Business

Column: Clarence Thomas and the bottomless self-pity of the upper classes

Published

1 year ago

January 10, 2024

Column: Clarence Thomas and the bottomless self-pity of the upper classes

Articles asking us to feel sympathy for families barely scraping by on healthy six-figure incomes may be staples of the financial press, but it’s rare that they come packaged as real-world case studies attached to flesh-and-blood individuals.

But that’s what happened just before Christmas, when law professor Steven Calabresi defended Supreme Court Justice Clarence Thomas’ shadowy financial relationships with a passel of conservative billionaires by explaining that Thomas simply was trying to avoid the difficulty of surviving on his government salary of $285,400 a year.

“If Congress had adjusted for inflation the salary that Supreme Court justices made in 1969 at the end of the Warren Court, Justice Thomas would be being paid $500,000 a year,” Calabresi wrote, “and he would not need to rely as much as he has on gifts from wealthy friends.”

That’s a novel definition of “neediness”: Calabresi was saying that Thomas had no choice but to create an ethical quandary for himself by accepting gifts from “friends,” some of whom have interests directly or indirectly connected with cases before the Supreme Court and on which Thomas has ruled.

If Congress had adjusted for inflation the salary that Supreme Court justices made in 1969…, Justice Thomas would be being paid $500,000 a year, and he would not need to rely as much as he has on gifts from wealthy friends.

— Steven Calabresi, Reason Magazine

Given these ethical issues, Calabresi’s argument attracted some sarcasm. University of Colorado law professor Paul Campos interpreted its gist as: “It’s just fundamentally unreasonable to expect a SCOTUS justice to scrape along on nearly $300K per year in salary, without expecting that he’ll accept a petit cadeau or thirty, from billionaires who just can’t stand the sight of so much human suffering.”

Still, it’s useful to view the argument in the context of our never-ending debate about income and wealth in America. The debate regularly generates articles purporting to explain how outwardly wealthy families can’t make ends meet on income even as high as $500,000.

There was a noticeable surge in the genre in late 2020, when then-presidential candidate Joe Biden said he would guarantee no tax increases for households collecting less than $400,000. His definition of that income as the threshold of “wealthy” elicited instant pushback from writers arguing that it was no such thing.

As I’ve pointed out before, accounts of the penuriousness of life on such an income invariably involve financial legerdemain. The expense budgets published with these articles generally place the subject households in the costliest neighborhoods in the country, such as in San Francisco or Manhattan.

They also describe as necessary or unavoidable expenses many items that most ordinary families would consider luxuries. An article tied to Biden’s $400,000 promise, for instance, showed how its hypothetical family with that much income ended the year with only $34 on hand to cover “miscellaneous” expenses.

Along the way, however, the emblematic couple (two lawyers with two kids) paid $39,000 into their 401(k) retirement plans, $18,000 into 529 savings plans for college, and more than $100,000 on the mortgage and property taxes on their $2-million home. Also, food with “regular food delivery,” life insurance, weekend getaways, clothes and personal care products.

Calabresi’s hand-wringing on Thomas’ behalf also engages in sleight of hand. He doesn’t mention that Thomas’ wife, Ginni, has her own career as a lawyer and consultant, though her income is unknown. (Thomas listed her employment on his most recent financial disclosure statement, but not her salary and benefits.)

Nor does Calabresi acknowledge that much of the gifting from wealthy friends on which Thomas purportedly “needs to rely” has had nothing to do with meeting the rigors of daily life as the average person would imagine them.

As ProPublica reported, they included “at least 38 destination vacations, including a previously unreported voyage on a yacht around the Bahamas; 26 private jet flights, plus an additional eight by helicopter; a dozen VIP passes to professional and college sporting events, typically perched in the skybox; two stays at luxury resorts in Florida and Jamaica; and one standing invitation to an uber-exclusive golf club overlooking the Atlantic coast.”

To Calabresi, the questioning of this largess by the “left wing” is “sickening and unfair,” since in his view Thomas is “the best and most incorruptible Supreme Court justice in U.S. history.” Your mileage may vary; the overall tone of Calabresi’s piece is reminiscent of the line, “Raymond Shaw is the kindest, bravest, warmest, most wonderful human being I’ve ever known in my life,” uttered repeatedly in the movie “The Manchurian Candidate.”

It’s worth noting that in the movie, the line is spoken by soldiers who were brainwashed at a North Korean prison camp. Just saying.

Calabresi benchmarked Thomas’ salary against those of law school deans or young lawyers with sterling credentials such as former Supreme Court clerks, which he placed at about $500,000 a year. But discussions turning on the relative pay of various jobs and professions always have an otherworldly, even absurd, feel.

In part that’s because it’s harder than you might think to compare the work of a Supreme Court justice to that of a law school dean — not to mention comparing the work of a justice to that of a merchandise picker in an Amazon warehouse.

As Campos observes, Supreme Court justices have lifetime sinecures (only one has ever been removed through impeachment), a lifetime pension at full pay after retirement, a huge professional bureaucracy to lean on, an annual three-month paid vacation and the “psychic benefit” of being endlessly praised for their perspicacity, wisdom and (to cite Calabresi) incorruptibility. Law school deans and lawyers can’t match those bennies.

For further perspective, the federal minimum wage has been frozen at $7.25 an hour since July 2009. In that time span, its purchasing power has fallen to $5.08. In the same period, the salary of Supreme Court justices has risen to $285,400 from $213,900, an increase of 33.4%.

That may not have quite kept up with inflation, which would have raised the justices’ pay to about $311,060 since 2009, but it’s not anything like the march backward experienced by those on the federal minimum wage.

It’s true that representatives and senators also haven’t received a pay raise since 2009, but they’re not exactly living on the minimum wage: The salaries for rank-and-file legislators is $174,000 but the majority and minority leaders of both chambers and the Senate president pro tem get $193,400 and the House speaker gets $223,500.

They also pay into and receive Social Security, have a separate pension benefit and have access to government health insurance. Anyway, they collect more than twice the median household income in America, which is about $75,000.

Occasionally some journalist will make the argument that Congress should be paid more. I’ve done it twice, in 2013 and 2019, on the argument that it might attract more candidates devoted to making government work.

But those were in the halcyon days before Capitol Hill was only partly, not entirely, dysfunctional. I wouldn’t make the same argument today, when there’s reason to doubt that a higher wage would attract anyone better than the buffoons who walk the hallways of the House of Representatives at the moment.

Indeed, a higher wage might increase the psychological distance between our elected representatives and their constituents.

Just compare how eager they were in December 2017 to enact a huge tax cut for the wealthy, which passed a GOP-controlled Congress on the nod and was promptly signed by President Trump, with the dithering over the child tax credit, an immensely successful anti-poverty program that they allowed to expire at the beginning of 2022 and is just now back on the negotiating table, with no guarantee of restoration.

That tells you that the gulf between the lawmakers and the people they supposedly represent is already too wide.

As for the other argument, that paying them and the Supreme Court justices more would reduce their incentive to take bribes, just what sort of people are we electing and appointing to office?

How much more would we have to pay Clarence Thomas to get him to stop taking free yacht voyages and private flights to private clubs from rich “friends”? Sadly, to ask the question is to answer it.

Business

4 Takeaways From the Arguments Before the Supreme Court in the TikTok Case

Published

6 hours ago

January 12, 2025

Press Room

4 Takeaways From the Arguments Before the Supreme Court in the TikTok Case

The Supreme Court on Friday grappled over a law that could determine the fate of TikTok, an enormously popular social media platform that has about 170 million users.

Congress enacted the law out of concern that the app, whose owner is based in China, is susceptible to the influence of the Chinese government and posed a national risk. The measure would effectively ban TikTok from operating in the United States unless its owner, ByteDance, sells it by Jan. 19.

Here are some key takeaways:

The court appeared likely to uphold the law.

While the justices across the ideological spectrum asked tough questions of both sides, the overall tone and thrust appeared to suggest greater skepticism toward the arguments by lawyers for TikTok and its users that the First Amendment barred Congress from enacting the law.

The questioning opened with two conservative members of the court, Justice Clarence Thomas and Chief Justice John G. Roberts Jr., suggesting that it was not TikTok, an American company, but its Chinese parent company, ByteDance, that was directly affected by the law.

Another conservative, Justice Brett M. Kavanaugh, focused on the risk that the Chinese government could use information TikTok is gathering on tens of millions of American teenagers and twentysomethings to eventually “develop spies, turn people, blackmail people” when they grow older and go to work for national security agencies or the military.

Justice Elena Kagan, a liberal, asked why TikTok could not just create or buy another algorithm rather than using ByteDance’s.

And another liberal, Justice Ketanji Brown Jackson, said she believed the law was less about speech than about association. She suggested that barring TikTok from associating with a Chinese company was akin to barring Americans from associating with foreign terrorist groups for national security reasons. (The Supreme Court has upheld that as constitutional.)

Still, several justices were skeptical about a major part of the government’s justification for the law: the risk that China might “covertly” make TikTok manipulate the content shown to Americans or collect user data to achieve its geopolitical aims.

Both Justice Kagan and Justice Neil M. Gorsuch, a conservative, stressed that everybody now knows that China is behind TikTok. They appeared interested in whether the government’s interest in preventing “covert” leveraging of the platform by a foreign adversary could be achieved in a less heavy-handed manner, like appending a label warning users of that risk.

Lawyers for TikTok and for its users argued that the law is unconstitutional.

Two lawyers argued that the law violates the First Amendment: Noel Francisco, representing both TikTok and ByteDance, and Jeffrey Fisher, representing TikTok users. Both suggested that concerns about potential manipulation by the Chinese government of the information American users see on the platform were insufficient to justify the law.

Mr. Francisco contended that the government in a free country “has no valid interest in preventing foreign propaganda” and cannot constitutionally try to keep Americans from being “persuaded by Chinese misinformation.” That is targeting the content of speech, which the First Amendment does not permit, he said.

Mr. Fisher asserted that fears that China might use its control over the platform to promote posts sowing doubts about democracy or pushing pro-China and anti-American views were a weaker justification for interfering in free speech than concerns about foreign terrorism.

“The government just doesn’t get to say ‘national security’ and the case is over,” Mr. Fisher said, adding, “It’s not enough to say ‘national security’ — you have to say ‘what is the real harm?’”

The Biden administration defended Congress’s right to enact the law.

The solicitor general, Elizabeth B. Prelogar, argued that Congress had lawful authority to enact the statute and that it did not violate the First Amendment. She said it was important to recognize that the law leaves speech on TikTok unrestricted once the platform is freed from foreign control.

“All of the same speech that’s happening on TikTok could happen post-divestiture,” she said. “The act doesn’t regulate that at all. So it’s not saying you can’t have pro-China speech, you can’t have anti-American speech. It’s not regulating the algorithm.”

She added: “TikTok, if it were able to do so, could use precisely the same algorithm to display the same content by the same users. All the act is doing is trying to surgically remove the ability of a foreign adversary nation to get our data and to be able to exercise control over the platform.”

The court appears unlikely to wait for Trump.

President-elect Donald J. Trump has asked the Supreme Court to issue an injunction delaying the law from taking effect until after he assumes office on Jan. 20.

Mr. Trump once shared the view that Chinese control of TikTok was an intolerable national security risk, but reversed course around the time he met with a billionaire Republican donor with a stake in its parent company.

If the court does uphold the law, TikTok would effectively be banned in the United States on Jan. 19, Mr. Francisco said. He reiterated a request that the court temporarily pause the law from taking effect to push back that deadline, saying it would “simply buy everybody a little breathing space.” It might be a “different world” for TikTok after Jan. 20, he added.

But there was scant focus by the justices on that idea, suggesting that they did not take it seriously. Mr. Trump’s brief requesting that the court punt the issue past the end of President Biden’s term so he could handle it — signed by his pick to be the next solicitor general, D. John Sauer — was long on rhetoric extolling Mr. Trump, but short on substance.

Business

'We will not be closing.' Amid the fires, employers and employees walk a fine line between work and safety

Published

7 hours ago

January 12, 2025

Press Room

'We will not be closing.' Amid the fires, employers and employees walk a fine line between work and safety

When Brigitte Tran arrived Wednesday morning at the Rodeo Drive boutique where she works as a sales associate, she was on edge.

Smoke from multiple wildfires raging across Los Angeles County billowed overhead. The luxury shopping corridor usually bustling with tourists appeared a ghost town.

Tran’s co-worker texted their boss to let her know neighboring stores had closed, and described the acrid smoke in the air. But the woman, at home in Orange County, did not seem to grasp their concerns. “We will not be closing unless the mall instructs us to close,” she replied.

Tran, who, fearing professional repercussions, asked that her place of work not be named, grew more anxious as the hours ticked by. Around 3 p.m., she and the two other employees working that day mutinied. They packed up, told the security guard to head home, and locked the doors a few hours before closing time.

As the wildfires have raged across Los Angeles County, choking the air, closing schools and forcing tens of thousands of people to evacuate, employers and employees alike have had to manage a difficult balancing act between work and well being. Some employers responded swiftly to the crisis, shutting down offices and shifting to remote work, providing outdoor workers with masks and other protective equipment, and offering support for employees forced to evacuate. Others have been less adept, clumsy in their communications or wholly unmoved by worker concerns — sparking anger among their ranks as a result.

The fires have underscored the need for companies to have a clear plan in place to respond to emergencies, said Jonathan Porter, a meteorologist at private weather forecaster AccuWeather. The obligation, he said, goes beyond monitoring whether an office is in an evacuation zone. For example, as the current devastation unfolds, businesses should be aware of the “copious amounts of dangerous smoke that’s wafting into the air” and be prepared to provide outdoor workers with quality respirators or move them away from polluted air.

Some employers gave employees flexibility. Snap, the Santa Monica-based creator of the photo messaging app Snapchat, for example, kept its offices open on Wednesday but encouraged employees to work remotely, said a company spokesperson.

Others changed course after fielding criticism.

An announcement by UCLA that the campus would remain open for classes and regular operations on Wednesday drew anger from some instructors and students on social media.

Victor Narro, project director for the UCLA Labor Center and a lecturer on campus, said in a post on X he would ignore UCLA’s mandate and hold an optional class online.

“Students have been up all night panicked about sleeping through evacuation orders, winds still high, branches falling all over Westwood, power outages across city, & our new chancellor (on his 2nd day) thought this should be his first bold call…” wrote Nour Joudah, an assistant professor in UCLA’s Asian American Studies Department, in another X post.

That evening, UCLA changed course as conditions worsened, announcing it would close campus.

On Saturday, UCLA Chancellor Julio Frenk released a statement saying classes would be held remotely for at least another week and campus operations would be curtailed. “We ask for continued flexibility and understanding as we all work through these difficult times,” Frenk wrote.

But for many workers, the chaos of the last few dayshas left them feeling like they are fending for themselves.

Tim Hernandez, a driver with Amazon Flex, an on-demand Uber-like program in which people use their own cars to deliver packages, was assigned a route Tuesday along the Pacific Coast Highway toward Malibu, which was rife with closures.

When he questioned whether making the delivery was safe, he said dispatchers at a Amazon facility in Camarillo brushed him off, leaving him to choose between concerns for his safety and worries that his rating in the Flex app would be hurt if he refused to go. He decided to try to make the deliveries, battling gusts of wind that knocked him over at one point. He lost cell signal, however, and was forced to return to the warehouse without completing the vast majority.

And when he arrived for his shift Tuesday, Alfred Muñoz, 43, an Amazon delivery driver who works out of a warehouse in the City of Industry, said he was handed an N95 mask but given little other instruction.

“It was just kind of business as usual,” Muñoz said.

High package counts and the number of stops on his assigned routes this week have made work even more difficult. On Tuesday, with wind gusts whipping debris around making it difficult to see, he had about 180 stops and 290 packages to deliver. On Thursday, the air thick with smoke and ash, he had more than 300 packages.

He woke up Thursday morning with a bloody nose and a sooty black crust in the corners of his eyes.

In response to a request for comment, Montana MacLachlan, an Amazon spokesperson, said the company was “closely monitoring the wildfires across Southern California and adjusting our operations to keep our employees and those delivering for us safe.”

“If a driver arrives at a delivery location and the conditions are not safe to make a delivery, they are not expected to do so and the driver’s performance will not be impacted,” she said.

At the Brentwood location of popular Italian eatery Jon & Vinny’s, staff complained of headaches and sore throats in a text message group chat. An employee, who asked not to be named fearing retaliation at work, said that on Tuesday, staff huddled around an iPad with a fire map pulled up to keep an eye on the expanding evacuation zone. From the front of the restaurant, they could see the glow of the Palisades fire.

The employee said they were frustrated management kept the restaurant open when the perimeter of the mandatory evacuation zone was just two blocks away. On Wednesday, every server scheduled to work called in to say they were not coming, the employee said.

A spokesperson for Joint Venture Restaurant Group, which owns Jon & Vinny’s, did not immediately respond to a request for comment.

During natural disasters and extreme weather, employers’ choices can sometimes mean life or death, said David Michaels, a professor at the Milken Institute School of Public Health and a former assistant secretary of labor for the Occupational Safety and Health Administration.

He pointed to recent floods from Hurricane Helene that killed several workers at a plastics manufacturer. The tragedy has drawn scrutiny from state investigators, and a wrongful death lawsuit accuses the company of requiring employees to stay on site amid flooding after they requested permission to leave.

“It’s incumbent on employers to ensure the safety of their workers,” Michaels said. “The safety of their employees must take precedence over business concerns.”

Yasha Timenovich, 48, a driver for rideshare app Lyft and food delivery platform DoorDash, is more worried about declining earnings than on-the-job safety. With many restaurants and other businesses closed and would-be customers fleeing the city, he said that rides and deliveries have been slow. Traffic patterns have been strange and unpredictable with families piling into vehicles to flee fires.

Timenovich, who faced an order to evacuate his Hollywood apartment with his fiance and 6-year-old daughter Wednesday night, said he planned to stay with relatives for a few days in San Luis Obispo, where he hopes business will be better.

“I’m going to get out of here because it’s too crazy with these fires,” Timenovich said.

Business

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Published

14 hours ago

January 11, 2025

Press Room

Scott Bessent, Trump’s Billionaire Treasury Pick, Will Shed Assets to Avoid Conflicts

Scott Bessent, the billionaire hedge fund manager whom President-elect Donald J. Trump picked to be his Treasury secretary, plans to divest from dozens of funds, trusts and investments in preparation to become the nation’s top economic policymaker.

Those plans were released on Saturday along with the publication of an ethics agreement and financial disclosures that Mr. Bessent submitted ahead of his Senate confirmation hearing next Thursday.

The documents show the extent of the wealth of Mr. Bessent, whose assets and investments appear to be worth in excess of $700 million. Mr. Bessent was formerly the top investor for the billionaire liberal philanthropist George Soros and has been a major Republican donor and adviser to Mr. Trump.

If confirmed as Treasury secretary, Mr. Bessent, 62, will steer Mr. Trump’s economic agenda of cutting taxes, rolling back regulations and imposing tariffs as he seeks to renegotiate trade deals. He will also play a central role in the Trump administration’s expected embrace of cryptocurrencies such as Bitcoin.

Although Mr. Trump won the election by appealing to working-class voters who have been dogged by high prices, he has turned to wealthy Wall Street investors such as Mr. Bessent and Howard Lutnick, a billionaire banker whom he tapped to be commerce secretary, to lead his economic team. Linda McMahon, another billionaire, has been picked as education secretary, and Elon Musk, the world’s richest man, is leading an unofficial agency known as the Department of Government Efficiency.

In a letter to the Treasury Department’s ethics office, Mr. Bessent outlined the steps he would take to “avoid any actual or apparent conflict of interest in the event that I am confirmed for the position of secretary of the Department of Treasury.”

Mr. Bessent said he would shutter Key Square Capital Management, the investment firm that he founded, and resign from his Bessent-Freeman Family Foundation and from Rockefeller University, where he has been chairman of the investment committee.

The financial disclosure form, which provides ranges for the value of his assets, reveals that Mr. Bessent owns as much as $25 million of farmland in North Dakota, which earns an income from soybean and corn production. He also owns a property in the Bahamas that is worth as much as $25 million. Last November, Mr. Bessent put his historic pink mansion in Charleston, S.C., on the market for $22.5 million.

Mr. Bessent is selling several investments that could pose potential conflicts of interest including a Bitcoin exchange-traded fund; an account that trades the renminbi, China’s currency; and his stake in All Seasons, a conservative publisher. He also has a margin loan, or line of credit, with Goldman Sachs of more than $50 million.

As an investor, Mr. Bessent has long wagered on the rising strength of the dollar and has betted against, or “shorted,” the renminbi, according to a person familiar with Mr. Bessent’s strategy who spoke on condition of anonymity to discuss his portfolio. Mr. Bessent gained notoriety in the 1990s by betting against the British pound and earning his firm, Soros Fund Management, $1 billion. He also made a high-profile bet against the Japanese yen.

Mr. Bessent, who will be overseeing the U.S. Treasury market, holds over $100 million in Treasury bills.

Cabinet officials are required to divest certain holdings and investments to avoid the potential for conflicts of interest. Although this can be an onerous process, it has some potential tax benefits.

The tax code contains a provision that allows securities to be sold and the capital gains tax on such sales deferred if the full proceeds are used to buy Treasury securities and certain money-market funds. The tax continues to be deferred until the securities or money-market funds are sold.

Even while adhering to the ethics guidelines, questions about conflicts of interest can still emerge.

Mr. Trump’s Treasury secretary during his first term, Steven Mnuchin, divested from his Hollywood film production company after joining the administration. However, as he was negotiating a trade deal in 2018 with China — an important market for the U.S. film industry — ethics watchdogs raised questions about whether Mr. Mnuchin had conflicts because he had sold his interest in the company to his wife.

Mr. Bessent was chosen for the Treasury after an internal tussle among Mr. Trump’s aides over the job. Mr. Lutnick, Mr. Trump’s transition team co-chair and the chief executive of Cantor Fitzgerald, made a late pitch to secure the Treasury secretary role for himself before Mr. Trump picked him to be Commerce secretary.

During that fight, which spilled into view, critics of Mr. Bessent circulated documents disparaging his performance as a hedge fund manager.

Mr. Bessent’s most recent hedge fund, Key Square Capital, launched to much fanfare in 2016, garnering $4.5 billion in investor money, including $2 billion from Mr. Soros, but manages much less now. A fund he ran in the early 2000s had a similarly unremarkable performance.