WASHINGTON — President Biden outlined a vast expansion of federal spending on Friday, calling for a 16 percent increase in domestic programs as he tries to harness the government’s power to reverse what officials called a decade of underinvestment in the nation’s most pressing issues.
The proposed $1.52 trillion in spending on discretionary programs would significantly bolster education, health research and fighting climate change. It comes on top of Mr. Biden’s $1.9 trillion stimulus package and a separate plan to spend $2.3 trillion on the nation’s infrastructure.
Mr. Biden’s first spending proposal to Congress showcases his belief that expanding, not shrinking, the federal government is crucial to economic growth and prosperity. It would direct billions of dollars toward reducing inequities in housing and education, as well as making sure every government agency puts climate change at the front of its agenda.
It does not include tax proposals, economic projections or so-called mandatory programs like Social Security, which will all be included in a formal budget document the White House will release this spring. And it does not reflect the spending called for in Mr. Biden’s infrastructure plan or other efforts he has yet to roll out, which are aimed at workers and families.
Trump administration’s efforts to gut domestic programs.
But Mr. Biden’s plan, while incomplete as a budget, could provide a blueprint for Democrats who narrowly control the House and Senate and are anxious to reassert their spending priorities after four years of a Republican White House.
Democratic leaders in Congress hailed the plan on Friday and suggested they would incorporate it into government spending bills for the 2022 fiscal year. The plan “proposes long overdue and historic investments in jobs, worker training, schools, food security, infrastructure and housing,” said Senator Patrick J. Leahy of Vermont, the chairman of the Appropriations Committee.
Shalanda D. Young, who is serving as Mr. Biden’s acting budget director, told congressional leaders that the discretionary spending process would be an “important opportunity to continue laying a stronger foundation for the future and reversing a legacy of chronic disinvestment in crucial priorities.”
The administration is focusing on education spending in particular, seeing that as a way to help children escape poverty. Mr. Biden asked Congress to bolster funding to high-poverty schools by $20 billion, which it describes as the largest year-over-year increase to the Title I program since its inception under President Lyndon B. Johnson. The program provides funding for schools that have high numbers of students from low-income families, most often by providing remedial programs and support staff.
The plan also seeks billions of dollars in increases to early-childhood education, to programs serving students with disabilities and to efforts to staff schools with nurses, counselors and mental health professionals — described as an attempt to help children recover from the pandemic, but also a longstanding priority for teachers’ unions.
Mr. Biden heralded the education funding in remarks to reporters at the White House. “The data shows that it puts a child from a household that is a lower-income household in a position if they start school — not day care — but school at 3 and 4 years old, there’s overwhelming evidence that they will compete all the way through high school and beyond,” he said.
There is no talk in the plans of tying federal dollars to accountability measures for teachers and schools, as they often were under President Barack Obama.
his vision of having every cabinet chief, whether they are military leaders, diplomats, fiscal regulators or federal housing planners, charged with incorporating climate change into their missions.
The proposal aims to embed climate programs into agencies that are not usually seen as at the forefront of tackling global warming, like the Agriculture and Labor Departments. That money would be in addition to clean energy spending in Mr. Biden’s proposed infrastructure legislation, which would pour about $500 billion on programs such as increasing electric vehicle production and building climate-resilient roads and bridges.
Strategic National Stockpile, the country’s emergency medical reserve, for supplies and efforts to restructure it that began last year. Nearly $7 billion would create an agency meant to research diseases like cancer and diabetes.
Reporting was contributed by Coral Davenport, Zolan Kanno-Youngs, Lisa Friedman, Brad Plumer, Christopher Flavelle, Mark Walker, Dana Goldstein, Mark Walker, Noah Weiland, Margot Sanger-Katz, Lara Jakes, Noam Scheiber, Katie Benner and Emily Cochrane.
“For over two years, I’ve tried to get off the no-fly list, but the government won’t even give me its reason for putting me on the list or a fair process to clear my name and regain my rights,” Mr. Chebli said in a statement released by the A.C.L.U. “No one should suffer what my family and I have had to suffer.”
The Justice Department had no immediate response to the lawsuit. But it has defended the legality of the government’s terrorism watch lists and its related practices in litigation over the past decade, arguing that the procedures are lawful and reasonable given the national security interests at stake.
Mr. Chebli’s case is a sequel to a major lawsuit by the A.C.L.U. during the Obama administration that challenged government procedures for reviewing whether it was appropriate to put someone’s name on the no-fly list. In 2014, a federal judge in Oregon ruled that those regulations were inadequate and violated Americans’ Fifth Amendment right to due process.
In response, the government promised to overhaul the Traveler Redress Inquiry Program to ensure that Americans would be told if they were on the list and given a meaningful opportunity to challenge the decision. (It also removed seven of the 13 original plaintiffs in that case from the no-fly list. Several remaining plaintiffs pressed on, but that judge, and later the appeals court in San Francisco, upheld the revised procedures as applied to them.)
Citing Mr. Chebli’s inability to obtain information about the government’s evidence about him or to challenge it in a hearing before a neutral decision maker, the new lawsuit said that the revised procedures are both unconstitutional and that they violate statutory law, including a federal law that protects religious liberty, the Religious Freedom Restoration Act of 1993, because he is unable to travel to Mecca for the required Muslim pilgrimage.
“More than two years ago, Mr. Chebli filed an administrative petition for redress, but the government has failed to provide any reason for placing him on the no-fly list or a fair process to challenge that placement,” it said. “As a result, Mr. Chebli has been subjected to unreasonable and lengthy delays and an opaque redress process that has prevented him from clearing his name.”
Beyond the Oregon case, the new lawsuit takes its place among a constellation of related litigation that has tested the limits of the government’s terrorism watch-listing powers and individual rights.
“It would be easy for schools to label such internships ‘related to education,’ even if a star athlete was given, say, a six-month ‘internship’ at a sneaker company or auto dealership that paid $500,000,” a brief filed in February said. “But fans, student-athletes and everyone else would recognize the reality: that student-athletes were being paid large sums in cash for their athletic play — with the ‘internships’ a thinly disguised vehicle for funneling them quintessentially professional salaries.”
The Supreme Court last considered how antitrust laws applied to the association in 1984, ruling that its restrictions on television coverage of college football games were unlawful. But the decision, National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, included an influential passage on student-athletes.
“The N.C.A.A. plays a critical role in the maintenance of a revered tradition of amateurism in college sports,” Justice John Paul Stevens wrote for the majority. “There can be no question but that it needs ample latitude to play that role, or that the preservation of the student-athlete in higher education adds richness and diversity to intercollegiate athletics and is entirely consistent with the goals of” the antitrust laws.
The Biden administration filed a brief supporting the athletes in the new case, National Collegiate Athletic Association v. Alston, No. 20-512, saying that the Ninth Circuit had struck the right balance.
“Promoting amateurism widens consumer choice, and thereby enhances competition, by maintaining a distinction between college and professional athletics,” the brief said. But “some of the challenged rules did not actually foster consumer demand.”
Besides the coronavirus pandemic, no issue has recently demanded more of the N.C.A.A.’s attention than the rights of student-athletes, especially whether they should be able to profit from their fame. College sports executives have long feared that loosening age-old rules would effectively professionalize students and open a different array of challenges, but they have faced mounting pressure over the past few years from Congress and many of the nation’s statehouses. Most crucially, a Florida law that directly challenges the N.C.A.A.’s policies is scheduled to take effect this summer, and California legislators are considering a proposal to speed up a similar measure there.
Although the N.C.A.A. has vowed to rewrite its rules, it delayed final approval over the winter after the Trump administration’s Justice Department raised misgivings. And Congress has not rushed to give the association the kind of political and legal cover it craves.
Charlie Oppler, the president of the National Association of Realtors, issued a statement on Jan. 6., condemning the assault on the Capitol, but no formal actions have been taken against brokers involved in the siege. Responding to a query about the trade association’s position, Wesley Shaw, a spokesman for the association, wrote that the organization was closely following the legal proceedings connected to the breach and was “committed to taking any action that is deemed appropriate and in the best interest of our association,” but deferred membership qualification decisions to the group’s local associations.
With 1.4 million members, the association is the country’s largest trade organization, representing about half of all licensed real estate agents in the United States. Far from avoiding politics, the organization’s Realtor Political Action Committee is the largest PAC operated on behalf of a trade association in the United States, Mr. Shaw said, giving close to $4 million annually to political candidates on both sides of the aisle who support real estate interests. The association encourages members to get involved in their communities, and to speak out on issues related to housing and property rights. But some may have become too outspoken.
In a year of political and social unrest, the association has been grappling with a wave of social media discourse that became so inflammatory it drove the association to update its code of ethics last November, banning all discriminatory behavior by its members.
After George Floyd’s death at the hands of Minneapolis police last May and the protests that followed, Realtor associations around the country were flooded with complaints about agents posting racist and sexist messages on their social media sites.
Calling out this activity last June, Jennifer Pino, then president of the Atlanta Realtors Association, wrote to the national association: “We cannot continue to allow the Realtor brand to be damaged by these hateful few. This must be stopped.”
“Realtors were being outwardly discriminatory on social media while supposedly adhering to Fair Housing rules,” said Ms. Pino, 49, managing broker at Sotheby’s International Realty’s Buckhead office. “If you were holding an open house, and you had expressed genuine hate for a protected class on social media, how could you possibly treat those people fairly?”
Over the next several months, the association held numerous internal meetings and online forums seeking input to amend the code. In October, Matt Difanis, an Illinois broker who was then chairman of the organization’s professional standards committee, released a video on YouTube where he shared examples from what he called “the mountain of hate speech” posted by agents. The sampling included messages like “I think Black people bring out the worst in us,” and “homosexuals and lesbians are murderers, according to the scripture.”
Initial claims for state unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week, the Labor Department reported Thursday. It was the lowest weekly level of initial state claims since the pandemic upended the economy a year ago.
On a seasonally adjusted basis, new state claims totaled 684,000.
In addition, there were 242,000 new claims for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, a decrease of 43,000.
Unemployment claims have been at historically high levels for the past year, partly because some workers have been laid off more than once.
“The labor market will benefit from a reopening, but it will take time for a complete recovery,” said Rubeela Farooqi, chief U.S. economist for High Frequency Economics. “The economy is doing well, but the job market is still far away from where it needs to be.”
Although the pace of vaccinations, as well as passage of a $1.9 trillion relief package this month, has lifted economists’ expectations for growth, the labor market has lagged behind other measures of recovery.
Still, the easing of restrictions on indoor dining areas, health clubs, movie theaters and other gathering places offers hope for the millions of workers who were let go in the last 12 months. And the $1,400 checks going to most Americans as part of the relief bill should help spending perk up in the weeks ahead.
Diane Swonk, chief economist at the accounting firm Grant Thornton, said she hoped for consistent employment gains but her optimism was tempered by concern about the longer-term displacement of workers by the pandemic.
“We’ve passed the point where you can just flip a switch and the lights come back on,” she said. “We need to see a sustained increase in hiring, which I think we will see, but the concern is that it won’t be so robust. It takes longer to ramp up than it does to shut down.”
United Airlines plans to add more than two dozen new flights starting Memorial Day weekend, the latest sign that demand for leisure travel is picking up as the national vaccination rate moves higher.
Most of the new flights will connect cities in the Midwest to tourist destinations, such as Charleston, Hilton Head and Myrtle Beach in South Carolina; Portland, Maine; Savannah, Ga.; and Pensacola, Fla. United also said it planned to offer more flights to Mexico, the Caribbean, Central America and South America in May than it did during the same month in 2019.
The airline has seen ticket sales rise in recent weeks, according to Ankit Gupta, United’s vice president of domestic network planning and scheduling. Customers are booking tickets further out, too, he said, suggesting growing confidence in travel.
“Over the past 12 months, this is the first time we are really feeling more bullish,” Mr. Gupta said.
Airports have been consistently busier in recent weeks than at any point since the coronavirus pandemic brought travel to a standstill a year ago. Well over one million people were screened at airport security checkpoints each day over the past two weeks, according to the Transportation Security Administration, although the number of screenings is down more than 40 percent compared with the same period in 2019.
Most of the new United flights will be offered between Memorial Day weekend and Labor Day weekend aboard the airline’s regional jets, which have 50 seats. The airline said it would also add new flights between Houston and Kalispell, Mont.; Washington and Bozeman, Mont.; Chicago and Nantucket, Mass.; and Orange County, Calif., and Honolulu.
All told, United said it planned to operate about 58 percent as many domestic flights this May as it did in May 2019 and 46 percent as many international flights. Most of the demand for international travel has been focused on warm beach destinations that have less-stringent travel restrictions.
“That is one of the strongest demand regions in the world right now,” Mr. Gupta said. “A lot of the leisure traffic has sort of shifted to those places and it’s actually seen a boom in bookings.”
Delta Air Lines issued a similar update last week, announcing more than 20 nonstop summer flights to mountain, beach and vacation destinations. Both airlines have said in recent weeks that they have made substantial progress toward reducing how much money they are losing every day.
Jerome H. Powell, the Federal Reserve chair, said on Thursday that the central bank was trying to make its economic employee base more racially diverse and he was not satisfied with its progress toward that goal so far.
“It’s very frustrating, because we have had for many years a strong focus on recruiting a more diverse cadre of economists,” Mr. Powell said while speaking on NPR’s “Morning Edition,” after being asked about a New York Times story on the Fed’s lack of Black economists. “We’re not at all satisfied with the results.”
Only two of the 417 economists, or 0.5 percent, at the Fed’s board in Washington were Black, according to data the Fed provided to The Times earlier this year. By comparison, Black people make up 13 percent of the country’s population and 3 to 4 percent of the U.S. citizens and permanent residents who graduate as Ph.D. economists each year.
Across the entire Fed system — including the Board of Governors and the 12 regional banks — 1.3 percent of economists identified as Black. The Fed has been making efforts to hire more broadly, Mr. Powell said, including by working with historically Black colleges.
“It’s a very high priority,” Mr. Powell said of hiring more diversely. “Institutions that focus on diversity and do it well are the successful institutions in our society.”
The Fed chair was also asked about how he would rate the central bank’s sweeping efforts to rescue the economy as markets melted down at the start of the coronavirus outbreak last year. In addition to cutting its policy interest rate to near zero and rolling out an enormous bond-buying program, the Fed set up a series of emergency lending programs to funnel credit to the economy.
Rolled out over a frantic few weeks, the programs included ones that the Fed had never tried before to backstop corporate bond and private company loan markets.
“I liken it to Dunkirk,” Mr. Powell said, referring to the rapid evacuation of British and Allied forces from France in World War II. “Just get in the boats and go.”
Despite the speed of the decision-making, Mr. Powell said that he looked back on the results as positive.
“Overall, it was a very successful program,” he said. “It served its purpose in staving off what could have been far worse outcomes.”
Esther George, the president of the Federal Reserve Bank of Kansas City, says that although the outlook for growth has improved as vaccinations increase and the government rolls out relief packages, the path of the pandemic remains a major question hanging over the U.S. and global economies.
“We’re not out of this yet,” Ms. George said in an interview on Wednesday. “It’s hard to know what the dynamics will be on the other side.”
Ms. George said she was focused on labor force participation as a sign of the job market’s strength more than the headline unemployment rate, which has fallen to 6.2 percent from a 14.8 percent peak but misses many people who aren’t looking for new jobs after losing theirs during the pandemic. Participation, the share of people working or looking, remains a hefty two percentage points below its prepandemic levels.
“That might be the thing I really watch in the coming months,” she said.
Ms. George expects inflation to “firm,” but that the process is likely to take a while, she said, and it is “too soon to say” whether it will end with a more meaningful rise. Some prominent economists have begun to warn that prices, which have been low for decades, could rise rapidly as the government spends big and the Fed keeps rates at rock bottom to support the economic recovery.
“Wages are a very telling factor in a story about inflation,” Ms. George said.
Many economists look for faster growth in compensation as a signal that inflation is sustainable, not just driven by short-lived supply constraints or temporary quirks in the data.
Ms. George’s colleagues, including Jerome H. Powell, the Fed chair, have been clear that they expect prices to move higher this year but will not necessarily see that as an achievement of their inflation goal. The Fed redefined its target last year and now aims for 2 percent annual price gains, on average, over time.
Ms. George did not venture a guess of when the Fed will hit its three criteria for raising interest rates: full employment, 2 percent realized price gains and the expectation of higher inflation for some time. Some Fed officials expect to raise rates next year or in 2023, but most of them expect the initial increase to come even later.
Dan Gilbert, the Quicken Loans founder, has spent more than a decade putting billions into downtown Detroit. Now he’s broadening his scope.
The Gilbert Family Foundation and the Rocket Community Fund, the philanthropic arm of Quicken Loans’ Rocket Mortgage company, announced on Thursday a $500 million investment in Metro Detroit, to be spent over the next 10 years. The first $15 million will be put toward paying off property tax debt of low-income homeowners who qualified for Detroit’s Pay As You Stay initiative.
Quicken Loans has been based in Detroit since 2010, and Mr. Gilbert and his real estate firm, Bedrock, have spent billions buying and redeveloping properties there. Those efforts have been praised for revitalizing a downtown area of roughly seven square miles, but also criticized by some who contend they did not do enough to help those who live in the rest of the city.
“We feel like we’ve made Detroit into a tech boomtown,” said Mr. Gilbert. But he acknowledged that some may have felt left behind. “This can bridge that,” he said.
Mr. Gilbert added that his focus outside of Detroit’s city center stems from his work on President Barack Obama’s Blight Removal Task Force in 2014 as the city was emerging from bankruptcy. “Property taxes was the No. 1 issue that was causing the blight foreclosures,” he said.
Detroit’s housing crisis dates to “racial covenants” in the 1920s. In the mid-2000s, the city became a center of risky lending that defined the financial crisis, with subprime lending accounting for three-fourths of the mortgages in the city. (Quicken Loans settled a lawsuit with the Justice Department for its own lending practices during that time, but admitted no wrongdoing.)
The economic crisis that followed toppled a city already grappling with a dwindling population and shrinking revenue. Those who paid for the recovery were largely low-income housing owners — in many cases Black — whom the city was also accused of overtaxing. Poverty rates ascended and city services deteriorated as a result.
The investment announced on Thursday is an effort to address the lingering effects of the crisis. Twenty thousand families qualify for the tax-relief program, said Mr. Gilbert’s wife, Jennifer, who founded the Gilbert Family Foundation with her husband.
“By preserving that wealth, we also preserve opportunities for intergenerational wealth transfer,” she said. “The stability of the home allows for people to then focus on other economic opportunities that allow them to thrive.”
After the first $15 million of the initiative is spent paying back taxes of low-income homeowners, the remaining funds will be focused on, among other things, home repair and narrowing the digital divide.
The community will be vital for input, including those who qualify for the initial tax relief. “We can learn a lot about where we want to invest next and how best we can positively impact them and their lives,” Ms. Gilbert said.
U.S. stock futures dipped on Thursday even as the latest weekly data on state unemployment claims showed that they fell to their lowest level since the start of the pandemic.
Initial claims for unemployment benefits fell last week to 657,000, a decrease of 100,000 from the previous week, the Labor Department reported Thursday. On a seasonally adjusted basis, new state claims totaled 684,000. Economists have been expecting the numbers to fall as the vaccine rollout continues and the effects of the $1.9 trillion stimulus package emerge.
European stocks were lower. The Stoxx Europe 600 index was down 0.8 percent and the FTSE 100 in Britain fell 1 percent.
Oil prices dropped. Futures of Brent crude, the European benchmark, fell 1.5 percent to $63.45 a barrel and futures of West Texas Intermediate, the U.S. benchmark, fell 1.8 percent to about $60 a barrel. On Wednesday, oil prices jumped more than 5 percent after a container ship got stuck in the Suez Canal, blocking one of the world’s key shipping routes, which is also an important artery for the flow of oil. On Thursday, efforts to dislodge the ship were ongoing as some 150 other ships were waiting on either side.
The company trying to move the ship warned it could take weeks. Shipping has already been heavily disrupted by the pandemic sending freight prices soaring.
German lockdown U-turn
As Europe grapples with an emerging third wave of the pandemic, Germany has canceled a strict five-day lockdown that was set to start at the beginning of April. Chancellor Angela Merkel said she took “ultimate responsibility” for the reversal, which came after a large backlash to the plan, even from within her own party, and anger from retailers and restaurants.
“In the near term, this avoids the negative economic consequences of a lockdown,” Paul Donovan, an economist at UBS Global Wealth Management, wrote in a note. But over a longer a period of time, markets will question whether this will just delay Germany’s ability to restrain the virus and slow down the recovery, he added.
Elsewhere in markets
Nike shares dropped 4 percent in premarket trading and H&M shares fell nearly 3 percent in Stockholm after Chinese social media users called for a boycott of the companies. The two fashion retailers had published statements expressing concern over reports of forced labor in Xinjiang. Nike’s statement said the company didn’t source cotton from the region but the online attacks have called this a boycott of the region’s cotton farmers.
Companies harmed by the coronavirus pandemic can soon borrow up to $500,000 through the Small Business Administration’s emergency lending program, raising a cap that has frustrated many applicants.
“The pandemic has lasted longer than expected,” Isabella Casillas Guzman, the agency’s administrator, said on Wednesday. “We are here to help our small businesses, and that is why I’m proud to more than triple the amount of funding they can access.”
The change to the Economic Injury Disaster Loan program — known as EIDL and pronounced as idle — will take effect the week of April 6. Those who have already received loans but might now qualify for more money will be contacted and offered the opportunity to apply for an increase, the agency said.
The Small Business Administration has approved $200 billion in disaster loans to 3.8 million borrowers since the program began last year. Unlike the forgivable loans made through the larger and more prominent Paycheck Protection Program, the disaster loans must be paid back. But they carry a low interest rate and a long repayment term.
Normally, the decades-old disaster program makes loans of up to $2 million, and in the early days of the pandemic, the agency gave some applicants as much as $900,000. But it soon capped loans at $150,000 because it feared exhausting the available funding. That limit — which the agency did not tell borrowers about for months — angered applicants who needed more capital to keep their struggling ventures alive.
The agency has $270 billion left to lend through the pandemic relief program, James Rivera, the head of the agency’s Office of Disaster Assistance, told senators at a hearing on Wednesday.
Tribune Publishing’s board recommended that shareholders approve a purchase offer from the hedge fund Alden Global Capital over a higher bid from a Maryland hotel executive, according to a securities filing Tuesday. Alden, Tribune’s largest shareholder, agreed last month to buy the rest of the company at $17.25 per share and take it private in a deal that would value the company at $630 million. Last week, Stewart W. Bainum Jr., a hotel magnate, made an $18.50 per share offer for the whole company.
Complaints of “Zoom fatigue” have emerged across industries and classrooms in the past year, as people confined to working from home faced schedules packed with virtual meetings and often followed up by long video catch-ups with friends, reports Anna Schaverien of The New York Times.
But Citigroup, one of the world’s largest banks, is trying to start a new end-of-week tradition meant to combat that fatigue: Zoom-free Fridays.
The bank’s new chief executive, Jane Fraser, announced the plan in a memo sent to employees on Monday. Recognizing that workers have spent inordinate amounts of the past 12 months staring at video calls, Citi is encouraging its employees to take a step back from Zoom and other videoconferencing platforms for one day a week, she said.
“The blurring of lines between home and work and the relentlessness of the pandemic workday have taken a toll on our well-being,” Ms. Fraser wrote in the memo, which was seen by The New York Times.
No one at the company would have to turn their video on for any internal meetings on Fridays, she said. External meetings would not be affected.
The bank outlined other steps to restore some semblance of work-life balance. It recommended employees stop scheduling calls outside of traditional working hours and pledged that when employees can return to offices, a majority of its workers would be given the option to work from home up to two days a week.
HONG KONG—A Chinese court has tried a Canadian citizen on espionage charges in a case at the center of a diplomatic standoff with the U.S. and Canada, concluding the hourslong hearing without issuing a verdict.
Michael Spavor, who was charged with “probing into and illegally providing state secrets” to foreign actors, attended the closed-door trial on Friday with his lawyer, according to a statement from a municipal court in the northeastern city of Dandong, where the proceedings took place.
Mr. Spavor, who has spent more than two years in custody, couldn’t be reached. Efforts to reach his lawyer weren’t immediately successful. The Canadian Embassy in Beijing didn’t immediately respond to a request for comment.
Mr. Spavor, who ran a Dandong-based nonprofit, is one of two Canadians detained by Chinese authorities in December 2018 and later charged with espionage offenses. Their detention is widely seen as retaliation for Canada’s arrest of a senior executive from Chinese telecom-gear giant Huawei Technologies Co. at the behest of the U.S. The other Canadian, Michael Kovrig, is scheduled to stand trial in Beijing on Monday.
These cases have locked China into a high-stakes diplomatic standoff with Canada and the U.S., with officials trading barbs over the detentions and accusing each other of taking hostages to advance political goals.
Mr. Spavor’s trial was closed to the public because state secrets were involved, the Dandong Intermediate People’s Court said in its statement, issued three hours after the scheduled start of Mr. Spavor’s hearing. It said a verdict would be issued later at an unspecified date.
Diplomats from at least nine Western countries, including Canada and the U.S., sought access to the trial but were unsuccessful, according to a person briefed on the matter. Chinese courts typically try national-security cases behind closed doors.
Legal experts say Chinese authorities could delay the verdict as long as they want. While Chinese law typically requires courts to issue verdicts within two to three months of accepting a case, time extensions are allowed for major and complicated cases, among other circumstances.
A news website of the Communist Party’s law-enforcement commission has accused Mr. Spavor of supplying intelligence to Mr. Kovrig, a researcher on leave from Canada’s diplomatic service. Chinese authorities have said that Mr. Kovrig faces charges of “probing into state secrets and intelligence” on behalf of foreign actors.
Mr. Spavor’s nonprofit, Paektu Cultural Exchange, organized academic, tourist and business trips to North Korea. Mr. Kovrig, an analyst with Brussels-based conflict monitor International Crisis Group, was detained while he was visiting Beijing from his Hong Kong base and drafting a research report on North Korea, friends say.
The two men were detained separately on the same day in December 2018. Days earlier, a senior Chinese Foreign Ministry official had threatened Canada with “severe consequences” for the arrest of Huawei Chief Financial Officer Meng Wanzhou, who was detained earlier that month while transiting through Vancouver. The U.S. has accused Ms. Meng of misleading banks about Huawei’s ties to a subsidiary that did business in Iran, leading those banks to clear transactions that potentially violated international sanctions. Huawei and Ms. Meng have denied any wrongdoing.
The two Canadians have had limited contact with their families and the outside world since their detention, largely restricted to supervised visits with Canadian consular officials and their China-based lawyers.
Canadian officials have accused Beijing of detaining Messrs. Spavor and Kovrig as leverage in efforts to secure Ms. Meng’s release. Chinese officials have denied that the cases against the two Canadians were spurred by the arrest of Ms. Meng, who is on bail in Vancouver, where she faces extradition proceedings.
Foreign diplomats say Beijing is unlikely to let Messrs. Kovrig and Spavor go unless Ms. Meng is released. The U.S. Justice Department had been discussing a deal with Ms. Meng that would allow her to return to China in exchange for admitting wrongdoing, though those discussions have since stalled.
Mr. Spavor’s hearing coincided with talks between senior U.S. and Chinese officials in Alaska, the first high-level, in-person meeting between the two governments since President Biden took office. It wasn’t clear if the two Canadians’ cases were discussed at the meeting.
The frenzy has already led to trouble. The stock of Nikola, an electric car start-up that went public via a SPAC in June, has plunged more than 80 percent after Hindenburg Research, an investment fund, accused the company in September of lying about its technology, overstating business deals and deceptively rolling a truck down a hill in a product video. Trevor Milton, Nikola’s founder and chairman, resigned, and the Securities and Exchange Commission and Justice Department have started investigating the company.
The S.E.C. has also opened inquiries into Clover Health, a health insurance start-up, and Lordstown Motors, an electric truck start-up, which both went public through blank check companies in recent months.
On March 10, the S.E.C. warned that SPACs face distinct risks and potential conflicts of interest. The agency was particularly critical of those backed by celebrities, concluding that “celebrities, like anyone else, can be lured into participating in a risky investment.”
For now, the special purpose vehicles remain on the prowl for targets.
Jedidiah Yueh, chief executive of Delphix, a data infrastructure company in Redwood City, Calif., has experienced the interest firsthand. Mr. Yueh, who founded Delphix 13 years ago, said SPACs began reaching out last summer as his business picked up in the pandemic. The company, which helps customers process and automate data, recently became profitable and is a candidate to go public.
But Mr. Yueh said he hadn’t decided if Delphix would go public through a traditional offering or another route, such as a “direct listing” or SPAC. As he has sorted through the options, SPACs have flooded his inbox with messages almost every day. One even sent a mailer to Delphix’s unoccupied office last year while everyone worked from home in the pandemic.
Mr. Yueh said he had met with some SPACs out of curiosity. But he quickly got the sense that sponsors were telling him whatever they thought he wanted to hear. Once they learned that Delphix was profitable, “they just switch gears and talk about how easy they are to work with,” he said.
He said he had stopped responding to cold pitches and created a canned response to ward off others. The investors he met with weren’t the kind of long-term backers that Delphix wanted, he said. But in a nod to the trend of celebrity-backed SPACs, he added, “I would have taken a meeting with Shaq.”
HONG KONG—Two Canadians facing espionage charges in China will stand trial in the next few days after more than two years in custody, marking a new phase in a pair of cases widely seen as retaliation for Canada’s arrest of a senior executive from Chinese tech giant Huawei Technologies Co.
A Chinese court will hear the case involving entrepreneur Michael Spavor Friday, while a separate hearing for Michael Kovrig, a researcher on leave from Canada’s diplomatic service, is scheduled for Monday, according to a statement issued late Wednesday by Canada’s foreign minister, who cited information provided to the Canadian Embassy in Beijing.
Their detention since December 2018 has locked China into a high-stakes standoff with Canada and the U.S. that stemmed from Washington’s request for the Huawei executive’s arrest. Chinese officials have traded barbs with Canadian and U.S. counterparts over the tit-for-tat detentions, accusing each other of taking hostages to advance political goals.
Mr. Spavor’s hearing coincides with scheduled talks between senior U.S. and Chinese officials in Alaska, the first high-level, in-person meeting between the two governments since the inauguration of President Biden. Mr. Biden has publicly urged Beijing to release the two Canadians and promised to sustain U.S. pressure on China over human rights.
Canadian officials have accused Beijing of detaining Messrs. Kovrig and Spavor as leverage in efforts to secure the release of Huawei’s chief financial officer, Meng Wanzhou, who was arrested on a U.S. extradition request while she was transiting through Vancouver in December 2018. Chinese officials have denied that the cases against the two Canadians were spurred by Ms. Meng’s arrest.
Foreign diplomats say Beijing is unlikely to let Messrs. Kovrig and Spavor go unless Ms. Meng is also released. The U.S. Justice Department had been discussing a deal with Ms. Meng that would allow her to return to China in exchange for admitting wrongdoing in a criminal case, though those discussions have since stalled.
It wasn’t clear whether U.S. and Chinese officials would discuss these cases during their Alaska talks Thursday and Friday. The Biden administration has criticized China for its “arbitrary detention” of Messrs. Kovrig and Spavor and signed up to a Canadian-led initiative to condemn the practice of detaining foreign nationals for diplomatic leverage.
Some legal experts say the timing of the two Canadians’ trials was likely deliberate. “Proceeding to trial gives China the opportunity to wrap up the case and put a bow on it anytime they want to,” said Donald Clarke, a professor at George Washington University who specializes in Chinese law.
While it remains unclear when and how the two cases would be resolved, in the event of a deal with the U.S. and Canada, China likely “would rather release two convicted Michaels than two Michaels who are in the middle of a criminal process,” Mr. Clarke said.
Chinese Foreign Ministry spokesman Zhao Lijian denied that the timing of the trials was linked to the Alaska meeting. At a routine briefing Thursday, he said Chinese judicial agencies handle cases independently and guarantee the lawful rights of the accused.
Mr. Spavor’s trial will take place in the northeastern city of Dandong while Mr. Kovrig’s case will be heard in Beijing, a person familiar with the matter said. While Canada’s foreign minister said Canadian officials have requested to attend the hearings, Chinese authorities aren’t expected to grant access to diplomats or journalists, people familiar with the process said. Chinese courts typically hear national-security cases behind closed doors.
Mr. Kovrig has been charged with “probing into state secrets and intelligence” on behalf of foreign actors, while Mr. Spavor was accused of “probing into and illegally providing state secrets” to foreign actors. A news website of the Communist Party’s law-enforcement commission has accused Mr. Spavor of supplying intelligence to Mr. Kovrig.
China’s Foreign Ministry has described the two men’s alleged offenses as being “especially serious”—a degree of severity for which China’s criminal law prescribes a jail sentence of at least 10 years or life imprisonment.
Neither man could be reached for comment. Mr. Spavor’s family hasn’t spoken publicly about his detention. Mr. Kovrig’s wife, Vina Nadjibulla, has said he is innocent.
Ms. Nadjibulla, who has separated from Mr. Kovrig but remains a close friend and his family’s liaison with Canadian officials, said she has no information about the hearing beyond its schedule. “We remain concerned about his well-being and safety,” she said.
Beijing could delay the verdicts as long at it wants, Mr. Clarke said. While Chinese law typically requires courts to issue verdicts within two to three months of accepting a case, time extensions are allowed for major and complicated cases, among other circumstances.
Mr. Kovrig, an analyst with Brussels-based conflict monitor International Crisis Group, was detained while he was visiting Beijing from his Hong Kong base and drafting a research report on North Korea, friends say. Mr. Spavor ran a Dandong-based nonprofit, Paektu Cultural Exchange, that organized academic, tourist and business trips to North Korea.
The two men were detained separately on the same day in December 2018 by state-security officials from Beijing and Dandong. Days earlier, a senior Chinese Foreign Ministry official had threatened Canada with “severe consequences” for the detention of Ms. Meng, who was arrested earlier that month.
The two Canadians have had limited contact with their families and the outside world since their detention, largely restricted to supervised visits with Canadian consular officials and their China-based lawyers.
Ms. Meng is the daughter of Ren Zhengfei, the founder of Huawei, one of China’s leading companies and a global pacesetter in telecommunications gear. The U.S. has alleged it engages in technology theft and may abet espionage by Beijing—allegations Huawei has denied.
The U.S. has accused Ms. Meng of misleading banks about Huawei’s ties to a subsidiary that did business in Iran, leading those banks to clear hundreds of millions of dollars in transactions that potentially violated international sanctions.
Extradition proceedings against Ms. Meng could drag on for years if the Canadian court rules against her and she decides to appeal. Ms. Meng and her lawyers have accused Canadian authorities of violating her rights and argued that the extradition request is improperly based on political motivations at a time when the U.S. sought an advantage in trade and technology tensions with China.
Ms. Meng is on bail and has been living in one of her homes in Vancouver. She is required to wear an ankle monitor and be supervised by court-appointed security.
In a filing that signifies the beginning of the end of the country’s most notorious manufacturer of prescription opioids, Purdue Pharma submitted its bankruptcy restructuring plan just before midnight on Monday. The blueprint requires members of the billionaire Sackler family to relinquish control of the company and transforms it into a new corporation with revenue directed exclusively toward abating the addiction epidemic that its signature painkiller, OxyContin, helped create.
The plan, more than 300 pages long, is the company’s formal bid to end thousands of lawsuits and includes a pledge from the Sacklers to pay $4.275 billion from their personal fortune — $1.3 billion more than their original offer — to reimburse states, municipalities, tribes and other plaintiffs for costs associated with the epidemic.
If the plan is approved by a majority of the company’s creditors and Judge Robert D. Drain of federal bankruptcy court in White Plains, N.Y., payments will start pouring into three buckets: one to compensate individual plaintiffs, like families whose relatives overdosed or guardians of infants born with neonatal abstinence syndrome, as well as hospitals and insurers; another for tribes; and the third — and largest — for state and local governments, which have been devastated by the costs of a drug epidemic that has only worsened during the Covid-19 pandemic.
“With drug overdoses still at record levels, it is past time to put Purdue’s assets to work addressing the crisis,” said Steve Miller, chairman of Purdue’s board of directors, in a statement. “We are confident this plan achieves that critical goal. ”
filed for bankruptcy protection in 2019.
pleaded guilty to federal criminal charges in November for defrauding health agencies and violating anti-kickback laws.
Individual members of the Sackler family agreed to pay the federal government $225 million in civil penalties, but said in a statement that they had “acted ethically and lawfully.” Although the Sacklers were not charged criminally, the Justice Department reserved the right to pursue criminal charges later.
recent public health principles that were signed by at least two dozen major medical, drug policy and academic institutions and that include attention to drug prevention, youth education, racial equity and transparency.
The plan will be voted on by tens of thousands of parties. Confirmation hearings will ensue, and a conclusion is expected in a few months. From the start of the bankruptcy proceedings 18 months ago, leaders of a major bloc of municipalities signaled their support, as did 24 states.
Lloyd B. Miller, who represents numerous tribes including the Navajo Nation, said his clients were on board.
“It’s critical that more opioid treatment funding starts flowing into tribal communities, all the more so given the extraordinary devastation tribes have suffered during the Covid pandemic,” he said.
But since 2019, when Purdue filed for bankruptcy, 24 other states — some controlled by Democrats, others by Republicans — and the District of Columbia have opposed the move, noting that Purdue has continued to profit from its OxyContin sales.
Maura Healey, the attorney general of Massachusetts, who was the first to sue individual members of the Sackler family, contended that under this plan, the Sackler payments would come from their investment returns rather than from principal.
“The Sacklers became billionaires by causing a national tragedy,” Ms. Healey said in a statement. “They shouldn’t be allowed to get away with it by paying a fraction of their investment returns over the next nine years and walking away richer than they are today.”
Attorneys general for the opposing states said that although the plan was an improvement over earlier proposals, they still found it disappointing for several reasons. Among those, they said, the plan should be amended to establish “a prompt and orderly wind-down of the company that does not excessively entangle it with states and other creditors.”
Two branches of the Sackler family — heirs of two of the brothers who founded the company — said: “Today marks an important step toward providing help to those who suffer from addiction, and we hope this proposed resolution will signal the beginning of a far-reaching effort to deliver assistance where it is needed.”
The eldest brother, Dr. Arthur Sackler, sold his shares before OxyContin was introduced and his relatives are not part of the litigation.
A forensic audit of the Sacklers’ finances, commissioned by Purdue in the course of the bankruptcy investigations, determined that from 2008 to 2017 the family earned more than $10 billion from the company. Lawyers for the family said that the full amount was not liquid: More than half went toward taxes and investments in businesses that will be sold as part of the bankruptcy agreement.
Although states and other blocs of creditors have vociferously objected to elements of the plan for 18 months, many factors seem to favor the likelihood of approval: the duration of the litigation, the exorbitant cost to all parties, the urgency of the worsening opioid crisis and the overall depletion of public health resources by the coronavirus pandemic.
The new company would continue to sell OxyContin, a painkiller that is still approved by theFood and Drug Administration under limited circumstances. But it would diversify its products to include generics and a drug to treat attention deficit hyperactivity disorder, as well as set aside new drugs to reverse overdoses and treat addiction, to be distributed on a nonprofit basis as a public health initiative.
The Swiss bank also hired Mr. Wray, then a partner at King & Spalding in Washington who had served as the head of the Justice Department’s criminal division and oversaw the Enron task force. (Mr. Wray became the director of the F.B.I. three years after he negotiated the final plea deal for Credit Suisse.)
“It is a mystery to me why the U.S. government didn’t require as part of the agreement that the bank cough up some of the names of the U.S. clients with secret Swiss bank accounts,” Carl Levin, then a Michigan senator leading an investigation into offshore tax avoidance, said after the 2014 plea agreement.
In the interview, Mr. Neiman, the whistle-blower’s lawyer, said that in July 2014, after the plea deal was signed and as Credit Suisse awaited its final sentencing, he told officials at the tax division of the Justice Department and federal prosecutors who had worked on the case that his client had information that the bank had continued to cloak money held by some U.S. account holders. He gave them one name in particular — Dan Horsky, the retired business professor, who lived in Rochester, N.Y.
The tip checked out. The following year, federal agents arrested Mr. Horsky, who had amassed a $200 million fortune and hidden it with the help of Credit Suisse bankers using offshore shell companies, court documents show. The arrangement lasted for several months after the bank signed its plea deal.
It is unclear why the Justice Department did not notify the court and change the terms of its settlement with Credit Suisse based on the information from the whistle-blower — either before Credit Suisse’s final sentencing or after Mr. Horsky’s case became public. At the sentencing, lawyers for both sides told the court that they had no information to add that would affect the agreement.
Officials who would have had authority to make the decision to review the Credit Suisse case for possible breaches in 2014 and 2015 — including James Cole, who was then the deputy attorney general, and Dana Boente, the U.S. attorney in the Eastern District of Virginia — did not respond to requests for comment.
In 2015, Mr. Horsky pleaded guilty to defrauding the U.S. government and said that he would cooperate with prosecutors. In 2017, he was sentenced to seven months in prison. Some details of his sentencing are sealed, and a federal judge denied a request by Bloomberg News to unseal it. The judge said he denied the request after consulting with the Justice Department and Mr. Horsky’s lawyers.
Mr. Neiman’s client could be richly rewarded if prosecutors move to impose more fines on Credit Suisse. Under an I.R.S. rule, whistle blowers can get as much as 30 percent of the amount of any additional money the government gets. And, Mr. Neiman said, the whistle blower has more names of American account-holders beyond Mr. Horsky’s, although he wouldn’t say how many.