I always rant and rave the Democrats are clueless. Well why you
ask?
Basically, most people vote their pocket book. It will always
be that way.
The Democrats have not addressed the high possibility that
this is the year that has a good chance for the middle class to feel better
about their finances.
The lower withholding might show some increase in take home
pay. The labor market is tightening and it is starting to catch up to corporations.
They may start paying more due to market conditions. The current announcements
of one time bonuses sounds good, yet the real trigger will be if wages
increase. And can they keep up the little bit more going into paychecks before
November. The answer is probably. In fact, they may get two to three years
increase for the middle and working class. And their 401ks could continue to go
up during this time. The lowered tax rates for corporations will help profits
which will continue the Trump tax reform increase in the market which is
possibly becoming a bubble.
If this keeps up till November, the corporations will push
hard to make sure the economy looks good and give the credit to Trump so they
can keep the Republican majority. Which is more probable than the Democrats
realize.
And if the Democrats push the Trump is bad, we are good campaign
it won’t turn out well for them. They desperately need to be able to address an
improving economy with a hard message that shows the faults in the results,
what can happen and most important how to make the economy work better.
If you read my earlier post on a tax reform plan, you know I
proposed a rise in corporate taxes with the idea the corporations can actually
lower their taxes by benefitting their workers.
And now with tightening labor
markets the corporations could have gotten a double benefit by not looking like
the bad guys if they play by the new rules raising wages and being able to
honestly make people think they are contributing because their standard tax rate
was higher. It was meant to be a win win so real wages would rise
significantly. If wages rise, then people will feel better about spending and hopefully
saving some too. This increases the chances for whomever implements this policy
to get re elected because… ta da, pocket book issues are positively impacted
while not overly benefiting corporations over workers.
Under the current plan, the Republicans could look good in
November. Unfortunately, the average voter has a short memory so all the October
talking points will favor the Republicans.
Long term though the middle class is shot. If true business results
do not pick up and the only increased profits corporations show one to two
years from now is based on the lower rate, then Wall Street will want more, the
market will correct, and the people buying into the current bubble will get
clobbered. And those people buying in now are the middle class. The investor
class has the money to play the market both ways and they will be more attuned
to true business fundamentals than the average Joe trying to maximize his 401k.
So wages hit a ceiling again, the market corrects creating
more wealth gap, along side of increased inflation and rising interest rates
means the middle class is squeezed again. It will be how much, not whether it
will happen. By this time it is 2019 or 2020. If the donor and investor class
can keep the economy afloat till November 2020, Trump gets re elected and then
the house of cards completely falls again and this time Trump is in charge so all
the help goes to the top 1% which even those people will feel some consolidation
and only a few will be wealthy and we have a country that is both first world,
yet primarily second world and decreasing.
And if you think this is a doomsday scenario, well you aren’t
looking at the big picture. For Trump’s tax plan to really work, the middle
class has to have enough sustained wage and wealth growth for years to come.
His plan doesn’t have that built into it. The more realistic scenario is
business growth doesn’t materialize and corporations cut back again slowing
wage and savings growth. And these magical market numbers become realistic real
fast.
And so the Democrats need to realize this scenario is probable
to highly probable and they need to create ideas and policies that show they
can move over the money back to the middle class in the long run, explain to
them in simple quick terms the problems of the Republican plan and be ready to
get into a dog fight.
Have you seen the Democrats preparing to take this approach?
I haven’t, so there fore I think they are clueless. Or any approach? They have
serious problems and Nationally they don’t even know it.
Obviously predicting the economy for a year or two out has
some flaws, yet hopefully you can see some of this coming for yourself.
Thoughts?
And on the inflation theme, it has started to rise. One area
is health care. My premiums went up enough this year that may latest paycheck
was less than the last one of 2017. Now
I do not think the lowered withholding has impacted my check. I think I read it
starts in February, but not sure. If true, then I may get back the difference.
Unfortunately, though this means I do not have extra spending money if the
lowered withholding doesn’t account for the premium increase. Can the Democrats
play into this? I do not know. Yet again, are you seeing them try?
And finally I haven’t seen any themes from the Democrats. The
Republicans will have one big “improving economy” theme that will destroy the
Democrats. Again… clueless
Immigration is not going to beat the Republicans and the
Republicans will continue the destruction of the middle class. Think not?
Please think.