Attorneys general challenge SEC’s stock buyback rule
Utah Attorney General Sean D. Reyes led 14 other states in filing an Amicus Brief on July 18 in support of the U.S. Chamber of Commerce, which is challenging the Securities and Exchange Commission’s new rules on stock buyback reporting. The coalition of attorneys general pointed out in the brief, “..stock buybacks are an important, economically beneficial way companies return value to shareholders and reallocate capital. Corporate governance traditionally is a matter of state, not federal regulation, and Amici States oppose inefficient, burdensome regulations on stock buybacks.” “We are leading this coalition of states in opposition to the SEC buyback rule because the federal government again overreaches with a shortsighted and misguided policy,” Reyes said. On May 3, 2022, the Securities and Exchange Commission adopted a new rule on stock buybacks. The new rule requires daily stock buybacks to be reported on a quarterly basis reflecting detailed characteristics about the shares, the issuers – both domestic and foreign, the class of stocks, the repurchase plans, the trading plans, and compliance dates, among other details, to be filed on regulation forms. Reyes noted, “This rule will have severe consequences not only for investors and companies but for everyday Americans and retirement account holders. We applaud the advocacy of the U.S. Chamber in this matter and join with it in standing up for the people of America.” On May 12, 2023, the U.S. Chamber of Commerce, the Texas Association of Business, and the Longview Chamber of Commerce sought to stop the SEC from implementing the rule in a lawsuit filed with the U.S. Court of Appeals for the Fifth District. “Stock buybacks play an important role in the functioning of healthy and efficient capital markets,” said U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley. “The SEC’s stock buyback rule doesn’t protect investors. Instead, it puts the thumb on the scale to discourage buybacks despite the fact that the repurchasing of shares improves returns for savers and investors across the economy.” The coalition believes that the SEC’s rule will make buyback programs of companies less attractive as it forces a public disclosure of sensitive financial information about companies, and the strategies and reasoning behind their buyback decisions. “Research has found that buybacks save investors hundreds of millions annually by stabilizing prices and reducing risk,” the Utah Office of the Attorney General stated. Disclosing company strategies “may provide competitors with critical insights or (become) fodder for lawsuits.” That concern which may cause companies to reduce buyback programs is a risk acknowledged by the SEC’s statement “the potential legal risk stemming from such disclosures, and the potential costs of leaking valuable private information to competitors that may infer proprietary information about the issuer,” can be derived from reports. The brief presents two arguments against the SEC rule: Joining Utah on this brief are the States of Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, West Virginia, and Wyoming. Republished with the permission of The Center Square.
Joe Biden has long-term inflation plan, but voter patience short
President Joe Biden came into office with a plan to fix inflation — just not the particular inflationary problem that the country now faces. He believes that a cluster of companies controls too many industries, which reduces competition for both customers and workers. That leads to higher prices and lower wages in what the White House says is an average cost of $5,000 annually for U.S. families. Biden is now trying to remedy the situation with 72 distinct initiatives — everything from new rules for cell phone repairs to regulations on meatpacking to more merger reviews. “The dynamics of the modern American economy — the increased consolidation and lack of competition — has distorted market incentives in important ways,” said Brian Deese, director of the White House National Economic Council. “The president gave us the direction that he wanted us to come back and say what could we do to address this issue of consolidation across industries in a way that would be durable.” But even administration officials acknowledge that the initiatives outlined by the president’s seven-month-old competition council aren’t designed to quickly stop the 7.5% inflation that’s frustrating Americans and damaging Biden’s popularity. Furthermore, business groups dispute the fundamental premise that competition has faded within the U.S. economy, and they are prepared to challenge the administration’s new initiatives in court. “It will strangle economic growth,” said Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce. “Ironically, what this will do is actually lead to more inflation.” Part of Biden’s dilemma is that reorienting a bureaucracy to promote competition takes time, and voters want to see inflation — running at a 40-year peak— start dropping now. Voters feel the bite of inflation with every trip they make to the grocery store or the gas station, yet the president is traveling the country to discuss solutions such as competition and new infrastructure that predate the current predicament and would have a much more gradual impact. America’s current inflation woes stem from the pandemic. Supply chains for computer chips, clothes, furniture, and other goods are under stress. At the same time, consumer demand has surged after a historical amount of government aid flowed into the economy. Despite efforts to get the kinks out of the supply chain, price increases have stayed high in recent months instead of fading, as many initial forecasts suggested. That has the Federal Reserve ready to increase interest rates to lower inflation. In a January survey by the University of Chicago, two-thirds of leading economists said that the concentrated power of companies does not explain the current rash of inflation. New York University economist Thomas Philippon has welcomed the administration’s approach — while allowing it would do little to bring down prices. As the author of the 2019 book, “The Great Reversal: How America Gave Up on Free Markets,” Philippon is the source of the administration’s statement that market concentration places a $5,000 drag on an average family. What Philippon observed was that other nations had embraced a level of antitrust enforcement and competition that no longer exists in America, resulting in lower costs for cell phone service, internet, and airline tickets in Europe relative to the U.S. “As a way to fight current inflation, it is unlikely to have a big impact in the short term, but it can still be useful,” Philippon said. “I think of it more as a positive side effect of something that should be done in any case.” The Biden administration contends that even if the lack of competition didn’t directly trigger the recent spike in prices, it has contributed to inflation. The White House Council of Economic Advisers blogged in July about how more sectors of the economy are effectively controlled by a smaller number of companies. It cited studies that show how mergers led to higher prices for hospital services, health insurance, airline tickets, and beer. It also documented a decline in government reviews of mergers and noted that the 2020 federal lawsuits against Google and, separately, Facebook were the first major monopolization cases in 22 years. After the second meeting of the government-wide competition council in late January, the White House charted its progress. The Food and Drug Administration has proposed selling hearing aids over-the-counter, “lowering their cost from thousands of dollars to hundreds of dollars,” according to a White House statement. The Federal Trade Commission will increase enforcement against restrictions that companies place on people repairing their own electronic devices. The Transportation Department figures it can cut prices of airline tickets in the New York City area by opening up 16 slots to a low-cost carrier at the airport in Newark, New Jersey. For proof that more competition can lead to lower prices, administration officials cite the example of eyeglasses. Before 1979, people could only buy eyeglasses from doctors who wrote their prescriptions. The FTC then passed a rule that forced doctors to give out prescriptions, causing the average price of glasses to fall 30.4% to $178 (in 1979 dollars). The issue does not break cleanly along partisan lines. Republican Sens. Todd Young of Indiana and Kevin Cramer of North Dakota have sponsored a bill to limit companies from using non-compete agreements, which can keep workers from going to another employer for more money. But many in the business sector dispute Biden’s core premise that the U.S. economy has become less competitive. They argue that mergers allow companies to operate more efficiently, and the resulting gains in productivity benefit consumers. The U.S. Chamber of Commerce says market concentration had waned by 2017, and it intends to challenge some of the administration’s regulatory actions in court. Airlines for America, a trade association, says that consumers are better off under industry consolidation. In inflation-adjusted terms, it said the average price of a roundtrip ticket has fallen nearly $100 since 2010 to $306 in 2020. The Business Roundtable, a group representing CEOs, said that at a time of high inflation, “more burdensome government regulations are not what the economy or Americans need.”
‘We have a deal’: Joe Biden announces infrastructure agreement
President Joe Biden announced on Thursday a hard-earned bipartisan agreement on a pared-down infrastructure plan that would make a start on his top legislative priority and validate his efforts to reach across the political aisle. He openly acknowledged that Democrats will likely have to tackle much of the rest on their own. The bill’s price tag at $973 billion over five years, or $1.2 trillion over eight years, is a scaled-back but still significant piece of Biden’s broader proposals. It includes more than a half-trillion dollars in new spending and could open the door to the president’s more sweeping $4 trillion proposals later on. “When we can find common ground, working across party lines, that is what I will seek to do,” said Biden, who deemed the deal “a true bipartisan effort, breaking the ice that too often has kept us frozen in place.” The president stressed that “neither side got everything they wanted in this deal; that’s what it means to compromise” and said that other White House priorities would be tackled separately in a congressional budget process known as reconciliation. He made clear that the two items would be done “in tandem” and that he would not sign the bipartisan deal without the other, bigger piece. Progressive members of Congress declared they would hold to the same approach. “This reminds me of the days when we used to get an awful lot done up in the United States Congress,” said Biden, a former Delaware senator, putting his hand on the shoulder of a stoic-looking Republican Sen. Rob Portman as the president made a surprise appearance with a bipartisan group of senators to announce the deal outside the White House. The deal was struck after months of partisan rancor that has consumed Washington while Biden has insisted that something could be done despite skepticism from many in his own party. Led by Republican Portman of Ohio and Democrat Kyrsten Sinema of Arizona, the group included some of the more independent lawmakers in the Senate, some known for bucking their parties. “You know there are many who say bipartisanship is dead in Washington,” said Sinema, “We can use bipartisanship to solve these challenges.” And Sen. Susan Collins, R-Maine, said, “It sends an important message to the world as well that America can function, can get things done.” The proposal includes both new and existing spending and highlights the struggle lawmakers faced in coming up with ways to pay for it. The investments include $109 billion on roads and highways, $15 billion on electric vehicle infrastructure and transit systems, and $65 billion toward broadband, among other expenditures on airports, drinking water systems, and resiliency efforts to tackle climate change. Rather than Biden’s proposed corporate tax hike that Republicans oppose or the gas tax increase that the president rejected, funds will be tapped from a range of sources — without a full tally yet, according to the White House document. Money will come from COVID-19 relief funds approved in 2020 but not yet spent, as well as untapped unemployment insurance funds that Democrats have been hesitant to poach. Other revenue is expected by going harder after tax cheats by beefing up Internal Revenue Service enforcement. The rest is a hodge-podge of asset sales and accounting tools, including funds coming from 5G telecommunication spectrum lease sales, strategic petroleum reserve, and an expectation that the sweeping investment will generate economic growth — what the White House calls the “macroeconomic impact of infrastructure investment.” The senators from both parties stressed that the deal will create jobs for the economy, a belief that clearly transcended the partisan interests and created a framework for the deal. “We’re going to keep working together–we’re not finished,” Sen. Mitt Romney said. “But America works, the Senate works.” For Biden, the deal was a welcome result. Though for far less than the approximately $2 trillion he originally sought, which is raising some ire on the left, Biden had bet his political capital that he could work with Republicans and showcase that “that American democracy can deliver” and be a counter-example to rising autocracies across the globe. Moreover, Biden and his aides believed that they needed a bipartisan deal on infrastructure to create a permission structure for more moderate Democrats — including Sinema and Joe Manchin of West Virginia — to then be willing to go for a party-line vote for the rest of the president’s agenda. There is still some skepticism on the left. Sen. Richard Blumenthal of Connecticut said the bipartisan agreement is “way too small –paltry, pathetic. I need a clear, ironclad assurance that there will be a really adequate robust package” that will follow the bipartisan agreement. House Speaker Nancy Pelosi, like Biden, warned that it must be paired with the president’s bigger goals now being prepared by Congress under a process that could push them through the Senate with only Democratic votes. “There ain’t going to be a bipartisan bill without a reconciliation bill,” Pelosi said. Portman had met privately ahead of the White House meeting with Senate Republican leader Mitch McConnell at the Capitol and said afterward that the Kentucky senator “remains open-minded and he’s listening still.” The announcement leaves unclear the fate of Biden’s promises of massive investment to slow climate change, which Biden this spring called “the existential crisis of our times.” Biden’s presidential campaign had helped win progressive backing with pledges of major spending on electric vehicles, charging stations, and research and funding for overhauling the U.S. economy to run on less oil, gas, and coal. The administration is expected to push for some of that in future legislation. But Sen. Bill Cassidy, R-La, stressed that there are billions of dollars for resiliency against extreme weather and the impacts of climate change and deemed Thursday’s deal a “beginning investment.” Biden has sought $1.7 trillion in his American Jobs Plan, part of nearly $4 trillion in broad infrastructure spending on roads, bridges, and broadband internet but also including the so-called care economy of child care centers,
Infrastructure often embraced by both parties, to no avail
When it comes to trying to upgrade the country’s road, rail, water and broadband systems, Washington frequently veers off the tracks.
