Trump Takes On Amazon Again, Urging Much More in Postage Fees

President Donald Trump said the U.S. Postal Service should charge Amazon.com Inc. more to deliver packages, the latest in a series of public criticisms of the online retailer and its billionaire founder.

The post office “should be charging MUCH MORE” for package delivery, the president tweeted Friday from his Mar-a-Lago estate in Florida, where he’s spending the holidays.

“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer?” Trump told his 45 million followers.

Trump regularly criticizes Amazon and its chief executive officer, Jeff Bezos, who also owns the Washington Post newspaper and is currently the world’s richest man. In August, Trump accused the company of causing “great damage to tax paying retailers,” even though the internet giant began collecting sales tax on products it sells directly in April.

As with prior missives targeting the company, Trump’s message appeared to concern investors. Amazon’s stock had gained the past three days, but dropped 0.6 percent to $1,178.68 at 12:41 p.m. in New York.

A sudden increase in postal service rates would cost Amazon about $2.6 billion a year, according to an April report by Citigroup. That report predicted United Parcel Service Inc. and FedEx Corp. would also raise rates in response to a postal service hike.

Amazon didn’t respond to requests for comment.

‘Last Mile’

Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and businesses daily. It has a network of more than 20 “sort centers” where customer packages are sorted by zip code, stacked on pallets and delivered to post offices for the final leg of delivery.

While full details of the agreement between Amazon and the Postal Service are unknown — the mail service is independently operated and strikes confidential deals with retailers — David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40 percent of Amazon’s volume the previous year. He estimated at the time that Amazon pays the Postal Service $2 per package, which is about half what it would pay UPS or FedEx.

Both shippers were up less than 1 percent Friday. Higher postal service rates would benefit private carriers by making their rates more competitive.

But the postal service’s losses have little to do with Amazon and more to do with its large health-care obligations and the dwindling use of first-class mail. USPS charges some of the world’s lowest stamp prices.

The president’s tweet also assumes that Amazon would be forced to pay if the Postal Service increased its rates for packages. But Amazon has been setting up its own shipping operations in the U.S. and elsewhere in the world to minimize costs.

For more on Trump’s Twitter storms, check out this podcast:

 

$62 Billion Loss

The Postal Service reported a net loss of $2.1 billion in the third quarter of 2017 and has $15 billion in outstanding debt. The service has lost $62 billion over the last decade.

USPS’s chief financial officer, Joseph Corbett, wrote in a post for PostalReporter.com in August that the service is required by law to charge retailers at least enough to cover its delivery costs.

“The reason we continue to attract e-commerce customers and business partners is because our customers see the value of our predictable service, enhanced visibility, and competitive pricing,” he wrote.

He said Congress should pass provisions of legislation introduced last year by former Representative Jason Chaffetz, a Utah Republican, that would allow the postal service to raise some rates and discontinue direct delivery to business customers’ doors.

Amazon is experimenting with a new delivery service of its own that is expected to see a broader roll-out in the coming year. Under the program, Amazon would oversee the pickup of packages from warehouses of third-party merchants and delivery to home addresses.

Despite the occasional anti-Amazon tweet, Trump is unlikely to target Amazon with any action because the company is creating jobs by building new warehouses around the country. It’s also expected to generate 50,000 new positions with its second headquarters, said James Cakmak, analyst at Monness Crespi Hardt & Co.

“The interests of Amazon and the administration are largely aligned – even factoring the dislocation to retail – given the positive headline potential around new job creation with fulfillment centers and HQ2,” he said.

    Read more: http://www.bloomberg.com/news/articles/2017-12-29/trump-says-u-s-post-office-should-charge-amazon-much-more

    Senate Passes Tax-Cut Bill in Milestone Move Toward Overhaul

    Senate Republicans narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans.

    The 51-49 vote — achieved just before 2 a.m. Saturday in Washington and only after closed-door deal-making with dissident senators — brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. 

    After the vote, Trump said on Twitter that he looks forward to signing a final bill before Christmas. Vice President Mike Pence tweeted that a pre-Christmas tax cut would be a “Middle-Class Miracle!”

    Before it goes to Trump, lawmakers will have to resolve differences between the Senate bill and one the House passed last month, a process that could begin Monday. Although both versions share common top-line elements, negotiations on individual provisions inserted to win votes, particularly in the Senate, may be protracted and difficult. The final product will end up being a central issue in the 2018 elections that will determine control of Congress.

    “We’re going to take this message to the American people a year from now,” Senate Majority Leader Mitch McConnell said after the vote.

    Speaking in New York on Saturday, Trump also predicted the tax package would be a winner for Republicans in the 2018 midterm elections. “We got no Democrat help and I think that’s going to hurt them in the election,” Trump said at a fundraising event.

    Read about the sticking points between Senate, House bills.

    Both the House and Senate measures would cut the corporate tax rate to 20 percent from 35 percent — though the Senate version would set that lower rate in 2019, a year later than the House bill would. Also, the Senate bill, unlike the House version, would provide only temporary tax relief to individuals, ending tax cuts for them in 2026. Both bills are expected to add more than $1.4 trillion to the federal deficit over 10 years, before accounting for any economic growth.

    Senator Bob Corker of Tennessee, who had cited concerns over the bill’s effects on federal deficits, was the only Republican dissenter. McConnell rejected revenue scores that suggested the bill’s tax cuts would add to the deficit. He predicted it would be a “revenue producer” by stimulating economic growth. Congress’s official tax scorekeeper this week said otherwise.

    The House and Senate bills also align on the contentious issue of individual deductions for state and local taxes: They’d eliminate all but a deduction for property taxes, which would be capped at $10,000.

    Mortgage Interest

    But they differ on the home mortgage-interest deduction; the House bill would restrict that break to loans of $500,000 or less with regard to new purchases of homes. The Senate legislation would leave the current $1 million cap in place.

    They also differ — narrowly — on the tax rates they’d apply to multinational companies’ accumulated offshore earnings. The House bill would tax those profits at 14 percent for earnings held as cash and 7 percent for less-liquid assets. The revised Senate bill contains a lengthy section that has no direct mention of the rates, but a person familiar with the Senate plan said they’d be 14.5 percent for cash and 7.5 percent for less-liquid assets.

    Senate Republican leaders muscled the sweeping legislation through the chamber less than two weeks after releasing the bill draft. Many GOP lawmakers, including Corker and Lindsey Graham of South Carolina, have expressed concerns that the party has little to show so far before next year’s congressional elections, after the collapse of an Obamacare repeal earlier this year and no action on issues ranging from immigration to infrastructure.

    ‘Working Families’

    Trump expressed gratitude to McConnell and Finance Committee Chairman Orrin Hatch for steering the measure through the Senate.

    “We are one step closer to delivering MASSIVE tax cuts for working families across America,” Trump wrote on Twitter.

    Republicans were able to bring the legislation to a vote using Senate rules that allowed them to approve it with a simple majority, therefore without any Democratic support. The GOP controls just 52 votes in the chamber, eight shy of what’s typically needed to move controversial measures that draw delaying tactics by opponents.

    Narrow Majority

    That narrow majority made it important for Senate leaders to try to hold every member’s vote; moderate Senator Susan Collins of Maine used that leverage to secure various concessions, including an agreement to enhance an individual deduction for large unreimbursed medical expenses through the end of next year. The House bill would eliminate that tax break.

    Democrats decried the bill’s deficit impact and complained they were shut out of the process to help draft the measure. They cited research showing that the legislation primarily benefits the nation’s highest earners and business owners, and will bleed federal revenues in a way that hurts domestic programs.

    “At a time of immense inequality, the Republican tax bill makes life easier on the well-off and eventually makes life more difficult on working Americans, exacerbating one of the most pressing problems we face as a nation — the yawning gap between the rich and everyone else,” said Minority Leader Chuck Schumer of New York during debate on the bill.

    ‘Back of a Napkin’

    Schumer noted that a set of last-minute revisions to the bill changed it in ways that had yet to be analyzed by the Joint Committee on Taxation, Congress’s official scorekeeper for the effects of tax legislation. “Is this really how Republicans are going to rewrite the tax code? Scrawled like something on the back of a napkin?”

    McConnell said the bill, the first text of which was introduced on Nov. 20, went “through the regular order.” He dismissed complaints like Schumer’s. “You complain about process when you’re losing,” McConnell said.

    Attention now shifts to a House-Senate conference committee — a specially appointed, temporary panel that will be charged with hashing out the differences in the bills and preparing a final version for both chambers to consider. Party leaders will select a small group of lawmakers, likely from the House and Senate tax-writing panels in each chamber, who would then be approved by each chamber.

    That work could start as early as Monday, with many high-stakes issues to be worked through. The deadline of Dec. 31 is an artificial one, though — aimed partly at securing a victory well in advance of the 2018 congressional elections. Republicans would have until the end of 2018 before they lose their ability to clear final passage in the Senate without a filibuster.

    Expensing Provision

    Both bills share some key central elements: They both almost double the standard deduction for individual taxpayers while eliminating personal exemptions. They both allow companies to fully and immediately deduct the cost of their spending on equipment for five years. But the Senate version would slowly step down the expensing provision after the five-year period — a feature that the House bill doesn’t provide for.

    Yet there are many differences — ranging from the taxation of business income to the amount set for the child tax credit — and Senate negotiators may have the upper hand during talks. That’s because the wafer-thin two-vote majority in the Senate will make it harder to usher a final bill back through that chamber.

    The House bill would consolidate the current seven individual tax brackets to four, leaving the top tax rate at 39.6 percent. The Senate bill would have seven brackets — with lower rates, and a top rate of 38.5 percent. Studies have shown that many of the tax bill’s benefits would go to the highest earners — and some middle-class taxpayers might actually pay more — a finding that could impact the House-Senate talks.

    The Senate bill includes a repeal of Obamacare’s mandate that most Americans have health insurance or pay a penalty. The House bill does not.

    Pass-Through Businesses

    Senators approved a 23 percent tax deduction — subject to certain limitations — on business income earned from partnerships, limited liabilities and other so-called pass-through businesses. The House version would create a 25 percent tax rate for such business income — with restrictions on which businesses could qualify. Small businesses would get extra relief under the House legislation as well.

    The House bill would also eliminate the estate tax, while the Senate version would limit the tax to fewer multimillion-dollar estates, but leave it in place. And after 2025, the limits would lift.

    Under current law, the estate tax applies a 40 percent levy to estates worth more than $5.49 million for individuals and $10.98 million for married couples. The Senate bill would temporarily double the exemption thresholds. The House bill would double the exemption thresholds, and then repeal the tax entirely in 2025.

      Read more: http://www.bloomberg.com/news/articles/2017-12-02/senate-passes-tax-cut-bill-in-milestone-move-toward-overhaul

      The GOP Tax Plan Is Entering Its Make-or-Break Week

      The $1.4 trillion item on President Donald Trump’s wish list — a package of tax cuts for businesses and individuals that he has said he wants to sign before year’s end — is headed into the legislative equivalent of a Black Friday scrum next week.

      Senate Republican leaders plan a make-or-break floor vote on their bill as soon as Thursday — a dramatic moment that will come only after a marathon debate that could go all night. Democrats are expected to try to delay or derail the measure, and the GOP must hold together at least 50 votes from its thin, 52-vote majority in order to prevail.

      Their chances improved this week when Republican Senator Lisa Murkowski of Alaska said she’ll support repealing the “individual mandate” imposed by Obamacare — a provision that Senate tax writers are counting on to help finance the tax cuts. Murkowski had earlier signaled some reservations about the provision; and her support was widely viewed as a positive sign for the tax bill’s chances.

      Trump is scheduled to address Senate Republicans at their weekly luncheon Tuesday afternoon on taxes and the legislative agenda for the rest of the year, according to a statement from Senator John Barrasso, chairman of the Senate Republican Policy Committee. 

      The White House previously announced that the president would talk with Republican and Democratic congressional leaders at the White House the same day about an agreement on spending to keep the government open after funding expires on Dec. 8. David Popp, a spokesman for Senate Majority Leader Mitch McConnell, and Drew Hammill, a spokesman for House Democratic leader Nancy Pelosi, both said that meeting is still on the schedule.

      If the tax bill clears the Senate — a step that’s by no means guaranteed — lawmakers in both chambers would have to hammer out a compromise between their differing bills, a process that presents potential pitfalls of its own. For now, though, much of the Senate’s attention will focus on its legislation’s price tag.

      Three GOP senators — Bob Corker of Tennessee, Jeff Flake of Arizona and James Lankford of Oklahoma — have cited concerns about how the measure would affect federal deficits. Independent studies of the legislation have found that — contrary to its backers’ arguments — its tax cuts won’t stimulate enough growth to pay for themselves. Both the Senate bill, and one that cleared the House earlier this month, would reduce federal revenue over a decade by roughly $1.4 trillion, according to the Joint Committee on Taxation.

      On Wednesday, a report from the Penn Wharton Budget Model at the University of Pennsylvania said the bill would reduce federal revenue in each year from 2028 to 2033. That finding would mean it doesn’t comply with a key budget rule that Senate Republican leaders want to use to pass their bill with a simple majority over Democrats’ objections.

      Budget Rule

      In essence, that rule holds that any bill approved via that fast-track process can’t add to the deficit outside a 10-year budget window. The JCT has already found that the Senate bill would generate a surplus in its 10th year because it has set several tax breaks for businesses and individuals to expire.

      But JCT hasn’t yet weighed in publicly on the revenue effects in subsequent years. Senate GOP leaders have expressed confidence that their proposal will satisfy the rule ultimately.

      Another potential stumbling block stems from the fact that Congress is trying to act on complex tax legislation under a tight, self-imposed timeline in order to deliver on promises from Trump, House Speaker Paul Ryan and McConnell.

      For example, Republican Senator Ron Johnson of Wisconsin has said he can’t support the current Senate bill because it would give corporations a tax advantage — a large rate cut to 20 percent from 35 percent — that other, closely held businesses wouldn’t get.

      ‘Change the Most’

      His concern centers on the Senate’s plan for large partnerships, limited liability companies, sole proprietorships and other so-called “pass-through” businesses. Under current law, these businesses simply pass their earnings to their owners, who pay income taxes at their individual rates — currently, as high as 39.6 percent, depending on how much they earn.

      Read more: A QuickTake guide to the tax-cut debate

      The Senate bill would provide pass-through owners with a 17.4 percent deduction for income — but in combination with other provisions, that would result in an effective top tax rate for business income that’s more than 10 percentage points higher than the proposed corporate tax rate.

      The House bill would use an entirely different approach, setting a top tax rate of 25 percent for pass-through business income, but then limiting how much of a business’s earnings could qualify for that rate.

      Reconciling those differences — and addressing Johnson’s concern — may be a complicated process. “That’s part of the equation that could change the most over the next few weeks,” Isaac Boltansky, senior vice president and policy analyst at Compass Point Research and Trading LLC, told Bloomberg Tax. “No one is planning around it yet. There is uncertainty across the board.”

      Meanwhile, the Obamacare issue looms in the background — threatening at least one GOP senator’s vote. Susan Collins of Maine said earlier this week that tax bill “needs work,” and “I think there will be changes.”

      The 2010 Affordable Care Act — popularly known as Obamacare — contained a provision requiring individuals to buy health insurance or pay a federal penalty. Removing that penalty in 2019, as the Senate tax bill proposes to do, would generate an estimated $318 billion in savings by 2027, according to the Congressional Budget Office. The savings would stem from about 13 million Americans dropping their coverage, eliminating the need for federal subsidies to help them afford it.

      Because many of the newly uninsured would be younger, healthier people, insurance premiums would rise 10 percent in most years, the nonpartisan fiscal scorekeeper found.

        Read more: http://www.bloomberg.com/news/articles/2017-11-24/trump-s-1-4-trillion-tax-cut-is-entering-its-make-or-break-week

        NFL’s Litany of Excuses Runs Out After Ratings Fall for Second Year

        TV networks are running out of excuses for the dwindling popularity of the National Football League.

        They blamed the election for ratings declines last year, and hurricanes for a soft week one in September. Protests during the national anthem, and President Donald Trump’s criticism of the league, have faded from the headlines. 

        Advertisers are starting to believe a different explanation: the viewers aren’t coming back. Audiences are down an average 7 percent from a year ago through the first eight weeks of the season, excluding last Monday. That’s on top of a decrease of about 8 percent last season that spurred numerous changes in the broadcasts, from shorter commercials to better matchups earlier in the year.

        “There’s just not as many people watching TV the way they used to watch TV,” said Jeremy Carey, managing director of Optimum Sports, a sports marketing agency. “It’s going to be an issue for advertisers when they can’t reach a large-scale audience the way they have.”

        With CBS Corp., 21st Century Fox Inc. and Walt Disney Co. set to report earnings in the next few days, analysts are bound to raise questions. These companies have used the popularity of the games to extract additional fees from cable operators, promote other shows on their networks and sell lots of commercials. Pro football games drew about $3.5 billion in ad spending last year, including the postseason, according to SMI Media Inc.

        Media companies have spent billions of dollars on the right to air football games, which had been immune to the erosion of viewership for other TV programming. Audiences for TV networks have diminished for years as the growing popularity of online alternatives Netflix and YouTube and the availability of most shows on-demand have reduced the appeal of dramas and comedies. Live TV, like sports, was supposed to be immune, but that theory looks highly questionable now.

        Ratings for the NFL suggest the same societal trends are now affecting the league, even if the declines aren’t as dramatic. The drop in game viewership ranges from 5 percent for NBC’s “Sunday Night Football” to 11 percent for the CBS Sunday package. “Monday Night Football,” on Disney’s ESPN, has attracted more fans this year than a year ago, but the numbers are still down from 2015.

        Viewership of the four main broadcast networks fell 8.7 percent last year, and 12 percent among adults 18 to 49, an important demographic for advertisers.

        CBS’s 11 percent slump for NFL games is the steepest of the networks. Its parent company, which reports earnings after the close Thursday, is more vulnerable than rivals to the trend because the vast majority of its earnings come from the broadcast network. The declines at CBS reinforce a complaint that has gotten louder and louder in recent weeks: The league got greedy in adding the Thursday night game on broadcast.

        Reserving top games for Thursday night robbed other time periods of good match-ups. After a nosedive in ratings at “Monday Night Football” last season, the league has scheduled better games for that time period, further damaging Sunday afternoon.

        “Ratings declines on both general entertainment and NFL programming could be the single biggest point of focus for investors this quarter, and we’re not sure what media companies can say about the health and tone of the ad market to assuage fears,” Steven Cahall, an analyst with RBC Capital Markets, wrote in a note last month.

        Viewership is dropping fast among people under 54 — a key demographic for advertisers — and even faster among those 18 to 34. Audiences for games on CBS, NBC and Fox have slid at least 10 percent among that younger cohort.

        Advertisers aren’t abandoning the NFL, one of the only places they can still reach more than 10 million people at once. But they are growing concerned. John Schnatter, who appears in TV spots on behalf of his Papa John’s Pizza International Inc., laid into the league on a conference call this week, blaming the ratings for his company’s slow revenue growth and calling for the league to put an end to player protests.

        Networks and other advertisers identify a wide range of reasons for the NFL’s struggles. The league has overexposed itself by making highlights available on Facebook, YouTube, Twitter and Snapchat. Identifiable stars like Peyton Manning and Aaron Rodgers have either retired or gotten hurt. The quality of play has deteriorated. Player protests and concussions have driven away some fans.

        Some executives argue viewership of the league has still improved over the long term while dropping for every other show. Yet the amount of time people have spent watching football this season is at the lowest point since 2011, back when there were fewer televised games, according to Mike Mulvihill, Fox Sports’ head of research.

        “The cumulative effect of everything happening in the world at large is having an impact on NFL viewership,” Mulvihill said. “ The league was defying the laws of gravity.”

          Read more: http://www.bloomberg.com/news/articles/2017-11-02/nfl-s-litany-of-excuses-runs-out-as-ratings-fall-for-second-year

          Opioid Billionaire’s Indictment Opens New Window on Epidemic

          More than a decade after opioid painkillers first exploded across the U.S., John Kapoor found an aggressive way to sell even more, according to prosecutors: He began bribing doctors to prescribe them.

          Speakers’ fees, dinners, entertainment, cash — federal charges unsealed Thursday claim Kapoor’s striving company, Insys Therapeutics Inc., employed all of that and more to spur prescriptions of a highly addictive fentanyl-based drug intended only for cancer patients.

          As President Donald Trump declared at a White House event that opioid abuse represents a public-health emergency, authorities arrested Kapoor in Arizona and painted a stark portrait of how Insys allegedly worked hand in glove with doctors to expand the market for the powerful agents.

          “Selling a highly addictive opioid-cancer pain drug to patients who did not have cancer makes them no better than street-level drug dealers,” Harold Shaw, the top FBI agent in Boston, said of Kapoor and other Insys executives charged earlier in the case.

          The story of the 74-year-old billionaire and the company he founded traces the arc of a crisis that claims 175 lives each day. What began with the over-prescription of painkillers in the late 1990s soon became a race by manufacturers to dispense more and more pills.

          Overdose Risks

          Charged with racketeering conspiracy and other felonies, Kapoor became the highest-ranking pharma executive to be accused of an opioid-related crime, and his arrest may portend charges against companies far larger than Insys, which has a modest $417 million market capitalization.

          In Connecticut, prosecutors have begun a criminal probe of Purdue Pharmaceutical Inc.’s marketing of OxyContin. Scores of states, cities and counties have sued companies including Purdue, Endo International Plc, and Johnson & Johnson’s Janssen Pharmaceuticals, alleging they triggered the opioid epidemic by minimizing the addiction and overdose risks of painkillers such as Percocet.

          But so far, no recent case has been so sweeping as the one against the executives including Kapoor, who made his initial court appearance late Thursday in Phoenix. A U.S. magistrate judge set bail at $1 million and ordered Kapoor to surrender his passport and submit to electronic monitoring. His lawyer, Brian Kelly, said Kapoor posted bail after the hearing.

          This week, a Rhode Island doctor admitted accepting kickbacks from Insys in exchange for writing prescriptions. Earlier this year, two doctors were sentenced to more than 20 years behind bars for accepting bribes from companies including Insys to sell fentanyl-based medications.

          The Kapoor indictment pinpoints the start of the alleged scheme.

          Oral Spray

          It was early 2012, and Insys’s new oral spray of the opioid fentanyl wasn’t selling well. Because it was so addictive, the pain-relief drug was subject to a tightly controlled distribution system, and regulators demanded to be notified about suspicious orders by manufacturers, wholesalers and pharmacies. And the drug wasn’t cheap, so insurers set up barriers for patients seeking it.

          That was when Kapoor and others at Insys went to extremes to dramatically boost sales of the painkiller, prosecutors said. Doling out speaker fees, marketing payments and food and entertainment perks, they allegedly began bribing doctors to prescribe the drug, and then tricked insurers into paying for it.

          One Insys sales executive told subordinates that it didn’t matter whether doctors were entertaining, according to the indictment: “They do not need to be good speakers, they need to write a lot of” Subsys prescriptions, the official said, referring to the brand name of the painkiller.

          Over a two-year period starting in 2013, Chandler, Arizona-based Insys set aside more than $12.2 million for doctors’ speaking fees, prosecutors said. One doctor received as much as $229,640 in speaker fees for appearing at what amounted to “sham events that were mere social gatherings also attended by friends and office staff,” according to the indictment.

          Friends, Family

          The company encouraged doctors to write more prescriptions by hiring their friends and family members to serve as “business liaisons’’ and “business-relation managers,’’ prosecutors said. These support-staff employees worked in the doctors’ offices but were paid by Insys in what the indictment called bribes and kickbacks.

          Insys even made a video featuring a sales rep dressed as a giant fentanyl spray bottle, rapping and dancing to a song that pushed the idea of getting doctors to prescribe higher doses, prosecutors said.

          Others previously charged include Michael Babich, Insys’s former CEO, Alec Burlakoff, the ex-vice president of sales, and Richard Simon, once the company’s national sales director. They all deny wrongdoing.

          Joe McGrath, an Insys spokesman, declined to comment on Kapoor’s indictment in Boston federal court. The company, which wasn’t charged, has reportedly been in settlement talks with the U.S. Justice Department to resolve a probe into its Subsys marketing. The company’s shares fell more than 22 percent to $5.74 in Nasdaq trading.

          The Lawyer Who Beat Big Tobacco Takes On the Opioid Industry

          The first person in his family to attend college, Kapoor rose from modest means in India to become a wealthy health-care entrepreneur, after earning a doctorate in medicinal chemistry at the University of Buffalo in 1972, according to a work-history the school posted.

          He was a plant manager at Invenex Laboratories in New York and later became chief executive officer of LyphoMed, a hospital-products company. He sold LyphoMed to Fujisawa Pharmaceuticals and formed a venture capital firm that invested in health-care companies.

          In 2010, he merged privately held Insys with NeoPharm Inc. to get access to technology to develop pain drugs for cancer patients. Even though he has stepped down as Insys’s chairman and chief executive officer, he still holds more than 60 percent of its stock.

          Kapoor and Babich are also accused of misleading insurers about patients’ diagnoses and the types of pain they suffered that were covered by the Subsys prescriptions tied to the payment scheme, prosecutors said.

          The company’s agents allegedly told insurers that patients were receiving Subsys for “breakthrough pain’’ to secure coverage. They also misled insurers about what other pain drugs patients had tried before being proscribed Subsys, according to the indictment.

          Some lower-level Insys employees have pleaded guilty and are cooperating with prosecutors, according to court papers. Elizabeth Gurrieri, a former manager who oversaw insurance reimbursements, pleaded guilty to one count of conspiring to commit wire fraud in June.

            Read more: http://www.bloomberg.com/news/articles/2017-10-26/insys-therapeutics-founder-charged-in-opioid-fraud-case

            Key GOP Senator Susan Collins Lays Out Her Demands for Tax Bill

            Republican Senator Susan Collins of Maine said Monday she’s opposed to two tax breaks for the wealthy that her party leaders are pushing for, indicating that her vote won’t be easy to win on President Donald Trump’s top legislative priority.

            “I do not believe that the top rate should be lowered for individuals who are making more than $1 million a year,” Collins said during an interview with Bloomberg News. “I don’t think there’s any need to eliminate the estate tax.”

            Repealing the estate tax and cutting the individual rate from 39.6 percent for top earners “concern me,” she said, adding that she’s conveyed her opposition to party leaders.

            Collins, a moderate Republican who played a decisive role in thwarting several iterations of Obamacare replacement legislation, offered her most pointed comments on her priorities for a tax bill to date.

            She added that the structure of the estate tax — a 40 percent levy applied to estates worth more than $5.49 million for individuals or $10.98 million for couples — means it avoids hitting “the vast majority of family-owned businesses and farms and ranches.” She said she’s open to adjusting the cutoff level slightly upward.

            The White House and GOP leaders released a tax framework last month that calls for a top individual rate of 35 percent and leaves room for tax committees to add another rate above that. It also proposes the repeal of the estate tax. The House Ways and Means Committee is scheduled to release its version of a tax bill on Wednesday. Collins said the Senate will likely offer a tax bill that differs from the House version.

            Collins’s demands are important because Republicans have only 52 seats in the 100-member Senate and little hope of Democratic support — they can’t afford to lose more than two members to get a bill passed. 

            Still, she said: “There is far more outreach on the tax bill” than there was on health care.

            Collins declined to say she’ll oppose a tax bill that adds to the deficit, in contrast to her colleague Senator Bob Corker of Tennessee. But she said she cares about the debt and doesn’t want the tax bill to “blow a hole” in the deficit. She argued that “certain tax cuts done right will increase economic growth” and produce revenue.

            “I hope very much to be able to support a tax reform package," Collins said. "It’s very difficult — I’m not going to say I can guarantee that because I don’t know what’s going to be in it.”

              Read more: http://www.bloomberg.com/news/articles/2017-10-30/key-gop-senator-susan-collins-lays-out-her-demands-for-tax-bill

              Americans Are Officially Freaking Out

              For those lying awake at night worried about health care, the economy, and an overall feeling of divide between you and your neighbors, there’s at least one source of comfort: Your neighbors might very well be lying awake, too.

              Almost two-thirds of Americans, or 63 percent, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday.  This worry about the fate of the union tops longstanding stressors such as money (62 percent) and work (61 percent) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73 percent) reported feeling stress than independents (59 percent) and Republicans (56 percent).

              The “current social divisiveness” in America was reported by 59 percent of those surveyed as a cause of their own malaise. When the APA surveyed Americans a year ago, 52 percent said they were stressed by the presidential campaign. Since then, anxieties have only grown.

              A majority of the more than 3,400 Americans polled, 59 percent, said “they consider this to to be the lowest point in our nation’s history that they can remember.” That sentiment spanned generations, including those that lived through World War II, the Vietnam War, and the terrorist attacks of Sept. 11. (Some 30 percent of people polled cited terrorism as a source of concern, a number that’s likely to rise given the alleged terrorist attack in New York City on Tuesday.)

              “We have a picture that says people are concerned,” said Arthur Evans, APA’s chief executive officer. “Any one data point may not not be so important, but taken together, it starts to paint a picture.”

              The survey didn’t ask respondents specifically about the administration of President Donald Trump, Evans said. He points to the “acrimony in the public discourse” and “the general feeling that we are divided as a country” as being more important than any particular person or political party.

              Yet he and the study note that particular policy issues are a major source of anxiety. Some 43 percent of respondents said health care was a cause. The economy (35 percent) and trust in government (32 percent) also ranked highly, as did hate crimes (31 percent) and crime in general (31 percent). 

               

              “Policymakers need to understand that this is an issue that is important to people, that the uncertainty is having an impact on stress levels, and that stress has an impact on health status,” Evans said, pointing out that the relationship between stress and health is well-established

              • And keeping up with the latest developments is a source of worry all its own. Most Americans—56 percent—said they want to stay informed, but the news causes them stress. (Yet even more, 72 percent, said “the media blows things out of proportion.”)

              The APA survey did find, however, that not everyone is feeling the same degree of anxiety. Women normally report higher levels of stress than men, though worries among both genders tend to rise or fall in tandem. This year, however, they diverged: On a 10-point scale, women reported a slight increase in stress, rising from an average 5.0 in 2016 to 5.1 in 2017, while the level for men dropped, from an average 4.6 to 4.4. 

              Racial divides also exist in reported stress. While the levels among blacks and Hispanics were lower in 2016 than the year before, they rose for both groups in 2017, to 5.2 for Hispanic adults and 5.0 for black adults. Among whites, meanwhile, the average remained the same, at 4.7. 

              The report also notes that many Americans are finding at least one healthy way to feel better: 53 percent reported exercising or doing other physical activity to cope. Social support is also important,  Evans said. “Third,” he says, “I think it’s really important for people to disconnect from the constant barrage of information.” 

              1. The 2017 Stress in America survey was conducted by the Harris Poll on behalf of the APA. It was conducted online between Aug. 2 and Aug. 31, and had 3,440 participants, all ages 18 and up living in the U.S. It included 1,376 men, 2,047 women, 1,088 whites, 810 Hispanics, 808 blacks, 506 Asians and 206 Native Americans. Data were then weighted by age, gender, race/ethnicity, region, education and household income to reflect America's demographics accurately. Interviews were conducted in English and Spanish.

              Read more: http://www.bloomberg.com/news/articles/2017-11-01/americans-are-officially-freaking-out

              Banks Pine for Loan Growth as Clients Wait on Trumps Promises

              President Donald Trump’s pledges to overhaul taxes, trade, infrastructure and health care may thrill some corporate leaders, but it’s causing many to delay expansions. That’s bad for banks.

              Lending growth probably decelerated for a fourth straight quarter in the three months ended Sept. 30 across more than a dozen of the biggest U.S. banks, according to Royal Bank of Canada analysts and Bloomberg calculations. Their total loans may have ticked up just 1.8 percent, the smallest increase in more than two years, as commercial and industrial customers held off on buying equipment and building plants.

              Executives are “hesitant to borrow in the face of uncertainty,” said Jason Goldberg, an analyst at Barclays Plc. “Whether it’s potential tax reform, health-care uncertainties, or they’re unclear what infrastructure spending is going to look like, you’ve definitely seen corporates take a pause.”

              Washington’s inaction has been frustrating bankers for months, a sentiment that may surface anew when they start posting quarterly results this week. During the last round in July, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon lashed out, saying, “There would be much stronger growth if there were more intelligent decisions and less gridlock.” In June, Bank of America Corp. Chief Operating Officer Thomas Montag said corporate clients need clarity to make big investment decisions.

              Trump and his top economic adviser, Gary Cohn, have said they expect the financial industry to help fund growth. But instead, a dearth of progress on big legislation has stymied that business.

              Congressional Republicans spent much of September trying to resurrect a failed health-care bill. Then Trump told lawmakers his $1 trillion infrastructure plan may not rely on public-private partnerships, potentially throwing a wrench into a key priority. The president also released a tax plan that many analysts consider unlikely to win support until designers can prove it won’t balloon the federal deficit.

              For banks, the uncertainties are compounding challenges in lending, which also is being constrained by tighter regulation and slower-than-expected interest-rate hikes — factors that have crimped trading revenue too. Low yields have encouraged firms to issue bonds and use the proceeds to repay bank loans, said Alison Williams, an analyst at Bloomberg Intelligence. U.S. Bancorp CEO Andrew Cecere addressed the challenges at an investor conference last month.

              “With the low yield curve, there was a lot of debt issuance, and that debt issuance was used to pay down some bank lending,” he said. In addition, “there was some more uncertainty that entered the market because of some of the slowdown in the perceived timing of tax policy and trade policy and regulation,” slowing companies’ capital expenditures.

              ‘Mental Signal’

              Corporate executives’ outlook for the next six to 12 months deteriorated in July and August, with some respondents citing heightened policy uncertainty, the Federal Reserve Bank of Chicago said last month. The number of workers on U.S. payrolls declined in September for the first time since 2010, reflecting major disruptions from hurricanes Harvey and Irma.

              For now, bank investors are willing to look beyond that. The 24-company KBW Bank Index surged more than 30 percent from the November election to early March on optimism that Trump’s administration will eventually ease bank regulation, reignite inflation and drive up interest rates. The rally resumed in September as attention shifted to taxes.

              “People were underweight financials for a long time,” said Chris Whalen, an independent analyst and consultant. “When Trump got elected that was a mental signal for these guys that we should increase our allocation.”

              Investors continue to see reasons for optimism. Trump’s plan to cut corporate tax rates would be particularly beneficial for banks, whose burdens are often elevated by a lack of deductions. The six largest U.S. banks could see net income rise $6.4 billion under the administration’s proposal. And lenders still produce big profits. JPMorgan generated $26.5 billion in the 12 months through June, a record for any U.S. bank.

              Mortgage, Autos

              Yet expectations for the third quarter are measured. JPMorgan, the nation’s largest bank, may say Oct. 12 that adjusted profit rose 2 percent to $5.89 billion, according to analysts surveyed by Bloomberg. At Citigroup Inc., set to report the same day, profit probably slipped 1 percent to $3.57 billion.

              Wells Fargo & Co. and Bank of America report the following day and Goldman Sachs Group Inc. and Morgan Stanley release earnings next week.

              There are other reasons for concern. While consumers are still borrowing more, there’s mounting evidence they’re becoming less reliable, potentially ending a period in which losses were low. Credit cards face heightened competition, while an overheated auto market has led some lenders like Wells Fargo to pull back.

              And for mortgage lending, a big driver for banks in the run-up to the 2008 financial crisis, new rules have made it more difficult to make money. Survivors have been buying loans from smaller “correspondent” lenders, a strategy that’s started to run out of room.

              “You will see some pain this quarter,” Whalen said. “JPMorgan and Wells Fargo have been bidding aggressively.”

              Trading Declines

              Trading also is expected to be down, in part because the lack of congressional action has left clients with few reasons to buy or sell. Executives from JPMorgan, Citigroup and Bank of America told investors last month to expect declines ranging from 15 percent to 20 percent in the third quarter from the same period a year ago.

              That may leave investors and analysts looking past this quarter’s results to the end of the year, when lawmakers may have more progress to show on tax policy and other priorities.

              “Banks tend to be more optimistic looking out than they are in the current quarter, so we’ll see,” Barclays’s Goldberg said. “Pipelines are good. At the end of the day though, loan growth is a reflection of the economy and economic growth has been a little bit more subdued than desired.”

                Read more: https://www.bloomberg.com/news/articles/2017-10-09/banks-pine-for-loan-growth-as-clients-wait-on-trump-s-promises

                The Glut of Private Jets Means Insane Bargains for Buyers

                Corporate-jet makers are flooding the market, spurring deep discounts for new aircraft and fueling a three-year slide in prices of used planes.

                Most major manufacturers, including Gulfstream and Bombardier Inc. — which is also contending with rising hurdles in its commercial-jet business — have pared production somewhat in the last couple years as demand for private jets has sagged. But that hasn’t been enough to halt declines in aircraft values, say consultants, brokers and analysts in the $18 billion industry.

                Gone is the optimism stoked by the election of President Donald Trump, a corporate-jet maven with his own Boeing 757, along with hopes for speedy tax cuts that would bolster plane purchases. Instead, the news has been full of setbacks. U.S. Health Secretary Tom Price resigned under fire for his frequent use of private planes at taxpayer expense. General Electric Co. is selling off its corporate fleet to cut costs.

                “The Trump bump is over,” said Janine Iannarelli, a Houston-based plane broker.

                The jet glut is one reason pre-owned prices were down 16 percent in August from a year earlier. With bargains aplenty on machines with few flight hours, manufacturers are cutting deals to entice buyers to purchase new planes. Meanwhile, they keep churning out aircraft and introducing new models.

                “It’s a question of who wants to blink first,” said Rolland Vincent, a consultant who puts together the JetNet iQ industry forecast. “Nobody — because whoever blinks, loses share.”

                A rise in demand for new company planes, which would help stabilize the market, isn’t in the cards. Corporate plane-buying plans have hit a 17-year low, according to an annual survey by Honeywell International Inc. of more than 1,500 flight departments. Companies expect to replace or add planes equivalent to 19 percent of their fleets on average over the next five years, down from 27 percent in last year’s survey.

                Discounts Galore

                The steep discounts on new aircraft are galling customers who paid closer to a full price, said Barry Justice, founder and chief executive officer of Corporate Aviation Analysis & Planning Inc. General Dynamics Corp.’s Gulfstream unit slashed as much as 35 percent off the price of its G450, which is being phased out as the new G500 aircraft nears arrival, Vincent said. The G450 had a list price of about $43 million, according to the Business & Commercial Aviation guide. 

                Bombardier has offered discounts of as much as $7 million on the Challenger 350’s list price of about $26 million as it fends off competitors entering the super midsize space, he said. The weakness across the industry in private-jet sales is adding to the pressure on Bombardier, which is also struggling to sell its C Series commercial planes. The U.S. government slapped import duties of about 300 percent on the single-aisle jetliner in the last two weeks after a complaint by Boeing Co.

                For corporate aircraft, the global market hasn’t fully recovered from the last U.S. recession, when plunging demand popped a bubble that had flooded the industry with more than 1,000 new jet deliveries in both 2007 and 2008. A nascent recovery in 2013 and 2014 fell apart after the price of oil and other commodities collapsed, drying up sales in emerging markets such as Russia and Brazil.

                Deliveries Fall

                Deliveries of new private jets are forecast to drop to 630 this year, from 657 last year and 689 in 2015, according to JPMorgan Chase & Co. The number is forecast to rebound slightly to 640 next year.

                The more conservative pace has done little to relieve the glut, creating a buyer’s market for used aircraft. A five-year-old jet sold in 2016 was worth only 56 percent of its original list price, on average. That’s down from 64 percent in 2012, according to a report by Jetcraft, a plane broker that expects to close more than 80 deals this year. The value retention was as high as 91 percent in 2008.

                Prices for used aircraft right now are “insane,” said Justice. Some companies and wealthy individuals are buying pre-owned aircraft for the first time because the bargains are too good to pass up, he said.

                “There’s a vast overproduction of large-cabin airplanes and there are only so many people in the world who are going to step up and pay $60 million-plus,” he said. “What happens is, people are going to that pre-owned market.”

                New Models

                More new aircraft are on the way. Next year Bombardier will begin selling the Global 7000, which will compete with the Gulfstream G650ER as the largest and longest-range business jet. Textron Inc.’s Cessna unit is close to beginning deliveries on a super midsize plane called the Longitude and is designing its largest-ever aircraft, the Hemisphere. 

                Cessna, which helps customers sell their used aircraft when purchasing a new one, is able to move those planes more quickly than before, said Rob Scholl, chief of sales and marketing with Textron Aviation. For new aircraft, Cessna is focused on “getting some price back into our products,’’ Scholl said.

                “We’re seeing a change in the marketplace,’’ he said. “The activity is really, really strong and I’m positive on where it’s going.’’

                Gulfstream will begin selling the G500 early next year and the G600 later in 2018, both of which are large-cabin aircraft.

                Small Planes

                Smaller aircraft are feeling the pressure as well. Swiss planemaker Pilatus Aircraft Ltd. is set to begin sales of its first business jet — the PC-24 — building on the success of its single-engine turboprop. HondaJet began deliveries at the end of 2015, the first-ever business jet for the Japanese carmaker.

                Those new models should help boost new aircraft sales because they will offer better performance and newer technology than the pre-owned models, which compete for buyers mostly on price, said Ben Driggs, Honeywell Aerospace’s president for the Americas.

                “We are projecting growth in ’18 and growth in ’19 and beyond” for new aircraft deliveries, Driggs said.

                Reaping Gains

                Bombardier pulled back production rates in 2015 after its inventory of new jets began to pile up. The slower pace helped the Canadian company boost operating margins and support pre-owned prices of its planes, spokeswoman Anna Cristofaro said in an email. Bombardier’s sales from business jets were more than twice its revenue from commercial planes last year.

                Gulfstream declined to comment.

                “Our actions in 2015 have yielded results, and Bombardier’s young pre-owned Global model aircraft continue to be among the top performers in the large category in terms of value retention and pre-owned inventory levels,” Cristofaro said.

                That’s a step in the right direction. But the market as a whole will have to wait a little longer for relief.

                  Read more: http://www.bloomberg.com/news/articles/2017-10-09/private-jet-glut-spurs-insane-bargains-for-aspiring-buyers

                  Trump’s New Obamacare Killer to Cost Uncle Sam $194 Billion

                  President Donald Trump is halting some Obamacare subsidies. A big money saver for taxpayers, right? Wrong. The move could actually force the government to dole out almost $200 billion more on health insurance over the next decade.

                  Here’s why: The insurer payouts Trump cut off aren’t the only government funds financing the program. Consumers also can get help with their insurance premiums. When the insurer subsidies are discontinued, those premiums are pushed higher — and because the consumer subsidies are far bigger than those given to insurers, that’s a costly trade.

                  More than eight in ten individuals who buy Obamacare plans get help paying their premiums directly from the federal government. Those subsidies effectively cap how much people have to pay for insurance as a percentage of their income. 

                  Even if premiums climb, people who receive those benefits won’t pay more out of their own pockets. The subsidies are available to people making as much as four times the federal poverty level, or just over $97,000 for a family of four.

                  That means that those most likely to be hurt by the president’s action aren’t low-income people who will still get help with their costs. Instead, consumers who make too much money to qualify for subsidies will now have to pay a much higher price for their health plans.

                  It all adds up to a hefty bill for taxpayers for as long as the Affordable Care Act is the law of the land. The Congressional Budget Office estimated that ending the cost-sharing payments would increase the U.S. fiscal shortfall by $194 billion over the next decade as subsidy outlays jump.

                    Read more: http://www.bloomberg.com/news/articles/2017-10-13/trump-s-latest-obamacare-killer-will-cost-uncle-sam-194-billion