Tag: finance and investments

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

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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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April 12, 2021
Amazon is ‘investing heavily’ in the technology behind ChatGPT | CNN Business

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CNN
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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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April 12, 2021
States have been on a tax-cutting spree, but revenues are now weakening | CNN Politics

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CNN
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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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April 12, 2021
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
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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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April 12, 2021
Google-parent stock drops on fears it could lose search market share to AI-powered rivals | CNN Business

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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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April 12, 2021
Lyft stock plunges nearly 15% on weaker than expected revenue forecast | CNN Business

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CNN
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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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April 12, 2021
Golf’s new Saudi deal presents questionable political, business and sporting realities | CNN Politics

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CNN
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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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April 12, 2021
Tax prep companies shared private taxpayer data with Google and Meta for years, congressional probe finds | CNN Business

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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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April 12, 2021
Britain’s ‘profound economic crisis’ gives Rishi Sunak only unpleasant choices | CNN Business

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London
CNN Business
—

Rishi Sunak, Britain’s third prime minister in seven weeks, took office on Tuesday with a pledge to fix the “mistakes” of predecessor Liz Truss and tackle a “profound economic crisis.”

The task won’t be an easy one, he acknowledged.

“This will mean difficult decisions to come,” Sunak said in his first speech from No. 10 Downing Street.

The United Kingdom was already sliding towards a recession when Truss took office in September, as soaring energy bills ate into spending. Now, Sunak has another headache: He must restore the government’s credibility with investors after Truss’ unfunded tax cuts sparked a bond market revolt, forcing the Bank of England to intervene to prevent a financial meltdown. Borrowing costs, including mortgage rates, shot higher.

Accomplishing this goal will require delivering a detailed plan to put public finances on a more sustainable path. (A government watchdog warned in July that without major action, debt could reach 320% of the UK’s gross domestic product in 50 years.)

The problem? There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy.

“It’s not a particularly pleasant economic hand to be dealt [as] a new prime minister,” said Ben Zaranko, a senior research economist at the Institute for Fiscal Studies.

Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth.

Yet Sunak and Hunt — who will stay in his job — still need to find between £30 billion and £40 billion in savings to bring down public debt as a share of the economy in the next five years, according to calculations by IFS, an influential think tank.

“It is going to be tough,” Hunt said in a tweet. “But protecting the vulnerable — and people’s jobs, mortgages and bills — will be at the front of our minds as we work to restore stability, confidence and long-term growth.”

Sunak and Hunt won’t have the option of going light on the details. If investors don’t buy into their plan and borrowing costs shoot up again, getting the situation under control would only become trickier, as interest payments on government debt rise.

“If markets don’t [see] the plans as credible, then filling the fiscal hole could become even harder,” said Ruth Gregory, senior UK economist at Capital Economics.

One area Sunak may be tempted to tap is the social welfare budget. Questions have swirled about whether the Conservative government may try to avoid boosting state benefits in line with inflation, as is customary. (American recipients of Social Security will receive the biggest cost-of-living adjustment in more than four decades next year.)

Most UK working-age benefits would typically go up by 10.1% next April based on inflation data. But there’s speculation the increase could be linked instead to average earnings, which are growing at a much slower rate than inflation. That could save £7 billion ($8 billion) in 2023-24, according to IFS.

Such a move would prove controversial, however — especially since benefits have not kept up with rampant inflation in 2022.

“I would like to see if we could find a way to increase benefits by inflation, but what I will say is that trade-offs are involved,” former Conservative cabinet minister Sajid Javid told ITV this week.

A more palatable option, at least for households, would be extracting more taxes from corporations.

Hunt has already said that corporate taxes will rise from 19% to 25% next spring. The Financial Times has reported that Hunt could also target earnings from oil and gas companies by extending a windfall tax on profits.

In an interview with the BBC earlier this month, Hunt said he was “not against the principle” of windfall taxes and that “nothing is off the table.” Higher taxes on the financial sector are also under consideration, according to the Financial Times.

Industry groups are already circling the wagons. Banking trade association UK Finance said its members already pay “a higher rate of taxation overall than any other sector,” and urged the government not to “risk the competitiveness of the UK’s banking and finance industry.”

Sunak could also walk back Truss’ commitment to boosting defense spending to 3% of the economy by 2030, though that carries its own political risks given Russia’s war in Ukraine. Other countries in the region, such as Germany, have said they will ramp up military investments, and the United Kingdom may be loath to fall behind, Zaranko said.

Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. Hunt is due to reveal his plans in greater depth on October 31.g

“Despite the fiscal U-turns, the government will still need to show a fiscally credible path next week in the budget to balance the books,” Sonali Punhani, an economist at Credit Suisse, said in a note to clients this week.

That could exacerbate the country’s downturn. The Bank of England has projected that the United Kingdom is already in a recession, and a gauge of business activity in October slumped to its lowest level in 21 months.

“We are seeing quite a dramatic shift in the fiscal outlook from being much looser than we expected just a few weeks ago to being much tighter than we expected,” Gregory of Capital Economics said. “I think the risk is that the recession is deeper or longer than we expect.”

A weaker economy would present its own complications.

No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

But business groups are warning that completely abandoning the objective of boosting Britain’s anemic economic growth would create problems, too.

The austerity of the 2010s produced “very low growth, zero productivity and low investment,” Tony Danker, head of the Confederation of British Industry, told the BBC on Tuesday.

“The country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts, because you’ve got no growth.”

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December 31, 1969