[Congressional Record Volume 165, Number 44 (Tuesday, March 12, 2019)]
[Senate]
[Pages S1771-S1772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                                Buybacks

  Madam President, on buybacks, I have come to the Senate floor several 
times over the past year to sound the alarm about the explosion of 
corporate stock buybacks. Corporate executives have been leaning on 
them more and more to satisfy shareholders who tend to be wealthy. The 
top 80 percent of all shares are owned by the top 10 percent of 
America; that is even including pension funds.
  After the Trump tax bill, last year buybacks reached their highest 
recorded level--over $1 trillion in a single calendar year. That is not 
money going to workers. That is not money going to communities. That is 
not money going into research to make better products. That is simply 
going to the wealthy CEOs and shareholders without other real benefit 
to the country.
  Based on an analysis of America's largest companies, for 466 of 
Standard & Poor's 500, the equivalent of 92 cents out of every dollar 
went to stock buybacks or dividends--92 percent. That has never 
happened before. Surely, there are more productive ways for 
corporations to allocate capital. Surely, those numbers suggest an 
overreliance, if not an obsession, with stock buybacks in an attempt to 
raise stock prices.
  This unhealthy development is not good for the long-term interests of 
companies or for America. Just yesterday, a major American corporation 
saw its outlook downgrade because it is spending tens of billions of 
dollars on corporate stock buybacks at the expense of investment and 
research and development. But some just refuse to look at the plain 
facts.
  Over the weekend, the Wall Street Journal editorial board criticized 
Congress--Members of both parties, in fact--for even expressing 
concerns about the level of stock buybacks that we have seen recently.
  Here is what the Journal editorial board wrote:

       Repurchasing shares is simply one way a company can return 
     cash to owners if it lacks better ideas for investment. Tax 
     reform increased corporate cash flow by cutting tax rates and 
     letting companies repatriate their cash held overseas.

  First of all, it is notable that the Wall Street ed board basically 
admits that the Trump corporate tax cuts

[[Page S1772]]

have fueled the explosion of stock buybacks. But, second, and more 
importantly, the Wall Street Journal makes no mention of the record 
amount that corporate America has announced in buybacks since the tax 
bill passed--$1 trillion--or the many things corporations could invest 
in with their spare cash.
  One thing the Journal never talks about is how income distribution is 
getting worse and worse and how the wealthiest at the top own more and 
more of our wealth and our income while the middle class is more and 
more worried about the future and even about paying their bills now.
  What about workers' wages? Wouldn't America be better off if workers 
were paid more? Income distribution is the worst it has been in 
decades. Why not reward workers for increases in productivity with 
higher wages? Productivity has gone up over the last decade--I think 
since about 2000--and workers haven't gotten that gain, even though 
they have produced a lot of it.
  What about pension funds? Listen to this. There are large numbers of 
corporate America that have not met the obligation of their pension 
funds--what they promised the workers they would pay to them in their 
retirement--and, instead, are using the money for corporate buybacks. 
How many of the S&P 500 have underfunded pension plans but are still 
authorizing billions of dollars for share repurchases? I think America 
would like to know that. In my view, I believe corporate America would 
have a hard time refuting that it is unconscionable for corporations to 
buy back billions in stock while letting its pension fund wither, 
breaking a promise to its workers, many of whom have spent decades and 
decades and decades working hard for their company and looking forward 
to a retirement with an amount of money that will not make them rich 
but at least allows them to live decently.
  The Wall Street Journal makes no mention of any of these options. 
They said that buybacks are simply ``one way a company can return cash 
to owners if it lacks better ideas for investment.''
  Well, if that is the case, a lot of companies are willfully ignorant. 
When 92 percent of profits are going to buybacks and dividends, 
corporations must be trying really hard not to think about workers, 
pensions, or R&D. To think about the maldistribution of income, to 
think how wealth is agglomerating to the top--it is all bad for 
America, both economically and politically, in the long term.
  I refuse--refuse--to accept that corporate America's sole 
responsibility is to maximize return for executives and wealthy 
shareholders. The American economy has to work for workers and 
communities. The Wall Street Journal just defends the status quo as 
things get worse and worse and worse in terms of middle-class workers' 
viability, getting gains from their productivity increases, and income 
distribution. It is a crisis in America.
  No matter what the Wall Street Journal editorial board thinks, this 
topic deserves the Senate's attention. If they don't believe our 
solutions on buybacks are the answer, what is their solution to income 
maldistribution?
  They said the tax cuts would work. I remember the President saying 
that every worker will get a $4,000 increase. Where is that? Almost all 
of that money is going to wealthy shareholders and corporate CEOs as 
the buyback mania, if you will--92 percent--continues.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The senior assistant legislative clerk proceeded to call the roll.
  Mr. THUNE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THUNE. Madam President, before I get to my main topic, I just 
want to briefly respond to something the Democratic leader, the Senator 
from New York, said regarding the tax cuts bill that passed in 2017.
  The Democrats, none of whom voted for it, obviously, have not ceased 
to criticize the passage of that tax relief bill, notwithstanding the 
significant economic progress that we have seen as a result of its 
passage, coupled with relief from regulations and other policies that 
have been implemented by this President in working with the Congress.
  There is historic economic data to report. We have record 
unemployment rates all across the country. We have seen record wage 
increases.
  The Senator from New York talked about how this hasn't benefited 
working Americans. That couldn't be further from the truth. If you look 
at the data, it is very clear that wage rates are growing. They are 
growing at the fastest rate in over a decade. Today, we actually have 
more jobs available in this country than we do people looking for jobs. 
That is also a historic first and something that has been happening now 
for many months in a row.
  We have record low unemployment, record high wages, and growth in the 
economy that we haven't seen in over a decade either--3.1 percent in a 
calendar year, fourth quarter over fourth quarter. That is the first 
time we have seen north of 3 percent growth in our economy since 2005. 
So if you look at the evidence, it is pretty clear that the tax relief 
bill that was passed by the Congress and signed into law by the 
President in late 2017 is having the desired effect.
  With respect to the arguments that were made that this is what is 
contributing to the debt and the deficit, just last week there was a 
piece in the Wall Street Journal by a former colleague of ours, Senator 
Phil Gramm from Texas, who pointed out the Congressional Budget Office 
has adjusted its projections when it comes to growth in the economy 
since the tax bill passed.
  In 2017, when it was in the process of being passed, the CBO was 
projecting 2 percent growth in 2018 and 1.7 percent growth in 2019. 
They have now modified those projections to 2.9 percent in 2018 and 2.7 
percent in 2019.
  What that means is--an additional percentage point of growth means 
higher government revenues. In fact, the CBO has adjusted their 
projections with respect to government revenues upward to about $1.2 
trillion over the next decade. Government revenues of $1.2 trillion 
would be about 80 percent of what the projected cost of the tax bill 
was, about $1.5 trillion. At the time, we projected we would see 
additional economic growth as a result of passing tax reform and 
allowing individuals and businesses, whether they are organized as C 
corps or whether they are organized as passthroughs, to benefit from 
these provisions and changes in the Tax Code--faster cost recovery and 
lower rates--that would encourage them to invest, grow, and expand 
their operations. That is exactly what has happened.
  As a result of that, according to the CBO and based on their 
projections, you have seen government revenues going up and up by over 
$1 trillion. Again, that is almost 80 percent and pays for the cost of 
the tax bill that the Democrats are so quick to criticize as 
contributing to the deficit and the debt.
  So I would argue that if you look at the facts--facts are stubborn 
things--if you look at the record, if you look at the data, and if you 
look at the statistics, they all point to the impact of tax reform and 
other pro-growth policies that have been implemented by the Trump 
administration and this Republican Congress; they are having the 
desired effect. We are seeing increases in wages. Obviously, we are 
seeing a tremendous impact on growth and on jobs in this economy, and 
that is good for American workers.
  Obviously, when you reduce tax rates, hopefully, that benefits 
everybody, but when you have a growing, vibrant, and robust economy, 
that lifts all folks. Everybody benefits from that, and we are seeing 
the effects of that as a result of this policy.
  I know the Democrats all voted against it, so I suppose they have 
every reason to try to criticize it, but, again, if you look at the 
facts, if you look at the record, and if you look at the actual data, 
you get a very different conclusion from the one that they are trying 
to put forward and advance.