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.”
IBM insists that its revised A.I. strategy — a pared-down, less world-changing ambition — is working. The job of reviving growth was handed to Arvind Krishna, a computer scientist who became chief executive last year, after leading the recent overhaul of IBM’s cloud and A.I. businesses.
But the grand visions of the past are gone. Today, instead of being a shorthand for technological prowess, Watson stands out as a sobering example of the pitfalls of technological hype and hubris around A.I.
The march of artificial intelligence through the mainstream economy, it turns out, will be more step-by-step evolution than cataclysmic revolution.
A New Wave to Ride
Time and again during its 110-year history, IBM has ushered in new technology and sold it to corporations. The company so dominated the market for mainframe computers that it was the target of a federal antitrust case. PC sales really took off after IBM entered the market in 1981, endorsing the small machines as essential tools in corporate offices. In the 1990s, IBM helped its traditional corporate customers adapt to the internet.
IBM executives came to see A.I. as the next wave to ride.
Mr. Ferrucci first pitched the idea of Watson to his bosses at IBM’s research labs in 2006. He thought building a computer to tackle a question-answer game could push science ahead in the A.I. field known as natural language processing, in which scientists program computers to recognize and analyze words. Another research goal was to advance techniques for automated question answering.
After overcoming initial skepticism, Mr. Ferrucci assembled a team of scientists — eventually more than two dozen — who worked out of the company’s lab in Yorktown Heights, N.Y., about 20 miles north of IBM’s headquarters in Armonk.
The Watson they built was a room-size supercomputer with thousands of processors running millions of lines of code. Its storage disks were filled with digitized reference works, Wikipedia entries and electronic books. Computing intelligence is a brute force affair, and the hulking machine required 85,000 watts of power. The human brain, by contrast, runs on the equivalent of 20 watts.
assassination of President Jovenel Moïse of Haiti was met on Monday with bewilderment by some who knew him and surprise by prominent Haitian Americans who said he had not been known as a major political player.
At the same time, a university professor who met with the doctor twice last month said that he had spoken then of being sent by God to take over the Haitian presidency.
Some two dozen people have been arrested in the killing, but Haitian officials have placed the doctor, Christian Emmanuel Sanon, 63, at the center of an investigation that has stretched out from Haiti to Colombia and the United States.
The doctor’s brother, Joseph Sanon, said he had not been in touch with him for a while and he had no idea what was going on. “I am desperate to know what’s happening,” he said.
A former neighbor of the doctor’s in Florida, Steven Bross, 65, said, “He was always trying to figure out ways to make Haiti more self-sufficient, but assassinating the president, no way.”
But in a telephone interview on Monday, Michel Plancher, a civil engineering professor at Quisqueya University in Port-au-Prince, said he had received a call from out of the blue to attend a meeting with Dr. Sanon, who he was told was planning a political campaign.
Professor Plancher said he had never heard of the doctor but decided to attend the meetings, which were held at a home in the capital, after internet searches showed Dr. Sanon to be a pastor who had done charitable work.
The two men had a first meet-and-greet encounter on June 1, Professor Plancher said. The initial contact was followed a day or two later by an hourlong meeting with Dr. Sanon and a group of six to eight people. Both meetings happened in the same home in the capital, Port-au-Prince.
There, he said, Dr. Sanon outlined his political ambitions.
“He said he was sent by God. He was sent on a mission of God to replace Moïse,” Professor Plancher said. “He said the president would be resigning soon. He didn’t say why.”
“He said he will implement a Marshall Plan to run the country,” Professor Plancher added. “He wanted to change French as an official language, and replace it with English. He seemed a bit crazy. I didn’t want to participate anymore.”
Haiti’s national police chief, Léon Charles, has accused Dr. Sanon of playing a pivotal role in the assassination and wanting to become president, but offered no explanation for how the doctor could possibly have taken control of the government.
During a raid of his home, the Haitian authorities said, the police found a D.E.A. cap — the team of hit men who assaulted Mr. Moïse’s home appear to have falsely identified themselves as Drug Enforcement Administration agents — six holsters, about 20 boxes of bullets, 24 unused shooting targets, and four license plates from the Dominican Republic.
A YouTube video recorded in 2011 titled “Dr. Christian Sanon — Leadership for Haiti” appears to present Mr. Sanon as a potential leader of the country. In it, the speaker denounces the leaders of Haiti as corrupt plunderers of its resources.
As the authorities focused on Monday on Dr. Sanon’s actions in recent months, a clearer picture of his past was also coming into view.
Dr. Sanon was born in 1958 in Marigot, a city on Haiti’s southern coast, and graduated from the Eugenio María de Hostos University in the Dominican Republic and the Midwestern Baptist Theological Seminary in Kansas City, Mo., according to a short biography from the Florida Baptist Historical Society.
Public records show that Dr. Sanon was licensed to practice both conventional medicine as well osteopathic medicine, in which doctors can provide therapies like spinal manipulation or massage as part of their treatment.
In 2013, he filed for Chapter 7 bankruptcy in Florida, a process in which people can liquidate assets to pay creditors. Dr. Sanon stated at the time of his bankruptcy filing that he was a doctor and the director of the Rome Foundation, a nonprofit involved in assisting people in Haiti.
Dr. Ludner Confident, a Haitian-born anesthesiologist who practices medicine in Florida, said he got to know Dr. Sanon while they were working for the foundation in the years before the devastating 2010 earthquake.
“He is a pastor,” Dr. Confident said. “He’s a man of God, wanting to do things for Haiti.”
Still, Dr. Confident, who said he had not spoken with Dr. Sanon for years, said, “When it comes to politics, I don’t have any information about his political agenda.”
And though Dr. Sanon was straddling two worlds, dividing time between his homes in Haiti and Florida, some in Miami’s Haitian diaspora expressed surprise when Dr. Sanon was named as a central figure in the assassination plotting.
“I never heard of this Sanon before,” said Georges Sami Saati, 68, a Haitian American businessman who is a prominent figure in Miami’s community of Haitian émigrés. “Nobody ever heard of him.”
A top security aide to President Jovenel Moïse of Haiti had traveled to Bogotá, Colombia’s capital, several times in the months before the president’s assassination last week, Colombian defense officials said on Monday morning, raising the prospect that the attackers had inside help.
The Colombian officials, who are helping in a wide-ranging investigation into the president’s death, said that they were examining what connection, if any, there was between the trips by the head of the presidential palace guard, Dimitri Hérard, and the Colombian former soldiers accused by Haitian officials of having been involved in the killing.
Since January, Mr. Hérard had traveled to Ecuador, Panama and the Dominican Republic, each time with a layover in Bogotá. On at least one occasion, he stayed for several days.
But the Colombian authorities have yet to establish a direct link between Mr. Hérard and the captured former soldiers, officials said.
At a news conference in Bogotá, Gen. Jorge Luis Vargas, the chief of the Colombian national police, said that the number of Colombians captured in Haiti had risen to 21, three of whom are dead.
The Colombians, Mr. Vargas said, had traveled from Colombia to the Dominican Republic and then on to Haiti after their plane tickets were purchased by a company based in Florida.
At least two of the Colombians, Duberney Capador and Germán Rivera García, were working with that company, CTU Security. Both are now dead.
Colombia has one of the best-trained militaries in Latin America, and because of this, Colombian veterans are highly sought after by global security companies. They deploy them to faraway places like Yemen and Iraq, often paying far more than they could expect to earn in Colombia.
Haitian officials have cast the Colombians as centerpieces of a well-organized plot carried out by “foreign mercenaries” to kill Mr. Moïse, but critical questions remain about what they were really in Haiti to do.
The country’s lead prosecutor has begun looking into what role Haitian security forces may have had in an operation that killed the president and wounded his wife but harmed no one else in the household or in the president’s security retinue.
In Colombia, some family members of the detained Colombians say the men went to Haiti to protect the president, not to kill him. That has only added to the many murky and often contradictory claims surrounding the assassination.
Then on Sunday, the Haitian authorities said they had arrested a Florida-based, Haitian-born doctor whom they described as a central figure in the assassination plot, and said he had hired a private security company that recruited at least some of the Colombians.
Things remain as murky as ever, but to Giovanna Romero, the widow of one of the Colombians killed in Haiti, one thing is clear: Her husband, Mauricio Javier Romero, was no assassin.
“Mauricio never would have signed up for such an operation, no matter how much money he was offered,” she said.
A team of U.S. officials newly returned from a trip to Haiti briefed President Biden on Monday about the situation on the ground in a country in upheaval, and it appears they may have come home with more questions than answers.
“What was clear from their trip is that there is a lack of clarity about the future of political leadership,”the White House spokeswoman, Jen Psaki, said at a news conference on Monday.
Haiti has a presidency left vacant after an assassination, two competing prime ministers and a Parliament that is not functioning. The country, overrun by gangs and hobbled by poverty, is still shaken by the death of President Jovenel Moïse, who was gunned down at his home by a team of hit men, the authorities say.
“The people of Haiti deserve peace and security,” Mr. Biden told reporters, “and Haiti’s political leaders need to come together for the good of the country.”
The American delegation met with both the interim prime minister, Claude Joseph, and with Ariel Henry, the man Mr. Moïse named to succeed Mr. Joseph as prime minister only days before he was assassinated.
“This is just the beginning of our conversations,” Ms. Psaki said, “and we will remain in close touch with law enforcement, with individuals in Haiti, with a range of leaders in Haiti about how we can assist and provide assistance moving forward.”
Ms. Psaki said the White House was still reviewing Haiti’s request that it send troops to help stabilize the county. “But as of right now,” she said, “the U.S. has not committed to having any sort of presence on the ground.”
The U.S. team included an F.B.I. agent and Department of Homeland Security officials, as well a representatives from the State Department and the National Security Council.
“The delegation reviewed the security of critical infrastructure with Haitian government officials and met with the Haitian National Police, who are leading the investigation into the assassination,” the National Security Council spokeswoman, Emily Horne, said in a statement on Monday.
John Kirby, the Pentagon press secretary, said in an interview with Fox News on Sunday that the U.S. focus was on “helping Haitian authorities“get their arms around investigating this incident and figuring out who’s culpable.”
In the wake of the assassination, there has been a sense of chaos in some parts of Haiti, with some people gathering at the U.S. Embassy there hoping to leave, and competing political factions vying for control of the government.
Chris Wallace of Fox News pressed Mr. Kirby on whether conditions in Haiti were a matter of national security. While the United States is watching the situation closely, Mr. Kirby said, the American investigative team would be “the best way forward.”
“I don’t know that we’re at a point now where we can say definitively that our national security is being put at risk by what’s happening there,” Mr. Kirby said. “But clearly we value our Haitian partners. We value stability and security in that country.”
The photos are horrifying. They seem to portray the body of President Jovenel Moïse of Haiti laid out in the morgue, his left eye crushed in, the flesh of one of his arms torn by bullets, his mouth gaping.
A country already reeling from the assassination of its leader on Wednesday and the chaos that followed reacted to the images with horror and despair, afraid that the photos circulating on social media channels would rip the last shreds of dignity from both the person and the office he held.
Even his critics were outraged.
“Even if @moisejovenel was decried and declared a de facto president, let’s not go down to the level of dehumanization established by the @PHTKhaiti,” tweeted the journalist Nancy Roc, referring to Mr. Moïse’s political party. “Haitians are better than that.”
She was among many who beseeched others not to forward the photos that were circulating through the country’s buzzing WhatsApp channels.
The authenticity of the pictures could not be independently confirmed, but forensic experts consulted by The Times who reviewed the photographs said that rumors that Mr. Moïse had been tortured — which swirled around social media along with the photos — were unlikely to be true.
“I don’t see anything that looks like it would be typical of torture,” said Dr. Michael Freeman, an associate professor of forensic medicine at Maastricht University in the Netherlands. Dr. Freeman noted that an autopsy would be needed to determine conclusively whether Mr. Moïse was tortured, but the wounds visible in the photographs appeared consistent with gunshots.
“The fact that he’s not bound is a pretty strong indication that he’s not been tortured,” Dr. Freeman added.
Photos of dead bodies left on the streets are sadly regular fare in Haiti. But that the country’s leader would face the same wretched indignity seemed to underscore just how cheap life had become in the country.
The Rev. Rick Frechette, an American Catholic priest with the Congregation of the Passion order and a doctor who regularly treats Haiti’s poor in clinics in Port-au-Prince’s slums and in the hospitals he built in a suburb of the capital, said that for some of his staff members, the president’s brutal assassination had brought back memories of past violence.
“People are traumatized and afraid,” he said.
And then there were those who believed the distribution of the photos was politically motivated, part of the struggle over who will govern the country in the president’s absence.
“Last night’s photos show how much they want to create a climate of violence and instability in the country after their heinous crime,” tweeted Danta Bien-Aimé, a nurse and former Fulbright scholar.
Harold Isaac contributed reporting from Port-au-Prince, Haiti.
Haitians gathered outside the U.S. Embassy in Port-au-Prince, hoping to be granted visas to leave the country as the assassination of President Jovenel Moïse last week heightened an uncertain and volatile situation in the country.
Just days after the assassination of President Jovenel Moïse of Haiti, a high-stakes battle for control of the country is heating up, and the president of the Senate, Joseph Lambert, is among those jockeying for power.
Although the Haitian Parliament is in a state of dysfunction — with only 10 sitting senators out of 30 because the terms of the other 20 have expired — a majority of the remaining lawmakers on Friday signed a resolution calling for a new government to replace the current interim prime minister, Claude Joseph. They declared that Mr. Lambert, who also has the support of several political parties, should become provisional president.
“He seems to be quite intelligent politically,” Laënnec Hurbon, a Haitian sociologist and researcher at the French National Center for Scientific Research, said of Mr. Lambert.
Mr. Lambert, 60, is from the city of Jacmel in southern Haiti. An agronomist by training, he is a seasoned politician who was elected to the lower house of Parliament in 1995, before winning a seat in the Senate in 2006. He is currently in his third term as president of the Senate.
Mr. Hurbon said that Mr. Lambert had initially been close to the Haitian Tèt Kale Party, whose name means “Bald Headed,” which supported Mr. Moïse as well as his predecessor Michel Martelly. But Mr. Hurbon said that Mr. Lambert had always managed to ingratiate himself with other parties.
In 2019, Mr. Lambert, who had been passed over for the position of prime minister, announced that he was joining the opposition to Mr. Moïse, according to the newspaper Nouvelliste. As Mr. Lambert rose to the Senate’s presidency in January, he criticized Mr. Moïse’s policies but also said that he wanted to cooperate closely with the president to devise solutions to the country’s problems.
On Friday, a dozen parties from all political stripes signed a “protocol of national accord” backing the Senate’s decision and calling for the installation of Mr. Lambert as interim president within the next 48 hours.
“He always knows in perilous, difficult situations like this one, to make the right speech and therefore to seduce the people,” Mr. Hurbon said of Mr. Lambert, adding that he had been surprised to see such a large coalition of opposition parties backing Mr. Lambert’s bid for power.
The Senate’s resolution on Friday said that Mr. Lambert should become provisional president until January, when a new parliament would be elected. It also said that Ariel Henry, a neurosurgeon, should replace Mr. Joseph, the current interim prime minister.
Mr. Lambert wrote on Twitter that the swearing-in ceremony was scheduled for Saturday afternoon but had been delayed because all senators wanted to be “present to actively participate in the inauguration.”
Lilas Desquiron, culture minister in Haiti from 2001 to 2004, said that Mr. Lambert was “a skilled politician” who was very popular among civil servants.
“He is someone who plays for himself but plays with a lot of intelligence,” she said.
The Haitian government’s extraordinary request for U.S. forces to help stabilize the country in the aftermath of the assassination of its president last week carries haunting vestiges from American military interventions that happened more than a century ago.
Back then, the United States dispatched forces without an invitation from Haiti. The American government was motivated by Haiti’s internal turmoil and a willingness to meddle in the affairs of neighbors to protect its own interests under the Monroe Doctrine.
In 1915, President Woodrow Wilson sent the Marines into Haiti, calling the invasion a justifiable response to avert anarchy after a mob assassinated Haiti’s president, Jean Vilbrun Guillaume Sam. The American military stayed for nearly two decades.
But even before that, Mr. Wilson saw fit to take military action in Haiti, worried about what his administration saw as the growing influence of Germany there, according to a historical page about the U.S. interventions on the State Department archive website.
In 1914, his administration sent in Marines who removed $500,000 from the Haitian National Bank for what the administration called “safekeeping” in New York, giving the United States control of the bank, the website said.
Eighty years later, President Bill Clinton ordered more than 23,000 U.S. troops sent to Haiti in what was termed “Operation Restore Democracy,” aimed at ensuring a transition that would return the ousted President Jean-Bertrand Aristide to power.
In 2004, President George W. Bush sent in the Marines as part of an “interim international force” after Mr. Aristide resigned under intense U.S. pressure.
Drew Austin, an entrepreneur and investor, invested heavily in cryptocurrencies and NFTs, including digital horses, digital sports cards and some digital art. He took a “substantial liquidity hit” when cryptocurrency prices crashed in May, he said. But he is not cashing out, because he believes these new assets are the future. Still, the volatility can be stressful. Unlike a stock exchange, these newer markets never close.
“There are nights when I go to bed and I think, Please, God, China, don’t mess this up,” he said using stronger language. “It’s 24/7. It never stops.”
Bitcoin’s volatile month — dropping by around 65 percent in May, recovering some and then falling further this week — has not swayed investor enthusiasm. A recent survey by The Ascent, a financial services ratings site, showed that Generation Z investors viewed cryptocurrencies as slightly less risky than individual stocks.
But they’re learning that wild price swings can happen over a single tweet. In February and March, when Elon Musk and his company, Tesla, embraced Bitcoin, its price soared. In May, when Mr. Musk tweeted that Tesla would not accept Bitcoin payments over concerns with its environment impact, its price dropped.
It jumped again this week when Mr. Musk suggested on Twitter that Tesla would again accept Bitcoin someday. (His tweets have also propelled Dogecoin, a joke cryptocurrency based on a meme about a Shiba Inu.)
The sustained appetite for risky bets has fueled companies, like Robinhood, that enable customers to trade stocks, options and cryptocurrencies. In January, Robinhood’s role in the trading of meme stocks landed it in hot water with Congress, state regulators and its customers.
The attention only turbocharged Robinhood’s growth: Revenue more than tripled in the first three months of 2021 compared with the same period last year. Robinhood plans to go public in the coming months.
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.”
On a recent Tuesday evening, Jully Lee and her boyfriend curled up on the couch and turned on the TV to watch the Ovation Awards, a ceremony honoring stage work in the Los Angeles area that was held virtually this year because of the coronavirus pandemic. Ms. Lee, an actor, had been nominated for her role in the play “Hannah and the Dread Gazebo,” which was in production before the pandemic.
Ms. Lee, 40, had submitted a prerecorded acceptance speech in case she won. During the ceremony, each nominee’s photo was shown as his or her name was announced. When Ms. Lee’s category arrived, her name was called, and a photo appeared on the screen. A photo of the wrong Asian: her colleague Monica Hong. The announcer also mispronounced Ms. Lee’s name.
“I was just stunned,” Ms. Lee said. She added that after a pause, she and her boyfriend started cracking up. “When things are awkward or uncomfortable or painful, it’s much safer to laugh than to express other emotions. It’s like a polite way of responding to things.”
A Rise in Anti-Asian Attacks
A torrent of hate and violence against people of Asian descent around the United States began last spring, in the early days of the coronavirus pandemic.
Background:Community leaders say the bigotry was fueled by President Donald J. Trump, who frequently used racist language like “Chinese virus” to refer to the coronavirus.
Data: The New York Times, using media reports from across the country to capture a sense of the rising tide of anti-Asian bias, found more than 110 episodes since March 2020 in which there was clear evidence of race-based hate.
Underreported Hate Crimes: The tally may be only a sliver of the violence and harassment given the general undercounting of hate crimes, but the broad survey captures the episodes of violence across the country that grew in number amid Mr. Trump’s comments.
In New York:A wave of xenophobia and violence has been compounded by the economic fallout of the pandemic, which has dealt a severe blow to New York’s Asian-American communities. Many community leaders say racist assaults are being overlooked by the authorities.
What Happened in Atlanta: Eight people, including six women of Asian descent, were killed in shootings at massage parlors in Atlanta on March 16. A Georgia prosecutor said that the Atlanta-area spa shootings were hate crimes, and that she would pursue the death penalty against the suspect, who has been charged with murder.
The LA Stage Alliance, which hosted the ceremony, disbanded in the wake of outrage over the blunder.
The irony of a mix-up like this wasn’t lost on Ms. Lee. It was rare to even be performing with other Asian actors, rather than competing for the same part. “It’s so funny because when there’s so many Asians, then you can’t tell them apart, but in media there are so few Asians that you can’t tell us apart,” she said. “What is it?”
The invisibility of Asians in pop culture is part of what, scholars say, contributes to the “wrong Asian” experience: When people aren’t accustomed to seeing Asian faces onstage or onscreen, they may have more trouble telling them apart in real life. To put it another way: If all you really have to work with are John Cho, Steven Yeun, Aziz Ansari and Kal Penn, that’s not going to go a long way in training you to distinguish among men of Asian descent offscreen. In contrast, Hollywood has given everyone plenty of training on distinguishing white faces, Dr. Nadal said.
Out of Hollywood’s top 100 movies of 2018, only two lead roles went to Asian and Asian American actors (one male and one female), according to a study by the University of Southern California’s Annenberg School for Communication and Journalism.
Donatella Galella, a professor of theater history and theory at the University of California, Riverside, said that popular culture has long reflected the Western world’s xenophobic views toward Asians, which resulted in placing them in diminished roles onstage and onscreen — the villain, the sidekick. That entrenched a kind of marginalization feedback loop.
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.
HONG KONG — A half year after he got out of prison, Daniel Tang has made a habit of going back. He waits in spare, crowded corridors. He greets familiar faces among the fellow visitors and guards. He brings books, postage stamps, writing paper and packets of M&Ms.
Mr. Tang is visiting people like him who were imprisoned for their role in the pro-democracy street protests that rocked Hong Kong in 2019. He travels three hours, round-trip, for a 15-minute chat through a thick plate of glass, sometimes with a total stranger. He summons a cheery, chatty demeanor, when he feels anything but.
“You owe them your best face,” he said. “If you’re not feeling right, don’t even bother going.”
Mr. Tang and many of those he meets with represent a new breed of convict in Hong Kong: activists who opposed the Chinese Communist Party’s growing power in the city. This group — often including college students or white-collar professionals — rose up two years ago in a historic campaign of public disobedience that led to clashes with police on the streets and focused the world’s attention on the future of the Asian financial capital.
tough new laws imposed by Beijing, mass arrests and the hazards of the coronavirus. Now, with dim job prospects, a fraught political future and the unending threat of another arrest, those protesters are emblematic of the uncertainties facing the city’s stricken democracy movement.
about 7,000 people. Beijing’s imposition last year of a national security law gives prosecutors greater powers to target even more.
Many of the activists are contemplating a future in exile. Others struggle to stay committed to the cause for which they sit behind bars.
“Being sentenced to jail fractures people,” said Alex Chow, a 30-year-old activist who spent a brief time in jail for his role as a leader of protests in 2014, a precursor to the 2019 demonstrations. He now lives in exile in the United States.
as well as veterans. Those sentenced to prison so far include Joshua Wong, Agnes Chow and Ivan Lam, young leaders of the 2014 protests. Wong Ji-yuet, 23, and Owen Chow, 24, activists who participated in a primary election that was organized by the pro-democracy camp, are awaiting trial in solitary confinement after they were charged with endangering national security.
For many young people in jail, the sentences have redrawn their lives.
Jackie Yeung, a 23-year-old university student serving a three-year prison sentence, said she had abandoned the “typical ambitions” she used to harbor — getting a good job and an apartment in a family-friendly district.
statement ahead of her sentencing. “And I have no way of comforting them through the glass in the visitation room in prison.”
She dreams of opening up a small business importing Taiwanese pineapples after she and a Taiwanese cellmate are released. With the profits, she would support other young people by helping to pay their legal fees and living expenses. “To do anything, you need money,” she said.
To make things easier on prisoners, Mr. Tang and some other activists have banded together to provide support. They write letters and gazettes to catch people up with protest news and raise funds to pay for better meals in jail while protesters await trials.
Mr. Tang frequently sees Ms. Yeung. During one visit to her prison near the border with the mainland city of Shenzhen, he brought pens and stamps. He left the stamps, but was unable to give her the pens, as it would have exceeded her monthly allowance of two.
For all of his dedication, Mr. Tang, who spent more than a half-year imprisoned after pleading guilty to arson charges, says it doesn’t feel like it’s enough.
“Many Hong Kongers have moved on and moved away and don’t think about how there is a group of people sitting behind bars for the movement we all fought for,” said Mr. Tang, who is in his late 30s. “It seems many have forgotten.”
Far from radicalizing during his time on the inside, Mr. Tang now struggles with cynicism and meaning in a city that suddenly seems unfamiliar. He has been disheartened by the protest movement’s stagnation and by the waves of migration out of the city. The camaraderie of protest has been replaced by dread of ever more targeted arrests. He sees it all as an abandonment of values and believes that escape is a privilege unavailable to many.
Mr. Tang’s protester friends from prison also seem to be moving on. A group chat they kept, called the “Lai Chi Kok Prisoners,” after the facility where they were detained, still lights up occasionally with holiday greetings and vague laments. But few want to talk politics. Sometimes those in prison that do speak out seem to be exaggerating their place in the movement. He rolls his eyes at one prisoner, who has taken to calling himself Mandela 2.0.
“All that we have left is our relationships with one another,” he said. “Some seem ready to let that go.”
Yet, for Mr. Tang, there is no road back — not that he’d take it. His former employer was understanding, but let him go when his absence stretched on. He has been unable to access his life savings, he said, after his bank account was frozen over automated donations he made in 2019 to a protester bail fund that police placed under investigation.
He has applied to managerial jobs like those he had worked in the past, only to be turned away because of his criminal record. Now, he’s mulling applying for a taxi license or working in construction.
He still faces four charges related to the protests that were filed just days before his release from prison. The thought of officers at his door has kept him away from the apartment he shares with his mother. He tells her he now works a night shift, and she doesn’t press him.
“I’m really tired,” Mr. Tang said. “The government has left us no room to resist and nowhere to go.”
President Biden and President Vladimir V. Putin of Russia have agreed to meet on June 16 in Geneva for a face-to-face encounter that comes at a time of fast-deteriorating relations over Ukraine, cyberattacks and a raft of new nuclear weapons Mr. Putin is deploying. The summit is the first in-person meeting between the two leaders since Mr. Biden became president.
The one-day meeting is expected to focus on ways to restore predictability and stability to a relationship that carries a risk of nuclear accident, miscalculation and escalation. Geneva was also the site of the 1985 summit between Mikhail Gorbachev, the Soviet leader, and Ronald Reagan that was focused on the nuclear arms race.
The meeting comes at the worst point in Russian-American relations since the fall of the Soviet Union about 30 years ago. To say that the two leaders have a tense relationship is an understatement: Mr. Biden called Mr. Putin a “killer” in a television interview in March, leading Mr. Putin to dryly return the accusation and wish the new president “good health.”
Russia, despite its aggressive language toward the West, has shown optimism about the talks. For Mr. Putin, a high-profile presidential summit can help deliver what he has long sought: respect for Russia on the world stage. And he is sure to repeat his message that the United States must respect Russian interests — especially inside Russia, where the Kremlin claims Washington is trying to undermine Mr. Putin’s rule, and in Eastern Europe.
new round of financial sanctions against the country.
That list includes the prosecution and jailing of Aleksei A. Navalny, the opposition leader Mr. Putin’s intelligence services tried to kill with a nerve agent. And Mr. Biden plans to spend considerable time on cybersecurity in hopes of limiting the rising tide of cyberattacks directed at the United States.
Such attacks have dogged Mr. Biden since December, with the disclosure of SolarWinds, a sophisticated hack into network management software used by most of the United States’ largest companies and by a range of government agencies and defense contractors.
Mr. Biden vowed a full investigation and a proportionate response, though it is unclear whether those moves — which his aides said would be “seen and unseen” — are sufficient to deter the low-cost attacks.
Two weeks ago, Mr. Biden said he would raise with Mr. Putin the more recent ransomware attack on Colonial Pipeline, which shut down nearly half of the supply of gasoline, diesel and jet fuel to the East Coast. That attack was the work of a criminal group, the Biden administration said, but Mr. Biden accused Russia of harboring the ransomware criminals.
The summit will come at the end of Mr. Biden’s first international trip as president, to Europe, where he will meet with the Group of 7 allies — a group the Russians had been part of for several years when integration with the West seemed possible — and NATO allies.
NAIROBI, Kenya — Growing American frustration over the war in the Tigray region of Ethiopia spilled over into an open confrontation on Monday when Ethiopian officials lashed out at Washington over new restrictions including aid cuts and a ban on some Ethiopians traveling to the United States.
The restrictions, announced by Secretary of State Antony J. Blinken on Sunday, amount to an unusual step against a key African ally, and a pointed rebuke to Prime Minister Abiy Ahmed, a Nobel Peace Prize winner whose troops and allies have been accused of ethnic cleansing, massacres and others atrocities that could amount to war crimes.
Despite “significant diplomatic engagement,” Mr. Blinken said in a statement, “the parties to the conflict in Tigray have taken no meaningful steps to end hostilities or pursue a peaceful resolution of the political crisis.”
American visa restrictions will apply to all actors in the Tigray conflict, Mr. Blinken said, including current and former Ethiopian and Eritrean officials, ethnic Amhara militias and Tigrayan rebels.
a statement on Monday, Ethiopia’s foreign affairs ministry reacted with an expression of regret and what appeared to be thinly veiled threats. It accused the United States of meddling in its internal affairs and trying to overshadow national elections scheduled for June 21.
And it said that Ethiopia could be “forced to reassess its relations with the United States, which might have implications beyond our bilateral relationship.”
gave $923 million, according to USAID, although the vast majority of that money was for humanitarian purposes — health care, food aid, education and democracy support — that will not be hit by the new measures.
The United States had already suspended $23 million in security aid to Ethiopia. Officials say the new measures will preclude any American arms sales to Ethiopia, although much of the country’s weapons come from Russia.
Still, there could be other impacts. Western diplomats say the United States could block international funding to Ethiopia from the World Bank and International Monetary Fund — integral to Mr. Abiy’s economic plans.
dispatched by President Biden in March, and Jeffrey Feltman, the recently appointed Horn of Africa envoy.
American officials worry that the growing chaos in Tigray could destabilize the entire Horn of Africa region, or jeopardize efforts to mediate a high-stakes dispute with Egypt over the massive hydroelectric dam that Ethiopia is building on the Nile.
The growing humanitarian crisis, including the threat of a famine within months, is also driving the sense of urgency.
Those responsible for the Tigray crisis “should anticipate further actions from the United States and the international community,” Mr. Blinken said. “We call on other governments to join is taking these measures.”