Evelyn Reynolds

More stories

  • 125 Shares189 Views

    in Economy

    Rules to Curb Illicit Dollar Flows Create Hardships for Iraqis

    The regulations were meant to prevent dollar transfers to those targeted by U.S. sanctions on Iran, Syria and Russia. But they have ended up harming ordinary Iraqis who need U.S. currency for business or travel.BAGHDAD — When the United States and Iraq put tough new currency rules into effect recently, the intent was to stem the illicit flow of dollars to those targeted by U.S. sanctions on Iran, Syria and Russia, as well as to terrorist organizations and money launderers.But in a country with a primarily cash economy, the changes created unintended hardships for ordinary Iraqis who need dollars for legitimate business purposes or travel abroad. Dollars have run short, and the cost in Iraqi dinars at some local currency traders has surged.Long lines are forming early in the day outside money changers’ shops, where Iraqis planning to travel outside the country often turn up grasping plastic bags stuffed with dinars, which banks outside the country do not accept. These days, it’s not easy to find a money changer who still has dollars. And those who do run out early.“I don’t have any dollars left,” one currency trader, Abu Ali, said last week at his shop in Baghdad’s Karrada neighborhood.The new currency rules, worked out in an agreement between the United States and Iraq, require greater transparency surrounding the transfers of dollars held as foreign currency reserves for Iraq in an account at the Federal Reserve Bank of New York. They went into effect late last year.The agreement was part of a long-delayed modernization of Iraq’s financial system as it begins to conform to the rules that most countries follow and adapts to requirements for more transparency in international financial transactions.U.S. dollars being counted at an authorized currency dealer in Baghdad.Joao Silva/The New York TimesEvery day, the Central Bank of Iraq facilitates the withdrawal of a large sum of dollars from its account at the New York Fed. The transfers are critical because, in Iraq’s largely cash economy, only a few businesses accept credit cards and almost no ordinary Iraqis have one. Even bank accounts are a rarity.Some of the money is wired on behalf of Iraqi businesses to pay for goods from outside Iraq. Some of it is designated for currency exchanges and banks to distribute to Iraqis traveling abroad.But there has been little in the way of electronic footprints to help U.S. officials trace whether some of the transfers were ending up in the hands of parties targeted by U.S. sanctions.A dollar shortage affecting ordinary Iraqis is one of the unintended consequences of new and tougher rules worked out by Iraq’s central bank in concert with the U.S. Treasury and the Federal Reserve Bank of New York.Joao Silva/The New York TimesThe concerns date back to soon after the 2003 U.S. invasion of Iraq.At that time, American authorities tried unsuccessfully to document the chain of custody for billions of dollars transported to the country in cash over a period of years. In one instance, $1.2 billion from Iraq was found in a Lebanese bunker with no record of how it got there, according to a New York Times investigation in 2014.The U.S. Treasury wanted to ensure that dollars were not being sent in violation of U.S. law to fronts or agents for parties under sanctions or terrorist entities. In congressional testimony in 2016, for example, a top Treasury official noted three groups targeted by sanctions that were known to be active in Iraq: Al Qaeda, the Islamic State and the Iran-backed Lebanese militia Hezbollah.With the Islamic State’s takeover of northern Iraq in 2014, it seized of a branch of Iraq’s central bank and those worries became more urgent.The situation underscored the need for more transparency in dollar transfers to Iraq, according to a U.S. Treasury official, who asked not to be named because he is not authorized to speak with reporters.An authorized currency exchange. Joao Silva/The New York TimesAfter the Iraqis finally defeated the Islamic State in 2018, Iraqi and U.S. bankers and the Treasury began to discuss a new system for money transfers.Under the new regulations, both individuals and companies requesting wire transfers of dollars must disclose their own identity, and the identity of whoever is ultimately getting the money. That information is then reviewed by an electronic system as well as by experts at Iraq’s central bank and the New York Fed, before payment is made.The new system allows banks around the world to conduct automatic checks on transfers of money from Iraq to other countries, said Ahmed Tabaqchali, the chief strategist for Asia Frontier Capital’s Iraq fund.“In short, the system heightens the visibility of red flags,” he said.Waiting at a currency exchange in Baghdad.Joao Silva/The New York TimesNow, many requests are being rejected, said Mudher Salih, a former deputy head of Iraq’s central bank and now a financial policy adviser to Iraq’s new prime minister, Mohammed Shia al-Sudani. Sometimes, he said, that is because of suspect identities but other times it is because many Iraqi businesses do not have the requisite licenses to import goods or are not properly registered as commercial entities and therefore are in violation of Iraqi law.The rejections have created a shortage of dollars, which has sharply increased their cost for Iraqis with legitimate needs, he added.Since 2003, there have been two Iraqi dinar rates for buying dollars; an official rate established by Iraq’s central bank and an unofficial street rate, which is higher. And when dollars are scarce, the street price goes up.The difference between the two is creating hardships for Iraqis like Janna, a mother of four. She said she had been saving up to buy a refrigerator and had her eye on a German model that cost about $250. In October, that was the equivalent of 320,000 dinars. Today, because of the scarcity of dollars, the refrigerator would cost 375,000 dinars.“It’s more than I can afford,” she said.Shoppers in Baghdad’s busy Karrada neighborhood.Joao Silva/The New York TimesAfter the new currency rules took effect, the quantity of dollars flowing daily into Iraq fell sharply — on some days down by nearly 65 percent from $180 million to $67 million — compared with the period before the rules were implemented, according to daily cash flow numbers released by Iraq’s central bank.The influx of dollars has since picked up, but it is still often less than half of what it was before the new system was put in place.It is not clear exactly how much of the drop in dollars reflects illicit recipients who have now either stopped requesting money because they do not want to make the disclosures required by the new rules or because the Iraqi central bank or the New York Fed rejected their requests.“I would not put down to fraud the almost 90 percent drop,” said Douglas Silliman, president of the Arab Gulf States Institute in Washington and a former U.S. ambassador to Iraq. “Maybe it’s 45 percent fraud and 45 percent incompetence or just not knowing how to deal with the new regulations.”Iraq’s financial system is going through a long-delayed modernization as it begins to conform to the rules followed in many other countries.Joao Silva/The New York TimesYasmine Mosimann More

  • 213 Shares179 Views

    in Economy

    Euro zone inflation softens to 8.5% in February as ECB signals interest rate hiking is not over

    Inflation in the euro zone eased slightly to 8.5% in the month of February, even as the ECB signalled that interest rate hiking cycle might not be at an end.
    Core inflation rose to an estimated 5.6% in February, from 5.3% in January.
    Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB.

    All eyes on the latest inflation numbers out of the euro zone as market players consider what the ECB will do next.
    Bloomberg | Bloomberg | Getty Images

    New data out of the euro zone on Thursday suggested that inflation is taking a while to come down significantly, raising prospects of further rate hikes in the region in the coming months.
    Headline inflation across the 20-member bloc came in at 8.5% in February, according to preliminary data released Thursday. This indicates that prices are not coming down at the pace that had been registered in recent months. Headline inflation stood as high as 10.6% in October, but reached a revised 8.6% in January.

    Analysts polled by the Wall Street Journal were expecting a lower February inflation rate of 8.2%. Food prices increased month-on-month, offsetting declines in energy costs.
    On top of a small drop in headline inflation, the core figure — which strips out energy and food costs, and is therefore less volatile — picked up to an estimated 5.6% in February, from 5.3% in January. All combined, this fuels arguments that the European Central Bank could keep its hawkish stance for longer.
    In recent days, market players have been considering this prospect following hotter-than-expected February inflation figures from France, Germany and Spain.

    Stock chart icon

    Euro versus U.S. dollar since the start of the year

    ECB President Christine Lagarde said Thursday that bringing down inflation will still take time, according to comments reported by Reuters. The bank targets a headline rate of 2%.
    The Frankfurt-based institution has indicated that another 50 basis point hike is on the cards for when the central bank adjourns later this month. In comments reported by Reuters, Lagarde said Thursday that this move is still on that table, as inflation remains well above target.

    Analysts at Goldman Sachs said earlier this week that they were raising rate hike expectations for the ECB and pricing in another 50 basis points hike in May.
    European bond yields have been moving at multi-year highs in recent days, amid considerations that the hawkish monetary policy is here to stay.

    ‘Too slow for comfort’

    “Euro zone inflation has trended down since its 10.6% year on year peak last October. Helped by base effects, it looks set to decline substantially further this year. However, the process is too slow for comfort,” Salomon Fiedler, economist at Berenberg, said in a note to clients Thursday.
    “The ECB is virtually guaranteed to follow through with its plans for a 50 basis point rate hike at its 16 March meeting, in our view. It will most likely also maintain strong guidance towards further rate hikes thereafter,” he added.

    Analysts at Capital Economics shared this view.
    “February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed,” Jack Allen-Reynolds, deputy chief euro zone economist, said in an email.
    “It now look increasingly likely that rates will rise even further,” he added.

    WATCH LIVEWATCH IN THE APP More

  • 113 Shares149 Views

    in Economy

    Eurozone Inflation Edges Lower, but Pressure on Prices Continues

    The annual rate of inflation was 8.5 percent in February, down from 8.6 percent a month earlier, among countries using the euro.With the winter drawing to a close, inflation levels eased in Europe last month, the European Commission reported on Thursday, even as concerns grew that stubbornly high prices could put pressure on central bankers to keep raising interest rates.Consumer prices in the 20 countries that use the euro as their currency rose at an annual rate of 8.5 percent in February, down slightly from January’s rate of 8.6 percent. Year-over-year rates have been declining since reaching a peak 10.6 percent in October.But some of the largest economies showed troubling increases, and core inflation — a measure that excludes the most erratic categories like food and energy — rose to a record high of 5.6 percent in February, from 5.3 percent.In France, inflation hit 7.2 percent in February, its highest point in more than two decades while in Spain, inflation grew at an annual rate of 6.1 percent. Germany, Europe’s largest economy, reported that the annual rate crept up to 9.3 percent.The grim economic outlook for Europe that had been predicted last fall has considerably brightened. Fears of a deep recession turned out to be overblown. Vertigo-inducing energy prices have dropped thanks in part to a warm winter and conservation efforts. Still, the road is bumpy.Inflation F.A.Q.Card 1 of 5What is inflation? More

  • 125 Shares149 Views

    in Economy

    Starbucks Violated Labor Law in Buffalo Union Drive, Judge Rules

    The decision cited “egregious and widespread misconduct,” including illegal monitoring and firing of workers. Starbucks signaled that it would appeal.In a sweeping decision, an administrative judge in New York ruled on Wednesday that Starbucks had violated federal labor law dozens of times in responding to a union campaign in the Buffalo area shortly after the campaign began roughly 18 months ago.Michael A. Rosas, a judge for the National Labor Relations Board, concluded that Starbucks had illegally monitored, disciplined and fired employees engaged in union organizing; added workers to stores to dilute support for the union; and promised new benefits to workers in an attempt to defuse support for the union.The ruling mandates the reinstatement of seven Buffalo-area workers who the judge concluded were unlawfully discharged from the company, and back pay and damages to more than two dozen workers who the judge concluded had suffered retaliation that affected their compensation, such as a reduction of hours.In addition, the judge ordered the chief executive of Starbucks, Howard Schultz, to read or be present for the reading of a notice, more than 10 pages long, promising to refrain from committing a series of labor law violations in the future, and to make and distribute a video of the reading.Because of the company’s “egregious and widespread misconduct demonstrating a general disregard for the employees’ fundamental rights,” Judge Rosas wrote, it was necessary to issue a broad order requiring Starbucks “to cease and desist from infringing in any other manner on rights guaranteed employees.”“This is truly a historic ruling,” Gary Bonadonna Jr., the regional head of Workers United, the union organizing Starbucks, said in a statement. “We will continue to fight and hold billionaires like Howard Schultz accountable for their actions. We will not rest until every Starbucks worker wins the right to organize.”The ruling can be appealed to the labor board in Washington, and to federal court after that, and Starbucks indicated that it might do so. “We believe the decision and the remedies ordered are inappropriate given the record in this matter and are considering all options to obtain further legal review,” the company said in a statement.The organizing campaign notched its first victory in Buffalo in 2021. Since then, more than 280 of the roughly 9,300 corporate-owned Starbucks locations in the United States have unionized. The ruling covers the period from August 2021 to July 2022, by which point the campaign had spread from the Buffalo area to dozens of stores nationwide.In the early months of the campaign, Starbucks workers complained that executives and other company officials were converging on Buffalo in an attempt to undermine their unionization effort.Judge Rosas found that Starbucks had violated labor law by “having high-ranking company officials make repeated and unprecedented visits to stores in order to more closely supervise, monitor or create the impression that employees’ union activities are under surveillance.”He also ordered the company to bargain with the union at a Buffalo-area location where the union lost an election in December 2021, concluding that the scope of the violations at the store tainted the vote and made a rerun of the election an “insufficient” remedy.It is rare but not unprecedented for a judge to effectively order in a union upon concluding that it had support among workers but that a fair vote is nearly impossible. More

  • 100 Shares179 Views

    in Economy

    Biden Nominates Julie Su as US Labor Secretary

    President Biden’s choice to lead the Labor Department is the deputy to the incumbent, Martin J. Walsh, who is leaving the administration.President Biden on Tuesday announced his intention to nominate Julie Su, the deputy labor secretary, to succeed Labor Secretary Martin J. Walsh, who has said he plans to leave his position in March.Ms. Su has helped oversee the Department of Labor during an administration that has made strong overtures to organized labor and to workers, both by communicating support for workers who are striking or seeking to unionize and through a series of regulatory, enforcement and legislative actions.Among those initiatives are a rule that would make it more likely for workers to be considered employees, granting them access to a minimum wage and unemployment insurance, and legislation that provides incentives to owners of clean energy projects to pay wages similar to union rates.Ms. Su’s contribution to these administration achievements won her widespread backing from labor unions.“Julie Su is broadly respected by unions, cares about the plight of workers, and folks appreciate her ability to manage the plumbing inside of D.O.L. and make the case to the world,” said Patrick Gaspard, a former senior union official and ambassador to South Africa who now heads the Center for American Progress, a liberal think tank.If confirmed, Ms. Su will take over the department at a time of rising interest in labor organizing. The labor secretary has little formal role in promoting unionization; it is the National Labor Relations Board that enforces labor rights. But Mr. Biden leaned on his first labor secretary to encourage workers to unionize, appointing Mr. Walsh to a task force to explore ways to increase union membership and including him in a White House meeting with union organizers.Ms. Su would probably be deployed in a similar way and make the case for legislation that the administration had failed to enact, which could benefit Mr. Biden politically even if it was unlikely to pass the Republican-controlled House over the next two years.Among the assignments that may land on her desk are promoting the Protecting the Right to Organize Act, or PRO Act, which would make it easier for workers to unionize by threatening fines for employers that violated labor law, and elevating the importance of workers in service professions like child care and home care.Mr. Biden has proposed spending hundreds of billions of dollars to benefit care workers, but the proposals were largely absent from the legislation that Congress passed during his first two years in office. The PRO Act passed the House in 2021 but stalled in the Senate. It was reintroduced in Congress on Tuesday.In his announcement, Mr. Biden urged the Senate to advance Ms. Su’s nomination quickly “so that we can finish the job for America’s workers,” a refrain he appears to have adopted in support of an expected re-election campaign..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.If she is confirmed, Ms. Su’s opportunities to advance a new regulatory agenda will also be somewhat limited. As deputy labor secretary, she helped oversee the department’s push for rules designed to protect workers from Covid-19; a rule making it more likely for workers in the gig economy and elsewhere to be classified as employees rather than contractors; and a rule that would most likely raise the wages paid to workers on federally funded construction projects. The latter two rules have yet to be made final.Some Republicans cited concern over her involvement in advancing such regulations. “Deputy Secretary Su has a troubling record and is currently overseeing the Department of Labor’s development of anti-worker regulations that will dismantle the gig economy,” said Senator Bill Cassidy of Louisiana, the ranking Republican on the committee that will hold a hearing on her nomination, in a statement on Tuesday.But few high-profile regulatory items remain. The most prominent is a move to raise the cutoff below which most salaried workers are automatically eligible for time-and-a-half overtime pay. The current cutoff is about $35,500, and the Biden administration is expected to propose raising it substantially, likely setting up a challenge from the business community.A federal judge struck down a 2016 rule put forth by the Obama administration raising the cutoff to about $47,500.Ms. Su, a speaker of Mandarin whose parents were immigrants, served as head of California’s Labor and Workforce Development Agency before joining the Biden administration in 2021.The agency won praise from worker groups for being quick to establish rules protecting workers from hazards related to Covid-19, but critics highlighted accusations that the agency paid out billions in fraudulent unemployment claims. Ms. Su conceded that a large number of unemployment insurance payouts during the pandemic had been improper, and Republicans cited those accusations in opposing her 2021 nomination as deputy, which the Senate approved, 50 to 47.For several years before taking over the Labor and Workforce Development Agency in 2019, Ms. Su served as California’s labor commissioner — its top enforcer of minimum-wage and overtime laws. In that capacity, she was known as an innovative regulator, reorienting the agency so that it relied on worker complaints as the basis for investigations rather than random inspections of workplaces.She helped draw attention to cases in which employers cheated workers on minimum-wage and overtime payments with a public-relations campaign announcing that “Wage Theft Is a Crime.”Before entering government, she was known for her work in the 1990s on behalf of several dozen Thai seamstresses who had been forced to work in a Southern California sweatshop for far below the minimum wage until the authorities freed them. Ms. Su helped the workers win compensation from the companies that used the sweatshop as a supplier. The MacArthur Foundation cited her work on behalf of the workers when it awarded her a “genius” grant in 2001. More

  • 138 Shares169 Views

    in Economy

    Biden’s Semiconductor Plan Bets on Federal Aid to Change Corporate Behavior

    The administration says the conditions it has attached to $40 billion in new subsidies will help U.S. semiconductor makers compete globally. Some economists disagree.WASHINGTON — President Biden’s plan to plow billions of dollars into semiconductor manufacturing represents a sharp turn in American economic policy, one aimed at countering China by building up a single, critical industry. But Mr. Biden is going even further. He is using the money to change how corporations behave.If semiconductor manufacturers want a piece of the nearly $40 billion in aid that Mr. Biden’s administration began the process of handing out on Tuesday, they will need to provide child care for employees, run their plants on low-emission sources of energy, pay union wages for construction workers, shun stock buybacks and potentially share certain profits with the government.That decision is a bet on the power of the federal government to transform private industry. But it is also a distinct break from how the United States has traditionally engaged with corporate America. The president is essentially incorporating disparate policy objectives into a big spending bill that was sold as an effort to shore up a supply of semiconductors critical for the economy and national security.The approach could amplify the effects of the CHIPS Act and other economic bills Mr. Biden has signed into law over the past two years, by accomplishing multiple goals at the same time. Administration officials say the money and the guidelines will drive American industry toward Mr. Biden’s vision of an economy with more U.S. production, better conditions for workers and fewer of the fossil fuel emissions driving climate change.But in testing the limits of a new industrial policy, the strategy may also carry significant risks. Some economists, even some who favor robust federal spending to bolster strategic industries, say Mr. Biden is in danger of drowning his core economic goals.“Everyone acknowledges what we are trying to do here, in trying to make a larger, more globally competitive U.S. semiconductor industry, is a difficult challenge,” said Adam Ozimek, the chief economist for the Economic Innovation Group, a bipartisan think tank in Washington. “We’re making that challenge much harder by trying to accomplish another dozen unrelated things at once.“Advocates of industrial policy should worry that not only is this going to fail, but it’s going to discredit industrial policy for a generation,” Mr. Ozimek said.The Global Race for Computer ChipsU.S. Industrial Policy: In return for vast subsidies, the Biden administration is asking chip manufacturers to make promises about their workers and finances, including providing affordable child care.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.A Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Biden officials say that they are not asking companies to do anything outside their own commercial interests and that the steps they are taking are not meant to be punitive. They are emboldened by the amount of money they have to hand out and confident that companies will accept it with the conditions they have attached. If anything, those officials essentially say, they are not unduly burdening businesses; they are helping them do what is necessary to attract workers and avoid wasting federal dollars.In an interview, Commerce Secretary Gina Raimondo repeatedly cast the lack of access to child care as an economic issue and a key contributor to the labor shortages that American manufacturers frequently complain they are experiencing. Entrenched bias against working women has prevented corporations and the government from addressing that issue, she said, in ways that have hurt companies.Commerce Secretary Gina Raimondo has described the financial rules for companies that take federal funds as a way to ensure that taxpayer dollars are not wasted.Haiyun Jiang/The New York Times“I am kind of requiring them to pay attention to this because I know this is what they need to be successful,” Ms. Raimondo said.Ms. Raimondo has described the financial rules for companies that take federal funds as a way to ensure taxpayer dollars are not wasted. Requiring companies to share some unexpected upside profits with the government will encourage companies to be accurate and honest with their financial projections, so the department can send dollars where they are needed most. The limitations on stock buybacks will prevent taxpayer dollars from going to enrich company shareholders and chief executives, administration officials say.But after reviewing the rules, industry lobbyists and some economists said they worried companies would be forced to siphon money away from the new law’s central objectives. Several complained that administration officials had not coupled the CHIPS funding announcements with efforts to shrink, not expand, environmental regulations and other government rules covering construction projects..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.“We should be focused on removing regulatory barriers — particularly in the permitting space — and we have to be careful about adding ancillary new requirements that only increase cost and delay bringing production online,” said Neil Bradley, an executive vice president at the U.S. Chamber of Commerce, a heavyweight business organization in Washington.And some congressional Republicans accused the administration of undermining the intent of the law by trying to force liberal priorities on companies competing for subsidies.Representative Frank D. Lucas of Oklahoma, the chairman of the Science, Space and Technology Committee, said the administration had been “adamant” that the United States needed to incentivize chip production, or else companies would choose to build in other countries that offered more attractive policies.“That’s why it’s troubling that now that the administration has the $52 billion in funds they requested,” Mr. Lucas said, “they’re focusing less on the urgent need for chip production and more on attempting to impose their labor agenda on this critical industry.”For some foreign chip makers, investing in the United States is already provoking concerns about high costs and managerial challenges. And other countries have also continued to subsidize their own chip facilities aggressively, providing a potentially attractive alternative to investing in the United States.Economists largely agree that both the scale and practices of Mr. Biden’s industrial policy are signs of how dramatically the thinking about the government’s role in the economy has changed in Washington.A core reason for that shift is what has happened in East Asia, particularly China, where governments have made frequent use of state subsidies to shore up industries and capture global market share. Since American researchers invented the integrated circuit in the 1950s, Taiwan, South Korea, China, Israel and other locations have invested heavily in chips, helping to push production out of the United States.The U.S. share of global chips manufacturing has now dwindled to just 12 percent. American companies still design many of the world’s most cutting-edge chips; they just manufacture them offshore.Representative Frank D. Lucas of Oklahoma said the administration was “focusing less on the urgent need for chip production and more on attempting to impose their labor agenda on this critical industry.”Kenny Holston/The New York TimesShortages of chips and other critical products in the pandemic helped underscore how reliant the country is on foreign factories. More broadly, U.S. dependence on China for key products like electric vehicles, solar panels, steel and rare earth metals has helped to turn the tide in Washington toward a more interventionist economic policy and dampened concerns about government interference in markets.Both political parties are now broadly aligned behind the use of industrial policy to counter China’s economic dominance. Members of the Trump and Biden administrations, and Democratic and Republican lawmakers, helped create the CHIPS and Science Act, which Congress passed last summer by significant margins.The bill included several strict provisions for companies that receive subsidies, including a ban on using government funding for stock buybacks and dividends and a 10-year restriction on making investments in cutting-edge chip facilities in China. The bill also encouraged companies to offer work force training initiatives and team up with unions and educational institutions.The Biden administration appears confident that the $52 billion carrot it is offering to chip makers, suppliers and research facilities is a big enough incentive for companies to overpower any corporate complaints about the administration’s efforts to influence their behavior. Officials note that some chip makers already comply with some of the requirements in other locations: Taiwan Semiconductor Manufacturing Company, which is building a new facility in Arizona, provides child care at several of its plants in Taiwan. Chip makers operating in other countries, China for example, may have to go to great lengths to support government initiatives or national security objectives.Chief executives have privately grumbled about the restrictions, but most continue to publicly praise the program. Most major semiconductor makers have already broken ground on expensive new U.S. facilities. Since early 2020, companies have pledged nearly $200 billion for U.S. chip manufacturing projects, many in anticipation of the funding.One of those companies, Intel, said in a release on Tuesday that the CHIPS guidelines released by the Commerce Department were “an important step for American semiconductor companies to be globally competitive and will help to restore balance in the global chip making industry.” The Semiconductor Industry Association said it was “carefully reviewing” the rules but welcomed the Commerce Department’s steps to set the program in motion.Clyde V. Prestowitz Jr., a former trade official and labor economist who has advocated industrial policy, said he was sympathetic to the Biden administration’s goals of maximizing the program’s benefit to the public, rather than company shareholders.“The policy is aimed at ensuring the security and increasing the well-being of all Americans,” he said. “It is not meant to be a special gift to the semiconductor companies.” More

  • 125 Shares189 Views

    in Economy

    Low-Income Families Brace for End of Extra Food Stamp Benefits

    When a pandemic-era boost ends on Wednesday, more than 30 million people will lose a significant amount of assistance.WASHINGTON — Tens of millions of low-income families are set to lose additional food stamp benefits on Wednesday after the expiration of a pandemic-era policy that had increased the amount they received, leaving food banks bracing for a surge in demand and some advocates predicting a rise in hunger nationwide.For nearly three years of the pandemic, emergency legislation enacted by Congress sought to cushion the economic blow of the coronavirus, allowing all participants in the Supplemental Nutrition Assistance Program to receive the maximum monthly benefit, regardless of income. The extra cash, along with other economic assistance programs, helped keep food insecurity at bay and cut poverty rates to a record low.But that temporary increase lapses for more than 30 million people across 35 states and territories on Wednesday, effectively cutting benefits for the vast majority of recipients as inflation remains persistently high and many other coronavirus-era programs end.“This is a cost shift from the federal government,” said Ellen Vollinger, the SNAP director at the nonprofit Food Research & Action Center. “It just shifts the burden of hunger onto states and counties, to the charitable sector, but of course, most harshly, it shifts the burden to that household to try to make do with even less.”Under the pandemic-era policy, each recipient got a monthly average of $251. That is expected to decline by about a third, or $82, in March, according to the Agriculture Department, which administers the food stamp program.Those who qualify for the minimum benefit under the standard income guidelines — many of whom are older Americans relying on Social Security — will see the steepest decrease, from $281 in monthly benefits to only $23, according to Ms. Vollinger.Even though the extra benefits will lapse, food stamp benefits will remain more generous than three years earlier, because the Biden administration permanently increased benefits by 25 percent over prepandemic levels. Inflation F.A.Q.Card 1 of 5What is inflation? More

  • 150 Shares169 Views

    in Economy

    What’s in the CHIPS Act, Aimed at Childcare Expansion and National Security

    A sprawling new program for the semiconductor industry is foremost about national security, but it will try to advance other priorities as well.The Biden administration unveiled rules Tuesday for its “Chips for America” program to build up semiconductor research and manufacturing in the United States, beginning a new rush toward federal funding in the sector.The Commerce Department has $50 billion to hand out in the form of direct funding, federal loans and loan guarantees. It is one of the largest federal investments in a single industry in decades and highlights deepening concern in Washington about America’s dependence on foreign chips.Given the huge cost of building highly advanced semiconductor facilities, the funding could go fast, and competition for the money has been intense.Here’s a look at the CHIPS and Science Act, what it aims to do and how it will work.Funding chip production and researchThe largest portion of the money— $39 billion — will go to fund the construction of new and expanded manufacturing facilities. Another $11 billion will be distributed later this year to support research into new chip technologies.The bulk of the manufacturing money is likely to go to a few companies that produce the world’s most advanced semiconductors — including Taiwan Semiconductor Manufacturing Company, Samsung Electronics, Micron Technology and, perhaps in the future, Intel — to help them build U.S. facilities.Some will go to makers of older chips that are still essential for cars, appliances and weapons, as well as suppliers of raw materials for the industry and companies that package the chips into their final products.While some critics have questioned the wisdom of giving grants to a profitable industry, semiconductor executives argue that they have little incentive to invest in the United States, given the higher costs of workers and running a factory.The Global Race for Computer ChipsU.S. Industrial Policy: In return for vast subsidies, the Biden administration is asking chip manufacturers to make promises about their workers and finances, including providing affordable child care.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.A Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.The administration does not plan to fund entire projects: Biden administration officials say they plan to offer grants of between 5 to 15 percent of a company’s capital expenditures for a project, with funding not expected to exceed 35 percent of the cost. Companies can also apply for a tax credit reimbursing them for 25 percent of project construction.Limiting foreign dependenceGina Raimondo, the secretary of commerce, describes the program as foremost a national security initiative.While the United States is still a leader in designing chips, most manufacturing has been sent offshore. Today, more than 90 percent of the most technologically advanced chips, which are critical for the U.S. military and the economy, are produced in Taiwan. That has prompted concerns about the supply’s vulnerability, given China’s aggression toward Taiwan and the potential for a military invasion of the island.At the same time, China has increased its market share in less advanced chips that are still critical for cars, electronics and other products. The United States manufactures 12 percent of chips, though none of the world’s most advanced.Chip shortages during the pandemic forced factories to halt work and brought home in a tangible way how vulnerable the supply chain is to disruption. Workers at Ford Motor factories in Michigan and Indiana worked a full week just three times last year because of a chips shortage, Ms. Raimondo said in a speech at Georgetown University last week. That helped create a car shortage and raise the price of cars, stoking inflation.The Commerce Department says the program will also provide the Department of Defense and the national security community with a domestic source of the world’s most advanced chips.An Intel factory under construction in Arizona. The Biden administration unveiled the rules for its program to build up U.S. semiconductor research and manufacturing.Philip Cheung for The New York TimesBuilding chip hubsAccording to Ms. Raimondo, the goal is to build at least two U.S. manufacturing clusters to produce the most advanced types of logic chips, as well as facilities for other kinds of chips, and complex supply networks to support them.Commerce officials have declined to speculate where these facilities might be, saying they must review applications. But chip makers have already announced billions of dollars in plans for new investments around the United States.TSMC, which produces most of the world’s leading-edge chips, has been busy expanding in Arizona, while No. 2 Samsung is growing in Texas. Micron, which makes advanced memory chips, has announced big expansion plans in New York. And Intel, a U.S. technology giant that is investing heavily to try to capture a technological edge, has broken ground on a “megasite” in Ohio.Ms. Raimondo has said the vision is to restore the United States to a position of leadership in semiconductor technology, to the point where every major global chip company wants to have both research and manufacturing facilities in the United States.Still, there is skepticism about how much the program can do. One 2020 study, for example, found that a $50 billion investment in the industry would increase U.S. market share only to 14 percent.Protecting taxpayer fundsThe stakes are high for the Biden administration to prove this foray into industrial policy can work. Critics have argued that the federal government may not be the best judge of winners and losers. If the administration gets it wrong, it could face intense criticism.The Commerce Department said it would look closely at companies that applied for funding, to try to ensure that they were not being given more taxpayer dollars than they needed.In a decision that may irk some companies, the department said projects receiving grants would be required to share a portion of any unanticipated profits with the federal government, to ensure that companies gave accurate financial projections and didn’t exaggerate costs to get bigger awards.The Commerce Department also said it would dole out funding over time as companies hit project milestones, and give preference to those that pledged to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price.Companies are also barred from making new, high-tech investments in China or other “countries of concern” for at least a decade, to try to ensure that taxpayer money does not go to fund new operations in China.But analysts said it remained to be seen how difficult it would be to enforce these provisions. Company finances can be opaque, and when a company saves a dollar in the United States, it may then choose to invest it elsewhere.Helping workers by attaching big stringsThe program also includes some ambitious and unusual requirements aimed at benefiting the people who will staff semiconductor facilities.For one, the department will require companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for plant construction workers and operators. This could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost or directly subsidizing workers’ care costs. Ms. Raimondo has said child care will draw more people into the work force, when many businesses are struggling in a tight labor market.Applicants are also required to detail their engagement with labor unions, schools and work force education programs, with preference given to projects that benefit communities and workers.Other provisions will encourage companies, universities and other parties to offer more training for workers, both in advanced sciences and in skills like welding. The department said it would give preference to projects for which state and local governments were providing incentives with “spillover” benefits for communities, like work force training, education investment or infrastructure construction.This is part of the Biden administration’s “worker-centered” approach to economic policy, which seeks to use the might of the federal government to benefit workers. But some critics say it could put the program’s goal of building the most advanced semiconductor factories at risk, if it adds excessive costs to new projects. More