Stock buybacks are expected to reach or surpass $1 trillion by the end of this year, but businesses have already spent more on buybacks than they've spent on their own business operations according to Goldman Sachs.
According to Goldman Sachs, aggregate share repurchases (or buybacks) rose by nearly 50 percent to $384 billion in the first half of 2018. That tops the $341 billion spent on capital expenditures, which are rising at the fastest pace in at least a quarter century.
“For the first time in 10 years, buybacks are garnering the largest share of cash spending by S&P 500 firms,” writes chief U.S. equity strategist David Kostin. “Capital spending has typically represented the largest single use of cash by corporations, a position it has held for 19 of the past 20 years.”
Awash with cash in light of a lower tax burden, corporate executives are electing to spend more on making themselves smaller rather than bigger -- a bet that’s rewarded shareholders.
Republicans said passing their tax cuts for corporations and the rich would lead to a wave of business investment that would be passed down to workers in the form of higher wages, but that obviously hasn't happened.
Businesses have spent more buying back their own stocks than they've spent investing in their own business operations.
Business spending has increased and the economy has continued to add jobs, but that would have occurred even if Republicans had not touched the tax code. Passing the GOP's tax cuts just gave corporations a new way to funnel even more money to their richest executives and shareholders while providing no tangible benefit to average workers. The tax cuts have not led to major shift toward growing business operations at any major corporation that wasn't already planning to expand.
It'll be average workers who eventually pay for the tax cuts they never received much if any benefit from.
Republicans socialized the cost of handing another trillion dollars to people who were already rich.