(ThyBlackMan.com) As we watched the sausage being made, as I and many of you have over the last several weeks, when it comes to what goes into spending $1.9 trillion and the enormity of the economic disaster in this country, some of us come away shaking our heads, shocked and rolling our eyes. Seriously, Mr. Biden and Democrats, this is how you spend $1.9 trillion, when the nation’s jobless rate for February is 11.1% and the black unemployment rate, which is usually 5-6% higher is at 16.1%. The question has to be posed, not loudly or cussing, as some of us would do, but with some degree of composure, “Really, Joe, this is how you say you got our backs!”
Many of us watched the Democrats, President Biden, Vice President Harris, and especially the Congressional Black Caucus. They never publicly or openly admitted to or discussed the real unemployment rates, as if by not saying what the rates really were, that in some way made them less dire. Federal Reserve Chairman, Jerome Powell came out and said, at the Federal Reserve Open Market Committee news conference on January 27, 2021, “The real unemployment rate (for December) is close to 10 percent if you include people that have left the labor force.” I would add that we are, as I mentioned, a long way from a full recovery. Something like 9 million people remain unemployed because of the pandemic. That’s as many people as lost their jobs at the peak of the global financial crisis in the Great Recession.”
Here is the imperative in spending $1.9 trillion to avoid the dark scenarios some proffer, such as hyperinflation. If the money is legitimately spent on growing jobs, the Federal Reserve (Fed) can prudently raise rates because the influx of money into the economy will tolerate an increase in interest rates. What I mean by saying that is, if the Fed has to raise interest rates due to an increase in inflation, businesses that are operating on the margins, such as ones with poor credit, and balance sheet problems, or any other number of problems, will fail, creating layoffs. However, if a significant part of the $1.9 trillion is genuinely devoted to job creation, the inflow of that money will offset the layoffs, as it flows to businesses that are growing and creating jobs.
So, I said okay, surely, we will see in the spending of $1.9 trillion, the Biden administration will have working-class Americans and Black America covered. But that is not the case, they do not have our backs, when it comes to affecting or doing something meaningful about the high unemployment rates, and growing the economy, going forward. The $1400 tax rebate, the unemployment insurance benefit payouts, and the 70 billion dollars for vaccinations and COVID-19 expenditures were already baked into the make-up of the $1.9 trillion package. If you will recall, the $1400 stimulus or tax rebate was promised, by the Georgia candidates for the Senate, if they won those two seats. Therefore, Biden and the Democratic Party leadership knew they could not renege on that and the other mentioned features.
However, that still left approximately $1.5 trillion. The $1.5 trillion was absorbed by a menagerie of 3rd Party Programs, $350 billion to state and local governments, and earmarks, which is money siphoned off and spent in the individual districts of Democratic Party representatives. Spending this money on pork projects, those not directly impacting COVID-19, could all be forgiven, if Biden and Democrats did not know, the money could be used to “END” the COVID-19 Economic Downturn. The American Rescue Plan fails to meet the test of a REAL economic growth plan. The long-term plan to end this Downturn once the $1400 Tax Cut is exhausted, in 8-10 months could have been easily done with this package, but Biden, and Democrats refused to do it. Remember, we are staring at a black unemployment rate of 16.1%. That is nearly 20%, or one out of every 5 black workers, many are women, with children and heads of households, who cannot find a full-time job.
How do we know Biden and Democrats know $1.5 trillion could be used to end this Economic Downturn, because they said it, in a tweet? Here is that tweet stated on February 25, 2021:
“Instead of working with Democrats to deliver much-needed relief to small businesses and families, Republicans in Congress are playing partisan politics. We need the American Rescue Plan – it will put money directly into people’s pockets and give a boost to the economy.”
Here is a question for Biden and Democrats, if putting money in people’s pockets gives a boost to the economy, why would Democrats be opposed to putting money in people’s pockets and growing the economy on a long-term basis? After all they are acknowledging that it works and is doable, on a short-term basis. In making this statement, Democrats are referring to the $1400 stimulus payment. A Stimulus Check is nothing more than an undeclared Consumer Tax Cut. Politicians do not clear-up the confusion. Thus, MOST consumers never make the connection. Tax Cuts to consumers is what creates jobs and economic growth! So, they are telling us in that tweet, the key to growing our economy is Consumer Spending through a tax cut. Thus, a real Consumer Tax Cut is the logical solution to ending this COVID-19 Economic Downturn.
In this linked reference, note the increase in inflation during the Clinton administration, as GDP grew. Money was introduced into the economy uniformly over a period of years to blunt any downside risk due to rate increases as Clinton successfully grew the economy during his time in office. A 10 year, 10%, $25,000 “Consumer Tax Cut” will act in the same manner, flowing into the economy uniformly, creating approximately “$254 to $300 million “a day” or more” for businesses large and small to compete for, blunting any layoffs (The Consumer Tax Cut Explained – Jobs and Their Creation (thefixthistime.com).
Lessons learned from the Great Recession showed, it is possible to offset tremendous job loss, through Consumer Spending. The question before us is, do you use $1.5 trillion of the $1.9 trillion, and end the COVID-19 Economic Downturn forever, and afterwards address the individual peculiar problems, caused by the Downturn, or do you use $1.9 trillion, to treat the peculiar problems associated with the Economic Downturn, indefinitely prolonging it, dooming working-class Americans and Black America to slow economic growth, and its impact, when it comes to joblessness.
If we are like the wise man, in the Bible, who built his house upon a rock rather than sand, the obvious answer to that question is, you end the Economic Downturn, using “the proven rock of Consumer Spending.” With a healthy economy, every ramification, or problem 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 the COVID-19 Economic Downturn, and address the pandemic, and not do it, amounts to FAILING middle-class, working-class, and Black American voters, who elected Biden, and Democrats to have the political guts to do, just that!
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.