Congress To Bail Out Firms That Avoided Taxes, Spent Billions On Stock Buybacks

Screengrab/The New York Times/YouTube

JakeThomas

Many of the companies seeking help from the government now have spent years blowing money on stock buybacks.

Airlines, hotels, cruise lines, coal companies and more have asked the federal government for help weathering the coronavirus crisis, but labor advocates, some economists and many everyday Americans are struggling to conjure up sympathy for their plight.

As The Washington Post noted, “many of these companies behaved in ways before the current economic crisis that are making a bailout tough to swallow,” including skipping out on paying taxes, investing in stock buyback programs, and otherwise failing to return their excesses to the workers they employ.

But Congress is looking to bail out those companies as part of a $2 trillion aid package funded by American taxpayers.

The problem with not moving forward with the bailout, The Post noted, is that these companies employ hundreds of thousands of people, like servers, flight attendants, housekeepers, janitors, security guards, and others — and unemployment is already projected to his 20 percent this year.

“You don’t want to reward companies for doing shortsighted, short-term things the past 11 years. You don’t want to reward them for stock buybacks and excessive CEO compensation,” Greg LeRoy of Good Jobs First, an advocacy group that tracks corporate subsidies, told the newspaper. “The trouble is a lot of the companies that are in trouble right now are the ones that have been doing that.”

Even President Donald Trump, who gifted corporations a massive tax break in 2017, addressed the issue this week, saying Monday that he “may be a Republican” but wants to see companies using their money to invest in workers.

“I don’t want to give a bailout to a company and then have somebody go out and use that money to buy back stock in the company and raise the price and then get a bonus,” the president said.

And many of these companies are good at the stock buyback game.

The Post reported that hotel giant Hilton just announced a $2 billion stock buyback on March 3 — well after the coronavirus crisis had begun affecting the hotel industry. “Hilton Worldwide has purchased roughly 55 million shares since 2017 for $4.3 billion, including the stock buyback announced March 3,” the newspaper reported.

It remains unclear what stipulations, if any, Congress will place on stock buybacks for companies receiving relief from the government.

Read the full report.

Comments (2)
Kradek
Kradek

We already gave these companies a bailout with the tax cut. They didn't use that money to "consume", that is invest. They bought their own stock. It's time to sell that stock for cash. It's time to borrow or even, god forbid, repatriate profits and pay some taxes.

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MattThornton
MattThornton

Ok, so of course this stuff is disgusting. However, you are forgetting that these companies are competing for a smaller number of high power investors. It isnt j ust the management that wants the buy backs. Valuations are stupid in vomparison to earnjngs over thd whole stock market. These shitty companies "have" to get their stock price up or Vanguard or Fidelity or Calpers will take their money elsewhere. When one does it, they all do it.


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