(ThyBlackMan.com) When Democrats and Republicans fight, the truth becomes a casualty. To wise and knowledgeable people, it is great news, the House of Representatives might overturn the deal made by the President and the Senate, as we never saw the Payroll Tax Holiday Plan, as nothing more than a sham perpetuated upon the American people. If you will recall, when this legislation was presented in 2010, H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, it was presented as a means to create jobs as its title states. It simply failed to achieve its intended objective of creating jobs. Unemployment increased from 9.0% in January 2011, to 9.2% in June of 2011, ending at 8.4% this pass November.
This amounted to a .60% decrease in the annual unemployment rate which in January started at 9.0%. The cost of less than 1% decrease was $105 billion dollars of our Social Security Retirement Trust Fund money! Because it could not be represented as job creation legislation anymore, the President and his 
advisors repackaged it and attempted to scare us by saying it will take 1% to 2% off GDP (Gross Domestic Product) if not passed again. When that approach did not get the reaction they wanted, they went to the now familiar refrain of, “If you don’t pass it, the Tax Holiday Plan amounts to a tax increase on the middle class.” Notice, it is never referred to anymore, as it was originally,”a Job Creation Act.” This failed legislation, and that is all it is, should get the proper burial it deserves and never be resurrected again. Nevertheless, the sound bites on television sound presidential to the misinformed and the deluded as intended, when the President says, “If you don’t pass this legislation, it is a tax increase on the middle class.” He, the President attracts votes without doing anything about our high unemployment rate.
The unemployment rate for Black males currently stands at 16.5% and has been in double digits for 3 years, lending to the decimation of the Black middle class as we know it!
However, the President’s Payroll Tax Holiday Plan does represent an opportunity which should be exploited to the benefit of the unemployed. The opportunity in the plan arises from where the Payroll Tax Holiday Plan drew its funding. It drew funds from the Social Security payroll tax, in that the President diverted our payments to the Social Security Trust Fund and used those funds to reduce payroll taxes. The President’s approach to putting money in the hands of the consumer, through the Payroll Tax Holiday, with the intent of stimulating the economy, is what I call a shotgun approach, and is flawed. The plan gives approximately $1000.00 on average per a year to 105 million consumers, thus the impact economically was muted. Additionally it is “not money handed directly to consumers,” it is a credit in their weekly or monthly payroll checks on average of $83.33 a month.
Here’s where I suggest a great opportunity presents itself and is being missed. The recession’s end can be done cleanly and without adding to the deficit by putting money “directly into the hands” of retiring baby boomers, a more concentrated group of consumers. You just simply have to change how Social Security checks are paid. Let the boomers have partial distribution of their Social Security principal in the amount of $20,000.00 or $40,000.00 dollars, and issue them a monthly check on the remainder of their principal. Look, let us say it takes $313,000.00 dollars in principal at 6.9% interest to send me a monthly Social Security check of $1800.00 dollars.
Therefore, I say to Social Security, I would like to have a part of my money up front, say $40,000.00 dollars. Now pay me a monthly check on the remainder, which is in this instance $273,000.00 dollars, which amounts to a monthly check of $1569.00 dollars. That makes this plan (the Davis Plan) deficit neutral. “It is our money, for heavens sake!” Presenting a partial distribution option of your retirement principal is common practice in the private sector. Yet we allow the largest payer of pensions, the Social Security Trust Fund, not to do it at a time when it will benefit our economy the most. The impact of allowing partial distributions, which is simply taking down a part of your pension principal and then rolling over the rest to be received monthly would pull this economy out of this recession! BOOMERS ARE RETIRING AT A RATE OF 10,000 PER DAY STARTING IN JANUARY! 10,000 x $20,000.00 = $200,000,000.00 million dollars. That is right! They will dump that amount into this faltering economy each day for the next 18 years. That amount in effect is really $400,000,000.00 million per day because money handed “directly to the consumer” turns over 1 to 2 times. There are 68 to 72 million boomers depending on who is counting. With $400,000,000. MILLION DOLLARS coursing through this economy every day, the recession ends! Add the incentive of waived or reduced taxes on the first $20,000.00 dollars taken down from any retirement fund, including Social Security and we are off to the races. It is the boomers and their kids who are getting hardest hit in this recession anyway!
Yes, it will require Congress making Social Security actuarially sound, but that is what they say they are going to do anyway! You simply make it actuarially sound with the partial distribution being a part of its make-up. Social Security, I am told, at this time has a surplus, based upon Congress being able to repay the $2.6 trillion it borrowed from the trust fund. Thus, it can pay out full benefits up to 2037 without a problem. Look, this plan addresses every objection Republicans and Democrats have. It creates jobs without increasing the deficit and lowers taxes on the wealthy as well as the middle class. It is big! Lifting all boats in the water at the same time and answers businesses’ need for long term planning.
Finally, here is the clincher, if every single boomer took the partial distribution of $20,000, it would cost the U.S. Treasury $73 billion, less than the $120 billion the President is proposing in the current Payroll Tax Holiday Plan. You could raise that to $40,000 partial distribution and the cost would be $146 billion. Both these plans use funds from the Social Security Trust Fund, which every one says only exist on paper. Ending the Bush tax cuts, which in some quarters is estimated to cost from $80 to $150 billion a year in lost revenue to the treasury, can pay for the plan long term. This relates to waiving taxes on the first $20,000.00 withdrawn from any pension fund. If this plan is explained correctly to baby boomers and AARP, the President not only ends the Great Recession but also gains the blessings of the American people. We Americans are in great financial pain and can use the money the plan will create. I would like to see my party, the Democrat Party, adopt this plan and bring this recession to end. Let’s end these talks about preserving the Payroll Tax Holiday.
Staff Writer; James Davis
More information about JD and his Deficit Neutral Stimulus Plan Can be founded at http://www.sslumpsum.com and http://www.change.org/petitions/how-to-create-jobs-now-join-us