Trump’s big buyback bamboozle

Source: The American Prospect
by Robert Reich

“Trump’s promise that corporations will use his giant new tax cut to make new investments and raise workers’ wages is proving to be about as truthful as his promise to release his tax returns. The results are coming in, and guess what? Almost all the extra money is going into stock buybacks. Since the tax cut became law, buybacks have surged to $88.6 billion. That’s more than double the amount of buybacks in the same period last year, according to data provided by Birinyi Associates. Compare this to the paltry $2.5 billion of employee bonuses corporations say they’ll dispense in response to the tax law, and you see the bonuses for what they are: a small fig leaf to disguise the big buybacks. If anything, the current tumult in the stock market will fuel even more buybacks. Stock buybacks are corporate purchases of their own shares of stock. Corporations do this to artificially prop up their share prices. Buybacks are the corporate equivalent of steroids. They may make shareholders feel better than otherwise, but nothing really changes.” (02/13/18)

http://prospect.org/article/trumps-big-buyback-bamboozle

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