Wednesday, October 17, 2018

Job Creation: A Priority of Americans is Doable Right Now! Part II

April 23, 2015 by  
Filed under Business, Money, News, Opinion, Weekly Columns

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( Following is how the job creation plan would work, once the $600 billion dollar payment is made to bolster the trust fund. This plan has the capacity to create a lot more than 300,000 jobs monthly. Retiring Baby-Boomers, who are estimated to be 68-72 million consumers are retiring over the next 16 years at a rate of approximately 10,000 per day, and they do not currently have the option of taking partial distribution payments from the Social Security trust fund. A partial distribution payment occurs when you take down a part of your pension principal and roll over the rest to be received monthly. It is important to note, Baby Boomers are consumers and consumers account for 70% of the economic activity of the United States economy. You can not have a healthy recovery without involving the consumer.

While this has long been an option in the private sector, government sponsored Social Security, the largest payer of retirement benefits in the world, does not offer this option. Why? Maybe , no one has asked. Please note, private sector retirement funds are required to offer you the option of taking partial distributions!

The federal government can and should modify its policies for retirees to make it possible for them to take up to $40,000 dollars in a partial distribution payment from their Social Security Retirement Fund, leaving the remainder of their retirement funds to be received in monthly annuity checks. To do this, Congress can “Expand Social Security Benefits” and place partial distributions of individual Social Security principal into the hands of retiring boomers. The partial distribution should not exceed more than 10-13 percent of any given principal amount, thus leaving the retiree with 87-90 percent of his Social Security principal to be received as a monthly annuity. This avoids making the retiree indigent.

If you change how Social Security checks are paid, this can be accomplished. Let the boomers have partial distributions of their Social Security principal in the amount of $40,000.00 dollars, and issue them a monthly check on the remainder of their principal. Look, let’s say it takes $313,000.00 dollars in principal at 6.9% interest to send a monthly Social Security check of $1800.00 dollars. So, I say to Social Security, I would like to have some of my money up front, say $40,000.00 dollars. Now pay me a monthly check on the remainder of the principal amount, which is in this instance $273,000.00 dollars, which amounts to a monthly check of $1569.00 dollars. That makes this plan ( let’s call it the Davis Plan ) deficit neutral.

It’s their money!
The impact of allowing partial distributions, would pull this economy out of this downturn. BOOMERS, as stated, ARE RETIRING AT A RATE OF 10,000 PER DAY having STARTED IN JANUARY of 2012, at the age of 66 and continuing for the next 16 years! ( at 66, they receive full benefit payments ) 10,000 x $40,000.00 = $400,000,000.00 million dollars. That’s right! They will dump that much money into our faltering economy each day for the next 16 years. That amount in effect is really $800,000,000.00 million dollars per day because money handed directly to the consumer turns over 1 to 2 times.jobsandmoreblackjobs-2015

There are 68 to 72 million boomers depending on who’s counting. With $800,000,000.00 MILLION DOLLARS coursing through this economy every day, the downturn ends and jobs the public wants are created! Add the incentive of waived or reduced taxes on the first $40,000.00 dollars taken down from any retirement fund, including Social Security and we get the middle class tax cut politicians have vowed to give to working Americans. It’s the boomers and their kids who are getting hardest hit in this downturn anyway.

The retirement of Baby-Boomers is happening in a bell-shape graphic, steep enough to have an immediate affect upon the economy, as this was the curve on which they were born, bell-shaped. The pool of capital is significant enough that it will have a stimulus impact and affect all sectors of the economy, that is, car purchases, housing, travel, manufacturing, big-ticket, and small-ticket items and the service sector. The federal government and the private sector owes the boomers these funds anyway, having drained the reserves of the Social Security trust fund. However, expanding the partial distribution option to Social Security and modifying the taxation of the first $40,000 dollars withdrawn from any retirement fund, Social Security included, the federal government effectively creates a pool of capital big enough with some consistency, which will stimulate the economy. The federal government in doing this will put a significant amount of money directly in the hands of the consumer (over one billion dollars a day when private pensions funds are included).

Why is it deficit neutral ? Because Social Security is paying out money it already owes, however it is paying it out in a much more useful way to the consumer. And the boomers are taking a decreased monthly payout based upon the Partial Distribution amount taken. Instead of taking equity out of the refinancing of homes which powered the last economic upswing, I am saying give the wisest group in term of age, an opportunity to take some equity from their Social Security principal. The federal government would buttress the trust fund with the $600 billion dollar down payment which it legitimately owes the fund.

Baby Boomers as you may well know, are those Americans born after 1946, up to 1964. If every single boomer, calculated at 70 million, chose the option of taking down the first $40,000 dollars in a partial distribution payment from the Social Security Retirement Fund, it would amount to approximately $2.8 trillion dollars over the life of plan. On an annual basis, that would come to approximately $146 billion dollars.

Republicans and Democrats do not get everything they want with the Davis Plan, but they do get some of what they desire. The middle class and the very wealthy are all affected by the waived or reduced taxes on the first $40,000.00, and our economy gets the needed shot in the arm immediately as the Baby Boomers put the partial distribution payments to work, buying the things they need for a comfortable retirement from paying off bills to purchasing houses and cars, underpinning the recovery.

Probably, the primary criticism from critics of this proposal is, Social Security is a benefits program with a cash hoard that exist only on paper. That criticism is unjustified and no more than a “sound bite,” because at the end of the day, the trust fund is really based on the taxing power of the United States government, and the will of Congress to use its legislative powers to replenish the trust fund. Understanding Congress may have to borrow the money to facilitate the payout, this is a “win-win” situation for both the government and the Social Security recipient. Why? The government’ own records indicates money handed directly to the consumer turns over 1-2 times. When the velocity of money increases, theoretically the economy improves. The reason we know this is the case, because when the consumer stops spending money, the number of times money turns over falls, and GDP (Gross Domestic Product) falls, thus the economy suffers.

Since, the federal government knows the money it will be handing to the Social Security recipient will generate economic activity, it is one debt the federal government should want to incur, because the result will be multiplied revenues in the system which should result in more tax income. Therefore the federal government will be getting a bang for every dollar it releases in the form of a partial distribution to a Social Security recipient. Contrast this to giving millionaires and billionaires more tax relief, spending money on building a bridge, buying a new battle ship, or even building a new road which will not generate the same economic activity.

Staff Writer; James Davis

This talented brother is a graduate of Florida A. and M. University(FAMU), a former stockbroker, and a human rights activist who resides in Sanford, Florida. He was awarded the prestigious Governor Haydon Burns Scholarship to attend FAMU and while at FAMU was awarded the first Martin Luther King Scholarship. He is also author of three books, among them are “The Fix This Time,” Expanding Social Security Benefits to Create Jobs and Spur Demand( ) and “Hey…God’s Talking To You,” The Study Book ( ).

He can be reached through his blog @, (

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