By Martin Cantor
BridgeTower Media Newswires
Out of Washington D. C. comes the tales of two Joes. One is President Joe Biden and the other is Senator Joe Manchin of West Virginia.
Both are Democrats with differing views on the president’s $3.5 trillion social and environment spending agenda being thrashed around in the House of Representatives.
Biden wants to put the pedal to the metal on his spending agenda and Manchin wants to hit the pause button. Manchin may be on to something, given the uncertainty of when inflation will be tamed, when workers and jobs lost during the pandemic will return to the workplace and when free market capitalism grows the economy instead of government spending.
While the Federal Reserve has been calling inflation transitory, it talks about tapering its’ liquidity generating $120 billion monthly bond purchases to control inflation. The reality is that driving the 5.2% inflation rate are consumers paying more for food and energy costs with food wholesalers and restaurants increasing their prices, along with gas prices spiking more than $1 since January.
Then the Fed’s latest “Beige Book”, a survey of the nation’s business conditions found that the July and August national economic data indicated that the economy has slowed, challenged by the COVID-19 case surge, supply chain issues that won’t abate, and a workforce that is struggling with workplace COVID-19 safety issues. The latter is reluctant to return to the workplace even though jobs await them and the enhanced $300 unemployment benefits and unemployment benefits for the self-employed have expired.
It’s not that the reluctant workforce has savings to live on until they decide it’s time to go back to work. A July 2021 survey reported that 51% of Americans have less than three months of expenses in an emergency fund and 25% have no emergency fund at all, an increase from 25% in 2020. Worse yet, just 17% have more savings today than before the pandemic, while 34%, twice as many, have less money in their savings. The fact is that the financial imperative to work is there, the question that begs is why aren’t these folks going back to work?
Long Island, for example, has lost 199,000 jobs since August 2019, 8.8% of jobs at that time. Nationally, approximately 5.2 million jobs have been lost due to the pandemic, while July unfilled job postings by employers has exceeded 10.9 million. This is the low hanging economic fruit. Why is so much easy economic activity on the sidelines and so difficult to cultivate? Is there a skills gap between the reluctant workforce, technology replacing jobs lost and the job postings?
The answer can’t be rejection of free market capitalism that needs to engage the reluctant workforce, only to be replaced by a $3.5 trillion government spending plan that will not only increase inflation but will increase business taxes and also increase personal taxes to a point where combined federal and state taxes on households in New York State with $450,000 in income will exceed 51%.
Manchin is right to say “we should be looking at everything and we’re not.” He is also right to ask that American business taxes be viewed in a global business competitive context, which the Biden Administration appears not to. We need to get Americans back to work and raising taxes isn’t the way to go about it.
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Martin Cantor is director of the Long Island Center for Socio-Economic Policy and a former Suffolk County economic development commissioner. He can be reached at EcoDev1@aol.com.
