MONEY Economy

Would Hillary Clinton’s Profit-Sharing Plan Put More Money in Your Pocket?

Democratic presidential candidate Hillary Clinton speaks during a campaign town hall meeting in Dover, New Hampshire July 16, 2015.
Brian Snyder—Reuters Democratic presidential candidate Hillary Clinton speaks during a campaign town hall meeting in Dover, New Hampshire July 16, 2015.

It might. But it wouldn't address the bigger forces holding down wages.

Democratic presidential candidate Hillary Clinton on Thursday outlined a plan to encourage companies to share more of their earnings with workers. It’s a tax credit companies could get for two years if they set up a profit-sharing plan tilted toward the lower- and middle-income employees on the payroll. (The tax credit would phase out for higher-paid workers.) In an example used by the campaign, if an employee was paid $5,000 in a profit-sharing bonus, the company would get a tax break of up to $750.

At least at first, the plan has generally been interpreted as part of Clinton’s tilt toward the progressive side of the economic debate. “Veering left…” is how the insider political paper The Hill put it.

Clinton herself has fit profit sharing into her broader message about fixing economic inequality. Here’s a graphic from the campaign website that illustrates the story Clinton is telling about what’s driving inequality. Companies are doing great and getting more productive, but they haven’t haven’t been sharing those gains with workers:

SOURCE: hillaryclinton.com, based on data from the Economic Policy Institute

But even though profit sharing has the word “sharing” in it, it’s actually a pretty business-friendly approach. (The idea that the credit phases out for higher earners is the main way you can tell the proposal comes from a Democrat.) Lots of companies like the idea of paying their people more only when the business is doing well; the flip side is they can pay less in fallow years. In the jargon of human resources, other names for profit sharing are the much less warm and fuzzy sounding “pay-at-risk” and “variable pay.” Walmart, a company that’s famously tough about holding down its labor costs, used to be well-known for profit sharing.

At qz.com, writer Alison Shrager worries that more profit-sharing would just shift more pay out of steady wages and into up-and-down bonuses, adding another source of instability to the finacial lives of low-and middle-income workers. The Clinton campaign told Vox.com that companies would only be able to get the credit for profit sharing above regular wages—presumably meaning they couldn’t cut salaries and then get a credit for adding a profit-sharing plan. But over time, as companies gave out regular raises and made new hires, or as new firms started up, the mix of pay might still shift toward variable bonuses. Profit sharing eligible for the credit would be capped at 10% of salary.

If Clinton’s proposal became law, it would really be just one more of several tax policies that shape how companies structure their pay. If you get health insurance at work or a 401(k) match, that’s because the tax code makes it appealing for companies to pay you that way. You pay less tax on $1 of health insurance or $1 of a 401(k) match than you do on $1 of straight cash pay, so companies like to offer those benefits; similarly, it would be slightly cheaper for a company to give you $1 of profit sharing than to give you $1 of a raise. As an economist will tell you, the health insurance you get at work isn’t a free gift on top of your pay. It’s part of your overall compensation. If companies didn’t offer health coverage, they’d have to pay us more. (Of course, then we’d still have use that money to buy insurance.)

So perhaps Clinton’s plan would largely move money from one line in your pay stub to another. But it might be better than a zero-sum game. For one thing, it’s effectively a tax cut on pay, which the Clinton campaign says is worth $10 billion to $20 billion over ten years—not huge as these things go. Companies would get the credit directly, but to the extent that it encouraged companies to make more money available for profit-based bonuses, the tax break could flow through to workers. (Though the campaign says one purpose of the temporary credit is simply to offset the administrative costs of starting up a profit-sharing program.)

And there’s at least some evidence that companies with profit sharing actually do pay more overall. An influential think-tank policy paper on “inclusive prosperity,” which the Clinton campaign is reported to be be drawing from, points to a study of the effects of profit sharing by the economists Joseph Blasi, Richard Freeman, and Douglas Kruse. Based on surveys of workers, it found that pay was generally as high or higher among companies that gave workers some kind of stake in company performance. That includes not just profit-sharing bonuses but employee stock options and other programs.

Why? Partly it may be because you have to give people a shot at higher total pay to compensate for the risk that they might not do as well in some years. Or, the economists write, it could be that people are getting paid more because profit sharing spurs them to be more productive. That looks like a win-win, but its not exactly money for nothing. Maybe profit sharing works because it improve morale, reduces employee turnover and gives people an incentive to worker smarter and more creatively. Or perhaps anxiety over losing a bonus scares people into working harder and faster.

But the wage stagnation of the past several decades isn’t mainly a productivity problem—just look at the Clinton campaign’s own graphic above. People with jobs these days are already working smart and working hard.

Profit-sharing tax credits might nudge some companies to share more of the gains from that productivity with people outside the C-suites. But the story of the last several years is that it’s taken employment a long time to climb back from the hit it took in 2008. One thing that really helps people get more pay—whether it’s in cash, bonuses, stock option, pensions, or insurance—is full employment and a hot labor market, where companies have to do everything they can to get the workers they need. That’s something Washington has had a hard time delivering.

TIME India

India’s Narendra Modi to Visit Pakistan in 2016 as Regional Foes Continue Dialogue

BRICS 2015 Summit
Sasha Mordovets—Getty Images From left: Pakistani Prime Minister Muhammad Nawaz Sharif, Chinese President Xi Jinping, Mongolian President Elbegdorj Tsakhia, Russian President Vladimir Putin, Kazakh President Nursultan Nazarbayev, Indian Prime Minister Narendra Modi, Iranian President Hassan Rouhani pose for a photo during the BRICS 2015 Summit in Ufa, Russia, on July 9, 2015

The visit was announced after bilateral talks between Modi and Pakistan's leader Nawaz Sharif on Friday

Correction appended, July 11, 2015

The highly anticipated talks between Indian Prime Minister Narendra Modi and his Pakistani counterpart Nawaz Sharif in Ufa, Russia, on Friday appeared to produce a few tangible positive outcomes, other than the former officially accepting an invitation to visit Pakistan next year.

Modi will travel to Pakistan’s capital city Islamabad for the 2016 summit of the South Asian Association for Regional Cooperation (SAARC), of which both India and Pakistan are founding members, according to a statement from the Foreign Secretaries of both countries after the meeting.

The one-on-one meeting between Modi and Sharif, the first in more than a year, took place in the led up to the Shanghai Cooperation Organization (SCO) summit. Modi’s visit to Pakistan in 2016 will be his first ever, and the first by an Indian Prime Minister since Atal Bihari Vajpayee in 2004 (Modi’s predecessor Manmohan Singh never went across the border during his 10-year tenure).

The two leaders also made a renewed commitment to fighting terrorism — a thorn in the side of their bilateral relationship for several decades — announcing a meeting of their respective national security advisers in New Delhi to resolve security issues and enhanced cooperation regarding the 26/11 terrorist attacks of 2008 in Mumbai (which India has accused Pakistan of engineering).

The neighbors, which have fought three wars in the past six decades, also moved a step closer to resolving other long-standing issues. Sharif and Modi also pledged enhanced cooperation between security forces at the India-Pakistan border, where violent clashes between troops are a frequent occurrence, and the release of hundreds of fishermen from both countries — imprisoned for straying into the other’s international waters — within 15 days.

“Whatever was signed was welcome,” Gopalapuram Parthasarathy, a former High Commissioner of India to Pakistan, says to TIME in an interview. “Ultimately this relationship’s direction will depend on terrorism and the situation on the borders.”

However, given the fragile nature of similar bilateral agreements in the past, Parthasarathy does recognize the need to maintain “healthy skepticism” until concrete action is taken.

“The proof of the pudding is in the eating,” he says. “Don’t forget we had great agreements in Lahore [during Vajpayee’s visit] and then we had Kargil [war of 1999] within three months.”

Correction: The original version of this article misstated the year of the most recent visit of Indian Prime Minister Atal Bihari Vajpayee. It was 2004. The article also misstated the length of Prime Minister Manmohan Singh’s time in office. It was 10 years.

TIME Race

Leaders Seek Solutions, Next Steps for Civil Rights Momentum

Sybrina Fulton trayvon martin
Amanda Edwards—Getty Images Activist Sybrina Fulton participates in a panel conversation at the Manifest: Justice pop-up art space on May 6, 2015 in Los Angeles.

The best way to channel "black lives matter" energy, many said, is by getting out to vote

As the 2016 election draws near, leaders of civil rights organizations are thinking about how to move the conversation generated through the black lives matter movement into more intense civic engagement.

“I say protest and push for policy change,” Melanie Campbell, president and CEO of the National Coalition on Black Civic Participation, told TIME. “In order to make change happen that we have to get out the vote.”

Campbell was one of many leaders on hand at the 2015 Essence Festival in New Orleans during the Fourth of July weekend, where many of the more than 150 speakers used the platform to issue calls to action to members of the black community.

During an address on Friday, Sybrina Fulton, mother of the late Trayvon Martin, challenged the gathered crowd to get out to vote and join nonprofit organizations that champion causes they support. All of the guests on a panel Saturday, including Nicole Paultre Bell, wife of Sean Bell, and Van Jones, called civic engagement an obvious next step for activists who’ve taken to the streets to have their voices heard. Deepak Chopra, who opened Saturday’s Empowerment Series, called on the black community to ask a series of questions—chief among them, “How can I serve?”

“People don’t think black folks are going to turn out because President Obama is no longer on the ticket, but we were voting long before that,” Campbell said. “My job is to make sure our voices are challenging anyone running for office.”

The audience at the weekend event, though—largely female, with ages ranging from old enough to have marched with Dr. Martin Luther King Jr. and young enough to have only lived at a time when there’s a black president—represents a potent voting block when its members turn out. In 2012, the increase in black voter turnout—which surpassed the white vote for the first time since 1996—was due to the swaths of black women who hit the polls. Voter turnout among young black voters, however, was down in 2012.

The black lives matter movement has made a real impact in driving the national conversation around race—as was apparent in the general theme of the weekend’s events—but the challenge going forward, said National Urban League President Marc Morial, is translating the grassroots momentum apparent on the ground into action that can impact the upcoming election.

“The advent of organic social media organizing is a new technique that’s creating an opportunity for a new generation to get its voice heard, but that doesn’t replace traditional work,” Morial said. “Movements don’t exist without changes, without an end goal of changes in public policy.”

Morial said his organization has invited 2016 presidential candidates including Hillary Clinton, Martin O’Malley, Jeb Bush and Ben Carson to an upcoming conference the organization is hosting in Tampa.

“What we’re trying to do is advance the conversation early around these issues—economic opportunity, criminal justice reform, schools and education—where do you stand? What are your points of view?” he said.

TIME 2016 Election

Jon Bon Jovi Happy for Chris Christie to Use Songs in Campaign Launch

"My friendships are apolitical," the Democrat rocker says.

Though Governor Chris Christie has been a lifelong Bruce Springsteen fan, the presidential hopeful used the music of another New Jersey native Tuesday when he announced his bid for the Republican ticket: Jon Bon Jovi.

Christie likely opted not use a Springsteen song fearing that the lifelong Democrat and critic of the Bridgegate scandal might disavow him as Neil Young did to Donald Trump earlier in June. But Bon Jovi is also an avowed Democrat; his wife even hosted a fundraiser for Hillary Clinton on Monday night, during which the rocker sang his biggest hit, “Livin’ on a Prayer.”

However, despite their political differences, Bon Jovi gave Christie his blessing to use songs like “We Weren’t Born to Follow” for his campaign, Mother Jones reports. The two met while Bon Jovi was helping with Hurricane Sandy relief. “My friendships are apolitical. And, yes, I absolutely gave him permission to use my songs,” he said.

[Mother Jones]

TIME politics

Hillary Clinton’s Campaign Launch Site Once Held the Worst Prison in the World

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Keith Sherwood—Getty Images/Flickr RF Aerial view of Roosevelt Island and Four Freedoms Park

Roosevelt Island has a long and complicated history

On Saturday, Hillary Clinton will celebrate the official launch of her presidential campaign in a part of New York City that may be unfamiliar to many non-residents: Roosevelt Island. The narrow stretch of land in the East River between Manhattan and Queens is named after President Franklin D. Roosevelt, and Clinton’s staff has noted that the candidate has long been inspired by FDR and his wife Eleanor.

But the island wasn’t always a political homage. Early names included Minnahanonck, Hog Island, Blackwell’s Island and, as of 1921, Welfare Island. And Welfare Island was, as TIME noted in 1934, “not a nice place to visit and nobody would want to live there.” It was home to the New York County Penitentiary, which the state’s Commissioner of Correction had just proclaimed the worst prison in the world, and a “vicious circle of depravity that is almost beyond the ability of the imagination to grasp.”

By the 1960s, the island was seen as a waste of valuable land. In 1961, as TIME reported, real-estate developers came up with a plan to cover the two-mile-long strip of “nurses’ homes, hospitals for the aged and poor, and homes for wayward girls” with a concrete platform that could hold enough housing for 70,000 New Yorkers. It was envisioned as a residential paradise, with postcard views and no cars allowed. And a new name, of course.

On Sept. 24, 1973, New York City’s mayor, John Lindsay, proclaimed Franklin D. Roosevelt Island Day in the city and officially re-dedicated the island in his honor. “This act signifies recognition for a man whose capacity for moral leadership gave much to our City, our State and our Nation,” Lindsay said in his proclamation. “It also heralds the transformation of an island that has too long been forsaken. It is altogether appropriate that Franklin D. Roosevelt, whose vision and vivacity re-invigorates and inspires this nation, should have named for him an island which is at last being reclaimed by and for the people of the City of New York.”

Clinton surely hopes to find that her “vision and vivacity” inspire the nation too—and launching her campaign on the island that bears FDR’s name is one way to start.

Read about the 1976 opening of the Roosevelt Island tram, here in the TIME Vault: The Little Apple

TIME politics

Rick Santorum’s Role in the Republican Renewal

rick santorum pennsylvania iowa republican
Charlie Neibergall—AP Former Pennsylvania Sen. Rick Santorum speaks during the Iowa Republican Party's Lincoln Dinner, on May 16, 2015, in Des Moines.

The 2016 contender came into the public eye during one of his party's most pivotal moments

Rick Santorum, in announcing on Wednesday that he would try for the Republican nomination for the 2016 presidential race, joins a crowded field of political contenders.

But it won’t be the first time that the former Pennsylvania Senator and 2012 also-ran has made a splash as part of a large group.

When Santorum first made national news, it was in 1994, as an upstart Congressman going to bat for Senator Harris Wofford’s seat. In covering the race, TIME cast Santorum as a barometer of the nation’s stance toward issues that stretched far beyond the state’s borders:

A party that opposes the President unyieldingly, he reasons, gets a nice, sharp profile. It could work, for instance, on health-care reform, one battle most Americans tell pollsters they are are no longer sure they want the President to win. That the issue, once a sure plus for Democrats, is now a more complicated blessing is evident in Pennsylania, where Democratic Senator Harris Wofford is in a tricky race against Rick Santorum, a Republican Congressman who promises to protect voters from government interference in their health-care decisions. It was Wofford’s surprise victory three years ago over Dick Thornburgh, after a campaign that made health-care reform an issue, that first alerted politicians to its potential. But while Wofford is far ahead of Santorum in fund raising this year, their contest is a toss-up. ”Health care is a significant factor that has energized a lot of people who are nonpolitical,” says Santorum, with the clear implication that this time the newcomers are his.

As we now know, of course, Santorum was right.

That was the year of Newt Gingrich’s ascension, and when election time rolled around, the Republican Party’s midterm gains were immense. As TIME put it, “voters angrily revoked the Democrats’ 40-year lease on the Congress,” as the G.O.P. picked up seats in both houses of Congress and in gubernatorial seats across the country. Representative Toby Roth of Wisconsin put it even more strongly: “[This] was more than an election. It was a revolution.”

Santorum’s conservative appeal to voters carried the day in Pennsylvania, just as his colleagues found success in other states. The political sea change of 1994 continues to reverberate throughout the political world—and Santorum’s latest try for the presidency is only one way of many.

Read the full cover story, here in the TIME Vault: G.O.P. Stampede

TIME 2016 presidential election

Carly Fiorina Says She Would ‘Roll Back’ Net Neutrality Rules

Republican presidential hopeful Carly Fiorina speaks at TechCrunchÕs Disrupt conference on May 5, 2015 in New York City.
Andrew Burton—Getty Images Republican presidential hopeful Carly Fiorina speaks at TechCrunchÕs Disrupt conference on May 5, 2015 in New York City.

And she wants the government to use technology to "re-engage" people

Carly Fiorina said Tuesday in her first public appearance since announcing her candidacy for the GOP nomination that she would “roll back” the new rules on net neutrality.

The former Hewlett-Packard CEO, arguably the presidential candidate with the most experience in the tech industry, came out swinging against the regulations in a talk at TechCrunch’s Disrupt event in New York City. “You don’t manage innovation, you let innovation flourish,” she said. “Regulation over innovation is a really bad role for government.”

Other Republican hopefuls have also come out in recent months against net neutrality—or the idea that all web content is treated equally—perhaps in opposition to Obama or in order to protect campaign donations, despite the fact that 85% of Republican voters say they oppose the creation of Internet “fast lanes.”

MORE: Why 2016 Republicans Oppose Net Neutrality

At other points during the talk, Fiorina pointed to her experience in the tech industry as a qualification for the Oval Office. “It is important to have someone in the White House who has a fundamental understanding of technology, and a fundamental vision of how technology could be used,” she said, adding that she hopes to use technology to “re-engage” people in politics.

Fiorina also addressed the industry’s inequalities for women, noting that they are “caricatured differently, criticized differently, scrutinized differently, because we’re still different.” To that end, she noted that she was pleased Hillary Clinton is also running for the Democratic nomination. “Obviously I’m running to beat Hillary Clinton, but I think It’s great there there are women on both sides of the aisle running for the highest office in the land.”

When the interviewer, a female journalist, asked Fiorina if she would consider a Vice Presidential slot, she bristled and replied: “Would you ever ask a man that question?”

In the past, male presidential candidates like former North Carolina Senator John Edwards and former New Mexico Governor Bill Richardson have been asked whether they’re running for VP, and the idea has also been posed for former Maryland Governor Martin O’Malley, a presumed Democratic candidate. After the journalist responded that she would, the candidate said, “I’m not running for something else, I’m running because I want this job, and I think I can do this job.”

Read next: Carly Fiorina Calls Foul on Vice President Quesion

TIME 2016 Election

Bill Clinton Says Nothing ‘Knowingly Inappropriate’ in Foundation’s Foreign Money

Former U.S. President Bill Clinton speaks at Georgetown University in Washington on April 21, 2015.
Win McNamee—Getty Images Former U.S. President Bill Clinton speaks at Georgetown University in Washington on April 21, 2015.

The former president has no regrets about taking foreign cash

The Clinton family’s charity has never done anything “knowingly inappropriate,” former President Bill Clinton said in a new interview, as the controversy surrounding foreign donations rattles Hillary Clinton’s weeks-old presidential bid.

“There is no doubt in my mind that we have never done anything knowingly inappropriate in terms of taking money to influence any kind of American government policy,” he told NBC. “That just hasn’t happened.”

Clinton denied allegations that his family’s foundation took money from donors who sought to influence U.S. foreign policy during his wife’s tenure as Secretary of State. In a new book, conservative author Peter Schweizer claims that Hillary Clinton’s State Department gave special treatment to foundation donors.

Bill Clinton said he still has no regrets about accepting millions in foreign donations—despite recently changing his foundation’s rules again to accept only contributions from six Western governments.

“It’s an acknowledgement that we’re going to come as close as we can during her presidential campaign to following the rules we followed when she became Secretary of State,” Clinton told NBC, referring to the foundation’s agreement during Hillary’s tenure at the state department to disclose all foreign contributions. (Foreign governments, however, had continued to give anonymously to a Foundation branch in Canada, where law guarantees privacy to donors.)

Bill Clinton said he is “proud” of the foundation’s work. “There has never been anything like the Clinton Global Initiative,” Clinton told NBC, “where you’ve raised over $100 billion worth of stuff that helped 43 million people in 180 countries.”

[NBC]

TIME

Cruz Walks a Careful Line on Immigration Reform

Ted Cruz
Cliff Owen—AP Republican presidential candidate Sen. Ted Cruz, R-Texas gestures while he talks at the U.S. Hispanic Chamber of Commerce (USHCC), on April 29, 2015, at the National Press Club in Washington.

The GOP presidential hopeful opposes a path to citizenship, but casts himself as a supporter of legal immigration

Texas Senator and Republican presidential candidate Ted Cruz cast himself as a supporter of immigration reform on Wednesday, while criticizing Democrats for killing prospects of a bipartisan deal by insisting on a pathway to citizenship for undocumented immigrants.

“I consider myself a proponent of immigration reform,” Cruz said during a question-and-answer session in Washington hosted by the U.S. Hispanic Chamber of Commerce. “There is no stronger advocate of legal immigration in the U.S. Senate than I am.”

Cruz was an outspoken detractor of the bipartisan rewrite of U.S. immigration laws that passed the Senate in 2013, which in the eyes of many Republicans would have shored up the party’s moribund support among Hispanic voters. His comments offer a telling glimpse of how he will attempt to find a delicate balance on a pivotal issue during his campaign.

The GOP presidential hopeful opposes citizenship for undocumented immigrants, but he stressed Wednesday the need to celebrate and encourage legal immigration. And he noted his support for dramatically increasing the available number of high-tech visas. His remarks drew an implicit contrast with Wisconsin Governor Scott Walker, a likely rival for the GOP nomination, who recently took a protectionist stance on legal immigration levels.

Cruz declined to directly answer a question from TIME about whether he would support a path to legal status for undocumented immigrants currently in the U.S., indicating a legislative fix should first focus on shoring up border security.

The freshman Senator said he believed there was significant bipartisan agreement around securing the borders and streamlining the legal immigration system. He criticized Democrats for crippling the recent reform plan in Congress by insisting on the “poison pill” of citizenship.

“They are treating immigration as a political cudgel,” Cruz said, “where they want to use it to scare the Hispanic community. And their objective is to have the Hispanic community vote monolithically Democrat.”

Many Republicans argued Mitt Romney’s hardline position on immigration was largely to blame for his dismal performance with Latino voters in the 2012 presidential race. But Cruz said his view—born out by his Senate campaign’s internal polling—was that Romney had alienated Hispanics with a message that appeared to denigrate middle-class Americans while venerating the wealthy.

Cruz argued that Republicans could win over Hispanics with a message of economic opportunity, saying Republicans “should be the party of the 47%.”

TIME millenials

Poll: Millennials Distrust Justice System, Soften on Democrats

Youth still favor Democrats, Clinton, but margins tighten

Nearly half of young American voters do not have confidence in the justice system, according to a new Harvard survey of millennials.

The poll of 18-29 year olds released Wednesday by Harvard’s Institute of Politics (IOP) found an even 49%-49% split among the age group on the question of the system’s “ability to fairly judge people without bias for race and ethnicity.” The nationwide #BlackLivesMatter movement finds broad support among millennials, but less so among white 18-29 year olds, of whom only 37% support the demonstrations. Less than a majority believe the protests will result in effective change to policing practices.

Millennial voters overwhelmingly support efforts to require police officers to wear body cameras to record interactions with their communities, while 60% support policies to require police departments to demographically reflect the neighborhoods they serve. But the age group is split 49%-49% on whether eliminating mandatory minimum sentences for drug offenses would make the system fairer.

Despite growing up in an age of two wars, 57% of 18-29 year olds would support deploying ground troops to fight the Islamic State of Iraq and Greater Syria (ISIS). The poll also found a significant bump in favor of American interventionism among the age group, though a majority still believe that the UN and other countries should take the lead in handling international crises.

Young Americans remain a solidly Democratic constituency, but by smaller margins than previous cycles. The poll found that 55% of the age group would prefer a Democrat to win the White House next year, with 40% supporting a Republican for the post. The gap between the parties is significantly smaller than President Barack Obama’s 2012 margin with the same cohort of 60% to 37%.

In the primaries, former Secretary of State Hillary Clinton holds an overwhelming lead with the age group, while millennials are widely split on the Republican side, with Ben Carson leading with 10%, followed by Sen. Rand Paul, former Florida Gov. Jeb Bush, and former Arkansas Gov. Mike Huckabee.

Obama’s approval rating among the age group jumped 7 points from October, to his highest approval rating since 2013.

While trust in government institutions has declined since 2010, millennial trust of the military, the Supreme Court, the president, the UN, the federal government, and Congress all increased from 2014 by a significant margin—with the military the only entity with a rating above 50%.

The web-based poll of 3,034 18-29 year olds was conducted by the IOP and KnowledgePanel from March 18 through April 1 and has a margin of error of ±2.4 percentage points.

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