“Modern American capitalism, with its short-term focus and its frankly non-focus on human capital, is not working for enough folks,” said Sen. Mark Warner. | Win McNamee/Getty Images Finance & Tax Warner: ‘Modern capitalism is under assault’

Sen. Mark Warner (D-Va.) on Thursday issued an emphatic call for economic reforms to make capitalism work for more Americans but declared that government deficits matter, in a preview of the debate looming for Democrats heading into the 2020 elections.

“Modern capitalism is under assault in ways that are frankly unprecedented,” Warner said at a conference hosted by the National Association for Business Economics. “If we look at whatever economic theories are being offered by the increasingly not mainstream but extreme, extreme version of both political parties, it scares the hell out of me.”


“Modern American capitalism, with its short-term focus and its frankly non-focus on human capital, is not working for enough folks,” he added in his unscripted remarks.

Warner said “at least half” of his party’s presidential candidates “have a different economic theory of the case” from him, with many increasingly believing “that top-down redistribution is the only answer.”

The senator will be up for reelection in 2020 and is also in the conversation as a potential presidential candidate.

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Countering a growing view that deficits aren’t a big deal, Warner said the country will eventually need to overhaul entitlement programs like Medicare and Social Security.

“I still believe that debt and deficit are the great overhang — and that is not a popular item — in America today,” Warner said. “The administration has zero credibility on this topic,” citing the ballooning deficits under President Donald Trump.

“Every year we kick the can on [entitlement reform], that change gets more challenging,” he said.

In a rebuke to Republicans, Warner called it “creative hogwash” to say that cutting taxes on the rich or on businesses will lead companies to reinvest in America.

“That’s proven to be a total fallacy,” he said. “Bernie Sanders was 100 percent right — 90 percent-plus was not reinvested. It was on spent on share buybacks and dividends.” He said perhaps businesses should also have to share something with employees if they do stock buybacks.

He also dismissed “happy talk” by corporate executives who say their biggest asset is their workforce.

“There’s nothing in our tax code or our accounting system that frankly incents any business to invest in human capital,” he said. Businesses, he argued, don’t want to spend money training low- and moderate-skill workers because those are the type of jobs that might be replaced by automation or outsourced.

Warner said the U.S. should offer a tax credit for companies that provide worker training, equivalent to the credit that rewards businesses for research and development.

He also criticized the structure of capital markets as providing “enormous pressure for short-term profits over long-term valuation.” He argued that technology companies had largely been able to resist this pressure because the founders retained significant control.

In a comment resembling a proposal from Sen. Elizabeth Warren (D-Mass.), Warner suggested that companies should be beholden to their workers, not just investors who own their stock.

“Maybe we should start to even start the beginnings of a debate about a new notion of fiduciary duty that goes beyond shareholders to at least include some stakeholders, potentially employees,” he said.