There’s a war of words between Sen. Bernie Sanders and the former head of Goldman Sachs, Lloyd Blankfein. The subject: corporate stock buybacks.

Sanders, the famously left-wing populist from Vermont, depicts buybacks—which have ballooned in size lately—as wasteful and indeed detrimental to society. Blankfein, who served as Goldman’s chief until his retirement last year, believes they bolster economic growth.

The verbal duel began after Sanders, who ran for the Democratic presidential nomination in 2016, and may try again in 2020, wrote an opinion piece in The New York Times inveighing against buybacks and calling for reining them in.

The Vermont senator and co-author Chuck Schumer, the Senate minority leader, called for a law to make companies commit funding to improve worker pay and benefits as well as to increase capital spending, before they’d be permitted to repurchase investors’ shares. Worker pay should rise to $15 an hour before management could even think of buying back stock, they wrote.

Blankfein’s answer to the op-ed was to tweet: “The money doesn’t vanish. It gets reinvested in higher-growth businesses that boost the economy and jobs.”

To Sanders, that sounded like the trickle-down theory, a concept that many liberal economists dispute. In his return tweet, the senator agreed that the money deployed for buybacks doesn’t simply disappear, adding: “It increases the wealth of billionaires like him. How about increasing wages for American workers. Is that a bad idea?”

What’s more, capital spending, while higher last year, is not on a tear nowadays. The thinking behind boosting capital expenditures is that they enhance worker productivity and create new jobs. A new factory will require hundreds more workers.

Certainly, buybacks are all the rage these days. In 2018, companies bought almost $800 billion of their own stock, a record. And this occurred even during a rocky year for the market, as stocks tumbled 6% and endured two corrections.

The counter-argument to Sanders, although Blankfein hasn’t made it, is that industries that tend to pay higher already, such as tech, could go crazy with buybacks. Plus, all capex isn’t wise. Case in point: General Electric laid out $217 billion in capital spending this century, which was nearly $100 billion more than its buyback tab. What happened? Its market value has shrunk $500 billion since then. Not a good use of money.

Either way, this is only the beginning of an argument that is sure to roil the political landscape as the new election season heats up.

Tags: Bernie Sanders, Lloyd Blankfein, S&P 500, stock buybacks