Explainer-Why U.S. flights were grounded by a FAA system outage
January 11, 2023
(Reuters) – The Federal Aviation Administration (FAA) allowed some flights to resume after an outage of the system that alerts pilots to any obstructions before take-off had earlier forced the civil aviation regulator to ground all aircraft in the United States.
Over 4,000 flights were delayed and more than 600 canceled because of the outage as of early Wednesday morning. U.S. flights were slowly beginning to resume departures as a ground stop was lifted.
Here is a brief summary of what the pilot warning system does, what we know about what went wrong and background about the safety notices provided to pilots, known as NOTAM.
WHAT HAPPENED?
The FAA system that is meant to distribute notices to pilots on hazards failed at about 2 a.m. Eastern Time, officials said.
The FAA ordered airlines to put a halt on all domestic departures until 9 a.m. Eastern time while it tested whether crews had managed to restore the system and bring it back online.
The White House said that U.S. President Joe Biden had been briefed on the outage by Secretary of Transportation Pete Buttigieg. “There is no evidence of a cyberattack at this point,” White House Press Secretary Karine Jean-Pierre said in a tweet. The U.S. Department of Transportation is conducting an investigation, she said.
WHAT IS A NOTAM?
The system that failed on Wednesday is part of a nearly century-old practice originally known as Notices to Airmen – originally modeled on a system for notices to mariners.
The system, which was changed to be called “Notices to Air Missions” in 2021, is meant to alert pilots to hazards, everything from snow, volcanic ash or birds near an airport.
It also provides information on closed runways and temporary air restrictions.
The NOTAMs sent by the U.S. Federal Aviation Administration are part of a global safety system managed through the United Nations’ aviation agency.
Pilots are required to review the notices, either printed on paper or on an iPad, before take-off.
The information provided can run up to 200 pages for long-haul international flights.
NOTAMs are written in a kind of encoded shorthand that had been originally designed to make communication more efficient.
HOW HAS THE SYSTEM CHANGED?
The U.N. Civil Aviation Organization (ICAO) has been leading an effort to overhaul the system to make it easier for airlines and pilots to filter the most important warnings and present them in clearer language.
In July 2017, an Air Canada jet landed on the wrong runway at San Francisco’s airport and came within seconds of colliding with four other planes.
The notice of the closure of one of the two runways at the airport had been flagged in the pre-flight NOTAM – on page eight of a 27-page briefing – and missed by the pilots.
The incident, and the information overload that pilots complain the system encourages, prompted the effort to change the way the system operates.
“(NOTAMs) are just a bunch of garbage that nobody pays any attention to,” U.S. National Transportation Safety Board Chairman Robert Sumwalt said at a 2018 hearing on the Air Canada incident, which helped spur a global campaign for change.
FAA officials have been involved in efforts to modernize the system in recent years.
(Reporting by Nathan Gomes and Abhijith Ganapavaram in Bengaluru, Editing by Kevin Krolicki and Nick Zieminski)
Why Trump loyalist went to prison rather than blame the boss
Nada Tawfik – BBC News, New York – January 10, 2023
Allen Weisselberg worked for former President Donald Trump for decades (file image)
Former US President Donald Trump’s long-serving chief financial officer, Allen Weisselberg, has been sentenced to five months in jail for his role in a tax fraud scheme.
Weisselberg, 75, was given a shorter-than-expected jail term after agreeing to a plea deal in which he served as a prosecutor’s witness against the Trump Organization.
But Mr Trump had little reason to fear that Weisselberg’s testimony in the autumn trial would harm him or overshadow his announcement in mid-November that he was launching another run for president.
Indeed, as expected, his employee – who started with his father Fred Trump and who was one of the first to join his company in 1986 – remained loyal even under immense pressure.- ADVERTISEMENT -https://s.yimg.com/rq/darla/4-10-1/html/r-sf-flx.html
While Mr Trump sounded off on social media, pinning the fraud scheme on Weisselberg, he continued to offer him his support in arguably more meaningful ways. Jurors heard how the Trump Organization was still paying Weisselberg his same salary under the title senior adviser, covering his legal fees, and recently celebrated his birthday in the office.
“In a normal organisation, a corrupt CFO would be terminated and thrown out the door,” says Professor Maurice Schweitzer from the Wharton School of Business. “And you would want to separate and preserve the integrity of the institution. In this case, it’s the exact opposite.”
The trial provided a fascinating insight into the relationship between the loyal lieutenant and his boss – as well as prosecutors’ efforts to try to turn one against the other by threatening Weisselberg with a lengthy sentence at Rikers Island.
Weisselberg is expected to report to the notorious New York prison to begin serving his sentence immediately.
His attorney, Nicholas Gravante, said after Tuesday’s hearing: “He deeply regrets the lapse in judgment that resulted in his conviction, and he regrets it most because of the pain it has caused his loving wife, his sons and wonderful grandchildren.”
Under the plea deal, Weisselberg admitted to 15 felonies including tax evasion, and must pay nearly $2m (£1.65m) in fines in addition to the five-month prison term.
But without the deal, he could have faced as much as 15 years in prison.
But despite prosecutors’ focus on Mr Trump, Weisselberg refused to co-operate with the wider investigation into the former president and his business practices.
The question of what Mr Trump potentially knew about executives deceiving the tax authorities and not properly reporting benefits became a persistent and tricky one throughout the trial given he was not personally charged with wrongdoing.
Weisselberg prepared for his testimony with both the prosecution and the defence, an unusual arrangement. The Trump Organization’s lawyers repeatedly argued during the trial that he was motivated by greed, and that “Weisselberg did it for Weisselberg”. The defence strategy, in a nutshell, was that the former CFO was not shown the door because he was regarded as a family member, “a prodigal son”.
Prosecutors throughout the trial carefully tried to extract concessions from Weisselberg to bolster their case, while also poking holes in his story that Mr Trump and the business knew nothing of his 15-year tax dodging scheme. They walked the jury through how Weisselberg joined Mr Trump from day one and rose from accountant to controller to CFO. He had deep knowledge of all of the financial workings of the business as it grew. His testimony was key to exposing corruption and fraud at the Trump Organization and gave insight into how the family operated.
On the stand, he teared up as he was asked: “Did you betray the trust that was placed in you?”
“I did,” he answered.
Defence lawyer Alan Futerfas continued: “Are you embarrassed by what you did?”
“More than you can imagine,” he replied.
The man who Mr Trump once described as tough to contestants on an episode of The Apprentice, his old reality show, appeared timid and nervous.
A source close to the case insists Weisselberg’s testimony under oath was truthful and that he chose not to make up stories about Mr Trump. “That’s just common moral decency. And it’s also consistent with the rule of law, you should not make up lies about someone and then offer to give that testimony, which is perjury, just to improve your own legal situation after you have messed up in order to try to get a reduced sentence,” the source told the BBC.
His determination to take blame, however, did not convince the jury, which unanimously decided to convict the Trump Organization. Nor did it convince former federal prosecutor Mitchell Epner, who got the impression that the 75-year-old was very scared. “He was hoping to be able to placate Donald Trump by his testimony. And I took those tears to be self-pity for fear that he is going to be frozen out of Trump World,” said Mr Epner.
Prof Schweitzer says the dynamics at play in this trial were in line with Mr Trump’s management style, what academics refer to as a “dominant” leader.
“There’s broadly two kinds of leaders, there are leaders who gain status because of their expertise and wisdom and capabilities, and there are leaders who maintain their positions of power because of dominance,” says Prof Schweitzer.
“Basically, they pull levers of rewards and punishments to coerce or compel people to do what they want.”
Mr Trump has been successful throughout his business and political career figuring out “loyalty levers to reward friends and hammer foes”, says Prof Schweitzer.
The former president has a history of rewarding those who stand by him and attacking those who don’t. Before he left office, he pardoned several of his former aides of their convictions, including his National Security Adviser Michael Flynn, his ex-adviser Roger Stone and his former campaign chairman Paul Manafort.
On social media, President Trump praised Manafort for not “breaking” like his former lawyer Michael Cohen. Cohen and Manafort’s deputy Rick Gates were convicted in the Mueller probe into Russian interference in the 2016 election, but both co-operated with prosecutors. They, to the surprise of no-one, did not get pardons from Mr Trump.
Weisselberg stands behind Mr Pence and the former president at Trump Tower in New York in 2017
The former president’s treatment of Mike Pence is another example of how he places loyalty above other values. Mr Trump reportedly told the former vice-president not to “wimp out” and to not certify the results of the 2020 election, according to an excerpt from Mr Pence’s book. He recounts Mr Trump asking him: “If it gives you the power, why would you oppose it?”
Prof Schweitzer says both Mr Trump and Weisselberg were shaped by the era of ’80s New York and the mindset that greed is good. “Greed was celebrated and endorsed in a way that it is not today, we had different mindsets about this wild west of capitalism,” he says. “Things that we are saying are illegal were common practice. These men really enjoyed the privileges that came with being a very powerful, wealthy person in the 1980s who were not constrained by the rules that bound the rest of us.”
Mr Epner agrees. “The New York real estate business has been a dirty business for not decades, but centuries. And he [Mr Trump] was part and parcel of the dirty part of the NY real estate business and then he shone the biggest spotlight in the world on himself [with the presidency].”
On the final day of the trial, Assistant Manhattan District Attorney Joshua Steinglass said during closing statements that the evidence had shown that Mr Trump knew exactly what was going on. He reminded the jury of that evidence, including a memo the former president initialled authorising a pay cut for another executive for the exact amount of his perk, rent paid by the company.
“Mr Trump explicitly sanctioning tax fraud! That’s what this document shows,” Mr Steinglass said.
To many, it begged the question why the former president, who built his entire reputation and bravado off the back of his namesake company, wasn’t charged, too. The Manhattan District Attorney’s office says investigations into Mr Trump are ongoing.
President Biden slams ‘reckless bill’ from Republicans to reverse funding for the IRS and its 87,000 new hires — here’s how it could impact you
Serah Louis – January 11, 2023
President Biden slams ‘reckless bill’ from Republicans to reverse funding for the IRS and its 87,000 new hires — here’s how it could impact you
Washington’s lawmakers have come back from their holiday break swinging.
After a days-long speaker standoff, Republicans in the House have moved on to their next priority: clawing back funds from the IRS.
President Joe Biden had included increased funding for the IRS in the Inflation Reduction Act to help the agency catch sneaky tax evaders — especially those high-earners who love to find loopholes. Advocates believe the increased funding could raise as much as $1 trillion by forcing tax cheats to pay their dues, especially after years of budget cuts have gutted the system.
But on Jan. 9, Republicans introduced and passed a bill to rescind that $80 billion in funding.
While it’s likely to be struck down by the Democrat-controlled Senate, and Biden’s office has already voiced his intentions to veto “this reckless bill” if it makes it to his desk, it’s still a strong statement from Republican lawmakers.
Meanwhile, at the center of this political football is an overworked and understaffed tax agency. And whoever wins the power struggle in Washington, experts say taxpayers could be the ones left holding the bag.
The IRS desperately needs the support
The $80 billion in funding spread over the next 10 years would help the IRS modernize its infrastructure, increase enforcement and replace its aging workforce (50,000 of the IRS’s 80,000 workers are expected to leave in the next five years).
A Treasury Department report from May 2021 estimates the extra money would allow the agency to hire around 87,000 new employees — which could include revenue agents and customer service and IT staff — by 2031.
The agency has reportedly been underfunded by about 20% for a decade — leading it to cut back on both staff and technology updates.
The customer service department has been woefully short-staffed as well. During the 2022 filing season, the IRS received around 73 million phone calls from taxpayers — but only 10% were actually answered.
“The combination of more than 21 million unprocessed paper tax returns, more than 14 million math error notices, eight-month backlogs in processing taxpayer correspondence, and extraordinary difficulty reaching the IRS by phone made this filing season particularly challenging,” national taxpayer advocate Erin M. Collins wrote in her 2022 midyear report to Congress.
On top of these issues, former IRS Commissioner Charles Rettig estimated in 2021 that the agency is losing $1 trillion in unpaid taxes each year — particularly due to evasion from the rich and big businesses. He also indicated they could be slipping through the cracks in part due to the lightly regulated cryptocurrency market, foreign source income and abuse of pass-through provisions.
Rettig has long pushed for increased funding “to bring on the fire-breathing dragons” to take cheaters to task.
Could bolstering enforcement do more harm than good?
Supporters argue the funding will help close the “tax gap” by helping catch more evaders.
From the total $80 billion, $45.6 billion has been allotted for increased enforcement — which would go toward hiring more enforcement agents, providing legal support and investing in “investigative technology” to determine who should or shouldn’t be audited.
But not everyone is thrilled with the news.
“They’re not going to get this ‘magic money,’” Brian Reardon told Bloomberg. Reardon is the president of the S Corporation Association, which represents small, privately-owned businesses that pass taxes onto their shareholders.
“If you dial up enforcement on people who are otherwise following the rules and paying what they owe, you create resentment and anger. You undermine people’s confidence in the tax system.”
However, the Biden administration maintains that the increased enforcement will be focused on the ultra wealthy and large corporations, and isn’t intended for small businesses or households who earn less than $400,000 a year.
Research from the Department of Treasury indicates that the top 1% of Americans could be dodging as much as $163 billion in taxes each year.
That being said, if the increased budget is approved, Eli Akhavan, a partner at Steptoe & Johnson in New York, says he expects audits will go up. But he’s been telling his wealthy clients they “have nothing to worry about other than some headaches,” provided they’re following good advice and have their “ducks in a row.”
“If there’s nothing to find, there’s nothing to find,” Akhavan says.
Here’s why the House GOP made defunding the IRS its first priority
Ben Werschkul, Washington Correspondent – January 10, 2023
The House GOP’s first policy bill out of the gate didn’t address inflation or gas prices or immigration, but instead went after the Internal Revenue Service.
The bill was passed Monday evening on a straight party line vote of 221 to 210 to reverse much of the $80 billion in extra funding set aside for the agency by 2022’s Inflation Reduction Act.
While it has little chance of it being enacted anytime soon with Democrats in control of the Senate and President Biden promising a veto, the prominence of the issue shows just how much the IRS has become a heated target of Republicans. That’s despite experts saying the funds in question would go toward prosaic concerns like helping the agency chase down tax cheats and refresh its outdated technology.
The enhanced funding for the IRS is “part of the broad Biden administration strategy to tax and audit exponentially more Americans,” said Rep. Adrian Smith (R-NE) as debate got underway on Monday. He added that the bill would “stops autopilot funding for an out-of-control government agency that is perhaps most in need of reform.”
Speaker Kevin McCarthy then announced the final results of the vote once it had passed, noting that it had been a GOP promise.
Newly-elected Speaker of the House Kevin McCarthy finally won the gavel early on Saturday morning after a protracted fight. (Elizabeth Frantz/For The Washington Post via Getty Images)
‘Absolutely false’ viral claims
The claim from countless Republicans, from Speaker McCarthy on down, is that the influx of money will lead to a flood of 87,000 new IRS agents who will then turn and harass everyday Americans. Some critics of the agency go even further and claim these new agents will be armed.
The viral claims are “absolutely false,” Rettig wrote at the time, adding his agency “is often perceived as an easy target for mischaracterizations,” but he promised the new money will not lead to increased audit scrutiny on households making under $400,000.
The plan is instead for much of the money to go toward wealthy tax cheats. IRS estimates of the so-called “tax gap” — the difference between what taxes are owed to the government and what is actually paid — is hundreds of billions of dollars a year.
Much of the $80 billion will be focused on taking a bite out of the gap, focusing on wealthy tax payers. The investment is projected to pay for itself and then bring in over $100 billion in increased tax revenue over the coming decade.
By contrast, a new analysis from the Congressional Budget Office released Monday afternoon found that the net effect of the House GOP bill’s to defund the agency would increase the deficit by more than $114.3 billion over the coming decade if enacted.
With the new funding, the IRS could hire an estimated 86,852 new employees, according to a May 2021 report by the Department of Treasury, but many of those would not be agents. Many would work in other areas like information technology.
And nearly all new agents would be unarmed. Very few IRS agents carry weapons as part of their responsibilities. Some of the hires may also be used to replace thousands of existing IRS workers expected to retire in the coming years.
Nonetheless, claims of a flood of new agents have persisted, repeated by figures ranging from the GOP chairwoman to Elon Musk.
The chronically understaffed IRS has until recently been a bipartisan concern, but the increased funding became an issue during the 2022 campaign and played into conservative suspicions of the agency that have been growing for years.
Conservatives have long claimed the IRS targeted the tax-exempt status of political groups during the Obama administration, while a 2017 Treasury report on the controversy found that groups on both sides of the political spectrum had faced scrutiny.
‘The average American cares about defunding 87,000 IRS agents’
This week’s vote comes just as Danny Werfel is set to return this year as IRS Commissioner, leading the agency’s revamp.
The newly elected chairman of the House Ways and Means Committee, Jason Smith (R-MO), said in a statement Monday that Werfel “should plan to spend a lot of time before our committee answering questions about the leaking of sensitive taxpayer information and an agency with a history of targeting conservative Americans.”
In a recent Fox News appearance, Rep. Dan Crenshaw (R-TX) additionally argued that “the average American cares about defunding 87,000 IRS agents.”
An Internal Revenue Service building in Washington, DC. (KAREN BLEIER/AFP via Getty Images)
On the other side, Democrats repeatedly attacked Republicans for holding a vote on the bill and also for making it their first priority, implying they will use it against Republicans in the coming years.
In a statement calling the move a giveaway to rich tax cheats, Vice President Kamala Harris said House Republicans were trying to undo recent progress under Democrats and hoping to allow “millionaires, billionaires, and corporations to cheat the system.”
This post has been updated.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
1st bill out of new GOP-majority House would cut $71 billion from IRS, cost $114 billion
Peter Weber, Senior editor – January 9, 2023
Kevin McCarthy Tom Williams/CQ-Roll Call, Inc via Getty Images
House Republicans passed their first bill of the 118th Congress on Monday night, voting along party lines to cut $71 billion from the IRS. The legislation will not be taken up by the Democratic-controlled Senate, and President Biden said Monday he would veto the cuts if they somehow arrived at his desk. Before the vote, the Congressional Budget Office said the legislation would increase the federal deficit by $114 billion over the next 10 years.
Democrats approved $80 million in IRS funding in the Inflation Reduction Act last year. The IRS says the money will be used to hire 87,000 new employees over the next 10 years, upgrade the agency’s antiquated technology, and beef up enforcement of tax laws on taxpayers earning more than $400,000 a year. Many of the 87,000 new IRS workers will be in customer service, to answer taxpayer questions, the Biden administration says, and others would replace the 50,0000 IRS agents expected to quit or retire in the coming years.
House Republicans promised to prioritize cutting those funds, arguing they will be used to harass middle class taxpayers and “create a ‘shadow army’ to shake down small businesses with assault rifles,” The New York Times reports. “Our very first bill will repeal the funding for 87,000 new IRS agents,” House Speaker Kevin McCarthy (R-Calif.) said Saturday morning, shortly after being elected speaker on the 15th ballot. “You see, we believe government should be to help you, not go after you.”
Former IRS Commissioner Charles Rettig, a Republican appointed by former President Donald Trump, said last November that the new investments in his understaffed agency would make it “even less likely for honest taxpayers to hear from the IRS or receive an audit letter.” Treasury Department spokeswoman Ashley Schapitl said Monday that “the IRS audits nearly 80 percent fewer millionaires than a decade ago,” and the House bill “would deny the agency much-needed resources to hire top talent to go after the $163 billion in taxes avoided by the top 1 percent annually.”
“The only way that House Republicans could make it any more obvious that they’re doing a favor for wealthy tax cheats is by coming out and saying it in exactly those words,” said Sen. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee. “This bill is going nowhere in the Senate.”
US Department of Agriculture approves first-ever vaccine for honeybees
The drug could protect bees from American foulbrood, a bacteria that can devastate entire colonies.
Igor Bonifacic, Weekend Editor – January 8, 2023
NurPhoto via Getty Images
The humble honeybee hasn’t had an easy go of things recently. Between climate change, habitat destruction, pesticide use and attrition from diseases, one of the planet’s most important pollinators has seen its numbers decline dramatically in recent years. All of that bodes poorly for us humans. In the US, honeybees are essential to about one-third of the fruit and produce Americans eat. But the good news is that a solution to one of the problems affecting honeybees is making its way to farmers.
This week, for the first time, the US Department of Agriculture granted conditional approval for an insect vaccine. A biotech firm named Dalan Animal Health recently developed a prophylactic vaccine to protect honeybees from American foulbrood disease. The drug contains dead Paenibacillus larvae, the bacteria that causes the illness.
Thankfully, the vaccine won’t require beekeepers to jab entire colonies of individual insects with the world’s smallest syringe. Instead, administering the drug involves mixing it in with the queen feed worker bees eat. The vaccine then makes its way into the “royal jelly” the drones to feed their queen. Her offspring will then be born with some immunity against the harmful bacteria.
The treatment represents a breakthrough for a few reasons. As The New York Times explains, scientists previously thought it was impossible for insects to obtain immunity to diseases because they don’t produce antibodies like humans and animals. However, after identifying the protein that prompts an immune response in bees, researchers realized they could protect an entire hive through a single queen. The vaccine is also a far more humane treatment for American foulbrood. The disease can easily wipe out colonies of 60,000 bees at once, and it often leaves beekeepers with one choice: burn the infected hives to save what they can.
Dr. Annette Kleiser, the CEO of Dalan, told The Times the company hopes to use the vaccine as a blueprint for other treatments to protect honeybees. “Bees are livestock and should have the same modern tools to care for them and protect them that we have for our chickens, cats, dogs and so on,” she said. “We’re really hoping we’re going to change the industry now.”
Joe Biden Wants to Change Social Security: Will the New Congress Help With Reform Efforts?
By Sean Williams – January 7, 2023
KEY POINTS
Social Security is facing a $20.4 trillion funding shortfall through 2096 that, if left unattended, could lead to sweeping benefit cuts.
Prior to his election as president, Joe Biden unveiled a four-point plan to reform Social Security.
Despite a new Congress taking shape just days ago, altering Social Security is highly unlikely.
Social Security is in trouble, and President Biden believes he has the ideal plan to fix it.
In November, nearly 66 million Americans, many of whom are aged 62 and over, received a Social Security benefit. For the 48.5 million who are retired workers, these payouts are widely viewed as a necessity to cover their expenses.
But despite providing a financial foundation for our nation’s retirees, America’s top retirement program finds itself in deep trouble. President Joe Biden believes he has the solution that can resolve what ails Social Security, but he’s going to need the help of newly elected lawmakers to fix it.
PRESIDENT BIDEN DELIVERING REMARKS. IMAGE SOURCE: OFFICIAL WHITE HOUSE PHOTO BY ADAM SCHULTZ.
Retired workers could be less than 12 years away from having their benefits cut
For each of the past 83 years, the Social Security Board of Trustees has released a report that’s examined the financial status of the program over the short term (the next 10 years) and long term (75 years following the release of a report). The Trustees Report effectively acts as Social Security’s balance sheet and allows anyone to see how revenue is collected and where those dollars end up.
In addition to backward-looking financial data, the Trustees Report factors in changing macroeconomic and demographic factors to determine the financial health of Social Security.
The 2022 Trustees Report showed that Social Security had dug its largest hole yet: an estimated $20.4 trillion funding shortfall through 2096. For what it’s worth, every Trustees Report since 1985 has projected a long-term funding shortfall.
Social Security’s increasingly dire financial footing is primarily a result of demographic shifts. Examples include historically low U.S. birth rates, a near-halving in net immigration into the country over two decades, and growing income inequality, among other factors. With these changes weighing on the worker-to-beneficiary ratio, it would appear the program’s financial foundation will only worsen.
Based on last year’s projections, the asset reserves for the Old-Age and Survivors Insurance Trust Fund (OASI) are expected to run out in 2034. The OASI is the Trust responsible for paying benefits to 48.5 million retired workers each month, as well as nearly 5.9 million survivors of deceased workers. If this excess cash were to be exhausted within the next 12 years, the Trustees believe an across-the-board benefit cut of 23% would be necessary to sustain payouts through 2096. For context, a 23% benefit cut would reduce the average Social Security check by roughly $420 per month (In January 2023 dollars), or $5,000 per year.
Joe Biden has proposed sweeping reforms for Social Security
In 2020, prior to his election as president, then-candidate Joe Biden released a plan he believed would strengthen Social Security for decades to come. Although there are four Social Security changes Biden is seeking, two stand out as key to shoring up the program.
This biggest Social Security change proposed by Biden would tackle income inequality head-on and generate a lot of extra revenue.
In 2023, Social Security’s 12.4% payroll tax is applicable to earned income between $0.01 and $160,200. “Earned income” means wages and salary but not any sort of investment income. Approximately 94% of all working Americans earns less than the maximum taxable earnings cap (the $160,200 figure). For the other 6% of workers, earned income above this $160,200 level is exempt from the payroll tax.
Joe Biden’s proposal would create a doughnut hole between the maximum taxable earnings cap and $400,000 where earned income would remain exempt, as well as reinstate the payroll tax on earned income above $400,000. Since the maximum taxable earnings cap tends to rise over time with inflation, this doughnut hole would eventually close decades down the line. This immediate increase in payroll tax revenue should push back the asset reserve depletion date of the OASI.
Since 1975, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been used to determine Social Security’s annual cost-of-living adjustment (COLA). Unfortunately, as its name implies, this is a price-measuring index focused on the spending habits of “urban wage earners and clerical workers.” In other words, people who generally aren’t receiving a Social Security benefit.
Biden would like to see the Consumer Price Index for the Elderly (CPI-E) used to calculate COLA instead of the CPI-W. The CPI-E specifically tracks the spending habits of older Americans, which would likely provide a larger annual cost-of-living adjustment.
Is a new Congress the recipe Biden needs to reform Social Security?
The challenge for Joe Biden — and frankly, every other president for more than three decades — is that he needs the support of lawmakers in Congress to amend the Social Security Act. Just a few days ago, the 118th Congress officially took shape.
The big question is: Will this new Congress work with the president to effect Social Security reform? If I were to give the Magic 8 Ball a shake, the “All signs point to no” answer would almost assuredly pop up.
Whereas the previous Congress featured a razor-thin majority in the U.S. Senate for Democrats, as well as a modest majority in the House of Representatives, the new Congress features a shift to a slight majority in the House for Republicans.
Democrats and Republicans both agree that Social Security needs attention. However, they’ve approached their respective fixes from completely different viewpoints. Whereas Biden’s proposal seeks to raise additional revenue from high-earners and boost benefits for low-earning workers, the Republican solution aims to increase the full retirement age and shift the inflationary measure to the Chained CPI. Without getting too far into the weeds, the GOP plan focuses on reducing long-term outlays to save Social Security money. In short, both parties have solutions that work, albeit on very different timelines and with ideologically opposite approaches.
The other challenge for Biden is getting the necessary votes in the Senate to amend Social Security. In the upper house of Congress, 60 votes are needed to amend America’s top retirement program. Since neither party has controlled at least 60 votes in the Senate since 1979, it means all legislation proposing to alter Social Security would require bipartisan support. Garnering that support has proved virtually impossible for every president since Ronald Reagan.
Though a new Congress has taken shape, Biden’s Social Security changes are extremely unlikely to find legislative support.
Great Salt Lake on track to disappear in five years, scientists warn
Sarah Kaplan and Brady Dennis, Washington Post – January 6, 2023
MAGNA, UTAH – AUGUST 02: Park visitors walk along a section of the Great Salt Lake that used to be underwater at the Great Salt Lake State Park on August 02, 2021 near Magna, Utah. As severe drought continues to take hold in the western United States, water levels at the Great Salt Lake, the largest saltwater lake in the Western Hemisphere, have dropped to the lowest levels ever recorded. The lake fell below 4194.4 feet in the past week after years of decline from its highest level recorded in 1986 with 4211.65 feet. Further decline of the lake’s water levels could result in an increase in water salinity and could generate dust from the exposed lakebed that could impact air quality in the area. The lake does not supply water or generate electricity for nearby communities but it does provide a natural habitat for migrating birds and other wildlife. According to the U.S. Drought Monitor, 99 percent of Utah is experiencing extreme drought conditions. (Photo by Justin Sullivan/Getty Images) (Justin Sullivan via Getty Images)
Without dramatic cuts to water consumption, Utah’s Great Salt Lake is on track to disappear within five years, a dire new report warns, imperiling ecosystems and exposing millions of people to toxic dust from the drying lake bed.
The report, led by researchers at Brigham Young University and published this week, found that unsustainable water use has shrunk the lake to just 37 percent of its former volume. The West’s ongoing mega-drought – a crisis made worse by climate change – has accelerated its decline to rates far faster than scientists had predicted.
But current conservation measures are critically insufficient to replace the roughly 40 billion gallons of water the lake has lost annually since 2020, the scientists said.
The report calls on Utah and nearby states to curb water consumption by a third to a half, allowing 2.5 million acre feet of water to flow from streams and rivers directly into the lake for the next couple of years. Otherwise, it said, the Great Salt Lake is headed for irreversible collapse.
“This is a crisis,” said Brigham Young University ecologist Ben Abbott, a lead author of the report. “The ecosystem is on life support, [and] we need to have this emergency intervention to make sure it doesn’t disappear.”
Scientists and officials have long recognized that water in the Great Salt Lake watershed is overallocated, – more water has been guaranteed to people and businesses than falls as rain and snow each year.
Agriculture accounts for more than 70 percent of the state’s water use – much of it going to grow hay and alfalfa to feed livestock. Another 9 percent is taken up by mineral extraction. Cities use another 9 percent to run power plants and irrigate lawns.
There are so many claims on the state’s rivers and streams that, by the time they reach the Great Salt Lake, there’s very little water left.
Over the last three years, the report says, the lake has received less than a third of its normal stream flow because so much water has been diverted for other purposes. In 2022, its surface sank to a record low, 10 feet below what is considered a minimum healthy level.
With less freshwater flowing in, the lake has grown so salty that it’s becoming toxic even to the native brine shrimp and flies that evolved to live there, Abbott said. This in turn endangers the 10 million birds that rely on the lake for a rest stop as they migrate across the continent each year.
The vanishing lake may short-circuit the weather system that cycles rain and snow from the lake to the mountains and back again, depriving Utah’s storied ski slopes. It threatens a billion-dollar industry extracting magnesium, lithium and other critical minerals from the brine.
It has also exposed more than 800 square miles of sediments laced with arsenic, mercury and other dangerous substances, which can be picked up by wind and blown into the lungs of some 2.5 million people living near the lakeshore.
“Nanoparticles of dust have potential to cause just as much harm if they come from dry lake bed as from a tailpipe or a smokestack,” said Brian Moench, president of Utah Physicians for a Healthy Environment. He called the shrinking of the lake a “bona fide, documented, unquestionable health hazard.”
Dried-up saline lakes are hot spots for dangerous air pollution. Nearly a century after Owens Lake in southern California was drained to provide water to Los Angeles County in the 1920s, it was still the largest source of hazardous dust in the country, according to the U.S. Geological Survey. The pollution has been linked to high rates of asthma, heart and lung disease and early deaths.
Kevin Perry, an atmospheric scientist at the University of Utah who studies pollution from the receding lake, said about 90 percent of the lake bed is protected by a thin crust of salt that keeps dust from escaping. But the longer the lake remains dry, the more that crust will erode, exposing more dangerous sediments to the air.
“You see this wall of dust coming off the lake, and it reduces horizontal visibility sometimes to less than a mile,” Perry said. The impact might only last a couple hours at a time, he said, but the consequences can be profound.
Perry and other researchers have mapped the location and elevation of the dust hot spots, he said, and the results show that the problem is unlikely to abate anytime soon. The lake would need to rise roughly 14 feet to cover 80 percent of current hot spots, Perry said, or about 10 feet to submerge half of them.
Even researchers have been taken aback by the rapid pace of the Great Salt Lake’s decline, Abbott said. Most scientific models projected that the shrinking would slow as the lake became smaller and saltier, since saltwater evaporates less readily than freshwater.
But human-caused climate change, driven mostly by burning fossil fuels, has increased average temperatures in northern Utah by about 4 degrees Fahrenheit since the early 1900s and made the region more prone to drought, the report said. Studies suggest this warming accounts for about 9 percent of the decline in stream flows into the lake. Satellite surveys also show significant declines in groundwater beneath the lake, as ongoing drought depletes the region’s aquifers.
If humans weren’t using so much water, the lake might be able to withstand these shifts in climate, Abbott said. But the combined pressure of drought and overconsumption is proving to be more than it can bear.
Candice Hasenyager, the director of the Utah Division of Water Resources, said Utahns are becoming increasingly aware of the urgency of the lake’s decline. Last year, the Utah legislature passed numerous bills aimed at conservation, including a $40 million trust intended to help the ailing lake. Gov. Spencer Cox (R) recently proposed another massive infusion of funding for water management and conservation.
“We don’t have the luxury to have one solution,” but curbing water demand is essential, Hasenyager said. “We live in a desert, in one of the driest states in the nation, and we need to reduce the amount of water we use.”
Yet recent efforts haven’t kept up with the accelerating crisis. Abbott and his colleagues found that Utah’s new conservation laws increased stream flow to Great Salt Lake by less than 100,000 acre feet in 2022 – a tiny fraction of the 2.5 million acre feet increase that’s needed to bring the lake back to a healthy minimum level.
“Among legislators and decision-makers there is still a very prevalent narrative of ‘let’s put in place conservation measures so over the next couple of decades the Great Salt Lake can recover,'” Abbott said. “But we don’t have that time.”
“This isn’t business as usual,” he added. “This is an emergency rescue plan.”
The new report, drafted by more than 30 scientists from 11 universities, advocacy groups and other research institutions, recommends that Cox authorize emergency releases from Utah’s reservoirs to get the lake up to a safe level over the next two years.
This would require as much as a 50 percent cut in the amount of water the state uses each year, requiring investment from federal agencies on down to local governments, church leaders and community groups.
For decades, Abbott said, officials have prioritized human uses for all the water that trickles through the Great Salt Lake watershed.
Until last year, the lake itself wasn’t even considered a legitimate recipient of any water that fell in the region. If a farmer chose not to use some of their shares, allowing that water to flow to the lake and the surrounding ecosystem, they risked losing their water rights in the future.
“We have to shift from thinking of nature as a commodity, as a natural resource, to what we’ve learned over the last 50 years in ecology, and what Indigenous cultures have always known,” Abbott said. “Humans depend on the environment. . . . We have to think about, ‘What does the lake need to be healthy?’ and manage our water use with what remains.”
The weather this year has given Utah a prime opportunity to, in Abbott’s words, “put the lake first.” After a series of December storms, the state’s snowpack is already at 170 percent of normal January levels. If that snow persists and precipitation continues through the rest of the winter, it would enable the state to set aside millions of acre feet of water for the lake without making such drastic cuts to consumption.
“I’m generally optimistic,” said Hasenyager, the water resources director. “I don’t think we are past a point of no return – yet.”
Op-Ed: The next stage of Russia’s secular decline comes in 2023
Simon Johnson – January 3, 2023
Russian President Vladimir Putin delivers a speech in September declaring the annexation of four regions of Ukraine. (Associated Press)
After a year of big surprises, led by Russia’s invasion of Ukraine, the global spike in inflation rates, and the collapse of cryptocurrency ventures, what kind of year will 2023 prove to be? This kind of short-run question is hard to answer because repercussions of global events can spread so quickly and unpredictably. But the last 12 months highlighted one major trend that will shape what happens next, in 2023 and beyond: the decline of Russia.
Russian aggression is nothing new. Moscow has been invading other countries since the mid-1990s and has occupied parts of Ukrainian territory since 2014. But the brutality of Russia’s attacks in Ukraine since last February and the most recent phase, destroying civilian energy infrastructure, is widely seen as amounting to a war crime. It is unlikely to change the course of the war, which Russia is losing.
In the bigger picture, Russia has again entered a period of secular decline, during which it will have limited access to Western investment, technology or consumer goods. Russia’s empires have collapsed before, in 1917-18 and again when the Soviet Union imploded in 1989-91. In both cases, the collapse took a while to get going, and then proved quite complete. Of course, historically Russia has also been able to reassert control over time, and during the 1990s, by getting a lot of help from Western companies.
This time, too, we should expect a long struggle for power within Russia, with serious existential risks for the world, including who ends up controlling Russian nuclear weapons. But the more direct economic impact will be reflected in the world energy market.
Demand for Russian fossil fuels is way down. Before its 2022 invasion of Ukraine, Russia produced about 10.8 million barrels of oil per day, of which around 8 million were exported either as crude or refined products. The sharp decline in Russian economic activity means that more oil is available for export, but the European Union, the United States, and their allies are now buying crude from other suppliers — and the same will be true for refined products from February 2023.
The International Energy Agency predicts that Russian oil exports will fall to around 6 million barrels per day over 2023-24. Over the medium term, India might buy 1-2 million barrels and China could sop up the rest — assuming both countries want to become more dependent on a malevolent and unreliable partner.
Purchases by India, China, and a few others can still result in a lot of free cash flow and tax revenue for Russia. Whoever leads Russia will put much of these proceeds into building and buying weapons — including missiles with which it can hit a wide range of countries from long distance. NATO member countries are, one hopes, protected to some extent by the threat of retaliation, but Russia can be expected to engage in sabotage and other deniable attacks on Western energy infrastructure and similar vulnerable strategic targets.
During the Cold War, the Soviet Union was careful not to attack Western Europe and the U.S. too directly (and vice versa). Instead, both sides used proxy wars and other forms of pressure. This time, however, we should expect much more direct confrontation. The Russian elite have boxed themselves into a corner, with a bizarre set of beliefs — right-wing nationalism on steroids — and long-range weapons. Giving ground to these extremists will only embolden them to take more.
The need to limit over time how much cash Russia can spend on aggression is why the price cap on Russian oil exports is so important. The evidence so far is that this is working as intended.
But further measures are needed, including accelerated investments in renewable energy to reduce world demand for oil. If we continue to depend on Russia and its allies in the OPEC+ cartel, the ability to disrupt our economies will remain immense. There is now a pressing national security dimension to the energy transition.
High inflation in the 1970s had multiple causes, beginning with tight economies in the 1960s and the Vietnam War. But the problems were exacerbated by two oil price shocks, in 1973 and 1979. OPEC+ members understand that they have the power to do this again, at a time of their choosing — or the next time Russia asks for a favor.
Oil demand and supply are quite unresponsive to oil prices in the short run, but historically quite responsive over five to 10 years. In 2023 and beyond, the West needs to focus more intently on reducing demand for fossil fuels, particularly oil, and increasing the supply of alternative energy sources outside the control of Russia and OPEC.
Simon Johnson, a former chief economist at the International Monetary Fund, is a professor at MIT Sloan School of Management.
Jim Tankersley, Susanne Craig and Russ Buettner – December 30, 2022
Former President Donald Trump speaks at a rally inside the Alaska Airlines Center in Anchorage, Alaska, July 9, 2022. Thousands of pages of Trump’s tax documents were released on Friday, Dec. 30. (Ash Adams/The New York Times)
Democrats on the House Ways and Means Committee have followed through with their vow to make public six years of former President Donald Trump’s tax returns, giving the American public new insight into his business dealings and drawing threats of retaliation from congressional Republicans.
The release Friday morning contained thousands of pages of tax documents, including individual returns for Trump and his wife, Melania, as well as business returns for several of the hundreds of companies that make up the real estate mogul’s sprawling business organization.
The committee had this month released top-line details from the returns, which showed that Trump paid $1.1 million in federal income taxes during the first three years of his presidency, including just $750 in federal income tax in 2017, his first year in office. He paid no tax in 2020 as his income dwindled and his business losses mounted.
The documents contain new details not revealed in those earlier releases. New York Times reporters are combing the pages for key takeaways. Here is a list.
Trump made no charitable contributions in 2020.
As a presidential candidate in 2015, Trump said he would not take “even one dollar” of the $400,000 salary that comes with the job. “I am totally giving up my salary if I become president,” he said.
In his first three years in office, Trump said he donated his salary quarterly. But in 2020, his last full year in office, the documents show that Trump reported $0 in charitable giving.
Also in 2020, as the pandemic recession swiftly descended, Trump reported heavy business losses and no federal tax liability.
In the earlier years, White House officials made a point of highlighting which government agencies were receiving the money, starting with the National Park Service in 2017. The tax documents released Friday show that Trump reported charitable donations totaling nearly $1.9 million in 2017 and just over $500,000 in both 2018 and 2019.
In a bad year for business, Trump didn’t take a full refund.
Trump reported nearly $16 million in business losses in 2020, which swamped his other income and left him with no federal income tax liability. But the tax documents show that he made nearly $14 million in tax payments to the federal government over the course of the year.
Those payments left him with the potential for a large income tax refund from the government — like the ones many taxpayers find when they go to file their taxes every March. In Trump’s case, he chose not to take the full refund available to him. He claimed a refund of just under $5.5 million, then directed the IRS to apply another $8 million to his estimated taxes for 2021.
His own tax law may have cost him.
The tax law Trump signed in late 2017, which took effect the next year, contained some provisions that most likely gave him an advantage at tax time — including the scaling back of the alternative minimum tax on high earners.
But one provision in particular drastically reduced the income tax deductions Trump could claim in 2018 and beyond: limits that Republicans placed on deductions for state and local taxes paid.
The so-called SALT deduction disproportionately hit higher earners, including Trump, in high-tax cities and states like New York. In 2019, he reported paying $8.4 million in state and local taxes. Because of the SALT limits included in his tax law, he was able to deduct only $10,000 of those taxes paid on his federal income tax return.
Those losses could have been mitigated at least in part by other sections of the law that were favorable to wealthier taxpayers like Trump.
Fred Trump is a silent actor in the returns.
Fred Trump, Trump’s long-deceased father, has continued to have an effect on his son’s finances.
In 2018, after a decade in which the former president declared no taxable income, he reported taxable income of more than $24 million and paid $1 million in federal taxes, nearly the entire total he paid as president.
That income, as previously detailed by the Times, appeared to be the result of more than $14 million in gains from the sale of an investment his father made in the 1970s, a New York City housing complex named Starrett City, which became part of Trump’s inheritance.
But the new documents show that the effect of his inheritance in 2018 was far greater: Trump reported $25.7 million in gains from the sale of business properties that he and his siblings inherited or took through trusts, including the sale of Starrett City.
The sales of business properties Trump created himself came at a loss, however, dragging down his net proceeds and somewhat reducing his tax liability, the tax itemization shows.
That included a total of $1 million in property sold at a loss by 40 Wall St., his office building in Manhattan, and DJT Holdings LLC. He recorded another $1 million loss bailing his son Donald Trump Jr. out of a failed business to build prefabricated homes.
Trump also received tens of thousands of dollars in dividends while he was in the White House from trusts that were established for him when he was young, his tax returns show.
A new tax firm got involved in 2020.
For years, Trump used the accounting firm Mazars USA to prepare his taxes and those of his businesses. Donald Bender, Trump’s longtime accountant at Mazars, had long been listed on the former president’s taxes as his accountant.
The firm formally cut ties with Trump and his businesses this year, saying it could no longer stand behind a decade of annual financial statements it prepared for the Trump Organization.
But it turns out Mazars and Trump had begun distancing themselves from each other as early as 2020. That year, BKM Sowan Horan, a Texas-based accounting firm, prepared Trump’s taxes, his returns show.
Republicans are threatening retaliation.
The release of the documents Friday set off a new round of attacks between Democrats and Republicans on Capitol Hill, including threats of escalating — and politically motivated — future releases of private tax information.
Democrats cast the move as necessary oversight on a president who broke decades of precedent in declining to release his returns.
“Trump acted as though he had something to hide, a pattern consistent with the recent conviction of his family business for criminal tax fraud,” Rep. Don Beyer, D-Va., a Ways and Means Committee member, said in a news release. “As the public will now be able to see, Trump used questionable or poorly substantiated deductions and a number of other tax avoidance schemes as justification to pay little or no federal income tax in several of the years examined.”
But Republicans — who won control of the House in November — warned Democrats that they had started down a dangerous road and that public pressure could push the incoming majority to release returns from President Joe Biden’s family or a wide range of other private individuals.
“Going forward, all future chairs of both the House Ways and Means Committee and the Senate Finance Committee will have nearly unlimited power to target and make public the tax returns of private citizens, political enemies, business and labor leaders, or even the Supreme Court justices themselves,” Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said in a statement Friday.
Trump weighed in late Friday morning in an email statement that also raised the threat of retaliation.
“The Democrats should have never done it, the Supreme Court should have never approved it, and it’s going to lead to horrible things for so many people,” he said. “The great USA divide will now grow far worse. The Radical Left Democrats have weaponized everything, but remember, that is a dangerous two-way street!”
