Sen. Bernie Sanders on Monday introduced a series of proposals designed to radically realign the balance of power in the American economy.
The Vermont independent’s agenda would guarantee workers eventually take control, through the issuance of new stock, of 20% stakes in the country’s largest companies, while mandating that employees elect 45% of corporate boards of directors. The Sanders plan would also impose strict new guidelines on mega-mergers, while asking a revamped Federal Trade Commission to review deals pushed through during the Trump administration.
In an interview, Sanders – who will make his return to the campaign trail on Tuesday at the CNN/New York Times Democratic debate in Ohio – argued that the measures, sure to be fiercely opposed by corporate leaders and moderate political rivals, would benefit companies and workers by fostering a more engaged, loyal and productive workforce.
“If you feel that you’re getting ripped off, if you feel that you’re powerless, you will do in many cases as little as you possibly can to get your paycheck,” Sanders told CNN. “But if you’re feeling good about your job, you want the company really to succeed because you prosper because your ideas are being implemented because you are treated with respect and not just being a cog in the machine.”
The plan, which the campaign touted as “the boldest and most comprehensive corporate accountability plan in modern presidential history” goes further than those of his 2020 Democratic primary rivals, including Sen. Elizabeth Warren. Sanders, in an interview on Sunday, made a rare direct distinction with his colleague from Massachusetts – one that is underscored by his new push to give workers an ownership stake in their companies.
“There are differences between Elizabeth and myself,” Sanders told ABC News. “Elizabeth, I think, as you know, has said that she is a capitalist through her bones. I’m not.”
Warren’s plan would require companies with $1 billion or more in annual revenue to empower employees to elect 40% of their boards. Sanders would up that number to 45% and lower the threshold to $100 million in revenue, while including companies with $100 million balance sheets and those that are publicly traded.
But it is the stock transfer plan that would likely have the most significant impact on the ways companies do business.
Those inside the parameters drawn up by Sanders would be required to issue new shares of stock, in increments of at least 2% per year, until the total employee ownership reaches 20%. The plan would create “Democratic Employee Ownership Funds,” which would be controlled by a board of trustees directly elected by workers. Stock dividends would be paid out directly from those funds.
Sanders said “having employees directly vested in the company’s success and playing a role in the decision-making process will lead to different outcomes. Outcomes that will benefit working people as opposed to stockholders driven by profit margins.”
“What you have is the motives of many of the large companies are the short-term profits and not looking long term,” Sanders told CNN. “If they could close on a plant today and move to China tomorrow to make a few more bucks, that is exactly what they will do. But if you have workers sitting on the board who participate in the decision-making process that is probably not the decisions that are going to be made.”
The proposal would also seek to dissuade companies from outsourcing their work overseas or automation technology. But when they do, according to the plan, the bottom-line benefits would have to be shared with employees who are dislocated by the changes.
“Champions of ‘globalization’ and ‘automation’ often claim ‘everybody wins’ through these practices, or that at least the gains exceed the losses,” the plan states. “If those claims are true, then the owners of those firms can more than afford to share their gains with the workers they displace.”
In a further effort to bolster the power of workers, and facilitate the creation of more employee-owned businesses, the Sanders plan creates a bank – with $500 million in funds to start – that would offer “low-interest loans, loan guarantees, and technical assistance” to workers who want to purchase their own businesses. That money would become available when a company is either put up for sale, shuttered or in cases when factories are closed.
Sanders plan also seeks to channel the trust-busting spirit of the early 20th century, by calling for the government to “break up monopolies and make markets more competitive.” He would achieve that by giving added power to the FTC, which would also be charged with crafting “bright-line” guidelines going forward that would govern both vertical mergers, which combine companies in different sectors – and horizontal mergers, which combine businesses operating in the same industry.
The blueprint unveiled Monday tracks with some more familiar positions, including a handful shared by most of the top tier Democratic primary candidates.
Sanders would repeal the Trump tax cuts for corporations, which would return the rate to 35% from the 21% passed by the Republican Congress in late 2017.
According to a campaign estimate, if the plan had been in place last year, tax revenue from four major corporations – Amazon, Delta, GM and Chevron – would have come in at nearly $9 billion.
The taxation plank of Sanders’ proposal would also seek to eliminate offshore tax havens and wipe out the 20% deduction on pass-through businesses, which in theory is designed to aid smaller business owners but because of a broad interpretation by the Internal Revenue Service is often claimed by more profitable companies.