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US Central Bank Could Lean Against Trump Tax Cut

President Donald Trump’s plan to slash business and household taxes could shift the U.S. economy into higher gear, but it may have one effect the White House would not welcome — interest rates ratcheted higher than expected by a wary central bank.

The Trump administration says hundreds of billions of dollars fed into the economy via deep cuts in business taxes and more generous exemptions for individuals will unleash a wave of investment and make the U.S. economy more competitive than ever.

But the plan, if approved in the form Trump officials outlined on Wednesday, could add inflationary fuel to an economy already running near full capacity, a risk Federal Reserve officials have been warning about since Trump got elected.

Confronted with the prospect of massive cuts that would slash the corporate tax rate to 15 percent from 35 percent and overhaul the personal tax code, Fed officials will need to start debating if they can maintain a measured pace of rate hikes or they might need to move faster, say analysts and economists who follow the U.S. central bank.

Fed’s inflation goal is 2 percent

The Fed aims to hold inflation at around 2 percent, and is close to that threshold, with its target short term rate expected to rise two more times, to about 1.5 percentage points, by the end of the year.

Trump has said he hopes low rates will continue, a potential source of friction with the Fed if officials do decide they need to move faster because of his policies.

An estimated up to $700 billion a year in tax cuts could threaten to derail such a scenario, especially if not all of that money finds its way into productive investments, or drives price and wage hikes.

“The premise is that all the tax savings get plowed into high-return investments to generate growth. But if they don’t and they just get churned around into M&A and other financial engineering things, it’s even worse because you’re raising risks elsewhere in the economy,” said Mark Mazur, former U.S. treasury assistant secretary for tax policy during the Obama administration, now head of the Urban-Brookings Tax Policy Center in Washington.

Uncertainty as to whether and in what shape the plan will get implemented adds to other challenges the Fed faces in trying to chart its course over the next several months.

Looming threats

The threat of a government shutdown and renewed debate over the federal debt ceiling late this summer or early in the fall will test both the new administration and the Fed’s ability to set its policy course. Republican and Democratic lawmakers need to pass a series of bills to keep the government running, but are sparring over issues such as whether to fund a border wall with Mexico.

Government closures, forced budget cuts, and a tense 2013 debt ceiling debate have thrown the Fed off course before, dragging down economic growth and idling hundreds of thousands of workers.

Taken together, the coming discussions will be critical for the Fed and for world markets looking for proof Trump can oversee a functioning government, said David Stockton, a former Fed research director now with the Peterson Institute of International Economics.

“If you have a shutdown followed by a serious flirtation with default … some of the optimism built into household and business confidence could deflate and deflate pretty quickly,” Stockton said. “If all of a sudden it begins to look like even with one party in control nothing seems to be happening, it could be a shock.”

For the Fed, those would be self-inflicted wounds in an otherwise calm economic environment. From healthy corporate profits to strong consumer confidence and geopolitical developments like the recent French election results, events have been breaking in favor of steady U.S. growth and job gains — and a gradual pace of Fed rate increases.

Policymakers are hesitant

Policymakers currently foresee two more rate increases this year, a view investors largely accept in how they have priced different securities.

So far, policymakers have been hesitant to mold their thinking too much around speculation about what Trump might do because details have been scant and Congress’ reaction uncertain.

With the scope of the tax plan now revealed and fiscal deadlines on the horizon, that is now likely to change — for better or worse.

Though the Republicans now control both the White House and the Congress, there is no guarantee they will easily reach agreement on either spending or tax plans, or on the debt ceiling. Divisions in the GOP doomed Trump’s first stab at healthcare overhaul, and some Republican lawmakers are likely to oppose either raising the debt limit or cutting taxes too much because of the larger deficits that would produce.

“The next few months are going to be make or break. They are going to have to show they are going to get something done,” said IHS Markit economist Chris Christopher.

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Economy & business
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Ivanka Trump, World Bank Discuss Women Entrepreneur Fund

Ivanka Trump has been involved in discussions with the World Bank about establishing a funding operation to support female entrepreneurs, bank and administration officials said Wednesday.

The officials stressed that nothing has been set up yet and that talks are ongoing about how this would be structured.

They said it could be a World Bank-run “facility,” which accepts contributions from governments and private donors and then provides funding and support to women in developing countries.

According to a senior administration official, Trump recently pitched the idea to World Bank Group President Jim Yong Kim.

The administration official, who sought anonymity because the project is in its early stages, said Trump would have no official authority over the fund and would not solicit contributions, but would be a “strong advocate.”

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Mnuchin: Trump Has ‘No Intention’ of Releasing Tax Returns

President Donald Trump “has no intention” of releasing his tax returns to the public, Treasury Secretary Steve Mnuchin said Wednesday, asserting Americans have “plenty of information” about the president’s financial matters.

For decades, presidents have released their tax returns. But Trump has so far refused, suggesting he would share the tax documents only after the Internal Revenue Service completes an “audit” of them. He’s never disclosed proof of an audit.

Mnuchin appeared to close the door completely Wednesday.

“The president has no intention. The president has released plenty of information and I think has given more financial disclosure than anybody else. I think the American population has plenty of information,” he said, inaccurately characterizing the president’s disclosures.

 

The comment came as the secretary briefed reporters on the president’s new proposal to overhaul taxes. Democrats have sought to use the tax debate to pressure Trump to release his returns, arguing the information is necessary to evaluate how Trump’s tax proposals would affect his personal wealth and his business’ bottom line.

Mnuchin declined to comment on how Trump would benefit from his proposals. He and other administration officials left the room as reporters shouted questions about how the plan would affect the Trump family.

Trump, a billionaire, owns a global real estate, marketing and property management company, which at the start of his presidency he placed in a trust that he can revoke at any time. His daughter and son-in-law, White House advisers, are also holding onto significant business assets. And Trump’s adult sons run his Trump Organization.

Trump officials have offered varying explanations for why the president does not disclosure his returns.

White House senior counselor Kellyanne Conway said in a television interview in January that the fact that he won the election without putting out the information shows that “people didn’t care” about it.

Trump’s sons Eric and Donald Trump Jr. have made similar points in various interviews.

There’s evidence the president has been thinking about the issue in recent weeks. He asked his friend and Las Vegas business partner Phil Ruffin, a fellow billionaire, whether he should put out the returns, Ruffin said.

“I advised him not to,” Ruffin said. “It’s a waste of time, and he’ll spend years explaining them and never get to accomplishing any of his goals.”

Ruffin said he told the president that Democrats would hire “armies of accountants” to pore over the documents and “make an issue out of any and everything.”

Even with Mnuchin’s seemingly definitive answer, the issue of Trump’s tax returns isn’t likely to go away. Democrats have threatened to hold up his tax proposals until they see the returns.

Senate Finance Committee Ranking Member Ron Wyden, a Democrat from Oregon, called Trump’s tax plan “unprincipled” — and one that “will result in cuts for the one percent, conflicts for the president, crippling debt for America and crumbs for the working people.”

Democrats also have been pushing for a vote on a bill that would require the president and all major-party nominees to publicly disclose their previous three years of tax returns with the Office of Government Ethics or the Federal Election Commission.

The Democrats have initiated a petition process that would lead to a House vote if they can get a majority of lawmakers to sign it — an unlikely prospect, but one that gives Democrats a chance to highlight which Republicans declined to help with their effort.

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Arts & Entertainment
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Are the Arts a Good Government Investment?

Musician David Byrne, known for his work with the 1980s pop band Talking Heads, wrote an urgent blog post this month. “I just got back from a rally at City Hall,” he said, referring to a New York City rally to support arts funding. “I spoke very briefly, making the economic and social argument that arts funding benefits the economy and creates jobs way in excess of the amount invested.”

Byrne and others at the rally were protesting a budget request by the White House for Congress to eliminate funding for the National Endowment for the Arts, as well as the National Endowment for the Humanities and the Corporation for Public Broadcasting.

While the Trump administration has said little beyond the budget proposal itself, conservative commentator George Will and others have made the case. Will wrote in The Washington Post last month that the arts mainly benefit the wealthy, and that the wealthy will support the arts regardless of federal help.

In addition, he said NEA funding, which goes to all 435 congressional districts in the United States, supports projects he does not consider art. The NEA, he said, “defines art democratically and circularly. Art is anything done by anyone calling himself or herself an artist, and an artist is anyone who produces art.”

 

The prospect of losing their funding is forcing arts organizations to pull out all the stops to show what good the arts do, beyond the fancy doors of museums and music auditoriums. And they question what good it would do to eliminate agencies whose spending combined makes up less than 1 percent of the national budget.

Byrne, the pop musician, said in his blog post: “Investment in the arts doesn’t cost us money — it MAKES us money!”

Attracting funds

The NEA says its budget appropriation for 2016 was $147.9 million, about .004 percent of the federal budget. It says its contributions to local arts institutions resulted in the leveraging of up to $9 million in private and other public funds.

 

Brad Erickson of Theatre Bay Area, a group representing 300 theater companies in the San Francisco area, clarified the issue in comments to The San Francisco Chronicle last month: “Nobody is getting enough from the NEA to keep the lights on and the rent paid. An NEA grant attracts other money. A dollar from the NEA attracts another $8 in private and local funding.”

The advocacy group Americans for the Arts studies the economic growth that the arts foster in the communities they serve. The group reported that in 2014, arts and culture represented 4.2 percent of the nation’s gross domestic product — a larger share, according to the U.S. Bureau of Economic Analysis, than transportation, tourism or construction.

Further, the NEA says 40 percent of the funding it doles out goes to organizations and activities in high-poverty neighborhoods, where arts education can matter the most.

 

Wolford McCue, president and CEO of the Arts Community Alliance in Dallas, told VOA that studies have found how important arts activities can be to an individual education.

“Young adults who have been engaged with the arts graduate from high school, junior college and college at a significantly higher rate than those not engaged in the arts,” he said. “Significantly more are gainfully employed, pay taxes, vote and volunteer in their community.”

Controversial content

One argument against arts funding persists from the 1980s, when NEA funding went to a venue hosting an art show of provocative photographs by Robert Mapplethorpe — an artist whose name is now synonymous with controversy. His sexually charged work set off a nationwide debate about obscenity and the role of public funding.

Those who defended Mapplethorpe’s work said he was entitled to free speech. Critics said federal dollars should not be used to support work that some people find obscene.

And that, some arts activists say, may be at the root of the issue. While the arts may look like an extravagance to some, others say shutting off arts funding amounts to stifling speech.

PEN, a writers organization focused on free speech, is circulating an online petition advocating for the NEA and its sister organizations. “Eliminating these vital agencies would lessen America’s stature as a haven for free thinkers and a global leader in humanity’s shared quest for knowledge,” it says.

Support in France

A group of French filmmakers also has rallied in support of keeping U.S. federal arts funding alive, saying defunding the NEA is “muffling diversity” because art enables people on the margins of society to tell their stories.

And in an op-ed piece in The New York Times last month, Eve Ewing, a sociologist at the University of Chicago, said, “Artists play a distinctive role in challenging authoritarianism. Art creates pathways for subversion, for political understanding and solidarity among coalition builders.

“Art teaches us that lives other than our own have value.”

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Trump’s Cuts to US Refugee Program Lead to 300-plus Layoffs

The president’s desire to cut refugees is also costing U.S. jobs.

A reduction in refugee resettlement that began after an executive order by President Donald Trump in late January has led to at least 300 layoffs in the U.S. nonprofit sector and nearly 500 positions abroad, according to data collected by VOA. In some cases, the jobs slashed were held by resettled refugees.

A review of news releases, media reports, and information obtained from a survey sent by VOA to the nine primary resettlement agencies shows that seven of those organizations contracted by the government to coordinate refugees’ first months and years of living in the United States have had layoffs at their headquarters and local offices around the country, or at affiliate and partner organizations.

VOA documented more than 300 part-time and full-time positions cut in the United States, including:

 

 

 

 

 

 

Sources: World Relief; Church World Service (CWS); Exodus; Catholic Charities of Tennessee; Community Refugee and Immigration Services; Catholic Charities-San Antonio; US Together; Catholic Charities of Southeast Michigan; Refugee Empowerment Center in Omaha; Catholic Charities in Cleveland

Additional organizations reported cutting employees’ hours and not filling vacancies to trim budgets.

“Our budget as a refugee resettlement agency was heavily dependent on the government funding and the suspension and reduction of U.S. admissions for 2017 as well as [the] same dim prospect for 2018 has caused a huge negative impact on agencies like ours,” Aklilu Adeye, Executive Director of the Ethiopian Community Association of Chicago, told VOA in an email. The organization recently cut five positions.

The tally is not exhaustive: Two of the nine primary resettlement organizations — Episcopal Migration Ministries and International Rescue Committee — did not respond to VOA’s request for information or make that figure otherwise public; the United States Conference of Catholic Bishops — historically one of the most active resettlement agencies — declined to provide data or comment about layoffs.

After the first executive order in January that would have stopped refugee arrivals for four months and cut the overall number for the fiscal year to 50,000, Sister Donna Markham, President and CEO of Catholic Charities USA, said that the program’s suspension would affect about 700 employees of Catholic Charities agencies nationwide, “with layoffs expected for nearly all of the workers.”

“If we’re talking about American jobs, this is laying off people in these public-private partnerships,” she told the National Catholic Reporter in February.

Overseas, Church World Service has laid off almost all 600 staff members at its Resettlement Support Center Africa, which coordinates with the State Department under a separate part of the refugee process from U.S.-based affiliates: 484 in Kenya, 27 in South Africa, and 19 in Tanzania.

“The decision to reduce our staff was a direct result of these executive orders, which sabotage our ability to offer vital services, support and counsel to families seeking to rebuild their lives in safety,” CWS President and CEO Reverend John L. McCullough said in a statement in March.

The contracts between the government and the nonprofit organizations — some of which have resettled refugees for decades — are based per capita on how many refugees are resettled by the agencies. They receive about $900 for each refugee to cover the administrative costs of helping the newcomers in their first 90 days in the country, from picking them up at the airport, setting up their first home and enrolling children in school, to hosting English classes and advising on job searches. Another $1,125 goes directly to each refugee for initial costs of setting up their lives in the United States, such as rent and furniture.

Fewer arrivals mean less funding, and that jeopardizes jobs — including some held by refugees themselves, who often are hired to interpret for members of their community or find other positions in the resettlement field.

In some cases, the nonprofit organizations are planning to receive thousands fewer refugees than anticipated by the end of the fiscal year.

From high hopes to layoffs

The fiscal year started with a surge ordered by then-President Barack Obama: The United States would take 110,000 refugees — more than it had in decades.

But those plans came to a screeching halt in late January, when one of Trump’s initial executive orders trimmed that number to 50,000; a revised order in March upheld the president’s call for that 55 percent reduction.

Despite federal lawsuits and injunctions rolling back those orders, the president maintains broad power over the ultimate number of refugees that will be allowed into the country. Trump has repeatedly expressed interest in significantly lower arrivals, leaning on what he says is a lack of confidence in the screening process for admitted refugees — although refugees are among the most rigorously vetted immigrants to the U.S.

Many resettlement organizations signed amicus briefs in support of lawsuits that challenged the refugee-related executive order, stating in one case that “faith-based refugee organizations’ ability to maintain operations and services moving forward has been devastated.”

The nonprofits have tried to rally financial support from the public in recent months, but several indicated in phone and email interviews that donations would not make up for any reduction in funding from the government.

The government’s Office of Refugee Resettlement operated on a budget of $1.67 billion in fiscal year 2016. That includes more than services for refugee resettlement, however. The bureau handles other programs, such as anti-trafficking efforts, and unaccompanied children. ORR asked for $2.18 billion for FY2017.

Refugee admissions in flux

So far this fiscal year, the U.S. has resettled about 42,000 refugees, but there has been no final word from the executive branch about how many more will be allowed in. The administration could halt the process abruptly at 50,000. At the current rate of arrivals — 800 to 900 individuals a week — that cap would be reached around the end of June or early July. (Last year, the country admitted 84,995.)

Fluctuations in the weekly refugee arrival numbers since Trump’s inauguration Jan. 20 reflect a system rattled by uncertainty, though in recent weeks that number has stabilized to align with a State Department comment to Huffington Post, indicating a goal of about 900 arrivals a week.

Trump promised to dramatically change not only the number of refugees admitted but the composition of where they come from and what religions they are, initially pledging to block Syrians and increase the number of Christians. However, the demographics remain nearly identical to those from before Trump took office.

A VOA analysis of refugee arrival data from Oct. 1 to Jan. 20 — the part of the fiscal year under Obama — compared with data from the beginning of Trump’s term until the end of March, shows the top 10 origin countries remain the same (DRC, Syria, Somalia, Burma, Iraq, Ukraine, Bhutan, Iran, Eritrea and Afghanistan). At the beginning of the fiscal year, about 48 percent of arriving refugees were Muslim. That figure is now 46 percent. Forty-three percent were Christian, which remained the same under Trump.

Lavinia Limon, head of USCRI, emphasizes that while U.S. refugee policy may leave some people out of work now, she believes the greater toll is on refugees awaiting resettlement. Even as the United States reduces its intake, the need for finding permanent new home-countries for some refugees remains the same.

“USCRI has been around for 104 years, and we have seen a lot of different politicians and politics surrounding the issues related to refugees and immigrants come and go,” Limon said. “I believe the focus needs to be on those thousands of refugees who will not be rescued and who will continue to suffer and might lose their lives because of politics in their homeland and politics in America.

“Whatever financial strain we may experience pales in comparison to their plights,” she added.

***

Have you or your resettlement organization been affected by staffing reductions? We want to hear from you. Email the reporter at vmacchi@voanews.com

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Silicon Valley & Technology
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Security Firm: Cyberattacks Against Saudi Arabia Continue

Researchers at U.S. antivirus firm McAfee say the cyberattacks that have hit Saudi Arabia over the past few months are continuing, revealing new details about an unusually disruptive campaign.

Speaking ahead of the blog post ‘s publication Wednesday, McAfee chief scientists Raj Samani said the latest intrusions were very similar, albeit even worse, to the malicious software that wrecked computers at Saudi Arabia’s state-run oil company in 2012.

“This campaign was a lot bigger,” Samani said. “Way larger in terms of the amount of work that needed to be done.”

It’s a striking claim. The 2012 intrusions against Saudi Aramco and Qatari natural gas company RasGas – data-wiping attacks that wrecked tens of thousands of computers – were among the most serious cyberattacks ever publicly revealed. At the time, the United States called it “the most destructive attack that the private sector has seen to date.”

Echoing research done by others, McAfee said the most recent wave of attacks drew heavily on the malicious code used in the 2012 intrusions. McAfee also said that some of the code appears to have been borrowed by a previously known hacking group, Rocket Kitten , and used digital infrastructure also employed in a cyberespionage campaign dubbed OilRig . U.S. cybersecurity firms have tied both to Iran, with greater or lesser degrees of certainty.

McAfee stopped short of linking any particular actor to the most recent attacks.

Saudi officials and news media have given little detail about the intrusions beyond saying that more than a dozen government agencies and companies were affected, and a government adviser did not immediately return a message seeking comment.

The Iranian Embassy in Paris did not immediately return messages.

 

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Romania: Hundreds of Taxis, Buses Protest Uber

Some 200 taxis and buses have parked outside the government offices in Romania’s capital, Bucharest, demanding that Uber and other online taxi services be outlawed in the country. 

 

Transport in the already crowded city was disrupted Wednesday morning as the protest, scheduled to last until the evening, got underway.

 

Drivers arrived early and parked their yellow taxis and blew vuvuzela horns in protest. Some met Premier Sorin Grindeanu to present their demands.

 

Bogdan Dinca, a transport union leader, told The Associated Press that they want the government to approve an emergency ordinance “to eradicate the piracy” they accuse Uber of. The ordinance awaits final approval by the prime minister. 

 

The Confederation of Licensed Transport Operators says it wants “online technology platforms that provide unauthorized taxi services to be outlawed,” to protect licensed carriers. 

 

Uber says it is a ride-sharing service with transparent costs and its drivers pay taxes. It says some 250,000 clients have used its services in the Romanian capital and other major cities in the past two years.

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Arts & Entertainment
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Arts Program in Poor Performing Schools Boosts Learning

In some of the lowest performing elementary and middle schools in the U.S., students are learning in an unconventional way. 

 

“I like to act and I like to sing and I like to dance,” said 10-year-old Kayla Driakare, whose teachers at Florence Griffith Joyner Elementary School are incorporating much of what she loves doing into the everyday curriculum.

 

Her school is a part of a national program called Turnaround Arts, and is an initiative started by former first lady Michelle Obama.It aims to help improve low performing schools through the arts.

 

For Driakare and her classmates, their school is a safe haven from life outside its walls.The students at Florence Griffith Joyner Elementary are from Watts, a neighborhood in Los Angeles known for its gang violence.

 

“High crime, high poverty, very multigenerational families in public housing. There’s gun violence. We see a lot of helicopters and we have lockdowns regularly and so, the thing is, all associated with poverty – that really traumatized students, so many of our students come to school with symptoms of post-traumatic stress,” explained school principal Akida Kissane Long.

 

She remembers when she first started at the school five years ago, there was “willful disobedience, primarily fighting (and) destruction of school property.”

 

Long said the suspension rate was “267 suspensions on record and (there were) 1,167 classroom suspensions.“

 

The school performed in the lowest 5% of the state and qualified for the Turnaround Arts program, a public-private partnership led by the President’s Committee on the Arts and the Humanities and managed by the D.C.-based John F. Kennedy Center for the Performing Arts.

 

It is one of 68 schools in the U.S. participating in the program.Teachers receive special training, and the arts are incorporated into all the subjects.Turnaround Arts schools also partner with professional musicians and actors who work with the students. Among the names are Yo-Yo Ma, Sarah Jessica Parker, Elton John and Cameron Diaz. 

 

“The children were so excited and have been so excited because it’s not just about – “Go to the board. Do the problem. Turn the page. Read the book.’It’s about acting and impersonating artists and historic figures, and acting out the water cycle and becoming a butterfly that goes from caterpillar through the cocoon to an expansive beautiful winged insect,” said Long.

 

On Thursdays, dedicated teachers in music and art give lessons. 

 

 “Art is fun. You get to draw what you draw and you get to draw something that you really like,” said an excited Driakare.

 

Only in the first year of a 3-year program, Long is already seeing results.

 

 “We’ve probably suspended one kid this year. That’s amazing. Parents are getting phone calls to come to family portraiture night and come to family arts night, and it’s not just the naughty calls home. It’s for them to come and learn more about what their children are learning.So our parent engagement goes up,” Long said.

 

Decreased disciplinary actions, increased attendance and improved academic achievement are occurring nationwide in a 3-year program evaluation of pilot schools.From 2011 to 2014, the study found a 22.55% improvement in math proficiency and 12.62% improvement in reading proficiency in the Turnaround Arts pilot schools.The study also found Turnaround Arts schools performed better than comparable schools that received special grants for school improvement.

 

At a time when President Donald Trump is proposing cutting the budget for the arts, and arts education is being deemphasized as policy makers push for more focus on math and science in U.S. education, Long is making a case for a more holistic approach.

 

 “Art speaks to everyone. Arts isn’t a set aside. It is part of what makes the curriculum rich and exciting and motivating.” Long added, “Because the arts is so universal and speaks across every culture and every language, every kid has an opportunity to access the highest levels of the curriculum because they had it delivered in a way that they could understand.”

 

At the end of the 3-year program, Long is asking the school district to turn this school into a visual and performing arts magnet school so it can get funding from the district to continue its focus on the arts, and allow more students to experience learning through a more creative approach.

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Science & Health
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A Glimpse Inside the VR Hospital of the Future

The future is full of virtual reality games, and applications. But one place where its utility is clearly going to have a positive impact is in the world of medicine. In London, the Virtual Reality Show is displaying some of the technologies that will change the way medicine, surgery, and even psychotherapy are practiced in the future. VOA’s Kevin Enochs reports

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