Plus, a question about a CARES Act loophole.
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Today’s read: 8 minutes.
Trump “bans” immigration, a question about tax loopholes in The Cares Act and a podcast appearance I had last week.
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As I always say, I love when readers write in and push back on my writing or my work. If I get something wrong, I promise to correct it. I also am happy to share arguments I don’t necessarily agree with.
First, I wanted to tackle a point made by Jeff from Aston, PA. For weeks, Jeff has been writing into Tangle to push back on a line I wrote back in March about Trump imposing travel restrictions on people coming to the United States from China [emphasis mine]:
“Many pundits, activists and reporters on the left took major issue with Trump and his allies calling coronavirus the “China” or “Wuhan” virus. They called it racist and xenophobic, much like how they described Trump’s restrictions on travel from China."
Jeff has been arguing that, despite Trump’s insistence, no major Democrats actually called his restrictions on travel from China racist or xenophobic. In fact, he’s basically rejected the notion that prominent Democrats criticized the move at all.
After many back and forths and long emails I won’t recap here, it appears Jeff mostly has a point: together, we could find just two elected Democrats who explicitly criticized the travel restrictions placed on China. Joe Biden did criticize Trumps’ “record of hysteria and xenophobia” around the time the restrictions were put in place, but it’s not actually clear he was criticizing the restrictions themselves. Then, yesterday, Aaron Blake published this article in The Washington Post, which broke down some claims from Rep. Dan Crenshaw (R-TX) about Trump’s response to coronavirus. In it, Blake notes that not many Democrats or liberal organizations were pushing back on Trump’s China restrictions, and the president has largely fabricated the pushback he got on his decision.
My ruling here: in my original writing, the “they” I referenced were pundits, activists and reporters. I remember clearly seeing the pushback to Trump’s announcement across social media, but I struggled to give Jeff solid examples of prominent leftwing figures who criticized the move. And I could only find a couple of lesser-known Democratic elected officials. I think Jeff makes a good point that the “pushback” and “criticism” has been grossly exaggerated by Trump, and I probably wouldn’t write that section today the way I did then.
Brendan from Madison, Wisconsin, also wrote in yesterday about the way I covered the right propping up television doctors like Dr. Oz or Dr. Phil instead of experts on the frontlines of the coronavirus fight:
“I find it a little funny that the TV Doctors are getting flack right now from the left, while the left so frequently propped up Bill Nye over the last few years to defend global warming,” he wrote. “I certainly don't think any of the doctors you mentioned are worth trusting right now, but I think it's only fair to compare them to Bill Nye the Science Guy, who has a BS in mechanical engineering, meaning he is not a scientist. Of course you can argue that there are more real scientists who would back Bill Nye re: global warming than real doctors who would back the TV doctors, but to bring up credentials isn't the best argument, I don't think.”
It’s a fair point. Bill Nye has done plenty of television spots to discuss climate change, a topic he’s not an expert in. It’s also true, as Brendan notes, that the big difference between Bill Nye and, say, Dr. Phil, is that Nye is not arguing against the “expert consensus” while Dr. Phil, Dr. Oz and Dr. Drew were. Regardless, I think it’s fair to note that both sides have their favorite television experts, and it’s certainly true the right has criticized Nye in the past.
I know many of you have asked for a Tangle podcast. While that’s a little ways off, I can offer you the “next best thing.” Last week, I went on the climate change podcast In Good Hands, which focuses on optimistic coverage about climate change. A large chunk of the conversation is about my journey in media and my experience writing “positive news” or solutions journalism at A Plus, where I work full-time. But Tangle comes up at the end, around the 46:30 mark. You can listen on Spotify here or find the podcast online here.
What D.C. is talking about.
Last night, President Trump tweeted that he plans to halt all immigration into the United States. The president said he would be signing an executive order to stop immigration in order to fight against the “Invisible Enemy” (coronavirus) and to “protect the jobs of our GREAT American Citizens.” The president did not provide additional details, though he described the halt as “temporary.” Administration officials said the order wouldn't make substantial changes to current U.S. policy, according to The Wall Street Journal, which has all but stopped every form of immigration already. Most visa processing has stopped, citizenship ceremonies have been postponed and refugee programs are on pause. Migrants who come into the U.S. are also being expelled immediately, instead of going through the asylum or processing system they typically encounter. Experts predict that the executive order will have exceptions for migrant farmworkers and health care workers.
What the right is saying.
Fox News host Tucker Carlson has been calling for an immigration ban for weeks. On April 1st, Carlson slammed the current administration for not doing more to stop immigrants from coming in — including migrant farmworkers who will likely be exempted from this executive order. "The time to placate corporate interest looking for low wages at all costs has passed, we need to stop this," Carlson said. Former Attorney General Jeff Sessions made similar pleas, calling on the administration to “immediately half immigration to the United States until Americans are back to work,” he said in a tweet. “It is insanity for this nation to invite foreigners to come in and take any of the few jobs available during the crisis.” Carlson and Sessions even came together for a Fox News bit where they both argued side-by-side for such a ban. On Fox & Friends, Ainsley Earhardt said she has an au pair on a work visa who takes care of her daughter and relies on her for child care. “I go to work at 3 o’clock in the morning, so I need her there,” Earnhardt said. She expressed hope that Trump would share more details about the immigration restrictions soon and encouraged him to consider families like hers.
What the left is saying.
It’s a dumb political play. Many observers saw the move as an attempt by Trump to rile up his base, many of whom harbor anti-immigrant sentiments that helped propel Trump to victory in 2016. Julián Castro, who ran for president this year, criticized the move, saying if you cut off immigration “you crater our nation’s already weakened economy. It’s that simple.” There’s also a good reason to believe the move doesn’t really change anything: the U.S.-Canada border is essentially closed, international air travel is almost non-existent and asylum seekers are already being deported on arrival. A lot of people think it’s just Trump’s latest attempt to distract the media from his failings and expect it will work. Walter Shaub said it was a “ploy to distract from his failed COVID-19 response” and Chris Lu, the former White House Cabinet Secretary, said immigrants are on the front lines of fighting coronavirus and treating COVID-19 patients. “Immigrants make up 7% of doctors, 24% of nurses and home health aides, and 50% of geriatric specialists.”
As many observers pointed out, and this is not an original take, I’m not sure how much this will change. Asylum seekers are being rejected at the border, very few people are flying anywhere internationally, and most appointments for green cards, visas or citizenship ceremonies have already been stopped. We also have no idea what the legal justification for this will be, which Trump has to provide. When he does, I suspect it will be challenged immediately and very well could end up halting this entire idea in its tracks. What I do think is interesting, though, is just how much this reveals about our reliance on immigrants.
Like most things, the devil will be in the details. Trump will almost certainly have to make exceptions for migrants coming here to work on farms, as they are crucial to keeping our food supply functioning. There’s been good reporting already about how the coronavirus has legally made undocumented farmworkers essential, and how in a lot of ways it proved how much we need them. And what about nurses and doctors? Nearly 21 million Americans live in areas where foreign-trained physicians account for at least half of all physicians. What happens if people here on work visas need to leave the country in 60 days? During an all-hands-on-deck pandemic? Certainly, you’d expect Trump to make an exception for them, too.
I’ve written here before and I’ll say it again now: I mostly fall on the left side of things when it comes to immigration. I’ve spent a lot of time traversing our borders and traveling internationally, where I’ve met countless people working to come here and be “productive members of society,” or however you want to qualify what makes a citizen “good.” What you often hear from those immigrants or immigrants-to-be is just how difficult it is to come here already, with all the barriers in place before this mess. Financial. Bureaucratic. Just the time alone it takes to get legal status. One tweet from journalist Sulome Anderson illustrates the situation:
I’m not sure what this order will do, and the language of it will make it much more clear. But the idea that formally shutting down all immigration is going to help anyone here, right now, is just nonsense to me. And it strikes me as an obvious ploy from the president to bring out the worst in his supporters (citizens vs. the immigrants) during a time when we’re relying so heavily on immigrants who are already here to keep the county on its feet.
Coronavirus quick hits.
- New skepticism about the coronavirus death rate is spreading. Late last week, The Wall Street Journal published an op-ed about a Stanford study claiming the real death rate may be more like .2% of those who get sick, or twice that of the flu. The study was based on research around 3,300 residents that showed 2.5% to 4.2% of them had a prevalence of coronavirus antibodies, which suggests they have already been infected. That would equal 50 to 85 times more than the previously known cases. It would mean far more people have it, and a much lower rate of death. Early estimates said the death rate was 3.4%. However, the Stanford study was rightly criticized because it collected participants via Facebook ads, which may have “self-selected” the sample size and brought in a larger proportion of participants who had reason to believe they had already had the virus. Despite that, the study is still raising questions about the death rate and the volume of questions about whether the coronavirus is as deadly as we thought seems to be increasing.
- Three Southern states — South Carolina, Georgia and Tennessee — said they plan to reopen beaches, restaurants and most businesses soon. Residents in Georgia will be allowed to return to the gym and get haircuts, pedicures, massages and tattoos as early as Friday. By Monday, they’ll be allowed to go to restaurants and the movies. Click.
- An Ohio prison says 73% of its inmates have been infected with the coronavirus. That amounts to 1,828 cases. There have been no deaths yet, but the prisoners alone account for more than 20% of all the cases in the entire state of Ohio.
Last night, the Trump campaign released a new ad slamming Nancy Pelosi and Democrats for their response to coronavirus. The ad features Pelosi’s now infamous shot of a freezer full of ice cream while she was giving a virtual update from her home.
Your questions, answered.
Reminder: Reader questions are a big part of Tangle. To ask a question, all you have to do is reply to this email and write in. Give it a try!
Q: I recently came across this article in Forbes and I’m wondering if you can shed some light on it. I don’t fully comprehend what I read but it basically sounds like there are roughly 43,000 taxpayers that are extremely wealthy who are about to seriously benefit from something slipped into the CARES Act. With all the scrutiny of what was written into the act, how is this possible and why doesn’t it seem to be a bigger deal?
— Bennett, Charleston, SC
Tangle: Believe it or not, it’s true. The basic outline of “how is this possible” or “how is it working” is the collision of a hotly contested 2017 bill with the hastily written CARES Act. The bill was 800 pages long and was passed so quickly I’m sure some people who voted on it didn’t even read the whole thing. Plenty of people out there probably view this provision as a feature of the bill, not a problem with it, and frankly, I’m not sure I have enough evidence to tamp those suspicions down. But there’s also a fairly reasonable defense from Republicans who put the provision in the bill, which I’ll discuss.
News of this provision first came about when the Joint Commission on Taxation (JCT) released a report about it, which was requested by Sen. Sheldon Whitehouse (D-RI) and Rep. Lloyd Doggett (D-TX). We know it was a Republican provision because they’ve defended it, and we also know it could benefit both President Donald Trump and his son-in-law Jared Kushner because of past reporting on their taxes. The JCT is not a partisan committee, and it found that 43,000 individual tax filers will be able to reap the rewards.
The technical jargon sounds like this: there is a provision in the bill that suspends the limit of how much owners of businesses organized as “pass-through firms” can deduct against their nonbusiness income to reduce their tax liability.
Basically, the provision means someone like a real estate owner could apply losses they took in real estate to their overall income, and use that money to reduce the taxes they’re supposed to pay on profits they made in something like the stock market. Real estate investors do this sort of thing all the time — they “depreciate” the value of a property they own in order to create losses on their revenue, and then they apply those losses as deductions on the taxes they are supposed to pay on other forms of revenue. In 2017, in the tax law Trump and Republicans pushed, they put a limit on the use of those losses. Now Republicans are saying that was a mistake, and they think by putting this provision in the bill they will create desperately needed liquidity for business owners and real estate investors.
The data here says the provision will disproportionately benefit the wealthy. 82% of the people who will benefit from the provision earn $1 million or more annually, and 95% who benefit earn $200,000 a year or more annually. It lifts the restriction for three years — this year, and retroactively for the last two years. This means wealthy people who have “more than $500,000 in annual capital gains or income from sources other than their business” can go back and retrieve this money, according to The New York Times. The provision is expected to cost the federal government $70.3 billion, and it will apply to 43,000 taxpayers, which is where the $1.6 million number comes from: that’s the average amount of money per taxpayer ($70.3 billion divided by 43,000).
Democrats have jumped on it as evidence Republicans used the CARES Act to give a handout for the wealthy.
“The [tax] policy is complex,” Senator Sheldon Whitehouse of Rhode Island told Quartz. “But the principle is straightforward: In the midst of a national health emergency, we ought to help those who need it—like healthcare workers and small businesses—not give huge tax breaks to hedge fund managers and real estate investors. This is a special-interest looting of the American taxpayer, plain and simple.”
As for whether it benefitted Trump: we don’t really know, because — unlike every other president in the modern era — Trump has never turned over his tax returns to the American public. However, it’s almost certain the real estate investors close to Trump and potentially Jared Kushner will benefit from this loophole.
Why doesn’t it seem like a bigger deal? I’m not sure. On one hand, it seems like it was covered in every major paper, so I think it is a big deal. I used reporting from The New York Times, The Washington Post, Fox News, Forbes, International Business Times, Quartz and The Wall Street Journal, which described it rather innocuously: “Businesses get the ability to apply losses from 2018, 2019 or 2020 to past years’ profits and claim refunds.”
But it probably hasn’t caused a major outpouring of anger because people are just consumed with their own day-to-day stuff. If this is as pernicious as Democrats claim, that’s kind of the beauty of it: Americans are too worried about the impact of coronavirus on their personal lives (staying healthy, keeping their jobs, paying their bills, etc.) that it’s tough to muster up concern about a complex, difficult-to-understand tax loophole.
On the other hand, there is an argument it may just not be as bad as Democrats are making it sound. Iowa Sen. Chuck Grassley spent a good bit of an op-ed in Fox News defending the pass-through provisions.
“We didn’t pick winners and losers,” he wrote. “The tools included in the CARES Act recognize all types and sizes of businesses – from farmers and sole proprietors, to pass-through businesses like partnerships, LLCs and S corporations, to larger corporations.”
Grassley said the Democrats are “driven by class warfare” and taking aim at pass-through businesses. He argued that 90% of American businesses operate as pass-through entities, according to the Tax Foundation, and said that includes many of the hardest-hit businesses out there: “farmers, restaurants, manufacturers, retailers and health care providers.” His argument is that these businesses are facing huge cash flow issues, and now taking on huge losses, and they should be able to apply those losses retroactively just like big corporations will to keep their doors open and employees paid.
“This partisan attack threatens the relief intended for businesses in every industry across America,” he said. “The attempt to paint this tax provision as a boon for real estate and hedge fund investors completely misses the mark.”
So, what’s the upshot? Yes, the story is real, but the “$1.6 million per person” is a misleading headline. The provision will benefit people unevenly, and many of the people it will benefit are business owners who are expected to put some of that money back into their companies. Will they? I don’t know. Will it benefit Trump and Kushner? I imagine it will, yes. Do we know for sure? No. Did Republicans push this provision? Yes. Are Democrats playing politics with how they’re framing it? Yes. Do they have a point? In many cases, yes. Is it overall a net good thing? I’ll let you be the judge.
A story that matters.
When the country “reopens” from coronavirus, it may not be the president or governors or elected officials who have the ultimate control. It will be employers. A closer look at how federal, state and local officials are encouraging people to go back to work shows they give wide latitude to individual employers for how to handle it. The Trump administration’s guidance leaves almost every key decision up to employers, with a general blanket ask to “develop and implement appropriate policies” regarding testing, prevention of spread, isolation and sanitation. “The testing fiasco means employers don’t know who can come back to work,” Drew Altman, president of the Kaiser Family Foundation, told Axios. “What does an employer do if someone gets sick and tests positive, send everyone home? Call the health department to do contact tracing? Do it themselves if, as will inevitably happen, the health department is slow or doesn’t show?” Altman noted that the “endless small stuff” like social distancing, avoiding congregation, sanitizing surfaces, providing hand sanitizer, forcing employees to wear masks — all of it will ultimately come down to business owners and employers. Ultimately, it’s those employers who will hold the fate of a resurgence of the virus in their hands. And it’s tough to predict how they’ll act. Click.
- 10. The number of points Jill Karofsky, the liberal Wisconsin Supreme Court Justice elected last week, outperformed her conservative opponent amongst mail-in voters.
- 20. The number of points that Democrats are more likely than Republicans to oppose an immediate return to “normal.”
- -$37.63. The price of a barrel of West Texas Intermedia crude oil to be delivered in May, the first time U.S. oil futures plunged below zero.
- 64%. The percentage of Americans who are now wearing face coverings outside the home either sometimes or all of the time.
- 300,000. The number of workers some experts estimate would be needed to accurately track the spread of coronavirus.
- $46.7 million. The amount of money Joe Biden raised in March, the best fundraising month of his entire campaign.
Have a nice day.
Michael Jordan is donating all the proceeds from the new documentary The Last Dance to charity. The documentary, which premiered on ESPN Sunday night, is a fascinating never-before-seen look at the 1998 Chicago Bulls and their quest for a sixth NBA championship. The debut on Sunday was like a cold glass of water for dehydrated sports fans who have nothing to watch on TV with sports suspended across the globe. The show brought in 6.1 million viewers on Sunday night, a record-breaking total for ESPN documentaries. Profits from the show that are supposed to go to Jordan are estimated to be $3-$4 million, all of which will go to charity instead. Click.