(ThyBlackMan.com) The collapse of the American economy is due to the lack of consumer demand. It is significant, Congress passed bills, that addressed some of the immediate problems, associated with the Covid-19 Virus, yet the issue of addressing long-term layoffs, which have begun, must not go undone.
The evidence is overwhelming, in favor of a Demand Side Tax Cut, as a solution to boost consumer demand. The Bureau of Labor Statistics reported the real national unemployment rate for April, U-6 (http://www.bls.gov/news.release/empsit.t15.htm), is 22.8%. That rate for the nation means, the African American community nationwide is experiencing a Great Depression, as their rate is usually 3-5 percent higher than the national rate. The average rate of national unemployment during The Great Depression of the 1930’s, reached 25%.
Without any real media attention, jobless black workers will suffer in isolation, alone; many feeling hopeless and angry. Black workers, who don’t have a support system will, no doubt be hit the hardest, especially those, without a college degree. It’s naive to think everyone is going to get their jobs back, as the Covid-19 Virus winds down; that old patterns of racism, in terms of hiring will disappear with a vaccine for the Virus.
Understanding, the economy was slowing prior to the Virus is crucial, as it gives us insight. It points to a structural problem, associated with giving tax cuts to millionaires, billionaires and corporations. These tax cuts have resulted, in not growing GDP (gross domestic product), which leads to job creation.
The theory of Supply Side Economics, as its purveyors advocate, is based on the assumption, that we must give millionaires, billionaires and corporations tax cuts, so they can grow our economy. This theory is now, debunked, as the nation, for the first time, is being impacted by a virus pandemic. We see, for ourselves, without consumer spending, our economy is collapsing, creating Depression Era job loss. Beyond Depression Era unemployment rates, as stated above; following, is more evidence favoring a Demand Side, or Direct Consumer Tax Cut.
Since 1980, Republican presidents have given millionaires, billionaires, and corporations five major tax cuts. There was during, the Ronald Reagan administration, the 1981 Economic Recovery Tax Cut, and the Tax Reform Act of 1986; during the George W. Bush administration, there was the Economic Growth, and Tax Reconciliation Act of 1981, and the Jobs, and Growth Relief Conciliation Act of 2003, and the Trump administration signed, into law the Tax Cuts and Jobs Act of 2017.
Since being enacted in December of 2017, an ample amount of proof has shown the Trump Tax Cut didn’t achieve its goal of growing our economy, as forecast and touted by Mr. Trump. Democrats from the time of its conception saw the Trump Tax Cut, as a giveaway of tax payer money to the rich and corporations. Nancy Pelosi, the Speaker of the House, called the Tax Cut and Jobs Act “a scam.”
With such animus and opposition toward the GOP Tax Cut, you would think Democrats, when presented with a doable Consumer Tax Cut Plan, that will grow the economy; the Democratic Party, led by the Speaker of the House, would advance such a plan to the floor, of the House of Representatives. Strangely, that is not the case.
Democrats have “never proposed a Direct Consumer Tax Cut.” Nevertheless, it’s obvious to thoughtful and honorable observers of integrity, this Economic Downturn needs a recovery plan, that emphasizes the consumer. This is particularly true, because the lack of consumption of products and services, is the core problem, when it comes to this Downturn. If Democrats aspire, to be the party of working people, prioritizing a Consumer Tax Cut, is the right policy at this time.
If Congress authorizes, another round of direct cash payments to Americans, extend unemployment benefits to January, add hazard pay for front-line workers and expand testing and contact tracing; lost output, due to the Virus can be restored, with a strong consumer demand initiative.
Right now, by giving consumers money, our economy is somewhat, stabilizing. Now, if consumers are given A REAL TAX CUT, not only will they continue to stabilize the economy, consumer spending will, also GROW the economy. Consumers are 70% of our economy. If you Give 70% of our economic pie a tax cut, you will grow GDP. Is this logic lost on anyone?
If we forget who we are, as a nation, we will surely fail. We are A CONSUMER driven economy! We watched as markets collapsed fearful that we, CONSUMERS wouldn’t be there, to buy products and services. Then, common sense, logic, and wise judgment tells us and Congress, to FIX THE CONSUMER, through A REAL TAX CUT! A 10%, $25,000 Consumer Tax Cut is doable.
A 10%, $25,000 Consumer Tax Cut, is a pragmatic solution. Baby Boomers, who are retiring at a rate of 10,000 per day, will be the target of the tax cut. Such a tax cut will drop $254,100,000 a day, into our economy for businesses to compete for and grow GDP. Its cost will be less, than Mr. Trump’s $1.9 trillion tax cut, over the same period of ten years.
This Economic Downturn can be shorten, before it does real long-term damage to our society. We need Congress, prompted by Joe Biden, Nancy Pelosi, Chuck Schumer, or even President Trump and Mitch McConnell, to “Come on and get on with it;” get on, without further delay, the rebooting of the U.S. economy, with a Consumer Tax Cut.
Staff Writer; James Davis
Mr. Davis is a leading expert and consultant in Financial Analysis and Social Dynamics. He 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 the author of three books, among them is “The Fix This Time,” Boost Your Retirement Income! Simultaneously Create Jobs and Spur Economic Growth (https://www.amazon.com/dp/B00MI3PD2M).
Mr. Davis can be reached through his blog @ https://thefixthistime.com.
