Trump Tax-Cut Bonuses Are A Bust For Middle Class Workers, Wages Lie In A Wasteland Of Failed Promises

Dimon’s raise last year was nothing. Citigroup’s CEO got a nice 48% raise. I guess they had to give him a big boost to get him up near Demon’s league. Citi’s Corbat got the big boost for overseeing a 25% jump in share value last year. A large part of that was due to stock buybacks. The rest came from Trump’s corporate tax cuts.

Citi has been buying back as much as 74 million shares a quarter. The company returned more than 100% of net income to shareholders through buybacks and dividends, and it has many more planned to come. No wonder Corbat is popular. It won’t be long, and we’ll be reading about Citi’s spectacular collapse because the best banksters know that to be worthy of the really big bucks they have to break their banks in order to qualify for free government money.

Citi’s stock is rising, but so are its operating costs and net credit losses. The credit losses will mount much faster now that emerging markets are crumbling because Citi has a very high exposure in high-risk emerging markets. Citigroup maintains the highest earnings per share of any American bank but only because it keeps cutting the number of shares in that denominator with massive buybacks. It’s essentially putting its money into buying itself out.

Goldman’s executives got their sachs of gold early (at the end of 2017) thanks to the tax changes — almost a $100 million worth. That number, of course, includes Goldman CEO, Lloyd Blankenstein. Netflix execs were happy, too, as the new tax laws caused Netflix to change executive compensation from performance bonuses to increases in guaranteed salary. While corporations wrote about these changes as something they were pressed to do to by the incoming law, I’m sure all their executives loved the earlier payments and the changes in how they get paid. Apparently, executives do recognize that people would rather have a pay increase than a bonus … at least, when it comes to themselves. A pay increase is a lot more solid.

What a fine and beautiful world … if you’re a big bankster.

CEOs earn on average 140 times more than the typical worker. Thank God they keep too many crumbs from feeding the worthless souls who keep the company running at the bottom while they tap it off the top. Thank Trump these guys are being deregulated because they are not getting fat enough fast enough. They need more cheeseburgers and Kochs.

News of bonuses was bellicose but brief

By the end of January, only eighteen (18%) of the Fortune 100 companies were listed by ATR as having given some benefit to their employees from the Trump Tax Cuts. Thirteen of those eighteen companies gave one-time bonuses. Six gave wage increases. That’s paltry when you consider these companies are cream off the top.

Among the larger set of Fortune 500 companies, the percentages were only half that already meager number, and that 9% also comprised companies who gave some of their tax benefits to customers or non-profit organizations, instead of employees. Only 5.8% were listed for giving a tax-cut-related benefit in the form of one-time bonuses, and just 3.4% were on the list for wage increases. Not much trickling down there.

Bear in mind that the corporate tax cuts repeat every year, but the bonuses in almost all cases do not. Of course, the income repatriation at a lower rate this year is a one-time tax break, but even there, consider the disparity. Apple, for example, received a $40-billion reprieve on its offshore profits because of which it announced one-time bonuses of $300 million, less than 1% of their repatriation savings. (And that’s in a purportedly extremely tight labor market, so they must be incredibly reluctant to let any of that money trickle down needlessly to the slobs at the bottom.) On the other hand, they are, at least, spending a vast amount on capital that will create a lot of jobs. That is more than most companies reported, but remember Apple is the company that has long had by far the largest overseas cache of cash.

Oh, and eight of those companies listed as having given bonuses laid off a total of 27,000 employees in 2018! The layoffs alone more than paid for the bonuses.

But that is incidental.

Reuters reported back in February that only 2% of American adults had received a raise or bonus as a result of the tax cuts, and that number includes the 1% who profited greatly!

Middle-class death syndrome

Is it any wonder, then, that the once great American middle Class that built this country is withering away? In 2015 the middle class comprised less than 50% of the population for the first time since those statistics have been kept.

The 1950s were the prime years of the middle class. Back then America built 75% of the cars and planes in the world, most of the world’s steel and most of the world’s skyscrapers, and the US stock market held most of the world’s stock (by capitalization). Trump may be trying to get some of that greatness back, but his plans are not working yet for workers, though they have been making bank for everyone at the top since the start of the year. You can argue that the trickle is about to start … any day now; but I’ll argue back that my ship is about to come in, too. (I’ve been waiting by the dock many years; though I’m not doing poorly, there is no big ship on the horizon yet.)

Back then the average person’s annual wage/salary equaled half the value of his home. Wages have not kept up with home prices since the seventies. The average annual wage/salary today is about 20% of the average cost of a home. A similar thing has happened with respect to Americans’ second-largest purchase — cars. The average salary equaled the price of two and a half cars in 1959. The average car costs $36,000 now, while median income is $59,000, enough to buy a little better than one and a half cars. We have made up this difference to retain our standard of living by living off of credit.

Elephants are fat

You may recall that the Donald boasted to proletariate Republicans that his rich friends would not like him after these tax cuts nor would his own accountant. If you believed him, you must have been surprised to hear that he boasted to his wealthy friends at Mar-a-Lago right after the cuts passed that they are now much richer because of him. Of course, they are.

Wondering whatever happened to the GOP and fiscal responsibility? I think this explains it: (It all began with the Republican clown car and ended when the biggest clown ran away from the whole DC circus with a herd of his own, taking the Grand Ol’ Party with him.)

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