Well-Timed Tax Cuts Open Thread

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OK, so the news on the ballooning poverty in the US will be kicked back and forth like a political socceer ball, but none of it is too good for Bush:

Real median household income remained unchanged between 2002 and 2003 at $43,318, according to a report released today by the U.S. Census Bureau. At the same time, the nation’s official poverty rate rose from 12.1 percent in 2002 to 12.5 percent in 2003. The number of people with health insurance increased by 1.0 million to 243.3 million between 2002 and 2003, and the number without such coverage rose by 1.4 million to 45.0 million. The percentage of the nation’s population without coverage grew from 15.2 percent in 2002 to 15.6 percent in 2003.

Among the details, I found this really interesting:

The native population had increases in their poverty rate (from 11.5 percent in 2002 to 11.8 percent in 2003) and their number in poverty (from 29.0 million in 2002 to 30.0 million in 2003). Poverty rates remained unchanged for foreign-born naturalized citizens (10.0 percent) and for foreign-born noncitizens (21.7 percent). Although the number for foreign-born naturalized citizens in poverty (1.3 million) did not change from 2002, the number of foreign-born noncitizens in poverty increased (to 4.6 million in 2003 from 4.3 million in 2002).

Assuming that foreign-born noncitizens tend to get unskilled labor type jobs, does this reconfirm that those types of jobs are the ones this economy is creating? That is, why, despite an increase in the number of foreign-born noncitizens in poverty is there no increase in their poverty rate, where as there’s an increase in both the rate and number of natives living in poverty?

19 thoughts on “Well-Timed Tax Cuts Open Thread”

  1. “Assuming that foreign-born noncitizens tend to get unskilled labor type jobs, does this reconfirm that those types of jobs are the ones this economy is creating?”
    I suspect that is a bad assumption. A better assumption is that since many foreign-born noncitizens are on visas with employment requirements, they work pretty hard to make sure that they are working.

  2. I don’t think you can argue that Bush’s tax cuts are responsible for stagnant or declining income levels. If anything, the fact that the upper rates were cut should in theory allow employers to raise income with less cost. But heck, are you actually arguing that or have I gone too far?

  3. I agree that it’s a problem and not just for Bush. It’s a problem for policy-makers, politicians, and workers. Protectionism won’t solve the problem. And nostalgia for the Internet/Tech Bubble won’t solve the problem, either.

  4. “I don’t think you can argue that Bush’s tax cuts are responsible for stagnant or declining income levels.”
    I didn’t see Edward making any such argument. However, the usual argument is not that Bush’s tax cuts caused income levels to decline, but that the recession did; and that Bush’s tax cuts play into it in two ways: first, they are not particularly well designed to create economic stimulus, since they give the most money to the people who are least likely to spend it; and second, by pumping more money into the economy in a less-than-optimally stimulating way, they make it harder for any further stimulus to be deployed without risking inflation and ensuring even higher deficits. (Or, in short: we used up our possible stimuli, and didn’t use them effectively.) So the idea is that other policies would have produced better results, and that that’s why Bush can be held accountable for the results his policies produced.

  5. Hilzoy,
    Fair enough, I agree completely with your outlined argument. However, I’m still befuddled by the tax cut talk – certainly, the ones you propose as opposed to the ones Bush made would be more likely to help the situation – but I’m agnostic to whether we’d be a great deal better off regarding these depressing statistics.

  6. Having now followed Edward’s links, there’s one other statistic that I found interesting: “For all children under 18, the poverty rate increased from 16.7 percent in 2002 to 17.6 percent in 2003. The number in poverty rose, from 12.1 million to 12.9 million.” Great.

  7. Aha. An interesting opportunity for partisanship without discussing the presidential campaign. So, given these statistics, what should the federal government do?
    a. Nothing.
    b. Increase eligibility for and size of EITC.
    c. Abandon tax support of employer-sponsored health care and create tax support (and re-insurance protection) [and financial support based on the number of low-income members] for not-for-profit non-discriminatory county-based insurance pools.
    d. Provide more job re-training programs.
    e. Provide longer term unemployment insurance.
    f. Raise the federal minimum wage.
    g. Make the tax cuts permanent, fix the AMT, watch the deficit explode and ?
    any takers? anyone want to jump in on this?
    Francis

  9. For me as a small business owner, I don’t want to focus on tax cuts. We need an entirely new tax code.
    With all the loopholes all the complexity is just a bad system.

  11. I read this in USA today too and thought it was interesting because it fits my own situation and my own experience of others.
    I have a place in Denver and was out of town for 6 weeks. When I had got back… they had put up 3 new office buildings… a new Chilli’s and some other businesses. I was dumbfounded at all the growth.
    My own work has been keeping me busier than I have every been. From my perspective, which includes 3 compeltely different industries business is really taking off for everyone. Please don’t think I am trying to tow the Bush party line. Somethings are really cooking out there and it’s somehow getting ignored.
    I must admit I see this as a realy opportunity to rack up some bucks before alot of people catch on. Of course, smart money already knows… darn them.
    pulled from IPSE dixet…
    The U.S. Bureau of Labor Statistics (BLS) recently snuck out a telling confession beneath everyone’s radar: Its flagship payroll survey is likely undercounting hundreds of thousands of jobs….
    The payroll survey has long been seen as the best measure because its larger sample dwarfs those of other methods. It surveys 160,000 businesses and government agencies. But now, BLS is admitting that the sample is muddy. There’s an alternative. The U.S. Labor Department’s household survey…. It surveys 60,000 households and counts self-employed consultants, real estate agents, farmers and other non-traditional workers who aren’t on old-style payrolls….
    In his July 20 testimony to Congress, Greenspan cited measures from the payroll and household surveys. Then the Federal Reserve, led by Greenspan, voted unanimously to raise interest rates. It said the economy is “poised to resume a stronger pace of expansion” and noted that labor-market conditions continue to improve. It’s no secret which survey would lead to that conclusion.
    The Fed’s actions helped everyone, including Wall Street, remember the good news. Claims for unemployment benefits, for example, are 10% below their 30-year average, while the unemployment rate has fallen to its lowest level since 2001. Best of all, the household survey showed a gain of more than half a million jobs in July alone.
    Everything adds up – except the payroll survey.

  12. I’m still nostalgic for Wes Clark’s tax proposal, which would have provided a lot of tax simplification, eliminated the need for a majority of families to file any income tax returns, provided tax cuts for everyone making under $100,000/year, and been revenue-neutral. (This was over and above repealing the Bush tax cuts for people making over $200,000/year, and undone one of the things that makes me furious, namely the repeal of the estate tax.) Sigh.

  13. Blue,
    And Greenspan also noted that the payroll survey was the best measure of employment. Guess you missed that.
    And who the hell is IPSE dixit?

  15. Francis,
    I’d like to see…
    b. Increase eligibility for and size of EITC.
    … and …
    f. Raise the federal minimum wage
    … combined, really. I’d like to lower the minimum wage actually (don’t kill me yet) to maybe roughly $4/hr, but have the EITC bump that up to livable wage (with the EITC immedately dispersed by employers, reimbursed by the government, of course.) I haven’t done the math, and my cynical side says it would be an enormous expense, but man, afterwards we’d be seeing some serious “insourcing,” I’d say.

  16. OT, did anyone notice that amid all the “Who is Fafnir” posts floating around lately, the one at the heart of the mystery offered an enigma of his (her? its?) own:
    [From the comments to this Brad DeLong post]

    …
    We are flattered by all this attention an stuff but really the big question in the bloggyworld is who is Edward Underscore? Giblets thinks he is Italo Calvino come back as a zombie. I think he is Kevin Drum.
    Posted by: fafnir at August 25, 2004 09:53 PM

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