(ThyBlackMan.com) The Democratic Party has no interest in supporting a Consumer Tax Cut. Perhaps, I should say that differently, it has no interest in supporting a plan identified as a Consumer Tax Cut Plan, as stimulus checks are no more than consumer tax cuts. Here is how Investopedia, a financial website, defines a stimulus check; A stimulus check is a check sent to a taxpayer by the U.S. government. Stimulus checks are intended to stimulate the economy by providing consumers with some spending money. When taxpayers spend this money, it boosts consumption and drives revenues at retailers and manufacturers and thus spurs the economy.
Here is how the Balance, an online financial site defines a tax cut; Tax cuts occur in different forms. Governments can cut taxes on income, profits, sales, or assets. The cut can be a one-time rebate, a reduction in the overall rate, or a tax credit. Tax cuts also include tax deductions, loopholes, or credits. So, you must ask yourself, what is the difference between “a one-time rebate check,” done over and over again and “a check sent to a taxpayer” by the U.S. government.
The difference is strictly political. Both the rebate check and stimulus check, when handed to the consumer and the consumer cashes and spends the check, in the support of the economy, they create jobs, as in the case of the stimulus checks that were a part of the Cares Act of 2020, and now part of the American Rescue Plan, in the amount of $1,400, promoted by the Biden administration. I say, it is strictly political, because someone, with an ounce of common sense, might ask the obvious question, if the issuance of this money to consumers create jobs in the short-term, why doesn’t the Democratic Party support a long-term Consumer Tax Cut Plan? Don’t we need jobs all the time?
Of course, we need jobs, especially now, the national unemployment rate in January stood at 11.1% and the African American rate at 16.1%. Biden’s Secretary of the Treasury, Janet Yellen has stressed, it is important to provide further fiscal support to promote a robust and lasting recovery. Not a single person reading this article has to take my word, when it comes to seeing the impact of Consumer Spending, on our economy and its ability to create the jobs, we sorely need. All you need to do is, recount the role Consumer Spending played, when the economy went into a free fall when COVID-19 struck, how the government responded and what has happened since.
Choosing to bring this Economic Downturn to an end with the $1.9 trillion is like the Biblical decision, made by the man who decided to build his house on a rock, rather than on sand. How do you do it? You do it the same way Congress did, with the Cares Act when the Bureau of Labor Statistics reported our economy had lost 20 million American jobs. Congress invested in the time-tested “rock,” Consumer Spending, which brought that 20 million job loss down to where we are currently, a loss of 9 million jobs, which Federal Reserve Chairman Jerome Powell has pointed out, “Are as many people, as lost their jobs, at the peak of the global financial crisis in the Great Recession.” The COVID-19 pandemic caused the biggest hit to the U.S. economy since the Great Depression.
Lessons learned from the Great Recession showed it is possible to offset tremendous job loss through Consumer Spending. To demonstrate that fact, when we examine “The Cares Act,” the single largest relief bill in the history of the nation, signed into law on March 27, 2020, we find at least 75-80% of the money legislated, went to enhancing Consumer Spending in one form or another. Consumer Spending, because of The Cares Act (stimulus) tax cuts, was a major contributor in the rate of unemployment dropping from 14.7% in May 2020 to 6.7% in November. As the economy reopened in May with 2.5 million jobs, strong Consumer Spending enhanced the recovery. The Cares Act (stimulus) tax cuts created demand for products, and services, which lasted for approximately eight months, as Consumer Spending slipped and fell in November and December of 2020, which was an indication the COVID-19 Economic Downturn is deeper and more severe than originally thought.
The question before us is, do you use $1.9 trillion, and end the COVID-19 Economic Downturn, and afterwards address the individual peculiar problems, caused by the Economic Downturn, or do you use $1.9 trillion, to treat the peculiar problems associated with the COVID-19 Economic Downturn, and prolong indefinitely the Downturn and its impact, when it comes to joblessness. If we are like the wise man, who built his house upon a rock rather than sand, the obvious answer to that question is, you end this Economic Downturn, first, using Consumer Spending. With a healthy economy, every ramification can be dealt with whether social, political, or economic. Every American deserves the peace of mind of being free from this Economic Downturn. Given the opportunity to end this Economic Downturn, and address the pandemic, and not do it, amounts to FAILING middle-class, working-class, and Black American voters.
Most Americans are in favor of raising direct payments to $2,000; that is the most popular feature in the American Rescue Plan, and the allocation of funds for vaccinations. THE REST OF THE PLAN, not so much. $1.5 trillion can be used to PUT THE UNITED STATES BACK to WORK! Mr. Biden in his wisdom, can use our wealth to enact a 10%, $25,000 Consumer Tax Cut (stimulus), augmenting the COVID-19 relief plan. The consumer tax cut (stimulus) would be comparable in time, 10 years, and in cost, to the $1.5 trillion Trump Tax Cut.
Buying into Consumer Spending, as the driver of our economy, as so indicated by the above factual data, President Biden going forward, can be more strategic in spending the $1.9 trillion. 40% of all Consumer Spending is driven by the 50 plus demographic, of which the Baby Boomer generation is the overwhelming majority. By laser focusing the 10%, $25,000 Consumer Tax Cut (stimulus) to a smaller group of consumers in volume, but homogeneous in makeup, increasing the amount to get the same spending impact, and spreading the distribution of $1.5 trillion over 10 years, President Biden, provides a grateful nation with its first Long-Term Data Driven Economic Growth and Job Creation Plan, through a Demand Side Tax Cut.
The incredible outcome of doing this is, Biden stays well within the parameters of the $1.9 trillion goal he has set, when it comes to spending, with $400 billion to spare (The Consumer Tax Cut Explained – Jobs and Their Creation (thefixthistime.com). The elusive and sometimes contentious goal of bringing the nation together is enhanced, through a time-tested fiscal policy, that we know will grow the economy, and create millions of jobs, as Baby Boomers include rural whites, and minorities, from every corner of this great country.
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.