(ThyBlackMan.com) The coalition, the Democratic Party is depending on to carry it successfully through the 2022 elections, is under economic, and social stress. Democrats, whether they believe it or not will not survive as the majority party, controlling the House of Representatives and Senate, if their coalition of working-class Americans, Black Americans, Hispanics, Progressives, intellectuals, and suburban voters, conclude they failed them, in the metrics of long-term job creation, and growing this economy. Democrats have to decide, who they want to be; that is whether they want to adopt a long-term data-based economic growth strategy. Any data-based job creation plan has to use real numbers, which makes such plans, successful.
Using the Democratic Party’s figures, roughly $15 billion monthly in tax cuts (tax relief) started going out to families with 170 days left in the year, as the beginning of the distribution of the Tax Cuts to Families with Children Program got under way. It means, approximately $529 million a day is hitting the economy on average up to the end of December. This amounts to, on an annual basis, a roughly $180 billion consumer tax cut. Consumption data show low- and middle-income Americans are more likely than wealthy earners to spend benefits, from the government immediately, and stimulate economic growth and create millions of jobs. Based on the Bureau of Labor Statistics July summary, of our job situation, 943,000 jobs were created in July, proving the validity of the aforementioned statement about consumption data. The creation of 943,000 jobs is irrefutable evidence, that the concept of giving consumers a direct tax cut, works. But, as previously said, the tax cut distribution to families with children will come to an end on 12/31, and so will this “LEVEL” of job creation.
Nevertheless, July is a good sign of what we can expect in job growth over the coming months to December, due to using a direct consumer tax cut to stimulate economic growth and create jobs. The Biden’s administration inaccurate Official Unemployment Rate (the REAL rate 9.2% / the black rate 15.2%) dropped from 5.9% in June to 5.4% in July and is likely to reach 4.0%, soon. Biden detractors, and some supporters will not want to see the tax cuts to families continued, beyond December, in any form due to concerns about inflation. They will say, the economy is at full employment, making use of Biden’s inaccurate Official Unemployment Rate, as it decreases, and heads towards 4.0%. Additionally, they’ll advocate, no more tax cuts are needed. They will use also the Republican Party talking point, which they have used successfully in the past, no increased welfare to families, without a work requirement.
Without the tax cuts (credit) programs, driving consumer spending, Biden’s left with unsure infrastructure spending (so-call Shovel-Ready Jobs) and 3rd party programs that’ll result in slow growth reminiscent of former President Obama’s economy after the 2008 Great Recession. We have seen this movie and know how it ends. Construction permits delays, when it comes to infrastructure projects, are a major factor in this problem. Not extending the Tax Cuts to Families with Children Programs, or an alternative consumer tax cut plan beyond December 31st puts our economy, at risk. The economy will lose steam, cool, and decline, when it comes to NEW job creation and economic growth, because consumer spending, connected to the tax cuts to families with children would have ended.
It is obvious to most of us who are familiar with this cause, the delivery vehicle for any future consumer tax cut must be a lot better and stronger, then the Tax Cuts to Families with Children, to survive criticism from outside detractors, and those who believe out of control inflation will flare-up, as a result of putting money directly into consumers hands. When the consumer spends, our economy grows, as consumer spending accounts for 70% of our job creation and has made the United States economy the #1 economy in the world. However, keep in mind, this is the Democratic Party’s “first time openly acknowledging,” and using a Direct Consumer Tax Cut to grow our economy and create jobs. Misapprehension, inexperience in dealing with growing jobs, and a “Direct Consumer Tax Cut” can be contributing factors in Biden, and Democrats not recognizing the need of a much more data-oriented delivery vehicle for the next consumer tax cut. Nevertheless, this current Consumer Tax Cut is behaving as predicted, it is creating a hefty amount of jobs. It should continue to perform in this manner, meaning next month, we should see a similar outcome in regard to job creation as approximately $529 million flushes daily through this economy.
Don’t believe a 10%, $25,000 Direct Consumer Tax Cut to Baby Boomers is possible, and doable, as the most logical vehicle to deliver a consumer tax cut? That’s the size and the vehicle I recommend in my book, “The Fix This Time” (https://www.amazon.com/dp/B00MI3PD2M). Having been an advocate of a data driven consumer tax cut plan to grow jobs long-term, for over a decade, I feel we all should step-up and encourage our politicians, especially Biden and the Democratic Party through social media, and direct contacts to stop using our economy, as a political football to score points. Join me on Twitter, at @Jamesabides1, as I press this case. It’s time to apply statistical data to growing our economy and jobs. We are seeing the positive results, forecasted, and expected, when it comes to job creation, based on what is happening with the Tax Cut to Families with Children, and this is occurring right before our eyes, in real time.
So, here we are. Look at the amount of the tax cut, Biden and the Democratic Party are giving to Families with Children. On an annual basis, Democrats are extending a tax cut of $180 billion, as I said above. Because the Tax Cut to Families with Children will last 6 months, July to December, it breaks down to approximately $90 billion, that will actually be spent between now and December. However, the 10%, $25,000 Baby Boomers Tax Cut is designed to last ten years, “not six months,” and the cost of the Tax Cut, $1.5 trillion, is spread-out over those 10 years.
A major shortcoming of the $90 billion Consumer Tax Cut to Families with Children Plan is, it cannot tolerate daily increases in interest rates. Incremental increases in interest rates are the main tool the Federal Reserve uses to control inflation. The reason the plan has a problem in this area is because the recipients of the tax cut benefits are vulnerable to layoffs as interest rates rise. Layoffs reduces the effectiveness of the tax cuts, due to a loss of income to the recipients, leading to a reduction in consumer spending which reduces economic growth.
Baby Boomers, as a homogeneous group, who are retiring at a rate of 10,000 a day, is statistically the best target of the Democratic Party’s next tax cut. They are responsible for close to 40% of all consumer spending (consumption). Baby Boomers also, include a fair number of minorities and rural whites. A 10%, $25,000 Consumer Tax Cut, will drop $254 to $300 million, a day into our economy, for businesses, both large and small to compete for, over the next 10 years, which is the duration of the tax cut. This will consistently create jobs at a hefty rate.
When it comes to daily interest rates increases, Baby Boomers are not generally affected because they are for the most part retired. Thus, they are able to continuously spend benefits from the federal government, consistently creating jobs and growing the economy, even as the Federal Reserve incrementally raises interest rates to control inflation. Giving room to the Federal Reserve to control inflation through incrementally increasing interest rates effectively shuts down the voices who say consumer spending creates uncontrollable inflation.
Consumer spending, which is responsible for 70% of our economic activity, when it comes to creating jobs, is what makes our free-market economy work. The truth is, there’s no greater economic engine in the world, than U.S. Consumer Spending. Therefore, if you increase consumer spending, you will shorten enormously, or end the COVID19 Economic Downturn altogether and grow our economy. The statistical data as information from this tax cut is made available, in terms of job creation, is driving that message home, to skeptics. A new American economy, for our families and the next generation, can be built through restoring lost consumer demand, due to the virus, with a long-term 10%, $25,000 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.