How Much Trump's Tax Cuts Cost the Government
What Are the Costs of the Trump Tax Cuts to You?

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BY
KIMBERLY AMADEO
Updated July 04, 2020

ARTICLE TABLE OF CONTENTS

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Two Other Reports Disagree
What If the Cuts Become Permanent?
Why Tax Cuts Won’t Work Now
The Bottom Line

President Donald Trump’s administration promised that the 2017 Tax Cut and Jobs Act would add $1.8 trillion in new revenue. That would more than pay for the $1.5 trillion cost of the tax cuts themselves.1

The U.S. Department of the Treasury looked at the combined effect of the tax cuts and Trump's Fiscal Year 2018 budget. The budget would boost growth through increased infrastructure spending, deregulation, and welfare reform.1

Congress approved the budget and then some. Trump asked for $1.15 trillion in discretionary spending and Congress gave him $1.3 trillion.2 3 Congress also added $10.6 billion to Trump’s request for infrastructure spending, amounting to a total of $21 billion.

The Treasury report projected the tax cuts and the budget would boost economic growth to 2.9% a year for the next 10 years.

The report said that prosperity generated by the cuts and the budget would boost tax revenue enough to offset the tax cuts.1

Two Other Reports Disagree

The Joint Committee on Taxation analyzed the tax cuts alone. It came to a different conclusion. It said the Act would increase the deficit by $1 trillion over the next 10 years. The Committee expected the economy to grow just 0.7% a year.4 It did not take into account the other changes in the FY 2018 budget.

It seems most fair to simply look at the effect of the tax cuts. In that case, the Joint Committee’s estimate would be most accurate.

The Tax Foundation came up with a second conclusion. It said the Act would add almost $448 billion to the deficit over the next 10 years.5 It looked at the effect of the tax cuts themselves and eliminated the Affordable Care Act mandate.

The Foundation said the tax cuts would cost $1.47 trillion in decreased revenue. It would add $600 billion in growth and savings. The plan would boost economic growth by 1.7% a year. It would create 339,000 jobs and add 1.5% to wages.5

What Happens If the Cuts Become Permanent

The tax cuts will expire for individuals in 2025. They remain permanent for corporations.6 In all likelihood, Congress will make the individual cuts permanent when the time comes.

Treasury’s latest analysis includes this scenario. In that case, the tax cuts would cost $2.3 trillion instead of $1.5 trillion over the next 10 years.7 A Politico analysis found that all additional revenue from increased growth would go toward paying for the cuts. The cost is too high for the tax cuts to pay for themselves. Instead, the deficit and debt would continue to grow.8

This increase to the debt means that formerly budget-conscious Republicans have done an about-face.

The party fought hard to pass the sequestration 10% spending cuts. In 2011, some members even threatened to default on the debt rather than add to it.9 Now they say that the tax cuts would boost the economy so much that the additional revenues would offset the tax cuts.10

Why Tax Cuts Won’t Work Now

Supporters of tax cuts believe in the theory of supply-side economics. It says that freeing up businesses to grow more will drive economic growth. When the government cuts taxes or regulations, companies will hire more workers. The resultant job growth creates more demand which boosts the economy.11

Supply-side is the opposite of Keynesian theory. It says that consumer demand drives the economy. It supports more government spending on infrastructure, unemployment benefits, and education.12

Tax cuts work when the economy is sluggish, businesses need money, and tax rates are high.

For example, the Treasury Department found that the Bush tax cuts gave the economy a short-term boost. But that was because it had been in a recession.13 Businesses had a lot of extra capacity they could put to use immediately.

According to a 2017 survey, many large corporations said they don’t need the money from the tax cuts. They are sitting on a record $2.3 trillion in cash reserves, double the level in 2001. The CEOs of Cisco, Pfizer, and Coca-Cola would instead use the extra cash to pay dividends to shareholders. The CEO of Amgen will use the proceeds to buy back shares of stock. In effect, the corporate tax cuts would boost stock prices but wouldn't create jobs.14

Economist Arthur Laffer found that tax cuts worked best when taxes were high. According to the Laffer Curve, that's called the prohibitive range.

For example, supply-side economics worked during the Reagan administration. But that was because the highest tax rate was 70%.15 The 2017 tax rates were half of what they were in the 1980s.16

Instead, the tax cuts could hurt economic growth because they will increase the debt. Investors see a large debt as a tax increase on future generations. That's especially true if the ratio of debt-to-GDP is near 77%. That's the tipping point, according to a study by the World Bank. It found that every percentage point of debt above this level costs the country 1.7% in growth.17 The U.S. debt-to-GDP ratio was 104% before the tax cuts.18

The Bottom Line

Tax cuts aren't effective at boosting economic growth when the economy is already expanding.19 They also don't work well when tax rates are below the 50% prohibitive range.20

There are three estimates of the cost of Trump's tax cuts:

The Trump administration said it would generate $1.8 trillion in revenue, more than making up for its $1.5 trillion cost. But it adds the boost to growth from the FY 2018 budget.1
The JCT said it would increase the deficit by $1 trillion. It does not include the impact of the FY 2018 budget.4
The Tax Foundation said the Act would add $448 billion to the deficit. It also includes the impact of eliminating the Obamacare mandate.5

If the individual cuts are made permanent, the cost will rise to $2.3 trillion.7

UPDATE 

USPS just made sweeping changes to its leadership as lawmakers call for an investigation into delayed mail ahead of the 2020 election

Benji Jones

A United States Postal Service (USPS) worker works in the rain in Manhattan during outbreak of coronavirus disease (COVID-19) in New York Reuters

The nation's public mail service USPS announced a sweeping overhaul to its organization Friday that displaced the agency's two top executives. 

The new structure follows previous changes the agency made under the leadership of Louis DeJoy that Democratic lawmakers say put USPS's ability to field scores of mail-in ballots at risk. 

Postmaster General Louis DeJoy said the changes will allow the agency to reduce costs and capture more revenue. The agency lost $2.2 billion in the second quarter of the year. 

Postmaster General Louis DeJoy announced a massive reorganization to the US Postal Service's leadership structure on Friday, amid calls from Democrats to investigate recent changes resulting in delayed mail deliveries. A surge of mail-in ballots is expected in the 2020 presidential election.

According to a new organizational chart released Friday, USPS is reassigning or displacing 23 postal executives including the two top officials who oversee day-to-day operations, The Washington Post reported. The agency is also implementing a management hiring freeze and will request volunteers for early retirements.

"This organizational change will capture operating efficiencies by providing clarity and economies of scale that will allow us to reduce our cost base and capture new revenue," Louis DeJoy, who was appointed in May, said in a public statement. "It is crucial that we do what is within our control to help us successfully complete our mission to serve the American people."

The announcement comes in the wake of $2.2 billion loss USPS reported for the period April through June and a handful of cost-cutting measures DeJoy made earlier this year.

A USPS employee in Santa Monica, California Mario Tama/Getty Images

Tensions flare with lawmakers ahead of the election

Earlier this summer, DeJoy prohibited overtime and tweaked delivery policies, among a handful of cost-cutting measures that Democratic lawmakers said weakened the agency's ability to field scores of mail-in ballots in November's election.

"We believe these changes, made during the middle of a once-in-a-century pandemic, now threaten the timely delivery of mail — including medicines for seniors, paychecks for workers, and absentee ballots for voters," House Speaker Nancy Pelosi and Senate Minority Leader Charles Schumer wrote in a letter sent to DeJoy on Thursday. "We believe these changes must be reversed," they wrote.

It's not clear exactly how the organizational changes will impact the postal service, and its role in the election, but analysts told The Post that it centers power around DeJoy, a "major ally" of President Trump.

Some postal experts also say DeJoy's recent efforts are turning an essential government service into a for-profit business, according to The Post.

"He keeps referring to the USPS as 'our business.' But he's been appointed postmaster general. You don't run a business," Philip Rubio, a history professor at North Carolina A&T State University and a former postal worker, told The Post.

Louis DeJoy, USPS Postmaster General Associated Press

A closer look at the restructure

Altogether, 23 executives were reassigned or displaced, The Hill reported, while five workers joined the hierarchy from other roles at the agency.


"These organizational changes do not initiate a reduction-in-force, and there are no immediate impacts to USPS employees," USPS said in a statement announcing the changes.

Among the many changes, David Williams, the former chief operating officer and EVP, will fill a new role, chief logistics and processing operations officer. Other executives were cut out of leadership roles including Kevin McAdams, the former VP for delivery and retail operations.

The agency's finances remain strained. USPS is projected to run out of money by as soon as next March, The Post reports. However, the agency recently secured a $10 billion loan authorized in an earlier coronavirus relief package. 

The White House reportedly asked South Dakota's governor how to add another president to Mount Rushmore, and she later gave Trump a 4-foot replica with his face on it

VANITY, VANITY, ALL IS VANITY

Benji Jones

President Trump and First Lady Melania Trump attend Independence Day events at Mount Rushmore on July 3, 2020 SAUL LOEB/AFP via Getty Images)

Last year, a White House aide asked the office of South Dakota's governor, Kristi Noem, how to add more presidents to Mount Rushmore, The New York Times reported Saturday, citing an anonymous source familiar with the conversation. 

Gov. Noem played to President Trump's interest in the monument in July, greeting him with a four-foot replica of Mount Rushmore with his face added on to it. 

Noem recalled her first meeting with Trump in the oval office: "I said, 'Mr. President, you should come to South Dakota sometime. We have Mount Rushmore.' And he goes, 'Do you know it's my dream to have my face on Mount Rushmore?'"

It's not possible to add another president to the monument, according to reporting by the South Dakota paper Argus Leader. 

It's not possible to carve a fifth president's face into South Dakota's Mount Rushmore national memorial — there's no secure surface left, according to the National Park Service.

But that didn't stop the Trump administration from asking.

Last year, a White House aide contacted the office of South Dakota's governor, Republican Kristi Noem, to inquire about the process for adding more faces, according to The New York Times. The Times cited a Republican official familiar with the conversation.

Trump's interest in Mount Rushmore, and his desire to be etched in among the four existing presidents, is no surprise to Noem, who says he brought it up during their first meeting in the oval office.

Mount Rushmore national memorial Mike Stewart/AP Photo

"He said, 'Kristi, come on over here. Shake my hand,'" Noem recounted to South Dakota's Argus Leader. "I shook his hand, and I said, 'Mr. President, you should come to South Dakota sometime. We have Mount Rushmore.' And he goes, 'Do you know it's my dream to have my face on Mount Rushmore?' "I started laughing," she said. "He wasn't laughing, so he was totally serious."

Noem, a close ally of President Trump's, has since played into that dream, at least with the power she has.

When Trump visited the monument in early July for an Independence Day speech, she greeted him with a four-foot model of Mount Rushmore with his face carved into it, the Times reported, citing a source familiar with the exchange.

The news came amid rumors that Noem could overtake Vice President Mike Pence as Trump's running mate in the 2020 election, though The Times cited a source who said Noem has already indicated to Pence that she isn't trying to replace him.

To be clear, adding another face to Mount Rushmore is not possible. While it looks like there's a spot to the right of George Washington — which is actually where the sculptor, Gutzon Borglum, intended to put Thomas Jefferson — the rock surface is unstable. 

Noem reportedly joked with Trump that there is another option, Argus Leader reports.

"Come pick out a mountain," she told him.

CYBORG CAPITALISM 

'I'd rather turn them into robo cops': Execs from Man Group, Bridgewater, and Schonfeld explain how they're trying to blend humans and machines
Dan DeFrancesco and Bradley Saacks
Aug 6, 2020, 1

Quant and fundamental firms are looking to bridge the gap between the two sides in an effort to get the best out of human and machine. Samantha Lee/Business Insider

"Quantamental" is gaining hype on Wall Street. It's a type of investing strategy that tries to blend the best of quant funds and fundamental analysis.

Bringing the two disciplines together is a feat in itself — hedge funds have tried and failed many times to get the culture and responsibilities just right.

But both sides need each other, as fundamental analysts struggle to sort through massive amounts of data and quant models malfunction during never-before-seen market conditions brought on by the coronavirus.

"I don't see my job as automating away humans," Man GLG's Paul Chambers told Business Insider. "I'd rather turn them into robo cops or Terminators, a machine-augmented human."

With a degree in physics and experience working as a scientist on airspace-weapon systems, Paul Chambers has the type of background many believe is the future of Wall Street.

And while traditional portfolio managers might fear for their future at the sight of someone like Chambers, the reality couldn't be farther from the truth.

For Chambers, who heads up quantitative investment and research at $26.7 billion hedge fund Man GLG, it's all about bringing the two sides — man and machine — together.

"I don't see my job as automating away humans," Chambers told Business Insider. "I'd rather turn them into robocops or Terminators, a machine-augmented human."

Chambers and Man GLG aren't alone in their efforts.

Across Wall Street, from highly quantitative shops like D.E. Shaw to well-known stockpickers like Steve Cohen, hedge funds are working to find the sweet spot between human and machine.

The push comes following a recognition in recent years that both sides could benefit from learning from each other. Commonly referred to as "quantamental," the strategy has picked up steam in recent years with funds on both sides of the aisle trying their hand at it.

Traditional managers have felt a growing pressure to use cutting-edge technology such as artificial intelligence and machine learning to digest the seemingly endless amount of data made available to Wall Street. Meanwhile, recent events, like March's market downturn driven by the coronavirus epidemic, have been a lesson for quants about the need to diversify their systematic models.

"The two sides are becoming closer to one." said Chambers, who re-joined Man last year to "supercharge" the work already happening at the hedge fund leveraging quant data in the discretionary world.

"Some quant performance has faded as easy trades have been arbed away, so it benefits them to learn what drives different types of companies to get the most from the data, and discretionary managers want to access the data that quants can unlock in order to remain competitive."
No simple solution to bridging the gap

Quantamental might be a topic du jour among hedge funds, but the increased buzz has hardly led to a standardized approach.

Take mutual-fund manager Strategic Global Advisors. Founded in 2005 as the brainchild of Gary Baierl, a former quant at Causeway Capital, and Cynthia Tusan, a portfolio manager at Wells Fargo, the firm attempted a quantamental approach from the get-go.

Brett Gallagher, SGA's president, told Business Insider the firm's strategy starts with a quantitative model built based on 15 factors. The suggested portfolio is then analyzed by fundamental analysts who have the option to kick stocks out — they typically reject 10-20% — but can't add any in.

That's followed by portfolio construction, which is then given a final look by the portfolio managers to make the last tweaks. Adjustments made by humans to the model are tracked and analyzed to recognize commonalities that could be plugged back into the model to improve it.

"I think having the fundamental overlay — we call them the gatekeepers — is really important to what we do," Gallagher said. "Even moreso in this time of craziness where there are a lot of things that may make the quantitative model look a little bit wonky on certain aspects. We have the analysts there who can scoot out the issues."

PanAgora Asset Management, meanwhile, takes the opposite approach. George Mussalli, PanAgora's chief investment officer, told Business Insider the firm was unhappy taking a purely quantitative approach, finding it difficult to get differentiated results in what was quickly becoming a crowded field.

As a result, the fund adjusted its focus to discretionary idea generation that could lean on the quantitative techniques they'd already built up. At it's core, Mussalli said, it's about understanding the fundamental framework of companies and industries and then finding the necessary data to emulate that.

"What you end up with are very differentiated signals, very differentiated approach," he added. "You're using the power of quant and the techniques of breadth, portfolio construction, and risk management to build the best portfolio. But what you get is a portfolio that acts very differently than a lot of other portfolios."

At Ray Dalio's Bridgewater, the largest hedge fund in the world with $160 billion in assets, the process is led by "human understanding," the firm's co-CIO Greg Jensen told Business Insider in an email.

"Nothing in our process is purely 'quantitative' in the sense that it is based on statistical relationships or historical patterns that machines are discovering. Everything is grounded in human understanding, and every part of our process is inspectable to us, so that we can have the computer read our logic back to us in more or less plain English and ensure that our decisions are consistent with that understanding," Jensen wrote.

Still, there are times that the machines can outweigh the people — Dalio himself was overruled in 2018 about a trade involving the US dollar, according to The Wall Street Journal.
Quantamental isn't without its own challenges

There is no denying interest in pursuing quantamental strategies is rising, but the trend hasn't been adopted with open arms by everyone in the space.

Josh Pantony, CEO of Boosted.ai, a fintech that helps fundamental managers use quantitative tools, recounted a particularly difficult sales call.

"The most brutal feedback I ever got from a prospective client was, 'Using your platform would be an admission of failure to my investors,'" he said.

Pantony's experience isn't an outlier. In many cases, fundamental managers view the usage of quantitative techniques as a threat to their job.

"I think it's always something that a true MBA from Harvard who is great at Excel and finance but doesn't know anything about coding worries about in the back of their mind," Daniel Goldberg, founder of advisory and consulting firm Alternative Data Analytics, told Business Insider.

Culture needs to be a key consideration of bringing both sides together. Speaking on a webinar in April, Carson Boneck, the chief data officer at Balyasny Asset Management, said transparency between the two groups was critical. Having "translators," or employees that can work with both quants and portfolio managers, also helped the process.

Balyasny ran into its own trouble with the strategy — the firm cut a 10-person team known as Synthesis after only a year because of poor performance in 2019. Coatue, the Tiger Cub manager known for fundamental stock-picking, rolled out a quant strategy a year ago — but has already returned outside capital after the pandemic overwhelmed its data-driven processes.

Industry sources echoed a similar sentiment, adding that quant teams brought into discretionary firms need to have clear responsibilities that show they are having a direct impact on the firm, as opposed to side projects that won't affect actual returns.

"Nobody likes to be put in a room and told to collaborate," Man GLG's Chambers said. "What you need to do is find a way for both sides to get something out of the process. ... Quants can't be seen as service providers."

To be sure, quant-based shops have their own issues attempting quantamental strategies.

For one, quants tend to take a build-over-buy approach, believing proprietary tech to be a key differentiator. But when it comes to the tools needed for quantamental strategies, they often don't have the same expertise and struggle with the process, Emmanuel Vallod, cofounder and CEO of SumUp Analytics, a natural-language-processing platform that analyzes text, told Business Insider.

The issue of explaining models also tends to be a hangup for quant-focused firms, as they aren't accustomed to having to break down models to the level required by fundamental managers.

"There is a need for explicability of the algorithm that is much, much, much higher than what systematic quants are usually requesting," Sylvain Forté, CEO of SESAMm, a provider of alternative-data analytic tools, told Business Insider "Reconciling the two worlds is not easy."

Whichever side you approach the process from, nearly all agreed it takes time. It's not something that can be expected to work overnight. Constant tweaking of the system is required to find the perfect blend.
Most firms can't resist pursuing quantamental strategies

There will always be those who remain either purely fundamental or quantitative. Quants like Renaissance Technology or stock-pickers like Warren Buffet have been successful for too long to drastically change their ways now.

But for the rest of the industry, a shift towards the middle seems more likely.

"I don't think anyone can sit still," Andrew Fishman, president at Schonfeld Strategic Advisors, told Business Insider.

The true definition of quantamental is probably lost forever as it has "one of those wildly generic Wall Street terms that is so amorphous that it doesn't mean much," according to Ryan Caldwell, chief investment officer and co-founder of Chiron Investment Management, a $1.8 billion manager that was bought by FS Investments at the end of last year.

But, Caldwell says, the evolution is necessary with alpha — returns generated beyond what the market churns out for everyone — becoming harder and harder to find.

Fundamental analysts have been pushed even further away from the research that was once the backbone of MBA programs across the country thanks to alternative data that can track supply chains more efficiently. No longer is it about "shaking info out faster than the guy sitting next to you," Caldwell says.

"The fundamental part of this is understanding the macro environment with which we operate in," he added.

And, during a global pandemic that has introduced never-before-seen volatility and record-low interest rates into the equation, quants can't rely on analyzing past situations to react to today because today is unprecedented.

"We would worry about any approach reliant on historical patterns or quantitative models based on historical data, whether combined with fundamental measures or not, as so much of the current environment and where we're likely headed isn't in the data, and instead requires a logical understanding of the economic machine," Bridgewater's Jensen wrote.

Former Goldman Sachs PM Mike Ho put an even finer point on the future. Quantamental, Ho wrote in a 2017 Medium post, will eventually be like "dating in the 7th grade": Everyone says they're doing it, even if they're not. Ho, who ran a firm called Quantavista for a time, is now at Steve Cohen's Point72.

"We suspect quantamental may become an official word in the coming years, too. But, by then we'll probably all drop the 'quantamental' term and it will just be the way that most investment analysis is done," Ho wrote.

"After all, why would you not want to combine quantitative and fundamental analysis?"

Two-thirds of UK’s furloughed workers continued job in Covid-19 lockdown

Male employees flouted government wage subsidy scheme more than women, survey reveals

CONSERVATIVES COMPLAINT WAGE PAYMENTS DURING COVID LEAD TO WORKERS NOT WANTING TO WORK ARE FALSE

Chancellor Rishi Sunak has warned that the furlough scheme will end in October.
Photograph: Jessica Taylor/AFP/Getty

Donna Ferguson
Sun 9 Aug 2020

The majority of people who have been furloughed have carried on working during lockdown, with men significantly more likely than women to flout the rules of the scheme and work for their employer when they are not allowed to do so.

Working mothers have also felt more compelled to volunteer to be furloughed than working fathers, research shared exclusively with The Observer reveals.

Economists from the universities of Cambridge, Oxford and Zurich have found that “not all workers are furloughed equally”, with women significantly more likely to be furloughed than men doing the same type of job.

The study also found that three-quarters (75%) of furloughed men had their wages topped up beyond the 80% provided by the government, while less than two-thirds (65%) of women enjoyed this financial benefit.

One reason seems to be a kind of deal with the employer: my salary gets topped up, so I do some workDr Christopher Rauh, economist

Nearly nine out of ten (87%) men and eight out of ten women (77%) who received a salary top up continued to work for their employer while on furlough, even though the government explicitly forbids this practice. Among those workers who didn’t receive a top up, 69% of men and 52% of women routinely ignored this prohibition.

“One reason seems to be a kind of deal with the employer: my salary gets topped up, so I do some work. But it also seems that people are afraid of losing their jobs when the scheme ends. In particular, men who can do work from home, are doing it,” said Dr Christopher Rauh, an economist at Cambridge University. “Most men who can do all of their tasks from home are even working-full time. They are signalling: hey, I’m a great worker.”

By contrast, just one in four furloughed women who can work full-time from home are choosing to do so. This may be because they have less time to devote to their jobs – previous research has found that, in general, women have taken on more childcare, homeschooling and housework during lockdown than men.

Rauh thinks the government should not have tried to prevent furloughed workers from working in the first place. “It’s better for everyone that people have ignored this rule. If people are working, they might be producing something which is creating some kind of value, and they are not losing their job skills.

“Other countries have a short term work scheme where an employer can say: I can’t make full use of this worker, so they’ll be working 50% of the time. And then the government only has to cover that part of their salary.”

Donald Trump flees press conference, AGAIN

Donald Trump has made an increasingly frequent habit of ending media briefings prematurely when reporters challenge him.

9 Aug, 2020 

news.com.au 

By: Alex Turner-Cohen

US President Donald Trump has once again cut a media conference short, turning and walking away from the lectern after being called out for a recurring fib.

It was a busy day for the commander in chief, who also signed four executive orders on coronavirus relief measures, bypassing Congress.

During the press conference at his golf club in Bedminster, New Jersey, Trump repeated his frequent false claim that he was responsible for passing a policy called Veterans Choice.

"They've been trying to get that passed for decades and decades and decades, and no president's ever been able to do it. And we got it done," he said.

Veterans Choice is a healthcare programme that allows American military veterans to see private sector doctors, outside the US Government's Veterans Affairs system, if they would otherwise have to wait too long for an appointment.

It was passed into law in 2014, when Trump's predecessor Barack Obama was president. Trump had nothing to do with it.

CBS reporter Paula Reid challenged the President on his discredited claim.

"Why do you keep saying that you passed Veterans Choice?" she asked, shouting over Trump and the cheering members of his club – who, for some reason, had been invited to the media conference – to be heard.

Trump tried to call on a different reporter.

"OK, go ahead," he said, pointing to someone else.

"It was passed in 2014. But it was a false statement, sir," Reid continued.

"OK, thank you very much everybody. Thank you very much," the President said, abruptly ending the event and walking away.

Union prepares for bitter BA strike battle over thousands of job cuts

More than 6,000 BA employees have applied for voluntary redundancy so far

Unite and the GMB union have called for BA to drop its 'fire and rehire' proposals

By HARRIET DENNYS FOR FINANCIAL MAIL ON SUNDAY

PUBLISHED: 8 August 2020

Union boss Len McCluskey is gearing up for strike action against British Airways over thousands of job cuts.

More than 6,000 BA employees have applied for voluntary redundancy so far, with thousands more braced for enforced job losses as BA battles what it has described as the worst crisis in its history.

In a letter sent last week to members of the Unite union, McCluskey said: 'It is for that reason that I have today instructed my teams to make preparations for industrial action. If BA think this ends when they either dismiss or force new terms on our members, then they do not know me or our union.'


More than 6,000 BA employees have applied for voluntary redundancy so far

Unite and the GMB union have called for BA to drop its 'fire and rehire' proposals which will reduce the pay and conditions of thousands of cabin crew, engineers and maintenance staff.

On Friday, BA began sending letters to staff to inform them of their fate in the plans to cut more than 10,000 jobs, including voluntary measures.

Employees will either be made redundant, keep their job but on lower pay, or remain on the same contract.

Pilots' union Balpa reached a deal that mitigated job losses late last month. An industry insider said: 'McCluskey's mistake has been to treat the consultation process as a dispute – not as a crisis for the airline.'

A BA spokesman said: 'We are having to make difficult decisions.'

Facebook Fired An Employee Who Collected Evidence Of Right-Wing Pages Getting Preferential Treatment

Facebook employees collected evidence showing the company is giving right-wing pages preferential treatment when it comes to misinformation. And they’re worried about how the company will handle the president’s falsehoods in an election year.

LONG READ
Last updated on August 6, 2020

BuzzFeed News; Jim Watson / AFP; Win McNamee / Getty Images

After months of debate and disagreement over the handling of inflammatory or misleading posts from Donald Trump, Facebook employees want CEO Mark Zuckerberg to explain what the company would do if the leader of the free world uses the social network to undermine the results of the 2020 US presidential election.

“I do think we’re headed for a problematic scenario where Facebook is going to be used to aggressively undermine the legitimacy of the US elections, in a way that has never been possible in history,” one Facebook employee wrote in a group on Workplace, the company’s internal communication platform, earlier this week.

For the past week, this scenario has been a topic of heated discussion inside Facebook and was a top question for its leader. Some 2,900 employees asked Zuckerberg to address it publicly during a company-wide meeting on Thursday, which he partly did, calling it "an unprecedented position."

Zuckerberg’s remarks came amid growing internal concerns about the company's competence in handling misinformation, and the precautions it is taking to ensure its platform isn’t used to disrupt or mislead ahead of the US presidential election. Though Facebook says it has committed more money and resources to avoid repeating its failures during the 2016 election, some employees believe it isn’t enough. President Trump has already spent months raising questions about the legitimacy of the upcoming 2020 election, spreading misinformation about mail-in ballots, and declining to say if he’d accept the possibility of losing to Democratic nominee Joe Biden in November.

In July, Trump told Fox News he wasn’t sure if he’d concede to Biden, casting doubt on whether there would be a peaceful transition of power if the former vice president wins the election. "I have to see. I'm not just going to say yes. I'm not going to say no," the president said.

“America can’t afford for Facebook to take a wait-and-see approach when it comes to the integrity of our democracy.”

On Facebook’s internal message boards, discussion about the Trump election question remained civil prior to Thursday’s all-hands meeting. Employees debated the merits of censoring a sitting president’s potentially false statements about election results with one person noting that “it would be a really troubling policy to apply globally.”

"America can't afford for Facebook to take a wait-and-see approach when it comes to the integrity of our democracy,” said Jesse Lehrich, a former foreign policy spokesperson to Hillary Clinton and cofounder of Accountable Tech, a nonprofit advocacy group. “Unless they proactively outline clear policies and enforcement mechanisms to safeguard the election, the platform will be weaponized to undermine it."
Do you work at Facebook or another technology company? We'd love to hear from you. Reach out at craig.silverman@buzzfeed.com, ryan.mac@buzzfeed.com, or via one of our tip line channels.

On Thursday, Zuckerberg told employees that the increased use of mail-in ballots due to the pandemic will likely lead to a situation where election results will not be available "for days" or "for weeks." He noted political figures and commentators may attempt to try to call an election early, in which case the company may label a post explaining that results are not yet final.

Zuckerberg did not have a clear answer for what the company would do should Trump declared the election results invalid.

"This is where we're in unprecedented territory with the president saying some of the things that he's saying that I find quite troubling," he said. "We're thinking through what policy may be appropriate here. This is obviously going to be a sensitive thing to work through."

While there are signs Facebook will stand up to Trump in cases where he violates its rules — as on Wednesday when it removed a video post from the president in which he claimed that children are “almost immune” to COVID-19 — there are others who suggest the company is caving to critical voices on the right. In another recent Workplace post, a senior engineer collected internal evidence that showed Facebook was giving preferential treatment to prominent conservative accounts to help them remove fact-checks from their content.

The company responded by removing his post and restricting internal access to the information he cited. On Wednesday the engineer was fired, according to internal posts seen by BuzzFeed News.

“Intervening in Fact-Checks”

With heightened internal tensions and morale at a low point, concerns about how the company handles fact-checked content have exploded in an internal Workplace group dedicated to misinformation policy.

Last Friday, at another all-hands meeting, employees asked Zuckerberg how right-wing publication Breitbart News could remain a Facebook News partner after sharing a video that promoted unproven treatments and said masks were unnecessary to combat the novel coronavirus. The video racked up 14 million views in six hours before it was removed from Breitbart’s page, though other accounts continued to share it.

Zuckerberg danced around the question but did note that Breitbart could be removed from the company's news tab if it were to receive two strikes for publishing misinformation within 90 days of each other. (Facebook News partners, which include dozens of publications such as BuzzFeed News and the Washington Post, receive compensation and placement in a special news tab on the social network.)

“This was certainly one strike against them for misinformation, but they don't have others in the last 90 days,” Zuckerberg said. “So by the policies that we have, which by the way I think are generally pretty reasonable on this, it doesn't make sense to remove them.”

But some of Facebook’s own employees gathered evidence they say shows Breitbart — along with other right-wing outlets and figures including Turning Point USA founder Charlie Kirk, Trump supporters Diamond and Silk, and conservative video production nonprofit Prager University — has received special treatment that helped it avoid running afoul of company policy. They see it as part of a pattern of preferential treatment for right-wing publishers and pages, many of which have alleged that the social network is biased against conservatives.

“We defer to third-party fact-checkers on the rating that a piece of content receives," Facebook spokesperson Liz Bourgeois said in a statement. "When a fact checker applies a rating, we apply a label and demotion. But we are responsible for how we manage our internal systems for repeat offenders. We apply additional system wide penalties for multiple false ratings, including demonetization and the inability to advertise, unless we determine that one or more of those ratings does not warrant additional consequences."

On July 22, a Facebook employee posted a message to the company’s internal misinformation policy group noting that some misinformation strikes against Breitbart had been cleared by someone at Facebook seemingly acting on the publication's behalf.

“A Breitbart escalation marked ‘urgent: end of day’ was resolved on the same day, with all misinformation strikes against Breitbart’s page and against their domain cleared without explanation,” the employee wrote.

The same employee said a partly false rating applied to an Instagram post from Charlie Kirk was flagged for “priority” escalation by Joel Kaplan, the company’s vice president of global public policy. Kaplan once served in George W. Bush’s administration and drew criticism for publicly supporting Brett Kavanaugh’s controversial nomination to the Supreme Court.

Aaron Sharockman, the executive director of PolitiFact, told BuzzFeed News a contact at Facebook did call to discuss Kirk’s post.

“We had a call with them where they wanted to know how this post was aligned with the program,” Sharockman said. "Was this just a minor inaccuracy or was it something that we thought was something that had potential harmful effects?"

PolitiFact did not change its rating on the post. “We stuck to our guns there,” Sharockman said.

Past Facebook employees, including Yaël Eisenstat, Facebook's former global election ads integrity lead, have expressed concerns with Kaplan’s influence over content enforcement decisions. She previously told BuzzFeed News a member of Kaplan's Washington policy team attempted to influence ad enforcement decisions for an ad placed by a conservative organization.

Facebook did not respond to questions about why Kaplan would personally intervene in matters like this.

“It appears that policy people have been intervening in fact-checks on behalf of *exclusively* right-wing publishers.”

These and other interventions appear to be in violation of Facebook’s official policy, which requires publishers wishing to dispute a fact check rating to contact the Facebook fact-checking partner responsible.

“It appears that policy people have been intervening in fact-checks on behalf of *exclusively* right-wing publishers, to avoid them getting repeat-offender status,” wrote another employee in the company’s internal “misinformation policy” discussion group.

Individuals that spoke out about the apparent special treatment of right-wing pages have also faced consequences. In one case, a senior Facebook engineer collected multiple instances of conservative figures receiving unique help from Facebook employees, including those on the policy team, to remove fact-checks on their content. His July post was removed because it violated the company’s “respectful communication policy.”

After the engineer’s post was removed, the related internal “tasks” he’d cited as examples of the alleged special treatment were made private and inaccessible to employees, according to a Workplace post from another employee.

“Personally this makes me so angry and ashamed of this company,” wrote the employee in support of their colleague.

The engineer joined the company in 2016 and most recently worked on Instagram. He left the company on Wednesday. One employee on an internal thread seen by BuzzFeed News said that they had received permission from the engineer to say that the dismissal “was not voluntary.”

In an internal post before his dismissal, the engineer said he was “told to expect to be contacted by legal and HR if my post is found to be violating other policies in addition to Respectful Comms.”

Facebook denied the employee had been terminated for the post but said it was because "they broke the company's rules."

“We have an open culture and encourage employees to speak out about concerns they have," Bourgeois said.

News of his firing caused some Facebook employees to say that they now fear speaking critically about the company in internal discussions. One person said they were deleting old posts and comments, while another said this was “hardly the first time the respectful workplace guidelines have been used to snipe a prominent critic of company policies/ethics.”

“[He] was a conscience of this company, and a tireless voice for us doing the right thing,” said another employee.

The terminated employee declined to comment and asked not to be named for fear of repercussions.


Samuel Corum / Getty Images
Facebook founder and CEO Mark Zuckerberg and Facebook's Vice President of Global Public Policy Joel Kaplan chat after leaving a meeting with Sen. John Cornyn on Capitol Hill in September 2019.


“Partner Sensitivity”

The internal evidence gathered by the engineer aligns with the experience of a journalist who works for one of Facebook’s US fact-checking partners. They told BuzzFeed News that conservative pages often complain directly to the company.

“Of the publishers that don’t follow the procedure, it seems to be mostly ones on the right. Instead of appealing to the fact-checker they immediately call their rep at Facebook,” said the journalist, who declined to be named because they were not authorized to speak publicly. “They jump straight up and say ‘censorship, First Amendment, freedom.’”

“I think Facebook is a bit afraid of them because of the Trump administration,” they added.

Facebook typically assigns dedicated partner managers to pages with large followings or big ad budgets. They help their clients maximize their use of the platform. But in the cases identified in the engineer's post, partner reps appear to have sought preferential treatment for right-wing publishers. This resulted in phone calls to fact-checking partners from people at Facebook, and instances where misinformation strikes appear to have been removed from content without a fact-checker’s knowledge or involvement.

A Facebook employee’s July 22 post restating the engineer’s findings identified multiple cases in which a fact-check complaint from a right-wing page was escalated and in some cases resolved in the account’s favor the same day.

According to the post, Joel Kaplan flagged a fact check of a Charlie Kirk Instagram post for resolution “ASAP/before 12 p.m. ET”. This same employee claimed PragerU's partner manager was part of a “two weeks long effort” to prevent the site from being given Repeat Offender status, a designation that would have limited its reach and advertising privileges.

Citing “partner sensitivity," the rep noted that PragerU runs a lot of ads, and argued that the content in question qualified as opinion and was therefore exempt from being fact-checked.

Facebook did not answer questions about why a partner manager would cite ad volume as a reason for not acting against a group of pages.

Sharockman said PolitiFact’s contacts at Facebook have never asked them to change a rating. But Facebook reps do reach out to discuss whether a post is opinion or otherwise outside of the scope of the program.

“We have had discussions where our partners have asked us, ‘Why did you fact check this? Why did you come to this conclusion? How do you think it fits within the scope of Facebook's rules or regulations within fact-checking?’” he said.

"We sometimes reach out to fact-checkers to clarify our guidelines and scope of the program," Bourgeois said.

Mark Provost manages multiple large progressive Facebook pages, including The Other 98%, one of the biggest on the platform. He said his Facebook partner manager is far less responsive than what the Facebook employee documented for Provost’s counterparts on the right. And he’s not aware of any case where Facebook contacted a fact-checker on his behalf.

“We don't get a message back for 10 days,” Provost said of Facebook. “I imagine the right wing is getting a way better deal.”

His Other 98% page is currently at risk of deletion because it has three strikes. Provost said one strike is for a hate speech violation three months ago, though as of now no one at Facebook has told him what the offending post was. His partner representative said they would look into it, according to Provost. That was last week and he says he still hasn’t received an update.

“I'm getting so frustrated with this,” Provost said. “The best solution would be if Facebook were as responsive as the fact-checking companies that they've assigned.”

Provost said Facebook’s fact-checking partners are easy to deal with when he contacts them to dispute a rating. In some cases, he provided additional proof of his claim to get a rating changed; in other cases, he corrected the offending post and the false rating was removed.

The fact-checker who spoke to BuzzFeed News said most page owners follow the policy and contact them to dispute a rating. But in some cases, they hear directly from the Facebook partner manager assigned to work with fact-checkers.

“They will ask us, ‘Could you take a look at this again? Are you sure?’” the checker said.

In other cases, Facebook itself will quietly remove a fact-check applied by one of its partners. That appears to be what happened with a March 25 post from Diamond and Silk. The duo wrote on Facebook, “How the hell is allocating 25 million dollars in order to give a raise to house members, that don't give a damn about Americans, going to help stimulate America's economy? Tell me how? #PutAmericansBackToWorkNow.”

Lead Stories, a Facebook fact-checking partner, rated the post false. Diamond and Silk initially followed the proper procedure and appealed directly to Lead Stories.

“They were detailed in their appeal and we replied promptly,” Alan Duke, the editor-in-chief of Lead Stories, told BuzzFeed News. “The result was that we decided that a false rating initially given their content should be revised downward to ‘partly false.’”

But that partly false rating apparently didn’t satisfy Diamond and Silk, who reportedly lost their online Fox News show after spreading coronavirus misinformation. As detailed in the July 22 internal Facebook post, Diamond and Silk appealed to their partner manager, who opened an internal ticket for the issue. The Facebook rep argued the post was opinion and warned that the duo “is extremely sensitive and has not hesitated going public about their concerns around alleged conservative bias on Facebook.”

While the partly false fact-check is still visible on their post, employees said Facebook removed the strike against their account internally.

The Facebook employee said “someone described on the task as ‘Policy/Leadership’ made the call to not only completely remove this strike, but also the one from January.”

PolitiFact’s Sharockman said he doesn't know what goes on inside Facebook when it comes to applying or removing strikes for misinformation. All the Facebook fact-checking partners can do is try to be honest, even if the other parties involved aren’t.

"We're trying to be intellectually honest and thoughtful and deliberate and open and transparent. And no one else is. Everyone else is using the system to their personal benefit." ●

August 6, 2020

Correction: The Lead Stories fact-check for a March post from Diamond and Silk is displayed in the "Related Articles" section of their post. This story incorrectly said it had been removed.

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Craig Silverman is a media editor for BuzzFeed News and is based in Toronto.

Ryan Mac is a senior tech reporter for BuzzFeed News and is based in San Francisco.

THE CANADA AFFAIR UPDATE
The Saudi Crown Prince Allegedly Kidnapped These Siblings And Tried To Kill Their Dad

Two weeks after the assassination of Jamal Khashoggi, the Saudi crown prince allegedly sent a death squad to Canada, targeting a former Saudi intelligence official, according to a new lawsuit.

Emerson Malone BuzzFeed News Reporter
Posted on August 7, 2020,


Courtesy of the Aljabri family
Omar and Sarah Aljabri.

A team of 50 armed men, dressed in plainclothes and driving unmarked cars, arrived early in the morning on March 16 at the home in Riyadh, Saudi Arabia, where Omar and Sarah Aljabri lived.

They were looking for the two siblings, now 22 and 20, respectively. The men "roused [Omar and Sarah] from their beds in the early morning hours and ‘disappeared’ them," according to a lawsuit.

“It’s now almost five months from their disappearance and there’s not a single sign,” their brother Khalid Aljabri told BuzzFeed News in a phone interview Friday from Canada. “You really come down to the basic question at this point: Are they alive or dead?”
The siblings’ father, Saad Aljabri, filed a lawsuit in DC federal court on Thursday against Crown Prince Mohammed bin Salman (MBS) and other top Saudi officials, alleging that the powerful royal is trying to kill him because of his knowledge about the Saudi regime. Other family members have been kidnapped and tortured to leverage Aljabri’s return to the country, the lawsuit says, including his brother and nephew.

Saad, an ex-official who was ousted from the Saudi government in September 2015, hasn’t seen them since, and the pain is taking a physical toll on his health. "Dr. Saad was and remains tormented by what is happening to his young son and daughter,” reads the lawsuit.

Officials at the Saudi Embassy in Washington, DC, did not immediately respond to a request for comment.


Courtesy of the Aljabri family

Aljabri had worked in the Saudi government since 1976 and was a longtime adviser to the crown prince's predecessor, Mohammad bin Nayef, until his ouster in June 2017, when MBS assumed the role. Aljabri served as a state minister for King Salman and was integral to the country’s counterterrorism intelligence.

In July 2015, Aljabri met with former CIA director John Brennan and reportedly told him that Crown Prince Mohammed was encouraging Russia’s involvement in the Syrian civil war. The crown prince removed Aljabri from his post that September.

Decades of experience in the Saudi government provided Aljabri with knowledge of the crown prince's "covert political scheming," "corrupt business dealings," and the formation of the hit squad that killed Washington Post columnist Jamal Khashoggi, the legal complaint states. (Western intelligence agencies have said MBS ordered Khasoggi's death, but the crown prince has insisted he had no knowledge).

"Few places hold more sensitive, humiliating, and damning information about [the crown prince] than the mind and memory of Dr. Saad—except perhaps the recordings Dr. Saad made in anticipation of his killing," the lawsuit states.


Andrew Caballero-reynolds / Getty Images
US Secretary of State Mike Pompeo shakes hands with Saudi Arabia's Crown Prince Mohammed bin Salman in Riyadh on Feb. 20.

Saad Aljabri alleges that in 2018, just two weeks after Khashoggi’s death, MBS sent a hit squad, or “tiger squad,” to Canada, where he has been living in exile, to kill him. But they were blocked from entering the country by Canada border agents.
This wasn’t the first time the crown prince had allegedly targeted his children; on the first day Mohammed bin Salman was appointed, on June 21, 2017, he enacted a travel ban that prevented Sarah and Omar (then 17 and 18) from flying from Saudi Arabia to Boston. Border security stopped the siblings. The crown prince ignored Aljabri's WhatsApp messages in which he pleaded to let his children go, the lawsuit says.

“This is how we found out: a FaceTime call from Sarah in the airport, crying,” recalled Khalid. “This is a young girl who’s 17 who was ecstatic when she got her student visa, looking forward to life in Boston, and then security officers at the airport tell them, ‘You can’t travel.’ She was crying, she couldn’t understand.”


Courtesy of the Aljabri family
Khalid and Omar Aljabri

According to the #SaveJabris website, which was established to publicize their disappearance, Sarah is an architectural engineering student who was kidnapped a few days after her 20th birthday. Omar is a 22-year-old computer science student at Prince Sultan University in Riyadh, Saudi Arabia, who regularly helped organize events at the school.

Sarah and Omar had been accepted and were paying tuition at the International Baccalaureate Program at the British International School and the Suffolk University, respectively, both in Boston, the complaint says, and both schools had contacted US immigration authorities about their absences.

Three months later, in September, Saad Aljabri asked the crown prince to let his children go. The crown prince allegedly responded that if he didn’t return to the Saudi kingdom, he would be targeted and killed.

Omar’s and Sarah’s whereabouts are still unknown. A tracker on the #SaveJabris site notes that it’s been more than 140 days since the alleged abduction.

“At the center of this story, there’s a couple of innocent people, like, sweethearts — they have nothing to do with any political intrigue or any state secrets or whatever the Saudis are trying to spin,” said Khalid. “They are a couple of children. Sarah should be back in my mother’s arms and Omar should be back with my dad, teasing and arguing with him.”

Emerson Malone is a copy editor for BuzzFeed News and is based in Los Angeles.

THE POST MODERN OLD WEST

Thousands of bikers heading to South Dakota rally to be blocked at tribal land checkpoints

Clampdown comes as fears mount that mask-free bikers headed to large gathering could spread coronavirus to tribal groups

Motorcyclists drive down Main Street during the 80th Sturgis Motorcycle Rally on Friday in Sturgis, South Dakota. Photograph: Michael Ciaglo/Getty Images

Thousands of bikers heading to South Dakota’s 10-day Sturgis Motorcycle Rally will not be allowed through Cheyenne River Sioux checkpoints, a spokesman for the Native American group said on Saturday.

The decision to prevent access across tribal lands to the annual rally, which could attract as many as 250,000 bikers amid fears it could lead to a massive, regional coronavirus outbreak, comes as part of larger Covid-19 prevention policy. The policy has pitted seven tribes that make up the Great Sioux Nation against federal and state authorities, which both claim the checkpoints are illegal.


'It's just madness': bikers throng South Dakota town despite Covid threat
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A duty officer for the Cheyenne River Sioux told the Guardian on Saturday that only commercial and emergency vehicles will be let through the checkpoints onto reservation land.

A number of bikers had tried to enter but had been turned back, they said. Other reservations in the region, including the Oglala Sioux, were also turning away bikers that had attempted routes to Sturgis that pass through sovereign land.

Under Cheyenne River tribal guidelines non-residents driving non-commercial out-of-state vehicles are never allowed through the reservation. During the rally, non-commercial vehicles with South Dakota plates are also not allowed through.

The clampdown comes as fears mount that mask-free bikers visiting Sturgis for the largest gathering of people since the start of the Covid-19 epidemic could spread the virus to tribal groups that are already experiencing a rise in cases.

Oglala Sioux recorded 163 cases last week, while the Cheyenne River Sioux has seen cases rise to 79, according to the tribe’s website.

The restrictions come as local law enforcement reported a convergence of bikers from all directions. According to reports, many bikers heading for Sturgis expressed defiance at rules and restrictions that have marked life during the coronavirus pandemic.

While South Dakota has fared better than most states – it ranks 38th in Covid deaths per capita, according to a Reuters tally – cases have risen in recent weeks as hotspots move into the midwest.

During the rally, people are expected to cram bars and pack concerts with at least 34 acts playing. “Screw COVID,” read the design on one T-shirt on sale. “I went to Sturgis.”

I trusted my people, they trusted me, and South Dakota is in a good spot in our fight against COVID-19.

The #Sturgis motorcycle rally starts this weekend, and we're excited for visitors to see what our great state has to offer! https://t.co/UiHvaYviqa— Kristi Noem (@KristiNoem) August 6, 2020

Stephen Sample, who rode his Harley-Davidson from Arizona, told the Associated Press that the event was a break from the routine of the last several months.

“I don’t want to die, but I don’t want to be cooped up all my life either,” Sample, 66, said, adding that he had weighed the risks of navigating the crowds, but the same thrill-seeking that attracted him to riding motorcycles seemed to win out.

“I think we’re all willing to take a chance,” he said, but acknowledged the trip “could be a major mistake.”

South Dakota’s Republican governor, Kristi Noem, has supported holding the Sturgis rally, pointing out that no virus outbreak was documented from the several thousand people who turned out to see Donald Trump at Mount Rushmore last month.

The rally is marking its 80th anniversary and typically injects $800m into South Dakota’s economy. Meade county sheriff, Rob Merwin, said: “It’s going to be a lot of people and a lot of motorcycles all over the place. People are tired of being penned up by this pandemic.”


Navajo elders: alone, without food, in despair
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On Friday, a worker at the event told the Guardian crowds seemed larger than in previous years and warned that Sturgis attendees were paying little heed to medical advice.

“I’ve not seen one single person wearing a mask,” said bartender Jessica Christian, 29. “It’s just pretty much the mentality that, ‘If I get it, I get it.’”

“In downtown Sturgis it’s just madness,” Christian added. “People not socially distancing, everybody touching each other. It’ll be interesting to see how that turns out.”

Over 60% of Sturgis 6,900 residents who responded to a city council survey in May said they wanted the rally canceled.

A month later, the council voted to move ahead, although it canceled all city-sponsored events associated with the rally and included measures such as hand-sanitizing stations. Sturgis mayor Mark Carstensen said throughout the pandemic, “the state of South Dakota has been the freedom state and the city of Sturgis has stayed true to that”.