Facebook says it uncovers new meddling before 2018 U.S. elections

FILE PHOTO: Facebook logo is seen at a start-up companies gathering at Paris' Station F in Paris, France on January 17, 2017. REUTERS/Philippe Wojazer/File Photo

By Joseph Menn and Paresh Dave

(Reuters) – Facebook Inc has identified a new coordinated political influence campaign to mislead users and organize rallies ahead of November’s U.S. congressional elections, taking down dozens of fake accounts on its site, the company said on Tuesday.

A Russian propaganda arm tried to tamper in the 2016 U.S. election by posting and buying ads on Facebook, according to the company and U.S. intelligence agencies. Moscow has denied involvement.

Facebook on Tuesday said they had removed 32 pages and accounts from Facebook and Instagram, part of an effort to combat foreign meddling in U.S. elections, attempts that lawmakers have called dangerous for democracy.

The company said it was still in the early stages of its investigation and did not yet know who may be behind the influence campaign for 2018 elections that will determine whether or not the Republican Party keeps control of Congress.

Chief Operating Officer Sheryl Sandberg said on a call with reporters that the attempts to manipulate public opinion would likely become more sophisticated to evade Facebook’s scrutiny, calling it an “arms race.”

“This kind of behavior is not allowed on Facebook because we don’t want people or organizations creating networks of accounts to mislead others about who they are, or what they’re doing,” the company said in a blogpost.

More than 290,000 accounts followed at least one of the pages and that about $11,000 had been spent on about 150 ads, Facebook said. The pages had created about 30 events since May 2017.

Facebook for months has been on the defensive about influence activity on its site and concerns over user privacy tied to longstanding agreements with developers that allowed them access to private user data.

DIVISIVE ISSUES

Facebook identified influence activity around at least two issues, including a counter-protest to a “Unite the Right II” rally set next week in Washington. The other was the #AbolishICE social media campaign aimed at the U.S. Immigration and Customs Enforcement agency.

In the blog post, Facebook said it was revealing the influence effort now in part because of the rally. A previous event last year in Charlottesville, South Carolina, led to violence by white supremacists.

Facebook said it would tell users who had expressed interest in the counter-protest what action it had taken and why.

Facebook officials on a call with reporters said that one known account from Russia’s Internet Research Agency was a co-administrator of one of the fake pages for seven minutes, but the company did not believe that was enough evidence to attribute the campaign to the Russian government.

The company previously had said 126 million Americans may have seen Russian-backed political content on Facebook over a two-year period, and that 16 million may have been exposed to Russian information on Instagram.

Adam Schiff, the top Democrat on the U.S. House of Representatives Intelligence Committee, in a statement urged Facebook to move against foreign groups trying to sway American voters and to warn legitimate users that such activity, as seen in 2016, is recurring this year.

“Today’s announcement from Facebook demonstrates what we’ve long feared: that malicious foreign actors bearing the hallmarks of previously-identified Russian influence campaigns continue to abuse and weaponize social media platforms to influence the U.S. electorate,” Schiff said.

Senate Intelligence Committee Chairman Richard Burr, a Republican, said in a statement there would be a hearing on Wednesday about the online threat to U.S. election security.

Burr said the goal of influence operations “is to sow discord, distrust, and division in an attempt to undermine public faith in our institutions and our political system. The Russians want a weak America.”

Washington imposed punitive sanctions on Russia following U.S. intelligence agency conclusions that Moscow interfered to undermine the 2016 U.S. elections, one of the reasons U.S.-Russian relations are at a post-Cold War low. Both U.S. President Donald Trump and Russian President Vladimir Putin have said, however, that they want to improve ties between the two nuclear powers.

Facebook disclosed in September that Russians under fake names had used the social network to try to influence U.S. voters in the months before and after the 2016 election, writing about divisive issues, setting up events and buying ads.

U.S. intelligence agencies said Russian state operators ran the campaign combining fake social media posts and hacking into Democratic Party networks, eventually becoming an effort to help Republican candidate Trump, who scored a surprise victory over Democrat Hillary Clinton.

Over the past several months, the company has taken steps meant to reassure U.S. and European lawmakers that further regulation is unnecessary. Chief Executive Officer Mark Zuckerberg says the company has 20,000 people working to police and protect the site.

Costs associated with that effort are part of the reason Facebook said last week that it expects its profit margins to decline, a warning that sent shares tumbling about 25 percent, the biggest one-day loss of market cap in U.S. stock market history. Shares of Facebook were up about 1.5 percent in Tuesday’s midafternoon trading, part of a broader tech rebound.

(Joseph Menn and Paresh Dave in San Francisco; additional reporting by Munsif Vengattil in Bengaluru, Kevin Drawbaugh in Washington; writing by Peter Henderson; Editing by Saumyadeb Chakrabarty and Grant McCool)

North Korea likely to pursue talks, South says in rosy New Year forecast

South Korean soldiers patrol along a barbed-wire fence near the militarized zone separating the two Koreas, in Paju, South Korea, December 21, 2017

By Haejin Choi

SEOUL (Reuters) – South Korea predicted on Tuesday that North Korea would look to open negotiations with the United States next year in an optimistic outlook for 2018, even as Seoul set up a specialized military team to confront nuclear threats from the North.

The U.N. Security Council unanimously imposed new, tougher sanctions on reclusive North Korea on Friday for its recent intercontinental ballistic missile test, a move the North branded an economic blockade and act of war.

“North Korea will seek negotiation with United States, while continuing to pursue its effort to be recognized as a de facto nuclear-possessing country,” South Korea’s Unification Ministry said in a report, without offering any reasons for its conclusion.

The Ministry of Defence said it would assign four units to operate under a new official overseeing North Korea policy, aimed to “deter and respond to North Korea’s nuclear and missile threat”.

Tensions have risen over North Korea’s nuclear and missile programs, which it pursues in defiance of years of U.N. Security Council resolutions, with bellicose rhetoric coming from both Pyongyang and the White House.

U.S. diplomats have made clear they are seeking a diplomatic solution but President Donald Trump has derided talks as useless and said Pyongyang must commit to giving up its nuclear weapons before any talks can begin.

In a statement carried by the official KCNA news agency, North Korea said the United States was terrified by its nuclear force and was getting “more and more frenzied in the moves to impose the harshest-ever sanctions and pressure on our country”.

China, the North’s lone major ally, and Russia both supported the latest U.N. sanctions, which seek to limit the North’s access to refined petroleum products and crude oil and its earnings from workers abroad, while on Monday Chinese Foreign Ministry spokeswoman Hua Chunying called for all countries to ease tension.

On Tuesday, Beijing released customs data indicating China exported no oil products to North Korea in November, apparently going over and beyond U.N. sanctions.

China, the main source of North Korea’s fuel, did not export any gasoline, jet fuel, diesel or fuel oil to its neighbor last month, data from the General Administration of Customs showed.

China also imported no iron ore, coal or lead from North Korea in November.

In its 2018 forecast, South Korea’s Unification Ministry said it believed the North would eventually find ways to blunt the effects of the sanctions.

“Countermeasures will be orchestrated to deal with the effects, including cuts in trade volume and foreign currency inflow, lack of supplies, and reduced production in each part of the economy,” the report said.

The latest round of sanctions was prompted by the Nov. 29 test of what North Korea said was an intercontinental ballistic missile that put the U.S. mainland within range of its nuclear weapons.

The Joongang Ilbo Daily newspaper, citing an unnamed South Korean government official, reported on Tuesday that North Korea could also be preparing to launch a satellite into space.

Experts have said such launches are likely aimed at further developing the North’s ballistic missile technology, and as such would be prohibited under U.N. resolutions.

The North Korean Rodong Sinmun newspaper said on Monday saying that “peaceful space development is a legitimate right of a sovereign state”.

North Korea regularly threatens to destroy South Korea, the United States and Japan, and says its weapons are necessary to counter U.S. aggression.

The United States stations 28,500 troops in the South, a legacy of the 1950-53 Korean War, and regularly carries out military exercises with the South, which the North sees as preparations for invasion.

(Additional reporting by Muyu Xu and Ryan Woo in Beijing; Writing by Josh Smith; Editing by Nick Macfie)

Long-awaited U.S. Republican legislation calls for deep tax cuts

A congressional aide places a placard on a podium for the House Republican's legislation to overhaul the tax code on Capitol Hill.

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – President Donald Trump’s drive for the deep tax cuts that he promised as a candidate reached a major milestone on Thursday, with his fellow Republicans in the House of Representatives unveiling long-awaited legislation to overhaul the tax code.

The bill called for slashing the corporate tax rate to 20 percent from 35 percent and cutting tax rates on individuals and families by consolidating the current number of tax brackets to four from seven: 12 percent, 25 percent, 35 percent and 39.6 percent, which is now the top rate and would be retained.

Largely in line with expectations for the tax-cut plan they have been developing behind closed doors for weeks, the House tax-writing Ways and Means Committee proposed roughly doubling the standard deduction for individuals and families.

It also called for preserving the home mortgage interest deduction for existing mortgages and for newly purchased homes up to $500,000, as well as continuing the deduction for state and local property taxes, capped at $10,000. It would retain the tax benefits of popular retirement savings programs including 401(k) and IRA.

The bill is the starting gun for a frantic race toward what Trump and Republicans in the House and Senate hope will be their first major legislative victory since he took office in January: the enactment this year of a package of deep tax cuts.

“This is the beginning of the end of this horrible tax code,” House Ways and Means Committee Chairman Brady told reporters on Thursday as he entered a meeting with Republican lawmakers ahead of the bill’s release.

The bill would create a new family tax credit, double exemptions for estate taxes on inherited assets and repeal the estate tax over six years, while also allowing small businesses to write off loan interest, according to the document.

The bill would cap the maximum tax rate on small businesses and other non-corporate enterprises at 25 percent, down from the present maximum rate on “pass-through” income of 39.6 percent. It would also set standards for distinguishing between individual wage income and actual pass-through business income to prevent tax-avoidance abuse of the new, lower tax level.

It would create a new 10-percent tax on U.S. companies’ high-profit foreign subsidiaries, calculated on a global basis, in a move to prevent companies from moving profits overseas, the Wall Street Journal reported.

Foreign businesses operating in the United States would face a tax of up to 20 percent on payments they make overseas from their American operations, the Journal added.

 

MARKET REACTION

U.S. equities have rallied in 2017 to a series of record highs, partly on expectations of deep corporate tax cuts. They were down slightly on Thursday as initial details of the Republican plan emerged. Housing stocks fell; bank stocks initially fell but then cut their losses.

Investors cautioned the tax plan was preliminary and it was too soon to gauge the effect on specific industries and asset classes. Long-dated bond yields and the U.S. dollar were down.

“This was what the market has been waiting for,” said Sean Simko, head of fixed-income management at Sei Investments Co in Pennsylvania. “It’s pretty much what the market has heard and priced in for. We are also waiting for the Fed chair nominee announcement and the payrolls number (Friday). Until then, the markets are going to be pretty contained.”

Congress has not succeeded with comprehensive tax changes since 1986, when Republican Ronald Reagan was in the White House and Democrats controlled the House. Bipartisan cooperation led to the passage of that plan, but Republicans have frozen Democrats out of the process of developing this legislation and passed a budget plan that would enable them to pass it with no Democratic votes.

Independent analysts have said that, based on an outline of the plan previously made public, corporations and the wealthiest Americans would benefit the most, and the federal deficit would be greatly expanded over the next decade because of a loss of tax revenue.

Trump said at the White House this week that he wanted Congress to pass the tax overhaul by the U.S. Thanksgiving holiday on Nov. 23.

Trump, House Republican leaders and Republican members of Brady’s panel will then meet at the White House on Thursday afternoon. Trump is also meeting separately with Republican senators, who must also unite to pass the tax plan.

“We’re going to get it done,” added House Republican leader Kevin McCarthy.

Brady himself predicts the initial legislation will change next week, when his panel is due to begin preparing it for an eventual House vote.

While Republicans control the White House and both chambers of Congress, intra-party differences have prevented them from passing major legislation sought by Trump, as exemplified by the collapse of their effort to dismantle the Obamacare law. Any failure to pass tax cuts legislation would call into question Republicans’ basic ability to deliver on promises.

The bill must also pass the Senate, where Republicans hold a slimmer 52-48 majority and earlier this year failed to garner enough votes to pass a major healthcare overhaul. Senate Republican leaders have said they aim to finish their work on taxes by year-end.

Democrats have criticized the proposed tax cuts as a giveaway to corporations and the wealthy that would harm workers and middle-class Americans.

 

 

(Reporting by Amanda Becker and David Morgan; Additional reporting by Richard Leong, Susan Heavey and Susan Cornwell; Writing by Will Dunham; Editing by Lisa Von Ahn and Nick Zieminski)