Davis Deficit Neutral Jobs Creation Plan ( Abbrev. Version )
With the month of May unemployment rate, for the country at 7.6%, the unemployment rate for Blacks hovering right around 13.5%, and the need for Job Creation, it is apparent we are a country in dire straits. Our economy needs to create 250,000 to 300,000 jobs each month to sustain a healthy economic recovery. The President and Congress can act now to make this happen and end this downturn by changing the laws governing Social Security to allow 10,000 baby boomers who are retiring each day over the next 18 years to take partial distributions of $40,000.00 dollars from their Social Security principal.
This is A JOB CREATION PLAN WHICH EFFECTIVELY ENDS THIS DOWNTURN WITHOUT RAISING THE DEFICIT. It can be done cleanly and without adding to the deficit by putting money into hands of retiring baby boomers, who are consumers. It’s a fact, consumers account for about 70% of our economic activity or GDP, ( gross domestic product). Therefore put money into the hands of consumers.You just simply have to change how Social Security checks are paid. Let the boomers have partial distributions of their Social Security principal in the amount of $40,000.00 dollars, and issue them a monthly check on the remainder of their principal. Look, let’s say it takes $313,000.00 dollars in principal at 6.9% interest to send me a monthly Social Security check of $1800.00 dollars. So, I say to Social Security, I would like to have some of my money up front, say $40,000.00 dollars. Now pay me a monthly check on the remainder, which is in this instance $273,000.00 dollars, which amounts to a monthly check of $1569.00 dollars. That makes this plan ( let’s call it the Davis Plan )deficit neutral. It’s their money, for heavens sake! Presenting the option of taking a partial distribution of your retirement principal is common practice in the private sector. Yet we allow, the largest payer of pensions, the Social Security Trust Fund, not to do it at a time when it will benefit our economy the most. The impact of allowing partial distributions, which is simply taking down a part of your pension principal and than rolling over the rest to be received monthly would pull, no, jerk this economy out of this downturn. BOOMERS ARE RETIRING AT A RATE OF 10,000 PER DAY having STARTED IN JANUARY, at the age of 66 and continuing for the next 18 years! ( at 66, they receive full benefit payments ) 10,000 x $40,000.00 = $400,000,000.00 million dollars. That’s right! They will dump that amount into this faltering economy each day for the next 18 yrs. That amount in effect is really $800,000,000.00 million dollars per day because money handed directly to the consumer turns over 1 to 2 times. There are 68 to 72 million boomers depending on who’s counting. THIS IS A NO BRAINIER! With $800,000,000.00 MILLION DOLLARS coursing through this economy every day, the downturn ends! Add the incentive of waived or reduced taxes on the first $40,000.00 dollars taken down from any retirement fund, including Social Security and we are off to the races. It’s the boomers and their kids who are getting hardest hit in this downturn anyway.
“Let the people have their money, and let them have it, abundantly.”
Yes, it will require, the politicians making Social Security actuarially sound, but that is what they say they are going to do anyway! Besides, making Social Security actuarially sound is a mathematical function not a political one. Look, this plan addresses every objection Republicans and Democrats have. It creates jobs without increasing the deficit and lowers taxes on the wealthy as well as the middle class. It’s big! Lifting all boats in the water at the same time, and answers businesses’ need for long term planning. Please sign the petition. Become a part of the solution of How to Create Jobs, Now! Thank you.
Uh, where’s that money coming from? It’s not like it’s is sitting there in a the bank, Social Security Trust Fund lent it all to the Government. The Government will have to borrow it to give to the Trust Fund. More debt.
Not good.
I agree, the Trust Fund loans the Treasury any excess money over its obligations and the Treasury gives the Trust Fund an IOU in the form of an iterest bearing security. Some said that the Federal Government owes the Trust Fund as much as $3.2 trillion dollars. Well obviously that practice will have to stop once this plan goes into effect, because there simply will not be as much excess money available. The boomers are owed that money back and the Federal Government is obligated to pay the Trust Fund. Where the Federal Government finds the capital, whether through borrowing or new receipts, it has an obligation to not renege.Of course, there will be additional revenues coming into treasury from the new jobs created by the Davis Plan also.
yes, but fact that the top five percent of the people in the US with respect to income account for nearly 40 percent of all US consumer spending.
http://rawdawgb.blogspot.com/2011/09/humpty-dumpty-economics.html
That is an interesting stat. Tell me, what is the source of your information. I would like to read and verify this myself. Obviously, I need to make my audience aware of this stat. We donot want to be dishonest about this plan in anyway. That is a real interesting statistic, so I want to incorpoarte it in my numbers. The American Jobs Act is being oversold in regard to its impact, and that is not my objective, to oversell this plan. Thanks for bringing this info to my attention. I thought I had covered most of the possibilities, but you learn something new every day and I am open to learning. By the way, I looked at your site and it’s very interesting. Thanks for your comments and please, please spread the word that we have possibly found an answer to this downturn. We will overcome, our unemployed brothers and sisters are depending on us.
James
How about just supporting a “basic income” for everyone (essentically, Social Security and Medicare from birth) instead?
http://www.basicincome.org/bien/
Mr Fernhout;
I uploaded your comment to my site because I wanted to address it. I can tell you are somewhat serious about the state of our economy. I am obviously serious and committed to changing things. The money from which the baby-boomers would draw their partial distribution is actually “their money,” and not a handout. My advocacy is to give them some of “their money” up front. In the process of doing this, the economy gets a needed boost. It is simple, it is direct and it will work. Did you know the politicians could not keep their hands off the Social Security Trust Fund. It was $2.5 trillion dollars just sitting there and they borrowed it and borrowed it and borrowed it, until they left a $2.5 trillion iou in form of government bonds.(Read the Q and A). I am sure part of it went to make up the difference in the federal government receipts left by the Bush Tax Cuts ( $200-500 billion a year depending on who you ask )and now President Obama is using the incoming funds to the Trust Fund to reduce the payroll tax. It is time for us to wake up and say to the politicians, take your sticky hands off our money and allow us to use it for ourselves. You know if we use it, they can’t use it and when we start using it, we will keep a better count of it. So, no it not a hand-out. It is our money!!
Is the Davis plan deficit-neutral, or impossible? Where will the money come from? The Social Security Administration would have to sell $194,000,000 in treasury bonds >every day< to raise the money. Could the Treasury redeem the bonds? Selling them on the open market would be equivalent to borrowing that much.
This is not only a Social Security problem, it is everybody's retirement problem. If we put our money in the bank until we retire, then the banks would have to pay it out. Prudent planning to do that would require them to hold loans to shorter terms. If we put our money in gold, and sell the gold off as we are retired, we would find the price of gold driven down. If we all invest in apartment houses, that market would be flooded. A possible and workable solution is to bring in immigrants to work and pay taxes. I did not say that would be desirable, just possible.
You made a statement,”The Social Security Administration would have to sell $194,000,000 in treasury bonds >every day< to raise the money." Why is that necessary?
It doesn't make logical sense. Social Security is actually paying the initial wave of boomers right now!! I don't see the disruption you are speaking of in the money markets.
You got me! The question I see is, “How much payroll tax money does the SSA have, how much comes in each year, and how much do they pay out?” I don’t know, and I do not know how to find out. I found no relevant information on the SSA web site. Apparently, they want to deal with retirees, not voters.
We are talking about paying $20,000 to each retiree who would get $1,900 per month, or about 10.5 month’s additional payment. Intuitively, that seems like a big shock. This question would have to be settled before the idea could proceed.
This is extremely interesting, I can see other ways to create jobs or use this plan to potential business owners who want to rebuild america..in this plan the would be borrowing their own money
YES YES WHERE DO I SIGN UP AT
E mail your Congressperson. Let’s solve this.