(ThyBlackMan.com) Working-Class Americans, and Black America are the “Biggest Losers,” in Biden’s version of Build Back Better, as economic growth and long-term job creation will suffer, or be considerably reduced. Democrats’ due diligence in considering how to spend possibly, $2.0 trillion leaves a lot to be desired. Holding a Senate majority by one vote, and only a five-vote majority in the House of Representatives; Democrats in facing the mid-term elections in November of 2022, must report back to you and me, the VOTERS. We, as voters should ask Democrats: Can You All Detail to Us Your Long-Term Job Creation Plan? Watch them, as they list 3rd party programs, which have questionable track records of success, as their answer.
Almost, anything could doom Democrats chances to expand their majorities. But there is one thing, for sure, will cost Democrats, the election. The coalition, the Democratic Party is depending on to carry it successfully through the 2022 elections, is under economic, and social stress. Democrats 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 important metrics of long-term job creation, and growing this economy.
Historically, the party with the president sitting in the White House, has lost seats in the House of Representatives in 36 out of 39 midterm elections, since the Civil War, except in 1902, 1934, and 1998. And in the Senate, seats were lost in 19 out of 26 midterm elections since the direct election of Senators began in 1914. So, this is a crucial election for Democrats. Whatever job creation plan survives the current negotiations, American workers, and the Democratic Party’s coalition will want to be assured that it is solid, will work, and do what it is supposed to do, grow the economy, and create jobs. Otherwise, this will be disheartening and demoralizing.
Why? Democrats would have had the means, and the money, $2.0 trillion, to achieve the task of growing our economy, and jobs and simply bungled it. There is no question, a legitimately growing economy will produce surpluses, and a means to pay for popular, and 3rd Party Programs, even some that produce deficits. And it appears, this is what many Democrats, don’t seem to understand, or maybe there are some, who just don’t get it, or don’t want, to get it. You, be the judge. However, it’s almost impossible to retain third party programs in an economy that is producing deficits, as the Republican Party will always want to cut any programs, especially those, that obviously do not produce jobs.
One of the lessons that Covid-19 and its variants taught us is how to create jobs and grow the American economy. Like the Goliath of all armies, Covid-19 struck, and our economy went into a dive, not seen since the Great Depression. There wasn’t any time to debate philosophically, as Bernie Sanders, Kyrsten Sinema, Joe Manchin and Joe Biden are doing, today. Biden talks fondly about his 17 Nobel Laureates, who approved his plan, however, I don’t know which side they came down on, once the consensus was reached that, we would spend our way out of this pandemic, using the Consumer and Consumer Spending.
At the same time that decision was made, something happened in the public rim, in the board rooms of corporations, big and small, in the kitchens of families, at small businesses (even the smallest), as a light went on in people’s heads, that said, we need to fix this pandemic downturn, and fix it fast. The nation turned to DATA, having experienced the 2008 Great Recession, and having seen, how too little money, closely held, and spread around did not, as many thought, effectively addressed the dire economic situation of the Great Recession, and the job losses we experienced, which afterwards led to a limped recovery and slow growth.
We also witnessed Republicans through former President Trump give a $1.5 trillion tax cut to the wealthy and corporations that did not ultimately grow jobs. So, the nation turned to the Federal Reserve (Fed), who turned to the consumer. The Fed encouraged politicians to go big, in terms of encouraging Consumer Spending, and our recovery, begin. We did not suffer the deplorable conditions of the Great Depression, and it was largely due to Consumer Spending, due to Consumer Tax Cuts.
If Consumer Spending pulled us out of the hole, and put us in the position where now, politicians are afforded debates, in regard to how to grow our economy and jobs, then common sense ought to arise within us saying, if Consumer Spending pulled our economy out of a deep economic hole, then Consumer Spending will also grow our economy and take us as a nation to, the next level. We have the data to prove it. So, what are these people debating? What we need to know at this juncture is, how to work up a plan to make Consumer Spending more efficient. We need to bring our politics around the issues of Economic Growth, and Job Creation into the 21st century. In some areas, if we are wise, we should go with the DATA and set politics, aside. Our economy is, and should be such an area, as we have just seen with the pandemic, how crucial, a working economy is, to our well-being.
If you will remember, Democrats’ response to going big was, the Tax Cut to Families with Children. Here is how it worked. Using Democrats’ figures, roughly $15 billion monthly in TAX CUTS started going out with 170 days left in this year, as the Tax Cut to Families programs got underway in July and is scheduled to end on December 31st. It resulted in $529 million a day being given to and spent by consumers, every day, on average.
Consumer Spending, as a result of “our first acknowledged” Consumer Tax Cut worked and is working efficiently, when it comes to creating jobs. It is no longer a theory. Consumer Spending contributed to the creation of 1.091 million jobs in July, 366,000 in August, (in spite of the onset of the Delta variant), and created 194,000 jobs in September, as many experts attested to the cresting of the effects of the variant, as fewer workers were sidelined in mid-September, as cases climaxed.
To President Biden’s credit, he extended, the Tax Cut to Families with Children one year in his Build Back Better plan. However, through Democratic Senator Joe Manchin, Republicans weighed in, saying in ought to pass the estimated $2.0 trillion economic plan, adjustments to the Tax Cut to Families with Children plan had to be made. The changes reflected old talking points, Republicans had made during the Clinton administration when a similar Tax Cut to Families with Children and the earned income tax credit were used to grow our economy.
Biden and his economic team must have certainly been aware of these objections by Republicans, as they were widely known. Republicans wanted to see the recipients of the benefits “mean tested,” and they wanted to see work requirements applied to the beneficiaries of the tax cut. Obviously, these requirements would reduce the effectiveness of the tax cuts, as Consumer Spending would take a big hit as fewer consumers would take advantage of the tax cuts, thus affecting spending and job creation. This is clearly a ploy by Republicans to gut the program.
However, the Tax Cut to Families with Children was never going to be a long-term creator of jobs anyway because it had an embedded Achilles heel. Due to inflationary pressures, the Federal Reserve announced, it will consider rolling back its easy money policies, as we approach the end of the year, to fight inflation. Such a move by the Federal Reserve could set-up interest rate increases sometime in 2022, and beyond.
The recipients of the Tax Cut to Families with Children are prone to be laid-off like all other worker groups. Layoffs would have reduced the effectiveness of the Tax Cut to Families with Children when it comes to job creation, due to a loss of income to the recipients, as a result of them being laid-off from their jobs, leading to a reduction in Consumer Spending, which would have reduced economic growth, and the ushering in of a slow growth economy.
With the gutting of the Tax Cut to Families with Children, which cost approximately $180 billion on an annual basis, and because of the requirements of Republicans, Biden can shift that money to a more resilient demographic, which do not have the problems listed above, and continue our economic expansion and job growth. That demographic is the Baby Boomer generation. He can finance the first year of the Baby Boomer Tax Cut. Because the Boomer Tax Cut was designed to start in 2021, he would have to finance 2021, and 2022 beginning in January of 2022, which would result in approximately the same amount of money, $529 million a day hitting the economy.
Baby Boomers, as a homogeneous group, who are retiring at a rate of 10,000 a day, is statistically the best target of the consumer tax cut. When it comes to daily interest rates increases, Baby Boomers are not affected, because they are for the most part retired. Thus, they are able to continuously spend benefits from the federal government, consistently sustaining job creation, and growing the economy at the same current rate, as the Federal Reserve incrementally raises rates to control inflation.
Additionally, DATA shows, they are responsible for close to 40% of all Consumer Spending. That means they will “widely spend the benefits from the federal government,” sustaining Job Creation across our nation. 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 $1.5 trillion Consumer Tax Cut Plan, (https://thefixthistime.com/the-10-25000-consumer-tax-cut-explained) as a result of Consumer Spending, will continue to consistently create jobs at a hefty rate and expand our economy. Finally, we are not asking Biden for a lot; and I think you all can see that, we are merely asking his administration to follow the DATA, and facts, when it comes to long-term Job Creation.
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.