An Inquiry Into Tech Giants’ Tax Strategies Nears an End

Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States.

The Senate Permanent Subcommittee on Investigations inquiry now drawing to a close began more than a year ago and involves at least a half dozen technology companies, according to people with firsthand knowledge of it, who declined to be identified.

Those people said the subcommittee had subpoenaed or otherwise asked the companies to explain methods they used to avoid domestic taxes. They said Apple had become a focus of the inquiry and was cooperating with the subcommittee, which is expected to issue wide-ranging recommendations that are likely to play a significant role in Congressional tax code negotiations.

Apple’s domestic tax bill has drawn the interest of corporate tax experts and policy makers because although the majority of Apple’s executives, product designers, marketers, employees, research and development operations and retail stores are in the United States, in the past Apple’s accountants have found legal ways to allocate about 70 percent of the company’s profits overseas, where tax rates are often much lower, according to corporate filings.

Apple, in a statement on Thursday, said the company was “one of the top corporate income taxpayers in the country, if not the largest.” The statement said the company “conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.”

It is unclear how broadly Senate investigators are looking into the technology industry, if any laws are thought to have been broken and how many companies are involved. The subcommittee is also known to be looking at Google, Hewlett-Packard, Microsoft and firms in such fields as biotechnology.

The subcommittee, which is overseen by Senator Carl Levin, a Michigan Democrat, has been interested in the impact on the budget deficit of offshore tax strategies. Representatives from Microsoft and Hewlett-Packard testified at a subcommittee hearing on the subject in September. Both companies were criticized sharply by Senator Levin for using accounting rules to allocate revenue to other nations to avoid paying taxes in the United States.

“This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes,” Senator Levin said at that hearing. “The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.”Apple has long been a pioneer in developing innovative tax strategies that lessen its domestic taxes. At the September hearing, Senator Levin said the investigation indicated that Apple had deferred taxes on over $35.4 billion in offshore income between 2009 and 2011.

Tech companies are able to easily shift “intellectual property, and the profit that goes along with it, to tax havens,” said a former Treasury Department economist, Martin A. Sullivan. “Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.”

In its statement, Apple said it paid “an enormous amount of taxes” to local, state and federal governments. “In fiscal 2012 we paid $6 billion in federal corporate income taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government,” it said. In the 1980s, Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies. More recently, Apple has moved revenue to states like Nevada and overseas nations where the company pays less, or in some cases no, taxes.

Almost every major corporation tries to minimize its taxes. However, technology companies are particularly well positioned to take advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.

Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft emerge from royalties on intellectual property, like the patents on software. At other times, products are digital, such as downloaded songs or movies. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers.

Although technology is now one of the nation’s largest and most highly valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’, according to a New York Times analysis. (Cash taxes may include payments for multiple years.)

Companies report their cash outlays for income taxes in their annual Form 10-K, but it is impossible from those numbers to determine precisely how much, in total, corporations pay to governments.

This article has been revised to reflect the following correction:

Correction: January 3, 2013

An earlier version of this article included outdated information on Apple’s tax payments. The company paid $6 billion in federal corporate income taxes in fiscal year 2012, according to a company statement on Thursday; it did not pay $3.3 billion “last year.” (That was the amount of cash taxes the company paid in fiscal year 2011.)

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Deepwater Horizon Owner Settles With U.S. Over Oil Spill in Gulf of Mexico

The driller whose floating Deepwater Horizon oil rig blew out in 2010, causing a massive oil spill, has agreed to settle civil and criminal claims with the federal government for $1.4 billion, the Justice Department announced Thursday.

The Deepwater Horizon exploded, burned and sank in April 2010. Eleven men were killed and millions of gallons of oil flowed into the Gulf of Mexico and fouled the shores of coastal states. The well, known as Macondo, was owned by British oil giant BP, which settled its own criminal charges and some of its civil charges in November for $4.5 billion.

While this settlement resolves the government’s claims against Transocean, that company and the others involved in the spill still face the sprawling, multistate civil case, which is scheduled to begin in February in New Orleans. In a deal filed in federal court in New Orleans, a subsidiary, Transocean Deepwater, agreed to one criminal misdemeanor violation of the Clean Water Act and will pay a fine of $100 million. Over the next five years, the company will pay civil penalties of $1 billion, the largest ever under the act.

As part of the criminal settlement, Transocean also agreed to pay the National Academy of Sciences and the National Fish and Wildlife Foundation $150 million each. Those funds will be applied to oil spill prevention and response in the Gulf of Mexico and natural resource restoration projects. The agreement will be subject to public comment and court approval. The company agreed to five years of monitoring of its drilling practices and improved safety measures.

In a statement, Transocean Ltd., the Switzerland-based parent of the rig owner, said that the company thought these were “important agreements” and called them a “positive step forward” that were “in the best interest of its shareholders and employees.” Of the 11 men killed on the rig, the company said, “their families continue to be in the thoughts and prayers of all of us at Transocean.”

The company announced in September that it had set an “estimated loss contingency” of $1.5 billion against the Justice Department’s claims.

Shares of Transocean Ltd. rose nearly 3 percent on the news, to close at $49.20.

In a statement, Lanny A. Breuer, assistant attorney general for the Justice Department’s Criminal Division, suggested that Transocean had played a subservient and lesser role in the disaster to that of BP: “Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs — at a tragic cost to many of them.” He said that the $1.4 billion “appropriately reflects its role in the Deepwater Horizon disaster.”

Under a law passed last year, 80 percent of the penalty will be applied to projects for restoring the environment and economies of gulf states.

That fact was applauded by a coalition of Gulf Coast restoration groups, including the Environmental Defense Fund and the National Audubon Society. A joint statement called this “a great day for the gulf environment and the communities that rely on a healthy ecosystem for their livelihoods.”

Still, the penalty struck some experts in environmental law as somewhat light. David M. Uhlmann, who headed the Justice Department’s environmental crimes section from 2000 to 2007, praised the size of the civil settlement, which he said “reflects the scope of the gulf oil spill tragedy.”

He argued, however, that the criminal penalty should have been at least as onerous, “given Transocean’s numerous failures to drill in a safe manner, which cost 11 workers their lives and billions of dollars in damages to communities along the gulf.” The settlement, he said, should have included seaman’s manslaughter charges, which were part of the BP settlement.

As for the company’s role in following the lead of BP, he said, “following orders is not a defense to criminal charges.”

At the Environmental Protection Agency, Cynthia Giles, assistant administrator for the office of enforcement and compliance assurance, called the settlement “an important step” toward holding Transocean and others involved in the spill accountable. “E.P.A. will continue to work with D.O.J. and its federal partners to vigorously pursue the government’s claims against all responsible parties and ensure that we are taking every possible step to restore and protect the Gulf Coast ecosystem,” she said.

The multistate trial over claims in the Deepwater Horizon cases that have not been settled are scheduled to begin in February. Stephen J. Herman and James P. Roy, lawyers who represent the steering committee of plaintiffs in the cases, said that Thursday’s settlement did not change the case, and that the plaintiffs thought that BP, Transocean and Halliburton “will be found grossly negligent” at trial.

BP continued its longstanding argument that the accident, in the words of the spokesman Geoff Morrell, “resulted from multiple causes, involving multiple parties,” and that other companies had to shoulder their share of the blame.

Transocean, Mr. Morrell said in a statement, “is finally starting, more than two-and-a-half years after the accident, to do its part for the Gulf Coast.” He then turned his attention to the other major contractor on the well, and said, “Unfortunately, Halliburton continues to deny its significant role in the accident, including its failure to adequately cement and monitor the well.”

Beverly Blohm Stafford, a Halliburton spokeswoman, said that the company “remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications for its well construction plan and instructions,” and so Halliburton, she said was protected from liability through indemnity provisions of its drilling contract.

“We continue to believe that we have substantial legal arguments and defenses against any liability and that BP’s indemnity obligation protects us,” she said. “Accordingly we will maintain our approach of taking all proper actions to protect our interests.”

This article has been revised to reflect the following correction:

Correction: January 3, 2013

An earlier version of this story misstated the size of the spill. It was not the nation’s biggest oil spill.

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Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

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Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

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Obama Signs Defense Bill, With Conditions

WASHINGTON — President Obama set aside his veto threat and late Wednesday signed a defense bill that imposes restrictions on transferring detainees out of military prisons in Afghanistan and Guantánamo Bay, Cuba. But Mr. Obama attached a signing statement claiming that he has the constitutional power to override the limits in the law.

His move awakened a dormant issue from Mr. Obama’s first term: his broken promise to close the Guantánamo prison. Lawmakers intervened by imposing statutory restrictions on transfers of prisoners to other countries or into the United States, either for continued detention or for prosecution.

Now, as Mr. Obama prepares to begin his second term, Congress has tried to further restrict his ability to wind down the detention of terrorists worldwide, adding new limits in the National Defense Authorization Act of 2013, which lawmakers approved in late December.

The bill extended and strengthened limits on transfers out of Guantánamo to troubled nations like Yemen, where the bulk of the remaining low-level detainees who have been cleared for repatriation are from. It also, for the first time, limited the Pentagon’s ability to transfer the roughly 50 non-Afghan citizens being held at the Parwan prison at Bagram Air Base in Afghanistan at a time when the future of American detention operations there is murky.

Despite his objections, Mr. Obama signed the bill, saying its other provisions on military programs were too important to jeopardize. Early Thursday, shortly after midnight, the White House released the signing statement in which the president challenged several of its provisions.

For example, in addressing the new limits on the Parwan detainees, Mr. Obama wrote that the provision “could interfere with my ability as Commander in Chief to make time-sensitive determinations about the appropriate disposition of detainees in an active area of hostilities.”

He added that if he decided that the statute was operating “in a manner that violates constitutional separation of powers principles, my administration will implement it to avoid the constitutional conflict” – legalistic language that means interpreting the statute as containing an unwritten exception a president may invoke at his discretion.

Saying that he continued to believe that closing the Guantánamo prison was in the country’s fiscal and national security interests, Mr. Obama made a similar challenge to three sections that limit his ability to transfer detainees from Guantánamo, either into the United States for prosecution before a civilian court or for continued detention at another prison, or to the custody of another nation.

It was not clear, however, whether Mr. Obama intended to follow through, or whether he was just saber-rattling as a matter of principle. Mr. Obama had made a similar challenge a year ago to the Guantánamo transfer restrictions in the 2012 version of the National Defense Authorization Act, but – against the backdrop of the presidential election campaign – he did not invoke the authority he had claimed.

Andrea Prasow, senior counterterrorism counsel and advocate at Human Rights Watch, which advocates closing Guantánamo, criticized Mr. Obama for not vetoing the legislation despite his threat to do so.

“The administration blames Congress for making it harder to close Guantánamo, yet for a second year President Obama has signed damaging congressional restrictions into law,” she said. “The burden is on Obama to show he is serious about closing the prison.”

Signing statements are official documents issued by a president when he signs bills into law that instruct subordinates in the executive branch about how to implement the new statutes. In recent decades, starting with the Reagan administration, presidents have used the device with far greater frequency than in earlier eras to claim a constitutional right to bypass or override new laws.

The practice peaked under President George W. Bush, who used signing statements to advance sweeping theories of presidential power and challenged nearly 1,200 provisions over eight years – more than twice as many as all previous presidents combined.

The American Bar Association has called upon presidents to stop using signing statements, calling the practice “contrary to the rule of law and our constitutional system of separation of powers.” A year ago, the group sent a letter to Mr. Obama restating its objection to the practice and urging him to instead veto bills if he thinks sections are unconstitutional.

As a presidential candidate, then-Senator Obama sharply criticized Mr. Bush’s use of the device as an overreach. Once in office, however, he said that he would use them only to invoke mainstream and widely accepted theories of the constitutional power of the president.

In his latest signing statement, Mr. Obama also objected to five provisions in which Congress required consultations and set out criteria over matters involving diplomatic negotiations about such matters as a security agreement with Afghanistan, saying that he would interpret the provisions so as not to inhibit “my constitutional authority to conduct the foreign relations of the United States.”

Mr. Obama raised concerns about several whistle-blower provisions that protected people who provide certain executive branch information to Congress from reprisals — including employees of contractors who uncover waste or fraud, and officials raising concerns about the safety and reliability of nuclear stockpiles.

He also took particular objection to a provision that directs the commander of the military’s nuclear weapons to submit a report to Congress “without change” detailing whether any reduction in nuclear weapons proposed by Mr. Obama would “create a strategic imbalance or degrade deterrence” relative to Russian stockpiles.

The provision, Mr. Obama said, “would require a subordinate to submit materials directly to Congress without change, and thereby obstructs the traditional chain of command.”

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In Victory for Google, U.S. Ends Antitrust Investigation

WASHINGTON — The Federal Trade Commission on Thursday found that Google had not violated antitrust or anticompetition statutes in the way it structures its Web search application — handing a big victory to the search giant in its ongoing dispute with regulators.

But the commission found that Google had misused its broad patents on cellphone technology, and ordered Google to make that technology available to rivals.

Google’s competitors, including Microsoft, have pressed vigorously for federal officials to bring an antitrust case involving its search business. Last year, an F.T.C. staff report recommended that the commission bring such a case.

The F.T.C. found that although Google sometimes favors its own products when producing search results with its ubiquitous search engine, its actions were “not undertaken without legitimate justification,” said Jon Leibowitz, the F.T.C. chairman.

Google agreed, however, to take certain actions to address what Mr. Leibowitz called “the most problematic business practices,” those that “relate to search in search advertising.”

The trade commission’s inquiry has been going on for at least a year and a half. Google disclosed in June 2011 that it had received formal notification from the commission that it was looking into Google’s business practices.

Google has long defended its search business, saying that it offers results that are most relevant to consumers and that the “competition is just a click away.” It contends that users who believe a Google search is not meeting their needs can easily move to another search engine, like Microsoft’s Bing.

Google has also said that the barriers to entry into the search business are so low that it cannot abuse its market power, even though it has more than a 70 percent share of the search business in the United States.

Companies that rely on Google to drive traffic to their sites have complained that Google adjusts its search algorithm to favor its own growing number of commerce sites — including shopping, local listings and travel.

But the trade commission faced an uphill battle in proving malicious intent — that Google changes its search algorithm to purposely harm competitors and favor itself. Antitrust lawyers say anticompetitive behavior cannot be proved simply by showing that a change in the algorithm affects other Web sites and causes sites to show up lower in results, even though studies have shown that users rarely look beyond the first page of search results.

The commission was pressing to wrap up its case before Monday, when a new commissioner will be sworn in, a development that could have affected the result of the Google investigation. Joshua D. Wright, a professor at George Mason University, was confirmed by the Senate this week to take one of the two Republican spots on the five-member commission. Mr. Wright had previously said he would recuse himself from any Google matters for two years, because he has done work for or about the company including co-authoring a paper arguing that Google has not violated any antitrust statutes.

Mr. Wright will replace J. Thomas Rosch, a commissioner since 2006. If the Google case were not settled by Monday, the commission faced the prospect that a vote on whether to charge Google would deadlock at 2-2.

The commission voted 4-1 to settle the patent charges, and voted 5-0 to close its antitrust and competition investigation.

“The F.T.C.’s credibility is eroded when confidential details of internal discussions are revealed to the media, as has continually been the case in the investigation of Google,” Senator Ron Wyden, Democrat of Oregon, said in a Nov. 26 letter to Mr. Leibowitz, the commission chairman. Mr. Wyden also said there was plenty of evidence that adequate competition exists in the search business. He cited the recent introduction of competitors like DuckDuckGo, which has a no-tracking privacy policy inspired by some consumers’ complaints about the tracking of consumer behavior that Google and other search engines perform.

“Compared to almost any other market in the history of antitrust regulation, online search has effectively zero barriers to entry,” Mr. Wyden said.

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It's the Economy: What Will the Economy’s New ‘Normal’ Look Like in 2013?

Illustration by Jasper Rietman

Back in the mid-2000s, the U.S. consumer economy was undergoing a serious change. After decades of favoring low prices (even when they promised low quality), consumers began paying more for all sorts of premium features like single-serve packaging and pretty much anything “green” or “organic.” Then came the financial crisis and the drop in consumer demand.

Deep thoughts this week:

1. Consumption is back.

2. But many buying habits are changing.

3. Regardless, the habits of the U.S. middle class are becoming less important.

It’s the Economy

Adam Davidson translates often confusing and sometimes terrifying economic and financial news.

Despite a worse-than-expected holiday season, the Federal Reserve forecast that G.D.P. growth would approach the historic average of about 3 percent in 2013. The economy may be coming back, but the question for many businesses is what the new “normal” looks like. Will shoppers spend as they did in the credit-bubble years? Or has the Great Recession scared them into prolonged stinginess? Early evidence suggests a mix. What is clear is that the big changes are just beginning.

Waste More, Want More

From the 1970s through the 1990s, the dominant retail trend was toward cheap and big: shoppers drove long distances to buy large boxes of everything they needed in bulk. Starting in the last decade, though, this began to change. And the success of products like Tide Pods (premeasured balls of detergent that made Procter & Gamble an estimated $500 million last year) suggest that the era of premium conveniences isn’t going anywhere.

Somewhat counterintuitively, this trend is directly related to the downturn, says John N. Frank, an analyst at Mintel, a market-research firm. Fearful of losing their jobs, millions of workers coped with the crisis by putting in more time at the office — “doing at least two people’s jobs,” Frank says — even if it meant less time to shop for deals. Dollar General saw tremendous growth as a more convenient alternative to Sam’s Club. Duane Reade, now owned by Walgreen, is proving that no block in Manhattan should be without a drugstore that also carries basic grocery items at an upcharge. Frank says he expects that anxious, overtired workers will drive this trend well into this decade, too.

Housing Is Back

Now that at least one million households are looking to move somewhere better, investors are looking to buy houses on the cheap — not to flip, but to rent. (The Blackstone Group, the private-equity colossus, has spent more than $1 billion this year buying up thousands of single-family homes around the country.) New residential construction starts also came back strong last year, and much of the growth was from multiunit apartment buildings designed, yes, for renting.

Despite the fact that homeownership has been promoted as a universal economic good since the Depression, the trend toward rentals might be a good one. Renters are more able to follow the job market. Renting, as the housing bubble revealed, benefits the overall recovery, because fewer people have their money tied up in one asset.

Not Your Father’s Oldsmobile

In 2012, the average life of a car in the United States reached a historic high of 11.2 years. This was tied to the collapse of new-car sales during the recession, but it was also driven by several long-term shifts. After steady increases for decades, Americans are driving less. Total miles driven in the United States hit 3 trillion for the first time in 2006. It went up even further in 2007 but has generally fallen since.

For the first time in nine decades, according to census data, walkable cities are growing faster than suburbs. And wherever people happen to move, they are buying smaller, more fuel-efficient cars. Large- and some luxury-car segments are falling, says Tom Libby, an automotive research analyst at Polk, and the cheaper subcompact and emerging sub-subcompact classes are growing. All this means that autos — one of the biggest industries in the United States — will not soon regain the explosive growth of the early 2000s.

Debt and Taxes

In 2008, Americans owed a collective $12.7 trillion. Today, thanks in part to mortgage defaults, we are down to $11.3 trillion, which is about 95 percent of our disposable income. That’s progress, but it’s still higher than the 88 percent we owed 10 years ago.

Additional reporting by Jacob Goldstein

Adam Davidson is co-founder of NPR’s “Planet Money,” a podcast and blog.

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Chinese Groups Slowly Carve Out Space in Work Against H.I.V./AIDS

Gilles Sabrie for The New York Times

In October, a student gave blood for an H.I.V. test at the Lingnan Health Center in Guangzhou. The center tries to be a safe space for gay men in an environment that can be hostile toward them.

GUANGZHOU, China — As he waited to give blood for an H.I.V. test one recent afternoon, Le, a 25-year-old marketing professional, explained why he was there. “I was aware of the consequences” of not using a condom, he said, “but somehow I didn’t know how to say no.”

Le, a gay man who would give only his first name, was being tested at the Lingnan Health Center, an organization run largely by gay volunteers, whose walls are adorned with red AIDS ribbons and a smiling condom mascot. In the past, Le went to hospitals to be tested, he said, but the stigma of being a gay man in China made the experience particularly harrowing.

“I’d always be concerned about what the doctors would think of me,” Le said. “Here we’re all in the same community, so there’s less to worry about.”

Le is one of thousands of gay men in this bustling city of 13 million people who are benefiting from a pioneering experiment that supporters hope will revolutionize the way the Communist Party deals with nongovernment groups trying to stop the spread of AIDS and other sexually transmitted diseases.

Encouraged by the new slate of leaders who came to power in November, civil society activists hope the model taking shape here in the prosperous southern province of Guangdong, which has long served as a petri dish for economic reform, will be replicated nationally, not just in the fight against disease but also on issues like poverty, mental health and the environment.

While China’s Center for Disease Control and Prevention has allowed community organizations across the country to participate in disease testing programs since 2008, in practice those efforts remain patchy. But in November, just before World AIDS Day the following month, the grass-roots movement received a high-profile endorsement from the incoming prime minister, Li Keqiang.

At a meeting with advocates for AIDS patients, Mr. Li, a large red ribbon pinned to his jacket, promised more government support and shook hands with H.I.V.-positive people. The image resounded in a society where those infected are routinely turned away from hospitals and hounded from their jobs. “Civil society plays an indispensable role in the national battle against H.I.V./AIDS,” he said, according to the state news media.

Activists remain wary, however, noting that the government has made similar promises in the past. And despite the high-level support and a policy in Guangdong allowing grass-roots groups to register directly with the government — instead of being forced to find an official sponsor, as in much of the country — many organizations say they still are stymied by dizzying bureaucratic hurdles or rejected for missing unannounced deadlines.

Tao Cai, the director of AIDS Care China, which provides support to 30,000 H.I.V.-positive people nationwide but remains unregistered, believes the obstacles come from local officials who are trying to prevent nonprofit groups from competing with their fiefs. “In China,” he said, “we say reform never gets out of Zhongnanhai,” a reference to the walled compound for senior leaders in Beijing.

There is little doubt that public health officials need help. Through October, nearly 69,000 new H.I.V. infections were reported in China in 2012, a 13 percent rise from the same period in 2011. Almost 90 percent of those cases were contracted through sexual intercourse, with rising numbers involving gay men. Medical experts also worry about syphilis, which has returned with a vengeance after being virtually wiped out during the Mao era.

Reported cases of syphilis, known in the south as “Guangdong boils,” have increased more than tenfold in the last decade, according to national statistics. As with H.I.V., gay men and sex workers are particularly at risk. Local health experts estimate that 5 percent of men who have sex with other men carry H.I.V., while around 20 percent test positive for syphilis.

The Chinese authorities have long tackled the rise in communicable diseases among gay men with all the sensitivity of a swinging billy club. In raids on bars, bathhouses and parks, police officers and health officials often force those detained to hand over their IDs and submit to blood tests.

Grass-roots health groups have been frequent targets of official harassment as well. In most provinces, they can legally register with the Bureau of Civil Affairs only if they are sponsored by a government agency. But advocates say few agencies are willing to vouch for groups focused on politically fraught issues like homosexuality, prostitution or sexually transmitted diseases.

In the face of such constraints, the majority of China’s estimated 1,000 H.I.V. organizations operate in a legal purgatory that deprives them of tax benefits and makes it risky to accept foreign donations, usually their main source of support.

Mr. Li, the incoming premier, has a spotty record when it comes to H.I.V. In the 1990s, when he was the top official in central Henan Province, a botched blood-collection program there infected hundreds of thousands of people with H.I.V. Critics say Mr. Li was more interested in covering up the problem than dealing with its causes. Even as he was holding court with AIDS groups, over a hundred of those infected in the scandal marched in Beijing to the Ministry of Health demanding justice.

Mr. Li’s views appear to have changed. In November, social media erupted over the case of a 25-year-old man seeking treatment for lung cancer who was turned away from two Beijing hospitals because he was H.I.V.-positive. A hospital in nearby Tianjin finally removed the tumor — but only after he altered his medical records to conceal his H.I.V. status from doctors. As a battle raged online between those condemning his actions and those sympathizing with his plight, Mr. Li ordered the Health Ministry to prohibit hospitals from rejecting AIDS patients.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

Because of an editing error, an earlier version of a picture caption misspelled part of the name of an organization in Guangzhou. It is the Lingnan Health Center, not Lignan. 

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Chinese Groups Slowly Carve Out Space in Work Against H.I.V./AIDS

Gilles Sabrie for The New York Times

In October, a student gave blood for an H.I.V. test at the Lingnan Health Center in Guangzhou. The center tries to be a safe space for gay men in an environment that can be hostile toward them.

GUANGZHOU, China — As he waited to give blood for an H.I.V. test one recent afternoon, Le, a 25-year-old marketing professional, explained why he was there. “I was aware of the consequences” of not using a condom, he said, “but somehow I didn’t know how to say no.”

Le, a gay man who would give only his first name, was being tested at the Lingnan Health Center, an organization run largely by gay volunteers, whose walls are adorned with red AIDS ribbons and a smiling condom mascot. In the past, Le went to hospitals to be tested, he said, but the stigma of being a gay man in China made the experience particularly harrowing.

“I’d always be concerned about what the doctors would think of me,” Le said. “Here we’re all in the same community, so there’s less to worry about.”

Le is one of thousands of gay men in this bustling city of 13 million people who are benefiting from a pioneering experiment that supporters hope will revolutionize the way the Communist Party deals with nongovernment groups trying to stop the spread of AIDS and other sexually transmitted diseases.

Encouraged by the new slate of leaders who came to power in November, civil society activists hope the model taking shape here in the prosperous southern province of Guangdong, which has long served as a petri dish for economic reform, will be replicated nationally, not just in the fight against disease but also on issues like poverty, mental health and the environment.

While China’s Center for Disease Control and Prevention has allowed community organizations across the country to participate in disease testing programs since 2008, in practice those efforts remain patchy. But in November, just before World AIDS Day the following month, the grass-roots movement received a high-profile endorsement from the incoming prime minister, Li Keqiang.

At a meeting with advocates for AIDS patients, Mr. Li, a large red ribbon pinned to his jacket, promised more government support and shook hands with H.I.V.-positive people. The image resounded in a society where those infected are routinely turned away from hospitals and hounded from their jobs. “Civil society plays an indispensable role in the national battle against H.I.V./AIDS,” he said, according to the state news media.

Activists remain wary, however, noting that the government has made similar promises in the past. And despite the high-level support and a policy in Guangdong allowing grass-roots groups to register directly with the government — instead of being forced to find an official sponsor, as in much of the country — many organizations say they still are stymied by dizzying bureaucratic hurdles or rejected for missing unannounced deadlines.

Tao Cai, the director of AIDS Care China, which provides support to 30,000 H.I.V.-positive people nationwide but remains unregistered, believes the obstacles come from local officials who are trying to prevent nonprofit groups from competing with their fiefs. “In China,” he said, “we say reform never gets out of Zhongnanhai,” a reference to the walled compound for senior leaders in Beijing.

There is little doubt that public health officials need help. Through October, nearly 69,000 new H.I.V. infections were reported in China in 2012, a 13 percent rise from the same period in 2011. Almost 90 percent of those cases were contracted through sexual intercourse, with rising numbers involving gay men. Medical experts also worry about syphilis, which has returned with a vengeance after being virtually wiped out during the Mao era.

Reported cases of syphilis, known in the south as “Guangdong boils,” have increased more than tenfold in the last decade, according to national statistics. As with H.I.V., gay men and sex workers are particularly at risk. Local health experts estimate that 5 percent of men who have sex with other men carry H.I.V., while around 20 percent test positive for syphilis.

The Chinese authorities have long tackled the rise in communicable diseases among gay men with all the sensitivity of a swinging billy club. In raids on bars, bathhouses and parks, police officers and health officials often force those detained to hand over their IDs and submit to blood tests.

Grass-roots health groups have been frequent targets of official harassment as well. In most provinces, they can legally register with the Bureau of Civil Affairs only if they are sponsored by a government agency. But advocates say few agencies are willing to vouch for groups focused on politically fraught issues like homosexuality, prostitution or sexually transmitted diseases.

In the face of such constraints, the majority of China’s estimated 1,000 H.I.V. organizations operate in a legal purgatory that deprives them of tax benefits and makes it risky to accept foreign donations, usually their main source of support.

Mr. Li, the incoming premier, has a spotty record when it comes to H.I.V. In the 1990s, when he was the top official in central Henan Province, a botched blood-collection program there infected hundreds of thousands of people with H.I.V. Critics say Mr. Li was more interested in covering up the problem than dealing with its causes. Even as he was holding court with AIDS groups, over a hundred of those infected in the scandal marched in Beijing to the Ministry of Health demanding justice.

Mr. Li’s views appear to have changed. In November, social media erupted over the case of a 25-year-old man seeking treatment for lung cancer who was turned away from two Beijing hospitals because he was H.I.V.-positive. A hospital in nearby Tianjin finally removed the tumor — but only after he altered his medical records to conceal his H.I.V. status from doctors. As a battle raged online between those condemning his actions and those sympathizing with his plight, Mr. Li ordered the Health Ministry to prohibit hospitals from rejecting AIDS patients.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

Because of an editing error, an earlier version of a picture caption misspelled part of the name of an organization in Guangzhou. It is the Lingnan Health Center, not Lignan. 

Read More..

Dozens of Syrians Killed in Explosions Around Damascus

Andoni Lubaki/Associated Press

Rebel fighters patrol a neighborhood in Aleppo on Wednesday.

BEIRUT, Lebanon — Dozens of Syrians were killed or wounded in an explosion at a gas station east of Damascus, the Syrian capital, on Wednesday, and explosions in another Damascus suburb killed at least six people and wounded many more, including women and children, according to videos and reports from antigovernment activists.

The violence came as the United Nations released a study showing that more than 60,000 people had been killed in Syria’s 22-month-old conflict, a third higher than estimates by antigovernment activist groups.

Also on Wednesday, the family of James Foley, a reporter for the Global Post Web site, announced that Mr. Foley had been kidnapped on Nov. 22 by unidentified gunmen in northwest Syria. Mr. Foley had survived an abduction in Libya while covering the conflict there.

A recent flurry of diplomatic activity by Russia, the United Nations’ special envoy and others aimed at finding a political solution appeared to founder in recent days as neither Bashar al-Assad, the Syrian president, nor his opponents expressed a willingness to make concessions to end the bloody conflict.

The explosion near Damascus, which witnesses blamed on an airstrike, took place in a heavily contested suburban area. It hit a gas station where scores of people had lined up for fuel, which had just become available there after about a month, residents said. Videos posted by antigovernment activists showed charred bodies.

One man, using the nickname Abu Fuad, said in a telephone interview that he had just filled up his gas tank and was driving away when he heard the screech of fighter jets.

He was less than a quarter mile away when he heard the explosions, he said.

“There were many cars waiting their turn,” he said. “Yesterday, we heard that the government sent fuel to the gas station here, so all the people around came to fill up their cars.”

In a sign of the depth of distrust the conflict has spawned, Abu Fuad suggested that restocking the station was a government ruse. “They sent fuel as a trap,” he said.

In northern Syria, rebels used rockets to attack the Taftanaz military airport, a long-contested area in the province of Idlib, activists reported. Rebels have also stepped up attacks on airports in the neighboring province of Aleppo, trying to disrupt the warplanes and helicopters that government forces increasingly rely on for attacks, and even for supply lines, in the north.

The United Nations study suggested that the human toll of the war was even greater than previously estimated. Two days ago, the Syrian Observatory for Human Rights, a rebel group that tracks the war from Britain, reported 45,000 deaths, mostly civilian, since the conflict began in March 2011.

“The number of casualties is much higher than we expected, and is truly shocking,” the United Nations high commissioner for human rights, Navi Pillay, said in a statement after her agency released the study.

“We must not compound the existing disaster by failing to prepare for the inevitable — and very dangerous — instability that will occur when the conflict ends,” she added. To avoid repeating the experience of collapsed states like Afghanistan, Iraq and Somalia, she said, “serious planning needs to get under way immediately, not just to provide humanitarian aid to all those who need it, but to protect all Syrian citizens from extrajudicial reprisals and acts of revenge.”

The study’s surprisingly high death toll reflected only those killings in which victims had been identified by their full name, and the date and location of their death had been recorded, leaving the possibility of many more dead.

Independent researchers compiled reports of more than 147,000 killings in Syria’s conflict from seven sources, including the government. When duplicates were removed, there remained a list of 59,648 people killed between March 2011 and the end of November.

Meanwhile, John Foley, James Foley’s father, stressed that his son was an “objective journalist” and issued a plea to his captors to contact the family so that they can work for his release.

“We want Jim to come safely home, or at least we need to speak with him to know he’s O.K.,” John Foley said. “Jim is an objective journalist and we appeal for the release of Jim unharmed. To the people who have Jim, please contact us so we can work together toward his release.”

Hwaida Saad contributed reporting.

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