Nearly 140 countries agreed Friday to the most sweeping overhaul of global tax rules in a century, a move that aims to curtail tax avoidance by multinational corporations and raise additional tax revenue of as much as $150 billion annually.
The reform sets out a global minimum corporate tax of 15%, targeted at preventing companies from exploiting low-tax jurisdictions.
Treasury Secretary Janet Yellen said the floor set by the global minimum tax was a victory for the U.S. and its ability to raise money from companies. She urged Congress to move swiftly to enact the international tax proposals it has been debating, which would help pay for extending the expanded child tax credit and climate-change initiatives, among other policies.
“International tax policy making is a complex issue, but the arcane language of today’s agreement belies how simple and sweeping the stakes are: when this deal is enacted, Americans will find the global economy a much easier place to land a job, earn a living, or scale a business,” Ms. Yellen said.
The agreement among 136 countries also seeks to address the challenges posed by companies, particularly technology giants, that register the intellectual property that drives their profits anywhere in the world. As a result, many of those countries established operations in low-tax countries such as Ireland to reduce their tax bills.
The final deal gained the backing of Ireland, Estonia and Hungary, three members of the European Union that withheld their support for a preliminary agreement in July. But Nigeria, Kenya, Sri Lanka and Pakistan continued to reject the deal.
The new agreement, if implemented, would divide existing tax revenues in a way that favors countries where customers are based. The biggest countries, as well as the low-tax jurisdictions, must implement the agreement in order for it to meaningfully reduce tax avoidance.
Overall, the OECD estimates the new rules could give governments around the world additional revenue of $150 billion annually.
The final deal is expected to receive the backing of leaders from the Group of 20 leading economies when they meet in Rome at the end of this month. Thereafter, the signatories will have to change their national laws and amend international treaties to put the overhaul into practice.
The signatories set 2023 as a target for implementation, which tax experts said was an ambitious goal. And while the agreement would likely survive the failure of a small economy to pass new laws, it would be greatly weakened if a large economy—such as the U.S.—were to fail.
“We are all relying on all the bigger countries being able to move at roughly the same pace together,” said Irish Finance Minister Paschal Donohoe. “Were any big economy not to find itself in a position to implement the agreement, that would matter for the other countries. But that might not become apparent for a while.”
Congress’ work on the deal will be divided into two phases. The first, this year, will be to change the minimum tax on U.S. companies’ foreign income that the U.S. approved in 2017. To comply with the agreement, Democrats intend to raise the rate—the House plan calls for 16.6%—and implement it on a country-by-country basis. Democrats can advance this on their own and they are trying to do so as part of President Biden’s broader policy agenda.
The second phase will be trickier, and the timing is less certain. That is where the U.S. would have to agree to the international deal changing the rules for where income is taxed. Many analysts say that would require a treaty, which would need a two-thirds vote in the Senate and thus some support from Republicans. Ms. Yellen has been more circumspect about the schedule and procedural details of the second phase.
Friction between European countries and the U.S. over the taxation of U.S. tech giants has threatened to trigger a trade war.
In long-running talks about new international tax rules, European officials have argued U.S. tech giants should pay more tax in Europe, and they fought for a system that would reallocate taxing rights on some digital products from countries where the product is produced to where it is consumed.
The U.S., however, resisted. A number of European governments introduced their own taxes on digital services. The U.S. then threatened to respond with new tariffs on imports from Europe.
The compromise was to reallocate taxing rights on all big companies that are above a certain profit threshold.
Under the agreement reached Friday, governments pledged not to introduce any new levies and said they would ultimately withdraw any that are in place. But the timetable for doing that has yet to be settled through bilateral discussions between the U.S. and those countries that have introduced the new levies.
Even though they will likely have to pay more tax after the overhaul, technology companies have long backed efforts to secure an international agreement, which they see as a way to avoid a chaotic network of national levies that threatened to tax the same profit multiple times.
SHARE YOUR THOUGHTS
Do you agree with the global minimum tax on corporations? Why or why not? Join the conversation below.
The Organization for Economic Cooperation and Development, which has been guiding the tax talks, estimates that some $125 billion in existing tax revenues would be divided among countries in a new way.
Those new rules would be applied to companies with global turnover of €20 billion (about $23 billion) or more, and with a profit margin of 10% or more. That group is likely to include around 100 companies. Governments have agreed to reallocate the taxing rights to a quarter of the profits of each of those companies above 10%.
The agreement announced Friday specifies that its revenue and profitability thresholds for reallocating taxing rights could also apply to a part of a larger company if that segment is reported in its financial accounts. Such a provision would apply to Amazon.com Inc.’s cloud division, Amazon Web Services, even though Amazon as a whole isn’t profitable enough to qualify because of its low-margin e-commerce business.
The other part of the agreement sets a minimum tax rate of 15% on the profits made by large companies. Smaller companies, with revenues of less than $750 million, are exempted because they don’t typically have international operations and can’t therefore take advantage of the loopholes that big multinational companies have benefited from.
Low-tax countries such as Ireland will see an overall decline in revenues. Developing countries are least happy with the final deal, having pushed for both a higher minimum tax rate and the reallocation of a greater share of the profits of the largest companies.
—Sam Schechner in Paris contributed to this article.
See. Charles Edward Andrew Lincoln IV, Is Incorporation Really Better Than Central Management and Control for Testing Corporate Residency? An Answer to Corporate Tax Evasion and Inversion, 43 Ohio N.U.L. Rev. 359 (2017).
Stocks sailed to record highs Monday before paring some gains as traders took in promising data on a leading COVID-19 vaccine candidate as well as President-elect Joe Biden’s victory in the U.S. presidential election, ending a days-long nail-biter over which candidate would prevail in winning the White House.
The S&P 500 jumped as much as 3.9% to more than 3,600 at session highs, topping its previous record intraday high of 3,588.11 from September, and its record closing high from that same day. The Dow gained as many as 1,610 points, or 5.7% to its own all-time high of more than 29,800. The Dow’s previous record intraday high was 29,568.57 from February. Both indices cut gains in the minutes leading up to market close, however.
The Nasdaq lagged and closed in negative territory, however, as hopes for a vaccine prompted traders to turn away from software stocks and other members of “stay-at-home” trade. Shares of Zoom Video Communications (ZM) and Peloton (PTON) each sold off on Monday. However, stocks poised to benefit from a broader economic reopening including airlines, cruise lines and lodging firms each surged.
Shares of Pfizer (PFE) jumped more than 7.5% after the company announced that their clinical trial showed that their vaccine candidate was more than 90% effective in preventing COVID-19 in participants with no evidence of a previous coronavirus infection. Shares of BioNTech (BNTX), which is working on the vaccine alongside Pfizer, also gained more than 16%.
Clarity around the results of the presidential election also helped fuel a market rally. Biden, alongside Vice President-elect Kamala Harris, is set to usher in a push for bigger fiscal stimulus, a public option in health care, investment in sustainability, and a more measured approach to foreign policy and trade, among other key issues. And in his victory speech Saturday, Biden promised to work toward these goals with an eye toward uniting a deeply divided nation, calling for an end of “this grim era of demonization in America” and underscoring that “if we can decide not to cooperate, then we can decide to cooperate.”
So far, traders have cast bets that some of the suspected “market negative” potential of a Biden presidency, such as a move to raise corporate taxes, would be tempered by a Senate that remained under Republican control. Two Senate races remain outstanding in Georgia and will not be decided until January, though prediction markets have so far given Democrats relatively slim odds of winning both seats needed for the party to claim a majority in the chamber.
“A divided government would constrain the Biden administration’s ability to implement plans for large-scale fiscal stimulus and public investment, tax, healthcare and climate related legislation,” analysts from BlackRock Investment Institute said in a note Saturday. “We see an increased focus on sustainability under a divided government, but through regulatory actions, rather than via tax policy or spending on green infrastructure. It also would likely signify a return to more predictable trade and foreign policy – even as U.S.-China rivalry is set to stay elevated due to bipartisan support for a more competitive stance.”
The analysts added that “some fiscal stimulus looks possible” during the lame-duck session in Congress, though the size and scope of any forthcoming package is likely to be much smaller than what a united Democratic government might have advanced.
“We’re monitoring the fiscal response closely, as a premature retrenchment could set back an economic restart that has so far surprised to the upside,” they said.
Other economists also expressed optimism that a stimulus package might get passed ahead of Inauguration Day, even after the months’ worth of discussions between Trump administration officials and congressional lawmakers fizzled out without an agreement.
“We are becoming increasingly hopeful that pressure from business leaders and vulnerable Republican Senators in 2022 will mean that something can pass before the end of the year, and very preferably before the end of the month,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Sunday.
And for the high-flying tech stocks that have driven the market higher for much of this year, a Biden presidential victory with a likely Republican Senate poses the “goldilocks Election outcome,” according to WedBush analyst Dan Ives.
“Investors should expect a ratcheting down of US/China tensions and the ‘decoupling path’ of the Cold Tech war, which is a bullish sign for Apple (AAPL) and semi [semiconductor] stocks looking ahead,” Ives said in a note Saturday. Concerns of a tougher antitrust environment for Big Tech companies have also likely eased, he added.
Biden is also set to strike a more serious tone on combatting the coronavirus pandemic, with the outbreak having already taken the lives of more than 230,000 Americans, sickened more than 9.8 million and dragged U.S. economic activity to a historic nadir. And while vote counts were under way last week, coronavirus cases hit a grim milestone in the United States: A record more than 120,000 new cases reported on Friday alone. Biden announced a new 13-person coronavirus task force on Monday, as one of his first major acts during his presidential transition.
4:04 p.m. ET: Dow climbs 835 points, or 3%, to pare some gains after soaring to a record intraday high
Here were the main moves in markets as of 4:04 p.m. ET:
U.S. West Texas intermediate crude oil prices (CL=F) jumped 8.5%, or $3.15 per barrel, to settle at $40.29 per barrel Monday afternoon, as hopes of a vaccine and broader economic reopening drove optimism over heightened energy demand. The energy sector far and away led gains in the S&P 500 Monday afternoon, surging more than 15% versus the broader market’s gain of just over 2.6%.
Still, crude oil prices remain lower by more than 30% for the year to date, with futures at one point having turned negative this spring before recovering.
11:45 a.m. ET: Why Pfizer’s promising vaccine data is bullish for Moderna: Morgan Stanley
Pfizer’s upbeat vaccine trial data, showing a more than 90% efficacy in preventing COVID-19 in patients without prior history of infection, points to potentially promising results for Moderna’s (MRNA) own vaccine candidate, according to Morgan Stanley equity analyst Matthew Harrison. Shares of Moderna were up more than 7.5% intraday on Monday.
Moderna’s candidate, like Pfizer’s, is based on messenger RNA (mRNA) technology, which produces a synthetic version of the mRNA a virus uses to build its proteins to teach cells how to create their own and eventually build immunity. Moderna calls its vaccine candidate mRNA-1273.
“Pfizer’s strong data should translate to mRNA-1273 since the level of neutralizing antibodies for mRNA-1273 is the same or better than Pfizer in earlier stage studies,” Harrison said in a note Monday. “We await potential differentiation in patient sub-groups or secondary endpoints (such as non-symptomatic infections).”
Harrison added that Modern’s vaccine candidate, if successful, will likely be easier to transport and thereby distribute en masse, since it does not require the same ultra-cold temperatures for storage.
“Moderna requires transport at -20C (vs. -80C for Pfizer), and can be stored at regular refrigeration for a week (vs. 24 hours for Pfizer) and requires no one-site dilution (vs. dilution required for Pfizer),” he said. “We see these factors as helping to maintain a commercial edge even with similar efficacy.”
9:54 a.m. ET: Stay-at-home trade comes unwound after promising vaccine data, while reopening stocks rally
Shares of companies that comprised the “stay-at-home” trade, or those viewed as beneficiaries of widespread social distancing and working and schooling from home, tumbled Monday morning after Pfizer and BioNTech released promising data around the efficacy of their COVID-19 vaccine candidate.
A vaccine has been viewed by many market pundits, business executives and policymakers as the key tenet of a sustained rebound in economic activity and corporate profitability, since without one, consumers would likely remain to some extent on the sidelines on returning to previous spending behaviors.
“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” Ryan Detrick, chief market strategist for LPL Financial, said in an email to Yahoo Finance Monday morning. “Coupled with an economy that continues to surprise to the upside and the stock market is now pricing in the prospects of a much better economy in ’21.”
Software stocks including Zoom Video Communications (ZM), Netflix (NFLX), Peloton (PTON), Etsy (ETSY), eBay (EBAY), Chewy (CHWY), Slack (WORK) and Amazon (AMZN) each sank shortly after market open.
The “reopening trade,” meanwhile, came roaring back to life. These included stocks like American Airlines (AAL), Delta Airlines (DAL), Southwest Airlines (LUV), Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), Wynn Resorts (WYNN), Planet Fitness (PLNT), which each gained by double-digit percentages Monday morning. Each of these stocks stand – among many others – stand to benefit from a pick-up in travel and leisure spending, which had been weighed down by the pandemic.
Elsewhere in risk assets, West Texas intermediate crude oil prices (CL=F) and Brent crude (BZ=F) also each jumped by more than 9% Monday morning, with an increase in travel poised to drive a pick-up in demand for energy.
9:37 a.m. ET: Stocks soar to record levels, Dow adds more than 1,450 points
The Dow and S&P 500 each surged Monday morning as markets opened for trading.
Here were the main moves in markets, as of 9:37 a.m. ET:
S&P 500 (^GSPC): +132.72 points (+3.78%) to 3,642.16
Dow (^DJI): +1,486.64 points (+5.25%) to 29,810.04
Nasdaq (^IXIC): +110.27 points (+0.92%) to 11,998.57
Gold (GC=F): -$69.20 (-3.55%) to $1,882.50 per ounce
10-year Treasury (^TNX): +10.9 bps to yield 0.929%
9:20 a.m. ET: Biden announces 13 health experts will comprise his Transition COVID-19 Advisory Board
Confirming reports from over the weekend, Biden on Monday announced 13 health experts would be part of his Transition COVID-19 Advisory Board to help inform his approach to combatting the pandemic in the U.S.
“The advisory board will help shape my approach to managing the surge in reported infections; ensuring vaccines are safe, effective, and distributed efficiently, equitably, and free; and protecting at-risk populations,” Biden said in a statement.
The board will be co-chaired by three individuals, including Dr. David Kessler, who served as FDA Commissioner from 1990 to 1997, Dr. Vivek Murthy, who served as U.S. Surgeon General from 2014 to 2017, and Dr. Marcella Nunez-Smith, whose work at Yale University focuses on promoting health-care for structurally marginalized populations.
8:28 a.m. ET: Biden applauds Pfizer’s vaccine progress, but warns ‘end of the battle against COVID-19 is still months away”
Biden, in a statement Monday morning, congratulated Pfizer for its work on its COVID-19 vaccine, but urged Americans to remain vigilant in wearing masks and social distancing to keep the spread of the virus under control.
“The end of the battle against COVID-19 is still months away,” Biden said in the statement. “This news follows a previously announced timeline by industry officials that forecast vaccine approval by late November. Even if that is achieved, and some Americans are vaccinated later this year, it will be many more months before there is widespread vaccination in this country.”
“This is why the head of the CDC warned this fall that for the foreseeable future, a mask remains a more potent weapon against the virus than the vaccine,” he added. “Today’s news does not change this urgent reality. Americans will have to rely on masking, distancing, contact tracing, hand washing, and other measures to keep themselves safe well into next year. Today’s news is great news, but it doesn’t change that fact.”
7:16 a.m. ET: Dow futures surge more than 1,400 points after upbeat vaccine data, Biden victory
Here were the main moves in equity markets, as of 7:16 a.m. ET:
S&P 500 futures (ES=F): 3,629.40, up 119.5 points or 3.4%
Dow futures (YM=F): 29,737.00, up 1,456 points or 5.15%
Nasdaq 100 futures (NQ=F): 12,144.25, up 98.25 points or 0.8%
7:10 a.m. ET Monday: Pfizer, BioNTech, say their COVID-19 vaccine candidate is more than 90% effective
Shares of Pfizer and German drug-maker BioNTech each soared Monday morning after the companies announced that their Phase 3 clinical trials showed their COVID-19 vaccine candidate was more than 90% effective in preventing the coronavirus in participants with no evidence of a previous infection.
The trial’s analysis assessed 94 confirmed COVID-19 infections among nearly 44,000 participants.
“The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose,” the companies said in a statement. “This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule.”
The companies added that they planned to submit a request for Emergency Use Authorization of their vaccine candidate to the U.S. Food and Drug Administration after they have a total of two months’ worth of data to achieve the agency’s safety requirements. This is expected to take place in the third week of November.
6:01 p.m. ET Sunday: Stock futures open higher after Biden named winner of presidential election
Here were the main moves in markets, as of 6:01 p.m. ET Sunday evening:
S&P 500 futures (ES=F): 3,517.00, up 16.25 points or 0.46%
Dow futures (YM=F): 28,334.00, up 130 points or 0.46%
Nasdaq futures (NQ=F): 12,141.5, up 66.5 points or 0.55%
Suppose, Mike Bloomberg is telling me, there’s been some sort of explosion. First of all, you want to be ready. “The first thing is preparation,” he says. “You don’t ever want to be in a situation where you have to develop the plan as you go along.”
The 78-year-old billionaire and former New York mayor is in Houston on Feb. 27, backstage from the campaign event where he’s just delivered his stump speech to a couple hundred locals. It’s not a bad crowd for a weekday morning, though the free food and T-shirts surely didn’t hurt. Bloomberg is perched on a small wooden chair; he has a slightly feline way of sitting—drawing inward, legs crossed and arms pulled close. Poised and self-contained, he’s the opposite of the dreaded “manspreader.”
Bloomberg speaks at a rally in Memphis on Feb. 28.
Christopher Lee for TIME
We’re talking about one of his favorite topics: how to handle a crisis. It’s a subject that has become newly relevant lately with the worldwide explosion of coronavirus, which has killed at least 3,000 worldwide and is now spreading in the U.S. Bloomberg has deep experience responding to crises, from the Sept. 11 attacks, which took place during his first mayoral run, to Superstorm Sandy, which slammed New York near the end of his 12 years in office, flooding subway tunnels, cutting off power and causing dozens of deaths and billions in damage. Cool-headed and decisive, Bloomberg thrives in such urgent situations, allies say. In the words of his longtime partner Diana Taylor, “Michael is at his best when he is in the middle of a hurricane.”
Crisis management has become the cornerstone of his presidential pitch. It’s the topline of his stump speech and the subject of a three-minute commercial, styled like a presidential address, that his campaign aired on major networks on March 1, 48 hours before the Super Tuesday polls are set to close. Trump, Bloomberg argues, has utterly failed as a crisis manager, ignoring months of briefings on the coronavirus, failing to staff the White House team in charge of pandemic response and proposing cuts to the Centers for Disease Control. “The mayor, or in this case the president—you have to stand up and be the leader. There’s no argument about that. But you have to be knowledgeable,” Bloomberg tells me. “The mayor’s job was to provide people with the confidence that adults were in charge and that they would be informed. You don’t go out and get them to be overexcited, and you also don’t want them to be complacent. There’s a balance, and you get it by practicing. And that’s what we don’t have in the White House now.”
Bloomberg waits to speak at a rally in Memphis on Feb. 28.
Christopher Lee for TIME
Nobody knows how serious the pandemic will be or whether the Administration will bungle it. Not everyone gave Bloomberg great marks for handling crises, either; his approval rating was middling when he left office in 2013. But more than any policy agenda or vision, the image of Bloomberg as world-class fixer is the selling point of his campaign. His speeches double as management seminars, delivered to eager audiences of educated, white-collar moderates. More than mere competence, he’s hawking an unflappable professionalism that contrasts starkly with Trump, renders moot his poor debate performances (he’s a doer, not a talker!), and offers an escape from his adopted party’s ideological battles. What if the next president just, you know, did a good job?
But it’s a very different kind of mess that Bloomberg is now trying to fix: the fractious Democratic presidential primary. In late November, with the field devolving into an acrimonious melee and Senator Bernie Sanders emerging as a front-runner for the nomination, Bloomberg, who’d long flirted with a presidential run, reversed his prior decision to stay out of the race. “I watched and I thought, ‘These people are all going to lose to Donald Trump. He’s much tougher,’” Bloomberg tells me.
Bloomberg greets supporters at the Memphis rally.
Christopher Lee for TIME
He blazed into the race with his usual combination of relentless drive and bottomless pockets, spending more than half a billion dollars of his $60 billion fortune on a campaign as unprecedented as it is overwhelming. Other campaigns buzz about the Bloomberg team’s lavish accoutrements, from $6,000 per month for low-level organizers to free iPhones and furnished apartments in Manhattan for staff at New York HQ. His TV ad spending is quadruple that of his remaining rivals combined. The would-be Bloomberg juggernaut combines a supersized version of rivals’ campaign tactics—more than 200 field offices and 2,400 staff in 43 states and territories—with more unconventional plays: paying social-media influencers for jokey Instagram posts; paying “digital organizers” (that is, regular people) to text their friends.
On March 3, Bloomberg’s big bet will be called. His name will be on the primary ballot for the first time as 15 states and territories vote and about one-third of the total delegates are awarded. Sanders holds a delegate lead over a surging Joe Biden, and Bloomberg’s debate flops have some Democrats accusing him of being an obstacle rather than savior, contributing to the clog of moderate contenders that’s preventing Democrats from consolidating around a non-Sanders candidate. Unlike when he was mayor, Bloomberg can’t order those in the path of his blitz to evacuate—not that he hasn’t tried. In an act of breathtaking hubris, his aides urged candidates who’d been running for many months to get out of the race to make way for Bloomberg, who has yet to contest a single primary.
Bloomberg scoffs at the notion that he’s making the situation worse, contending that he can hardly be considered a spoiler when he hasn’t even been on the ballot in the contests that have produced the current muddle. “Today our internal polls show us at 18%. Now, is it at 24%, where our polls show Bernie? No, but we still have some time,” he tells me. “There’s plenty of other states and maybe nobody will get a majority. And if nobody has a majority, then you go to a convention and they have a democratic process and some rules of how you decide. And we’ll see what happens.”
Bloomberg speaks at a rally in Oklahoma City on Feb. 27.
Christopher Lee for TIME
From Houston, Bloomberg and his entourage fly to Oklahoma City, where a few hundred people are filtering into another impeccably staged event venue. Bloomberg reads the same speech from teleprompters at each stop, with a couple of canned lines about local traffic problems or college rivalries thrown in. He races through it in a singsong lilt, pausing for laughter that never comes at lines he thinks are funny. (Even his staff can’t understand why he’s so amused every time he says, “If you’re looking for a candidate that talks turkey—”, an idiom that’s not remotely a joke.) He does not, as Trump has charged, stand on a box, but he does use an identical lectern at every appearance, a two-toned wooden platform that conveniently hits the 5-foot-8 pol right at his waistline.
Some people take free “I Like Mike” T-shirts on the way in or stop at the catering tables. They’re stocked with red, white and blue donuts; “MB 2020” sugar cookies in both round and rectangular formats; fresh fruit; pretzel bites and cheesy dip; and water infused with your choice of orange or lemon-lime. The spread is unusual for campaigns, which typically hoard their resources to spend on things normal candidates have to worry about, like paying for ads. A younger Bloomberg once said of the lunches Bloomberg LP provides its employees: “If people believe it’s really free, you don’t understand the business model.”
Paul Garrett, a 61-year-old financial adviser and political independent, tells me he’s looking for a candidate who will be an effective president, and has narrowed his choices down to Bloomberg and Amy Klobuchar. (Klobuchar dropped out of the race on March 2, squeezed partly by Bloomberg’s spending.) He didn’t watch much of the “so-called debates,” which he mostly considered useless shoutfests, and is not put off by Bloomberg being a billionaire. “I do not have biases against successful people,” he says.
Cookies and doughnuts at the Oklahoma City rally.
Christopher Lee for TIME
Bloomberg speaks during an interview with TIME in Houston on Feb. 27.
Christopher Lee for TIME
Like many successful people, Bloomberg, having made a fortune running his company that sold computer terminals to Wall Street, decided the next step was to run something even bigger. His political career was forged in crisis. On Sept. 11, 2001, he was a long-shot Republican candidate for mayor of overwhelmingly Democratic New York City. It was the day of the mayoral primary, and he had just cast his ballot for himself and returned to his campaign headquarters when the first plane hit, recalls Jarrod Bernstein, who worked for Bloomberg at the time and would go on to serve in his administration and the Obama White House.
A licensed pilot, Bloomberg immediately sensed that what was happening was not an accident. “He got very calm and focused,” Bernstein says. “I remember him saying, in the first two or three minutes: I need to know where my people are. He immediately wanted an accounting of the people he was responsible for.”
Taylor, Bloomberg’s girlfriend, remembers seeing the planes hit on the news and rushing down to the campaign office. “I’ll never forget, he was sitting at his desk,” she says. “Everyone was watching the TVs and what was happening downtown. He looked up at me and said, ‘I guess we’re not having a party tonight.’”
Bloomberg, president and founder of Bloomberg Financial Markets, poses for a portrait, circa 1995.
Erik Freeland—Getty Images
The primary was rescheduled. After he won it, Bloomberg pivoted off the tragedy in the general election, arguing that the city needed the kind of strong executive experience he could provide. Many observers credited 9/11 for his narrow victory. And while then-mayor Rudy Giuliani is most remembered for his leadership of the city during the attacks, it was Bloomberg who was responsible for dealing with much of the aftermath.
Bloomberg, then a New York City Republican mayoral candidate, speaks to the media in Brooklyn on Sept. 26, 2001, after winning the Republican primary.
Mario Tama—Getty Images
The pile had barely stopped smoldering when he became mayor four months after the planes hit. Ground Zero presented a vast array of short- and long-term problems. He had to oversee the cleanup, provide aid and comfort to the victims’ families, restore the city’s morale, get business going again and participate in discussions about what to do with the site. Giuliani had been laser-focused on the rescue effort, but Bloomberg realized there were other issues too, says Madelyn Wils, who was chair of lower Manhattan’s community board at the time.
People in lower Manhattan had lost their homes and businesses, but until Bloomberg took office, the city ignored them, Wils says. “There was an enormous shift when Bloomberg came in,” she says. “Immediately, he started to meet with people in the community. He was very calm and productive and made sure that the community and businesses were being heard.” Bloomberg refereed contentious disputes over the future of the site, she says, expressing his view that Giuliani’s proposal for a 16-acre memorial would turn lower Manhattan into a “cemetery” and embracing plans for a smaller memorial. “He found a way to take care of everyone,” says Wils.
Bloomberg also fought to improve the city’s counterterrorism preparedness and lobbied Congress for funds to monitor and treat the health issues sustained by first responders. He oversaw a secret NYPD counterterrorism program that surveilled Muslims in the city, which he still defends against charges it was discriminatory.
Bloomberg, the New York City mayor, views a map with President Obama during an aerial tour to view damage there from Superstorm Sandy on Nov. 15, 2012.
Pete Souza—The White House/Getty Images
The 9/11 aftermath was only the first of a series of crises that studded Bloomberg’s tenure. There was a shooting in the city council chamber, an anthrax scare, a Staten Island ferry crash that killed 11. In 2003, a citywide blackout had residents temporarily convinced that another terror attack was under way.
The financial crash of 2008 was a catastrophe of a different sort, but it hit the city hard. Bloomberg takes credit for steering New York out of it, in part by drawing on his elite business contacts. But critics charge that he was too fixated on Wall Street’s challenges to see that Main Street was suffering, too. “The city was facing a massive budget crisis, and instead of supporting more taxes on the wealthy to fill the budget gaps, he pushed through a massive cut to schools, housing and social services,” says Jonathan Westin, director of the community-activist group New York Communities for Change.
It was local austerity as much as national malaise that fueled the Occupy Wall Street protests of 2011, Westin says—protests to which Bloomberg responded not with sympathy but with mass arrests and a midnight police raid to clear Zuccotti Park. “When Occupy rose up in response, his reaction was to crush it.”
Bloomberg reviews a speech while driving to catch a flight in Memphis on Feb. 28.
Christopher Lee for TIME
As he had done with 9/11 and is doing now with coronavirus, Bloomberg seized on the recession as a political opportunity. He used the downturn to argue that he should stay in office beyond his two-term limit. After a contentious political battle, he got the city council to amend the city charter to allow him to serve a third term—part of what critics argue is a pattern of changing the rules to get his way when it suits him.
Narrowly winning a third term with the help of $100 million in campaign spending, Bloomberg was increasingly assailed for turning Manhattan into a playground for the rich. He spent many weekends jetting off to play golf at his estate in Bermuda, and sometimes violated city airspace rules by taking off in his personal helicopter. He was apparently out of town when a major snowstorm hit in late 2010. This time the city’s response, which included plowing Manhattan streets before those in the outer boroughs, was panned. Bloomberg initially insisted everything was fine because Broadway shows were still going on, but later expressed regret.
Nine months later, Hurricane Irene barreled in from the Atlantic. New York had been one of many cities to take stock of their hurricane preparedness after Hurricane Katrina devastated New Orleans in 2005. Bloomberg personally insisted that this be done, even though New York hadn’t been hit by a major hurricane since 1938, says Cas Holloway, who served as deputy mayor for operations. The administration mobilized for Irene, working with the state to order evacuations and shut down the subway system, but the storm ended up petering out before it got to New York City. Holloway says this allowed the city to test-run its hurricane protocols, which proved useful when a bigger storm began heading toward the city the following year.
Superstorm Sandy hit with force, drenching the region and flooding neighborhoods. “There were so many issues—the flooding of the tunnels going into the city, issues with power outages, issues with providing health and welfare assistance to those rendered homeless by the hurricane,” says Janet Napolitano, who was then secretary of homeland security, the federal department that includes FEMA. “It was amazing how quickly New York City got back on its feet and became operational. Literally half the city was in the dark, and they had the lights back on in Manhattan within 24 hours.”
Bloomberg allies say Sandy showcased the mayor at his best. His insistence on preparedness paid off. The credibility he’d amassed with New Yorkers meant that when he ordered evacuations, most people listened. His management approach, which stresses empowering teams of people to rely on data to creatively solve problems, allowed people to customize solutions. For example, Bloomberg quickly determined that the usual solution to hurricane displacement, temporary housing, wouldn’t work in New York City and instead focused his administration on repairing people’s homes as quickly as possible. “He said, ‘There’s no room for trailers in New York City, we’ve got to get people back in their homes,’” Holloway says. “We repaired 11,000 multi-family and single-family homes in 110 days.” People talk about Bloomberg as if he were himself a computer, taking in data and spitting out decisions, emotionless and perfectly efficient—a walking, talking Bloomberg terminal.
Bloomberg was criticized after he left office for the bottlenecks in long-term Sandy aid that followed, and for devoting resources to long-term climate planning when the short-term problems still weren’t resolved. But prevention is really the best crisis management, argues Noah Kroloff, who was Napolitano’s chief of staff. “Not everyone has that natural instinct to lead, to immediately jump in and start solving problems,” he says.
This is the skill set Bloomberg says Trump is missing—with potentially deadly consequences. Rather than talking about the price tag of the coronavirus response, Trump should be laser-focused on making sense of imperfect information and communicating clearly with the public, Bloomberg tells me. “We ran simulations all the time and what-ifs,” he says. “And so when we did have a crisis, the teams were ready. The teams knew each other. They all coordinated. There wasn’t everybody going in a different direction.”
Bloomberg arrives at the airport for a flight in Memphis on Feb. 28.
Christopher Lee for TIME
Bloomberg’s last stop of the day is in Bentonville, Ark., home of Wal-Mart, where an overflow crowd streams through the doors past a ragged handful of Sanders-supporting protesters. They’re shouting, “Classy Klan rally!” and “No blue Trump!” As she passes them, one woman remarks to her companion, “Those are my son’s friends!”
The crowds at Bloomberg’s events are often racially diverse but economically homogenous—people with graduate and professional degrees, lawyers and bankers, CEOs and executive vice-presidents. At one Bloomberg rally, I meet a former senior adviser with the Coalition Provisional Authority in Iraq; at another, the labor director for the Port Authority of New York and New Jersey.
Bloomberg signs autographs and greets supporters at a rally in downtown Houston on Feb. 27.
Christopher Lee for TIME
The people attracted to Bloomberg’s candidacy are achievers and doers; they’re people who feel they’ve earned their success. These aren’t the kind of people who feel personally screwed by the system as currently structured and yearn to overthrow it. But they’re looking for an alternative to Trump, and many are downright alarmed by what’s happening to their country. “We’ve got to find somebody,” Mary Kennedy, a 75-year-old retiree who’s attending the Bentonville event with her husband, tells me, sounding near-frantic. “Our country’s in a mess. Everything’s been gutted. I don’t know how anyone could put it back together.”
From Sanders’s call for political revolution to Biden’s campaign theme of a twilight struggle for the nation’s soul, everyone running in 2020 seems to see a nation in crisis—everyone, that is, except the would-be crisis-manager-in-chief.
A Boy Scout at the Bloomberg rally in Memphis.
Christopher Lee for TIME
When I interviewed Bloomberg, I expected he would pivot from his crisis-management pitch to make the argument that he was thus suited to tackle the larger cataclysm Trump has caused for American democracy. But he didn’t see it that way. To him, crises are discrete situations, not abstract states of being. “We have a potential crisis from the virus,” he says dispassionately. “We have a White House that’s dysfunctional—there’s a crisis there. The stock markets, you could argue that we’re in crisis, although I think that’s a small thing compared to these other things.”
Crisis management, to Bloomberg, is a specific aspect of a chief executive’s job. In his mind, America is still basically OK. “It’s still the country—people vote with their feet, less so maybe than before—this is where you want to go,” he says. “We have an enormous amount to be proud of. We still have the democracy. We have lost a lot, but we’re still the country that most other countries look to for guidance and protection and that sort of thing.”
If America is still essentially intact, is it really such a problem that Trump is arguably a terrible manager? Bloomberg maintains that Trump has been lucky that none of his errors has been truly disastrous so far. “Just be thankful that some of the worst things that could have happened didn’t,” he says, pointing to the assassination of Iranian general Qasem Suleimani, which could have sparked a broader conflagration in the Middle East.
Mike Bloomberg speaks at the Oklahoma City rally.
Christopher Lee for TIME
Trump and his allies point to episodes like that to argue that he’s right to take bold actions that upset the establishment, and that in doing so he’s taking on the governing class’s endemic timidity. The economy didn’t crash when he was elected. A war didn’t break out when he moved the U.S. Embassy in Israel from Tel Aviv to Jerusalem. NATO didn’t fall apart when Trump bad-mouthed it. Time and again, pointy-headed experts have warned of dire consequences from the president’s actions, only to have America muddle through more or less as before.
To Bloomberg, this is attributable to the virtues of the permanent government, which Trump derides as the “deep state.” “The bureaucracy is going to outlive us all, and they know they’re going to outlive us all,” he says. “So if there is something that the president does which is cuckoo, that’s our insurance policy.”
Perhaps, even in a freaked-out Democratic Party, there’s a latent longing for this sort of equanimity. The crowds at Bloomberg’s events, and his initial surge in the polls, suggest that there is at least some appetite for what he’s selling. His flop as a debater deflated the bubble somewhat. Onstage in Las Vegas and Charleston, he struggled to rebut predictable attacks on his history of insensitivity to women, his company’s secret settlements in gender-discrimination lawsuits and his administration’s “stop and frisk” policing practices. Many attendees at his events tell me the debates made them reconsider supporting him. Nevertheless, he still stands in third place in the national polling average with a healthy 15%.
Bernie Sanders’ supporters protest outside of a Bloomberg rally in Bentonville, Ark., on Feb. 27.
Christopher Lee for TIME
Bloomberg reviews a speech before speaking at a rally in Bentonville.
Christopher Lee for TIME B
Biden’s resounding South Carolina win and the withdrawal of Klobuchar and Pete Buttigieg have led many Democrats to call for Bloomberg to drop out so the party’s moderates can rally around the former vice president. But Bloomberg says he plans to stay in the race until it produces a clear winner—or not. “If you look at the debate stage, I’m the only one that’s ever done anything,” he tells me. “Joe Biden was a legislator, and Sanders, Warren, and Amy. They don’t have any managerial experience whatsoever, and this is not a job where you can come in and get on training wheels.”
The morning after his first disastrous debate performance, Bloomberg appeared in Salt Lake City. Seeming not at all rattled, he gave his usual speech largely unaltered, talking about uniting the country and getting things done with “common sense plans that are achievable.” He deviated from the usual routine only to proclaim, “Look, the real winner of the debate last night was Donald Trump. Because I worry that we may very well be on the way to nominating someone who cannot win in November.” This imperturbability in the face of a potential campaign-ending calamity seemed discordant, until I realized it was exactly the point. If Bloomberg is the candidate you want in a crisis, it’s precisely because he’s so unruffled. He keeps his head when everyone else is losing theirs.
Bloomberg begins speaking at the Memphis rally on Feb. 28.
Christopher Lee for TIME
Midway through the Utah speech, a young woman in wide-legged jeans started shouting. “Mike Bloomberg was in Jeffrey Epstein’s little black book!” she yells. “Mike Bloomberg is evil!” As the crowd turns on her, she makes for the exit, crying, “InfoWars dot com!”
It was a reminder that you can try all you want, as Bloomberg has, to run a massive campaign that renders the candidate’s personal qualities all but irrelevant. But no matter how much money you have, you can never completely shut out the conspiracy and chaos of America in 2020.