The bonus mirage

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The bonus mirage

You may recall the headlines.

Shortly after the passage of Trump's tax cuts in December 2017, major companies, eager to demonstrate that a $1 trillion corporate tax cut benefited the American worker, made a series of splashy announcements about bonuses.

"Walmart raises wages, gives bonuses after GOP tax cut"

"Home Depot announces bonuses for 400,000 workers after tax cut"

"Best Buy giving bonuses because of corporate tax cuts"

"Chipotle announces new employee bonuses, citing tax cuts"

"U-Haul announces $1,200 employee bonuses thanks to Trump tax cuts"

And so on. And so forth.

Americans for Tax Reform, the anti-tax group headed by Grover Norquist, compiled a list of 726 companies that gave workers bonuses or other benefits in the wake of tax reform.

Trump claimed in his State of the Union address that 3 million workers got bonuses because of his tax cuts.

So was this true? After all, bonuses were not invented in December 2017. The key question is not whether companies gave bonuses after the tax cuts. It's whether companies gave more bonuses than they had previously because of the tax cuts.

Three pennies

Earlier this month, the Bureau of Labor Statistics released data about bonuses in the first two quarters of 2018. The Economic Policy Institute ran the numbers, and there is absolutely no evidence that the tax cut spurred any significant increase in the number or size of bonuses going to workers.

The increase from the fourth quarter of 2017 to the first quarter of 2018 was from 2.7 to 2.8 percent of compensation, an increase from $0.92 to $0.96 an hour. The second quarter shows the same share and level of nonproduction bonuses, $0.96 an hour and 2.8 percent of compensation. The inflation-adjusted increase (all inflation-adjusted data adjusted to June 2018 dollars) in bonuses was just $0.03 an hour between the fourth quarter of 2017 and the second quarter of 2018.

You read that right. The increase in bonuses after the Trump tax cuts amounted to a grand total of 3 cents per hour.

Moreover, there is no evidence that this 3 cent increase had anything to do with the tax cuts. As the Wall Street Journal notes, "[b]onuses started taking off four years ago." There was a larger increase in worker bonuses under the Obama administration which did not pass any corporate tax cuts.

There was a massive public relations campaign designed to convince Americans that corporate tax cuts resulted in workers being showered with cash. It was all a mirage.

Show me the money

If the massive corporate tax windfall is not going to worker bonuses, then where is it going? Stock buybacks.

While workers get pennies, companies are projected to spend $1 trillion buying their own stock, shattering previous records.

Stock buybacks juice share prices and are therefore a boon for investors and executives, whose compensation is often linked to share prices. But buybacks offer almost nothing to workers or to the productivity of the American economy overall. It chokes off resources for research and development, capital expenditures and workforce investment.

You can't fool all of the people all of the time

The stream of headlines about bonuses boosted the popularity of the Trump tax cuts for a time. Some polls in January and February of 2018 showed a majority of Americans, or close to it, supported the cuts.

But the gambit only worked for so long. Workers know whether they are earning more or receiving bigger checks. For the most part, they are not, and public support of the tax legislation is deteriorating.

Recent polls have shown, on average, just 39% of Americans support Trump's tax cuts and more than 42% disapprove.  


The meaning of Brett Kavanaugh

The nomination of Brett Kavanaugh to the Supreme Court started as a battle over the future of the law and America. And, of course, it's still about that.

But since two women, Christine Ford and Deborah Ramirez, have alleged that Kavanaugh sexually assaulted them as teenagers, it is also about much larger, basic cultural questions.

When should women be believed? And when should men be held responsible for their actions?

On Wednesday, the people supporting and opposing Kavanaugh offered starkly contrasting answers.

Trump suggests women who drink can't be sexually assaulted

Speaking from the United Nations in New York, Trump harshly attacked Ramirez and suggested that a woman who has been drinking cannot be a victim of sexual assault.

The president, who has been accused of sexual assault by at least 14 women, said that Ramirez "has nothing" and "doesn't even know" what happened to her because she was "totally drunk."

"This is a person, and this is a series of statements, that’s going to take one of the most talented, one of the greatest intellects, from a judicial standpoint in our country, going to keep him off the United States Supreme Court?" Trump asked.

Trump, echoing Kavanaugh, also said that Ford and Ramirez were part of a Democratic "con." Also like Kavanaugh, Trump did not provide any evidence to support this claim.

"It's unfortunate"

Republican Congressman Kevin Cramer (R-ND), who is in a competitive battle for a U.S. Senate seat, suggested that even if Christine Ford's allegations are true, sexual assault is not disqualifying. Cramer said that if Ford is telling the truth, it's "unfortunate" and "tragic" but suggested it should not prevent Kavanaugh from being confirmed.

"[E]ven if it’s all true, does it disqualify him? It certainly means that he did something really bad 36 years ago, but does it disqualify him from the Supreme Court?" Cramer asked.

In a radio interview last week, Cramer said that Ford's allegation was "even more absurd" than Anita Hill's because "these people were teenagers when this supposed alleged incident took place."

Murkowski's message

Lisa Murkowski (R-AK) offered a very different view of Ford and Ramirez's allegations.

"We are now in a place where it’s not about whether or not Judge Kavanaugh is qualified. It is about whether or not a woman who has been a victim at some point in her life is to be believed," Murkowski said in an interview with the New York Times.

Murkowski cautioned her Republican colleagues against prejudging Ford before they hear from her. "We need to be able to listen. We have to listen to what she will say on the record, under oath, and what Judge Kavanaugh will say on the record, under oath," she said.

Trump and Cramer are effectively arguing that we should not listen.

In so doing, they are pushing Kavanaugh's confirmation to a new place. A vote for Kavanaugh is not simply for a lifetime position on the Supreme Court, but a statement about how America's most powerful legislative body views women who speak out about sexual assault.


The smoking gun on family separation

Secretary of Homeland Security Kirstjen Nielsen insisted in June that "[t]his administration did not create a policy of separating families at the border."

Sec. Kirstjen Nielsen@SecNielsen

We do not have a policy of separating families at the border. Period.

June 17, 2018
An internal memo from April obtained through the Freedom of Information Act proves that this was a lie. The key section:

DHS could also permissibly direct the separation of parents or legal guardians and minors held in immigration detention so that the parent or legal guardian can be prosecuted

More than 2500 children were separated from their parents as a result of the policy. According to the latest information filed in federal court, 182 kids still have not been reunited with their families.


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Hundred dollar bill photo by Vladimir Solomyani.