Clinton calls on corporations to shift focus to longer-term growth

Reporting from Washington —  Hillary Rodham Clinton called on American business leaders Friday to rethink a focus on short-term stock gains in favor of longer-term growth, outlining proposals she said would address the trend of what she called “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.

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“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, Clinton took a moment to address the reports that government inspectors general had asked the Justice Department to investigate into 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” while noting that she has 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 the capital gains reform an “important first step” to address short-term culture and said it would be part of a larger tax reform plan she will 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 off a broader economic policy speech Clinton gave on 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 the heavy favorite 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. Notably in her speech, Clinton welcomed a recent decision by a New York panel to implement a $15-per-hour wage for fast-food 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 at the Capitol this week calling for a national $15-per-hour 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.

“If Secretary Clinton wants to earn the enthusiastic support of grassroots progressives that means standing up, staking out genuinely bold positions on income inequality, and aggressively taking on the powerful, greed-driven institutions that have dominated the Democratic Party and held back the prosperity of the American people for far too long,” Charles Chamberlain, executive director of Democracy for America, said in a statement. “Today’s speech hits those notes in some ways, but fails to do so in others.”

Clinton promised that additional proposals focused on “reining in excessive risk on Wall Street” would be forthcoming but 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.

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