Category Archives: Economy

Even on Child Care, Donald Trump has to help wealthy people the most

I have an op-ed in US News that digs into Donald Trump’s new child care proposal. The details are sketchy and seem to change by the minute, but I did my best to run some numbers on this. Based on the most generous assumptions I could use, Trump’s plan will not make child care affordable for low- and middle-income families (HHS says child care costs above 10% are unaffordable), but it will be a nice windfall for richer households that get the most benefit.

Even after deducting $18,000 in child care costs under Trump’s proposal and claiming the existing Child and Dependent Care Credit, a typical family making about $62,000 with an infant and a preschooler would still need to pay 23 percent of their income to place their kids in a child care center – not even close to affordable. Even if this family has just one infant and pays $10,000 for a child care center, child care costs would still consume 13 percent of their income. But it gets even worse: a tax break that arrives the following year at tax time will not make ends meet for families who need to pay for child care up front.

 Low-wage workers fare even worse under Trump’s plan. Since these families will not benefit from Trump’s tax deduction, Trump has proposed a rebate worth up to $1,200 per family. But this is not nearly enough to make child care affordable for these families. Even assuming that a family with two parents working at minimum wage gets the full $1,200, they would still need to spend 55 percent of their income to place an infant and preschooler in child care centers. The same family would still need to spend 27 percent of their income if they only need child care for the infant.

By the way, it now looks like the minimum wage family in my example only gets a rebate of about $600, not the full $1200. So it’s even worse. The full column is at US News.

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Lying with numbers

Lies, damned lies, and statistics. Recently, I’ve been getting a graduate-level course in how to lie with numbers. The first lesson comes from the Heritage Foundation, which has a chart showing that despite spending tons of money on anti-poverty programs, the poverty rate hasn’t budged in years.

rectorchart

The chart is by Robert Rector, in a column titled “The War on Poverty Has Been a Colossal Flop.” What’s wrong with this picture? The vast majority of means-tested welfare programs, like Medicaid, are not counted by the official poverty standard. So basically, the chart proves that anti-poverty programs don’t reduce poverty when you ignore the effects of anti-poverty programs.

Strangely, Rector acknowledges this point, which makes it even weirder that he would go through the trouble to make the chart in the first place. His argument seems to be that poor people aren’t really poor because they have microwaves (seriously). So…if there are no poor people, then didn’t we win the War on Poverty? Rector still says no, because the poor don’t all have good paying jobs. I agree that’s a problem, I’m just not sure taking away their health insurance will solve it.

But again, why bother making a chart you know proves nothing, unless your goal is to mislead? And he is very committed to making this data into a chart; he included a similar graph in an earlier post titled “This Chart Proves the War on Poverty Has Been a Catastrophic Failure.

The second lesson comes from American Enterprise Institute, which is usually more honest than Heritage, but seems to have dropped their standards in this case. Mark J. Perry argues that rising economic inequality is an “imaginary hobgoblin” (points for mixing Spiderman villians into an economics column), and he has a chart to prove it: Continue reading

A new report delivers good news for corporations…and bad news for the rest of the economy

Over at ThinkProgress, I highlight concerning economic news buried in the Congressional Budget Office’s latest update to their budget and economic outlook:

The CBO now estimates that the economy will grow even slower than it expected in its previous economic outlook. Not only that, it now expects that wages and salaries will comprise a smaller portion of that reduced economic pie. The report suggests that troubling long-term trends in our economy are getting worse. Middle-class wages have been stagnant for over a decade. Steven Greenhouse notes in the New York Times that “overall employee compensation — including health and retirement benefits — has also slipped badly, falling to its lowest share of national income in more than 50 years while corporate profits have climbed to their highest share over that time.”

At the same time, the CBO increased its estimate for corporate profits. Workers’ low wages are good news for corporations: the CBO explains that “lower labor costs are expected to reduce businesses’ expenses,” which means higher profits.

Read the full post here.

Congress Just Passed a Trillion Dollar Spending Bill. What Does It Mean for the Economy?

My latest column at Center for American Progress examines the omnibus appropriations bill that Congress passed yesterday. The challenge of covering legislation like the omnibus is finding a way to tell a coherent story about a very long bill that is essentially a list of government programs and how much money each will receive for the year. I chose to focus on some of the key investments in the bill, to try shedding some light on what the bill will mean for our economy. From the column:

The omnibus reverses some of the most damaging sequester cuts, but not all of them. The omnibus also makes a few excellent investments in our economy, and it is certainly better than allowing the full sequester cuts to continue for another year. This column focuses on four major areas of economic investment: infrastructure, early childhood education, scientific research, and job training. It also examines the smaller but very important long-term investment in preventing lead poisoning. Altogether, the omnibus delivers mixed results for these sectors, primarily because it faces restrictions from a spending cap that is simply too low to enable the investment our economy needs.

The whole column is posted here.