Big business beware: Regulators rising
It has never been a better time to be a large American company, with stocks at record highs and corporate taxes at 60+ year lows. But with great success comes great scrutiny, and big business is now getting hammered by both sides of the political aisle.
Why it matters: The rhetorical heat is only going to intensify as we head into the midterms.
From the left: Sen. Bernie Sanders next week will propose a tax on large, profitable businesses whose employees utilize federal assistance programs like food stamps, Medicaid or public housing. If McDonald's, for example, has an employee who receives $1,000 worth of federal benefits, then McDonald's Corp. would basically get a $1,000 IRS bill.
- Sanders is taking particular rhetorical aim at Amazon, even asking warehouse employees to send him stories of insufficient pay or poor working conditions.
- Amazon chose to respond, which is something it hasn't done after any of President Trump's barbs. The Bezos borg says that Sanders is sharing bad info — not differentiating between full-time employees and part-timers (or those who only worked at Amazon for a short period of time).
- Sanders' basic argument is that these companies, and their CEOs, are reaping massive profits while many of their workers struggle to pay the rent.
- His bill won't become law, at least not in this Congress, and increasing the federal minimum wage is probably a more efficient means of achieving his desired end. But he can throw a lot of reasonable-sounding math out there.
- This was the topic of yesterday's Pro Rata podcast, on which I was joined by Felix Salmon. (Listen) (Subscribe)
From the right: President Trump's attacks on big tech are having major downstream effects, and it goes well beyond next week's congressional hearings on alleged political bias.
- Sen. Orrin Hatch yesterday asked the FTC to investigate Google for potential anti-competitive behavior in its search and digital ad business.
- Trump, in a Bloomberg interview, egged him on: "I won’t comment on the breaking up, of whether it’s that or Amazon or Facebook. As you know, many people think it is a very antitrust situation, the three of them. But I just, I won’t comment on that.”
- But the most consequential move might have come from cable news, where Fox's Tucker Carlson last night basically sided with ... Bernie Sanders.
- Per Carlson: "Jeff Bezos is the richest man in the world. Many of his employees are so poor, you’re paying their welfare benefits. And he’s not the only tech billionaire offloading his payroll costs onto taxpayers. This is an indefensible scam. Why is only Bernie talking about it?"
- When Tucker talks, Trump listens. Then he tweets, and congressional Republicans fall quickly into line.
The bottom line: Most of the fire is being aimed at tech, because it makes an easy political pinata, but this is just as much about supermarkets, fast-food and other low-pay industries. Unemployment might be low, but exploiting unhappy employment may be about to surge.