Taxes Tag Archive
I like it when the little light bulb above my head goes off. It doesn’t happen as often these days, but it did the other day when I read this interview in Salon with Elizabeth Warren. She is professor at the Harvard Law School. Together with her daughter Amelia Warren Tyagi they wrote a recently published book “The Two-Income Trap: Why Middle Class Mothers and Fathers are Going Broke.”
It’s a great interview and I’ll probably have go out and buy the book now. The book puts its finger on a nagging question: why more of us are going broke in America. The results were not what I expected. The McMansions popping up around my neighborhood do not mean that we are living better; in fact the study shows that people are living pretty much the same lifestyle our parents did. Yes, we have more toys like DVD players and computers, but we are not spending more on similar things than our parents did.
What has changed is that to live the lifestyle our parents lived it takes two incomes, not one. And because it takes two incomes, the loss of any one income is devastating and can lead rather rapidly to bankruptcy. Consequences range from homelessness to moving your husband, wife and children into the basement of your parent’s house, if you are that lucky.
I see it around me in this economic malaise, but in reality this is a 30 year phenomenon. A neighbor’s husband down the street lost his job about a year back and is still unemployed. They’ve burned through his 401-K and most of their other assets. He was another victim of the high tech implosion. Her income, which is pretty decent working as she does for Fannie Mae, is insufficient to maintain their fairly modest lifestyle.
They live in the same sort of house I had growing up: just another colonial in a decent neighborhood. But in the past if one parent became unemployed the other could probably get some work to help make ends meet. In a depressed economy finding two or three jobs to make ends meet is difficult. If they can be found they are unlikely to pay the bills.
Why? Because lots of bills have gone through the roof. As the authors document, things cost more — a lot more, in real terms, than they used to. Two big examples: mortgage payments and health insurance. It used to be that you did not need health insurance; if necessary you could pay for medical costs out of pocket. That’s not an option anymore. The mortgage payment phenomenon is more interesting. The problem seems to be that we are drawn to zip codes with good schools and will pay inflated prices for housing so that our children will benefit from good education. It’s quite possible to find more affordable housing elsewhere, it’s just that most of us have a fear of living in these neighborhoods. But, paradoxically, if we had the courage to live in these neighborhoods rather than “follow the crowd” there would be sufficient critical mass to likely improve the local schools to our liking.
A few of their observations I figured out a long time ago and implemented in my life but still could not quite articulate them. One was that kids are huge financial risk factors. In short kids not only increase the risk that you will go broke but are huge income drains on the family. Sensing this was one of the reasons I was comfortable with stopping at one child. My wife and I had talked about having a second child but thinking of how much money it would take to raise a second child and send him or her to college was one reason I wanted to stop at one: adding another child would be too risky to our family unit. Of course I was also aware that life would be a lot more manageable with one child. But on some level I understood that even though I came from a family of ten I would be lucky to maintain the same lifestyle my parents had, which was pretty Spartan, with two children.
The interview though made me realize why it’s almost impossible to elect a politician these days who will raise your taxes. It’s not that taxes are evil, as many Republicans assert, it is because families have no more money to throw at taxes. Their money is already committed and they are at enough risk with two incomes trying to navigate their family through life to pay more taxes. It’s not a matter of philosophy, it’s a matter of economic necessity. Metaphorically, parents are on their front porch with a loaded shotgun warily looking up and down the street. They know it won’t take much for their American Dream to vanish, and they are vigilant in an almost reflexive way.
The consequences of “me first” on society at large are very real. If my income were cut in half I probably would be neglecting a lot of basic maintenance. The house and yard would look pretty shabby. The same is true of our society. As our costs of living escalate, and with little ability or will to maintain the infrastructure, things suffer. That’s why our roads and schools are so crowded. Citizens are saying “Sorry, me first!”
You have seen this happen most recently in California in the election of Arnold Schwarzenegger. Schwarzenegger said he would repeal the tripling of car taxes. This is money that people can put in their pockets. Naturally it’s hard not to vote for someone like that. The consequence is to exacerbate California’s budget problems but citizens are saying “Too bad: me and my family first.” It’s not that Californians explicitly want their state to go to hell; it’s that they are living too close to the margin and are consequently too scared to pull together.
I’m not sure how this will play out but most likely we will continue to see a decline in our prosperity. Right now we don’t really see it because dual income families are providing the illusion that it is under control. But increasingly cracks are beginning to show and soon we may have a bellwether event. It may be that with the costs of health insurance becoming out of reach even for middle class Americans we will demand national health insurance. It may be that the engines that sustain our growth, like cheap land, will gradually disappear and there will be no real way to get out of this economic box.
Ultimately this “me first” approach is not sustainable. We are in this together. It’s all well and good to promote growth as President Bush is doing, but this is not going to solve these systemic problems. To some extent the Wal-mart-izing of American may be the last step. We are making it as cheap as possible to buy the stuff we need, but eventually all the cost savings from that supply chain will be realized. And then what?
The malaise that so many people are feeling is very palpable. The solution out of it is not.
October 15th, 2003 at 10:03am
Posted by
Mark |
Politics 2003 |
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I’m fortunate I don’t live in California.
To recap: in about two weeks a special election will be held. Voters will have the option of throwing out Gray Davis, the twice elected governor of the state. Davis has never been a very popular fellow. He’s about as smooth as sandpaper. Nonetheless, there would be no special election had not a disgruntled Republican with lots of spare cash organized a state wide voter effort to force a special election for his recall. They can do that in California. The rest of the states for some reason figure that if the guy was elected he should serve out his term, unless he committed high crimes and misdemeanors.
But anyhow in California with enough signatures you can force a special election about anything and dictate the terms. This one though is particularly egregious because you get to pick a replacement at the same time you are throwing the guy out. And no majority or run off election is required. Whoever gets the most votes gets in. Consequently a Republican who might well lose a general election in this Democratic state can get swept into office with 30% of the vote or less. This is democracy in action, California style.
Such is life in that peculiar state. Arnold Schwarzenegger, a man whose career consisted of lifting enormous weights and starring in testosterone laden action movies, who has never run for public office, and whose sole claim to politics is being married into the Kennedy clan, figures he can do a good job as governor. And maybe he will win because the polls currently show he is leading, although I can’t figure out why. He looked foolish in the one debate he participated in, and he seems to have the same high opinion of women as his character had in the latest Terminator movie. Arnold even alluded to it when during the debate independent Arianna Huffington gave him a hard time. Arnold said he had a part for her in her next movie: presumably the next lady to have the terminator put her head into a toilet.
It’s quite a collection of gadflies and eccentrics in this election, with the exception of Lieutenant Governor Cruz Bustamante, who by rights should assume the office anyhow if Davis were removed. We have another Republican candidate Tom McClintock who is so far to the right he is likely to fall off the planet, porno publisher Larry Flint, columnist Arianna Huffington (whose voice makes you want to put your fingers in your ears), and Mary Carey, a porno star with great hooters who has no chance of winning but whose videos can’t stay on the shelves of adult video outlets. Them and 130 or so other candidates. I guess there is plenty of choice for voters.
Meanwhile, the legislature, controlled by the Democrats, can’t address a $35B budget deficit very well because a law requires any new taxes to pass by a two thirds majority, which they don’t have. That effectively leaves the Republicans in charge during fiscal emergencies and they won’t, god forbid, allow any new taxes to be incurred. Davis was able to triple car taxes only because of the way that law was written long ago. That extra money, plus borrowing billions of dollars, is how Davis balanced the budget this year. The Republicans couldn’t be bothered to even try because all they kept saying was “No new taxes.”
Meanwhile in flusher economic times California voters basically took away most of the discretionary spending from its legislature. Education, health care and prison spending are dictated by California voter referendum, state law and federal laws, leaving little money for the legislature to cut to fix $35B budget gap.
And yet of course all the candidates are denying this reality. Schwarzenegger is just one of many promising to balance the budget somehow, even though Republicans will slit their own wrists before they vote for a tax increase, and there is not enough money to do it while the economy remains sour in California. And of course by law California must also balance its budget.
In short voters have boxed politicians into a no win situation. They are saying we will have our cake (education, prison, health care spending) and eat it too (but they won’t pay for it when revenues go down). No one can win.
So take it all out on Gray Davis. Put someone else in charge. Just don’t expect the underlying problems to be solved.
A candidate with courage would be leveling with California voters. For example either the referendum which requires educational spending to be at certain levels has to be repealed, or the legislature have to vote to raise taxes, or the state must continue borrow billions of dollars at increasingly high interest rates. This will eventually bankrupt the state or cause California’s debt rating to go to junk bond status. At some point no creditor will lend the state any more money.
It is fitting that Fantasyland started in California. I suggest the capital of California move from Sacramento to Anaheim, and the legislature should meet there in Cinderella’s castle. Clearly Californians are comfortable living in a fiscal fantasy anyhow.
September 29th, 2003 at 08:26am
Posted by
Mark |
Politics 2003 |
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Now we understand that when Bush said he wanted to leave no child left behind, he really meant that he wanted no millionaire left behind from a large tax cut.
Today’s story in the Washington Post reveals the realities of what states are facing: a recession, declining tax base and guess what … schools are taking huge cuts, classroom sizes are increasing, training for teachers is being cut or abandoned altogether. Oregon citizens are so bent against tax increases that they will send their kids home for two extra weeks rather than pony up the money to give them a decent education. The same state is proposing increasing the class size next year to … this is NOT a misprint … 42 students!
This article should shock anyone.
The few little coins the federal government is throwing in the coffers of state budgets to implement its No Child Left Behind program doesn’t begin to pay for it. Voters unwilling to raise their taxes are making a very dramatic statement: all this talk about the importance of public education is just talk. We really don’t care that much, certainly not enough to raise taxes to ensure adequate public funding.
It is curious where the Bush Administrations priorities lie. It is certainly not out there lobbying the states to spend more money on education in spite of the recession. Gosh, that would demonstrate actual commitment to its principles. But there is plenty of money to fund a war against Iraq that will cost at least $100B, although the Bush Administration refuses to suggest how much the endeavor will cost. There is plenty of money for large tax cuts that will give the largest tax cuts to the upper class. There seems to be no limit to the money to give farmers and mega-agricultural businesses. There is always more money to give to Israel.
This administration is shamefully talking out both sides of its mouth. If it were sincere about ensuring no child is left behind, instead of cutting taxes for the rich it would allocate this money to subsidize education so that at the very least standards don’t slip.
This is a “no sacrifice” administration: no one who funds the Republican party’s coffers needs to worry about suffering in the least. Take your tax cuts. Drive your SUVs and your Lexuses. Send volunteers to fight our wars, certainly not your kids who will go to Ivy League schools as usual. Let’s wage a war that is inadvisable and unaffordable. Let’s shift the burden, as always, to the little people. Let them deal with declining schools and larger class sizes. Let them figure out how to afford unaffordable health insurance and pay for medications costing hundreds of dollars a month with no deductibles.
I guess the notion of public office as one of being a good steward and acting as a fiduciary is hopelessly outdated. Instead let’s pander to our base and let the rest flounder.
It is hard to think of a case where there is a bigger dichotomy between Bush’s words and his actions. But it is abundantly clear that Bush is no education president.
March 15th, 2003 at 12:06pm
Posted by
Mark |
Politics 2003 |
2 comments
This is going to win me no friends on Capitol Hill, or in the White House for that matter. But isn’t it time we civil servants said “Enough with the downsizing crap!”?
I’m sick of it. Our agency is going through another one of its politically required processes to bring the number of federal employees down, down. Fortunately no one has been laid off (to my knowledge), perhaps because there are so few of us still around to actually do the government’s business. Anyhow there were “early outs” recently and it doesn’t take an abacus to figure out that this trend is going to continue until I find it worth my while to take an early out too. Since I am 45 though I would hope it wouldn’t be too soon.
But the real problem is that it’s all a numbers game. Guess what … the work load keeps increasing! Yes, fewer and fewer of us “federal staff” are expected to do more and more managing of tasks, and yet it’s not always true that we have the skill to manage the diverse stuff thrown at us. Working as a fed in my agency is like juggling balls without having any training. Okay you are doing two, now do three without even stopping. Now four! Five!
Guess what happens: less and less actually gets done. When you juggle lots of balls you have less opportunity to actually complete anything because you fight fires instead of trying to manage the big picture. So things keep getting delayed and delayed and guess what: that’s not really serving the public interest.
True we have contractors. In my office the contractors outnumber the federal staff about 5:1. It’s gotten to the point (actually it’s been this way for several years) that contractors are effectively doing things that should never be delegated to them, like making decisions on how to conduct the government’s business! There is simply no other way to do it other than to say “we can’t do it” and no one in the chain of command is capable of having spine like this.
Meanwhile middle management, who shall remain nameless but know who they are, are imploring us NOT TO QUIT. Their worst fear is that some other federal agency will hire us away. They know our slots won’t be renewed if we leave and that means even fewer people to do more and more.
It’s a vicious cycle to the bottom. Who’s at fault here? Why your leaders, of course. It’s a numbers game and has no basis in reality. What is the effect? Government is costing you more. It takes longer to do stuff and because contractors are doing the work instead of feds it costs more.
But I know you bought that soap Rush Limbaugh puts out about how “efficient” the private sector is. Yeah, right. Admittedly a federal employee comes with some long term costs: like pensions and stuff. But a GS-13 might cost, max, $50 an hour to the federal government with benefits. I can’t get into specifics here but I can tell you that contractors bill more than that per hour for the most junior level computer programmers. I know this for a fact. The same stuff I did as a GS-9 costs the government more than a fully loaded GS-13!
But you are afraid once a federal employee is hired they are hired for life? Well change the civil service law, dammit. I’m okay with making it easier to fire those of us who truly aren’t earning their salary, but the number is far smaller than people think. Otherwise a federal employee is a bargain compared to a contractor, unless perhaps we are talking about someone hired to clean restroom stalls.
Your tax money is being wasted by this politically correct nonsense. You should be up in arms.
December 16th, 2002 at 08:39pm
Posted by
Mark |
Politics 2003 |
no comments
