Warm Southern Breeze

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A Simple Pandemic Economy Fix: Give 10.25M People $40,000

Posted by Warm Southern Breeze on Thursday, January 28, 2021

Give money to everybody who needs money.

It’s just that simple.

How much, how many?

10,252,500 people

$30,000 cash

$10,000 in their FICA/SECA accounts

That’s a total of $40,000 per person.

The Quick-N-Easy math looks like this:

We’ll use 10,252,500 unemployed people (discussion, rationale, and calculations for that figure are later in this entry)

10,252,500 unemployed people
x $30,000 = $307,575,000,000 ($307.5 billion)

10,252,500 unemployed people
x $10,000 = $102,525,000,000 ($102.5 billion)

$307,575,000,000
+ $102,525,000,000 = $410,100,000,000 ($410.1 billion)

10,252,500 unemployed people
x $40,000 = $410,100,000,000 ($410 billion)

That’s MUCH LESS than the $1.9 TRILLION proposed.

Plus, the $10,000 FICA/SECA money would be for their employers, a $10,000 tax deduction!

Why do something like that?

First, it puts a significant amount of money (delivered in a lump sum) into the hands of hurting people. And they need that help DESPERATELY. It keeps them from being evicted/foreclosed upon, it keeps the lights turned on, and water and gas turned on, etc.

Second, it significantly helps employers, many which are also hurting, and need help. In the case of small businesses, many owners are employees of their companies, so they would also get $30,000 checks. PLUS, they would also get $10,000 checks (per se), which would be credited to the company’s books as a deduction in operating expenses, thereby increasing their profit (perhaps they’ll use it to pay down long-term debt). How they use the value of the deduction is entirely up to them, but it (the money) MUST BE PAID TO THE EMPLOYEE’S FICA ACCOUNT. In fact, the mechanics of the transaction are practically moot, insofar as the employer would simply need to show a “list” per se, of their employees who were/are laid off because of the pandemic. The money is put into the employees’ FICA accounts, and the employer takes the deduction, which is how it works, anyway.

Third, it helps the employee in the long-term by boosting their Social Security account. In the immediate, and near term on a broad scale, it improves the solvency of Social Security… which should be a “HANDS OFF!” account, used EXCLUSIVELY to pay for claims upon it, rather than being a political “slush fund” as it is now.

And if you think about it, The People are going to SPEND that money, anyway – thereby improving the economy.

FICA/SECA is a payroll tax that funds an employee’s Social Security account, and helps pay for Medicare, the total of which is paid on a 50/50 sharing basis by the Employee and Employer. Since it comes from payroll, the employer gets to deduct it as part of their operating expenses. That is to say, while ALL employees’ pay is 100% deductible, since the employee is not being “paid,” per se, by the company, to allow the company to take credit for a $10,000 payment per employee affected, is a generous gift to the employer. The money deducted (the $10,000 as payroll taxes) accrues to the benefit of the Employee into their Social Security account, and to Medicare. That also helps shore up Social Security.

DISCUSSION

There are about 330,000,000 people in our United States. We’ve lost a few in this pandemic. We’re not exactly sure how many right now, but we know now, that there are at least 432,000 pandemic-related deaths… and most likely many more – perhaps at least 50% more. But the 330,000,000 population figure is fairly spot-on.

The Bureau of Labor Statistics tells us that approximately 6.5% of the workforce is unemployed (seasonally unadjusted, or 6.7% seasonally adjusted) through no fault of their own, due to the pandemic.

How many people is that?

The St. Louis Federal Reserve Economic Data shows a 4-Week Moving Average of Continued Claims (Insured Unemployment) of 5,126,250 last observed on 2021-01-09, and updated January 21, 2021.

There are several ways to calculate a generous proportion of unemployed people (stinginess never helped anyone), all of which would include more than the CURRENT RATE, which is a reasonable thing to do, because even though the rate is declining, we cannot accurately foretell the future, and things could conceivably worsen. Plus, there others who have been adversely affected, and – even though they may now be presently employed – they may have taken a job that is not equivalent to what they had previously, as far as earnings are concerned. It is almost always better to err on the side of generosity, than on stinginess, need, and want.

There are essentially THREE figures which can be used in the calculations:
1.) The MAXIMUM 4-Week Moving Average – 22,669,500
2.) The CURRENT RATE – 5,126,250
3.) Variations upon those two figures

The CURRENT RATE is 4.42 times LESS than the MAXIMUM
Expressed another way, the CURRENT RATE is 22.6129% of the MAXIMUM
Or, expressed yet another way, it is 77.387% LESS THAN the MAXIMUM

The highest 4-Week Moving Average of Continued Claims (Insured Unemployment) was reported on Saturday, May 16, 2020, with 22,669,500 unemployed, which we’ll identify as the MAXIMUM.

Half that figure would be: 11,334,750

METHOD #1 ––
If we took the MAXIMUM figure of 22,669,500
added to it the CURRENT RATE of 5,126,250
and divided it in half, that gives 13,897,875
which is 8,771,625 MORE than now are currently unemployed
And is 1.71 times MORE than the CURRENT RATE

METHOD #2 ––
However, if we took HALF the MAXIMUM figure, which would be: 11,334,750
And we added the CURRENT RATE of 5,126,250
that gives a total of 16,461,000
HALF of that figure is 8,230,500
ADD back the CURRENT RATE 5,126,250
That gives 13,356,750
Which is 2.6 times MORE than the CURRENT RATE

–OR–

METHOD #3 ––
We could take HALF the MAXIMUM figure, which is 11,334,750
Then, add HALF the CURRENT RATE, which is 2,563,125
That would be 13,897,875
Which is 2.71 times MORE than the CURRENT RATE

The AVERAGE of the THREE multipliers (1.71, 2.6, and 2.71) is 2.00.

So, we could DOUBLE the CURRENT RATE of 5,126,250
which would be 10,252,500
and is 45.22% of the MAXIMUM RATE
which could reasonably be estimated to be in need of assistance.

Now, we’ll need to determine how much would money we should give them.

The data last collected by the U.S. Bureau of Labor Statistics in the Current Population Survey (Household Survey), shows that the Average Weeks Unemployed [referred to AWU in this entry] (UEMPMEAN) is, as of December 2020, 23.4 weeks, and was last updated January 8, 2021. That’s very nearly 6 months. During this recession period, which began in February 2020, the AWU has ranged from 22.2 weeks in January 2020, to 6.1 weeks in April, and has risen to the current figure of 23.4 weeks in December. The average of those three figures is 17.2 weeks.

Number Unemployed for 27 Weeks & Over (UEMP27OV)
Thousands of Persons, Seasonally Adjusted
December 2020: 3,956 (3,956,000)
Updated: January 8, 2021

3,956,000 is 77.1714% of 5,126,250. So, expressed another way, 3 out of 4, or 77% of all people now unemployed, have been unemployed for at least 27 weeks, and over.

The Real Median Personal Income (RMPI) as measured in 2019 CPI-U-RS Adjusted Dollars, in 2019 was $35,977.

The Median Household Income (MHI) (middle household income figure of all household incomes measured, includes income of ALL household members) 2019 CPI-U-RS Adjusted Dollars, Not Seasonally Adjusted in 2019 was $68,703.
MHI is only $3,251 LESS THAN TWICE the RMPI, which strongly suggests at least a two-income household.

So, if we used a $40,000 per person figure, that would be only modestly more generous (by $4,023) than the last figures for which data exists.

This pandemic thing has wreaked havoc upon our nation in peoples lives’ lost by disease, and economically. We literally have no idea how this will affect our decennial Census. But suffice it to say, that the previous administration w.as wholly, fully, and utterly incompetent in every way, shape, manner, and form, and we probably won’t know the full scope, or extent of the damage done for at least a year, if not more. And it’ll certainly take us AT LEAST that long to begin to see, or experience some degree of return to “normalcy” because of it.

The pandemic, and response to it at ALL levels of government – Federal, State, and Local – has “shown up” and exploited the inadequacies, flaws, and inherent weaknesses in pursuing the notion of “smaller, better government” – the GOP’s intellectual equivalent of a “Flat Earth” theory.

Democrats have pussy-footed around by sending (or trying to) $1000 here, $600 there, an extra $600, then $300 per week in Unemployment Compensation for a few months, and after that, $2500 elsewhere, all in piecemeal fashion. And, true to form, Banana Republicans have practically checked them at every turn. And even then, not everyone has received their money.

In the mean time, folks are being evicted because they can’t pay rent or mortgage. And who knows how many automobiles have been repossessed?

Point being, there are at least TWO things that need doing in order to get back upon the right track:
1.) Putting money into suffering people’s hands, and;
2.) Getting people vaccinated against COVID-19.

• POTUS Biden should PULL OUT ALL THE STOPS and get FEMA involved in ALL 50 states, Federalize ALL 50 States’ National Guard, employ the Commissioned Corps of the U.S. Public Health Service (USPHS Commissioned Corps), activate to full-time active duty the Army, Air Force & Navy Reserves, and more, in order to vaccinate the entire population rapidly.

• Congress should simply put about $30,000 CA$H into EVERYONE’S hands who have been put out of work by COVID-19 (that means WORKING MEN & WOMEN, not millionaires or the well-to-do), and make a temporary change to the Tax Code to tax that money at a significantly lower rate – perhaps 3% – for Income Tax Purposes, and then, perhaps defer that 3% tax due upon it for at least a year, and then place about $10,000 extra into each individual’s FICA/SECA aside from that amount. And then, for accounting purposes, credit the FICA as being paid by their employers for the full amount, i.e., 100%, rather than as a employee/employer share, which is the typical method. The amount of FICA withheld varies upon gross wages.

And so, for accounting purposes:

1.) For the purposes of FICA, it would appear as if the employee was given a significant raise – of $130,720 – since the employee and employer each pay 50% of the the FICA tax, and $10,000 is 15.3% of $130,720, while 50% of that figure is $65,360.

$65,360, which would accrue to their benefit as a % INCREASE to their Social Security base), or bonus (for which the employee would NOT have to pay taxes);

2.) It would significantly fund (and boost) Medicare and Social Security, and;

3.) Employers would be enabled by law to “write off” (to as great an extent as possible) the contribution as an expense (since it comes from wages, which they pay), and deduct the amount from their Corporate Income Taxes, which thereby would increase their corporate profitability.

A $10,000 per employee FICA/SECA contribution would, in effect, be a net DEDUCTION of $10,000 for the employer.

Whether, or not, the executives and their boards chose to disperse an increase in dividends to shareholders, as a reflection of that increase, would be entirely up to the executive decision-makers. It might improve their solvency if they did not, and rather, instead applied that amount to long-term corporate debt.

(NOTE: The FICA/SECA is the Federal Insurance Contributions Act (FICA), Self-Employed Contributions Act (SECA), which is a law that mandates a payroll tax on employees’ paychecks, as well as requiring contributions from employers, in order to fund the Social Security and Medicare programs. Self-employed individuals pay an equivalent through the SECA. The Federal government withholds Social Security taxes up to the annual wage base/cap, which was set at $137,700 in 2020 and $142,800 in 2021. The Social Security tax rate is 6.2%, while the Medicare tax rate is 1.45% for 2020 and 2021. The employer pays a tax equal to the amounts withheld from employee earnings, so the TOTAL per-employee contribution is 15.3% of their GROSS TOTAL earnings, which is paid on a 50/50 basis by employee and employer. While there is no maximum to the Medicare contribution, there is an additional 0.9% tax on wages over $200,000 for individuals ($250,000 for married couples filing jointly) paid by employees. In total, the Additional Medicare Tax is 2.35% (1.45% plus 0.9%). Employers are not required to match the additional Medicare levy.)

The math works out like this:
5,126,250 unemployed people
x $30,000 = $153,787,500,000 ($153 billion)

10,252,500 unemployed people
x$40,000 = $410,100,000,000 ($410 billion)

That’s MUCH LESS than the $1.9 TRILLION proposed.

And, for every business which has been adversely affected, a $30,000 lump sum payment, and a $10,000 FICA addition per laid off employee would:
• Cover many employees’ lost wages
• Enable States in some cases to STOP or LIMIT paying Unemployment Compensation (thereby saving the State, and the affected employees money)
• Create a $10,000 tax deduction for businesses for each laid-off employee (which would go into the employee’s FICA account)
• Increase profitability and solvency for many businesses

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