Our Coming Chronic Discouraged-Worker Epidemic: Friday Focus
Sunday Evening Must Read: Paul Krugman: Robert Gordon vs. the Androids

The Hamilton Project on SNAP--the Program Formerly Known as "Food Stamps"--and Confiscatory Marginal Tax Rates on Two-Earner Working Poor Families: What Other Equitable Growth Think Tanks Are Doing Weblogging

From Benjamin Harris and Melissa Kearney of the WCEG's older cousin, the Hamilton Project:

Via Mark Thoma: A Dozen Facts about America’s Struggling Lower-Middle-Class :

  • More than half of families in the United States earn $60,000 or less per year.
  • Nearly half of families in the United States live below 250 percent of the federal poverty level.
  • Struggling lower-middle-class families are almost equally headed by single parents and married couples....
  • Roughly 40 percent of children in the struggling lower-middle class experience food insecurity or obesity, or both....
  • Nearly 90 percent of Supplemental Nutritional Assistance Program (SNAP) recipients live in a household with at least one child, one disabled individual, or one elderly individual. America’s tax and transfer system expands the middle class....
  • A low-income, single parent can face a marginal tax rate as high as 95 percent.
  • The highest marginal tax rates tend to fall on the struggling lower-middle class.

And they have nice graphs:



The only criticism one can have of the Hamilton Project's event is the mammoth disproportion between the size of the problem they focus on and the policy steps they propose.

Diane Whitmore Schanzenbach and Hilary Hoynes have very smart things to say about how to strengthen the food stamp (SNAP) program. Melissa Kearney and Lesley Turner have a smart proposal for a secondary-earner tax deduction to diminish the working-poor marriage penalty. And these are certainly worth thinking about, and doing--would it be that we lived in Platonis Πολιτεια and were merely doing minor tweaks to a well-functioning system.

My view is: Next to nothing is likely to happen for the next year, or three--it's not as though the Hamilton Project's events will attract the attention of senior Finance Committee staffers and then Chair Danforth (R-MO) and Ranking Member Bentsen (D-TX) or Chair Bentsen (D-TX) and Ranking Member Danforth (R-MO) will pick these up and stuff them in a markup somewhere, is it? So why not go bigger?

But the Hamilton Project is not alone in this. Kevin Drum has the same reaction to Obama's inequality speech:

Kevin Drum: Really, Obama? That's All You've Got on Income Inequality?:

President Obama gave a big speech... about rising income inequality and declining income mobility.... Obama's speech was chock full of statistics, which may or may not have been a good idea, but all of them are probably familiar to anyone who reads this blog regularly. Personally, I was more interested in what kinds of policy changes he wanted us all to get behind. Here they are:

To begin with, we have to continue to relentlessly push a growth agenda... simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas... a trade agenda that grows exports and works for the middle class... coming together around a responsible budget....

Step two is making sure we empower more Americans with the skills and education they need... supporting states that have raised standards for teaching and learning... helped more students go to college with grants and loans that go farther than before... innovation that reins in tuition costs... worked to connect local businesses with community colleges... making high-quality preschool available to every child in America....

The third part of this middle-class economics is empowering our workers... collective bargaining laws [that] function as they’re supposed to... raise a minimum wage that in real terms right now is below where it was when Harry Truman was in office....

Number four, as I alluded to earlier, we still need targeted programs for the communities and workers that have been hit hardest by economic change....And we're also going to have to do more for the long-term unemployed....

Fifth, we've got to revamp retirement to protect Americans in their golden years... encourage private savings and shore up the promise of Social Security for future generations.

I understand that even a fairly anodyne prescription like this is going to get the Fox News crowd all lathered up about how Obama is finally tearing away the disguise and revealing his true Marxist colors, but still. It's kind of weak tea, isn't it? Maybe it's not reasonable to expect an awful lot more from a sitting US president, but I guess I'm not feeling all that reasonable these days.... I sure wish there had been at least one genuinely big, newsworthy proposal here. It might have no chance of going anywhere, but then again, neither does most of this other stuff. At least something big might have started driving the conversation in a more interesting direction.

Well, Kevin, we are here: we share your belief that we need to drive the conversation in a more interesting direction. What do you most wish he had put forward?

And, by contrast, Paul Krugman is very pleased with the Obama inequality speech:

Paul Krugman: Obama Gets Real:

Much of the media commentary on President Obama’s big inequality speech was cynical... another “reboot” that will go nowhere; none of it will have any effect on policy, and so on. But before we talk about the speech’s possible political impact or lack thereof, shouldn’t we look at the substance? Was what the president said true? Was it new?.... Mr. Obama laid out a disturbing--and, unfortunately, all too accurate--vision of an America losing touch with its own ideals, an erstwhile land of opportunity becoming a class-ridden society....

What struck me about this speech, however, was what he had to say about the sources of rising inequality. Much of our political and pundit class remains devoted to the notion that rising inequality, to the extent that it’s an issue at all, is all about workers lacking the right skills and education. But the president now seems to accept progressive arguments that education is at best one of a number of concerns, that America’s growing class inequality largely reflects political choices.... And because the president was willing to assign much of the blame for rising inequality to bad policy, he was also more forthcoming than in the past about ways to change the nation’s trajectory, including a rise in the minimum wage, restoring labor’s bargaining power, and strengthening, not weakening, the safety net.

And there was this:

When it comes to our budget, we should not be stuck in a stale debate from two years ago or three years ago.  A relentlessly growing deficit of opportunity is a bigger threat to our future than our rapidly shrinking fiscal deficit.

Finally! Our political class has spent years obsessed with a fake problem--worrying about debt and deficits that never posed any threat to the nation’s future — while showing no interest in unemployment and stagnating wages. Mr. Obama, I’m sorry to say, bought into that diversion. Now, however, he’s moving on.

Still, does any of this matter?... Ideas matter, even if they can’t be turned into legislation overnight. The wrong turn we’ve taken in economic policy--our obsession with debt and “entitlements,” when we should have been focused on jobs and opportunity--was, of course, driven in part by the power of wealthy vested interests. But it wasn’t just raw power. The fiscal scolds also benefited from a sort of ideological monopoly: for several years you just weren’t considered serious in Washington unless you worshipped at the altar of Simpson and Bowles.

Now, however, we have the president of the United States breaking ranks....

So don’t believe the cynics. This was an important speech by a president who can still make a very big difference.