Some of the nation’s largest employers, for months reluctant to wade into the fraught issue of whether Covid-19 vaccinations should be mandatory for workers, have in recent days been compelled to act as infections have surged again.
On Tuesday, Tyson Foods told its 120,000 workers in offices, slaughterhouses and poultry plants across the country that they would need to be vaccinated by Nov. 1 as a “condition of employment.” And Microsoft, which employs roughly 100,000 people in the United States, said it would require proof of vaccination for all employees, vendors and guests to gain access to its offices.
Last week, Google said it would require employees who returned to the company’s offices to be vaccinated, while Disney announced a mandate for all salaried and nonunion hourly workers who work on site.
Other companies, including Walmart, the largest private employer in the United States, and Lyft and Uber, have taken a less forceful approach, mandating vaccines for white-collar workers but not for millions of frontline workers. Those moves essentially set up a divide between the employees who work in offices and employees who deal directly with the public and, collectively, have been more reluctant to get the shots.
different set of reasons that are not primarily political. They say many of their members are worried about potential health side effects or bristle at the idea of an employer’s interfering in what they regard as a personal health decision.
Marc Perrone, the president of the United Food and Commercial Workers union, representing 1.3 million employees in grocery chains such as Kroger and at large meatpacking plants, said he would not support employer mandates until the Food and Drug Administration gave full approval to the vaccine, which is being administered on an emergency basis.
“You can’t just say, ‘Accept the mandate or hit the door,’” Mr. Perrone said in an interview on Monday.
After Tyson announced its vaccine mandate on Tuesday, Mr. Perrone issued a statement that the union “will be meeting with Tyson in the coming weeks to discuss this vaccine mandate and to ensure that the rights of these workers are protected and this policy is fairly implemented.”
several meat plants became virus hot spots. Now, it is requiring its leadership team to be vaccinated by Sept. 24 and the rest of its office workers by Oct. 1. Frontline employees have until Nov. 1 to be fully inoculated, extra time the company is providing because there are “significantly more frontline team members than office workers who still need to be vaccinated,” a Tyson spokesman said.
Throughout the pandemic, companies have treaded carefully in carrying out public health measures while trying to avoid harm to their businesses.
Last year, when major retailers began requiring customers to wear masks, they quietly told their employees not to enforce the rule if a customer was adamant about not wearing one.
Companies like Walmart have tried a similarly tentative approach with vaccine requirements.
Walmart announced last week that it was requiring the roughly 17,000 workers in its Arkansas headquarters to be vaccinated but not those in stores and distribution centers, who make up the bulk of its 1.6 million U.S. employees.
In a statement, the retailer said the limited mandate would send a message to all workers that they should get vaccinated.
“We’re asking our leaders, which already have a higher vaccination rate, to make their example clear,” the company said. “We’re hoping that will influence even more of our frontline associates to become vaccinated.”
Lyft told their corporate employees last week that they would need to show proof they had been inoculated before returning to company offices.
Requiring vaccinations “is the most effective way to create a safe environment and give our team members peace of mind as we return to the office,” said Ashley Adams, a spokeswoman for Lyft.
But those mandates did not extend to the workers the companies contract with to drive millions of customers to and from their destinations. The drivers are being encouraged to be vaccinated, but neither Lyft or Uber has plans to require them.
Public health experts warn that limited mandates may reinforce the gaping divide between the nation’s high- and low-wage workers without furthering the public health goal of substantially increasing vaccination rates.
They also say it’s naïve to think that workers who resisted vaccines for ideological reasons would suddenly change their mind after seeing a company’s higher-paid executives receive the shots.
“Ultimately we want to ensure that they really have the broadest reach,” Dr. Kirsten Bibbins-Domingo, the vice dean for population health and health equity at the University of California, San Francisco, said of company directives. “Failing to do that, I think, will only cause others to be more suspicious of these types of mandates.”
Legally, companies are likely to be on solid ground if they mandate vaccines. Last year, the Equal Employment Opportunity Commission said employers could require immunization, though companies that do could still face lawsuits.
George W. Ingham, a partner at the law firm Hogan Lovells, said companies with mandates would potentially have to make difficult decisions.
“They are going to have to fire high performers and low performers who refuse vaccines,” he said. “They have to be consistent.” Reasons an employee could be exempted include religious beliefs or a disability, though the process of sorting those out on an individual basis promises to be an arduous one.
Companies may also have to contend with pushback from state governments. Ten states have passed legislation limiting the ability to require vaccines for students, employees or the public, according to the National Conference of State Legislatures.
Disney is among the few big companies pursuing a broad vaccine mandate for their work forces, even in the face of pushback from some employees.
In addition to mandating vaccines for nonunion workers who are on-site, Disney said all new hires — union and nonunion — would be required to be fully vaccinated before starting their jobs. Nonunion hourly workers include theme park guest-relations staff, in-park photographers, executive assistants and some seasonal theme park employees.
It was the furthest that Disney could go without a sign-off from the dozen unions that represent the bulk of its employees. Walt Disney World in Florida, for instance, has more than 65,000 workers; roughly 38,000 are union members.
Disney is now seeking union approval for the mandate both in Florida and in California, where tens of thousands of workers at the Disneyland Resort in Anaheim are unionized. Most of the leaders of Disney’s unions appear to be in favor of a mandate — as long as accommodations can be worked out for those refusing the vaccine for medical, religious or other acceptable reasons.
“Vaccinations are safe and effective and the best line of defense to protect workers, frontline or otherwise,” Eric Clinton, the president of UNITE HERE Local 362, which represents roughly 8,000 attraction workers and custodians at Disney World, said in a phone interview.
Mr. Clinton declined to comment on any pushback from his membership, but another union leader at Disney World, speaking on the condition of anonymity so he could speak candidly, said “a fair number” of his members were up in arms over Disney-mandated vaccinations, citing personal choice and fear of the vaccine.
“The company has probably done a calculation and decided that some people will unfortunately quit rather than protect themselves, and so be it,” the person said.
Lananh Nguyen contributed reporting.
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“It gave me a feeling of déjà vu, because that’s what we were doing in the ’70s — we were trying to get supply-side effects,” said Barry P. Bosworth, a senior fellow at the Brookings Institution who led the Council on Wage and Price Stability under President Jimmy Carter. The efforts failed to control overall inflation, he said.
“It doesn’t work,” he said. “As a macro policy, you can’t go around trying to put your finger in the dike everywhere it pops up.”
Wages: The trouble with spirals.
The big price spikes in the 1960s and 1970s reversed once the underlying conditions that created them eased. But not all the way — in each case, the rate of inflation bottomed out a bit higher than the time before. Many economists believe that pattern had to do with human psychology: Workers and businesses had come to expect a higher rate of inflation, and had adapted their behavior accordingly, creating a self-sustaining cycle.
Economists particularly highlight the role of wages. Businesses can cut prices just as easily as they can raise them, but cutting wages is harder. No worker wants to be told that a job that was worth $10 an hour yesterday is worth just $9.50 an hour today. And if workers expect prices to rise at 5 percent per year, they will want raises to keep up with inflation.
Most economists believe that the forces driving the current surge in inflation will ease in the months ahead. The question is whether that will happen before expectations shift. Some surveys have found that consumers are already beginning to anticipate faster inflation to stick around, although that evidence is mixed. Wages, too, have continued rising as employers struggle to rehire workers, although it’s not yet clear that they are taking off.
One reason that temporary price increases turned into permanent wage increases in the middle of the 20th century is that many union contracts had escalator clauses that tied wage gains directly to inflation. Those provisions effectively helped lock in price increases, feeding into the price spiral, said David Card, an economist at the University of California, Berkeley, who has studied the role of union contracts in inflation. Far fewer workers are members of unions today, and few contracts have inflation clauses, in part because they haven’t been necessary in a period of low inflation.
Perhaps the largest difference of all? Time. In the 1960s, it took years of price spikes and policy failures for Americans to lose confidence that their leaders could keep inflation under control.
“What happened by the ’70s took almost 10 years to develop,” Mr. Card said. “I don’t think it’s that feasible that it could happen that quickly.”
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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 are so grossly overmatched it’s not funny.”
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This morning, I am going to tell you another story about the C.D.C. and its approach to Covid-19 behavioral guidelines. It’s a story that highlights the costs of extreme caution.
When Dr. Rochelle Walensky, the C.D.C. director, appeared before a Senate committee this month and defended the agency’s description of how often Covid-19 is transmitted outdoors, she cited a single academic study.
She was responding to a question from Senator Susan Collins of Maine, who had asked why some C.D.C. guidelines seemed inconsistent with the available data. Collins quoted from that day’s edition of this newsletter and argued that the C.D.C. was exaggerating the risk of outdoor activities by claiming that “less than 10 percent” of Covid transmission occurred outside.
Anything close to 10 percent would mean that outdoor infections were a huge problem. Yet the true share appears to be closer to 0.1 percent.
a study published in The Journal of Infectious Diseases. The study was “a meta-analysis,” she explained, which means it synthesized data from other studies. “The topline result of all studies that were included in the systematic review said less than 10 percent of cases were transmitted outdoors,” she said.
Her answer made the study sound definitive. Walensky did not mention any other studies or offer any logical argument for why she believed outdoor transmission was a significant risk. She implied that the C.D.C. was simply listening to The Journal of Infectious Diseases, which, as she noted, is a top journal.
Later that day, one of the study’s authors posted several messages on Twitter, and the story got more complicated.
‘An amazing resource’
The tweets came from Dr. Nooshin Razani, an epidemiologist at the University of California, San Francisco. In them, she emphasized that the study’s results suggested that the share of Covid occurring outdoors was “much lower than 10 percent.” The central message of the paper, Razani wrote, was the relative safety of the outdoors:
in her testimony, had used the two terms interchangeably.)
Singapore construction workers who probably transmitted it in enclosed spaces.)
The actual share occurring outdoors is “probably substantially less than 1 percent,” Razani told me. “The outdoors is an amazing resource,” she added. “What we really should be focused on is how to transition more activities to be outdoors.”
Masks for all campers
Yet the C.D.C.’s guidance continues to treat outdoor activities as a major risk — as if the truth were closer to 10 percent than 0.1 percent.
The agency advises unvaccinated people to wear masks outdoors much of the time, and many communities still impose strict guidelines on outdoor activities. The C.D.C. has also directed virtually everyone attending summer camp this year — counselor or camper, vaccinated or not — to wear a mask at almost all times. The camp guidelines use the word “universal.”
It’s true that for many people, masks are a minor nuisance. For others, though, masks bring real costs. Some children find it harder to breathe while wearing one during, say, a game of soccer or tag. Many adults and children find it more difficult to communicate. That’s especially true for people without perfect hearing and for young children, both of whom rely heavily on facial movements to understand others.
has written, is often “like talking on your phone in a zone with weak cell service.”
No free lunch
For unvaccinated adults indoors or in close conversation outdoors, the costs of a mask are vastly lower than the risks from Covid. But the trade-offs are different in most outdoor settings, and they are different for children. The Covid risks for children are similar to those from a normal flu (as these charts show).
There does not appear to be much scientific reason that campers and counselors, or most other people, should wear a mask outdoors all summer. Telling them to do so is an example of extreme caution — like staying out of the ocean to avoid sharks — that seems to have a greater cost than benefit.
The C.D.C., as I’ve written before, is an agency full of dedicated people trying their best to keep Americans healthy. Walensky, a widely admired infectious-diseases expert, is one of them. Yet more than once during this pandemic, C.D.C. officials have acted as if extreme caution has no downsides.
Everything has downsides. And it is the job of scientific experts and public-health officials to help the rest of us think clearly about the benefits and costs of our choices.
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baked feta pasta and dalgona coffee — as well as a new generation of cooking stars who are largely self-taught, preparing meals in their home kitchens.
Within 24 hours of posting his first TikTok in 2019, Eitan Bernath, now 19, had tens of thousands of followers. His upbeat and approachable food videos have since earned him over a million more, and he has three full-time employees, as well as a gig as a resident culinary expert on “The Drew Barrymore Show.”
Other up-and-coming food creators are making six figures through the app and sponsorships, often using TikTok fame to launch cookware lines, cookbooks and more.
Read Taylor Lorenz’s full story. — Sanam Yar, a Morning writer
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I want to end this week by showing you two Covid-19 charts. They contain the same message: The pandemic is in retreat.
received at least one vaccine shot, and the share is growing by about two percentage points per week. Among unvaccinated people, a substantial number have already had Covid and therefore have some natural immunity. “The virus is running out of places to be communicable,” Andy Slavitt, one of President Biden’s top Covid advisers, told me.
noted. For the first time since March 5 of last year, San Francisco General Hospital yesterday had no Covid patients — “a truly momentous day,” Dr. Vivek Jain said.
There are still important caveats. Covid remains especially dangerous in communities with low vaccination rates, as Slavitt noted, including much of the Southeast; these communities may suffer through future outbreaks. And about 600 Americans continue to die from the disease every day.
But the sharp decline in cases over the past month virtually guarantees that deaths will fall over the next month. The pandemic appears to be in an exponential-decay phase, as this helpful Times essay by Zoë McLaren explains. “Every case of Covid-19 that is prevented cuts off transmission chains, which prevents many more cases down the line,” she writes.
This isn’t merely a theoretical prediction. In Britain, one of the few countries to have given a shot to a greater share of the population than the U.S., deaths are down more than 99 percent from their peak.
down 23 percent from their peak in late April. In India, caseloads have been falling rapidly for almost two weeks.
The rising number of vaccinations also helps; it has exceeded 1.5 billion, which means that more than 10 percent of the world’s population — and maybe closer to 15 percent — has received at least one shot. (A new outlier: Mongolia has secured enough shots to vaccinate all of its adults, thanks to deals with neighboring Russia and China.) Natural immunity, from past infections, may also be slowing the spread in many places, and the virus’s seasonal cycles may play a role, too.
Most countries remain more vulnerable than the U.S. because of their lower vaccination rates. In Africa, a tiny share of people have received a shot, and the numbers are only modestly higher in much of Latin America, the Middle East and Southeast Asia.
The vaccines are how this pandemic ends. That point is coming nearer in the United States and a few other affluent countries, but it remains distant in much of the world. Accelerating the global manufacturing and distribution of vaccines is the only sure way to avoid many more preventable deaths this year. (The Times editorial board, The Economist and National Review have each recently laid out arguments for how to do so.)
“Unless vaccine supplies reach poorer countries, the tragic scenes now unfolding in India risk being repeated elsewhere,” The Economist’s editors wrote. “Millions more will die.”
More on the virus:
Some Americans are struggling to make sense of — and pay — exorbitant and confusing bills, The Times’s Sarah Kliff reports.
A data idea, from Matthew Springer of the University of California, San Francisco: States should report Covid deaths and hospitalizations by vaccination status to highlight the value of the shots.
Virus resources: Look up the pace of vaccinations in your state.
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The Guardian has a roundup of this year’s entries, including Ukrainian folk-techno and an Azerbaijani ode to a wartime spy. — Claire Moses, a Morning writer
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