The rumored grand bargain would cost the economy about half a million jobs in 2013
Are you ready for a grand bargain? A deficit hawk party! Yes? No? Maybe? (Is this John Boehner?).
With the deadline for the fiscal cliff -- which is really more of a slope -- looming, President Obama and House Republicans have reportedly come close on an agreement that would kick most of the fiscal can. Well, they did for a few hours at least. It didn't take long for Boehner to walk back his support for the plan, but that hardly means it's dead. If there is a grand-ish bargain to be had, it will probably look something like this latest iteration of a deal.
As Ezra Klein reported, the deal comes in three parts: revenue, cuts, and stimulus. Let's break it down, and then break down what it means for jobs in the coming year.
REVENUE. Let the Bush tax cuts expire for households with adjusted gross incomes of $400,000 or more, and limit the value of itemized deductions to 28 percent. In other words, set tax rates for the top 1 percent back to where they were under President Clinton, and stop richer households from taking bigger deductions than middle-class households. All told, it raises a little more than $1 trillion in revenue over the next decade relative to a world where all of the Bush tax cuts continue. As Paul Krugman points out, it's unclear whether this includes the higher taxes on capital gains and dividends scheduled to kick in on January 1, 2013 -- on top of the 3.8 percent Obamacare surtax on capital gains.
Taxes would also go up from switching to chained CPI. As my colleague Derek Thompson explained, chained CPI is an alternative (and perhaps more accurate) measure of inflation that assumes consumers substitute to similar, lower-priced goods when other prices rise. In other words, it says inflation is lower. Tax brackets are indexed to inflation, so a lower measure of inflation means they will rise less -- and more people will creep into these higher brackets. It adds up to about $60-90 billion over ten years.
CUTS. Say hello to chained CPI again. It's not just a tax hike. It's a Social Security cut too. Remember, Social Security benefits are indexed to inflation as well, so the logic of a lower measure of inflation kicks in here too -- benefits will rise slower than they otherwise would have, with the compounded effect hitting older retirees the worst. It's about a $100-200 billion cut over a ten-year window. Congress is supposed to negotiate on another $1 trillion or so of cuts, and if they cannot agree on them there will be -- wait for it! -- a new sequester in the future. Because the last one worked so well.
STIMULUS. Extend unemployment insurance and the refundable tax credits from the stimulus, but not the payroll tax cut. There's also some new, albeit unspecified, infrastructure spending thrown in.
There are a lot of moving parts here, but only three of these moving parts will matter in 2013: the end of the Bush tax cuts for the rich, the end of the payroll tax cut, and new infrastructure spending. In other words, it's unlikely any of the cuts will hit the economy next year. The can known as the sequester would get kicked for another year or so -- unless, haha, Congress can agree to other, immediate cuts -- and chained CPI will be the same as CPI-W in 2013. That leaves the three aforementioned changes -- changes that add up to about a half million less jobs in 2013 than if there was no fiscal cliff at all, as you can see in the chart below. The payroll tax cut is a political orphan in need of a champion.
The Cliff Notes version of why this deal would cost us 500,000 jobs next year is it sucks more money out of the economy than it puts back in. Let's look at it piece-by-piece.
Bush tax cuts for the rich expire. Less money for the rich means less money for the rich to spend. But the rich are different from you and me -- they tend to have money left over after they buy the things they want. In other words, they spend less of their incomes, so a tax hike on them doesn't hurt demand as much as a tax hike on the middle-class would (as we shall see). The Congressional Budget Office (CBO) figures higher taxes on higher earners would subtract about 200,000 jobs next year.
Payroll tax cut ends. Less money for everybody means less money for everybody to spend. That's what the payroll tax, which, remember, hits the middle-class harder than it does the rich, does. But it gets worse. A higher payroll tax means a higher cost of hiring and that means less hiring. A lot less hiring. Working backwards from thesetwo CBO reports shows it means about half a million less jobs in 2013. As the left-leaning Center on Budget and Policy Priorities (CBPP) points out, it's almost twice as stimulative as the Bush tax cuts for the rich, at similar costs. Spending the $115 billion to extend it another year would be money well spent.
Infrastructure. This is where things get admittedly speculative. We don't even know how much infrastructure spending both sides have talked about, let alone what kind of projects, but we can make some informed guesses. President Obama has asked for $50 billion of new infrastructure spending before, which he probably wouldn't get, but we'll use here as a best-case. If we take former Vice Presidential economic adviser and current CBPP fellow Jared Bernstein's rule of thumb that every $1 billion of construction or repair spending adds roughly 9,000-10,000 jobs, and then assume that this new spending would come in over two years, that gives us about 250,000 new jobs in 2013. Again, this is a pretty generous estimate.
As far as can-kicking goes, this ain't too shabby. The CBO figures that the fiscal cliff will cost us 3.4 million jobs next year if Congress does nothing; suddenly, half a million less sounds okay. But Washington can do better. It just needs to go over the fiscal cliff first.
Right now, Obama is offering lower revenues than he originally asked for and entitlement cuts for more stimulus -- and he's not even getting all of the stimulus! It's all because of the baseline illusion. As long as the Bush tax cuts are around, Boehner can claim he's the one offering concessions on revenues by saying he'll raise them at all. It's a silly argument, but it's a silly argument that goes away after January 1, when tax rates automatically go up. Then, Democrats can push a bill that cuts middle-class taxes and cuts deductions for the rich -- the $1.6 trillion from Obama's first offer -- and tell Republicans they have a choice. They can either get less revenue or less entitlement spending, but not both, and in return they have to sign off on all of the stimulus -- extended unemployment insurance, the payroll tax cut, and infrastructure spending. They could even set up a commission -- or a supercommittee, if they're feeling bold -- to cut spending in a year's time, with a new sequester to incentivize them to find cuts.
It's a deal that would bring our medium-term budget closer to balance, without costing the economy in the short-term. Now that would be grand.
Trump’s misogyny is shocking because it’s so brazen, but it’s infuriating because it’s so familiar. Chances are, if you’re a woman in 2016, you’ve heard it all before.
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The first time you meet Donald Trump, he’s an older male relative who smells like cigarettes and asks when you are going to lose that weight. You’re nine years old. Your parents have to go out and buy a bottle of vodka for him before he arrives. His name is Dick. No, really, it is. At dinner one night, he explains to you that black people are dangerous. “If you turn around, they’ll put a knife in your back.” Except Bill Cosby. “He’s one of the good ones.” Turns out he’s wrong about Cosby and everything else, but the statute of limitations on Dick’s existence on Earth will run out before that information is widely available.
Even in big cities like Tokyo, small children take the subway and run errands by themselves. The reason has a lot to do with group dynamics.
It’s a common sight on Japanese mass transit: Children troop through train cars, singly or in small groups, looking for seats.
They wear knee socks, polished patent-leather shoes, and plaid jumpers, with wide-brimmed hats fastened under the chin and train passes pinned to their backpacks. The kids are as young as 6 or 7, on their way to and from school, and there is nary a guardian in sight.
A popular television show called Hajimete no Otsukai, or My First Errand, features children as young as two or three being sent out to do a task for their family. As they tentatively make their way to the greengrocer or bakery, their progress is secretly filmed by a camera crew. The show has been running for more than 25 years.
Who will win the debates? Trump’s approach was an important part of his strength in the primaries. But will it work when he faces Clinton onstage?
The most famous story about modern presidential campaigning now has a quaint old-world tone. It’s about the showdown between Richard Nixon and John F. Kennedy in the first debate of their 1960 campaign, which was also the very first nationally televised general-election debate in the United States.
The story is that Kennedy looked great, which is true, and Nixon looked terrible, which is also true—and that this visual difference had an unexpected electoral effect. As Theodore H. White described it in his hugely influential book The Making of the President 1960, which has set the model for campaign coverage ever since, “sample surveys” after the debate found that people who had only heard Kennedy and Nixon talking, over the radio, thought that the debate had been a tie. But those who saw the two men on television were much more likely to think that Kennedy—handsome, tanned, non-sweaty, poised—had won.
Campus life is too diverse at most schools for dorms to serve as a place of respite from uncomfortable ideas.
Last week, I got an email from Decker O’Donnell, an economics major at Lewis & Clark College in Portland, Oregon. He was troubled by my claim that dorm life at residential colleges cannot be like home. “We live there 30 weeks a year,” he wrote. “I know people with abusive or homophobic families who couch-surf in the summer.”
College, he observed, “is the only home they have.”
There is, of course, a subset of college students whose troubled home lives cause them to feel more comfortable on campus than in the households where they grew up, and the escape that higher education affords them is very much worth celebrating. But those cases are not the core of O’Donnell’s disagreement with me.
By way of background, I wrote about home during last year’s controversy at Yale, when students protested the faculty-in-residence at Silliman College after his wife sent an email that upset them. She argued that Yale undergrads, not administrators, should shape the norms around what Halloween costumes are appropriate. “As master,” a student retorted, “it is your job to create a place of comfort and home for the students who live in Silliman. You have not done that. By sending out that email, that goes against your position as master. Do you understand that?!”
Early photographs of the architecture and culture of Peking in the 1870s
In May of 1870, Thomas Child was hired by the Imperial Maritime Customs Service to be a gas engineer in Peking (Beijing). The 29-year-old Englishman left behind his wife and three children to become one of roughly 100 foreigners living in the late Qing dynasty's capital, taking his camera along with him. Over the course of the next 20 years, he took some 200 photographs, capturing the earliest comprehensive catalog of the customs, architecture, and people during China's last dynasty. On Thursday, an exhibition of his images will open at the Sidney Mishkin Gallery in New York, curated by Stacey Lambrow. In addition, descendants of the subjects of one of his most famous images, Bride and Bridegroom (1870s), will be in attendance.
In Greenwich, Darien, and New Canaan, Connecticut, bankers are earning astonishing amounts. Does that have anything to do with the poverty in Bridgeport, just a few exits away?
BRIDGEPORT, Conn.—Few places in the country illustrate the divide between the haves and the have-nots more than the county of Fairfield, Connecticut. Drive around the city of Bridgeport and, amid the tracts of middle-class homes, you’ll see burned-out houses, empty factories, and abandoned buildings that line the main street. Nearby, in the wealthier part of the county, there are towns of mansions with leafy grounds, swimming pools, and big iron gates.
Bridgeport, an old manufacturing town all but abandoned by industry, and Greenwich, a headquarters to hedge funds and billionaires, may be in the same county, and a few exits apart from each other on I-95, but their residents live in different worlds. The average income of the top 1 percent of people in the Bridgeport-Stamford-Norwalk metropolitan area, which consists of all of Fairfield County plus a few towns in neighboring New Haven County, is $6 million dollars—73 times the average of the bottom 99 percent—according to a report released by the Economic Policy Institute (EPI) in June. This makes the area one of the most unequal in the country; nationally, the top 1 percent makes 25 times more than the average of the bottom 99 percent.
The New England Patriots’ recent success is a reminder of how America’s favorite sport is also the most hierarchical and least collaborative.
The “Deflategate” scandal involving the New England Patriots quarterback Tom Brady—one that dominated NFL headlines for well over a year, involved multiple levels of the American legal system, instilled in every football fan a keen interest in air-pressure physics, and finally ended in a four-game suspension for Brady to start the 2016 season—has ended up having little effect on the field. The Patriots beat the Houston Texans Thursday night in Foxborough, Massachusetts, improving their record to 3-0 with only one game left before they get their starting QB back. The win against the Texans, a team that entered the game undefeated itself, was a 27-0 shellacking, New England besting them in every category of play.
Muslim Americans cannot prevent discrimination by trying to blend in.
It seems like every day, there is a new story involving Muslim Americans being kicked off of planes, harassed online, assaulted on the street, or worse. With news of each new terrorist attack perpetrated by extremists in the United States and abroad, Islamophobia is on the rise. Donald Trump has made suspicion of American Muslims a pillar of his campaign, and discussions of blanket bans and religious tests for immigrants have become so regular as to be mundane.
Muslims thus feel obligated to broadcast their all-American identity, whether by disguising their foreign-sounding names, changing their appearances, avoiding their native tongues, or obscuring their religious affiliations. Increasingly, Muslim Americans feel the need to make themselves appear as “normal” as possible by white, Christian standards. Whether through donning a hijab or appearing to speak Arabic, openly existing as Muslim has material consequences. Muslims thus attempt to combat Islamophobia by simply blending in. But true acceptance for Muslims will only come when those Muslims who wear their religious differences openly are seen as being just as American as those whose choices hew closer to the norm.
The rich were meant to have the most leisure time. The working poor were meant to have the least. The opposite is happening. Why?
"Every time I see it, that number blows my mind.”
Erik Hurst, an economist at the University of Chicago, was delivering a speech at the Booth School of Business this June about the rise in leisure among young men who didn’t go to college. He told students that one “staggering” statistic stood above the rest. "In 2015, 22 percent of lower-skilled men [those without a college degree] aged 21 to 30 had not worked at all during the prior twelve months,” he said.
"Think about that for a second,” he went on. Twentysomething male high-school grads used to be the most dependable working cohort in America. Today one in five are now essentially idle. The employment rate of this group has fallen 10 percentage points just this century, and it has triggered a cultural, economic, and social decline. "These younger, lower-skilled men are now less likely to work, less likely to marry, and more likely to live with parents or close relatives,” he said.
Parenting in the age of mass incarceration, the War on Drugs, and frequent exposure to crime and trauma
Photographer Phyllis B. Dooney was introduced to East New York, a low-income Brooklyn neighborhood, by way of a marching band. Rather than running home to a traditional nuclear family, the students she photographed would spend evenings with their aunts, with their grandmothers, or shuttling between their mom’s and dad's separate houses or apartments. Communities like this are often condemned by the media as having broken homes. But Dooney wanted to explore what parenting, specifically fatherhood, really looked like when adults and children alike are grappling with "the long-term societal and psychological effects of mass incarceration, the War on Drugs and the 1980s crack epidemic, and frequent exposure to crime and trauma."