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You are here: Home / Archives for Economics / Austerity Bombing

Austerity Bombing

Kids These Days (Are F**ked)

by Tom Levenson|  March 21, 20206:05 pm| 67 Comments

This post is in: Austerity Bombing, Economics, Free Markets Solve Everything, Fuck The Middle-Class, Fuck The Poor, Republican Stupidity, Republican Venality

Coronavirus is changing America hugely in the here and now–just look outside.

It’s also true that it will have a lasting impact on the country (and the world), and while prediction is hard, especially about the future, there is one obvious impact that will harm both millions of individual Americans and the long term economic health of the nation.

That would be what’s waiting for students graduating this June into a job market that for all intents and purposes won’t exist–likely for months/years to come.

TL:DR: it’s bad. Really bad. There are serious losses of income and long term wealth that produce knock-on effects on health and social factors in the lives of those who, by no fault or action of their own, happen to come into adulthood at just the wrong moment.

Kids These Days (Are F**ked)

At this moment, we’re diving into what looks like a deep economic disaster that will wreck the dreams of millions of kids just getting started, and we are doing so because the Republican leadership botched both short and long term plans for a predictable event. This is social misery that is about to happen as a direct result of political choices made by Donald Trump and 40 years of decisions by Republican elected officials. We will need to drive that point home, until being a Republican ranks in popular estimation a couple of rungs below refurbished condom retailer.

To our sorrow, there’s a fair amount of research on  the natural experiments we’ve already endured that shwo what starting one’s career in such a moment does to both short term and longer prospects.  In 2006, a paper looking at Canadian college graduates between 1982 and 1999 showed that recessions have a significant impact on new graduates:

Our main results suggest that the average worker graduating college in a recession faces earnings losses that are very persistent but not permanent. On average, a two standard deviation increase in the unemployment rate (roughly comparing the difference between those exiting college in a bust versus boom) leads to an initial wage gap of about 10 percent. This gap declines relatively slowly, and fades to zero after about the eighth year. Controlling for unemployment rate conditions after the first year of labor market entry, we also conclude that virtually all of the wage deficit can be attributed to the unemployment rate variation in the very first year after leaving school.

Graduating at the wrong time affects the shape of careers; timing matters, in that the newest graduates suffer more than those with a toe-hold in the job market; finally, that average 10% loss masks the differential effects by income level. As usual, the poor suffer more (from the non-technical summary):

show full post on front page

 …initial random shocks affect the entire career. Graduating in a recession leads workers to start at smaller and lower paying firms, and they catch-up by switching jobs more frequently than those who graduate in better times. Third, some workers are more affected by luck than others. In particular, earnings losses from temporarily high unemployment rates are minimal for workers with two or more years of work experience and are greatest for labor market entrants. Among graduates, those with the lowest predicted earnings suffer significantly larger and much more persistent earnings losses than those at the top.

I’ve seen studies on the impact of the 2007-8 events that report similar patterns, but what really caught my eye was this one, published in January, 2020, by Hannes Schwandt of Northewestern and Till M. von Wachter from UCLA. Here’s the abstract, which captures the scope of its miserable findings:

We find that cohorts coming of age during the deep recession of the early 1980s suffer increases in mortality that appear in their late 30s and further strengthen through age 50. We show these mortality impacts are driven by disease-related causes such as heart disease, lung cancer, and liver disease, as well as drug overdoses. At the same time, unlucky middle-aged labor market entrants earn less and work more while receiving less welfare support. They are also less likely to be married, more likely to be divorced, and experience higher rates of childlessness. Our findings demonstrate that tempo-rary disadvantages in the labor market during young adulthood can have substantial impacts on lifetime outcomes, can affect life and death in middle age, and go beyond the transitory initial career effects typically studied.

Schwandt and von Wachter begin with background capturing how the picture of income and career costs have held up, and in some cases worsened since the earlier research I linked above:

Losses in cumulated lifetime income implied by typical estimates per se could lead to lower wealth accumulation, and there is some evidence of reductions in housing wealth among individuals coming of age in the Great Recession (e.g., Dettling and Hsu, 2014). Several studies have documented lasting changes in occupational choice (Oyer, 2006, 2008; Altonji et al., 2016) and employer characteristics (Oreopoulos et al., 2012), and Kahn (2010) finds that 1982 college graduates may begin to lose ground again around 15 years after job entry.

So yeah: graduating in a recession is not what you want. But here’s the killer, literally:

For cohorts coming of age during the early 1980s recession, a temporarily higher state unemployment rate at the age of labor market entry leads to precisely estimated increases in mortality that appear in the late thirties and increase until age 50. These increases in mortality are driven to an important extent by a rise in both disease-related and “external” causes, including lung cancer, liver disease, and drug poisoning.

Aside from early death, effects of entering the job market in crap times make life suck in many ways:

We also find entering the labor market during a recession has a substantial impact on a broad range of measures of socioeconomic status in middle age, including a decline in marriage rates, a rise in divorce rates, and a decline in family size. We also find that after initial recovery in their mid-thirties, adversely affected entry cohorts suffer a reduction in earnings as they reach their mid-forties.

And there are interesting (if that’s the word) distinctions in outcomes by race that may help explain Trump’s appeal to folks whose interests he assaults:

Finally, while the effects on overall mortality are similar by race, increases in deaths of despair appear to be chiefly concentrated among white, nonHispanic men. White men also tend to experience a decline in earnings in midlife and tend to experience larger reductions in family stability than their non-white counterparts. This is despite the fact that non-whites experience larger short-run effects on earnings and other outcomes…

Kids These Days (Are F**ked) 1

In sum: the Trump recession/depression that is beginning right now will damage the hopes and prospects of a generation for a generation.  It will affect us all, including those of us fortunate enough to start our careers in better times, as millions of Americans will have less of chance to lead the fully productive/creative lives they could–and thus our economy and culture as a whole will lose what could have been.

There are some responses that could mitigate the worst effects, it seems to me, and I’m going to be getting in touch with my legislators to push them. First, the most obvious, is to forgive any tuition debt incurred this year. Second, almost equally obvious, would be to forgive it all, certainly for students currently in college, but better, for everyone, as that would be an instant stimulus/support. If students graduating now or over the next few years didn’t have to pay down a debt that the crappy job market will make yet more intractable, they would have more flexibility, more resilience, and hopefully both a better short term and more healthy and emotionally robust time as the years roll by.

And the other urgency, of course, is to not do what Hoover did, and Trump and McConnell and the rest of the junta are doing now: dither over a response that in its first iterations is clearly inadequate to the task. The best thing to do when facing the prospect of double digit job losses is to throw money at anything that (a) keeps folks alive and (b) offers jobs that pay wages.

It’s really not that complicated: don’t burden the most vulnerable with the hardest road to hoe; give them a leg up in hard times. And drop cash from helicopters.

Over to y’all.

Images: Franz von Felbinger, Poor Children, by 1906.

Edvard Munch, Despair, 1894.

Kids These Days (Are F**ked)Post + Comments (67)

We Shouldn’t Cure Cancer Because It Would be Unfair to Everyone Who Fought Cancer and Won

by John Cole|  April 22, 20193:12 pm| 166 Comments

This post is in: Austerity Bombing, Assholes, Go Fuck Yourself

Adding to Betty’s post, if there is anything that more perfectly encapsulates the wingnut mindset of “I got mine, fuck you,” I don’t know what it is. As someone who JUST a few months ago paid off my student loans, which were much less than your average millennials because I had the GI Bill, several jobs, and was a GA during grad school, I can tell you that I don’t for one minute think it would be unfair to me if other people had this burden removed from them. As Warren notes, society inflicted these loans on these kids because the boomers* and others didn’t want to pay the taxes previous generations paid to educate them. I am all for student loan forgiveness- I can think of nothing better than to let these kids have the financial freedom to move to careers they want rather than taking multiple gig jobs they have to have to pay their student loans. And then they can do all sorts of other shit like buy houses and go to Applebee’s and all the other shit they haven’t been able to do and are accused of “killing.”

Fuck Phil Klein.

*- I am talking generationally not about you I am sure you are a very fine boomer with the noblest of intentions you whiny fuck.

We Shouldn’t Cure Cancer Because It Would be Unfair to Everyone Who Fought Cancer and WonPost + Comments (166)

What this is really all about

by Betty Cracker|  May 4, 20177:02 pm| 218 Comments

This post is in: Austerity Bombing, Election 2018, Election 2020, Open Threads, Politics, Republican Stupidity, Ryan Lyin' Weasel, Trump Crime Cartel, Assholes, Decline and Fall, General Stupidity, Get Angry, Not Normal, Rare Sincerity

Here’s a tweet from The Hill a couple of days ago and my response:

Here’s a link to the article. I think it’s spot on regarding Trump’s goal here, and I’m glad the writer used the word “brand,” even though it’s usually annoying to see life-or-death matters discussed in the language of an ad campaign.

It’s appropriate because Trump thinks in those terms. Fellow citizens, our country has empowered a malignant narcissist with a massive inferiority complex. And he is bent on unmaking President Obama’s legacy because it drives him insane(r) that Obama is more loved, accomplished and respected than Trump will ever be.

Does Trump have a fucking clue what’s in the AHCA? Nope. He might actually believe the lies he’s telling about the bill covering more people and costing less. More importantly, that’s not what matters to him. Probably the only thing that confers wood to the flaccid little appendage Trump’s wife dreads is the prospect of undoing something Obama achieved.

What’s worse, the Republicans have figured this out, so they’ll continue to manipulate Velveeta Voldemort to their nefarious ends with “wins,” like ripping away healthcare for millions, unleashing predatory bankers, getting rid of consumer protections, disenfranchising voters and persecuting women, gay people, black and brown people, Muslims, immigrants, etc.

They’ll stop at nothing, the GOP — both in Congress and their hate-filled base — including collusion with a hostile foreign power. So we have to stop them. We simply have no other choice. Suit up, Juicers. We’re in for the fight of our lives, and I don’t know about you, but if I’m going down, I’m going down swinging.

What this is really all aboutPost + Comments (218)

Late Night Open Thread: The Common Clay, a/k/a Crab Bucket Politics on A Global Scale

by Anne Laurie|  March 17, 20173:36 am| 81 Comments

This post is in: Austerity Bombing, Dolt 45, Grifters Gonna Grift, Open Threads, Assholes, Just Shut the Fuck Up, Riveted By The Sociological Significance Of It All

This literally happened…
Tucker Carlson: "The counties who voted for you will do far worse under your plan"
Donald Trump: "Oh, I know…" pic.twitter.com/tsG96kybxe

— William LeGate (@williamlegate) March 16, 2017

How dumb are your voters, Mr. Trump?… Very fuggin’ dumb indeed, Mr. Carlson!

So, McDonald’s twitter account got hacked…

1. This is just a bad tweet. It is nasty & condescending. It is also terribly uniformed. Go to any minority community. McDonald's are packed pic.twitter.com/mMH198MwVj

— Chris Arnade (@Chris_arnade) March 16, 2017

Our Modern Victorians (who, like their forebears, are inherently patriarchal and racist) are busy promoting the myth of the noble-savage Trump voter, straggling survivors of an earlier more primitive culture whose quaint customs and fantastical beliefs must be respected (but never honored). These simple, unlettered tribalists — the last of their kind! an endangered almost-human species! — are to be granted endless lip service for their perceived grievances and genuine sufferings, as long as doing so doesn’t involve one iota of inconvenience or expense for Their Betters. Let them vote, predictably for grifters who lie to them about revenge upon their traditional enemies and the return of the buffalo herds good jobs in their neighborhoods that don’t require education. The results of those votes are only going to impact other members of the lower classes, anyway. (If there were any risk those votes would affect Very Serious People, well, *that* would be quite a different just-so-story.)

3. It is extreme version of a belief many Front-row kids have that they are smarter & hence have correct taste/judgement & deserve power & $ pic.twitter.com/pLqRSL11b4

— Chris Arnade (@Chris_arnade) March 16, 2017

As any Irish country-dweller under English occupation, Native American exiled to a reservation, or Appalachian hillbilly during the last century could’ve warned the Trump voters, the people who romanticize your poverty and ignorance are not your friends.

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4. Uglier off shoot of this view is those not educated exactly as them are lesser/lacking. Just Back-row kids. Or "Fat slobs with bad taste" pic.twitter.com/bWiReXZd6o

— Chris Arnade (@Chris_arnade) March 16, 2017

Mr. Arnade’s Guardian bio:

Chris Arnade received his PhD in physics from Johns Hopkins University in 1992. He spent the next 20 years working as a trader on Wall Street. He left trading in 2012 to focus on photography.

You ever heard the expression “poverty tourism”, Mr. Arnade?

People who ‘view their lives as worse than their parents and their children’s lives will be worse than their own’ don’t need to be patted on the head (and written off as irrelevant, except as a stick to beat ‘liberals’). They need access to resources that’ll help them, at the very least, make sure their children’s lives aren’t even worse than their own depleted existences. Telling them that voting for Trump or other Republican freebooters is “a protest” to which they are “entitled” is as much a scam as any Victorian missionary offering the starving foreign heathens rice (or gruel) in return for their ‘souls’ (and their underpaid labor.)

The McDonald’s in poor neighborhoods aren’t packed because the people buying McDonald’s have a plethora of alternatives. As Paul Ryan and his fellow Repubs would put it, those McD’s customers might (in some cases) be said to have access to better, tastier nutritional choices, but they don’t have the actual money for warm, wi-fi’d, public gathering places that serve boutique coffee and organic baked goods. They “want” to go there because it’s the best they can do, not because they’ve researched a vast array of better options and turned up their noses.

Okay, you're right, I was being a jerk. Apologies.

— Josh Barro (@jbarro) March 16, 2017

(Josh Barro did right by apologizing, though.)

Late Night Open Thread: The Common Clay, a/k/a Crab Bucket Politics on A Global ScalePost + Comments (81)

Bronze is a great age

by David Anderson|  March 14, 20175:59 am| 18 Comments

This post is in: Anderson On Health Insurance, Austerity Bombing, Don't Trip, Organize, Election 2018, Free Markets Solve Everything, Fuck The Middle-Class, Fuck The Poor, Zombie-Eyed Granny Starver

I want to look at one element of the CBO score. It is the offered actuarial value of plans. Under the House Bill, out of pocket maximums would be fixed but there would be no age banding. The CBO sees this having an interestingly low effect.

Beginning in 2020, the legislation would repeal those requirements, potentially allowing plans to have an actuarial value below 60 percent. However, plans would still be required to cover 10 categories of health benefits that are defined as “essential” under current law, and the total annual out-of-pocket costs for an enrollee would remain capped. In CBO and JCT’s estimation, complying with those two requirements would significantly limit the ability of insurers to design plans with an actuarial value much below 60 percent.

Mechanically, under the House bill without a follow-on phase 2 or phase 3 bill, insurers can probably design plans that have at least 55% actuarial value (AV) coverage as the minimum level of coverage. Bronze right now is 60% +/-2 points of AV.

It will be very hard for people to buy a non-Bronze plan because insurers won’t offer them except at exorbirant prices. Let’s work through my logic.

Insurers are currently required to offer at least one Silver and one Gold plan if they want to sell on Exchange. Those plans are age rated at 3:1 with subsidies absorbing almost all of the local price increase risk for the Silver plan. Under the AHCA, those requirements are not in place and the subsidy is not tied to local pricing. Young buyers who are healthy will either opt out or buy the lowest actuarial value coverage possible because it will cost them very little.

Insurers then have to look at the people who actually need coverage and cost money to cover. They’ll offer a Bronze plan to get the young people in. But if they see a 58 year old asking for a Silver or Gold plan, they know that this person is going to be hyper expensive to cover as they have just self-identified as being high risk and high expense. Insurers won’t offer actuarial value levels above the minimum requirements because they will lose money on those policies.

So we will quickly see a proliferation of $6,000 to $9,000 deductible plans and very little else. That means the 64 year old who is seeing a $10,000 a year premium increase will also see their deductibles increase by $4,000 to $7,000 a year.

Bronze is a great agePost + Comments (18)

Brand new cadillac

by DougJ|  February 24, 20171:10 pm| 165 Comments

This post is in: Austerity Bombing

This sounds like a real winner politically:

A draft House Republican repeal bill would dismantle Obamacare subsidies and scrap its Medicaid expansion, according to a copy of the proposal obtained by POLITICO.

The legislation would take down the foundation of Obamacare, including the unpopular individual mandate, subsidies based on people’s income, and all of the law’s taxes. It would significantly roll back Medicaid spending and give states money to create high-risk pools for some people with pre-existing conditions. Some elements would be effective right away; others not until 2020.

The replacement would be paid for by limiting tax breaks on generous health plans people get at work — an idea that is similar to the Obamacare “Cadillac tax” that Republicans have fought to repeal.

Brand new cadillacPost + Comments (165)

Government, Meet Bathtub

by Tom Levenson|  January 19, 20171:02 pm| 188 Comments

This post is in: Austerity Bombing, Don't Mourn, Organize, Free Markets Solve Everything, Fuck The Middle-Class, Fuck The Poor, Kochsuckers, All we want is life beyond the thunderdome, Assholes, Bitter Despair is the New Black, Nobody could have predicted, Peak Wingnut Was a Lie!, Sociopaths

It’s easy to run a government that does (next to) nothing.

Here’s where Trumpism — or really Pence-ism, or really, exactly what the GOP has been promising (threatening) will have its most immediate, and quite possibly its most damaging impact:

Staffers for the Trump transition team have been meeting with career staff at the White House ahead of Friday’s presidential inauguration to outline their plans for shrinking the federal bureaucracy, The Hill has learned.

The departments of Commerce and Energy would see major reductions in funding, with programs under their jurisdiction either being eliminated or transferred to other agencies. The departments of Transportation, Justice and State would see significant cuts and program eliminations.

The Corporation for Public Broadcasting would be privatized, while the National Endowment for the Arts and National Endowment for the Humanities would be eliminated entirely.

Overall, the blueprint being used by Trump’s team would reduce federal spending by $10.5 trillion over 10 years.

The NEH and NEA cuts are at once symbolic — the GOP is killing stuff liberals like, which is reward enough in those quarters — and, I think, intended to distract from other hugely reckless choices:

The Heritage blueprint used as a basis for Trump’s proposed cuts calls for eliminating several programs that conservatives label corporate welfare programs: the Minority Business Development Agency, the Economic Development Administration, the International Trade Administration and the Manufacturing Extension Partnership. The total savings from cutting these four programs would amount to nearly $900 million in 2017.

At the Department of Justice, the blueprint calls for eliminating the Office of Community Oriented Policing Services, Violence Against Women Grants and the Legal Services Corporation and for reducing funding for its Civil Rights and its Environment and Natural Resources divisions.

At the Department of Energy, it would roll back funding for nuclear physics and advanced scientific computing research to 2008 levels, eliminate the Office of Electricity, eliminate the Office of Energy Efficiency and Renewable Energy and scrap the Office of Fossil Energy, which focuses on technologies to reduce carbon dioxide emissions.

Under the State Department’s jurisdiction, funding for the Overseas Private Investment Corporation, the Paris Climate Change Agreement and the United Nations’ Intergovernmental Panel on Climate Change are candidates for elimination.

The single most important point I can make is that this is the Kansas-ification of America.  This isn’t a Trump policy choice.  This is Mike Pence shepherding plans the Republican Party has been trying to implement for years, decades even.  I doubt it will all get through, but much of it will, I’d guess, and when it does we will need to hang every shitty outcome and terrible choice around the neck of every Republican officeholder.

This is what they want. This is what they told us they wanted. They’re likely going to get it, to some approximation.  And they’re going to have to own it, so that once again, Democrats can come in and fix the serial catastrophes we’re going to witness very damn soon.

Also, too — who wants to bet all the pieties about the deficit and restoring balance to the budget will fall to the tax cuts to come?

Fuck it.  I’m heading back to the seventeenth century.

Image: Francesco de Rossi, Bathesheba at her Bath, 1552-1554.

Government, Meet BathtubPost + Comments (188)

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