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corporate welfare
Trump-Aligned Project 2025 Would Mean Higher Taxes for Workers, 'Corporate Welfare' for the Rich
"The ultra-wealthy would get hefty handout while families suffer. We can't let that happen," said Sen. Martin Heinrich, the chair of the Joint Economic Committee.
Aug 01, 2024
An economic analysis of the far-right Project 2025 agenda crafted by at least 140 former Trump administration officials shows that the plan would result in higher taxes on working-class Americans and "corporate welfare" for the rich and large businesses.
Conducted by the Democrats on the Joint Economic Committee (JEC), the new analysis notes that Project 2025's sprawling "Mandate for Leadership" would establish a "two-rate individual tax system of 15% and 30% that eliminates most deductions, credits, and exclusions."
Such a system, according to the JEC, "would force many middle-class families to pay thousands of dollars more in tax payments."
"Together, these changes to tax rates would mean that a family of four earning $90,000 per year would have paid roughly $2,300 more in taxes last year," the JEC found. "If the Child Tax Credit was also eliminated, this family would have paid roughly $6,300 more. Meanwhile, millionaires would pay a lower top tax rate."
The analysis also points to Project 2025's push for a "national sales tax," a highly regressive proposal endorsed by dozens of Republican lawmakers in the House of Representatives.
A national sales tax would "force working families to pay more at the grocery store, gas pump, and any other place they buy
goods or services," JEC said Thursday, noting that past GOP proposals "would have hiked the cost of essentials like groceries and housing—usually exempt from state and local sales taxes—by 30%."
Meanwhile, Project 2025 calls for reducing the U.S. corporate tax rate from 21% to 18%. According toThe Washington Post, GOP presidential nominee Donald Trump's advisers have discussed slashing the tax rate to as low as 15%, and the president himself has told leading executives and his wealthy campaign donors that he intends to push for additional tax cuts if he wins another four years in the White House.
"It would force Americans to pay more at the grocery store, strip workers of overtime pay, and raise taxes on working families."
Sen. Martin Heinrich (D-N.M.), chair of the JEC, said in a statement that "Republicans' Project 2025 is bad for America," as "it would force Americans to pay more at the grocery store, strip workers of overtime pay, and raise taxes on working families."
"The ultra-wealthy would get hefty handout while families suffer," Heinrich added. "We can't let that happen."
The JEC analysis also highlights Project 2025's proposed assault on worker protections, noting that the far-right plan would make "fewer workers eligible for time-and-a-half overtime pay"; allow "children to work in hazardous occupations such as factories, meatpacking plants, and sawmills"; and gut National Labor Relations Board enforcement.
Other broad, potentially destructive reforms advocated by Project 2025—which is spearheaded by the Heritage Foundation—are eliminating the Federal Reserve's mandate to pursue full employment and abolishing the Consumer Financial Protection Bureau, long a target of corporate America and their Republican allies in Congress.
Recent polling data indicates that Project 2025 is unpopular with U.S. voters and becomes even more so once they are informed about the far-right initiative's proposals.
That could explain why Trump has sought to distance himself from Project 2025 in recent weeks, claiming he has "no idea who is behind it" despite the close involvement of a number of prominent figures who served in his administration, including former Office of Management and Budget Director Russ Vought.
An unnamed former senior adviser to Trump toldNew York magazine last month that "it's totally false he doesn't know what P25 is."
"Privately, he is of course talking to Heritage, and [Heritage president] Kevin Roberts has reportedly even met with Trump on P25," the ex-adviser said.
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Chip Firms Poised to Rake In Taxpayer Subsidies Spend Big on Stock Buybacks
Companies in line to receive CHIPS Act subsidies spent a combined $41 billion on share repurchases between 2019 and 2023, a new report shows.
Jul 11, 2024
An analysis published Thursday estimates that semiconductor firms positioned to receive billions of dollars in taxpayer subsidies thanks to a 2022 U.S. law have spent big on investor-enriching stock buybacks in recent years, a finding that amplified calls for meaningful restrictions on companies benefiting from public money.
The new report released by the Institute for Policy Studies (IPS) shows that between 2019 and 2023, the first 11 corporations to reach preliminary CHIPS and Science Act agreements with the U.S. Department of Commerce collectively poured more than $41 billion into stock buybacks—a sum that would have been enough to finance a $27,541 raise for 300,000 employees annually for five years.
Intel, the company set to receive more CHIPS Act money than any other semiconductor firm, spent the most on buybacks: a staggering $30.2 billion between 2019 and 2023.
"We found no evidence that any of the companies with preliminary agreements have publicly committed to suspend their existing share repurchase plans—or to refrain from authorizing new plans—during the grant period," reads the report. "In fact, when members of Congress asked BAE Systems executives if the firm would commit to pausing stock buybacks or to not engage in future ones while receiving a taxpayer-funded CHIPS grant, they declined to answer."
The Biden White House, which worked hard to get the CHIPS Act across the finish line in 2022, has insisted that the law contains "strong guardrails" to prevent the misuse of taxpayer money, including on share repurchases.
But Sarah Anderson of IPS and Natalia Renta of the Americans for Financial Reform Education Fund, the co-authors of the new report, noted Thursday that the statute only prohibits CHIPS Act subsidy recipients from spending the taxpayer money directly on buybacks.
"Since money is fungible, this is not a strong guardrail," the pair argued.
"Congress passed the CHIPS and Science Act and President Biden signed it into law to bolster semiconductor manufacturing in the U.S.—not to waste public dollars on stock buybacks."
Critics of stock buybacks and sky-high executive compensation warned prior to the CHIPS Act's passage that the measure would amount to large-scale corporate welfare unless lawmakers placed serious constraints on how companies could spend the money.
Sen. Bernie Sanders (I-Vt.) tried unsuccessfully to attach an amendment to the measure that would have barred subsidy recipients from buying back their own stock, outsourcing jobs, or attempting to sabotage unionization efforts.
A little over a month after President Joe Biden signed the CHIPS Act into law, a group of Democratic legislators warned U.S. Commerce Secretary Gina Raimondo that while the statute "specifically prohibits the use of CHIPS funds for stock buybacks and dividend payments, these restrictions do not explicitly prohibit award recipients from using CHIPS funds to free up their own funds, which they can then use for those purposes."
The new IPS report notes that four semiconductor firms that have reached CHIPS Act agreements with the Biden administration have "board-approved share repurchase plans that would allow an additional $14.3 billion in buyback spending," with Intel accounting for more than half of that total.
The analysis also found that annual CEO compensation between 2019 and 2023 averaged close to $14 million at firms in line for CHIPS Act funding, while median pay at the companies was $73,046.
"Congress passed the CHIPS and Science Act and President Biden signed it into law to bolster semiconductor manufacturing in the U.S.—not to waste public dollars on stock buybacks that make rich executives richer and exacerbate economic and racial inequality," said Renta, senior policy counsel for corporate governance and power at the Americans for Financial Reform Education Fund.
"Commerce Secretary Raimondo must finalize CHIPS contracts with strong stock buyback restrictions to make sure public money serves the public good, as intended, not narrow, private interests," Renta added.
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Pillaging by the Super-Rich Will Continue Until the Working Class Revolts
American workers are not stupid. They're getting fleeced and they know it. But until we rebuild large scale working-class power, it’s going to be a very rough ride.
Jun 24, 2024
They'll stone you when you're at the breakfast table.
They'll stone you when you are young and able.
They'll stone you when you're tryin' to make a buck.
They'll stone you and then they'll say good luck.
—Bob Dylan, from “Rainy Day Women #12 and 35”
There comes a time in the history of a nation when extreme inequality turns into pillage. If economic power is concentrated so is political power, and the wealthy are able to do whatever they damn well please. They can lie, cheat, and steal because they know they won’t be held to account.
Have the super-rich now taken control of our political and economic systems? Some current news makes me worry.
Let’s start with the food industry, the food cartel that includes General Mills, PepsiCo, and Tyson, which has been jacking up prices non-stop since 2020. Why are food prices up 25 percent since then?
These giants blame supply chains, the rising costs of labor, and the rising prices of other inputs required to produce and distribute their products. It’s not their fault, they say. But the real culprit, upon closer examination, is stock buybacks, another word for stock manipulation. These firms are fleecing shoppers by raising prices and then using the cash to buy back their own stocks, thereby increasing the market value of each share. Stock buybacks do not increase the value of a company, but they move money effortlessly to the largest Wall Street shareowners and to a company's top executives, who receive most of their compensation via stock incentives.
Since the deregulation of Wall Street, corporations have been on a job killing spree.
As food prices shot up by 25 percent, “the ten largest grocery and restaurant brands have together returned or pledged to return more than $77 billion to shareholders,” reports Veronica Riccobene in her excellent article “Big Food, Big Profits, Big Lies.”
In related news, California fast-good giants have claimed that the state’s 2023 minimum wage law, which raised wages from $16 to $20 per hour, killed 10,000 jobs. A closer look, picked up by the Los Angeles Times, showed that the industry cooked the numbers by comparing employment in September with December. But every year, September is within the peak dining out season, and in December people dine out least. When adjusted for seasonal variation or compared with the employment levels exactly one year earlier (both standard ways of measuring employment levels) the number of jobs actually increased by 7,000 after the minimum wage law was enacted.
Boeing recently crashed into the news again, when company CEO Dave Calhoun was roasted by a couple of congressional committees about its shoddy production processes. There were plenty of outraged performances, but none of the oh-so-self-righteous lawmakers had the cajónes to ask about the impact on safety of Boeing’s $61 billion in stock buybacks or about how about Calhoun hauled in $30 million in stock incentives while Boeing lost $1.6 billion in 2023. Is it possible that maybe, just maybe, Boeing financed those buybacks by laying off workers, moving work to lower-wage sub-contractors, and cutting safety corners? Radio silence from Congress. (See “Did Stock Buybacks Knock the Bolts Out of Boeing?”)
Then there’s the way Wall Street squeezes out new home buyers by gobbling up houses and turning them into rentals. (See “Wall Street to Working-Class Homebuyers: Fuggeddaboutdit!”)
Let’s not forget that John Deere recently announced moving jobs from the U.S. to Mexico while feasting on government contracts and, of course, using job cuts to finance stock buybacks.
There is no organized mass of working-class folks with enough power to stop corporate looting.
Do we have to even mention how Big Pharma is charging us more than it does Canadians, or how health insurance companies collude to fix prices, or how giant hospital chains over-charge us with impunity?
They rip us off to feed their profits, which then gets shipped to the richest of the rich via stock buybacks. Of the $3 trillion in after tax U.S. corporate profits in 2022, about $1.31 trillion went to stock buybacks. In 1980 there were 13 US billionaires. Now there are 748.
None of this is accidental. Stock buybacks were deregulated in 1982. That’s when Wall Street began its financial war on workers and got filthy rich. (See my new book for the gory details.)
Corporate Welfare
Just hearing that phrase makes me nauseous because it’s a stark reminder of how feeble we are. Progressives have been complaining about government giveaways to large corporations at least since the 1970s and the practice has only grown worse.
I’ll bet you already know how bad it is. We taxpayers give the oil industry about $20 billion a year in subsidies while BP, Shell, Chevron, Exxon Mobile and TotalEnergies plow $104 billion in dividends and stock buybacks into the pockets of their shareholders (2022). Wall Street may be getting as much as $800 million a day via the Federal Reserve, according to one report. I have yet to find a credible source that adds it all up. I’m guessing it’s well over a trillion dollars a year in direct subsidies, tax breaks, and financial market supports. To rub it in, the richest corporations have successfully lobbied for so many tax loopholes that they pay little or nothing at all. (See here and here.)
“But wait,” they tell us, “Tax cuts and subsidies create jobs.”
That’s the biggest and most painful lie of all. Since the deregulation of Wall Street, corporations have been on a job killing spree. Stock buybacks are financed with job cuts. More than 30 million of us have suffered through mass layoffs (defined as 50 or more workers let go at one time) since 1996. Kill the jobs, save some money, buy back your stocks, put the money in your pocket, rinse and repeat.
Working Class Revolt?
We’re nowhere near any kind of organized mass uprising. But American workers are not stupid. They may not be able to spell out in detail how they are getting ripped off, but they know it’s happening. Most importantly, they understand that the government works for the rich and not for them. That’s why so many are willing to support train-wrecking outsiders who attack the government, even when they are anti-worker billionaire buffoons. In 1964, 77 percent of Americans had trust in the federal government. Now it’s 16 percent.
We’re living with the results of the collapse of countervailing working-class power. In 1955, 35 percent of the private sector workers were in labor unions. Today it’s only 6 percent. That means there is no organized mass of working-class folks with enough power to stop corporate looting.
Somehow, somewhere, a new working-class movement has to emerge.
I hate to be alarmist, but we’re really in bad shape and it is likely to get worse. Power is so tilted towards the rich that more and more people are giving up on politics, leaving the field open to the modern-day robber barons. This corrupt environment is a petri dish for conspiracy theories and hate.
Somehow, somewhere, a new working-class movement has to emerge. I’ve been begging progressive labor leaders to start a new organization that would fight against mass layoffs and for workers who are not in unions. (How about Workers United for Justice?)
While labor unions must organize shop by shop, they should also acknowledge that labor law is so tilted against workers, that it will be very difficult to make major inroads into the 94 percent with no union protection. We need a new parallel path to connect with these workers that doesn’t involve years and years of costly combat within a rigged labor law system.
Victims of mass layoffs are everywhere. They need a voice. They need an organization that will fight for them. If leaders like Shawn Fain of the United Auto Workers (UAW) and Sara Nelson from the Association of Flight Attendants-CWA (AFA) reached out to non-union workers who are getting crushed by Wall Street stock buybacks, those workers just might come running.
Until we rebuild large scale working-class power, it’s going to be a very rough ride. If we have learned anything at all since 1980, it’s that greed begets greed. The super-rich always want more and they’re not shy about grabbing it, even if democracy crumbles all around them—and us.
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