Why Do The Airlines Need A Bailout? They Made A Fortune Over The Past Decade. Now They’re Demanding $50 Billion To Stay In Business.

(By Henry Grabar, Slate, 17 March 2020)

If Washington doesn’t do something, all U.S. airlines are going under.   That was the message that industry lobby Airlines for America delivered on Monday, arguing that under the most likely  scenario, all seven major U.S. passenger carriers would run out of money between July and December. The group asked for $50 billion in assistance from the federal government, divided evenly between grants (free money) and low-interest loans.   


That’s a lot. For comparison, the feds spent $50 billion to bail out General Motors during the financial crisis—most of which was repaid.   It has been a little more than two years since American Airlines CEO Doug Parker told investors, in an instant business school cautionary tale, “I don’t think we’re ever going to lose money again.” How time flies when a viral pandemic ravages the earth.

Help is on the way, President Donald Trump said on Monday. The coronavirus outbreak and the sudden decline in air travel is “not their fault,” the president observed, “they were having record seasons.”   Fact check: true. Airlines are coming off a remarkable 10-year run. Delta’s profits for each of the past five years, back from 2019 to 2015, were $4.8 billion, $3.9 billion, $3.2 billion, $4.2 billion, and $4.5 billion. Mergers have given the big four (Delta, United, American, and Southwest) about 80 percent of the U.S. market. With oil prices low and the economy humming along, it has been a great time to run an airline.

So now that the lean times are here—admittedly, a surprising turn of events for us all—where did all that money go? Why are multibillion-dollar airlines held to a budgeting standard that, if it were adopted by a typical American household, would seem totally irresponsible? And why, if they blew through all that cash, should we help them now?

The last question is the easiest to answer: because we have no choice, if we want to maintain our national travel infrastructure.   The first question—where’s the money?—is also not so complicated. Over the past decade, according to Bloomberg, U.S. airlines spent 96 percent of their cash profits on stock buybacks to enrich investors and their own executives, whose positions often come with stock holdings.*  As for why airlines behave with relatively little foresight, that’s more complicated.

Investors see little reason for airline companies—or any other companies—to have cash on hand. In 2017, analysts at McKinsey concluded that the 500 largest companies in the U.S. (excluding banks) had about 20 percent of their revenues in cash. That was too much, they thought. “While companies do need to hold some cash to do business,” they wrote, “in the past we’ve found that companies can typically do with cash balances of less than 2 percent of revenues.” (This cash is mostly held off shore, but that’s another story.)

By keeping cash in the bank, executives weren’t just depressing their own salaries. They were also making their companies look bad. They risked the ire of activist investors who saw cash as “unproductive capital,” workers who saw cash reserves as raises that hadn’t been paid, and even savvy consumers, who would protest stingy service and aging equipment.   And so at the end of a record decade in profits, according to Bloomberg, American had $7 billion on hand, United $4.9 billion, and Delta $2.9 billion.

Those rainy-day funds still sound like a lot of money, but there’s another problem with airlines. Historically, they were considered a bad investment prone to bankruptcies. In 2007, Warren Buffett wrote, “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”* (Even Buffett came around and bought stock in the big four in 2016.) Despite this recent merger-driven boomlet, they are low-margin, capital intensive  businesses.  Low margins mean your savings don’t get you far. At the rate it’s going now, United’s blockbuster 2019 profits will be spent down in less than 90 days. The company says it’s losing $1.5 billion a month.  Capital-intensive means it’s hard to tighten your belt. You can save some money on fuel and food, but not on labor or rent. You still have to pay banks or leasing companies for your planes. You can’t save those seats for later, or fly twice as many flights when business picks up again. There is no factory to shut down. Even if you ground flights, many costs are fixed.

Which brings us to the current pandemic-induced crisis, and the fifth reason—after the unprecedented disruption, shareholder capitalism, low margins, and a capital-intensive business—that airlines do not have enough money sitting around: moral hazard. America won’t let the airlines fail, and the people who run the airlines know it.   Nobody wants to bail out executives and shareholders who spent years lining their pockets as hundreds of thousands of owner-operated restaurants go out of business. But letting the planes go down would put nearly a million people out of work and deprive the country of nearly all its long-distance travel infrastructure.

The mergers that helped the companies throw off such big profits have left us with corporations so fundamental to American life they are basically utilities. Let McDonald’s go under and you still have Burger King. Let American Airlines shutter and Dallas will be as distant as Timbuktu.  The question for Congress, then, is not whether to save the airlines—but how to redraw corporate governance to fix its bad incentives.

After Sept. 11, Congress passed an airline bailout of grants and loans. It was designed to help airlines obtain insurance again, but it also included caps on CEO pay and “golden parachutes” for departing executives. In a bigger bailout, the public can demand more significant oversight. “We won’t let this look like the bank bailout of 2008, nor can you compare the two,” Sara Nelson, the president of the flight attendants’ union, said on Twitter. “The airline industry didn’t cause the pandemic and money should come with significant conditions to help workers and keep planes flying, not enrich shareholders or pad executive bonuses. Airlines must commit to maintaining payroll. It means no bonuses, no buybacks, & no breaking union contracts in bankruptcy. Companies should commit to pay a min $15 wage and board seats for workers.”

It’s a good template for how Washington should approach the crisis: With an open mind toward fixing corporate America’s problems. In the New York Times, the antitrust advocate Tim Wu writes that we should force airlines to cap or abolish fees and take steps to undo industry consolidation. Over in Europe, Italy has announced it will nationalize Alitalia, and other European airlines will not be far behind.  Whatever we decide to do with the airlines will be just an appetizer to the considerably more fraught negotiation that’s just around the bend, over the future of death-plane producer Boeing, whose departing CEO Dennis Muilenburg walked away with more than $60 million earlier this year.

One thing is for sure: The central condition of any assistance has got to require airlines keep their profits in the bank for the next time this happens (as was required for automakers after the 2008 crash—Ford has $37 billion in reserve). This pandemic is a surprise. The next one won’t be. If you’re expected to keep your savings on hand, so should American, United, Southwest, and Delta.


https://slate.com/business/2020/03/airlines-bailout-coronavirus.html

Taylor Swift And Kanye West's 'Famous' Phone Call Video Leaks: Read The Transcript

(By Melody Chiu, People Magazine, 21 March 2020)

Four years after Kim Kardashian shared an edited phone call between her husband Kanye West and Taylor Swift discussing his “Famous” lyrics, extended portions of the conversation were leaked online late Friday night.  In clips posted to Twitter, the rapper, 42, is heard asking Swift, 30, to release his new song on her Twitter account. “So my next single, I wanted you to tweet it … so that’s why I’m calling you. I wanted you to put the song out,” he tells the Grammy winner on the phone.

After telling Swift he included a “very controversial line” about her in the song, the pop star nervously asks West what the lyrics are.  West then tells Swift he’s been mulling over the lyrics for eight months and warns her “it’s gonna go Eminem a little bit” and to “brace yourself for a second.”

A wary Swift asks if it’s “gonna be mean,” and West acknowledges even Kim initially felt it was “too crazy” but had come around. “It’s like my wife’s favorite f—ing line,” he says.

Taylor Swift, Kanye West and Kim Kardashian West- Kevin Mazur/WireImage

RELATED: Taylor Swift and Kanye West’s Rocky History: A Timeline

“So it says, ‘To all my Southside n— that know me best/ I feel like Taylor Swift might owe me sex,” continues West with a chuckle. Responds Swift with a laugh: “That’s not mean.”

Further discussing his proposal to have her release the song, Swift — who expresses relief that the lyrics aren’t about her being “that stupid dumb bitch” — tells West she needs to “think about it because it is absolutely crazy.”


Later in the call, West tells Swift the original lyric he wrote was, “To all my Southside n— that know me best/ I feel like me and Taylor might still have sex.” (The lyric that made it into the final version of the track is “For all my Southside n— that know me best/ I feel like me and Taylor might still have sex / Why? I made that bitch famous”)


In another leaked portion, West asks Swift how she would feel if he included a line that said “I made her famous,” to which she warily responded: “Did you say that? Well, what am I going to do about it? It’s just kind of, like, whatever at this point. But I mean, you gotta tell the story the way it happened to you and the way that you’ve experienced it. Like, you honestly didn’t know who I was before that. Like, it doesn’t matter if I sold 7 million of that album before you did that, which is what happened. You didn’t know who I was before that. It’s fine. But um, yeah, I can’t wait to hear it.”


West also promises Swift—who encourages West to protect his relationship with Kim after he tells her his wife prefers him saying “owes me sex” instead of “might still have sex”—to send her the final version of the track.  “I’m going to send you the song and send you the exact wording and everything about it, right? And then we could sit and talk through it,” West tells Swift, who has long contended she never heard the song before its release.


After “Famous” was released in February of 2016, Swift’s rep told PEOPLE the singer “declined and cautioned him about releasing a song with such a strong misogynistic message. Taylor was never made aware of the actual lyrics, ‘I made that bitch famous.’” 

          Kanye West and Taylor Swift - Christopher Polk/Getty Images

In June of 2016, Kardashian West told GQ the singer had told her husband she would “laugh” and tell media she was “in on it the whole time” in a phone call. Then a month later, the Keeping Up with the Kardashians star branded Swift a snake on social media and leaked edited snippets from the call on her Snapchat account.  “If people ask me about it, look, I think it would be great for me to be like, ‘He called me and told me before it came out . . . Joke’s on you, guys. We’re fine,’” Swift is heard saying in the footage Kardashian West posted on Snapchat.  


Swift’s rep was quoted in the GQ article as saying that “much of what Kim is saying is incorrect. Taylor has never denied that conversation took place. It was on that phone call that Kanye West also asked her to release the song on her Twitter account, which she declined to do. Kanye West never told Taylor he was going to use the term ‘that bitch‘ in referring her. A song cannot be approved if it was never heard. Kanye West never played the song for Taylor Swift. Taylor heard it for the first time when everyone else did and was humiliated. Kim Kardashian’s claim that Taylor and her team were aware of being recorded is not true, and Taylor cannot understand why Kanye West, and now Kim Kardashian, will not just leave her alone.”


Moments after Kardashian West posted snippets of the call, Swift released a statement on her Instagram slamming the couple. “Where is the video of Kanye telling me he was going to call me ‘that bitch’ in his song? It doesn’t exist because it never happened. You don’t get to control someone’s emotional response to being called ‘that bitch’ in front of the entire world,” the singer wrote.

“Of course I wanted to like the song. I wanted to believe Kanye when he told me that I would love the song. I wanted us to have a friendly relationship. He promised to play the song for me, but he never did. While I wanted to be supportive of Kanye on the phone call, you cannot ‘approve’ a song you haven’t heard. Being falsely painted as a liar when I was never given the full story or played any part of the song is character assassination.”


While Swift went on to record and tour reputation, a dark album inspired by the depressive period she went through following the drama, Kanye West has remained mum about the feud while Kardashian West told Andy Cohen last January she was “over it.”


For a transcript of the newly leaked portion of Swift and West’s phone conversation, keep reading below:


KW: —old school s—, yeah. I’m doing great. I feel so awesome about the music. The album’s coming out Feb. 11. I’m doing the fashion show Feb. 11 at Madison Square Garden and dropping the album Feb. 12, that morning. It’s like …. yeah. Yeah. Yeah. Aw thank you so, so much. Thank you. It feels like, real. I don’t know, just ‘Ye, Apple, Steve Jobs-type music. Like, so my next single, I wanted you to tweet it … so that’s why I’m calling you. I wanted you to put the song out.


TS: What would people … I guess it would just be, people would be like, “Why is this happening?” And I had something to do with it, probably.


KW: The reason why it would happen is because it has a very controversial line at the beginning of the song about you.


TS: What does it say? [nervous laughter]


KW: It says, and the song is so, so dope, and I literally sat with my wife, with my whole manager team, with everything, and try to rework this line. I’ve thought about this line for eight months, I’ve had this line and tried to rework it every which way, and the original way that I thought about it is the best way, but it’s the most controversial, so it’s gonna go Eminem a little bit, so can you brace yourself for a second?


TS: Yeah…


KW: Okay, alright. It says—wait a second, you sound sad.


TS: Well, is it gonna be mean?


KW: No, I don’t think it’s mean.


TS: Okay, then let me hear it.


KW: Okay, um … and the funny thing is when I first played it and my wife heard it, she was like “Huh? What? That’s too crazy, blah, blah, blah.” And when Ninja from Die Antwoord heard it, he was like, “Oh God, this is the craziest sh—! This is why I love Kanye,” that kind of thing. It’s like my wife’s favorite f—ing line. I just wanted to give you some premise of that, right?


TS: Okay.


KW: So it says, “To all my Southside n— that know me best/ I feel like Taylor Swift might owe me sex.” [chuckles]


TS: [chuckles] That’s not mean.


KW: Okay. Yeah, well, this is the thing why I’m calling you because you got an army. You own a country of motherf—ing two billion people, basically, that if you felt that it’s funny and cool and like hip hop and felt like, you know, just The College Dropout and the artist like, ‘Ye that you love, then I think that people would be like way into it, and that’s why I think it’s super genius to have you be the one that says, ‘Oh, I like this song a lot, like, yeah, whatever. This is cool. Whatever, it’s like, I got like s— on my album where I’m like, “I bet me and Ray J will be friends if we ain’t love the same bitch.”


TS: Oh my [laughs]. I mean, I need to think about it because you hear something for the first time, you need to think about it because it is absolutely crazy. I’m glad it’s not mean though. It doesn’t feel mean, but like, oh my God, the build-up you gave it. I thought it was gonna be like that stupid dumb bitch, like, but it’s not. Um, so I don’t know. I mean, the launch thing, I think it would be kind of confusing to people, but I definitely like, I definitely think that when I’m asked about, of course I’m gonna be like, “Yeah, I’m his biggest fan. I love that. I think it’s hilarious,” but um, I’ll think about it.


KW: Yeah, you don’t have to do—you don’t have to do the launch and retweet. That’s just an extra idea that I had, like, but if you think that that’s cool, then that’s cool. If not, we are launching the s— like on just GOOD Fridays, on Soundcloud, the site, s— like that.


TS: You know, the thing about me is like, anything that I do becomes a feminine think-piece, and if I launch it, they’re gonna be like, “Wow,” like this thing—like they’ll just turn it into something that … I think if I launch it, it honestly like, it’ll be less cool ‘cause I think if I launch it, it adds this level of criticism, ‘cause having that many followers and having that many eyeballs on me right now, people are just looking for me to do something dumb or stupid or lame, and it’s like almost … I don’t know, like I kind of feel like people would try to make it negative if it came from me. Do you know what I mean?


KW: Yeah.


TS:  I try to be super self-aware about where I am, and I feel like, I feel like right now I’m like this close to overexposure.


KW: Well, this one, I think this is a really cool thing to have.


TS: I know, it’s like a compliment [laughs].


KW: I had this line where I said—and my wife really didn’t like this one because we tried to make it nicer. So I said, “To all my Southside n— that know me best/ I feel like me and Taylor might still have sex,” and my wife was really not with that one. She was way more into “She owes you sex,” but then the owe part was the feminist group-type s— that I was like, “Ahhh.”


TS: That’s the part that I’m kind of—I mean, they’re both really edgy, but that’s the only thing about that line is that it’s like gonna … the feminists are gonna come out, but I mean, you don’t have to give a f—, so…


KW: Yeah, basically. Well, what I give a f— about is just you as a person and as a friend. I want things—


TS: That’s sweet—


KW: —that make you feel good. I don’t wanna do rap that makes people feel bad, like of course like I’m mad at Nike, so people think like, “Oh, he’s a bully. He ran on stage with Taylor. He’s bullying Nike now, this $50 billion company.”


TS: Why are people saying you’re bullying Nike?


KW: Because on “Facts” I said like, “Yeezy, Nike out here bad, they can’t give s— away.”


TS: Yeah, yeah, yeah, yeah, yeah, yeah. I mean, that’s just what you do though.


KW: [laughs]


TS: [laughs] I mean, I wouldn’t say that it’s like possible to bully a company like Nike where—I mean, um, yeah, I mean, go with whatever line you think is better. It’s obviously very tongue-in-cheek either way, and I really appreciate you telling me about it. That’s really nice.


KW: Oh yeah. I just had a responsibility to you as a friend. I mean, thanks for being, like, so cool about it.


TS: Thanks. Yeah, I really appreciate it. The heads-up is so nice. You’d be surprised how many people just do things without even asking or seeing if I’d be okay with it, and I just really appreciate it. I never would have expected you to tell me about a line in one of your songs. That’s really nice that you did.


KW: You mean like unexpected s— like you taking the time to give someone a really, really valuable award and then they completely run for president right afterwards? Like unexpected in that kind of way? [laughs]


TS: [laughs] We have not talked about what happened.


KW: I just thought that was wavy. It was vibe-y. The funny thing is I thought about the weed and the president … both of those things I thought about in the shower the day before and just started laughing like crazy. I was like, I gotta say that I had just smoked some weed, and then say I’m gonna run for president. So those are my bases of … I knew I wanted to say the thing about going to like the Dodgers game with my daughter and like getting booed and that being scary, and I knew I wanted to say, like, me changing and thinking about people more since I had a daughter. And then I wanted to say the weed thing. And then I wanted to say the president thing. And everything else was just like off the cuff.


TS: Oh my God. It was definitely, like, it stole the show. And then the flowers that you sent me. I Instagram-ed a picture of them and it’s the most Instagram likes I’ve ever gotten. It was like 2.7 million likes on that picture of the flowers you sent me. Crazy.


KW: It’s some connection or something that I think is really important about that moment when we met on stage. There’s something that I think is really important about that, and where humanity is going, or now where me and Kim are, and having a family and just everything, the way things are landing. So it’s always—relationships are more important than punchlines, you know.


TS: Yeah, I mean, I don’t think anybody would listen to that and be like, “Oh, that’s a real diss.” Like, “She must be crying about that line.” And I think because of how crazy and strange and fateful the way we met was, I think we have to pick our moments to do stuff together and make sure it’s only really cool stuff.


KW: Yeah, exactly. We can’t have it, like, be somebody else’s idea that gets in front and they’re, like—because if you’re like a really true, creative, visceral, vibe-y type person, it’s probably hard for you to work at a corporation. So how can you give a creative—creative ideas and you’re working in a house of non-creativity? It’s like this weird … so whenever we talk directly—okay, now what if later in the song I was also to have said, uh, “I made her famous”? Is that a—


TS: [hesitant] Did you say that?


KW: Yes, it might’ve happened [laughs].


TS: Well, what am I gonna do about it?


KW: Uh, like, do the hair flip?


TS: Yeah, I mean, um, it’s just kind of like, whatever, at this point. But I mean, you’ve got to tell the story the way that it happened to you and the way that you’ve experienced it. Like, you honestly didn’t know who I was before that. Like, it doesn’t matter if I sold seven million of that album before you did that, which is what happened. You didn’t know who I was before that. It’s fine. But, um, yeah. I can’t wait to hear it.


KW: I mean, it’s fun. It’s definitely—you’re ready to trend. That’s all I can say.


TS: Uh, what’s the song called?


KW: Uh, it might be called “Hood Famous.”


TS: Oh, cool. Is it going to be like a single-single, or is it going to be a Soundcloud release? What are you doing?


KW: Oh, this one right here is like f—ing song of the year-type territory.


TS: Oh my God, amazing. That’s crazy. Oh my God. Speaking of song of the year, are you going to the Grammys?


KW: Uh, you know what? I was thinking to not do it. But I think that this song—you know what? I’m going to send you the song and send you the exact wording and everything about it, right? And then we could sit and talk through it. But if the song goes and f—ing just—


TS: …they just look at us and go … Even if we’ve made an incredible achievement, it’s harder for people to write down our names for some reason. That’s just human nature. It’s envy. It’s asking people in our industry to vote for the people who are already killing it.


KW: Yeah. It’s, like, so many people wanted Meek Mills to win because Drake was just killing it for so long, and they were just like, “We just need like Meek Mills to like—but I think, you know, okay, so that has my mind going through a lot of places to problem-solve. I was talking to Ben Horowitz. Do you know this guy? He’s a VC. Ben Horowitz out of San Fran. But he’s down with that.


TS: I know that name. I don’t know him.


KW: It’s just like the San Fran clique, you know, that type of thing. Like he stays down the street from Mark Zuckerberg and s— like that. So I was talking to him and I was like, “Bro.” Like me, I’m in personal debt. I’m in debt by a good like $20, 30 million, ever since the fashion … and still have not made it out of it. So that’s part of the reason why I had to go to Roc Nation and the touring deals evolved, and it allowed the whole town to try to feel like they could control Kanye or even talk to me like I’m regular or have agents do it, but they saw they couldn’t. It’s like even in debt, he moves around like he’s like a billionaire. I’m like, yeah, I’m a cultural trillionaire! I might have financial debts. So I told Ben Horowitz, I was like, “You guys, you, Mark Zuckerberg or whoever, Tim Cook, you guys have to clean that up.” So I’m sending Ben Horowitz my current balance. That means that l’m not up $50, not up 100 million, not up 200 million, not up 300 million. No. Negative $20 million, currently. I, Kanye West, the guy who created the genre of music that is The Weeknd, that is Drak —the guy who created—every single person that makes music right now, favorite album is The College Dropout. Every single person that makes music. 


But I’m rich enough. Like, I went into debt to my wife by $6 million working on a f—ing house, less than like a few months ago, and I was able to pay her back before Christmas and s— like that. So, you know, when I talk about Nike, the idea that they wouldn’t give me a percentage, that I could make something that was so tangible, when Drake was just rapping me into the motherf—ing trashcan, that I could have something that was tangible that showed my creativity and expressed myself, that also could be a business that I could have a five-times multiple on and actually be able to sell it for like $100 million, $200 million or a billion dollars, that was very serious. Every conversation, every time I’d scream at Charlemagne or scream at Sway, that was really, really, really serious. 


And it also was with my family. I felt like, look, if I’m just the angry black guy with some cool red shoes from Nike five years ago, I was going to be visiting my daughter, as opposed to be living with her. It would’ve been like, enough is enough. It wouldn’t have been cool anymore, because it would have been a group of people, including my wife, that all had at least like $500, 400 million in their account. And then you get the angry black man at the party talking about “I’m the one that put Kim in the dress! I’m the one that did this!” But it never realized itself. So that’s one of the things I just talked to Ben. And I talk about it on the album. Talk about personal debt and s—. Just the idea like, “Oh s—, this dude with this f—ing Maybach that makes f—ing $50 million a tour still hasn’t lined it up or came out of the point when AEG and Live Nation wouldn’t give him a deal.” The debt started after Watch the Throne, because I got no deal. But I still was doing my creative projects on my own, shooting a film, doing a fashion show, just trying to be very Disney, be very visceral, be creative. And…


TS: I mean, I’m sure you’ve thought about this up and down, but I mean, is there a way to monetize these in a way that you thought would still feel authentic but make them into a multi-billion dollar company?


KW: Well, that’s what we’re going to do. That’s what we’re in the plans of. I’m 100 percent going to be like a multi, multi, multi-billionaire. I think it’s fun that I can like be like Charlie Sheen and be like, “Hey, like, I got AIDS.” You know, like—to me, I told Drake that the other night. I was like, “Yo, Drake, I’m in personal debt.” And for me to tell Drake, the f—ing number one bachelor in the world that can f—ing rap anybody into a trashcan, that lives four blocks down the street from my wife and like basically f—s all of her friends, that I’m in personal debt, it’s such a like putting down the sword or putting down the hand or opening, showing the hand. 


That I don’t have my poker face on with any of you guys. I’m just me. I’m just a creative. You know, everything I did, even when it was mistimed, whatever it might’ve been from a—it’s always, like, from a good place, and I know that I’ll overcome it and I know that the world will overcome it. Because, like, I’m going to change the world. I’m going to make it—I’m gonna make people’s lives better on some post-Steve Jobs, Howard Hughes-type s—. Like, I’m going to do things with education. I’m going to do things that help to calm down murders in Chicago or across the globe.

Things that help to calm down police brutality, to equalize the wealth amidst the class system. Because there’s a bunch of classes of wealthy people that hate Obama because he’s more social and he wants the people who don’t have anything to have everything. And in my little way, by learning how to design, design is something that’s only given to the rich currently. The exact color palette that Hermès uses versus the color palette that Forever 21 uses—a color palette is extremely important. 

Color is important. You know, the knowledge of proportions, you know, the size of our house versus the size of someone else’s houses, and just the dynamics of that proportion. Like, I don’t want this conversation to go too, too long, but I wanted to give you a bit of where I’m at and the perspective that I’m at and the way … the fact that I am the microprocessor of our culture. 


Meaning like, I can figure out how to give Rihanna a Mary J. Blige-type album. I can figure out how to get the fashion world to accept my wife, and thus the whole family. I can figure out a lot of impossible … I can figure out how to make something that you’re wearing to the airport, five years after the entire globe was like, “Hang that n— alive and f— him, and let’s watch him die, slowly, publicly.” So, it’s a lot. I figured that out for myself, so it’s a lot of s— that we collectively, with the power that you have and your fans, the power my wife has, the power that I have, that we can do to really make it where it’s not just the rich getting richer, but you know, make it not just a f—ing charity, not singing for Africa, but change things in a way that people can experience s— themselves, a piece of the good life. You know?


TS: Yeah. I mean, they’re amazing ideas and amazing concepts, and I definitely would love to talk to you more about it. I know you have to do something right now, but I love that that’s where you’re headed. And it’s been like that. I mean, when we went to dinner, there were the rumblings of those ideas. I like that you’re always thinking outward. And over the last six, seven, eight years, however long it’s been since that happened, I haven’t always liked you, but I’ve always respected you. And I think that’s what you’re saying when you say like, you know, “I might be in debt, but I can make these things happen, and I have the ideas to do it, and I can create these things or these concepts.” Like, I’m always going to respect you. And I’m really glad that you had the respect to call me and tell me that as a friend about the song, and it’s a really cool thing to do, and a really good show of friendship. So thank you.


KW: Oh, thank you too.


TS: And you know, if people ask me about it, look, I think it would be great for me to be like, “Look, he called me and told me the line before it came out. Like, the joke’s on you guys. We’re fine.”


KW: Yeah. Yeah. Okay. I think that’s pretty much the switch right there.


TS: Yeah. Like, you guys want to call this a feud, you want to call this throwing shade, but you know, right after the song comes out, I’m gonna be on a Grammy red carpet, and they’re gonna ask me about it and I’ll be like, “He called me and sent me the song before it came out.” So I think we’re good.


KW: Okay. I’m gonna go lay this verse, and I’m gonna send it to you right now.


TS: Oh, you just—you haven’t recorded it yet?


KW: I recorded it. I’m nuancing the lines. Like the last version of it says, “me and Taylor might still have sex.” And then my wife was like, ”That doesn’t sound as hard!”


TS: Well, I mean, she’s saying that honestly because she’s your wife, and like, um … so I think whatever one you think is actually better. I mean, obviously do what’s best for your relationship, too. I think “owes me sex,” it says different things. It says—”owes me sex” means like, “look, I made her what she is. She actually owes me.” Which is going to split people because people who like me are going to be like, “She doesn’t owe him s—.” But then people who like thought it was badass and crazy and awesome that you’re so outspoken are going to be like, “Yeah, she does. It made her famous.” So it’s more provocative to say “still have sex,” because no one would see that coming. They’re both crazy. Do what you want. They’re both going to get every single headline in the world. “Owes me sex” is a little bit more like throwing shade, and the other one’s more flirtatious. It just depends on what you want to accomplish with it.


KW: Yeah, I feel like with my wife, that she probably didn’t like the “might still have sex” because it would be like, what if she was on a TV show and said, “Me and Tom Brady might still have sex” or something?


TS: You have to protect your relationship. Do what’s best. You just had a kid. You’re in the best place of your life. I wouldn’t ever advise you to f— with that. Just pick whatever. It’s cause and effect. One is gonna make people feel a certain way, and it’s gonna be a slightly different emotion for the other. But it’s not—it doesn’t matter to me. There’s not one that hurts my feelings and the other doesn’t.


KW: Yeah. It’s just, when I’m pointing this gun, what I tried to do differently than two years ago, is like when I shoot a gun, I try to point it away from my face. So one is a little bit more flirtatious and easier, I think, so really, that means the conversation is really—one is like a little bit better for the public and a little bit less good for the relationship. One is a little bit worse for the public and better for the relationship.


TS: Yeah. I can hear it. But it’s your goals, really. I mean, you always just go with your gut, obviously. But, um, amazing. Send it to me. I’m excited.


KW: All right, cool. Thanks so much.


TS: Awesome, I’ll talk to you later.


KW: All right, cool. Peace. Bye. [to camera] We had to get that on the record.


Cameraman: I’m sorry. The battery on this thing died.


KW: It’s just when it dies, you get some s— like Kanye talking to Taylor Swift explaining that line? There’s gotta be three cameras on that one. We can’t miss one element.


https://people.com/music/taylor-swift-kanye-west-famous-phone-call-leaks/?did=504399-20200323&utm_campaign=ppl-nonewsubs_relationship-builder&utm_source=people.com&utm_medium=email&utm_content=032320&cid=504399&mid=31250606084

Stock Buybacks Enriched Companies And Their Leaders — At Everyone Else’s Expense.

(Gary Rivlin, Washington Post, 27 March)

The titanic coronavirus stimulus package, if it passes, comes with a condition for the businesses it bailed out: They can’t use taxpayer money to buy back shares of their own stock. Companies such as American Airlines, which spent $15 billion on buybacks in the past half-dozen years, and Boeing, which initiated $43 billion over the past decade, have earned notoriety for depleting their cash reserves through these moves and then telling the government they are broke and need help.

The prohibition is a popular one. Sen. Elizabeth Warren (D-Mass.) calls this practice a “sugar high for corporations” that “boosts [stock] prices in the short run” but destroys value over the long run. Other critics call it an “accounting trick” for corporate chieftains to enrich themselves and their shareholders at the expense of workers. Even President Trump offered this admonition: “I don’t want to give a bailout to a company and then have somebody go out and use that money to buy back stock in the company,” he said Sunday. “. . . So I may be Republican, but I don’t like that.”

Even businesses not participating in the bailout will be less likely to initiate stock buybacks in the coming months. In a depression, many simply won’t have the cash. And if they do, they’ll recognize the wisdom of building their reserves in an uncertain time. AT&T, JPMorgan Chase, Citigroup and McDonalds are among the corporations that since the outbreak have announced they are suspending their buyback programs.

Yet that means only a temporary pause in a practice that has flourished in corporate America: U.S. companies spent $1.09 trillion on buybacks in 2018, according to Winston Chua at TrimTabs, an asset management company. That was the highest on record, Chua said. The $900 billion companies spent in 2019 was the second-highest.

And unfortunately, the practice is toxic for working Americans. Between 2003 and 2012, companies in the S&P 500 devoted 54 percent of their earnings to buying their own shares (and an additional 37 percent to paying out dividends), according to a study by William Lazonick, an economist at the University of Massachusetts at Lowell. That left less than 10 percent for research and development, plant modernization, raises for workers, and other more productive uses of profits. It used to be that workers did well at corporations that did well. That’s no longer true, and buybacks are a big part of the reason.

For decades, stock buybacks were considered market manipulation and, if not quite outlawed, were strongly discouraged, says Lenore Palladino, an economist at the University of Massachusetts at Amherst. That changed in the deregulation sweep of the 1980s under Ronald Reagan. In 1982, the Securities and Exchange Commission loosened its definition of stock manipulation, opening the floodgates. What had been a frowned-upon activity that put a company at risk of an SEC investigation soon became standard practice.

Today, shareholders love buybacks, in which a company spends its profits to purchase more control of itself. The maneuver pushes up share prices — not because a company is killing it in the marketplace but because there are fewer shares to trade (less supply, higher cost). It also helps a company look better: A key measure used by analysts and investors is “earnings per share.” Dividing the same revenue by fewer shares makes this metric magically rise.

Chief executives love buybacks as well. The vast majority of their pay comes in the form of stock options and stock grants. Buybacks increase the value of the shares they’ve already earned and help them earn more. And CEO compensation is tied to share price, so they have good reason to push the value up any way they can.

But buybacks have become a major driver of income inequality and help explain why members of the top 0.1 percent (which includes most high-ranking corporate executives) “reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid,” as Lazonick put it in a 2014 Harvard Business Review study called “Profits Without Prosperity.” He argued that American workers were no longer prospering because companies no longer shared wealth with them.

Corporate executives are twice as likely to sell their own stock during scheduled buyback periods, according to research by Palladino. Some companies even borrow money to cover the costs of a buyback. “They really are the tip of the spear of how large corporations have operated for the benefit of the wealthiest shareholders and corporate insiders at the expense of everyone else,” Palladino says.
The Trump tax cut only accelerated the practice. Under the Tax Cuts and Jobs Act of 2017, the corporate tax rate fell 40 percent, from 35 percent to 21 percent. That meant a lot more cash in the coffers of the country’s biggest companies. When top executives and their political allies were selling the cut, they promised new investments in America and its people. Instead, stock buybacks reached a crescendo. Some companies didn’t even wait for Trump to sign the bill. The board of directors at Pfizer, which had already approved $6.4 billion in buybacks before the tax cut, authorized an additional $10 billion pre-signing. Also jumping the gun were Home Depot, which announced a $15 billion buyback, and Bank of America, which committed to a $5 billion buyback.

As they bought up stock, many companies failed to deliver on their promises to workers. By the end of 2018, Senate Democrats had assembled a list of companies that had put some of their tax savings toward buybacks while initiating layoffs. They included General Motors, Wells Fargo and JPMorgan Chase, which laid off hundreds of workers that year despite a $3.7 billion windfall from the tax cut. The company committed to more than $50 billion in buybacks in 2018 and 2019 before announcing that it was temporarily abandoning its repurchasing plan.

Still, it wasn’t until the country’s airlines fell on hard times this month that buybacks ignited a major public debate. The same day the news broke that the airlines had asked the federal government for more than $50 billion in loans, guarantees and cash grants, Bloomberg News reported that the major air carriers had spent 96 percent of their cash over the past decade on stock buybacks. American, for instance, went deep into debt while spending $15 billion on buybacks. All told, six of the country’s largest airlines approved roughly $47 billion in buybacks over the past decade, spurring outrage.

Members of Congress have offered a number of solutions to this problem. Senate Minority Leader Chuck Schumer and Sen. Bernie Sanders have been touting an idea to bar buybacks unless companies pay their workers at least $15 an hour, provide seven days of paid sick leave, and offer health-care and retirement benefits. Another bill (the Reward Work Act, introduced by Sen. Tammy Baldwin last March) and its House companion (introduced by Reps. Jesús García and Ro Khanna) would ban open-market stock buybacks and require public companies to allow their workers to elect one-third of their board members. Sen. Sherrod Brown’s proposal would have companies give their workers $1 for every $1 million spent on buybacks.

For the moment, though, there’s only a temporary freeze in buybacks. American workers are about to suffer the effects of an economic depression. The eventual recovery should help them, too, not just their bosses.


This essay is published in partnership with the nonprofit newsroom Type Investigations. Nina Zweig provided research assistance.

https://www.washingtonpost.com/outlook/stock-buybacks-gouged-workers-the-measure-stopping-them-comes-too-late/2020/03/27/d6170752-6fcb-11ea-b148-e4ce3fbd85b5_story.html?utm_campaign=wp_todays_headlines&utm_medium=email&utm_source=newsletter&wpisrc=nl_headlines Subscriber sign in

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