Month: May 2017

The Koch Brothers’ political network is preparing to spend millions of dollars to ensure their vision for tax reform isn’t lost in the increasing chaos consuming President Donald Trump’s administration.

The network’s leading organizations, Americans for Prosperity and Freedom Partners, on Thursday released a set of general preferences for major changes to the tax code. While explicitly stating their opposition to new border-adjustment or value-added taxes, there were few specifics in a document that was designed to inject a new sense of urgency into the stalled tax debate.

“Now is the time. We’ve got to unite around these principles,” network spokesman James Davis said. “The White House hopefully will see this as a jolt to support them in driving this forward.”

Beyond Thursday’s release, Davis said the network backed by billionaire industrialists Charles and David Koch is launching a multimillion-dollar campaign through the summer to ensure their conservative tax plan is not forgotten. The campaign will include digital ads and town hall meetings across the country, along with phone banks and direct mail.

The Koch push reflects broader concerns from the nation’s business community that Trump’s promise to overhaul the tax code may fall victim to his mounting political challenges. The stock market on Wednesday suffered its largest single-day loss of the Trump presidency. That was before the Justice Department appointed a special counsel to investigate allegations that Trump’s campaign collaborated with Russia to sway the 2016 election.

Late last month, Trump released a one-page proposal that included massive tax cuts for businesses and a bigger standard tax deduction for middle-income families, lower investment taxes for the wealthy and an end to the federal estate tax for the superrich. It’s largely in line with the Koch network’s preference, which calls for lower rates, fewer brackets and the elimination of “special loopholes” and deductions.

There were modest signs Wednesday that the Trump administration was trying to spark new momentum for its tax plan.

Treasury Secretary Steven Mnuchin and other administration officials met with Republican and Democratic members of the Senate Finance Committee in what Democrats described afterward as an opening conversation in the tax debate.

Even under the best of political circumstances, tax reform is difficult. Congress hasn’t overhauled the tax code in more than three decades.

“If we don’t start making the case to the American people and showing them how this improves their lives now, it becomes increasingly more and more difficult, particularly as we move closer to the election,” Davis said.

 
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As China hails the success of its first Belt and Road summit, major powers remain skeptical about the $1 trillion-dollar infrastructure and trade project. Analysts say while the ambitious plan has whet the appetite of developing nations, China missed an opportunity to get developed countries on board.

The fact that China could get the leaders of the World Bank, International Monetary Fund and the United Nations, along with 29 heads of state to sign a communique is a triumph for Beijing, said Ethan Cramer-Flood, associate director for the Conference Board’s China Center for Economics and Business.

By signing the document, they publicly endorsed Beijing’s vision. But that victory was largely symbolic, he said.

“Is it a signal of genuine economic cooperation or is it anything as significant, like a free trade negotiation where new policies are going to emerge because of this document. No, it certainly is not, it is a statement of intent,” Cramer-Flood said.

That intent was borne out by the use of bland phrases such as encouraging, enhancing and promoting, which showed up 16 times in the document. The document is loaded with references to U.N.-related issues, everything from poverty to sustainability and its wording was clearly “strained and stressed to be overwhelmingly inclusive” to get everyone on board, he added.

It also appears to have been prepared beforehand and participants had little opportunity to participate in its wording.

Unmet expectations

“This was an opportunity to create, well, on the one hand, the institutionalization of the initiative, which I think is very important, especially to the Western countries, you know. On the other hand, it was also an opportunity to create greater stakeholder buy-in,” said Jan Gaspers, a China analyst at the Mercator Institute for China Studies or MERICS.

The communique could have been an opportunity for Belt and Road countries to re-shape the initiate, but it was clear from the wording that did not happen, he said.

China also missed an opportunity when it failed to get support from developed countries to sign a crucial document for reducing trade barriers. Gaspers said those who refused to sign the document saw it as a step backwards.

“Basically, it would fall behind what was agreed within the framework of G-20 Summit last year on trade issues as it regards to transparency, reciprocity and so on,” Gaspers said.

Analysts say participants found common ground on issues such as finance, but the document on free trade was the one that faced the most headwinds.

“Certain western principles and values that some of the European countries wanted to insert were rejected by the Chinese side,” said the Conference Board’s Ethan Cramer-Flood.  “And not just the Chinese side, I am hearing talk of Russia and Turkey as well,” “they weren’t able to get aligned on that wording.”

Wording and principles aside, it is mostly about getting a share of business.

Putting own interests first

Christopher Balding, a professor at Peking University’s HSBC Business School, said Beijing has made it exceedingly clear the Belt and Road will be a China focused project that will openly favor Chinese firms.

“I don’t think anyone [in developed countries] has any real expectations that their businesses will be able to compete for One Belt, One Road business in any real manner,” Balding said.

At the same time, developed countries are keenly aware the initiative is not only about public diplomacy, but also about domestic politics.

Later this year, China hosts a once in five-year leadership reshuffle, and raising the country’s international profile is crucial for President Xi Jinping as he works to consolidate power within the party.

“This is essentially what amounts to be an election year in China. This is something that a lot of people have overlooked, the importance of how this plays domestically in bolstering Xi Jinping and the [Communist] party’s image,” Balding said.

Gaspers said the meeting was also significant because of a political alignment of authoritarian forces that emerged, noting that it was no coincidence that Xi Jinping and the presidents of Russia and Turkey were seen standing so close to each other during the meetings.

“It shows a shift in terms of global and bilateral, and indeed multilateral alliances. That was confirmed at the summit and so optics were quite interesting,” he said.
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Wal-Mart delivered first-quarter earnings that show how it’s winning over shoppers at stores and online, even in an increasingly competitive retail landscape.

The world’s largest retailer beat Wall Street estimates and delivered another solid gain in comparable-store sales. Customer traffic at Wal-Mart also rose while other major retailers like Macy’s and Target suffered declines.

And online sales surged 63 percent, more than doubling the previous quarter’s digital sales. The majority of the online sales growth was organic through Walmart.com.

Wal-Mart, like other traditional retailers, has played catch-up to Amazon.com and other online companies. It has retooled how it operates online and accelerated that shift by buying already successful online operators.

Wal-Mart spent more than $3 billion for Jet.com in its bid to lure younger and more affluent customers. Then it bought ShoeBuy.com for $70 million and the outdoor and gear seller Moosejaw for $51 million. In March, it bought the trendy clothing seller ModCloth. The clothing sites are operating as stand-alone operators and appeal to millennial shoppers.

Wal-Mart also raised its stake in JD.com, China’s No. 2 e-commerce site.

Under Marc Lore, the founder of Jet.com who is now CEO of Walmart.com, the company is still looking for new startups to buy. Since he joined the company, the number of items available on its third-party online marketplace has soared to more than 50 million. That’s up 10 million from a year ago. Wal-Mart is working to accelerate the integration between Wal-Mart.com and Jet.com, and trying to take advantage of its scale in areas like shipping.

It’s also aggressively hunting Amazon shoppers, scrapping a fee-based shipping program earlier this year in favor of free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35.

Amazon Prime costs $99 a year, but comes with services like streaming music and video. Amazon has countered, lowering the free-shipping minimum purchase price for non-members.

In April, Wal-Mart also began offering discounts on thousands of online-only items when customers elect to have them shipped to one of the company’s stores for pickup — cheaper for the company than delivering to people’s homes. Wal-Mart plans to expand the price cuts to more than a million items by the end of June.

Wal-Mart is now launching an incubator lab focused on projects in robotics, virtual and augmented reality, and artificial intelligence in its battle with Amazon for customers The so-called Store No. 8 will be located in Silicon Valley.

Even as it goes after Amazon online, it’s shoring up its advantage in stores.

Wal-Mart is honing its image at those locations and making customer service friendlier and faster. The company has invested $2.7 billion in higher wages and training for workers to decrease turnover and make the shopping experience more desirable.

Wal-Mart Stores Inc. reported fiscal first-quarter earnings of $3.04 billion.

On a per-share basis, the Bentonville, Arkansas, company had a profit of $1.

The results surpassed Wall Street expectations of 96 cents per share, according to a poll by Zacks Investment Research.

Revenue was $117.54 billion, just shy of the $117.63 billion analysts had expected.

Wal-Mart expects its per-share earnings to range from $1 to $1.08 for the current quarter. Analysts forecast adjusted earnings per share of $1.07.

Wal-Mart’s revenue at stores opened at least a year rose 1.5 percent, at the top end of the company’s estimated range of 1 percent to 1.5 percent.

That was fueled by customer traffic increase of 1.5 percent.

Shares rose slightly in pre-market trading Thursday.

 
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Prime Minister Theresa May revealed her core election promises and political vision Thursday, saying she will slash immigration and take Britain definitively out of the EU, then build a “great meritocracy” by giving the poor a helping hand and lifting barriers to social mobility.

May’s platform for the June 8 election marks a big shift away from the strongly pro-business, free-market policies of past Conservative governments. She said leaving the EU offers the chance to build “stronger, fairer, more prosperous Britain” based on “a new contract between government and people.”

The Conservative election manifesto renews a promise to reduce net immigration to below 100,000 — a vow the party has made and broken since 2010. It sets no date by which Britain will reach the goal.

Many Britons who voted last year to leave the European Union were motivated by a desire to control immigration, which has soared as the EU has expanded. EU citizens have the right to live and work in other member states.

Net migration — the difference between the number of people moving to Britain and those leaving — was 273,000 in the year to September 2016, and has not been below 100,000 in 20 years.

After Britain leaves the EU — by 2019 at the soonest — the country will have more power to limit those moving to the country. But many economists say the “tens of thousands” target is arbitrary and could prevent companies recruiting workers with essential skills.

Paul Johnson, director of think tank the Institute for Fiscal Studies, said sharply reducing immigration would be “an additional cost on employers and the economy” because it implied losing a source of productive labor.

The Conservative platform says Britain will enter EU divorce negotiations “in a spirit of sincere cooperation” — and will pay an exit bill based on “a fair settlement of the U.K.’s rights and obligations as a departing member state.” The amount Britain will be asked to pay is expected to be one of the first flashpoints in the exit talks.

May insists she is determined to make a success of Brexit, which poses huge risks for the British economy. The value of the pound has tumbled since Britons voted to leave the bloc, pushing costs up and driving inflation past wage growth.

May’s economic vision outlined in the manifesto includes ideas more reminiscent of the center-left Labour Party than traditional Conservative policies.

May launched it with a speech in the northern England town of Halifax, a Labour seat the Tories hope to win on June 8. Opinion polls give May’s Conservatives a big lead over the opposition.

The platform signals that May is more willing than her predecessor, David Cameron, to let the state intervene in markets. There are promises to strengthen regulators and cap energy prices to ensure consumers aren’t ripped off by utility firms.

The manifesto also gives the government greater flexibility to raise and spend money. It scraps a guarantee that state pensions will rise by at least 2.5 percent a year, and abandons Cameron’s promise not to raise income tax. It also eases off on previous promises to eliminate the deficit, moving the target date to 2025.

There are promises to spend at least 8 billion pounds ($10.4 billion) more on health care by 2022, put more money into education and tackle the growing cost of elderly care, which risks becoming a social and fiscal crisis as the population ages.

To do that, May said she will remove some financial protections for pensioners — generally a group politicians are loath to alienate because of their high voter-turnout rates. A payment that pensioners currently receive to help pay winter fuel bills will in future go only to the poorest.

May is often compared to Britain’s only other female prime minister, Margaret Thatcher, who transformed the country with pro-market policies that came to be dubbed “Thatcherism.”

May’s political philosophy appears strikingly different. While Thatcher mistrusted the state, May’s election manifesto says that “government can and should be a force for good,” and outlines a more interventionist role in business and industrial strategy.

May rejected suggestions there is a distinctive vision that could be labeled “Mayism.”

“There is no Mayism,” she said. “There is good solid Conservatism.”

 
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U.S. stocks, the dollar, and government bonds were down in Wednesday’s trading amid investor worries about controversial actions and comments from President Donald Trump. The major U.S. stock indexes fell 1.8 percent or more, and the Dow Jones Industrial Average was off 372 points.

The faltering markets follow Trump’s firing of the FBI chief, his reported sharing of secrets with top Russian officials, and allegations that the president may have tried to block an investigation into actions by a top aide who was fired.

Following Trump’s election, the dollar rose and stocks climbed to a series of record highs as investors bet that Trump’s promises to cut taxes and regulations would boost economic growth and corporate profits.

Investors may be having second thoughts, though, after legislative efforts to repeal and replace a health care law stalled, and the tax cut agenda is tangled in political bickering.

Even Trump’s Republican allies say calls for congressional and other investigations of the administration’s actions are a distraction for lawmakers trying to move his agenda forward against determined opposition from Democrats.
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