(ThyBlackMan.com) Every day we delay in not voting into law, the ten year, 10%, $25,000 Baby Boomer Consumer Tax Cut, is a day without a plan of long-term Job creation, economic prosperity, and growth for working-class Americans, across this nation. Our real and most comprehensive level of unemployment for March, is 7.9%, not 4.2%, as indicated by President Donald Trump’s administration use, of the U-3 category rate, from the Table of Alternative Measures of Labor Underutilization.
As a result of the 7.9% unemployment rate, the Trump administration has been handed the challenge of growing the “REAL” economy, by not only voters who voted for him, but all Americans. Our Democracy is a system that persists in challenging its leaders in this manner. By focusing on working-class Americans, America is made “Great Again,” as working-class Americans are the heart and soul of America.
Former president Biden’s unemployment numbers simply didn’t add up when fact checked, and neither will Trump’s if his administration continues Biden’s policy of misinformation, saying the March U-3 category rate of 4.2% is comprehensive of our monthly Job situation. Per the Bureau of Labor Statistics (BLS) economists, 7.9% is the most comprehensive rate of unemployment, which is the U-6 category rate. Go to TheFixThisTime.com for additional information.
Consumer spending is responsible for creating approximately seven out of every ten Jobs in our economy. As a result of this fact, the United States is largely a consumer driven economy, with consumer spending accounting for a significant portion of our economic activity. Economic data supports consumer spending or personal consumption expenditures (PCE) typically accounts for 68-70% of U.S. gross domestic product (GDP) according to the Bureau of Economic Analysis (BEA).
During the nation’s recovery from Covid 19, stimulus payments, tax credits, and tax cuts under the Cares Act, the single largest relief bill in the history of the nation at the time of its signing ($2.3 trillion), into law on March 27, 2020, we find 75%-80% of the money legislated was spent on enhancing consumer spending, either directly, or indirectly. The unemployment rate dropped from 14.7% in May 2020 to 6.7% by November, a period when consumer focused stimulus was active. This proves there is a correlation between consumer spending and Job creation.
The logic and practicality of giving consumers a 10% tax cut to grow our economy and create Jobs is mathematically and empirically sound. In our recovery from Covid 19, we observed that it worked in real time. The $2,000 stimulus check; it was not recorded as part of the gross income of its recipients. So, there was no income taxes paid on it (it was given to us tax free (a tax cut), so we could go out and spend it, creating demand, which led to creating Jobs in our economy).
When the nation was on its knees economically, due to the Covid 19 pandemic, leveled headed, and wise policy makers, both Democratic and Republican, did not turn to, what President Trump and Republicans are attempting to sell us, as a fix for our economy, and that’s tax cuts for billionaires, millionaires and corporations. They turned to what would work, and it did work, and it was consumer spending.
There were such programs, as the $484 billion Payroll Protection Program, and the $367 billion outlays of various loans, and grant programs to businesses, individuals and to major corporations. The Act provided for $454 billion to support the Federal Reserve lending. The deployment of these funds primarily kept consumers employed and spending, to sustain Job creation. However, one of the major tax cut programs disguised as a tax credit program, stood out, and helps us understand and drives home the point, it’s consumer spending that is at the heart of our nation’s growth and Job creation.
The tax cut to Families with Children, stood out as being very effective. It caused a gust of growth, and Job creation. Using Democrats’ figures, roughly $15 billion monthly in TAX CUTS started going out with 170 days left in 2021, as the tax cut to Families with Children programs got underway in July and ended on December 31st. It resulted in $529 million a day being given to, and spent by consumers, every day, on average. What the federal government did was, front loaded money to Families with Children, based on the number of children, Internal Revenue Service records showed they had, and sent them a check.
1.091 million Jobs were created, in July, 483,000, in August, (in spite of the onset of the Delta variant), and 379,000 Jobs, in September during the peak of the variant. But the tax cut to Families with Children does not give the treasury the flexibility it needs to fix the economy, “this time.” Its payments must be issued to parents monthly based on a rigid, and pre-calculated amount based on the number of children. So, the ability and flexibility to increase, or decrease consumer spending, through pulling demand or payments forward to create a soft-landing for the economy is not possible, with the Families with Children tax cut.
So how can this be fixed and American voters comforted? There is a more acceptable group of recipients, for Mr. Trump, the GOP and Democrats. This group’s consumer spending will ensure those same Families with Children have Jobs, and a means to survive, and grow successfully. Baby Boomers, as a homogeneous group, who are retiring at a rate of 10,000 a day, will statistically be the best target of the coming direct consumer tax cut. Distribution of the Baby Boomer Consumer tax cut, by appropriately pulling demand forward when needed, will create a soft-landing, and give the Secretary of the Treasury, Scott Bessent, the flexibility spoken of above.
The age group, beginning at 55 plus years, are responsible for about 40% of the spending done in our economy. Baby Boomers are the largest population among that age group of consumers. Baby Boomers, who will receive the $25,000 Consumer Tax Cut at the time of retirement, once they start receiving Social Security retirement payments, will spend the money, creating economic growth, and Job creation.
Even the Chinese government has come to recognize the power of consumer spending or personal consumption expenditures (PCE). Peng Sen, president of the China Society of Economic Reform, said in an article by Bloomberg News on 3/25/2025, “Authorities should make efforts to boost consumption as a share of gross domestic product to 70% by 2035 from about 55% currently.” Peng’s remarks add urgency to calls for China to adjust its growth model as geopolitical tensions threaten to slow exports and returns on investment diminish. The Chinese government has made boosting domestic demand, particularly consumption, the top economic priority this year, although authorities didn’t put a number to that goal.”
Critics of the 10 year, 10% $25,000 Baby Boomer Consumer Tax Cut, point to inflation as a possible problem and dwell on whether Boomers will actually spend the tax cut. They are wrong on both counts. The tax cut is spread out over ten years mitigating any inflationary impact. Additionally, the tax cut adds to the Federal Reserve’s ability to reduce inflation, without destroying growth.
The Federal Reserve (Fed) in a responsible way can actually increase interest rates to fight inflation. When we go back to 1994, during the Clinton administration’s economic expansion, GDP reached 4.0%. Unemployment was 5.5% and inflation was at 2.7%, and the Fed increased the federal fund rate from 3.25% in February to 5.5% in November, to fight inflation.
In the 1995 year, as the federal fund rate reached a high of 6.0% in February, GDP fell to 2.7%, unemployment increased to 5.6% and inflation dropped to 2.5%. However, the economy resumed upward growth in 1996, with GDP reaching 3.8%, and GDP continued rising in 1997 to 4.4%, in 1998 to 4.5%, and topped out in 1999 at 4.8%, with the federal fund rate at 5.5% on November 16,1999. In regard to whether Baby Boomers will spend the 10%, $25,000 Consumer Tax Cut, consumption DATA shows, low-and middle-income Americans are more likely than wealthy earners to spend benefits, from the government immediately, and stimulate economic growth, and Job creation.
An additional and great benefit of consumer spending, as an effect of a 10%, $25,000 Consumer Tax Cut, is deficit reduction, meaning there will be surplus money, as new consumer spending will generate new revenue streams, that can be taxed at the local, state, and federal levels. The Covid 19 recovery demonstrated that, when you give a direct tax cut to consumers, who make up approximately 70% of your economic activity, you will create surplus revenues, making the tax cut deficit neutral. Don’t take my word for it, let’s look at the numbers. The Treasury Department reported, the U.S. government posted a $119 billion budget surplus in January 2022. It was the first, in more than two years, due to strong growth in tax receipts as the pandemic declined.
Staff Writer; James Davis
Mr. Davis is a Financial Analyst. His articles are about relating facts in a usable, truthful, and understandable way. That way, WE ALL WIN. James is, the author of three books, among them, “The Fix This Time,” Boost Your Retirement Income! Simultaneously Create Jobs and Spur Economic Growth (https://www.amazon.com/dp/B00MI3PD2M). Reach out to James @ his blog https://thefixthistime.com.
Question? Comment? One may use this email address; MrDavis@ThyBlackMan.com.
