When the GOP passed tax reform in 2017, the party justified its corporate tax cuts with claims that the reductions would boost US employment, wages, and the overall economy. The FCC similarly justified its repeal of net neutrality by arguing that the onerous regulation of wireless and wireline service was hampering innovation, imposing ruinous costs, and generally harming the telcos, ISPs, and cellular service providers in the United States.
Thus far, the corporations Ajit Pai and the Republican Party bent over backward to help haven’t exactly been returning the favor. GM plans to close plants and fire 14,000 people. Verizon has no plan to boost 5G investment, despite Pai’s claim that repealing net neutrality would lead to additional corporate network spending. Now ATT is reportedly preparing to fire 7,000 people, despite having previously promised that tax breaks and freedom from burdensome regulation would actually create jobs.
What ATT Said Then
On May 4, 2017, ATT CEO Randall Stephenson gave an interview to CNBC declaring the importance of cutting taxes. “Lower taxes drives more investment, drives more hiring, drives greater wages,” Stephenson said on CNBC’s Squawk Box. “All of this fits together.”
Other choice quotes include: “If you can have a tax reduction of 35 percent down to, you pick your number, 25 or 20 percent — to think that wouldn’t cause additional investment is nonsensical. I know exactly what ATT would do: We would invest more.”
Here’s a really good one:
“Every billion dollars in additional investment we make is 7,000 additional jobs we have to put on to put that capital into the ground or on cell towers and so forth,” Stephenson said. “And these are 7,000 jobs wearing hard hats, these are high-paying jobs with good benefits. The correlation is very, very tight. If we have to make that kind of hiring and do that kind of hiring, that drives productivity, which drives what? Wage growth.” (Emphasis added).
ATT reported a $19B tax windfall in January of 2018, along with an additional $3B in cash that it claimed it would spend on network investments throughout 2018. Capital expenditures in 2017 totaled $21.6B. At the beginning of 2018, ATT forecast capital expenditures of $25B.
What ATT Says Now
We don’t know how much ATT spent on capital expenditures for the entire year, but in Q3 2018 the company stated its estimated capex for FY2018 would be ~$22B. That’s on par with what it spent in 2017, with no increase associated with either the GOP tax bill or the $20B windfall.
In the memo (leaked to Motherboard and confirmed by ATT), ATT tries to dodge its own previous statements, claiming that its CEO had previously said that $1B in investment creates 7,000 jobs “across the broader economy.” But that’s not what Stephenson said.
In 2017, Stephenson claimed that the Trump tax cuts would result in ATT boosting its investment levels. He knew exactly what ATT would do: It would invest. That investment would create jobs, not “across the broader economy,” but for ATT workers. Hard hat jobs, with great benefits and good pay. The kind of jobs Americans want. The kind of jobs a CEO would dangle in front of Americans to make them think supporting a giant tax cut and regulatory reduction for corporations was a good idea. The kind of jobs you talk about when you use a pronoun like “we,” which doesn’t mean “Other companies besides ATT.”
ATT has earned record profits for itself by shuttering call centers and offshoring workers, with an estimated 16,500 jobs lost since 2011. The Communication Workers of America estimate ATT eliminated 10,800 positions in the last year alone.
The bonuses ATT claimed were paid out as a result of the Trump tax cuts were actually negotiated beforehand with its unions and had absolutely nothing to do with the GOP tax bill. Despite the promise that net neutrality repeal and the tax cut would boost wireless investment, overall wireless capital expenditures are believed to have fallen in 2018. And this isn’t unique to ATT — Verizon also claimed plans to boost its own investment levels before deciding not to.
Instead of creating 7,000 jobs with every additional $1B in network investment, ATT will shed 7,000 jobs to further enrich its stockholders and pay for stock buybacks.
Sometimes, in a story like this one, someone will pop in and accuse me of political bias. While I won’t pretend to lack political opinions, the point here isn’t political. It’s ethical.
Put simply, I’m tired of being lied to. The tax cuts and net neutrality repeal were advertised, justified, and declared necessary because of the necessary and critical impact they would have on overall investment and infrastructure. None of it happened. No one is punished for it. The chairman of the FCC has produced no data at any point that actually justified his claim that net neutrality was a threat to broadband investment or had resulted in a reduction of it. (At least, none that stood up to factual analysis).
We live in a country where powerful heads of major multi-national companies with resources and wealth that rival that of some countries are allowed to blithely lie about their own intentions and the impact of laws that blatantly favor their own self-interests. Our politicians, instead of serving as guardians of the public good, fall over themselves to enable this nihilistic behavior. And everyone — including, all too often, members of the press — treats this as business as usual.
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