Investors seeking tax breaks skip poverty-stricken areas
By JEFF HORWITZ and STEPHEN BRAUN
Monday, December 17
WASHINGTON (AP) — A real estate investment firm co-founded by President Donald Trump’s son-in-law and adviser, Jared Kushner, is betting big on the administration’s Opportunity Zone tax breaks but isn’t that interested in steering its investors to the poorest, most-downtrodden areas that the program seeks to revitalize.
New York-based Cadre, in which Kushner still holds at least a $25 million passive stake, made it clear to potential investors in recent marketing materials that it doesn’t plan to look for development deals in most of those zones because of their “unfavorable growth prospects.”
Instead, Cadre says it will target a “small subset” of zones in such cities as Los Angeles, Seattle and Miami where both populations and incomes are already set to rise faster than the national average.
Cadre is a high-profile example of how early investor interest in the program appears focused on the places that need it the least: zones that qualified for the tax breaks despite already drawing substantial investment or are undergoing obvious gentrification.
Among the examples of such zones is a swath of the Upper East Side of Manhattan that includes the top of Fifth Avenue’s Museum Mile, where three-bedroom apartments overlooking Central Park sell for $4 million. Another is Ledroit Park in the nation’s capital, which falls mostly in what real estate blog Curbed has anointed Washington’s “most gentrified” ZIP code. Yet another Opportunity Zone includes part of The Willows neighborhood of Menlo Park, California, less than 2 miles (3.2 kilometers) from Stanford’s campus, where the tech boom has driven home prices to $1,500 per square foot, 10 times the national average. The Opportunity Zone where Amazon put its New York City headquarters in Queens has a median household income of more than $130,000.
“It’s hard to imagine why we should be subsidizing that,” said Brett Theodos, a researcher whose Urban Institute analysis found nearly one-third of the nation’s more than 8,700 Opportunity Zones are showing signs of pre-existing heavy investment. “These investors are not bad people. They are responding to the incentives.”
Such is the major criticism of the Investing in Opportunity Act, which became law last December as part of the Republican-sponsored tax overhaul. Promoted by Trump in a White House event this past week, it offers developers potentially millions of dollars in capital gains tax breaks to invest in zones selected by states based on such factors as high poverty and low income.
While the program highlights an average 32 percent poverty rate in the zones, it includes a wide range of areas — and allows “contiguous” tracts that might not be low-income but are close enough to distressed areas to qualify.
Cadre said in a statement to The Associated Press that the neighborhoods it is targeting for investment may be poised for growth but still exhibit low median incomes and are “capital deprived.”
“At the end of the day, the Opportunity Zone tax benefits only kick in if we succeed for the communities in which we invest,” the statement said.
There’s no evidence the administration sought to include better-off Opportunity Zones in the program. A White House spokesman told the AP this past week that the choice of the zones was up to the states. The Treasury Department, which certified the final roster of zones, declined to comment on the presence of gentrified areas in the program.
For some funds, the obvious gentrification of some zones was an explicit selling point, a much safer bet than putting money in seriously distressed areas.
Anthony Scaramucci, the hedge fund executive who was briefly the White House’s communications director for Trump, is trying to raise as much as $3 billion for Opportunity Zone projects. On a marketing call this past week, he pitched both a warehouse project in Savannah, Georgia, and a “swanky” hotel project in Oakland, California.
“For those of you who have yet to go to that part of the Bay Area, I can tell you that it is fully gentrifying,” Scaramucci said.
Fundrise, another Opportunity Zone fund that is trying to raise $500 million for investments, is targeting many of the same areas as Cadre, ranking its “Top Ten” targets for Opportunity Zone investing based on which have the fastest-rising housing costs.
One measure of how much the zones overlap with developers’ pre-existing interests is how much they overlap with their current holdings. An AP review of Kushner’s holdings found that he holds stakes in 13 Opportunity Zone properties, all in locations deemed by the Urban Institute to be showing indications of rapid change or full-out gentrification.
An AP investigation found that Kushner and his wife, Ivanka Trump, both helped push for the program and as a couple stand to benefit financially from it. Even though Kushner gave up any management role in Cadre, ethics watchdogs say it is a conflict that arose from their decision to become presidential advisers without divesting from their extensive investments.
Marcy Hart, a Philadelphia real estate tax lawyer who has advised clients on the Opportunity Zone program, says she hasn’t seen much indication that the program is redirecting investment to places that lacked it before.
“There are some projects that have probably come online because they’re in Opportunity Zones,” she said. “But my clients were already investing in these areas.”
Even some of the program’s strongest proponents have acknowledged that not all the Opportunity Zones are equally needy. At a Kemp Foundation gala last month honoring Sean Parker, a San Francisco venture capitalist who helped push for the Opportunity Zone’s creation, Parker himself said that the zones included some “low hanging fruit,” neighborhoods that were already clearly drawing investment.
But the program’s incentives are great enough, he said, that after the obvious opportunities are exhausted, investors will eventually turn their attention to needier areas.
“There will be a lot of capital sitting in opportunity funds, and it’s going to have to find a place to go,” he said.
AP Business Writer Bernard Condon in New York contributed to this report.
The math on why the Trump administration’s fuel standards report is seriously flawed
December 17, 2018
Author: Christopher R. Knittel, Professor of Applied Economics and Director of the Center for Energy and Environmental Policy Research, MIT Sloan School of Management
Disclosure statement: Christopher R. Knittel does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Fuel economy standards are an important way for the U.S. to combat climate change. However, a 2018 study conducted by the Trump administration proposes hitting the pause button on regulations, potentially leaving billions of dollars in benefits on the table.
This is a significant change from the Obama administration, which ramped up prior fuel economy standards. That administration mandated the fleet-wide fuel economy of passenger vehicles and light trucks to reach 54.5 miles per gallon by 2025. The federal government’s cost-benefit analysis, completed in January 2017, concluded that this was technologically feasible and that benefits exceeded costs by over US$90 billion.
The current administration challenges that conclusion and recommends freezing standards at model year 2020 levels through 2025. Their analysis finds that the costs exceed the benefits by over $170 billion – a difference of over $260 billion from the previous report.
Who is right? The answer matters, because fuel economy standards are the last remaining major federal regulation to fight greenhouse gas emissions. The current administration has eliminated other regulations related to clean power and is promoting coal consumption. If the Obama administration’s analysis is correct, then pausing fuel standards will cost the economy money and impact the environment. If the Trump analysis is correct, then this may be the right call. There is a lot at stake.
My colleagues and I analyzed the differences between the two reports, looking to see whether those differences are supported by research and best practices. While both studies contain flaws, we found that the Trump administration’s study contains more.
First, the Trump administration’s study doubles the “rebound effect” – it assumes that consumers will drive twice as many extra miles if they purchase an efficient car. As a result, this leads to more traffic deaths, a claim that has been repeated a number of times. Yet, there is no justification in the research literature for doubling the rebound effect, so this focus on costs associated with increased accidents and deaths is artificial.
The study’s second flaw is that it ignores the global impact of carbon emissions, only looking at the impact on the U.S. This effectively announces to the world that the U.S. does not care about climate impacts outside of its borders. This is a major difference that reduces the social cost of carbon – the economic harm due to emitting a ton of CO2 into the atmosphere – from $48 per ton globally to only $7 per ton in the U.S. This impacts the bigger picture, as it reduces the benefits of fuel standards from $27.8 billion in 2016 to $4.3 billion in 2018.
Third, the study claims that eliminating the fuel economy standards decreases the number of vehicles on the road by 6 million cars by 2029. However, this is completely inconsistent with economic theory, which predicts that tighter standards make both new and used vehicles more expensive. As standards increase vehicle prices, total fleet size should decrease over time – but the 2018 analysis claims the opposite.
In contrast, if standards are rolled back, this should increase demand for vehicles, resulting in a larger fleet. This mistake alone leads the Trump administration to claim over $90 billion of cost savings, from the fewer cars on the road, that just aren’t there.
Mistakenly assuming 6 million fewer cars on the road also means that the study’s assumptions about miles driven and fatalities from car crashes may be off, too.
Finally, the Trump administration study doubles the assumed costs of new technologies required to meet fuel standards compared to the 2017 analysis. We couldn’t find any empirical justification for that.
The Obama administration’s study found $90 billion in net benefits, while the Trump administration’s found a net loss of $186 billion. If the first analysis is right, then the U.S. is leaving this $90 billion on the table by not capturing those net benefits.
Both researchers and the administration need to take a closer look at the data, because this latest study could have a lasting impact on climate change protections in the U.S. and climate change in the world. A change this important needs to be supported by data and best practices, rather than flawed statistics.
Senate report: Russia social media influence efforts ongoing
By MARY CLARE JALONICK
Monday, December 17
WASHINGTON (AP) — A report compiled by private researchers and expected to be released Monday by the Senate intelligence committee says that “active and ongoing” Russian interference operations still exist on social media platforms, and that the Russian operation discovered after the 2016 presidential election was much broader than once thought.
The report was compiled by the cybersecurity firm New Knowledge with data provided by the Senate committee from major tech companies Facebook, Twitter and Alphabet, the parent company of Google. Along with another report expected to be released by the panel, it is the first comprehensive analysis of the Russian interference on social media beyond what the companies themselves have said.
The report says that there are still some live accounts tied to the original Internet Research Agency, which was named in an indictment from special counsel Robert Mueller in February for an expansive social media campaign intended to influence the 2016 presidential election. Some of these accounts have a presence on smaller platforms as the major companies have tried to clean up after the Russian activity was discovered.
“With at least some of the Russian government’s goals achieved in the face of little diplomatic or other pushback, it appears likely that the United States will continue to face Russian interference for the foreseeable future,” the researchers wrote.
The report says that none of the companies turned over complete data sets to Congress and some of them “may have misrepresented or evaded” in testimony about the interference by either intentionally or unintentionally downplaying the scope of the problem.
One major takeaway of the study is the breadth of Russian interference that appeared on Instagram, which is owned by Facebook and was not as frequently mentioned when its parent company testified on Capitol Hill. The study says that as attention was focused on Facebook and Twitter in 2017, the Russians shifted much of their activity to Instagram.
The study says that there were 187 million engagements with users on Instagram, while there were 77 million on Facebook.
“Instagram was a significant front in the IRA’s influence operation, something that Facebook executives appear to have avoided mentioning in Congressional testimony,” the researchers wrote. They added that “our assessment is that Instagram is likely to be a key battleground on an ongoing basis.”
The Russian activity went far beyond the three tech companies that provided information, the report says, reaching many smaller sites as well. It details the sophisticated attempts to infiltrate internet games, browser extensions and music apps. The Russians even used social media to encourage users of the game Pokemon Go — which was at peak popularity in the months before the 2016 presidential election — to use politically divisive usernames, for example.
The report discusses even more unconventional ways that the Russian accounts attempted to connect with Americans and recruit assets, such as selling merchandise with certain messages, specific follower requests, job offers and even help lines that could encourage people to unknowingly disclose sensitive information that could be used against them.
The Russians’ attempts to influence Americans on social media first became widely public in the fall of 2017. Several months later, Mueller’s indictment laid out a vast, organized Russian effort to sway political opinion. While the social media companies had already detailed some of the efforts, the indictment tied real people to the operation and named 13 Russians responsible.
The study repeats several conclusions that Mueller, the intelligence community and the Senate and House intelligence committees had already made — that many of the postings focused on race, that they were primarily to hurt Democrat Hillary Clinton and help Donald Trump, and that the ultimate goal was to sow American division.
Also notable is the study’s finding that WikiLeaks founder Julian Assange was favorably treated in posts aimed at both left-leaning and right-leaning users. The report says there were a number of posts expressing support for Assange and Wikileaks, including several in October 2016 just before WikiLeaks released hacked emails from Hillary Clinton’s campaign.
The second report, compiled by researchers at the University of Oxford and called the Computational Propaganda Research Project, is also partly based on data from the Senate panel. It notes that peaks in Internet Research Agency advertising and organic activity — or posts, shares and comments by users — often corresponded with important dates in the U.S. calendar, crises and international events.
That report says the IRA’s posts focused on the United States started on Twitter as far back as 2013, and eventually evolved into the multi-platform strategy. The researchers from Oxford said that organic postings were much more far reaching than advertisements, despite Facebook’s sole focus on ads when the company first announced it had been compromised in 2017.
Other findings in the study:
— Russian activity on Twitter was less organized around themes like race or partisanship but more driven by local and current events and made use of occasional pop culture references;
— Facebook posts linked to the IRA “reveal a nuanced and deep knowledge of American culture, media, and influencers in each community the IRA targeted.” Certain memes appeared on pages targeted to younger people but not older people. “The IRA was fluent in American trolling culture,” the researchers say;
— Establishment figures of either party, especially Clinton, were universally panned. Even a tag targeted to feminists criticized Clinton and promoted her primary opponent Bernie Sanders;
— Several posts promoted the Russian agenda in Syria and Syrian President Bashar Assad;
— During the week of the presidential election, posts on right-leaning sites connected to the IRA aimed to generate anger and suspicion and hinted at voter fraud, while posts on sites targeted to African-Americans largely ignored mentions of the election until the last minute.
OPINION: Ruling with rats
by Tom H. Hastings
Maria Butina, rat. She is Russian, she was caught as a foreign agent who never registered. She pled guilty to spying for Russia and conspiracy to hijack the NRA, and presumably is spilling the beans in order to reduce the consequences of her nefarious activities helping funnel NRA millions plus loud endorsement to Trump.
Michael Cohen was a rat whose cooperation might have at least reduced his penalties, which included a million or so in fines plus three years in prison. He was Donald J. Trump’s lawyer and fixer for years, and confessed to many criminal activities, all done in the service of, and at the direction of, Trump.
Even the National Enquirer—paid by Trump to kill a story about his “alleged” extramarital affair with Playboy playmate Karen McDougal—has turned state’s evidence, via its parent corporation, in order to gain immunity from prosecution for violations of federal election laws. A century ago saw the term yellow journalism, for the fake news promulgated by Hearst and others in screaming false headlines, so we might call Fox News the new millennium yellow journalism premier example, but now we conflate that with gaining immunity in exchange for incriminating revelations to prosecutors and the National Enquirer—a most obvious example of yellow journalism with its headlines about aliens infesting our planet—and they have now created a new category, Yellow Rat Journalism. Congrats!
Mike Flynn, Big Rat. He is no doubt going to see a reduction in his exposure to effectively nothing, even though he was clearly acting repeatedly in a blatantly treasonous betrayal of American democracy as a Russian agent. He lied to the FBI, to the public, to Pence, to Congress, and probably his wife and his priest. After 33 years in the military or other US government employ, he seems to have gotten in touch with his Inner Profit-Taking Traitor. But he subsequently met and presumably divulged a great deal to the Mueller Special Counsel team—AKA The Rat Trap—in 19 sessions, more than 60 hours of spilling the sacks of beans he had been hoarding. And while we’re on the number 33, that is how many rats the Mueller team has flipped, plus three corporations involved in violations of election, bribery, and illegal hush money activities. Infestation Alert!
Let’s be clear about these rats. None were struck with an attack of conscience that caused them to come forward. Each one, every one, was caught. All of them decided to cooperate only after the government prosecutors had the goods on them. These are not praiseworthy people. I mean, Flynn was the one initiating and leading chants of “LOCK HER UP, LOCK HER UP” at Trump campaign rallies. Uh-huh, a real hero. Lock. Him. Up.
Even Mueller—the most taciturn DC prosecutor imaginable—had to break radio silence on this matter after Flynn’s attorneys filed a brief attempting to exculpate Flynn because the FBI agents didn’t explicitly warn him it was a crime to lie to the FBI. Apparently, Flynn and his lawyers believed it was Just Fine to lie to the FBI otherwise.
And while one story seems to be about sex and another seems to be about working with Russians to steal the 2016 election for Trump, they are in the end the same. It all comes down to election theft and crushing democracy. The National Enquirer and Cohen were busy trying to cover up Trump’s cheating on his wife with porn stars so that presumably the oh-so-moral white evangelicals would not fail to vote Trump—that is, to cover it up with huge payments right before the 2016 election. Meanwhile, Flynn is meeting with Sergey I. Kislyak, the Russian ambassador to the United States at the time of the transition, assuring him that Trump would end those pesky sanctions on Russia that Obama placed when Putin invaded and stole Crimea. That was the Russian bet: elect Trump and sanctions go away, as well as NATO weakens. Flynn, as Trump’s boy in the campaign and then as head of the National Security Agency, did all that, acting as an agent of a hostile foreign dictator, even as another of their Russian agents, Butina, was being directly handled by Vladimir Putin’s buddy, oligarch banker Alexander Torshin. Trump loves to accuse others of conspiracy; this is classic projection.
Ah, the rat system. It is how the po-po and the prosecutors get damning information on defendants, those threatened with prosecution, and all their criminal associates. Flipping rats.
George Papadopoulos was one of those small-time rats who performed so poorly that the FBI simply recommended that he get no break at all. Lousy rat. He was the drunk who first bragged at some bar in Australia that the Trump campaign was getting massive tech help from the Russians, who illegally hacked and stole Hillary’s emails, shunted them to Julian Assange and his Wikileaks, who then acted on his obsessive hatred of Hillary and released them to the world. Thanks, Julian! You gave us Trump, you ratty twerp. Showing great faith in his version of American kleptocracy, Papadopoulos announced he will be running for Congress in 2020. Go, Republican Rats!
Trump is just surrounded by rats, isn’t he? The Big Stinky Cheese in the White House, with the rats all gnawing at his fetid manner of power-wielding.
We are now to the point where no half-decent project manager wants what used to be one of the most coveted plum positions in DC, the Chief of Staff of any administration. Now it’s about as desirable as Vice-President of Afghanistan living a block from Taliban HQ. The rats jump ship and who wants to get on? It’s no longer safe for the sellouts, the criminals, and the looters, so who is left? Family?
I wonder if we’ll get to the “Sorry and so long, Dad” point? I mean, Donald Jr. and Ivanka have no presidential immunity and they are check-signers in the Trump organization, which is tantamount now to a RICO violation, as we see the money trail to campaign finance laws exposed for all to see. Organized crime is becoming less organized as key criminals bail, one-by-one, leaving the Trump mob more tattered by the day. 1600 Pennsylvania Avenue is becoming known as Felony Flats, a home to future cell blockers whose best chance at staying out from behind bars is to open up about the Capo. Don Trumpleone…Lock. Him. Up. What a rat.
Dr. Tom H. Hastings is PeaceVoice Director and on occasion an expert witness for the defense in court.