California Controller warns that economic downturn may be near

FILE PHOTO - The California flag flies above City Hall in Santa Monica, California, U.S. on February 6, 2009. REUTERS/Lucy Nicholson/File Photo

By Robin Respaut

SAN FRANCISCO (Reuters) – California’s state tax collections in April fell short of expectations, a sign that the state may be headed toward an economic downturn, State Controller Betty Yee warned on Wednesday.

Collections totaled $15.98 billion, $1.05 billion or 6.2 percent short of the governor’s projected budget for the month.

“April is usually the state’s biggest tax filing month, so lower-than-expected personal income tax receipts are troubling,” said Yee, the state’s chief fiscal officer, in a statement.

“While we await the governor’s May Revision, this is another signal that we may be inching towards an economic downturn, and we must tailor our spending accordingly.”

California has collected $96.88 billion during the first 10 months of fiscal 2017, which ends June 30. That means the state is $1.83 billion behind last summer’s budget estimates and $211.3 million shy of January’s revised fiscal year-to-date predictions.

Governor Jerry Brown plans to release on Thursday his mid-year revision of the proposed state budget for fiscal 2018. The revised budget is expected to reflect changes in the state’s financial position since January.

For the month of April, during which California tends to collect about 17 percent of its personal income tax receipts, collections lagged by 5.3 percent. Retail sales and use tax receipts fell short of projections in the governor’s proposed 2017-18 budget by $106.7 million, or 13.3 percent. Corporation tax receipts for April were 13.8 percent lower than estimates in the budget.

In January, Governor Brown proposed a $179.5 billion state budget for fiscal 2018, a 5 percent increase over this year, but he warned that the state must remain fiscally prudent ahead of an inevitable economic downturn.

California is especially vulnerable to downturns, because the state is more reliant than most on capital gains taxes, a volatile revenue source, and less on property tax revenue, which is more stable.

(Reporting by Robin Respaut; Editing by Richard Chang)

Graduates at Florida university turn backs in protest of DeVos speech

FILE PHOTO - Betsy DeVos, U.S. Secretary of Education, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S. on May 1, 2017. REUTERS/Mike Blake/File Photo

By Bernie Woodall

(Reuters) – Graduating seniors at Bethune-Cookman University in Florida turned their backs in protest of U.S. Education Secretary Betsy DeVos at the start of her commencement speech on Wednesday at the historically black institution.

Boos and jeers could be heard as DeVos, who drew ire in February when she said historically black colleges were “pioneers” of educational choice, was introduced. Faculty and school administrators on stage stood and applauded.

Live video of the ceremony in Daytona Beach showed many graduates facing away from DeVos, though it was not clear how many of the approximately 300 seniors participated in the silent protest.

“One of the hallmarks of higher education and of democracy is the ability to converse with and learn from those with whom we disagree,” DeVos told the graduates.

The university’s president, Edison Jackson, interrupted her speech with a warning to students. “If this behavior continues, your degrees will be mailed to you,” he said. “Choose which way you want to go.”

Ahead of the speech, students, alumni and political activists sought to have DeVos’ invitation rescinded, saying they were offended by her earlier comment. DeVos, who is a proponent of school choice – including charter schools and school vouchers – later clarified her remark, noting that historically black colleges were created because other institutions were not open to African-Americans.

About 60,000 signatures on two petitions were delivered to school officials on Tuesday objecting to her appearance at the university.

“Right now is not the time for Secretary DeVos to speak at any historically black college,” said Dominik Whitehead, a Bethune-Cookman alumnus who led one of the petition drives. DeVos’ statement, he said, “just shows she is out of touch.”

In a statement on Sunday, President Donald Trump said DeVos chose Bethune-Cookman for her first commencement address as education secretary to show the Republican administration’s dedication to the mission of historically black colleges and universities.

Jackson, an African-American and a Republican, and some others defended the choice of DeVos as the graduation speaker for the school, which was named for black educator and civil rights activist Mary McLeod Bethune.

Sean P. Jackson, chairman of the Black Republican Caucus of Florida, said DeVos had long been a champion of providing strong education opportunities for minority students.

“The secretary says we should allow charter schools to come in and educate children if they are doing a better job than the public schools,” Jackson said on Tuesday.

(Reporting by Bernie Woodall; Editing by Colleen Jenkins and Leslie Adler)

Protesters call for investigation following FBI director firing

Protesters gather to rally against U.S. President Donald Trump's firing of Federal Bureau of Investigation (FBI) Director James Comey, outside the White House in Washington, U.S. May 10, 2017. REUTERS/Jonathan Ernst

By Chris Kenning and Ian Simpson

CHICAGO/WASHINGTON (Reuters) – A day after President Donald Trump’s stunning dismissal of FBI Director James Comey, protesters gathered in Washington, Chicago and other cities to urge an independent investigation of alleged collusion between Russia and Trump’s presidential campaign.

Waving signs and chanting outside the White House and at Senate constituency offices in other states, demonstrators said Trump’s move had compromised the Federal Bureau of Investigation’s probe.

“I still don’t have any love for Comey,” said Cody Davis, 29, among a small group of protesters near Chicago’s 96-story Trump International Hotel and Tower. “I’m not here to defend him. You could easily argue he lost the election for Hillary.”

Comey has been criticized by Democrats for his handling of an investigation surrounding 2016 Democratic presidential nominee Hillary Clinton’s use of a private email server while she was secretary of state.

“The reason I’m here today is not that he was fired but because it was so clearly because Trump was afraid of something,” Davis said.

White House officials have denied any political motivation behind the firing and Trump said Comey had not been doing a good job and had lost the confidence of everyone in Washington.

Critics at various protests compared the Comey dismissal to the “Saturday Night Massacre” of 1973, in which President Richard Nixon fired an independent special prosecutor investigating the Watergate scandal.

MoveOn.Org and a coalition of liberal groups hastily organized protests at senators’ offices in more than a dozen states including New York, Kentucky, Arizona, California and Florida.

“Donald Trump just fired the one man in America who was leading the most thorough and long-lasting investigation of Donald Trump,” Jo Comerford, campaign director for MoveOn.org, said in a statement.

The issue also was discussed at town hall meetings being held by members of Congress across the country.

For some Trump supporters the controversy was overblown.

Denny Herman of Wamego, Kansas, said Comey deserved to be fired and the Russia investigation would not turn up wrongdoing. He said there was no need for a special prosecutor.

“It’s just liberal crap,” he said while relaxing at a bar. “We got bigger fish to fry.”

But in downtown Chicago, several dozen people banged pots and pans, waved signs reading “You can’t fire the truth” and chanted “Investigate Now!”

Several hundred people also gathered outside the White House and called for a special prosecutor.

“I feel like what happened yesterday was truly shocking, and the Republicans won’t stand up and do what they should without somebody pressing them,” said demonstrator Kelli Rowedder, a 34-year-old teacher from Washington.

(Additional reporting by Karen Dillon in Wamego, Kan. and Kathy Lynn Gray in New Albany, Ohio; Editing by Bill Trott)

Brazil on edge as ex-president Lula squares off with judge Moro

Members of Workers Party (PT) attend a march before former Brazilian President Luiz Inacio Lula da Silva's testimony to federal judge Sergio Moro, in Curitiba, Brazil, May 9, 2017. REUTERS/Rodolfo Buhrer

By Brad Haynes

SAO PAULO (Reuters) – When Brazil’s former President Luiz Inacio Lula da Silva and Judge Sergio Moro meet for the first time in a courtroom on Wednesday, the contrasts – and the stakes – could hardly be greater.

One is the country’s most popular president ever and the front-runner in next year’s election – a former union leader who still whips up crowds with his fiery and folksy oratory. The other, a soft-spoken law professor who represents Lula’s main obstacle to power.

The legacy and political future of Brazil’s first working-class president are on the line as Lula faces one of the five criminal cases against him, part of the biggest corruption probe in the country’s history.

While denying any wrongdoing, Lula and his lawyers have turned his defense into an attack on Moro himself, arguing the judge’s track record in overseeing the graft probe has undermined his impartiality. Lula’s supporters are traveling from across Brazil to the southern city of Curitiba to protest outside the court.

Local media has fed expectations of a confrontation with a breathless buildup to Wednesday’s hearing. One news magazine’s cover painted the two as masked wrestlers going head to head. On another, they are boxers “Settling Scores.”

Pollster Datafolha found Moro was one of the few public figures who could beat Lula in the 2018 presidential race – though Moro denies he will enter politics.

The 44-year-old judge has avoided addressing the electoral impact of his decisions and discouraged portrayals of him as David to Lula’s political Goliath.

Lula’s testimony is just one more step in a three-year-old operation, insists Moro, who has kept lecturing public university students on criminal law as he runs the probe.

“I’m a little concerned by this climate of confrontation, these heightened expectations about something that may be totally banal,” the judge said at a public event on Monday, regarding this week’s hearing.

Moro has already sentenced dozens of businessmen and money launderers for a bribery scheme paying billions of dollars to politicians in return for public contracts, political favors and deals with state firms such as oil giant Petrobras <PETR4.SA>.

Office holders in Brasilia must be tried by the Supreme Court, so prosecution has moved more slowly against alleged beneficiaries in the ruling Brazilian Democratic Movement Party and the Workers Party, which ran the country under Lula and his successor Dilma Rousseff from 2003 to 2016.

“CLIMATE OF CONFRONTATION”

Prosecutors say Lula masterminded the scheme during his eight years in office, but Wednesday’s hearing focuses on whether he traded influence for the refurbishing of a beach condo.

On Monday, Moro began hearing testimony in a second trial against Lula, regarding 12 million reais ($4 million) of land bought by a construction firm to be used for his institute.

A conviction in either case, if upheld in an appeals court before elections in October next year, would bar him from seeking office.

While Lula’s allies are calling for tens of thousands of partisans to convene in Curitiba, Moro posted a Facebook video discouraging a rival march by supporters of the investigation.

Yet even that call for restraint stirred controversy.

“Judge Moro, who ought to be impartial, is speaking directly to his supporters. That is not normal in a democratic system. In a democracy, politicians have supporters and adversaries – not judges,” said Lula attorney Cristiano Zanin in a video response.

The exchange underscored that while both Lula and Moro face public scrutiny, the judge may have more to lose if the interrogation devolves into a contentious exchange.

A courtroom spat would stoke complaints from Lula supporters who call the investigation a political witch hunt and bolster his lawyers’ demands that another judge try the case.

Attempts at such a legal maneuver are not uncommon, said Oscar Vilhena Vieira, dean of the law school at the Getulio Vargas Foundation. In Brazil, the same judge is usually responsible for overseeing an investigation and then ruling on a case.

Yet relations between Moro and Lula’s team are especially tense amid their campaign to discredit him, which included the lawyers’ complaint to the United Nations that the judge violated Lula’s human rights during the corruption investigation.

Moro often cites the value of public support for the task force he oversees, pointing to the lessons of Italy’s “Mani Pulite” graft probe in the 1990s to show the importance of popular opinion to sustain a major corruption investigation.

“From a political perspective, there is a greater risk for Judge Moro,” said Vieira. “His rhetorical options are far more limited. He has to take great care not to fall into the traps set by Lula’s lawyers.”

(Reporting by Brad Haynes; Editing by Brad Brooks, Daniel Flynn and Andrew Hay)

Defending firing of FBI director, Trump derides Democratic critics

This picture shows a copy of the letter by President Trump firing Director of the FBI James Comey at the White House. REUTERS/Joshua Roberts

By Susan Heavey

WASHINGTON (Reuters) – President Donald Trump defended his firing of FBI Director James Comey on Wednesday, fighting a storm of criticism that the ouster was aimed at blunting an agency probe into his presidential campaign’s possible collusion with Russia to sway the 2016 election.

The Republican president’s abrupt move on Tuesday stunned Washington and was swiftly condemned by Democrats and by some in his own party.

In a series of posts on Twitter on Wednesday morning, Trump sought to explain his move, and lambasted his critics.

“Comey lost the confidence of almost everyone in Washington, Republican and Democrat alike. When things calm down, they will be thanking me,” he said.

The Trump administration said on Tuesday Comey’s firing was over his handling of an election-year FBI probe into then-Democratic presidential nominee Hillary Clinton’s use of a private email server during her time as secretary of state.

Though many Democrats have criticized Comey’s management of that investigation, they said they were troubled by the timing of his dismissal, given that Trump could have acted soon after taking office on Jan. 20 and that he has repeatedly criticized the FBI and congressional probes into alleged Russian involvement in the election.

Asked if Trump had fired Comey over his handling of the Russia investigation, White House spokeswoman Sarah Huckabee Sanders said no.

“Frankly, if that’s going to continue, it’s going to continue whether Jim Comey is there or not,” she told MSNBC in an interview.

Some Democrats compared the move to the “Saturday Night Massacre” of 1973, in which President Richard Nixon ordered the firing of an independent special prosecutor investigating the Watergate scandal that eventually led Nixon to resign.

Democrats amplified their calls on Wednesday for an independent investigation into Moscow’s role in the 2016 election.

‘CONSTITUTIONAL CRISIS’

“What we have now is really a looming constitutional crisis that is deadly serious,” Democratic Senator Richard Blumenthal told CNN.

In one tweet on Wednesday, Trump referred to previous Democratic criticism of Comey over the Clinton probe. “The Democrats have said some of the worst things about James Comey, including the fact that he should be fired, but now they play so sad!” he said.

The president also personally attacked Blumenthal, referring to him as “Richie,” calling his comments on the Comey firing “a joke” and alluding to a years-old controversy over the senator’s military service during the Vietnam War era.

Some Republicans have also said they were troubled by the timing of Comey’s firing, including Senator Richard Burr, the Republican chairman of the Senate Intelligence Committee. That is one of several congressional panels investigating Russian interference during the election and possible collusion by Trump campaign staff.

U.S. intelligence agencies concluded in a January report that Russian President Vladimir Putin had ordered an effort to disrupt the 2016 election that included hacking into Democratic Party emails and leaking them, with the aim of helping Trump.

Russia has repeatedly denied any such meddling and the Trump administration denies allegations of collusion with Russia.

LAVROV VISIT

Russian Foreign Minister Sergei Lavrov is visiting Washington this week for high-level meetings, including one with Trump at the White House later on Wednesday in what will be the highest-level contact between Trump and the Russian government since he became president.

The two were scheduled to meet at 10:30 a.m. ET (1430 GMT), the White House said.

Asked by reporters at the U.S. State Department before a meeting with Secretary of State Rex Tillerson if Comey’s firing would cast a shadow over the talks, Lavrov responded in a sarcastic tone: “Was he fired? You’re kidding. You’re kidding.”

The Kremlin said it hoped Comey’s firing would not affect Moscow’s ties with Washington, saying it believed his dismissal had nothing to do with Russia.

Legal experts said Trump’s dismissal of Comey does not mean the FBI’s Russia investigation will be disrupted or end, since career FBI staffers can continue the probe even as the search for a new director begins.

CNN reported on Tuesday night that federal prosecutors had issued grand jury subpoenas to former Trump national security adviser Michael Flynn, seeking business records, as part of the probe into Russian interference in the election.

Comey’s deputy, Andrew McCabe, took over as acting FBI director while the White House searches for a new permanent director.

“James Comey will be replaced by someone who will do a far better job, bringing back the spirit and prestige of the FBI,” Trump tweeted.

(Reporting by Susan Heavey, David Alexander, Arshad Mohammed; Writing by Will Dunham and Susan Heavey; Editing by Frances Kerry)

After Macron win, EU lawmakers eye swap plan to close Strasbourg seat

By Francesco Guarascio

BRUSSELS (Reuters) – Plans to move the European Union’s London-based medicines regulator to Strasbourg and push through a long-held project to close the EU parliament’s expensive second seat in the French city are gaining traction among legislators, EU officials said.

Lawmakers have been holding discreet talks on such a swap, which they hope would help eliminate French opposition to Strasbourg losing the seat, one official said.

Last week’s election win in France of pro-EU President Emmanuel Macron may further help the plan come to fruition.

MEPs convene in Strasbourg for one week every month and in Brussels for the remainder. The monthly upheaval costs the bloc 114 million euros a year, EU auditors say.

Critics have long called for the arrangement to be scrapped, but it has stayed in place largely because France would have vetoed any attempt to make the required amendment to the EU treaty.

However, since Britain voted to leave the EU, lawmakers from several groupings in the parliament have come to support the idea of a swap, a parliament official said.

A text urging to use the “excellent opportunity” of the Brexit-driven transfer of EU agencies from London to reach an agreement on a single seat of the EU parliament in Brussels was backed in April by 75 percent of EU lawmakers.

The European Medicines Agency (EMA), one of the biggest EU bodies, will have to be moved from London after Britain leaves the EU.

London also hosts the European Banking Authority, which Germany’s Frankfurt is seen as likely to win over competitors Paris, Dublin, Amsterdam and other European cities.

Outgoing French President Francois Hollande chose Lille as the French candidate city to host the EU drugs regulator. Macron would have to reverse such a choice, a potentially risky move as France prepares for legislative elections in June.

Other EU countries would also have to approve EMA’s transfer to France, giving up their own ambitions. Around 40 European cities, from nearly all 27 remaining EU states, have put forward their candidacy to host EMA, with Milan and Vienna seen as the frontrunners.

(Reporting by Francesco Guarascio @fraguarascio; Editing by Raissa Kasolowsky)

Judges hit Trump lawyer with tough questions over revised travel ban

FILE PHOTO: A member of the Al Murisi family, Yemeni nationals who were denied entry into the U.S. last week because of the recent travel ban, shows the cancelled visa in their passport from their failed entry to reporters as they successfully arrive to be reunited with their family at Washington Dulles International Airport in Chantilly, Virginia, U.S. February 6, 2017. REUTERS/Jonathan Ernst/File Photo

By Lawrence Hurley

RICHMOND, Va. (Reuters) – Federal appeals court judges on Monday peppered a U.S. Justice Department lawyer with tough questions about President Donald Trump’s temporary ban on travelers from six Muslim-majority nations, with several voicing skepticism that protecting national security was the aim of the policy, not religious bias.

Six Democratic appointees on a court dominated by judges named by Democratic presidents showed concerns about reviving the Republican president’s March executive order that prohibited new visas to enter the United States for citizens of Iran, Libya, Somalia, Sudan, Syria and Yemen for three months.

But three Republican appointees on the Richmond, Virginia-based 4th U.S. Circuit Court of Appeals seemed to lean toward the administration, asking whether the president should be second-guessed when it comes to protecting the country’s borders and whether the plaintiffs bringing the suit had been sufficiently harmed by the order during arguments before 13 judges.

Based on the judges’ questions, a ruling could hinge on whether the appeals court agrees with a lower court judge that past statements by Trump about the need to prevent Muslims from entering the United States should be taken into account. That would be bad news for a young administration seeking victory on one of its first policy changes.

“This is not a Muslim ban,” Acting Solicitor General Jeffrey Wall, arguing for the government, told the judges during the hearing that lasted two hours, twice as long as scheduled.

Judge Robert King, named by Democratic former President Bill Clinton, told Wall that Trump has never retracted previous comments about wanting to impose a ban on Muslims.

“He’s never repudiated what he said about the Muslim ban,” King said, referring to Trump’s campaign promise for a “total and complete shutdown of Muslims entering the United States.”

POLITICAL DEBATE

Wall told the judges past legal precedent holds that the court should not look behind the text of the Trump’s executive order, which does not mention any specific religion, to get at its motivations. He warned that despite the “heated and passionate political debate” about the ban, there was a need to be careful not to set legal precedent that would open the door to broader questioning of presidential decision making on security matters.

Judge Paul Niemeyer, appointed by Republican former President George H.W. Bush, told Omar Jadwat, the American Civil Liberties Union lawyer representing the plaintiffs who challenged the order, that they were asking the court to rule on a president’s national security judgments.

“You have the judiciary supervising and assessing how the executive is carrying out his office,” Niemeyer said, pressing Jadwat, who seemed to stumble at times after pointed questioning by the judges. “I just don’t know where this stops.”

The revised travel ban was challenged in Maryland by refugee organizations and individuals who said they were being discriminated against because they were Muslim and because they had family members adversely affected by the ban. They argue the order violated federal immigration law and a section of the U.S. Constitution’s First Amendment barring the government from favoring or disfavoring a particular religion.

The administration appealed a March 15 ruling by Maryland-based federal judge Theodore Chuang that put the ban on hold just a day before it was due to go into effect.

The arguments marked the latest legal test for Trump’s ban, which also was blocked by federal judge Derrick Watson in Hawaii in a separate legal challenge. An earlier version of the ban was also blocked by the courts.

Chuang, in Maryland, blocked the part of Trump’s order relating to travel by people from the six countries. Watson, in Hawaii, also blocked another part of the order that suspended the entry of refugees into the United States for four months.

‘HOW IS THIS NEUTRAL?’

To a packed audience in the ornate pre-Civil War era courthouse, Judge Pamela Harris said Trump’s action clearly had a disparate impact on Muslims, asking, “How is this neutral in its operation as to Muslims?” Judge Barbara Keenan, who like Harris was appointed by Democratic former President Barack Obama, said the order could affect some 200 million people.

Regardless of how the 13 judges rule, the matter is likely to be decided ultimately by the U.S. Supreme Court. The full 4th Circuit took up the appeal but two Republican-appointed judges did not participate. That left nine judges appointed by Democratic presidents, three Republican appointees and one judge originally appointed by a Democrat and later re-appointed by a Republican.

It was unclear when the court would rule.

Trump issued the March executive order after federal courts blocked an earlier version, issued on Jan. 27 a week after he took office, that also had included Iraq among the nations targeted. That order, which went into effect immediately, triggered chaos and protests at airports and in several cities before being put on hold due to legal challenges.

The second order was intended to overcome the legal problems posed by the original ban.

The administration’s appeal in the Hawaii case will be heard in Seattle on May 15 by a three-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals. The three judges assigned all are Democratic appointees.

Wall said the temporary ban was intended to give the government time to evaluate whether people from the six countries were being subjected to adequate vetting to ensure they did not pose a security threat to the United States.

But he said the administration had not been able to proceed on all the work it wanted to do because of the litigation, noting “we have put our pens down.”

(Reporting by Lawrence Hurley; Additional reporting by Mica Rosenberg in New York and Dan Levine in San Francisco; Editing by Will Dunham and Mary Milliken)

Netanyahu tosses Hamas policy paper on Israel into waste bin

Israeli Prime Minister Benjamin Netanyahu chairs a weekly cabinet meeting in Jerusalem May 7, 2017. REUTERS/Oded Balilty/Pool

By Ori Lewis

JERUSALEM (Reuters) – Israeli Prime Minister Benjamin Netanyahu on Sunday symbolically tossed into a bin a Hamas policy paper published last week that set out an apparent softening of the Palestinian Islamist group’s stance toward Israel.

In a document issued last Monday, Hamas said it was dropping its longstanding call for Israel’s destruction, but said it still rejected the Jewish state’s right to exist and continued to back “armed struggle” against it.

The Israeli government has said the document aimed to deceive the world that Hamas was becoming more moderate.

Netanyahu, in a 97-second video clip aired on social media on Sunday, said that news outlets had been taken in by “fake news”. Sitting behind his desk with tense music playing in the background, he said that in its “hateful document”, Hamas “lies to the world”. He then pulled up a waste paper bin, crumpled the document into a ball and tossed it away.

“The new Hamas document says that Israel has no right to exist, it says every inch of our land belongs to the Palestinians, it says there is no acceptable solution other than to remove Israel… they want to use their state to destroy our state,” Netanyahu said.

Founded in 1987 as an offshoot of the Muslim Brotherhood, the banned Egyptian Islamist movement, Hamas has fought three wars with Israel since 2007 and has carried out hundreds of armed attacks in Israel and in Israeli-occupied territories.

Many Western countries classify Hamas as a terrorist group over its failure to renounce violence, recognize Israel’s right to exist and accept existing interim Israeli-Palestinian peace agreements.

Outgoing Hamas leader Khaled Meshaal said Hamas’s fight was not against Judaism as a religion but against what he called “aggressor Zionists”. Ismail Haniyeh, Hamas’s leader in the Gaza Strip, was named on Saturday to succeed Meshaal.

Netanyahu concluded his clip by saying that “Hamas murders women and children, it’s launched tens of thousands of missiles at our homes, it brainwashes Palestinian kids in suicide kindergarten camps,” before binning the document.

(Writing by Ori Lewis; Editing by Susan Fenton)

France fights to keep Macron email hack from distorting election

Candidates for the 2017 presidential election, Emmanuel Macron (R), head of the political movement En Marche !, or Onwards !, and Marine Le Pen, of the French National Front (FN) party, pose prior to the start of a live prime-time debate in the studios of French television station France 2, and French private station TF1 in La Plaine-Saint-Denis, near Paris. REUTERS/Eric Feferberg/Pool

By Adrian Croft and Geert De Clercq

PARIS (Reuters) – France sought to keep a computer hack of frontrunner Emmanuel Macron’s campaign emails from influencing the outcome of the country’s presidential election with a warning on Saturday it could be a criminal offence to republish the data.

Macron’s team said a “massive” hack had dumped emails, documents and campaign financing information online just before campaigning ended on Friday and France entered a quiet period which forbids politicians from commenting on the leak.

The data leak emerged as polls predicted Macron, a former investment banker and economy minister, was on course for a comfortable victory over far-right leader Marine Le Pen in Sunday’s election, with the last surveys showing his lead widening to around 62 percent to 38.

“On the eve of the most important election for our institutions, the commission calls on everyone present on internet sites and social networks, primarily the media, but also all citizens, to show responsibility and not to pass on this content, so as not to distort the sincerity of the ballot,” the French election commission said in a statement on Saturday.

However, the commission – which supervises the electoral process – may find it difficult to enforce its rules in an era where people get much of their news online, information flows freely across borders and many users are anonymous.

French media covered the hack in various ways, with left-leading Liberation giving it prominence on its website, but television news channels opting not to mention it.

Le Monde newspaper said on its website it would not publish the content of any of the leaked documents before the election, partly because the huge amount of data meant there was not enough time to report on it properly, but also because the dossiers had been published on purpose 48 hours before the election with the clear aim of affecting the vote.

“If these documents contain revelations, Le Monde will of course publish them after having investigated them, respecting our journalistic and ethical rules, and without allowing ourselves to be exploited by the publishing calendar of anonymous actors,” it said.

As the #Macronleaks hashtag buzzed around social media on Friday night, Florian Philippot, deputy leader of Le Pen’s National Front party, tweeted “Will Macronleaks teach us something that investigative journalism has deliberately kept silent?”

DESTABILISATION

As much as 9 gigabytes of data purporting to be documents from the Macron campaign were posted on a profile called EMLEAKS to Pastebin, a site that allows anonymous document sharing.

It was not immediately clear who was responsible, but Macron’s political movement said in a statement the hack was an attempt to destabilize democracy and to damage the party.

En Marche! said the leaked documents dealt with the normal operations of a campaign and included some information on campaign accounts. It said the hackers had mixed false documents with authentic ones to “sow doubt and disinformation.”

Sunday’s election is seen as the most important in France for decades, with two diametrically opposed views of Europe and the country’s place in the world at stake.

Le Pen would close borders and quit the euro currency, while Macron wants closer European cooperation and an open economy.

Voters in some French overseas territories and the Americas were due to cast their ballots on Saturday, a day before voting in France itself. The first polling stations to open at 1000 GMT were in Saint Pierre and Miquelon, islands off Canada.

Others in French Guiana in South America; Guadeloupe and Martinique in the Caribbean; the South Pacific islands of French Polynesia and French citizens living elsewhere in the Americas were also due to vote on Saturday.

In France, police union Alternative Police warned in a statement that there was a risk of violence on election day by activists of the far-right or far-left.

Extreme-right student activists burst into the office of Macron’s political movement in the southeastern city of Lyon on Friday evening, setting off smoke grenades and scattering false bank notes bearing Macron’s picture, police said.

France is the latest nation to see a major election overshadowed by allegations of manipulation through cyber hacking after U.S. intelligence agencies said in January that Russian President Vladimir Putin had ordered hacking of parties tied to Democratic presidential candidate Hillary Clinton to influence the election on behalf of Republican Donald Trump.

Vitali Kremez, director of research with New York-based cyber intelligence firm Flashpoint, told Reuters his review indicated that APT 28, a group tied to the GRU, the Russian military intelligence directorate, was behind the leak.

Macron’s campaign has previously complained about attempts to hack its emails, blaming Russian interests in part for the cyber attacks.

The Kremlin has denied it was behind any such attacks, although Macron’s camp renewed complaints against Russian media and a hackers’ group operating in Ukraine.

(Additional reporting by Bate Felix, Andrew Callus, Myriam Rivet, and Michel Rose in Paris, Catherine Lagrange in Lyon, Jim Finkle in Toronto and Eric Auchard in Frankfurt; Editing by Alexander Smith)

With Obamacare vote, House Republicans free to turn to tax reform

U.S. President Donald Trump (C) celebrates with Congressional Republicans in the Rose Garden of the White House after the House of Representatives approved the American Healthcare Act, to repeal major parts of Obamacare and replace it with the Republican healthcare plan, in Washington, U.S., May 4, 2017. REUTERS/Carlos Barria

By David Morgan

WASHINGTON (Reuters) – The Republican-controlled U.S. House of Representatives plans to turn to tax reform in earnest, after concluding a lengthy healthcare debate this week with a vote to repeal and replace Obamacare.

But even as Republicans predicted that tax reform would succeed before year-end, lawmakers encountered new uncertainties about what a final tax package might contain, as well as doubts about whether Republicans will be able to enact reforms without Democratic help.

President Donald Trump and Republicans in Congress have pledged to complete the biggest tax reform since 1986, when President Ronald Reagan was in office, before the end of 2017. But they face an uphill battle, mainly over policy differences within their own ranks.

Thursday’s 217-213 House vote on healthcare legislation raised confidence in the Republican-controlled chamber’s ability to move major legislation after two earlier pushes ended in failure.

But to move forward on tax reform, the House, Senate and Trump administration must agree on where to set tax rates, how to pay for cuts and whether the final package should add to the deficit or pay for itself, all areas where common ground may be hard to find.

A plan to enact reforms without Democratic support will also require Republicans to pass a 2018 budget authorizing the parliamentary process known as reconciliation. But a new budget agreement poses a daunting task given Republican opposition to Trump demands for deep domestic spending cuts.

“That may prove to be one, if not the most difficult votes of the tax reform process,” Jonathan Traub, a managing principal at the consulting firm Deloitte Tax LLP.

Meanwhile, the need to reach agreement between the House, Senate and White House will likely delay introduction of a tax reform bill, which had been expected in early June.

But Republicans say it will ultimately make it easier to enact reforms before the end of the year.

The House Ways and Means Committee, which will unveil the initial tax bill, is still aiming for a revenue-neutral package that raises $2.4 trillion for tax cuts through a new border adjustment tax and elimination of business deductions for net interest payments, both controversial measures.

Panel chairman Kevin Brady told reporters that revenue neutrality is necessary to ensure bold, permanent changes to tax policy that can drive economic growth.

“That’s the argument and the case we’re going to make to the Senate and the Trump administration,” he said.

But Representative Mark Meadows, who chairs the conservative Freedom Caucus that helped block Trump’s first healthcare bill,

voiced opposition to a revenue neutral approach.

“If it’s revenue neutral, you’re not really lowering taxes. You’re shifting the burden,” Meadows told reporters.

The Trump tax plan unveiled last week calls for steep tax cuts financed by government revenues that officials say will result from higher growth. Some fear the plan could add trillions of dollars to the deficit if growth does not materialize.

Meadows said tax cuts should be offset by cuts to entitlement programs including Social Security and Medicare, which Trump has promised not to touch.

(Editing by Alistair Bell)