Viewpoint: Instead of juicing economy, boosting consumer spending, should be looking to lower cost of living

Karen Rubin
Karen Rubin

Andrew Yang, the entrepreneur candidate for the Democratic nomination for president, says he intends to fight what he predicts will be widespread unemployment and economic catastrophe brought about by artificial intelligence and robots by giving each adult a $1000 “dividend” per month.

Where will this come from? He claims a value added tax (a regressive tax on consumers) and requiring profitable companies like Amazon to pay their fair share will do the trick (I am doubtful).

With Democrats being accused of turning the USA from capitalist to socialist over just the insinuation of universal health care and free community college, what would you bet the chances are of Yang’s proposal (actually, his only one in his bid to lead the country) actually happening?
Here’s a better idea: lower the cost of living.

The cost of living – mainly housing in decent neighborhood (that is, with access to decent public schools) – has tripled ever since women achieved greater rights and access to jobs. Whereas before, American households (in the glorious 1950s) could make do with one “breadwinner” in the house and only spend 25 percent of one income on housing; by the 1990s, households spend 50 percent of two incomes on housing, so women working outside the home became more an imperative than a choice to fulfill their professional ability.

While this was happening, the government did little to promote parental leave or affordable childcare, pretty much wiping out a family’s ability to save money for college funds or retirement, let alone homeownership.

Let’s see what else is pushing up the cost of living (existing): health care. Health insurance premiums, deductibles, co-pays are through the roof. Of course, taxes are rising, as well, along with utility rates. And thanks to the climate catastrophes, costs for basics – food, clothing, shelter and disaster aid to repair destroyed infrastructure – are also rising to unsustainable levels.

Instead of paying people not to work (which actually would just create a ground floor for inflated prices of $12,000/year), what makes more sense in society is moving toward a living standard where it isn’t necessary to have two people working to support a family.

Today’s economy is dependent on consumer spending which accounts for two-thirds of Gross Domestic Product.

Sustaining GDP growth requires conspicuous consumption, gorging on the earth’s dwindling resources and exacerbating climate change that will promote scarcity, raise the cost of necessity and hasten the demise of species and civilization.

But Trump, who knows that a strong economy is his only hope (except for Russia, China “help”) to win in 2020, is hysterical because of concerns about an economic slowdown, even recession, that would torpedo the myth that he has done anything to build the economy, as opposed to dismantle and derail it.

To keep consumer confidence propped up, he thinks just reciting propaganda will do the trick. If that doesn’t work, he will pull out all the short-term tools to juice the economy he can, just to get through to November 2020 (then he doesn’t actually care) – without actually improving lives or the economy.

Reminder: Trump has ballooned the budget deficit (which Obama was successfully lowering) to over $1 trillion because of an ill-conceived tax cut that directed 83% of the benefit to the already obscenely rich (and powerful) without spending a dime on infrastructure or anything else.

And with the chaos and ill-will caused by his trade wars and tariffs, instead of businesses investing, innovating, maintaining American technological leadership in the 21st century, he has short-circuited all of it.

Trump is looking to cut payroll taxes to juice consumer spending (effectively buying votes), which will cut funding to Social Security and Medicare (unlike when Obama did it to stave off a Great Recession, Trump won’t have the ability to borrow money to make up the difference).

Instead, he should raise or even remove the cap on payroll taxes which actually would enable the payroll taxes to actually be lowered for everyone, from 6.5 percent to say, 3 percent.

Instead of cutting food stamps (which he thinks will reduce his $1 trillion budget deficit), he should recognize SNAP benefits benefit the entire family, community and economy, with a 54% rate of return to taxpayers; $1 billion in new SNAP benefits generates $1.54 billion in GDP.

He should be addressing health care and pharmaceutical costs with meaningful health care reform; implementing policies for universal pre-K and affordable childcare; and allowing people burdened with student debt to refinance (like homeowners do) at the lower interest rates.

He should take advantage of what he claims is a booming economy (and still-low interest rates) and be investing in climate resiliency and clean, renewable energy and sustainable agriculture – to prevent the worst, costly impacts of climate change and generate millions of jobs that robots can’t do.

Trump could tell Mitch McConnell to let the Senate vote on the Raise the Wage Act, which would give 34 million Americans a raise – that would certainly goose consumer spending and boost the economy.

What else would bring down the cost of living while continuing to improve the quality of life: make quality schools available in communities where housing is more affordable, and yes, have more decent, affordable housing. (This should be the avenue for “reparations” to make up for centuries of systemic racist policies.)

Trump won’t bother with any of these constructive solutions because these would actually help people, raise living standards, improve the quality of life, help people make progress, be as productive as they can be and fulfill their potential in their life – that is the American Dream.

Mitch McConnell may be the Grim Reaper but Trump is the dysfunctional destroyer – he doesn’t believe in investment; his modus operandi has been bankruptcy and fraud, cheating investors, suppliers, workers and taxpayers.

His vision of America is one that is split between an obscenely rich ruling class and everyone else.

If this sounds like there needs to be fundamental, structural, systemic change in American society, well yes – towards social, economic, political, environmental justice.

And Elizabeth Warren has plans for that.

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