Two top Senate Democrats said they’ll introduce legislation barring companies from buying back their own stock unless they first increase workers’ pay and benefits, as the party seeks to frame 2020 election issues by spotlighting corporate responsibility.
Senate Minority Leader Chuck Schumer and Senator Bernie Sanders, who is considering a second run for the Democratic presidential nomination in 2020, wrote in a New York Times opinion piece Monday that their plan would require companies pursuing buybacks to take such actions as raising workers’ minimum pay to $15 an hour, improving pensions or offering seven days of paid sick leave.
“At a time of huge income and wealth inequality, Americans should be outraged that these profitable corporations are laying off workers while spending billions of dollars to boost their stock’s value to further enrich the wealthy few,” the two wrote. They pointed to recent decisions of companies including Walmart Inc. and Wells Fargo & Co. to repurchase billions of dollars in shares at about the same time they cut jobs.
The proposal would generate little support among Republicans in the GOP-controlled Senate, so its likely to serve more as a campaign issue than to be enacted into law.
Several of the party’s presidential hopefuls in the Senate are focusing on corporate governance as an election issue, including Senators Elizabeth Warren of Massachusetts, Kamala Harris of California and Cory Booker of New Jersey. Sanders, an independent who has a spot in Democratic Senate leadership, sought the party’s presidential nomination in 2016 and is weighing another run.
GOP Tax Cuts
Corporate governance issues also may be important in Senate races next year, as Democrats seek to take advantage of an election map that plays in their favor. Republicans will be defending 22 seats they now hold, while Democrats have just 12 on the ballot. Only one incumbent Democratic senator, Doug Jones of Alabama, is seen as at risk.
The GOP tax cuts enacted in late 2017, which reduced the corporate tax rate to 21 percent from 35 percent, sparked a windfall that companies are using to repurchase their own shares, Schumer of New York and Sanders of Vermont said in their opinion piece.
The pace of share repurchases by companies in the S&P 500 accelerated last year, with authorizations surpassing $1 trillion for the first time as tax cuts boosted profits and cash piles grew.
Executed buybacks hit a record $200 billion in the third quarter, the latest period when full results were available. Qualcomm Inc., Apple Inc. and Oracle Corp. were the biggest buyers, with each repurchasing at least $10 billion of their own stock.