players.

    Mickelson was also open about the reality of partnering with the Saudis, calling them “scary m*therf**kers to get involved with,” in an interview with golf journalist Alan Shipnuck that he later claimed was off the record. Shipnuck has written that he offered Mickelson no such agreement.

    On Tuesday, Mickelson simply tweeted: “Awesome day today,” with a smiley sunshine emoji.

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  • Tax prep companies shared private taxpayer data with Google and Meta for years, congressional probe finds | CNN Business

    Tax prep companies shared private taxpayer data with Google and Meta for years, congressional probe finds | CNN Business

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    CNN
     — 

    Some of America’s largest tax-prep companies have spent years sharing Americans’ sensitive financial data with tech titans including Meta and Google in a potential violation of federal law — data that in some cases was misused for targeted advertising, according to a seven-month congressional investigation.

    The report highlights what legal experts described to CNN as a “five-alarm fire” for taxpayer privacy that could lead to government and private lawsuits, criminal penalties or perhaps even a “mortal blow” for some industry giants involved in the probe including TaxSlayer, H&R Block and TaxAct.

    Using visitor tracking technology embedded on their websites, the three tax-prep companies allegedly sent tens of millions of Americans’ personal information to the tech industry without consent or appropriate disclosures, according to the congressional report reviewed by CNN.

    Beyond ordinary personal data such as people’s names, phone numbers and email addresses, the list of information shared also included taxpayer data — details about people’s filing status, adjusted gross income, the size of their tax refunds and even information about the buttons and text fields they clicked on while filling out their tax forms, which could reveal what tax breaks they may have claimed or which government programs they use, according to the report.

    The report, which drew on congressional interviews and written testimony from Meta, Google and the tax-prep companies, also found that every taxpayer who used TaxAct’s IRS Free File service while the tracking was enabled would have had their information shared with the tech companies. Some of the tax-prep companies still do not know whether the data they shared continues to be held by the tech platforms, the report said.

    “On a scale from one to 10, this is a 15,” said David Vladeck, a law professor at Georgetown University and a former consumer protection chief at the Federal Trade Commission, the country’s top privacy watchdog. “This is as great as any privacy breach that I’ve seen other than exploiting kids. This is a five-alarm fire, if what we know about this so far is true.”

    It is also an example, Vladeck said, of why the United States needs federal legislation guaranteeing every American a basic right to data privacy — an issue that has languished in Congress for years despite electronic data becoming an ever-larger part of the global economy.

    The congressional findings represent the latest claims of wrongdoing to hit the embattled tax-prep industry after a report last year by the investigative journalism outlet The Markup highlighted the tracking practice.

    Wednesday’s bombshell report adds to those earlier revelations by identifying a previously unreported category of data that was allegedly being collected and shared: the webpage titles in online tax software that can reveal what tax forms users have accessed, said an aide to Democratic Sen. Elizabeth Warren, who helped lead the congressional probe. For example, taxpayers who entered information about their college savings contributions or rental income may have done so on webpages bearing titles reflecting that information, which would then have been shared with the tech companies, the aide said.

    During the probe, Meta told investigators it used the taxpayer data it received to target third-party ads to users of its platform and to train its artificial intelligence algorithms, the report said. The Warren aide told CNN it was unclear whether Meta knew it was inappropriately using taxpayer data at the time. A Meta spokesperson said the company instructs its partners not to use its tools to share sensitive information and that Meta’s systems are “designed to filter out potentially sensitive data it is able to detect.”

    The technology behind the data collection, known as a tracking pixel, is commonly used across the entire internet. A small snippet of code that website owners can insert onto their sites, tracking pixels gather information that can help companies, including but not limited to Meta and Google, understand the behavior or interests of website visitors.

    Because of the tracking technology used by TaxAct, TaxSlayer and H&R Block, “every single taxpayer who used their websites to file their taxes could have had at least some of their data shared,” the report said.

    The tax-prep companies at the center of the investigation told lawmakers the collected data had been scrambled to help protect privacy, according to the report. But the report also said some of the tax-prep firms themselves were not fully aware of how much information was being exposed to the tech platforms, and the report cited past FTC research concluding that even “anonymized” data can be easily reverse-engineered to identify a person.

    The pixels’ use in a taxpayer context resulted in the “reckless” sharing of legally protected data that could put taxpayers at risk, according to the report by Warren and her Democratic colleagues Sens. Ron Wyden; Richard Blumenthal; Tammy Duckworth; and Sheldon Whitehouse; Sen. Bernie Sanders, an independent who caucuses with Democrats; and Democratic Rep. Katie Porter.

    The FTC, the Internal Revenue Service, the Justice Department and the Treasury Inspector General for Tax Administration “should fully investigate this matter and prosecute any company or individuals who violated the law,” the lawmakers wrote in a letter dated Tuesday to the agencies and obtained by CNN. The FTC and DOJ declined to comment; the IRS and TIGTA didn’t immediately respond to a request for comment.

    In a statement, H&R Block said it takes client privacy “very seriously, and we have taken steps to prevent the sharing of information via pixels.” Wednesday’s report said H&R Block had testified to using the tracking technology for “at least a couple of years.”

    TaxAct and TaxSlayer didn’t immediately respond to a request for comment. The report said TaxAct had been using Meta’s tools since 2018 and Google’s since about 2014, while TaxSlayer began using Meta’s tools in 2018 and Google’s in 2011. The investigation found that all three tax-prep companies had discontinued their use of Meta’s pixel after The Markup’s report last November.

    Intuit, the maker of TurboTax, received an initial inquiry letter from the lawmakers in December but was not a focus of Wednesday’s report because the company did not use tracking pixels to the same extent, the investigation found.

    Tax preparation firms have faced mounting scrutiny in recent years amid reports that many have turned to data harvesting as a business model and that the largest among them have spent millions lobbying against legislation that could make it easier for Americans to file their tax returns. An IRS report this year found that 72% of Americans would be interested in using a free, electronic tax filing service if it were provided by the agency as an alternative to private online filing services. The IRS plans to launch a pilot version of that service to a limited number of taxpayers in the 2024 tax filing season.

    Google told CNN it prohibits business customers from uploading to its platform sensitive data that could be traced back to a person.

    “We have strict policies and technical features that prohibit Google Analytics customers from collecting data that could be used to identify an individual,” a Google spokesperson said. “Site owners — not Google — are in control of what information they collect and must inform their users of how it will be used. Additionally, Google has strict policies against advertising to people based on sensitive information.”

    Wednesday’s report focuses more heavily on Meta’s use of taxpayer data, the Warren aide told CNN, because Google did not appear to have used the information for its own commercial purposes as overtly as Meta and the investigation was unable to fully determine whether Google may have used the data for other applications.

    The allegations could nevertheless create extensive legal risk for both the tech companies as well as the tax-preparation firms, according to tax and privacy legal experts.

    The tax-prep companies could face billions in fines under US tax law if the federal government decides to sue, said Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center. In addition, the US government could seek criminal penalties.

    “The scope of ‘taxpayer information’ is broad by design,” Rosenthal said, adding that tax-prep companies can be sued for “knowingly” or “recklessly” leaking that information. “The companies shouldn’t be sharing it in a way that some third party could obtain it.”

    Theoretically, he said, the tax code also affords individual taxpayers the right to file private lawsuits against the tax-prep companies. But most if not all of those firms require customers to submit to mandatory arbitration that could realistically make bringing a private claim more challenging, said the Warren aide.

    Apart from the tax code, both the tech giants as well as the tax-prep firms could also face civil liability from the FTC — which can police data breaches and hold companies accountable for their commitments to user privacy — and potentially from state governments that have their own privacy laws on the books, said Vladeck.

    Depending on the strength of the allegations, the tax-prep companies could quickly be forced into a binding settlement, said a former FTC official who requested anonymity in order to speak more freely.

    “If the facts are really strong, these companies would probably rather settle than go to court. This is very embarrassing,” the former official said. “It could be a mortal blow to the tax prep companies.”

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