The New York Times reports on a topic near and dear to our interests:
No place better illustrates the absurdities of the proliferating use of tax incentives for job creation than the Kansas City metro area, which straddles the Missouri-Kansas state line.
Over the past decade, Missouri and Kansas have offered more than $330 million in tax breaks to lure companies back and forth across State Line Road. More than 100 companies and more than 12,000 workers have moved to new offices, some headed east, some headed west. Missouri poached Swiss Re and Applebee’s; Kansas got JPMorgan Chase and AMC Entertainment.
The net result? No increase in economic activity; no improvement in the lives of workers. Just a few more jobs in Kansas, a few less in Missouri — and a big loss of tax dollars.
Corporate tax incentives are a dubious business. The giveaways frequently serve no higher purpose than rewarding businesses for moving where they already plan to move or creating jobs they already plan to create. And even when incentives prove motivational, there is often reason to question whether governments are getting value for the money.
The black comedy of corporate relocation across State Line Road is an extreme example, but it is by no means unique. Half of the nation’s 10 most populous metropolitan areas — New York, Chicago, Washington, Philadelphia and Boston — include portions of multiple states. So do smaller metro areas such as St. Louis; Charlotte, N.C.; Portland, Ore.; Cincinnati; and Memphis. And all are struggling to limit a practice that amounts to paying your furniture to rearrange itself.
A variant of the sports ball stadium boondoggle which we’ve also covered ad nauseam, corporate tax giveaways rarely, if ever, make sense in the long term. The politicians who vote for the tax giveaways are usually long gone, but the bill remains, payable by taxpayers. Consultants have raked in their consulting fees, businesses continue doing what they would have done, albeit with a slightly improved quarterly profit for a several years.
Not to mention, sometimes the corporation moves to somewhere else:
But the success stories tend to be celebrated while the failures are forgotten — and studies find that over time, the recipients of tax incentives are no more likely to create jobs or to drive investment than companies that don’t get a break. The plain truth is that governments have no special ability to predict which companies will thrive. Recipients of tax incentives aren’t even guaranteed to stay put. Missouri used $12.9 million in tax breaks to lure Applebee’s corporate headquarters from Kansas in 2011. Four years later, the company moved to California.
Why do politicians still lavish money on corporations for dubious reasons? Who knows, perhaps there should be a study of how many people involved in these sorts of decisions directly benefit from them within a decade.
The agreement with the attorney general’s office says that Trump must sell two large portraits of himself that he spent $30,000 of foundation money on. The paintings are now valued at thousands of dollars less than what he paid for them.
One painting was a six-foot-tall portrait of Trump, a “speed painting” by artist Michael Israel painted in under six minutes during an event at Mar-a-Lago. The other painting is a four-foot-tall portrait of Trump’s face that the Washington Post described as a “a younger-looking, mid-’90s Trump, painted in acrylic on top of an old architectural drawing.”
Trump also spent $12,000 of money ostensibly donated for charity on a Denver Broncos helmet signed by former quarterback Tim Tebow.
Take together, all three items have been valued at $975 on a recent IRS filing, a drop in value of $41,025.
Trump is being forced to shut down the Trump Foundation, which New York Attorney General Barbara D. Underwood described as being part of “a shocking pattern of illegality.” Underwood said Trump and his foundation engaged in “unlawful coordination with the Trump presidential campaign, repeated and willful self-dealing, and much more.”
The foundation, she said, was “little more than a checkbook to serve Mr. Trump’s business and political interests.”
The Environmental Protection Agency signed off last March on a Canadian energy company’s pipeline-expansion plan at the same time that the E.P.A. chief, Scott Pruitt, was renting a condominium linked to the energy company’s powerful Washington lobbying firm.
Both the E.P.A. and the lobbying firm dispute that there was any connection between the agency’s action and the condo rental, for which Mr. Pruitt was paying $50 a night.
Nevertheless, government ethics experts said that the correlation between the E.P.A.’s action and Mr. Pruitt’s lease arrangement — he was renting from the wife of the head of the lobbying firm Williams & Jensen — illustrates why such ties to industry players can generate questions for public officials: Even if no specific favors were asked for or granted, it can create an appearance of a conflict.
“Entering into this arrangement causes a reasonable person to question the integrity of the E.P.A. decision,” said Don Fox, who served as general counsel of the Office of Government Ethics during parts of the Obama and George W. Bush administrations.
Staying in a 2 bedroom condo in a swanky DC neighborhood for $50 a night? That’s a good deal if you can stomp out of the swamp to get it. Pruitt’s daughter got to use the other room, but she stayed for free. And the $50 was only for nights he was there, not the entire time. You know, like a deal you would negotiate with your landlord. If your landlord was a lobbyist who had business in front of your agency, naturally.
However, an examination of Capitol Hill rentals suggests that rates typically are considerably higher and generally do not come with a provision, as Mr. Pruitt’s did, that the renter can pay for only the nights stayed at the condo.
“I’ll leave my stuff here for six months, will sleep here a few nights a month on an irregular schedule, and you’ll charge me only for the nights when the police don’t break down the door, and I wake up in your bed. Deal? Deal.“
Phil Marches On
Environmental Protection Agency head Scott Pruitt’s security detail broke down the door of the Capitol Hill condo he rented from the wife of an energy lobbyist last year because they believed the Trump cabinet member was unconscious, according to a report Friday.
The bizarre March 2017 incident unfolded after a member of Pruitt’s personal security became concerned about the administrator when he didn’t answer his phone, according to ABC News.
“They say he’s unconscious at this time,” a 911 operator is told, according to a recording obtained by the network. “I don’t know about the breathing portion.”
If one had paid attention to Donald Trump over the years, either as a running joke, or as an example of crony capitalism run amok, one would have noticed his frequent skirting of ethical norms. I’ve always considered Trump to be a wanna-be gangster. Everything is permitted, as long as Donnie gets his beak wet. Sadly, in the 2016 election, Trump and his enablers were able to switch media focus onto other shiny objects: Hillary Clinton’s emails, “economic nationalism”, sexual misconduct and so forth. There could have been a thousand television segments aired in 2016 about Trump’s corrupt business practices in Panama, Vancouver, the Republic of Georgia, and wherever else, instead Trump was allowed to call in by telephone, guide the conversation, and get thousands of hours of free media coverage.
Trump has always been a swamp dweller, Bannon’s “Drain the Swamp” branding was ironic, but never based in reality. The Trump White House is filled with ethically challenged corrupt people of all levels of mendacity.
Anyway, can’t go backward.
Ben Smith writes about Trump and Trump’s love of corruption…
When Donald Trump was elected, reporters and editors all over sat down to think through the possible reporting tracks on the Trump presidency: There was his new populist movement, his personality and family, his policy plans.
And then there was the corruption beat: Trump had a long history of enriching himself at taxpayers’ expense, and he and his circle did not come out of a tradition that knew the meaning of the term public service.
But a year ago, there was no reporting to do on the corruption story for a simple reason: The Trump administration hadn’t been around long enough.
Well, now it’s been around long enough.
And in recent weeks there has been an escalating series of stories about self-dealing, money flowing to cronies, and high-stakes policy decisions impossibly tangled with personal wealth. What Trump and his critics appear not to have realized is that this — not conspiracies, porn actresses, or divisive comments — is the starkest threat to his presidency.
That is another way of saying that what we typically call corruption isn’t a criminal matter. It’s a political one.
This is an axiom of politics: You can get away with horrible policy, bad leadership, and complicated conflicts of interest. But when you’re caught doing something easier to explain — sexually harassing staffers or stealing even modest amounts of money — you’re announcing your resignation.
Former Rep. Aaron Schock, for instance, is still fighting corruption charges — but his Downton Abbey–styled office made the appearance of corruption too easy to fight. Former Rep. Jesse Jackson Jr. blew campaign funds on a Rolex, fur coats, and Bruce Lee memorabilia, and went to jail without even stealing any public funds. And while former secretary Tom Price dodged concerns about insider trading that could have been worth millions of dollars, expensive plane travel — mere thousands! — ended his career.
Several news accounts have confirmed that Mueller has indeed begun to examine Trump’s real-estate deals and other business dealings, including some that have no obvious link to Russia. But this is hardly wayward. It would be impossible to gain a full understanding of the various points of contact between the Kremlin and the Trump campaign without scrutinizing many of the deals that Trump has made in the past decade. Trump-branded buildings in Toronto and the SoHo neighborhood of Manhattan were developed in association with people who have connections to the Kremlin.
Other real-estate partners of the Trump Organization—in Brazil, India, Indonesia, and elsewhere—are now caught up in corruption probes, and, collectively, they suggest that the company had a pattern of working with partners who exploited their proximity to political power.
One foreign deal, a stalled 2011 plan to build a Trump Tower in Batumi, a city on the Black Sea in the Republic of Georgia, has not received much journalistic attention. But the deal, for which Trump was reportedly paid a million dollars, involved unorthodox financial practices that several experts described to me as “red flags” for bank fraud and money laundering; moreover, it intertwined his company with a Kazakh oligarch who has direct links to Russia’s President, Vladimir Putin. As a result, Putin and his security services have access to information that could put them in a position to blackmail Trump. (Sekulow said that “the Georgia real-estate deal is something we would consider out of scope,” adding, “Georgia is not Russia.”)
The reality of Trump’s presidency has been just the reverse.
There is nothing blind about his finances — his business empire is merely managed on a day-to-day basis by his adult sons, with whom he is in regular contact and who also work as leading members of his political operation.
His daughter and son-in-law serve as high-ranking officials in the White House, he operates a hotel in the nation’s capital that serves as an informal headquarters for his administration, and he spends a majority of his weekends at his private resorts in Florida, Virginia, and New Jersey.
Some of the grifting that results from this is almost comical, as in the periodic stories about the Secret Service spending thousands of dollars at a time renting golf carts from clubs that the president owns.
But lining his pockets with vast sums of public money is the least of the problems with Trump’s conduct in this regard. The real issue is that by joining one of Trump’s private clubs, wealthy individuals are putting cash directly in the president’s pocket while also gaining access to him. Trump seems to regularly — and quite openly — poll Mar-a-Lago members for their thoughts on the issues of the day. But it’s also an opportunity for more subtle lobbying in unprecedented ways.
An early Trump administration controversy that now seems almost quaint came when presidential counselor Kellyanne Conway used a television news appearance from the White House grounds to tout Ivanka Trump’s shoe brand. It wasn’t a big deal in the grand scheme of things, but this kind of low-level legal violation keeps happening in the Trump era, right up to an apparent Hatch Act violation from Jared Kushner as he touted Brad Parscale’s appointment as campaign manager of the Trump 2020 reelection bid.
But the list gets longer and contains more serious violations:
US intelligence agencies have reports of multiple foreign governments discussing ways to use Kushner’s business interests to compromise his work for the federal government.
This week, four political appointees at the Commerce Department lost their jobs after they flunked background checks.
Even as Ben Carson’s tenure at the Department of Housing and Urban Development was facing an inspector general investigation over improper involvement of the Carson family in public business, Carson apparently demoted a career staffer after she objected to his plan to spend $31,000 on a dining set for his office.
Veterans Affairs Secretary David Shulkin was caught improperly accepting Wimbledon tickets and charging the public for his wife’s travel.
Environmental Protection Agency Administrator Scott Pruitt is flying first-class at public expense so he could avoid having unpleasant interactions with fellow passengers. T
hese kinds of problems will only grow worse the longer Trump’s own conflicts of interests are permitted to go unabated. Maintaining a high standard of ethical conduct across a sprawling bureaucracy overseen by dozens of political appointees is genuinely challenging, even when elected officials are trying to do it.
When the president of the United States doesn’t care about ethics and the predominant attitude of his co-partisans in Congress is that ignorance is bliss, corruption will grow like mushrooms in the shade.
Early last year, a private equity billionaire started paying regular visits to the White House.
Joshua Harris, a founder of Apollo Global Management, was advising Trump administration officials on infrastructure policy. During that period, he met on multiple occasions with Jared Kushner, President Trump’s son-in-law and senior adviser, said three people familiar with the meetings. Among other things, the two men discussed a possible White House job for Mr. Harris.
The job never materialized, but in November, Apollo lent $184 million to Mr. Kushner’s family real estate firm, Kushner Companies. The loan was to refinance the mortgage on a Chicago skyscraper.
Even by the standards of Apollo, one of the world’s largest private equity firms, the previously unreported transaction with the Kushners was a big deal: It was triple the size of the average property loan made by Apollo’s real estate lending arm, securities filings show.
It was one of the largest loans Kushner Companies received last year. An even larger loan came from Citigroup, which lent the firm and one of its partners $325 million to help finance a group of office buildings in Brooklyn.
For the record, I walked by 225 W. Randolph today, currently the regional headquarters of AT&T, leased from Kushner, and the building looked pretty run-down from the outside.
Slightly Run Down Entrance to 225 W Randolph
Jennifer Rubin of The Washington Post adds:
“Kushner represents a total failure in every possible dimension,” says ethics guru Norm Eisen. “His appointment was a violation of the federal anti-nepotism statute. We now know that he has the worst ethics and conflicts issues of anyone in the administration with the possible exception of his father-in-law. He could not even fill out his financial disclosures and security clearance forms properly, with dozens of amendments being required.” He adds, “His contacts with the Russians and other foreign governments are deeply problematic. His security clearance has been downgraded to the level of a White House intern, making it impossible for him to do the jobs for which he is purportedly there. He must go before he does any more damage.”
News this week that Kushner received jumbo loans from two banks after meeting with Citigroup and Apollo Global Management highlights the risk he poses. How many other suspect meetings have been taken? What ones are planned? Kushner apparently has no appreciation for the appearance of conflicts of interest, let alone actual conflicts. Because he is so heavily indebted and still operates his real estate company, we cannot be sure whether performance of his White House duties are for his own benefit or the country’s. If he meets with a bank executive, or representatives of one of the four countries attempting to influence there is at the very least the appearance of corruption. And because Kushner’s portfolio is so broad it seems unlikely he wouldn’t inevitably make some decision that affects his own financial interests and/or those of his lenders.
All of this goes to the legal and ethical implications of his continued presence in the White House. However, the political ramifications are nearly as bad, It’s now painfully obvious he is there solely by nepotism and that the president knew or should have known about the security risks and conflicts Kushner brought with him. To allow him to remain simply reaffirms the president’s comfort level with ethical malfeasance. Just as keeping Rob Porter for so long signaled the White House really didn’t think spousal abuse was that big a deal, Trump’s retention of Kushner suggests that the president doesn’t much care if his inner circle is beholden to foreigners.
Federal investigators are scrutinizing whether any of Jared Kushner’s business discussions with foreigners during the presidential transition later shaped White House policies in ways designed to either benefit or retaliate against those he spoke with, according to witnesses and other people familiar with the investigation.
Special counsel Robert Mueller’s team has asked witnesses about Kushner’s efforts to secure financing for his family’s real estate properties, focusing specifically on his discussions during the transition with individuals from Qatar and Turkey, as well as Russia, China and the United Arab Emirates, according to witnesses who have been interviewed as part of the investigation into possible collusion between Russia and the Trump campaign to sway the 2016 election.
Kushner’s family real estate business, Kushner Companies, approached Qatar multiple times, including last spring, about investing in the company’s troubled flagship property at 666 Fifth Avenue in New York, but the government-run sovereign wealth fund declined, according to two people familiar with the discussion. Another discussion of interest to Mueller’s team is a meeting Kushner held at Trump Tower during the transition in December 2016 with a former prime minister of Qatar, Hamad bin Jassim bin Jaber Al Thani, or HBJ, according to people familiar with the meeting.
HBJ had been in talks with Kushner Companies about investing in its Fifth Avenue property, which is facing roughly $1.4 billion in debt that is due in 2019, these people said. Those talks with the company continued after Kushner entered the White House and stepped away from the business, but last spring HBJ decided against investing, these people said.
In the weeks after Kushner Companies’ talks with the Qatari government and HBJ collapsed, the White House strongly backed an economically punishing blockade against Qatar, led by Saudi Arabia and the UAE, citing the country’s support for terrorism as the impetus. Kushner, who is both President Donald Trump’s son-in-law and a key adviser, has played a major role in Trump’s Middle East policy and has developed close relationships with the crown princes of Saudi Arabia and the UAE.
Some top Qatari government officials believe the White House’s position on the blockade may have been a form of retaliation driven by Kushner who was sour about the failed deal.
New York’s banking regulator has reportedly requested loan information about Jared Kushner, his family and real estate business Kushner Companies, from three banks including Deutsche Bank AG, which is steeped in another controversy involving the presidential adviser.
New York State’s Department of Financial Services last week sent letters to Deutsche Bank, Signature Bank and New York Community Bank requesting loan applications and processes, and information about the institutions’ relationships with Kushner and his business assets, a person familiar with the correspondence told Bloomberg in a report published Wednesday.
Kushner and his wife, Ivanka Trump, took on more debt over the past year from lenders including Signature Bank and New York Community Bank, recent government disclosures show. The couple had unsecured lines of credit of $5 million to $25 million from each of the three banks, according to a disclosures filing from late December.
As more and more Americans are beginning to share scientists’ long expressed concerns over climate change, revelations of big bank energy market manipulations highlight Wall Street’s entrenched stake in the fossil fuel economy that is heating up the planet. In what critics are calling Enron 2.0, JPMorgan Chase is facing a reported fine in the range of $500 million from the Federal Energy Regulatory Commission (FERC) for manipulating energy markets in California and Michigan. Chase acquired a slew of aging power plants from Bear Stearns when the firm tanked in the 2008 market meltdown. …(Photo: Seth Anderson / Flickr)