Re childcare: You are exactly right - the decision to have two incomes and pay for childcare is a choice that government should stay out of except for general deductions for children on income tax. If a company thinks it gets benefits from a working parent, it can pay. We don't need another situation like with higher education, where subsidies lead to higher costs.
Don't always agree with your opinions, but love the clarity you have on them! I really enjoyed today's newsletter, but wonder why you didn't address the inflation component driving childcare costs or the regulations adding to those costs? Or truly, the opportunity for businesses to use childcare as a significant benefit for working parents. Would love to read your thoughts on these and keep up the excellent work! Thanks.
We certainly are in another reality. Teamsters are backing Republican candidates as they are on a mission to make unions illegal. The federal fifth circuit has just ruled that the NLRB is unconstitutional and looking at the way things are going the Supreme Court will agree. Tariffs are devastating the economy, while the wage earners are not seeing inflation in their wages. Transportation and logistics companies are purging workers because of this. I spent 20 years in logistics, I am selling furniture due to layoffs. The childcare issues have been an issue since atleast 2011. We paid 900 a month for 1 kid, 1100 a month for 2 kids in 2014. This was for private daycare. Still a problem today. Trump accounts will not solve this. Trillion dollar tax cuts for corporations and billionaires will not solve this.
What was it exactly that made it impossible to maintain a middle class lifestyle without two incomes. Rather than having yet another government program that will never go away, we should think about reversing that. Open borders certainly expanded the labor supply and lowered wages. Exporting jobs, especially in manufacturing, played a big role too. The surplus labor pool also lowered wages as did concentrating employment in services. Feminism somehow convinced women that life in a cubicle was better than life with her children which also suppressed wages. By the time the biological alarm clock started ringing it was often too late. Steps have been taken to fix the first two problems. We will see if the tradwife movement actually takes off.
Within living memory (mine), it was possible to be middle class with only one income. My father was certainly no high end professional but we lived well and my mother didn't reenter the workforce until I was in high school.
You're leaving off the most important factor: neoliberal shareholder-primacy economic culture promoted by libertarians. You know their mantra: "Greed is good". Entrepreneurship is valorized. Any regulations which diverts resources from top 1% is deemed evil. After all, the executive who makes $10M per year but whose golfing buddy makes $12M feels like a loser, and we can't have that. Who will create the jobs?! In turn, people like me who basically enjoy work and mainly want to provide for their families, but lack the ambition to make it to the C-suite or start their own business are treated as suckers.
My backstory is similar to Richard's. My father was born in the early 1930's. I was born in the early 1960's, the oldest of 5. My father had an associates degree in accounting. So always a white-collar worker, though he never had anyone reporting to him. My mom also did not start working until all the kids were out of the house (late 1980's), and even then only part time, and only for ~5 years or so. All 5 kids went to private university (one that today costs $80,000+ per year) and majored in technical fields (2 chemical engineers, 3 applied math majors).
My father retired at 62. Like him, I (Ph.D. chemical engineer) have always been the sole income earner in my household -- developmental disabilities of my 3 kids necessitated one stay-at-home parent. However, my parents had a better lifestyle *in his 25-plus-year retirement* (more travelling, more amenities) than I do now or ever hope to have. The other big differences between then and now is my father had a guaranteed benefit retirement plan, and I do not -- another consequence of neoliberal economic policies which has been devastating for the middle class.
Hmm, should we infer that Oren has finally settled on a rationale for Don's taco tariffs? They're apparently a regressive tax increase meant to offset the massive deficit spending in Dons regressive BBB, all in the name of workin stiffs:). So much for being leverage in trade negotiations, but I'm sure the injection molding plants will soon follow. But isn't it odd Oren remains silent on the BBB, the "new" rights signature legislative achievement and its biggest economic policy move? Does he support the wealth transfer from the poor to the plutocrats? Does the loss of health care for millions of workin stiffs work hand in glove with Oren's child care dreams?
Meanwhile, we'll wait for Oren's analysis of the long term economic impact of Don's degradation of the rule of law, obliteration of our scientific/research infrastructure and hollowing out of our civil service. Perhaps he's fearful of a fate similar to Don's former appointees, all of whom inevitably face the same retribution? Having his tax exempt status revoked if he peers outta the foxhole and tells the truth? I guess unidentified masked agents and armed military forces on our streets cow the unprincipled. The self gelding of JD and Lil Marco were but the canaries in the coal mine.
As we watch the cast of clowns-RFK Jr, Hegseth, Bongino, Loomer, Hassett etc wreak their havoc, it seems timely to recall the words of Hannah Arendt in The Origins of Totalitarianism.
“Totalitarianism in power invariably replaces all first rate talent, regardless of their sympathy, with crackpots and fools, whose lack of intelligence and creativity is still the best guarantee of their loyalty".
Let's not get the pom-poms out for tariffs projected to balance out the deficit created by the BBB. That is simply a projection of running in place. We all know that in the ensuing ten years, Congress is likely NOT to tackle the deficit problem, seeking to fund their interests/donors from the public till. Much like parents where one stays at home to care for kids, Congress is going to have to tighten its belt and get things right on the country's financial ledger.
The fastest way to fix child care is to make school a 9 to 5 operation. Start in the schools with the poorest test results. Use the extra time to have PT every day and include what used to be extra curricular activities. But most of the extra time should be used to make sure kids can read and do math. Teachers need to be paid a competitive full time wage for a job that requires a college degree. Then maybe we will get more of the dedicated teachers kids deserve and fewer loosers that have no other choice of career. There have always been great teachers, but recently it seems that there are fewer of them. Require any Dept of Ed worker to have a license and teach a full load at least 1 year in 5 ( or 4 or 10). And allow the teacher to rule the classroom. Just like an economy, top down rule does not work, because the complete set of circumstances is not available to the remote rule giver.
I agree with Mr. Cass that likely most American families would like to have the option of having one of the parents stay home and take care of their own children. My family had to make this choice at one time and we were able to have my wife stay home and raise our four children. To pay for daycare would have meant my wife who was a schoolteacher would be working for about $1 an hour.
Where I think Mr. Cass totally misses the boat is that this is not a tax issue, it is a "living wage" issue. The reason most families must have both spouses work is because neither is being paid a living wage by their employers. If you look at data showing the "labor share of GDP" going back to the 70s you see that once the wonderful Ronald Reagan took office and began the efforts to shift power to the wealthy and to corporate business, the percentage of GDP that labor receives has continuously declined. The key is that unchecked and unregulated capitalism will do everything to minimize its cost and increase profits to owners. The religion of Milton Friedman who was the economic leader of Reagan and Goldwater.
The result of decades of intentionally removing the bargaining power of the American Worker by right to work laws and not keeping minimum wage levels up to inflation and allowing many other forms of worker disenfranchisement, has resulted in a highly underpaid workforce, while literally the majority of wealth has shifted to a few percent of our population.
Mr. Cass's proposal of a larger tax credit won't solve the real problem. When major companies like Walmart are allowed to not pay a living wage to their employees such that these Americans must be subsidized by the government (by the American people) just so they can in fact have food to eat, is a crime.
The solution is that we as a society need to recognize the importance of all citizens having a decent standard of living and to use government to ensure that all working Americans receive a living wage. Instead of subsidizing corporations and the extremely wealthy we need to tax them fairly and if they don't pay a living wage we need to tax them for not doing so. We need to shift incentives to ensure that corporations recognize they are allowed to exist by the population and that they have an obligation to our society and not just to the few wealthy owners. We need to return to "trust busting" mindsets to reduce the massive economic and therefore political and social power of these few institutions and people.
I do agree with Mr. Cass's point about returning to tax rates long gone. We need to tax wealth and not just income.
And BTW the point about the trump tariffs being a positive because it will pay for the massive tax breaks and spending of the bill is a terrible justification of a flawed approach. What he does not indicate is the tariffs will also reduce the overall GDP growth by as much as 0,4 points forever, as long as the tariffs are in place. Jason Furman had a good piece about this. A good way to think about it is it’s about $150 billion a year — about a thousand dollars out of every American family’s pocket as a result of these tariffs. Probably a little bit more, depending on where the China tariff number lands.
Given that GDP growth in the trump administration has fallen to around 2%, this is a major blow to all of us. Also given the erratic approach of trump, the tariffs are not even intelligently applied to where they could do the most good. It is likely the result will in fact be a reduction of competition - tariffs will protect US sectors who are not acting to invest to be competitive. And it is not that they don't have capital because they do, it is because they don't want to spend the money and reduce their PE ratios so they can build the wealth of their CEOs.
I am grateful that Mr. Cass has illuminated this problem. In the short term, subsidies from government are in fact needed and justified. However our government must reflect the needs of the people and work to endure that working Americans (all working Americans) are paid a decent living wage so that families don't have to have parents both work if they don't want to, or not to have to work multiple jobs just to put food on the table.
This is never going to happen if we allow trump to destroy our democracy and the ability of Americans to freely elect true representation.
Oren - so the deficit situation will get better if we go back to pre-2017 (meaning pre-Trump) tax rates? Wow, what a genius you are. I suggest telling this to Trump and the rest of the Republican party.
Fiat currency debasement (money printing through sovereign debt expansion) IS the reason for the difficulty in paying for household expenses with a single income. Bitcoin is the antidote to this problem as its supply is capped at 21M. This will become apparent to more people over time, but my suggestion to young people is to save a little in bitcoin each paycheck to prepare for the future.
The high quality Japanese-made coffee grinders I recently bought fell under the de minimis provision, and they certainly don’t for the scenarios of that CBP official you quoted. There is more to this story than you’re letting on, and that’s dishonest.
I got this far: "subsidizing commercial childcare because “companies benefit when parents are freed up to work—and the government, for its part, benefits from getting taxpaying citizens.”
Any lunatic who thinks citizens are citizens in order to work for the government is a person to be watched.
Hey, junior: the govt. TAKES from me what I would otherwise keep and employ in any way I see fit. The govt. is nothing but a collection of leeches who would otherwise be begging in the streets if not for their bureaucracy of illiterates.
Saturn Mike: In 1979 The United Auto Workers had 1.5 million members and the Stell Workers union had nearly the same. Today the UAW has only 150,000 members in the Big Three and the Steel workers less. How did that happen and how did that impact the American middle class? The UAW supported "Free Trade" but wanted to raise the 2.9 percent tariffs and limit imports. The UAW President Fraser went to Japan and invited the Japanese automakers to "put their capital in America and build their cars here. They did. The UAW lobbied to increase tariffs o9n Japanese imports. Jimmey Carter no way! Ronald Reagan forced the Japanese to limit imports "voluntarily" Ten years later President Clinton negotiated NAFTA and then Clinton helped China become a favored nation foreign trader, and President George H Bush finished the deal by helping China join the World Trade Organization. This opened the door to US pension capital to be invested in manufacturing in China and Mexico. Now people are asking what happened to the middle class? Open your eyes. It's never a revolution; it's always boiling the frog/crab slowly process. Now AI is predicted to
eliminate 30% of low skilled whiter collar workers and tariffs forces new capital investment in manufacturing over the next 3-5 years and AI will increase the cost of power by 11percent. We're going to force 20 million illegals to go back where they came from and stop H1-B's. What will be the impact on the American two-income potential middle class "family? The only federal program I can see today is "Make the American Family Healthy Again."
PS: The NLRA of 1935 got us into this dilemma and is incapable of getting us out! In a Prisoner's Dilemma situation, the two suspects better cooperate and stay the course, or one will suffer the consequences and that's historically been the labor class.
Re childcare: You are exactly right - the decision to have two incomes and pay for childcare is a choice that government should stay out of except for general deductions for children on income tax. If a company thinks it gets benefits from a working parent, it can pay. We don't need another situation like with higher education, where subsidies lead to higher costs.
Hey Oren,
Don't always agree with your opinions, but love the clarity you have on them! I really enjoyed today's newsletter, but wonder why you didn't address the inflation component driving childcare costs or the regulations adding to those costs? Or truly, the opportunity for businesses to use childcare as a significant benefit for working parents. Would love to read your thoughts on these and keep up the excellent work! Thanks.
We certainly are in another reality. Teamsters are backing Republican candidates as they are on a mission to make unions illegal. The federal fifth circuit has just ruled that the NLRB is unconstitutional and looking at the way things are going the Supreme Court will agree. Tariffs are devastating the economy, while the wage earners are not seeing inflation in their wages. Transportation and logistics companies are purging workers because of this. I spent 20 years in logistics, I am selling furniture due to layoffs. The childcare issues have been an issue since atleast 2011. We paid 900 a month for 1 kid, 1100 a month for 2 kids in 2014. This was for private daycare. Still a problem today. Trump accounts will not solve this. Trillion dollar tax cuts for corporations and billionaires will not solve this.
What was it exactly that made it impossible to maintain a middle class lifestyle without two incomes. Rather than having yet another government program that will never go away, we should think about reversing that. Open borders certainly expanded the labor supply and lowered wages. Exporting jobs, especially in manufacturing, played a big role too. The surplus labor pool also lowered wages as did concentrating employment in services. Feminism somehow convinced women that life in a cubicle was better than life with her children which also suppressed wages. By the time the biological alarm clock started ringing it was often too late. Steps have been taken to fix the first two problems. We will see if the tradwife movement actually takes off.
Within living memory (mine), it was possible to be middle class with only one income. My father was certainly no high end professional but we lived well and my mother didn't reenter the workforce until I was in high school.
You're leaving off the most important factor: neoliberal shareholder-primacy economic culture promoted by libertarians. You know their mantra: "Greed is good". Entrepreneurship is valorized. Any regulations which diverts resources from top 1% is deemed evil. After all, the executive who makes $10M per year but whose golfing buddy makes $12M feels like a loser, and we can't have that. Who will create the jobs?! In turn, people like me who basically enjoy work and mainly want to provide for their families, but lack the ambition to make it to the C-suite or start their own business are treated as suckers.
My backstory is similar to Richard's. My father was born in the early 1930's. I was born in the early 1960's, the oldest of 5. My father had an associates degree in accounting. So always a white-collar worker, though he never had anyone reporting to him. My mom also did not start working until all the kids were out of the house (late 1980's), and even then only part time, and only for ~5 years or so. All 5 kids went to private university (one that today costs $80,000+ per year) and majored in technical fields (2 chemical engineers, 3 applied math majors).
My father retired at 62. Like him, I (Ph.D. chemical engineer) have always been the sole income earner in my household -- developmental disabilities of my 3 kids necessitated one stay-at-home parent. However, my parents had a better lifestyle *in his 25-plus-year retirement* (more travelling, more amenities) than I do now or ever hope to have. The other big differences between then and now is my father had a guaranteed benefit retirement plan, and I do not -- another consequence of neoliberal economic policies which has been devastating for the middle class.
Hmm, should we infer that Oren has finally settled on a rationale for Don's taco tariffs? They're apparently a regressive tax increase meant to offset the massive deficit spending in Dons regressive BBB, all in the name of workin stiffs:). So much for being leverage in trade negotiations, but I'm sure the injection molding plants will soon follow. But isn't it odd Oren remains silent on the BBB, the "new" rights signature legislative achievement and its biggest economic policy move? Does he support the wealth transfer from the poor to the plutocrats? Does the loss of health care for millions of workin stiffs work hand in glove with Oren's child care dreams?
Meanwhile, we'll wait for Oren's analysis of the long term economic impact of Don's degradation of the rule of law, obliteration of our scientific/research infrastructure and hollowing out of our civil service. Perhaps he's fearful of a fate similar to Don's former appointees, all of whom inevitably face the same retribution? Having his tax exempt status revoked if he peers outta the foxhole and tells the truth? I guess unidentified masked agents and armed military forces on our streets cow the unprincipled. The self gelding of JD and Lil Marco were but the canaries in the coal mine.
As we watch the cast of clowns-RFK Jr, Hegseth, Bongino, Loomer, Hassett etc wreak their havoc, it seems timely to recall the words of Hannah Arendt in The Origins of Totalitarianism.
“Totalitarianism in power invariably replaces all first rate talent, regardless of their sympathy, with crackpots and fools, whose lack of intelligence and creativity is still the best guarantee of their loyalty".
Good luck America.
Let's not get the pom-poms out for tariffs projected to balance out the deficit created by the BBB. That is simply a projection of running in place. We all know that in the ensuing ten years, Congress is likely NOT to tackle the deficit problem, seeking to fund their interests/donors from the public till. Much like parents where one stays at home to care for kids, Congress is going to have to tighten its belt and get things right on the country's financial ledger.
The fastest way to fix child care is to make school a 9 to 5 operation. Start in the schools with the poorest test results. Use the extra time to have PT every day and include what used to be extra curricular activities. But most of the extra time should be used to make sure kids can read and do math. Teachers need to be paid a competitive full time wage for a job that requires a college degree. Then maybe we will get more of the dedicated teachers kids deserve and fewer loosers that have no other choice of career. There have always been great teachers, but recently it seems that there are fewer of them. Require any Dept of Ed worker to have a license and teach a full load at least 1 year in 5 ( or 4 or 10). And allow the teacher to rule the classroom. Just like an economy, top down rule does not work, because the complete set of circumstances is not available to the remote rule giver.
I agree with Mr. Cass that likely most American families would like to have the option of having one of the parents stay home and take care of their own children. My family had to make this choice at one time and we were able to have my wife stay home and raise our four children. To pay for daycare would have meant my wife who was a schoolteacher would be working for about $1 an hour.
Where I think Mr. Cass totally misses the boat is that this is not a tax issue, it is a "living wage" issue. The reason most families must have both spouses work is because neither is being paid a living wage by their employers. If you look at data showing the "labor share of GDP" going back to the 70s you see that once the wonderful Ronald Reagan took office and began the efforts to shift power to the wealthy and to corporate business, the percentage of GDP that labor receives has continuously declined. The key is that unchecked and unregulated capitalism will do everything to minimize its cost and increase profits to owners. The religion of Milton Friedman who was the economic leader of Reagan and Goldwater.
The result of decades of intentionally removing the bargaining power of the American Worker by right to work laws and not keeping minimum wage levels up to inflation and allowing many other forms of worker disenfranchisement, has resulted in a highly underpaid workforce, while literally the majority of wealth has shifted to a few percent of our population.
Mr. Cass's proposal of a larger tax credit won't solve the real problem. When major companies like Walmart are allowed to not pay a living wage to their employees such that these Americans must be subsidized by the government (by the American people) just so they can in fact have food to eat, is a crime.
The solution is that we as a society need to recognize the importance of all citizens having a decent standard of living and to use government to ensure that all working Americans receive a living wage. Instead of subsidizing corporations and the extremely wealthy we need to tax them fairly and if they don't pay a living wage we need to tax them for not doing so. We need to shift incentives to ensure that corporations recognize they are allowed to exist by the population and that they have an obligation to our society and not just to the few wealthy owners. We need to return to "trust busting" mindsets to reduce the massive economic and therefore political and social power of these few institutions and people.
I do agree with Mr. Cass's point about returning to tax rates long gone. We need to tax wealth and not just income.
And BTW the point about the trump tariffs being a positive because it will pay for the massive tax breaks and spending of the bill is a terrible justification of a flawed approach. What he does not indicate is the tariffs will also reduce the overall GDP growth by as much as 0,4 points forever, as long as the tariffs are in place. Jason Furman had a good piece about this. A good way to think about it is it’s about $150 billion a year — about a thousand dollars out of every American family’s pocket as a result of these tariffs. Probably a little bit more, depending on where the China tariff number lands.
Given that GDP growth in the trump administration has fallen to around 2%, this is a major blow to all of us. Also given the erratic approach of trump, the tariffs are not even intelligently applied to where they could do the most good. It is likely the result will in fact be a reduction of competition - tariffs will protect US sectors who are not acting to invest to be competitive. And it is not that they don't have capital because they do, it is because they don't want to spend the money and reduce their PE ratios so they can build the wealth of their CEOs.
I am grateful that Mr. Cass has illuminated this problem. In the short term, subsidies from government are in fact needed and justified. However our government must reflect the needs of the people and work to endure that working Americans (all working Americans) are paid a decent living wage so that families don't have to have parents both work if they don't want to, or not to have to work multiple jobs just to put food on the table.
This is never going to happen if we allow trump to destroy our democracy and the ability of Americans to freely elect true representation.
Oren - so the deficit situation will get better if we go back to pre-2017 (meaning pre-Trump) tax rates? Wow, what a genius you are. I suggest telling this to Trump and the rest of the Republican party.
Fiat currency debasement (money printing through sovereign debt expansion) IS the reason for the difficulty in paying for household expenses with a single income. Bitcoin is the antidote to this problem as its supply is capped at 21M. This will become apparent to more people over time, but my suggestion to young people is to save a little in bitcoin each paycheck to prepare for the future.
The high quality Japanese-made coffee grinders I recently bought fell under the de minimis provision, and they certainly don’t for the scenarios of that CBP official you quoted. There is more to this story than you’re letting on, and that’s dishonest.
I got this far: "subsidizing commercial childcare because “companies benefit when parents are freed up to work—and the government, for its part, benefits from getting taxpaying citizens.”
Any lunatic who thinks citizens are citizens in order to work for the government is a person to be watched.
Hey, junior: the govt. TAKES from me what I would otherwise keep and employ in any way I see fit. The govt. is nothing but a collection of leeches who would otherwise be begging in the streets if not for their bureaucracy of illiterates.
Saturn Mike: In 1979 The United Auto Workers had 1.5 million members and the Stell Workers union had nearly the same. Today the UAW has only 150,000 members in the Big Three and the Steel workers less. How did that happen and how did that impact the American middle class? The UAW supported "Free Trade" but wanted to raise the 2.9 percent tariffs and limit imports. The UAW President Fraser went to Japan and invited the Japanese automakers to "put their capital in America and build their cars here. They did. The UAW lobbied to increase tariffs o9n Japanese imports. Jimmey Carter no way! Ronald Reagan forced the Japanese to limit imports "voluntarily" Ten years later President Clinton negotiated NAFTA and then Clinton helped China become a favored nation foreign trader, and President George H Bush finished the deal by helping China join the World Trade Organization. This opened the door to US pension capital to be invested in manufacturing in China and Mexico. Now people are asking what happened to the middle class? Open your eyes. It's never a revolution; it's always boiling the frog/crab slowly process. Now AI is predicted to
eliminate 30% of low skilled whiter collar workers and tariffs forces new capital investment in manufacturing over the next 3-5 years and AI will increase the cost of power by 11percent. We're going to force 20 million illegals to go back where they came from and stop H1-B's. What will be the impact on the American two-income potential middle class "family? The only federal program I can see today is "Make the American Family Healthy Again."
PS: The NLRA of 1935 got us into this dilemma and is incapable of getting us out! In a Prisoner's Dilemma situation, the two suspects better cooperate and stay the course, or one will suffer the consequences and that's historically been the labor class.
You might find some guidance by reading a book I just picked up. "Having Nothing, Possessing Everthing. It is by a pastor at an inner city church in Indianapolis, https://www.goodreads.com/book/show/39090999-having-nothing-possessing-everything?