U.S. politics in two sentences

by on December 13, 2012 at 2:19 pm in Current Affairs, Law, Political Science | Permalink

If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $2,000 over the next year. That would follow a 12-year period in which median inflation-adjusted income dropped 8.9 percent, from $54,932 in 1999 to $50,054 in 2011.

That is from Annie Lowrey, here is more.

1 DocMerlin December 13, 2012 at 2:27 pm

Here’s the secret:
They don’t actually want to fix the problem. They want the taxes to rise.

2 Peter Schaeffer December 13, 2012 at 4:07 pm

Living beyond your means, by having the Federal government borrow money for you, is still living beyond your means.

3 Miraj Patel December 13, 2012 at 4:25 pm

Except the Federal government is not yet spending/borrowing beyond its means.

4 Peter Schaeffer December 13, 2012 at 4:43 pm

The Fiscal 2011 Federal budget deficit was 8.62% of GDP. See http://research.stlouisfed.org/fred2/series/FYFSGDA188S?cid=5 for a historical table.

5 Andrew' December 14, 2012 at 5:33 am

I think we learned that you can’t decide if you are borrowing within your means just because lenders continue to throw money at you.

6 JWatts December 14, 2012 at 9:59 am

“Except the Federal government is not yet spending/borrowing beyond its means.”

Net long term borrowing is by definition “living beyond your means”. The US Federal government is absolutely living beyond it’s means.

7 Adam December 13, 2012 at 4:31 pm

You need to define “the problem” if you’re going to talk about whether “they” want to fix it.

8 mulp December 14, 2012 at 4:09 pm

Since Reagan, Republicans have been borrow and spend when they are in power and fix the debt when not, while Democrats remained tax and spend.

Obama sought to end the partisan divide and has compromised with Republicans on borrow and spend. But with Republicans now fix the debt, he’s demanding Republicans return to tax and spend, or shut up and just hike the debt limit.

The problem is the incoherence of Republican fiscal policy.

The tax cuts were passed in 2001/2003 by budget reconciliation as temporary because they increased the deficit. The Republicans could have cut spending enough so the tax cuts would not increase the deficits so they would be permanent tax cuts. That is what Republicans did in the 20s. I’m guessing Republicans today see that the 8 years of coherent fiscal policy in the 20s resulted in five decades of Democratic control when tax and spend was hard to fight.

Reagan’s small government was merely a brand name for borrow and spend big government – Reagan was opposed to the Republican cut big war government of the 20s, but he liked the 20s tax cuts.

9 liberalarts December 13, 2012 at 2:35 pm

Note that the increase is in terms of taxes but the decrease is not in terms of median inflation-adjusted AFTER TAX income.

10 Cliff December 13, 2012 at 2:39 pm

Is the median giving us useful information? Are actual peoples’ income going down, or are high-income old people retiring and being replaced by lower-income graduated, or what?

11 TheAJ December 13, 2012 at 2:50 pm

good point

12 Brian Donohue December 13, 2012 at 3:34 pm

If you look at the age breakdowns on page 6, it looks like a pretty broad-based decline (1%-2% for the 25-54 groups) over the past year. I agree that the overall median can be misleading for a ton of reasons, and as the demographically significant baby-boomers head into (lower income) retirement, the ‘headline’ number will become increasingly alarming and irrelevant.

13 Peter Schaeffer December 13, 2012 at 4:23 pm

“Is the median giving us useful information?”

Population is rising faster (much faster) than employment. Employment peaked (establishment survey) at 132.53 million in 2001. The last data point for November of 2012 is 133.8 million. Population rose by 30 million over the same period (at least half of it do to immigration).

Import million of people, don’t create any new jobs, incomes go down. That’s simple enough that even the Open Borders crowd should be able to understand it.

2001-02-01 132529

14 Orange14 December 13, 2012 at 5:05 pm

Hmmm, as an n=1 my income went down by 80% between 2010 and 2011 but of course that’s because I retired. Pension and investments still put me comfortably above the median AGI.

15 Anon December 13, 2012 at 5:14 pm

Mine went up 9% a year over the last 13 years, since I first started a full-time job.

This is evidence of the need to look at cohorts.

16 Andrew' December 14, 2012 at 5:43 am

You and your unearned incomes…

17 Rich Berger December 13, 2012 at 2:50 pm

I don’t think this post lives up to its billing. Taxes on all need to rise given the current and future expected levels of spending. That sentence was not included – but this is the New York Times you are quoting. I note that only Democrats are quoted in the article, too. The Times, Fairly Unbalanced, the way its readers like it.

18 Michael December 13, 2012 at 3:11 pm

In the article about the “stance of Democrats” they only quoted Democrats.

In the article about “House Conservatives” all the quotes are from conservative Republicans in the House of Representatives.

19 Rich Berger December 13, 2012 at 3:48 pm

That wasn’t the article that TC quoted. Not even sure where it can be found.

20 dan1111 December 13, 2012 at 3:55 pm

The Democrats’ article is mostly about 1) how much money the rich make and how deserving they are of being taxed more. And 2) how even more tax increases than the Democrats want are needed. Several left-leaning or at least center-left think tanks are cited, without mentioning their political leanings.

On the other hand, the Republicans’ article is about how much they are in disarray. It mostly interviews a small group of Representatives who are dissatisfied with Boehner. It also cites three different Democratic sources (unlike the Democrats’ article, which cited none).

21 dan1111 December 13, 2012 at 3:56 pm
22 Rich Berger December 13, 2012 at 4:08 pm


23 albatross December 13, 2012 at 4:29 pm

Well, another possibility is that spending could go down. But hey, that’s crazy talk.

24 Joe Smith December 13, 2012 at 4:45 pm

albatross – Sure spending could go down. All the Republicans have to do to start that conversation is be specific about what they want to cut. Easy.

Waiting for Mr. Boehner to grow a pair.

25 dan1111 December 13, 2012 at 4:47 pm

It may be true that the Republicans would wimp out about serious spending cuts. But it is also true that they can converse all they want, and spending cuts will still be blocked by Obama and Democrats in the senate.

26 Mike Hunter December 14, 2012 at 9:27 am

So what if they’re blocked? If the Republicans are serious about spending cuts they should at least articulate what it is that they want to cut, why, and how that would help us.

My theory is that the Republicans actually *don’t* want any spending cuts; they only want further tax cuts. That way they can significantly increase the national debt while blaming it on ‘runaway democratic spending’. A large national debt will give them a good reason to largely dismatle the social safety net. The end game is that they end up with exactly what they want, low taxes and almost no spending on social welfare programs.

27 Dan Weber December 13, 2012 at 4:53 pm

Spending going down would not violate the laws of physics. But both parties seem to be playing hot potato with the issue, demanding the other side take responsibility for the unpopular spending cuts. Which, of course, the other party will never do.

28 Brian Donohue December 13, 2012 at 5:04 pm

Reagan/Rostenkowski. Clinton/Gingrich. Obama/Boehner?

29 JWatts December 14, 2012 at 10:34 am

Reagan, Bush Sr, Clinton and Bush Jr all seemed to have a much better working relationship with the opposition party in Congress than Obama does. I’ve seen no indications that Obama is particularly interested in any kind of compromise. Indeed, he is saying that he’s not. Perhaps we should take him at his word? Furthermore, usually one would expect the Senate Leader to be actively engaged in these kind of discussions, but Harry Reid seems pretty passive.

Granted, Boehner has made plenty of statements that he’s willing to go part way and some on the Right feel like he might completely cave. But it’s highly unlikely that Boehner will cut a deal that would be seen universally as a cave in.

So, that being said, for the first time in the last 25, I don’t see a compromise as likely. It looks like we’ll go over the ‘fiscal cliff’.

Assuming this happens what will be the likely results?

30 mulp December 14, 2012 at 4:21 pm

Let’s see, Democrats didn’t start out 1981 stating loudly:
1) my goal is to make Reagan fail
2) Reagan isn’t really an American, where is his birth certificate? he was really born in Canada
3) Reagan hates America and wants to destroy America

Of course, Reagan could hike taxes without fear because Grover Norquist hadn’t gotten so pissed off at Reagan hiking taxes, he was prepared to primary Reagan in 1984 like he tried to do in 1992.

Norquist has made clear he will throw elections to Democrats if Republicans are reasonable and do the right thing for the nation over Norquist’s objections.

Given Obama is negotiating with Norquist by talking to Boehner, can anyone imagine Obama and Norquist ever having a working relationship?

31 bluto December 14, 2012 at 8:15 pm

Reagan didn’t put out promotional material claiming he was born in Canada to sell a book. Also, if Bush had made a solid effort toward advancing that claim, no doubt the Democratic party would have followed up the attack. One should expect to have their feet held to the fire when they have a history of playing fast and loose with the facts to be all things to all people.

I don’t know why all presidential candidates aren’t required to have their birth state deliver an official copy of their birth certificate to the FEC.

32 dan1111 December 14, 2012 at 2:19 am

It is unpopular for the federal government to amass huge quantities of debt. Raising taxes is also unpopular–probably even less so than spending cuts (though it obviously depends on the specifics). At some level of debt, cuts become the post politically palatable option.

Also, Brian Donohue’s point is well taken. Divided government might actually make it easier to pass controversial legislation, because it creates a situation of ambiguous responsibility: each side can claim success on anything that turns out to be popular, while blaming the other for whatever goes wrong.

33 Dan Weber December 14, 2012 at 10:10 am

Yes, anything unpopular will need to be bipartisan. If Mom makes you eat your vegetables, then Dad will win your vote with his ice-cream-for-dinner platform.

Debts are unpopular, but it’s a can that can always be kicked down the road. Until it can’t.

34 celestus December 13, 2012 at 5:01 pm

Yep. The determinant of “should taxes on the middle class be the same as in the 1990s, or lower?” should not be “is the median [household?] income the same as in the 1990s, or lower”. It’s “is government spending the same as in the 1990s, or lower?”. And thanks to the wars, Tricare for Life, Medicare Part D, increases in military spending ex-wars, increases in disability/food stamp/unemployment insurance/etc. spending, not to mention the aging of the population…the middle class should count themselves lucky if taxes don’t go higher than the 1990s.

35 Adam December 13, 2012 at 4:30 pm

A question that might be dumb: do we know to what extent, if at all, that drop in median inflation-adjusted income was the result of decreasing taxes?

One of my (amateur) pet theories is that labor markets are priced (roughly) in after-tax income, such that unexpected decreases in taxes (i.e., the various rounds of Bush and Obama tax cuts) put downward pressure on wages. The tax cut happens, and all of the sudden the after-tax price of your labor has been increased. Of course, sticky prices mean your wages aren’t decreasing, but (especially in a low inflation environment), they also aren’t going up as fast as they might have because you already got your raise from Uncle Sam.

Is there literature on this? Can it be dismissed out of hand?

36 Spencer December 13, 2012 at 5:23 pm

Care to explain how a tax cuts reduce real median income?

37 Adam December 13, 2012 at 5:56 pm

I believe I just did. Tax cuts increase after tax wages, on the demand side at least labors is priced after taxes, thus tax cuts reduce the need for wage increases over time.

Or, in the simplest terms, you can get a raise next year or you can get a tax cut, but you aren’t getting both, because they are effectively the same thing in terms of making labor markets clear.

38 Steven Kopits December 13, 2012 at 6:18 pm

Median incomes tends to fall historically well into a recovery. Don’t know why.

39 ANdrewL December 13, 2012 at 8:15 pm

Sooo you are saying employees demand higher wages due to the increases taxes to maintain the same level of after-tax income. Employers are then faced with higher labor costs becuase they cannot find employees that would work for less than the market value of that labor. As a result, the employer’s has to price his goods higher to meet the labor costs. The employees who consume the employer’s products are now faced with higher costs and thus require higher wages… taxes are helping who now?

40 Adam December 14, 2012 at 2:05 pm

It’s okay to say that you don’t know the answer.

41 Floccina December 13, 2012 at 5:34 pm

1. Where does middle class end? I would say far before $200k/year , maybe about $130k/year.

2. IMHO you cannot subsidize the middle class, you have to get the consumption from somewhere.

42 MC December 13, 2012 at 6:58 pm

Are you counting the upper middle class as middle class? If not, you’re right, but if you are counting them then it definitely ends above 130k. That’s barely enough to pay off law school and med school loans if you have kids. Think HENRYs (High Earners Not Rich Yet).

43 albatross December 14, 2012 at 10:26 am

The answer to this question depends heavily on where you live, and the regional cost of living. I make more than twice as much now, in the DC suburbs, as I made years ago living in a small town in the midwest. And yet, we are probably quite a bit lower in the income distribution here than we were there.

44 JWatts December 14, 2012 at 10:49 am

“2. IMHO you cannot subsidize the middle class, you have to get the consumption from somewhere.”

+2, absolutely.

And this is why retirement and medicare eligibility ages must rise. You can’t retire unless you can find someone to perform essential services for you. And the “working class” won’t politically except working longer hours for less net income to support a large retired Baby Boomer population who are on average going to be retired for 20 years and who have become richer than the “working class” that supports them.

(I’m using Working class here to mean middle income full time employed workers.)

45 Ashok Rao December 14, 2012 at 6:43 pm

That works all well and dandy except for the real working class (brick layers, miners, etc.) who physically cannot work any longer due to frailty and real tire. I support Simpson-Bowles take on it. Raising eligibility for, say, a teacher is alright as long as your silver miner is safe.

46 joshua December 13, 2012 at 6:31 pm

Didn’t taxes on that average middle income family also drop $2,000 in that 12-year period? Why pretend that wages are going down AND taxes would be going up if taxes would be flat over the same period that the wages are going down?

47 Andrew' December 14, 2012 at 5:38 am

And that $2k is what, 1/40th of the household debt or something.

I think that taxes should go up only on people who have vote Democrat and/or Republican. We can pro-rate it.

48 Freethinking Jeremy December 13, 2012 at 6:50 pm

Where is this “median” household? Adjusting for the fluctuations, my income keeps rising. My friends’ incomes keep rising. My relatives’ income keeps rising. Homes keep getting bigger and nicer. Cars keep getting nicer features. Computers have improved about 10,000% and are cheaper in nominal terms than when I was a kid. We have more clothes than we had before. Baby toys are much better than when I was a kid.

All of this leads me to think that either 1) the measurements we’re using are off somehow, or 2) maybe the “median” household isn’t doing so great because poor people are reproducing like bunnies and the middle and upper classes are not.

49 albatross December 14, 2012 at 10:27 am

Similarly, how did Nixon win when nobody you know voted for him? It’s a mystery, alright.

50 mulp December 14, 2012 at 4:29 pm

In other words, the rich get richer, the poor get poorer, and there is no social or economic mobility because no one can cross the tracks into the wealthy part of town, and those rich who become poor vanish quietly out of respect for the comfort of the rich who don’t want to confront the poverty.

By the way, who do you know that does not have a car? Could anyone you know survive without a car? How can you know anything about America if you don’t know anyone who can’t afford a car?

51 DCBILLS December 13, 2012 at 7:08 pm

There is no need to get a headache making this complicated. Thanks to thirty years of government failure to address the needs of the mass of Americans and depending on voodoo trickle down economics to lift all ships (total failure) Americans are now forced to compete in too many cases against overseas workers who are happy to work for much less and who are in many cases more productive as well. The situation will get much worse as more Americans are forced to compete against overseas workers. US standards of living must fall a long way to reach equilibrium.

52 dan1111 December 14, 2012 at 2:29 am

Who is “forcing” Americans to compete against overseas workers, and how many is “too many cases” of Americans actually having to be a part of the world labor market? “Voodoo trickle down economics to lift all ships” sounds like a conflation of all the attacks on Reagan’s tax policies (which were 40 years ago, by the way), but what does any of this tax policy discussion have to do with overseas workers?

My head hurts.

53 Adam December 13, 2012 at 7:49 pm

Count me in as another who just doesn’t see how U.S. standard of living is decreasing. My wife and I are two and a half years out of college (grad school for me) and we already own a four bedroom house on a half acre of land, are close to buying a second, have two late-model cars with less than 30,000 miles on them, have the means to vacation out of country twice a year, buy new stuff pretty much whenever we feel like it, and still save enough to hit our retirement goal, at least so far.

When I was a kid and it was my parents, we lived next to a railroad where it felt like there was an earthquake twice a day, we weren’t allowed to wear red or blue or Raider’s jerseys to school because kids were getting shot, we had smog days where we weren’t allowed to play outside, my sisters and I wore strictly hand-me-down clothing and shopped at swap meets, and we shared rooms and had cousins and aunts and what not living with us pretty regularly.

I mean, sure, that’s one family, but heck, even my deadbeat sister who works at a call center with no college education and her husband fresh out of prison for a heroin charge but gainfully employed thanks to construction picking back up in LA, still lives better than that. Owns a pretty decent condo, multiple flat screens and smart phones, sends her daughter to private school, and drives a BMW.

Heck, better air and water quality, better technology, safer streets, and safer schools alone seem like they make life better even at an equivalent inflation-adjusted income than in the early 90s. If I had been born in my grandparents’ time, before mass production of penicillin, I probably wouldn’t have even lived past the age of 5, since I had a pretty bad bout of pneumonia that caused me to miss nearly half of kindergarten. If I had been born in my dad’s time, maybe I’d have been kicked out of multiple schools like him for starting fights with the white kids who tried to bully him for being Mexican, and maybe would have never gone to college.

Again, is life really getting worse?

54 somaguy December 13, 2012 at 9:09 pm

“My wife and I are two and a half years out of college (grad school for me)”

You’ve just answered your own question. It’s understandable why you don’t think it’s getting worse.

Note: It’s getting better for the top ~5%. It’s getting worse for everyone else. That’s not a good thing.

55 Dismalist December 13, 2012 at 9:39 pm

The puzzle is solved by first recognizing that the median person, family, or household is a different one each year. Steve Landsburg’s blog had a post that median incomes for whites, blacks, hispanics, and asians all rose for a substantial recent period of time. I would guess the same is true for immigrant cohorts, perhaps classified by ethnicity or region of origin. The calculated median is heavily influenced by demographic shifts.

As for the fiscal cliff, I welcome the middle class paying for a greater share of the benefits it receives!

56 uffy December 14, 2012 at 12:48 am

Yep. All deadbeats and ex-convicts can now afford private school for their offspring.

We’re in post-scarcity territory for quite a few goods and even some services, but private school ain’t one so what gives? Is this brother-in-law selling his previous drug of choice on the side?

57 The Anti-Gnostic December 14, 2012 at 10:00 am

Owns a pretty decent condo, multiple flat screens and smart phones, sends her daughter to private school, and drives a BMW.

It’s called “debt” and/or not paying taxes. No other way call-center workers and construction workers generate that kind of cash flow. That is extremely fungible employment.

58 mulp December 14, 2012 at 5:15 pm

You are obviously lying, No one living in California can be better off today than ten years ago because liberals have destroyed the California economy and stolen all their money with high taxes to pay for big government and overpaid government workers! California is bankrupt and everyone is loading up their cars Okie style to drive to Texas where they can get a job and not have government confiscate it all.

After all, California is so stupid they reelected moonbeam Brown as governor and everyone knows he destroyed California after Gov Reagan saved California. If only oil drilling had oiled the beeches like in Texas, and let industry boom without the EPA shutting them down, California would be a great place to live.

59 Ashok Rao December 14, 2012 at 6:15 pm

I agree with the sentiment of this post, if not the ridiculous evidence. Any ordinary heroin addict working at a construction firm living in LA with a BMW?

60 Adam December 14, 2012 at 8:17 pm

She leases it, my parents help them pay for the school, and her husband is a skilled tradesman who completed his apprenticeship and journeyman status before going to prison. I’m not saying it was or is easy for them, just easier than it was for my parents, and they still enjoy a pretty good life, if not a ton of security (they were inches from losing the condo three years ago). It’s not like these are super privileged people. But my sister has worked at the same place for ten years, her husband busted his ass to learn a trade and spent years doing it, all things anyone can do. Hell, my wife grew up in foster care because her mom is a paranoid schizophrenic and her dad simply disappeared after basically going psychotic from his experiences as a Green Beret in Vietnam.

Today, the drugs exist to allow her mom to live a normal life and the people coming back from war are not nearly as bad off as they were in the 70s. They also aren’t growing up under the threat of nuclear annihilation. Life is better.

Heck, maybe I’m generalizing too much from one family, but my great-grandfather grew up picking cotton and came to California during the depression, taught himself stonemasonry, and built his own house in the absolute middle of nowhere in the desert. We’ve come a long way. It’s hard to believe any individual family is significantly worse off now than in past generations. The median is trending down for other reasons, like more first-generation families that will be me in a few decades, and the fact that measuring income alone doesn’t account for the fact that even if you can afford less car, they now all come with crumple zones and intelligent wheels and are far less likely to kill you. Even if you can afford less house, they don’t have lead and asbestos in them and they’re less likely to collapse during earthquakes and hurricanes. Even if you can’t afford to live exactly where you want to, the water and air where you live is less likely to be poisoned by industrial waste. Even if you’re not close to a library and can’t afford to travel, for a one-time investment of a few hundred bucks plus twenty a month after that, you have the world at your fingertips plus all the accumulated knowledge of all of human history.

Yet everyone wants to predict doom and gloom and say the world is going to hell. Look at the Arab Spring. The American revolution eventually resulted in the near-extinction of a continent’s worth of natives and left a nation so fractured that it fought a civil war that killed more than half the adult males in certain states 80 years later. Communist revolutions in Asia in just the last century resulted in at least 50 million deaths. Does anyone in their right mind really believe it will be near that bad in the Middle East and Africa?

61 Bill December 13, 2012 at 8:47 pm

Thanks for making the argument that taxes need to rise for the top 1%.

That is what you meant when you said the median income declined, isn’t it?

62 Ashok Rao December 13, 2012 at 11:08 pm

There isn’t necessarily a correlation between income declining for the middle class and top tax rates. There is with deficit and with inequality, of course.

63 Andrew' December 14, 2012 at 5:40 am

Why should taxes rise on the top 1% if they don’t think they should?

64 Ashok Rao December 14, 2012 at 12:34 pm

I think wealthy Americans by and large are okay paying slightly higher taxes. Eight of America’s ten richest counties voted Obama. I think there’s a good chance that some portion of this was due to his much more tolerant and enlightened social views, but it at least implies they understand their taxes might go up.

65 Steko December 13, 2012 at 9:13 pm

The first sentence should say: “If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $5-$6 a day, drastically increasing pressure on the two parties to come to a deal quickly.”

66 Ashok Rao December 14, 2012 at 1:11 am

We should further abstract it – every middle class American is out one Starbucks latte a day. Oh my god, imagine if the middle class crowd emptied out of Starbucks!

67 Danny December 14, 2012 at 8:35 am

This is an excellent point, that bears emphasising. If a deal is reached on January 2 2013 that has vastly different implications to a deal not being reached by December 31 2013. But much of the breathless commentary assumes the two are identical in their consequences.

68 Mogden December 13, 2012 at 9:31 pm

Given the incredible subsidy we provide to the lazy and degenerate, and the large taxation on honest work, it is a wonder that anything productive happens in this economy at all.

69 Vivian Darkbloom December 14, 2012 at 2:44 am

“If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $2,000 over the next year. That would follow a 12-year period in which median inflation-adjusted income dropped 8.9 percent, from $54,932 in 1999 to $50,054 in 2011.”

Creating a false comparison between “average” and “median” is just classic NYT obfuscation and propaganda. Lowry sets it up so that most readers think the former group are equivalent to the latter. Lowry is comparing the *average* tax increase for those in the “middle cash income quintile” with those earning less than $50K. How much of that “average” $2,000 tax increase actually falls on those earning less than $50,054? According to the Tax Policy Center’s distributional analysis by “cash income” the tax increase on those earning less than $50K does not increase by more than $1,721 for those earning $40-$50K and the amount steadily declines from there. Lowry has included in this “average” over 17 million households that earn more than $50K. And, how much of that “tax increase” comes from expiration of the Bush tax cuts? A significant portion of that “tax increase” comes from the expiration of the “temporary” payroll tax holiday that was marketed as “stimulus” and not from the Bush tax cuts, as well as tax legislation for the EITC, the Child Tax Credit and other “temporary” provisions that were sold as stimulus measures. A small portion even comes from the tax hikes envisioned in ObamaCare!


And then, of course, one can take “median household income” at the top of the DotCom bubble in 1999 and compare it with today. Or, you could take the median in 2007 ($54,489) immediately prior to the recession and compare it to today. Other than distorting economic incentives, I doubt very much that our tax policy has anything to do with the “median household income”. Actually, if one thinks not too hard about it, that Census Bureau “median household income” is gross income before taxes. So, due to the “Bush tax cuts”, those median households had larger real *disposible incomes* in 2007 than they did in 1999. Aside from the recession, the other difference is four years of horrible economic policy.

But, Tyler is right—this explains American politics very concisely. He could have also written that it explains American journalism even better.

70 Pensans December 14, 2012 at 5:00 am

Only the Eunuch could reduce Amrican politics to this. American politics is ended when the producutive Republic was replaced by ethnic socialism.

71 8 December 14, 2012 at 7:34 am

America has been successfully trolled. After the fiscal cliff, most people will think the deficit is solved. Then they will learn it was a political sideshow and the real cuts/tax increases need to be made at one order of magnitude larger. Are they going to immediately pivot from the possible $4 trillion in “cuts” to tackling the $40 trillion+ in “cuts” that need to be made? Or will they decide printing money is the best choice?

72 albatross December 14, 2012 at 10:32 am

The fiscal cliff freakout explains why we aren’t going to address our deficit spending, in much the same way that the utter political unviability of a fifty cent a gallon gas tax explains why we aren’t going to address global warming. Addressing those things requires pain now for voters, in exchange for a somewhat speculative improvement in our well-being in the future. Most voters aren’t paying all that much attention, but they’ll certainly notice a bigger tax bill.

73 Brian Donohue December 14, 2012 at 10:52 am

But these things do happen from time to time. Every once in a while, the country wakes up and behaves like a grown-up. I think this may happen during 2013.

The pols are increasingly hemmed in- the writing is on the wall, and everyone is looking at the same numbers
(http://www.usdebtclock.org/), which are all in Simpson-Bowles anyway. And they say: raise taxes on EVERYBODY, cut spending, starting with defense, reform entitlements. Something for everybody to hate.

74 The Other Jim December 14, 2012 at 11:17 am

>”in much the same way that the utter political unviability of a fifty cent a gallon gas tax explains why we aren’t going to address global warming.”

Except that the US debt is a real, man-made problem with catastrophic consequences.

No one in the US Government cares about the debt, and on Nov 6 the US population chipped in with a resounding “Hell, neither do we!” And there’s your problem right there.

The cliff’s middle-class tax hikes will delight Obama, and be yet-another kneecap-shot to the economy, but ultimately it is noise. The debt will be unaffected either way, and it is an anvil dragging us Earthward. Pray for a rapid hydraulic-fracturing-based miracle recovery that makes the USA #1 in energy production, because it’s going to take something on the order of that to save us.

75 Rich Berger December 14, 2012 at 11:37 am

Didn’t you get the memo? It’s climate change now, not global warming.

76 Doug M December 14, 2012 at 12:24 pm

Why are we comparing a nominal increases in taxes in 1 year to a real drop in income over 12 years?

77 Ashok Rao December 14, 2012 at 6:14 pm

I don’t think $2000 is nominal to the people it affects.

78 RobP December 14, 2012 at 2:22 pm

I thought that one of the reasons for the decreasing real income of middle class workers was because of increased cost of housing and taxes, which includes the increases in sales taxes, property taxes, payroll taxes, taxes on cable, phone services, electrical bills. Increased food prices. Increased gas prices.

The inflation factor is one of the reasons for the lower income, and that is the Fed’s plan to revive the economy.

At the end of the day, poor investments lead to lower standards of living for the entire country, which is the crux of the problem.

As far as republicans, I thought that they wanted to decrease funding for fraud going on in social security disability benefits, decrease funding for free food, and decrease funding for unemployment benefits. I know I heard Boehner mention those.

As far as the rich, who cares? If Bill Gates and Buffett couldn’t get their deductions, it would be a bigger effect on them than the income tax rate, so I guess that is why they supported the president.

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