FINANCIAL TRANSACTIONS AND LAW ENFORCEMENT BECAUSE THEY HAVE
BEEN WRONGLY ADDED TO THE LIST.
>> OKEYDOKE.
>> OKEYDOKE. IT’S TIME FOR THE "VELSHI &
RUHLE" TAX CUT TRACKER.
WE KNEW THIS WAS GOING TO
HAPPEN.
HAPPEN. 2018 WAS A RECORD SETTING YEAR
FOR STOCK BUY BACKS IN PART
THANKS TO THE MASSIVE TAX CUTS
SIGNED INTO LAW BY PRESIDENT
TRUMP.
TRUMP. U.S. COMPANIES ANNOUNCED A
WHOPPING $1.1 TRILLION WITH A T
DOLLARS IN STOCK BUY BACKS AND
HALF OF THOSE ANNOUNCED BUY
BACKS, $460 BILLION ARE
CONCENTRATED IN 19 BIG
COMPANIES.
COMPANIES. WHO ANNOUNCED THE BIGGEST STOCK
BUY BACKS LAST YEAR?
ALPHABET, THE PARENT COMPANY OF
GOOGLE, ANNOUNCED $8.6 BILLION
IN STOCK BUY BACKS.
$10 BILLION APIECE FOR PFIZER,
MERC AND 3M.
ABBVIE, PEPSI CO. AND INTEL $15
MILLION EACH.
MILLION EACH. THOSE WITH $20 MILLION OR MORE
BOEING, BANK OF AMERICA, ORACLE,
CISCO SYSTEMS, AND QUALCOMM.
AND THE BIGGEST OF ALL APPLE.
THEY ANNOUNCED A $100 BILLION
TOTAL IN STOCK BUY BACKS FOR
2018.
2018. THAT IS A RECORD ALL ON ITS OWN.
NOW, THE REPUBLICAN TAX CUT WAS
SOLD ON THE PROMISE THAT
COMPANIES WOULD REINVEST THE
MONEY THEY SAVED IN
INFRASTRUCTURE, LIKE NEW STORES
OR MANUFACTURING SITES, OR
INVESTING IN EMPLOYEES BY HIRING
MORE PEOPLE OR TAKING UP WAGES.
WHEN COMPANIES FIND A WAY TO DO
BOTH, LIKE APPLE DID, WHO
INVESTED IN EMPLOYEES AND STILL
HAD AN OUTSIDE SUM LEFT OVER, IT
MAY BE A WIN/WIN FOR
SHAREHOLDERS, EMPLOYEES AND THE
ECONOMY AT LARGE.
WE HAVE TO REMIND PEOPLE OF
THIS, ALI.
THIS, ALI. STOCK BUY BACKS ARE NOT ILLEGAL
AT ALL.
AT ALL. IT’S A CEO’S RESPONSIBILITY AS A
FIDUCIARY TO PERFORM.
IF THEY DECIDE THE BEST WAY TO
DEPLOY CAPITAL IS IN SHARE BUY
BACKS, THEN THAT’S THEIR OPTION
TO DO SO.
TO DO SO. THE PROBLEM IS THIS TAX CUT WAS
SOLD IN A WAY WHERE THEY SAID,
COMPANIES, THEY’RE NOT GOING TO
BE CLOSING PLANTS, THEY’RE GOING
TO BE OPENING PLANTS AND
BUILDING PLANTSZ.
BUILDING PLANTSZ. >> YOU SAID EVERY TIME, WHY
WOULDN’T THEY DO BUY BACKS?
IT’S A THING COMPANIES DO.
YOU MENTIONED AS FIDUCIARIES.
COMPANIES HAVE ACTUAL LEGAL
RESPONSIBILITY TOWARD THEIR
SHAREHOLDERS.
SHAREHOLDERS. SOME MIGHT ARGUE, WHY DON’T THEY
HAVE THE SAME LEGAL
RESPONSIBILITY TOWARD THEIR
OTHER STAKEHOLDERS, INCLUDING
THEIR WORKERS AND THEIR
COMMUNITY AND THE EARTH AND ALL
THAT.
THAT. >> THAT IS NOT HOW A FIDUCIARY
IS DEFINED.
IS DEFINED. IF YOU WERE A SHAREHOLDER OF A
COMPANY AND THAT COMPANY
SUDDENLY SAID, WE’RE GOING TO
SPEND A WHOLE LOT OF MONEY
MASKING OUR BUILDING GREEN, BUT
THEY HAVEN’T PROVEN WHY THAT’S
GOOD FOR THE BUSINESS, AS A
SHAREHOLDER, YOU COULD SUE THEM.
YOU COULD SAY, YOU WANT TO GO
GREEN?
GREEN? DO THAT IN YOUR OWN PRIVATE
HOUSE.
HOUSE. DON’T DO IT WITH MY MONEY.
>> I’M NOT SURE THAT ISN’T WORTH
RECONSIDERING WHETHER COMPANIES
SHOULD DO THAT.
LEGALLY THAT IS NOT THE
OBLIGATION OF THE COMPANY.
>> BUT IF THE COMPANY DOESN’T
SHOW THEIR SHAREHOLDERS, HERE IS
WHY IT WORKS FOR A NUMBER OF
REASONS, THE SHAREHOLDER COULD
SAY, THAT’S MY MONEY, YOU’RE
WORKING FOR ME.
>> THE MISTAKE IS ALL THOSE
PEOPLE WHO CAME ON THE SHOW WHY
WON’T THEY USE THE MONEY FOR BUY
BACKS, NO, NO, THEY’RE GOING TO
BUILD PLANTS AND GIVE RAISES AND
FREE FOOD TO THEIR EMPLOYEES.
WHY WOULD THEY DO THAT?
THEIR LEGAL RESPONSIBILITY IS
TOWARD THEIR SHAREHOLDERS.
>> AND THE REASON THEY WERE
CLOSING PLANTS OR OPTIMIZING
THEIR BUSINESS OR LAYING PEOPLE
OFF, THAT WAS THE RIGHT THING TO
DO FOR THEIR BUSINESS.
NOW, THERE’S A SOCIAL
RESPONSIBILITY COMPONENT THAT’S
NOT DISCUSSED, THAT’S NOT
CURRENTLY A RESPONSIBILITY.
MAYBE WE’LL CHANGE THAT.
>> LET’S BRING IN JOHN HARWOOD,
WHO IS CNBC’s EDITOR AT LARGE.
I GUESS THE EXAMPLE IS APPLE,
RIGHT?
RIGHT? THEY ANNOUNCED $100 BILLION, AS
STEPHANIE SAID, IN BUY BACKS AND
$350 BILLION IN U.S.
INVESTMENTS.
INVESTMENTS. I SUPPOSE USING THE FIDUCIARY
ARGUMENT, THEY ARE ABLE TO MAKE
THE ARGUMENT TO THEIR
SHAREHOLDERS THAT THIS IS GOOD,
THIS WILL BE GOOD FOR US, THIS
WILL BE GOOD FOR BUSINESS.
HOW DO -- HOW WOULD WE
INCENTIVIZE COMPANIES TO DO MORE
OF THAT?
OF THAT? >> WELL, THERE IS LEGISLATION
THAT’S BEEN PROPOSED TO MAKE
THEM PRIORITIZE OTHER THINGS.
THE LEGISLATION OFFERED BY
SENATE DEMOCRATIC LEADER CHUCK
SCHUMER AND BERNIE SANDERS WHO
HAS NOW JUMPED INTO THE
PRESIDENTIAL RACE, WOULD REQUIRE
COMPANIES TO MEET CERTAIN
CONDITIONS BEFORE THEY COULD
ENGAGE IN BUY BACKS, WHICH IS
PAYING THEIR EMPLOYEES MINIMUM
WAGE AND OTHER TERMS OF THEIR
BARGAIN WITH THEIR WORKERS.
TO STEPHANIE’S POINT, ON THE
FIDUCIARY RESPONSIBILITY, THAT’S
ONE OF THE AIMS THAT ELIZABETH
WARREN HAS ADVOCATED IN 2020, IS
CHANGING THE TERMS OF CORPORATE
GOVERNANCE BY REQUIRING
COMPANIES TO HAVE THEIR BOARDS
COMPOSED OF DIFFERENT WAYS.
TRYING TO ALTER THOSE
RELATIONSHIPS.
RELATIONSHIPS. I WILL SAY THAT SOME MEMBERS OF
THE ADMINISTRATION ARGUED BEFORE
THE TAX CUT PASSED -- GARY COHN,
REMEMBER, A CONVERSATION WITH
HIM, SAID, LOOK, IF THEY DO
STOCK BUY BACKS, THAT’S OKAY
BECAUSE THEN THE BENEFICIARIES
OF THOSE STOCK BUY BACKS WILL
INVEST THAT MONEY SOMEWHERE.
AND SOME LIBERAL ECONOMISTS
AGREED WITH THAT AS AN ECONOMIC
MATTER.
MATTER. BUT IF THERE AREN’T GOOD
INVESTMENTS AND NEW PLANTS THAT
ARE GOING TO BE PROFITABLE FOR
THOSE COMPANIES, IT BEGS THE
QUESTION OF WHY THE TAX CUT WAS
NEEDED IN THE FIRST PLACE PLACE.
>> OR ARE THEY STARTING TO
CONSIDER MAYBE THE TAX CUT WAS
JUST TOO LARGE.
IT’S NOT JUST DEMOCRATS WHO ARE
PUSHING BACK ON THIS.
SOME REPUBLICANS ARE.
YOU WANT TO WALK US THROUGH
MARCO RUBIO’S PLAN?
>> WELL, I HAVEN’T SEEN MARCO
RUBIO’S PLAN IN DETAIL, BUT HE
TALKS ABOUT WAYS IN WHICH -- I
MEAN, HE’S BEEN SOMEBODY WHO
COMPLAINED BEFORE THE TAX BILL
PASSED THAT IT WASN’T FOCUSED
ENOUGH ON SMALL COMPANIES, ON
PAYCHECK TO PAYCHECK WORKERS.
SO HE’S TRYING TO PUT SOME
CONDITIONS ON THE TERMS OF STOCK
BUY BACKS AS WELL.
THERE IS DEMOCRATIC LEGISLATION
THAT SAYS YOU CAN’T BUY THOSE
SHARES ON THE OPEN MARKET.
YOU CAN DO TENDER OFFERS.
THE SEC RULES ARE BEING TALKED
ABOUT.
ABOUT. SEC GRANTED WIDE PURVIEW FOR
COMPANIES TO DO STOCK BUY BACK.
THE LAST 15 YEARS OR SO,
COMPANIES HAVE SPENT $5 TRILLION
ON THEM.
ON THEM. >> OKAY.
>> OKAY. HE
HE >> SO THERE ARE PROPOSALS IN
BOTH PARTIES TO TAKE SOME ACTION
ON THIS.
ON THIS. I THINK THIS IS GOING TO BE A
DOMINANT THEME OR A SUBSTANTIAL
THEME THROUGHOUT THE DEMOCRATIC
PRESIDENTIAL FIELD.
PRESIDENTIAL FIELD. >> I’D LIKE TO BE CYNICAL FOR A
MOMENT, THOUGH.
MOMENT, THOUGH. IF THESE ARE PROPOSALS, AND IT’S
A THEME, WHAT IS THE ACTUAL
POLITICAL WILL TO DO SOMETHING?
I TAKE YOU BACK TO THE LAST
ELECTION AND I HEARD ON BOTH
SIDES, CARRIED INTEREST, WE’VE
GOT TO GET RID OF CARRIED
INTEREST.
INTEREST. >> YOU’RE RIGHT, YOU HEARD IT
FROM DEMOCRATS.
FROM DEMOCRATS. YOU ACTUALLY HAD -- JOHN WAS IN
ON SOME OF THESE CONVERSATIONS
WITH REPUBLICANS WHO SAID WE
DON’T NEED THAT.
>> PRESIDENT TRUMP SAID IT OVER
AND OVER.
AND OVER. GARY COHN SAID IT, THEN
MIRACULOUSLY WHEN WE SAW THE TAX
CUT, SOMEHOW IT WASN’T IN THERE.
OVER AND OVER WE ASKED ON THE
SHOW, PLEASE, ANY REPUBLICAN WHO
IS OPENLY SUPPORTING WHY CARRIED
INTEREST SHOULD STAY IN
EXISTENCE,
EXISTENCE, >> COME TELL US.
>> COME EXPLAIN.
NOBODY WOULD.
NOBODY WOULD. >> ZERO.
>> ZERO. >> TO YOUR POINT, STEPHANIE,
THERE IS ZERO POLITICAL WILL TO
DO THIS NOW.
WE SHOULD POINT OUT MARCO RUBIO
WHO IS MAKING THOSE COMPLAINTS
NOW, MADE THEM BEFORE VOTING FOR
THAT TAX BILL.
IT WASN’T ENOUGH TO CAUSE HIM TO
OPPOSE IT.
OPPOSE IT. THIS IS SOMETHING THAT’S NOT
GOING TO HAPPEN UNTIL YOU GET A
NEW ELECTION.
NEW ELECTION. IF A DEMOCRATIC PRESIDENT IS
ELECTED AND YOU’VE GOT A
DEMOCRATIC HEAD OF STEAM ON
CAPITOL HILL, THEN I THINK YOU
COULD SEE THE POLITICAL WILL TO
DO THIS.
DO THIS. IN THE MEEPT, AS LONG AS YOU
HAVE REPUBLICANS CONTROLLING ONE
HAFT OF THE WHITE HOUSE, YOU’LL
SEE COMPANIES RESORTING NOT TO
DO IT.
DO IT. PROBABLY WON’T HAVE MUCH EFFECT.
GENERAL MOTORS, PEOPLE LIKE AMY
KLOBUCHAR, DEMOCRATIC SENATORS
REQUESTED THAT GM NOT EXECUTE A
LARGE STOCK BUY BACK AT A TIME
WHEN THEY ANNOUNCED SOME PLANT
CLOSING.
CLOSING. SO THERE WILL BE A LOT OF NOISE
ABOUT IT.
ABOUT IT. THEY’LL BE PRESSING 0 NOT
COMPANIES.
COMPANIES. I WOULDN’T EXPECT MUCH ACTION
UNTIL 2021 AT THE EARLIEST.
>> JOHN, GOOD TO SEE YOU AS
ALWAYS.
ALWAYS. CNBC EDITOR AT LARGE, JOHN
HARWOOD.
HARWOOD. >> CARRIED INTEREST.
>> HOW MANY TIMES HAVE WE SAID
THIS, MAKE A TAPE, CARRIED
INTEREST GOING TO BE THERE?
>> I’M SURE THIS IS GOING TO BE
A BIG THEME.
I DON’T THINK WE’LL SEE REAL
ACTION BECAUSE CARED FROM IS --
>> YOU COULD SAY, HEY,
COMPANIES, WE’LL GIVE YOU MORE
MONEY BACK, WE’LL TAX YOU LESS.
THERE CAN BE THIS EFFECT, SOME
MIGHT CALL IT TRICKLE DOWN.
YOU PAY PEOPLE MORE AND YOU DO
GOOD THINGS FOR THE ENVIRONMENT.
OR YOU LEGISLATE HIGHER MINIMUM
WAGES AND SAY, LOOK, DON’T LEAVE
IT UP TO THE COMPANIES, LET’S DO
THAT.
THAT. SOME PEOPLE SAY THAT’S
ANTI-MARKET BEHAVIOR AND THAT’S
THE GOVERNMENT GETTING INVOLVED
AND PICKING WINNERS AND LOSERS.
WHEN YOU GIVE THE COMPANIES ALL
THIS MONEY BACK AND MIDDLE CLASS
TAXPAYERS ARE NOT GETTING THIS
MONEY BACK AND YOU DON’T SEE
WAGES GO UP AND YOU DON’T SEE
INVESTMENTS HAPPENING, IT MAKES
PEOPLE WONDER WHETHER THE SYSTEM
IS RIGGED.
IS RIGGED. A SYSTEM YOU AND I ARE GENERALLY
SUPPORTIVE OF.
SUPPORTIVE OF. WE’RE CAPITALISTS.
WE’RE CAPITALISTS. >> ALI, AS LONG AS THERE ARE TAX
STRUCTURERS AS A JOB, AS LONG AS
THEY HAVE TAX DEPARTMENTS --
>> WHICH REGULAR PEOPLE DON’T
HAVE.
HAVE. >> AND TAX LAWYERS ARE AMONG THE
HIGHEST PAID LAWYERS OUT THERE.
AND AS LONG AS REGULAR PEOPLE
ARE DOING THEIR TAXES ON THEIR
DINING ROOM TABLE NEXT TO THEIR
KIDS STUDYING FOR S.A.T.s.
>> SORRY, YOU’RE A WAGE EARNER,
THERE IS ONLY SO MUCH YOU CAN
DO.
DO. SORRY, SUCKER.
SORRY, SUCKER. >> THE RICH EST PEOPLE OUT
THERE, YOU KNOW WHAT THEY DID,
TURNED THEMSELVES INTO LLCs.
YOU KNOW WHAT THAT GOT THEM?