Senators Chuck Schumer andBernie Sanders say their plan would require companies pursuingbuybacks to take such actions as raising workers' minimum pay to$15 an hour, improving pensions or offering seven days of paid sickleave. (Photo: Diego M. Radzinschi/ALM)

(Bloomberg) –Two top Senate Democrats said they'll introducelegislation barring companies from buying back their own stock unless they first increase workers' payand benefits, as the party seeks to frame 2020 election issues byspotlighting corporate responsibility.

Senate Minority Leader Chuck Schumer and Senator Bernie Sanders,who is considering a second run for the Democratic presidentialnomination in 2020, wrote in a New York Times opinion piece Monday that their plan wouldrequire companies pursuing buybacks to take such actions as raisingworkers' minimum pay to $15 an hour, improving pensions or offeringseven days of paid sick leave.

“At a time of huge income and wealth inequality, Americansshould be outraged that these profitable corporations are layingoff workers while spending billions of dollars to boost theirstock's value to further enrich the wealthy few,” the two wrote.They pointed to recent decisions of companies including WalmartInc. and Wells Fargo & Co. to repurchase billions of dollars inshares at about the same time they cut jobs.

Related: Stock buyback limit proposal prompts former GoldmanSachs CEO to face off on Twitter

The proposal would generate little support among Republicans inthe GOP-controlled Senate, so its likely to serve more as acampaign issue than to be enacted into law.

Several of the party's presidential hopefuls in the Senate arefocusing on corporate governance as an election issue, includingSenators Elizabeth Warren of Massachusetts, Kamala Harris ofCalifornia and Cory Booker of New Jersey. Sanders, an independentwho has a spot in Democratic Senate leadership, sought the party'spresidential nomination in 2016 and is weighing another run.

GOP tax cuts

Corporate governance issues also may be important in Senateraces next year, as Democrats seek to take advantage of an electionmap that plays in their favor. Republicans will be defending 22seats they now hold, while Democrats have just 12 on the ballot.Only one incumbent Democratic senator, Doug Jones of Alabama, isseen as at risk.

The GOP tax cuts enacted in late 2017, which reduced thecorporate tax rate to 21 percent from 35 percent, sparked awindfall that companies are using to repurchase their own shares,Schumer of New York and Sanders of Vermont said in their opinionpiece.

The pace of share repurchases by companies in the S&P 500accelerated last year, with authorizations surpassing $1 trillionfor the first time as tax cuts boosted profits and cash pilesgrew.

Executed buybacks hit a record $200 billion in the thirdquarter, the latest period when full results were available.Qualcomm Inc., Apple Inc. and Oracle Corp. were the biggest buyers,with each repurchasing at least $10 billion of their own stock.

While the dollar value of buybacks hit records, they'vedecreased as a percentage of market value amid the record bullmarket. Repurchases in the 12 months ending in September 2018equaled 2.72 percent of total market cap, well below the 4.31percent in 2007.

Among the presidential contenders, Booker has pushed to requirepublicly traded companies that use profits for stock buybacks topay a similar amount to employees as a “worker dividend.” Warrenhas advocated repealing a Securities and Exchange Commission rulethat makes it easier for companies to make stock buybacks. It alsowould end corporations' ability to repurchase stocks on the openmarket.

Sanders spokesman Josh Miller-Lewis said no further details areavailable on the Schumer-Sanders proposal, including when it may beintroduced or which types of corporations would be subject to thebuyback limits.

In their opinion piece, the senators said stock buybacksfundamentally benefit the wealthy, who are more likely to beshareholders or executives who are compensated through stock-basedpay.

“It's no coincidence that at the same time that corporate stockbuybacks and dividends have reached record highs, the median wagesof average workers have remained relatively stagnant,” they said.“Far too many workers have watched corporate executives cash in oncorporate stock buybacks while they get handed a pink slip.”

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