Kudos to Hillary Clinton for making stock buybacks into an issue in the 2016 presidential campaign. Most Americans don’t realize just how much money corporations spend buying back their own stock, rather than creating jobs. It’s probably the biggest, ugliest secret of our troubled economy.
But Candidate Clinton doesn’t go far enough.
Her speech yesterday called for more-timely disclosure of buybacks. But just like with #MoneyInPolitics, public disclosure isn’t going to fix the problem. We need to restore the laws that used to protect us, back when we had a Middle Class.
Disclosure hasn’t solved the problem of our politicians being bought by corporations and the ultra-wealthy. Everybody knows that the Koch Brothers plan to spend almost a billion dollars buying themselves a president in 2016. They announced it in the press. They’re proud of it. Disclosure isn’t stopping them. Ever since they made the announcement, they’ve had a steady stream of sycophantic candidates “interviewing” with them, seeking their support.
Anyone who’s watching Big Oil knows that the industry has been busy buying politicians. Starting with the Chairman of the Senate Committee on the Environment, Jim Inhofe. Disclosure hasn’t made a difference. He’s proud of the money he gets from Big Oil: “Whenever the media asked me how much I have received in campaign contributions from the fossil fuel industry, my unapologetic answer was ‘not enough’.”
Disclosure hasn’t fixed the problem of #MoneyInPolitics. And it’s not going to fix the problem of stock buybacks, either.
Before the Securities and Exchange Commission created its “Safe Harbor Rule” in 1982, stock buybacks were almost unheard-of. Now, they’re one of the top priorities of corporate executives. Last year, corporations spent more than $556 billion buying back their own stock. This year, they’re expected to spend $707 billion.
The ugly secret of our “trickle-down” economy: corporations are spending enormous amounts of money consolidating their ownership. Rather than, say, expanding their businesses, hiring new employees or even paying existing employees a living wage.
(Can’t help but notice the trend of corporations focused on stock buybacks, while their employees need public assistance programs to make ends meet. Walmart. McDonalds. Big Banks.)
Disclosure isn’t going to solve this. Corporations are proud of their buyback programs. They announce buybacks in press releases.
Just like the Koch Brothers used the press to announce their intention to buy a president.
Somebody needs to tell Secretary Clinton: the SEC’s 1982 “Safe Harbor Rule” is the regulatory equivalent of the Supreme Court’s Citizens United decision. It enables corporations to do things that are really, really bad for our country.
But unlike Citizens United, the “Safe Harbor Rule” is an administrative regulation. It can be changed or repealed by the administrative agency.
And SEC members are appointed by the President.
Clinton could be pledging to only appoint SEC Commissioners who will repeal the rule. Instead, she’s just looking for more disclosure.
Clinton deserves a whole lot of credit for raising the issue, and for talking about the impact that stock buybacks are having on our economy.
But it would be even better if she would go one step further, and talk about a solution that would actually fix the problem.
Read more NHLN coverage of stock buybacks here.
Read Marketwatch, “Wall Street’s new drug is the stock buyback” here.