“Respondents were allowed to select more than one answer to the question, and most said the money would go to filling an essential need. The survey found about 60 percent of people planning to use at least some of their money on food, and about 45 percent planning to spend some or all the funds on housing — either rent or mortgages. Other bills were also a priority, with 45 percent saying the stimulus would help with utility payments, and about 31 percent wanting to put money toward credit cards or loans.
About 15 percent of respondents felt they might be able to save some or all of the money. Only 2.5 percent said some portion of the money would go toward recreational expenses.”
“Early on in his administration, Trump raised tariffs. The Cato Institute’s Scott Lincicome describes the president’s trade war as having “implemented five different tariff actions on almost $400 billion in annual U.S. imports (as of 2018) under three different laws with different rationales: ‘safeguards,’ ‘national security,’ and ‘unfair trade.'” We were promised ever-more jobs thanks to the tariffs. But as numerous academic studies have shown, the people who shouldered nearly all of the burden of these import taxes were not foreigners but, rather, Americans.
Protectionism reduces the overall wealth of the nation. Aside from a few favored and protected producers, Americans, in general, are made poorer. Consumers have to spend a higher share of their incomes to buy goods that they could otherwise get for less. As a result, ordinary Americans save less and have less to spend—even on nontariffed goods and services. The American producers of goods that use tariffed foreign inputs also see their production costs driven up, which drives their ability to compete down.
Unsurprisingly, the administration’s belligerent trade policies disturbed our trading partners. They retaliated with their own tariffs on American exports (to the detriment of their consumers). Adding insult to injury, the president’s erratic behavior, threats, and contradictory tweets about his trade policy likely spooked investors. The overall uncertainty and negative effects of the trade disputes surely dampened the beneficial effects of the president’s few good fiscal policies and regulatory reforms.
Take, for instance, the corporate income tax reduction as part of the Tax Cuts and Jobs Act of 2017. This reform should attract to the United States much foreign direct investment, or FDI. Yet, FDI flows into the United States were 10 percent lower in 2019 than during the two previous years. Simeon Djankov and Eva Zhang of the Peterson Institute for International Economics recently looked into the fall of FDI flows into the United States. “It is likely that the positive effect of the corporate tax cut in attracting FDI to the US,” they concluded, “was outweighed by trade disputes and threats of withdrawal, as well as actual withdrawals, from international treaties and organisations, which may have scared investors away.”
As for trade treaties, the Trump experiment is one that I hope we won’t repeat. First, he impulsively withdrew the United States from the Trans-Pacific Partnership, a multilateral trade agreement designed to oblige China to behave better on trade while opening up a large free-market zone with other Asian nations.
Trump renegotiated the North American Free Trade Agreement with overall negative net impacts, thanks to an anti-growth minimum wage and increased domestic content requirements. And he moved to extend high tariffs on Korean trucks as part of the one-sided reform of the George W. Bush-era U.S.-Korea Free Trade Agreement, to the detriment of U.S. consumers.
Finally, the president inflicted serious damage to the World Trade Organization—the great arbitrator of all international trade disputes—on the specious claim that the organization wasn’t sufficiently deferential to the United States. Here’s how Lincicome sums it up: The administration chose “to shut down the organization’s appellate body (basically the supreme court of trade dispute settlement) instead of negotiating new and necessary reforms in good faith (e.g., by teaming up with like-minded countries while offering actual concessions on longtime irritants like U.S. agricultural subsidies and ‘trade remedy’ rules).””
“A growing chorus of lawmakers and experts argue Congress could further improve jobless benefits by adding something called “automatic stabilizers” into the equation. That would mean that benefits would be tied to certain economic conditions — say, the unemployment rate — and would phase out as the economy gets better. They would be triggered on and off according to what’s actually happening in the economy for businesses and for workers.
“A ton of resources are wasted during a really crucial time … just having to go through this ad hoc stimulus and relief and recovery, and it just doesn’t have to be like that,” said Heidi Shierholz, a senior economist and director of policy at the Economic Policy Institute and former chief economist at the Labor Department. “We can automate things to make it so Congress could step in if they ever needed to do more relief, but it would mean that the basic structure of relief and recovery would be there already.””
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“The government already has in place automatic stabilizers, including unemployment itself, which is intended to stabilize the economy — not only do they replace income for people who lose jobs, but they’re also meant to help prop up the economy in moments of downturn and keep consumer spending going. When an unemployed worker can’t pay their rent, it’s bad for both the tenant and the landlord.
Because the unemployment system has become so whittled down over the years, benefits are less effective at supporting the economy than they used to be — food stamps tend to be more impactful — but it varies by state. “Unemployment insurance is a much better stabilizer in Massachusetts and New Jersey than it is in Texas and Virginia,” said Wayne Vroman, a labor economist at the Urban Institute.
But with federal interventions during the pandemic, that has changed somewhat, at least temporarily. Expanded unemployment benefits appear to have been quite useful in helping people spend what they need, which in turn helps businesses dependent on those customers. Research shows they actually helped many people with savings, and they likely made the recession less severe. They also reduced some inequalities in how Black and white workers access benefits and the amount of benefits they receive. This makes the argument that they should continue as long as the crisis continues make sense.”
“A genuinely free market family agenda could start with reforming tax laws to ease the burden on two-income families with children. As Edward McCaffery documented in his 1997 book Taxing Women, the U.S. tax code is biased against secondary earners, who are usually women. The secondary earner’s first dollar is taxed at the same high rate as the primary earner’s last dollar, because we don’t allow true individual filing for married couples.”
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“One of the book’s best chapters explores the benefits of marriage and decries falling marital rates among the poor. But it does not explore how tax and welfare policies that distort market signals help explain the rejection of marriage. For example, a couple who each earn $20,000 and are eligible for the Earned Income Tax Credit can get substantially more by remaining unmarried and filing two separate tax returns than by marrying and filing one. And because many welfare benefits are reduced as household income rises, there is a disincentive to live with the other biological parent of one’s children. A simpler relief system, along the lines of a negative income tax or a universal basic income, could avoid many of those dysfunctions by providing benefits directly to individuals regardless of marital status or other demographics. But even that sort of reform, hardly a radical libertarian move, doesn’t get discussed here.”
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“Nor do we hear as much as we should about the potential drawbacks to the policies Eichner prefers. She frequently invokes Finland as a country that does more to mandate paid parental leave, subsidize day care, and limit weekly hours of paid work. She does not ask what the costs to Finnish society might be from such policies. For example, the Finnish unemployment rate over the last decade (before COVID-19) was roughly twice the U.S. average, falling only briefly below 6 percent and topping out at almost 12 percent in 2015. The female unemployment rate for 2009–19 averaged about 8 percent, compared to about 6 percent in the United States. In 2014, Reuters found that fewer women are in high management positions in the private sector in the Nordic countries than in the United States. There are two likely explanations for this. First, despite public policy geared toward equality, Nordic women still are disproportionately represented in occupations such as health care and education that are largely in the public sector. Second, parental leave laws still encourage more time off for mothers, and that time off can set women back when pursuing management tracks. The Financial Times recently reported a similar result looking specifically at Norway.
Perhaps these costs are worth the benefits, but to make that case you have to discuss the cost side of the equation. The Free-Market Family does not grapple with the evidence that virtually every federal social program in U.S. history has ended up costing far more than projected when it passed. Whatever Eichner imagines the costs of her preferred pro-family policies to be, we can reliably multiply that several times over to get the likely costs over time.
She does finally say something about costs in the final chapter. But even there we get only a few paragraphs of hand waving and the assurance that these programs will pay for themselves with greater productivity and female employment. And if they don’t, well, we can just reallocate what we spend on the military and make the tax code more progressive. There is no discussion of the potential tradeoffs caused by higher marginal tax rates. (She points out that the U.S. economy grew when statutory rates were higher in the past, but this ignores the difference between statutory rates and the effective rates paid after avoidance and deductions. According to the Tax Foundation, the top 1 percent of earners in the 1950s paid an effective tax rate of about 42 percent, which is not that much different from the 36 percent effective rate today.)
Despite these omissions and flaws, The Free-Market Family does document some significant problems facing American families. As Eichner shows, the more we learn about the neuroscience of child development, the more we know about the material conditions under which children thrive. It is important to think through how best to ensure that parents can create those conditions, especially at a time when the prevailing policy assumptions tend to favor big-government interventions like the ones Eichner proposes.”