I am definitely not a “shopper.” My phone calendar for today says, “Xmas eve, buy presents.”
Fortunately, it’s done; my wife dragged me out of the house last week. At one store, we were sincerely thanked by an employee as we left with our purchases. He genuinely understood the relationship between us spending money and his employment. Today, I echo his thanks and thank all of you who spent money in Fairfield and Solano County this Christmas and helped create American jobs in the process. My dad ran Evans & Pyle Hardware downtown on Texas Street for many years; I know how this works.
According to an article in Thursday’s Daily Republic, retailers are experiencing a 2½ percent increase in Christmas sales over last year, but were hoping for more, as the U.S. economy slowly continues to recover. I’m sure you realize that retail spending is the driving force behind our nation’s economy and, according to the Commerce Department, consumer spending has been up every month in 2012 over corresponding 2011 levels. More than the millionaire and billionaire “job creators” continually praised by Republican politicians, it is average, working-class Americans, just like you and me living here in Fairfield, who provide the financial steam that powers our nation’s economic engine.
Economists warned that the uncertainty surrounding the “fiscal cliff” negotiations could have a detrimental effect on this year’s holiday spending, but Washington’s dithering was not a deal-breaker for most Americans.
According to the latest Gallop poll, consumers will spend an average of $770 on Christmas gifts this year, up from last year, and way up from the $616 of Christmas 2008, when the bottom fell out of our economy. To me, the irritating thing about this “fiscal cliff” debate is that the tax rate for millionaires and billionaires is getting all the political and media attention. The Office of Budget Management, Congress’ nonpartisan bean-counters, say that ending the tax break for these people will have a minuscule, 0.1 percent effect on America’s Gross Domestic Product.
It seems the Republicans’ sacred “job creators” have very little to do with the actual creation of jobs and all their stubbornness and hysteria is simply to make their wealthy donors, a bit more wealthy.
By contrast, two items that are not getting any media attention are the 2 percent payroll tax cut and the emergency unemployment extension. These two items affect pretty much all of us, not just the rich, and according to the OMB, if these items are excluded from the ultimate solution, America’s Gross Domestic Product would drop by 1.4 percent. That would be quite a gut-punch to our rocky economy.
Why such a profound effect?
Basically, the less money you have, the larger percentage you have to immediately spend on the necessities of living. While the wealthy can bank the money they save on their tax cuts, almost everybody else has to spend what they have. Our nation’s economic health depends not only on the number of dollars outstanding but, to a great extent, how fast those dollars are turned over, or the “velocity” of money.
Believe it or not, we actually have much more money in circulation than ever before, but bankers and corporations are slowing down the velocity of money by holding onto ginormous piles of cash, the most in recorded history. In order to get our nation’s economy moving along, we need to have more money in poorer hands, not richer hands. Allowing us workers to keep an additional 2 percent of our paychecks and extending emergency unemployment benefits would guarantee that money would be immediately put right back into our economy, creating jobs.
Mike Kirchubel grew up in Fairfield and is the author of “Vile Acts of Evil – Banking in America.” He can be reached at [email protected]