Los Angeles Times

Clinton decries trend of ‘quarterly capitalism’

She calls on corporatio­ns to focus on long-term growth, not short-term profit.

- By Michael Memoli michael.memoli@latimes.com Twitter: @mikememoli

WASHINGTON — Hillary Rodham Clinton called on U.S. business leaders Friday to rethink a focus on shortterm stock gains in favor of longer-term growth, outlining proposals she said would address the trend of “quarterly capitalism” that has left the middle class behind.

Speaking in New York, Clinton cited data that showed large publicly held companies returned a record amount of earnings directly to shareholde­rs through dividends and stock buybacks, at the expense of capital expenditur­es or wage increases for their employees. The kind of focus on tactics to boost short-term profits was “bad for business, bad for wages and bad for our economy, and fixing it will be good for everybody,” she said.

“American business needs to break free from the tyranny of today’s earning report so they can do what they do best: innovate, invest and build tomorrow’s prosperity,” she said. “It’s time to start measuring value in terms of years or the next decade, not just the next quarter.”

At the start of her speech, the Democratic presidenti­al candidate took a moment to address reports that government inspectors general had asked the Justice Department to investigat­e whether classified informatio­n was mishandled through the private email account Clinton used as secretary of State. Clinton said there “have been a lot of inaccuraci­es” but noted that she had released 55,000 pages of her emails and was ready to testify before a special congressio­nal panel.

“We are all accountabl­e to the American people to get the facts right. And I will do my part,” she said.

The centerpiec­e of the plan Clinton laid out Friday was a revision to the capital gains tax that would implement a sliding scale, taxing gains from stock sales within two years at the same rate as incomes for those earning more than $465,000 a year, but returning to the current rate of 20% after six years.

She called capital gains reform an “important first step” to address the issue in the short term, and said it would be part of a larger tax reform plan she would outline. Executive compensati­on was another area she said should be examined, saying there was “something wrong when senior executives get rich when companies stutter.”

The speech builds on a broader economic policy speech Clinton gave July 13 in which she called ending wage stagnation the “defining economic issue of our time.” Later that week in New Hampshire, she proposed giving short-term tax credits to businesses that create profit-sharing arrangemen­ts with their employees.

Though Clinton is favored to win her party’s nomination, she faces pressure from an active progressiv­e base and Democratic rivals to embrace more-sweeping economic proposals to address income inequality. Notable in her speech, Clinton welcomed a recent decision by a New York panel to implement a $15-per-hour wage for fastfood workers, while noting that the cost of living in the state was higher than other places. Sen. Bernie Sanders of Vermont, an independen­t running in the Democratic primary, headlined a rally in Washington this week calling for a national $15-perhour minimum wage.

Another Democratic candidate, former Maryland Gov. Martin O’Malley, challenged his opponents to embrace a set of principles guiding additional Wall Street and corporate reforms.

Clinton focused on answering Friday what she said was the important question of how to define shareholde­r value.

“I understand that most CEOs are simply responding to very real pressures from shareholde­rs and the market to turn in good quarterly numbers. And investors are always looking for strong, reliable returns. But it is clear that the system is out of balance,” she said.

 ?? Justin Lane European Pressphoto Agency ?? CANDIDATE Hillary Rodham Clinton greets supporters after a speech at New York University.
Justin Lane European Pressphoto Agency CANDIDATE Hillary Rodham Clinton greets supporters after a speech at New York University.

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