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Legislature
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New business incentive bill sparks legislative blowback

A proposed new Nebraska business attraction and development incentive package encountered considerable pushback Wednesday from members of the Legislature's Revenue Committee who were largely concerned about long-term costs.

The state faces $454 million in obligations that already are in place as a result of the Nebraska Advantage Act, which would be replaced by the new economic development initiative, Sen. John McCollister of Omaha noted.

"We've spent considerable money," Sen. Curt Friesen of Henderson said.  "When are we going to grow ourselves into lowering taxes?"

"This thing goes a little too far," Sen. Mike Groene of North Platte said.

"This helps three counties mostly. The rest of the state pays for these projects in Omaha. There's frustration in rural Nebraska; how does this help us?"

Several senators noted that employee health insurance coverage is not required of employers who would be eligible for the tax incentive benefits. 

Despite the blowback from members of the committee, the proposal (LB720) introduced by Sen. Mark Kolterman of Seward stands on firm legislative ground with built-in support from 22 co-sponsors.

The new business incentive structure is required to succeed in the highly competitive field of business attraction, Kolterman said.

"A competitive business climate helps provide tax relief," he argued.

"A thriving business sector is part of the solution for property tax relief and education funding," Kolterman told the committee.

"The Nebraska Advantage Act has resulted in 850 business expansions and creation of 100,000 jobs," he said.  

Dave Rippe, director of the Nebraska Department of Economic Development, said the proposal would build a "modernized and refocused incentive program" that would center on attraction of high-wage jobs in a highly competitive environment. 

David Brown, president and CEO of the Greater Omaha Chamber of Commerce, said business attraction is highly competitive and "companies expect the availability of incentives when they make their location decisions."

"Without this," he told the committee, "the phone will stop ringing. If incentives disappear, so will economic development in the state."

"When we get into bidding wars with other states, we lose," Friesen argued.  "Should we just lower our tax rates and reduce regulations and get out of the incentives?"

Under terms of the bill, tax benefits would be targeted according to a range of factors, including the number of jobs created, expanded employment, the amount of investment and wage figures tied to the project.

The legislation, called the "ImagiNE Nebraska Act," provides an emphasis on "quality jobs," along with modernization projects and mega-projects.

Renee Fry, executive director of OpenSky Policy Institute, opposed the legislation, pointing to $1 billion in obligations that already will be incurred under the existing Nebraska Advantage Act by 2027.

That law is due to expire in 2020.

"Tax incentives do not pay for themselves and so there is good reason to ensure that Nebraska's tax incentives are not only inducing the intended economic activity, but are also more cost-effective than other policy options," Fry said. 

In closing remarks at the end of a hearing that extended more than four hours, Kolterman said: "I don't think we can afford to jump off the bandwagon at this stage."


FRANCIS GARDLER, JOURNAL STAR 

Lincoln Southeast High School English teacher Julie Krueger (second from right) walks Wednesday with students (from left) Ashley Hebb, Ella Salem, Sara Petersen and Trinity Babcock as they look for donations to Dunk for Dollars, an annual basketball game played by staff to raise money for the Food Bank’s backpack program.


Business
AP
Zuckerberg promises strides in privacy

SAN FRANCISCO — Facebook, which grew into a colossus by vacuuming up your information in every possible way and using it to target ads back at you, now says its future lies in privacy-oriented messaging that Facebook itself can't read.

Mark Zuckerberg, co-founder and CEO, announced the shift in a Wednesday blog post apparently intended to blunt both criticism of the company's data handling and potential antitrust action. Going forward, he said, Facebook will emphasize giving people ways to communicate in truly private fashion, with their intimate thoughts and pictures shielded by encryption in ways that Facebook itself can't read.

But Zuckerberg didn't suggest any changes to Facebook's core newsfeed-and-groups-based service, or to Instagram's social network, currently the fastest growing part of the company. Facebook pulls in gargantuan profits by selling ads targeted using the information it amasses on its users and others they know.

"All indications that Facebook and Instagram will continue growing and be increasingly important," Zuckerberg said in an interview Wednesday with The Associated Press.

Critics aren't convinced Zuckerberg is committed to meaningful change.

"This does nothing to address the ad targeting and information collection about individuals," said Jen King, director of consumer privacy at Stanford Law School's Center for Internet and Society. "It's great for your relationship with other people. It doesn't do anything for your relationship with Facebook itself."

Facebook's new orientation follows a rocky two-year battering over revelations about its leaky privacy controls. That included the sharing of personal information from as many as 87 million users with a political data-mining firm that worked for the 2016 Trump campaign.

Since the 2016 election, Facebook has also taken flak for the way Russian agents used its service to target U.S. voters with divisive messages and being a conduit for political misinformation. Zuckerberg faced two days of congressional interrogation over these and other subjects last April; he acknowledged and apologized for Facebook's privacy breakdowns in the past.

Since then, Facebook has suffered other privacy lapses that have amplified the calls for regulations that would hold companies more accountable when they improperly expose their users' information.

As part of his effort to make amends, Zuckerberg plans to stitch together its Messenger, WhatsApp and Instagram messaging services so users will be able to contact each other across all of the apps.

The multiyear plan calls for all of these apps to be encrypted so no one but senders and recipients can see the contents of messages. WhatsApp already has that security feature, but Facebook's other messaging apps don't.

Zuckerberg likened it to being able to be in a living room behind a closed front door, and not having to worry about anyone eavesdropping. Meanwhile, Facebook and the Instagram photo app would still operate more like a town square where people can openly share whatever they want.

While Zuckerberg positions the messaging integration as a privacy move, Facebook also sees commercial opportunity in the shift. "If you think about your life, you probably spend more time communicating privately than publicly," he told the AP. "The overall opportunity here is a lot larger than what we have built in terms of Facebook and Instagram."

Critics have raised another possible motive — the threat of antitrust crackdowns. Integration could make it much more difficult, if not impossible, to later separate out and spin off Instagram and WhatsApp as separate companies.

"I see that as the goal of this entire thing," said Blake Reid, a University of Colorado law professor who specializes in technology and policy. He said Facebook could tell antitrust authorities that WhatsApp, Instagram and Facebook Messenger are tied so tightly together that it couldn't unwind them.

Combining the three services also lets Facebook build more complete data profiles on all of its users. Already, businesses can already target Facebook and Instagram users with the same ad campaign, and ads are likely coming to WhatsApp eventually.

And users are more likely to stay within Facebook's properties if they can easily message their friends across different services, rather than having to switch between Messenger, WhatsApp and Instagram. That could help Facebook compete with messaging services from Apple, Google and others.


MARCIO JOSE SANCHEZ, ASSOCIATED PRESS 

Facebook CEO Mark Zuckerberg makes the keynote speech May 1, 2018  at F8, Facebook's developer conference in San Jose, Calif. Zuckerberg laid out a new "privacy-focused" vision for social networking on WednesdaY.


Business
AP
Trade gap jumps to 10-year high

WASHINGTON — The U.S. trade deficit jumped nearly 19 percent in December, pushing the trade imbalance for all of 2018 to widen to a decade-long high of $621 billion. The gap with China on goods widened to an all-time record of $419.2 billion.

The Commerce Department figures released Wednesday undermined a key commitment by President Donald Trump, who promised to cut the trade imbalance on the belief that it would bring back overseas factory jobs and bolster the broader U.S. economy.

But America's appetite for imports appears to have increased after the tariffs that Trump imposed last year on foreign steel, aluminum and Chinese products. The greater reliance on Chinese imports likely reflects an acceleration in economic growth last year from Trump's debt-funded tax cuts, which were designed to increase spending by consumers and businesses.

The gap between what the United States sells and what it buys from other countries rose to $59.8 billion in December from $50.3 billion in November, the Commerce Department said. Adjusted for inflation, December was the highest imbalance on trade goods in U.S. history.

Stephen Stanley, chief economist at Amherst Pierpont Securities, suggested that the trade gap climbed so quickly because importers were rushing to bring their goods into the United States before a planned expansion of tariffs Chinese products on Jan. 1. But the tariff hikes have since been postponed as the administration has cited progress in trade talks with China.

While strong economic growth helped to fuel a jump in imports, a higher trade gap can also be a drag that worsens the rate of growth.

The increased trade gap along with weak home construction figures for December likely means slower economic growth during the final three months of 2018, according to Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

O'Sullivan estimated that annualized growth in the October-December quarter will be revised down to 2.4 percent from 2.6 percent.

On an annual basis, the trade gap widened 12.5 percent. The trade gap reached the largest total since 2008, when it was $708.7 billion. That imbalance fell in the aftermath of that year's financial crisis as the United States and other nations plunged into severe recessions.

December's trade imbalance worsened because U.S. imports rose 2.1 percent as Americans bought more household appliances, cellphones and computer products from abroad. Simultaneously, U.S. exports fell 1.9 percent as foreign demand for civilian aircraft and oil products declined.

Trump hit roughly half of Chinese imports with taxes last year, a move designed to kickstart trade negotiations with the goal of increasing exports to that country and stopping the forced turnover of U.S. technology and theft of intellectual property.

China retaliated, and the simmering trade war roiled financial markets last year. U.S. and Chinese officials have recently signaled that they're close to some kind of agreement, although China has only bolstered its commitment to investing in and developing its technology sector and questions about how to enforce any trade rules remain.

In addition to a record trade gap in goods with China, the imbalance reached new peaks with Mexico ($81.5 billion) and the European Union ($169.3 billion). The United States ran a record surplus last year with South and Central America.


Evan Vucci 

Trump (right)