Tweedledee. Tweedledum: The two parties spend with abandon.

tweedledumTweedledee

Tweedledee. Tweedledum. This is what we get when the two parties work together, a massive spending spree.

A $1.1 trillion federal spending bill and a $650 billion tax package unveiled today show that neither party gives a damn about holding down spending. It’s not that all the items to be funded are wasteful or unneeded, but the package will push spending above previously agreed limits by $66 billion in 2016 and permanently extend a vast array of tax benefits that will add at least a half-trillion dollars to the federal deficit, once a matter of great concern.

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  • Bowing to pressure on Republicans and Democrats from medical device manufacturers across the county, including in Oregon, anti-Obamacare zealots, and ticked-off unions with expensive healthcare plans, the legislation will postpone for two years (which probably means forever) a 2.3 percent excise tax on medical devices manufacturers, that was expected to raise $29 billion of net revenues over 10 years and a so-called “Cadillac Tax” tax on expensive employer-sponsored healthcare plans, that was projected to raise about $30 billion over 10 years to cover new spending under Obamacare. Then, to add insult to injury, the legislation makes the Cadillac tax refundable when it restarts. The lost taxes will blow a hole in planned funding to cover the cost of Obamacare.
  • The Defense Department will get $1111 billion for new military equipment, including F-35 Joint-Strike Fighters, Black Hawk helicopters, attack submarines and guided missile destroyers.
  • A 40-year-old oil export ban will be rescinded and, in trade, Democrats will get expensive extensions of wind and solar power tax incentives.
  • A research and development tax credit will be expanded and extended permanently.
  • The $1,000 Child Tax Credit will be extended permanently.
  • The Earned Income Tax Credit will be permanently extended.
  • A federal health program for first responders and construction workers who worked at the World Trade Center site after 9/11 and a separate victims compensation fund will be extended at a cost of $8 billion.
  • A National Oceans and Coastal Security Fund will be created to “support work that helps Americans understand and adapt to forces like sea level rise, severe storms, and ocean acidification” associated with climate change.
  • The American Opportunity Tax Credit, an annual credit for tuition and other qualified expenses, will be permanently extended.
  • A $250 annual deduction on qualified expenses of teachers will be indexed for inflation and permanently extended.
  • Five tax credits tied to charitable donations by individuals and businesses will be permanently extended.
  • Funding for the IRS will be frozen, punishing the IRS for targeting conservative groups, but also further limiting its ability to go after tax scofflaws and, this, reducing tax receipts.
  • A $255 per month pre-tax benefit for parking and public transportation expenses will be permanently extended.

But aside from all the spending, Congress did accomplish a few good things.

There will be a pay freeze for Vice President Biden, for example.

Also, earlier this year the dour, stick-in-the-mud Capitol Police said sledding by gleeful children and adults on the snow of Capitol Hill would no longer be allowed. The package asks that the Capitol Police rescind that prohibition so the jollity can resume.

Capitol-Sledding

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The fatuous fight for $15

mcdonalds

Hold the burgers, hold the fries! MAKE OUR WAGES SUPER SIZE!!! ‪#fightfor15

 

New York’s Gov. Andrew Cuomo announced earlier this month that he would set a $15 minimum wage for all state workers on his own and without legislative action.

Cuomo’s move will give raises to about 10,000 state workers, adding $20.3 million annually to state spending by the time the increase is fully phased in.

What the heck. No skin off his nose. The state doesn’t have to make a profit. Take it out of taxpayers’ pockets.

That seems to be the attitude of a lot of folks these days. Wages have been stagnant for years for most people and inequality is the topic de jour. Let’s give a whole bunch of people a raise.

But whatever people say to pollsters about their support for higher minimum wages, that doesn’t necessarily translate into a willingness to pay the higher prices for goods and services that often result.

Furthermore, a sweeping across-the-board $15 an hour mandate that might be bearable for a business in Portland also might be devastating for a small business in Astoria, Echo or Pendleton.

The Economic Policy Institute, a left-leaning policy organization with ties to the organized labor movement, says, “All workers deserve a wage sufficient to support themselves and their family.”

The problem is that the minimum wage was never intended to be enough to support a family and that even a $15 minimum wage would still be a long way from achieving that goal.

In Oregon, for example, a family of four needs to earn about $64,000 for a reasonably comfortable living. A $15 an hour wage in a full-time 40-hr week would translate into an annual income of just $31,200.

It’s not even clear that raising the minimum hourly wage to $15 would be a clear victory for all the poor. It would certainly raise the wages of many workers, but it would also likely lead to the elimination of many jobs traditionally open to unskilled minimum-wage earners. In addition, most of the benefits of an increase to $15 an hour would not go to people actually living in poverty.

In fact, about 50 percent of current minimum-wage workers are under 25, and about 25 percent are teenagers. The unemployment rates of both groups are already higher than the 5 percent national unemployment rate.

People without a job are much more likely to be living in poverty than those who are employed. Furthermore, many of those earning less than $15 an hour today are not the primary breadwinners in families. That being the case, a better way to address poverty would be to work harder to position the unemployed for the workforce and to target income supplements on low-income families through such programs as the Earned Income Tax Credit.

When I see a plaintive story about Suzie, a fast food worker who protests that she’s been working at the counter for 4 years and hasn’t seen any substantial raises, my first thought isn’t, “Well, double Suzie’s pay, youInstead, I think, “How can you justify a big jump in pay to someone who has been performing the same low-skill job for 4 years, with no increase in her expertise and no increase in her productivity that enhances the company’s bottom line?” That may sound brutal, but it’s how things work at every single successful company. It can’t be otherwise.

Supporters of the $15 an hour minimum wage also err when they say it won’t cost much. A $15 an hour minimum wage would not happen in isolation. There would be a cascading effect on other workers, thus a greater cost impact on the employer.

If you raise the hourly pay of the McDonald’s crew from $9.25 to $15 an hour, a 62 percent increase, can you leave the shift manager’s pay at $10.20 an hour, and so on up the ladder?

At some point a franchise owner will say, “enough!” McDonalds has tested automated self-service kiosks that have been shown to reduce customer wait times and generate higher sales than ordering from workers at the counter asking, “Do you want fries with that?” That may be the future if we go down the $15 road?

 

 

 

 

 

 

 

Single mothers = singular troubles

It’s no secret that single motherhood is a prescription for economic insecurity for many women.

Single-mother families are nearly five times as likely to be poor than married-couple families and a majority of America’s poor children live in single mother-led households, according to the left-leaning Center for American Progress.

Lone mothers

At the other end of the political spectrum, the conservative Heritage Foundation says marriage is the greatest weapon against child poverty.

“Family disintegration, lack of education, and counterproductive welfare incentives all contribute to child poverty,” Heritage wrote recently. “Rebuilding a strong marriage culture should be at the forefront of our efforts to fight poverty.”

A New York Times story cited a number of studies that attributed the growing income gaps in American society to the changing structure of the typical family with the growing number of single parent families. The article suggested that changing marriage patterns could account for anywhere from 15-40% of growing income inequality across the country, with a surge in births outside of marriage among less educated women pushing single-parent families into the lower end of the socio-economic range.

“College-educated Americans … are increasingly likely to marry one another, compounding their growing advantages in pay,” The Times said. “Less-educated women…are growing less likely to marry at all, raising children on pinched paychecks that come in ones, not twos.”

“It is the privileged Americans who are marrying, and marrying helps them stay privileged,” said Andrew Cherlin from Johns Hopkins University.

Now there’s even more evidence connecting single-motherhood to poverty.

The Earned Income Tax Credit (EITC) is a refundable tax credit for low to moderate income working persons, particularly those with children.

The Brookings Institution, a Washington, D.C.-based centrist think tank, put together an illuminating interactive map of the share of taxpayers that claim the EITC at the county level nationwide:

Map: The Earned Income Tax Credit in Your County

Brookings then compared the EITC map with a map of single motherhood in the United States in the most recent year for which complete data is available.

Map: Percent of all households that are single female headed with children in 2010.

The principal conclusion? The map of EITC benefits by county looks a lot like a map of single motherhood.

As Brookings points out, looking at the number of parents in a household as an indicator of financial stability and opportunity, changing marriage patterns could account for anywhere from 15-40% of growing income inequality across the country.

While correlation doesn’t necessarily equal causation, the link between poverty and mothers with children growing up without a father is clearly something that ought to be part of the discussion of income inequality in the United States.