The Corner

Politics & Policy

Since When Have We Sniffed at $1,000?

NBC’s Katy Tur watched Trump’s tax event yesterday, and reacted with ill-concealed contempt to the stories she heard from his crowd:

I must confess to being slightly confused as to what point Tur is trying to make here. Surely she can’t think that the “gentleman” in the first tweet believes he will only need $1,000 to “save to start a family”? And surely she can’t think that the “woman” in the second tweet, who said she’d use her “$1,000 bonus and tax cut to help buy a home and pay for her two kids who are going to college,” believes that a home in Ohio plus college for two will cost only $1,000 in total? And if Tur doesn’t, then surely she can see that, for both of these people, having $1,000 more today than they did yesterday is a welcome development? Given that nobody has claimed otherwise, the fact that the extra $1,000 won’t buy everything immediately is immaterial. Per these voters, it’ll help with their long-term goals. In what universe do we respond to people who say they intend to start saving for a home, a family, or a college education by suggesting that they are actually too poor?

One wonders at what point it became controversial to see extra money as a good thing. Back in 2011/12, when President Obama was touting his payroll tax-cut, the White House put up a whole website dedicated to explaining “What $40 means to Americans across the country.” The page is absolutely brimming with examples of the difference that extra money made. Oddly enough, I don’t remember much pushback against this. Assuming fortnightly paychecks, that $40 cut amounted to $1,040 per family per year, which gives us an almost identical figure to the one being touted by the attendees at Trump’s event. Is money somehow more valuable when Barack Obama is involved in its delivery?

As with the payroll-tax cut, there have been some reasonable criticisms of the Republicans’ tax bill. Indeed, I have advanced some of them myself. One could argue, for example, that it is highly inefficient for an already-indebted federal government to borrow up to $1.5 trillion later in order to finance tax cuts and bonuses now. One could argue, too, that as a mechanism for funneling more money to those in need, the Republicans’ plan was lacking. But neither of these is the argument Tur is making. Really, her response is akin to telling a ten-year-old who plans to put the $20 he got for Christmas toward an electric guitar that “guitars cost much more than that, dummy.” Indeed they do. And that says what exactly about the value of saving over time?

Tur’s examples are peculiar. Most people do not buy homes outright, and, indeed, most people find collecting the down payment, not the monthly payments, the most challenging part of buying property. At the moment, the average down payment on a home is between 8 and 11 percent, depending on the buyer’s age. As such, a home worth $277,582 would require a down payment of between $22,000 and $30,000, and monthly payments of around $1,200. Of course a sudden $1,000 bonus (plus an ongoing tax cut) will help here — not least for those who are close to having saved enough, but who are not quite there yet.

The same is true of medical bills. If Tur is correct to predict that the “gentleman” who wanted to “start a family” would end up paying $5,836 for a birth, then the bonus he’s received will cover up to 17 percent of that (taxes depending) — a not inconsiderable amount. Moreover, in the event that he can’t afford the expense all at once (an awful lot of people pay medical bills over time), that $1,000 will help his cashflow to no end. I am struggling to imagine Tur exhibiting the same reaction if, for example, a Democratic Congress had voted to subsidize every birth with $1,000 in parent-directed cash. Why is that?

As for college, the cost of which Tur puts at between $19,000 and $35,000 (presumably per year), it is hard to ascertain what she’s complaining about. Assuming that a parent saved an equal amount for each child in each of his pre-college years, $1,000 represents a whole year’s saving for a year at public college, and half a year’s saving for a year at private college. In anyone’s terms, that’s a lot of money, especially when one factors in that a) as a result of financial aid, most Americans do not pay anything close to Tur’s numbers, and b) that 41 percent of those saving for college use 529 accounts that grow over time, tax-free. 

It has been enormously strange to watch the critics of this tax bill shift away from the strongest available arguments, and imply instead that money doesn’t matter much after all. It’ll be worth remembering this attitude next time a tiny cut to an obscure program is cast as the end of the Republic.

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