Merriott column: What kind of world are we leaving for Keith Richards
I read last Thursday that Mitch McConnell and his Senate cohorts had proposed an emergency $1 trillion stimulus package to deal with the impending melt down on Wall Street without any Democratic Party input. I remarked to Carly, “Now I wonder how that’s going to work for Mitch”
Well, now its Tuesday night and, surprise, it isn’t done. Oh yeah, it is now doubled to $2 trillion and still growing. Coincidentally, it is probably about as much as the Trump tax bill put into the hands of corporate taxpayers over the last couple years.
Well, I for one know how the Dems must feel to not be consulted because no one seems to consult us independents in Colorado to see what we think about issues either. This is despite the fact we now make up almost 40% of Colorado voters and are the fastest growing bloc of voters. This especially among young people.
Some would say it took balls for Mitch to do something like he did. I would instead chalk it up to arrogance and stupidity. Hopefully, yours are a dying breed, Mitch. That’s because without strong, honest and inclusive leadership, and really soon, the world as we know it will probably no longer exist.
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Never mind climate change, the world’s largest economy is at a real risk of another Great Depression. The debt at the last bailout in 2008 was at $10.8 trillion, and with the latest tax cut it has now ballooned to $23.5 trillion (yes, that’s more than double). This bailout will add at least another $2 trillion.
We are in uncharted waters here folks, and I for one don’t think you can just keep printing money without deleterious effects. At some point, somebody is going to have to pay this tab.
Let’s look at a couple examples here. With the last “$700 billion bailout” in 2008 and the recent $1.5 trillion tax cuts, I think corporate America has pulled a real fast one on we the taxpayers.
One way is by doing stock buy backs. It is important for all of us to understand the basic effects of this. Here is an example of how that works — stay with me.
A company has $10 billion of stock outstanding and gets a $1 billion tax cut, but instead of investing it in assets to grow its business into the future or giving its employees well-deserved pay raises and benefits, it buys back its own stock. What does this do? It drives up the per-share value of the stock (as there are fewer shares outstanding), and it likely triggers top executive bonuses which are typically tied to the price per share (going up).
These executives get tens (if not hundreds) of millions in bonuses (cash and stock), and voila, the tax cuts have not made it to people who really need them.
A real example of this: The big four airlines just spent $42.5 billion in buying back their own stock between 2014-19. How much are they asking out of this $2 trillion stimulus? — $50 billion. Coincidence?
This is why the Democrats want restrictions on the $500 billion set aside for corporate America in the $2 trillion stimulus. The hogs are at the trough and snorting for favors. Corporate America should not be rewarded for mismanagement and self-enrichment.
There are multiple stories like the one above, and then there is the one out of Billings, Montana, where the lobbying arm of the U.S. coal industry is asking for hundreds of millions of dollars in royalty relief, tax cuts that are earmarked at covering beneficiary payments for black lung disease, and of course a break in having to decrease the amount of mine reclamation fees due to the financial crisis brought on by the coronavirus pandemic.
What the heck? These benefits could be worth $800 million a year to an industry that should have been phased out and its employees retrained at least 10 years ago. Natural gas and renewable energy are cheaper and much cleaner.
Other random notes:
• Average CEO compensation rose 940% between 1978 and 2018 compared with a 12% rise in the average American worker pay.
• The 2008 bailout of AIG (deemed too big to fail) resulted in $185 million in bonuses to AIG executives.
God help us if something like this happens again. What the hell kind of world are we leaving for Keith Richards anyhow?!
By the way, kudos to the Garfield County commissioners for authorizing a $100,000 emergency food assistance grant to LIFT-UP to help ensure no one goes hungry during this pandemic and economic disaster.
Frosty Merriott is a CPA in Carbondale and served on Town Council for 10 years. He is a registered Independent, considers himself a fiscal conservative and an original tree hugger from Louisiana. He prefers to shoot his grizzlies up close and personal with his Nikon camera and not participate in blood sport.
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