DOW BE DAMNED, THE ECONOMIC TRUTH
Part Two
For those who watched the State of the Union, if you read what I wrote in part one you would see the point I was making to be even more glaring. President Trump touted the stock market and its recent surge as a result of the recent Republican tax bill. There is much to disagree with President Trump about, but I have to admit, the tax cuts had a part in what is driving the stock markets success. I could be a true Democrat and say, President Obama's financial policies had us on the path before President Trump took office, but I'm going to skip the politics and give this one to President Trump. That being said, President Trump would like middle class America to believe the rise in the stock market is benefiting them? Let's take a look at that.
The rise in the stock market is benefiting people, it's making the top 10% wealthiest in the U.S. much richer. As I pointed out, 93% of the stock market wealth is owned by 20% of the people, while the remaining 7% is owned by the middle class. If you are one of those in the middle class, more than likely you own stocks through a 401k or some kind of pension fund. What you're not told is, after fees paid to manage your fund, fees paid for inner stock trades, your 401k or pension fund may have a small modest gain at best. Nothing like the top 10% will have, they will use tax loopholes, as well as other financial techniques to avoid paying as many taxes as possible. I personally like the stock market, I also know the average citizen doesn't benefit much from a rising stock market.
That being said, President Trump used the State of the Union speech to highlight that because of his financial policies unemployment among the African American community is lower than it has been in history. Part of his statement is true, unemployment is lowest it has been in history, what President Trump omitted is, the unemployment rate has been dropping in the African American community since 2013 under President Obama. (Bureau of labor statistics) "Under Trump, African American unemployment rate has dropped a full percentage point to 6.8 percent in December. That’s the lowest rate since the bureau began regularly breaking out unemployment rates by race in 1972.
A similar drop of 1 percentage point was recorded during the same 11-month period in 2016. The drop was even more pronounced in each of the three years before that. It fell 1.9 percentage points in 2015, 1.5 percentage points in 2014 and 1.8 percentage points in 2013". Under President Trump, BLS shows unemployment is actually dropping slower than when President Obama was in office. Hey, arguing this point is fighting over pennies, here is where the real money is, the unemployment rate for white Americans is almost twice as low at 3.7% than it is for black Americans at 6.8%. If President Trump is going to draw racial distinctions he needs to give all the facts, not tell half the story. Fact of the matter is, the rise of the stock market will do little to help the African American community, truth be told, most of the middle class community regardless or race will not benefit.
Another point President Trump cheered, all the bonuses he claimed is being given out by companies all over the U.S. because of the Republican tax bill. Well, let's talk about those bonuses and corporate profits. According to (USA TODAY) 39+ companies in the S&P (standard and poor's) have given out some kind of bonus or increased match to 401k plans. This all sounds great, right? Getting a one time $1,000 bonus is a play on people's financial emotions. Getting a bonus is good, but it is very short term, it does nothing to help you with your average salary, it's a one time thing, it also does nothing to help with your retirement which in many cases is based on your last three years of service. These companies and President Trump know what is going on here, give you a bonus and you will cheer for he one sided Republican tax bill for the rich. Increasing 401k match is even worse than getting a bonus, how many of you actually take full advantage of your workplace 401k plan? Based on the data I wrote in part one, not many. Companies know this, but it sounds nice to say. The truth is, with all the bonuses, 401k matches and other one time giveaways, those 39+ companies are going to give an estimated $1.7 Billion in bonus compensation. With the new Republican tax bill, S&P companies are estimated to pay $75 - $100 billion less in taxes, where is all that additional money going? Workers as stated in my aforementioned data will receive $1.7 billion of a $100 billion being saved. I'm not saying don't take the bonus, that would be crazy, what I am saying is, if these companies are serious, they should give their employees and additional $1 an hour pay, $40 a week, $2,080 a year in their paychecks. That is a long term benefit that would multiply year over year and would help boost the middle class. Don't be fooled by the financial smoke and mirrors being peddled by President Trump and the Republican led Congress. The Republican tax bill will help some, the rich mainly, it will lift some up, but the big winners are the rich for sure, there is no doubt about that. One more point about the Republican tax bill, it will add $1.5 Trillion dollars to the national debt, what happen to being the party of fiscal conservatism?
