Schumer Floor Remarks on Trade Tariffs and the GOP Tax Bill Leading to Huge Stock BuybacksMarch 8, 2018
Washington, D.C. – U.S. Senator Chuck Schumer today spoke on the Senate floor regarding trade tariffs and the GOP tax bill leading to huge stock buybacks. Below are his remarks which can also be viewed here:
Mr. President, later this afternoon, President Trump plans to announce sweeping steel and aluminum tariffs.
Let me say once again, that I believe the president’s instincts on China are correct, all those who are trying to push him away from his instincts will allow China over the next decade to become the dominant power and greatly hurt American jobs and American prosperity and wealth. So I would say to President Trump, stick to your instincts. But while the president’s instincts are correct, the execution of these tariffs is rather poor. That’s the difference here, not that we shouldn’t go after China and not that we have to do more to bolster American wealth and American workers against rapacious policies of China, which will stop at nothing, nothing, nothing to steal our intellectual property, to manipulate their currency, to exclude American companies from being there.
China has been rapacious about trade and I’ve spoken about this problem for years, early on. I think it was 2004 or 2005, Senator Graham and I discovered that China was manipulating its currency. I heard it from Crucible Steel up in Syracuse, New York. All the great thinkers said, ‘they don’t manipulate their currency, this is protectionist.’ In the same week, The New York Times editorial board, liberal, The Wall Street Journal editorial, conservative, both said there’s no such thing as manipulation and Schumer and Graham ought to back off. We proved to be right on that and other issues. China is rapacious, if we don’t stop China, America will be a weaker place with fewer good paying jobs, with less wealth, less strength. And we probably won’t stay the greatest country in the world, although we deserve to because we play by the rules.
President Trump has identified the right opponent – China – much better than both the Obama and Bush administrations did. Both Democrats and Republicans have been blind to this and President Trump isn’t. But I would say to you Mr. President, don’t swing blindly and wildly at our foe, China, establish a well-placed jab at China. Set them back. Let them know we mean business. President Trump ought to rethink his plan so it actually achieves what he says he wants it to achieve.
U.S. steel and aluminum workers have been battling heavily subsidized products from China for decades. I know, I have new core in my state, in Auburn and Chemung County, on aluminum I have Alcoa in my state, in Massena. Our steel and aluminum workers deserve a more level playing field against countries like China that heavily subsidize its products, or other countries who purchase Chinese steel at artificially low prices and ship it to the U.S.
A targeted trade action against China would be very helpful not only in providing relief for these workers in New York and around the country, but it would send a strong shot across the bow of China for the first time in decades that we mean business. We’re not going to let you prey on us any longer. Targeted trade against China and against countries that allow China to sell them artificially steal at low prices and then send it here, we need to go after them.
But instead of getting right at China, the president’s across-the-board tariffs will cause more damage to key allies and other domestic industries. I not only have steal workers in Upstate New York, I have a lot of autoworkers. We are so proud for instance of the GM plant in Tonawanda near Buffalo, or the Ford Stamping plant, also in Western New York. We’re so proud of our agriculture and incidentally, the president’s right, Canada has put certain restrictions on American dairy going to Canada that’s hurt companies like the Cayuga Cooperative in Central New York and Oatka in Genesee County. But we’ve got to protect and help our workers and auto manufacturing and our farmers, who do export and who do good things. China doesn’t let our auto products in in a fair way. But other countries do, Canada does. So the president’s proposal does more harm to Europe and other allies and Canada than it does to China. That’s what’s wrong with it. It’s so typical of this White House. Even when they have a good idea they mess it up because they don’t think it through and the president acts only by his instincts. You’ve got to act by your instincts and put a thought process on top of it. So the goal of the president to go after China was not achieved very well in his proposal.
The haphazard way these tariffs were put together
has caused the policy to miss the mark. It seems that no one is home at the
White House right now. President Trump makes up his mind one day and changes it
the next, and meanwhile, major trade policies or foreign policies, all other
gun policies, immigration policies, are all in chaos. Because he says one thing
and one thing the next. So we need the president to follow his instincts but
then allow people who know this issue to craft something smart.
The president and I may agree on trade – we may be closer on this issue than I’ve been with either the Bush or Obama administrations– but the slapdash way these tariffs were constructed has few of us cheering, even those who really wanted to after China long before politics was a gleam in President Trump’s eye. Well maybe that’s not true, it may have been a gleam in his eye, but before he ran for anything.
I strongly urge the president to rethink these tariffs and focus his policy more directly at China and countries that ship cheap Chinese steel to the U.S. On the flip side, I’m sure some business interests will tell the president do nothing on trade. The Chamber of Commerce, they’re interested in the bottom line profits of their big companies and they don’t care if they make those profits at the expense of American workers. They are not a barometer here and President Trump is right to ignore them. But, we’ve got to be smart about this. Not just tough but tough and smart. We need to get tough and smart about China, and the right approach is targeted action against China’s most flagrant abuses.
Now, on tax.
Since the Republican tax bill passed last year, nearly every day there has been a new story about a corporation choosing to pass along the savings from the tax law to wealthy shareholders and corporate executives because they buy back their stocks. They use this new tax money not to help their workers, but to buy back their stocks. In January, there was an initial flurry, ‘oh these bonuses.’ They have been totally overwhelmed by stock buybacks. What Democrats said is proving to be true. The vast majority of this tax break, is for the wealthy, by the wealthy, used by the wealthy, to help themselves. Not help workers. That’s been the history when we give these corporations lots of money when they have so much money already without pointing it in the direction of helping workers.
Yesterday it was Chevron, who joined the parade of stock buybacks. It was Chevron, who announced that while it was making no changes to worker compensation or benefits, it would be restarting its dormant stock repurchasing program. You know how much Chevron got from this tax bill? $2 billion dollars. You know how much they’re giving their workers or benefits out of that $2 billion? Nothing as of now. You know what they’re using it for? Stock buybacks. Let our Republican friends come to the floor and defend those stock buybacks. Let them do that.
Today, another oil company, Hess, announced that it would be purchasing back $1 billion of its stock by the end of the year.
Since just the start of 2018, Mr. President, just the last few months, the cumulative total of share buybacks has surpassed 200 billion dollars. Let me repeat that, 200 billion dollars has been used for stock buybacks. The month of February set the one-month record for share buybacks, and analysts at JP Morgan Chase – hardly a liberal think tank said “we expect total buybacks in 2018 to surpass $800 billion, way up from the $530 billion last year and demolishing 2007’s all-time high that came in a bit below $700 billion.” That’s not Chuck Schumer or CAP or any of these liberal think tanks. That’s JP Morgan Chase. So our poor Republican friends, they had hoped that this tax bill would send them on a trajectory to win elections and by February, the numbers are starting to turn against them again. Look at the Quinnipiac Poll of yesterday. Why? Because as this tax bill plays out, what Democrats said all along the vast majority of the benefits are going to the wealthy. That it increases the deficit. And it increases the clarion call of many in the Republican side to cut Medicare and Social Security to pay for the deficit they created. It’s not going over too well. We’ll match our argument against theirs now, in October, in November. We’re confident, we’re going to win that argument. And that’s why already, the enthusiasm about this tax bill has faded.
The massive deluge of corporate share buybacks is proving to be the principal legacy of the Republican tax bill. Not benefits to workers, not bonuses, not wage increases, not even new equipment or investment in R&D (I’d welcome that) – no – corporations are spending the bulk of the savings from the tax bill on themselves, their corporate executives, and their wealthy shareholders. Companies, guess how much, Mr. President, guess how much companies have allocated the capital that they’ve earned from the tax bill to their employees, the workers who are going to get such huge benefits from this bill? 6%. No, no, no it’s not sixty. Six! Sixty is the percent that’s gone back to corporations in the form of stock buybacks, ten-to-one ratio. Doesn’t make much sense. The American public’s beginning to realize that. That’s the numbers according to Just Capital.
So, as I said, the American people are starting to catch wind of the truth. Yesterday, three separate polls, I mentioned the Quinnipiac, there are two others, three separate polls showed the popularity of the Republican tax bill was significantly underwater and has lost ground since the last round of polling. I predict those numbers will continue to slip as more Americans learn that their hard-earned taxpayer dollars were used to give a tax break to corporations who hoard the savings for themselves. It’s no wonder that their candidate in the hard fought race in Southwest Pennsylvania has abandoned the tax argument. It’s not going over well with his working class constituents because they get the tiny little bit. And everyone else gets so much more.
So, Democrats have a plan to rein in these buybacks and put the middle class first.
Yesterday, Senator Baldwin and I announced an amendment to the pending bill that would rein in to the pending banking bill that would rein in corporate buybacks by giving the SEC the authority to reject buybacks that come at the expense of workers. Who will object to that? I hope not my colleagues. They say the buybacks will benefit workers so they shouldn’t be objecting to our bill. Our bill would also, Senator Baldwin’s bill and my bill, would also require company boards and their executives to put their money where their mouth is and certify that the buyback is in the best long-term financial interest of the company.
We’re going to make this one of our top amendments to the banking bill, and I hope it gains Republican support. If the Republicans mean what they say about their tax bill helping workers, they should join Senator Baldwin’s amendment.
The glut of corporate share buybacks highlights precisely how the corporate tax cut in the Republican bill is being put to ill use. Rather than stimulating the economy or creating jobs or raising pay, corporations are spending the lion’s share of the tax savings on goosing their stock. And let’s not forget, these buybacks are relatively new. A ruling by the SEC I think in the early 80’s, said they could start doing these. Before that at the heyday when corporate America dominated the wealthy world and profits were great and jobs were growing and wages went up, the safe harbor provision wasn’t there, corporations had to go through a lot of hoops before they could buy back their stock. That made sense! But, once our Republican colleagues get in power they do what the corporate leaders want them to do and look what happened.
So the amendment to say no to buybacks unless they can prove it’s really going to benefit their workers and be in the long-term financial interest of their company that amendment is going to be one of the top amendments to the upcoming bill. I hope it gains Republican support, I really do. If Republicans mean what they say, they should join Baldwin’s amendment as I said before.
Americans are scratching their heads wondering why we put ourselves in deeper into debt so that corporations could further enrich themselves. Why we tell our children and grandchildren, “You’re going to pay for the CEO of Exxon’s pay raise.” Or increase in value because his stock’s going up. That doesn’t make any sense at all.
There are much better uses for that money. Yesterday Democrats announced our plan to help build a trillion dollars of infrastructure in America. Desperately needed infrastructure. And how do we pay for it? We unwind some of the tax cuts for the biggest corporations to pay for a massive infusion of federal funds in infrastructure. Job creating infrastructure. Desperately needed.
Just by putting the top rate where it was, just by putting the top rate on individuals back to where it was, reinstituting the AMT and estate tax, which goes only to the very wealthy and setting the corporate tax rate at 25% -- you may recall it was the Business Roundtable that asked for 25 percent, oh no our Republican colleagues said and President Trump, that wasn‘t good enough. Make it lower! Even though the two hundred biggest businesses in America said twenty five was certainly an adequate drop, many on my side wouldn’t even think of that as good. But in any case, BRT asked for 25%. We go to 25% along with these other changes and guess what we do with a trillion dollars? We create infrastructure jobs. Millions. We create new roads and bridges, new water and sewer. We say that every rural home in America should get broadband, just as Franklin D. Roosevelt in the 1930’s said every rural home should get electricity. We update our power grid. So all this new energy coming from other places can go to the most populated centers. It would be a huge shot in the arm for jobs in America, for prosperity in America, far more than this slanted tax bill aimed so much at the few wealthy who are so tight with this new Republican Party.
So, I dare say our proposal is a much more effective use of taxpayer dollars than a handout to the biggest corporations, and it will create far more good-paying jobs in the process.
I hope our Republican colleagues will rethink things. Their path is a path to a cul-de-sac, to great losses in the election. Re-think that tax cut. Don’t allow these buybacks. They’re doing no good for anyone but the handful. That’s where sixty percent of the money is going on the corporate rate. And join us in taking some of that money to do what the federal government has done since Henry Clay proposed it in the 1820s. Put that money into infrastructure. Jobs, good paying jobs, efficiency.
Let’s not let China or another country become the leader in infrastructure. They invest. The Chinese government, the Japanese government, European governments invest in infrastructure. So did this government until Donald Trump became president and the hard right gained a stranglehold all over the Republican Party. Let’s reverse course before it’s too late.