Not unlike junk food the new tax reform will feel great at first but after a few years it will take its toll on the driver of the economy; consumer spending. Most Americans will see extra money in their pockets for the first few years and this can help positively impact the economy via spending, but the long term effects will be disastrous for consumer spending and the impact of excessive consumer debt.
In previous articles, I covered the impact of consumer debt and how it will lead to the inevitable slowing of the economy if not a repeat of 2008. Since I published, he latest GOP tax reform bill was passed and signed into law; and while there are currently positive signs, many of which have nothing to do with this tax plan since it just went into effect this year so companies couldn’t possibly be benefiting from it yet, there are new factors involved which should be discussed here. This tax plan will have some immediate effects that are positive such as placing extra cash in the hands of the average individual, and because it guts the government subsidies for the ACA, we will see some rapid negative repercussions in healthcare and it’s related industries. As subsidies stop flowing to the insurance companies, higher premiums, insurance companies withdrawing from the marketplace, layoffs in both insurance, healthcare and more bad healthcare debt will be affecting millions. Rising premiums will result in dropped coverage, and the lack of insurance will result in lower demand for employees for both insurance and medical facilities and the obvious unpaid medical bills. The long term effects of the tax plan are rising taxes for the middle class in about nine years, which will result in less money in commerce and furthering bad consumer debt as families find themselves short the money to pay on their debt. This tax plan is trickle down on steroids which will result in the necessity of higher taxes by 2026/2027 on the middle class, which is purposefully designed to occur after a second term of the Trump administration (should it occur) so that democrats are blamed for the rising taxes. Politics running rampant, this plan is insane in its lack of foresight and meant to bolster popularity of republicans in the short term.
The American economy has been prone to more abbreviated periods of economic boom followed by a bust which recur at an alarming rate since the late 70’s, which is a direct result of economic policy set forth by ‘fiscal conservatism’ born under Newt Gringrich and his reformation of the republican party in 1979. In Economics there will always be flux, but with Voodoo/Reaganomics the bust periods are more commonplace and increasingly more severe. Our best hope is to return to FDR and Eisenhower economic policies, which will require change.
To change the future, we must change the present. Change is hard even when it’s necessary; people resist change even when it is for their own good, it’s human nature. We have to change our representation in our cities, states, Congress and the Whitehouse if we want an economy that works for everyone. Transformation at this level requires capturing the hearts and minds of the majority of Americans, or giving them no other choices through subversion of the current duopoly. Changing the hearts and minds of those indoctrinated is like trying to take a nap in house full of infants, it is best to understand that we cannot change the minds of others easily and because economics has been politicized with many fallacies and subverted to serve the few, we must focus not on changing minds, but changing politics itself.
Creating a transformative economy means recognizing the necessity of steadily increasing consumer spending while limiting consumer debt and while a tax credit can have a very immediate short term effect, the only long term effect is by increasing wages for the average American worker. Increased wages gives the average American worker money that comes in regularly with each paycheck allowing them to purchase more goods and services. As more goods and services are purchased, businesses find themselves busier and in need of more help, thereby creating more jobs. We can do this by raising the minimum wage in three rapid stages to $16.80 per hour then making it raise automatically the same percentage as the rate of inflation, which would incentivize market leaders to control inflation. Arguments can be made for the fact that wages have risen since the 70’s but they are inversely proportional to the rate of inflation. Secondly, it requires proper regulation on the financial sector, which helps prevent incentivizing financial institutions making bad lending decisions thereby reducing the amount of bad and slow consumer debt and slowing the purchases of big ticket items which drives economic bubbles. Third, we need a balanced budget and to do that a graduated income tax must be implemented along with higher corporate taxes, cuts to excessive spending while investing in infrastructure in both our highways, bridges and high speed internet. A simple transaction tax on Wall Street can go a long way to making a bachelors degree or a trade school degree a mandatory part of public education. Ultimately, education, regardless of university or trade is how America is made great, because we certainly did not get this country from shear stupidity. Finally, obscene amounts of money in politics must be addressed with an amendment that requires campaigns be publicly funded doing away with the Citizens United ruling and McCutcheon v. FEC and a bill requiring all elected officials must make all stock investments immediately inactive, in a suspended state with out the ability to make changes or sell them thus removing incentives to vote for legislation that would enrich themselves.
Enacting a revolution requires a supermajority, and creating a supermajority requires thinking outside the box. Remember, political labels are just that, definitions of those labels change over time, for instance, Republicans were once the progressives and Democrats were once the conservatives, which means change is possible and the method of transformation should be singular and not attempted previously. This requires everyone who has an understanding of the economic policies of FDR and Eisenhower that believes in implementing a true populist economic agenda and is suited to do so, needs to run for office, whether it is on your city council, state legislation, Governor, Congress, or even president. The critical component is understanding your constituency and their voting habits, for instance if you are in an area that votes strictly republican regardless of the issues, then you must register and run as a republican, same if you are in a district run by democrats. If you’re in a district that swings either way, then run as an independent and caucus with whatever the research says is the dominating influence that year. Candidates must be willing to debate based on economic policy only, and avoid the peril of speaking about key social issues, regardless of the candidates stance, do not debate on gun control, abortion, birth control, women’s rights, and the death penalty. All of these are important issues, but these are the issues used to control the conversation when the opposition does not like what you are saying. Understand that once in office, these issues can be addressed as well, but on the campaign trail they should be avoided as the general public on both sides are robust at forgetting the message and regressing towards single issue voting. Samuel Ronan has taken this approach, and by all means it takes guts to run on this platform in the republican party, and he is no traitor to the cause of progressives by doing so. Once enough progressive candidates are elected on both sides of the political divide, we can become a disrupting force in the quibbling and polarization between the two parties and move forth with the passage of legislation that will make the economic system work for all of us. This is the best method for disrupting the republican agenda and permanently altering both parties platforms. If you are campaigning on these principles, be sure to call out your opponent for changing subjects when in a debate, stay on topic and do not falter. In the end, remember that you have friends on both sides of the aisle who will be voting with you should you succeed. Supporting the cause, overwhelming congress is the place to come and self-identify, provide your district, website and link to donation page and we will create posts for people to donate to your campaign. In the end, remember, the strategy is not to become them but to overwhelm them.