Story 1: Will President Trump Boldly Cut Taxes and Spending? — A Competitive Race Towards Lower Taxes And Less Government Spending: Replace All Income Based Taxes (All Income, Capital Gain and Payroll Taxes) With Broad-Based Consumption Tax With Generous Tax Prebate ( FairTax or Fair Tax Less!) And Real Cuts of 5% Per Year In Government Spending To Balance The Budget In 8 Years Or Less To Pay For Tax Cuts!) — Cut Taxes and Spending — Videos —
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PUBLISHED: 02:20 EDT, 10 April 2017 | UPDATED: 10:56 EDT, 10 April 2017
President Donald Trump has scrapped the tax plan he campaigned on and is going back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system.
The administration’s first attempt to write legislation is in its early stages and the White House has kept much of it under wraps. But it has already sprouted the consideration of a series of unorthodox proposals including a drastic cut to the payroll tax, aimed at appealing to Democrats.
Some view the search for new options as a result of Trump’s refusal to set clear parameters for his plan and his exceedingly challenging endgame: reducing tax rates enough to spur faster growth without blowing up the budget deficit.
Administration officials say it’s now unlikely that a tax overhaul will meet the August deadline set by Treasury Secretary Steve Mnuchin.
Off plan: Donald Trump is abandoning the tax overhaul he campaigned on
Tough deadline: Steven Mnuchin, the Treasury Secretary who was at the table when Trump was briefed on the Syria missile strikes, had set an the August deadline for tax reform
But the ambitious pace to figure out a plan reflects Trump’s haste to move quickly past a bruising failure to broker a compromise within his own party on how to replace the health insurance law enacted under President Barack Obama.
The White House is trying to learn the lessons from health care. Rather than accepting a bill written by the lawmakers, White House officials are taking a more active role.
Administration officials have signaled that they want to pass tax legislation with only Republican votes, yet they’ve also held listening sessions with House Democrats.
White House aides say the goal is to cut tax rates sharply enough to improve the economic picture in depressed rural and industrial pockets of the country where many Trump voters live.
But the administration so far has swatted down alternative ways for raising revenues, such as a carbon tax, to offset lower rates.
Trump, who brands himself as a deal-maker, has not said which trade-offs he might accept and he has remained noncommittal on the leading blueprint, from Rep. Kevin Brady, chairman of the Ways and Means Committee.
Brady, a Republican from Texas, has proposed a border adjustment system, which would eliminate corporate deductions on imports, to raise $1 trillion over 10 years that could fund lower corporate tax rates.
But that possibility has rankled retailers who say it would lead to higher prices and threaten millions of jobs, while some lawmakers have worried that the system would violate World Trade Organization rules.
Brady has said he intends to amend the blueprint but has not spelled out how he would do so.
Other options are being shopped on Capitol Hill.
One circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security.
The change, proposed by a GOP lobbyist with close ties to the Trump administration, would transform Brady’s plan on imports into something closer to a value-added tax by also eliminating the deduction of labor expenses.
This would bring it in line with WTO rules and generate an additional $12 trillion over 10 years, according to budget estimates.
Those additional revenues could then enable the end of the 12.4 percent payroll tax, split evenly between employers and employees, that funds Social Security, while keeping the health insurance payroll tax in place.
This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to the lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations.
Although some billed this as a bipartisan solution, and President Barack Obama did temporarily cut the payroll tax after the Great Recession, others note it probably would run into firm opposition from Democrats who are loathe to be seen as undermining Social Security.
The White House would not comment on the plan, but said a value-added tax based on consumption is not under consideration ‘as of now,’ according to a White House statement.
The lack of detail about how to significantly rewrite tax laws for the first time in 30 years may provide Trump some time to build consensus among Republicans. But without Trump laying down his hand, lawmakers appear reluctant to back a plan that will likely stir controversy.
How will markets react? Stocks rallied after the election on the promise of lower taxes and fewer regulations, but the Dow has dipped 1.2 percent over the past month
Stock markets take a hit after Trump’s healthcare defeat
‘Because there are trade-offs, congressmen need cover from the president to withstand the lobbyists and constituents who are going to complain,’ said Bill Gale, an economist at the Brookings Institution who worked at the White House Council of Economic Advisers during President George H.W. Bush’s administration.
The Trump administration appears to have shut out the economists who helped assemble one of his campaign’s tax overhaul plans, which independent analyses show would have increased the budget deficit.
‘It’s a little frustrating that they feel they have to write a new tax plan when they have a tax plan,’ said Steven Moore, an economist at the conservative Heritage Foundation who helped formulate tax policy for the Trump campaign.
Rob Portman, the Republican senator from Ohio, a member of the Senate Finance Committee, said that all of the trial balloons surfacing in public don’t represent the work that’s being done behind the scenes.
‘It’s not really what’s going on,’ Portman said. ‘What’s going on is they’re working with on various ideas.’
Investors are beginning to show some doubts that Trump can deliver. Stocks rallied after his election on the promise of lower taxes and fewer regulations, but the Dow Jones Industrial Average has dipped 1.2 percent over the past month as the path for health care and tax revisions has become muddied.
‘The White House is going to need its own clear direction, or it’s going to need to defer to Congress, but saying that your plan is forthcoming and then not producing a plan kind of puts everything in stasis,’ said Alan Cole, an economist at the conservative Tax Foundation.
The BAT is a bad idea. There are far better ways to shrink the federal budget deficit.
By GENE EPSTEIN
March 18, 2017
“Anytime I hear border adjustment, I don’t love it,” Donald Trump told The Wall Street Journal shortly before his inauguration, noting that the proposed border adjustment tax was “too complicated.”
Trump isn’t always right when he makes off-the-cuff remarks such as that, but this time he was. The proposed border adjustment tax is so complicated that even its advocates can’t agree on how its disruptive effects on the U.S. economy will play out, and there’s nothing to love about that. The BAT is a bad idea, and it should be scrapped. And while taking it off the table will bring more red ink to the federal budget, there are better ways to stanch the bleeding than subjecting the economy to the trauma of a BAT.
Despite protestations to the contrary, the border adjustment levy is a tax hike embedded in the program of tax reductions that House Republicans put forward last June under the rubric of “A Better Way.” It’s there, presumably, to help offset the effect of the administration’s planned cuts, since the Republicans’ stated aim is to keep those cuts revenue-neutral. Barron’s fully supports the goal of not adding to deficits that, before too long, will be running above $1 trillion a year, given repeated warnings from the nonpartisan Congressional Budget Office about the risk of a financial crisis, due to exploding debt.
The attraction of a BAT is that it could generate an estimated $100 billion a year in revenue. There may be reasons to challenge that estimate, but we’ll accept it for now. There are, however, better ways to slash the fiscal deficit by $100 billion a year than the Better Way plan, and most fall under the heading of spending cuts.
President Trump has spoken about “waste, fraud, and abuse” in “every agency” of the federal government. Indeed, he promised that “we will cut so much, your head will spin.” He should therefore find plenty to love in our proposed reductions in spending. Just for starters, if all corporate welfare were cut from the budget, as much as $100 billion a year could be saved, about matching the total expected from the BAT.
The president also favors slashing the top rate on corporate income to 15% from 35%. Barron’s has proposed a more modest cut, to 22% (“Cut the Top U.S. Corporate Tax Rate to 22%,” Nov. 26, 2016). The Republican package calls for a reduction to 20%, which is close enough to our original proposal and which we believe should boost revenue rather than shrink it.
A list of potential cuts and revenue enhancements, totaling $200 billion, is in the table at the bottom of this page.
THE BETTER WAY PLAN, as noted, would reduce the top federal tax rate on corporate profits to 20% from 35%—which is all to the good. The proposed tax cut would not only be revenue-neutral; it would probably be revenue-enhancing.
In a study released this month by the London-based Centre for Policy Studies, analyst Daniel Mahoney traces the effect on revenue from Britain’s cuts in the corporate tax rate over a 34-year period. According to his calculations, the take from the corporate tax has added three-tenths of a percentage point annually to gross domestic product since rates were slashed.
Similarly, last year, in calling for a maximum U.S. rate of 22%, we traced the significant decline in the average top rate on corporate income for 19 countries in the Organization for Economic Cooperation and Development, which includes the U.S. and the United Kingdom. Over 33 years, their average tax take as a share of GDP rose six-tenths of a percentage point.
While that might not sound like much, every tenth of a percentage point of U.S. nominal GDP is worth $18.9 billion. So if revenue from the corporate tax rises by, say, three-tenths of a percentage point, to 2.5%—a conservative guess—that increase would translate into a bonus of nearly $57 billion a year in revenue. That alone gets us more than halfway to the $100 billion value of a BAT.
The idea of a revenue-enhancing cut in the corporate income tax was put forward in 1978, when economist Arthur Laffer was first cited as arguing that some rate decreases could generate enough added economic growth that the government wouldn’t lose revenue over the long run—and might, in fact, even gain revenue. Laffer also noted that most tax hikes generate less revenue than a conventional “static” analysis indicates, and that most tax cuts lose less.
Laffer’s “dynamic” analysis covered all of the behavioral changes likely to result from a cut. To begin with, if the tax collector claims a lower share of income, there is an incentive to produce more income. Second, a lower rate means there’s less incentive to spend time and effort avoiding the tax.
Corporations don’t pay taxes; only people do. And there is a tendency to forget that if a corporation nets more profits as a result of a lower tax, those funds will soon take the form of salaries, dividends, and capital gains, and will be taxed in those forms.
The second factor, less tax avoidance, applies with special force to a rollback of corporate taxes. As we noted last year, bringing down the top rate to 22% from 35% would dramatically reduce corporate flight to low-tax jurisdictions in the rest of the world.
Following the publication of our article, the CBO released a study confirming that U.S corporate tax rates are among the highest in the world. Among the Group of 20 countries—including Japan, China, Russia, Germany, France, Canada, and the U.K.—the U.S. is No. 1, 3, and 4, respectively, in “top statutory corporate tax rate,” “average corporate tax rate,” and “effective corporate tax rate.” The Better Way plan would narrow this gap significantly and make the U.S. more competitive.
But when it comes to the Better Way plan for cutting tax rates on personal income, Barron’s believes that there would be a loss of revenue even after taking into account behavioral changes. The revenue reduction from the proposed personal income-tax cuts has been estimated, on a static basis, at an average of $98 billion a year. We can assume that dynamic losses would run 10% less, or $88 billion, mainly because lower taxes are likely to encourage people to work.
Still, $88 billion a year is a huge loss of revenue. Barron’s proposes that the Better Way plan consider splitting the difference and going halfway on the tax cut, thus saving $44 billion.
THE REVENUE-ENHANCING corporate tax cut would include a special kicker in the form of the border adjustment tax. The BAT would deny corporations the ability to deduct the cost of imports from their taxable income, while all income earned from exports would be exempt from the 20% levy.
This means that companies selling imported goods in the domestic market would be taxed on the sale’s full proceeds—not just on the profit earned—which could more than offset the gains from the corporate tax reduction. At the same time, as noted, there would be no tax on the sale of exports.
The GOP’s Big Three Key players in the border adjustment tax debate: Senate Majority Leader Mitch McConnell, above, and House Speaker Paul Ryan and President Donald Trump, below. McConnell has said that he hasn’t made up his mind about the levy. Alex Wong/Getty Images
The BAT would bring uncertainty and disruption to the U.S. economy, making it hard to predict whether it really would raise $100 billion annually in revenue. The basic idea is that, because the U.S. imports more than it exports, the export exemption would be more than offset by hitting imports hard. Regardless of how it shakes out, the value of the transactions affected by the BAT is huge.
The U.S. trade deficit—the difference between exports and imports—ran at just 3.4% of real GDP in 2016, much lower than the 5.5% peak of 2005. But the actual gross flows of exports and imports are much larger than the difference between the two flows. Exports last year were valued at $2.2 trillion, or 12.8% of real GDP, and imports at $2.7 trillion, or 16.2% (see chart). Given those magnitudes, the tax plan is likely to require massive readjustments throughout the economy.
That’s why major importers, like Wal-Mart Stores, are objecting—and why exporters are clearly pleased. As you might expect, then, the BAT is pitting exporters against importers, creating needless discord at a time when the country is surely suffering from more discord than it can handle.
THE POSITION PAPER for the Better Way asserts that by “exempting exports and taxing imports,” the BAT does “not” consist of the “addition of a new tax.” But of course, the BAT’s designers know that imports normally exceed exports by about $500 billion a year. Apply a back-of-the-envelope 20% to that $500 billion, and you get the hoped-for $100 billion in revenue. So the maneuver of “exempting exports and taxing imports” certainly looks and sounds like a new tax.
The Better Way statement also argues that there is an imbalance in the tax treatment of imports and exports that the BAT must remedy. “In the absence of border adjustments,” it states, “exports from the United States implicitly bear the cost of the U.S. income tax, while imports do not bear any federal income tax cost. This amounts to a self-imposed unilateral penalty on American exports and a self-imposed unilateral subsidy for U.S. imports.”
Ryan strongly supports the tax. Chip Somodevilla/Getty Images
But all other countries impose this “implicit cost” on exports through their own corporate income tax. And since the Better Way would slash America’s top rate to 20%, this implicit cost would finally become competitive with that of other nations.
Some supporters of the BAT like it precisely because it would help exports and penalize imports. The mercantilist view of economics implicit in that aim was discredited in Adam Smith’s 1776 treatise, The Wealth of Nations. And apart from the massive dislocations that will occur if imports shrink, this calls into question whether the projected $100 billion a year in revenue is realistic. As Alan Greenspan once wisely said, “Whatever you tax, you get less of.”
Then again, whether we really will get fewer imports depends a lot on the exchange value of the dollar. Other supporters of the BAT predict that the dollar will respond by appreciating against other currencies, conforming to the dictates of textbook fundamentals. If the dollar appreciates enough, the advantage to exporters and disadvantage to importers will be nullified. Without getting into the technicalities of how all this would work, we concede that it is all quite possible.
But as currency analysts and traders can tell you, exchange rates are subject to all kinds of forces and can spend long periods flouting textbook fundamentals. So whether the dollar will really strengthen in response to the BAT is anyone’s guess. But even if it does, a much stronger greenback would bring other disruptions. American investors with holdings denominated in foreign currencies would take a huge hit. And America’s tourist industries, which are already hurting from what the Los Angeles Times has called a “Trump slump,” would be hurt even more, as the cost of traveling to the States jumps.
There are other questions. Would the World Trade Organization challenge the BAT? Might our trading partners respond in ways that would be unfavorable to us? The border adjustment tax is an experiment in Rube Goldberg economics that the U.S. can do without.
SINCE REVENUE NEUTRALITY is the goal of the Better Way package, what about making up for the $100 billion a year in revenue that the border adjustment tax is supposed to generate?
Whether this tax really will raise as much as $100 billion depends on how imports and exports respond, which is hard to predict. Also, the reduction in the corporate income tax would probably be revenue-enhancing and could generate more than $50 billion in annual revenue.
The president has declared that “anytime I hear border adjustment, I don’t love it” and has voiced concern that it’s overly complicated. Michael Reynolds/Getty Images
We note that the full title of the House Republican plan is “A Better Way: Our Vision for a Confident America,” which leaves room for a vision that includes cost-cutting, along with tax-cutting.
That discussion revealed much low-hanging fruit. For example, the Medicare system is rife with “improper payments,” which Medicare itself estimates at 11% of its spending in 2016. That’s probably a low estimate, because those who get improperly paid tend to keep these payments hidden. Barron’s calculated that if the improper-payment rate could be halved, it would save more than $400 billion over 10 years.
That would contribute $40 billion a year to the $100 billion shortfall from forgoing the BAT. To that we add $65 billion, and perhaps as much as $100 billion, by eliminating corporate welfare.
The Better Way statement properly criticizes the tax code for being “littered with hundreds of preferences and subsidies that pick winners and losers” and “direct resources to politically favored interests.” Spending on corporate welfare is another form of subsidy that picks winners and losers and directs funds to politically favored interests.
IN A 2012 PAPER, “Corporate Welfare in the Federal Budget,” the Cato Institute identified nearly $100 billion worth of yearly spending on corporate handouts, broadly defined, that could be ended. At Barron’s request, Cato senior fellow Chris Edwards updated the scoring on just 10 of the institute’s 40 categories of corporate welfare and came up with $66 billion in potential cuts.
High on Edwards’ list: farm subsidy programs, which redistribute taxpayer money to relatively rich agribusinesses and landowners. That the farm industry receives subsidies makes about as much sense as channeling funds to the restaurant industry, which could well be riskier than farming, based on its high failure rate. This form of corporate welfare goes back to the Great Depression of the 1930s. But whatever argument might have been made for it then hardly applies today, with the yearly tab currently at $25 billion.
Also on the corporate welfare list: pork-barrel handouts administered by the Department of Housing and Urban Development, totaling $13 billion, which go under the heading of “community development,” and which distribute funds to such recipients as museums, recreational facilities, and parking lots. Whatever one may think about the worthiness of these projects, they are better left to states and localities.
Another $10 billion could be saved by abolishing the Universal Service Fund, through which the Federal Communications Commission subsidizes telecommunications companies, among others. A creation of the Telecommunications Act of 1996, this attempt to pick winners and losers is more unnecessary than ever in this dynamic and competitive industry.
PRESIDENT TRUMP PROMISED to “drain the swamp” of Washington’s special interests. One route toward that admirable goal would be to cut corporate welfare. Trump should repeat his objections to a border adjustment tax that would favor the interests of some businesses over others. He can help make U.S. corporations great again by weaning them off subsidies and reducing their tax burdens.
And there are many other provisions that would reduce penalties on work, saving, investment, and entrepreneurship. No, it’s not quite a flat tax, which is the gold standard of tax reform, but it is a very pro-growth initiative worthy of praise.
That being said, there is a feature of the plan that merits closer inspection. The plan would radically change the structure of business taxation by imposing a 20 percent tax on all imports and providing a special exemption for all export-related income. This approach, known as “border adjustability,” is part of the plan to create a “destination-based cash flow tax” (DBCFT).
When I spoke about the Better Way plan at the Heritage Foundation last month, I highlighted the good features of the plan in the first few minutes of my brief remarks, but raised my concerns about the DBCFT in my final few minutes.
Allow me to elaborate on those comments with five specific worries about the proposal.
Concern #1: Is the DBCFT protectionist?
It certainly sounds protectionist. Here’s how the Financial Timesdescribed the plan.
The border tax adjustment would work by denying US companies their current ability to deduct import costs from their taxable income, meaning companies selling imported products would effectively be taxed on the full value of the sale rather than just the profit. Export revenues, meanwhile, would be excluded from company tax bases, giving net exporters the equivalent of a subsidy that would make them big beneficiaries of the change.
Charles Lane of the Washington Postexplains how it works.
…the DBCFT would impose a flat 20 percent tax only on earnings from sales of output consumed within the United States… It gets complicated, but the upshot is that the cost of imported supplies would no longer be deductible from taxable income, while all revenue from exports would be. This would be a huge incentive to import less and export more, significant change indeed for an economy deeply dependent on global supply chains.
That certainly sounds protectionist as well. A tax on imports and a special exemption for exports.
But proponents say there’s no protectionism because the tax is neutral if the benchmark is where products are consumed rather than where income is earned. Moreover, they claim exchange rates will adjust to offset the impact of the tax changes. Here’s how Lane explains the issue.
…the greenback would have to rise 25 percent to offset what would be a new 20 percent tax on imported inputs — propelling the U.S. currency to its highest level on record. The international consequences of that are unforeseeable, but unlikely to be totally benign for everyone. Bear in mind that many other countries — China comes to mind — can and will manipulate exchange rates to protect their own short-term interests.
For what it’s worth, I accept the argument that the dollar will rise in value, thus blunting the protectionist impact of border adjustability. It would remain to be seen, though, how quickly or how completely the value of the dollar would change.
Concern #2: Is the DBCFT compliant with WTO obligations?
The United States is part of the World Trade Organization (WTO) and we have ratified various agreements designed to liberalize world trade. This is great for the global economy, but it might not be good news for the Better Way plan because WTO rules only allow border adjustability for indirect taxes like a credit-invoice value-added tax. The DBCFT, by contrast, is a version of a corporate income tax, which is a direct tax.
The column by Charles Lane explains one of the specific problems.
Trading partners could also challenge the GOP plan as a discriminatory subsidy at the World Trade Organization. That’s because it includes a deduction for wages paid by U.S.-located firms, importers and exporters alike — a break that would obviously not be available to competitors abroad.
Advocates argue that the DBCFT is a consumption-base tax, like a VAT. And since credit-invoice VATs are border adjustable, they assert their plan also should get the same treatment. But the WTO rules say that only “indirect” taxes are eligible for border adjustability. The New York Timesreports that the WTO therefore would almost surely reject the plan.
Michael Graetz, a tax expert at the Columbia Law School, said he doubted that argument would prevail in Geneva. “W.T.O. lawyers do not take the view that things that look the same economically are acceptable,” Mr. Graetz said.
A story in the Wall Street Journal considers the potential for an adverse ruling from the World Trade Organization.
Even though it’s economically similar to, and probably better than, the value-added taxes (VATs) many other countries use, it may be illegal under World Trade Organization rules. An international clash over taxes is something the world can ill afford when protectionist sentiment is already running high. …The controversy is over whether border adjustability discriminates against trade partners. …the WTO operates not according to economics but trade treaties, which generally treat tax exemptions on exports as illegal unless they are consumption taxes, such as the VAT. …the U.S. has lost similar disputes before. In 1971 it introduced a tax break for exporters that, despite several revamps, the WTO ruled illegal in 2002.
And a Washington Posteditorial is similarly concerned.
Republicans are going to have to figure out how to make such a huge de facto shift in the U.S. tax treatment of imports compliant with international trade law. In its current iteration, the proposal would allow corporations to deduct the costs of wages paid within this country — a nice reward for hiring Americans and paying them well, which for complex reasons could be construed as a discriminatory subsidy under existing World Trade Organization doctrine.
Concern #3: Is the DBCFT a stepping stone to a VAT?
If the plan is adopted, it will be challenged. And if it is challenged, it presumably will be rejected by the WTO. At that point, we would be in uncharted territory.
Would that force the folks in Washington to entirely rewrite the tax system? Would they be more surgical and just repeal border adjustability? Would they ignore the WTO, which would give other nations the right to impose tariffs on American exports?
One worrisome option is that they might simply turn the DBCFT into a subtraction-method value-added tax (VAT) by tweaking the law so that employers no longer could deduct expenses for labor compensation. This change would be seen as more likely to get approval from the WTO since credit-invoice VATs are border adjustable.
This possibility is already being discussed. The Wall Street Journal story about the WTO issue points out that there is a relatively simple way of making the DBCFT fit within America’s trade obligations, and that’s to turn it into a value-added tax.
One way to avoid such a confrontation would be to revise the cash flow tax to make it a de facto VAT.
One tax initiative that should be strangled before it sees the light of day is to give a tax rebate to exporters and to impose taxes on imports. …It’s a bad idea. Why do we want to make American consumers pay more for products while subsidizing foreign buyers? It also could put us on the slippery slope to our own VAT.
And that’s not a slope we want to be on. Unless the income tax is fully repealed (sadly not an option), a VAT would be a recipe for turning America into a European-style welfare state.
Concern #4: Does the DBCFT undermine tax competition and give politicians more ability to increase tax burdens?
Alan Auerbach, an academic from California who previously was an adviser for John Kerry and also worked at the Joint Committee on Taxation when Democrats controlled Capitol Hill, is the main advocate of a DBCFT (the New York Timeswrote that he is the “principal intellectual champion” of the idea).
He wrote a paper several years ago for the Center for American Progress, a hard-left group closely associated with Hillary Clinton. Auerbach explicitly argued that this new tax scheme is good because politicians no longer would feel any pressure to lower tax rates.
This…alternative treatment of international transactions that would relieve the international pressure to reduce rates while attracting foreign business activity to the United States. It addresses concerns about the effect of rising international competition for multinational business operations on the sustainability of the current corporate tax system. With rising international capital flows, multinational corporations, and cross-border investment, countries’ tax rates and tax structures are of increasing importance. Indeed, part of the explanation for declining corporate tax rates abroad is competition among countries for business activity. …my proposed reforms…builds on the [Obama] Administration’s approach…and alleviates the pressure to reduce the corporate tax rate.
This is very troubling. Tax competition is a very valuable liberalizing force in the world economy. It partially offsets the public choice pressures on politicians to over-tax and over-spend. If governments no longer had to worry that taxable activity could escape across national borders, they would boost tax rates and engage in more class warfare.
Concern #5: Does the DBCFT create needless conflict and division among supporters of tax reform?
As I pointed out in my remarks at the Heritage Foundation, there’s normally near-unanimous support from the business community for pro-growth tax reforms.
That’s not the case with the DBCFT.
The Washington Examiner reports on the divisions in the business community.
Major retailers are skeptical of the House Republican plan to revamp the tax code, fearing that the GOP call to border-adjust corporate taxes could harm them even if they win a significant cut to their tax rate. As a result, retailers, oil refiners and other industries that import goods to sell in the U.S. could provide a major obstacle to the Republican effort to reform taxes. …The effect of the border adjustment, retailers fear, would be that the goods they import to sell to consumers would face a 20 percent mark-up, one that would force retailers like Walmart, the Home Depot and Sears…to raise prices and lose customers.
A story from CNBC highlights why retailers are so concerned.
…retailers are nervous. Very nervous. …About 95 percent of clothing and shoes sold in the U.S. are manufactured overseas, which means imports make up a vast majority of many U.S. retailers’ merchandise. …If the GOP plan were adopted as it’s currently laid out, Gap pays 20 percent corporate tax on the $5 profit from the sweater, or $1. Plus, 20 percent tax on the $80 cost it paid for that sweater from the overseas supplier, or $16. That means the tax goes from $1.75 to $17 for that sweater, more than three times the profit on that sweater. Talk about a hit to margins. …Retailers certainly aren’t taking a lot of comfort in the economic theory of dollar appreciation. …the tax reform plan will dilute specialty retailers’ earnings by an average of 132 percent. …Athletic manufacturers could take a 40 percent earnings hit… Gap, Carter’s , Urban Outfitters , Fossil and Under Armour are most at risk under the plan.
And here’s another article from the Washington Examiner that explains why folks in the energy industry are concerned.
…the border adjustment would raise costs for refiners that import oil. In turn, that could raise prices for consumers. The border adjustment would amount to a $10-a-barrel tax on imported crude oil, raising costs for drivers buying gasoline by up to 25 cents a gallon, the energy analyst group PIRA Energy Group warned this week. The report warned of a “potential huge impact across the petroleum industry,” even while noting that the tax reform plan faces many obstacles to passage.
Concern #6: What happens when other nations adopt their versions of a DBCFT?
Advocates of the DBCFT plausibly argue that if the WTO somehow approves their plan, then other nations will almost certainly copy the new American system.
But is also has negative implications for the fight to protect America from a VAT. The main selling point for advocates of the DBCFT is that we need a border-adjustable tax to offset the supposed advantage that other nations have because of border-adjustable VATs (both Paul Krugman and I agree that this is nonsense, but it still manages to be persuasive for some people).
So what happens when other nations turn their corporate income taxes into DBCFTs, which presumably will happen? We’re than back where we started and misguided people will say we need our own VAT to balance out the VATs in other nations.
The bottom line is that a DBCFT is not the answer to America’s wretched business tax system. There are simply too many risks associated with this proposal. I’ll elaborate tomorrow in Part II and also explain some good ways of pursuing tax reform without a DBCFT.
Chairman Brady Acknowledges “Valid Concerns” About the Border Adjustment Tax Harming U.S. Businesses
Post by Freedom Partners
After months of insisting that a trillion-dollar Border Adjustment Tax (BAT) on American consumers is the best and only way to achieve pro-growth tax reform without adding to the deficit, Ways and Means Chairman Kevin Brady acknowledged that importers fearful of the new tax have “valid concerns.”
The proposed BAT from House Republicans would mean a new 20 percent tax on everything imported into the U.S., raising up to $1.2 trillion of new government revenue in the form of higher prices, shouldered by consumers. In effect, the regressive tax could undercut positive economic outcomes from lower rates and a simplified tax code through tax reform.
According to Chairman Brady, House Republicans need to “make sure that we allay the valid concerns of those that are importing today,” CNBC reports.
Freedom Partners Vice President of Policy Nathan Nascimento issued the following statement:
“Some of the ‘valid concerns’ that Chairman Brady acknowledges include a devastating new trillion-dollar tax hike, higher costs on everyday goods, fewer jobs, and less economic opportunity. We hope to work with the administration and Congress to get pro-growth tax reform done, but a 20 percent tax hike on all imports would only undermine the point of tax reform – which is to provide much-needed relief for taxpayers and the economy. A massive tax hike on all imports is bad policy, and Americans deserve a better plan that can unite lawmakers in both the House and Senate behind comprehensive tax reform.”
Americans for Prosperity has already identified more than $2 trillion in wasteful spending, unnecessary programs, and corporate welfare that ought to be eliminated before any new tax on U.S. consumers. Freedom Partners and its coalition allies support the efforts of Congress and the administration to bring comprehensive tax reform to reality in a way that protects all Americans from a massive tax hike.
U.S. Businesses Facing Massive Tax Increases Under A Border-Adjusted Tax System Have “Valid Concerns”
Wall Street Journal: “Some Retailers And Other Big Importers … Warn Of Tax Bills That Would Exceed Profits, Forcing Them To Pass Costs To Consumers. ”Cody Lusk, president of the American International Automobile Dealers Association, says his members are shocked that a Republican Congress is proposing a 20% tax on imports.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)
LUSK: “We view this as a very, very serious potential blow to the auto sector and the economy.” (Richard Rubin, “GOP Plan To Overhaul Tax Code Gets Held Up At The Border,” Wall Street Journal, 2/7/17)
Financial Times: Border Tax Threatens To Devastate Importers Through Soaring Tax Bills. “Yet for Mr. Woldenberg the hope has turned to horror. Republicans are still promising the most sweeping changes since the Reagan reforms of 1986. But the only firm proposal on the table — from the House of Representatives — threatens to devastate his 150-person business because it includes a 20 per cent tax on imports … The problem for Mr. Woldenberg is that his goods come from China — 98 per cent of the products he sells in the US are imported. US factories could not produce them with the same low costs and specialized skills, he says. So he would have no choice but to pay the import levy. He estimates it would send his tax bill soaring to 165 per cent of earnings.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)
RICK WOLDENBERG: “To preserve cash flow I [would have to] raise my prices by a third, expect volume to go down by 40 per cent, and fire one out of five people.” (Barney Jopson, Sam Fleming & Shawn Donnan, “Trump And The Tax Plan Threatening To Split Corporate America,” Financial Times, 2/13/17)
RBC Capital Markets: Major Retailers Would Face Tax Bills That Exceed Their Operating Profits. “Major retailers like Wal-Mart, Best Buy, Costco and Dollar Tree would face tax bills that exceed their operating profits under House Republicans’ plans to create a ‘border adjustable’ business tax, RBC Capital Markets said. The investment bank sided with retailers in a debate over the proposal, saying in a research note it would have a ‘seriously adverse’ impact on them. ‘If the US moves to a border-adjusted tax system, most of our retailers would be forced to raise prices (and revenues) or meaningfully change their import/domestic sourcing mix, or their earnings would be materially reduced,’ it said.” (Brian Faler, “RBC Capital Markets: GOP Border-Adjustment Plan Bad For Retailers,” POLITICO Pro, 12/12/16)
POLITICO: “Retailers Fear Massive Tax Increases Under House Republican Tax Plan” “Many retailers fear that, even with Republicans promising to slash the corporate tax rate, they will still face big tax increases that in some cases will exceed their profits. On high alert over the proposal, retailers have begun a big lobbying campaign on the Hill, warning lawmakers and their aides that any tax hikes will get passed on to their constituents in the form of higher prices.” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)
The National Retail Federation Warns That A Border Tax Could Shut Businesses Down Completely. “‘Our members have told us that the import tax could be as high as five times their profits,’ said David French, chief lobbyist for the National Retail Federation. ‘I don’t know how viable some retailers would be in the face of this import tax.’” (Brian Faler, “Retailers Fear Massive Tax Increases Under House Republican Tax Plan,” POLITICO, 11/23/16)
POLITICO Pro: “Some Of The Biggest Losers Would Be Retailers Like Walmart, Best Buy And Home Depot That Import Massive Amounts Of Goods And Materials On Which They Would Suddenly Have To Pay Taxes.” “The border adjustment plan would affect individual companies differently, depending in part on how much they import and export. Some of the biggest losers would be retailers like Walmart, Best Buy and Home Depot that import massive amounts of goods and materials on which they would suddenly have to pay taxes.” (Brian Faler, “Some Companies May Never Pay Taxes Under Border-Adjustment Tax Plan,” POLITICO Pro, 1/9/17)
Axios: Cowen Research Released A Study Highlighting Some Of The Big Name Companies That Will Be Hurt By The Border Adjustments High Tax Hikes. “Cowen Research published a report Thursday that estimates the effect of the reform plan, and other planned measures, like eliminating the deductibility of interest and a headline corporate tax cut, on different industries and companies. Here are some of the big-name firms Cowen says will be hurt by reform: 1. Apple: The world’s largest company would see its tax bill jump because it won’t be able to deduct the expense of assembly abroad. 2. Constellation Brands: The largest beer importer in America will not be able to expense the cost of goods it brings across the border, like its Corona brand. 3. Gap: Between 50% and 80% of the retailer’s cost of the goods its sells comes from abroad. Walmart: 4. Walmart’s low margins means that it may not be able to survive a tax hike on imported goods without raising prices. 5. Target: Will suffer from the same conundrum as Walmart, but will be worse off since less of its revenue comes from domestically-sourced groceries. J.C. Penney: The department store has high debt loads, and interest on debt will not be deductible under the Republican plan. (Christopher Matthews, “These Companies Will Be Hit Hardest By GOP Tax Reform,” Axios, 1/27/17)
Border Adjustment Tax Would Result In Higher Costs For Hard-Working Families
Christian Science Monitor: Border Tax Could Raise Car Prices By Thousands Of Dollars. “Michigan-based Baum & Associates says that a border tax–one that applies not only to vehicles imported from factories abroad but also to foreign-made vehicle parts–could increase sticker prices by as much as $17,000 … Most increases would be smaller, but still very substantial. Volvo, for example, would need to up its prices by more than $7,500 to accommodate a border tax. Volkswagen wouldn’t be far behind, with increases of around $6,800. Even Detroit brands would see price upticks: Ford’s would climb $285, and General Motors’ would rise by nearly $1,000. Fiat Chrysler would have to boost prices by closer to $2,000.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,” Christian Science Monitor, 2/8/17)
Auto Sales Would Plummet Under A Border Adjustment Tax. “A report from UBS Securities says that the higher car prices would slash U.S. auto sales by about 2 million vehicles per year. That would more than erase the increased capacity and almost certainly result in layoffs.” (Richard Read, “How Trump’s Border Tax Could Raise Car Prices By Thousands Of Dollars,” Christian Science Monitor, 2/8/17)
More Than A Hundred American Businesses Are Opposing The Republican Border Tax: “Don’t Make Hard-Working Families Pay More On Essential Products.” “Nike, Rite Aid, The Gap, Best Buy and Abercrombie & Fitch have joined a new advocacy group aimed at killing House Republicans’ plans to create a border adjustable business tax. They are some of the more than 100 companies and trade associations behind Americans for Affordable Products, an organization launched today that is pushing lawmakers to dump a plan to begin taxing imports as part of a broader tax-code rewrite. The groups, which rely on imports, fear the House Republican plan will mean huge tax increase even as Republicans promise to simultaneously slash the corporate tax rate … Other well-known companies joining the effort include Target, Walmart, QVC, Petco, AutoZone, Macy’s and Levi Strauss.” (Brian Faler, “Border Adjustment Tax Opponents Launch New Group Targeting GOP Proposal,” Politico, 2/01/17)
“A Sweeping Tax Reform Proposal Meant To Boost U.S. Manufacturing Faces Mounting Pressure From Industries That Rely Heavily On Imported Goods …” “A sweeping tax reform proposal meant to boost U.S. manufacturing faces mounting pressure from industries that rely heavily on imported goods as President-elect Donald Trump and congressional Republicans work to finalize new tax legislation. As Republican members of the House of Representatives tax committee prepared to discuss tax reform this week, the panel received a letter from 81 industry groups rejecting the proposal known as ‘border adjustability.’ A lynchpin of the House Republican ‘Better Way’ agenda and viewed favorably by Trump’s team, the policy would help manufacturers by exempting export revenues from corporate taxes. But it would tax imports, hitting import-dependent industries.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)
“Companies That Rely On Global Supply Chains Would Face Huge Business Challenges Caused By Increased Taxes And Increased Cost Of Goods.” “In a Dec. 13 letter to House Ways and Means Chairman Kevin Brady and incoming top Democrat Richard Neal, groups representing the auto and retailing industries, among others, said: ‘Companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods.’ They warned of ‘reductions in employment, reduced capital investments and higher prices for consumers’ as potential consequences.” (David Morgan, “U.S. Tax Reform Proposal On Border Trade Faces Growing Opposition,” Reuters, 12/15/16)
CNBC: Coach CEO Victor Luis Acknowledged That “Any Border Tax Will Lead To Higher Prices For The Consumer.” “If we see this border adjustment in an economy where 70 percent of GDP is driven by consumption that is driven on imports, any border tax will lead to higher prices for the consumer … That’s just a reality that we’ll have to face if it comes to that.” (Rachel Cao, “Coach CEO: Any Border Tax Will Lead To Higher Prices For The Consumer,” CNBC, 1/31/17)
National Retail Federation: The Border Adjustment Tax Could Cost The Average Family $1,700 In Just The First Year. “The imposition of a ‘border adjustment tax,’ a key provision of a pending House tax reform proposal, would end up seriously harming U.S. consumers. NRF analysis indicates that this plan could cost the average family $1,700 in the first year alone if the border adjustment provision is enacted. While economic theory suggests that trade flow of imports and exports would balance out over the long run due to offsetting exchange rate and price adjustments, there is no consensus as to the degree or the timing of these adjustments. In the near term, consumers would be left to pick up the significant tab while hoping that the economic theory proves out.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)
NRF: Annual Family’s Savings Could Be Wiped Out By Nearly A Third. “For the average family, 27 percent of their savings (income after taxes and expenditures) could evaporate with the cost increases caused by the border tax.” (Mark Mathews, “Border Adjustment Tax Would Cost American Households Up To $1,700 In First Year Alone,” National Retail Federation, 2/3/17)
“Unmarried adults without children currently have only $443 left over annually after taxes and expenditures. If the border adjustment tax were enacted, they could see an $836 increase in costs — nearly 200 percent higher than their annual savings.”
“One-parent households, which are already in the red, could see an additional $1,000 added to their debt burden as they do what they can to make ends meet. Their apparel and footwear bills would increase by $271”
“The average family (married with children) could see their apparel costs (including shoes) increase by $437 a year.”
“Single people could see their annual gasoline bills rise by $189, a whopping 43 percent of their annual average savings.”
“Married couples with children could see their annual gasoline bill could increase by over $400.”
CNBC: “The Republicans’ Plan To Enact A Border Adjustment Tax Will Leave Consumers Digging Deeper Into Their Pockets,” Increasing The Price Of Everyday Goods Like Clothes And Shoes By 20 Percent. “It will force consumers to pay as much as 20 percent more for the products they need. Gasoline is estimated to go up as much as 35 cents a gallon,’ said ‘Americans for Affordable Products’ advisor Brian Dodge … ‘Common household goods, apparel, things that people count on every day, pajamas, will cost more and really just so a certain, select group of corporations can avoid paying taxes forever. We think that’s bad policy…” (Michelle Fox, “Consumers Could See 20% Price Hike With Border Adjustment Tax, Retail Group Says,” CNBC, 2//17)
Economists And Analysts Weigh-In Against Border Adjustments
Dan Mitchell, Cato Institute: “I’ve Never Understood Why Politicians Think It’s A Good Idea To Have Higher Taxes On What Americans Consume And Lower Taxes On What Foreigners Consume.” (Dan Mitchell, “A Remarkably Good And Reasonably Bold Tax Reform Plan From House Republicans,” International Liberty, 6/25/16)
President Of The New York Fed Bill Dudley: “… There Could Be A Lot Of Unintended Consequences.” “Another prominent critic of a ‘border adjustment tax’ emerged Tuesday: the president of the New York Federal Reserve. Bill Dudley was asked by Macy’s CEO Terry Lundgren at a meeting of the National Retail Federation trade group what he thinks of the idea of a border adjustment tax, which involves taxing imports at 20 percent, while making U.S. exports tax-free. … ‘I think that it will lead to a lot of changes in the value of the dollar, the price of imported goods in the U.S., and I’m not sure that would all happen very smoothly,’ Dudley said. ‘I also think there could be a lot of unintended consequences.’” (Michelle Caruso-Cabrera, “NY Fed’s Dudley Sees ‘A Lot Of Unintended Consequences’ From Border-Tax Plan,” CNBC, 1/17/17)
Stephen Moore, Heritage Foundation: Border Tax Unlikely To Be Enacted. “A Heritage Foundation economist who advised President Trump’s campaign said he doubts a proposal from House Republicans to tax imports and exempt exports will gain traction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)
MOORE: “I think it’s a distraction.” (Naomi Jagoda, “Trump Campaign Adviser: Border Tax Unlikely To Be Enacted,” The Hill, 2/7/17)
Steve Forbes: Border Adjustment Amounts To “Sneaky, Anti-Consumer Tax.” “This levy will cost American consumers at least a trillion dollars over the next ten years … Prices for everyday items, such as socks, shoes and household appliances, will go up. So will tech devices like the iPad, not to mention automobiles and trucks. Gasoline? Millions of Americans will pay an additional 30 cents or more per gallon at the pump. Lower-income and struggling middle-class Americans will get hit the hardest.” (Steve Forbes, “OMG! House Republicans Are Preparing To Hit Consumers With A Horrible New Tax That Will Harm Trump And Hurt The Economy,” Forbes, 1/11/17)
POLITICO Pro: “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans.” “An economic adviser to President-elect Donald Trump slammed plans to create a so-called border adjustable business tax, and predicted it could kill efforts to overhaul the tax code. The House Republican proposal is overly complicated … said Larry Kudlow, who helped write Trump’s tax-reform plans.” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)
KUDLOW: “That is an exercise in government planning and complexity that I believe is doomed to fail … I think the whole corporate tax reform, which is the most important pro-growth measure, will go down the drain over this … There’s a problem that exists, but this is not the right solution …” (Brian Faler, “Trump Adviser Larry Kudlow Slams Border-Adjustment Tax Plans,” POLITICO Pro, 1/12/17)
KUDLOW: “GOP’s Border Adjustment Tax Is ‘Voodoo Economics” “President-elect Donald Trump is correct to criticize the House Republican plan to tax cross-border trade … said Larry Kudlow, who served as a senior economic adviser to Trump’s campaign…’I hate to say this, but it’s ‘voodoo economics’” (R. Williams, “Larry Kudlow: GOP’s Border Adjustment Tax Is ‘Voodoo Economics,” Newsmax, 1/17/17)
I wrote yesterday to praise the Better Way tax plan put forth by House Republicans, but I added a very important caveat: The “destination-based” nature of the revised corporate income tax could be a poison pill for reform.
I listed five concerns about a so-called destination-based cash flow tax (DBCFT), most notably my concerns that it would undermine tax competition (folks on the left think it creates a “race to the bottom” when governments have to compete with each other) and also that it could (because of international trade treaties) be an inadvertent stepping stone for a government-expanding value-added tax.
Brian Garst of the Center for Freedom and Prosperity has just authored a new study on the DBCFT. Here’s his summary description of the tax.
The DBCFT would be a new type of corporate income tax that disallows any deductions for imports while also exempting export-related revenue from taxation. This mercantilist system is based on the same “destination” principle as European value-added taxes, which means that it is explicitly designed to preclude tax competition.
Since CF&P was created to protect and promote tax competition, you won’t be surprised to learn that the DBCFT’s anti-tax competition structure is a primary objection to this new tax.
First, the DBCFT is likely to grow government in the long-run due to its weakening of international tax competition and the loss of its disciplinary impact on political behavior. … Tax competition works because assets are mobile. This provides pressure on politicians to keep rates from climbing too high. When the tax base shifts heavily toward immobile economic activity, such competition is dramatically weakened. This is cited as a benefit of the tax by those seeking higher and more progressive rates. …Alan Auerbach, touts that the DBCFT “alleviates the pressure to reduce the corporate tax rate,” and that it would “alter fundamentally the terms of international tax competition.” This raises the obvious question—would those businesses and economists that favor the DBCFT at a 20% rate be so supportive at a higher rate?
Brian also shares my concern that the plan may morph into a VAT if the WTO ultimately decides that is violates trade rules.
Second, the DBCFT almost certainly violates World Trade Organization commitments. …Unfortunately, it is quite possible that lawmakers will try to “fix” the tax by making it into an actual value-added tax rather than something that is merely based on the same anti-tax competition principles as European-style VATs. …the close similarity of the VAT and the DBCFT is worrisome… Before VATs were widely adopted, European nations featured similar levels of government spending as the United States… Feeding at least in part off the easy revenue generate by their VATs, European nations grew much more drastically over the last half century than the United States and now feature higher burdens of government spending. The lack of a VAT-like revenue engine in the U.S. constrained efforts to put the United States on a similar trajectory as European nations.
And if you’re wondering why a VAT would be a bad idea, here’s a chart from Brian’s paper showing how the burden of government spending in Europe increased once that tax was imposed.
In the new report, Brian elaborates on the downsides of a VAT.
If the DBCFT turns into a subtraction-method VAT, its costs would be further hidden from taxpayers. Workers would not easily understand that their employers were paying a big VAT withholding tax (in addition to withholding for income tax). This makes it easier for politicians to raise rates in the future. …Keep in mind that European nations have corporate income tax systems in addition to their onerous VAT regimes.
And he points out that those who support the DBCFT for protectionist reasons will be disappointed at the final outcome.
…if other nations were to follow suit and adopt a destination-based system as proponents suggest, it will mean more taxes on U.S. exports. Due to the resulting decline in competitive downward pressure on tax rates, the long-run result would be higher tax burdens across the board and a worse global economic environment.
Brian concludes with some advice for Republicans.
Lawmakers should always consider what is likely to happen once the other side eventually returns to power, especially when they embark upon politically risky endeavors… In this case, left-leaning politicians would see the DBCFT not as something to be undone, but as a jumping off point for new and higher taxes. A highly probable outcome is that the United States’ corporate tax environment becomes more like that of Europe, consisting of both consumption and income taxes. The long-run consequences will thus be the opposite of what today’s lawmakers hope to achieve. Instead of a less destructive tax code, the eventual result could be bigger government, higher taxes, and slower economic growth.
My concern with the DBCFT is partly based on theoretical objections, but what really motivates me is that I don’t want to accidentally or inadvertently help statists expand the size and scope of government. And that will happen if we undermine tax competition and/or set in motion events that could lead to a value-added tax.
Let’s close with three hopefully helpful observations.
Helpful Reminder #1: Congressional supporters want a destination-based system as a “pay for” to help finance pro-growth tax reforms, but they should keep in mind that leftists want a destination-based system for bad reasons.
Based on dozens of conversations, I think it’s fair to say that the supporters of the Better Way plan don’t have strong feelings for destination-based taxation as an economic principle. Instead, they simply chose that approach because it is projected to generate $1.2 trillion of revenue and they want to use that money to “pay for” the good tax cuts in the overall plan.
That’s a legitimate choice. But they also should keep in mind why other people prefer that approach. Folks on the left want a destination-based tax system because they don’t like tax competition. They understand that tax competition restrains the ability of governments to over-tax and over-spend. Governments in Europe chose destination-based value-added taxes to prevent consumers from being able to buy goods and services where VAT rates are lower. In other words, to neuter tax competition. Some state governments with high sales taxes in the United States are pushing a destination-based system for sales taxes because they want to hinder consumers from buying goods and services from states with low (or no) sales taxes. Again, their goal is to cripple tax competition.
Something else to keep in mind is that leftist supporters of the DBCFT also presumably see the plan as being a big step toward achieving a value-added tax, which they support as the most effective way of enabling bigger government in the United States.
Helpful Reminder #2: Choosing the right tax base (i.e., taxing income only one time, otherwise known as a consumption-base system) does not require choosing a destination-based approach.
The proponents of the Better Way plan want a “consumption-base” tax. This is a worthy goal. After all, that principle means a system where economic activity is taxed only one time. But that choice is completely independent of the decision whether the tax system should be “origin-based” or “destination-based.”
The bottom line is that you can have the right tax base with either an origin-based system or a destination-based system.
Helpful Reminder #3: The good reforms of the Better Way plan can be achieved without the downside risks of a destination-based tax system.
The Tax Foundation, even in rare instances when I disagree with its conclusions, always does very good work. And they are the go-to place for estimates of how policy changes will affect tax receipts and the economy. Here is a chart with their estimates of the revenue impact of various changes to business taxation in the Better Way plan. As you can see, the switch to a destination-based system (“border adjustment”) pulls in about $1.2 trillion over 10 years. And you can also see all the good reforms (expensing, rate reduction, etc) that are being financed with the various “pay fors” in the plan.
I am constantly asked how the numbers can work if “border adjustment” is removed from the plan. That’s a very fair question.
But there are lots of potential answers, including:
Make a virtue out of necessity by reducing government revenue by $1.2 trillion.
Reduce the growth of government spending to generate offsetting savings.
Reduce the size of the tax cuts in the Better Way plan by $1.2 trillion.
I’m not pretending that any of these options are politically easy. If they were, the drafters of the Better Way plan probably would have picked them already. But I am suggesting that any of those options would be better than adopting a destination-based system for business taxation.
Ultimately, the debate over the DBCFT is about how different people assess political risks. House Republicans advocating the plan want good things, and they obviously think the downside risks in the future are outweighed by the ability to finance a larger level of good tax reforms today. Skeptics appreciate that those proponents want good policy, but we worry about the long-run consequences of changes that may (especially when the left sooner or late regains control) enable bigger government.
P.S. This is not the first time that advocates of good policy have bickered with each other. During the 2016 nomination battle, Rand Paul and Ted Cruz proposed tax reform plans that fixed many of the bad problems in the tax code. But they financed some of those changes by including value-added taxes in their plans. In the short run, either plan would have been much better than the current system. But I was critical because I worried that the inclusion of VATs would eventually give statists a tool to further increase the burden of government.
THE CORNER THE ONE AND ONLY. Speaker Ryan’s Use of Reporters’ Recorders to Explain His Border Tax Was Cute — But Misleading
Faced with growing opposition to their border-adjustment tax, congressional Republicans are nonetheless on the offensive trying to sell it. I have expressed my many reasons for opposing the tax, including my disbelief that Republicans would support a massive tax increase alongside what is otherwise a pro-growth tax reform. While they oppose tax increases to pay for spending increases in other contexts and usually make the case that spending increases should be paid for by spending cuts, Republicans continue to push for this massive new source of revenue, in spite of the distortions it would introduce.
Until now, supporters of the tax have used many questionable arguments. For instance, they claim we shouldn’t worry about the protectionist aspect of a tax that imposes a 20 percent rate to imports but exempts exports under the hope that the U.S. dollar will adjust fully and quickly. However, there are reasons to believe that while the U.S. currency will adjust, it won’t adjust fully (Federal Reserve Board chairwoman Janet Yellen is only the latest one to stress that point), it won’t adjust as quickly as they claim (especially if the tax is challenged under the World Trade Organization as the Europeans have warned is going to be the case), and it won’t result in unicorns and rainbows.
But the latest misguided statements about the border-adjustment tax comes from House speaker Paul Ryan — who ought to know better. During a press conference last week, he repeated the claim that United States was at a disadvantage because other countries’ exports are exempted from taxes while U.S. goods aren’t. [Ryan] noted that most other countries already border-adjust their taxes and tax goods based on whether they were consumed in their jurisdiction.
That comment is bound to confuse reporters because, as Mr. Ryan must know, no other country border-adjusts their corporate income tax. They border-adjust their Value Added Tax. Conflating the two is misleading, to say the least.
The Speaker picked up two reporters’ recorders to give an example of how goods are taxed currently. He suggested one was American-made and the other was Japanese-made. Early on, he dropped one of the recorders, saying “oops” and receiving laughter from the reporters. “Here’s what Japan does when they make this tape recorder: When they send it for export they take the tax off of it, and then it comes to America and it’s not taxed, and it comes through to compete against our good, which was taxed. Theirs was untaxed twice,” Ryan said. “When America makes something, like a tape recorder, we tax it, and then we send it to Japan. As it enters Japan it’s taxed again, to compete against their tape recorder,” he continued. “So we are doing it to ourselves. We are hurting our manufacturing and jobs. We are putting a bias against making things in America in the tax code. . . . That is why we think this is very important. This is good manufacturing policy.”
Oh boy, where do I begin? First, it is true that U.S. companies are at a disadvantage but it is not because of other countries’ tax codes. It is because our corporate-income-tax system has the highest rate of all OECD countries and because, unlike most of our competitors, it taxes U.S. companies’ profits no matter where they are earned in the world. The solution to this disadvantage is to reduce the rates and move to a territorial system. Oh, and by the way, unlike what Ryan and other proponents of a border-adjustment tax would like you to believe, you do not need to move to an expansive destination-based-cash-flow tax to have a territorial tax.
Now let me address the cute tape-recorder example used by the speaker. It is totally misleading because it conflates foreign countries corporate tax and VAT taxes and it paints a picture that is incorrect. For instance, he claims that Japanese exports are exempt from taxes. No, Japanese products exported to the U.S. are exempt from the Japanese VAT but the Japanese company is still paying U.S. corporate tax on its U.S. profits. And you know what? In that sense, the Japanese export is treated exactly like the U.S. goods sold in the U.S. In other words, the playing field is even! I repeat: Japanese goods in the U.S. are taxed like U.S. goods in the U.S.
How about U.S. exports in Japan? Well, it gets hit by the Japanese VAT in Japan and by the Japanese corporate tax but so are Japanese goods sold in Japan. Again, the only disadvantage faced by U.S. companies selling tape recorders abroad comes from the U.S. tax system, which requires that income earned in Japan be taxed by Uncle Sam at 35 percent after benefiting from a tax credit for tax paid in Japan. If the U.S. company decides to keep its Japanese income outside the U.S., the U.S. rate won’t apply.
Dan Mitchell explains why the VAT doesn’t change the terms of trade in this video.
Finally, economists have debunked the idea implied by the speaker that foreign VATs give an advantage to foreign exports — and therefor boost foreign exports. It is simply not true. It follows that imposing a border-adjustment tax in the U.S. will not boost U.S. exports either. Period.
Let me summarize this for you:
No, other countries do not border-adjust their corporate income tax.
Comparing other countries’ VATs and our corporate tax is problematic to say the least.
No, foreign exports sold in the U.S. do not have an advantage over U.S. goods sold in the U.S. Foreign VATs do not boost foreign exports.
A border tax in the U.S. will not boost our exports but it will hurt consumers and many U.S. retailers.
The disadvantage faced by U.S. companies exporting goods abroad comes from the terrible worldwide tax and high rates of the U.S. tax regime, not from other countries’ tax system.
The way to fix the U.S. disadvantage is not to create a new expansive tax that would penalize imports in the U.S. — including imports for the benefit of U.S. domestic companies — and would penalize U.S. consumers.
The Border Adjustment Tax, a proposal favored by House Speaker Paul Ryan, has aroused serious opposition from Republican senators.
FEB 21, 2017
Donald Trump is feeling good about taxes. In his gonzo press conference last Thursday, he assured Americans that “very historic tax reform” is absolutely on track and is going to be—wait for it!—“big league.” The week before, he told a bunch of airline CEOs that “big league” reform was “way head of schedule” and that his people would be announcing something “phenomenal” in “two or three weeks.” And at his Orlando pep rally this past weekend, he gushed about his idea for a punitive 35 percent border tax on products manufactured overseas. The magic is happening, people. And soon America’s tax code will be the best, most beautiful in the world.
But here’s the thing. What Trump doesn’t know about the legislative process could overflow the pool at Mar-a Lago. And when it comes to tax reform, even minor changes make Congress lose its mind. Weird fault lines appear, and the next thing you know, warring factions have painted their faces blue and vowed to die on the blood-soaked battlefield before allowing this marginal rate to change or that loophole to close.
Such drama has, in fact, already begun over the proposal percolating in the House. At issue: a provision known as the border adjustment tax—let’s call it BAT—which, shrunk to its essence, incentivizes domestic manufacturing by slapping a 20 percent levy on imports, while making U.S. companies’ export-revenues tax deductible.
BAT fans—most notably House Speaker Paul Ryan and Ways and Means Chairman Kevin Brady—pitch the provision as an economically elegant twofer: an America-First measure that discourages companies from moving operations overseas while creating a revenue stream ($1 trillion every decade or so) that allows the overall corporate tax rate to be slashed.
Opponents—most vocally Senators David Perdue and Tom Cotton—argue that a BAT is another grubby government cash grab that will ultimately hurt consumers when, say, Walmart has to jack up the prices of underwear, bananas, and Playstations. In a February 8 letter to colleagues, Perdue, who spent four decades in the business world, charged that the BAT is “regressive, hammers consumers, and shuts down economic growth.”Thus the battle lines are drawn. And, make no mistake, this will not be some bush-league, penny-ante skirmish. Behind the legislative factions are amassing some of the heaviest hitters in corporate America, ready to spend millions to sway debate on behalf of their team.Roughly speaking, companies that do a lot of exporting dig the BAT (think: Boeing, Merck, and Dow Chemical) while import-dependent retailers (including Target, Nike, and, yes, Walmart) fear it will destroy their bottom lines. The oil industry isn’t feeling much BAT love either. The Koch brothers want it dead, like, yesterday.At this point, anti-BATers have an edge. Why? Partly, because the provision is super complicated and almost impossible to explain in terms that don’t sound like something a coven of economists vomited up. Ask BAT fans why the provision won’t, in fact, hurt retailers or consumers, and you’re instantly hip-deep in talk of currency revaluation, purchasing power, and territorial taxation. Last Wednesday, one day after Paul Ryan tried to educate Senate Republicans on the wonders of BAT at their weekly policy lunch, Tom Cotton (who represents Walmart’s home state of Arkansas) snarked on the Senate floor, “Some ideas are so stupid only an intellectual could believe them.”This is in no way to suggest that the pro-BAT arguments are wrong. They simply don’t push the same buttons as anti-BAT warnings that Congress is poised to screw consumers in order to fund big tax cuts for corporations.For the past few weeks, in fact, an anti-BAT coalition called Americans for Affordable Products has been busy hawking this exact message. “This is a consumer tax—a means by which House Republicans are paying for other tax deductions,” asserted AAP member Brian Dodge. “It’s not about America First. It’s not a trade-deficit reduction tool. It is a pay-for.”AAP is lobbying lawmakers and staffers and doing public outreach. Last Wednesday, it dispatched eight CEOs to chat with Trump and Vice President Pence. “We view our job as leading a large education campaign,” said Dodge. “We believe the more that lawmakers understand about this proposal, the less inclined they’ll be to support it.”Of course, BAT fans are gearing up as well and promise to be equally aggressive. The day after the AAP roll out, the American Made Coalition launched, with an eye toward helping Ryan’s office spread the good word. “It takes time to educate both policy makers and businesses on what’s on the table,” said Brian Reardon, an adviser to the group.There is no place for subtlety in this war. Part of BAT supporters’ argument is that, without the provision, tax overhaul will implode altogether. Message: Get on board or kiss your once-in-a-lifetime reform opportunity good-bye.It’s a question of Senate math. To pass with a simple majority (and avoid a filibuster by Democrats), the GOP’s plan must go through under the procedure known as reconciliation. But to qualify for reconciliation, the package–which slashes both corporate and upper-bracket taxes–cannot blow a hole in the long-term budget. Without the $1 trillion in revenues from BAT, say advocates, there’s no way that hole can be plugged.“This is the only way at these rates and keeping things revenue neutral,” insisted a senior Republican aide. There is no other viable option. Period. End of story.But anti-BATers are eyeing a different Senate equation. To amass even a simple majority of votes, the BAT can lose only two of the 52 Republican members. (Unless Democrats cross the aisle, of course.) In addition to Cotton’s and Perdue’s open hostility, Senators John Boozman, Mike Rounds, John Cornyn, Tim Scott, and Mike Lee have all expressed reservations. “I have real concerns that this piece of the House blueprint will cause more disruption than necessary,” Lee said. “Will the dollar suddenly shoot up by 20 percent? Will U.S. manufacturers have to redo their international supply chains? These are all open questions.”
With the provision’s Senate prospects iffy, there’s less incentive for House conservatives to support something that smells even faintly like a tax. Both the current chairman of the Freedom Caucus, Mark Meadows, and the former chairman, Jim Jordan, have said they’d like reform done without a BAT.
“My reasoning is very basic,” Jordan told me. “Why in the world would we want to add another revenue stream?” You can debate the impact on exchange rates and purchasing power all day, said Jordan, but that doesn’t address many conservatives’ core objection. “We come at it from fundamental perspective,” he said. “The idea that you’re going to add an entirely new tax is a big problem.”
(BAT fans, for the record, dispute that this is a new tax. It is, they insist, replacing the existing system with an entirely new, far superior one that must be looked at, as Reardon put it, “holistically.”)
The only thing everyone can agree on is that this will be a long, ugly fight. If Trump drops his tariff idea and embraces BAT, it could boost the cause. But even then, he’d need to do major arm-twisting to get Senate skeptics on board (especially with the likes of Walmart and the Kochs twisting the other arm.) Like it or not, this is what the political big leagues are like: slow, messy, and infuriating.
The up side for Trump: He’ll have time to throw a lot more pep rallies on this topic before anything gets decided.
The Internal Revenue Service has recently released new data on individual income taxes for calendar year 2014, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles.
The data demonstrates that the U.S. individual income tax continues to be very progressive, borne mainly by the highest income earners.
In 2014, 139.6 million taxpayers reported earning $9.71 trillion in adjusted gross income and paid $1.37 trillion in individual income taxes.
The share of income earned by the top 1 percent of taxpayers rose to 20.6 percent in 2014. Their share of federal individual income taxes also rose, to 39.5 percent.
In 2014, the top 50 percent of all taxpayers paid 97.3 percent of all individual income taxes while the bottom 50 percent paid the remaining 2.7 percent.
The top 1 percent paid a greater share of individual income taxes (39.5 percent) than the bottom 90 percent combined (29.1 percent).
The top 1 percent of taxpayers paid a 27.1 percent individual income tax rate, which is more than seven times higher than taxpayers in the bottom 50 percent (3.5 percent).
Reported Income and Taxes Paid Both Increased Significantly in 2014
Taxpayers reported $9.71 trillion in adjusted gross income (AGI) on 139.5 million tax returns in 2014. Total AGI grew by $675 billion from the previous year’s levels. There were 1.2 million more returns filed in 2014 than in 2013, meaning that average AGI rose by $4,252 per return, or 6.5 percent.
Meanwhile, taxpayers paid $1.37 trillion in individual income taxes in 2014, an 11.5 percent increase from taxes paid in the previous year. The average individual income tax rate for all taxpayers rose from 13.64 percent to 14.16 percent. Moreover, the average tax rate increased for all income groups, except for the top 0.1 percent of taxpayers, whose average rate decreased from 27.91 percent to 27.67 percent.
The most likely explanation behind the higher tax rates in 2014 is a phenomenon known as “real bracket creep.”  As incomes rise, households are pushed into higher tax brackets, and are subject to higher overall tax rates on their income. On the other hand, the likely reason why the top 0.1 percent of households saw a slightly lower tax rate in 2014 is because a higher portion of their income consisted of long-term capital gains, which are subject to lower tax rates.
The share of income earned by the top 1 percent rose to 20.58 percent of total AGI, up from 19.04 percent in 2013. The share of the income tax burden for the top 1 percent also rose, from 37.80 percent in 2013 to 39.48 percent in 2014.
Table 1. Summary of Federal Income Tax Data, 2014
Number of Returns
Adjusted Gross Income ($ millions)
Share of Total Adjusted Gross Income
Income Taxes Paid ($ millions)
Share of Total Income Taxes Paid
Income Split Point
Average Tax Rate
Note: Does not include dependent filers
High-Income Americans Paid the Majority of Federal Taxes
In 2014, the bottom 50 percent of taxpayers (those with AGIs below $38,173) earned 11.27 percent of total AGI. This group of taxpayers paid approximately $38 billion in taxes, or 2.75 percent of all income taxes in 2014.
In contrast, the top 1 percent of all taxpayers (taxpayers with AGIs of $465,626 and above) earned 20.58 percent of all AGI in 2014, but paid 39.48 percent of all federal income taxes.
In 2014, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid $543 billion, or 39.48 percent of all income taxes, while the bottom 90 percent paid $400 billion, or 29.12 percent of all income taxes.
High-Income Taxpayers Pay the Highest Average Tax Rates
The 2014 IRS data shows that taxpayers with higher incomes pay much higher average individual income tax rates than lower-income taxpayers.
The bottom 50 percent of taxpayers (taxpayers with AGIs below $38,173) faced an average income tax rate of 3.45 percent. As household income increases, the IRS data shows that average income tax rates rise. For example, taxpayers with AGIs between the 10th and 5th percentile ($133,445 and $188,996) pay an average rate of 13.7 percent – almost four times the rate paid by those in the bottom 50 percent.
The top 1 percent of taxpayers (AGI of $465,626 and above) paid the highest effective income tax rate, at 27.2 percent, 7.9 times the rate faced by the bottom 50 percent of taxpayers.
Taxpayers at the very top of the income distribution, the top 0.1 percent (with AGIs over $2.14 million), paid an even higher average tax rate, of 27.7 percent.
5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 2. Number of Federal Individual Income Tax Returns Filed 1980–2014 (Thousands)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Between 5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 3. Adjusted Gross Income of Taxpayers in Various Income Brackets, 1980–2014 ($Billions)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Between 5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 4. Total Income Tax after Credits, 1980–2014 ($Billions)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Between 5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 5. Adjusted Gross Income Shares, 1980–2014 (percent of total AGI earned by each group)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Between 5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 6. Total Income Tax Shares, 1980–2014 (percent of federal income tax paid by each group)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Table 7. Dollar Cut-Off, 1980–2014 (Minimum AGI for Tax Returns to Fall into Various Percentiles; Thresholds Not Adjusted for Inflation)
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
Source: Internal Revenue Service.
Between 5% & 10%
Between 10% & 25%
Between 25% & 50%
Table 8. Average Tax Rate, 1980–2014 (Percent of AGI Paid in Income Taxes)
Source: Internal Revenue Service.
The Tax Reform Act of 1986 changed the definition of AGI, so data above and below this line not strictly comparable
The IRS changed methodology, so data above and below this line not strictly comparable
For data prior to 2001, all tax returns that have a positive AGI are included, even those that do not have a positive income tax liability. For data from 2001 forward, returns with negative AGI are also included, but dependent returns are excluded.
Income tax after credits (the measure of “income taxes paid” above) does not account for the refundable portion of EITC. If it were included, the tax share of the top income groups would be higher. The refundable portion is classified as a spending program by the Office of Management and Budget and therefore is not included by the IRS in these figures.
The only tax analyzed here is the federal individual income tax, which is responsible for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government), and are more progressive than most state and local taxes.
AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.
The unit of analysis here is that of the tax return. In the figures prior to 2001, some dependent returns are included. Under other units of analysis (like the Treasury Department’s Family Economic Unit), these returns would likely be paired with parents’ returns.
These figures represent the legal incidence of the income tax. Most distributional tables (such as those from CBO, Tax Policy Center, Citizens for Tax Justice, the Treasury Department, and JCT) assume that the entire economic incidence of personal income taxes falls on the income earner.
 There is strong reason to believe that capital gains realizations were unusually depressed in 2013, due to the increase in the top capital gains tax rate from 15 percent to 23.8 percent. In 2013, capital gains accounted for 26.6 percent of the income of taxpayers with over $1 million in AGI received, compared to 31.7 percent in 2014 (these calculations apply for net capital gains reported on Schedule D). Table 1.4, Publication 1304, “Individual Income Tax Returns 2014,” Internal Revenue Service, https://www.irs.gov/uac/soi-tax-stats-individual-income-tax-returns-publication-1304-complete-report.
 Here, “average income tax rate” is defined as income taxes paid divided by adjusted gross income.
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National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2016 (Third Estimate)
Corporate Profits: Fourth Quarter and Annual 2016
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of
2016 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the
third quarter of 2016, real GDP increased 3.5 percent.
The GDP estimate released today is based on more complete source data than were available for the
"second" estimate issued last month. In the second estimate, the increase in real GDP was 1.9 percent.
With this third estimate for the fourth quarter, the general picture of economic growth remains largely
the same; personal consumption expenditures (PCE) increased more than previously estimated (see
"Updates to GDP" on page 2).
Real gross domestic income (GDI) increased 1.0 percent in the fourth quarter, compared with an
increase of 5.0 percent in the third. The average of real GDP and real GDI, a supplemental measure of
U.S. economic activity that equally weights GDP and GDI, increased 1.5 percent in the fourth quarter,
compared with an increase of 4.3 percent in the third quarter (table 1).
The increase in real GDP in the fourth quarter reflected positive contributions from PCE, private
inventory investment, residential fixed investment, nonresidential fixed investment, and state and local
government spending that were partly offset by negative contributions from exports and federal
government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).
The deceleration in real GDP in the fourth quarter reflected downturns in exports and in federal
government spending, an acceleration in imports, and a deceleration in nonresidential fixed investment
that were partly offset by accelerations in private inventory investment and in PCE, and upturns in
residential fixed investment and in state and local government spending.
Current-dollar GDP increased 4.2 percent, or $194.1 billion, in the fourth quarter to a level of $18,869.4
billion. In the third quarter, current-dollar GDP increased 5.0 percent, or $225.2 billion (table 1 and
The price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared
with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.0 percent,
compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index
increased 1.3 percent, compared with an increase of 1.7 percent (appendix table A).
Updates to GDP
The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE and
to private inventory investment that were partly offset by downward revisions to nonresidential fixed
investment and to exports. Imports, which are a subtraction in the calculation of GDP, were revised
upward. For more information, see the Technical Note. For information on updates to GDP, see the
"Additional Information" section that follows.
Advance Estimate Second Estimate Third Estimate
(Percent change from preceding quarter)
Real GDP 1.9 1.9 2.1
Current-dollar GDP 4.0 3.9 4.2
Real GDI --- --- 1.0
Average of Real GDP and Real GDI --- --- 1.5
Gross domestic purchases price index 2.0 1.9 2.0
PCE price index 2.2 1.9 2.0
Real GDP increased 1.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual level),
compared with an increase of 2.6 percent in 2015 (table 1).
The increase in real GDP in 2016 reflected positive contributions from PCE, residential fixed investment,
state and local government spending, exports, and federal government spending that were partly offset
by negative contributions from private inventory investment and nonresidential fixed investment.
Imports, which are a subtraction in the calculation of GDP, increased (table 2).
The deceleration in real GDP from 2015 to 2016 reflected downturns in private inventory investment
and in nonresidential fixed investment and decelerations in PCE, in residential fixed investment, and in
state and local government spending that were partly offset by a deceleration in imports and
accelerations in federal government spending and in exports.
Current-dollar GDP increased 3.0 percent, or $532.5 billion, in 2016 to a level of $18,569.1 billion,
compared with an increase of 3.7 percent, or $643.5 billion, in 2015 (table 1 and table 3).
Real GDI increased 1.6 percent in 2016, compared with an increase of 2.5 percent in 2015 (table 1).
The price index for gross domestic purchases increased 1.0 percent in 2016, compared with an increase
of 0.4 percent in 2015 (table 4).
During 2016 (that is, measured from the fourth quarter of 2015 to the fourth quarter of 2016), real GDP
increased 2.0 percent, compared with an increase of 1.9 percent during 2015. The price index for gross
domestic purchases increased 1.5 percent during 2016, compared with an increase of 0.4 percent during
2015. Real GDI increased 1.9 percent during 2016, compared with an increase of 1.5 percent during
2015 (table 7).
Corporate Profits (table 12)
Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $11.2 billion in the fourth quarter of 2016, compared with an
increase of $117.8 billion in the third quarter.
Profits of domestic financial corporations increased $26.5 billion in the fourth quarter, compared with
an increase of $50.1 billion in the third. Profits of domestic nonfinancial corporations decreased $60.4
billion, in contrast to an increase of $66.4 billion. The estimate of nonfinancial corporate profits in the
fourth quarter was reduced by a $4.95 billion ($19.8 billion at an annual rate) settlement between a U.S.
subsidiary of Volkswagen and the federal and state governments. For more information, see the FAQ,
"What are the effects of the Volkswagen buyback deal on GDP and the national accounts?”. The
rest-of-the-world component of profits increased $45.1 billion, compared with an increase of $1.3 billion.
This measure is calculated as the difference between receipts from the rest of the world and payments to
the rest of the world. In the fourth quarter, receipts increased $9.1 billion, and payments decreased
In 2016, profits from current production decreased $2.3 billion, compared with a decrease of $64.0
billion in 2015. Profits of domestic financial corporations increased $20.5 billion, compared with an
increase of $8.5 billion. Profits of domestic nonfinancial corporations decreased $47.0 billion, compared
with a decrease of $47.3 billion. The rest-of-the-world component of profits increased $24.3 billion, in
contrast to a decrease of $25.2 billion.
* * *
Next release: April 28, 2017 at 8:30 A.M. EDT
Gross Domestic Product: First Quarter 2017 (Advance Estimate)
Additional Resources available at www.bea.gov:
• Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
subscription service, or following BEA on Twitter @BEA_News.
• Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
• Access BEA data by registering for BEA’s Data Application Programming Interface (API).
• For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
• BEA's news release schedule
• NIPA Handbook: Concepts and Methods of the U.S. National Income and Product Accounts
Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.
Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.
Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”
Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and
depreciation of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic
measures used in the national income and product accounts.
For more definitions, see the Glossary: National Income and Product Accounts.
Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”
Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”
Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.
Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.
Updates to GDP
BEA releases three vintages of the current quarterly estimate for GDP: "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.
Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.
Vintage Average Revision Without Regard to Sign
(percentage points, annual rates)
Advance to second 0.5
Advance to third 0.6
Second to third 0.2
Advance to latest 1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP updates, see Revision
Information on the BEA Web site.
The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.
Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.
When top Bill Clinton aide Douglas Band wrote the memo, he was a central player at the Clinton Foundation and president of his own corporate consulting firm. Over the course of 13 pages, he made a case that his multiple roles had served the interests of the Clinton family and its charity.In doing so, Band also detailed a circle of enrichment in which he raised money for the Clinton Foundation from top-tier corporations such as Dow Chemical and Coca-Cola that were clients of his firm, Teneo, while pressing many of those same donors to provide personal income to the former president.The system has drawn scrutiny from Republicans, who say it allowed corporations and other wealthy supporters to pay for entree to a popular former president and a onetime secretary of state who is now the Democratic presidential nominee.Band wrote the memo in 2011 to foundation lawyers conducting a review of the organization amid a brewing feud with the Clintons’ daughter, Chelsea Clinton, who was taking a stronger role in leading the foundation and had expressed concerns about Teneo’s operations.
Clinton supporters at a rally in Florida respond to WikiLeaks revelations. (Alice Li/The Washington Post)
The memo, made public Wednesday by the anti-secrecy group WikiLeaks, lays out the aggressive strategy behind lining up the consulting contracts and paid speaking engagements for Bill Clinton that added tens of millions of dollars to the family’s fortune, including during the years that Hillary Clinton led the State Department. It describes how Band helped run what he called “Bill Clinton Inc.,” obtaining “in-kind services for the President and his family — for personal travel, hospitality, vacation and the like.”
Band and his Teneo co-founder, former Hillary Clinton fundraiser Declan Kelly, declined to comment. But Teneo issued a statement saying that “as the memo demonstrates, Teneo worked to encourage clients, where appropriate, to support the Clinton Foundation because of the good work that it does around the world. It also clearly shows that Teneo never received any financial benefit or benefit of any kind from doing so.”
Spokesmen for Bill Clinton and Chelsea Clinton and the foundation declined to comment.
Hillary Clinton campaign spokesman Glen Caplin declined to comment on the memo, calling the material “hacked by the Russian government and weaponized by WikiLeaks.” Caplin declined to authenticate the memo, but he also did not dispute it.
Band, who grew close to Bill Clinton two decades ago as his personal aide in the White House and became the architect of his post-presidential activities, argued in the memo that he and his firm had benefited the former president and his foundation.
“We have dedicated ourselves to helping the President secure and engage in for-profit activities,” Band wrote. He also said he had “sought to leverage my activities, including my partner role at Teneo, to support and to raise funds for the foundation.”
The Democratic presidential nominee hits the road as Election Day nears.
Band’s memo provided data showing how much money each of Teneo’s 20 clients at the time had given to the Clinton Foundation, how much they had paid Bill Clinton and, in some cases, how he or Kelly had personally forged the relationships that resulted in the payments.
Band wrote that Teneo partners had raised in excess of $8 million for the foundation and $3 million in paid speaking fees for Bill Clinton. He said he had secured contracts for the former president that would pay out $66 million over the subsequent nine years if the deals remained in place.
For instance, Band wrote that Kelly arranged for the former president to meet the chief executive of Coca-Cola in January 2009 at the Clintons’ home in Washington. In all, according to Band’s memo, Coke had contributed $4.33 million to the foundation between 2004 and 2010.
A Coca-Cola spokesman said the company had supported the Clinton Foundation because it believed “in the great work that can be done when businesses, civil society and governments come together to solve problems.” He said Teneo had been hired to provide “business and communications” consulting.
Band also described how Kelly helped expand a fruitful relationship with UBS Global Wealth Management, introducing Bill Clinton to a top executive at a 2009 charity dinner. In the ensuing years, UBS upped its giving to the foundation, signed on as a Teneo client and agreed to pay Bill Clinton for speeches, Band wrote.
Records show UBS paid Clinton about $2 million in speaking fees between 2011 and 2015 for a series of appearances, generally alongside former president George W. Bush. The company also paid Hillary Clinton $225,000 for a 2013 speech.
UBS declined to comment.
Another achievement cited by Band: Laureate International Universities, a chain of for-profit international colleges, which donated to the foundation and agreed to pay Bill Clinton $3.5 million a year to serve as honorary chancellor.
Clinton has credited Band with conceiving of the Clinton Global Initiative, the glitzy annual meeting where corporate, government and nonprofit leaders gathered annually to talk about the world’s problems. Started in 2005, CGI became the best-known arm of the Clinton Foundation, which also operated education, environmental and health programs around the world. The final CGI meeting took place last month.
By 2011, the longtime Clinton aide was ready to strike out on his own.
That’s when Band and Kelly joined forces to form Teneo. At first, the firm remained closely linked to the Clinton network.
Band described in the memo how he combined his work for CGI and Teneo. He wrote that he had used a hotel room upstairs from the 2011 CGI gathering to meet with Teneo clients. He also acknowledged giving free CGI memberships to “target Teneo clients” being cultivated as potential foundation donors. Memberships generally cost $20,000 a year.
Teneo, meanwhile, named Bill Clinton its “honorary chairman.” Clinton had been initially tapped for a three-year arrangement in which he would provide advice to Teneo “regarding geopolitical, economic and social trends,” according to a separate June 2011 memo that Band wrote to the State Department seeking ethics approval for the former president’s employment.
Bill Clinton was initially paid $2 million by Teneo, according to “Man of the World,” a book written with the former president’s participation by author Joe Conason.
But Chelsea Clinton grew concerned when news leaked in late 2011 that MF Global, the hedge fund owned by former New Jersey governor Jon Corzine, had been paying the Clinton-tied firm $125,000 a month just before MF Global went bankrupt.
According to emails released by WikiLeaks, Chelsea Clinton complained in December 2011 to longtime Clinton aide John Podesta, who at the time was serving as an adviser to the Clinton Foundation, that she had been informed that a member of her father’s office staff who answered to Band had been making calls to British lawmakers “on behalf of President Clinton” for Teneo clients, particularly for the chief executive of Dow Chemical.
Chelsea Clinton wrote that the calls were occurring without her father’s knowledge and that the reactions she was hearing to them would “horrify” Bill Clinton. In another email, she wrote she feared Teneo was “hustling business at CGI.”
Chelsea Clinton’s concerns helped spark efforts at the foundation to adopt new policies governing outside consulting agreements designed to erect a more solid wall between Bill Clinton’s private and charitable activities. Emails show that Cheryl Mills, who at the time was serving as Hillary Clinton’s chief of staff at the State Department, was deeply involved in the foundation’s proceedings.
Bill Clinton also separated from Teneo, returning to the company all but $100,000 of the money he had been paid, tax returns show.
Emails show how the dispute between Chelsea Clinton and her father’s longtime aide led to personal hostility.
“I don’t deserve this from her and deserve a tad more respect or at least a direct dialogue for me to explain these things,” Band wrote to Podesta at the time. “She is acting like a spoiled brat kid who has nothing else to do but create issues to justify what she’s doing because she, as she has said, hasn’t found her way and has a lack of focus in her life.”
Band complained that no similar scrutiny was being applied to Bill Clinton himself. Band noted that he had previously signed a conflict of interest document for CGI.
“Oddly, WJC does not have to sign such a document even though he is personally paid by 3 cgi sponsors, gets many expensive gifts from them, some that are at home etc.,” he wrote.
The Band memo disclosed by WikiLeaks on Wednesday made no direct reference to Hillary Clinton.
But Band outlined that Kelly, his Teneo co-founder, had served simultaneously between 2009 and 2011 as an unpaid economic envoy to Northern Ireland appointed by then-Secretary of State Hillary Clinton and as head of a separate consulting company whose clients included Coke, UBS and Dow. Band wrote that the arrangement was consistent with Kelly’s State Department ethics agreement.
Kelly’s multiple roles came together during one State Department event in 2010, when then-Secretary Clinton recognized Dow, among other companies, for creating jobs in Northern Ireland and thanked Kelly for his work on the issue.
Dow became one of Teneo’s first major clients. According to Band’s memo, Dow chief executive Andrew Liveris had been introduced to Bill Clinton over a round of golf with Kelly in August 2009.
The company then increased its Clinton Foundation support, contributing $705,000 in 2010 and 2011. A Dow spokeswoman said that the company’s participation in the foundation dated to 2007 and that the charity was “aligned to core business and citizenship strategies that have positively leveraged the resources and capabilities of our company.”
Dow paid Teneo $2.8 million in 2011, payments that then jumped to $19.4 million in 2012, according to internal Dow documents made public as part of a whistleblower complaint. The company later said in public filings that the increase reflected a cost-saving decision to consolidate several consulting contracts with one firm.
But the spike raised red flags for an internal company fraud investigator, who expressed alarm that it may be linked to Bill Clinton’s work with a charity founded by Liveris — a charge the company denied.
“It appears Dow is paying Teneo for connections with Clinton,” the investigator wrote.
Anu Narayanswamy and Alice Crites contributed to this report.
Why isn’t the IRS investigating the Clinton Foundation?
Main Street Columnist Bill McGurn on how the former president used his foundation as a vehicle for personal enrichment. Photo credit: Zuma Press.
Oct. 27, 2016 6:51 p.m. ET
Hillary and Bill Clinton are asking for a third term in the White House, and voters who want to know what this portends should examine the 12-page memo written by a Clinton insider that was hacked and published Wednesday by WikiLeaks. This is the cold, hard reality of the Clinton political-business model.
Longtime Clinton aide Doug Band wrote the memo in 2011 to justify himself to lawyers at Simpson, Thacher & Bartlett who were reviewing his role and conducting a governance review of the Clinton Foundation at the insistence of Chelsea Clinton. In an email two weeks earlier, also published on WikiLeaks, Ms. Clinton said her father had been told that Mr. Band’s firm Teneo was “hustling” business at the Clinton Global Initiative, a regular gathering of the wealthy and powerful that is ostensibly about charitable activity.
Poor innocent Chelsea. Bill and Hillary must never have told her what business they’re in. If she had known, she would never have hired a blue-chip law firm to sweep through the hallways of the Clinton Foundation searching for conflicts of interest. Instead of questioning Mr. Band’s compensation, she would have pleaded with him never to reveal the particulars of his job in writing.
But she didn’t, and so Mr. Band went ahead and described the “unorthodox nature” of his work while emphasizing his determination to help “protect the 501(c)3 status of the Foundation.” That’s the part of the tax code that has allowed the Clinton Foundation to remain tax-exempt on the premise that it is dedicated to serving humanity.
Mr. Band graciously copied John Podesta, then adviser to the board, who would eventually become Hillary’s campaign chief. His helpful reply was to suggest that Mr. Band “strip the defensive stuff out” and later “go through the details and how they have helped WJC” [ William Jefferson Clinton].
The Band memo reveals exactly what critics of the Clintons have long said: They make little distinction between the private and public aspects of their lives, between the pursuit of personal enrichment, the operation of a nonprofit, and participation in U.S. politics.
Mr. Band writes that he and his colleague Justin Cooper “have, for the past ten years, served as the primary contact and point of management for President Clinton’s activities—which span from political activity (e.g., campaigning on behalf of candidates for elected office), to business activity (e.g., providing advisory services to business entities with which he has a consulting arrangement), to Foundation activity.”
This excerpt and all the potential conflicts it describes, plus Chelsea’s warning about business “hustling” at foundation events, would seem more than ample cause to trigger an IRS audit of the foundation. For that matter, why aren’t the IRS and prosecutors already on the case? Any normal foundation has to keep records to show it is separating its nonprofit activity from any for-profit business.
Mr. Band’s memo confirms that donors were not seeking merely to help the sick and the poor. He explains that the Clinton Foundation had “engaged an array of fundraising consultants” over the past decade but “these engagements have not resulted in significant new dollars for the Foundation.” In other words, it wasn’t working as a conventional charity.
Mr. Band then explains how he and his Teneo partner Declan Kelly had to carry the fundraising load, and did so by packaging foundation solicitations with other services such as a meeting with Bill Clinton, $450,000 speeches or strategic advice. Many of the donations, from U.S. companies like Coca-Cola and Dow Chemical and foreign firms like UBS and Barclays, occurred while Hillary Clinton was Secretary of State.
Why exactly were donors writing checks? The Band memo makes clear that donations untied to additional Clinton or Teneo services weren’t all that appealing to potential supporters. This is significant, because the large grant-making foundations in the U.S. are almost entirely run by Clinton voters. So you know they weren’t turned off by the brand name. They’d contribute more if they thought they were also buying goodwill and influence with a current Secretary of State and a potential future President.
We don’t applaud WikiLeaks or the theft of information, and these hacks deserve a firm U.S. government response. But the emails are public and they will confirm for many Americans their worst suspicions about the people who run their government.
It’s also worth noting that in the vast digital trove of Mr. Podesta’s stolen emails we haven’t noticed emails from Mrs. Clinton. Perhaps they don’t exist. But American voters shouldn’t worry merely about the emails released before the election. What emails or memos exist that these hackers, Russian or not, could be withholding for leverage after the election with another President Clinton?
The Clinton campaign has suggested that Donald Trump has praised Vladimir Putinbecause the Russian has something on the Republican. The question is what do any number of possible bad actors know about Bill and Hillary Clinton’s mixing of business, charity and politics?
The Clinton Foundation (founded in 1997 as the William J. Clinton Foundation, and called beginning in 2013 the Bill, Hillary & Chelsea Clinton Foundation) is a nonprofit corporation under section 501(c)(3) of the U.S. tax code. It was established by former President of the United States Bill Clinton with the stated mission to “strengthen the capacity of people in the United States and throughout the world to meet the challenges of global interdependence.” Its offices are located in New York City and Little Rock, Arkansas.
Through 2016 the foundation had raised an estimated $2 billion from U.S. corporations, foreign governments and corporations, political donors, and various other groups and individuals. The acceptance of funds from wealthy donors has been a source of controversy. The foundation “has won accolades from philanthropy experts and has drawn bipartisan support”.
Charitable grants are not a major focus of the Clinton Foundation, which instead keeps most of its money in house and hires staff to carry out its own humanitarian programs. The charity watchdog group Charity Navigator gave the Foundation its highest possible rating, four out of four stars, after its customary review of the Foundation’s financial records and tax statements. A different charity monitor, CharityWatch, says that 88% of the foundation’s money goes toward its charitable mission and gave the foundation an A rating for 2016. In 2015, based on revenue of $223 million and an expense ratio of 12% the foundation spent in excess of $26 million to complete its mission.
This foundation is a public organization to which anyone may donate and is distinct from the Clinton Family Foundation, a private organization for personal Clinton family philanthropy.
Neither Bill Clinton, nor his daughter Chelsea Clinton (both board members), draws any salary or receives any income from the Foundation. When Hillary Clinton was a board member she received no income from the Foundation either.
Bill founded the William J. Clinton Foundation in 2001 following the completion of his presidency. Longtime Clinton advisor, Bruce Lindsey, became the CEO in 2004. Later, Lindsey moved from being CEO to being chair, largely for health reasons.Other Clinton hands who played an important early role included Doug Band, and Ira Magaziner. Additional Clinton associates who have had senior positions at the foundation include John Podesta and Laura Graham.
Most of the foundation’s successes came from Bill’s worldwide fame and his ability to bring together corporate executives, celebrities, and government officials. Similarly, the foundation areas of involvement have often corresponded to whatever Bill suddenly felt an interest in.
Preceding Barack Obama‘s 2009 nomination of Hillary Clinton as U.S. Secretary of State, Bill Clinton agreed to accept a number of conditions and restrictions regarding his ongoing activities and fundraising efforts for the Clinton Presidential Center and the Clinton Global Initiative. Accordingly, a list of donors was released in December 2008.
By 2011, Chelsea Clinton was taking a dominant role in the foundation and had a seat on its board. To raise money for the Foundation, she gave paid speeches, such as her $65,000 2014 address at the University of Missouri in Kansas City for the opening of the Starr Women’s Hall of Fame.
In July 2013, Eric Braverman was named CEO of the foundation. He is a friend and former colleague of Chelsea Clinton from McKinsey & Company. At the same time, Chelsea Clinton was named vice chair of the foundation’s board. The foundation was also in the midst of a move to two floors of the Time-Life Building in Midtown Manhattan.
Chelsea Clinton moved the organization to an outside review, conducted by the firm of Simpson Thacher & Bartlett. Its conclusions were made public in mid-2013. The main focus was to determine how the foundation could achieve firm financial footing that was not dependent upon the former president’s fundraising abilities, how it could operate more like a permanent entity rather than a start-up organization, and thus how it could survive and prosper beyond Bill Clinton’s lifetime.Dennis Cheng, a former Hillary Clinton campaign official and State Department deputy chief, was named to oversee a $250 million endowment drive. The review also found the management and structure of the foundation needed improvements, including an increase in the size of its board of directors that would have a more direct involvement in planning and budget activities. Additionally, the review said that all employees needed to understand the foundation’s conflict of interest policies and that expense reports needed a more formal review process.
In January 2015, Braverman announced his resignation. Politico attributed the move to being “partly from a power struggle inside the foundation between and among the coterie of Clinton loyalists who have surrounded the former president for decades and who helped start and run the foundation.” He was succeeded at first in an acting capacity by former deputy assistant secretary, Maura Pally.
On February 18, 2015, The Washington Post reported that, “the foundation has won accolades from philanthropy experts and has drawn bipartisan support, with members of the George W. Bush administration often participating in its programs.”
In August 2016 The Boston Globe‘s editorial board suggested that the Clinton Foundation cease accepting donations. The Globe’s editorial board offered praise for the foundation’s work but added that “as long as either of the Clintons are in public office, or actively seeking it, they should not operate a charity, too” because it represents a conflict of interest and a political distraction.
In 2016, the Reuters wire news service reported that the Clinton Foundation suspected that it had been the target of a cyber security breach. As a consequence of the suspected cyber security breach, Clinton Foundation officials retained a security firm, FireEye, to evaluate its data systems. The cyber security breach has been described as sharing similarities with cyberattacks that targeted other institutions, such as the Democratic National Committee.
As of January 1, 2010, the Clinton HIV/AIDS Initiative, an initiative of the Clinton Foundation, became a separate nonprofit organization called the Clinton Health Access Initiative (CHAI). Organizations such as the Clinton Foundation continue to supply anti-malarial drugs to Africa and other affected areas; according to director Inder Singh, in 2011 more than 12 million individuals will be supplied with subsidized anti-malarial drugs.
In May 2007, CHAI and UNITAID announced agreements that help middle-income and low-income countries save money on second-line drugs. The partnership also reduced the price of a once-daily first-line treatment to less than $1 per day.
The Clinton Foundation HIV/AIDS Initiative’s work on the ground has been subject of some criticism. The American Enterprise Institute, a conservative think tank, wrote that governments and organizations in Africa and Asia that partnered with the Foundation expressed caution and alarm at the Foundation’s focus on treating a large number of patients with less regard for the importance of adherence, follow-up and quality of care.
The Clinton Global Initiative (CGI) was founded in 2005 by Bill Clinton. Doug Band, counselor to Bill, was also heavily involved in the formation. Clinton has credited Band with being the originator of CGI and has noted that “Doug had the idea to do this.” Band left his paid position at CGI in 2010, preferring to emphasize his Teneo business and family pursuits, but remains on the CGI advisory board. The overlap between CGI and Teneo, of which Bill was a paid advisor, drew criticism. One of its major donors is Norway’s government—20 million Norwegian kroner per year as of 2013.
President Clinton started a program to fight climate change, the Clinton Foundation’s Climate Initiative (CCI) in August 2006.
On August 1, 2006, the Foundation entered into a partnership with the Large Cities Climate Leadership Group, agreeing to provide resources to allow the participating cities to enter into an energy-saving product purchasing consortium and to provide technical and communications support.
In May 2007, CCI announced its first project which will help some large cities cut greenhouse gas emissions by facilitating retrofitting of existing buildings. Five large banks committed $1 billion each to help cities and building owners make energy-saving improvements aimed at lowering energy use and energy costs.
At the 2007 Clinton Global Initiative, President Clinton announced the 1Sky campaign to accelerate bold federal policy on global warming. The 1Sky campaign supports at least an 80% reduction in climate pollution levels by 2050.
On May 19, 2009, CCI announced the global Climate Positive Development Program where it will work with the U.S. Green Building Council to promote “climate positive” city growth.
Clinton Development Initiative (CDI)
The Clinton Development Initiative, originally the Clinton Hunter Development Initiative, was formed in 2006 as a partnership with Scottish philanthropist Sir Tom Hunter‘s Hunter Foundation to target the root causes of poverty in Africa and promote sustainable economic growth.
The Alliance for a Healthier Generation
The Alliance for a Healthier Generation is a partnership between the Clinton Foundation and the American Heart Association that was working to end the childhood obesity epidemic in the United States by 2010.
The Robert Wood Johnson Foundation, which provided an initial $8 million to start the Healthy Schools Program, awarded a $20 million grant to expand the program to over 8,000 schools in states with the highest obesity rates.
In November 2012, Bill Clinton announced the launch of the Clinton Health Matters Initiative (CHMI). CHMI is a national initiative, building on the Clinton Foundation’s work on global health and childhood obesity, that works to improve the health and well-being of people across the United States by activating individuals, communities, and organizations to make meaningful contributions to the health of others. CHMI holds an annual Health Matters conference every January in the Coachella Valley.
President Clinton and Secretary Clinton Pose for a Photo With Workers at Caracol Industrial Park. Photo: Kendra Helmer/USAID
The Foundation has funded extensive disaster relief programs following the 2004 Indian Ocean earthquake and Hurricane Katrina in 2005. Shortly after Hurricane Katrina hit, President George W. Bush asked former Presidents George H. W. Bush and Bill Clinton to raise funds to help rebuild the Gulf Coast region. The two Presidents, having worked together to assist victims of the Indian Ocean tsunami, established the Bush-Clinton Katrina Fund to identify and meet the unmet needs in the region, foster economic opportunity, and to improve the quality of life of those affected. In the first month after the hurricane, the Fund collected over 42,000 online donations alone; approximately $128.4 million has been received to date from all 50 states and $30.9 million from foreign countries. The foundation has been involved in Haiti both before and after the 2010 Haiti earthquake.
Around 2007, the Clinton Foundation was criticized for a lack of transparency. Although U.S. law did not require nonprofit charities — including presidential foundations — to disclose the identities of their contributors, critics said that the names of donors should be disclosed because Hillary was running to be the Democratic nominee for President of the United States. Commentator Matthew Yglesias wrote in a Los Angeles Timesop-ed that the Clintons should make public the names of foundation donors to avoid any appearance of impropriety.
A lengthy donors list was then released by the Foundation in December 2008, which included several politically sensitive donors, such as the Kingdom of Saudi Arabia and Blackwater Worldwide. The Foundation stated that the disclosures would ensure that “not even the appearance of a conflict of interest” would exist once Hillary Clinton was Secretary of State.
The ethics agreement between the State Department and the Clinton Foundation that was put into force at the beginning of the Secretary of State Clinton’s tenure came under scrutiny from the news media during February 2015. A Wall Street Journal report found that the Clinton Foundation had resumed accepting donations from foreign governments once Secretary Clinton’s tenure had ended. Contributions from foreign donors who are prohibited by law from contributing to political candidates in the U.S. constitute a major portion of the foundation’s income. The foundation’s chief communications officer Craig Minassian explained that it is a “false choice to suggest that people who may be interested in supporting political causes wouldn’t also support philanthropic work.” A Washington Post inquiry into donations by foreign governments to the Clinton Foundation during the secretary’s tenure found six cases where such governments continued making donations at the same level they had before Clinton became secretary, which was permissible under the agreement, but also one instance of a new donation, $500,000 from Algeria for earthquake relief in Haiti, that was outside the bounds of the continuation provision and should have received a special ethics review, but did not. Foundation officials said that if the former secretary decided to run for president in 2016, they would again consider what steps to take in reference to foreign donations. But in general, they stressed that, “As with other global charities, we rely on the support of individuals, organizations, corporations and governments who have the shared goal of addressing critical global challenges in a meaningful way. When anyone contributes to the Clinton Foundation, it goes towards foundation programs that help save lives.” State Department spokesperson Jen Psaki attested that the foundation’s commitment to the ethics agreement in question “has been over and above the letter of the law”. In August 2016, with less than 90 days before the upcoming presidential election, the Clinton Foundation announced that it will stop accepting foreign donations if Clinton is elected.
In March 2015, Reuters reported that the Clinton Foundation had broken its promise to publish all of its donors, as well as its promise to let the State Department review all of its donations from foreign governments. In April 2015, the New York Times reported that when Hillary Clinton was Secretary of State, the State Department had approved a deal to sell American uranium to a Russian state-owned enterprise Uranium One whose chairman had donated to the Clinton Foundation, and that Clinton had broken her promise to publicly identify such donations. The State Department “was one of nine government agencies, not to mention independent federal and state nuclear regulators, that had to sign off on the deal.”FactCheck.org notes that there is “no evidence” that the donations influenced Clinton’s official actions or that she was involved in the State Department’s decision to approve the deal, and PolitiFact concluded that any “suggestion of a quid pro quo is unsubstantiated.”
In February 2016, The Washington Post reported that the United States Department of State issued a subpoena to the foundation in the fall of 2015. According to the report, the subpoena focused on “documents about the charity’s projects that may have required approval from federal government during Hillary Clinton’s term as secretary of state” and “also asked for records related to Huma Abedin, longtime Clinton aide who for six months in 2012 was employed simultaneously by the State Department, the foundation, Clinton’s personal office, and a private consulting firm with ties to the Clintons.”
The Clinton Foundation is a public organization to which anyone may donate. Due to their similar names, the public foundation has sometimes been confused with the Clinton Family Foundation, which is reserved for the Clintons’ private philanthropy. The two foundations have sometimes been conflated by news sources. The significantly smaller Clinton Family Foundation is a traditional private foundation that serves as the vehicle for their personal charitable giving. Headquartered in Chappaqua, New York, it received nearly all of the approximately $14 million the Clintons gave to charity from 2007–13.
Doug Band helped everyone get rich in the post-presidential empire, but his re-emergence in the WikiLeaks hack is another headache for Hillary.
Who is Doug Band, and what did he do for Bill Clinton?
A little bit of everything, it turns out.
He helped launch the Clinton Foundation, came up with the idea for the Clinton Global Initiative, brokered deals for paid speeches that enriched Clinton, and then started a private consulting firm called Teneo that made the Foundation, Bill Clinton, and Band himself even wealthier.
All of that became clear in the latest batch of hacked emails released by WikiLeaks, which include messages from Band and a 12-page memo that he wrote both explaining and defending his and his company’s work on Clinton’s behalf. For Hillary Clinton’s campaign, the publication of the Band memo is yet another WikiLeaks-induced headache, as it provides even more detail into the unsavory-if-not-illegal intersection of interests at the heart of her family’s philanthropic work.
Band, now 44, was to Bill Clinton what Huma Abedin has been to Hillary. He started as a junior staffer in the White House straight out of college in the 1990s, and once the Clintons left office in 2001, he never left Bill’s side.
Here’s how one Clinton loyalist describes Band:
Doug turned down a lucrative job at Goldman Sachs to help the President transition into private life, even in the midst of a difficult time when President Clinton’s approval rating was lower than it had ever been, and many had left the President’s side for greener pastures. The decision Doug made to stick with the President was made out of loyalty, and I always admired that.
But in a very short period of time, and at an astonishingly young age, Doug not only helped build and guide the Clinton Foundation, he also traveled the world with the President, came up with the idea for the Clinton Global Initiative, and worked to turn it into an entity that has helped literally hundreds of millions of people across the globe.
Those were Band’s own not-so-modest words, taken from a reference letter he wrote for John Podesta to send out in his name in 2013, at a time when news stories were painting a negative portrait of Band’s influence in Hillaryland. The most damaging was a profile by Alec MacGillis in the New Republic that was headlined “Scandal at Clinton Inc.” and identified Band as the cause of the turmoil. The crux of the piece was that after helping to build the Clintons’ philanthropic empire, he was now using it to amass riches for himself through Teneo, the consulting firm he started in 2011 with the Irish businessman Declan Kelly. And the unseemly way in which he was going about it risked tarnishing both Hillary Clinton’s future presidential run and Bill Clinton’s post-presidential brand.
Bill Clinton now leads a sprawling philanthropic empire like no other. The good it achieves is undeniable. It has formed partnerships with multinationals and wealthy individuals to distribute billions of dollars all over the globe. Its many innovative projects include efforts to lower the costs of medicines in developing nations and reduce greenhouse-gas emissions in major cities. And yet it’s hard to shake the sense that it’s not all about saving the world. There’s an undertow of transactionalism in the glittering annual dinners, the fixation on celebrity, and a certain contingent of donors whose charitable contributions and business interests occupy an uncomfortable proximity. More than anyone else except Clinton himself, Band is responsible for creating this culture. And not only did he create it; he has thrived in it.
MacGillis’s reporting proved prescient, right down to the use of the phrase “Clinton Inc.” Questions about the ethics of the Clinton Foundation have hovered like a cloud around Hillary’s campaign from the start, never quite turning into a storm but never quite going away, either. Did the Clintons trade access to themselves for donations to the charity? Yes. Did Band mix his work raising money for the foundation with his business interests? Yes. But the revelations have thus far stopped at the government’s door. Neither the emails about a deal with the king of Morocco to host a CGI conference nor Band’s memo about Teneo and his work for Bill Clinton suggest that Hillary Clinton took actions as secretary of state to benefit donors to the Clinton Foundation.
The WikiLeaks hack has confirmed tensions between Chelsea Clinton, who stepped into to try to overhaul and “professionalize” the operation of the foundation, and Band, who bristled at her interference and at one point referred to her as “a spoiled brat.” In one email, Band defends himself against accusations of “a conflict of interest” with Teneo by pointing out that Bill Clinton had also received compensation and gifts from donors to the foundation. And in his 12-page memo, Band argues that through his company and his “unique role” in an “unorthodox” arrangement, he has helped both Bill Clinton and the foundation, in part by soliciting donations from his Teneo corporate clients. The section that stands out the most is the one titled, “For-Profit Activity of President Clinton (i.e. Bill Clinton Inc.).” Band writes of himself and another Clinton aide, Justin Cooper:
Independent of our fundraising and decision-making activities on behalf of the Foundation, we have dedicated ourselves to helping the President secure and engage in for-profit activities – including speeches, books, and advisory service engagements. In that context, we have in effect served as agents, lawyers, managers and implementers to secure speaking, business and advisory service deals. In support of the President’s for-profit activity, we also have solicited and obtained, as appropriate, in-kind services for the President and his family – for personal travel, hospitality, vacation and the like. Neither Justin nor I are separately compensated for these activities (e.g., we do not receive a fee for, or percentage11 of, the more than $50 million in for-profit activity we have personally helped to secure for President Clinton to date or the $66 million in future contracts, should he
choose to continue with those engagements).
With respect to business deals for his advisory services, Justin and I found, developed and brought to President Clinton multiple arrangements for him to accept or reject. Of his current 4 arrangements, we secured all of them; and, we have helped manage and maintain all of his for-profit business relationships. Since 2001, President Clinton’s business arrangements have yielded more than $30 million for him personally, with $66 million to be paid out over the next nine years should he choose to continue with the current engagements.
How does this all affect Hillary Clinton, the Clinton who is actually running for president? Mostly, it just doesn’t look good. (And thanks to Donald Trump’s endless antics, it probably won’t stop her from winning the election.) Both Clintons have vigorously defended the charitable work they have done over the last 16 years, and while that work may be admirable, the WikiLeaks hack has exposed that the former president’s philanthropy, his personal enrichment, and the business interests of perhaps his closest aide were too closely tied.
The Clinton campaign has made a policy of not commenting on the specific WikiLeaks revelations other than to accuse Russia of stealing Podesta’s emails and suggest that the Trump campaign was involved. In an appearance Thursday on MSNBC, spokeswoman Jennifer Palmieri said the campaign doesn’t believe “that this is something that voters are going to focus on or voters are going to care about.”“The foundation, as is known, has done great work,” Palmieri said. “The State Department has looked at this. They have said that there is no decision that Hillary Clinton made as Secretary of State that was based on people who donated to the Clinton Foundation.”Teneo issued its own statement on Thursday: “As the memo demonstrates, Teneo worked to encourage clients, where appropriate, to support the Clinton Foundation because of the good work that it does around the world. It also clearly shows that Teneo never received any financial benefit or benefit of any kind from doing so.”The Band memo does not directly involve Hillary, but to Republicans it makes no difference. They have already seized on the WikiLeaks revelations to promise “years” more of hearings and investigations if she wins the presidency.“The more e-mails Wikileaks releases, the more the lines between the Clinton Foundation, the Secretary of State’s office, and the Clintons’ personal finances are blurred,” Trump said. “Mr. Band called the arrangement ‘unorthodox.’ The rest of us call it outright corruption.”http://www.theatlantic.com/politics/archive/2016/10/the-man-at-the-center-of-bill-clinton-inc/505661/
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You must leave now
Take what you need you think will last
But whatever you wish to keep
You better grab it fast
Yonder stands your orphan with his gun
Crying like a fire in the sun
Look out, the saints are coming through
And it’s all over now, baby blue
The highway is for gamblers
Better use your sense
Take what you have gathered
The empty handed painter from your streets
Is drawing crazy patterns on your sheets
This sky, too, is folding under you
And it’s all over now, baby blue
All your seasick sailors
They are rowing home
Your empty handed army
Is all going home
Your lover, who just walked out the door
Has taken all his blankets from the floor
The carpet too, is moving under you
And it’s all over now, baby blue
Leave your stepping stones behind
Now, something that calls for you
Forget the dead you’ve left
They will not follow you
The vagabond who’s rapping at your door
Is standing in the clothes that you once wore
Strike another match, go start anew
And it’s all over now, baby blue
It’s Alright, Ma (I’m Only Bleeding)
Darkness at the break of noon
Shadows even the silver spoon
The handmade blade, the child’s balloon
Eclipses both the sun and moon
To understand you know too soon
There is no sense in trying.
Pointed threats, they bluff with scorn
Suicide remarks are torn
From the fools gold mouthpiece
The hollow horn plays wasted words
Proved to warn
That he not busy being born
Is busy dying.
Temptation’s page flies out the door
You follow, find yourself at war
Watch waterfalls of pity roar
You feel to moan but unlike before
That you’d just be
One more person crying.
So don’t fear if you hear
A foreign sound to you ear
It’s alright, Ma, I’m only sighing.
As some warn victory, some downfall
Private reasons great or small
Can be seen in the eyes of those that call
To make all that should be killed to crawl
While others say don’t hate nothing at all
Disillusioned words like bullets bark
As human gods aim for their marks
Made everything from toy guns that sparks
To flesh-colored Christs that glow in the dark
It’s easy to see without looking too far
That not much
Is really sacred.
While preachers preach of evil fates
Teachers teach that knowledge waits
Can lead to hundred-dollar plates
Goodness hides behind its gates
But even the President of the United States
Sometimes must have
To stand naked.
An’ though the rules of the road have been lodged
It’s only people’s games that you got to dodge
And it’s alright, Ma, I can make it.
Advertising signs that con you
Into thinking you’re the one
That can do what’s never been done
That can win what’s never been won
Meantime life outside goes on
All around you.
You loose yourself, you reappear
You suddenly find you got nothing to fear
Alone you stand without nobody near
When a trembling distant voice, unclear
Startles your sleeping ears to hear
That somebody thinks
They really found you.
A question in your nerves is lit
Yet you know there is no answer fit to satisfy
Insure you not to quit
To keep it in your mind and not forget
That it is not he or she or them or it
That you belong to.
Although the masters make the rules
For the wise men and the fools
I got nothing, Ma, to live up to.
For them that must obey authority
That they do not respect in any degree
Who despite their jobs, their destinies
Speak jealously of them that are free
Cultivate their flowers to be
Nothing more than something
They invest in.
While some on principles baptized
To strict party platforms ties
Social clubs in drag disguise
Outsiders they can freely criticize
Tell nothing except who to idolize
And then say God Bless him.
While one who sings with his tongue on fire
Gargles in the rat race choir
Bent out of shape from society’s pliers
Cares not to come up any higher
But rather get you down in the hole
That he’s in.
But I mean no harm nor put fault
On anyone that lives in a vault
But it’s alright, Ma, if I can’t please him.
Old lady judges, watch people in pairs
Limited in sex, they dare
To push fake morals, insult and stare
While money doesn’t talk, it swears
Obscenity, who really cares
Propaganda, all is phony.
While them that defend what they cannot see
With a killer’s pride, security
It blows the minds most bitterly
For them that think death’s honesty
Won’t fall upon them naturally
Must get lonely.
My eyes collide head-on with stuffed graveyards
False gods, I scuff
At pettiness which plays so rough
Walk upside-down inside handcuffs
Kick my legs to crash it off
Say okay, I have had enough
What else can you show me ?
And if my thought-dreams could been seen
They’d probably put my head in a guillotine
But it’s alright, Ma, it’s life, and life only.
Once upon a time you dressed so fine
Threw the bums a dime in your prime, didn’t you?
People call say ‘beware doll, you’re bound to fall’
You thought they were all kidding you
You used to laugh about
Everybody that was hanging out
Now you don’t talk so loud
Now you don’t seem so proud
About having to be scrounging your next meal
How does it feel, how does it feel?
To be without a home
Like a complete unknown, like a rolling stone
Ahh you’ve gone to the finest schools, alright Miss Lonely
But you know you only used to get juiced in it
Nobody’s ever taught you how to live out on the street
And now you’re gonna have to get used to it
You say you never compromise
With the mystery tramp, but now you realize
He’s not selling any alibis
As you stare into the vacuum of his eyes
And say do you want to make a deal?
How does it feel, how does it feel?
To be on your own, with no direction home
A complete unknown, like a rolling stone
Ah you never turned around to see the frowns
On the jugglers and the clowns when they all did tricks for you
You never understood that it ain’t no good
You shouldn’t let other people get your kicks for you
You used to ride on a chrome horse with your diplomat
Who carried on his shoulder a Siamese cat
Ain’t it hard when you discovered that
He really wasn’t where it’s at
After he took from you everything he could steal
How does it feel, how does it feel?
To have on your own, with no direction home
Like a complete unknown, like a rolling stone
Ahh princess on a steeple and all the pretty people
They’re all drinking, thinking that they’ve got it made
Exchanging all precious gifts
But you better take your diamond ring, you better pawn it babe
You used to be so amused
At Napoleon in rags and the language that he used
Go to him he calls you, you can’t refuse
When you ain’t got nothing, you got nothing to lose
You’re invisible now, you’ve got no secrets to conceal
How does it feel, ah how does it feel?
To be on your own, with no direction home
Like a complete unknown, like a rolling stone
Dylan’s parents, Abram Zimmerman and Beatrice “Beatty” Stone, were part of a small, close-knit Jewish community. They lived in Duluth until Robert was six, when his father had polio and the family returned to his mother’s hometown, Hibbing, where they lived for the rest of Robert’s childhood. In his early years he listened to the radio—first to blues and country stations fromShreveport, Louisiana, and later, when he was a teenager, to rock and roll. He formed several bands while attending Hibbing High School. In the Golden Chords, he performed covers of songs by Little Richard and Elvis Presley. Their performance of Danny & the Juniors‘ “Rock and Roll Is Here to Stay” at their high school talent show was so loud that the principal cut the microphone. In 1959, his high school yearbook carried the caption “Robert Zimmerman: to join ‘Little Richard’.” The same year, as Elston Gunnn [sic], he performed two dates with Bobby Vee, playing piano and clapping.
The thing about rock’n’roll is that for me anyway it wasn’t enough… There were great catch-phrases and driving pulse rhythms… but the songs weren’t serious or didn’t reflect life in a realistic way. I knew that when I got into folk music, it was more of a serious type of thing. The songs are filled with more despair, more sadness, more triumph, more faith in the supernatural, much deeper feelings.
He began to perform at the Ten O’Clock Scholar, a coffeehouse a few blocks from campus, and became involved in the Dinkytownfolk music circuit.
During his Dinkytown days, Zimmerman began introducing himself as “Bob Dylan”.[a 1] In his memoir, Dylan said he hit upon using this less common variant for Dillon – a surname he had considered adopting – when he unexpectedly saw some poems by Dylan Thomas. Explaining his change of name in a 2004 interview, Dylan remarked, “You’re born, you know, the wrong names, wrong parents. I mean, that happens. You call yourself what you want to call yourself. This is the land of the free.”
Relocation to New York and record deal
In May 1960, Dylan dropped out of college at the end of his first year. In January 1961, he traveled to New York City, to perform there and visit his musical idol Woody Guthrie, who was seriously ill with Huntington’s disease inGreystone Park Psychiatric Hospital. Guthrie had been a revelation to Dylan and influenced his early performances. Describing Guthrie’s impact, he wrote: “The songs themselves had the infinite sweep of humanity in them… [He] was the true voice of the American spirit. I said to myself I was going to be Guthrie’s greatest disciple.” As well as visiting Guthrie in hospital, Dylan befriended Guthrie’s acolyte Ramblin’ Jack Elliott. Much of Guthrie’s repertoire was channeled through Elliott, and Dylan paid tribute to Elliott in Chronicles: Volume One.
“Blowin’ in the Wind” was, according to critic Andy Gill, “the song with which Dylan’s name is most inextricably linked, and safeguarded his reputation as a civil libertarian through any number of changes in style and attitude”.
Dylan made two important career moves in August 1962: he legally changed his name to Robert Dylan, and he signed a management contract with Albert Grossman. (In June 1961, Dylan had signed an agreement with Roy Silver. In 1962, Grossman paid Silver $10,000 to become sole manager.) Grossman remained Dylan’s manager until 1970, and was notable for his sometimes confrontational personality and for protective loyalty. Dylan said, “He was kind of like a Colonel Tom Parker figure … you could smell him coming.” Tensions between Grossman and John Hammond led to Hammond’s being replaced as producer of Dylan’s second album by the young African-American jazz producer, Tom Wilson.
The first song on the Freewheelin‘ album, “Blowin’ in the Wind“, partly derived its melody from the traditional slave song, “No More Auction Block”, while its lyrics questioned the social and political status quo. The song was widely recorded by other artists and became a hit for Peter, Paul and Mary. Another Freewheelin’ song, “A Hard Rain’s a-Gonna Fall” was based on the folk ballad “Lord Randall“. With veiled references to an impending apocalypse, the song gained more resonance when the Cuban Missile Crisis developed a few weeks after Dylan began performing it.[a 2] Like “Blowin’ in the Wind”, “A Hard Rain’s a-Gonna Fall” marked a new direction in songwriting, blending a stream-of-consciousness, imagist lyrical attack with traditional folk form.
Dylan’s topical songs enhanced his early reputation, and he came to be seen as more than just a songwriter. Janet Maslin wrote of Freewheelin‘: “These were the songs that established [Dylan] as the voice of his generation—someone who implicitly understood how concerned young Americans felt about nuclear disarmament and the growing movement for civil rights: his mixture of moral authority and nonconformity was perhaps the most timely of his attributes.”[a 3]Freewheelin‘ also included love songs and surreal talking blues. Humor was an important part of Dylan’s persona, and the range of material on the album impressed listeners, including the Beatles. George Harrison said of the album, “We just played it, just wore it out. The content of the song lyrics and just the attitude—it was incredibly original and wonderful.”
The rough edge of Dylan’s singing was unsettling to some but an attraction to others. Joyce Carol Oates wrote: “When we first heard this raw, very young, and seemingly untrained voice, frankly nasal, as if sandpaper could sing, the effect was dramatic and electrifying.” Many early songs reached the public through more palatable versions by other performers, such as Joan Baez, who became Dylan’s advocate as well as his lover. Baez was influential in bringing Dylan to prominence by recording several of his early songs and inviting him on stage during her concerts.
“Mixed-Up Confusion“, recorded during the Freewheelin’ sessions with a backing band, was released as a single and then quickly withdrawn. In contrast to the mostly solo acoustic performances on the album, the single showed a willingness to experiment with a rockabilly sound. Cameron Crowe described it as “a fascinating look at a folk artist with his mind wandering towards Elvis Presley and Sun Records.”
Dylan said of “The Times They Are a-Changin'”: “This was definitely a song with a purpose. I wanted to write a big song, some kind of theme song, with short concise verses that piled up on each other in a hypnotic way. The civil rights movement and the folk music movement were pretty close and allied together at that time.”
In the latter half of 1964 and 1965, Dylan moved from folk songwriter to folk-rock pop-music star. His jeans and work shirts were replaced by a Carnaby Street wardrobe, sunglasses day or night, and pointed “Beatle boots“. A London reporter wrote: “Hair that would set the teeth of a comb on edge. A loud shirt that would dim the neon lights of Leicester Square. He looks like an undernourished cockatoo.” Dylan began to spar with interviewers. Appearing on the Les Crane television show and asked about a movie he planned, he told Crane it would be a cowboy horror movie. Asked if he played the cowboy, Dylan replied, “No, I play my mother.”
In 1965, heading the Newport Folk Festival, Dylan performed his first electric set since high school with a pickup group mostly from the Paul Butterfield Blues Band, featuring Mike Bloomfield (guitar), Sam Lay (drums) and Jerome Arnold (bass), plus Al Kooper (organ) and Barry Goldberg (piano). Dylan had appeared at Newport in 1963 and 1964, but in 1965 met with cheering and booing and left the stage after three songs. One version has it that the boos were from folk fans whom Dylan had alienated by appearing, unexpectedly, with an electric guitar. Murray Lerner, who filmed the performance, said: “I absolutely think that they were booing Dylan going electric.” An alternative account claims audience members were upset by poor sound and a short set. This account is supported by Kooper and one of the directors of the festival, who reports his recording proves the only boos were in reaction to the MC’s announcement that there was only enough time for a short set.
Nevertheless, Dylan’s performance provoked a hostile response from the folk music establishment. In the September issue of Sing Out!, Ewan MacColl wrote: “Our traditional songs and ballads are the creations of extraordinarily talented artists working inside disciplines formulated over time …’But what of Bobby Dylan?’ scream the outraged teenagers … Only a completely non-critical audience, nourished on the watery pap of pop music, could have fallen for such tenth-rate drivel.” On July 29, four days after Newport, Dylan was back in the studio in New York, recording “Positively 4th Street“. The lyrics contained images of vengeance and paranoia, and it has been interpreted as Dylan’s put-down of former friends from the folk community—friends he had known in clubs along West 4th Street.
In July 1965, the single “Like a Rolling Stone” peaked at two in the U.S. and at four in the UK charts. At over six minutes, the song altered what a pop single could convey. Bruce Springsteen, in his speech for Dylan’s inauguration into the Rock and Roll Hall of Fame, said that on first hearing the single, “that snare shot sounded like somebody’d kicked open the door to your mind”. In 2004 and in 2011, Rolling Stone listed it as number one of “The 500 Greatest Songs of All Time“. The song opened Dylan’s next album,Highway 61 Revisited, named after the road that led from Dylan’s Minnesota to the musical hotbed of New Orleans. The songs were in the same vein as the hit single, flavored by Mike Bloomfield‘s blues guitar and Al Kooper‘s organ riffs. “Desolation Row“, backed by acoustic guitar and understated bass, offers the sole exception, with Dylan alluding to figures in Western culture in a song described by Andy Gill as “an 11-minute epic of entropy, which takes the form of a Fellini-esque parade of grotesques and oddities featuring a huge cast of celebrated characters, some historical (Einstein, Nero), some biblical (Noah, Cain and Abel), some fictional (Ophelia, Romeo, Cinderella), some literary (T.S. Eliot and Ezra Pound), and some who fit into none of the above categories, notably Dr. Filth and his dubious nurse.”
In support of the album, Dylan was booked for two U.S. concerts with Al Kooper and Harvey Brooks from his studio crew and Robbie Robertson and Levon Helm, former members of Ronnie Hawkins‘s backing band the Hawks. On August 28 at Forest Hills Tennis Stadium, the group was heckled by an audience still annoyed by Dylan’s electric sound. The band’s reception on September 3 at the Hollywood Bowl was more favorable.
From September 24, 1965, in Austin, Texas, Dylan toured the U.S. and Canada for six months, backed by the five musicians from the Hawks who became known as the Band. While Dylan and the Hawks met increasingly receptive audiences, their studio efforts floundered. Producer Bob Johnston persuaded Dylan to record in Nashville in February 1966, and surrounded him with top-notch session men. At Dylan’s insistence, Robertson and Kooper came from New York City to play on the sessions. The Nashville sessions produced the double album Blonde on Blonde (1966), featuring what Dylan called “that thin wild mercury sound”. Kooper described it as “taking two cultures and smashing them together with a huge explosion”: the musical world of Nashville and the world of the “quintessential New York hipster” Bob Dylan.
On November 22, 1965, Dylan secretly married 25-year-old former model Sara Lownds. Some of Dylan’s friends, including Ramblin’ Jack Elliott, say that, immediately after the event, Dylan denied he was married.Journalist Nora Ephron made the news public in the New York Post in February 1966 with the headline “Hush! Bob Dylan is wed.”
Dylan toured Australia and Europe in April and May 1966. Each show was split in two. Dylan performed solo during the first half, accompanying himself on acoustic guitar and harmonica. In the second, backed by the Hawks, he played electrically amplified music. This contrast provoked many fans, who jeered and slow handclapped. The tour culminated in a raucous confrontation between Dylan and his audience at the Manchester Free Trade Hall in England on May 17, 1966. A recording of this concert was released in 1998: The Bootleg Series Vol. 4: Bob Dylan Live 1966. At the climax of the evening, a member of the audience, angered by Dylan’s electric backing, shouted: “Judas!” to which Dylan responded, “I don’t believe you … You’re a liar!” Dylan turned to his band and said, “Play it fucking loud!” as they launched into the final song of the night—”Like a Rolling Stone”.
During his 1966 tour, Dylan was described as exhausted and acting “as if on a death trip”.D. A. Pennebaker, the film maker accompanying the tour, described Dylan as “taking a lot of amphetamine and who-knows-what-else.” In a 1969 interview with Jann Wenner, Dylan said, “I was on the road for almost five years. It wore me down. I was on drugs, a lot of things … just to keep going, you know?” In 2011, BBC Radio 4 reported that, in an interview that Robert Shelton taped in 1966, Dylan said he had kicked heroin in New York City: “I got very, very strung out for a while … I had about a $25-a-day habit and I kicked it.” Some journalists questioned the validity of this confession, pointing out that Dylan had “been telling journalists wild lies about his past since the earliest days of his career.”
Motorcycle accident and reclusion
After his tour, Dylan returned to New York, but the pressures increased. ABC Television had paid an advance for a TV show. His publisher, Macmillan, was demanding a manuscript of the poem/novel Tarantula. ManagerAlbert Grossman had scheduled a concert tour for the latter part of the year.
On July 29, 1966, Dylan crashed his 500cc Triumph Tiger 100 motorcycle near his home in Woodstock, New York, and was thrown to the ground. Though the extent of his injuries was never disclosed, Dylan said that he broke several vertebrae in his neck. Mystery still surrounds the circumstances of the accident since no ambulance was called to the scene and Dylan was not hospitalized. Dylan’s biographers have written that the crash offered Dylan the chance to escape the pressures around him. Dylan confirmed this interpretation in his autobiography: “I had been in a motorcycle accident and I’d been hurt, but I recovered. Truth was that I wanted to get out of the rat race.” Dylan withdrew from public and, apart from a few appearances, did not tour again for almost eight years.
Dylan’s next release, Nashville Skyline (1969), was mainstream country featuring Nashville musicians, a mellow-voiced Dylan, a duet with Johnny Cash, and the hit single “Lay Lady Lay“.Variety wrote, “Dylan is definitely doing something that can be called singing. Somehow he has managed to add an octave to his range.” Dylan and Cash also recorded a series of duets, but only their recording of Dylan’s “Girl from the North Country” was used on the album.
In May 1969, Dylan appeared on the first episode of Johnny Cash’s television show, duetting with Cash on “Girl from the North Country“, “I Threw It All Away”, and “Living the Blues”. Dylan next traveled to England to top the bill at the Isle of Wight festival on August 31, 1969, after rejecting overtures to appear at the Woodstock Festival closer to his home.
Dylan began 1973 by signing with a new label, David Geffen‘s Asylum Records (and Island in the UK), when his contract with Columbia Records expired. On his next album, Planet Waves, he used the Band as backing group, while rehearsing for a tour. The album included two versions of “Forever Young”, which became one of his most popular songs. As one critic described it, the song projected “something hymnal and heartfelt that spoke of the father in Dylan”, and Dylan himself commented: “I wrote it thinking about one of my boys and not wanting to be too sentimental.”
Columbia Records simultaneously released Dylan, a collection of studio outtakes (almost exclusively covers), widely interpreted as a churlish response to Dylan’s signing with a rival record label. In January 1974, Dylan returned to touring after seven years; backed by the Band, he embarked on a North American tour of 40 concerts. A live double album, Before the Flood, was on Asylum Records. Soon, according to Clive Davis, Columbia Records sent word they “will spare nothing to bring Dylan back into the fold”. Dylan had second thoughts about Asylum, miffed that while there had been millions of unfulfilled ticket requests for the 1974 tour, Geffen had sold only 700,000 copies of Planet Waves. Dylan returned to Columbia Records, which reissued his two Asylum albums.
Dylan said of the opening song fromBlood on the Tracks: “I was trying to deal with the concept of time, and the way the characters change from the first person to the third person, and you’re never sure if the first person is talking or the third person. But as you look at the whole thing it really doesn’t matter.”
After the tour, Dylan and his wife became estranged. He filled a small red notebook with songs about relationships and ruptures, and recorded an album entitled Blood on the Tracks in September 1974. Dylan delayed the release and re-recorded half the songs at Sound 80 Studios in Minneapolis with production assistance from his brother, David Zimmerman.
Released in early 1975, Blood on the Tracks received mixed reviews. In the NME, Nick Kent described “the accompaniments [as] often so trashy they sound like mere practice takes.” In Rolling Stone, Jon Landau wrote that “the record has been made with typical shoddiness.” Over the years critics came to see it as one of Dylan’s greatest achievements. In Salon.com, Bill Wyman wrote: “Blood on the Tracks is his only flawless album and his best produced; the songs, each of them, are constructed in disciplined fashion. It is his kindest album and most dismayed, and seems in hindsight to have achieved a sublime balance between the logorrhea-plagued excesses of his mid-1960s output and the self-consciously simple compositions of his post-accident years.” Novelist Rick Moody called it “the truest, most honest account of a love affair from tip to stern ever put down on magnetic tape.”
Running through late 1975 and again through early 1976, the tour encompassed the release of the album Desire, with many of Dylan’s new songs featuring a travelogue-like narrative style, showing the influence of his new collaborator, playwright Jacques Levy. The 1976 half of the tour was documented by a TV concert special, Hard Rain, and the LP Hard Rain; no concert album from the better-received and better-known opening half of the tour was released until 2002’s Live 1975.
Dylan performing in the Feyenoord Football Club Stadium, Rotterdam, June 23, 1978
The 1975 tour with the Revue provided the backdrop to Dylan’s nearly four-hour film Renaldo and Clara, a sprawling narrative mixed with concert footage and reminiscences. Released in 1978, the movie received poor, sometimes scathing, reviews. Later in that year, a two-hour edit, dominated by the concert performances, was more widely released.
In 1978, Dylan embarked on a year-long world tour, performing 114 shows in Japan, the Far East, Europe and the US, to a total audience of two million. Dylan assembled an eight piece band and three backing singers. Concerts in Tokyo in February and March were released as the live double album, Bob Dylan At Budokan. Reviews were mixed. Robert Christgau awarded the album a C+ rating, giving the album a derisory review, while Janet Maslin defended it in Rolling Stone, writing: “These latest live versions of his old songs have the effect of liberating Bob Dylan from the originals.” When Dylan brought the tour to the U.S. in September 1978, the press described the look and sound as a ‘Las Vegas Tour’. The 1978 tour grossed more than $20 million, and Dylan told the Los Angeles Times that he had debts because “I had a couple of bad years. I put a lot of money into the movie, built a big house … and it costs a lot to get divorced in California.”
In April and May 1978, Dylan took the same band and vocalists into Rundown Studios in Santa Monica, California, to record an album of new material: Street-Legal. It was described by Michael Gray as, “after Blood On The Tracks, arguably Dylan’s best record of the 1970s: a crucial album documenting a crucial period in Dylan’s own life”. However, it had poor sound and mixing (attributed to Dylan’s studio practices), muddying the instrumental detail until a remastered CD release in 1999 restored some of the songs’ strengths.
Dylan took five months off at the beginning of 1979 to attend Bible school. His subsequent album Slow Train Coming reached No. 3 on the U.S.Billboard 200 chart and included thisGrammy-winning song.
Years ago they … said I was a prophet. I used to say, “No I’m not a prophet” they say “Yes you are, you’re a prophet.” I said, “No it’s not me.” They used to say “You sure are a prophet.” They used to convince me I was a prophet. Now I come out and say Jesus Christ is the answer. They say, “Bob Dylan’s no prophet.” They just can’t handle it.
Dylan’s Christianity was unpopular with some fans and musicians. Shortly before his murder, John Lennon recorded “Serve Yourself” in response to Dylan’s “Gotta Serve Somebody”. By 1981, Stephen Holden wrote in the New York Times that “neither age (he’s now 40) nor his much-publicized conversion to born-again Christianity has altered his essentially iconoclastic temperament.”
Dylan in Toronto April 18, 1980
In late 1980, Dylan briefly played concerts billed as “A Musical Retrospective”, restoring popular 1960s songs to the repertoire. Shot of Love, recorded early the next year, featured his first secular compositions in more than two years, mixed with Christian songs. “Every Grain of Sand” reminded some of William Blake‘s verses.
Dylan sang on USA for Africa‘s famine relief single “We Are the World“. On July 13, 1985, he appeared at the climax at the Live Aid concert at JFK Stadium, Philadelphia. Backed by Keith Richards and Ronnie Wood, he performed a ragged version of “Hollis Brown”, his ballad of rural poverty, and then said to the worldwide audience exceeding one billion people: “I hope that some of the money … maybe they can just take a little bit of it, maybe … one or two million, maybe … and use it to pay the mortgages on some of the farms and, the farmers here, owe to the banks.” His remarks were widely criticized as inappropriate, but they did inspire Willie Nelson to organize a series of events, Farm Aid, to benefit debt-ridden American farmers.
In April 1986, Dylan made a foray into rap music when he added vocals to the opening verse of “Street Rock”, featured on Kurtis Blow‘s album Kingdom Blow. Dylan’s next studio album, Knocked Out Loaded, in July 1986 contained three covers (by Little Junior Parker, Kris Kristofferson and the gospel hymn “Precious Memories“), plus three collaborations with (Tom Petty, Sam Shepard and Carole Bayer Sager), and two solo compositions by Dylan. One reviewer commented that “the record follows too many detours to be consistently compelling, and some of those detours wind down roads that are indisputably dead ends. By 1986, such uneven records weren’t entirely unexpected by Dylan, but that didn’t make them any less frustrating.” It was the first Dylan album since Freewheelin’ (1963) to fail to make the Top 50. Since then, some critics have called the 11-minute epic that Dylan co-wrote with Sam Shepard, “Brownsville Girl“, a work of genius.
In 1986 and 1987, Dylan toured with Tom Petty and the Heartbreakers, sharing vocals with Petty on several songs each night. Dylan also toured with the Grateful Dead in 1987, resulting in a live album Dylan & The Dead. This received negative reviews: Allmusic said, “Quite possibly the worst album by either Bob Dylan or the Grateful Dead.” Dylan then initiated what came to be called the Never Ending Tour on June 7, 1988, performing with a back-up band featuring guitarist G. E. Smith. Dylan continued to tour with a small, evolving band for the next 20 years.
In 1987, Dylan starred in Richard Marquand‘s movie Hearts of Fire, in which he played Billy Parker, a washed-up rock star turned chicken farmer whose teenage lover (Fiona) leaves him for a jaded English synth-pop sensation played by Rupert Everett. Dylan also contributed two original songs to the soundtrack—”Night After Night”, and “I Had a Dream About You, Baby”, as well as a cover of John Hiatt‘s “The Usual”. The film was a critical and commercial flop. Dylan was inducted into the Rock and Roll Hall of Fame in January 1988, with Bruce Springsteen’s introduction declaring, “Bob freed your mind the way Elvis freed your body. He showed us that just because music was innately physical did not mean that it was anti-intellectual.”
The album Down in the Groove in May 1988 sold even more unsuccessfully than his previous studio album. Michael Gray wrote: “The very title undercuts any idea that inspired work may lie within. Here was a further devaluing of the notion of a new Bob Dylan album as something significant.” The critical and commercial disappointment of that album was swiftly followed by the success of the Traveling Wilburys. Dylan co-founded the band with George Harrison, Jeff Lynne, Roy Orbison, and Tom Petty, and in late 1988 their multi-platinum Traveling Wilburys Vol. 1reached three on the US album chart, featuring songs that were described as Dylan’s most accessible compositions in years. Despite Orbison’s death in December 1988, the remaining four recorded a second album in May 1990 with the title Traveling Wilburys Vol. 3.
Dylan finished the decade on a critical high note with Oh Mercy produced by Daniel Lanois. Michael Gray wrote that the album was: “Attentively written, vocally distinctive, musically warm, and uncompromisingly professional, this cohesive whole is the nearest thing to a great Bob Dylan album in the 1980s.” The track “Most of the Time”, a lost love composition, was later prominently featured in the film High Fidelity, while “What Was It You Wanted?” has been interpreted both as a catechism and a wry comment on the expectations of critics and fans. The religious imagery of “Ring Them Bells” struck some critics as a re-affirmation of faith.
In 1991, Dylan received a Grammy Lifetime Achievement Award from American actor Jack Nicholson. The event coincided with the start of the Gulf War against Saddam Hussein, and Dylan performed “Masters of War“. Dylan then made a short speech, saying “My daddy once said to me, he said, ‘Son, it is possible for you to become so defiled in this world that your own mother and father will abandon you. If that happens, God will believe in your ability to mend your own ways.'” This sentiment was subsequently revealed to be a quote from 19th-century German Jewish intellectual, Rabbi Samson Raphael Hirsch.
Over the next few years Dylan returned to his roots with two albums covering folk and blues numbers: Good as I Been to You (1992) and World Gone Wrong (1993), featuring interpretations and acoustic guitar work. Many critics and fans commented on the quiet beauty of the song “Lone Pilgrim”, written by a 19th-century teacher. In November 1994 Dylan recorded two live shows for MTV Unplugged. He said his wish to perform traditional songs was overruled by Sony executives who insisted on hits. The album from it, MTV Unplugged, included “John Brown”, an unreleased 1962 song of how enthusiasm for war ends in mutilation and disillusionment.
Dylan performs during the 1996 Lida Festival in Stockholm
With a collection of songs reportedly written while snowed in on his Minnesota ranch, Dylan booked recording time with Daniel Lanois at Miami’s Criteria Studios in January 1997. The subsequent recording sessions were, by some accounts, fraught with musical tension. Before the album’s release Dylan was hospitalized with a life-threatening heart infection,pericarditis, brought on by histoplasmosis. His scheduled European tour was cancelled, but Dylan made a speedy recovery and left the hospital saying, “I really thought I’d be seeing Elvissoon.” He was back on the road by mid-year, and performed before Pope John Paul II at the World Eucharistic Conference in Bologna, Italy. The Pope treated the audience of 200,000 people to a homily based on Dylan’s lyric “Blowin’ in the Wind”.
In September Dylan released the new Lanois-produced album, Time Out of Mind. With its bitter assessment of love and morbid ruminations, Dylan’s first collection of original songs in seven years was highly acclaimed. One critic wrote: “the songs themselves are uniformly powerful, adding up to Dylan’s best overall collection in years.” This collection of complex songs won him his first solo “Album of the Year” Grammy Award.
In December 1997, U.S. President Bill Clinton presented Dylan with a Kennedy Center Honor in the East Room of the White House, paying this tribute: “He probably had more impact on people of my generation than any other creative artist. His voice and lyrics haven’t always been easy on the ear, but throughout his career Bob Dylan has never aimed to please. He’s disturbed the peace and discomforted the powerful.”
In 1999, Dylan embarked on a North American tour with Paul Simon, where each alternated as headline act with a “middle” section where they performed together, starting on the first of June and ending September 18. The collaboration was generally well-received, with just one critic, Seth Rogovoy, from the Berkshire Eagle, questioning the collaboration.
“Love and Theft” was released on September 11, 2001. Recorded with his touring band, Dylan produced the album himself under the pseudonym Jack Frost. The album was critically well received and earned nominations for several Grammy awards. Critics noted that Dylan was widening his musical palette to include rockabilly, Western swing, jazz, and even lounge ballads.“Love and Theft” generated controversy when The Wall Street Journal pointed out similarities between the album’s lyrics and Japanese author Junichi Saga’s book Confessions of a Yakuza.
In October 2004, Dylan published the first part of his autobiography, Chronicles: Volume One. Confounding expectations, Dylan devoted three chapters to his first year in New York City in 1961–1962, virtually ignoring the mid-1960s when his fame was at its height. He also devoted chapters to the albums New Morning (1970) and Oh Mercy (1989). The book reached number two on The New York Times’ Hardcover Non-Fiction best seller list in December 2004 and was nominated for a National Book Award.
May 3, 2006, was the premiere of Dylan’s radio presenting career, hosting a weekly radio program, Theme Time Radio Hour, for XM Satellite Radio, with song selections revolving around a chosen theme. Dylan played classic and obscure records from the 1930s to the present day, including contemporary artists as diverse as Blur, Prince, L.L. Cool J and the Streets. The show was praised by fans and critics as “great radio,” as Dylan told stories and made eclectic references with his sardonic humor, while achieving a thematic beauty with his musical choices. In April 2009, Dylan broadcast the 100th show in his radio series; the theme was “Goodbye” and the final record played was Woody Guthrie’s “So Long, It’s Been Good to Know Yuh”. This led to speculation that Dylan’s radio excursion had ended.
Dylan, the Spectrum, 2007
On August 29, 2006, Dylan released his Modern Times album. Despite some coarsening of Dylan’s voice (a critic for The Guardian characterised his singing on the album as “a catarrhal death rattle”) most reviewers praised the album, and many described it as the final installment of a successful trilogy, embracing Time Out of Mind and “Love and Theft”.Modern Times entered the U.S. charts at number one, making it Dylan’s first album to reach that position since 1976’s Desire.The New York Times published an article exploring similarities between some of Dylan’s lyrics in Modern Times and the work of the Civil War poet Henry Timrod.
Bob Dylan performs at Air Canada Centre, Toronto, November 7, 2006
On October 1, 2007, Columbia Records released the triple CD retrospective album Dylan, anthologising his entire career under the Dylan 07 logo. As part of this campaign, Mark Ronson produced a re-mix of Dylan’s 1966 tune “Most Likely You Go Your Way and I’ll Go Mine“, which was released as a maxi-single. This was the first time Dylan had sanctioned a re-mix of one of his classic recordings.
The sophistication of the Dylan 07 marketing campaign was a reminder that Dylan’s commercial profile had risen considerably since the 1990s. This first became evident in 2004, when Dylan appeared in a TV advertisement for Victoria’s Secret lingerie. Three years later, in October 2007, he participated in a multi-media campaign for the 2008 Cadillac Escalade. Then, in 2009, he gave the highest profile endorsement of his career, appearing with rapper will.i.am in a Pepsi ad that debuted during the telecast of Super Bowl XLIII. The ad, broadcast to a record audience of 98 million viewers, opened with Dylan singing the first verse of “Forever Young” followed by will.i.am doing a hip hop version of the song’s third and final verse.
In October 2008, Columbia released The Bootleg Series Vol. 8 – Tell Tale Signs as both a two-CD set and a three-CD version with a 150-page hardcover book. The set contains live performances and outtakes from selected studio albums from Oh Mercy to Modern Times, as well as soundtrack contributions and collaborations with David Bromberg and Ralph Stanley. The pricing of the album—the two-CD set went on sale for $18.99 and the three-CD version for $129.99—led to complaints about “rip-off packaging” from some fans and commentators. The release was widely acclaimed by critics. The abundance of alternative takes and unreleased material suggested to one reviewer that this volume of old outtakes “feels like a new Bob Dylan record, not only for the astonishing freshness of the material, but also for the incredible sound quality and organic feeling of everything here.”
Together Through Life and Christmas in the Heart
Bob Dylan released his album Together Through Life on April 28, 2009. In a conversation with music journalist Bill Flanagan, published on Dylan’s website, Dylan explained that the genesis of the record was when French film director Olivier Dahan asked him to supply a song for his new road movie, My Own Love Song; initially only intending to record a single track, “Life Is Hard,” “the record sort of took its own direction”. Nine of the ten songs on the album are credited as co-written by Bob Dylan and Robert Hunter.
The album received largely favorable reviews, although several critics described it as a minor addition to Dylan’s canon of work. Andy Gill wrote in The Independent that the record “features Dylan in fairly relaxed, spontaneous mood, content to grab such grooves and sentiments as flit momentarily across his radar. So while it may not contain too many landmark tracks, it’s one of the most naturally enjoyable albums you’ll hear all year.”
In its first week of release, the album reached number one in the Billboard 200 chart in the U.S., making Bob Dylan (67 years of age) the oldest artist to ever debut at number one on that chart. It also reached number one on the UK album chart, 39 years after Dylan’s previous UK album chart topper New Morning. This meant that Dylan currently holds the record for the longest gap between solo number one albums in the UK chart.
The album received generally favorable reviews.The New Yorker commented that Dylan had welded a pre-rock musical sound to “some of his croakiest vocals in a while”, and speculated that Dylan’s intentions might be ironic: “Dylan has a long and highly publicized history with Christianity; to claim there’s not a wink in the childish optimism of ‘Here Comes Santa Claus’ or ‘Winter Wonderland’ is to ignore a half-century of biting satire.” In USA Today, Edna Gundersen pointed out that Dylan was “revisiting yuletide styles popularized by Nat King Cole, Mel Tormé, and the Ray Conniff Singers.” Gundersen concluded that Dylan “couldn’t sound more sentimental or sincere”.
In an interview published in The Big Issue, journalist Bill Flanagan asked Dylan why he had performed the songs in a straightforward style, and Dylan responded: “There wasn’t any other way to play it. These songs are part of my life, just like folk songs. You have to play them straight too.”
On October 18, 2010, Dylan released Volume 9 of his Bootleg Series, The Witmark Demos. This comprised 47 demo recordings of songs taped between 1962 and 1964 for Dylan’s earliest music publishers: Leeds Music in 1962, and Witmark Music from 1962 to 1964. One reviewer described the set as “a hearty glimpse of young Bob Dylan changing the music business, and the world, one note at a time.” The critical aggregator website Metacritic awarded the album a Metascore of 86, indicating “universal acclaim”. In the same week, Sony Legacy released Bob Dylan: The Original Mono Recordings, a box set that for the first time presented Dylan’s eight earliest albums, from Bob Dylan (1962) to John Wesley Harding (1967), in their original mono mix in the CD format. The CDs were housed in miniature facsimiles of the original album covers, replete with original liner notes. The set was accompanied by a booklet featuring an essay by music critic Greil Marcus.
The extent to which his work was studied at an academic level was demonstrated on Dylan’s 70th birthday on May 24, 2011, when three universities organized symposia on his work. The University of Mainz, the University of Vienna, and the University of Bristol invited literary critics and cultural historians to give papers on aspects of Dylan’s work. Other events, including tribute bands, discussions and simple singalongs, took place around the world, as reported in The Guardian: “From Moscow to Madrid, Norway to Northampton and Malaysia to his home state of Minnesota, self-confessed ‘Bobcats’ will gather today to celebrate the 70th birthday of a giant of popular music.”
On May 29, 2012, U.S. President Barack Obama awarded Dylan a Presidential Medal of Freedom in the White House. At the ceremony, Obama praised Dylan’s voice for its “unique gravelly power that redefined not just what music sounded like but the message it carried and how it made people feel”.
On September 11, 2012, Dylan released his 35th studio album, Tempest. The album features a tribute to John Lennon, “Roll On John”, and the title track is a 14 minute song about thesinking of the Titanic. Reviewing Tempest for Rolling Stone, Will Hermes gave the album five out of five stars, writing: “Lyrically, Dylan is at the top of his game, joking around, dropping wordplay and allegories that evade pat readings and quoting other folks’ words like a freestyle rapper on fire.” Hermes called Tempest “one of [Dylan’s] weirdest albums ever”, and opined, “It may also be the single darkest record in Dylan’s catalog.” The critical aggregator website Metacritic awarded the album a score of 83 out of 100, indicating “universal acclaim”.
On August 27, 2013, Columbia Records released Volume 10 of Dylan’s Bootleg Series, Another Self Portrait (1969–1971). The album contained 35 previously unreleased tracks, including alternate takes and demos from Dylan’s 1969–1971 recording sessions during the making of the Self Portrait and New Morning albums. The box set also included a live recording of Dylan’s performance with the Band at the Isle of Wight Festival in 1969. Another Self Portrait received favorable reviews, earning a score of 81 on the critical aggregator, Metacritic, indicating “universal acclaim”.AllMusiccritic Thom Jurek wrote, “For fans, this is more than a curiosity, it’s an indispensable addition to the catalog.”
On November 4, 2013, Columbia Records released Bob Dylan: Complete Album Collection: Vol. One, a boxed set containing all 35 of Dylan’s studio albums, six albums of live recordings, and a collection, entitled Sidetracks, of singles, songs from films and non-album material. The box includes new album-by-album liner notes written by Clinton Heylin with an introduction by Bill Flanagan. On the same date, Columbia released a compilation, The Very Best of Bob Dylan, which is available in both single CD and double CD formats. To publicize the 35 album box set, an innovative video of the song “Like a Rolling Stone” was released on Dylan’s website. The interactive video, created by director Vania Heymann, allowed viewers to switch between 16 simulated TV channels, all featuring characters who are lip-synching the lyrics of the 48-year-old song.
On February 2, 2014, Dylan appeared in a commercial for the Chrysler 200 car which was screened during the 2014 Super Bowl American football game. At the end of the commercial, Dylan says: “So let Germany brew your beer, let Switzerland make your watch, let Asia assemble your phone. We will build your car.” Dylan’s Super Bowl commercial generated controversy and op-ed pieces discussing the protectionist implications of his words, and whether the singer had “sold out” to corporate interests.
In 2013 and 2014, auction house sales demonstrated the high cultural value attached to Dylan’s mid-1960s work, and the record prices that collectors were willing to pay for artefacts from this period. In December 2013, theFender Stratocaster which Dylan had played at the 1965 Newport Folk Festival fetched $965,000, the second highest price paid for a guitar. In June 2014, Dylan’s hand-written lyrics of “Like a Rolling Stone“, his 1965 hit single, fetched $2 million dollars at auction, a record for a popular music manuscript.
On October 28, 2014, Simon & Schuster published a massive 960 page, thirteen and a half pound edition of Dylan’s lyrics, Lyrics: Since 1962. The book was edited by literary critic Christopher Ricks, Julie Nemrow and Lisa Nemrow, to offer variant versions of Dylan’s songs, sourced from out-takes and live performances. A limited edition of 50 books, signed by Dylan, was priced at $5,000. “It’s the biggest, most expensive book we’ve ever published, as far as I know,” said Jonathan Karp, Simon & Schuster’s president and publisher.
On February 3, 2015, Dylan released Shadows in the Night, featuring ten songs written between 1923 and 1963, which have been described as part of the Great American Songbook. All the songs on the album were recorded by Frank Sinatra but both critics and Dylan himself cautioned against seeing the record as a collection of “Sinatra covers”. Dylan explained, “I don’t see myself as covering these songs in any way. They’ve been covered enough. Buried, as a matter a fact. What me and my band are basically doing is uncovering them. Lifting them out of the grave and bringing them into the light of day.” In an interview, Dylan said he had been thinking about making this record since hearing Willie Nelson‘s 1978 album Stardust.
Shadows In the Night received favorable reviews, scoring 82 on the critical aggregator Metacritic, which indicates “universal acclaim”. Critics praised the restrained instrumental backings and Dylan’s singing, saying that the material had elicited his best vocal performances in recent years. Bill Prince in GQ commented: “A performer who’s had to hear his influence in virtually every white pop recording made since he debuted his own self-titled album back in 1962 imagines himself into the songs of his pre-rock’n’roll early youth.” In The Independent, Andy Gill wrote that the recordings “have a lingering, languid charm, which… help to liberate the material from the rusting manacles of big-band and cabaret mannerisms.” The album debuted at number one in the UK Albums Chart in its first week of release.
On October 5, 2015, IBM launched a marketing campaign for its Watson computer system which featured Dylan. Dylan is seen conversing with the computer which says it has read all his lyrics and reports: “My analysis shows that your major themes are that time passes and love fades.” Dylan replies: “That sounds about right.”
On November 6, 2015, Sony Music released The Bootleg Series Vol. 12: The Cutting Edge 1965–1966. This work consists of previously unreleased material from the three albums Dylan recorded between January 1965 and March 1966: Bringing It All Back Home, Highway 61 Revisited and Blonde on Blonde. The records have been released in three formats: a 2-CD “Best Of” version, a 6-CD “Deluxe edition”, and an 18-CD “Collector’s Edition” in a limited edition of 5,000 units. On Dylan’s website the “Collector’s Edition” was described as containing “every single note recorded by Bob Dylan in the studio in 1965/1966”. The critical aggregator website Metacriticawarded Cutting Edge a score of 99, indicating universal acclaim.The Best of the Cutting Edge entered the Billboard Top Rock Albums chart at number one on November 18, based on its first-week sales.
On March 2, 2016, it was announced that Dylan had sold an extensive archive of about 6,000 items to the George Kaiser Family Foundation and the University of Tulsa. It was reported that the sale price was “an estimated $15 million to $20 million”, and the archive comprises notebooks, drafts of Dylan lyrics, recordings, and correspondence. Filmed material in the collection includes 30 hours of outtakes from the 1965 tour documentary Dont Look Back, 30 hours of footage shot on Dylan’s legendary 1966 electric tour, and 50 hours shot on the 1975 Rolling Thunder Revue. The archive will be housed at Helmerich Center for American Research, a facility at the Gilcrease Museum.
On May 20, 2016, Dylan released his 37th studio album, Fallen Angels, which was described as “a direct continuation of the work of ‘uncovering’ the Great Songbook that he began on last year’s Shadows In the Night.” The album contained twelve songs by classic songwriters such as Harold Arlen, Sammy Cahn and Johnny Mercer, eleven of which had been recorded by Sinatra. Jim Farber wrote in Entertainment Weekly: “Tellingly, [Dylan] delivers these songs of love lost and cherished not with a burning passion but with the wistfulness of experience. They’re memory songs now, intoned with a present sense of commitment. Released just four days ahead of his 75th birthday, they couldn’t be more age-appropriate.” The album received a score of 79 on critical aggregator website Metacritic, denoting “generally favorable reviews”.
In September 2016, Legacy Recordings announced a 36-CD set, Bob Dylan: The 1966 Live Recordings, including every known recording of Bob Dylan’s 1966 concert tour, will be released on November 11. Legacy Recordings president Adam Block said: “While doing the archival research for The Cutting Edge 1965-1966, last year’s box set of Dylan’s mid-’60s studio sessions, we were continually struck by how great his 1966 live recordings really are.” The recordings commence with the concert in Sydney, Australia, on April 13, 1966, and end with the Royal Albert Hall concert in London on May 27. The liner notes for the set are by Clinton Heylin, author of the book,Judas!: From Forest Hills to the Free Trade Hall: A Historical View of Dylan’s Big Boo, a study of the 1966 tour.
Bob Dylan performing at Finsbury Park, London, June 18, 2011
The Never Ending Tour commenced on June 7, 1988, and Dylan has played roughly 100 dates a year for the entirety of the 1990s and 2000s—a heavier schedule than most performers who started out in the 1960s. By May 2013, Dylan and his band had played more than 2,500 shows, anchored by long-time bassist Tony Garnier, drummer George Recile, multi-instrumentalist Donnie Herron, and guitarist Charlie Sexton. To the dismay of some of his audience, Dylan’s performances remain unpredictable as he alters his arrangements and changes his vocal approach night after night. Critical opinion about Dylan’s shows remains divided. Critics such as Richard Williams and Andy Gill have argued that Dylan has found a successful way to present his rich legacy of material. Others have criticized his live performances for mangling and spitting out “the greatest lyrics ever written so that they are effectively unrecognisable”, and giving so little to the audience that “it is difficult to understand what he is doing on stage at all.”
Dylan’s performances in China in April 2011 generated controversy. Some criticised him for not making any explicit comment on the political situation in China, and for, allegedly, allowing the Chinese authorities to censor his set list. Others defended Dylan’s performances, arguing that such criticism represented a misunderstanding of Dylan’s art, and that no evidence for the censorship of Dylan’s set list existed. In response to these allegations, Dylan posted a statement on his website: “As far as censorship goes, the Chinese government had asked for the names of the songs that I would be playing. There’s no logical answer to that, so we sent them the set lists from the previous 3 months. If there were any songs, verses or lines censored, nobody ever told me about it and we played all the songs that we intended to play.”
Dylan commenced a tour of Japan in Tokyo on April 4, 2016, which concluded in Yokohama on April 28. Dylan announced a tour of the US starting in Woodinville WA on June 4, 2016, and finishing in Gilford NH on July 17.Dylan also participated in a so-called “Mega-Fest” titled Desert Trip, in California on October 7, which also included the Rolling Stones, Neil Young, Paul McCartney, the Who and Roger Waters.
The cover of Dylan’s album Self Portrait (1970) is a reproduction of a painting of a face by Dylan. Another of his paintings is reproduced on the cover of the 1974 album Planet Waves. In 1994 Random House publishedDrawn Blank, a book of Dylan’s drawings. In 2007, the first public exhibition of Dylan’s paintings, The Drawn Blank Series, opened at the Kunstsammlungen in Chemnitz, Germany; it showcased more than 200 watercolors and gouaches made from the original drawings. The exhibition coincided with the publication of Bob Dylan: The Drawn Blank Series, which includes 170 reproductions from the series. From September 2010 until April 2011, the National Gallery of Denmark exhibited 40 large-scale acrylic paintings by Dylan, The Brazil Series.
In July 2011, a leading contemporary art gallery, Gagosian Gallery, announced their representation of Dylan’s paintings. An exhibition of Dylan’s art, The Asia Series, opened at the Gagosian Madison Avenue Gallery on September 20, displaying Dylan’s paintings of scenes in China and the Far East.The New York Times reported that “some fans and Dylanologists have raised questions about whether some of these paintings are based on the singer’s own experiences and observations, or on photographs that are widely available and were not taken by Mr. Dylan.” The Times pointed to close resemblances between Dylan’s paintings and historic photos of Japan and China, and photos taken by Dmitri Kessel and Henri Cartier-Bresson. The Magnum photo agency confirmed that Dylan had licensed the reproduction rights of these photographs.
Dylan’s second show at the Gagosian Gallery, Revisionist Art, opened in November 2012. The show consisted of thirty paintings, transforming and satirizing popular magazines, including Playboy and Babytalk. In February 2013, Dylan exhibited the New Orleans Series of paintings at the Palazzo Reale in Milan. In August 2013, Britain’s National Portrait Gallery in London hosted Dylan’s first major UK exhibition, Face Value, featuring twelve pastel portraits.
In November 2013, the Halcyon Gallery, in London, exhibited seven wrought iron gates created by Dylan (the exhibition was entitled Mood Swings). In a statement released by the gallery, Dylan said, “I’ve been around iron all my life ever since I was a kid. I was born and raised in iron ore country, where you could breathe it and smell it every day. Gates appeal to me because of the negative space they allow. They can be closed but at the same time they allow the seasons and breezes to enter and flow. They can shut you out or shut you in. And in some ways there is no difference.”
Since 1994, Dylan has published six books of paintings and drawings.
The Nobel Prize committee announced on October 13, 2016 that it would be awarding Dylan the Nobel Prize in Literature “for having created new poetic expressions within the great American song tradition”.The New York Times reported: “Mr. Dylan, 75, is the first musician to win the award, and his selection on Thursday is perhaps the most radical choice in a history stretching back to 1901.” It is the first time since 1993 that the Nobel committee has offered the award in the category of American literature.
Dylan’s website acknowledged the prize five days later, posting the heading “Winner Of The Nobel Prize In Literature” on a section promoting a book of the writer’s lyrics between 1961 and 2012. The mention was removed the following day. On October 21, a member of the Swedish Academy, writer Per Wästberg, termed Dylan “rude and arrogant” for ignoring the Nobel Committee’s attempts to contact him.
After two weeks of speculation about Dylan’s lack of response to the prize, he said in an interview that his reaction to news of the award was: “amazing, incredible. Whoever dreams about something like that?”. When asked whether he would attend the ceremony in Stockholm in December 2016, Dylan responded, “Absolutely. If it’s at all possible.” 
Dylan married Sara Lownds on November 22, 1965. Their first child, Jesse Byron Dylan, was born on January 6, 1966, and they had three more children: Anna Lea (born July 11, 1967), Samuel Isaac Abram (born July 30, 1968), and Jakob Luke (born December 9, 1969). Dylan also adopted Sara’s daughter from a prior marriage, Maria Lownds (later Dylan, born October 21, 1961). Bob and Sara Dylan were divorced on June 29, 1977. Maria married musician Peter Himmelman in 1988. In the 1990s, Dylan’s son Jakob became well known as the lead singer of the band the Wallflowers. Jesse Dylan is a film director and a successful businessman.
Desiree Gabrielle Dennis-Dylan, Dylan’s daughter with his backup singer Carolyn Dennis (often professionally known as Carol Dennis), was born on January 31, 1986, and Dylan married Carolyn Dennis on June 4, 1986. The couple divorced in October 1992. Their marriage and child remained a closely guarded secret until the publication of Howard Sounes‘ biography, Down the Highway: The Life of Bob Dylan, in 2001.
Growing up in Hibbing, Minnesota, Dylan and his family were part of the area’s small but close-knit Jewish community, and in May 1954 Dylan had his Bar Mitzvah. Around the time of his 30th birthday, in 1971, Dylan visitedIsrael, and also met Rabbi Meir Kahane, founder of the New York-based Jewish Defense League.Time magazine quoted him saying about Kahane, “He’s a really sincere guy. He’s really put it all together.” Subsequently, Dylan downplayed the extent of his contact with Kahane.
During the late 1970s, Dylan converted to Christianity. Starting in 1978 Dylan started studying the New Testament with Brooklyn-born convert Al Kasha; then, from January to April 1979, he participated in Bible study classes at the Vineyard School of Discipleship in Reseda, California. Pastor Kenn Gulliksen has recalled: “Larry Myers and Paul Emond went over to Bob’s house and ministered to him. He responded by saying, ‘Yes he did in fact want Christ in his life.’ And he prayed that day and received the Lord.”
By 1984, Dylan was distancing himself from the “born again” label. He told Kurt Loder of Rolling Stone magazine: “I’ve never said I’m born again. That’s just a media term. I don’t think I’ve been an agnostic. I’ve always thought there’s a superior power, that this is not the real world and that there’s a world to come.” In response to Loder’s asking whether he belonged to any church or synagogue, Dylan laughingly replied, “Not really. Uh, the Church of the Poison Mind.” In 1997 he told David Gates of Newsweek:
Here’s the thing with me and the religious thing. This is the flat-out truth: I find the religiosity and philosophy in the music. I don’t find it anywhere else. Songs like “Let Me Rest on a Peaceful Mountain” or “I Saw the Light“—that’s my religion. I don’t adhere to rabbis, preachers, evangelists, all of that. I’ve learned more from the songs than I’ve learned from any of this kind of entity. The songs are my lexicon. I believe the songs.
In an interview published in The New York Times on September 28, 1997, journalist Jon Pareles reported that “Dylan says he now subscribes to no organized religion.”
Dylan has continued to perform songs from his gospel albums in concert, occasionally covering traditional religious songs. He has also made passing references to his religious faith—such as in a 2004 interview with 60 Minutes, when he told Ed Bradley that “the only person you have to think twice about lying to is either yourself or to God.” He also explained his constant touring schedule as part of a bargain he made a long time ago with the “chief commander—in this earth and in the world we can’t see.”
In a 2009 interview with Bill Flanagan promoting Dylan’s Christmas LP, Christmas in the Heart, Flanagan commented on the “heroic performance” Dylan gave of “O Little Town of Bethlehem” and that he “delivered the song like a true believer”. Dylan replied: “Well, I am a true believer.”
Dylan has been described as one of the most influential figures of the 20th century, musically and culturally. He was included in the Time 100: The Most Important People of the Century where he was called “master poet, caustic social critic and intrepid, guiding spirit of the counterculture generation”. In 2008, The Pulitzer Prize jury awarded him a special citation for “his profound impact on popular music and American culture, marked by lyrical compositions of extraordinary poetic power.” President Barack Obama said of Dylan in 2012, “There is not a bigger giant in the history of American music.” For 20 years, academics lobbied the Swedish Academy to give Dylan the Nobel Prize in Literature, which awarded it to him in 2016. Dylan became the first musician to be awarded the Literature Prize, placing him in the company of Dario Fo, Toni Morrison and Samuel Beckett. In 2011, Rolling Stone ranked Dylan at number two in its 2011 list of “100 Greatest Artists” of all time, while “Like A Rolling Stone” was listed as the “Greatest Song of all Time.” In 2008, it was estimated that Dylan had sold about 120 million albums worldwide.
Initially modeling his writing style on the songs of Woody Guthrie, the blues of Robert Johnson, and what he termed the “architectural forms” of Hank Williams songs, Dylan added increasingly sophisticated lyrical techniques to the folk music of the early 1960s, infusing it “with the intellectualism of classic literature and poetry”.Paul Simon suggested that Dylan’s early compositions virtually took over the folk genre: “[Dylan’s] early songs were very rich … with strong melodies. ‘Blowin’ in the Wind’ has a really strong melody. He so enlarged himself through the folk background that he incorporated it for a while. He defined the genre for a while.”
When Dylan made his move from acoustic folk and blues music to a rock backing, the mix became more complex. For many critics, his greatest achievement was the cultural synthesis exemplified by his mid-1960s trilogy of albums—Bringing It All Back Home, Highway 61 Revisited and Blonde on Blonde. In Mike Marqusee‘s words:
Between late 1964 and the middle of 1966, Dylan created a body of work that remains unique. Drawing on folk, blues, country, R&B, rock’n’roll, gospel, British beat, symbolist, modernist and Beat poetry, surrealismand Dada, advertising jargon and social commentary, Fellini and Mad magazine, he forged a coherent and original artistic voice and vision. The beauty of these albums retains the power to shock and console.”
Dylan’s lyrics began to receive detailed scrutiny from academics and poets. Richard F. Thomas, Classics professor at Harvard University, created a freshman seminar called “Dylan” in 2004 to “to put the artist in context of not just popular culture of the last half-century, but the tradition of classical poets like Virgil and Homer.” William Arctander O’Brien, literary scholar and professor of German and Comparative Literature at the University of California San Diego, memorialized the significance of Dylan’s contribution to world literature when he created a full academic course in 2009 devoted to Dylan that analyzed and celebrated the “historical, political, economic, aesthetic, and cultural significance of Dylan’s work.” Kevin Barents, lecturer at Boston University, teaches a class on Bob Dylan’s lyrics, focused on the mechanics of poetry, while also examining the relationship between the lyrics and music itself. Literary critic Christopher Ricks published Dylan’s Visions of Sin, a 500-page analysis of Dylan’s work, placing him in the context of Eliot, Keats and Tennyson, claiming that Dylan was a poet worthy of the same close analysis. Former British poet laureate Sir Andrew Motion argued that his lyrics should be studied in schools.
Dylan’s voice also received critical attention. New York Times critic Robert Shelton described his early vocal style as “a rusty voice suggesting Guthrie’s old performances, etched in gravel like Dave Van Ronk’s.”David Bowie, in his tribute, “Song for Bob Dylan“, described Dylan’s singing as “a voice like sand and glue”. His voice continued to develop as he began to work with rock’n’roll backing bands; critic Michael Gray described the sound of Dylan’s vocal work on “Like a Rolling Stone” as “at once young and jeeringly cynical”. As Dylan’s voice aged during the 1980s, for some critics, it became more expressive. Christophe Lebold writes in the journal Oral Tradition, “Dylan’s more recent broken voice enables him to present a world view at the sonic surface of the songs—this voice carries us across the landscape of a broken, fallen world. The anatomy of a broken world in “Everything is Broken” (on the album Oh Mercy) is but an example of how the thematic concern with all things broken is grounded in a concrete sonic reality.”
Some critics have dissented from the view of Dylan as a visionary figure in popular music. In his book Awopbopaloobop Alopbamboom, Nik Cohn objected: “I can’t take the vision of Dylan as seer, as teenage messiah, as everything else he’s been worshipped as. The way I see him, he’s a minor talent with a major gift for self-hype.” Australian critic Jack Marx credited Dylan with changing the persona of the rock star: “What cannot be disputed is that Dylan invented the arrogant, faux-cerebral posturing that has been the dominant style in rock since, with everyone from Mick Jagger to Eminem educating themselves from the Dylan handbook.”
Fellow musicians also presented dissenting views. Joni Mitchell described Dylan as a “plagiarist” and his voice as “fake” in a 2010 interview in the Los Angeles Times, in response to a suggestion that she and Dylan were similar since they had both created personas. Mitchell’s comment led to discussions of Dylan’s use of other people’s material, both supporting and criticizing him. Talking to Mikal Gilmore in Rolling Stone in 2012, Dylan responded to the allegation of plagiarism, including his use of Henry Timrod’s verse in his album Modern Times, by saying that it was “part of the tradition”.[a 5]
If Dylan’s work in the 1960s was seen as bringing intellectual ambition to popular music, critics in the 21st century described him as a figure who had greatly expanded the folk culture from which he initially emerged. Following the release of Todd Haynes’ Dylan biopic I’m Not There, J. Hoberman wrote in his 2007 Village Voice review:
Elvis might never have been born, but someone else would surely have brought the world rock ‘n’ roll. No such logic accounts for Bob Dylan. No iron law of history demanded that a would-be Elvis from Hibbing, Minnesota, would swerve through the Greenwich Village folk revival to become the world’s first and greatest rock ‘n’ roll beatnik bard and then—having achieved fame and adoration beyond reckoning—vanish into a folk tradition of his own making.
When Dylan was awarded the Nobel Prize in Literature, The New York Times commented: “In choosing a popular musician for the literary world’s highest honor, the Swedish Academy, which awards the prize, dramatically redefined the boundaries of literature, setting off a debate about whether song lyrics have the same artistic value as poetry or novels.” Responses varied from the skepticism of Stephen Metcalf, who thought the award was ill-advised because “the distinctive thing about literature is that it involves reading silently to oneself”, to the positive tone of Salman Rushdie who tweeted: “From Orpheus to Faiz, song & poetry have been closely linked. Dylan is the brilliant inheritor of the bardic tradition. Great choice.”
Dylan has published Tarantula, a work of prose poetry, Chronicles: Volume One, the first part of his memoirs, several books of the lyrics of his songs, and six books of his art. He has been the subject of many biographies and critical studies.
Story 1: The Solution To Trump’s Tax Returns and Making America Great Again — No More Income, Capital Gains, Estate and Gift and Payroll Taxes, No More Tax Returns, No More IRS Plus Monthly Check of $1,000 Tax Prebate For Every Adult American Citizen or $12,000 Per Year For Taxes On Essential Goods and Service — 20% Broad Based Consumption Tax — Fair Tax Less — Videos
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Net Operating Loss (NOL): What Is It & How Do I Write It Off
Net operating losses (NOL) carryback, carryforward CH 19 p 7 –
Net Operating Loss Carryback & Carryforward (Tax Refund, Tax Benefit Due, Deferred Tax Asset)
Net Operating Loss – NOL
What is a ‘Net Operating Loss – NOL’
A net operating loss (NOL) is a loss taken in a period where a company’s allowable tax deductions are greater than its taxable income. When more expenses than revenues are incurred during the period, the net operating loss for the company can generally be used to recover past tax payments. The reasoning behind this is that corporations deserve some form of tax relief when they lose money, so they may apply the net operating loss to future income tax payments, reducing the need to make payments in future periods.
BREAKING DOWN ‘Net Operating Loss – NOL’
An NOL makes a company unprofitable for tax purposes. For example, Company A has taxable income of $500,000, tax deductions of $700,000 and a corporate tax rate of 30%. Its NOL is $500,000 – $700,000 = -$200,000. Because Company A does not have taxable income, it does not pay taxes that year. Otherwise it would have paid $250,000 x 30% = $75,000 in taxes. Because the company had an NOL the previous year, it may put the NOL toward the current year’s tax bill or apply it against taxable income in previous years.
Rules for Applying an NOL
A business may carry the taxable amount back to the two previous years and apply it against taxable income for a refund. For example, an NOL occurring in 2015 may be used for lowering tax payments in 2013 or 2014. Because the time value of money shows that tax savings at that time is more valuable than in the future, this is the more beneficial choice. However, if the business did not pay taxes in prior years, or the owner’s income is expected to substantially increase in the future and raise the company’s tax rate, the business may also carryforward the amount over the next 20 years, reducing the amount of taxable income during that time.
If a business creates NOLs in more than one year, they are to be drawn down completely in the order they are created before drawing down another NOL. Because any remaining NOL is canceled after 20 years, this reduces the risk of the NOL not being used.
Section 382 Limitation
An NOL may be considered a valuable asset because it can lower a company’s amount of taxable income. For this reason, the Internal Revenue Service (IRS) has a restriction on using an acquired company simply for its NOL’s tax benefits. Section 382 of the Internal Revenue Code states that if a company with a NOL has at least a 50% ownership change, the acquiring company may use only that part of the NOL in each concurrent year that is based on the long-term tax-exempt bond rate multiplied by the stock of the acquired company. However, purchasing a business with a substantial NOL may mean an increased amount of money going to the acquired company’s shareholders than if the business possessed a smaller NOL.
This morning, the Government Accountability Office (GAO) published a report on corporate income taxes, which found that 19.5 percent of “profitable large corporations” paid zero corporate income taxes in 2012.
Senator Bernie Sanders, whose campaign has been circulating the report, had this to say:
“There is something profoundly wrong in America when one out of five profitable corporations pay nothing in federal income taxes… We need real tax reform to ensure that the most profitable corporations in America pay their fair share in taxes. That means closing corporate tax loopholes to raise the revenue necessary to rebuild America and create millions of jobs.”
Should you be as outraged as Senator Sanders about the number of U.S. corporations that pay no corporate income tax?
In fact, there is good reason to think that many of the corporations that the GAO identifies as “profitable” did not actually earn a profit. In such cases, it would have been a mistake to collect corporate income taxes from these companies.
Defining Profitable Corporations
To understand why some unprofitable corporations might have been considered profitable by the recent GAO report, we need to distinguish between three concepts: book income, taxable income, and economic profit.
Book income refers to the income that a corporation reports on its publicly filed financial statement. Corporations generally seek to report book incomes that are as high as possible, in order to appear as profitable as possible to their shareholders.
Taxable income refers to the amount of income that a corporation reports on its tax return. Much of the U.S. tax code is devoted to defining corporate taxable income, which often differs somewhat from book income. Corporations with more than $10 million in assets are required to file Schedule M-3 to reconcile their book income with their taxable income.
Economic profit refers to a company’s revenues minus its expenditures. There are a few important differences between book income and economic profit, as described below.
The recent GAO report defines “profitable large corporations” as “those that did not report net losses in their financial statements.” In other words, the GAO’s 19.5 percent statistic applies to corporations with positive book income in 2012.
However, there are many clear-cut cases in which a corporation with positive book income should not owe federal corporate income taxes:
1. Corporations with Carried-Forward Net Operating Losses
Especially over the last decade, many U.S. corporations have experienced volatile earnings, with large gains in some years and large losses in other years. The U.S. tax code allows companies with losses in one tax year to deduct those losses from their profits in future tax years.
To see why this is important, imagine a company that had $3 million in losses in 2014 and made $1 million in profits in 2015. Over the two-year period, the corporation experienced a net loss, and should not be required to pay corporate income taxes on its income over that period.
The deduction for carried-forward losses allows the corporation to reduce its tax liability in 2015 to zero, to reflect that it still recovering from past losses. But if the company were not able to carry its losses forward, it would owe a positive tax liability in 2015, even though it made a net loss over the two year period.
Tax liability if the corporation is not allowed to carry losses forward
In all likelihood, some of the “profitable” corporations in the GAO report that paid zero corporate income taxes in 2012 were carrying forward losses from past years. These corporations might have had positive book incomes in 2012, but might have had no taxable income, due to carried-forward losses from the Great Recession.
The deduction for carried-forward losses is an important provision in the U.S. tax code, which prevents corporations with long-term net losses from being taxed. If some corporations in 2012 paid zero corporate income taxes because they were carrying forward past losses, this should be seen as a normal feature of the U.S. tax code, not a cause for concern.
2. Corporations with Foreign Profits and Domestic Losses
Many large U.S. corporations conduct business in multiple countries. It is likely that some of the corporations that were categorized as “profitable” by the GAO in 2012 did not actually earn positive profits in the United States.
As an example, we can imagine a U.S. multi-national corporation that brought back $2 million in 2012 from its overseas business but lost $1 million on its domestic business. Such a business would be categorized as profitable by the recent GAO report, because its total book income (foreign and domestic) adds up to $1 million.
Total (book) income
However, there are good reasons why such a corporation would still face zero corporate tax under the U.S. law. The U.S. tax code offers corporations tax credits for the taxes they pay to foreign governments on their foreign income. The corporation in this example would probably be able to reduce its tax liability to zero by claiming a credit for the foreign taxes paid on its $2 million of overseas business income.
Foreign tax credits are a feature, not a bug, of the U.S. tax system. There are several good arguments for why U.S. corporations should not face U.S. corporate taxes on income earned abroad. Foreign tax credits help mitigate the double tax that arises when both a foreign government and the U.S. government try to tax the same foreign income.
To the extent that some of the “profitable” corporations in the GAO report earned only foreign profits, rather than domestic profits, it is entirely reasonable that these corporations should not be subject to any U.S. corporate tax burden.
3. Corporations with Large Capital Investments
The most important difference between book income, taxable income, and economic profit has to do with the treatment of investment costs. Under typical U.S. accounting standards, when a corporation makes a capital investment, it is only able to treat a small fraction of that investment as a current-year expense. However, the U.S. tax code allows corporations to treat a much larger fraction of the investment as a current year expense. Meanwhile, when calculating a corporation’s economic profit, it is appropriate to treat the entire cost of an investment as a current year expense.
As a result of these different calculation rules, a corporation with significant book income could have a much lower taxable income and an even lower economic profit. For example, we can imagine a corporation with $1 million in operating profits and $2 million in investment costs. Depending on how much of the investment the corporation treats as a current-year expense, the corporation could be making a large profit, no profit, or negative profit (see the example below).
Measuring the income of a corporation with $1 million in operating profit and $2 million in investments
Note: the calculation for book income assumes that the corporation depreciates 10% of its investment. The calculation for taxable income assumes that the corporation depreciates 50% of its investment. The calculation for economic profit treats the full cost of the investment as an expense.
This blog post is not the place to argue how corporations should treat their capital investments for tax purposes (although the Tax Foundation has pretty strong opinionsabout this). The important point is that some U.S. corporations with positive book income might have negative taxable income: not because of any tricks or loopholes, but simply because the tax code operates under different accounting rules.
It is likely that many of the “profitable” corporations that owed zero corporate tax in 2012 were corporations with significant capital investments, who had positive book income under one accounting method but zero or negative taxable income under another accounting method. These corporations are not evading taxes or taking advantage of loopholes; they’re simply less profitable according to the tax code’s definitions than they are according to the GAO’s.
In conclusion, there are real, legitimate reasons why a “profitable” corporation would not and should not be required to pay corporate income taxes in a given year. Politicians should avoid jumping to the conclusion that there is something “profoundly wrong” when a large minority of corporations do not pay corporate income taxes.
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Can Assange turn it around for Trump? Wikileaks boss WILL release ‘damaging information’ about Hillary tomorrow after initially cancelling ‘October Surprise’ speech from embassy balcony
Julian Assange had originally planned to address the world from the balcony of the Ecuadorian embassy in London on Monday
He was due to speak at the tenth anniversary of the founding of WikiLeaks
Assange will instead speak video link to an event in Berlin on Tuesday
The organisation earlier released information hacked from the Democrats
It came as a new report claimed Clinton had proposed a drone strike to take out Assange in 2010
By DARREN BOYLE FOR MAILONLINE and KHALEDA RAHMAN FOR DAILYMAIL.COM
PUBLISHED: 03:07 EST, 3 October 2016 | UPDATED: 14:19 EST, 3 October 201
WikiLeaks founder Julian Assange cancelled a planned appearance to mark the 10th anniversary of his organization from the balcony of the Ecuadorian embassy in London over security fears on Monday.
He had been planning to give a speech – amid claims he was about to release damaging information about Clinton which some claimed could be an ‘October Surprise’ which would swing the presidential election.
However, Assange, who is wanted by Swedish authorities for questioning in connection with an alleged rape, will make an announcement via video link to an event in Berlin on Tuesday morning.
In a tweet on Monday afternoon, WikiLeaks said Assange’s speech in London was moved to Berlin due to ‘specific information’ but did not elaborate further.
Scroll down for video
Wikileaks founder Julian Assange, pictured here in February on the balcony of the Ecuadorian embassy in London, had been planning to address a press conference later this week
In a tweet on Monday afternoon, WikiLeaks said Assange’s speech in London was moved to Berlin due to ‘specific information’ but did not elaborate further
Donald Trump’s former right-hand man Roger Stone claimed the new WikiLeaks revelations would destroy Clinton’s campaign.
In August this year, Assange told Fox News that he was holding information on Clinton which yielded ‘some quite unexpected angles, that are quite interesting, some even entertaining’.
He said he would release the information before the November 8 election.
Assange claimed the information could alter the election result, adding: ‘I think it’s significant. It depends on how it catches fire in the public and in the media.’
Meanwhile, a new report claims that Clinton once proposed a military drone strike to take out Assange in a bid to silence WikiLeaks.
Clinton discussed the possible assassination while she was Secretary of State in a meeting with her staff in 2010 about how to prevent a WikiLeaks document dump dubbed ‘CableGate,’ TruePundit reports.
Donald Trump supporters believe Wikileaks will release highly damaging information later this week on Hillary Clinton’s presidential campaign in a so-called October Surprise event
Conservative political commentator Roger Stone believes Clinton’s campaign will collapse
At the time, Assange had been declaring his intention to release 250,000 secret cables – revealing a huge amount of damning communications between State Department officials and its foreign allies between 1966 and 2010.
‘Can’t we just drone this guy?’ Clinton asked during the meeting on November 23, 2010, the website reports citing State Department sources.
The sources said that her controversial query drew laughter in the room, but that it quickly died down when Clinton continued to speak in a ‘terse’ manner.
She allegedly called Assange a soft target as he was walking around freely at the time and not fearful of any reprisals.
Clinton and the Obama administration feared the content of the cables would damage US intelligence gathering operations as well as compromise private communication and intelligence shared with foreign governments.
In 2010, Assange had already released records that divulged secret US documents about the war in Afghanistan in July and about the war in Iraq in October.
A new report claims that Clinton once proposed a military drone strike to take out Assange in a bid to silence WikiLeaks. Above, one of Clinton’s aides sent an email with the subject line ‘an SP memo on possible legal and nonlegal strategies re Wikileaks’
After Clinton allegedly proposed a drone strike, another solution was reportedly brought up to solve the WikiLeaks problem: place a bounty for Assange’s capture and extradition to the United States.
Figures discussed were in the area of $10million, according to TruePundit.
And following that meeting, one of Clinton’s top aides – Anne-Marie Slaughter, the State Department’s director of policy planning – wrote an email to Clinton, Clinton’s aides Huma Abedin and Jacob Sullivan as well as Chief of Staff Cheryl Mills with the subject line ‘an SP memo on possible legal and nonlegal strategies re Wikileaks.’
Assange will make an announcement via video link to an event in Berlin on Tuesday morning
This year, WikiLeaks has already released information stolen by unknown hackers from the Democratic leadership in advance of the party’s convention.
The 20,000 leaked emails showed how party officials had tried to undermine Clinton’s rival Bernie Sanders.
The release of the emails forced the resignation of Debbie Wasserman Schultz, chair of the Democratic National Committee.
Assange said: ‘In the case of the DNC leaks for example, we pushed as fast as we could to try and get it in before the Democratic Nomination Conference, because obviously people had a right to understand who it is that they’re nominating.
‘The same is true here for the US electoral process.’
Tuesday’s anniversary party in Berlin will commemorate the 2006 registration of the domain name wikileaks.org.
WikiLeaks launched in January 2007, with Assange saying it would use encryption and a censorship-proof website to protect sources and publicise secret information.
The site has since published more than 10million leaked documents.
It first caught the world’s attention when it released manuals for prison guards at Guantanamo Bay.
But it really hit its stride in 2010, unveiling logs of US military operations in Iraq and Afghanistan and a video showing a US helicopter crew mowing down a group of unarmed civilians – including two journalists – in Baghdad.
That same year, it also published a cache of diplomatic cables from US embassies around the world, deeply embarrassing Washington.
In an interview with Der Spiegel over the weekend, Assange said: ‘The most important single collection of material we have published is the US diplomatic cable series.’
But 2010 also saw grave blows to the organization.
Assange was accused of having sex with a woman while she was asleep after the two met at a Stockholm conference.
The white-haired WikiLeaks founder took refuge in the Embassy of Ecuador, London – which granted him political asylum in 2012 after he lost a legal battle to block his extradition to Sweden.
The 45-year-old has always maintained the allegations are false and has refused to travel to Stockholm for questioning due to concerns that Sweden will hand him over to the US to stand trial for espionage.
WikiLeaks has been accused of allowing foreign powers to influence November’s presidential election by publishing information which may have been gathered by Russian hackers.
He said: ‘We’re not going to start censoring our publications because there is a US election. Our role is to publish. We believe in what we’re doing. The attacks only make us stronger.’
Since November 2010, Assange has been subject to extradition to Sweden, where he is wanted for questioning concerning an allegation of rape. Assange denies the allegation and has expressed concern that he will be extradited from Sweden to the United States due to his perceived role in publishing secret American documents.
After exhausting his legal options in the United Kingdom, Assange failed to surrender for extradition. Instead, he sought and was granted asylum by Ecuador in August 2012. Assange has since remained in the Embassy of Ecuador in London, and he is unable to leave without being arrested for breaching his bail conditions. The United Nations’ Working Group on Arbitrary Detention found, by a majority, that he has been “arbitrarily detained” and that his detention should be brought to an end; UK Foreign Secretary Philip Hammond said the claim was “ridiculous” and that the group was “made up of lay people”, and called Assange a fugitive from justice.
Assange was born in the north Queensland city of Townsville, to Christine Ann Hawkins (b. 1951), a visual artist, and John Shipton, an anti-war activist and builder. The couple had separated before Assange was born.
When he was a year old, his mother married Richard Brett Assange, an actor, with whom she ran a small theatre company. They divorced around 1979, and Christine Assange then became involved with Leif Meynell, also known as Leif Hamilton, a member of the Australian New Age group the Family, with whom she had a son before the couple broke up in 1982. Assange had a nomadic childhood, and had lived in over thirtydifferent Australian towns by the time he reached his mid-teens, when he settled with his mother and half-brother in Melbourne, Victoria.
In September 1991, Assange was discovered hacking into the Melbourne master terminal of Nortel, a Canadian multinationaltelecommunications corporation. The Australian Federal Police tapped Assange’s phone line (he was using a modem), raided his home at the end of October, and eventually charged him in 1994 with 31 counts of hacking and related crimes. In December 1996, he pleaded guilty to 25 charges (the other six were dropped), was ordered to pay reparations of A$2,100 and released on a good behaviour bond, avoiding a heavier penalty due to the perceived absence of malicious or mercenary intent and his disrupted childhood. After the trial, Assange lived in Melbourne, where he survived on single-parent income support.
In 1993 Assange gave technical advice to the Victoria Police Child Exploitation Unit and assisted with prosecutions. In the same year he was involved in starting one of the first public Internet service providers in Australia, Suburbia Public Access Network. He began programming in 1994, authoring or co-authoring the Transmission Control Protocol port scanner strobe.c (1995); patches to the open-source database PostgreSQL(1996); the Usenet caching software NNTPCache (1996); the Rubberhosedeniable encryption system (1997), which reflected his growing interest in cryptography; and Surfraw, a command-line interface for web-based search engines (2000). During this period he also moderated the AUCRYPTO forum; ran Best of Security, a website “giving advice on computer security” that had 5,000 subscribers in 1996; and contributed research to Suelette Dreyfus’sUnderground (1997), a book about Australian hackers, including the International Subversives. In 1998, he co-founded the company Earthmen Technology.
In 1999 Assange registered the domain leaks.org, but, as he put it, “I didn’t do anything with it.”[unreliable source?] He did, however, publicise a patent granted to the National Security Agency in August 1999 for voice-data harvesting technology: “This patent should worry people. Everyone’s overseas phone calls are or may soon be tapped, transcribed and archived in the bowels of an unaccountable foreign spy agency.” Systematic abuse of technology by governments against fundamental freedoms of world citizens remained an abiding concern — more than a decade later in the introduction to Cypherpunks (2012) Assange summarized “the Internet, our greatest tool for emancipation, has been transformed into the most dangerous facilitator of totalitarianism we have ever seen”.
After his period of study at the University of Melbourne, Assange and others established WikiLeaks in 2006. Assange is a member of the organisation’s advisory board and describes himself as the editor-in-chief. From 2007 to 2010, Assange travelled continuously on WikiLeaks business, visiting Africa, Asia, Europe and North America.
WikiLeaks published secret information, news leaks, and classified media from anonymous sources. By 2015 WikiLeaks had published more than 10 million documents and associated analyses, and was described by Assange himself as “a giant library of the world’s most persecuted documents”. The published material between 2006 and 2009 attracted various degrees of publicity, but it was only after it began publishing documents supplied by Chelsea Manning that Wikileaks became a household name. The Manning material included the Collateral Murder video (April 2010) which showed US soldiers shooting dead 18 people from a helicopter in Iraq,  the Afghanistan war logs (July 2010), the Iraq war logs(October 2010), a quarter of a million diplomatic cables (November 2010), and the Guantánamo files (April 2011).
The year 2010 culminated with the Sam Adams Award, which Assange accepted in October, and a string of distinctions in December—the Le Monde readers’ choice award for person of the year, the Time readers’ choice award for person of the year (he was also a runner-up in Time’s overall person of the year award), a deal for his autobiography worth at least US$1.3 million, and selection by the Italian edition of Rolling Stone as “rockstar of the year.”
Assange wrote on WikiLeaks in February 2016: “I have had years of experience in dealing with Hillary Clinton and have read thousands of her cables. Hillary lacks judgement and will push the United States into endless, stupid wars which spread terrorism. … she certainly should not become president of the United States.”
After WikiLeaks released the Manning material, US authorities began investigating WikiLeaks and Assange personally with a view to prosecuting them under the Espionage Act of 1917. In November 2010 US Attorney-GeneralEric Holder said there was “an active, ongoing criminal investigation” into WikiLeaks. It emerged from legal documents leaked over the ensuing months that Assange and others were being investigated by a federal grand jury in Alexandria, Virginia. An email from an employee of intelligence consultancy Strategic Forecasting, Inc. (Stratfor) leaked in 2012 said, “We have a sealed indictment on Assange.” The US government denies the existence of such an indictment.
In December 2011 prosecutors in the Chelsea Manning case revealed the existence of chat logs between Manning and an alleged WikiLeaks interlocutor they claimed to be Assange; he denied this, dismissing the alleged connection as “absolute nonsense.” The logs were presented as evidence during Manning’s court-martial in June–July 2013. The prosecution argued that they show WikiLeaks helping Manning reverse-engineer a password. The evidence that the interlocutor was Assange is circumstantial, however, and Manning insists she acted alone.
Assange was being examined separately by “several government agencies” in addition to the grand jury, most notably the FBI. Court documents published in May 2014 suggest that Assange was still under “active and ongoing” investigation at that time.
Moreover, some Snowden documents published in 2014 show that the United States government put Assange on the “2010 Manhunting Timeline”, and in the same period they urged their allies to open criminal investigations into the editor-in-chief of WikiLeaks. In the same documents there was a proposal by the NSA to designate WikiLeaks as a “malicious foreign actor”, thus increasing the surveillance against it.
On 26 January 2015, WikiLeaks revealed that three members of the organisation received notice that “Google had handed over all their emails and metadata to the United States government”.In the notifications, there was the list of possible charges that originated the warrant to Google and that the secret grand jury intends to use against WikiLeaks and likely Assange too. They were espionage, conspiracy to commit espionage, theft or conversion of property belonging to the United States government, violation of the Computer Fraud and Abuse Act and general conspiracy. They carry up to a minimum of 45 years in prison, if they amount to one charge per these five types; otherwise, even more years could be added.
The United States investigation confirmed its ongoing proceedings against WikiLeaks in a 15 December 2015 court submission.
Swedish sexual assault allegations
Demonstration in support of Assange in front of Sydney Town Hall, 10 December 2010
In November 2010 Assange was alleged to have committed several crimes against two different women during a visit to Sweden that August. He was wanted for questioning in Sweden over two counts of sexual molestation, one count of unlawful coercion and one count of “lesser-degree rape” (mindre grov våldtäkt). Assange denies the allegations.
After 18 August 2015, Assange could no longer be charged for all three of the less serious allegations, as the Swedish prosecutors did not succeed in interviewing Assange before the statute of limitations for these alleged crimes ran out. However, he is still wanted for questioning over the allegation of rape. The preliminary investigation still continues as the statute of limitations here will only expire in 2020.
Political asylum and life at the Ecuadorian embassy
Julian Assange on a balcony in the Ecuadorian embassy in London
Assange and his supporters claim he is concerned not about any proceedings in Sweden as such, but that his deportation to Sweden could lead to politically motivated deportation to the United States, where he could face severe penalties, up to the death sentence, for his activities related to WikiLeaks.
Ecuadoran Foreign Minister Ricardo Patiño met with Julian Assange in the Ecuadorian Embassy on 16 June 2013
On 16 August 2012, Foreign Minister Patiño announced that Ecuador was granting Assange political asylum because of the threat represented by the United States secret investigation against him and several calls for assassination from many American politicians. In its formal statement, Ecuador reasoned that “as a consequence of [Assange’s] determined defense to freedom of expression and freedom of press… in any given moment, a situation may come where his life, safety or personal integrity will be in danger”. Latin American states expressed support for Ecuador. Ecuadorian PresidentRafael Correa confirmed on 18 August that Assange could stay at the embassy indefinitely, and the following day Assange gave his first speech from the balcony. Assange’s supporters forfeited £293,500 in bail and sureties. His home since then has been an office converted into a studio apartment, equipped with a bed, telephone, sun lamp, computer, shower, treadmill, and kitchenette.
Just before Assange was granted asylum, the UK Government wrote to Foreign Minister Patiño stating that the police were entitled to enter the embassy and arrest Assange under UK law. Patiño criticised what he claimed to be an implied threat, stating that “such actions would be a blatant disregard of the Vienna Convention“. Officers of the Metropolitan Police Service were stationed outside the building from June 2012 to October 2015 in order to arrest Assange for extradition and for breach of bail, should he leave the embassy. The police guard was withdrawn on grounds of cost in October 2015, but the police said they would still deploy “a number of overt and covert tactics to arrest him”. The cost of the policing for the period was reported to have been £12.6 million.
In April 2015, during a video conference to promote the documentary Terminal F about Edward Snowden, Bolivia‘s ambassador to Russia, María Luisa Ramos Urzagaste, accused Assange of putting the life of Bolivian presidentEvo Morales at risk by intentionally providing the United States with false rumours that Snowden was on the president’s plane when it was forced to land in Vienna in July 2013. “It is possible that in this wide-ranging game that you began my president did not play a crucial role, but what you did was not important to my president, but it was to me and the citizens of our country. And I have faith that when you planned this game you took into consideration the consequences,” the ambassador told Assange. Assange stated that the plan “was not completely honest, but we did consider that the final result would have justified our actions. We weren’t expecting this outcome. The result was caused by the United States’ intervention. We can only regret what happened.” Later, in an interview with Democracy Now, Assange explained the story of the grounding of Morales’ plane, claiming that after the United States cancelled Snowden’s passport, WikiLeaks thought about other strategies to take him to Latin America, and they considered private presidential jets of those countries which offered support. The appointed jet was that of Venezuelan President Nicolás Maduro, but Assange stated that “our code language that we used deliberately swapped the presidential jet that we were considering for the Bolivian jet […] and in some of our communications, we deliberately spoke about that on open lines to lawyers in the United States. And we didn’t think much more of it. […] We didn’t think this was anything more than just distracting.” Eventually, the plan was not pursued and, under Assange’s advice, Snowden sought asylum in Russia.
Paris newspaper Le Monde in its edition of 3 July 2015 published an open letter from Assange to French President François Hollande in which Assange urged the French government to grant him refugee status. Assange wrote that “only France now has the ability to offer me the necessary protection against, and exclusively against, the political persecution that I am currently the object of.” In the letter Assange wrote, “By welcoming me, France would fulfill a humanitarian but also probably symbolic gesture, sending an encouragement to all journalists and whistleblowers … Only France is now able to offer me the necessary protection … France can, if it wishes, act.”
In a statement issued by the Élysée Palace on 3 July 2015 in response to this letter, the French President said: “France cannot act on his request. The situation of Mr Assange does not present an immediate danger.”
On 4 July 2015, in response to the denial of asylum by France, a spokesman for Assange denied that Assange had actually “filed” a request for asylum in France. Speaking on behalf of Assange, Baltasar Garzón, head of his legal team, said that Assange had sent the open letter to French president Francois Hollande; but Assange had only expressed his willingness “to be hosted in France if and only if an initiative was taken by the competent authorities”.
On 5 February 2016, the UN’s Working Group on Arbitrary Detention decided that Assange had been subject to arbitrary detention by the UK and Swedish Governments since 7 December 2010, including his time in prison, on conditional bail and in the Ecuadorian embassy. According to the group, Assange should be allowed to walk free and be given compensation.
Assange’s book, When Google Met WikiLeaks, was published by OR Books on 18 September 2014. The book recounts when Google CEO Eric Schmidt requested a meeting with Assange, while he was under house arrest in rural Norfolk, UK. Schmidt was accompanied by Jared Cohen, director of Google Ideas; Lisa Shields, vice-president of the Council on Foreign Relations; and Scott Malcomson, the communications director for the International Crisis Group. Excerpts were published on the Newsweek website, while Assange participated in a Q&A event that was facilitated by the Reddit website and agreed to an interview with Vogue magazine.
While in his teens, Assange married a woman named Teresa, and in 1989 they had a son, Daniel Assange, now a software designer. The couple separated and initially disputed custody of the child. Assange was Daniel’s primary carer for much of his childhood. In an open letter to French President François Hollande, Assange stated his youngest child lives in France with his/her mother. He also claimed that his family had faced death threats and harassment due to his work, forcing them to change identities and reduce contact with him.
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Donald John Trump (born June 14, 1946) is an American businessman, television personality, author, and politician. He is chairman of The Trump Organization, which is the principal holding company for his real estate ventures and other business interests. He is also the presumptive nominee of the Republican Party in the 2016 presidential election.
Trump graduated from the Wharton School of the University of Pennsylvania in 1968. Having worked in his father Fred Trump’s real estate and construction firm while attending college, he assumed control of that family business in 1973, later renaming it The Trump Organization. During his career, Trump has built hotels, casinos, golf courses, the Manhattan neighborhood Riverside South and numerous other developments, many of which bear his name, including Trump Entertainment Resorts (now owned by Carl Icahn). He has made the Trump name a valuable and distinct brand, licensing it to numerous enterprises in which he has minimal or no stake. He briefly sought the Reform Party’s nomination in the 2000 presidential election, withdrawing prior to any primary contests, although he won two primaries after his withdrawal. Listed by Forbes among the wealthiest 400 of The World’s Billionaires, Trump and his businesses, as well as his three marriages, have for decades received prominent media exposure. He hosted The Apprentice, a popular reality television show on NBC, from 2004 to 2015.
On June 16, 2015, Trump announced his candidacy for president as a Republican, and quickly emerged as the front-runner for his party’s nomination. His platform includes measures to combat illegal immigration, opposition to many free-trade agreements that he regards as unfair, often non-interventionist views on foreign policy, and a proposal to temporarily ban immigration to the United States from countries with a proven history of terrorism against the United States, until the government has perfected its ability to screen out potential terrorists. His statements in interviews and at campaign rallies have often been controversial, with the rallies sometimes accompanied by protests or riots.
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