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Westlake Legal Group > Posts tagged "United States Economy"

Coronavirus Live Updates: Spanish Hotel Locked Down Amid Outbreak Fears

Here’s what you need to know:

ImageWestlake Legal Group 25virus-briefing03-articleLarge Coronavirus Live Updates: Spanish Hotel Locked Down Amid Outbreak Fears United States Economy Travel Warnings Stocks and Bonds New York Times Italy Iran Epidemics Coronavirus (2019-nCoV) China

A view of Santa Cruz de Tenerife, in the Canary Islands, during a dust storm on Sunday. Credit…Ramon De La Rocha/EPA, via Shutterstock

A hotel on the Spanish resort island of Tenerife was placed under a police cordon on Tuesday after an Italian guest tested positive for the new coronavirus, the authorities said.

According to local news reports, around 1,000 guests are booked at the hotel, the H10 Costa Adeje Palace, at a resort that is popular with British tourists. It was initially unclear the extent to which the hotel had been locked down and whether an official quarantine was in place.

Officials at the Canary Emergency Services Department are working to determine the severity of the outbreak in the building. In recent cases, including the quarantine of the Diamond Princess cruise ship, the authorities demanded quarantine periods of at least 14 days.

Tenerife is the largest of the Canary Islands, a Spanish territory off the coast of West Africa.

The Italian patient is being kept in isolation at a hospital on the island, pending the results of a second test to be conducted in Madrid by Spain’s National Center of Microbiology.

The hotel guests have been told to remain in their rooms, according to Antena 3, a Spanish television channel, while health inspectors are checking people inside who could have come into contact with the Italian.

Guests were given a note by the hotel management asking them to stay in their rooms and telling them that for health reasons, the hotel had been temporarily closed.

Police enlarged the security cordon around the hotel to block access to nearby streets and a parking lot on Tuesday morning.

According to the local news media, the man who tested positive is a doctor who was visiting from Lombardy, a region of Italy that has been hit particularly hard by the virus. He reportedly took himself to a hospital with a fever about a week after arriving in Tenerife.

Spain previously confirmed two cases of the virus, both foreigners who were hospitalized on Spanish islands: a German citizen on La Gomera and a Briton on Majorca.

Calling the coronavirus “a plague,” an Iraqi lawmaker demanded on Tuesday that the government seal its borders with Iran “until the disease is completely controlled,” the same day that Iraq’s health ministry announced four more cases of the virus.

The demand by Qutayba Al Jubori, chairman of the Iraqi Parliament’s Health and Environment Committee, came as governments across the region sought to limit the entry of Iranian travelers following an outbreak in that country that has killed at least 15 people.

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

The Iraqi government said it would suspend all flights from Iran beginning Monday afternoon, but by Tuesday morning flights were still scheduled to and from Najaf, a central Iraqi city that is home to Shiite shrines popular with Iranian pilgrims.

Iraq reported its first case of the virus on Monday, a 22-year old religion student in Najaf, who has been quarantined at a location outside the city. On Tuesday, the health ministry confirmed that a family of four from Kirkuk who just returned from Iran had contracted the coronavirus and were being quarantined.

The government told citizens to avoid crowded places including shrines, universities and schools, shopping malls and stores, sports activities and entertainment parks. They also recommended avoiding kissing or shaking hands with others and urged people to use disposable napkins.

The firebrand cleric Moktada al-Sadr said he would suspend massive protests against his political opponents.

“I had called for million man protests and sit-ins against sectarian power-sharing and today I forbid you from them for your health and life, for they are more important to me than anything else,” he said in a statement.

Global stocks stabilized on Tuesday, a day after fears of the spread of the new coronavirus outside China spooked investors into a worldwide sell-off.

Shares fell in most markets in Asia, led by Japan, which had closed for a holiday on Monday and missed that day’s drop. The Nikkei 225 index dropped more than 3.3 percent. Most other Asian markets fell at a much slower pace.

But shares in Europe opened higher, suggesting investors’ nerves had steadied. Futures trading indicated that American markets would rise when they opened on Tuesday.

The signs of stabilization followed a difficult Monday, when investors began to more fully comprehend the extent of the outbreak. On Wall Street, the S&P 500 index fell 3.4 percent on Monday, its worst single-day performance since February 2018. European markets recorded their worst session since 2016.

In China, the Shanghai stock market fell 0.6 percent, while the market in the city of Shenzhen rose by about half a percent. The Hong Kong market was little changed.

In South Korea, shaken by the world’s second-largest outbreak of the virus outside China, share prices rebounded on Tuesday morning after enduring one of the sharpest drops of any large market around the world the day before. They ended up 1.2 percent.

In Europe, London’s FTSE 100 was up 0.3 percent early, while German’s DAX rose 0.1 percent.

China appears to be getting the new coronavirus under control, but infections are spreading rapidly in South Korea, Iran and Italy. And the world is not prepared for a major outbreak, World Health Organization officials said on Monday.

A W.H.O. mission to China has said that the daily tally of new cases there peaked and then plateaued between Jan. 23 and Feb. 2, and has steadily declined since.

Chinese officials reported 508 new cases and 71 deaths as of Monday, a slower pace than in previous days.

By Tuesday, South Korea had reported a total of 893 cases, the second most in the world. Of the 60 new cases reported by South Korea’s Centers for Disease Control and Prevention, 49 came from Daegu, the center of the outbreak in that country.

In Iran, a spike in coronavirus infections has prompted fears of a contagion throughout the Middle East. In Italy, one of Europe’s largest economies, officials are struggling to prevent the epidemic from paralyzing the commercial center of Milan. And in New York, London, and Tokyo, financial markets plummeted on fears that the virus will cripple the global economy.

The emergence of Italy, Iran, and South Korea as new hubs of the outbreak underscored the lack of a coordinated global strategy to combat the coronavirus, which has infected nearly 80,000 people in 37 countries, causing at least 2,600 deaths.

Westlake Legal Group china-wuhan-coronavirus-maps-promo-articleLarge-v42 Coronavirus Live Updates: Spanish Hotel Locked Down Amid Outbreak Fears United States Economy Travel Warnings Stocks and Bonds New York Times Italy Iran Epidemics Coronavirus (2019-nCoV) China

Coronavirus Map: Tracking the Spread of the Outbreak

The virus has infected more than 80,000 people in China and 33 other countries.

American citizens were advised on Monday to avoid nonessential travel to South Korea because of the rapid spread of the coronavirus there. The U.S. Centers for Disease Control and Prevention has raised the travel warning to Level Three, its highest warning.

“There is a widespread, ongoing outbreak of respiratory illness caused by a novel (new) coronavirus that can be spread from person to person,” the C.D.C. said in an advisory. “Older adults and people with chronic medical conditions may be at risk of severe disease.”

The C.D.C. also warned that “there is limited access to adequate medical care in affected areas.”

The warning came as South Korea reported Tuesday that the number of cases in the country had risen by 60 to 893 overall. The majority of the cases have been centered in the area in and around Daegu, South Korea’s fourth-largest city, 180 miles southeast of Seoul. And roughly half the patients in the country are members of the Shincheonji religious group, a church that has a large following in the city.

President Moon Jae-in on Sunday put the country on the highest possible alert in its fight against the coronavirus.

The Trump administration, after weeks of pleading from lawmakers, asked Congress on Monday to allocate at least $2.5 billion in emergency funds to bolster its coronavirus response, according to three White House officials and a request letter obtained by The New York Times.

The request from the White House, $1.25 billion in new funds and $1.25 billion in money diverted from other federal programs, is a significant escalation in the administration’s response to the outbreak of the virus and a sign of how long the fight to stop it may be.

The letter, which was signed by Russell T. Vought, the acting director of the Office of Management and Budget, said the funds would be spent on emergency medical supplies, lab testing, the development of vaccines and other forms of monitoring, among other features.

Representative Nita M. Lowey of New York, the chairwoman of the House Appropriations Committee, called the request “woefully insufficient to protect Americans from the deadly coronavirus outbreak.”

“It is profoundly disturbing that their answer now is to raid money Congress has designated for other critical public health priorities,” she said in a statement. “Worse still, their overall request still falls short of what is needed for an effective, comprehensive governmentwide response.”

At least one and as many as 19 people have died from causes that could be linked to the coronavirus at a nursing home located steps from the likely source of the outbreak in Wuhan, China, the Chinese news outlet Caixin reported.

The nursing home, known as the Wuhan Social Welfare Institute, is near the seafood market that was identified the center of the outbreak. A spokesman told The New York Times it could not comment without approval from the civil affairs bureau.

In an indication that the authorities have acknowledged the risks posed to nursing homes, the civil affairs bureau has said every facility in the city will now be put under strict management, and that nucleic acid tests would be conducted for employees by Feb. 28.

The aged are particularly vulnerable to the coronavirus, with many of the reported deaths occurring among people over 60 years old who had underlying health conditions. Five people at the nursing home are said to have died in December and January, and another 14 in February, according to Caixin. Lung infections and heart attacks were listed among the causes of the deaths.

A nurse cited by Caixin said the infirmary attached to the home lacked testing capabilities for the virus. The municipal Civil Affairs Bureau in Wuhan said in a notice dated Thursday that 11 residents and an employee at the home have been infected and that one had died.

Many more deaths are going unreported, according to Caixin.

In a decision that could complicate California’s efforts to deal with the coronavirus crisis, a federal judge on Monday kept a temporary restraining order in place that would prevent infected patients on a military base from being moved to a state-owned facility in the city of Costa Mesa.

The judge said she would reconsider the issue after state and federal authorities provide more details about how they plan to protect the health of the community, as well as the people with coronavirus. “The state has shown great empathy for the patients,” Judge Josephine L. Staton said in a ruling that drew applause, adding that she wanted to see “the same empathy for the residents of Costa Mesa.”

Costa Mesa had asked the judge to prevent California from moving people infected with the new coronavirus into a former residential home for developmentally disabled people, where the patients would remain in isolation while recovering. The area, which is in Orange County, is too heavily populated to host people infected with such a dangerous virus, the local officials argued.

Federal officials had planned to move the patients to a facility in Alabama operated by the Federal Emergency Management Agency, court documents said, but officials in California thought that moving the group out of the state would be detrimental to their health and well-being.

The standoff over where to send the patients underscored the unwieldy, decentralized nature of the U.S. health system, even as federal authorities were warning of serious risks from the coronavirus outbreak

Beijing officials announced on Tuesday that they had ordered local governments to streamline the many new requirements they have imposed before companies can reopen after weeks of stalled production as a result of the outbreak

Worried that further infections might be blamed on them, local officials all over China have been demanding that companies pass extensive reviews and even on-site inspections before they can restart production. Rules include making sure that companies provide employees with face masks, keep track of employees’ temperatures and set up hand-washing stations.

Manufacturers of medical protection equipment can bypass the new rules almost entirely, so as to produce more face masks and other gear as quickly as possible.

But while Beijing is trying to restart the private sector, it does not want companies to mark up prices steeply for scarce products. Tang Jun, the deputy director of the State Administration of Market Regulation, said at a news briefing on Tuesday morning in Beijing that the Chinese government had investigated 4,500 companies for price gouging and was filing more than 11,000 legal cases.

The cases involved, “medical protective supplies and important commodities related to the people’s livelihood,” he said. More than 36,000 online vendors have already been identified as trying to overcharge specifically for face masks, he added, and electronic commerce companies have removed their overpriced listings.

Reporting and research was contributed by Raphael Minder, Matt Phillips, Russell Goldman, Keith Bradsher, Gerry Mullany, Aimee Ortiz, Alissa Rubin, Elaine Yu, Mark Landler, Steven Lee Myers, Sui-Lee Wee, Farah Stockman, Louis Keene, Noah Weiland, Emily Cochrane and Maggie Haberman.

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‘Now Is the Time’: Fed Official Urges Congress to Plan for Recessions

Westlake Legal Group merlin_166835511_978bff17-5237-4cad-a0ea-dc7282573229-facebookJumbo ‘Now Is the Time’: Fed Official Urges Congress to Plan for Recessions United States Economy Unemployment Insurance Recession and Depression Quantitative Easing Interest Rates Inflation (Economics) Federal Reserve System Daly, Mary C Brainard, Lael Banking and Financial Institutions

Federal Reserve officials and top economists have been debating which tools will work best to fight future recessions, and a clear consensus is forming: They are going to need lawmakers’ help.

Interest rates are mired at lower levels than in past economic expansions, part of a long-running trend that looks unlikely to reverse anytime soon. That leaves central bankers with less room to goose the economy in a downturn — and raises the possibility that they could exhaust their monetary ammunition in a serious slump.

Lael Brainard, a Fed governor, on Friday issued one of the clearest calls for proactive congressional action, while speaking at a conference in New York held by the University of Chicago Booth School of Business.

“Just as monetary policymakers are actively reviewing their tools and strategies, now is the time to undertake a review of fiscal tools and strategies to ensure they are ready and effective,” she said. Fiscal policy is made by lawmakers with taxing and spending authority, and Ms. Brainard said the design of “more automatic, faster-acting” responses in that arena would take work.

Central bankers are hoping that both Congress and state and local authorities will step up come the next recession, helping to offset any economic pain. Monetary policy remains a powerful tool for fighting downturns — and officials plan to use mass bond-buying and promises to keep rates low for longer to make up for their lost room to cut rates. But central bankers could run out of the ammunition they need to quickly return the economy to health.

The Fed has long used the federal funds rate as its primary tool for guiding the economy, and it is now set in a range of 1.5 percent to 1.75 percent. It was above 5 percent heading into the 2007 to 2009 recession.

“Long-term interest rates are likely to be much lower going into the next downturn than they were going into any recession in the past 75 years,” a set of top economists wrote in a paper prepared for the conference. “This will clearly limit the potential for old and new monetary policy tools to ease financial conditions and bolster economic outcomes.”

Fed Chair Jerome H. Powell often tells lawmakers that the Fed will need their help going forward. During testimony last week, he said that “it would be important for fiscal policy to help support the economy if it weakens.”

But Ms. Brainard’s implication that Congress should be thinking about how to make fiscal tools more automatic goes a bit further. The idea that Congress could pre-commit to taxing or spending policies that would kick in as soon as the economy starts to slow has increasingly been a centerpiece of Fed and academic economic research.

One such proposal is the so-called Sahm Rule. Created by Claudia Sahm, a former Fed economist, it would use a pronounced jump in the unemployment rate to trigger a fiscal response such as stimulus payments to households.

Ms. Brainard’s colleague, Mary C. Daly, president of the Federal Reserve Bank of San Francisco, has also made a case for government spending policies that kick in immediately.

Central bankers “face greater uncertainty about the impact of our tools and their ability to achieve our goals,” she said in a speech earlier this month. “Fiscal policy will need to play a larger role in smoothing through economic shocks,” and “expanding the array of automatic stabilizers that form part of the social safety net can help mitigate the depth and duration of economic downturns.”

Ms. Brainard did not endorse any specific set of policies, but pointed out that while “monetary policy is powerful but blunt,” fiscal policy can be used to tackle precise problems — important when a big share of households “have low liquid savings and are particularly vulnerable to periods of unemployment or underemployment.”

While some congressional committees have looked into supplementing or strengthening existing spending programs that work to counter recessions — like unemployment insurance, which pays out more when times are tough — they have not been beefed up since the Great Recession.

Some economists worry that a divided Congress would be slow to coalesce around a big spending package, like the crisis-era American Recovery and Reinvestment Act, to help right the economy in a future downturn.

The onus does not fall entirely on lawmakers. As Ms. Brainard suggested, the Fed itself is thinking about how to make monetary policy faster-acting in times of crisis.

Part of the reason that the recovery from the Great Recession was so plodding is that monetary policy responded only slowly, many economists think, and then took a long time to seep through the financial system.

“We should clarify in advance that we will deploy a broader set of tools” to right the economy, Ms. Brainard said. “To have the greatest effect, it will be important to communicate and explain the framework in advance so that the public anticipates the approach and takes it into account in their spending and investment decisions.”

It is not a foregone conclusion that the Fed will find its powers depleted come the next expansion. Ben S. Bernanke, the former chair, estimates that tools including bond-buying will be enough. Proactive promises like the ones Ms. Brainard raised could help, too.

But if such policies fall short, the consequences could be serious. Europe and Japan’s experiences have showed that weak economic recoveries can lead to slumping inflation. They also come at a huge human cost, as workers struggle to find jobs and experience drawn-out periods of weak wage growth.

“Monetary policy should not be the only game in town,” according to the paper presented at the conference, written by a group of economists including JPMorgan Chase’s Michael Feroli and Citigroup’s Catherine Mann. The group wrote that “monetary policymakers should be humble about how much can be expected” from new monetary policy tools.

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The Liberal Economists Behind the Wealth Tax Debate

Westlake Legal Group 21DC-WEALTHTAX-01-facebookJumbo The Liberal Economists Behind the Wealth Tax Debate United States Economy Presidential Election of 2020 Income Tax Income Inequality Income High Net Worth Individuals Federal Taxes (US) Affordable Housing

BERKELEY, Calif. — One of the most liberal policy proposals animating the Democratic presidential primaries is the handiwork of two French economists who are not formally advising any campaign and have barely met the candidates running for the White House.

Gabriel Zucman and Emmanuel Saez are the driving force behind proposals for a wealth tax, an idea embraced by Senators Bernie Sanders and Elizabeth Warren as a way to reduce economic inequality by forcing the richest Americans to pay taxes on everything they own and diverting that money to public services like universal health care and free college tuition.

Their efforts documenting a sharp increase in the concentration of wealth at the very top and their outspokenness have vaulted the tax from a fringe idea in American politics to the center of a reinvigorated debate on taxing the rich.

They have also made Mr. Zucman and Mr. Saez the most visible, and polarizing, economists in the 2020 campaign.

Other economists, including some who held top jobs under past Democratic presidents, have attacked Mr. Zucman and Mr. Saez over their research methods, their policy conclusions and their data. Conservative economists say their proposals would cripple economic growth.

Last year, the faculty at Harvard’s Kennedy School of Government voted to offer Mr. Zucman, 33, a tenured position. But Harvard’s president and provost nixed the offer, partly over fears that Mr. Zucman’s research could not support the arguments he was making in the political arena, according to people involved in the process. He has since been awarded tenure alongside Mr. Saez, 47, at the University of California, Berkeley.

The pair have won praise from some liberal activists. Felicia Wong, the president of the Roosevelt Institute, a progressive think tank, said Mr. Saez and Mr. Zucman had helped bring large tax increases on the rich into the mainstream, winning support even from Democratic candidates who do not support their wealth tax.

“It’s a very different debate,” Ms. Wong said, “and now we’re having it on Saez and Zucman’s terms.”

The effect was evident in the Democratic presidential debate on Wednesday in Las Vegas. Over two hours that included few concrete economic policy proposals, Ms. Warren and Mr. Sanders both promoted their wealth-tax plans. Mr. Sanders leaned on Mr. Zucman and Mr. Saez’s data to denounce “the insane situation that billionaires today, if you can believe it, have an effective tax rate lower than the middle class.”

Late last month, Mr. Zucman and Mr. Saez discussed their work from their university offices in Berkeley, with billion-dollar views of the San Francisco financial district in the background.

They acknowledged their critics and the uncertainties involved in their research, which attempts to assemble a picture of America’s wealth distribution that is essentially invisible in standard economic data. But they defended their methods and conclusions, and said they were not surprised that the wealth tax, which polling shows is popular even with a majority of Republicans, had captured the imagination of candidates and voters.

“Clearly it’s been central to the campaign,” Mr. Zucman said, citing voter dissatisfaction with the levels of inequality in America.

But he added: “Let me be very clear that the wealth tax is not going to solve all these problems. It’s part of the solution.”

Both Mr. Saez and Mr. Zucman have built their careers studying the rise of inequality and its intersections with tax policy. In 2009, Mr. Saez won the John Bates Clark Medal for leading what the American Economic Association called “a remarkable resurgence of interest in tax policy research over the last decade.”

Mr. Zucman began his doctoral studies in economics that year. The son of two doctors in Paris, he wrote his master’s thesis on the effects of France’s wealth tax on the migration of high earners and spent the fall of 2008 interning at a Parisian financial firm. Lehman Brothers, the investment bank, collapsed on his first day, and he found himself explaining the macroeconomic dynamics of a financial crisis to panicked traders. It helped inspire him to pursue a doctorate in economics.

Mr. Zucman eventually made his way to Berkeley, where he teamed up with Mr. Saez, who, along with another French economist, Thomas Piketty, was producing pioneering research that documented the rising share of income earned by the very richest Americans in recent decades. Mr. Saez and Mr. Zucman, building on that data, showed that wealth had grown more concentrated as well.

In their book published last fall, the pair estimated that the top tenth of 1 percent of Americans — fewer than 250,000 adults, with an average wealth of about $70 million each — held 19.3 percent of all wealth in 2018. That was triple their share from four decades earlier.

That statistic has helped galvanize the left, prompting lawmakers and other Democrats to call for a complete overhaul of how America thinks about taxation. Every major Democratic presidential candidate has proposed trillions of dollars in tax increases on the rich and corporations to pay for government programs to help reduce inequality, like affordable housing, debt-free college and universal health coverage.

“In terms of Democratic thinking, it’s been enormously influential, both in highlighting the issue of inequality — particularly how concentrated it is at the very top — and the way the tax system has been inadequate in combating that increase in inequality,” said Jason Furman, a Harvard economist who was a chairman of President Barack Obama’s Council of Economic Advisers.

Four years ago, Mr. Saez and Mr. Zucman pitched the leading Democratic candidates, Hillary Clinton and Mr. Sanders, on their wealth tax proposal, but both campaigns passed.

This cycle has been different. Mr. Sanders and Ms. Warren have both proposed wealth taxes. A third leading candidate, Pete Buttigieg, has said America “should consider” a wealth tax, though he has criticized Ms. Warren’s. Michael R. Bloomberg, the billionaire former mayor of New York, this month proposed raising taxes on the richest Americans but stopped short of endorsing a wealth tax.

“They are the experts on wealth and income inequality in America,” said Warren Gunnels, a senior adviser to Mr. Sanders’s campaign. “Those that disagree with Saez and Zucman,” he added, “are the types of groups and academics that are funded by the powers that be, the establishment, the billionaire class.”

Mr. Sanders is counting on the wealth tax to raise more than $4 trillion over a decade, which he would spend on universal child care, affordable housing and part of the financing for his “Medicare for all” plan. Ms. Warren sees it supplying $2.75 trillion for education and child care and $1 trillion for Medicare for all.

Mr. Saez and Mr. Zucman produced those revenue estimates. Leading economists have challenged them, most notably Harvard’s Lawrence Summers, a former chairman of Mr. Obama’s National Economic Council, and Natasha Sarin, a University of Pennsylvania law school professor, who calculated that the tax would raise less than half that amount.

The debate has turned ugly on Twitter, a development that Mr. Zucman has embraced. He engages in prolonged back-and-forth debates with his critics, defending his views with charts, data, emojis and sarcasm.

In December, he dismissed Mr. Summers and Ms. Sarin’s revenue estimates as “unserious.” A month earlier, when The New York Times and other outlets reported that Mr. Bloomberg was prepared to spend as much as $1 billion on his presidential campaign, Mr. Zucman feigned surprise: “This is astonishing, because what I learned from Larry Summers and others is there’s no evidence that the wealthy have a lot of influence on US politics. Very confused right now.”

Mr. Zucman seems to regard social media as a necessary but unfortunate venue for advocacy. Asked in an interview if he enjoyed Twitter, he let out a long sigh. “Who does?” he said. As for losing out on the opportunity at Harvard, he said it was appropriate for social scientists to contribute to policy debates and said Harvard’s decision “should not discourage young scholars in the U.S. to publicly defend new ideas.”

Mr. Zucman dives into long back-and-forth debates with critics on Twitter.Credit…Ian C. Bates for The New York Times

He seemed disappointed in Mr. Summers, whom he regards as a brilliant economist who has strayed into a subfield where Mr. Zucman claims more expertise. Mr. Summers regards Mr. Zucman as highly talented, and was among the economists who argued strongly in favor of his hiring at Harvard.

“These things get sorted out over time,” Mr. Summers said in an interview, after praising Mr. Zucman and Mr. Saez for pushing the debate on inequality. “Most serious professionals in the tax policy area think that the polemical urge at some points has gotten the better of Gabriel and Emmanuel, especially when Gabriel starts to tweet.”

Other economists have challenged the details of Mr. Zucman and Mr. Saez’s wealth inequality calculations. They have engaged in a debate with the economists Matthew Smith, Eric Zwick and Owen Zidar, whose work shows a much smaller concentration of wealth among top earners. The competing study implies there is less for the government to gain by taxing the very wealthy.

And while candidates like Mr. Sanders support raising taxes on the wealthy by citing Mr. Zucman and Mr. Saez’s claim that the rich pay lower effective tax rates than poor and middle-class Americans, many liberal economists say the claim is wrong since the calculations do not include some tax benefits for the poor, like the earned-income tax credit.

“Leaving them out seems both analytically and politically mistaken,” said Jared Bernstein, a former top economist for Mr. Obama who counts himself a fan of Mr. Zucman and Mr. Saez.

Some economists have long been critical of Mr. Saez and Mr. Zucman’s work, including Wojciech Kopczuk, a Columbia University economist who published a rebuttal to the pair’s wealth data in 2015. But their rising public profile has brought more scrutiny. Mr. Kopczuk argues that, compared with their earlier work, the Berkeley economists’ recent book made more aggressive — and he believes incorrect — assumptions.

“That’s when you can say without any doubt they crossed from academic research to advocacy,” Mr. Kopczuk said. “It’s liberating when you don’t have to deal with reviewers.”

Mr. Saez and Mr. Zucman defend their methods as “conservative” estimates and note that the imposition of an American wealth tax would provide much more transparent evidence on wealth concentration.

“If we have the wealth tax data, we will see who is right,” Mr. Saez said. “If we’re wrong, fine. If it turns out there is no wealth concentration in the United States, we don’t need a wealth tax.”

Jim Tankersley reported from Berkeley, and Ben Casselman from New York.

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Surging Dollar Reflects the Standout U.S. Economy

Westlake Legal Group defaultPromoCrop Surging Dollar Reflects the Standout U.S. Economy US Dollar (Currency) United States Economy International Trade and World Market Economic Conditions and Trends Currency

The dollar climbed to its highest level in years this week, a reflection of the standout status of the American economy against a global backdrop clouded by the coronavirus.

Pessimistic economic updates from Japan, Britain and Germany have only added to the uncertainty created by the coronavirus, which all but idled China’s economy for weeks.

The slowdown has stimulated a rush into American stocks and bonds, as global investors exchanged their currencies for dollars — pushing the value of the dollar higher — and then used those dollars to snap up financial assets.

“People are spooked by the coronavirus, and the global economy is weakening. It’s struggling mightily,” said Bob Schwartz, a senior economist at Oxford Economics in New York. “And whenever this happens, you see a capital flight into dollar-denominated assets.”

The U.S. dollar index, which measures the dollar’s value against six currencies of major trading partners, is up more than 3.6 percent this year, pushing it to its highest level since April 2017. It was up 0.2 percent on Thursday.

The dollar has risen more than 1 percent against China’s government-managed currency, the renminbi, in February alone. For the year, it’s up more than 3.5 percent against the euro, 3 percent against the yen and more than 2.5 percent against the British pound.

Those regions have faced a flurry of lackluster economic results.

Official reports this month showed that the British economy flatlined during the fourth quarter. A report last week showed that the Japanese economy shriveled at a 6.3 percent annual clip during the fourth quarter, in part because of a tax increase. And this week, survey data about economic sentiment in Germany tumbled anew, as the country’s manufacturing sector copes with the fallout of the coronavirus outbreak in China, a key customer for its industrial goods and automobiles.

“Currencies are weakening on incoming bad data that leads to inflows into dollar assets,” wrote Ben Emons, global macro strategist at Medley Global Advisors.

While weakening foreign fundamentals have pushed money out of those markets, the relatively high interest rates in the United States have exerted a magnetic pull.

Yields on U.S. Treasury bonds — a benchmark for measuring investment returns — are quite low by domestic standards, but they’re downright generous compared with global rates.

The yield on the 10-year Treasury note was about 1.52 percent on Thursday, trouncing the negative yields of roughly 0.04 percent and 0.44 percent on 10-year government bonds from Japan and Germany. (Negative yields effectively mean that lenders are paying borrowers for the privilege of handing them money.)

The strengthening dollar can be a boon for the American economy: It helps lower the costs of borrowing and makes imports cheaper, bolstering already strong consumer sentiment.

But that dynamic can also have negative consequences. Despite the country’s robust labor market, business investment has been shrinking and manufacturing has struggled since late 2018 — and a strong dollar won’t help those parts of the economy much.

American exports such as aircraft, automobiles and soybeans become less competitive on global markets as the dollar rises in value. That, in turn, could weigh on the industrial manufacturers, from the makers of farm equipment to the factories that churn out piping for oil and gas extraction. A slowdown in foreign economic growth will also weaken overseas demand for American-made goods.

“There is no question that the industrial side of the economy continues to suffer the effects of weak global growth, the strong dollar, tariffs and trade uncertainty,” Mr. Schwartz wrote in a recent client note. “Those headwinds are not expected to vanish anytime soon.”

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Fed Flagged Coronavirus Risk at January Meeting

Westlake Legal Group 19DC-FED-01-facebookJumbo Fed Flagged Coronavirus Risk at January Meeting United States Economy Powell, Jerome H Interest Rates Inflation (Economics) Federal Reserve System Factories and Manufacturing Economic Conditions and Trends Coronavirus (2019-nCoV) Banking and Financial Institutions

WASHINGTON — Federal Reserve officials left interest rates unchanged at their January meeting as the economy grew steadily, but they spent their meeting reviewing risks to the outlook — including fresh concerns about the coronavirus that had begun to take hold in China.

Minutes from the Fed’s Jan. 28 and 29 meeting showed that officials called the new coronavirus “a new risk to the global growth outlook.” At the time, the outbreak had killed more than 100 people and sickened about 5,000. It has continued to spread since, causing more than 2,000 deaths and infecting more than 75,000 people.

Central bankers have been cautious about predicting how much the virus will affect the United States economy, though they have made it clear that they expect some spillover. Swaths of China have ground to a standstill as authorities try to contain the virus by shuttering factories and enforcing quarantines, disrupting trade and tourism. Factories across the nation are reopening, but haltingly.

The Fed is monitoring how the economic fallout in China bears on American growth and inflation.

“The question for us really is: What will be the effects on the U.S. economy? Will they be persistent, will they be material?” Jerome H. Powell, the Fed chair, told lawmakers while testifying last week. “We know that there will be some, very likely to be some effects on the United States. I think it’s just too early to say.”

Fed officials have signaled that they plan to leave policy unchanged as they wait to see how the economy shapes up in 2020. That patient stance comes after central bankers cut interest rates three times last year in a bid to insulate the economy against fallout from President Trump’s trade war and a slowdown abroad.

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

While an initial trade deal with China has alleviated some uncertainty that dogged America’s economy last year, tensions are not fully resolved. Beyond that, manufacturing remains slow and business investment is still weak.

“Participants generally expected trade-related uncertainty to remain somewhat elevated, and they were mindful of the possibility that the tentative signs of stabilization in global growth could fade,” according to the January minutes. Against that backdrop, they saw the current policy as “likely to remain appropriate for a time.”

Interest rates are currently set in a range between 1.5 and 1.75 percent. That is below the Fed’s longer-run estimate of where its rate will settle, and officials believe the current stance should give the economy a slight boost.

The central bank’s next meeting will take place March 17 and 18 in Washington. Since the January gathering, Fed officials have consistently signaled that they remain comfortable leaving rates unchanged for now, unless an economic surprise knocks them off that course.

Coronavirus is not the only risk on the Fed’s radar.

Some Fed officials fretted over financial stability risks at the meeting, noting that “financial imbalances — including overvaluation and excessive indebtedness — could amplify an adverse shock to the economy.”

And “several” pointed out that “planned increases in dividend payouts by large banks and the associated decline in capital buffers might leave those banks with less capacity to weather adverse shocks.”

But the minutes also suggest a paradox for regulators, noting that relatively high capital requirements could cause “potential migration of lending activities” into the shadow banking system — loosely regulated non-bank lenders where supervisors lack oversight authority. From the way the minutes are written, it is unclear how many people shared in that concern.

Officials also discussed a longer-running problem at the January gathering: inflation has remained below policy maker’s 2 percent goal even as the unemployment rate lingers near half-century lows and the economy grows steadily.

“A few participants stressed that the Committee should be more explicit about the need to achieve its inflation goal on a sustained basis,” the minutes said. Several said that “mild overshooting” might help the Fed to reinforce that its goal is symmetric, meaning that officials want price gains to oscillate around 2 percent rather than hovering below that level.

If prices grow too slowly, it diminishes the central bank’s already-limited room to cut interest rates in a recession, since the federal funds rate incorporates price gains. As of December, the central bank’s preferred price index accelerated by just 1.6 percent.

While Fed officials are hopeful that inflation will rise toward its 2 percent target in 2020, they have expressed a similar optimism for years, only to repeatedly fall short.

The Fed has been reviewing its monetary policy framework, and that discussion continued in January with a look at how to handle future financial stability concerns. If the Fed cuts rates at rock-bottom and keeps them there for an extended period of time to fight recessions going forward, they noted, it could encourage investors and financial institutions to take excessive risks — and that reality should potentially play into policy-setting.

But those at the meeting “generally agreed” that supervisory and regulatory tools should make up the backbone of the central bank’s main approach to financial stability concerns, according to the minutes.

While “many participants remarked that the Committee should not rule out the possibility of adjusting the stance of monetary policy to mitigate financial stability risks” participants noted that it was unclear how changes in rates would actually interact with financial vulnerabilities.

As such, “monetary policy should be guided primarily by the outlook for employment and inflation,” the minutes said.

Several suggested that the Fed would need a communication strategy to convey the Committee’s assessment of financial vulnerabilities and the policy implications of those views.

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How Millennials Could Make the Fed’s Job Harder

Westlake Legal Group 23millennial-econ-facebookJumbo How Millennials Could Make the Fed’s Job Harder United States Economy United States Savings Pensions and Retirement Plans Millennial Generation Labor and Jobs Interest Rates Inflation (Economics) Federal Reserve System Banking and Financial Institutions

WASHINGTON — “They say millennials are lazy,” billboards plastered across 15 major cities declared last summer. “Retire early and prove them right.”

That sentiment, reflected in ads for the investment manager Prudential, is the stuff of a 30-year-old’s fantasy — and the Federal Reserve’s nightmare.

A young generation of aggressive savers could leave central bankers with less room to cut interest rates, which they have long done to boost growth in times of economic trouble.

To leave the work force early, millennials would need to build up massive retirement funds and consume less in the process. That hit to demand could slow growth and force rates to drop ever lower to entice spending. And if today’s workers actually managed to retire young, it would exacerbate the situation by shrinking the labor force, further weighing on the economy’s potential.

Millennials, who are roughly between the ages of 24 and 39 and have not lived through pronounced price spikes, already have the lowest inflation expectations of any adult generation. Their belief that costs will not increase could eventually slow actual price gains by making it hard for businesses to charge more. The Fed’s main interest rate includes inflation, so that would leave it with even less room to cut.

It may not come to this. Millennials could become more worried about inflation as they age, giving companies more room to lift prices. Their difficult post-recession entry into the labor market means many are laden with student debt, so it’s unclear if they will be able to retire young. But many indicate that they want to leave the work force early — an ambition that economists say could spell macroeconomic trouble if realized.

“It would lower interest rates — that’s certainly true,” said Joseph Gagnon, an economist at the Peterson Institute for International Economics. “It would be a double whammy: It directly raises savings” and “it would further reduce the need to invest in factories and offices for these people.”

Interest rates have been falling for decades, and demographics are a major factor in that decline, economists say. Once people are past middle age, they are living longer without working correspondingly later in life, so they have been saving heavily to fund extended retirements.

Millennials, already accused of killing everything from paper napkins to mayonnaise, would happily exacerbate the drop in interest rates, which baby boomers have driven to date.

Of millennial workers with an active 401(k), 43 percent expect to retire before the age of 65, based on data from T. Rowe Price. For Generation X — often defined as those aged 40 to 55 — that figure is 35 percent. While the T. Rowe Price survey targeted a privileged group, broader polls have turned up similar findings.

Members of Gen X are short on savings, so they may need to work further into old age. But younger people have time to turn things around: While they got a slow start, they are still under the age of 40. Millennials have begun saving more as they work in greater numbers and benefit from a record-long economic expansion.

There’s even a movement — Financial Independence, Retire Early, or “FIRE” — dedicated to frugality in pursuit of quitting the work force as soon as possible.

Scott Rieckens, 36, and his wife Taylor, 35, began following a FIRE plan in 2017. The couple, who have one child, ditched their leased cars and $3,000-a-month apartment in San Diego to move to Bend, Ore. They save more than 50 percent of their income and aim to have the $1.7 million they think they’d need to retire by their early 40s, though Mr. Rieckens doesn’t plan to completely stop working then.

He recently produced a documentary on the FIRE movement, released last year, which drew more than 10,000 people to screenings in over 200 cities. The audience skewed younger, Mr. Rieckens said, explaining that FIRE appeals to millennials partly because they have faced precarious jobs without pensions.

“You start to get this sense of lack of control, and fear,” he said. “You can take control of your life.”

The Rieckens may be extreme savers, but many millennials with means are prioritizing saving. According to a recent Bank of America survey, 25 percent of millennial savers had amassed more than $100,000, up from 16 percent in 2018.

They have good reason. Millennials have grown up with dire warnings that Social Security will be exhausted by the time it is their turn to use it. They came of age in the worst downturn since the Great Depression, so they are no strangers to economic insecurity.

But there’s a paradox to thrift: Saving, even if virtuous on an individual level, can cause economic trouble en masse. If ambitious cash stockpiling were to catch on, it could exacerbate secular stagnation, a term that the Harvard University economist Lawrence H. Summers repopularized to describe the low-growth, low-inflation state of many advanced economies.

When consumers save a big portion of their income, they are not spending as much on dinners out, movie nights and cars. Businesses respond by investing less in equipment and technology, and productivity stalls. Bosses are unwilling to pay their workers more for the same output, and weak pay gains further restrain spending.

Retirement saving behavior is not the only driver causing economic torpor and lower rates. Inequality has left a small number of people with more money than they can realistically spend. Slower labor force growth and more iterative technological improvements could also have an impact.

The lower interest rates that result from high and unequal saving might sound great — think cheaper mortgages — but they leave economies vulnerable to shocks. In the United States, for example, rates are now in a range of just 1.5 percent to 1.75 percent, leaving the Fed room for about six quarter-point rate cuts in a downturn. Headed into the last recession, rates topped 5 percent.

Fed officials think mass bond-buying and promises to keep rates low for longer can give them power to fight a slump. But the jury is out on whether such alternatives will add enough ammunition to make up for lost room on interest rates.

Even Ben S. Bernanke, a former Fed chair with an optimistic take on the central bank’s ability to prop up the economy in a downturn, says officials could end up in a tight spot if rates drop substantially lower.

It is anyone’s guess whether they will stabilize at low levels, rise or resume their descent.

“A continued downtrend is as likely as reversion to normal,” Mr. Summers said. “Lots of the structural forces that are driving this seem likely to continue.”

That’s what makes millennial retirement behavior so interesting: It is a wild card still, one that could slightly lift or substantially lower rates going forward.

Policy could influence how things play out. The government could nudge workers toward later retirement or ramp up deficit spending on old-age benefits. Mr. Summers’s research shows that fiscal spending is already propping rates up. Alternately, uncertainty about the fiscal future — like whether the present complacency over large deficits continues — could spur millennials to save more now.

What is clear is that rates are unlikely to head higher soon. That makes maintaining slow but stable inflation more important than ever.

Doing so is proving difficult. The Fed’s preferred inflation index accelerated just 1.6 percent over the past year. It has never sustainably topped 2 percent since the Fed formally adopted that goal in 2012.

That shortfall is threatening to derail inflation expectations. Americans who lived through the great inflation of the 1970s remember an era when services and goods were rapidly increasing in price, and they tend to have a higher outlook for future prices.

Millennials and Generation Z are a different story. Rents and tuition have gotten pricier, but computing power worth millions of dollars a generation ago now fits into a $600 phone. Free entertainment abounds. As America’s collective memories of breakneck price gains fade, the nation’s younger people have become an anchor that threatens to drag down overall expectations.

John C. Williams, the president of the Federal Reserve Bank of New York, said in a speech last month that “there is still time to avert this fate.” Moving inflation up and keeping it there could convince millennials, he said.

“In this case, it’s fortunate that the young are impressionable.”

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Trump Effort to Keep U.S. Tech Out of China Alarms American Firms

Westlake Legal Group 00DC-TECHPROTECT-ross-facebookJumbo-v2 Trump Effort to Keep U.S. Tech Out of China Alarms American Firms United States Politics and Government United States Economy United States Defense and Military Forces Trump, Donald J International Trade and World Market Industrial Espionage Huawei Technologies Co Ltd Economic Conditions and Trends Commerce Department China

WASHINGTON — The Trump administration’s push to prevent China from dominating the market for advanced technologies has put it on a collision course with the same American companies it wants to protect.

Firms that specialize in microchips, artificial intelligence, biotechnology and other industries have grown increasingly alarmed by the administration’s efforts to restrict the flow of technology to China, saying it could siphon expertise, research and revenue away from the United States, ultimately eroding America’s advantage.

The concerns, which have been simmering for months, have taken on new urgency as the Commerce Department considers adopting a sweeping proposal that would allow the United States to block transactions between American firms and Chinese counterparts. Those rules, on top of new restrictions on Chinese investment in the United States and proposed measures that would prevent American companies from exporting certain products and sharing technology with foreign nationals, have the tech industry scrambling to respond.

The Trump administration’s crackdown has already prompted foreign firms to shun American components and technology over concerns that access to parts they need could be abruptly cut off. American companies are watching warily as the United States considers restricting export licenses for companies that sell products or share intellectual property with China, including General Electric, which sells aircraft parts to China as part of a joint venture with Safran, a French firm.

Top administration officials plan to meet on Feb. 28 to discuss further restrictions on China, including whether to block G.E.’s license to sell jet engines and whether to further curtail the ability of Huawei, the Chinese telecom giant, to have access to American technology.

There is growing bipartisan consensus in Washington that China poses a security threat and that the United States must protect domestic industries to retain a technological edge. While President Trump’s trade war with China was aimed at forcing Beijing to end practices that gave Chinese industries an advantage, the initial deal signed last month did little to address the security concerns.

The tech industry has warned that limiting access to China, both in terms of selling and buying products, could cripple American companies and end up undercutting the United States as the biggest global hub of research and development.

Companies, along with the lawyers and consultants who advise them, say firms increasingly have no choice but to locate more research and development outside the United States, to ensure that they have uninterrupted access to China, a fast-growing consumer market and the center of the global electronics supply chain. New investment dollars are being funneled to research hubs near University of Waterloo in Canada, as well as Israel, Britain and other places beyond the reach of the American government, they say.

“Anyone who thinks our concerns are exaggerated should talk to the U.S. semiconductor industry workers who are already losing their jobs due to walling off our largest market,” said John Neuffer, the president and chief executive of the Semiconductor Industry Association, which represents chip makers. “Revenue from that big market fuels our big research investments, which allows us to innovate and drive America’s economic growth and national security.”

The RISC-V Foundation, a nonprofit that has created an open-source software standard for the chips that power smartphones and other electronics, acknowledged in recent months that it had chosen to move its incorporation from Delaware to Switzerland because of concerns from its members about more stringent regulations in the United States.

“If this administration proceeds with the current trajectory, we’ll see more defections of companies, of scientists,” said Scott Jones, a nonresident fellow with the Stimson Center. “They’ll take their toys and they’ll go elsewhere, and other economies will be the beneficiary of that.”

The most recent source of concern stems from a Commerce Department plan to vet and potentially block technology transactions that pose a risk to the United States. The proposed rule would allow the commerce secretary to block transactions involving technology that was tied to a “foreign adversary” and that posed a significant risk to the United States.

The rule grew out of an executive order Mr. Trump signed last year to try to shut out Huawei by authorizing the commerce secretary to bar any purchase of technology designed by a “foreign adversary” that put America at risk. American companies say the regulations are written so broadly that they could give the United States authority to block transactions or unwind existing ones in areas far afield from telecom gear.

While tech companies say they support efforts to protect U.S. national security, dozens of companies and industry lobbying groups have expressed concerns about the proposal.

IBM, in a January comment letter, told the Commerce Department to “go back to the drawing board” and said the rules “will lead to a broad disengagement of U.S. business from global markets and suppliers.”

“Its reach, breadth and vagueness are unprecedented,” IBM said.

The Internet Association, which counts Google and Facebook among its members, said the proposal lacked “substantive safeguards.” The Motion Picture Association warned that it could affect Hollywood’s ability to pursue transactions around special effects or animation.

The Commerce Department said in a statement that the process would ensure that “all points of view have been considered and the U.S. national security considerations are balanced against corporate commercial interests.”

The tougher measures have come in response to what the administration and even the tech industry view as a rising economic and security threat. China is gaining ground in a range of technologies that experts say could give the country an economic and military edge, including artificial intelligence, facial recognition, microchips and quantum computing.

To try to dominate these advanced industries, China has deployed subsidies, targeted acquisitions of American firms and created industrial plans like Made in China 2025 to leap ahead. The administration has repeatedly accused China and its companies of engaging in corporate espionage, hacking and intellectual property theft.

Last week, the U.S. government charged Huawei and two of its subsidiaries with federal racketeering and conspiracy to steal trade secrets from six American companies. It also charged four members of China’s military with hacking into Equifax, one of the nation’s largest credit reporting agencies, and stealing trade secrets and the personal data of about 145 million Americans in 2017.

Beijing’s actions have created an overwhelming fear in Washington that China will come to dominate advanced industries and put American competitors out of business, in the same way it did for steel, furniture and solar panels. But the stakes are even higher this time, given that many of these new technologies are critical for the military.

“The Chinese have long been a commercial people, but for China, purely economic success is not an end in itself,” Attorney General William P. Barr said in a speech this month. “It is a means to wider political and strategic objectives.”

The Trump administration’s response has been to offer a new definition of national security, one that encompasses economic threats. The distinction has allowed the United States to enact powerful rules restricting commercial exchanges with China.

Mr. Trump has cited national security in his decision to tax foreign metals, propose new limits on the technology that can be transferred outside the United States and bar Chinese companies like Huawei from buying American components.

While tech companies found a way around the initial Huawei ban, the administration is considering much more severe restrictions. A new proposal would extend the reach of the U.S. government to regulate products made around the world, prohibiting companies from using American components and technologies in foreign-made products that are then supplied to Huawei.

The proposals have set off panic within the technology industry, which fears the new restrictions will hamper its ability to tap into the Chinese market. Industry lawyers and trade groups have begun warning that, unless the administration can persuade its allies to adopt similar restrictions, companies will decide the safest course is to try to limit their use of American technology.

Critics point to past incidents where tight regulation pushed American industries offshore — including machine tool makers in the 1990s, and commercial satellites in the 2000s. While it is illegal for companies to move existing operations abroad to try to circumvent export control rules, there are no such constraints on new investments.

“Their incentive is shareholder value and making money,” Jim McGregor, the chairman of greater China for APCO Worldwide, said of America’s biggest technology companies. “It’s not defending what is good for America. You can say that’s terrible, but that’s the way our system works.”

Mr. McGregor said the economic incentives of the Chinese market would encourage companies to “decouple from America.”

Chinese companies are also working to weed American components out of their supply chains — a long-running effort toward self-sufficiency that has accelerated under the threat of harsher U.S. measures.

In recent months, some Chinese companies have begun asking their suppliers to certify that their products are made with a minimal amount of American content, so they are not at risk from American export controls, people familiar with the conversations say.

Chinese telecom companies have been asked to find an alternative to using Oracle’s software in their systems. And CITIC Capital, a giant investment management firm with deep links in China, has embraced helping Chinese companies find alternatives to American technology as an investment theme for this year.

Some who favor tougher China rules say companies are exaggerating the potential impact in an attempt to influence new regulations. They say that the United States retains big advantages in research and development, and that companies are trying to scare the government into loosening rules by saying they will leave.

Others say the national security threat from China is so serious that some short-term revenue loss is warranted.

“You can’t avoid paying that price,” said Clyde Prestowitz, a former Reagan administration official who led trade negotiations with Japan and China. “Your only choice is to pay it now or later. Now, you still have a cutting-edge industry that will take a hit, but that can survive and prosper if high tech does not become a Chinese playground.”

The administration’s view is not monolithic. Within the Commerce Department, some are pressing for stricter rules while others say crippling American business will do more to endanger national security.

The Pentagon is also split, with some officials calling for tighter regulations and others saying the government should not put innovation at risk, given that military technologies typically draw on commercial products.

Some China experts say that American companies are deluding themselves and that, without safeguards, China will eventually steal their technology and drive them out of business.

“We’ve seen what happens to many foreign firms who ‘have to be there’ in steel, telecom, et cetera,” Derek Scissors, a resident scholar at the American Enterprise Institute, said of China. “They get progressively more desperate, until they die.”

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Bipartisan Lawmakers Cast Doubt on Judy Shelton, Trump’s Fed Nominee

Westlake Legal Group 13dc-Shelton-facebookJumbo Bipartisan Lawmakers Cast Doubt on Judy Shelton, Trump’s Fed Nominee Waller, Christopher (1959- ) United States Politics and Government United States Economy Shelton, Judy Senate Committee on Banking Senate Gold Standard (Monetary) Federal Reserve System Banking and Financial Institutions

WASHINGTON — Republican lawmakers expressed concern about Judy Shelton, President Trump’s nominee for the Federal Reserve, casting doubt on the confirmation chances of a candidate viewed as a potential next Fed Chair.

Ms. Shelton faced skepticism from both Republicans and Democrats on the Senate Banking Committee, with lawmakers questioning whether she would protect the Fed’s independence and pressing her about previous policy positions she has espoused, including a return to the gold standard.

“I’m concerned,” Senator Richard Shelby, the Alabama Republican, said when asked which way he was leaning on her confirmation following the hearing. He was joined by Senator John Kennedy, Republican of Louisiana, and Senator Patrick J. Toomey, Republican of Pennsylvania, in expressing uncertainty about whether she would win their support.

Ms. Shelton, 65, has been a controversial pick for the job. She has a history of supporting the gold standard, has questioned the need for the Fed, and has changed her policy views significantly since Mr. Trump, for whom she served as an unofficial campaign adviser, came into office.

Senator Mike Crapo, the Idaho Republican who chairs the committee, sought to portray Ms. Shelton as a solid pick for diversity who would support lighter financial regulation.

But other Republicans were less sanguine, with Mr. Toomey, Republican of Pennsylvania, calling Ms. Shelton’s view that the Fed should pay attention to foreign exchange rates “dangerous.”

“I remain concerned,” he told reporters outside of the hearing, saying that he has not yet made up his mind on Ms. Shelton’s nomination. He said he would be willing to oppose one of Mr. Trump’s nominees if he thinks the “nominee is unsuitable for the job.”

Mr. Kennedy said “nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas,” adding that he was “not saying that’s the case here.”

Because Ms. Shelton would need a simple majority vote to move onto confirmation by the full Senate, only one Republican would need to object in order to potentially dash her chances of moving forward. The committee has 13 Republicans and 12 Democrats, and it is not clear that any of the Democrats would support her bid.

“They asked substantive, tough questions,” Sam Bell, the founder of Employ America, said of Republican senators. Mr. Bell’s group has been pushing for Fed nominees that are focused on boosting employment and has vocally opposed Ms. Shelton.

“The aura, after the hearing, is that there’s serious bipartisan skepticism.”

Democrats showed their discomfort with Ms. Shelton, particularly her close ties to Mr. Trump, and pressed her repeatedly on whether she would operate independent of the White House. They quizzed her on whether she felt the president’s frequent attacks on Jerome H. Powell, the chairman of the Federal Reserve, were appropriate.

“Frankly, no one tells me what to do,” Ms. Shelton said at one point. “I don’t think it’s the job of the Federal Reserve to accommodate political agendas” and “the Fed operates independently, as it should.”

But she indicated that she did not have a problem with Mr. Trump’s ongoing criticisms of Mr. Powell. The president regularly blasts the Fed Chair on Twitter and in public remarks, faulting him for not doing more to boost the economy and pushing him to cut interest rates more aggressively.

“I do believe that every American, every member of Congress” and “our President” have the right to criticize the Fed, she said, adding later that “in some ways, it’s refreshing that it is out in the open.”

Ms. Shelton’s nomination has raised concerns among economists and former central bankers, who worry that her changing policy views — she used to support higher interest rates, but flipped to support lower rates around the time Mr. Trump came into office — suggests she would operate with an eye on the White House.

Heightening that concern is the possibility that Ms. Shelton is viewed as a possible successor to Mr. Powell should Mr. Trump win a second term and opt to replace his first pick for the Chair job.

That tough questions came from both sides of the aisle could owe, in part, the Fed’s extensive efforts in recent years to explain its policies and the importance of its independence to members of Congress. Mr. Powell and the Fed’s governors regularly visit with lawmakers, discussing policy and hearing out their concerns. When they appear on Capitol Hill to offer testimony, they often highlight that politically unconstrained central banks have a history of fostering superior economic outcomes.

Mr. Trump’s other nominee for the Fed, Christopher Waller, 60, also appeared before the Senate Banking Committee but had a far less testy hearing. Mr. Waller, currently research director at the Federal Reserve Bank of St. Louis, faced only light vetting, though he was asked some questions mirroring those posed to Ms. Shelton.

Ms. Shelton was asked repeatedly about her history of supporting a gold standard, a monetary approach that the United States abandoned half a century ago because it was deemed impractical. Mainstream economists generally say that returning to a gold-backed currency, if it were even possible, would be economically damaging.

“You never go back, with money,” Ms. Shelton said during the hearing, suggesting she was surprised to be portrayed as supporting a return to a traditional gold standard. At one point, Ms. Shelton said that she “would not advocate going back to a prior historical monetary arrangement.”

In 2009, Ms. Shelton started a Wall Street Journal editorial with the line: “Let’s go back to the gold standard.”

Ms. Shelton has been a longtime critic of the type of policies the Fed undertook during the last recession to reinvigorate the economy, including lowering rates to near zero and purchasing large quantities of government-backed securities, often called quantitative easing or Q.E. She has blamed those efforts, which were intended to lower borrowing costs and encourage investment, for rising inequality.

During the hearing, Mr. Kennedy asked both nominees what they would do in the event of a serious recession, and pushed Ms. Shelton in particular.

“I would never go negative, I’m adverse to that idea,” Ms. Shelton said, referring to the idea of lowering interest rates below zero.

“At the maximum,” Ms. Shelton said, she would take rates to zero and engage in mass bond-purchases “very reluctantly. But first I would make it clear that there are limits to monetary policy.”

While Mr. Trump regularly urges the Fed to adopt negative interest rates, central bank officials have long been skeptical about pushing rates below zero in the United States — even in a recession — because it can have undesirable side effects.

Ms. Shelton’s ties to Mr. Trump have become an issue in part because of the president’s vocal criticism of the Fed, which is independent and answers to Congress, not the White House.

She “had a whole lot of explaining to do, and it’s not at all clear that she won over any detractors or undecideds,” Ian Katz, an analyst at Capital Alpha Partners, a policy and political research company in Washington, wrote in note following the hearing.

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Powell, Warning of a Possible Virus Fallout, Is Slammed Again by Trump

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WASHINGTON — Federal Reserve Chair Jerome H. Powell warned lawmakers on Tuesday that the coronavirus epidemic sweeping China could pose broader economic risks, even as he signaled that the central bank is comfortable holding interest rates steady for now.

“We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Mr. Powell told House Financial Services Committee members.

The central bank chief is also set to testify before the Senate Banking Committee on Wednesday.

The Fed is treading cautiously as the economy continues to add jobs but inflation remains low. An initial trade deal with China has eased one major source of economic uncertainty, but tariffs remain on Chinese goods and tensions with other nations could reignite. And the new virus — which has killed more than 1,000 people and sickened tens of thousands — has emerged as an economic wild card.

“Some of the uncertainties around trade have diminished recently, but risks to the outlook remain,” Mr. Powell said. Still “the current stance of monetary policy will likely remain appropriate” as long as incoming economic information remains in line with the Fed’s outlook.

When asked by lawmakers about the coronavirus, Mr. Powell said the Fed is asking questions including “What will be the effects on the U.S. economy? Will they be persistent? Will they be material?”

“We know that there will be some — very likely be some effects on the United States,” he said. “I think it’s just too early to say, we have to resist the temptation to speculate on this.”

Mr. Powell added that “the Chinese government has obviously taken very strong measures” in terms of containing the virus. “The People’s Bank of China has done a number of things to support economic activity. I think you can expect the Chinese government to do lots of things to support economic activity,” he said.

The Fed’s policy rate is now set in a range of 1.5 to 1.75 percent, after officials cut it three times last year to insulate the economy against wobbling global growth and fallout from President Trump’s trade battles.

The housing market perked up as the Fed made its cuts, and the economy as a whole is growing steadily through a record 11th year of expansion.

Despite that, Mr. Powell has remained the subject of near-constant White House complaints. Mr. Trump told Fox Business Network on Monday that “we should have a lower interest rate” and said Mr. Powell “let me down. I think he’s done the wrong thing.”

As Mr. Powell testified Tuesday, Mr. Trump commented on his performance on Twitter, seemingly blaming the Fed Chair as stock prices drifted downward. Prices later recovered and it is unclear what caused the minor wobble, which came amid developing news about the coronavirus and potential regulatory action involving technology companies.

Mr. Powell was asked about negative rates, which Mr. Trump has repeatedly pressed for in the United States. He said that the Fed chose to use other tools to stimulate the economy in the last downturn, and would probably do so again in the next.

“When you have negative rates, does it wind up creating downward pressure on bank profitability, which limits credit extension?” he said. “There’s some evidence of that.”

The Fed operates independently of the White House but answers to Congress, which has given it the freedom to pursue its two goals — stable inflation and maximum employment — as it sees fit.

Mr. Powell has met extensively with lawmakers from both the House and the Senate, and he tends to get a comparatively welcoming reception during his visits to Capitol Hill.

A good relationship with Congress could prove essential in the next recession. Interest rates have fallen across advanced economies as the population has aged and productivity growth has slowed, which means that the Fed will likely have less room to cut borrowing costs to coax the economy back to life in future downturns.

That means “it would be important for fiscal policy to help support the economy if it weakens,” Mr. Powell said. He tied that point to a pet topic of his: the size of the government’s debt.

“Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn,” he said. “A more sustainable federal budget could also support the economy’s growth over the long term.”

The budget deficit topped $1 trillion in 2019 and the Congressional Budget Office expects trillion-dollar deficits for the next several years.

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Trump’s $4.8 Trillion Budget Would Cut Safety Net Programs and Boost Defense

Westlake Legal Group 10DC-BUDGET-01-facebookJumbo Trump’s $4.8 Trillion Budget Would Cut Safety Net Programs and Boost Defense United States Politics and Government United States Economy Student Loans Presidential Election of 2020 National Debt (US) Medicare medicaid Federal Taxes (US) Federal Budget (US) environment Affordable Housing

WASHINGTON — President Trump released a $4.8 trillion budget proposal on Monday that includes a familiar list of deep cuts to student loan assistance, affordable housing efforts, food stamps and Medicaid, reflecting Mr. Trump’s election-year effort to continue shrinking the federal safety net.

The proposal, which must be approved by Congress, includes additional spending for the military, national defense and border enforcement, along with money for Mr. Trump’s Space Force initiative and an extension of the individual income tax cuts that were set to expire in 2025. Its biggest reduction is an annual 2 percent decrease in spending on discretionary domestic programs, like education and environmental protection.

Speaking to the nation’s governors at the White House, Mr. Trump said Monday that his budget proposal would bring the deficit close to zero in “not that long a period of time” and that he was investing heavily in the military and America’s nuclear arsenal.

“We’re going to have a very good budget with a very powerful military budget, because we have no choice,” he said, adding that he was aiming to reduce spending by rooting out fraud and abuse.

“We’re doing a lot of things that are good including waste and fraud,” Mr. Trump said Monday. “Tremendous waste and tremendous fraud.”

The White House budget is largely a messaging document that reflects the administration’s spending priorities and has little chance of being enacted in full by Congress. While Monday’s proposal is similar to the president’s previous requests, it is a stark contrast with the leading Democratic rivals for the White House, who have proposed large tax increases on the rich and expansions of government efforts to provide health care, education, affordable housing and aid for the poor.

For instance, at a time when many Democratic candidates are proposing sweeping efforts to forgive student loan debt and make some or all public colleges tuition-free, Mr. Trump’s budget again recommends eliminating subsidized federal student loans and ending the public service loan program, an incentive for teachers, police officers, government workers and other public servants that cancels their remaining federal student loans after a decade of payments. Those proposals were in last year’s budget; Congress failed to adopt them.

The budget also calls for the creation of a single income-driven loan repayment program, to replace what has become a confusing jumble of different payment plans. Under the administration’s plan, borrowers would pay 12.5 percent of their discretionary income toward their loans, instead of the 10 percent many currently pay.

Mr. Trump’s $4.8 trillion budget deviates from his previous proposals in that it does not contain an explicit plan to repeal and replace Obamacare.

In previous years, Mr. Trump’s budget has proposed repealing the Affordable Care Act and replacing it with a system that would provide block grants of funding to states with far fewer rules about how the money should be spent. The new budget backs away from that approach. It leaves the Affordable Care Act’s funding in place but asks Congress to develop policies that would “advance the president’s health reform vision,” with a corresponding price tag, which it says would save $844 billion over the decade.

The budget’s approach to health care is particularly striking given its actions in court. It has joined a lawsuit brought by a group of Republican states that would seek to invalidate all of Obamacare. The Supreme Court is deciding whether it will take up that case or allow the lower courts to continue reviewing it. The president has repeatedly promised to release a health care plan that could be deployed if he wins in court, but he has yet to release one.

The budget still makes major changes to health care programs, including several that would tend to lower federal spending in Medicaid, by reducing the share of medical bills the federal government will pay for the Obamacare expansion population and imposing new requirements on beneficiaries who wish to enroll. Altogether, it proposes combined cuts to spending in Medicaid and Affordable Care Act subsidies that come to a trillion dollars, cuts that would mean substantial program changes.

Democratic candidates, in contrast, have offered detailed plans, which typically cost trillions of dollars raised via new taxes on corporations and the rich, to expand health care coverage and reduce costs for American patients.

The budget maintains the administration’s tradition of highly optimistic economic growth forecasts, which have not born out the past two years. Even then, it would leave the federal budget deficit only slightly smaller at the end of a possible second term for Mr. Trump, in 2024, than it was the year before he took office. It would not balance the budget until 2035 and add a projected $7 trillion to the national debt by the end of this decade, breaking Mr. Trump’s campaign promise to pay off the entire debt while in office.

It also avoids some hot-button issues that Democrats could seek to turn against Mr. Trump in November — notably, by not reducing Social Security or Medicare benefits. Most of the administration’s initiatives to save money on Medicare are cost-reduction proposals first offered under President Barack Obama, a Democrat.

Instead, the budget seeks to claim victories on core issues of Mr. Trump’s appeal to voters, including growing the economy and cracking down on immigration. That focus was underscored in the first lines of the budget’s introduction, written by Mr. Trump, which looked backward.

“Over the past three years, my administration has worked tirelessly to restore America’s economic strength,” he wrote. “We have ended the war on American workers and stopped the assault on American industry, launching an economic boom the likes of which we have never seen before.”

The administration reserved some of its deepest cuts for the Environmental Protection Agency, which would face a 26 percent reduction in funding and the elimination of 50 programs Mr. Trump deemed “wasteful” or duplicative. The budget would shrink the agency to funding levels it last saw during the 1990s and focus it on “core functions” like addressing lead exposure in water and revitalizing former toxic sites, while excluding efforts like beach cleanup. It does not mention climate change.

Congress has typically ignored the administration’s proposals for cuts to the agency.

The budget did contain a few new initiatives, compared to past budgets. It included a White House proposal to move Secret Service from the Department of Homeland Security to the Treasury Department, arguing that such a move would “create new efficiencies” in the investigation of financial crimes and prepare the United States to face “the threats of tomorrow” such as the use of cryptocurrencies to finance terrorism.

There appears to be bipartisan support for the move, though Democrats have balked at Treasury Secretary Steven Mnuchin’s unwillingness to provide reports ahead of the 2020 election on the cost to taxpayers of protecting Mr. Trump.

Emily Cochrane, Stacy Cowley, Lola Fadulu and Lisa Friedman contributed reporting.

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