The Employee Ownership Update
May 12, 2003
Bill to Create Presidential Commission on Employee Ownership IntroducedCass Ballenger (R-NC), Rob Portman (R-OH), Nancy Johnson (R-CT) and Dana Rohrabacher (R-CA) have introduced H.R. 1778, the "Employee Ownership for the Twenty-First Century Act." The bill would establish a presidential commission on employee ownership to report on issues surrounding employee ownership within two years. The commission would have fifteen members, six from companies with an employee ownership trust owning at least 50% of the company (three from top management and three who are not from senior management), three academics, three employee ownership non-profits, and three from government. The bill also directs the General Accounting Office to study issues that can affect the creation of employee ownership companies.
At this point, it is far too early to assess prospects for the legislation. Portman has been a leader on issues concerning retirement reform, however.
ESOP Champion Russell Long DiesRussell Long, the Senator who made ESOPs possible, died on May 9. Long was the son of Huey Long, the former governor of and senator from Louisiana. He was elected to the Senate at 29 and rose to the chairmanship of the Senate Finance Committee. Often a controversial figure seen by some as too tied into oil interests, Long also maintained what was, to some, a surprisingly populist streak. In 1973, he met Louis Kelso, who created what we now know as ESOPs. Kelso had been trying for many years to find political support for this idea. Long saw the concept as a perfect way to blend the populist ideas of his legendary father with his generally more pro-business position on taxes. "The problem with capitalism," Long often said, "is that there are not enough capitalists." The ESOP idea was to provide owners of capital with tax incentives to use their collateral in businesses they owned to back loans to trusts that could acquire stock for their employees. That way, Long said, there would be no redistribution of wealth; instead, there would be new opportunities for more people to have a chance at ownership themselves. From 1974 until he retired in 1986, Long shepherded new legislation on ESOPs through virtually every succeeding Congress.
Long's commitment to employee ownership was entirely philosophical; there was noting for him to gain politically from the considerable time, skill, and political capital he contributed to ESOPs. As one of the most powerful members of Congress, Long was able to move ESOPs forward in a way almost no member of that body could. It would be another eleven years after he left before new pro-ESOP legislation passed. Without Russell Long, it is doubtful employee ownership would ever have become what it is today.