The New York Times reports on a trend we’ve been watching closely — the explosion of stock buybacks in the wake of the GOP tax plan’s passage:

In the fourth quarter, American companies’ investments in things like factories and business equipment grew by 6.8 percent. That was the fastest growth rate since 2014, but far from the giant surge in capital spending that was promised ahead of the tax overhaul.
But the buying back of shares is also at record levels.
Almost 100 American corporations have trumpeted such plans in the past month. American companies have announced more than $178 billion in planned buybacks — the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.

The dollar amounts are stunning:

Cisco said this month that in response to the tax package, it would bring back to the United States $67 billion of overseas cash, using $25 billion to finance additional share repurchases. Alphabet, the parent company of Google, authorized up to $8.6 billion in stock purchases. PepsiCo announced a fresh $15 billion in planned buybacks. Chip gear maker Applied Materials disclosed plans for a $6 billion program to buy shares. Late last month, home improvement retailer Lowe’s unveiled plans for $5 billion in purchases.

It is hardly surprising, therefore, that Senate Minority Leader Charles E. Schumer (D-N.Y.) went to the floor to blast the GOP. “Republicans made a conscious decision to give corporations and the wealthiest Americans the lion’s share of the tax cuts and promised that it would trickle down to everyone else,” he said. “Unfortunately, trickle-down never works. Corporate America is doing what’s best for corporate America, and working America is getting left behind.”

This might not be as big a problem for Republicans had the administration not made outlandish projections that corporate tax cuts would be used to boost wages. Kevin Hassett, head of the Council of Economic Advisers, “predicted average U.S. household income would increase at least $4,000 a year but could rise as much as $9,000 annually.” At the time, that was widely ridiculed because there is a rich body of economic research that has found the majority of savings from corporate tax cuts go to shareholders, not workers. FactCheck.org found:

A Democratic economist — former Treasury Secretary Lawrence Summers — has attacked the CEA’s $4,000 to $9,000 prediction, characterizing its analysis as “some combination of dishonest, incompetent and absurd.” Summers concedes that just cutting the top corporate rate could in theory lead to more investment and economic growth, but he says Trump’s CEA fails to take into account several offsetting factors, including the fact that the economy is already “very close to or at full employment” and that “the tax cuts will put upward pressure on interest rates” as federal deficits increase.

The tax plan has barely kicked in, but if the buyback frenzy continues, the administration is going to have some explaining to do. And that, it seems, is what is in store. (“More buybacks are almost certainly on the way. UBS analysts covering Apple said the iPhone maker might authorize another $30 billion in share purchases when it reports its next quarterly earnings in April. That would be on top of the $30 billion it already spends each year to buy back its shares. ‘I’m expecting buybacks to get to a record for 2018,’ said Howard Silverblatt, a senior index analyst with S.&P. Dow Jones Indices.”) Hassett argues that the balance between buybacks and investment/wages will shift over time. Perhaps. If not, the Republican tax plan — and a good deal of the supply-side dogma of the 1980s — will be badly discredited.

Now, if workers also benefit — that is, if wages rise, unemployment remains historically low and labor force participation increases — workers may not care all that much about shareholders’ windfall, although the gap between the rich and everyone else was what in part fueled the rise of Trump-style populism. However, if alternatively, shareholders who are already among the mostly well-off (the top 1 percent enjoys 60 percent of the stock market returns) get even richer and there is not a dramatic change for voters who have been  struggling to pay the bills, Republicans will pay a heavy price.

If only they had not been quite so generous to the rich and to corporations or quite so Pollyannaish about the plan’s effect on wages, they might not be facing a classic Trump problem: over-promise, underperform.

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