Corporate Debt and Stock Buybacks: The Hidden Threat to America’s Economy

When I look at today’s financial markets, one issue keeps surfacing louder than ever: corporate debt. Businesses in America now hold a staggering $14 trillion in debt more than the federal government. The difference? The government can print money in an emergency. Private companies can’t. And what makes this worse is that so much of this borrowing isn’t going into innovation or growth it’s going into stock buybacks.

The problem with stock buybacks is simple: they make numbers look good on paper without making businesses stronger. Executives repurchase shares to boost earnings per share and drive up stock prices. Investors cheer, and CEOs walk away with enormous bonuses. But here’s the catch many companies are borrowing money to do it. Boeing, Intel, and General Electric are just a few names that have leaned on financial engineering to satisfy shareholders in the short term while ignoring long-term sustainability.

This short-term mindset traces back to the 1980s, when laws restricting buybacks were repealed. Since then, dividends and reinvestment have taken a back seat to aggressive buybacks. Today, CEO compensation averages more than 340 times that of the average worker, largely fueled by stock performance metrics. Shares are now six times more expensive than they were in 1982 for the same level of profit. The result? Fragile companies, inflated valuations, and investors left holding the bag when markets wobble.

The ripple effects go even further. Federal government spending now makes up more than one-third of U.S. GDP, fueling corporate profits through contracts, subsidies, and bailouts. Businesses have become reliant on taxpayer money, while household debt climbs and savings hit record lows. Corporate profits may look strong, but the foundation is shaky when millions of households are financially stretched.

So how do we fix this? First, we need smarter regulation around buybacks and corporate consolidation. Companies should be rewarded for reinvestment in R&D, workforce development, and long-term planning—not for leveraging debt to pump up stock prices. Executive compensation needs to be tied to sustainability, not just quarterly returns. And businesses need to rediscover the value of patience, because chasing short-term wins has left the entire economy vulnerable.

I believe the solution also requires cultural change in leadership. Too many executives nearing the end of their careers focus on quick gains rather than building resilient companies for the next generation. As a result, startups aim to scale fast and cash out instead of creating sustainable businesses. If we’re going to strengthen the economy, we need leadership that values the long game.

Corporate debt and buybacks may sound like Wall Street issues, but they touch every household. When companies buckle under their own financial engineering, it means layoffs, weaker retirement accounts, and a less stable economy. The bottom line is clear: short-term thinking is costing us long-term stability, and it’s time for businesses and policymakers to act before the cycle breaks us.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.