September 2018, Week 1


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 		 [Bernie Sanders and Ro Khanna introduced a new bill to curb
so-called “corporate welfare.” It’s aimed squarely at Amazon.]



 Emily Stewart 
 September 5, 2018

	* [https://portside.org/node/18095/printable/print]

 _ Bernie Sanders and Ro Khanna introduced a new bill to curb
so-called “corporate welfare.” It’s aimed squarely at Amazon. _ 

 Bernie Sanders at a Protect Working Families event in December 2017
in Pennsylvania, Lisa Lake/Getty Images for MoveOn.org 


Sen. Bernie Sanders [https://www.vox.com/bernie-sanders], hero of the
left and a widely rumored 2020
[https://www.vox.com/2018/8/31/17796108/democratic-2020-contenders-overrated-underrated] presidential
contender, is showing he won’t back down from powerful corporations
like Amazon
If companies won’t pay their employees a living wage, Sanders
argues, the government should recoup the cost of providing government
services through a specific tax.

Sanders is partnering with prominent House progressive Rep. Ro Khanna
(D-CA) on the Stop Bad Employers by Zeroing Out Subsidies (Stop BEZOS)
Act, which would enact a tax on large corporations equal to the
federal benefits their low-wage employees receive in order to make
ends meet. Companies such as Amazon, Walmart, and American Airlines
will have to pay every dollar in aid their workers get from the
government back through taxes.

The bill’s goal is to curb so-called “corporate welfare” —
part of an ongoing battle Sanders has been waging against corporations
more broadly — but Amazon has been in his crosshairs of late. He
hosted a worker town hall
[https://twitter.com/SenSanders/status/1018877773639712769] in July
and last month put together a petition
[https://act.berniesanders.com/signup/Amazon-wage-petition?source=em180822-1-full&t=1&akid=108%2E810667%2ENsu72C] to
demand Jeff Bezos implement better working conditions and pay. Last
month, he also set up a web portal
[https://www.sanders.senate.gov/share-your-experiences-working-at-amazon] for
employees to share their experiences, prompting Amazon, in an unusual
move, to respond

Sanders’s office says they’re not picking on Amazon, per se. “We
don’t want to think of it as targeting Amazon,” Sanders spokesman
Josh Miller-Lewis said. “Jeff Bezos is the wealthiest person in the
history of the world, and Amazon as of [Tuesday] is a $1 trillion
company. They are the perfect example of the inequality and greed that
exists in America today.” Amazon declined to comment on Sanders’s
proposed legislation on Wednesday.

Sanders is landing on an interesting point of tension for the
Democratic Party. Amazon remains one of the most popular corporations
in America
[https://www.axios.com/exclusive-poll-facebook-favorability-plunges-1522057235-b1fa31db-e646-4413-a273-95d3387da4f2.html] and
in particular is popular with a subset of the Democratic base — but
so is asking corporations to step up on paying the necessary price for
expanding the social safety net, especially if it’s one their
employees used.

“In some sense, [Sanders’s] critique is not big enough,” Matt
Stoller, a fellow at the Open Markets Institute and a vocal part of
the left, told me. “It’s a basic abuse of power problem, and
Bernie is shining a light on one part of it, but it’s not the whole

It’s also an idea that, though it sounds popular, makes some worry
about potential negative effects, including fewer jobs. It could speed
up automation or incentivize companies to find ways around the tax by
changing their business structures to be excluded from it.

In a Republican-controlled Congress, Sanders’s bill is unlikely to
gain any traction at the moment. But he is laying down his opening bid
for how corporations should be asked to participate in his mission of
broadly expanding the social safety net.


The Stop BEZOS Act says for every dollar of federal assistance a
worker gets, the company that employs them will be taxed that amount

Sanders and Khanna’s bill would require large companies — defined
as those employing 500 or more workers, including part-time and
franchise workers and independent contractors — to pay the costs of
federal programs their employees use. It would impose a 100 percent
tax equal to the amount a company’s workers receive in federal
benefits from the Supplemental Nutrition Assistance Program
[https://www.fns.usda.gov/snap/supplemental-nutrition-assistance-program-snap] (SNAP),
Medicaid, the school lunch program, and Section 8 housing

The idea, essentially, is that instead of American taxpayers footing
the bill to help workers make ends meet, companies would have to, at
least via their tax bills. Basically, it’s saying companies have to
pay either way — they either have to provide workers a high enough
salary that they don’t qualify for those benefits, or they’ll have
to pay the government back.

How the Sanders/Khanna legislation would be implemented is not clear.
Sanders’s office says that the IRS would have to consult with the
United States Department of Agriculture, Department of Housing and
Urban Development, and the Centers for Medicare and Medicaid Services
to issue regulations to make it work. They haven’t offered more

Sanders is likely responding to a collection of problems found by
economists recently: A 2015 Berkeley study
[http://laborcenter.berkeley.edu/the-high-public-cost-of-low-wages/] shows
that low wages cost US taxpayers $152.8 billion annually in public
support; wages are growing more slowly
[https://www.vox.com/the-big-idea/2018/7/31/17632348/wages-lagging-inequality-income-recovery-recession-wage-puzzle-economics] than
they have historically; and hourly wages, adjusted for
inflation, dropped by 0.2 percent in July
And a recent Urban Institute survey
that, last year, 40 percent of American families struggled to meet at
least one of their basic needs, including buying food, paying medical
bills, or covering utility bills, rent, or mortgage.

Sanders is tapping into an idea a lot of Democrats on the populist
left have had: The economy isn’t working for everyone. If
corporations aren’t going to pay their employees enough, they’ll
pay the government.

Sen. Sherrod Brown (D-OH) earlier this year introduced legislation
[https://www.vox.com/policy-and-politics/2018/5/18/17368330/food-stamps-work-requirements-farm-bill-sherrod-brown] that
would charge companies a “freeloader” fee if their employees
depend on government aid like food stamps. Last year, Khanna
introduced a similar
[https://khanna.house.gov/media/press-releases/release-rep-khanna-introduces-corporate-responsibility-and-taxpayer-protection] bill
to the one he and Sanders presented on Wednesday, called the Corporate
Responsibility and Taxpayer Protection Act.

“The basic message of this bill is billionaires should get off
welfare, but it is an attempt to expose the way that our economy
works,” Miller-Lewis said.

The idea doesn’t get rave reviews from economists

The idea has clearly gained currency in the Democratic Party, but some
economists worry about the broader effects.

There are some potential flaws in the legislation. It assumes that
low-wage workers are the principal group receiving public assistance,
but there are plenty of middle-income Americans who rely on the
social safety net
[https://www.brookings.edu/research/the-rise-of-the-middle-class-safety-net/] as
well. The bill could also discourage companies from hiring people they
believe might need federal government assistance, or accelerate the
transition to a more automated workforce.

“Right now, there is a kind of tacit social bargain that the public
sector will cooperate with the private sector to maintain … a lot of
low-wage jobs, which if the private sector had to pay full freight for
a living wage might disappear,” said William Galston, senior fellow
in governance studies at the Brookings Institution. “Is that a good
thing or a bad thing?”

Greg Daco, an economist at Oxford Economics, told me that he doesn’t
believe the legislation would have a large effect on the economy as a
whole, but on a smaller-scale basis, it might have a negative effect.
“The tax would create a dead weight loss, and would cause businesses
either to seek ways to circumvent the penalty, or improve productivity
and replace lost labor cost,” he said in an email. “This could
actually lead to a negative feedback loop for workers.”

Essentially, companies would find ways around the tax, or they’d cut

Bruce Meyer, professor of public policy at the University of Chicago,
echoed the skepticism. “I am skeptical that raising the cost to
successful firms of hiring more employees is a good idea,” he said.

Ultimately, the bill is a way to deliver a message — and to continue
the clash between Sanders and Amazon.

The Bernie versus Bezos battle is likely to rage on

Sanders has been on quite a tear with regard to Amazon and Bezos in
recent months. When employees used the company’s annual Prime Day
[https://www.vox.com/2018/7/16/17577614/amazon-prime-day-strike-boycotts] to
speak out about worker conditions, he expressed solidarity with them.
He hosted Amazon workers at his CEOs vs. Workers Town Hall
[https://twitter.com/SenSanders/status/1018877773639712769] in July,
and his team has produced multiple
[https://www.facebook.com/senatorsanders/videos/vl.1994416117276564/10157175602057908/?type=1] videos
[https://www.facebook.com/senatorsanders/videos/518110881969546/] featuring
[https://www.facebook.com/senatorsanders/videos/2240482446238745/] Amazon
employees telling their stories.


In August, Sanders sent out an email to his supporters asking them to
join forces against Amazon, and he launched a petition
[https://act.berniesanders.com/signup/Amazon-wage-petition?source=em180822-1-full&t=1&akid=108%2E810667%2ENsu72C] to
call on Bezos to pay workers a living wage and improve working
conditions. It’s received more than 100,000 signatures. He’s also
asking workers to share their stories about Amazon on his Senate

Sanders has attacked Amazon over its low median wage — $28,446
[https://www.bloomberg.com/gadfly/articles/2018-04-19/amazon-is-defined-by-billions-median-salary-is-28-446] —
and how it stacks up to Bezos’s net worth of $167 billion.
“Instead of attempting to explore Mars or go to the moon, how about
Jeff Bezos pays his workers a living wage?” Sanders asked in his
August email to supporters.

Amazon, which has largely ignored President Donald Trump’s
criticism of it and of Bezos
has fired back at Sanders. In a blog post last week
it rebutted many of his claims, including saying that its median US
salary is actually $34,123.

Employee wages and Bezos’s wealth are only part of the broad
concerns about Amazon and the role it plays in the US economy.
Amazon’s sheer size and scope has raised concerns about potential
antitrust issues
[https://www.vox.com/2018/7/17/17583070/amazon-prime-day-monopoly-antitrust] and
whether it’s headed down a path where it will eventually tax every
part of Americans’ lives.

Thus far, concerns haven’t really weighed it down: Amazon reached
a $1 trillion valuation
[https://www.cnbc.com/2018/09/05/the-next-companies-poised-to-hit-1-trillion.html] on

_Emily Stewart is a reporter at Vox. More articles by Emily Stewart.

_Sign up to receive clear explanations from Vox._


	* [https://portside.org/node/18095/printable/print]







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