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Why getting Congress to fund help for US children in poverty is so hard to do

Proponents of using the child tax credit to alleviate poverty need to reach an agreement with those who insist that it must encourage low-income parents to work.

House Speaker Nancy Pelosi strongly supported the 2021 expansion of the child tax credit. Mario Tama/Getty Images

The Build Back Better bill, the centerpiece of the Biden administration’s domestic policy, cleared the House of Representatives by a slender margin largely along party lines in November 2021.

Legislative progress came to a sudden stop a month later when Sen. Joe Manchin announced, in a Fox News interview, that he would not support it. Without the West Virginian’s vote, Senate Democrats lacked the majority they needed to pass the bill.

Manchin raised concerns about inflation and objected to several of the measure’s energy provisions. He also had qualms about a program that had been temporarily helping, according to one estimate, over 90% of the children in his state: the expansion of the child tax credit.

As far back as the Nixon administration, the federal government’s efforts to give low-income families financial assistance have repeatedly sparked the same debate: How can the government, at a reasonable cost, provide adequate benefits for children in need and strong work incentives for their parents or guardians?

Solving this problem, as I observed long ago as a graduate student studying the Nixon plan and a similar one debated in the United Kingdom in the 1970s, depends more on political calculations than on economic analysis.

A 1-year trial run

The Biden administration’s $1.9 billion COVID-19 relief bill, which Congress passed in March 2021, included a single-year expansion of the child tax credit.

This benefit for families with children originated with a tax package Congress passed in 1997. Lawmakers subsequently modified it several times, often with bipartisan support. Prior to 2021, the most recent update was part of former President Donald Trump’s 2017 tax reform package.

Biden’s version gave most U.S. families a credit against taxes of $3,000 for each child from age 6 to 17, and $3,600 for those younger than 6. Lower-income families could obtain this credit as six monthly cash payments from July to December, reserving the rest of the money for a lump sum at tax time in 2022. The monthly payments ceased in January 2022.

Previously, the credit was delivered at tax time only and maxed out at $2,000 per child. Families with very low incomes, but not those without any earnings at all, were eligible only for up to $1,400 in payments. A big change in 2021 was that even parents without any earnings, who therefore owed no taxes, could get the maximum benefit.

This change alone, Columbia University researchers estimated, reduced the number of children in poverty by 25% after payments began in July. That research team predicted that greater declines would be likely once more families claimed their benefits.

The Build Back Better bill would have extended the child tax credit expansion for another year. But Manchin, along with many Republicans, said he believed the Biden administration’s real goal was to make it permanent – a goal of many Democrats in Congress.

Conservatives viewed the long-term adoption of a more generous child tax credit, which would cost an estimated $1.6 trillion over 10 years, according to the Congressional Budget Office’s calculations, as too expensive. They also feared that it might reduce employment among low-income families, even though social policy experts disagree on the extent to which that would happen.

Republican lawmakers have generally favored a more targeted approach that would restrict payments to the low-income families that needed them most and had at least some earnings. They were unwilling to let go of the system adopted in 1997, which prioritizes work incentives over helping the neediest families.

Sen. Joe Manchin of West Virginia stands behind closing doors.
Has Sen. Joe Manchin closed the door on a more expansive child tax credit? Kent Nishimura / Los Angeles Times via Getty Images

Competing priorities

The version of that system was in effect until 2021 and is again in place for the 2022 tax year. It did not allow families with less than $2,500 in earnings to receive any portion of the child tax credit as a payment and then no more than $1,400, if eligible.

Before Biden’s COVID-19 relief bill, higher-earning families could still use the credit of $2,000 per child to lower their taxes until their incomes reached the $200,000 mark for single parents and $400,000 for married couples with children, at which point the credit phased out.

By contrast, the Biden administration’s version provided its larger tax credit not only to low-income families but also to those with modified adjusted gross income above $75,000 for single filers, $112,500 for head-of-household filers and $150,000 for married couples filing a joint return. Above those amounts, it reverted to the previous version until it phased out entirely.

If a program gives more generous help to families with children that have little or no income, as the Biden administration’s did and most Democrats are demanding, it could wind up giving larger tax credits to a much higher number of working-class and middle-class Americans as well – making the program costlier. In the face of an economy-devastating pandemic, the Biden administration and Congress ignored this trade-off last year. They are clearly having trouble doing so again.

According to a Wharton School analysis, 70% of the budgetary impact of the child tax credit expansion the House approved would result from tax cuts for families in the middle three-fifths of the income distribution.

American families with children among the top fifth of earners would get a little less than 12%, with the bottom fifth getting the remaining 18%, Wharton’s economists projected.

In other words, families who are by no means poor are getting the bulk of money made available by the temporary expansion of the child tax credit.

To fix that – and to orient the aid in line with what Republicans are calling for – benefits could be sharply reduced for families with higher earnings. But this would effectively increase tax rates among these families. Alternatively, if the amount of the credit were diminished, it would do less in terms of poverty reduction.

[There’s plenty of opinion out there. We supply facts and analysis, based in research. Get The Conversation’s Politics Weekly.]

A path forward

Many Democrats are already examining ways to modify the child tax credit expansion to win Manchin’s support for reinstating it.

But I believe that a better alternative might be to leave the child tax credit alone, letting the more robust version for the 2021 tax year remain expired.

The previous version, enacted as part of the Trump administration’s tax reform package, is in effect again for the 2022 tax year. It will continue only through the 2025 tax year, at which point the policy is slated to expire and be replaced by an even earlier and less generous version. Congress should, in my view, now try to make that child tax credit permanent, while also seeking ways to improve its effectiveness that have broad backing.

Until 2021, the child tax credit provided modest assistance for low-income families with children and, perhaps more importantly, had satisfied those worried about work incentives and cost. It was not perfect, but it was better than nothing and, not least of all, politically acceptable.

It’s a good starting point for future improvements.

Leslie Lenkowsky does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Economics

Energy Stocks Are Down, But Remain Top Sector Performer

High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s…

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High-flying energy shares have hit turbulence in recent weeks but remain, by far, the leading performer for US equity sectors so far in 2022, as of yesterday’s close (June 27), based on a set of ETFs. But with global growth slowing, and recession risk rising, analysts are debating if it’s time to cut and run.

The broad-based correction in stocks has weighed on energy shares lately. Energy Sector SPDR (XLE) has fallen sharply after reaching a record high on June 8. Despite the slide, XLE remains the best-performing sector by a wide margin year to date via a near-36% gain in 2022.

By contrast, the overall US stock market is still in the red via SPDR S&P 500 (SPY), which is down nearly 18% year to date. The worst-performing US sector: Consumer Discretionary Sector SPDR (XLY), which is in the hole by almost 29% this year.

The case for, and against, seeing energy’s recent weakness as a buying opportunity can be filtered through two competing narratives. The bullish view is that the Ukraine war continues to disrupt energy exports from Russia, a major source of oil and gas. As a result, pinched supply will continue to exert upward pressure on prices in a world that struggles to quickly find replacements for lost energy sources. The question is whether growing headwinds from inflation, rising interest rates and other factors will take a toll on global economic growth to the point the energy demand tumbles, driving prices down.

The market seems to be entertaining both possibilities at the moment and is still processing the odds that one or the other scenario prevails, or not. Meanwhile, energy bulls predict that the pullback in oil and gas prices is only a temporary run of weakness in an ongoing bull market for energy.

Goldman Sachs, in particular, remains bullish on energy and advises that the potential for more prices gains in crude oil and other products “is tremendously high right now,” according to Jeffrey Currie, the bank’s global head of commodities research. “The bottom line is the situation across the energy space is incredibly bullish right now. The pullback in prices we would view as a buying opportunity,” he says. “At the core of our bullish view of energy is the underinvestment thesis. And that applies more today than it did two weeks, three weeks ago, because we’ve just seen exodus of money from the space… investment continues to run from the space at a time it should be coming to the space.”

Meanwhile, a bit of historical perspective on momentum for all the sector ETFs listed above reminds that the trend direction remains bearish overall. But contrarians take note: the downside bias is close to the lowest levels since the pandemic first took a hefty bite out of market action back in March 2020 (see chart below). This may or may not be a long-term buying opportunity, but the odds for a bounce, however, temporary, look relatively strong at the moment.


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Commodities

Gold as an investment; a long-term perspective

To many investors, gold was a disappointment during the COVID-19 pandemic and the high-inflation period that followed. Instead of protecting a portfolio…

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To many investors, gold was a disappointment during the COVID-19 pandemic and the high-inflation period that followed. Instead of protecting a portfolio from inflation, the price of gold declined from its all-time high reached in 2020.

At the same time, inflation in the US and other advanced economies kept rising. Nowadays, inflation in the UK is expected to reach double-digit territory at the end of this year and runs at more than four decades high in the US.

Moreover, the news that a huge gold deposit was discovered in Uganda made many wonder what the point of investing in gold is if it isn’t so scarce. The new deposit has some 320,000 tonnes of extractable pure gold.

But time is on gold’s side. As an uncorrelated asset with the main financial markets, gold has its place in an investment portfolio.

Because of that, an analysis of the price of gold from a long-term perspective is useful as it helps filter the noise. After the bullish breakout in the early 2000s, the price of gold is in a bullish run, unlikely to end despite the recent underperformance.

Only bullish patterns followed the early 2000s bullish breakout

In the early 2000s, gold traded below $400/ounce. A bullish breakout led to several bullish patterns – including the current one, which may end up being bullish after all.

First, it was a pennant – a continuation pattern that was responsible for sending the gold price to $1000/ounce for the first time ever. What followed was an ascending triangle.

After the market had cleared the horizontal resistance given by the $1,000 level, it did not stop all the way to $1,900 in 2012. The move was reversed in the years to follow, but an inverse head and shoulders pattern propelled the price to a new all-time high in 2020, as uncertainty during the COVID-19 pandemic reigned on financial markets.

From that moment on, gold is in a consolidation area. Because it hesitated at horizontal resistance, one may argue that the price of gold forms an ascending triangle. The last time it did so, the market traveled more than $900, so bears might want to watch the current pattern closely.

Gold price’s resilience against the dollar has been impressive

Perhaps the best way to interpret the market is through the eyes of the US dollar. The gold price has been resilient against a rising US dollar, and the chart below shows it accurately.

From June 2020, the gold price did not move much, while the US dollar declined initially, only to recover the lost ground. Hence, gold’s price resilience in an environment of a rising US dollar adds strength to the yellow metal because a strong dollar limits the effects of inflation by offsetting the price of imports.

To sum up, gold is consolidating. A move to a new all-time high should trigger more strength, and a higher dollar might accompany it.

The post Gold as an investment; a long-term perspective appeared first on Invezz.

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Science

How prepared is biopharma for the cyber doomsday?

One of the largest cyberattacks in history happened on a Friday, Eric Perakslis distinctly remembers.
Perakslis, who was head of Takeda’s R&D Data…

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One of the largest cyberattacks in history happened on a Friday, Eric Perakslis distinctly remembers.

Perakslis, who was head of Takeda’s R&D Data Sciences Institute and visiting faculty at Harvard Medical School at the time, had spent that morning completing a review on cybersecurity for the British Medical Journal. Moments after he turned it in, he heard back from the editor: “Have you heard what’s going on right now?”

Eric Perakslis

He had not. While he was knee deep in the review, a ransomware later known as WannaCry ripped through the globe at breakneck speed, descending on a quarter million computers in more than 150 countries. One of the hardest hit groups was the United Kingdom’s National Health Service, which saw tens of thousands of devices — computers, MRI scanners, blood-storage refrigerators and other equipment — compromised, bringing many hospitals to a standstill for several days. By the time the NHS sorted through the rampage, government officials estimated the attack had cost them £92 million, or $120 million, both in direct costs and lost output — including more than 10,000 canceled appointments.

For Perakslis, looking back, the coincidental timing was almost eerie. But having first called on the healthcare industry to take cyber threats seriously in 2014, Perakslis had already warned others something like this could happen.

“I wasn’t surprised at all,” he told Endpoints News. “It’s not validation. It’s just like … I hate to be right.”

Five years and a pandemic later, as the whole world got a crash course on battling a highly contagious virus, the issue of defending oneself against malicious, insidious cyberthreats appears to have quietly taken root in biopharma. It came largely thanks to a confluence of factors, from the new reality of remote work to realizations about how dangerous it could be when, say, the rollout of a lifesaving vaccine is compromised.

Even as some warn industry is woefully unprepared for coordinated attacks, in many ways, drug developers are heeding the call to pay serious attention.

“I actually think that most of the pharmas are getting there,” said Perakslis, who’s since moved to the chief science and digital officer role at Duke Clinical Research Institute. “Do I think they’re meeting the threat? No. But I think they’re doing a good job trying to get there.”

Multiple biopharma companies declined to comment, citing the fear of becoming a target. But experts offered advice on how to navigate the ever-evolving threats of cybersecurity, which can ripple well into the future, in an industry where security is tough in a connected ecosystem of universities, research centers, labs, patient groups and hospitals.

“We need to focus on really defining and explaining what we need to protect,” said Kathryn Millett, a researcher at the UK-based NGO Biosecu.re.

War, crime and others

In 2017, Merck fell victim to NotPetya, an attack instigated by the Russian government that affected multiple big companies. But the aftermath of the attack continued to generate new headlines in 2022.

A court ruled earlier this year in the pharma giant’s favor, deciding that it should be awarded $1.4 billion in insurance payout for the damages it suffered when the malware wiped out years of research, disrupted sales operations and crippled Gardasil 9 production facilities, forcing the company to dip into the US national stockpile.

Bob Maley, chief security officer at the cyber risk monitoring service firm Black Kite, describes it as a “watershed moment.”

It was useful not just in illuminating what could happen when a drugmaker gets swept up in a large-scale cyberattack, but in helping define what people mean when they talk about cyberthreats in the biopharma space. For one, NotPetya illustrated the difference between cybercrime, where the ultimate goal often is to extort money, and cyberwar, which is always meant to be destructive.

“Those things do happen, but I think that for most business purposes, that kind of event — there’s not much we can do about that,” Maley said, referring to NotPetya. “If those state actors decided they’re going to do something in a cyber warfare, they’re going to do it.”

Other, more mundane kinds of attacks, though, can be just as devastating. The potential consequences vary widely, as do the points or modes of attacks, straddling the precarious line between the corporeal and the digital.

Jean Peccoud

The sheer range of possibilities for cyberattacks in life sciences led a group of researchers to propose the term “cyberbiosecurity” in 2017 “as a formal new enterprise which encompasses cybersecurity, cyber-physical security and biosecurity as applied to biological and biomedical-based systems.” Although that was credited by some for kicking off the conversation, Jean Peccoud, a synthetic biology researcher and professor at Colorado State University who co-authored that paper, noted it’s still a broad definition.

“This is a loosely defined field,” Peccoud said in an email to Endpoints.

Depending on who you are and what you are working on, the concerns could be vastly different. Peccoud himself, for instance, believes what’s unique to life science is the “dual representation of DNA sequence”: They exist as both molecules and as computer records, and translating or even transcending the two is increasingly convenient. That’s why for him, the scariest thing that could happen would be a biosecurity incident caused by an engineered organism, possibly with malicious DNA sequences designed in software, which could affect people’s health.

Some may be most worried about confidential data getting leaked; others may fear getting brought to a standstill when hackers lock down operations, demanding a ransom. For many, the nightmare scenario happens when attackers are lurking within company data, and no one knows about it — giving bad actors free reign to tamper with, to take an extreme example, the formula or quality control tests for a drug and thereby endangering patients.

“The state of play as it stands is that the problem of cyberbiosecurity itself is so large and nebulous that we cannot yet provide any clear messaging, guidance or solutions,” Millett of Biosecu.re said.

With bigger data…

While the threats of cyberattack are ubiquitous, security researchers, advocates and vendors have long warned that biopharma was a much greater target than other sectors.

“These industries offer an attractive target for cyberattacks because of their substantial investment in research and development, valuable intellectual property, connected IT and operational networks, and sensitive stores of data,” an MIT group wrote in 2018.

Emil Hewage

Emil Hewage is co-founder and CEO of BIOS Health, a Y Combinator-backed startup striving to personalize neural medicine through real time reading of patients’ neural code.

“In the discovery ecosystem we generate every week more data than that has been generated by public research efforts,” he said. “So we’re talking about many terabytes of brand new data sets per week.”

BIOS is but one player riding on a tidal wave of new discovery technologies generating data at unprecedented scale, which is often accompanied by the requisite analysis tools to interpret them. At the same time, research, development and manufacturing operations are all turning to more sophisticated technologies and data systems to measure and monitor performance on an ever-growing list of indicators.

Kelvin Lee

“The growing emphasis on cybersecurity is occurring at the same time that the industry is arguably changing to one driven by data,” said Kelvin Lee, director of the Manufacturing USA National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), in an email.

Biopharma companies are also somewhat unique in how they are entangled in a complex ecosystem of universities, research centers, labs, patient groups, hospitals and more. That’s not to mention regulators, who impose an additional layer of compliance requirements.

“It’s not just a matter of number of systems, but also number of integrations between those systems,” said Adin Stein, head of engineering operations, IT and cybersecurity at cell therapy developer Lyell.

Then there are more ways for hackers to target companies. Businesses in general have been using more devices and connecting them, exponentially expanding the number of what security folks call “attack surfaces.”

“This is more data to lose or more subtle ways for that to be extracted and exhibited privily now,” Hewage said.

Perakslis and Peccoud also both point to a concept in the cyber space known as asymmetry: For any corporation, cybersecurity is a cost that executives try to minimize. Hackers, on the other hand, stand to gain immensely from an attack, and one person can theoretically take down an entire company (even though they usually work in groups these days).

The good thing about general problems is that general solutions exist, such as employee training and cyber hygiene.

At Black Kite, Maley said his team has gone through a long list of recommended cyber practices to try and predict which companies are most at risk of becoming victims of ransomware.

“What we found was that the bad actors, out of all those hundreds of things that could be exploited, they were only exploiting a very small subset,” he said. “What’s shocking to me is so few things that a company could do to reduce their likelihood of being a victim, for some reason, they just don’t do.”

They include patching the systems on old servers to get rid of vulnerabilities, configuring emails so that it’s harder for hackers to send phishing emails, mandating multi-factor authentication and asking employees not to use the same passwords for everything — lest their login information end up on the dark web and become easy keys for hackers in attacks dubbed credential stuffing.

“Basic, basic, basic kind of things,” Perakslis said. “It doesn’t protect you from the really hard stuff. But again, it’s like driving without a seat belt, you know. Seat belts are not going to keep you out of an accident. But it’s dumb if you get into an accident, you didn’t have one on.”

Building defense

When Kathryn Millett at Biosecu.re first conducted a pilot survey of biotech and cybersecurity leaders, all respondents agreed that cyberbiosecurity risks posed a “real and current threat.” In a follow-up survey that’s still ongoing, she’s heartened to find that the awareness has “trickled down to lab practitioner level.”

“I think there’s been enough sort of news out there, you know, and enough big stories that biotech is really taking notice, and recognizing that there’s a lot at stake and they don’t want to be part of that story,” Stein, the Lyell exec, observed.

Even if biopharma companies don’t go around boasting about it, plenty of signs point to a greater emphasis on cybersecurity. Big Pharma is increasingly bringing chief information officers into the executive suite when in the past they might have reported to the CFO. By Perakslis’ count, budgets are also increasing.

A report by cybersecurity solution provider Fortinet last year found that 98% of pharmaceutical companies surveyed “experienced at least one intrusion,” and around half of them saw between three and five intrusions. But importantly, business-critical data or intellectual property were among the least impacted.

Troy Ament

“With the uptick of these intrusions in general, companies have likely gotten better about protecting business-critical data, but that’s not to say cyberattacks targeting these pharmaceutical organizations are not serious, but it is possible that data is better segmented to prevent cascading impact if an intrusion happens,” said Troy Ament, Fortinet’s chief information security officer.

Lee, the NIIMBL director and University of Delaware professor, noted that while the leading pharma companies are sophisticated in the space, performance is also uneven.

“Smaller companies in the field that have just a few years of experience usually do not have strong cybersecurity protocols or the funding to invest in third-party analysis and compliance services,” Alex Zhavoronkov, co-CEO of the AI drug discovery company Insilico, wrote to Endpoints. “This sometimes worries me a lot.”

At companies that do allocate enough resources, cybersecurity often consists of three pillars: cutting-edge technology that cements every system update patching vulnerabilities; outside experts who provide intelligence and an assessment of risk levels; and a framework to integrate the handling of cyberattacks into the rest of the risk management system.

“One of the best cybersecurity strategies starts with assuming you’ve already been hacked because what happens when you’re hacked, you’re going to look for data that’s leaving,” Perakslis said, and he noted companies are getting better about using real time threat surveillance data to identify and jump on issues.

Alex Zhavoronkov

Biopharma could also learn from other industries, Maley said, learning from case studies such as the breach experienced by Colonial Pipeline, where a mix of exposed remote access ports and credential stuffing led to catastrophe.

For smaller players, Hewage noted, it’s best to start thinking about cybersecurity before they lay their hands on sensitive data. Alternatively, Zhavoronkov noted Insilico decided to lower the risk by minimizing the amount of patient data its platform relies on — while carefully following compliance protocols demanded by Big Pharma partners and engaging providers to perform stress tests.

“I think as you think about particularly emerging biotech, one of the key lessons that I’ve picked up on through the community is the idea of security by design,” Stein said. “It is easier to put a security program in place and develop a culture of security than it is to go back and retrofit.”

Still, no defense is permanent.

“While the industry has certainly taken notice, being on alert never ends,” Ament said.

Culture of secrecy

After a cyberattack, biopharma companies are reluctant to share what happened with other drugmakers, losing what could be teaching moments. Maley said what to disclose has been an issue even going back to a 2006 cybersecurity conference that he attended.

“We’re still talking about it 16 years later,” he said.

To this day, Merck has kept public statements about the NotPetya attack to a minimum. And while others, from Dr. Reddy’s to Roche to Bayer to more recently Novartis, have reported cyber intrusions, they often don’t offer any details beyond whether any sensitive data were compromised.

There are legitimate reasons for staying mum, Perakslis said: “One of the important reasons is that you would never give an adversary your playbook.”

There are also few laws requiring disclosure, while board members do have a fiduciary responsibility to shareholders — which often means to limit bad press.

“I think most companies when they experience these things, one of the first questions that management asks is, well, who do we have to tell? Not who should we tell,” Maley said.

But conversations do happen, Stein said, where specifics are kept confidential and lessons are shared, whether through speaking engagements at conferences, consulting vendors or contributing to the creation of industry standards.

“I wouldn’t assume that if you’re not hearing from a particular organization, they’re not contributing very heavily to quite complex discourse,” said BIOS CEO Hewage. “And in some senses, it’s best to trust really heavily peer reviewed and vetted, industry wide conversation.”

Government agencies can sometimes play that middleman role. The US Department of Homeland Security, for instance, has established Information Sharing and Analysis Centers for early information sharing; the Department of Health and Human Services set up the Health Sector Cybersecurity Coordination Center to do something similar and alert stakeholders to threats; and the UK is also reviewing its biosecurity strategy.

That said, it is nearly impossible to truly tell how prepared a certain company is against cyberattacks — and even with options for sharing, companies tend to be selective about what they say. As a pharma insider told Endpoints, “There’s no prize for naiveté.”

Finding a balance

Even those who are most steeped in cyberbiosecurity advocacy tend to acknowledge that cybersecurity cannot, and should not, be the sole focus of biopharma companies. Their stated mission, after all, is to develop new vaccines and treatments for diseases.

With all the other projects, plans and needs vying for attention, Perakslis said it’s all a matter of prioritization and resource allocation — thinking through how much money to spend on things that are likely but low impact, versus those that are unlikely but high impact.

Understanding the risks and impact thoroughly, then, becomes key.

Finding reference in other areas, Peccoud noted that the aviation industry has an incident reporting system that’s essential to develop its safety culture. Voluntary reporting is shielded from prosecution, which, along with the National Transportation Safety Board, provides material that can be discussed in training or to develop regulation.

“Without transparency the bad guys will always have the edge,” he said.

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