Category Archives: Politics

Describing the 20% of temporary rich (“mass affluent”) Americans

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New survey data looks at new rich Americans who draw a lot of attention from companies and who might have outsized political influence:

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America’s economy and politics. This little-known group may pose the biggest barrier to reducing the nation’s income inequality…

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners…

Companies increasingly are marketing to this rising demographic, fueling a surge of “mass luxury” products and services from premium Starbucks coffee and organic groceries to concierge medicine and VIP lanes at airports. Political parties are taking a renewed look at the up-for-grabs group, once solidly Republican…

In a country where poverty is at a record high, today’s new rich are notable for their sense of economic fragility. They’ve reached the top 2 percent, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged…

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children…

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

This sounds like a group that would call themselves upper middle-class: wealthy enough to enjoy some luxuries and good things for their kids but not wealthy enough to truly compete with the millionaires and CEOs. They resent the idea that they are rich as they think middle-class values, such as hard work and providing for their kids, helped them arrive at their current position.

Yet, when the median household income in the United States is around $50,000 it is hard not see this group as wealthy. To some degree, it is all relative: the mass affluent might not be able to consistently live the high life in Manhattan or San Francisco but they could do really well in cheaper places like the Midwest or Atlanta or Dallas. Perhaps it is the perceived fragility that matters most: losing their job might be enough to move them down back near the median income, though unemployment rates are much lower for the educated and well-trained.

A few questions after reading this article:

1. How big should this group be in the United States?

2. Long-term, which party will capture these voters?

3. Will this group get a lot of negative attention as they are more accessible than the ultra-wealthy who can live more cloistered lives?

Big city mayors discuss why no sitting mayor has ever been elected President

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Watch this video of current big city mayors talking about why no one has ever moved from sitting mayor to American President. The most common reason given: mayors have to make decisions, big and small and often pragmatic, all the time and this doesn’t line up with the gotcha politics of today and keeping all the constituents happy. It may be just me reading into the video but it seems like these mayors give this reason with both a sense of pride and regret: “Hey, we make tough decisions all the time and this can make people mad. Unfortunately, we don’t get rewarded at the highest level for such choices.”

I suspect there is more to this story, particularly if we asked the mayors of the biggest cities, and it would be worth hearing more.

Recent book details the “new swing states” of suburbia

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Richard Florida describes the findings from a recent book titled The Political Ecology of the Metropolis that looks at the swing votes available in American suburbs:

Sellers and his colleagues analyze the political characteristics of cities and suburbs across many advanced nations. Sellers’s own chapter covers the U.S., and it includes some eye-opening insights. While most previous research has looked mainly at states and counties, Sellers has developed a detailed data set on the municipalities that make up America’s metro regions. He tracks the political geography of the 1996, 2000 and 2004 elections across twelve U.S. metros with populations of at least 450,000: New York, Los Angeles, Philadelphia, Detroit, Atlanta, Seattle, Cincinnati, Fresno, Birmingham, Syracuse, Wichita, and Kalamazoo.

Democrats have a “decisive” advantage in dense, urban localities and poorer, majority-minority suburbs. In the affluent suburbs, Sellers explains, “Republicans enjoy an analogous, if less dramatic” advantage. He notes that “a pervasive divide separates the Republican low density areas of metropolitan peripheries from the Democratic urban centres and minority suburbs.” At the broad metropolitan level, votes follow the same red/blue, rich/poor pattern identified by Larry Bartels and Andrew Gelman at the state level. Sellers found that municipalities with educated and affluent voters tended to vote with their state’s winners – they voted more Republican in red states and more Democratic in blue states.

With these bases locked down, the key political footballs – the new “swing states,” so to speak – are the swelling ranks of economically distressed suburbs, where poverty has been growing and where the economic crisis hit especially hard. There are now more poor people living in America’s suburbs than its center cities, and as a recent Brookings Institution report found, both Republican and Democratic districts have been affected by this reality…

America’s new metropolitan geography is overlaid by one additional factor: voter participation. Turnout levels have ranged between 52 and 62 percent over the past several national elections. Even though Democrats have the clear advantage in raw numbers, Republicans dominate the kinds of communities where people are more likely to actually vote. Turnout, Sellers finds, tends to be higher in GOP strongholds – the more affluent, highly educated suburbs and low-density rural and exurban areas, all places with higher levels of home-ownership.

See earlier posts on Joel Kotkin’s analysis of swing votes in the suburbs. The candidates should know this as well and we should see a lot of visits in the future to such suburbs.

These economically distressed suburbs, often inner-ring suburbs adjacent to big cities but also more far-flung places that are more working class and not as dependent on white-collar and professional work, may hold more than just the political key to metropolitan regions. While wealthier residents batten down the hatches in nicer suburbs and trendy urban neighborhoods, what happens to the majority of residents who face fewer prospects?

Changing the official poverty measure leads to 49.7 million Americans in poverty

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If recommendations from social scientists are followed, the official US government measure of poverty will change and nearly 50 million Americans will be categorized as in poverty:

The number of poor people in America is 3 million higher than the official count, encompassing 1 in 6 residents due to out-of-pocket medical costs and work-related expenses, according to a revised census measure released Wednesday.

The new measure is aimed at providing a fuller picture of poverty, but does not replace the official government numbers. Put in place two years ago by the Obama administration, it generally is considered more reliable by social scientists because it factors in living expenses as well as the effects of government aid, such as food stamps and tax credits.

Administration officials have declined to say whether the new measure eventually could replace the official poverty formula, which is used to allocate federal dollars to states and localities and to determine eligibility for safety-net programs such as Medicaid.

Congress would have to agree to adopt the new measure, which generally would result in a higher poverty rate from year to year and thus higher government payouts for aid programs.

Some other interesting data in the story as well: Social Security reduces poverty for those over 65 years old quite a bit and food stamps reduce the number of Americans in poverty by over 5 million.

On one hand, it is hard to argue with calls for a more accurate measure of poverty. This would better reflect actual living situations and give the government a better tool for addressing the issue. On the other hand, this is quite the political football. Don’t poor Americans have plenty of electronics (a bad argument)? But, as Joseph Stiglitz notes in the article, how can one of the wealthiest countries in the world have 1 out of every 6 residents living below the poverty line?

Bill de Blasio the first ever New York City mayor to send his kids to public schools?

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A look at how the new mayor of New York City identifies with the working class and forgotten elements of the city includes this interesting piece of information about where de Blasio’s kids go to school:

The Brooklyn resident says he would become the first mayor in the city’s history with children enrolled in public schools. “He knows our issues because he has children in the trenches with us,” said Freddie Sneed Jr., 55, a truck driver.

I know different parts of the political spectrum might interpret this information differently but it struck me as quite surprising. Not one mayor in NYC history would have their children attend public schools? Here is more on de Blasio’s claim as he used it on the campaign trail:

This week, at a televised debate between the 2013 Democratic mayoral candidates, the issue of parental school choices came up again. But this time the topic was brought up voluntarily, by Public Advocate and public-school parent Bill de Blasio.

De Blasio pointed out that if he wins, he will become the first mayor in the city’s history with children in public school.

It’s not a claim I could substantiate. I can say with certainly, however, that he would be the first mayor with a child in public school at the time he was mayor in at least 50 years…

None of the other leading candidates from either party who have children made the decision to send them to public school: Bill Thompson sent his daughter to private school and his step-children are in boarding school, while Republicans Joe Lhota and John Catsimatidis sent their children to private schools.

Read on for more history of NYC mayors and their choices of where their kids went to school. Did de Blasio’s claim make a difference in the election?

It’s hard to tell just how much it will matter when it comes time for people to vote, though, since there’s so little precedent for becoming mayor on the strength of being a public-school parent.

Since he won, I suspect more people will claim this choice mattered more.

Illinois revenue issue: “sin taxes” can’t keep pace

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Even as legislators raise “sin taxes,” it is difficult for the state to bring in as much revenue from such taxes:

While state lawmakers continue to increase taxes on liquor, cigarettes and gambling, revenues from the so-called “sin taxes” aren’t keeping pace. At $1.95 billion, 2012 revenue from those taxes was almost on par with that of 2003, even though most tax rates increased significantly, according to a Daily Herald analysis of Illinois Department of Revenue financial reports…

Since tobacco taxes were raised in 2002, revenues steadily have declined to pre-hike levels as cigarette purchases dropped in Illinois. Legislators last year doubled tobacco taxes, but revenue did not keep up. After getting $609 million in tobacco taxes in the previous fiscal year, the state generated $856.5 million from tobacco taxes in the fiscal year that wrapped up a few months ago, according to the state legislature’s Commission on Government Forecasting and Accountability…

While taxes on things like cigarettes and liquor are relatively easy to sell to many taxpayers, critics say a failure to maintain these revenue levels ultimately results in higher taxes for everyone. It’s no surprise to Illinois Policy Institute Executive Vice President Kristina Rasmussen that sales and income tax rates have also increased in recent years…

The state’s sales and income tax projections are also eroded by buyers going elsewhere for alcohol, cigarettes and similar products. Rasmussen said legislators are taking a shortsighted approach to revenue enhancements instead of solving long-term debt problems.

It is more popular politically to go after sin taxes than to look at larger spending or taxing issues.

But, what counts as a “sin” is also interesting to note – it is quite a social construction. Cigarettes are seen as a huge threat to public health but are not illegal. Alcohol was once banned on a national level and there were decades of temperance movements but it too is legal and brings in a lot of revenue beyond sin taxes – think what restaurants generate. Marijuana is a growing sin tax alternative as some places look to cut costs: instead of jailing users and sellers, why not just ticket them or tax them, making money off of behavior that is still seen as deviant. Thus, it isn’t surprising as more of these traditional “sins” fail to generate sufficient revenue that new sins are identified, from red-light cameras to speed cameras to soft drinks to junk food and beyond.

New report says Chicago area transit agencies have a host of issues

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Here are some of the issues facing Chicago area transit agencies according to an Illinois task force:

• The Metra scandal demonstrated that “those responsible for the transit system do not always have the rider’s best interests at heart.” Many transit board members are appointed without background checks and there are no ethics rules or discipline for those guilty of misdeeds, the task force found.

• There are four transit boards with 47 people appointed by 16 elected officials. The system leads to a lack of accountability and “makes it difficult to know who is responsible when the system is not functioning well,” the report stated. Instead of pushing for excellence, boards are more about representing political or geographic constituencies.

• A 2007 Illinois auditor general’s report found duplication and lack of coordination among various transit fiefdoms. That situation hasn’t improved in the past six years, the task force found.

• A coordinated regional transit plan to increase ridership is lacking. Traffic congestion has nearly tripled since 1980 but the percentage of commutes to work using transit have dropped from 18 percent to 13 percent in that time frame.

• The transit system under-serves the region. Only 53 percent of jobs in the six-county area can be reached using transit within 90 minutes, according to one estimate and another projection puts that number at 24 percent.

• Funding formulas encourage turf wars and a “divisiveness that splits the region and creates competition,” the report found.

Sounds like too many agencies with members who represent all sorts of groups (and perhaps not the riders) leading to a system that is not so great.

If the problems are easy to spot, what are some workable solutions? Illinois is known for fragmented government bodies – many levels with lots of groups having access to tax dollars – so this wouldn’t necessarily be easy to change. Are there models from other metropolitan areas that could produce a better mass transit system? What might Chicago area residents get in mass transit if these problems were reduced?

Who is the most powerful person in the world?

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One commentator argues Janet Yellen would become the most powerful female in history as Chair of the Federal Reserve:

The Fed is as powerful as it is boring. (Alright, maybe not that powerful, but you get the point). See, its job is to make sure the U.S. economy stays in the Goldilocks zone: growing neither too fast nor too slow, but just right to keep both unemployment and inflation low. It raises interest rates when it thinks growth is too high, and cuts them when it thinks growth is too low — and it does all this by controlling how much money is in the economy. But the Fed’s interest rate decisions don’t just set the course for the U.S. economy; its decisions set the course for the world economy too. That’s because the dollar is the world’s reserve currency, and so many emerging markets have pegged their own to it — which means they’ve decided to import our monetary policy. Think about it this way. If I say my currency will always be worth a certain number of dollars, then I have to print more of it when the Fed prints more dollars. That’s why economists call the Fed a monetary superpower: it’s the world’s central bank all but in name. And, as you can see in the chart below from economist David Beckworth, the Fed’s hegemony isn’t limited to emerging markets. The European Central Bank (light blue line) and the Bank of Japan (black dotted line)  have also followed the Fed’s lead the past 10 years or so.

In other words, Janet Yellen will have more control over the global economy than any other living person once she’s confirmed as Fed Chair. Now, the Fed is a democracy, not a dictatorship, but it’s a funny kind of democracy — the Chair alone sets the agenda. So if Yellen even just talks about slowing down the Fed’s bond-buying, Europe’s troubled economies are liable to see their interest rates rise, and emerging markets are liable to see their currencies collapse.

This might be enough to get conspiracy thinkers going: the Fed Chair, an appointed position, certainly has a lot of international power. This got me to thinking: if Yellen has all this power, who else might be in the conversation for most powerful person in the world? Here are some options:

1. The President of the United States. Political power backed with a lot of economic, military, and cultural power. The “leader of the free world.”

2. The wealthiest person in the world. Bill Gates has $72 billion, the most in the United States, but Carlos Slim has the wealth in the world at $73 billion. Both men are connected to powerful companies. However, just how much can even the wealthiest business leader do compared to the economic prowess of a large country?

3. People that Time names as Person of the Year. It is an American publication so that skews the data with lots of American political leaders. But, still a well-known list.

4. Another Time list: the 100 most influential people in the world. This list tends to make room for more cultural and artistic leaders, in addition to the more typical political and economic leaders.

5. People who subvert international norms on a global scale. Think Adolph Hitler or Osama bin Laden. With some resources put to more nefarious uses, they are able to dominate policy decisions and cultural understandings.

6. The flip side of #5: people who are leaders of successful large social movements. Think Gandhi or Martin Luther King, Jr. They become icons for helping bring about great good.

7. Whomever currently has the most Twitter followers. Justin Bieber currently tops the list followed by Katy Perry, Lady Gaga, and Barack Obama. Definitely more about cultural power and Twitter users are still a relatively small percentage of the population.

I’m sure there are more options out there. From a Marxist perspective, we would want to look more at economic leaders while Weber’s addition of status and power are also helpful. And, we could also think of how big of a structure or number of followers a single person can leverage – by themselves, individuals, even the wealthiest, may not be able to do much.

Wording matters: more Americans oppose and support Obamacare than support and oppose the Affordable Care Act

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This is a good example of how wording questions differently can lead to different results: support of Obamacare versus the Affordable Care Act.

More Americans oppose the health care law when you call it Obamacare—46% of Americans oppose the health care law when it carries Obama’s name, while just 37% oppose the Affordable Care Act.

When dubbed Obamacare, however, the law has more supporters: 29% of those polled in a new CNBC poll said they supported Obamacare; just 22% of those polled said they supported the Affordable Care Act.

CNBC asked half of its poll respondents about the Affordable Care Act and half of them about Obamacare.

There are a couple of possible explanations here: some people react more negatively or positive to Obama while others might be unclear what exactly the Affordable Care Act is.

Given these results, it makes President Obama’s decision to fully own the Obamacare title as opposed to using a more neutral title. While he might feel the legislation is a signature part of his presidency, its attachment to him rather than having a more bland bureaucratic name might be hurting its cause.