The mid-term problem for the Democrats

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.