President Donald Trump celebrated the passage of a Republican tax bill that cuts taxes on wealthy individuals and big corporations Wednesday. Republicans have promised that the legislation will stimulate the economy because corporations, now relieved in part of their tax burden, will turn around and invest in jobs and increase worker wages. But in the run-up to the bill becoming law, several large corporations proved — yet again — that trickle-down economics simply don’t work.
Last week, Boeing announced an $18 billion share buyback plan, and earlier this month, Home Depot announced it would launch a $15 billion share buyback program. Pharmaceutical company Pfizer and computer software company Oracle also both announced share repurchases earlier this month — $10 billion and $12 billion endeavors, respectively — and banking group ANZ announced a $1.5 billion share repurchase earlier this week.
In the last two weeks, Hyatt Hotels, Jet Blue, and T-Mobile all announced share buybacks of their own, and on Wednesday, the same day the tax cuts were signed into law, telecommunications company Liberty Global announced a $2 billion share buyback. Nasdaq put the announcement on its website, and the first line reveals everything you need to know: “In a move to enhance shareholders’ wealth, Liberty Global plc’s LBTYA board of directors approved a new share repurchase program.”
Share buybacks are a way of enhancing the shareholder wealth, and, facing the prospect of a major tax cut, that’s exactly what many large corporations have decided to do. The repurchasing does not create new jobs or increase wages for workers.
The folks at Nasdaq aren’t the only ones saying the quiet part loud. On Tuesday, Tim Sloan, CEO of notoriously fraudulent bank Wells Fargo, told CNN Money what he planned to do with extra cash in which they will now be rolling.
“Is it our goal to increase return to our shareholders and do we have an excess amount of capital? The answer to both is, yes,” Sloan said. “So our expectation should be that we will continue to increase our dividend and our share buybacks next year and the year after that and the year after that.”
Well Fargo did announce Wednesday that it will be increasing its minimum wage to $15 an hour — an actual living wage — but the money being funneled to stock buybacks far exceeds that being devoted to bonuses or wage increases.
On Wednesday, AT&T announced that, thanks to the passage of the tax plan, it would be giving more than 200,000 workers $1,000 bonuses — as long as Trump signed the bill before Christmas. (Otherwise, the bonus would come “over the holidays.”)
But a Communication Workers of America (CWA) spokesperson told ThinkProgress Wednesday that the $1,000 bonus was “a drop in the bucket compared to what was promised.” Republicans consistently promised that their tax plan would mean every American family had would see an additional $4,000 in their pocket, and CWA asked AT&T for exactly that, a $4,000 wage increase. They got a quarter of what they asked for, and only before Christmas if the president signed the bill quickly enough.
The move is seen as an olive branch to Trump, who has been hostile to AT&T’s proposed takeover of Time Warner, a merger that would be worth $84.5 billion.
Comcast also announced that it would be giving “special $1,000 bonuses to more than 100,000 eligible frontline and non-executive employees… based on the passage of tax reform and the FCC’s action on broadband.” But, like AT&T’s bonuses, the bonuses are only temporary, one-time paycheck increases, not the investments in wages Republicans have promised.