Hillary's Economic Agenda Sure Looks Like Payback for Wall St Giving Her Huge Piles of Campaign Cash
Billed as a major populist economic address, Hillary Clinton recently put forth her jobs program in Michigan.
Wall Street is smiling.
Her program fits perfectly within the neoliberal framework as she focuses on how to use public funds and policies to promote private sector gain. There are tax incentives to urge large and small corporations to create more jobs in the U.S. There are tax breaks to encourage corporations to provide more training and profit sharing plans. And there are tax breaks to promote long term investment instead of short-term gains. To balance this equation, she also calls for exit taxes if companies take tax breaks and then move out of the country. Her mantra is clear: if you do right to the American people, we'll do right by you.
Along the way, she waxes euphoric about the buoyancy of the private sector: "New businesses are opening. Families are moving in. The streetlights are on again. The buses and running again. There is a palpable feeling of pride and community and we have to spread economic revitalization to all of Detroit's neighborhoods." (See here for full speech.)
Not a word is mentioned about public goods or public sector jobs. Clearly, the only real job is a private sector job.
Hillary Sends a Signal to Wall Street
At the same time, she uses a dog whistle to let Wall Street know that she won't be coming down hard on them: “I’m not interested in condemning whole categories of businesses or the entire private sector”
Furthermore, she dances around the perils of free-trade deals by putting the entire blame on China, and therefore not on the Clinton and Obama administrations who were/are gung-ho free traders..
Her silence about NAFTA, however, is deafening. And that's very good news to corporate and financial elites because NAFTA is the trade deal that has facilitated the financial strip-mining of the American worker. It has placed U.S. workers into direct daily competition with much less expensive labor south of the border.
In fact, Hillary argues all such debates are now ancient history. It's unproductive, she claims, to be "re-fighting battles from 20 years ago...."
But those battles are not over for Michigan workers who feel the incessant pressure from NAFTA on job security and the downward pressure on incomes and benefits. Hillary can't rebuild the middle-class, even on her own free-market terms, without undoing large parts of NAFTA.
Fearing to take on Financial Strip-mining
Throughout her glowing tribute to the private sector, she also duly notes that corporations and financiers care too much about short-term stock prices instead of the long-term health of the company. She is correct to say that they are spending 80 to 90 percent of all corporate revenues on stock buybacks and dividends: “That’s money they’re not using to train their workers or give them a raise,”
And then there are the usual tropes about the "casino culture on Wall Street" and the ever faithful applause line: "We need to make sure Wall Street never wrecks Main Street again."
Amen to all that.
But the whip she hopes to crack is more like a wet noodle. She wants to reward corporations and investors with tax incentives to encourage long-term investment, worker training and profit sharing with employees.
But, she remains silent on two real power moves that could actually change elite Wall Street and corporate behavior. She does not talk about outlawing stock buybacks. And she does not mention the financial speculation tax.
It is relatively easy for a president to stop stock buybacks. All it takes is a rule change at the SEC. Until 1982, it was considered stock manipulation for a company to boost its price by buying back its own shares en mass. Reagan's SEC appointee then legalized it.
But making stock buybacks illegal again would be fiercely opposed by the very Wall Street executives and CEOs who are filling her campaign coffers. In fact, the system of runaway inequality is built upon those buybacks Today, the goal of virtually every large corporation is to use all of its cash-flow to buy back its own shares to enrich its CEOs and largest Wall Street investors.
The Corruption of Stock Buybacks at GM
While noting that the "auto industry just had its best year ever," Hillary ignores the outrageous case of financial strip-mining at GM. She couldn't mention it because it would also show the revolving door between the Obama administration and Wall Street.
Harry Wilson, the Obama administrator who helped to negotiate the GM bailout, then left for a hedge fund job. The 43 year-old Wilson and his investors proceeded buy up 34 million GM shares. Why not? By then he was a GM expert, trained at taxpayer expense.
He then demanded GM use its cash reserves to buy back its own shares to make him and his investors tens of millions of dollars....for doing nothing at all.
The American people bailed out GM to save hundreds of thousands of jobs throughout the Midwest. Many of us hoped that once GM returned to financial health, it would use its reserves to build the most environmentally sound cars in the world, thereby helping retain U.S. jobs and help our planet survive.
Instead, Wilson pressures GM to use its precious cash reserves to buyback its own shares in order to put money into his deep pockets and the pockets of his investors. Increase GM wages? Increase training? Increase R&D. No way.
His wish was GM's command. On January 13, GM announced a $9 billion stock buyback plan.
But Hillary couldn't talk about any of this. Because if she did, she would be forced to admit that her fairytale version of capitalism will never work as long as Wall Street dominates the economy.
Carefully Ignoring Public Sector Jobs
Team Hillary's populist sounding plan is in harmony with the most pernicious neo-liberal principle -- that the private sector, by definition, is more valuable than the public sector -- that all must be done to "encourage" private sector jobs while limiting public sector jobs.
Hillary makes no mention at all at the decades-old attack on public sector jobs and benefits. Not a word about the privatization that is wrecking Michigan's public sector. Not a word about the need for increases in public sector jobs to bring safe water to the people of Flint. Instead she just blames the Republicans.
When she discusses how to revitalize communities of color left behind, her only way of doing so is through private sector investment. But the public sector is the best path towards the middle class incomes for low-income Americans especially African Americans. She can't bring decent jobs and incomes to low-income communities without an expansion of the public sector.
But why the knock on public sector jobs?
Because Wall Street and the super-rich would have to pay for those jobs. To have a robust public sector that would get the lead out of inner-city pipes, fix up dilapidated schools, increase the number of teachers, and provide free higher education for all requires the expansion of the public sector. To maintain a decent society requires an increase in public goods and the hiring of more pubic workers.
But doing so, leads us directly to a financial speculation tax on Wall Street as well as the end of off-shore tax havens for the super-rich, neither of which are mentioned in her economic plan.
Instead Team Hillary wants to sound tough on corporate bad actors, while providing tax breaks to most of the private sector. She wants to rein in Wall Street's risky behavior, without damaging its financial strip-mining operation. And she wants to let market miraculously create better paying jobs for people of color, while remaining silent on the public sector and 20-year old trade deals.