Economic Malaise Tax Cuts Won’t Help….
If we want to sum up the basic problem with our economy & the source of much of the frustration out there among the populace, here it is: for-millions-low-wage-work-rea
The bottom 50% of the income chain aren’t nearly as financially secure as the lower-middle class from a half-century ago, when many families got along fine on just one income, while today it can take several incomes from multiple jobs for a family to get by. So roughly half the population have basically been going backwards for decades. Don’t believe the hype by politicians & the media how the economy is so strong. It is only strong for the upper half, skewing the economic statistics. The low unemployment rate & median household incomes/wage growth slowly creeping higher only tell part of the story, & can actually be misleading as millions have yet to (& may never) recover from the aftermath of the great recession. That we’ve seen any improvements at all in median incomes reflect the increases going to the top half as wage/wealth gaps keep becoming more pronounced. When we track through the years the median incomes of just the bottom 50%, they are stagnant & keep falling further behind relative to the costs of living.
Those working full time should not be destitute like we keep seeing. Something’s got to give & major changes are needed giving millions more Americans better access to rewarding careers & upward mobility, but as a nation we’re doing a horrible job of discussing & cultivating new ideas. It would take a full commitment to a comprehensive plan that ranges everywhere from better training/education to inventing all-new professions based on integrating high technology. Every viable idea should be explored domestically & in conjunction with international partners, with this being just one idea: an-american-development-
The U.S. economy is booming, unemployment is at a 17-year low and wages appear to be picking up. So what’s not to like? If you’re one of the approximately 65 million Americans in low-paid service jobs, getting a share of that economic prosperity may be unbearably difficult. Jobs may be plentiful, but finding one that pays better than your current gig is much more rare than commonly believed, according to new research paper from the Federal Reserve Bank of New York. “If you start in one of those low-wage occupations, you have a higher probability of becoming unemployed than moving up the career ladder,” said Todd Gabe, a co-author of the paper, titled “Can Low-Wage Workers Get Better Jobs?” The answer seems to be, “With extreme difficulty.”
The authors looked at 175,000 workers in so-called low-quality jobs — with low pay, unpredictable scheduling and few or no benefits — and examined how those people’s jobs changed over a six-year period ending in 2017. Of this group, only 5.2 percent were in a higher-paying job one year later, the authors found. By contrast, more than 10 percent left the workforce and 6.7 percent became unemployed. In other words, a low-wage worker was three times more likely to stop working altogether than to move to a better job in a given year. Among those who did move from low-wage to higher-wage work, some common threads appeared. Typical jobs they upgraded to included work as nursing aides, customer service representatives, administrative assistants or wholesale and manufacturing sales. None of the “better” jobs typical for workers leaving low-wage work were in production, the paper notes.
Still, the role of low-paid work in the U.S. is important. Nine years after the Great Recession began, the largest and fastest-growing sector of the economy is in low-paid, “service class” jobs. Labor advocates and some academics have argued that rolling back economic polarization requires upgrading the jobs at the very bottom. As Richard Florida, a co-author of the New York Fed paper, said in another paper he co-wrote: “The only way to create a large number of family-supporting jobs that will rebuild the middle class is by upgrading the millions of precarious, low-skill, and low-wage service class jobs we already have.”
The start of the article opinion/big-economic-ideas.htm
The headlines may talk about growth, but we are living in a dark economic era. For most families, income and wealth have stagnated in recent decades, barely keeping pace with inflation. Nearly all the bounty of the economy’s growth has flowed to the affluent. And if you somehow doubt the economic data, it’s worth looking at the many other alarming signs. “Deaths of despair” have surged. For Americans without a bachelor’s degree, one social indicator after another — obesity, family structure, life expectancy — has deteriorated. There has been no period since the Great Depression with this sort of stagnation. It is the defining problem of our age, the one that aggravates every other problem. It has made people anxious and angry. It has served as kindling for bigotry. It is undermining America’s vaunted optimism.
So what are we going to do about it? The usual answers — technocratic changes to the tax code and safety net — are not good enough. They don’t measure up to the problem: an economy that no longer delivers a consistently rising standard of living. They also aren’t very inspiring. In 2016, Hillary Clinton offered many thoughtful proposals, precisely none of which she got to implement. This is a time for big ideas. One of the Trump presidency’s only silver linings is its proof that our political discourse had been too narrow. Frustrated Americans don’t feel bound by old rules. Almost 63 million of them voted for a man who had no political experience and made a mockery of politics as usual.
Whatever benefits the average American does see from the tax cuts, they’re likely to be dwarfed in the long run by the price we’ll pay by running trillion dollar deficits, which the revenue shortfalls will be directly traced largely to the Trump tax bill. It’s just another example of pursuing a temporary sugar high, while the enormous weight of a growing national debt is a can that keeps getting kicked down the road, & inside that can is a powder keg which we can fully expect will someday explode. Or the can will get so heavy, we’ll break our toes trying to kick it. That’s always been a big flaw of American politics, with our leaders bringing on long-term pain in favor of short-term gain. So those tax cuts that Trump & his GOP cronies seem so proud of, the benefits went disproportionately to the highest income earners who are already well off, while burdening all Americans by spiking deficits. Maybe the real effects of the new tax bill can be more akin to rearranging the deck chairs on the Titanic.
So I have articles below on the actual results from the tax cuts, which the benefits for the middle class still may be realized down the road, but the evidence so far is not encouraging. These excerpts come from hey-white-house-trust-me-peopl
President Trump’s chief economist, Kevin Hassett, penned a piece in the Wall Street Journal this week on how the tax cut was already pumping up the paychecks of average-wage earners. Trump and his congressional allies continue to try to gin up some love for the big tax cut from people that don’t inhabit the top 1 percent or a corner office of a big bank. But as Paul Krugman lays it out this morning, no one’s buying it. He attributes this to the deficit impacts, Trump’s lack of credibility and, of course, the fact that any middle-class benefits from the cuts are tiny “loss-leaders,” compared with the goodies for the rich. All true, but I’d like to drill down on one key point that I strongly suspect is in play here: the wage part of the story. Hassett throws out numbers on bonuses and a lot of (incorrect) theoretical claptrap on how higher profits must translate into higher wages, as if the rise in earnings inequality, or the well-documented split between profits, productivity and middle-class wages and incomes never occurred. But what he and every other Republican fail to discuss is what’s happening with real pay for average workers. Below is a table I tweeted out the other day in response to Hassett’s op-ed. Since Trump has been in office, the inflation-adjusted hourly wage of middle-wage workers (blue collar, non-managers, or BCNM) is up zero percent. Because they’re putting in more hours per week, their weekly earnings are up slightly, 0.3 percent, or about $2 per week. The table also looks at the real median paycheck for full-time workers. That’s up about $1.60 between the end of 2016 and now.
And trust me, as someone who used to be one of the White House economists tapped to explain how our anti-recessionary programs were working, people really don’t like being told they’re doing better than they think they are. (If you really want to upset people, you can, as I foolishly tried to do, explain that things may not be that good, but they would have been worse without our interventions. Economists do “counterfactuals”; humans do not.) Although real, middle-class wage stagnation is a profound, long-term problem, there’s something very positive about all of this: At the heart of the broad dissatisfaction with the tax cut is a widespread realization that the trickle-down tax cuts don’t work. People understand that such tax policy enriches the donor class that paid for it, but they don’t help the working class. They also bust the budget and, in so doing, threaten other parts of government that working-class people care about. This realization comes packaged with the recognition that our politics are uniquely nonrepresentative, which, in turn, helps to explain a potential shift in the electoral winds we keep hearing more about. In other words, the pendulum swings back, and one of the things that’s pushing it is the unmasking of a lot of phony economics about how enriching the rich helps the poor and middle class. To my mind, that’s progress.
If we’re hoping for the added revenues companies receive will be invested in plant & equipment, eventually filtering down to workers, we may be waiting a very long time (if it happens at all). The factors behind our modern-day global economy are not particularly accommodating to a trickle-down approach. Other articles on the ill-conceived Trump tax cuts come from paltry-wage-gains-rising-
In the latest Gallup poll, 48% of respondents said they disapprove of the tax cuts, while just 39% approve–which seems surprising, given that the cuts have boosted take-home pay for roughly two-thirds of workers. Republicans in Washington are so dismayed by the tax law’s unpopularity that they’re considering another round of tax cuts, although passage seems unlikely. Yahoo Finance conducted its own flash poll on April 18 to figure out why, exactly, Americans don’t like the tax cuts. We found three basic reasons: People think the tax cuts favor the wealthy over the middle and working class. They’re suspicious that tax cuts for businesses are permanent but tax cuts for individuals are temporary. And they think it’s irresponsible to finance the tax cuts with debt that future workers will have to shoulder.
For more interesting views on the tax cuts, see Wall-Street-Journal-strugg
On Friday, though, some good news. One group of Americans most certainly had noticed the positive effects of the tax cuts, as reported by the Associated Press. “The nation’s six big Wall Street banks posted record, or near record, profits in the first quarter,” the AP’s Ken Sweet reported. “While higher interest rates allowed banks to earn more from lending in the first quarter, the main boost to banks came from the billions of dollars they saved in taxes under the tax law Trump signed in December. Combined, the six banks saved at least $3.59 billion last quarter, according to an Associated Press estimate, using the bank’s tax rates going back to 2015.”
And this excerpt is how the article begins from trump-gop-new-tax-law-boosts-e
President Donald Trump and the Republican Party sold their new tax law as a big win for American workers and businesses. But a new report says a significant amount of the law’s benefits could end up helping people outside the US. In response to an inquiry from Sen. Chris Van Hollen, a Democrat from Maryland, the nonpartisan Congressional Budget Office determined 43% the tax law’s economic benefits on average would go to foreign investors from 2018 to 2028. The CBO reached this conclusion by estimating the tax law’s boost to gross-domestic-product growth, the preferred measure for US economic growth, and gross national product. GDP measures all the goods and services produced in the geographic US, including from foreign investment, while GNP measures growth attributable to US citizens or corporations around the globe. The CBO takes the difference of the two to determine how much of the economic boost goes toward foreign investors in the US.
Everything about Trump’s incoherent economic policies aren’t based on sound strategies, but it’s more a reckless impulsivity that will prove to have severe long-term consequences. So it is with the Trump tax cuts, which fail to direct most of the revenues in the hands of the middle class who need it most, & where it would do the most good towards growing the economy. I’ve been saying for awhile in our current circumstances, a bottoms-up approach to tax policy would be wiser than top-down. And we will all pay in the long run, as we find the tax bill curtailing revenue coming into government coffers can only make deficits worse, & the spending cuts that need to be made are politically toxic: paul-ryan-congress-scale-back-
While since 1960 we have had five budgets with surplus, 1969 and 1998-2001, the Congressional Budget Office’s (CBO) latest predictions show budget deficits of $981 billion in 2019 and in excess of a trillion dollars through 2028. The real problem is not the process by which discretionary spending is enacted each year. I suspect following Enzi’s suggestion of eliminating the Senate Budget Committee and other major changes to the annual process would not have much effect. The reason that it is so difficult to balance the budget using discretionary spending is that discretionary spending makes up such a small portion of the total federal spending. It is mandatory spending that is driving the deficits, thus making it impossible to balance the budget using annual appropriations, whether they be in the form of 12 bills or an omnibus bill, or whether there is a Senate Budget Committee or a budget resolution.
Using CBO’s latest estimates, the 2019 budget deficit will be $981 billion. Total spending is estimated at $4.470 trillion. Of this total, mandatory spending will be $2.719 trillion. This is spending that is spent no matter what Congress does, as it is mandated through Social Security, Medicare, Medicaid and other spending programs that are set in statute and are outside the budget process. If Congress never passed an annual budget bill, this amount would be spent since the particular statute, such as the Social Security Act, requires the spending. Net interest on the national debt, which has to be paid in order to avoid a default, will be $390 billion. This means that the total discretionary spending for 2019 will be $1.362, or only $381 billion more than the deficit. So if you eliminated all discretionary spending, including defense, you will barely balance the budget. Realistically this means either you give up on balancing the budget or you address mandatory spending, in particular Social Security, Medicare, and Medicaid, which make up about three-fourths of mandatory spending.
Speaking of revenue shortfalls, the agency tasked with collecting that revenue is being hamstrung by Congress, as seen in the start to this article this-years-tax-day-mel
RICKETY TECHNOLOGY at the Internal Revenue Service was not the direct cause of Tuesday’s Tax Day meltdown, in which the agency’s systems temporarily stopped accepting returns on the frantic last day to file them. But it should be a wake-up call for Congress, which for years disinvested in the agency. IRS officials long have warned of the risks. “The number of glitches has been increasing,” former commissioner John Koskinen said Thursday. “If you keep underfunding the agency, it’s a question of when, not whether, you have a significant systems failure.” Now Congress knows what a significant systems failure looks like. Lawmakers should not want to be responsible for another, potentially more serious one. To say that IRS technology is obsolete is an understatement. “Approximately 64 percent of IRS hardware is aged, and 32 percent of supporting software is two or more releases behind the industry standard, with 15 percent more than four releases behind,” IRS Deputy Commissioner Jeffrey J. Tribiano testified to Congress in October. The agency still uses software dating to the 1960s, the era of giant, tape-based computers. Taxpayer files are kept in an archaic “master file” that operates on a computer language few people still use. Once state-of-the-art, the IRS has been building around this legacy arrangement for decades, resulting in a mostly functional but also complex and inefficient technical hodgepodge in which taxpayer case records are managed in more than 60 separate systems, many of which cannot communicate with one another. One result is daily inconvenience; for example, taxpayers who need help with multiple problems are transferred from place to place because certain files are inaccessible on some systems.
There are so many areas where factors are picking away at federal & household budgets, yet far too often our political leadership cowers & bows to special interests/large donors: phrma-spends-record-amount-on-
Based on circumstances & repeated tragedies, we continue to see the need for stronger gun laws, from universal background checks to banning (or at least making it extremely difficult) the ability to acquire semi-automatic weapons: waffle-house-shooting-suspect-
I’m including these excerpts from a letter I received over the weekend from my congressman Dave Joyce, which the opioid crisis is another one we need a far greater sense of urgency over:
As you know, our nation’s opioid epidemic has gotten out of control. Every family has either been directly impacted or know another family that has been impacted. Of the 20.5 million Americans who were 12 or older and had a substance use disorder in 2015, 2 million had a substance use disorder involving prescription pain relievers and 591,000 had a substance use disorder involving heroin. Every day, more than 115 people in the United States die after overdosing on opioids. I have been working diligently with my colleagues on both sides of the aisle to get this epidemic under control and at this rate, the only solution is to have the Administration declare the crisis a national disaster. This would allow Congress to appropriate emergency supplemental funding to get to our communities NOW. We need more access to beds in treatment centers. We need more full-time recovery staff. We need our doctors, nurses, and medical professionals to understand more on the risks and treatment of an overdose. We need our law enforcement to respond effectively and promptly to overdoses. This cannot be implemented until there is more help from our government. For years we have swept this issue under the rug, wishing it would just go away because its uncomfortable and sad. We let this get out of hand and let it ravage through our neighborhoods like a natural disaster. Now it’s time for all of us to pick up the pieces as a collective nation to help our neighbors, friends, and family.
This is absolutely a horrible trend for America, when bipartisanship to solve problems is punished: look-what-you-get-fo
All of them understood from the Great Depression, the rise of fascism and a destructive world war that moderation is conservatism’s best impulse and that market economies require a social dimension. Capitalism could not work absent an active government that fostered a degree of economic equality and security. Applying the insights of this more responsible version of conservatism to our time would lead us to seek the best approaches to the very discontents that helped put Trump in the White House in the first place — for example, growing inequality. A 2016 Congressional Research Service report found that income inequality has been increasing since 1970. And between 2000 and 2015, incomes actually went down for the bottom 60 percent of earners. There are many causes of division and resentment in our country, and this is surely one of them.
Liberal democracy also faces challenges in Europe, where a 2017 Organization for Economic Cooperation and Development study found that “social cohesion” is threatened by the rise of economic inequality over nearly four decades. We need a politics where the democratic left and right compete over who can most effectively and efficiently excise this social cancer from our body politic. Such a debate could be both instructive and productive. Alas, except for a small, honorable cadre of writers and think-tankers, the American right has taken itself out of the game. Our politics will remain broken as long as conservatism confines its energies to cutting taxes and defending a reckless president at all costs.
An Amazing Prognostication….
This song has magically predicted the dialogue that will occur during the coming negotiations between Trump & Kim Jong Un:
(Click on image for full video)