Economy

Here's the truth about the stock market's reaction to Biden' new tax plan

In addition to proposing an increase of the United States' corporate tax rate from 21% to 28%, President Joe Biden began a push this week for a major hike in the capital gains tax. Republican Sen. Shelley Moore Caputo of West Virginia and others on the right, not surprisingly, slammed the proposal and predicted the worst, and some on the right felt vindicated when the stock market dipped sharply after Biden's announcement.

But liberal economist and New York Times columnist Paul Krugman noted there was little warrant for their dire predictions on Twitter Friday morning.

Caputo, during a Friday morning appearance on CNBC's "Squawk Box," complained, "Is there not a tax that's not going to be raised just in enormous amounts to fulfill the Green New Deal and other promises that were made during (Biden's 2020) campaign? I mean, I don't see why the thirst for raising taxes is so incredibly large when we see the impact that's going to have on our economy, on our job creation and all that…. I can't support that."

The Wall Street Journal's conservative editorial board had an equally negative reaction to Biden's proposed capital gains tax hike, writing, "The lesson that investors should have learned by now is that Bernie Sanders was right when he predicted that Joe Biden would be the most left-wing president since FDR. Moderate Joe was always a mirage."

On Thursday, Laura Davison and Allyson Versprille of Bloomberg News reported that according to sources, Biden proposes "almost doubling the capital gains tax rate for wealthy individuals to 39.6%" or as high as 43.4% from "the current base rate of 20%." The S&P 500 took a slight dip on Thursday, but the following day, Krugman assured Twitter users that Biden was not causing the sky to fall.

Posting an S&P 500 chart showing a 52-week period, Krugman tweeted:

Krugman, in his Twitter thread, added that he "was struck by how small the reaction to the tax announcement was — less than 1 percent on the day":

White House Press Secretary Jen Psaki weighed in on fluctuations in the stock market when a reporter, at a press briefing on Friday, mentioned Biden's proposal for higher capital gains taxes. Psaki told the reporter, "I've been doing this long enough not to comment on movements in the stock market, but I did see just data, factually, that it went back up this morning."

Bloomberg News' John Authers, in an article published on Friday, explains, "Stock markets don't like it when politicians say they are going to raise capital gains taxes. This should come as no surprise to anyone, and so, Wall Street's response to Thursday's Bloomberg News exclusive that President Biden is planning a big hike in CGT was predictable."

Authers goes on remember how capital gains taxes can affect the stock market, writing, 'What are the direct effects of a CGT hike? If you were thinking of selling shares anyway, it makes far more sense to sell them before the end of the year…. It's not clear that higher CGT does anything more than bring sales forward. The way the market handled the last major CGT increase, at the end of 2012, is instructive."

Recalling how the stock market behaved in 2012 and 2013 — when Barack Obama was president and Biden was vice president — Authers notes, "As it grew clear that higher capital gains taxes were coming, the S&P 500 languished and went sideways for the last few months of the year, closing roughly where it had been in March. Then, 2013 turned out to be a great year; stocks started their rally at the beginning of January and never really stopped."

One recent event makes it abundantly clear that so-called ‘low-skill workers’ are ‘vital economic utilities’

Conservatives and libertarians have often insisted that minimum-wage service workers are not underpaid — that if they had the skills of computer programmers, attorneys or cardiologists, they would be able to command higher wages. But during the COVID-19 pandemic, Americans who work for low wages cleaning floors in medical buildings or working at the checkout register in dollar stores have been described as "essential" workers by state and local governments. The horrors of the COVID-19 pandemic — which, according to Johns Hopkins University in Baltimore, has killed more than 3 million people worldwide — have dramatically underscored the importance of the jobs they perform. And journalist Annie Lowrey, in a thought-provoking article published by The Atlantic on April 23, argues that there is no such thing as a "low-skill" worker and that the very concept is fundamentally flawed.

Lowrey explains, "Being a prep cook is hard, low-wage and essential work, as the past year has so horribly proved. It is also a 'low-skill' job held by 'low-skill workers,' at least in the eyes of many policy makers and business leaders, who argue that the American workforce has a 'skills gap' or 'skills mismatch' problem that has been exacerbated by the pandemic. Millions need to 'upskill' to compete in the 21st Century, or so say the New York Times and the Boston Consulting Group, among others. Those are ubiquitous arguments in elite policy conversations. They are also deeply problematic."

The journalist adds that the term "low-skill" is frequently used in a "derogatory" way that "positions American workers as being the problem, rather than American labor standards, racism and sexism, and social and educational infrastructure."

"It is a cancerous little phrase, low-skill," Lowrey argues. "As the pandemic ends and the economy reopens, we need to leave it behind."

Lowrey adds that "low-skill" workers actually have vitally important skills.

"Imagine going up to a person who's stocking shelves in a grocery store and telling him that he is low-skill and holding the economy back," Lowrey writes. "Imagine seeing a group of nannies and blasting 'Learn to code!' at them as life advice. The low-skill label flattens workers to a single attribute, ignoring the capacities they have and devaluing the work they do. It pathologizes them, portraying low-skill workers as a problem to be fixed, 'My Fair Lady'–style."

Lowrey goes on to say, "Many 'low-skill jobs' held by 'low-skill workers' are anything but. Many of these are difficult, physically and emotionally taxing jobs that, in fact, require employees to develop extraordinary skills, if not ones you learn at medical school or MIT. A great deal of skill is necessary to wash a lunch rush's worth of dishes. A great deal of skill is required to change the clothes of an immobilized senior who might not want to have her clothes changed, or to wrangle a class of toddlers, or to clean up an overgrown yard at breakneck pace, or to handle five tables of drunk guys who want their wings yesterday."

Arguments similar to the ones made in Lowrey's article were made by progressive Rep. Alexandria Ocasio-Cortez of New York City in a pre-pandemic tweet she posted on July 30, 2019. Republicans, for all of former President Donald Trump's pseudo-populism, love to sneer at AOC for having once been a bartender — and she called them out for it:

With more than half of U.S. residents having been at least partially vaccinated for COVID-19, millions of Americans are hoping and praying that the pandemic will end sooner rather than later. Lowrey worries that when life in the U.S. starts to get back to some degree of "normal," Americans will forget how important and necessary many low-paying jobs are.

"The pandemic has helped us recategorize many 'low-skill' jobs as 'essential' jobs — jobs integral to the functioning of the economy, but whose importance so often does not translate into fair pay and good benefits," Lowrey stresses. "But I fear we are losing that paradigm shift as the world normalizes again. Cashiers and receptionists and delivery drivers and parents' helpers will once again be seen as economic deadweight, not vital economic utilities."

Trump’s 'depression' predictions flopped — and now the GOP is scrambling to find an economic message

On Thursday, writing for The Washington Post, David Lynch noted that former President Donald Trump's dire predictions that "you will have a depression the likes of which you've never seen" if Joe Biden is elected, but the economy is soaring — and Republicans are struggling to adapt their economic message to the new reality.

"The rebounding economy is headed for its best year since 1984, according to the International Monetary Fund. The U.S. economy likely expanded in the first quarter at an annual rate of 6 percent and should accelerate in the months ahead, economist Ian Shepherdson of Pantheon Macroeconomics told clients this week. More than 1.3 million jobs have been added since the election," wrote Lynch. "By Trump's preferred metric — the stock market — Biden is outperforming his predecessor at this stage of his presidency. Last summer, the Republican said stock values would 'collapse' under Biden. But through Thursday, the Dow Jones industrial average was up nearly 16 percent since Nov. 7, when the Democrat was declared the apparent election winner, compared with a 10.5 percent gain over a similar period following Trump's election."

The result is that Republicans are scrambling to come up with a new message to counter Biden's popularity.

"Republicans have lashed Biden's $1.9 trillion American Rescue Plan as unnecessary given the economy's emerging strength and as being poorly designed, because some of the direct payments will go to households earning as much as $150,000 annually," wrote Lynch. "But so far, none of the attacks have drawn much support beyond the GOP base. A Gallup poll last month found that 63 percent of Americans backed the Biden plan."

All of this bodes poorly for the GOP, noted Lynch, because parties that run against an administration presiding over economic growth tend to do poorly — as did the recently deceased Democratic presidential candidate Walter Mondale in 1984.

"The economy grew that year at an annual rate of 7.2 percent, its best performance since the Korean War. Republican advertising boasted of 'morning again in America,' and Democrats responded with an unpopular prescription for a tax increase to address the federal budget deficit that Reagan had used to fuel his boom," noted Lynch. "The Democrat lost 49 states that year."

You can read more here.

American capitalism has passed its peak — and the signs of decline are piling up

Like all previous economic systems in recorded history, capitalism is on track to repeat the same three-step trip: birth, evolution, and death. The timing and other specifics of each system's trip differ. Births and evolutions are commonly experienced as positive, celebrated for their progress and promise. The declines and deaths, however, are often denied and usually feel difficult and depressing. Notwithstanding endlessly glib political speeches about bright futures, U.S. capitalism has reached and passed its peak. Like the British Empire after World War I, the trip now is painful.

Signs of decline accumulate. The last 40 years of slow economic growth have seen the top 10 percent take nearly all of it. The other 90 percent suffered constricted real wage growth that drove them to borrow massively (for homes, cars, credit cards, and college expenses). Their creditors were, of course, mostly that same 10 percent. College costs rose as graduates' prospects for good jobs and incomes fell. Those without college degrees faced worse prospects. Inequalities of wealth and income soared. To protect their positions atop those inequalities, the 10 percent increased their donation-fueled sway over politics and culture. Compliant politicians then reinforced the deepening inequalities of wealth and income in that typical spiral of systems in decline.

The relentlessly deepening inequality is especially painful and difficult for the United States because it had been temporarily reversed in the 1930s and 1940s. The sharply reduced inequality then—celebrated as the rise of a vast "middle class"—led to renewed affirmations of American exceptionalism and capitalism's virtues. We lived, it was said, in a post-1930s "people's capitalism." The claim had its grain of truth, if no more than that. It made expectations of "middle class" jobs and incomes seem to be birthrights of most (white) Americans. The ever-deepening inequality since the 1970s first frustrated and then collapsed those expectations. A kind of bitterness at a fading American dream has settled in and agitated popular consciousness. Capitalism became increasingly a disappointment, a sign of system decline. Another sign is the increasing interest in socialism and elections of socialists despite the relentless anti-socialist drumbeats of the Cold War and since.

The nation's response to COVID-19 displays more signs. With 4 percent of the world's population, the United States accounts for 20 percent of the world's COVID-19 deaths. Despite being a rich country with a well-developed medical apparatus, the system as a whole has failed to cope. Its response compares unfavorably with that of many less rich, less medically equipped nations. In the United States, testing, prevention, treatment, and vaccination remain uneven, inadequate, and slow.

During the last capitalist crash of comparable scope, the 1930s Great Depression coupled with World War II, the pre-1930s' extremely unequal distributions of wealth and income were reduced by over a third. In sharp contrast, this latest capitalist crash coupled with a pandemic increased already extremely unequal distributions. U.S. capitalism's flexibility from 1930 to 1945 compares with the rigidity of its income and wealth distributions now. Then a nation rallied in the face of massive dangers. Now that nation splits. A capitalism still ascending back then became ossified, and decline set in.

The last 40 years of redistributing income and wealth upward from the poor and middle class to the top culminated with Trump's 2017 tax cuts. Over the 30-plus years before 2017, corporations and the richest 10 percent (who own more than 80 percent of stock market securities) had enjoyed unprecedented gains, absolutely and relative to the other 90 percent. They "needed" a massive tax cut less than ever. But the GOP's control of the U.S. government could and therefore did gift it to them anyway. This worsened the already fast-rising reliance on deficits and national indebtedness that followed the 2008-09 crash. The unprecedented and continuing explosion of money and national debt increases are the public finance signs of capitalist decline.

When the Roman Empire declined, many blamed the resistances arising within its far-flung areas for the decline. They were called "barbarians," denounced as "invaders," and generally scapegoated to distract attention from plentiful signs of internal decay. Today, the anxiety about and demonization of immigrants and all manner of foreigners "cheating" the United States, economically and politically, are likewise signs of decline. The United States' remarkable economic growth across its history "solved" its labor problems by a combination of rising wages for workers already here plus massive immigration of lower-wage workers. A rising capitalism needed and could accommodate both parts of that solution. Today's U.S. capitalism can accommodate neither.

The United States' recent wars in Afghanistan and Iraq were neither necessary nor successful in military terms. They did enable massive government spending and justified rising "defense" outlays in federal budgets. The Soviet Union as a great enemy had gone. A limitless, global war on "terrorism" provided an interim foreign danger until today's pivot toward a new Cold War with China could settle in as a prime justification. But whatever global protection the U.S. military provides to today's global and vulnerable supply chains, huge military spending also helped cause neglect of infrastructure maintenance. That has now become urgent. The old guns versus butter problem typically attends economic system declines.

As the U.S. government tries desperately to manage the mushrooming costs of its foreign and domestic programs, it resorts to a modern version of the ancients' "debasing of the coinage." The Federal Reserve System monetizes deficits in fast-growing magnitudes. Given unemployment, constricted wages, and excessive personal debt levels, the money creation does not flow into real investment but rather into stock markets. Inflation there has thus been real, fueling ever-deepening wealth inequality. We get promises that money creation will never shift its focus onto goods and services, thereby provoking classic inflation. We get assurances that the Fed will register and control such an inflation if it threatens. Those promises and assurances aim to help prevent what those in charge know are terrifying possibilities.

The January 6 assault on the Capitol made a shocked nation more aware of how deep its social divisions have become and how its social cohesion has disintegrated. Those who attacked the Capitol reacted to the decline of capitalism by desperate resistance: to an election result, to political liberalism, to multiculturalism, to secularism, and so on. Like Trump, they tried to reverse capitalism's decline. Because their ideology precludes them from recognizing that decline, they reason otherwise. They blame and therefore seek to dismantle the government. Yet, the U.S. government, via the two-party oligopoly in U.S. politics, has single-mindedly supported U.S. capitalism. The parties differ partly and only on how best to do that. As decline proceeds, despite the parties' efforts to stop it, building frustration eventually boils over. Efforts become extreme and thereby worsen rather than solve the problem. Trump's Cabinet members often devoted themselves to destroying their respective departments. The January 6 attackers sought to destroy as well. Such self-destruction is a sign of advanced system decline.

Throwing money now at the long-neglected U.S. infrastructure runs a risk of failure parallel to what happened to U.S. foreign aid and many U.S. military adventures. The U.S. federal spending involved always goes either to private corporations for contracted goods and services or else it goes to governments, foreign or domestic, local, regional or national. The recipient governments likewise use them for contracts with private corporations. Large private corporations will, for example, carry out most of the work of U.S. infrastructure repair and updating.

The contracted corporations will in turn use the money paid to them just as they use all their revenues from all their other contracts. Some of the money will go to employees' wages and salaries, but much of it will go to all the other "normal costs of doing business." These include high salaries for middle management and luxurious pay packages for upper management, machines for automation, relocating facilities from higher-wage areas to lower-wage areas to enhance profits, dividend increases for shareholders, interest on and repayment of corporate loans, and fees paid to outside consultants (hired to help plan corporate growth, overseas investments, and defeating union drives). In short, federal spending will flow into corporate hands who will then reproduce the very system that neglected infrastructure and deepened income and wealth inequalities over recent decades.

The system's decline is reproduced because its leaders cannot see the internal production structure of U.S. capitalism as a central problem, let alone change it. U.S. factories, offices, and stores are nearly all divided into a dominant minority of owners and boards of directors versus a dominated majority of employees. That structure is deeply undemocratic. Employers are not accountable to employees. They use their position to enrich themselves relative to employees, increasingly so over the last half-century. The minority's unstable investment decisions (driven by irreducible uncertainty and what John Maynard Keynes called "animal spirits") impose recurring, costly business cycles on society. The tensions and antagonisms between employers and employees upset and undermine physical and mental health and the vaunted "efficiency" of the system at every turn.

Because the signs of U.S. capitalism's decline are denied or misunderstood, they lead individuals and groups often to resort to frustrated, misguided, and desperate acts. They are blind to the structural problem of an economic system no longer capable of dealing with its contradictions. Thus, the decline accelerates: like a train rushing down a track toward a stone wall. Most of its conductors and passengers either see no signs or else note them but without connecting them to their basic problem: being on a moving train on track to hit a stone wall.

Richard D. Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, and a visiting professor in the Graduate Program in International Affairs of the New School University, in New York. Wolff's weekly show, "Economic Update," is syndicated by more than 100 radio stations and goes to 55 million TV receivers via Free Speech TV. His three recent books with Democracy at Work are The Sickness Is the System: When Capitalism Fails to Save Us From Pandemics or Itself, Understanding Marxism, and Understanding Socialism.

This article was produced by Economy for All, a project of the Independent Media Institute.

Republicans repeat a big mistake in their counteroffer to Biden's infrastructure plan

Remember back when Senate Republicans presented a ridiculously underfunded and insulting COVID-19 relief plan in response to President Joe Biden's American Rescue Plan? One that solved absolutely nothing for hurting Americans and was so blatantly bad that Biden had no qualms about dismissing it out of hand? How they were basically laughed out of the negotiating rooms?

Senate Republicans apparently don't remember it, because they're doing it again. To counter Biden's $2 trillion proposed investment in the American Jobs Plan to restore crumbling infrastructure and start to address the threat of climate change, Republicans have this: a $568 billion proposal limited almost entirely to transportation and broadband. And make Americans pay for it through higher fees for driving electric vehicles.

Demonstrating their rock-solid commitment to the fossil fuel technology of the last century, the Republican plan doubles what Biden would spend on roads and bridges, $299 billion. It would spend the remainder on narrow range of other projects, including $61 billion for public transit, $44 billion for airports, $65 billion for broadband internet access, and $35 billion for water and wastewater projects. They seriously want to pay for this through user fees including new fees for owners of electric vehicles—penalizing the businesses and individuals who are trying to reduce their carbon output and save the world. (Because of course that's who Republicans think should be paying.) They also want to claw back any unspent COVID-19 relief money, because of course they do. They're Republicans.

Biden's proposal includes $115 billion to modernize the bridges, highways, and roads of the fossil fuel age. His proposal includes another $85 billion for public transit, $80 billion for Amtrak, and $174 billion to build 500,000 electric vehicle charging stations, electrify 20% of school buses, and electrify the federal fleet. He'd spend $100 billion on broadband, $25 billion for airports, and $111 billion for water projects. Biden also includes a critical $400 billion for home-based care for elderly and disabled people and $300 billion toward building and retrofitting safe homes.

This idea from Republicans is still basically just a sketch, but its lead author, West Virginia Republican Sen. Shelley Moore Capito, touts it as "the largest infrastructure investment Republicans have come forward with." Which is pretty pathetic when you really think about it. Much of it doesn't include any new spending projects but is just tacking some increases to existing programs.

Again, that's in contrast to the new programs Biden is proposing to expand the number of electric vehicles on the roads, to modernize schools and public housing, and to address not just climate change but social ills as well. That includes replacing every lead water pipe in the country. It includes addressing the decades of racial inequity in how this nation built itself.

That includes funds to find ways to "reconnect" communities of color that were bulldozed, paved under, and cut into parts by previous redevelopment and urban renewal programs that emphasized building highways to bring white suburbanites into cities by plowing through existing neighborhoods. So of course Republicans are opposed to that.

This is supposed to be the "good faith" effort to show they want to be engaged in this process. They have to at least pretend at this point, because it's what the American people want.

What Republicans have come up with here isn't even enough to satisfy the Senate Democrats like Joe Manchin and Chris Coons, who have been insisting Republicans will help and that this can be done with bipartisanship. But what they were talking about was an $800 billion offer from Republicans, one that showed they were serious. What they got instead was this.

Republicans have no new ideas. They are so out of the habit of actual governing that the best they can do is crib stuff from previous bills and use pixie dust and "owning the libs" to pay for it. They're actually proud of this. They're bragging about how far they've been willing to go.

Foxconn 'drastically' scales back the Wisconsin project that was a key part of Trump’s 'America first' agenda

In 2017, then-President Donald Trump and his allies promised that the Foxconn deal — a key part of his "America first" agenda — would create countless new jobs in Wisconsin. But the Taiwan-based electronics manufacturer, according to CNBC, is "drastically scaling back a planned $10 billion factory" inthe midwestern state.

Foxconn, on April 20, announced that its investment in Wisconsin is being reduced from $10 billion to $672 million — and the number of new jobs planned for the facility is being reduced from 13,000 to 1,454.

Foxconn announced, "Original projections used during negotiations in 2017 have, at this time, changed due to unanticipated market fluctuations."

CNBC notes, "Foxconn, the world's largest contract manufacturer of electronic devices, proposed a 20-million-square-foot manufacturing campus in Wisconsin that would have been the largest investment in U.S. history for a new location by a foreign-based company…. But industry executives, including some at Foxconn, were highly skeptical of the plan from the start, pointing out that none of the crucial suppliers needed for flat-panel display production were located anywhere near Wisconsin."

Wisconsin, a state that Trump won in 2016's presidential election but lost to now-President Joe Biden four years later, has had a great deal of debate about the merits of the Foxconn deal. Trumpistas pointed to the deal as proof that Trump was a major job creator, while Trump's critics viewed it as corporate welfare for a foreign company. CNBC points out that the deal's critics didn't like the fact that it "granted extensive water rights and allowed for the acquisition and demolition of houses through eminent domain."

According to Democratic Wisconsin Gov. Tony Evers, Foxconn's change of plans will save taxpayers in his state "a total of $2.77 billion compared to the previous contract, maintain accountability measures requiring job creation to receive incentives, and protect hundreds of millions of dollars in local and state infrastructure investments made in support of the project." And Wisconsin will reduce the tax credits for the project from $2.85 billion to $80 million.

New report reveals what Joe Manchin told corporate lobbyists behind closed doors

Democratic Sen. Joe Manchin of West Virginia on Tuesday reportedly mocked the popular push for a $15 federal minimum wage during a private event with restaurant industry lobbyists, telling attendees he prefers an hourly wage floor of $11 and nothing "above half of that" for tipped workers.

According to The Daily Poster, Manchin specifically singled out Sen. Bernie Sanders (I-Vt.)—one of the leading proponents of a $15 minimum wage in Congress—in remarks at the conference, which was hosted by the National Restaurant Association (NRA), a powerful lobbying group that has been fighting the Raise the Wage Act for years.

"We've been having meetings on minimum wage, and I can't for the life of me understand why they don't take a win on $11," said the West Virginia senator. "Bernie Sanders is totally committed in his heart and soul that $15 is the way to go. Well, it might be the way to go, Bernie, but it ain't gonna go. You don't have the votes for it. It's not going to happen. So they're going to walk away with their pride, saying we fought for $15, got nothing."

"If it comes down to one person," Manchin added, "I don't believe it should be above $11, I don't think the tipped wage should ever go above half of that."

The Daily Poster's Joel Warner and Andrew Perez reported that Sean Kennedy, the NRA's top lobbyist, "couldn't contain his excitement" at Manchin's comments.

"From your lips to God's ears," said Kennedy, who sent a letter (pdf) to congressional leaders in February urging them to reject the Raise the Wage Act of 2021, which would gradually raise the federal minimum wage to $15 an hour by 2025 and phase out the subminimum wage for tipped workers—a proposal that's anathema to many in the restaurant industry.

Last month, Manchin was one of eight Democratic senators who joined Republicans in voting down Sanders' attempt to reattach a $15 minimum wage provision to the American Rescue Plan, a coronavirus relief package. Senate Democrats removed the provision from the original bill in deference to the Senate parliamentarian, an unelected official who said the proposed wage hike violated arcane budget reconciliation rules.

Sen. Kyrsten Sinema (D-Ariz.), who voted against the Sanders amendment with a theatrical and now-infamous thumbs-down, joined Manchin in speaking at the NRA event on Tuesday.

During her remarks, according to The Daily Poster, Sinema said she believes that "achieving lasting results on the issues that matter to everyday Americans really requires bipartisan solutions."

HuffPost reported earlier this month that Sinema is working with Sen. Mitt Romney (R-Utah) on legislation that would increase the federal minimum wage, but the details—including the wage floor the bill will propose—have not been finalized. The federal minimum wage, which currently sits at $7.25 an hour, has not been raised since 2009.

Asked about the Sinema-Romney bill, Manchin told HuffPost, "I think it's $11."

If so, that would be lower than the current $12 minimum wage in Sinema's home state of Arizona, where a strong majority of voters favor raising the federal minimum wage to $15 an hour.

Progressives fume as Democrats eye smaller corporate tax hike to appease centrists

Senate Democrats are reportedly considering lowering the corporate tax rate proposed in President Joe Biden's infrastructure plan from 28% to 25% to mollify centrists in the caucus, a backtrack that would leave hundreds of billions of dollars in potential revenue on the table.

Citing sources close to negotiations over the nascent infrastructure package, Axios reported Sunday that "Democrats close to the White House expect Biden will accept 25% and pocket it as a political win."

But progressives found little to celebrate in settling for a corporate tax rate 10% lower than it was during the Obama administration. In 2017, then-President Donald Trump and congressional Republicans lowered the rate from 35% to 21% as part of their massive and unpopular tax cut legislation.

"The top corporate tax rate before Trump was 35%. Saying 'corporations must pay their fair share' should mean that pre-Trump rates are the starting point," said Ohio congressional candidate Nina Turner. "We also need to close the loopholes companies use to get away with paying $0 in federal income taxes."

Earlier this month, Sen. Joe Manchin (D-W.Va.)—the most conservative Senate Democrat and a key swing vote—said in an appearance on a local radio show that he and "six or seven other" Democratic senators "feel very strongly" about moving to a 25% tax rate instead of 28%. Senate Democrats can't afford to lose a single vote given their narrow control of the upper chamber, leaving individual senators with significant power to shape legislation.

According to Axios, "Democrats who've privately hinted they may be uncomfortable with going to 28% include Sens. Tim Kaine and Mark Warner of Virginia, Kyrsten Sinema of Arizona, and Jon Tester of Montana."


Manchin, for his part, has offered little by way of concrete justification for his push for a smaller corporate tax hike. In 2012, the West Virginia Democrat supported an Obama proposal to lower the corporate tax rate from 35% to 28%—a rate Manchin now apparently believes is too high.

In response to Manchin's new stance on the 28% rate, political commentator Mehdi Hasan mocked the notion that Manchin "has put some super serious thought into the difference between a 25% and 28% corporate tax rate and isn't just trying to split the difference between GOP outlier position and reasonable Biden proposal."

Haggling over the proposed corporate tax hike comes as Democrats are attempting to chart a path forward for Biden's infrastructure package amid unified Republican opposition to the roughly $2.3 trillion plan. Last week, Manchin's fellow West Virginia Sen. Shelley Moore Capito (R) suggested that keeping in place the current 21% corporate tax rate is a "non-negotiable red line" for the GOP in infrastructure negotiations—a position that one top Democrat rejected as absurd.

"Corporate revenue is down nearly 40% from the 21st century average since Republicans' tax giveaway," Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, said in a statement. "In 2018, the United States was dead last among OECD countries in how much corporate tax revenue it collected as a share of GDP."

"Republicans' insistence that the most profitable companies in the world shouldn't contribute a single penny to investments in roads, schools, and our clean-energy future is simply not acceptable," Wyden added.

Republicans lock in their losing position against Biden's American Jobs Plan

The more one thinks about the position Republican lawmakers are taking on President Joe Biden's American Jobs Plan, the more preposterous it seems.

In essence, they are eager to kill an infrastructure proposal that will create millions of jobs, in order to preserve the skimpy corporate tax rate they set in a 2017 law that absolutely bombed with the American public.

It's a loser any way you slice it, starting with the proposition that Americans never liked the GOP's tax giveaway to the wealthy to begin with, and still don't. A series of polls taken around tax time in 2019 found the GOP tax law was consistently underwater and peaked at 40% approval.

Yet this unfortunate piece of Trump-era legislation is indeed where Republicans have planted their flag, in service of maintaining an obscenely low corporate tax rate of 21% when most Americans already believe corporations aren't paying their fair share. In fact, multiple polls have now shown that increasing corporate taxes to help fund Biden's infrastructure package actually makes the plan more popular.

Even as Republicans seem keen to pick this fight, corporate America has been a bit more skittish about it. CNBC reports that businesses were "divided" over how aggressively to combat Biden's suggested tax hike to 28%, which is still 7 points lower than the 35% they paid before Republicans slashed it. Biden's 28% proposal is also very competitive with the tax rates of similarly situated countries.

But at the end of the day, corporations both want and need the $2.3 trillion overhaul to the nation's ailing infrastructure and have been mulling "whether to put up much of a fight," according to CNBC. Additionally, taking the position that major businesses shouldn't help foot the bill for investments that will clearly benefit them seems almost preposterous. The U.S. Chamber of Commerce, for instance, said the country needed "a big and bold program to modernize our nation's crumbling infrastructure." But the Chamber also opposed the tax increase, explaining the plan "should be paid for over time—say 30 years—by the users who benefit from the investment." The suggestion, in case you missed it, is that American corporations somehow won't be benefitting from the investment.

But corporate opposition is already faltering. Outgoing Amazon CEO Jeff Bezos has thrown his weight behind Biden's plan, specifically saying he was "supportive of a rise in the corporate tax rate" and hailing the administration's "focus on making bold investments in American infrastructure." The benefits of the overhaul, in Bezos' estimation, clearly outweighed the costs of a several-point bump in the tax rate.

This week, a new center-left group associated with Amazon also backed Biden's plan. The Chamber of Progress, a tech industry group funded by behemoths like Amazon, Facebook, and Google, announced its support in a Medium post titled, "A deal the tech industry can embrace: Pay more taxes, get better infrastructure."

Chamber of Progress founder and CEO Adam Kovacevich quoted none other than Treasury Secretary Janet Yellen in his post, noting her observation that "by choosing to compete on taxes, we've neglected to compete on the skill of our workers and the strength of our infrastructure. It's a self-defeating competition."

In essence, Republicans' indefensible position against raising taxes is already imploding, and they are barely a few weeks into the fight.

Even centrist Democratic Sen. Joe Manchin of West Virginia—who has promised Republican votes exist on infrastructure—seems unimpressed by the GOP's starting position of a $600 to $800 billion package. "We're going to do whatever it takes. If it takes $4 trillion, I'd do $4 trillion, but we have to pay for it," Manchin said Thursday, noting that lawmakers still needed to identify what type of investments should be included in the bill. "There's no number that should be set on at all," he added.

Wherever Republicans land, it seems safe to say that $4 trillion is a far cry from $600 billion. Manchin has also indicated an openness to raising the corporate tax rate to 25%. In fact, if anything, Manchin already seems a little annoyed by Republicans' unyielding opposition to President Biden's proposals.

"I just hope they help me a little bit in bipartisanship," Manchin said of Republicans. "That's all."

Perhaps the GOP's "red line" on raising corporate taxes is already wearing thin with one of the only Senate Democrats willing to entertain Republican antics.

So just to sum up: Republicans are trying to sell voters on the notion that it's worth killing jobs to protect a corporate tax cut they never liked to begin with, while corporations themselves splinter on the matter and one of the GOP's only Democratic allies feels further alienated.

Please proceed, senators.

Liberal economist Paul Krugman believes that a leading Democratic NYC mayoral candidate is ‘demonstrably wrong’ on economics

Economist Paul Krugman is a liberal. New York City mayoral candidate Andrew Yang is a liberal/progressive. But in a New York Times column published on April 15, Krugman explains why he is vehemently opposed to one of Yang's most talked-about proposals: giving a monthly check of $1000 to every resident of the United States.

Krugman has been an unapologetic supporter of New Deal and Great Society economics, explaining in one New York Times column after another why liberalism has been great for the U.S. economically — and he is a scathing critic of the modern Republican Party. Far-right pundits at Fox News and Fox Business hate his guts, which as Krugman's admirers see it, shows that he is doing his job well.

Yang, meanwhile, is to the left of Krugman on economics. And after proposing a guaranteed monthly income of $1000 for all Americans in the 2020 Democratic presidential primary, he has proposed that idea again as one of the contenders in New York City's Democratic mayoral primary.

"Will Andrew Yang, the current frontrunner, become New York City's next mayor?," Krugman writes. "If he wins, would he be any good at the job? I have no idea, although I'm skeptical about the latter. My guess is that the mayoral office needs an effective political brawler, not an intellectual — and Yang, who has never held office, owes his prominence largely to his reputation as a thought leader, someone with big ideas about economics and policy. What I do know is that Yang's big ideas are demonstrably wrong."

Krugman continues, "Yang's claim to fame is his argument that we're facing social and economic crises because rapid automation is destroying good jobs and that the solution is universal basic income — a monthly check of $1000 to every American adult. Many people find that argument persuasive, and one can imagine a world in which both Yang's diagnosis and his prescription would be right. But that's not the world we're living in now, and there's little indication that it's where we're going any time soon."

The economist/Times columnist goes on to lay out some reasons why he opposes Yang's proposal of $1000-per-month checks from the federal government for all Americans.

"It's both too expensive to be sustainable without a very large tax increase and inadequate for Americans who really need help," Krugman argues. "I've done the math…. These payments would also be grossly inadequate for Americans who actually did lose their jobs, whether to automation or something else."

Krugman adds, "The best way to provide an adequate safety net is to make aid conditional. We can and should provide generous aid to the unemployed; we can and should provide aid to families with children. But sending checks to everyone, every month, is just too poorly focused on the real problems."

Yang, who comes from a tech background, believes that automation, in the future, will displace huge numbers of Americans. Krugman, however, doesn't view automation as the real culprit when it comes to the United States' income inequality — which he blames, to a large degree, on GOP tax policies and the decline of unions.

"The real story of inequality and wage stagnation in America has a lot to do with the decline of unions and workers' loss of bargaining power, but some commentators are uncomfortable talking about power relations and would rather blame technology," Krugman writes. "You could argue that none of this is particularly relevant to running New York City, and in a direct sense that's clearly right. But if Yang does become mayor, it will be because voters have a vague sense that he's a man with deep insights proposing smart progressive policies. Unfortunately, that's not who he is."

Here's why 'every American' can relate to cults

"If you ask me where I'm from, I'll lie to you," Lauren Hough writes in the first line of her debut essay collection. "I'll tell you my parents were missionaries. I'll tell you I'm from Boston. I'll tell you I'm from Texas. Those lies, people believe." The truth is she was raised all over the world in the infamous Children of God cult, a detail she kept secret for years until, with the help of the internet, she was able to connect with others like her. It turns out, as "Leaving Isn't the Hardest Thing" (Vintage Books, out now) reveals in prose that crackles with dark wit, sharp observations and stunning revelations, surviving a childhood shaped by an abusive cult with her ambition intact may have uniquely positioned Hough to see not only authoritarian religions, but America itself — its military, its criminal justice system, its bigotries, the precarious edge upon which it positions its working class — through the clearest of eyes.

Hough's book has been hotly anticipated since her HuffPost essay, "I Was A Cable Guy. I Saw The Worst Of America," went viral in 2018. In that essay and 10 others, Hough writes about navigating her way through a multitude of identities, regions, and subcultures, daring to tell the truth about America from the inside and out.

I spoke with Hough by phone last week, shortly after the delightful news broke that Cate Blanchett would be joining her in narrating the audiobook. Our conversation has been lightly edited for length and clarity.

One thing that I was really struck by in this book is how deeply it grapples with loneliness, particularly a specific kind of loneliness that occurs when a person is surrounded by others — first in living in group homes with the Children of God, and then with your family, and then with roommates in tiny spaces. It reaches an apex in the scenes when you're incarcerated in solitary confinement. America is supposedly this obscenely chatty, gregarious country and people, but studies also show that we're also a really lonely country. What do you think creates this paradox?

It's funny you said "chatty," because I figured out a long time ago if I talk a lot, I don't have to say anything. When you meet people, if you seem earnest — well, not earnest, I avoided that — but if you seem like an open book, and you have plenty of stories to tell, and you drop in, "Yeah, my parents were missionaries, f**king hippies, don't know what to tell you," and change the subject, people don't ask any questions. They think they know everything there is to know about you. I think we just don't connect. Nobody who's ever asked, "How are you?" in America has actually meant the question or wanted an answer. And I think that's becoming really apparent with the pandemic, because now people ask, "How are you?" and you get a world full of tragedy.

People will tell you their answer now. But are we ready to hear it?

We're not. We're just unloading on random strangers. How are you? Well, my dog died last week. Everybody has this tragic thing, and I don't think we're capable of pretending anymore and answering, "Fine, how are you?" and moving on from the conversation. We're all experiencing that loneliness right now. We're just, deeply, deeply, deeply desperate to connect.

That brings up the question of whether we're being reshaped as a people by the pandemic. Everyone is going through this big trauma but isolated from each other. As Americans, we still want to buy into this myth that this is a country where you can always start over — fresh start, clean slate, you can be whoever you want to be. Do you think that we will be able to move on for real from this? Will we just clean slate, memory-hole this last year?

I hope not. Everyone's talking about going back to normal, and normal wasn't that f**king good for a lot of us. Normal was awful. I hope we don't go back to normal. I hope we experience something together and remember it, but we're really good — as a country, as a culture — of just shoving s**t down and not thinking about it.

The term "essential worker" has become such an irony-laden term over the last year, as we apply it to the folks who stock the shelves and run the checkouts at the supermarket, or work in the warehouses that service our two-day shipping, despite the the humiliating and debilitating demands that are placed on them. And that ties in closely to one of your running threads in the book about how class and labor and gender intersect, how the American workplace's principle of your time is not your own when you're on the clock then manifests itself as therefore your body is not your own. What do you think that the mainstream media misses about America's working class, when they have such a narrow slice of it they want to focus on — namely white, conservative, straight cisgender men without college degrees?

I think the biggest problem there is the working class isn't sitting in a diner hanging out all morning [talking to journalists]. The working class is sh**ting in a Big Gulp cup in the back of their work van, because there aren't any bathrooms around. It's been infuriating to watch. People will gladly cheer for essential workers, but won't pay them.

Just f**king pay people. Nobody needs to be cheered. It's like being a veteran, being thanked for your service while they cut VA benefits. Support our troops — but not if you need anything!

America hates talking about class, right?

Yeah, we really do.

Which means hating talking about a lot of things that intersect with that, too.

We just don't like to be inconvenienced. We'll gladly support essential workers as long as it doesn't mean anything about our lives has to change at all. It's funny talking about it right now, because I just tried to commit career suicide the other night, and it backfired on me — apparently I suck at that. I picked a fight with Amazon, and told people to cancel their [book] orders. I really thought I'd get in trouble. And apparently, it's not a bad idea to make bookstores love you.

Most people have heard my name because I wrote an essay about needing to pee. When I was trying to figure out how to write it, I was talking to a couple guys I knew and I asked them for stories. Do you guys remember anything that happened? Because I don't remember 10 years. I said to my friend Andre that really, I just remember needing to pee. He was like, well, there's the essay.

I don't know that a lot of people who work in offices understand. It depends on the office, I mean, if you're working in call center, I'm talking about you. But yeah, I don't think people understand how you have to ask for a day off and beg and have a really good excuse or you just don't get one.

And we're seeing now, with sick leave, how do you stop a pandemic when people have to work sick?

And working through sickness or injury has lasting effects. I have this sentence you wrote on opiate addiction highlighted: "People are in pain, because unless you went to college, the only way you'll earn a decent living is by breaking your body or risking your life." It's so rare, almost like a Bigfoot sighting, to see this point about addiction raised in discussions about class and work in America. There's often a romanticization of "the trades" out there by people who do work in offices, who seem to want to ignore how physical that labor is, and how a lot of people can't keep doing it for their whole life.

Not at the pace that we're required to work in our Protestant work ethic. A month off in August, like the Europeans have, might have a lot of effect on how our bodies feel. But we don't have time to heal. We can't go to a doctor. How do you get better if you don't get medical care? Even if you have health insurance, you don't have time off to do it.

There's constant jokes about rednecks and their opioids. It's not "rednecks and their opioids," people are in pain. And the doctor prescribes them opioids because they have to go back to work the next day. Or their buddy gives them a few because they have to go back to work the next day, and it's really easy to get addicted. I got addicted after I had a sinus surgery. It took maybe a week of intense pain and horrific withdrawals that were real. And I don't even like opioids, I get nauseated on them, so I don't take them. But yeah, it's really easy to get addicted.

Let's talk about the word "cult." Your book is not a tell-all cult memoir. But you write about your childhood with the Children of God as the big secret you carried for much of your life. If you start listening for the word "cult" it's kind of everywhere these days. Donald Trump voters are a cult. QAnon is a cult. CrossFit is a cult. On one hand, maybe we're diluting this term. But I think your book also makes a strong case that cult-like leadership behavior shapes a lot of our mainstream institutions, too.

Yeah, I think that's what I wanted to say with that. I spent most of my life just twitching at the word "cult." But when you start talking about and thinking about what it actually was, it's not all that different from what most of us experience as Americans, or as employees of a store that want you to be loyal to the store instead of paying you [well]. We throw the word around a lot, but maybe it's appropriate. And maybe it's fine that it's diluted, because it's apt. Our groupthink, our tribalism, our gather together to follow personalities instead of policy [tendencies] in politics. It's kind of bizarre, but I thought [being in a cult] was this huge secret, and it turns out pretty much every American can relate to it.

There's aspects of it in how you write about the military. There's definitely strong parallels made to mainstream religions, as well, and evangelicalism.

That was the shocking thing, coming out of the cult and realizing none of their beliefs were really that weird.

I really thought it was just a Children of God thing: We thought the Antichrist was coming, there would be a mark of the beast. And now, there are entire Facebook groups dedicated to warning you the vaccine's going to insert the mark of the beast into you. And it's still a little baffling to me. I really thought the end of the world would be more exciting and less f**king stupid. I'm supposed to be fighting the Antichrist, and I'm just not putting a bra on and watching Netflix.

Speaking of Netflix. There was that "SNL" musical sketch a few weeks ago about women who like murder shows, and in the end, it takes that little turn when Nick Jonas comes home and is like, baby, let me introduce you to the cult show. There was a violent crime in my extended family, and I get twitchy about the idea of it popping up as a story on one of those murder comedy podcasts. So I wonder what it's like for you to see cult shows — docuseries like "Wild Wild Country" and the NXIVM exposés — out there in the pop culture discourse?

It doesn't make it fun to tell people you were in a cult when people start thinking about NXIVM. That documentary is problematic for me anyway, because you're asking people who've been out of a cult for a week to explain what happened to them. I mean, f**k, it's been 20 years, I still don't know what the f**k happened to my family. I wrote a book about it, but it's not an easy thing to explain. You can't be the expert on your own life, which is a really weird thing to say for someone who just wrote a book about my own, but — [laughs] I'm f**king selling it here —

This career suicide you keep trying to commit is not going to work.

I'm going to tank the book, goddamnit! Nobody read it. Please don't read my book. The more I tell people not to, they're just going to. We don't really follow orders really well. I do love that about Americans. [Laughs.]

I used to think we were watching the crime shows, especially as women, as homework. What situations to avoid, and what men to avoid. But we kind of already know not to get into a stranger's car. Also, now we do it as practice, to get any place you get in a stranger's Uber and drive around. I used to think we're doing this as homework, but I don't think — we're just feeding off of people's tragedies for entertainment. I don't know why we do that, except maybe our home lives are really too hard to look at. It's easier to look at something shocking and weird in someone else's life than understand why our lives are f**king miserable.

To go back to what you were saying earlier about companies that demand loyalty from their workers, maybe we're also looking for recognition in these more extreme cases?

Yeah, it might be. It also seems like more of an easy fix: Don't join a cult. Cool. Wrote that one down. If he starts branding people, you should probably leave. Those are all pretty easy fixes. But you know, we're looking at the next 20 years of our lives before we can retire going to work every day for a company that is a cult because they don't want to pay us or give us time off, in a country where we can't even get f**king health care or our college paid for. "Walk out when they start branding people," is pretty easy advice but we can't really escape our own lives.

Yeah, maybe it's supposed to make us feel a little better to like we're not we're not there yet.

America is kind of founded on Oh, at least I'm not that guy. That is what we've got.

You were joking earlier: Don't read my book, don't read my book! For writers who write memoir and essays, people read their work and they feel like they're very close to the writer. When in truth they only know what you're allowing them to know. This is a crafted work of art, and they're the reader, not a confidant. You've probably experienced the weird side of that: people feeling like they know you well enough to comment on you as if you're either a very intimate friend, or even like a character on a show that they watch. I'm curious about how you navigate that public attention now as a writer in light of what you've written about having to keep so much of your life private for so long.

Yelling "I'm a private person!" if you've just written a memoir is kind of like yelling, "I'm not crazy!" but it doesn't really jibe with the fact that I just put out a book of really personal essays. But they are kind of a snapshot. And I don't know that people understand that. We don't really understand the parasocial relationship as consumers. I understand a little more now that I'm on the other side of it. I whine a lot about not getting a book tour [because of the pandemic] because I feel like I'm getting robbed, but at the same time, I do get to avoid a whole lot of people trying to hug me. I don't think people wrote reviews of any David Sedaris book talking about how much they wanted to hug him. I don't think that happened. I don't think anyone's ever called Augusten Burroughs "brave" in a review, and I think there is a little bit of a sexist bent to it.

I put the book out. And that's what you get. We're all in therapy to figure out walls versus boundaries. And I'm trying to step away from Twitter a little bit. I mean, I'm still compulsively tweeting, God help me. But I'm trying not to put so much personal information out there. I got on there because I wanted to connect to other writers and figure out how to publish a book, but that's done now. And while I'm still trying to connect to people — we're all f**king lonely, sitting around in the pandemic, trying to talk to someone — but yeah, I don't want to be consumed, and it feels a lot like I am being consumed for entertainment.

You are a very funny writer. I think there is this perception out there, perhaps, that comedy is natural, it's innate, it's easy, if you're a funny person anyway. Not that it's a craft, a skill, that takes conscious work. You use humor very skillfully and adeptly in your essays in a way that feels like an act of writerly generosity, and it's a craft element that isn't always highlighted when we talk about essays on difficult subjects.

It is a skill level. How do you make child abuse hilarious?

How did you develop that muscle? Because you are very purposefully funny about topics which are also horrific.

Gallows humor has been around for a little while. I didn't invent it. We joke to process things.

I can get kind of emotional writing something and I want to make a point and I want to drive it home. But you have to add a little bit of levity or give people the tools to read it. Especially in the beginning, we add a few funny things to like, Hey, we're going to get through this. It's not going to be that bad. I'm not going to make you need a shower after you read this book. It's just practice. And Twitter came in handy there a lot. How to tell a joke? Follow a bunch of comics and watch the way they work, watch how they arrange a story so that it's funny, not tragic. The most tragic things can be the funniest. I just think it's the way our our emotions work. We like that release.

Who are you reading right now? What books are you excited about?

Speaking of serial murderers and podcasts, Elon Green wrote this book ["Last Call"] about a serial killer in the '90s who was killing gay men in New York. And he did it a different way, I think, than any of the podcasts. I tweeted about this other day, but really, really the worst thing I think that can happen to you besides being murdered by a serial killer, is to have someone on a podcast giggling about it. He put the victims in it first. He tells their stories. And they're treated with such tenderness. And he doesn't make them the perfect victim. It's this history of gay New York, which of course, I'm fascinated by because I was too scared to go to New York. So I like to read about it.

Your book gives a really great snapshot of a particular time in gay D.C. too, and also in the South, which is often overlooked in LGBTQ narratives. Like what it's like to try to find the one gay bar in a 100-mile radius of your rural town.

You don't think about it when you're living it. But any Gen Xer is now really horrified when it occurs to us that people are talking about the '90s like we used to talk about the '60s.

Jesus Christ. [Laughs.]

I'm sorry I just ruined your week.

I routinely feel old. But Don't Ask Don't Tell was only repealed 10 years ago. And I feel like that's something that has been memory-holed fast, like, well, that's over! In the same way that people tried to pretend that because we elected a Black man president, racism is now over! And the progress we have made feels so fragile right now. I think it's important that books like yours and Elon Green's are chronicling that time, which was not that long ago. But it is often treated like ancient history to be swept under the rug.

Yeah, we really don't like to look at our pasts. Which is the f**king problem. Because we're doing it to trans people now. There's a [North Carolina state] law that just passed where teachers have to report to parents if a kid doesn't fit the correct gender performance. And that's every tomboy. Every boy who's a little bit into art. And God help us, lesbians like to clearly pretend that trans rights have nothing to do with them. But it does. If someone is being oppressed, it really does affect all of us. And forgetting where we came from doesn't f**king help. We haven't won yet. I don't know that we're ever going to win. You do actually have to still keep fighting these things. Because yes, gay people are allowed in the military. And now finally trans people are allowed to be in the military. But they're not allowed to play high school sports?

People like to say about the generation coming up that they're not going to stand for this bigotry any longer, so its days are numbered. Is this the last gasp of institutional bigotry trying to sink its claws in before it's replaced? Or are we going to be fighting the same fights for years to come?

I mean, I thought Gen X would get rid of a lot of it because we were always watching MTV and they told us racism was bad. And we watched "The Real World," and we watched our favorite gay character die of AIDS. I thought we would make some changes. We've made a few. I have a lot of hope for the next generation that they'll make a few more. But that's a lot of weight to put on an 18-year-old.

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