Annie Lowrey | The Atlantic

We Shouldn’t Need Accountants

2026-04-15T07:00:00-04:00

If you are anything like me, you have spent a lot of time over the past few weeks opening letters, finding receipts, requesting PDFs, scanning documents, and going through your credit-card statements line by line. It’s tax season. And in the United States, taxes are a DIY affair.

This is the case even though Washington could probably do your taxes for you. If you earn a salary or an hourly wage, the Internal Revenue Service already knows how much money you make. It likely knows how much you owe or how big your refund should be too. Nine in 10 households take the standard deduction, making their liability easy to glean from payroll and banking data.

Yet Uncle Sam demands that Americans fire up TurboTax, head to a storefront preparer, hire an accountant, or sit down with a sharp pencil and a strong cup of coffee to get their taxes done each spring. The average filer spends 13 hours on their 1040—a time tax that many of our wealthy peer countries have reduced to a couple of minutes, if that. Prepopulated documents and return-free systems are common everywhere but here. Sweden lets residents file by text. Canada prefills paperwork. Japan sends households a document summarizing their tax contributions. If everything looks copacetic, many workers get to do a blissful nothing. Denmark, Estonia, Spain, and Norway have similarly simple processes.

The United States imposes a cost in cash, as well as in effort. A majority of Americans, whether wealthy or poor, pay for help with their return, spending an average of $290 annually. Add up the amount that people spend out of pocket, and you would have a sum 12 times larger than the IRS’s budget. The situation is needless, as well as annoying. It’s far past time for it to end.

To be fair to the IRS, the situation is not its fault. The country’s politicians have created a tax code with 10,000 sections and innumerable carve-outs. It includes deductions for medical expenses, tips, overtime earnings, prescription-drug costs, state income and sales taxes, mortgage interest, charitable giving, gambling losses, student-loan-interest payments, alimony payments, and retirement contributions, as well as write-offs for property destroyed by or stolen during a natural disaster. (A favorite Kafkaesque fillip of mine: The cost of tax preparation is often itself deductible.) The tax code offers credits to parents and low-income Americans, as well as to people paying for child care, job-training programs, and college. Families taking the standard deduction don’t have to substantiate the $500 that they tithed to their church or the “Don’t worry about it, sweetie” funds that they lost in Vegas. But they do need to demonstrate to the IRS that they had a kid or enrolled in a vocational-training program.

At the same time, politicians have woven safety-net initiatives into the tax code. The IRS has become a shadow social-insurance agency, requiring the painstaking vetting of family finances and the ginning up of all kinds of fussy contingencies and phase-ins. If the United States scrapped the child tax credit and opted for universal child care, tax season wouldn’t be so onerous. Tax filing would be simpler if Washington covered college tuition instead of subsidizing student loans. Things would be easier if the country had a single-payer health-insurance system instead of an employer-sponsored, tax-subsidized omnishambles.

But tax expenditures tend to fly through Congress, whereas social-spending bills tend to get stuck. Tax initiatives can be pinpoint-targeted to households with specific earnings and work situations, whereas universal programs are universal. And tax programs are cheaper for the government to administer than direct services are. As a result, Washington keeps layering complicated provisions into the code, and letting individual families do the work.

The IRS could take over, as tax experts have suggested for three decades. Complexity does not pose an insurmountable obstacle. A few years ago, the IRS built a TurboTax competitor—a free, public system that could help families fill in lines and check boxes on the 1040, and calculate their liability. Direct File aided half a million households with simple tax situations in 2024 and 2025. Most people got their taxes done in less than an hour. Americans loved it.

The tax-preparation industry did not, and neither did many Republicans. A group of attorneys general asserted that Direct File was an affront to the Americans who choose to hire “small businesses in our states to file their taxes at an affordable cost.” More than 30 members of Congress argued that the IRS was acting as “assessor, collector, preparer, and enforcer—all in one,” a “deeply concerning” situation and “a clear conflict of interest.” Although the IRS wanted to expand Direct File, Donald Trump killed it.

Direct File was neither deeply concerning nor a clear conflict of interest. The tax returns that it generated were more accurate than those created by other filing tools. Families were under no obligation to use it, either. They could hire a storefront preparer or do their taxes by hand if they wanted, and they could adjust the government’s tabulations.

As a general point, the IRS prepopulating returns would not create opportunities for graft or amp up the risk of error. The agency’s commissioner isn’t getting a bonus for denying a low-income mom a refund. And automatic filing would lower many households’ tax bill by ensuring that they get all of the subsidies and credits they qualify for. (Many families miss out because they do not file a return or do not fill out the paperwork correctly.)

Of late, Washington has taken a few steps toward efficiency: expanding the standard deduction, signing young men up automatically for the draft. Yet mostly, it has sprinted backwards: gutting the Consumer Financial Protection Bureau, adding work requirements to Medicaid and SNAP, axing Direct File. Many Republicans remain resolute in their opposition to actual administrative elegance. And Jackson Hewitt and the like retain their billion-dollar interest in ensuring that the IRS doesn’t become like Denmark’s Skattestyrelsen or Japan’s Kokuzei-chō. The company behind TurboTax has spent millions of dollars on a “sophisticated, sometimes covert war” to keep tax season excruciating, a ProPublica investigation found.

Washington has gotten used to providing substandard services, and Americans have gotten used to accepting them. This spring, the government is giving households 7 billion migraine-blinded hours’ worth of needless homework, and is forcing them to hand billions of dollars over to rent-seeking accountants as they hand over trillions of dollars to the IRS. If Denmark and Japan can make tax filing painless, so can we.

How to Guess If Your Job Will Exist in Five Years

2026-03-25T08:25:47-04:00

Will my job even exist in five years? Following the rise of Claude Code and ChatGPT, pretty much every white-collar worker I know has been asking themselves that question. AI can code like an engineer, write a business plan like a consultant, decorate like an interior designer, and answer medical questions better than a doctor. It can make up a shockingly catchy and shockingly filthy country tune, and croon it in a voice drenched in Tennessee whiskey. The realization that America might not need so many engineers, consultants, interior designers, doctors, and country singers in the future naturally follows. Searches for the phrase job apocalypse are spiking. Polls show that voters are beginning to freak out.

But there’s a better question for white-collar workers to ask themselves: Am I coal, or am I a horse?

Horses and mules have had a rough go of it in the labor market, to say nothing of hinnies. American farms employed 26,493,000 equines in 1915. One hundred years later, the number of such animals on the payroll had collapsed to 700,000. (To be fair, the data aren’t great.) Farmers needed horses until tractors and trucks did their work better, so farmers hired millions of them instead. (Again, not great data. The government inexplicably stopped keeping a tally of farm trucks in 2013, though it still counts the number of tractors.)

The problem with horses—one of the problems with horses, I say as a former horse girl—is that they are as stubborn as mules. When the combine rolled onto the alfalfa field, horses did not see the writing on the barn wall and start applying for factory jobs. They didn’t learn to code or attend community college. They stood there and ate carrots.

Humans have managed the tides of change far better. More than half of the American labor force worked in agriculture in 1880, compared with 2 percent today. But farmers didn’t become obsolete. They became sewing-machine operators whose children became steamfitters, whose children became teachers, whose children became contestants on reality shows. Many jobs common 100 years ago—drayman, telephone operator, woodchopper, hoistman—are niche or nonexistent today.

[From the March 2026 issue: America isn’t ready for what AI will do to jobs]

I’m smoothing things over, granted. The transition from agricultural employment to factory employment involved wrenching mass migration, the utter misery of the Great Depression (as well as other brutal recessions, now faded from collective memory), and the painful dealmaking of the New Deal. The shift from blue-collar work to white-collar work has decimated communities such as Dayton and Youngstown and Muncie, and contributed to the rise of extreme inequality. We’re still experiencing the social, political, and public-health consequences. When technology leads to huge numbers of jobs disappearing quickly, bad things happen. Still, humans are transformers. We adapt, we change, we prosper, and sometimes we thrive, even as a robot revolutionizes our job—which is where coal comes in.

In 1865, a brilliant English economist named William Stanley Jevons published a book, The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines. Coal “is the material energy of the country—the universal aid—the factor in everything we do,” he wrote. “With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times.” The text is rhapsodic, romantic even. (Find someone who looks at you the way Jevons looked at a furnace.) But Jevons wasn’t overdoing it. England was one of a handful of places where coal sat on or near the surface of the Earth, along with Appalachia and the Ruhr, the economic historian Brad DeLong told me when I called him to chat about Jevons. You could dig it up and heat a home, boil water, forge a metal, or power an engine. Coal was why England was the seat of the Industrial Revolution. Coal made England rich.

Yet the country had only so much of it. (Problem.) Efficiency improvements in steam-powered engines would ease demand, economists who weren’t Jevons argued. (Solution?) But the same improvements would drive down the price of consumer goods, push up corporate profits, and extend the penetration of coal into the economy; efficiency would lead to the demand for coal increasing, not decreasing. That insight became known as the Jevons paradox within the world of academia. England would need more coal, or it would decline as an economic power.

You’ll be hearing a lot about this obscure Victorian notion in the coming years. Silicon Valley types can’t stop talking about it. Searches for the phrase Jevons paradox are looking a lot like searches for the phrase job apocalypse. Contemporary examples of the paradox in action are plenty: LEDs, heat pumps, and front-loading washer-dryers use less electricity than incandescent bulbs, furnaces, and top-loaders. But the United States uses more electricity now than it did 20 or 50 years ago because we have so many more electrical gadgets. Broadband, mobile data, and semiconductors are Jevons-paradoxical too. Better phones and faster networks have led to people watching short-form videos every waking moment, meaning we need more bandwidth. Advanced chips that turn everything into a tiny computer means that someone can hack your coffee maker and demand a ransom, meaning we need more chips.

The paradox occurs in the labor market as well, with humans in many jobs standing in for coal. In 2016, the Nobel laureate Geoffrey Hinton argued that we “should stop training radiologists” because software would soon render them obsolete. But improvements in medical imaging unlocked new use cases for CTs and MRIs; patients demanded, and doctors ordered, more tests, and radiologists were the doctors administering and interpreting them. Technology acted as a complement to human work rather than a substitute for it. Ditto with radiology and AI. At least for now, artificial intelligence is changing how doctors do their job, not eating their lunch.

Perhaps the most relevant example is software engineers. Earlier this month, the fintech company Block fired half of its employees. “We’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working,” Jack Dorsey, the company’s CEO, explained on X. “I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now.”

To translate that from corporate-speak: To Dorsey, people are horses. Innovation is driving them out of existence. But people are coal—or, to be more precise, coders seem to be coal at the moment. Businesses employ 6 percent more software engineers now than they did a year ago, in part because corporate executives are desperate for workers to figure out how to develop or implement AI products. (Dorsey might have had other reasons for axing those 4,000 Block employees, by the way. A former employee speculated in The New York Times that the cuts were the result of “standard prioritization and cost management, not an A.I.-driven reinvention.”)

[Kwame Anthony Appiah: The age of de-skilling]

Of course, people can be horses and coal and a thousand other things, because AI will have different effects on different workers in different industries in different places and in different times. The government, too, could affect the job market: It could raise taxes on corporate profits, or pass AI-constraining or labor-protecting regulations. Part of the reason Hinton’s prediction about radiologists never came true is that medical-imaging software needs to go through the notoriously challenging FDA review process, slowing down its deployment and raising costs. Given the friction out there, AI’s labor-market and productivity effects could be far more muted than many people (me) fear. And some sectors of the economy won’t be affected much, if at all. The most common job in the Bay Area isn’t AI-systems architect. It’s home health aide.

As AI changes everything or nothing or both, coal is finally headed the way of the horse, in England at least. Jevons correctly predicted that technological advances would increase demand for coal, yet he profoundly underestimated the ability of British mines and the global market to meet that demand. The country’s production volumes increased until the early 1950s. And while Jevons was writing his book, a Pennsylvanian called Colonel Drake (not actually a colonel) was figuring out how to drill deep into the Earth and pump out petroleum. Soon after, oil and gas supplanted coal, as coal had supplanted biomass, and as solar will someday—perhaps—supplant oil and gas. All of England’s industrial-scale coal mines have closed. Its last coal-fired power plant closed in 2024. Today, the country uses as much coal as it used in 1666, when the most common profession was peasant.

Will Small Businesses Get Their Money Back?

2026-03-17T07:31:00-04:00

Last month, Jonathan Silva, the chief executive officer of WS Game Company, paused a meeting to try to make sense of a Supreme Court decision the moment it was handed down. “I have no law experience whatsoever,” he told me. But “I know that at 10 a.m., you go to the Supreme Court’s website, and I know what link to go to, and I know when to refresh it, and I got this 144-page—I forget the exact term of what it is. I’m not a lawyer.”

The dense, allusive text foretold the future of his small business and tens of thousands like it. A year ago, Donald Trump unilaterally kicked off a global trade war, putting tariffs on imports from scores of countries and shifting the levies up and down repeatedly. The tariffs cost each American household $1,800 in 2025, slowing GDP growth by 0.5 percentage points and raising the unemployment rate by 0.3 percentage points. Companies had to scramble, reroute, and rejigger—in particular, small firms, which have less negotiating power and access to capital than their larger competitors, and often operate on thinner margins. Many firms faltered. A few failed.

Yet trade-law experts argued that Trump never had the authority to impose the tariffs in the first place. And as Silva found out that morning, the Supreme Court agreed. “The Framers gave ‘Congress alone’ the power to impose tariffs during peacetime,” Chief Justice John Roberts argued. “Accordingly, the President must ‘point to clear congressional authorization’ to justify his extraordinary assertion of that power.” And “he cannot.”

Silva sat there for a second after he read the decision, he told me, likening the feeling to the moment at the end of a roller coaster when the track straightens out and the cars slow down and the passengers glide back to the platform. “I exhaled for the first time in 11 months,” he said. “I got emotional.”

Yet it’s not clear that he can get off the ride just yet, or that any of us are getting out of this amusement park anytime soon. The White House has turned around and announced new 15 percent charges on imported goods, with a different legal justification—Section 122 of the Trade Act of 1974. And Trump has promised to keep the trade war going as long as he is in power.

Trump’s earlier tariffs put WS Game, a family-owned firm that produces premium board games, including collectible editions of Clue, Monopoly, and Scrabble, into “flat-out survival mode,” Silva told me. We first spoke shortly after Trump had placed a 145 percent import tax on the company’s products, which were manufactured in China. That spurred some of its brick-and-mortar retailers to renege on their purchase commitments. The tariff rate dropped to 30 percent, then Trump paused the levies. WS Game boosted production and imported extra containers of goods. “I over-ordered,” Silva said. “Now I’m holding inventory.” He added: “I don’t even know what I paid for some of the products, to be honest.”

The company faced a slowdown in sales and an increase in costs, paying $1.6 million in direct import charges. It had to cut its owners’ compensation and stop matching its employees’ retirement contributions. It reduced spending on marketing and human resources. It took out a line of credit, helping it to cover a retainer for legal representation and $250,000 for research into shifting its manufacturing to Vietnam, Mexico, Canada, Thailand, or another country.

Over the summer, Silva arranged to meet with a Brazilian manufacturer at a convention in Indianapolis. Two weeks before the meeting, Trump hiked tariffs on Brazilian imports in protest of the prosecution of former President Jair Bolsonaro. “It was pretty darn close to impossible to find any of that expertise and experience we have with our trusted partners in China,” Silva said. With no viable option but to keep the company’s manufacturing where it was, WS Game rearranged its business structure to shift the burden of the levies to its retailers.

WS Game did try to re-shore its production, as Trump wanted companies to do. But “we’re at the high end of expectations and quality,” Silva told me. “We’re not making just a regular cardboard box.” Not many American businesses make cardboard boxes, or heirloom-quality board games, or millions of other consumer goods that Americans want and need. In the end, WS Game found one U.S. factory to produce one game, out of the 130 in its product line: a forthcoming Monopoly set celebrating the United States’ 250th birthday. Still, it could not find an American woodworker to make the tiny houses and hotels, so it settled for plastic. And it couldn’t find a single domestic dice maker, so it imported them and included a disclaimer.

With tariff rates holding at a more reasonable level, at least for now, WS Game has cut retail prices, posted new job listings, and paid out those retirement-matching funds. Things are looking up, Silva told me, particularly given that a court has ordered the Trump administration to refund companies affected by the illegal trade policy. Customs and Border Protection reverts payments “every day,” Richard Eaton, a senior judge on the U.S. Court of International Trade, argued. “They liquidate entries and make refunds.”

Although not at this scale: The government has collected more than $130 billion in illicit tariffs over the past year. And not with this resistance: The Trump administration is seeking to delay the refund process, noting that CBP will have to go through millions of import records by hand. The president, for his part, is calling the Supreme Court “completely inept and embarrassing” and arguing that he does have the “absolute right” to impose trade levies. He’s looking into other legal vehicles for new charges, in addition to the 15 percent tariffs.

Knowing he might face more trade chaos ahead, Silva is planning on filing for a refund, and has rejected hedge funds’ offers to buy his claim for nickels or dimes on the dollar. (Financiers are betting that the Trump administration will eventually pay out, but that many small importers can’t afford to wait.) But the company will never get back the time and energy that it wasted. “There was too much time spent focused on this and not on doing what we do best, and that’s bringing family fun back to a Friday night,” he told me.

Even after the Supreme Court ruling, the country’s effective tariff rate remains high—essentially acting as a $600 annual tax increase on each household and cutting GDP growth by 0.2 percentage points. Small importers might eventually get a flush of funds, but American consumers won’t be so fortunate. Nobody expects them to get their money back.

The Disappearing American Mortgage

2026-03-03T07:52:59-05:00

If you’ve secured a loan and you are closing on a new home in the near future, congratulations. You’ve taken part in an essential middle-class rite of passage—and you’re one of the lucky few.

The mortgage, the cornerstone of wealth building for generations of Americans, is vanishing. Data from the Mortgage Bankers Association show that Americans are applying for fewer mortgages than they have at any point in the past quarter century, including during the worst of the Great Recession, when the jobless rate was more than twice as high. Since the end of 1999, 96 of the 100 lowest readings of the MBA’s weekly index of new mortgage-loan applications have occurred in the past three years.

The American real-estate market is frozen. Mortgage rates have just fallen below 6 percent for the first time since 2022. Still, few families are putting their homes up for sale, few families are buying, and little new stock is being created. High prices and high interest costs are holding working-class households out of the market, and wealthy individuals are making up a larger share of transactions. Young people are facing a future as perpetual renters. With less time to accrue home equity, many will end up poorer in retirement than their parents were.

This overlooked trend has a few obvious causes. After the Great Recession, the Dodd-Frank Act tightened lending and underwriting standards. Mortgage lenders increased the amount of credit extended to wealthy households and reduced the amount of credit extended to middle-income households. (They did not change the amount of credit offered to low-income Americans, who are unlikely to buy a home anyway.) Banks focused more on providing suites of services to the well off, such as home loans, credit cards, and brokerage accounts, and less on making bread-and-butter loans to working families. The changes made the financial system safer, but also made buying a home harder for many people.

At the same time, the country’s home builders sharply cut back on construction, producing a quarter as many properties in the early 2010s as they had before the Great Recession. Despite a recent uptick, they’re still producing roughly 40 percent fewer today, causing the country’s housing shortage to spread from the major coastal cities to smaller cities, suburbs, and rural areas. With supply constrained, prices shot up in the 2010s. The situation created winners. “Folks that bought, particularly pre-pandemic, have benefited from one of the biggest increases in home values that we’ve seen in history,” Michael Fratantoni, the chief economist at the Mortgage Bankers Association, told me. It also created losers. Many younger families couldn’t save for a down payment, given rising prices, the burden of student-loan payments, and the increasing cost of child care and health insurance.

[Read: It will never be a good time to buy a house]

When the coronavirus pandemic hit, the Federal Reserve dropped interest rates to zero. More than 6.9 million properties traded hands in 2021, pushing real-estate values up again. Even more borrowers—14 million of them—refinanced their existing loans to secure lower rates in 2020 and 2021. Then rising inflation forced the Fed to jack up borrowing costs. The average rate on a 30-year mortgage climbed from less than 3 percent to as high as 7.5 percent. Homeowners with cheap rates got “locked in,” leading the number of active listings to fall. The deep freeze commenced.

In 2024, families needed an income of $126,700 to qualify for a median-price home, up from $79,600 in 2021, Chris Herbert, the managing director of Harvard’s Joint Center for Housing Studies, told me. “That priced 8 million renters out of the market,” he said, noting that most renters make $50,000 to $60,000 a year.

Wealthy individuals and institutions became a stronger force. The portion of all-cash purchases rose 33 percent from 2020 to 2023. Cash buyers scooped up more than half of homes in New York City in the first six months of 2025. In West Palm Beach, Cleveland, and Miami, they made up more than a third of purchases. “Mortgage deserts” formed in disinvested neighborhoods, as well as in vacation towns and expensive cities, as real-estate-investment trusts and landlords scooped up “buy low, rent high” properties. In Baltimore, half of homes were purchased without a mortgage in 2022 and 2023, a report by Sharon Cornelissen, the director of housing at the Consumer Federation of America, found. In rural Hudspeth County, Texas, 98 percent were.

The country still has twice as many homeowners as it has renters, and the homeownership rate is down only four percentage points from its George W. Bush-era high. Nevertheless, the share of Americans owning a home has not climbed in five years, despite the low unemployment rate, increase in wages, and boom in asset values—an unprecedented trend. Many younger families just can’t get on the property ladder. In the 1980s, the typical first-time homebuyer was in their late 20s; now they are nearly 40, according to some surveys. In the country’s 50 largest metro regions, only 3.1 percent of people under the age of 30 have a mortgage.

The disappearance of the middle-class mortgage does not represent merely a short-term challenge for individual families. It portends major changes in the long-term financial security of the American middle class. The younger you are when you buy a property, the more time you have to develop equity and the more you benefit from rising real-estate prices. Imagine two people purchasing the same condo with the same loan terms, one at 28 and one at 48. If they both sell at 65, the latter’s settlement check will be only a third as big as the former’s, assuming that home values increase 3 percent a year. Plus, mortgage costs are generally fixed for 30 years, whereas rent goes up annually, sometimes far faster than wages. “Housing wealth provides a lot of stability,” Herbert told me.

Nobody likes paying their mortgage. But many Americans are going to wish they had the chance to.

The Worst-Case Future for White-Collar Workers

2026-02-18T08:00:00-05:00

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White-collar workers are getting nervous, with good reason. Sure, 98 percent of college graduates who want a job still have one, and wages are ticking up. Sure, some companies that cite the labor-saving, efficiency-promoting effects of ChatGPT and Claude as they let employees go are just “AI washing”—talking about algorithms to distract from poor managerial decisions.

But the labor market for office workers is beginning to shift. Americans with a bachelor’s degree account for a quarter of the unemployed, a record. High-school graduates are finding jobs quicker than college graduates, an unprecedented trend. Occupations susceptible to AI automation have seen sharp spikes in joblessness. Businesses really are shrinking payroll and cutting costs as they deploy AI. In recent weeks, Baker McKenzie, a white-shoe law firm, axed 700 employees, Salesforce sacked hundreds of workers, and the auditing firm KPMG negotiated lower fees with its own auditor. Two CNBC reporters with no engineering experience “vibe-coded” a clone of Monday.com’s workflow-management platform in less than an hour. When they released their story, Monday.com’s stock tanked.

Maybe algorithm-driven changes will happen slowly, giving workers plenty of time to adjust. Maybe white-collar types have 12 to 18 months left. Maybe the AI-related job carnage will be contained to a sliver of the economy. Maybe we should be more worried about a stock-market bubble than an AI-driven labor revolution.

I don’t think anyone knows what will happen, or even what is happening now. AI technology is changing at an exponential pace, and changing the workforce in a thousand hard-to-parse ways. But if AI quickly eliminates white-collar work, the country is going to end up in something much stranger than a downturn, and something much harder to recover from too.

The United States is adept enough at handling the labor-market damage caused by recessions. Congress slashes taxes, writes stimulus checks, and fattens unemployment-insurance payouts. Washington amps up infrastructure spending and patches holes in the budgets of state and local governments. The Federal Reserve drops interest rates down to zero and purchases hundreds of billions of dollars of safe assets, making borrowing cheaper for families and encouraging businesses to invest. Demand increases, pushing the unemployment rate down and GDP up.

But if white-collar layoffs cause a downturn, Washington might not be able to restore hiring and lift consumer spending as it has done before. Businesses wouldn’t need the skills workers possess. Firms wouldn’t want to hire the legions of accountants, engineers, lawyers, middle managers, human-resources executives, financial analysts, PR types, and customer-service agents they just laid off. (Writers would be fine, I choose to believe.) The United States would have a “structural” unemployment problem, as economists put it, not a “cyclical” demand problem.

The country has struggled with structural joblessness in the past, but the problem has tended to afflict blue-collar workers, not white-collar ones. The labor market is normally womblike in the security it delivers the college-educated. The downsizing trend of the 1990s did not actually result in the pool of office jobs shrinking. Even during the Great Recession, the unemployment rate for workers with a bachelor’s degree never went higher than 5.3 percent. For workers with only an associate’s degree or some college credits, it hit 9 percent; for workers with only a high-school diploma, 11.9 percent.

In this new economic paradigm, the educated and well-to-do would fare worse than their less-educated and lower-income neighbors. The main bulwark against joblessness—the unemployment-insurance system—wouldn’t meet the challenge. Payments last for only so long: six months at most currently, 18 months during the coronavirus pandemic. If AI eliminated the need for office work, many people would be unemployed for years; their earnings would potentially fall, their mental health would deteriorate, and their chance of finding a new position would diminish with every month that passed. Plus, the unemployment system isn’t designed to support six-figure earners. Most state payments max out at $500 or $600 a week, a quarter of what many upper-middle-class employees earn. Young workers would face their own challenges: The pool of entry-level white-collar jobs would shrink, as it already is, pushing recent graduates’ income down for years, even decades.

If rich households cut back on spending, many businesses that have nothing to do with AI—grocery stores, gas stations, retail shops, hairdressers, restaurants—would suffer and the labor market would keep deteriorating. The housing market would begin to falter; home prices in many regions would fall and fewer properties would go to market. Tax revenue might fall. Bond yields might go up as the country’s deficits increased, making it harder for the Fed to stimulate investment. Rank-and-file workers’ incomes would drop at the same time that executives using AI to cut costs would see their wealth increase. Inequality would rise to even higher heights. The 0.01 percent would pull away from the 0.1 percent, which would pull away from the 1 percent.

White-collar workers would go through what blue-collar workers went through beginning in the 1970s. Advances in machine technology improved productivity and depressed employment in Detroit; Pittsburgh; Gary, Indiana; and Worcester, Massachusetts. Rust Belt communities fell apart and never recovered. Then China joined the World Trade Organization, and globalization spurred another round of job losses, causing even more permanent damage. Affected workers ended up poorer, less happy, and less healthy. They died sooner. Their kids were worse off too.

To get the economy going again during the AI transition, the country would need to figure out how to get white-collar workers back to work. And I really mean figure out—essentially from scratch. Existing workforce-training initiatives have yielded “muted” and “inconclusive” results. Existing displaced-worker initiatives have “dubious” value. These kinds of programs offer net-negative value to participants, taxpayers, and “society as a whole,” studies have found. Community-college programs have the strongest track record, but the overwhelming majority of office workers have a two-year or four-year degree already. The country doesn’t have answers that don’t involve upskilling, education, or trying and failing to compensate the losers.

Silicon Valley leaders are enamored of one policy Hail Mary: the establishment of a universal basic income, in which the government would provide all adults with $1,500 a month or so, no strings attached and in perpetuity. It’s not as crazy an idea as it sounds; think of it as Social Security for everyone, or an extension of the earned-income tax credit to families without any earned income. The cash would ensure that every family kept its head above water, and redistribute the wealth generated by rising productivity. “People will be freed up to spend more time with people they care about, care for people, appreciate art and nature, or work toward social good,” Sam Altman of OpenAI has argued.

But UBI is a dystopian outcome, not a utopian one. For families to thrive in this new post-work paradigm, the government would need to redistribute a lot more than $1,500 per person per month, necessitating confiscatory taxes on corporations—taxes they would fight tooth and nail. The bigger problem would be that Americans would hate a world without work, where the jobless rate floats at 30 percent instead of 4 percent. Many Americans like working. They like having somewhere to go during the day. They like trading watercooler stories with their colleagues. They like getting promoted and starting their own firms. They are proud of earning a living. Long-term unemployment destroys people’s mental and physical health, and generates toxic societal unrest. Politicians love saying that Americans want a hand up, not a handout—and they aren’t wrong.

Perhaps Americans would adjust, and American culture would adjust in turn. Maybe people would become more interested in and fulfilled by leisure, art, and other activities. But it’s hard to imagine social capital being divorced from actual capital. It’s even harder to imagine the country becoming more egalitarian and its politics more participatory, instead of developing a hyper-wealthy techno-oligarchy and a dispossessed and teed-off underclass. Some people would spend their time gardening, volunteering, painting, exercising, or learning. Others would spend hours a day watching short-form videos and never leave their apartments.

I don’t really think society will come to this. Throughout history, people have used technology to become more productive and prosperous without reducing the demand for human labor overall. Then again, maybe I’m just in denial.

America’s Annoyance Economy Is Growing

2026-02-09T10:05:40-05:00

On a Wednesday evening in mid-June, Ralph Coolman, a small-business owner and accomplished athlete, set out to run a 5K in Ventura, California. He quit after a mile, and spent the next few days afflicted by nausea, indigestion, and exhaustion. His wife, Erika, a nurse and an athlete herself, figured he had the flu. But on Saturday morning, Ralph began breathing rapidly. She rushed him to an urgent-care center, where a doctor put him on oxygen and sent him to the emergency room. Four or five hours after he arrived, Ralph was dead of a heart attack at the age of 62. Shortly after, Community Memorial Hospital told Erika his care would cost roughly $270,000.

“We always had insurance—always,” Erika told me. But when Ralph got sick, she was in the process of changing jobs. Erika initially did not opt to cover Ralph on the COBRA plan she was using as a stopgap, because he was going to purchase individual coverage. She later changed her mind and sent a check in to cover his premium. The insurer “ended up adding two months on for me” instead of adding her husband, she told me. “I didn’t find out until it was too late.” Ralph was uninsured when he died, thanks to the complexity of the American insurance system. That left his family on the hook for an enormous bill they couldn’t begin to understand, again thanks to the complexity of the American health-care system.

While grieving, Erika had to put together her husband’s memorial service, try to keep his business afloat, and handle the mundane bureaucracy of death: legal certificates, beneficiaries, account issues, estate management. “Ralph thought he was invincible,” Erika told me. “He didn’t make any preparations.” Matt Rosenberg, Erika’s brother-in-law, added, “It’s really hard to see paperwork through tears.”

After Erika tried and failed to appeal the COBRA issue, she was inclined to pay the hospital what she could “and be done with it,” Rosenberg told me. “I was like, no, no, no. That’s what they count on—people making big decisions in confusing moments. Send me everything. I will deal with it. We’re not going to be those people. I’m not scared of a fight.”

The Coolman family had experienced a sudden trauma and ended up enmeshed in what Chad Maisel of Groundwork Collaborative, a progressive think tank, and Neale Mahoney, an economist at Stanford, call “the annoyance economy” in a new study: “the steady grind of small hassles that eat away at our time, patience, and wallets,” turning simple interactions into “fraught ordeals, leaving people feeling overwhelmed, ignored, or jerked around.”

To be sure, consumers have never had an easier time spending their money. You can choose from among millions of films on your iPhone in an instant, buy a plane ticket to Bali in minutes, get a restaurant meal delivered in an hour, and have a full house’s worth of furniture placed in your home in a few days. Yet businesses have also embedded countless frictions into the consumer experience. You might expect such hassles in health care, but they’re everywhere. We live in a world of “total bureaucracy,” as the anthropologist David Graeber put it. Our grandparents bought goods and services outright, but we purchase subscriptions and rentals and insurance coverage and contracts, handling rebates and intermediaries and applications and enrollment periods. As of 2018, the country had 826,537,000 consumer-arbitration agreements in force, one study found. And that’s an undercount.

“Companies have worked really hard to make it easy for you” to spend, Lindsay Owens, the executive director of Groundwork, told me. “Of course, when it comes to trying to get out of a purchase or out of a subscription, the same design choices are flipped and reversed.” She likened digital consumer platforms to Las Vegas casinos. Designers create colorful playgrounds with flashing lights and free drinks and chandeliers and mirrors and water features, where gamblers never know what time it is and never see a path to the exit.

The American government doesn’t help the situation. Washington wraps essential programs in red tape, forcing millions of people who have lost a job, lost their insurance coverage, developed a disability, given birth to a child, gotten divorced, or slid into poverty to pay a tithe in paperwork before accessing aid. The government shuns universal, direct services and opts for subsidies, grants, credits, and loan guarantees. It works through nonprofits and contractors and subgovernments, so people rarely know what is on offer and who is actually providing it. Washington underinvests in agile digital systems. (Why on earth does part of the Social Security website have business hours?) It declines to provide the automatic services many other wealthy countries do, such as free tax preparation. It shifts the work of public administration onto the public, creating “time taxes,” as I call them, everywhere.

Moreover, the government allows or even encourages private businesses to entrap customers in bureaucratic mazes. As Graeber argued, Washington “provides the legal framework” and “the elaborate mechanisms of enforcement.” The American government lets insurers deny necessary medical procedures, just as it lets hospitals make up prices and hide them from patients. It lets employers foist extortionate contract terms on workers. It lets airlines and gyms and multilevel marketing companies and landlords and time-share businesses and auto companies and banks and telecoms swindle their customers with fine print.

Maisel and Mahoney decided to try to count the hours lost to this “total bureaucracy” and tally up the annual cost to the public: $8 billion for robocalls, $25 billion for phone scams, $22 billion for phone calls (just phone calls!) with insurance administrators, $90 billion for junk fees, $19 billion for medical waiting times, $2 billion for governmental wait times. The annoyance economy saps American families of $165 billion a year, they estimated. And that’s an undercount.

Rosenberg, who works in marketing consulting, was determined to get his sister-in-law’s bill down. He was willing to spend his time negotiating. He asked the hospital for an itemized bill. The hospital offered the Coolmans a discount, knocking the total down to a little less than $200,000. Rosenberg asked for the itemized bill again. The hospital sent him a document with proprietary procedure codes, “meaning I couldn’t look them up anywhere. They only existed inside the hospital’s computer.”

The family kept trying to speak with a human being in the billing office. “The person we were supposed to be talking to kept ignoring us,” Erika said. “At one point, she admitted that she wasn’t taking care of us, and blamed it on the fact that they had gotten new computers five months before.” Eventually, Community Memorial provided Rosenberg with a “complicated form filled with boxes for codes and procedures and costs and patient information and hospital information and all kinds of things that no human being can understand.”

Rosenberg fed the document into Claude, an AI system, and asked it to figure out what Medicare would have paid for his brother-in-law’s care, while also flagging any confusing or questionable codes. After some back-and-forth with the chatbot, Rosenberg realized that the hospital might have over- and double-billed the family. Medicare likely would have reimbursed the hospital $28,675 for the services Ralph actually received. Claude helped Rosenberg write a stern letter, calling Community Memorial’s pricing practices “unconscionable” and noting that it had marked up certain tests by 2,300 percent. In the end, Erika Coolman and Community Memorial agreed on a total of $32,000. (The hospital declined to comment.)

The AI system equalized the asymmetries between institution and individual, Rosenberg told me. “Claude could search the Medicare rules and regulations in a way that I could have, I guess, but it would have been time-consuming, tedious, and I probably would have given up.” Others have used Claude and ChatGPT to help them negotiate with their internet providers, write letters to airlines, understand employment contracts, and slash through the fine print on retail deals.

Yet powerful institutions are adopting AI too, pushing those asymmetries right back up again and creating new ways for companies to screw over the public. Consumers are shuffled to chatbots instead of human agents. AI algorithms track customers and present them with different prices and contract terms. “Algorithms could make life easier,” Owens said. “But it is dizzying to think about the additional shifts coming.”

The only solution is for the government to do its job. It should require companies to act transparently. And it should protect consumers from extractive administrative practices. Granted, voters rarely make it to the polls or switch their political affiliation to support click-to-cancel rules and arcane insurance regulations. But restrictions on robocalls and hidden fees are among the most popular policy proposals out there, on a bipartisan basis; two-thirds of Americans think that Congress should address these time-wasting, income-sapping frustrations.

This winter, Erika started getting a new round of bills from providers involved in Ralph’s care. “That wasn’t good,” she said. Now the family is just refusing to pay.

The Program That’s Turning Schools Around

2026-01-28T07:31:00-05:00

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On a chilly day before Christmas, Teresa Rivas helped a tween boy pick out a new winter coat. “Get the bigger one, the one with the waterproof layer, mijo,” she said, before helping him pull it onto his string-bean frame. Rivas provides guidance counseling at Owen Goodnight Middle School in San Marcos, Texas. She talks with students about their goals and helps if they’re struggling in class. She’s also a trained navigator placed there by a nonprofit called Communities in Schools.

The idea behind CIS and other “community school” programs is that students can’t succeed academically if they’re struggling at home. “Between kindergarten and 12th grade, kids spend only 20 percent of their time” in a classroom, Rob Watson, the executive director of the EdRedesign Lab at the Harvard Graduate School of Education, told me. If America wants kids to thrive, he said, it has to consider the 80 percent. Educators and school administrators in San Marcos, a low-income community south of Austin, agreed. “Tests and academics are very important,” Joe Mitchell, the principal of Goodnight Middle School, told me. “But they are secondary sometimes, given what these kids’ lives are like away from here.”

Along with mediating conflicts and doing test prep, Rivas helps kids’ families sign up for public benefits. She arranges for the nonprofit to cover rent payments. She sets up medical appointments, and keeps refrigerators and gas tanks full.

A new study demonstrates that such efforts have long-term effects. Benjamin Goldman, an assistant professor of economics at Cornell, and Jamie Gracie, a postdoctoral fellow at Harvard, evaluated data on more than 16 million Texas students over two decades, examining data from the Census Bureau and IRS, as well as state records on academic outcomes. They found that the introduction of CIS led to higher test scores, lower truancy rates, and fewer suspensions in Texas schools. The program bumped up high-school graduation rates by 5.2 percent and matriculation rates at two-year colleges by 9.1 percent. At age 27, students who had attended a CIS school earned $1,140 more a year than students who had not.

[Jonathan Chait: Why the left stopped talking about achievement gaps]

The program’s impact is “quite big,” Gracie told me: Spending $1,000 on CIS increased student earnings at age 27 by $400, whereas spending $1,000 on smaller class sizes increased student earnings by $40. The researchers estimated that every $3,000 in CIS investment would increase income-tax revenue by $7,000.

Although contemporary education policy has focused intently on standardized tests, student and teacher tracking, and other accountability measures, the CIS study suggests that the United States could bolster achievement by providing more social support too. “You could have the world’s greatest teacher,” Goldman told me. “It’s only going to matter so much if you’re not actually showing up to school.” Watson said he hoped the study would lead policy makers to finance community-school programs in every low-income neighborhood. “If you care about morals and social justice, there’s something here for you,” he said. “If you care about good fiscal and economic policy, there’s something here for you.”

But the country is veering in the other direction. The White House has slashed hundreds of millions of dollars from a free-school-meal initiative, ended a $1 billion grant covering mental-health counseling, and revoked $170 million from the federal community-schools program, which helps cover the salaries of hundreds of workers like Rivas. Other whole-child initiatives might lose financing if they are found to fall under the Trump administration’s DEI rubric. At the same time, the White House is reducing financial support for low-income families, cutting more than $1 trillion from SNAP and Medicaid.

The United States wants schools to act as a “great equalizer,” yet socioeconomic differences among students remain the central drivers of student outcomes. Community schools can’t prevent homelessness, pay for health insurance, or stop parents from getting deported; they cannot construct a strong safety net. Still, they can help to close the gap.

A decade ago, the San Marcos school district’s dropout rate was higher than the state average, and its standardized-test scores lower. In 2016, Michael Cardona was named superintendent and tasked with a turnaround mission.

“We have great—amazing—kids,” Cardona told me. But more than 100 students were homeless in the 8,000-student district. “That’s a lot for a town with one high school,” he said. Seven students had died by suicide in recent years. Students had been involved in 282 recorded incidents of domestic violence over an 18-month period. “Typically, it was mom trying to discipline the kid or grandma trying to discipline the kid, taking away the cellphone, then the kid beats up the family member and gets put in jail,” Cardona said.

A visit to a fifth-grade gifted-and-talented classroom put the crisis into even sharper relief for him. Cardona asked the students a softball question: What could he do for them as superintendent? One asked if he could help keep their father out of prison. Another wondered if he could stop their mother from partying every weekend. Afterward, he sat in his truck and cried. “These are the students identified as the best of the best,” he said. “We’ve got a mental-health issue in this district unlike anything we’ve ever seen.”

Cardona decided to focus not only on test scores and remediation measures but also on social support. The district expanded its health-care and counseling initiatives, putting a focus on early intervention. And it reached out to CIS, which offered to place a navigator, such as Rivas, in every school.

CIS is a half century old and works with 2 million children in 26 states. (It’s not a pilot, in other words; it’s three times the size of Head Start.) The nonprofit has a few unusual qualities. For one, it doesn’t apply rigid criteria or means tests in determining who gets help, and doesn’t provide a set menu of benefits to students and families. The model is adaptable. In some districts, navigators focus on violence prevention or absenteeism. In San Marcos, they focus on behavioral health. Inside schools, CIS staff members created lamp-lit, womblike rooms, stocked with fidget toys and snacks, where kids can calm down and talk about their feelings. Some middle-school girls told me that Rivas helped them with “drama and stuff”—meaning “girls fighting over boys.” One boy who was having trouble sleeping and had a 69 average in math told me that Rivas was helping get his eyes shut and his grades up. “You only need one more point!” she said, beaming.

[Idrees Kahloon: America is sliding toward illiteracy]

CIS workers help families navigate existing public programs. “The traditional economist view would have been, Just give people cash. They’ll figure out what to do with it,” Goldman told me. But decades of studies have found that families in crisis don’t know that help is out there, possess limited capacity to research complex social-safety-net initiatives, and are averse to signing up for benefits, given the stigma. Community schools take paperwork away from stressed-out families and put it on trained employees.

CIS workers also come with a pool of funds to distribute. A freshman named Valencia Ayub told me about a time when her mother had lost a job at Dollar Tree, and her father had lost his job as an electrician. She considered going “straight to work” to help her younger sisters, rather than applying to college. CIS sent two checks, one for $500 and one for $800, to cover the family’s rent. School systems don’t have to make these payments themselves; in general, CIS is inexpensive for school districts to offer because it uses a mix of public, private, and philanthropic funding.

These kinds of wraparound supports keep kids in class, reduce the number of behavioral incidents, and make sure students are capable of learning when they sit down at their desks; as Goldman and Gracie’s study showed, they also have long-term effects. For those reasons, “there’s been a significant expansion in terms of systematic initiatives and interventions,” Anna Maier of the Learning Policy Institute told me; school districts, states, and individual institutions have built out their social-work capacity. Still, the country underinvests in kids and schools, creating achievement gaps that classroom teachers struggle to close and preventing children from reaching their full potential. The Trump administration’s withdrawing community-school financing as it slashes the safety net stands to make the problem worse.

In San Marcos, at least, the school district is seeing improvements. Kids feel safer, and the number of violent incidents has fallen. “At the end of the day,” Cardona told me, “that’s what I look at.”

The Three-Step Guide to Fixing Affordability

2025-12-22T09:37:05-05:00

Earlier this month, Donald Trump took a break from his busy schedule of watching TV and overseeing the renovation of his taxpayer-financed mansion to rally his constituents. “They always have a hoax—the new word is affordability,” the president told a packed crowd in the Poconos. “You can give up pencils, because under the China policy, you know, every child can get 37 pencils. They only need one or two.” In a televised address a week later, he tried out an alternative argument: Inflation was the fault of Democrats and immigrants. Prices are “falling rapidly” now, he said. “Nobody can believe what’s going on.”

True enough, nobody can believe that prices are falling rapidly. Big-ticket necessities, including health care, housing, and child care, became wildly unaffordable over the past few decades. Then COVID led to a gigantic surge in general inflation. Then borrowing costs went up sharply, making credit-card bills and auto loans more expensive. Then utilities started going bananas, in part thanks to the AI data centers popping up all over the place. Then the trade war pushed up the cost of clothing, food, and other goods. Then Congress let an important health-insurance-subsidy program expire, meaning 22 million Americans will see their premiums spike next month.

Affordability is voters’ No. 1 issue by far. It propelled Trump back into office last year, as it propelled Zohran Mamdani, Mikie Sherrill, and Abigail Spanberger into office this year. Trump might be callous, but his comments—it’s not real, so buy less; it is real, but it’s getting better—point to the profound dilemma all politicians face when trying to address the cost-of-living crisis.

[Derek Thompson: The affordability curse]

For one, affordability is a squidgy, subjective concept, based on what people believe they should be able to buy and the prices they believe they should have to pay. By the most straightforward, objective measures, Trump has a pretty good argument that the affordability crisis does not exist. Real disposable income is near its highest point in history, and Americans are buying more stuff than ever. Yet voters want prices to come down to where they were a few years ago, a shift that would likely never occur outside the context of a devastating recession. (Deflation would in and of itself cause the economy to shrink: Why buy something today if it will cost less tomorrow?)

Moreover, elected officials have a smaller toolbox to address prices than they have to address, say, rising unemployment or lackluster wages. “I used to go out to the cameras on the White House North Lawn and talk about the inflation report and the jobs report,” Jared Bernstein, Joe Biden’s chief economic adviser, told me. “I’d say, You had a great jobs report, but we know that prices are still too high, and we’re trying to help. And in the back of my mind, when we’re talking about groceries, I was always like, Well, yeah, there’s not much we can do.”

Many policies that would bring down prices in a durable fashion (such as a huge home-building push) would do nothing in the next few years. Many of the policies that would bring down prices in the short term (such as rent freezes) would generate shortages and lift costs over time. “We call it the affordability conundrum,” Neale Mahoney, an economist at Stanford, told me, referring to work he did with the policy adviser Bharat Ramamurti. “People want affordability now, and the tools we have don’t work on an immediate or short-term basis.” Even worse, many of the policies that sound good to voters (such as stimulus checks) would spike inflation, and many of the policies that would do a lot of good (getting rid of the tax exclusion for employer-sponsored health coverage, for instance) would be challenging to pass and challenging to implement.

What’s a policy maker to do? Three things, I learned by speaking with campaign operatives, pollsters, economists, think-tank types, and a lot of teed-off voters from across the political spectrum. Stop making things worse. Provide immediate relief. Then do the hard work of getting the most important prices down.

Today’s affordability crisis isn’t really one crisis. It’s several crises stacked on top of one another. And recent policy actions have made a few of them worse.

The cost of consumer goods soared during the coronavirus pandemic, and the White House’s tariff regime effectively slapped a $140 billion, regressive sales tax onto those same goods. The economy was growing decently and inflation was above the Federal Reserve’s target when the Trump administration passed a deficit-financed, inflationary super bill this summer. Americans were already paying twice as much for health care as citizens of other wealthy nations when Congress failed to restore the health-care subsidies.

Politicians could temper at least some of the country’s affordability crisis by doing less. Getting rid of the trade measures would put roughly $1,800 a year back into consumers’ pockets while increasing job creation and lifting the pace of GDP growth. Leaving the subsidies as is would prevent 22 million Americans from paying an average of $1,000 more a year for coverage. “It’s going to be really bad,” Drew Altman, the president of the Kaiser Family Foundation, told me of the looming price hike. “We’re not having an honest discussion about it.” Washington should also refrain from adding to the deficit, which amps up inflation and interest rates.

Yet undoing the bad choices and refraining from making new ones won’t be enough, for people or their bank accounts. Voters want radical policies that deliver instant relief. They want prices to go down. In polls, they say they want bans on price gouging, freezes on rental costs and utility bills, tax cuts, stimulus checks, and price controls.

The standard economic argument is that the voters shouldn’t get what they want, because a lot of those proposals would raise inflation or worsen the country’s affordability crisis in the long term. Take Mamdani’s promise to freeze the rent on roughly 1 million New York City apartments. The residents of eligible units would benefit. But people paying market rates or looking to buy a home would not, and the policy could fuel gentrification and dampen construction, pushing up real-estate costs in the long term. But what if the rent freeze were only temporary and lasted just long enough to give the city time to build more housing units? Maybe that’s not a bad trade.

Capping prescription-drug costs—perhaps the single most popular policy idea out there, embraced by voters of both parties—seems to be a reasonable quick fix for the health-care-cost crisis. But it wouldn’t do much, Altman said. Prescriptions account for less than 10 percent of overall health expenditures. Nevertheless, caps might still be worth implementing, helping the sickest Americans and delivering immediate relief to consumers.

Rate freezes on utility bills, similarly, aren’t much more than a Band-Aid. The average monthly energy bill has gone up 35 percent since 2022, and 12 percent in the past year alone. “There’s this disconnect between the private companies that are profiting off of energy markets and people’s struggles to keep the lights on,” Mike Pierce, the executive director of the advocacy group Protect Borrowers, told me. Climate change, the AI buildout, and the aging of the country’s utility systems threaten to hike costs in the future too. The country needs green-power plants, grid improvements, and public control over utility systems. But for now, the answer might be “stopping these companies” from raising rates, Julie Margetta Morgan, the president of the Century Foundation, told me.

The United States isn’t going to become affordable again unless Washington and the statehouses tackle three broken markets: housing, health care, and child care.

The country is short an estimated 5 million housing units, thanks to excessive zoning regulations, excessive community input, rising financing costs, and rising input costs. Washington doesn’t have a ready way to fill the gulf. State and local governments have control over nearly all of the relevant land-use rules, with the federal government working almost exclusively through mortgage and rental subsidies. The good news is that states are getting their act together: Governor Gavin Newsom signed more than 60 housing bills in California last year; Montana passed a massive package of land-use reforms in 2023. And Congress is finally starting to figure out policies to push towns and cities to build.

Will houses really be cheaper in the future? Austin, Texas, shows that they could be: Asking rents dropped 16 percent from the end of 2023 to the end of 2024, thanks to “an influx of new supply,” as Redfin explained.

As for health costs, well, “there has never been a meaningful, national effort” to hold them down, Altman said. (The Affordable Care Act expanded coverage but didn’t do much on prices.) As a result, health care pushes half a million Americans into bankruptcy a year, and excess spending acts as a miserable tax on every family’s budget.

The problem is structural. “Most people get health benefits through their employer—they’re exempt from payroll taxes, they’re exempt from income taxes, and employers can deduct them as a cost of doing business,” Meredith Rosenthal of the Harvard T.H. Chan School of Public Health explained. The situation “drives unaffordability,” she told me. Employers have a reduced incentive and little leverage to demand low-cost plans. Employees can’t effectively shop around. She and Altman also pointed to hospital consolidation and a lack of price controls as core issues.

[Read: Trump’s affordability weave]

Neither Democrats nor Republicans have shown much interest in wringing money out of the system. Legislation to do so would be challenging to put together, unpopular among the hospital systems that are many regions’ largest employers, and potentially disruptive to Americans’ coverage. Yet it would boost wages, reduce inequality, and improve family finances in a way that nothing other than reducing housing costs would.

Trump, for his part, seems to want to somehow get rid of insurance at a conceptual level. “I want to give billions of dollars directly to the people,” he said. “I want to give all of that money we give to the big, fat, rich insurance companies, and I want to give them nothing.” But without insurance, only the very richest Americans would be able to afford cancer treatment or a C-section. Hospitals would shut down. The broken market would fall apart.

Last, there’s child care, a ruinous, if temporary, expense. Parents pay the equivalent of a second mortgage. Day-care centers offer poverty wages to workers. Far too few families get affordable, high-quality care, pushing millions of women out of the labor market. Connecticut and New Mexico are setting up publicly financed universal-child-care systems, and the federal government should consider doing the same on a national level. “These things would be expensive,” Lena Bilik of the Roosevelt Institute told me. “But think of all the foregone wages and the lost economic security when people have to step back from work for any kind of unpaid caregiving.”

The affordability crisis is the problem, one that has been with us for decades and will be with us for decades unless politicians get their act together. It is sapping wages and imperiling families’ financial security. It’s driving political instability and voter frustration. It’s stopping people from having kids, starting businesses, going to college, living where they want, and retiring when they need to.

Prices “are all coming down and coming down fast,” Trump promised. That isn’t true. But hopefully someday it will be.

How Private Equity Is Changing Housing

2025-12-08T07:57:51-05:00

We have a housing crisis, as you probably, painfully, know. Wouldn’t you like to have someone to blame for it?

The United States is short 4 million housing units, with a particular dearth of starter homes, moderately priced apartments in low-rises, and family-friendly dwellings. Interest rates are high, which has stifled construction and pushed up the cost of mortgages. As a result, more Americans are renting, and roughly half of those households are spending more than a third of their income on shelter.

This crisis has many causes: restrictive zoning codes, arcane permitting processes, excessive community input, declining construction productivity, expensive labor, and expensive lumber. And, some say, the aggressive entry of private equity into the housing market. Institutional investors have bought up hundreds of thousands of American homes since the start of the coronavirus pandemic, outbidding families and pushing up rents—a trend lamented by everyone from Alexandria Ocasio-Cortez to J. D. Vance.

Casting private equity as a central villain in the country’s real-estate tragedy makes intuitive sense. Who’s going to win in a bidding war for a three-bedroom in a suburb of Cincinnati: a single-income family with a scrabbled-together 10 percent down payment or a Wall Street LLC offering cash? Still, housing economists and policy analysts have argued that institutional investors have played at most a bit part. Supply constraints began cropping up on the coasts a generation ago, if not earlier, whereas Wall Street started buying up significant numbers of homes only after the Great Recession and especially after the pandemic. Moreover, even if big investors are purchasing thousands of homes, they don’t own significant numbers of homes compared with small-scale landlords and individuals.

[Rogé Karma: The secretive industry devouring the U.S. economy]

Yet in some markets, the balance has shifted. Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties.

I figured that big investors might be picking up vacation rentals in Colorado and expensive apartment buildings in the Bay Area and the Acela Corridor. They are, the report’s authors told me. But these investors are pouring the most money into “buy low, rent high” neighborhoods: communities, many of them in the South and the Rust Belt, where large shares of families can’t afford a mortgage.

“They’re pulling all the starter homes off of the market in low-income, high-minority-density neighborhoods,” George McCarthy, the president of the Lincoln Institute, told me—a trend that is intensifying the country’s yawning racial wealth and homeownership gaps. In Cleveland, corporations own 17.5 percent of residential real-estate parcels. In the city’s East Side, which contains many predominantly Black neighborhoods, just one in five homebuyers in 2021 took out a mortgage. The rest—many investors, presumably—paid in cash or took out a loan from a non-traditional financier.

[Jerusalem Demsas: Meet the latest housing-crisis scapegoat]

In Baltimore’s majority-Black McElderry Park and Ellwood Park/Monument neighborhoods, owner-occupants made just 13 percent of purchases in 2022. In a majority-white neighborhood not far away, owner-occupants bought more than 80 percent of homes that same year, and out-of-state corporations owned less than 1 percent of residential parcels.

The report made me see the country’s real-estate crisis in a different light. Private-equity firms and other deep-pocketed investors aren’t why Seattle and Boston are unaffordable. Those cities have had shortage-driven housing crises that have intensified over decades. The firms aren’t why many towns in the Mountain West have seen jumps in home values and a corresponding increase in homelessness, displacement, and eviction. In those communities, white-collar emigrants from big cities have arrived and outbid locals. But investor money is distorting the housing market in communities with low wages and decent-enough housing supply, pushing thousands of Black and Latino families off the property ladder. Tens of thousands of workers who would like to invest in a home are instead stuck paying rent, and putting up with the associated uncertainty.

While not all corporate landlords are bad landlords, some are bad landlords. Corporations are more likely to threaten to evict and to actually evict their tenants. They are also prone to skimping on maintenance and upkeep. “At the neighborhood level, when more than half of the properties are owned by outside investors—when you’ve now flipped that neighborhood from being primarily homeowner driven to investor driven—that matters, because homeowners behave very differently, politically and otherwise,” McCarthy said. An out-of-state investment firm might be less likely than a longtime resident or a local property manager to plant shade trees and demand safe sidewalks, for instance.

In response to the rising corporate ownership of homes, a variety of politicians have pushed for policy fixes. In New York, Governor Kathy Hochul has proposed legislation barring firms from bidding on single-family or two-family homes for the first 75 days they are on the market. Washington State is contemplating capping the number of units that corporations can own. Other legislators have suggested revoking tax benefits from large-scale owners.

McCarthy said that caps probably would not work well: Corporations might simply set up multiple entities to get around the rules and keep purchasing properties, for instance. “It’s just not going to fly,” he said. But he supports treating firms that own more than 10 properties in a given jurisdiction as commercial owners rather than residential owners, subjecting them to higher property-tax rates and higher taxes on their capital gains.

If nothing is done, what’s happening to majority-Black communities in Ohio and Virginia and Georgia and Michigan might start happening in communities around the country. Private equity might not be causing the housing crisis, but corporate owners could end up making it a lot worse for everyone.

Donald Trump’s War on Christmas

2025-11-27T07:00:00-05:00

President Donald Trump might not be ruining Christmas, but he’s making it more expensive. American families are expected to spend $1 trillion on gifts and other goods this November and December, roughly 4 percent more than they spent last year. But they’re paying more for everything—artificial trees, ornaments, toys, novelty sweaters. They have fewer options to choose from when they log on to Etsy and browse upscale boutiques. Some retailers have stopped shipping to the United States, and some have gone out of business—all thanks to Trump’s globe-engulfing and pointless trade war.

Holiday shoppers might not notice that things are a little less merry and bright than they would have been otherwise. The average family is expected to spend $132 more this year because of tariffs—not nothing, but not enough to break the bank, either. But wage growth has been cooling. The unemployment rate has been rising. Consumer confidence has been falling sharply. Rent, co-pays, mortgages, car payments, and utilities remain brutal for average families to afford—and health insurance is about to get radically more expensive. In recent weeks, customers have started shopping at cheaper outlets, buying fewer items, and putting off major expenses.

Shoppers are looking for deals, but it has not been easy for stores to provide them. When Trump kicked off the trade war early this year, the White House argued that foreign exporters would pay the fees slapped on goods from nearly every American trading partner. Instead, the government has collected $118 billion and counting from domestic importers.

Big companies have managed to dodge and shuffle in response: pressing their suppliers for discounts, stocking up and storing products to get ahead of the tariffs, rerouting their supply lines, buying merchandise from lightly tariffed countries. Retailers including Walmart have managed to keep their sales figures up and hold costs down, for the most part. Yet many companies have run out of warehoused items, leaving them no choice but to raise sticker prices or cut into their profits.

Small companies have had fewer options. Many small-scale businesses lack the time, bandwidth, or travel budget to find new overseas suppliers—especially when big importers are doing so too. Boutiques don’t have the bargaining power to press manufacturers and shipping companies for discounts. Single-person firms cannot take out loans to buy up stock and move it to the United States before a trade levy hits. Many small firms cannot change their product lines, either.

As a result, the trade war has helped large companies squeeze out their smaller competitors. Many small firms have closed down, fired workers, watched their sales fall apart, or worse. In a new survey, 71 percent of small-business owners said they expect the trade war to depress their revenue this holiday season. Only 5 percent said they were hiring and expanding their business.

The holiday season “is our Super Bowl,” Nichole MacDonald told me. “This is when we’re supposed to make all of our money.” MacDonald runs the Sash Bag, a company that manufactures and sells specialty handbags. Like many retailers, the Sash Bag generates an outsize share of its annual sales and profits leading up to Christmas. But this year, she said, she is “literally terrified.” Batches of her bags are stuck in two warehouses in India because she cannot produce the $430,000 needed to cover the import tariffs on the goods. “That product is done,” she said. “It’s sewn. It’s perfectly saleable—beautiful leather, beautiful Sash bags, sitting in India for months because I don’t have the budget to bring it here.”

In addition, she has let go some of her employees, raised prices by 10 to 15 percent, canceled special orders, and considered finding new suppliers. But “people don’t understand” how hard that is to do, MacDonald told me, when you have “your own proprietary product, not something a manufacturer has already invented or already created.”

Struggling firms aren’t the economy’s only problem. The government shutdown has depressed the Washington, D.C., metro economy. Concerns about artificial intelligence and the growth outlook have led businesses of all sizes to quit hiring, and some have started firing workers too. Households have noticed those changes and are limiting their spending. Yet companies don’t have much room to win back customers by cutting prices, in many cases—because of the tariffs, which are at their highest effective rate in close to a century. The country is in a stagflationary, queasy state as the year comes to a close, and it’s not doing much for anyone’s holiday spirit.

“Are they literally trying to make it impossible to run a business?” MacDonald asked me. Because “that’s how it feels.”

What Tariffs Did

2025-11-13T08:00:00-05:00

The trade war might be coming to a strange end.

Last week, the Supreme Court heard two cases questioning the legal underpinnings of Donald Trump’s tariff regime. A group of state governments and businesses—selling toys, wine, plumbing supplies, bicycle saddles, and other goods—argued that the United States’ trade deficits do not constitute an emergency and that the International Emergency Economic Powers Act does not give the White House the unilateral authority to impose tariffs anyway.

The president argued that it “would literally destroy the United States of America” if the Court rules against him. Alas, I guess, the justices—three Trump appointees among them—seem likely to do so, as three lower courts have so far this year, and as a formidable group of conservative legal experts insists they must.

The financial fallout would be messy. Such a ruling would cut in half the country’s effective tariff rate—which, at nearly 18 percent, is the highest it has been since 1934—meaning that the revenue the Treasury collects from businesses would fall by half. The White House might have to figure out how to return tens of billions of dollars to companies that have paid import fees this year, plus interest. Despite the probable chaos, however, a ruling against the tariffs would be good for Americans’ pocketbooks, and good for ensuring that the current slowdown does not transform into a recession.

The American economy is growing at a decent-enough pace at the moment, and the jobless rate is rising but low. The real problem is the cost of living, as households have told pollsters and politicians over and over and over again. Trump’s tariffs are certainly not the cause of sky-high rents, obscene utility bills, child-care shortages, and ridiculous out-of-pocket health costs. But they have pumped up the price of consumer goods. The average family will pay $1,800 more for groceries, clothing, and other necessities thanks to the Trump administration’s trade policies in 2025. For many lower-income households, the tariffs will end up swamping the tax cuts Republicans passed this summer.

Moreover, the tariffs have forced the Federal Reserve to keep borrowing costs relatively high to tamp down on inflation—perhaps 0.5 percentage points higher than they would be otherwise. That means fewer homes being built, driving up real-estate costs. It means more credit-card delinquencies. It means fewer Americans being able to afford a house, a car, a medical bill. It means fewer companies pouring money into novel products and technologies.

The Trump administration’s inane and perhaps illegal policies have hit certain sectors particularly hard: the fashion industry, agribusinesses, small-scale firms selling household goods. But few businesses have gone unscathed. “You’ve got uncertainty,” Diane Swonk, the chief economist at the accounting firm KPMG US, told me. “Measures of uncertainty are extremely elevated.” Given that uncertainty, many companies outside of the health-care industry have declined to add workers, and investors have poured little money into anything other than AI.

On Sunday, Trump announced in a social-media post that the government would send Americans a tariff rebate: “$2000 a person (not including high income people!).” It’s not clear whether he can. If his administration does send the rebates, the checks might help some families get by. But they would also make the Federal Reserve’s effort to hold down inflation even harder. “We have a low-hire-with-layoffs-coming environment, and that may be blunted a bit by this fiscal stimulus,” Swonk told me. “But we also know from the pandemic: When you add a lot of fiscal stimulus when prices are already going up, you get stickier inflation. It’s a very difficult situation.”

The better policy would have been no policy at all. Imagine what the economy would look like right now if Trump had never started the trade war. The Yale Budget Lab estimates that the tariffs have depressed real GDP growth by 0.5 percentage points this year, lifted the unemployment rate by 0.3 percentage points, and cost the economy close to half a million jobs. Moody’s Analytics estimates the hit to real GDP growth to be 0.8 percentage points. In other words, the Trump administration has likely cut the country’s expansion by a third or more and its annual employment gains in half—for nothing.

The Supreme Court can’t undo the damage by affirming the lower courts’ rulings, nor can the Trump administration undo the damage by sending out checks. The Court can’t even end the trade war entirely. The tariffs on steel and aluminum will still stand, for instance, because Trump did not invoke the same economic-emergency authority when making them.

Nevertheless, the Court could do what Congress, the White House, and the Fed haven’t been able to this year: help nudge the economy out of its stagflationary funk. Inflation should temper. Real household disposable incomes should rise. Uncertainty should ease. The Fed should have more room to lower rates. Companies should import more goods and spend more money on long-range investments. American households hate the cost-of-living crisis—and the Court might finally give them some relief.

Can Mamdani Pull Off a Child-Care Miracle?

2025-11-05T17:24:34-05:00

Zohran Mamdani will be New York City’s next mayor. The Queens assembly member has rocketed from local political obscurity to national political celebrity in less than a year, making bumper-stickery campaign promises aimed at alleviating the city’s cost-of-living crisis. Fast, free buses. A freeze on rents. Municipal grocery stores. Universal child care.

That last proposal has gotten little attention—perhaps because a relatively small sliver of New Yorkers would directly benefit, perhaps because the proposal hinges on a tax increase Albany would have to approve, perhaps because early-childhood initiatives are so pervasively underemphasized in American life.

When Mayor Bill de Blasio created a universal prekindergarten program and a near-universal 3-K program in New York a decade ago, it was rightly described as a miracle. But in many ways, that undertaking was far simpler than what Mamdani is promising. He aims to provide high-quality, year-round care to toddlers and infants as young as six weeks old, while setting day-care workers’ earnings “at parity” with those of public-school teachers. It’s a cosmically aspirational set of goals, and it faces a steep set of obstacles. But if he can pull it off, the scheme would transform New York’s demography and economy, constituting one of the most radical examples of policy entrepreneurship in recent memory.

I say this as a parent: Day care is great. Good programs enhance children’s cognitive development and school readiness, increasing educational attainment and improving health outcomes decades later. There’s “a mountain of scientific evidence that the early years are the most important,” Philip Fisher, the director of the Stanford Center on Early Childhood, told me.

But unlike other wealthy countries, the United States forces parents to go it alone for the first three years of their children’s lives, and more often the first five. Though targeted investments in kids have among the highest returns of all public expenditures, Washington devotes just 0.4 percent of its budget to young children. Some cities offer municipal child-care programs, and some low-income families get vouchers. Still, parents shoulder most of the burden of the cost of child care.

As a result, the United States has a severe child-care shortage, and the situation is especially dire in New York. The city has one licensed spot available for every four children under the age of 3. Close to half of neighborhoods have less than 20 percent of the necessary capacity for kids under the age of 2.

Enrolling in a program is like taking on a second mortgage. In the five boroughs, day care costs, on average, $18,200 a year in a home-based setting, or $26,000 in a center. The federal government holds that child-care costs should eat up no more than 7 percent of a family’s income. By that standard, a household in New York has to earn $300,000 or $400,000 a year to have one kid. Wealthy families have the option of hiring au pairs or nannies. Middle-income families commute long distances to drop their kids off before work. Low-income families set up informal arrangements with family members or shift their hours to watch their kids.

In a recent survey of working mothers in New York, 34 percent said that they had declined a promotion or chosen a part-time schedule because of child-care pressures. Nearly as many said they had lost a job. And the cost of child care forces many families out of the city: Households with young kids are twice as likely to leave New York for cheaper pastures as those without.

The lack of affordable child care is a societal and economic catastrophe, not just one afflicting individual households. Parents’ caregiving challenges cause the city to forgo $23 billion in economic activity and $2.2 billion in tax revenue a year. Providing a public option would lift mothers’ earnings by close to $1 billion annually, the city has estimated. Broadly, the paucity of public spending on early-childhood programs is a central driver of the country’s gender wage gap and the low rate of labor-force participation among women.

Even as parents fork over 10, 20, 40 percent of their paychecks to child-care providers, nursery schools and day-care centers cannot afford to pay their workers much. The city’s early-childhood workers earn half what workers in other industries do. A quarter live below the poverty line, many earning less than they would at big-box stores and fast-food chains.

[Michael Powell: The mainstreaming of Zohran Mamdani]

The market is broken and it can’t fix itself. Yet policy makers have historically considered universal-child-care systems too high in cost and too low in political benefit to bother enacting. Day care has a narrow constituency: Perhaps one in 15 American households includes an infant or toddler. Although voters might give their warm approval to early-childhood initiatives, not many of them turn out for day care on Election Day or switch their support to candidates that would fully finance Head Start. (That some voters believe children would be better off if their mother stayed at home figures in too.)

The political winds are shifting. The country’s affordability crisis has hit apocalypse levels, discouraging couples from having kids and stoking profound disillusionment among young voters. In his campaign, Mamdani spoke directly to that disillusionment; exit polls showed he won a supermajority of ballots cast by New Yorkers under the age of 45. The coronavirus pandemic decimated the child-care system, forcing thousands of day cares to close and requiring millions of parents to watch their kids and do their day jobs simultaneously. The pandemic also spurred many Democrats to recognize child care as social infrastructure, not a niche, nice-to-have benefit.

New Mexico has become the first state to guarantee free child care for all residents, and is in the process of scaling up its system. Connecticut is making it free for families making less than $100,000 a year, and affordable for everyone else. Could New York City be next?

The budget poses the first and central challenge to Mamdani’s plans. His campaign has estimated that universal child care would require roughly $6 billion a year. He wants to increase taxes on millionaires and corporations to cover the cost, bumping the city’s annual budget up by 11 percent. Albany would have to approve the tax increase.

Governor Kathy Hochul has made child care a priority, sharply increasing the state’s spending on grants, paid leave, and tax credits. The issue is personal for her. Decades ago, she quit her job as an attorney for Senator Daniel Patrick Moynihan to stay home because the cost of care was so high. “I’ve had conversations with Assembly Member Mamdani about how we can get to universal child care,” she said in a joint appearance with him in Queens last month. “I believe we can.”

[Read: New Mexico’s free-child-care gamble]

But Hochul has repeatedly said that she opposes the tax hike, citing concerns about the 50-plus percent marginal rates already applied to the city’s wealthiest individuals, and about pushing businesses and families to lower-tax jurisdictions. Hochul is up for reelection next year. Would it be more advantageous for her to approve the tax increase and show solidarity with the city that’s home to nearly half of state residents, or to appeal to corporations and moderates by holding tax rates steady? The answer is not clear.

Even if the tax hike passes, the revenue might not be enough to create a truly universal system. The nonprofit Prenatal to Five Fiscal Strategies has estimated that a comprehensive program would cost $6.6 billion a year at prevailing wages, and $9.5 billion if child-care workers made a living wage, as of 2023. (The numbers would be higher now, thanks to wage growth, rent increases, and so on.) Bringing workers’ earnings to “parity” with public-school teachers might require even more money. I asked the Mamdani campaign for details on what it meant by “parity.” Would compensation be based on education levels and tenure? Would it include benefits as well as salaries? I did not hear back.

Nevertheless, if Mamdani got his $6 billion, it would pay for a tremendous expansion of the city’s child-care infrastructure. With the money secured, the real challenge would begin.

Elegant-sounding policy designs for child-care systems exist, experts told me. They just wouldn’t work very well in practice. The city could enroll toddlers and babies in public schools. “I don’t think anybody thinks that’s a great idea,” Emmy Liss, an early-childhood consultant and a former de Blasio staffer, told me. Elementary-school classrooms would have to be retrofitted to accommodate six-month-olds and 2-year-olds. The city would risk putting hundreds of providers out of business as parents switched over to the public option.

Alternatively, New York could give all families vouchers, allowing them to choose their own providers. But if the country’s public schools are any guide, rich families would use the vouchers to offset their costs while poor families would struggle to find quality care and cover their bills. The system would rely on “providers being incentivized in the private market to just go open new sites” in the places where they’re needed, Liss told me, and the city would have little recourse if they did not.

A messy system, combining different models, would actually be a better system.

The obvious first step would be to age the city’s 3-K program down: enrolling 2-year-olds and 1-year-olds in public day-care centers, as well as for-profit, nonprofit, and home-based programs, and paying those programs directly. It works for 3-year-olds. It would work for younger kids, too, experts told me. Still, Mamdani will have to repair the city’s relationships with providers as he expands enrollment. For years, the Department of Education has antagonized care centers by revoking their leases and failing to make payments on time. Some programs have had to take out loans to cover payroll, and some have closed. “I cleaned our accounts” out, Ingrid Matias Chungata, the executive director of Nuestros Niños, in Williamsburg, said at a city-council meeting in February. “Fifty-two years of savings, of having a cushion—it’s all gone.”

Then the Mamdani administration would have to figure out how to turn hundreds of small-scale day cares—many run by women of color in their apartment or house—into municipal contractors. At the moment, the city is not equipped to strike deals with so many vendors, analysts told me. Nor are day-care owner-operators equipped to sign contracts with the city. Mamdani might be able to use New York’s family-child-care networks as intermediaries instead.

Mamdani wants to support informal arrangements too, such as grandparents watching their grandchildren. His administration will need to figure out how to apply health-and-safety regulations and compensate these caregivers. New York City will also likely need to provide vouchers to families with uncommon needs, experts told me, such as parents who work the graveyard shift. (That way, the Mamdani administration would not need to include overnight care and other specialty options in its contracts with day care centers.)

Finally, the city would need to take on all that administrative complexity, and give parents a clear set of choices and an easy path to enrollment.

Of course, setting up a universal-child-care system is not the same thing as delivering universal child care.

New York City has 32,917 early-childhood workers. It probably needs 32,917 more to achieve total coverage. Mamdani’s proposal to raise wages will spur many individuals to apply for child-care jobs and set up home-based day cares. Still, City Hall might need to offer loan forgiveness and cash bonuses to entice enough workers—all without worsening long-standing staffing shortages in other parts of the school system.

City Hall will also have to make sure that child-care providers offer the kind of slots needed, where they are needed—a problem that has bedeviled the 3-K program. Mamdani might have to build and operate public centers in underserved neighborhoods or pay day-care chains to open facilities in child-care micro-deserts. Similarly, he might need to provide bonuses to centers enrolling infants and kids with health issues and disabilities.

Giving parents the opportunity to stay home with their babies, if they wish, might be the best way to cover the youngest kids. “Other countries solve the infant-care issue by providing a year of paid family medical leave or paid parental leave,” Julie Kashen of the Century Foundation told me. Thus far, Mamdani hasn’t included six months or a year of leave in his child-care proposal.

[Read: The problem with ‘affordable’ child care]

I could write thousands more words on the hurdles the new administration will face and the questions it will need to answer to get to universal child care. Mamdani will have to expand the city’s community-outreach, contracting, site-inspection, and workforce-development infrastructure. He will need to decide how to scale up the system, balancing the political need for immediate results with the technocratic need for a slow rollout. And if tax revenue declines or real-estate prices climb or the White House goes after the city’s budget …

These concerns might sound like an argument that Mamdani shouldn’t create a universal-child-care system, or that he won’t be able to. But they could also be seen as an argument for letting politicians promise the perfect so that their administrations can figure out how to deliver the good. More than 1 million voters propelled Mamdani into office this week, and his victory speech focused on the cost of living and the mayor’s mandate to bring it down.

New York City has double the budget of the state of Massachusetts. It educates as many children in its public-school system as the Pentagon commands adults in the active-duty military. It has a history of delivering inferior programs and failing to solve pressing issues, but it also has a history of getting big, tough things done, including the wildly popular pre-K and 3-K initiatives.

New York could show other governments that creating a universal-child-care system might be expensive and difficult, but it isn’t impossible. If Mamdani falls short, expanding the number of free day-care spots while raising educators’ wages instead—well, it won’t be what he promised. But it still sounds like a miracle to me.

Trump’s Partisan Redistribution of Wealth

2025-10-23T09:08:57-04:00

The federal shutdown is dragging into its fourth week with no end in sight. TSA workers are not getting paid for screening airport passengers’ bags for contraband. National parks are asking tourists for donations. Prospective homebuyers are struggling to secure flood insurance. Start-ups are idling, figuring out if they can go public.

As much of America stalls and sputters, President Donald Trump is forging ahead on a plan to remake the government’s budget without Congress’s assent. His administration has used the shutdown as a pretext to withhold billions of dollars from scores of projects: a subway line in Manhattan, a utility microgrid in Oahu. The White House has diverted anti-terrorism money to red states and canceled clean-energy projects in blue states. Trump’s goal is not only to make the government smaller again but also to alter the country’s economic geography, pushing Democratic regions to falter and Republican ones to flourish.

None of this is subtle. “We’re cutting Democrat programs that we didn’t want, because, I mean, they made one mistake,” Trump said, referring to Democratic legislators who declined to vote for the GOP’s spending proposals. “They didn’t realize that that gives me the right to cut.”

Democrats may have made plenty of mistakes, but they did not give the president the right to axe congressionally approved programs when they declined to vote for the GOP’s appropriations proposals. The legislature retains the power to decide how much money to collect from taxpayers and how to spend it.

[Read: Trump is trying—and failing—to shield MAGA from the shutdown]

And what’s true during the shutdown is true when the government is open too: Congress is supposed to have control of the purse. Nevertheless, the shutdown rescissions are merely Trump’s latest effort to use the federal budget to punish Democratic places and voters. In recent months, the administration has sued, investigated, or defunded bastions of the left—universities, scientific-research institutions, think tanks, museums, media outlets, law offices, civic nonprofits, green-energy companies, the civil service. It has gone after “woke” functions of the government, such as agencies aiding Black families and supporting clean-energy production. And it has pulled dollars from Democratic areas and pushed them to Republican ones: moving Space Command headquarters from Colorado to Alabama, closing five of the 10 regional offices of the Department of Health and Human Services—specifically, the ones based in Boston, Chicago, New York, San Francisco, and Seattle.

Now Trump has used the lapse in appropriations to declare a kind of budgetary free-for-all. Russell Vought, the White House budget chief, has directed the Army Corps of Engineers to pause “over $11 billion in lower-priority projects” in New York, San Francisco, Boston, and Baltimore—those cities, again! The White House has frozen money for the renovation and expansion of the railway tunnels connecting New York and New Jersey, arguing that “unconstitutional DEI principles” were used in the financing process. Work on the tunnels is already under way; a cofferdam the size of an oil tanker is anchored in the Hudson.

Again, the White House is not supposed to have a magic line-item eraser that allows it to alter congressional spending plans. That was true when DOGE’s unvetted stooges fired thousands of civil servants and kneecapped entire agencies during Trump’s first weeks in office. It was true when the White House delayed or canceled financing for elementary schools, libraries, weather-forecasting programs, and NIH research projects earlier this year. It’s true today.

Although, in some cases, the courts have allowed the White House to slash programmatic financing and reduce head counts, judges are still likely to force Trump to release some of the money he’s refusing to spend during the shutdown. If they do not, Trump’s vindictive budgeting might slow down projects and inconvenience millions of Americans, including New York’s commuters. But the rescissions will total perhaps $30 billion— a rounding error in terms of the nation’s GDP and a sliver of the $1 trillion the government spends on nondefense discretionary programs each year.

In a broader sense, and despite his vindictive intentions, Trump’s economic project actually threatens red districts more than blue ones. His signature second-term domestic-policy package, the One Big Beautiful Bill Act, slashes the Medicaid budget by close to $1 trillion, which means that hundreds of small-town hospitals in Appalachia and clinics in the Deep South might not be able to keep their doors open. Two of the three states expected to see the largest increases in their uninsured populations are Kentucky and Louisiana.

[Read: The Project 2025 shutdown is here]

Right now, Republicans are extending the shutdown to deny insurance subsidies to families that purchase health coverage on the Affordable Care Act exchanges. If the GOP succeeds, an estimated 20 million households will see their premiums rise next year. South Carolina, Georgia, Florida, Mississippi, Texas, and Utah would be hardest hit, the Kaiser Family Foundation has estimated.

Trump’s trade war has functioned as a sales tax on every single American household. The average family will pay $1,800 more a year for groceries, clothing, and other common goods thanks to the tariffs. But manufacturers and farmers have so far borne the brunt of the pain. Input prices have soared: The costs of fertilizer, machinery, lumber, aluminum, steel, and auto parts have risen. Export demand has plunged as the United States’ trading partners have put retaliatory tariffs in place. The agricultural sector is in the midst of a quiet recession; the manufacturing sector is shedding jobs. Bright-red states such as Iowa, South Dakota, and Indiana are getting the worst of it.

Trump might want to use his executive power to damage the country’s blue islands and coastal elites, but the places he’s harming the most are the very ones that powered his rise. No one should feel any schadenfreude, however, because pain in red states will spill over into blue states, and pain in blue states will spill over into red ones. A farm failing in Iowa has a way of increasing the cost of breakfast in Los Angeles. A hospital closing in Louisiana means fewer job opportunities for health aides training in Seattle. A cut to heavy-infrastructure spending in New Jersey might depress sales for a machinery business in Ohio. An HHS office shutting down in San Francisco might mean falling IT spending in Virginia. The country’s economy is more interconnected than Trump realizes, and its polity more indivisible than he might think too: There are more Republicans in California than there are in the Deep South. More Texans and Floridians voted for Kamala Harris than did residents of New England.

In the United States’ economy, there’s no way to separate “us” from “them.” When Trump signs bills that help the rich and hurt the poor, he ends up hurting everyone. When he punishes blue places, he damages red ones too. We’re in this together, whether Trump sees it that way or not.

How Are We Still Fighting About Obamacare?

2025-10-10T13:06:00-04:00

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Has any law in recent memory proved as controversial for as long as the Affordable Care Act?

The legislative package will be old enough to drive next year, yet it’s somehow the main reason the federal government remains shut down today. In exchange for their votes, Senate Democrats are demanding that the GOP roll back its Medicaid cuts and preserve insurance subsidies used by 20 million Americans. Without those subsidies, a person earning $28,000 a year will go from paying $325 a year for health coverage to paying $1,562, and 2 million people will become uninsured next year.

Donald Trump has seemed open to a deal, as have many congressional Republicans. “I am happy to work with the Democrats on their Failed Healthcare Policies, or anything else, but first they must allow our Government to re-open,” the president posted on Truth Social. But the Club for Growth and other conservative groups are pushing Congress to let the subsidies expire. And a hard-line legislative faction is refusing to finance what it describes as a costly, malfunctioning experiment. “Did democrats really shut down the federal government so they could tell us all how big of a failure Obamacare has been?” Representative Eli Crane of Arizona asked. “Wild strategy.”

On one thing, both sides agree: Health care is grotesquely unaffordable in this country. The average family with employer-sponsored insurance pays an astonishing $25,572 a year for coverage. Private insurers plan to bump up prices by 6.5 percent in 2026, the largest single-year increase since the passage of the ACA and more than double the overall rate of inflation. On top of that, the typical person spends $1,425 a year out of pocket on prescriptions and co-pays, and 25 million Americans lack any insurance at all. The system is a hyper-expensive shambles, one that tips 550,000 people into bankruptcy every year.

[Read: Americans are about to feel the government shutdown]

Yet another thing is true, even if few Americans know it or would agree with it: The ACA worked. It delivered affordable coverage to millions of families and helped bend the cost curve, as economists put it, stopping the share of GDP spent on medical services from rising. “It doesn’t get any press,” Jonathan Gruber, a professor at MIT and one of the country’s foremost health economists, told me. “It’s just phenomenal.”

It is phenomenal, its salutary effects not so much undersung as unbelievable. That’s in part because the country’s broader affordability crisis, evident in everything from the cost of bananas to the cost of rent, has obscured the law’s success. But it’s also because many of the law’s benefits are invisible, best measured in terms of dollars never spent. When health costs are so ridiculously high, it’s hard to grasp that they could be even higher.

Americans spend twice as much on insurance, doctor visits, hospitals, and drugs as residents of other wealthy countries, and for worse health outcomes. Half struggle to afford the care they need, and four in 10 adults have medical debt. Still, the ACA lowered the uninsurance rate from 16 to 8 percent, granting Medicaid to 20 million people and defraying costs for an additional 22 million as of this year. It also pushed expenses down overall. National health spending went from growing 6.9 percent a year before the law passed to 4.3 percent a year after. The share of the economy devoted to medical care stopped rising. The rate of inflation in the health-care sector slowed, even as Americans received more care. The Congressional Budget Office’s projections of future Medicare spending declined “dramatically.”

The ACA wasn’t the only reason for the cost curve bending. The rise of “narrow” insurance networks, which steer patients to low-cost providers; the shift from hospital-based to outpatient care; the rise of telemedicine; and the dearth of blockbuster drugs released in the aughts and 2010s mattered too. Still, a series of technical reforms and coverage provisions in the law helped squeeze spending out of the system.

Families benefited directly and indirectly. They got coverage and care, and had more money to spend on other things, in part because they started making more money. Indeed, a raft of studies shows that when employers spend more on benefits, they spend less on salaries. “If compensation is growing but more of it is going to health care, less of it is available to wages,” Katherine Baicker, an economist and the provost of the University of Chicago, told me.

There isn’t any literature showing that the reverse is true, Gruber told me, saying he could not think of a single “compelling empirical study” demonstrating that lower health-care costs drove up wages. But that doesn’t mean it doesn’t happen. It seemed to happen in the 1990s, when wages surged and health spending slowed. It seems to be happening now, quietly flushing billions of dollars into workers’ pockets.

[Read: The Project 2025 shutdown is here]

But nobody thinks a much-maligned law that passed 15 years ago is the reason they got a raise today. And nobody thinks of health care as affordable, because it isn’t. Even Americans with good insurance spend thousands of dollars a year on care, including on hefty co-pays and deductibles. Indeed, the form of medical spending that’s most obvious and painful to families—the price you pay at the pharmacy and the bill that comes in the mail from the hospital—has grown and grown, even after adjusting for inflation. Ironically, perhaps, that’s another reason for the slowdown in the growth of medical expenditures. When care is expensive, people avoid it.

If Congress does not extend the subsidies, a lot more Americans will have to forgo care. Even if it does, hundreds of thousands of Americans will still go bankrupt when they get sick. Washington could—and should—do much more to cut costs and squeeze inefficiencies out of the system. Enroll more people in Medicaid and Medicare. Allow the government to negotiate drug prices and set the cost of hospital procedures. Tackle the underinsurance crisis. Promote telemedicine and outpatient care. Limit premium increases. And more.

But the unpopularity of the ACA, and the filibuster-proof majority required to pass it, has tempered Democrats’ interest in passing another giant health-care bill. If Washington can’t keep the government open and protect the improvements that the Affordable Care Act already made, further reforms seem too much to hope for.

The Everything Recession

2025-10-06T07:31:00-04:00

Last week, the federal government shut down, with both Republican and Democratic plans to finance ongoing appropriations failing to garner enough votes to pass the Senate.

Donald Trump did not seem overly worried about the situation, calling it an “unprecedented opportunity” to throttle funds going to blue states and fire federal employees. The stock market surged higher and the bond market did not react. But up to 750,000 workers will be furloughed, losing out on $400 million in wages a day. Every week that the government remains closed will cut the annualized GDP growth rate by 0.1 percent this quarter, Mark Zandi of Moody’s Analytics estimates. The White House forecasts that a month-long shutdown would lead to 43,000 Americans losing their job. The economy is already weakening in some important respects. Might this be enough to tip it into a recession?

No, one might say, of course not: GDP is rising at a strong 3.8 percent a year. Yes, certainly, another might argue: Businesses have been on a months-long hiring freeze and the jobless rate is starting to tick up. No: The country is in the midst of a massive technology and infrastructure boom. Yes: Confidence is sinking, wage growth is slowing, and default rates are rising. No: The Federal Reserve is cutting interest rates, flushing cheaper money to credit-starved borrowers. Yes: The trade war and the White House’s immigration policies are causing sharp “Trump slumps” in Las Vegas and other communities. No: Consumer spending has remained remarkably resilient, despite high prices.

I could go on like that for paragraph after paragraph; a reader could be forgiven for being confused, because what’s happening is confusing.

[Read: The Project 2025 shutdown is here]

Sometimes, the economy has a single story to tell. Toward the end of George W. Bush’s presidency, the housing market collapsed, causing a financial crisis that led to a catastrophic global downturn. Near the end of Trump’s first term, the coronavirus froze the economy in place, causing a brief but extreme recession and a long shakeout in the supply chain.

Today, the economy has several stories to tell. Mike Wilson, the chief investment officer of Morgan Stanley, argues that we have been in a “rolling recession” for three years—an apt term, capturing the queasy, bewildering state of the financial world. Downturns have afflicted sector after sector, region after region, and many of these mini-busts resolved into mini-recoveries. The technology sector is flourishing as the housing market and manufacturing industry flail. Overall the economy has performed fine. Still, if a few more stories turn darker, the country might be in trouble.

The shutdown won’t cause a nationwide recession, provided it is over soon. But it could certainly worsen some smaller ones already gathering force. Trump’s dismissal of 300,000 federal workers and cancellation of hundreds of billions of dollars of government contracts tipped the Washington region into a slump this year. The jobless rate has been flat in most large metro areas, but the D.C. area’s unemployment rate has jumped 0.6 percent; measures of financial distress, such as food-bank usage, have surged.

If the Senate agrees on a spending bill and reopens the government quickly, the shutdown and furloughs won’t have much effect, Zandi told me. But “if the shutdown lasts three or four weeks, it becomes a deal for the economy, as government workers who aren’t getting paid pull back on their spending and government contractors lose business,” he said. If it lasts for more than a month, the shutdown could have a significant impact—directly on families, and indirectly as investors question “the ability of the U.S. government to do basic things like keep the lights on.”

At the same time, the trade war has led to a minor downturn in the manufacturing sector, which has contracted for the past seven months and shed workers for the past two and a half years. The agricultural industry is also shrinking, thanks to the rising cost of labor and equipment and the falling price of commodity crops, though the Trump administration is angling for a bailout. Finally, the housing market is in a—well, I’m not even sure what to call it. The number of “starts,” or new projects that construction firms have broken ground on, is perilously low. Existing-home sales are dropping. Real-estate prices are falling. Lower interest rates and prices might help some borrowers, but won’t make much of a dent in the country’s severe housing shortage.

The country’s GDP and stock market are performing well, though, thanks to a colossal flush of investment in artificial intelligence and related technologies. Companies are pouring hundreds of billions of dollars a year into data centers; investors are forking over money to start-ups and major tech firms, which are spending the cash on operating costs, model improvements, acquisitions, and hires. ChatGPT and its ilk are driving half of American GDP growth at the moment. And the tech boom (or bubble, perhaps) is buoying the country’s equity valuations and its electricity and utility sectors.

[Rogé Karma: How bad would an AI bubble be?]

At the household level, the unemployment rate remains low and income strong enough. But most companies are simply not hiring, meaning that jobless workers are spending much longer looking for a position. And though the jobless rate is not high, it is rising, climbing from a post-pandemic low of 3.4 percent to 4.3 percent. The country’s cost-of-living crisis shows no sign of relenting either. The APR on a credit card sits at 21.1 percent, up from 14.5 percent three years ago; mortgage rates are above 6 percent. And tariffs are jacking up the cost of consumer goods: The effective tariff rate is 17.9 percent, the highest since 1934, according to the Yale Budget Lab. The price increases are costing families $2,400 a year.

Given these dynamics—plus the uncertainty afflicting businesses, plus the tenor of the political debate in Washington, plus soaring insurance premiums and pending health-care cuts—the public’s assessment of how things are going is plummeting. Consumers are “much less positive” than they were a few months ago, argues Stephanie Guichard of the Conference Board. A lot of people think the economy is already in a recession.

Depending on where they are and what sector they work in, they might not be wrong. It may take some time for us to know for sure. While the government remains shut down, the Bureau of Labor Statistics and other agencies won’t publish data on hiring, inflation, unemployment, and other key metrics. Jerome Powell, the chair of the Federal Reserve, describes the overall situation as “challenging,” “turbulent,” and “curious”—not exactly the words you want to hear from the head of the country’s monetary authority.

Washington has already put itself in a recession. Maybe the rest of the country is next.

The Last Americans Really Paying Taxes

2025-09-17T16:23:00-04:00

Donald Trump is altering the tax code for the benefit of millionaires and billionaires. That is the simplest conclusion to draw from the passage of the One Big Beautiful Bill Act earlier this summer, and not an incorrect one. Yet the bill also does something stranger and harder to parse, and something that might prove a more perilous threat to the country’s finances in the long term.

Republicans are riddling the tax code with carve-outs and loopholes, targeting workers at both ends of the income spectrum. The OBBBA creates ways for waiters and consultants, truck drivers and technology executives, to avoid taxation—but not so much the back-office managers and accountants working alongside them.

This shift stands to reduce horizontal equity, increase tax-rate dispersion, and shrink the tax base, as economists put it. In plain English, it will result in families with similar incomes facing wildly different tax bills, while subjecting a smaller share of earnings to taxes in the first place. Indeed, the legislation begs Americans rich and poor to game the system, structuring their businesses, employment contracts, and workweeks to duck the IRS. If and when America’s bill comes due, comfortable pencil-pushers might be the last people paying reliable, predictable sums to the tax man.

Ronald Reagan might applaud today’s party for lowering Americans’ tax bills. But he would hate the contemporary GOP’s complication of an already complicated system, and its use of administrative fine print to achieve populist ends. Republicans are “no longer trying to solve the puzzle of delivering tax cuts in a deficit-neutral way,” Jessica Riedl of the right-of-center Manhattan Institute told me. “They’re just handing out benefits like candy.”

The biggest bonbons have gone to the ultrarich. The OBBBA extends and expands Trump’s 2017 Tax Cuts and Jobs Act, tapping down marginal rates for individuals and slashing them for corporations. The laws allow prosperous parents to pass tens of millions of dollars to their children and grandchildren tax-free, and shrink the number of high-income households subject to the alternative minimum tax.

The TJCA and OBBBA also let companies write off the full cost of investments and equipment, turning profits into losses and making their tax liabilities go poof. And they permit so-called pass-through businesses to shelter 20 percent of their profits from taxation. These policies are meant to encourage companies to hire workers, build factories, buy equipment, launch new products, and pour money into research, and they do. But they also encourage executives and owner-managers to make themselves subject to the business tax code, rather than the individual tax code—pulling profits from a pass-through, say, instead of drawing a hefty salary from a corporation. As a result, a majority of earners in the top 1 percent of the income distribution invest in a pass-through, as does nearly everyone in the top 0.1 percent.

These people make a lot of money. And, come tax season, they keep a lot of the money they make, thanks to Trump. A new study found that the TCJA reduced the effective tax rate on the 400 wealthiest Americans from 30 percent to 24 percent. Corporate titans such as Jeff Bezos and Mark Zuckerberg benefited, but so did the burghers who constitute the country’s industrious upper crust: doctors, dentists, lawyers, consultants, accountants, specialty tradespeople, and the owners of auto dealerships, gas stations, franchise outlets, and so on. Today, the pass-through provision alone is worth roughly $70 billion a year for the rich. And the Congressional Budget Office estimates that the OBBBA will save the average American in the top 10 percent of the income distribution $13,622 a year.

As Republicans relieve the country’s red-leaning capitalist class from the burden of income taxes, they are also moving to relieve them of taxes on many of their most valuable assets: their homes. The country is in the midst of a full-on property-tax revolt, David Schleicher of Yale Law School told me. “The price of property in suburban and exurban areas exploded post-COVID,” he said, pushing up local-government assessments on apartments and houses. President Trump, for instance, paid more than $2 million in taxes on his Palm Beach properties in 2023, up from $1.5 million two years before.

The Club for Growth will not stand for it, and neither will many red-state legislators. (Nor will this guy, who went viral for breakdancing and moonwalking in protest of property taxes at a town hall in Cranford, New Jersey.) Texas Republicans are limiting the amount of property-tax revenue cities and counties can raise. Politicians in Ohio are discussing capping their levies, or requiring voters to approve any increases. Governor Ron DeSantis of Florida is pushing to get rid of property taxes entirely, casting them as an unfair “one-way ratchet” on homeowners.

In some cases, states and cities might replace property taxes with sales taxes. But property taxes are “the one real wealth tax we have,” Schleicher noted. In contrast, taxes on consumer goods are regressive, meaning that they are disproportionately paid by poor people.

Trump has already slapped the working class with a massive regressive tax this year, though he refuses to admit it. Tariffs are not paid by foreign exporters. They’re paid by domestic importers, who pass the fees onto their consumers by raising retail prices. The White House’s trade war is costing each and every American family $2,300 in 2025, and adding an estimated $100 billion to the government’s coffers. Still, the prospect of stagflation might force the Trump administration to repeal the levies, if the Supreme Court does not do so first.

In the drearier realm of W-2s and 1099s and 1040s, the Trump administration is reducing the amount of tax revenue collected from working-class families—and spinning them the kinds of loopholes traditionally reserved for the rich. The TCJA made the tax code cleaner and simpler by doubling the standard deduction, to its credit. The OBBBA makes the tax code messier and more chaotic by applying different levies to different income sources, to its detriment.

This month, the Treasury identified 68 occupations that would be allowed to deduct up to $25,000 a year in gratuity from their taxable income—bartenders, waiters, housekeepers, and hairdressers, sure, but also plumbers, electricians, comedians, and social-media influencers. The provision is “going to be a very interesting one to watch,” Janet Holtzblatt of the Tax Policy Center told me. “Interesting, like seeing someone’s artwork and calling it ‘interesting.’”

Millions of people who do not customarily get tips might be eligible for the valuable write-off. The change will probably lead to some “uncomfortable pauses” as locksmiths and roofers and language tutors wait around for a gratuity, Holtzblatt told me, or as podcasters push for their listeners to smash that “Follow” button and chip in on Venmo if they liked what they heard. Middle-income folks will benefit along with low-income ones: Households earning as much as $300,000 a year qualify for the break, and most waiters and dog walkers do not pay federal income tax anyway.

Very low-income families might profit in an indirect, unexpected way, Tom O’Saben of the National Association of Tax Professionals told me. Each year, many of these households miss out on valuable tax credits—the child tax credit, the earned-income tax credit, the American opportunity tax credit, the lifetime learning credit—because they do not report their full income to the IRS, claim the credits, or file a tax return at all. Families “are not educated about what benefits there are out there, and their fear of making a mistake or fear of the government has caused them to lose out,” he said. But the no-tax-on-tips exclusion is so large that waiters and coat-check attendants might report more income to the IRS, and end up with bigger rebates as a result.

The OBBBA also gives seniors a special deduction and gets rid of federal income taxes on the half part of time-and-a-half, with some limitations. In response, employees might work extra hours rather than picking up extra shifts. Employers might offer new hires an hourly wage rather than a salary, O’Saben told me, telling them that “actually, you’re going to keep more money” that way, given the new overtime rules.

Hardworking Americans keeping more of their money seems like it would be an unadulterated, uncontroversial good. But the no-tax-on-tips and no-tax-on-overtime rules are a problem for exactly the same reason that the pass-through tax shelter is a problem. The provisions create “a fundamental unfairness” in the tax code, as Riedl, of the Manhattan Institute, put it.

Why should a waiter get a tax cut, but not a nursery-school teacher? Why should the owner of a pass-through business pay a top income-tax rate of 29.6 percent, while a nurse anesthetist pays 37 percent? Why should a 65-year-old get a special deduction, but not a 63-year-old? Why not get rid of all the kudzu, ensuring that similar families with similar incomes pay similar tax bills and receive similar tax refunds?

Perhaps because then Trump and his fellow Republicans would not have goodies to give out to their supporters, whether billionaires in their beachfront estates or blue-collar workers drifting to the right or truck-driving Second Amendment enthusiasts. (The OBBBA lets people write off the interest on their auto loans and zeroes out a federal tax on certain firearms, by the way.)

Beyond being unfair, the loopholes encourage Americans to constitute their earnings as something other than a standard salary or a normal wage. The tax code already imposes different rates on income from different sources, such as capital gains and business profits. Now it will charge different rates on income from the same source, depending on the profession of the taxpayer and the number of hours they worked. At the moment, budget analysts don’t forecast that the no-tax-on-tips rule will affect many families or cost the government much revenue. But it could, because nobody knows how social norms will change, how workers will behave, or how the IRS will interpret and enforce the rules.

The IRS is facing a far more onerous task than it was a decade ago. “Tax laws never used to change as rapidly as they have,” O’Saben told me. “All of a sudden, we have this blistering series of changes,” with Congress “dumping it on the IRS to figure out”—right as the Trump administration gets rid of seasoned employees and slashes the institution’s enforcement budget.

With all this chaos, who will keep paying their taxes like they always have? Steve from accounting, pretty much. As a general point, high-income and low-income households have more variability in the amount of tax they pay than average-income households do. Some millionaires pay an effective tax rate of 3 percent and some close to 50 percent. Some people in the lowest decile pay an effective tax rate of 5 percent and some negative 15 percent (meaning they get more money back than they pay in). For typical earners, the range is tighter, the Yale Budget Lab has found—precisely because they have fewer credits, deductions, exclusions, and esoteric loopholes available to them.

The TCJA and OBBBA are likely to amplify these trends. Families in the professional-managerial class will benefit from the reduction in rates and changes to the so-called SALT cap, which reduces the amount of revenue collected from households in high-tax states, such as Connecticut and New Jersey. But many won’t benefit from the provisions for pass-through profits, bonus depreciation, tipped income, or overtime, or from the property-tax repeals. They might end up the last people paying predictable and transparent amounts on predictable and transparent sources of income. They might end up the last people for whom the tax code is a tax code, not an endless game of Calvinball.

Democrats seem unlikely to clean up the mess. The party has committed to never raising taxes on anyone making less than $400,000 a year, abandoning the idea that such levies are a reasonable price to pay for a thriving and abundant democracy. It has also started proposing its own Swiss-cheesing of the revenue rules. Like Trump, Kamala Harris supported eliminating taxes on tips. Like Trump, Senator Ruben Gallego of Arizona has called for eliminating taxes on Social Security.

I worry about a world in which the professional-managerial class is the last bulwark against budgetary collapse, as the tax base erodes and loopholes worm their way through it. A world in which Democrats and Republicans raise too little money and refuse to acknowledge taxes as an unfun but important part of adulthood. A world in which millions of bartenders and car-dealership owners and proprietors of gaudy Italianate beach clubs join together to fight against raising taxes, and also against a revenue system that is equitable and fair.

For Trump’s friends, I guess, everything. For Trump’s enemies, a 37 percent top rate.

The Job Market Is Hell

2025-09-08T07:59:00-04:00

Harris started looking for his first real job months before his graduation from UC Davis this spring. He had a solid résumé, he thought: a paid internship at a civic-consulting firm, years of volunteering at environmental-defense organizations, experience working on farms and in parks as well as in offices, a close-to-perfect GPA, strong letters of recommendation. He would move anywhere on the West Coast, living out of his car if he had to. He would accept a temporary, part-time, or seasonal gig, not just a full-time position. He would do anything—filing paperwork, digging trenches—to build his dream career protecting California’s wildlife and public lands.

He applied to 200 jobs. He got rejected 200 times. Actually, he clarified, he “didn’t get rejected 200 times.” A lot of businesses never responded.

Right now, millions of would-be workers find themselves in a similar position. Corporate profits are strong, the jobless rate is 4.3 percent, and wages are climbing in turn. But payrolls have been essentially frozen for the past four months. The hiring rate has declined to its lowest point since the jobless recovery following the Great Recession. Four years ago, employers were adding four or five workers for every 100 they had on the books, month in and month out. Now they are adding three.

At the same time, the process of getting a job has become a late-capitalist nightmare. Online hiring platforms have made it easier to find an opening but harder to secure one: Applicants send out thousands of AI-crafted résumés, and businesses use AI to sift through them. What Bumble and Hinge did to the dating market, contemporary human-resources practices have done to the job market. People are swiping like crazy and getting nothing back.

Every time Harris logged in to LinkedIn or Indeed, he would see scores of gigs that seemed like they might be a good fit. He would read a posting carefully, scrub his résumé, tailor an introductory note, answer the company’s screening questions, hit “Send,” hope for the best, and hear nothing in response—again and again and again.

Other job seekers described similar experiences. In suburban Virginia, a paralegal named Martine got laid off by a government contractor in April. (Like Harris, she did not want to dim her employment prospects by providing her full name.) She saw plenty of jobs being advertised at nonprofits, law firms, consultancies, and universities. She sent out dozens of applications. She even got to the second round a few times. But she never came close to being hired. “I have 10 years of experience,” she told me. “I would be happy if a person told me no at this point.”

For employers, the job market is working differently too. Businesses receive countless ill-fitting applications, along with a few good ones, for each open position. Rather than poring over the submissions by hand, they use machines. In a recent survey, chief HR officers told the Boston Consulting Group that they are using AI to write job descriptions, assess candidates, schedule introductory meetings, and evaluate applications. In some cases, firms are using chatbots to interview candidates, too. Prospective hires log in to a Zoom-like system and field questions from an avatar. Their performance is taped, and an algorithm searches for keywords and evaluates their tone.

Priya Rathod, a career-trends expert at Indeed, told me she understands why job seekers feel as if their résumés are “going into a void.” But she argued that the online platforms make it easier for people to find open positions and that AI can “get them to the next stage of the interview quicker,” if their applications fit an employer’s needs.

Still, a lot of job applicants never end up in a human-to-human process. The impossibility of getting to the interview stage spurs jobless workers to submit more applications, which pushes them to rely on ChatGPT to build their résumés and respond to screening prompts. (Harris told me he does this; he used ChatGPT pretty much every day in college, and finds its writing to be more “professional” than his own.) And so the cycle continues: The surge in same-same AI-authored applications prompts employers to use robot filters to manage the flow. Everyone ends up in Tinderized job-search hell.

For months, the economy has been in a low-hire, low-fire equilibrium; virtually every sector of the labor market except for health care has been frozen. The amount of time a worker has spent looking for a job has climbed to an average of 10 weeks, meaning that Americans are spending two weeks longer on the job market than they were a few years ago. The share of American workers quitting a job has fallen to its lowest level in a decade, because of concerns about rising prices and jitters about slowing growth.

The equilibrium now seems to be falling apart, and a full-on recession looks likely. Black workers have experienced a dramatic surge in joblessness, in part because of the Trump administration’s mass layoffs of federal employees. (The 154,000 civil servants who took the White House’s “Fork in the Road ” deferred-resignation offer will receive their last paycheck this month.) More than 10 percent of workers under the age of 24 are searching for a job. “Performance-based and strategic layoffs are increasing,” Lydia Boussour of the consultancy EY-Parthenon wrote in a note to clients last week. “Cracks are increasingly showing.”

What is a worker supposed to do? Martine and Harris and millions like them are still trying to figure that out; she keeps on applying, whereas he is doing landscaping and volunteering. Rathod said that she recommends old-fashioned networking: asking recruiters out for coffee, going to in-person job events, and surveying friends and former employers for leads.

Such strategies might work if employers begin hiring again. But if not, millions more people might be left pitching their CVs into the void.

Yes, Cash Transfers Work

2025-08-30T07:31:00-04:00

In 2023, the United States produced $28 trillion worth of goods and services. The average family had a net worth of $192,900. Shares in American companies accounted for more than half of global-market capitalization. Yet one in eight Americans lived in poverty, as did one in seven children.

The best way we have to help those people is to give them money. Year in and year out, Social Security lifts more than 20 million Americans above the poverty line; tax credits lift 6 million; and food stamps, housing subsidies, unemployment insurance, and Supplemental Security Income payments lift another 2 million to 4 million each. Expanding these programs would move the poverty rate lower, experts have long argued. Providing families with much-needed cash also tends to have a range of positive knock-on effects, such as keeping kids in school and improving health measures.

But a new set of cash-transfer programs has had lackluster results. Writing in the new publication The Argument, Kelsey Piper notes that “multiple large, high-quality randomized studies are finding that guaranteed income transfers do not appear to produce sustained improvements in mental health, stress levels, physical health, child development outcomes or employment.” Given the sobering results, politicians and policy makers should hesitate before pumping funds into these safety-net initiatives, she argues. If not, “money will be wasted on things that don’t work.”

Having a technocratic debate over how to spend the next marginal safety-net dollar feels a touch absurd at the moment. Republicans are gutting the Supplemental Nutrition Assistance Program and Medicaid to finance tax cuts for billionaires; Trump-administration officials are sending masked thugs to disappear people off the streets when they are not busy texting war plans to my boss; American democracy is fading; nobody is talking about instituting a universal basic income anytime soon. Still, policy design is important, and the analysis of these new studies seems to have convinced a number of Beltway wonks and denizens of econ Twitter that cash transfers might not be as good of an idea as we once thought.

[Listen: The myth of the poverty trap]

Yet the argument has tended to overinterpret a limited and novel body of evidence while ignoring decades of sterling research showing that cash—particularly when targeted to infants and children—is near unmatched as a salve for poverty and its horrible consequences.

The new studies focused on programs that were launched over the past eight years. Each worked in a similar way. Researchers found people interested in receiving unconditional cash payments, divided participants into a control group and a treatment group, disbursed the money, and studied the differences between the two groups. The programs varied in the types of people they enrolled (Baby’s First Years targeted infants and mothers; the Denver Basic Income Project, the homeless; the Compton Pledge, low-income households) and the size and duration of transfers (the OpenResearch Unconditional Income Study offered $1,000 a month, Baby’s First Years, one-third that sum).

The results were disappointing in some respects. “Homeless people, new mothers and low-income Americans all over the country received thousands of dollars. And it’s practically invisible in the data,” Piper writes in her summary. Denver’s program did not lead to a material reduction in homelessness. Compton’s did not improve its participants’ psychological well-being or alleviate certain measures of financial distress. The OpenResearch initiative did not bolster health outcomes. Baby’s First Years did not advance child development or spur families to move to better neighborhoods. “On so many important metrics, these people are statistically indistinguishable from those who did not receive this aid.”

But people receiving aid were statistically distinguishable from those not receiving aid: They had more money to use on the things they needed, or wanted. In the OpenResearch pilot, participants spent more on housing, transportation, and food. Mothers who got cash through the Baby’s First Years initiative were less likely to be in poverty than those who did not. In other words, a famed anti-poverty measure reduced poverty.

This intuitive finding is underplayed, perhaps because it is so intuitive. Cash transfers aren’t new. No safety-net policy has ever been as thoroughly examined over the course of decades. Last year alone, initiatives to send cash and cashlike substitutes to American families cut the overall poverty rate in half. Just a few years ago, a massive temporary federal cash transfer to parents slashed the child-poverty rate to a historic low of 5.2 percent; the rate rebounded after the program ended. You give people money; they have money.

That said, I am not surprised that the pilots’ effects were limited, given when they were happening and how they were structured. The initiatives took place during and after the coronavirus pandemic, when Congress flooded families with stimulus checks, $600-a-week bonuses to unemployment-insurance payments, and a $3,600-per-kid child allowance. If the no-strings-attached payments from OpenResearch or Baby’s First Years were the only cash transfers that low-income families were receiving, I imagine that they would have had a stronger impact. (Cash transfers have more bang for the buck in developing countries than the super-wealthy United States for a related reason: The more money people have, the more expensive it is to improve their situation; the more intense the material deprivation, the greater effect a single dollar has in alleviating it.)

More important, the pilots took place during an acute cost-of-living crisis: a giant surge in inflation combined with a long-simmering run-up in the price for child care, health care, and housing. A few hundred dollars a month was never going to secure a single mom an apartment in Denver or cover the cost of 9-to-5 day care in Queens. Thus it might have had a smaller impact on financial well-being than anticipated, and might explain why transfers did more for people living in low-cost Illinois and Texas than in the witheringly expensive Los Angeles metro area.

There is a real lesson for policy makers here. Cash is no good if you cannot buy the things you need with it, and the brutal cost of day care, elder care, higher education, doctor visits, prescription medication, and rent—especially rent—continues to hammer the working and middle classes. We cannot transfer our way out of this crisis. If you give parents child-care vouchers, prices will go up unless supply expands. If you provide rental assistance, landlords will soak up the cash. Right now, surging energy costs are eating up Social Security payments, jobless benefits, and earned-income tax-credit transfers.

But the relationship between household income and supply constraints is not the focus of the current debate. Rather, folks are dinging cash-transfer initiatives for failing to bolster breastfeeding rates, cut maternal stress levels, change people’s physical activity, or increase people’s educational attainment. Given these results, a “big ‘give everyone cash’ program” will not “make them measurably healthier or happier, or get them better jobs, or improve their children’s intellectual development,” Piper writes, not “at any detectable scale.”

[Zach Parolin: Why poor American kids are so likely to become poor American adults]

Hundreds of studies of cash-transfer programs conducted over the past half century, however, have come to the opposite conclusion. Giving people money does have strong ancillary benefits. Cash makes people healthier, eliminates hunger, increases educational attainment, cuts the disability rate, reduces inequality, raises lifetime earnings, and prevents incarceration. The strongest benefits redound to infants and children. But cash is not magic, and these second- and third-order effects take time to show up in the data. Mothers’ pensions, the precedent for today’s welfare program, had muted effects on the women receiving them from the 1910s to the 1930s, but significant effects on the lifetime earnings and educational attainment of their sons, decades later.

Perhaps other interventions would have worked better. Perhaps researchers should have taken the money from the pilots and spent it on, say, workforce training, job coaching, therapy, health counseling, or some other intervention. But such policies do not have a promising track record, and these studies shed no light on their comparative efficacy versus cash. Complicated programs with complicated participation criteria also tend to be expensive for the government to run and difficult for citizens to navigate, meaning fewer people use them. That’s a big reason to just give people money. Folks would rather receive cash than a refundable tax credit to reduce energy costs, or an income-scaled voucher redeemable at a certain location after you fill out a bunch of paperwork.

The point of giving people money right now is to get them out of poverty. The point of giving people money is to give their kids a better chance at a healthy, abundant life. Reading the studies, I kept on thinking about that temporary child allowance. When parents received the cash, they didn’t feel happier. They moved above the poverty line, and bought more groceries. They could afford more formula for their babies and berries for their toddlers. Maybe that’s a disappointment. But as a parent myself, I kept thinking: What a win.

The Markets Won’t Save the Fed From Trump

2025-08-27T07:31:00-04:00

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On Monday, Donald Trump announced that he had fired Lisa Cook, a member of the Federal Reserve’s board, accusing her of “deceitful and potentially criminal conduct in a financial manner.” The Trump administration alleges that the economist lied to mortgage lenders when purchasing two properties in 2021, naming both as her primary residence.

The allegations against Cook are unproven, and she has not been charged with a crime; even if the claims are true, it is not clear that they would justify her removal. But the president has spent years harassing and denigrating Fed officials, and appears to be trying to replace Cook in order to sway the course of monetary policy—and not subtly either. If he succeeds, in the short term, he risks letting inflation get out of control, driving up prices for American families. In the long term, he risks raising borrowing costs for individuals, businesses, and the government permanently.

The country has a system of checks and balances to prevent this kind of executive overreach and its perilous financial consequences. The Supreme Court and Congress could prevent the White House from canning vetted officials and replacing them with unqualified, politically motivated appointees. But so far, the judicial branch has given the administration wide latitude, and the Senate has rubber-stamped candidate after candidate. Trump tends to pay attention to the markets, pulling back when asset prices crash. Maybe they will send him a message this time too. But there’s not much hope for traders to defend democracy if judges and senators will not.

For years, Trump has harangued the country’s central bankers, calling Jerome Powell, whom Trump himself appointed as Fed chair, a “stupid person,” and arguing that the Fed’s governors should be “ashamed” for holding interest rates where they are. But most experts agree that borrowing costs are sitting at an appropriate-enough level: The economy is growing, and inflation is ticking up thanks to the White House’s trade war. Virtually nobody except for Trump thinks the federal funds rate should be 1 percent—a rate suited for markets in panic and an economy in recession. More important, the White House is not supposed to have any direct control over monetary policy. The president can name appointees to the Fed and fire them “for cause.” That’s it. The fact that the Fed operates without political influence is one reason the American economy is as strong as it is.

Still, unhappy with borrowing costs and eager to replace Cook with someone willing to lower them, the administration seems to have gone searching for cause. Loyalist officials at the Federal Housing Finance Agency ostensibly pulled Cook’s lending documents, scoured them for potential errors and misrepresentations, and referred the matter to the Justice Department. They seem to have done the same to other Democrats, including California Senator Adam Schiff and Letitia James, the attorney general of New York.

The Trump administration charges that Cook might have committed fraud when she purchased a house in Michigan and a condo in Atlanta in quick succession four years ago, by designating both properties as her primary residence in lending documents. (Banks give preferred terms to borrowers seeking a mortgage for a home they will live in.) Most instances of occupancy fraud have to do with people purposefully lying to get sweetheart lending rates on vacation or rental properties, and many are uncovered only if the borrower goes into default. The crime is rarely prosecuted: The federal government sentenced just 58 people for mortgage fraud in the 2021 fiscal year.

The Trump administration appears to be engaging in what has come to be called lawfare. Adam Levitin, a scholar of financial regulation, describes the director of the Federal Housing Finance Agency’s actions as “terrifyingly inappropriate,” arguing that he is using his authority to “pursue a political enemies list,” which constitutes “an incredibly dangerous abuse of office.” Even if Cook did err on her mortgage documents, it is not clear that the charge would be serious enough to qualify her for removal. (The White House has never fired a Fed governor before, so there is no standard for misconduct.)

For now, Cook remains in her position. If she challenges her removal, as her lawyer has said she will, the case will likely end up in front of the Supreme Court. Congress designed the central bank to be independent of political influence. But the Roberts court has acted as a weak check on the executive branch, and interpreted the president’s powers broadly. If Cook loses her position, the Senate could refuse to confirm anyone Trump appoints to fill it. But given Republicans’ fealty to the White House, that seems unlikely. The legislative body could also refuse to finance the government’s continuing operations unless the Trump administration backs off. That seems even less likely.

What about the markets? In the past, investors have sold off American assets when Trump has made cavalier announcements, rebounding when he has backed off. The effect has been consistent enough to get a name: the TACO trade, for “Trump always chickens out.” (“I chicken out? I’ve never heard that,” the president told a reporter earlier this year. “To me, that’s the nastiest question.”) Yet this week, the market had a muted reaction to Trump’s announcement about removing Cook. Stocks were flat; bonds were flat. There is no slump that might force Trump to reconsider.

Why aren’t the markets moving? Perhaps because the course of interest-rate policy and the Fed’s independent status aren’t immediately changing. Trump has been threatening Fed officials since his first term. He might not be able to fire Cook. He might end up removing her only after a months-long legal battle. And if he does end up removing her, interest-rate decisions would still be made by committee. Borrowing costs would not suddenly drop down to 1 percent, as Trump wants.

Still, Trump’s actions will have an effect on the financial system and the real economy, in time. If the White House manages to install lackeys at the Fed and push interest rates lower, Washington risks creating bubbles and allowing inflation to get out of control, with American consumers footing the bill. And if investors lose confidence in the quality of Fed officials and the independence of the central bank, interest rates will rise, if imperceptibly, meaning every credit-card bill, mortgage payment, small-business and farm loan, and stimulus package will cost more than it would have otherwise. The economy will be more sluggish. Ultimately, foreign investors might elect to invest in Europe or Japan rather than the United States, eroding the dollar’s primacy.

The markets are not going to end the White House’s assault on this vaunted American institution. The courts, Congress, and voters are going to need to do it.

How the Richest People in America Avoid Paying Taxes

2025-08-25T06:00:00-04:00

According to the Joint Committee on Taxation, the richest of rich Americans pay an average tax rate of 34 percent, higher than any other cohort’s. In reality, as everyone has long known, they pay less than that. A new study by some of the country’s most preeminent economists has finally put concrete numbers to the disparity. The average rate that the richest Americans pay, they find, sits at just 24 percent. That number has fallen markedly in recent years and will remain low for the foreseeable future, thanks to Donald Trump.

The new study is a technical feat, combining data on corporate earnings, private wealth, and individual tax payments. And it confirms that the country’s tax code is regressive, not progressive, at the very top. Every year, America’s richest citizens paper over their earnings with losses and use other creative accounting strategies to shelter their fortunes, as the tax code allows them to do. As a result, the country’s billionaires pay lower tax rates than many of its millionaires do. Indeed, they pay lower tax rates than many middle-class professionals.

The study, by the UC Berkeley economists Akcan Balkir, Emmanuel Saez, Danny Yagan, and Gabriel Zucman, examines the wealth of Americans on the Forbes 400—not the 1 percent or even 0.01 percent, but the 0.0002 percent, a group including Larry Ellison, Elon Musk, Jeff Bezos, and Trump himself. As of this year, these individuals have a minimum net worth of $3.3 billion.

[Rogé Karma: Buy, borrow, die]

To study these billionaires and their wealth-management strategies, Saez, Zucman, and their co-authors could not examine their personal tax returns. The IRS’s strict data-privacy rules would prevent any academic from doing so. Instead, they received anonymized IRS data files, provided only to vetted researchers, on the richest 400 Americans by wealth, rather than earnings. The data were pooled so that the researchers couldn’t connect specific numbers to any particular individual. The academics augmented the pooled statistics with information culled from the annual filings made by public companies, government data on gift and estate taxes, and IRS data on the earnings of private firms.

Many wealthy Americans do not have much in the way of salaries or realized earnings to tax in a given year. Mark Zuckerberg, for instance, whose net worth was estimated by Forbes last year to be $181 billion, pays himself a $1 base salary at Meta. Last year, he took home $27 million in total compensation—an immense sum, but not much given the company’s profits, and a fraction of what some of the company’s top artificial-intelligence engineers reportedly make.

Business titans tend to take their compensation as shares in publicly traded companies and privately held businesses, as well as investments in “pass-through” companies with special tax rules. As a result, their incomes are smaller than one might expect, and subject more to the country’s loopholed corporate-tax code than to its straightforward individual marginal tax rates. And, as a result, research on the tax rates paid by the country’s highest earners, as measured by personal income, does not shed much light on the tax rates paid by the country’s wealthiest people.

[David A. Graham: Americans are starting to sour on tax cuts]

In some ways, the new study is more comprehensive than an analysis of the billionaires’ 1040 forms would be, Saez and Zucman told me in an email, because it “includes not only individual income tax, but all the other taxes, and particularly corporate taxes” that they pay. The “biggest surprise,” Saez and Zucman said, was that the country’s billionaires—or, more precisely, their highly compensated accountants—had used deductions and exclusions, such as depreciation, to make their profitable pass-through businesses appear to be operating at a loss. Those paper losses reduced the billionaires’ taxable income by $33 million a year, on average, between 2018 and 2020. The effect was so pronounced that companies’ taxable income was “no longer a good measure” of their “true profits,” the economists told me.

In the end, the top 400 Americans paid an estimated 23.8 percent of their income to Uncle Sam from 2018 to 2020—down from roughly 30 percent before the passage of the Tax Cuts and Jobs Act, in 2017. They paid 1.3 percent of their total wealth to the IRS in those years, down from 2.7 percent from 2010 to 2013. Their tax rates were lower than the average paid by all American households.

The Tax Cuts and Jobs Act, Trump’s signature first-term domestic-policy package, helped these billionaires keep more of their money. The One Big Beautiful Bill Act, passed this summer, extends the TCJA’s tax cuts, creates new business loopholes, and lowers taxes on estates. To help offset the revenue losses, the Trump administration is stripping health coverage from millions of low-income Americans and shrinking the Supplemental Nutrition Assistance Program. The rich, including Trump, will keep getting richer. The poor will pay for it.

Trump Is a Degrowther

2025-08-09T07:31:00-04:00

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In the past few weeks, Americans learned that Robert F. Kennedy Jr. canceled half a billion dollars of government investment in the development of mRNA vaccines, Las Vegas saw a 7 percent drop in visitors, residential electricity prices shot up by an average of 6.5 percent, the number of housing permits issued hit their lowest point in half a decade, employers quit adding workers, the manufacturing sector shrank, and inflation rose.

These bleak figures depict an American economy slowing and its labor market weakening. A recession isn’t guaranteed, but it’s becoming much more likely and the stagflation that forecasters described as inevitable when President Donald Trump began prosecuting his global trade war is now a lot closer. Americans, now and in the future, will be paying more and buying less. Trump’s second-term economic ideology is not only one of protectionism, mercantilism, atavism, and cronyism. It is also one of degrowth.

Trump, who entered the White House promising to slash prices on household goods and supercharge the American economy, would never use that term himself. Degrowth—the notion that wealthy countries can and should reduce their consumption and production—is associated with environmental activists and leftist and green parties in Europe. Still, at its heart, degrowth argues that people should not only tolerate but desire a smaller economy. That’s second-term Trumponomics, and everyone stands to be worse off for it.

Without admitting it, the White House is pursuing a multipronged strategy to raise prices, suppress consumption, freeze production, and lower productivity in the United States. The trade war is the most obvious example, as well as the one having the most immediate consequences. Since January, Trump has raised and lowered and raised tariffs on goods imported from American allies around the world. Such barriers will eliminate the country’s bilateral trade deficits and boost domestic manufacturing, the White House has promised, while warning that consumers and employers might have to endure a chaotic period of adjustment.

[Read: Does the stock market know something we don’t?]

But Trump has slapped tariffs on commodities and parts that factories use to make things in America, such as engine components and timber. He has slapped tariffs on products that are not or cannot be produced here, such as bananas and gallium. And he has slapped tariffs on items that would be too expensive for American consumers to purchase if they were made in this country, given the cost of American wages and the network of factories in operation, such as costume jewelry and sneakers. The Yale Budget Lab estimates that the country’s effective tariff rate now stands at 18.3 percent, the highest since 1934. Prices are beginning to rise as importers pass the cost of Trump’s import taxes on to retailers and families. Industrial production is falling, as uncertainty plagues the sector.

In response, Trump has argued with reality. “We’re only in a TRANSITION STAGE, just getting started!!! Consumers have been waiting for years to see pricing come down,” he wrote on Truth Social. “NO INFLATION,” he added, pointing to egg and gas prices. But those are just two of 80,000 prices the government tracks each month to calculate the overall inflation rate. The cost of eggs has declined as the bird-flu pandemic has waned; the price at the pump has gone down due to weaker global growth and increased OPEC production. Across the economy, costs have remained witheringly high, despite the Federal Reserve combatting them with high interest rates. If the Fed cut borrowing costs, inflation would climb.

Trump’s campaign against reality extends beyond the price of consumer goods. Unhappy with the pace of employment growth, the president canned the head of the Bureau of Labor Statistics. “Important numbers like this must be fair and accurate,” he wrote on Truth Social. “They can’t be manipulated for political purposes.” (Touché.) Unhappy with Fed policy, he has threatened to put Jerome Powell, his own appointee, “out to pasture.”

At the same time as he has prosecuted his bizarre unilateral war on imports, Trump has reduced government subsidies for a range of necessities. He has taken $1 trillion away from Medicaid, while vowing not to reduce the program’s budget. He has cut food-stamp benefits, meaning low-income families will buy fewer groceries. He has eliminated support for the loans and grants that poor kids rely on to get a higher education. And he has slashed financing for renewable-energy production.

Each of these policies will raise costs and reduce supply. Trump’s One Big Beautiful Bill Act, for instance, is expected to eliminate 1.6 million green-energy jobs and reduce electricity-generation capacity by 330 gigawatts by 2035. (That’s roughly equivalent to the country’s current solar-production capacity.) Americans a decade from now will pay higher prices for electricity and will use less of it, thanks to Trump.

Right now, the United States is suffering from shortages—yes, shortages—of immigrants and visitors. Tourist meccas around the country are reeling as visitors from Europe and Asia opt to take their euros and yen elsewhere. Farms and nursing facilities are suffering from a lack of workers. Global investors are opting to park their money abroad, raising domestic borrowing costs and weakening the dollar.

[Read: So, about those big trade deals]

In the long term, Trump’s attack on colleges and scientific-research institutions might end up being the most damaging of his degrowth policies. The American system of higher education—for all of its many, many faults—is an engine of global modernity. The country’s land-grant schools help feed the world. Its public colleges vault poor kids up the income ladder. Its name-brand universities are laboratories of scientific innovation.

But for the crime of supporting Black and brown kids, admitting foreign students, and hiring liberal thinkers, these institutions are under assault. The mathematician Terence Tao, described by some of his contemporaries as a latter-day Albert Einstein, might not be able to continue his research at UCLA, because of Trump’s budget cuts. What good could possibly come of that? The same good that will come from slashing financing for mRNA-vaccine research, meant to prevent cancer and end pandemics. “I’ve tried to be objective & non-alarmist in response to current HHS actions—but quite frankly this move is going to cost lives,” argued Jerome Adams, a physician who served as surgeon general during the first Trump administration.

As a counterweight, the White House has cut taxes and slashed regulations, for some industries at least. The wealthy stand to do just fine in the Trump economy—happy, I suppose, to have a smaller pie if they get a bigger piece of it. Yet Trumpian degrowth will hurt them, too, in time. Rich people purchase homes and sneakers and bananas, and send their kids to college. Rich people use energy. Rich people hire workers to provide them with home-health support and staff their businesses. And rich people use vaccines and require cancer treatments.

Unlike typical degrowthers—with their focus on long-term human flourishing and the conservation of the planetary ecosystem—Trump is engaged in financial nihilism. The president has, at least once, admitted that his policies will lead to Americans having less instead of more: “Maybe the children will have two dolls instead of 30 dolls, you know? And maybe the two dolls will cost a couple of bucks more than they would normally.” If only that was the worst of it.

Children’s Health Care Is in Danger

2025-08-07T07:31:00-04:00

Alison Chandra was thrilled and gutted. She was pregnant with a much-wanted second child. But her baby had a rare disease called heterotaxy, causing heart defects and organ abnormalities. He might not survive, her doctors warned her, describing his condition as “likely incompatible with life.”

Chandra is a nurse. She “grew up on the far right, and very staunchly in that pro-life, single-issue-voter camp,” she told me. “That was the first time that I had to come face-to-face with what being pro-life actually meant.” She chose not to terminate the pregnancy. Because she and her husband had no income—they had spent the past half decade volunteering on a medical ship off the coast of West Africa—the family decided to sign up for Medicaid.

“I was someone who really thought Medicaid is just for moochers and leeches,” she told me. “Quote-unquote good people should never have to need Medicaid. It was really hard for me to walk into that office and hand over my paperwork.” But she did. “It obviously changed the trajectory of everything because at that point we were able to pursue the best care.” Medicaid covered her prenatal visits, her son’s delivery, and two open-heart surgeries. Eleven years later, her son is thriving, and Chandra is working in suburban Utah as a nurse specializing in the care of children with complex health needs—kids covered, as she and her son once were, by Medicaid.

Soon she might not be able to provide that care. This summer, Congress passed the One Big Beautiful Bill Act, Donald Trump’s sweeping second-term domestic legislation. The bill does not cut Medicaid, the White House insists. It slashes taxes and offsets the revenue losses by tamping down on what Republicans describe as waste, fraud, and abuse in the health-insurance program.

[Annie Lowrey: A big, bad, very ugly bill]

Yet the Congressional Budget Office foresees that the law will drain close to $1 trillion of Medicaid’s financing in the next decade and cause 11 million Americans to lose their insurance coverage. Experts anticipate a cascade of effects. Private-insurance premiums and medical-bankruptcy rates will climb. Wait times for appointments with specialists will rise. Care deserts will expand. Hospitals and clinics will have to shut down. The most fragile sectors of our health-care system will be in danger of collapsing. And pediatric care might be first on that list.

The law does not target children’s-health coverage or children’s-health initiatives. But nearly half of American children are enrolled in Medicaid or the related Children’s Health Insurance Program. If the One Big Beautiful Bill Act goes into effect as written, sick babies will end up paying for tax cuts for the wealthy.

The bill “strengthens” Medicaid, as Republicans put it, by stripping insurance coverage from adults. For the first time, the country is implementing a nationwide work requirement for the program. Any state with an expanded Medicaid initiative (meaning that the state offers coverage to all low-income adults, not just those with a disability or another qualifying condition) will have to verify that enrollees are working, volunteering, or attending school, and kick them off the rolls if they’re not. The work requirement is not expected to spur more people to get a job; studies have found that nearly every adult on Medicaid already works if they can. But states will have to spend millions of dollars to implement it, diverting cash from delivering actual health care. And 8 million Americans are predicted to lose coverage as they struggle to keep up with the paperwork. The bill also contains a series of technical changes to Medicaid’s financing, altering the taxes that states levy on medical providers and the payments they make to them.

Experts warn that dropping parents from Medicaid will mean dropping kids, even if those children continue to qualify in their own right. Parents are twice as likely to enroll their children in a public-insurance program if they are enrolled themselves, and states that cover a small share of low-income adults tend to cover a small share of low-income kids too. Already, more than 4 million American children lack health coverage. Hundreds of thousands more might join them in a year or two.

A rising uninsurance rate among children is a crisis in and of itself. Kids without insurance are less likely to have a pediatrician monitoring their well-being and development. They’re more likely to be sick, less likely to get immunizations and prescription medications, less likely to be treated for severe health conditions, and more likely to be hospitalized. They are also more likely to die before reaching adulthood.

At the same time as the number of uninsured children rises, states are expected to slash spending on “optional” or “nonessential” Medicaid initiatives, such as in-home care for children with chronic health problems and disabilities. These services allow disabled kids to learn in classrooms and sick kids to sleep in their own bedroom, alongside their pets, siblings, and stuffies, rather than in pediatric-hospital wards. Providing care at home reduces emergency-room visits, and slashes the rate of hospital admissions. It is also essential for families, Chandra told me, her tone oscillating between tempered rage and measured despair. “Those are my patients,” she said. “Those are the kids I love.”

Medicaid already has an “institutional bias,” explains s.e. smith, the communications director of Little Lobbyists, an advocacy group for children with disabilities and complex health needs. The program covers care in hospitals and clinics more comprehensively than care provided at home or in the community. When state Medicaid programs face financing crunches, they tend to slash in-home services first. The bill will lead to much greater cuts, separating kids “from loving families, depriving them of a free and appropriate public education, and denying them an opportunity to participate in society,” smith told me.

[Jonathan Chait: They didn’t have to do this]

As at-home care is reduced and demand for in-hospital treatment rises, the bill will make it harder for parents and caregivers to access institutional services too. Over the past decade and a half, health systems have gotten rid of 20 percent of pediatric beds and 30 percent of pediatric-care units. That’s because hospitals make more money admitting adults than children: Kids are much more likely to be on Medicaid, and Medicaid offers lower reimbursement rates than Medicare and private-insurance plans do.

As a result, pediatric care has become concentrated in specialty children’s hospitals that cannot meet the existing demand. The country has too few hospital beds for babies and teenagers, too few pediatric-health specialists to make diagnoses and provide treatment, and far too few pediatric-health providers in low-income and rural areas. What institutions exist are fragile: Nonprofit children’s hospitals have profit margins of 2.7 percent, versus 6.4 percent for all hospitals.

The system is a rickety structure, the One Big Beautiful Bill Act a hurricane-force wind. With fewer kids covered by Medicaid, revenue per patient will go down, giving health systems a yet-greater incentive to focus on providing care to adults and seniors; hospitals will close, affecting not only kids with Medicaid but all children; in surviving pediatric institutions, demand will rise, given that families will have fewer options for treatment. Doctors foresee panicked parents driving their ill and injured kids for hours and hours to a children’s ER or ICU—only to find it overflowing.

Health experts anticipate exactly the same dynamic playing out in rural medical care. “This is going to impact 62 million Americans,” Alan Morgan, the CEO of the National Rural Health Association, told me. “If you’re in a rural area, it’s impacting your ability to access health care, because you’re reducing the bottom line of these facilities and the ability of these facilities to stay in the community.” They see the same dynamic playing out in nursing-home, rehabilitative, and long-term care as well. A law intended, putatively at least, to get adults to work might end up destroying fragile institutions for the country’s most vulnerable, and weakening those providing health care to everyone.

The bill’s work requirements do not come into effect until after the 2026 midterm election—a sign that, perhaps, Republicans understand just how catastrophic and unpopular the party’s policies are. Aides on Capitol Hill and hospital executives believe that Congress might soften the bill or push parts of it back. But there are tax cuts to pay for, and people with disabilities and cancer available to pay for them.

“I have lived and worked in countries where people lack access to health care. I know what that looks like,” Chandra told me. “It is heartbreaking to me that we are facing, potentially, some of the same challenges that I’ve dealt with in some of the poorest countries in the world. It should not be the case anywhere, but especially not in the richest country in the world.”

Start Budgeting Now

2025-07-11T07:00:00-04:00

You might have forgotten about the trade war, but the trade war has not forgotten about you.

This week, Donald Trump reignited the global financial conflict he started in January, sending letters threatening new tariff rates to nearly two dozen countries. Starting in August, American importers will pay a 25 percent tax on goods from South Korea and Japan, a 35 percent tax on goods from Canada and Bangladesh, and a 50 percent tax on goods from Brazil unless those countries agree to bilateral deals. Additionally, Trump warned he would slap tariffs on goods from any country “aligned” with the “Anti-American policies” of China, India, and other industrial powerhouses—no further details given—and put a 50 percent levy on imported copper, used to build homes, electronics, and utility systems.

The summer tariff announcement was characteristic of all the White House’s tariff announcements this year: draconian, nonsensical, and hard to take seriously. In his first weeks in office, Trump trashed the North American trade agreement that he had negotiated during his first term before exempting most goods coming from Canada and Mexico from border taxes. In April, the White House put high levies on goods from scores of American trading partners, only to announce a three-month “pause” on those levies shortly after. During the 90-day pause, American negotiators would craft 90 new trade deals, the White House promised.

This time, Trump did not make a formal trade announcement, opting instead to send error-laden form letters to foreign capitals (one addressed the female leader of Bosnia and Herzegovina as “Mr. President”). In a Cabinet meeting, he argued that “a letter means a deal,” adding that “we can’t meet with 200 countries. We have a few trusted people that know what they’re doing, that are doing a good job, but you can’t—you have to do it in a more general way, but it’s a very good way, it’s a better way. It’s a more powerful way.” (Even if a letter was a deal, which it isn’t, the Trump administration is more than 60 letters short of 90.)

The stock market shrugged at the letters; investors are now used to the president saying something nuts and then doing nothing. Traders have figured out how to make money from the short-lived dips that Trump periodically causes, calling it the “TACO trade,” for “Trump always chickens out.” But Trump is not doing nothing. Businesses are struggling to negotiate the uncertainty created by the White House. Trump’s tariffs are forcing up consumer costs and damaging firms. And the latest renewal of the trade war will make the economy worse.

Small businesses and companies reliant on imported goods from high-rate countries are struggling the most. A few weeks ago, I spoke with Jonathan Silva, the chief executive officer of WS Game Company. On our Zoom call, he sat in front of a howitzer-size, rainbow-colored Nerf gun, sporting a five-o’clock shadow and emanating a heavy-lidded weltschmerz. His 22-person business produces upscale versions of classic Hasbro board games: a pastel, tempered-glass Monopoly board; a turquoise-and-white Scrabble set reminiscent of Portuguese azulejo tile work; and a three-dimensional wooden Clue game that looks like a billiards table. The idea is to make board games “part of your lifestyle,” he told me, instead of stuffing them “in a cardboard box with tattered corners, falling apart at the top of your coat closet.”

The company produces its games in China, meaning that the fee it pays to import its goods has changed several times in the past six months, going as high as 145 percent. The time around Trump’s April “Liberation Day” tariffs was the “worst 45-plus days of our company’s history,” Silva told me. His company put in place a spending freeze: halting bonuses, barring new hires, and cutting all unnecessary business expenses. “The main goal was to keep every employee that we have employed,” Silva told me. Then the company raised prices. “We tried to sell whatever we had domestically in our warehouses to free up cash and give us as long of a runway as possible,” he said. Even so, the company lost $16 million in purchase commitments from its sticker-shocked retailers.

The disruption from the spring will affect the rest of the business’s year, and, in particular, its crucial holiday-sales season, Silva told me. “It’s about 150 days from when I place an order to when it might hit the shelves,” he explained. “When the supply chain gets put on pause for four to six weeks, getting back on schedule takes a year.” That happened in a more extreme fashion during the early days of the coronavirus pandemic.

This year, “the shelves might be filled with products for the holiday, but they might not be filled with the products that the retailers really want to put on the shelf,” Silva said. “The consumer might not notice, but the businesses do.”

Businesses thus far have sheltered American consumers from tariffs by eating some of the cost themselves and relying on stockpiled goods. As a result, inflation has remained subdued and economic growth strong enough through the first half of the year. But firms can keep only so much stock in warehouses. Analysts at BNP Paribas, a banking group, estimate that inventories will “clear” by the end of the summer, and prices will rise in turn. Right now, American consumers are facing an 18 percent effective tariff rate, the highest since 1934, the Yale Budget Lab estimates. Households will pay an average of $2,400 more for goods this calendar year, thanks to Trump’s policies.

Thousands of businesses are again negotiating extremely high and haphazardly implemented rates on goods from any number of crucial trading partners. South Korea sends billions of dollars of heavy machinery to the United States each year. Bangladesh ships billions of dollars of clothing. (Clothes and shoes will see the biggest price increases because of the trade war, the Yale analysts found; prices on these goods are expected to rise roughly 40 percent.) Canada is the United States’ second-largest trading partner, an important source of farm equipment, auto parts, minerals, and crops. And companies will have to negotiate whether to work in the cost of the new tariffs or to make their own TACO trades, assuming that the Trump administration will fold and cut rates again.

History suggests that this is exactly what Trump will do, especially if the market tanks. But who knows? This week, a reporter asked the president whether new tariff rates would take effect on July 9, the end of the 90-day pause, or on August 1, the date indicated in the letters.

“What are you talking about?” Trump asked.

The tariff rates, the reporter said.

The president provided some clarification: “They’re going to be tariffs. The tariffs are going to be the tariffs.”

I Fought Plastic. Plastic Won.

2025-07-07T09:00:00-04:00

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I used to love my Teflon pans. I crisped tofu, fried latkes, and reduced sauces to sticky glazes in them, marveling at how cleanup never took more than a swipe of a sponge. Then I started to worry that my skillets might kill me.

The lining on the inside of a nonstick pan is made of plastic. When heated, it can release toxic fumes; when scratched, it can chip off, blending in with tasty bits of char and grains of pepper. “Data indicates that there are no health effects from the incidental ingestion of nonstick coating flakes,” the company that produces Teflon says, noting that the government has deemed the cookware “safe for consumer use.” Still, it warns people to turn their burners down and air vents up when they use their nonstick pans, and to avoid preheating them empty.

Other data, a lot of data, suggest that ingesting plastic can damage your organs, suppress your immune system, harden your veins, and predispose you to neurodegenerative diseases and cancer. Pet birds have died of the “Teflon flu” after breathing in the smoke from their owners’ overheated pans. (Birds’ lungs are especially susceptible to toxic gases.) A story about a budgie did it for me. I tossed my nonstick pans into the trash, over my husband’s objections.

Thus began my slowly escalating, dimly informed campaign to rid my body and life of plastics. I heard a local-radio report on colorectal cancer and impulse-purchased metal baby spoons for my kids at 3 a.m. I recalled a column on endocrine disrupters from who knows when and started drinking my iced coffee from a metal-lined tumbler. I read something about how flexible plastic is particularly problematic and threw out the cling wrap. I got rid of our black plastic spatulas too, after one of my colleagues reported that they might contain flame retardant, which you’re really not supposed to eat.

[Read: Throw out your black plastic spatula]

I was doing my own research, by which I mean I was taking in data from disparate sources with differing degrees of credibility on a bewilderingly complicated issue and analyzing it with sophomore-year scientific literacy before making consumer decisions driven by single-issue neuroticism and a penchant for online shopping. I was also annoying the bejesus out of my husband, who kept asking where the pancake flipper had gone.

Then I read an article suggesting that microplastics might be behind the increasing incidence of type 1 diabetes, which I happen to have. I recalled all the molten Stouffer’s lasagnas I had eaten as a kid. I needed to do something right now, but I realized that I had already purged the obvious offenders from the kitchen.

Before I could buy something expensive and relax, I stopped, for once. Was I actually reducing my exposure to dangerous chemicals? Was my family safer than it had been before I began my campaign? What kinds of plastic are truly dangerous in the first place? I had no idea. More than I wanted to spend hundreds of dollars at Williams-Sonoma, I wanted to know my enemy.

An encomium for the adversary: Plastics are amazing. The synthetic polymers are light and inexpensive, moldable and waterproof, stretchy and resilient. They are also new. The fax machine was invented before plastic was. Plastics have made us safer in a thousand ways: Much-castigated plastic water bottles make the storage and transportation of clean drinking water easy; single-use surgical gear is better at preventing infection than boiled linen. Plastics have also dramatically cut the cost of making and moving things, powering our modern consumer economy no less than gas and electricity have.

[Judith Enck and Jan Dell: Plastic recycling doesn’t work and will never work]

Plastics are the consumer economy, to a remarkable extent. I knew that fleece and diapers were made from plastic. I was surprised to find out that tea bags, sponges, glitter, paint, cigarette filters, nail polish, chewing gum, toothpaste, mattresses, dental floss, wet wipes, and tampons commonly contain plastic too. The Boeing 787 Dreamliner is half plastic composites. Even things that seem like they have nothing to do with plastic are plastic. Aluminum soda cans are lined with an epoxy resin, meaning my predominant source of liquid (room-temperature Diet Coke; not ashamed) essentially comes in a plastic bathtub.

This past spring, I decided to see how long I could go without using plastic. I woke up on linen and cotton sheets and glowered at my iced coffee, chilling in its off-limits plastic bottle in the refrigerator. Head aching, I went to get ready for the day. I couldn’t turn on the light in my closet or my bathroom. Nor could I brush my teeth, or put on deodorant, moisturizer, sunscreen. The only outfit I could conjure up was a capacious linen shift and a saggy cotton-wool cardigan. No underwear or socks, because they have some stretch to them, and if something stretches, it’s thanks to plastic. I could not traipse into my office looking like Gollum’s great-aunt, nor could I commute without shoes on. Eighteen minutes after waking up, I surrendered.

Plastic is not just everywhere in our homes, but everywhere, period. The world produces so much plastic (more than 400 million metric tons a year, according to one estimate—roughly the combined weight of every human alive) that degraded nubbins coat the planet, detectable in the sedimentary depths of the Mariana Trench and the icy heights of Mount Everest.

The human body itself is part plastic: We are humans made of a human-made material. Scientists have found plastic in brains, eyeballs, and pretty much every other organ. We cry plastic tears, leak plastic breast milk, and ejaculate plastic semen. Fetuses contain plastic. Plastic is so ubiquitous that researchers, wanting to examine the effect of plastics on the human body, are struggling to find all-natural individuals to use as controls in studies.

Concerns over plastic exposure have exploded in recent years, with podcast bros, MAHA types, and crunchy moms joining environmentalists (and a number of physicians and scientists) in attempting to ditch the substance. Businesses have started offering direct-to-consumer blood tests for microplastics and related contaminants. (Until I started writing this story, the distinctions were lost on me: We are exposed to bits of plastic, known as nanoplastics or microplastics, and plastic-related chemicals, which can leach out of plastics. The latter can include PFAS, “forever chemicals” with particularly worrisome health implications.)

[Read: The cost of avoiding microplastics]

Curious to know how plastic I am, I coughed up $357 (and some plastic particles, probably) and visited a Quest Diagnostics. “I’ve never seen anyone get this test before,” the phlebotomist whispered, before puncturing my vein.

The results came back a week later: I had 2.06 nanograms of PFAS in every milliliter of my blood, an “intermediate” quantity implying a “potential risk of adverse health effects.” Specifically, the test found perfluorononanoic acid, perfluorohexanesulfonic acid, n-perfluorooctanoic acid, n-perfluorooctane sulfonic acid, and perfluoromethylheptane sulfonic acid isomers swimming around in my blood.

Knowing what I already knew, I would have been shocked if the test had come back negative. But I still felt concerned. Quest provided me with a phone number to set up a consultation with a physician to discuss my results. I called, hoping someone could tell me what, if anything, I should do with this information.

The numbers were “very good news,” the physician told me at first, saying that my report indicated the chemicals were “not detected.” But some substances were detected, I pointed out. What did that mean?

“I see why you’re confused; your level is higher,” she told me. “You have to address this to the lab.” After a few minutes of poring over the numbers, she added, “This is very confusing, even for me.”

We went back and forth on safe levels and detectable quantities before I asked her what it meant to test positive for these substances in general. “There’s not much for us to do but to alert you,” she said. “Everything is made from chemicals, and things are made in China and they don’t have high levels of quality control. That’s what the modern world has to offer us.” She told me to watch out for breast cancer.

I was already doing that. I had read studies linking PFAS to developmental delays, liver damage, kidney cancer, and thyroid disease, among other conditions. Phthalates, used to make plastic flexible, are associated with early menopause and miscarriages. Microplastics and nanoplastics are mixed in with the sand on beaches and float in bottles of distilled water at the grocery store. Nascent research ties them to strokes and lung cancer. How many horrid diagnoses did I need to be on the lookout for?

I could be as vigilant as I wanted to be, but the Quest test was essentially meaningless. It gave me a point-in-time estimate of a handful of kinds of PFAS in my bloodstream. But it provided no sense of my lifetime exposure, nor could it help diagnose a current illness or predict my likelihood of disease going forward.

Kjersti Aagaard is a physician specializing in maternal-fetal medicine whose research demonstrates where the science is today. She recently co-authored a paper showing that the placentas of preterm infants contain more tiny plastic particles than those of full-term infants. Microplastic accumulation might alter blood-vessel development in the womb, increasing the risk of preterm birth, she told me. But she and her colleagues had “no data” demonstrating how microplastics caused early deliveries, if they were causing them at all.

Still, scientists know more than enough to be concerned. Research indicates that plastic chemicals can bind to hormone receptors, kill cells, and damage DNA. Studies show that the degree of exposure to plastics corresponds to the incidence of disease. We don’t know yet “if this is ‘Silent Spring 2.0,’ ” Aagaard wrote in an email. We may not know for a long time. But that doesn’t mean we shouldn’t work to reduce the risks now.

That was my next project, and I conscripted Tracey Woodruff, the director of UC San Francisco’s Program on Reproductive Health and the Environment. Yes, she said, there were straightforward, scientifically informed ways for people to protect themselves. Plastic and plastic-related chemicals have to get into your body to hurt you. You have to consume them, breathe them in, or absorb them through your skin. Cut off the supply lines and hamper the enemy.

She told me she sympathized with the urge to buy your way out of harm, but noted that wealthy people have more PFAS in their body than lower-income people, perhaps because they buy so much more stuff. Some fixes involve spending money, but many don’t; people should just do what they can, she said. In the kitchen, opt for glass and stainless-steel containers, and throw away degraded plastic tools. Avoid doing anything to heat or agitate plastic, so quit putting plastic containers in the microwave and kiddie cups in the dishwasher. Food and beverages themselves carry plastic particles, so avoid processed foods. “Eat less takeout and fast food, eat less packaged food, and eat more food prepared in your home; that can reduce your exposure,” she told me.

Elsewhere in the home, you can replace polyester rugs, vinyl fabrics, and microfiber towels with alternatives made from linen, cotton, leather, or wool. You can rip up your carpet and opt for bare wood floors. Hang plastic-derived garments to dry after washing them on a gentle cold cycle. “Ugh, we were the original fleece family,” Woodruff told me. “It’s so great, lightweight, and warm. But it’s recycled plastic,” so now she’s trying to buy wool and denim coats from thrift stores instead.

Then, keep the battleground clean. Wash your hands. Take off your shoes in the house. Use a HEPA filter. The dust bunnies under your bed and the film on your stove vent contain contaminants, so scrub away grease and mop, dust, and vacuum. “I don’t want people to think, Oh, I should go out and buy industrial-strength cleaning products,” Woodruff said. “Those contain toxic chemicals. You can clean everything with water and vinegar and baking soda.”

I began to put her recommendations to use. I bought a metal filter to make my own iced coffee. (Good luck finding an automatic coffee maker without plastic in it.) I started hang-drying a lot of the household’s laundry and decided to try to buy natural-fiber clothing going forward.

Another point Woodruff made stuck in my head. “People say the dose makes the poison, and that’s fine if you are a healthy adult,” she said. “But there’s a range of how susceptible people are.” People who are pregnant, people with preexisting health conditions, people who work in industrial environments, people who live in polluted neighborhoods, and children are most vulnerable to the “insult” of plastic chemicals.

I turned my attention to my kids. Sheets and blankets are important because you breathe so close to the fibers for so many hours. I replaced my younger son’s with natural alternatives. Then I contemplated what to do about my older son, who is obsessed with dragons. A few years ago, I bought him a plastic-fiber duvet cover with dragons on it. I get sweaty looking at it. I needed to get rid of it.

“Why don’t I get you a nicer comforter with dragons on it?” I said one evening, trying to be nonchalant. He looked at me like I had threatened to send him to an orphanage.

“No,” he said. The dragons were crucial for the household’s safety.

“What if I put dragons above your bed, or around your bed?” No. “What if I got dragon toys?” No. We had fought to a draw. I waited a few weeks, bought a soft cotton duvet cover, and threw out the dragon one without telling him, changing the HEPA filter while I was at it.

The HEPA filter itself was plastic, I noted while standing in my kids’ room, awaiting the tantrum that, thankfully, never materialized. My boys’ chewed-up stuffies were plastic. Their closet was filled with plastic clothes, their shelves stuffed with plastic-coated books, their backpacks and lunch boxes formed from plastic. That night, I dreamed about plastic. I was back in the hospital where I had given birth for the first time, sitting in a plastic wheelchair in the NICU, eating ice chips out of a plastic jug and absorbing plastic stitches into my skin. I took my older son, tiny enough to slip into a pint glass, out of a plastic box where he was being fed by a plastic tube and oxygenated by a plastic cannula.

My anxiety about myself was really about my children—about them growing up in a world where all the objects around them seem bound to hurt them, where too many corporations fight to pad their profits and hide the evidence, where problems are solved by individual action rather than collective responsibility. Until our government acts to protect us, we are both the home chef using the Teflon pan and the budgie choking on the fumes.

Throwing the pans out seemed, for now, like the least I could do. And the most I could do, too.

This article appears in the August 2025 print edition with the headline “My Personal War on Plastic.”

Annoying People to Death

2025-07-07T07:31:00-04:00

According to the White House, the One Big Beautiful Bill, the president’s signature second-term domestic legislation, does not cut Medicaid. According to any number of budget analysts, including Congress’s own, it guts the health program, bleeding it of $1 trillion in financing and eliminating coverage for 10 million people.

The White House has found a simple way to square this technocratic circle: lie. A trillion dollars in cuts is not a cut; stripping 10 million people of health insurance does not constitute shrinking the program; the president never said “lock her up”; Joe Biden did not win the 2020 election; up is down and down is up.

Other Republicans are adopting a more complicated form of explanatory geometry. The law implements a nationwide work requirement for Medicaid. Able-bodied adults will have to prove that they are employed, volunteering, or in school in exchange for coverage. “If you are able to work and you refuse to do so, you are defrauding the system,” Speaker Mike Johnson explained on CBS. “You’re cheating the system, and no one in the country believes that that’s right. So there’s a moral component to what we’re doing.” The law does not cut Medicaid, in this telling. It protects the program from abuse.

Johnson’s explanation is no less galling than Donald Trump’s lies. The Medicaid work requirement will not strengthen the program, improve the labor market, or kick lazy cheaters off government benefits. Rather, it will saddle taxpayers with billions of dollars of new costs and low-income Americans with hundreds of millions of hours of busywork. Red tape will cause millions of people to lose health coverage, some of whom will perish because they cannot access care. Republicans are not protecting Medicaid. They are voting to annoy their own constituents to death.

Why does Medicaid need a work requirement in the first place? To prevent the safety net from becoming a hammock, Republicans love to say. But most people on Medicaid are already working if they can work. And Medicaid doesn’t provide its enrollees with cash or a cash-like payment, as the country’s unemployment-insurance, welfare, Social Security, and SNAP programs do. You can’t eat an insurance card. You can’t pay your rent with the guarantee of low co-pays for ambulatory care. Because insurance does not help recipients make ends meet, it does not shrink the labor market, as proved by a randomized controlled trial.

According to the Kaiser Family Foundation, 64 percent of nondisabled adults on Medicaid have a job. Most of the others are not working because they have medical problems or significant caretaking responsibilities, or because they are attending school. Just 8 percent of nondisabled adults seem to be in the category of folks Johnson hopes will be spurred to work by the threat of losing their health coverage. They aren’t 28-year-old guys signing up for public insurance so they can play video games all day. They are retirees and people who can’t find work in their community.

Thus, the work requirement should really be understood as a work-reporting requirement. Starting in 2027, nondisabled adults will have to log in and tell Uncle Sam what they do with their time in order to afford cancer screenings and bloodwork. Each state with an expanded Medicaid program will have to pay a contractor to create, test, and launch a complex intake-and-verification system in 18 months—six, really, because the Department of Health and Human Services is not expected to release detailed rules on the new requirement until midway through next year. In 2019, the Government Accountability Office found that states had spent as much as $463 per beneficiary setting up such systems in the past. Georgia, the only state that currently has a Medicaid work requirement, spends $9 on overhead for every $1 it spends on medical care through the initiative.

More than 20 million Americans will have to set up accounts to let the state know that they are in compliance with the work requirement, out of compliance, or not subject to it. This likely means collecting documents, uploading them, waiting for verifications, submitting sensitive personal data, and appealing incorrect determinations, all on what, history shows, will surely be a clunky, faulty system backed by a too-small cadre of overworked and underpaid civil servants. A broken laptop or a faulty internet connection might cause an individual to get rejected; a missed phone call from a caseworker might lead to a person missing out on care. Washington is shifting the burden of public administration onto individuals, and counting on people to fail.

In general, work requirements are far better at weeding out worthy participants than they are at motivating noncompliant ones. Roughly 240,000 Georgians are eligible for the state’s work-for-Medicaid initiative, which covers very poor nondisabled adults. Only 5,500 are actually enrolled, thanks to the complexity of the program’s rules and the impossibility of its portal. Arkansas kicked nearly 20,000 people off Medicaid when it required applicants to prove that they were working in 2018 and 2019; the change had no effect on employment. One analysis of the One Big Beautiful Bill suggests that each “appropriate” disenrollment from Medicaid will cost taxpayers $5,000 in bureaucratic overhead—not far off from how much Medicaid spends per person to begin with.

Trump’s law doesn’t protect Medicaid. It requires Americans to spend hundreds of millions of hours a year filling out tedious, unnecessary paperwork. It will cause millions of Americans to lose their health coverage, limiting their access to care and forcing them into debt. An estimated 50,000 people will die each year—many thanks to red tape.