ParadisePapers show Trump Commerce Secretary Has Ties to Putin Cronies

From today’s Slate Magazine by Daniel Politi:

Looks like it’s Panama Papers Part Two. The non-profit International Consortium of Investigative Journalists began publishing on Sunday what it is calling the Paradise Papers. More than a year after the organization’s network of journalists around the world shook up politicians in several countries with leaked data on offshore havens, another trove of documents taken from a Bahamas-based firm promises to expose how companies and the wealthy use complicated structures to skirt taxes. Most of the more than 13.4 million documents, which were analyzed by a group of more than 380 journalists in 67 countries, are from Bermudan law firm Appleby.

Among the most explosive revelations so far involves news that Commerce Secretary Wilbur Ross shares business interests with close allies of Russian President Vladimir Putin, which he failed to fully disclose during confirmation hearings. The documents show Ross continues to have a significant interest in a shipping firm that has a Russian energy company as one of its main clients. The owners of that company include Putin’s son-in-law and an oligarch under U.S. sanctions. The stake in the firm is held in Cayman Islands, just like much of the commerce secretary’s massive wealth that has been estimated at more than $2 billion.

The Commerce Department is not disputing the allegations. Ross “recuses himself from any matters focused on transoceanic shipping vessels, but has been generally supportive of the administration’s sanctions of Russian and Venezuelan entities,” a spokesman said. “He works closely with Commerce Department ethics officials to ensure the highest ethical standards.”

Lawmakers who were part of Ross’ confirmation hearings say they feel duped. During the process, Ross was asked about his ties to Russia and his investment in another shipping company, but Navigator never came up. Sen. Richard Blumenthal from Connecticut told NBC News that the general impression was that Ross had gotten rid of his stakes in Navigator, and they didn’t know about the firm’s ties to Russia. “I am astonished and appalled because I feel misled,” Blumenthal said. “Our committee was misled, the American people were misled by the concealment of those companies.” Ethics experts say that even if there is nothing illegal about the arrangement, it still raises several ethical questions because one of the lead voices in the administration’s trade policy could make money from business with Russia.

Read the entire article here.

U.S. economy contracts slightly

The U.S. economy contracted by a fraction of a percent in the final quarter of last year, catching investors off guard. According to a Commerce Department report released yesterday GDP contracted by .01 percent at the end of 2012, the weakest economic report since the second quarter of 2009. The report cites declining military spending and exports as some of the many reasons for decline. In addition, the political impasse in Washington over the “fiscal cliff” was blamed for frustrating investment.

Some information in the report was cited to dispel concerns about a return to recession. For example, investment in residential housing jumped 15.3 percent, and equipment and software purchases by businesses rose 12.4 percent. However, the 22.2 percent drop in military spending is the single largest drop in 40 years represents a significant amount of federal spending, and that decline alone helped push the last quarter into negative growth. Along with a decline in the consumer confidence index this month  news of negative growth sent stocks down this morning, though the market rallied later.

With unemployment remaining at 7.8 percent and forecasts for growth reigning back estimates for the first quarter of 2013, Congress and President Obama will have to achieve a more fair process that leads to more stable budgeting. The so-called “fiscal cliff” cannot be resolved unless Republicans compromise on a sensible tax plan and Democrats stand their ground on further austerity cuts. Although a balance has to be struck between taxes and spending, the report clearly shows that declines in government spending directly contribute to slow growth. This is because spending cuts are more likely than not to undermine effective demand further and frustrate solid growth.