Qualcomm layoffs show GOP tax bill boosts Wall Street, not Main Street

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San Diego-based Qualcomm announced massive layoffs in April, and just weeks later announced a $10 billion stock buyback plan to benefit Wall Street investors.

Despite the promise from Republicans that the tax bill would dramatically grow the economy, more than 1,500 Californians are set to lose their job with San Diego-based technology company Qualcomm.

One group that doesn’t have to worry is Wall Street investors, as Qualcomm also announced a massive stock buyback initiative. In other words, rich corporate investors are set to profit, while workers in San Diego and San Jose are out of luck.

When the Republicans passed their tax bill, it was sold as “rocket fuel” for the economy. Congresswoman Mimi Walters (R-Irvine) boasted the tax bill would “generate significant economic growth.” Congressman Steve Knight (R-Palmdale) declared it would be “a tax code that puts American families first.”

But those promises mean little to workers who will soon receive a pink slip. The layoffs — 289 in San Jose, and 1,231 in San Diego — are part of an effort by the multinational company to trim $1 billion in costs, according to CNN.

When the bill was moving through Congress, critics warned that corporations would not use the massive kickbacks from the bill to invest in workers, but would instead use the cash to enrich shareholders. As CNBC noted, “Democratic lawmakers who have been critical of the GOP bill have claimed it would be used for such things as share buybacks to enrich shareholders, rather than for capital expenditures or improving worker pay.”

Qualcomm proved the critics right.

Not even a month after announcing the massive layoffs, Qualcomm announced $10 billion stock buyback plan. In their announcement, the priority of the company could not be clearer: “Consistent with our commitment to return capital to our stockholders, we are pleased that our Board has approved a new stock repurchase authorization.”

Stock buybacks are used by companies to boost the price of their stock, thus benefitting wealthy investors and executives with lucrative stock options. Rather than invest in workers, Qualcomm joins other companies in lining the pockets of investors.

“Share buybacks in 2018 have averaged $4.8 billion a day, double the pace for the same period last year, according to market data firm TrimTabs,” reports CNBC. Some pharmaceutical companies are increasing the prices of their medicine while at the same time lavishing Wall Street investors with stock buybacks.

Republicans made big promises around the tax bill, but the reality doesn’t match the hype. Job growth isn’t booming and wages continue to grow at the same rate as before the bill became law.

Wealthy corporations and rich Wall Street investors are growing even more wealthy. For the rest of America, the only thing growing is our national deficit — to the tune of more than $1 trillion.

CNN is right: “shareholders, not workers, are far bigger direct winners from the Tax Cuts and Jobs Act of 2017.”