BERLIN — Chancellor Angela Merkel on Sunday met with survivors and thanked volunteers as she made her way through a village wrecked by the extraordinary floods that have killed at least 183 people in Germany and Belgium, calling the level of destruction “surreal and eerie.”
As rescue teams continued searching for victims amid the wreckage and debris, heavy rains in the southern German region of Bavaria caused still more flooding on Sunday. The authorities said they expected the number victims to rise, as many hundreds of people remained unaccounted for, though it was unclear how many were simply unreachable by friends or family amid the chaos of the calamity and lost communications.
Helicopters buzzed overhead as Ms. Merkel arrived in Schuld, a formerly quaint village of half-timbered homes and cobbled streets on the banks of the Ahr River, rendered an unrecognizable tangle of debris covered in sticky brown mud by gushing waters last week. German meteorologists called the flooding the worst in 500 years, if not a millennium.
“The German language has no words, I think, for the devastation,” Ms. Merkel told reporters after touring the village. She pledged that her government would organize aid, immediately and in the midterm, as well as help to rebuild infrastructure.
was in Washington when the worst of the flooding struck on Thursday. She held video conferences with the leaders of the worst-affected regions after she returned on Friday. Saturday was her 67th birthday.
Despite her relative absence, Ms. Merkel has been shielded from public criticism by the sudden timing of the floods, the significance of her trip to Washington — considered an important step to restoring ties with the United States after the tumultuous Trump administration — her formidable political stature well into her fourth term as chancellor, and now her status as a lame duck.
Instead, most of the German news media have focused on how the candidates to replace her in September’s election have responded to the tragedy. All three of the main candidates in the race visited the stricken areas last week.
Still, after 16 years of guiding Europe’s largest and most powerful country through one calamity after the other — including the global economic downturn in 2008, the European debt crisis that followed, the arrival of more than one million migrants six years ago and, most recently, the coronavirus pandemic — Germans have become accustomed to her approach of analyzing and contemplating a situation before deciding to act.
Ms. Merkel’s finance minister, Olaf Scholz, said the government was working to organize several hundred million euros, or dollars, of immediate relief for those who lost their homes and their livelihoods in the floods.
Flooding in Western Europe
On Saturday, President Frank-Walter Steinmeier of Germany visited the city of Erftstadt, where the raging waters washed away several homes and triggered a landslide; at least 16 residents there remain unaccounted for. He was accompanied by Armin Laschet, 60, the head of the conservative Christian Democratic Union and the leading contender for the chancellery, who is the governor of North Rhine-Westphalia state.
in a message on Twitter.
“The fate of those affected, which we heard about in many conversations, is important to us,” he wrote, and he thanked Mr. Steinmeier for his visit. “So I regret all the more the impression that arose from a conversational situation. That was inappropriate and I am sorry.”
Even as the country struggled to come to terms with the extent of the damage to the states of Rhineland-Palatinate, where Schuld is, heavy rains caused more flooding in Germany’s east and south, killing at least one person, in addition to the 112 people pronounced dead in Rhineland-Palatinate.
In North-Rhine Westphalia, where the interior minister said 45 people had died, more storms ripped through the south of the country.
Flooding in Belgium killed at least 27 people, local news media reported the authorities as saying. Dozens remained missing there, and rescue workers spent much of the day going door to door looking for anyone who had not been able to escape the rising waters in time.
That the authorities still lacked clarity on Sunday over how many people were missing four days after the floods struck reflected the severity of the damage caused to local infrastructure in Rhineland-Palatinate, said Malu Dreyer, the state’s governor.
“The water was still flowing up until a couple of days ago, we have mud and debris,” Ms. Dreyer said. “Now we have the police, soldiers and firefighters who are systematically combing through the whole region searching for the missing.”
Ms. Merkel said that in addition to the financial support from the government, the German Army and other emergency assistance organizations would remain in the area as long as needed.
“Everything we have is being put to use,” she said, “and still it is unbelievably painful for those who have lost loved ones, for those who still don’t know what has happened and for those facing the destruction of their livelihoods.”
WASHINGTON — When the nation’s antitrust laws were created more than a century ago, they were aimed at taking on industries such as Big Oil.
But technology giants like Amazon, Facebook, Google and Apple, which dominate e-commerce, social networks, online advertising and search, have risen in ways unforeseen by the laws. In recent decades, the courts have also interpreted the rules more narrowly.
On Monday, a pair of rulings dismissing federal and state antitrust lawsuits against Facebook renewed questions about whether the laws were suited to taking on tech power. A federal judge threw out the federal suit because, he said, the Federal Trade Commission had not supported its claims that Facebook holds a dominant market share, and he said the states had waited too long to make their case.
The decisions underlined how cautious and conservative courts could slow an increasingly aggressive push by lawmakers, regulators and the White House to restrain the tech companies, fueling calls for Congress to revamp the rules and provide regulators with more legal tools to take on the tech firms.
David Cicilline, a Democrat of Rhode Island, said the country needed a “massive overhaul of our antitrust laws and significant updates to our competition system” to police the biggest technology companies.
Moments later, Representative Ken Buck, a Colorado Republican, agreed. He called for lawmakers to adapt antitrust laws to fit the business models of Silicon Valley companies.
This week’s rulings have now put the pressure on lawmakers to push through a recently proposed package of legislation that would rewrite key aspects of monopoly laws to make some of the tech giants’ business practices illegal.
“This is going to strengthen the case for legislation,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School. “It seems to be proof that the antitrust laws are not up to the challenge.”
introduced this month and passed the House Judiciary Committee last week. The bills would make it harder for the major tech companies to buy nascent competitors and to give preference to their own services on their platforms, and ban them from using their dominance in one business to gain the upper hand in another.
including Lina Khan, a scholar whom President Biden named this month to run the F.T.C. — have argued that a broader definition of consumer welfare, beyond prices, should be applied. Consumer harm, they have said, can also be evident in reduced product quality, like Facebook users suffering a loss of privacy when their personal data is harvested and used for targeted ads.
In one of his rulings on Monday, Judge James E. Boasberg of U.S. District Court for the District of Columbia said Facebook’s business model had made it especially difficult for the government to meet the standard for going forward with the case.
The government, Judge Boasberg said, had not presented enough evidence that Facebook held monopoly power. Among the difficulties he highlighted was that Facebook did not charge its users for access to its site, meaning its market share could not be assessed through revenue. The government had not found a good alternative measure to make its case, he said.
He also ruled against another part of the F.T.C.’s lawsuit, concerning how Facebook polices the use of data generated by its product, while citing the kind of conservative antitrust doctrine that critics say is out of step with the technology industry’s business practices.
The F.T.C., which brought the federal antitrust suit against Facebook in December, can file a new complaint that addresses the judge’s concerns within 30 days. State attorneys general can appeal Judge Boasberg’s second ruling dismissing a similar case.
fined Facebook $5 billion in 2019 for privacy violations, there were few significant changes to how the company’s products operate. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps — including WhatsApp, Instagram or Messenger — every month.
The decisions were particularly deflating after actions to rein in tech power in Washington had gathered steam. Ms. Khan’s appointment to the F.T.C. this month followed that of Tim Wu, another lawyer who has been critical of the industry, to the National Economic Council. Bruce Reed, the president’s deputy chief of staff, has called for new privacy regulation.
Mr. Biden has yet to name anyone to permanently lead the Justice Department’s antitrust division, which last year filed a lawsuit arguing Google had illegally protected its monopoly over online search.
The White House is also expected to issue an executive order this week targeting corporate consolidation in tech and other areas of the economy. A spokesman for the White House did not respond to requests for comment about the executive order or Judge Boasberg’s rulings.
Activists and lawmakers said this week that Congress should not wait to give regulators more tools, money and legal red lines to use against the tech giants. Mr. Cicilline, along with Representative Jerrold Nadler of New York, the chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook show “the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy.”
Senator Amy Klobuchar, a Democrat of Minnesota who chairs the Senate Judiciary Committee’s subcommittee on antitrust, echoed their call.
“After decades of binding Supreme Court decisions that have weakened our antitrust policies, we cannot rely on our courts to keep our markets competitive, open and fair,” she said in a statement. “We urgently need to rejuvenate our antitrust laws to meet the challenges of the modern digital economy.”
But the six bills to update monopoly laws have a long way to go. They still need to pass the full House, where they will likely face criticism from moderate Democrats and libertarian Republicans. In the Senate, Republican support is necessary for them to overcome the legislative filibuster.
The bills may also not go as far in altering antitrust laws as some hope. The House Judiciary Committee amended one last week to reinforce the standard around consumer welfare.
Even so, Monday’s rulings have given the proposals a boost. Bill Baer, who led the Justice Department antitrust division during the Obama administration, said it “gives tremendous impetus to those in Congress who believe that the courts are too conservative in addressing monopoly power.”
Facebook and the tech platforms might like the judge’s decisions, he said, “but they might not like what happens in the Congress.”
As Federal Reserve Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin scrambled to save faltering markets at the start of the pandemic last year, America’s top economic officials were in near-constant contact with a Wall Street executive whose firm stood to benefit financially from the rescue.
Laurence D. Fink, the chief executive of BlackRock, the world’s largest asset manager, was in frequent touch with Mr. Mnuchin and Mr. Powell in the days before and after many of the Fed’s emergency rescue programs were announced in late March. Emails obtained by The New York Times through a records request, along with public releases, underscore the extent to which Mr. Fink planned alongside the government for parts of a financial rescue that his firm referred to in one message as “the project” that he and the Fed were “working on together.”
While some conversations were previously disclosed, the newly released emails, together with public calendar records, show the extent to which economic policymakers worked with a private company as they were drawing up a response to the financial meltdown and how intertwined BlackRock has become with the federal government.
60 recorded calls over the frantic Saturday and Sunday leading up to the Fed’s unveiling on Monday, March 23, of a policy package that included its first-ever program to buy corporate bonds, which were becoming nearly impossible to sell as investors sprinted to convert their holdings to cash. Mr. Mnuchin spoke to Mr. Fink five times that weekend, more than anyone other than the Fed chair, whom he spoke with nine times. Mr. Fink joined Mr. Mnuchin, Mr. Powell and Larry Kudlow, who was the White House National Economic Council director, for a brief call at 7:25 the evening before the Fed’s big announcement, based on Mr. Mnuchin’s calendars.
book on funds.
On March 24, 2020, the New York Fed announced that it had again hired BlackRock’s advisory arm, which operates separately from the company’s asset-management business but which Mr. Fink oversees, this time to carry out the Fed’s purchases of commercial mortgage-backed securities and corporate bonds.
BlackRock’s ability to directly profit from its regular contact with the government during rescue planning was limited. The firm signed a nondisclosure agreement with the New York Fed on March 22, restricting involved officials from sharing information about the coming programs.
were contracting and its business outlook hinged on what happened in certain markets.
While the Fed and Treasury consulted with many financial firms as they drew up their response — and practically all of Wall Street and much of Main Street benefited — no other company was as front and center.
Simply being in touch throughout the government’s planning was good for BlackRock, potentially burnishing its image over the longer run, Mr. Birdthistle said. BlackRock would have benefited through “tons of information, tons of secondary financial benefits,” he said.
Mr. Mnuchin could not be reached for comment. Asked whether top Fed officials discussed program details with Mr. Fink before his firm had signed the nondisclosure agreement, the Fed said Mr. Powell and Randal K. Quarles, a Fed vice chair who also appears in the emails, “have no recollection of discussing the terms of either facility with Mr. Fink.”
“Nor did they have any reason to do so because the Federal Reserve Bank of New York handled the process with great care and transparency,” the central bank added in its statement.
Brian Beades, a spokesman for BlackRock, highlighted that the firm had “stringent information barriers in place that ensure separation between BlackRock Financial Markets Advisory and the firm’s investment business.” He said it was “proud to have been in a position to assist the Federal Reserve in addressing the severe downturn in financial markets during the depths of the crisis.”
Daily Business Briefing
The disclosed emails between Fed and BlackRock officials — 11 in all across March and early April — do not make clear whether the company knew about any of the Fed and Treasury programs’ designs or whether they were simply providing market information.
Fed chair’s official schedule from that March. Those calendars generally track scheduled events, and may have missed meetings in early 2020 when staff members were frantically working on the market rescue and the Fed was shifting to work from home, a central bank spokesman said.
Mr. Powell’s calendars did show that he talked to Mr. Fink in March, April and May, and he has previously answered questions about those discussions.
“I can’t recall exactly what those conversations were, but they would have been about what he is seeing in the markets and things like that, to generally exchanging information,” Mr. Powell said at a July news conference, adding that it wasn’t “very many” conversations. “He’s typically trying to make sure that we are getting good service from the company that he founded and leads.”
BlackRock’s connections to Washington are not new. It was a critical player in the 2008 crisis response, when the New York Fed retained the firm’s advisory arm to manage the mortgage assets of the insurance giant American International Group and Bear Stearns.
Several former BlackRock employees have been named to top roles in President Biden’s administration, including Brian Deese, who heads the White House National Economic Council, and Wally Adeyemo, who was Mr. Fink’s chief of staff and is now the No. 2 official at the Treasury.
in early 2009 to $7.4 trillion in 2019. By the end of last year, they were $8.7 trillion.
As it expanded, it has stepped up its lobbying. In 2004, BlackRock Inc. registered two lobbyists and spent less than $200,000 on its efforts. By 2019 it had 20 lobbyists and spent nearly $2.5 million, though that declined slightly last year, based on OpenSecrets data. Campaign contributions tied to the firm also jumped, touching $1.7 million in 2020 (80 percent to Democrats, 20 percent to Republicans) from next to nothing as recently as 2004.
short-term debt markets that came under intense stress as people and companies rushed to move all of their holdings into cash. And problems were brewing in the corporate debt market, including in exchange-traded funds, which track bundles of corporate debt and other assets but trade like stocks. Corporate bonds were difficult to trade and near impossible to issue in mid-March 2020. Prices on some high-grade corporate debt E.T.F.s, including one of BlackRock’s, were out of whack relative to the values of the underlying assets, which is unusual.
People could still pull their money from E.T.F.s, which both the industry and several outside academics have heralded as a sign of their resiliency. But investors would have had to take a financial hit to do so, relative to the quoted value of the underlying bonds. That could have bruised the product’s reputation in the eyes of some retail savers.
fund recovery was nearly instant.
When the New York Fed retained BlackRock’s advisory arm to make the purchases, it rapidly disclosed details of those contracts to the public. The firm did the program cheaply for the government, waiving fees for exchange-traded fund buying and rebating fees from its own iShares E.T.F.s back to the New York Fed.
The Fed has explained the decision to hire the advisory side of the house in terms of practicality.
“We hired BlackRock for their expertise in these markets,” Mr. Powell has since said in defense of the rapid move. “It was done very quickly due to the urgency and need for their expertise.”
Federal Reserve officials left policy unchanged on Wednesday but moved up expectations for when they would first raise interest rates from rock bottom, a sign that a healing labor market and rising inflation were giving policymakers confidence that they would achieve their full employment and stable price goals in coming years.
Fed policymakers expect to make two interest rate increases by the end of 2023, the central bank’s updated summary of economic projections showed Wednesday. Previously, the median official had anticipated that rates would stay near zero — where they have been since March 2020 — at least into 2024. The Fed now sees rates rising to 0.6 percent by the end of 2023, up from 0.1 percent.
The significant upgrade comes as the economy is healing, and as Fed officials penciled in stronger growth in 2021, faster inflation and slightly quicker labor market progress next year.
“Progress on vaccinations has reduced the spread of Covid-19 in the United States,” the Fed said in a statement released at the conclusion of its June 15-16 policy meeting, one that contained several optimistic revisions. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
late April, and since it last released economic projections in March. Inflation data have come in faster than officials had expected, and consumer and market expectations for future inflation have climbed. Employers have been hiring more slowly than they were this spring, as job openings abound but it takes workers time to flow into them.
The Fed continued to call that inflation increase largely “transitory” in its new statement. It has consistently pledged to take a patient approach to monetary policy as the economic backdrop rapidly shifts.
Mr. Powell acknowledged that “inflation has come in above expectations” but suggested it was largely because of robust consumer demand coupled with shortages and bottlenecks as the economy reopens.
“Our expectation is that these high inflation readings that we’re seeing now will start to abate,” he said, adding that if prices moved up in a way that was inconsistent with the Fed’s goal, central bankers would be prepared to react by reducing monetary policy support.
The central bank made no changes on Wednesday to its main policy interest rate, which has been set at near zero since March 2020, helping keep borrowing cheap for households and businesses. The Fed will also continue to buy $120 billion in government-backed bonds each month, which keeps longer-term borrowing costs low and can bolster stock and other asset prices. Those policies work together to keep money flowing easily through the economy, fueling stronger demand that can help to speed up growth and job market healing.
Officials have pledged to continue to support the economy until the pandemic shock is well behind the United States. Specifically, they have said that they want to achieve “substantial” progress toward their two economic goals — maximum employment and stable inflation — before slowing their bond purchases. The bar for raising interest rates is even higher. Officials have said they want to see the job market back at full strength and inflation on track to average 2 percent over time before they will lift interest rates away from rock bottom.
a “number” of officials at the Fed’s April meeting suggested that they would like to start talking about how and when to begin the so-called taper soon, minutes from that gathering showed.
The Fed is buying $80 billion in Treasury bonds each month, and $40 billion in mortgage-backed securities. Those purchases have helped to push the central bank’s balance sheet holdings up to about $8 trillion — roughly twice as big as they were as recently as summer 2019.
Officials including Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, and Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, have signaled that they think it would be appropriate to get those discussions going. Other important policymakers have sounded patient, with John Williams, the New York Fed president, saying that “we’re not near the substantial further progress marker,” in a June 3 Yahoo Finance interview.
Mr. Powell said on Wednesday that officials had begun “talking about talking about” slowing those bond purchases but that the central bank was not preparing to start tapering anytime soon.
“I expect that we’ll be able to say more about timing as we start to see more data,” Mr. Powell said.
Some Republican politicians have questioned whether emergency monetary policy settings remain necessary as the economy reopens and growth rebounds, the Fed has signaled over that the United States is in for a long period of central bank support.
preferred inflation gauge came in at 3.6 percent in April compared to the previous year and is likely to jump even higher in May. The more up-to-date Consumer Price Index was up 5 percent in the year through last month, partly as the figures were compared to very low readings last year.
Officials expect the current price pop to prove temporary, the product of one-off data quirks and the fact that demand is recovering faster than supply chains coming out of the pandemic. Markets seem to broadly share that view: While they have penciled in slightly higher inflation, that recent increase in expectations appears to be stabilizing at a level that is probably more or less consistent with the Fed’s goals.
Still, Wall Street strategists and politicians in Washington alike are watching for any sign that Fed officials have become more concerned about lasting price pressures as some stickier prices in the real economy — such as shelter costs — stabilize and increase.
If inflation does take off in a lasting way and the Fed has to lift interest rates to slow the economy and tame price pressures, that could be bad news. Rapid rate adjustments have a track record of causing recessions, which throw vulnerable workers out of jobs.
But the Fed tries to balance risks when setting policy, and so far, it has seen the risk of pulling back support early as the one to avoid. Millions of jobs are still missing since the start of the pandemic, and monetary policy could help to keep the economy recovering briskly so that displaced employees have a better chance of finding new work.
Alan Rappeport and Matt Phillips contributed reporting.
There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code.
Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes.
The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.
The Trump administration’s farewell gift to the buyout industry was part of a pattern that has spanned Republican and Democratic presidencies and Congresses: Private equity has conquered the American tax system.
one recent estimate, the United States loses $75 billion a year from investors in partnerships failing to report their income accurately — at least some of which would probably be recovered if the I.R.S. conducted more audits. That’s enough to roughly double annual federal spending on education.
It is also a dramatic understatement of the true cost. It doesn’t include the ever-changing array of maneuvers — often skating the edge of the law — that private equity firms have devised to help their managers avoid income taxes on the roughly $120 billion the industry pays its executives each year.
Private equity’s ability to vanquish the I.R.S., Treasury and Congress goes a long way toward explaining the deep inequities in the U.S. tax system. When it comes to bankrolling the federal government, the richest of America’s rich — many of them hailing from the private equity industry — play by an entirely different set of rules than everyone else.
The result is that men like Blackstone Group’s chief executive, Stephen A. Schwarzman, who earned more than $610 million last year, can pay federal taxes at rates similar to the average American.
Lawmakers have periodically tried to force private equity to pay more, and the Biden administration has proposed a series of reforms, including enlarging the I.R.S.’s enforcement budget and closing loopholes. The push for reform gained new momentum after ProPublica’s recent revelation that some of America’s richest men paid little or no federal taxes.
nearly $600 million in campaign contributions over the last decade, has repeatedly derailed past efforts to increase its tax burden.
Taylor Swift’s back music catalog.
The industry makes money in two main ways. Firms typically charge their investors a management fee of 2 percent of their assets. And they keep 20 percent of future profits that their investments generate.
That slice of future profits is known as “carried interest.” The term dates at least to the Renaissance. Italian ship captains were compensated in part with an interest in whatever profits were realized on the cargo they carried.
The I.R.S. has long allowed the industry to treat the money it makes from carried interests as capital gains, rather than as ordinary income.
article highlighting the inequity of the tax treatment. It prompted lawmakers from both parties to try to close the so-called carried interest loophole. The on-again, off-again campaign has continued ever since.
Whenever legislation gathers momentum, the private equity industry — joined by real estate, venture capital and other sectors that rely on partnerships — has pumped up campaign contributions and dispatched top executives to Capitol Hill. One bill after another has died, generally without a vote.
An Unexpected Email
One day in 2011, Gregg Polsky, then a professor of tax law at the University of North Carolina, received an out-of-the-blue email. It was from a lawyer for a former private equity executive. The executive had filed a whistle-blower claim with the I.R.S. alleging that their old firm was using illegal tactics to avoid taxes.
The whistle-blower wanted Mr. Polsky’s advice.
Mr. Polsky had previously served as the I.R.S.’s “professor in residence,” and in that role he had developed an expertise in how private equity firms’ vast profits were taxed. Back in academia, he had published a research paper detailing a little-known but pervasive industry tax-dodging technique.
$89 billion in private equity assets — as being “abusive” and a “thinly disguised way of paying the management company its quarterly paycheck.”
Apollo said in a statement that the company stopped using fee waivers in 2012 and is “not aware of any I.R.S. inquiries involving the firm’s use of fee waivers.”
floated the idea of cracking down on carried interest.
Private equity firms mobilized. Blackstone’s lobbying spending increased by nearly a third that year, to $8.5 million. (Matt Anderson, a Blackstone spokesman, said the company’s senior executives “are among the largest individual taxpayers in the country.” He wouldn’t disclose Mr. Schwarzman’s tax rate but said the firm never used fee waivers.)
Lawmakers got cold feet. The initiative fizzled.
In 2015, the Obama administration took a more modest approach. The Treasury Department issued regulations that barred certain types of especially aggressive fee waivers.
But by spelling that out, the new rules codified the legitimacy of fee waivers in general, which until that point many experts had viewed as abusive on their face.
So did his predecessor in the Obama administration, Timothy F. Geithner.
Inside the I.R.S. — which lost about one-third of its agents and officers from 2008 to 2018 — many viewed private equity’s webs of interlocking partnerships as designed to befuddle auditors and dodge taxes.
One I.R.S. agent complained that “income is pushed down so many tiers, you are never able to find out where the real problems or duplication of deductions exist,” according to a U.S. Government Accountability Office investigation of partnerships in 2014. Another agent said the purpose of large partnerships seemed to be making “it difficult to identify income sources and tax shelters.”
The Times reviewed 10 years of annual reports filed by the five largest publicly traded private equity firms. They contained no trace of the firms ever having to pay the I.R.S. extra money, and they referred to only minor audits that they said were unlikely to affect their finances.
Current and former I.R.S. officials said in interviews that such audits generally involved issues like firms’ accounting for travel costs, rather than major reckonings over their taxable profits. The officials said they were unaware of any recent significant audits of private equity firms.
No Money Owed
For a while, it looked as if there would be an exception to this general rule: the I.R.S.’s reviews of the fee waivers spurred by the whistle-blower claims. But it soon became clear that the effort lacked teeth.
Kat Gregor, a tax lawyer at the law firm Ropes & Gray, said the I.R.S. had challenged fee waivers used by four of her clients, whom she wouldn’t identify. The auditors struck her as untrained in the thicket of tax laws governing partnerships.
“It’s the equivalent of picking someone who was used to conducting an interview in English and tell them to go do it in Spanish,” Ms. Gregor said.
The audits of her clients wrapped up in late 2019. None owed any money.
The Mnuchin Compromise
As a presidential candidate, Mr. Trump vowed to “eliminate the carried interest deduction, well-known deduction, and other special-interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers.”
wanted to close the loophole, congressional Republicans resisted. Instead, they embraced a much milder measure: requiring private equity officials to hold their investments for at least three years before reaping preferential tax treatment on their carried interests. Steven Mnuchin, the Treasury secretary, who had previously run an investment partnership, signed off.
McKinsey, typically holds investments for more than five years. The measure, part of a $1.5 trillion package of tax cuts, was projected to generate $1 billion in revenue over a decade.
credited Mr. Mnuchin, hailing him as “an all-star.”
Mr. Fleischer, who a decade earlier had raised alarms about carried interest, said the measure “was structured by industry to appear to do something while affecting as few as possible.”
Months later, Mr. Callas joined the law and lobbying firm Steptoe & Johnson. The private equity giant Carlyle is one of his biggest clients.
‘The Government Caved’
It took the Treasury Department more than two years to propose rules spelling out the fine print of the 2017 law. The Treasury’s suggested language was strict. One proposal would have empowered I.R.S. auditors to more closely examine internal transactions that private equity firms might use to get around the law’s three-year holding period.
The industry, so happy with the tepid 2017 law, was up in arms over the tough rules the Treasury’s staff was now proposing. In a letter in October 2020, the American Investment Council, led by Drew Maloney, a former aide to Mr. Mnuchin, noted how private equity had invested in hundreds of companies during the coronavirus pandemic and said the Treasury’s overzealous approach would harm the industry.
The rules were the responsibility of Treasury’s top tax official, David Kautter. He previously was the national tax director at EY, formerly Ernst & Young, when the firm was marketing illegal tax shelters that led to a federal criminal investigation and a $123 million settlement. (Mr. Kautter has denied being involved with selling the shelters but has expressed regret about not speaking up about them.)
On his watch at Treasury, the rules under development began getting softer, including when it came to the three-year holding period.
Monte Jackel, a former I.R.S. attorney who worked on the original version of the proposed regulations.
Mr. Mnuchin, back in the private sector, is starting an investment fund that could benefit from his department’s weaker rules.
A Charmed March
Even during the pandemic, the charmed march of private equity continued.
The top five publicly traded firms reported net profits last year of $8.6 billion. They paid their executives $8.3 billion. In addition to Mr. Schwarzman’s $610 million, the co-founders of KKR each made about $90 million, and Apollo’s Leon Black received $211 million, according to Equilar, an executive compensation consulting firm.
now advising clients on techniques to circumvent the three-year holding period.
The most popular is known as a “carry waiver.” It enables private equity managers to hold their carried interests for less than three years without paying higher tax rates. The technique is complicated, but it involves temporarily moving money into other investment vehicles. That provides the industry with greater flexibility to buy and sell things whenever it wants, without triggering a higher tax rate.
Private equity firms don’t broadcast this. But there are clues. In a recent presentation to a Pennsylvania retirement system by Hellman & Friedman, the California private equity giant included a string of disclaimers in small font. The last one flagged the firm’s use of carry waivers.
The Biden administration is negotiating its tax overhaul agenda with Republicans, who have aired advertisements attacking the proposal to increase the I.R.S.’s budget. The White House is already backing down from some of its most ambitious proposals.
Even if the agency’s budget were significantly expanded, veterans of the I.R.S. doubt it would make much difference when it comes to scrutinizing complex partnerships.
“If the I.R.S. started staffing up now, it would take them at least a decade to catch up,” Mr. Jackel said. “They don’t have enough I.R.S. agents with enough knowledge to know what they are looking at. They areso grossly overmatched it’s not funny.”
LONDON — The top economic officials from the world’s advanced economies reached a breakthrough on Saturday in their yearslong efforts to overhaul international tax laws, unveiling a broad agreement that aims to stop large multinational companies from seeking out tax havens and force them to pay more of their income to governments.
Finance leaders from the Group of 7 countries agreed to back a new global minimum tax rate of at least 15 percent that companies would have to pay regardless of where they locate their headquarters.
The agreement would also impose an additional tax on some of the largest multinational companies, potentially forcing technology giants like Amazon, Facebook and Google as well as other big global businesses to pay taxes to countries based on where their goods or services are sold, regardless of whether they have a physical presence in that nation.
Officials described the pact as a historic agreement that could reshape global commerce and solidify public finances that have been eroded after more than a year of combating the coronavirus pandemic. The deal comes after several years of fraught negotiations and, if enacted, would reverse a race to the bottom on international tax rates. It would also put to rest a fight between the United States and Europe over how to tax big technology companies.
has been particularly eager to reach an agreement because a global minimum tax is closely tied to its plans to raise the corporate tax rate in the United States to 28 percent from 21 percent to help pay for the president’s infrastructure proposal.
EU Tax Observatory estimated that a 15 percent minimum tax would yield an additional 48 billion euros, or $58 billion, a year. The Biden administration projected in its budget last month that the new global minimum tax system could help bring in $500 billion in tax revenue over a decade to the United States.
The plan could face resistance from large corporations and the world’s biggest companies were absorbing the development on Saturday.
“We strongly support the work being done to update international tax rules,” said José Castañeda, a Google spokesman. “We hope countries continue to work together to ensure a balanced and durable agreement will be finalized soon.”
said this month that it was prepared to move forward with tariffs on about $2.1 billion worth of goods from Austria, Britain, India, Italy, Spain and Turkey in retaliation for their digital taxes. However, it is keeping them on hold while the tax negotiations unfold.
Finishing such a large agreement by the end of the year could be overly optimistic given the number of moving parts and countries involved.
“A detailed agreement on something of this complexity in a few months would just be lighting speed,” said Nathan Sheets, a former Treasury Department under secretary for international affairs in the Obama administration.
The biggest obstacle to getting a deal finished could come from the United States. The Biden administration must win approval from a narrowly divided Congress to make changes to the tax code and Republicans have shown resistance to Mr. Biden’s plans. American businesses will bear the brunt of the new taxes and Republican lawmakers have argued that the White House is ceding tax authority to foreign countries.
Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said on Friday that he did not believe that a 15 percent global minimum tax would curb offshoring.
“If the American corporate tax rate is 28 percent, and the global tax rate is merely half of that, you can guarantee we’ll see a second wave of U.S. investment research manufacturing hit overseas, that’s not what we want,” Mr. Brady said.
At the news conference, Ms. Yellen noted that top Democrats in the House and Senate had expressed support for the tax changes that the Biden administration was trying to make.
“Retailers were asking and requiring you to wear masks,” said Willy Solis, a shopper for the delivery app Shipt in Denton, Texas, who works in stores like Target, Kroger and CVS. “A large majority of people were still doing the right thing and wearing them.”
Since the C.D.C. announcement, however, “it’s been a complete shift,” Mr. Solis said. Denton, like Yorktown, sits in a county that supported former President Donald J. Trump by a single-digit margin in the November election.
According to the Kaiser Family Foundation, 97 percent of Democrats said in a March poll that they wore a mask “at least most of the time” when they might be in contact with people outside their homes, and a similar portion of Democrats said they believed masks limit the spread of coronavirus.
That compared with only 71 percent of Republicans who said they wore a mask outside the home at least most of the time, and just half said they thought masks were effective.
That suggests that a significant number of Republicans have worn masks only to comply with rules, not because they believed it was important, said Ashley Kirzinger, the Kaiser foundation’s associate director for public opinion and survey research. She cited polling showing that Republicans were also less likely to be vaccinated.
Matt Kennon, a room-service server at the Beau Rivage Resort and Casino in Biloxi, Miss., said that before the C.D.C. relaxed its recommendations, the resort’s policy was that all guests must wear masks in common areas unless they were eating, drinking or smoking, and that it was strictly enforced.
“There were several security checkpoints around the place where we’d have someone from security let them know, ‘Please put on a mask,’” said Mr. Kennon, a shop steward with his union, UNITE HERE. “There were stations with disposable masks for guests to wear in case they didn’t have one.”
Fox News once devoted its 7 p.m. and 11 p.m. time slots to relatively straightforward newscasts. Now those hours are filled by opinion shows led by hosts who denounce Democrats and defend the worldview of former President Donald J. Trump.
For seven years, Juan Williams was the lone liberal voice on “The Five,” the network’s popular afternoon chat show. On Wednesday, he announced that he was leaving the program, after months of harsh on-air blowback from his conservative co-hosts. Many Fox News viewers cheered his exit on social media.
Donna Brazile, the former Democratic Party chairwoman, was hired by Fox News with great fanfare in 2019 as a dissenting voice for its political coverage. She criticized Mr. Trump and spoke passionately about the Black Lives Matter movement, which other hosts on the network often demonized. Ms. Brazile has now left Fox News; last week, she quietly started a new job at ABC.
Onscreen and off, in ways subtle and overt, Fox News has adapted to the post-Trump era by moving in a single direction: Trumpward.
amounted to an existential moment for a cable channel that is home to Trump cheerleaders like Sean Hannity and Laura Ingraham: the 2020 election.
Fox News’s ratings fell sharply after the network made an early call on election night that Joseph R. Biden Jr., the Democratic presidential nominee, would carry Arizona and later declared him the winner, even as Mr. Trump advanced lies about fraud. With viewers in revolt, the network moved out dissenting voices and put a new emphasis on hard-line right-wing commentary.
the network fired its veteran politics editor, Chris Stirewalt, who had been an onscreen face of the early call in Arizona for Mr. Biden. This month, it brought on a new editor in the Washington bureau: Kerri Kupec, a former spokeswoman for Mr. Trump’s attorney general William P. Barr. She had no journalistic experience.
opinion shows at 7 and 11 — with segments that lament “cancel culture” and attack Mr. Biden — are attracting bigger audiences than the newscasts they replaced. And the niche right-wing network Newsmax has failed to sustain its postelection audience gains.
In some ways, the Murdochs are making a rational business decision by following the conservatives who have made up the heart of the Fox News audience; recent surveys show that more than three-quarters of Republicans want Mr. Trump to run in 2024.
But under Roger Ailes, the network’s founder, who shaped its look and feel, Fox News elevated liberal foils like Alan Colmes, a Democrat who shared equal billing in prime time with Mr. Hannity until the end of 2008, and moderates like Mr. Williams.
“Roger’s view was you had to have some unpredictability and you had to challenge the audience; you couldn’t just be reading Republican talking points every night,” said Susan R. Estrich, a Democratic lawyer and former commentator on Fox News who negotiated Mr. Ailes’s exit from the network amid his sexual misconduct scandal.
Today in Business
Ms. Estrich recalled that Mr. Ailes had defended Megyn Kelly, the former Fox News host, when Mr. Trump, then a presidential candidate, attacked her in misogynist terms. Now, she said, “instead of trying to broaden their audience, Fox News is narrowing it and digging in.”
Rick Santorum, after he was criticized for remarks about Native Americans.
Ms. Brazile said she had left Fox News of her own accord.
“Fox never censored my views in any way,” she wrote in an email. “Everyone treated me courteously as a colleague.” Ms. Brazile added: “I believe it’s important for all media to expose their audiences to both progressive and conservative viewpoints. With the election and President Biden’s first 100 days behind us, I’ve accomplished what I wanted at Fox News.”
an outcry from the Anti-Defamation League.
A pro-Trump drift at Fox News is not new: George Will, a traditional conservative who opposed Mr. Trump’s candidacy, lost his contributor contract in 2017. Shepard Smith, a news anchor who was tough on Mr. Trump, left in 2019.
Some Fox News journalists, though, say privately that they are increasingly concerned with the network’s direction. Kristin Fisher, one of the network’s rising stars in Washington and a White House correspondent, left Fox News last month despite the network’s effort to keep her. She had faced criticism from viewers in November after a segment in which she aggressively debunked lies about election fraud advanced by Mr. Trump’s lawyers.
The longtime Washington bureau chief, Bill Sammon, resigned in January after internal criticism over his handling of election coverage, around the time that Mr. Stirewalt was fired. (Mr. Stirewalt was let go along with roughly 20 digital journalists at Fox News, which the network attributed to a realignment of “business and reporting structure to meet the demands of this new era.”)
Mr. Sammon has effectively been replaced by Doug Rohrbeck, a producer with extensive news experience on Bret Baier’s newscast and Chris Wallace’s Sunday show. Still, some Fox journalists were surprised when the network hired Ms. Kupec, the former Barr spokeswoman, to work under Mr. Rohrbeck. (In 2019, CNN hired Sarah Isgur, the spokeswoman for former Attorney General Jeff Sessions, as a political editor. After protests from staff, she was shifted to an on-air role and later left the network.)
Fox News International, a streaming service available in 37 countries in Asia and Europe.
Despite continuing criticism from liberals, Fox News remains a financial juggernaut for the Murdoch empire; it is expected to earn record advertising revenues this year, the network said.
Even as its programming decisions seem aimed at attracting Trump supporters, Fox News does face one roadblock: Mr. Trump. The former president has maintained his stinging criticism of Fox News, which, he has claimed, betrayed him by calling the election for Mr. Biden.
On Friday, after criticism from Paul Ryan, the former House speaker, Mr. Trump wrote that “Fox totally lost its way and became a much different place” after the Murdochs appointed Mr. Ryan to the Fox Corporation board.
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Hoo boy, this is a moment. A government authority in the United States has sued Amazon over claims that the company is breaking the law by unfairly crushing competition.
The lawsuit, filed on Tuesday by the attorney general for the District of Columbia, joins the recent government antitrust cases against Google and Facebook. These lawsuits will take forever, and legal experts have said that the companies likely have the upper hand in court.
The D.C. attorney general, Karl Racine, however, is making a legal argument against Amazon that is both old-school and novel, and it might become a blueprint for crimping Big Tech power.
It’s a longstanding claim by some of the independent merchants who sell on Amazon’s digital mall that the company punishes them if they list their products for less on their own websites or other shopping sites like Walmart.com. Those sellers are effectively saying that Amazon dictates what happens on shopping sites all over the internet, and in doing so makes products more expensive for all of us.
told me that he believed that those price claims were the strongest potential antitrust case against Amazon on legal grounds. (He has since been picked to advise the White House on corporate competition issues.)
I don’t know if any of these lawsuits against Big Tech will succeed at chipping away at the companies’ tremendous influence. And I can’t definitively say whether we’re better or worse off by having a handful of powerful technology companies that make products used and often loved by billions of people.
the price of power is scrutiny.
How to fight back against bogus online information: The comedian Sarah Silverman and three of my colleagues are hosting a virtual event Wednesday about disinformation and how to combat it. Sign up here for the online event at 7 p.m. Eastern. It’s open only to New York Times subscribers.
fine social media companies for permanently barring political candidates’ accounts. The measure is most likely unconstitutional and unenforceable, Democrats, libertarian groups and tech companies told my colleague David McCabe, but it’s a response to Facebook’s and Twitter’s suspension of former President Donald Trump.
Posting is life. My colleague Taylor Lorenz explains how social media invitations to a teenager’s birthday party spread on TikTok and drew thousands of people and a police crackdown. The event got big partly because it was an opportunity for attendees to post compelling material online. SIGH.
POTUS loves Apple News? I don’t like it when computers and smartphones come with the device makers’ apps already installed, but it’s effective — even with the president of the United States. The Washington Post reported that during the 2020 campaign Joe Biden shared with aides human interest stories from Apple News, which came on his iPhone and he apparently hadn’t deleted.
Hugs to this
The Linda Lindas are glorious. Here is the talented punk band of four girls between the ages of 10 and 16 — Bela, Eloise, Mila and Lucia — playing “Racist, Sexist Boy” at a Los Angeles public library. The Guardian interviewed them about their sudden internet fame.
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Shortly after 8 p.m. on May 25, 2020, Derek Chauvin, a Minneapolis police officer, placed his knee on George Floyd’s neck and kept it there for more than nine minutes. None of the three other officers standing near Chauvin intervened. Soon, Floyd was dead.
Initially, the police gave a misleading account of Floyd’s death, and the case might have received relatively little attention but for the video that Darnella Frazier, a 17-year-old, took with her phone. That video led to international outrage and, by some measures, the largest protest marches in U.S. history.
Today, one year after Floyd’s murder, we are going to look at the impact of the movement that his death inspired in four different areas.
30 states and dozens of large cities have created new rules limiting police tactics. Two common changes: banning neck restraints, like the kind Chauvin used; and requiring police officers to intervene when a fellow officer uses extreme force.
pledged to hire more diverse workforces.
wrote. “So companies and institutions stopped whining about supposedly bad pipelines and started looking beyond them.”
It’s still unclear how much has changed and how much of the corporate response was public relations.
3. Changes in public opinion
Initially, public sympathy for the Black Lives Matter movement soared. But as with most high-profile political subjects in the 21st-century U.S., opinion soon polarized along partisan lines.
Today, Republican voters are less sympathetic to Black Lives Matter than they were a year ago, the political scientists Jennifer Chudy and Hakeem Jefferson have shown. Support among Democrats remains higher than it was before Floyd’s death but is lower than immediately afterward.
There are a few broad areas of agreement. Most Americans say they have a high degree of trust in law enforcement — even more than did last June, FiveThirtyEight’s Alex Samuels notes. Most also disagree with calls to “defund” or abolish police departments. Yet most back changes to policing, such as banning chokeholds.
4. A crime surge, much debated
It’s clear that violent crime has risen over the past year. It’s not fully clear why.
Many liberals argue that the increase has little to do with the protest movement’s call for less aggressive policing. The best evidence on this side of the debate is that violent crime was already rising — including in Chicago, New York and Philadelphia — before the protests. This pattern suggests that other factors, like the pandemic and a surge of gun purchases, have played important roles.
Many conservatives believe that the crime spike is connected to the criticism of the police, and they point to different evidence. First, the crime increase accelerated last summer, after the protests began — and other high-income countries have not experienced similar increases. Second, this acceleration fits into a larger historical pattern: Crime also rose in Baltimore and Ferguson, Mo., after 2015 protests about police violence there, as Patrick Sharkey, a sociologist and crime scholar, notes.
Sharkey has told us. But that doesn’t mean that the pre-protest status quo was the right approach, he emphasizes. Brute-force policing “can reduce violence,” he said, in a Q. and A. with The Atlantic. “But it comes with these costs that don’t in the long run create safe, strong, or stable communities.”
Some reform advocates worry that rising crime will rebuild support for harsh police tactics and prison sentences. “Fear makes people revert to old ways of doing things,” Lopez said.
The big question
How can police officers both prevent crime and behave less violently, so that they kill fewer Americans while doing their jobs?
Some experts say that officers should focus on hot spots where most crimes occur. Others suggest training officers to de-escalate situations more often. Still others recommend taking away some responsibilities from the police — like traffic stops and mental-health interventions — to reduce the opportunities for violence.
So far, the changes do not seem to have affected the number of police killings. Through last weekend, police officers continued to kill about three Americans per day on average, virtually the same as before Floyd’s murder.
A timeline of the events of the past year.
President Biden will meet with members of Floyd’s family at the White House today. Follow updates here about the anniversary.
THE LATEST NEWS
125th anniversary, The Times Book Review is highlighting some noteworthy first mentions of famous writers. You can find the full list here. Some of our favorites:
F. Scott Fitzgerald: In 1916, Princeton admitted only men, and they would often play women’s roles in campus plays. The Times featured a photo of Fitzgerald in character, calling him “the most beautiful showgirl.”
in an article about a “Greek Games” competition among students at Barnard: “A messenger, Joan Roth, rushed in to say that Persephone still lived and a rejoicing group danced in. Eight tumblers did tricks before the crowd to distract the still disconsolate Demeter.” Highsmith was among the student acrobats.
Ralph Ellison: In 1950, two years before the publication of “Invisible Man,” Ellison reviewed a novel called “Stranger and Alone,” by J. Saunders Redding. Ellison wrote that Saunders “presents many aspects of Southern Negro middle-class life for the first time in fiction.”
John Updike: An acclaimed short-story writer who had yet to publish a novel, Updike appeared in an advice article in 1958, encouraging parents to teach their children complex words. “A long correct word is exciting for a child,” he said. “Makes them laugh; my daughter never says ‘rhinoceros’ without laughing.” — Sanam Yar, a Morning writer
PLAY, WATCH, EAT
What to Cook
Here’s today’s Mini Crossword, and a clue: Comedian Silverman (five letters).
If you’re in the mood to play more, find all our games here.
Thanks for spending part of your morning with The Times. See you tomorrow. — David
P.S. The first “Star Wars” movie premiered 44 years ago today. Vincent Canby’s Times review called it “the most elaborate, most expensive, most beautiful movie serial ever made.”
You can see today’s print front page here.
“The Daily” is about a student free speech case. On “Sway,” Eliot Higgins discusses Bellingcat’s journalism.
Lalena Fisher, Claire Moses, Tom Wright-Piersanti and Sanam Yar contributed to The Morning. You can reach the team at firstname.lastname@example.org.
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