Money

Budgets, wealth, taxes, and poverty  

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Making Sense of Debt, Deficits and Other Dull Mysteries of the Universe

There’s been a lot of news recently about the government’s ongoing battle over the deficit and the debt ceiling.

But what does it all really mean?

If you happened to be snoozing through most of your 12th grade economics class, here’s a quick refresher:

The deficit is the gap between what the government spends and what it actually makes in revenue (through taxes).

So, basically, to put it into first-grade math terms: (D)eficit  = (S)pending – (R)evenue 
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Is It Time To Raise The Federal Minimum Wage?

Includes interactive maps, video, audio
Source: NPR

Source: NPR

 

Much of President Obama’s State of the Union address last Tuesday centered on the theme of boosting America’s dwindling middle class.

“It’s our generation’s task,” he implored, “to reignite the true engine of America’s economic growth — a rising, thriving middle class.”

Among the more tangible policies mentioned that evening to further that objective,  the president proposed raising the federal minimum wage – from $7.25 per hour to $9 by the end of 2015 –  and provide for annual cost of living adjustments. (This would apply to most hourly jobs, with some exceptions, including some tip-based work.)

“Let’s declare that in the wealthiest nation on earth, no one who works full time should have to live in poverty,” he said. “Working folks shouldn’t have to wait year after year for the minimum wage to go up, while CEO pay has never been higher. So here’s an idea that Gov. Romney and I actually agreed on last year: Let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.” Continue reading

What Prop. 30 Means For Your Taxes

Includes explainer video

Kevork Djansezian/Getty Images

Wait … Californians actually voted to tax increase their own taxes?

Get outta here!

Like most Americans, California residents don’t look too kindly on the notion of raising taxes. In fact, voters have rejected statewide tax measures the last seven times they’ve been on the ballot!

So in many ways, it’s pretty miraculous that on Tuesday 54 percent of California’s electorate approved Proposition 30, which temporarily increases sales tax for everyone by a quarter cent and raises income taxes for those making over $250,000. The measure, which Governor Jerry Brown crafted and threw himself behind, is expected to raise about $6 billion a year and prevent massive cuts to the state’s already beleaguered public education system.

Here’s how it’ll affect you:

Brown staked much of his political reputation on winning what became a bitter, hard-fought, and incredibly pricey fight; both sides waged a relentless ad war, collectively spending more than $120 million.

“I know a lot of people had some doubts and some questions: Can you really go to the people and ask them to vote for a tax?” Brown told supporters at the victory party late Tuesday night. “Well here we are. We have a vote of the people – I think the only place in America where a state actually said, let’s raise our taxes for our kids, our schools, for our California dream.”

And he was right. In a state where voters haven’t approved a tax hike in almost three decades, the very real threat of huge cuts to education appears to have actually resonated with voters.

The consensus seemed to be: “Yes, taxes suck, but some things are just too important to lose.”

The temporary nature of the tax, also, likely made the measure more palatable to voters.

Interestingly, it was younger voters who turned out in force on Tuesday in support of the measure. Voters ages 18-29 – who Brown and his campaign targeted – made up almost 30 percent of the electorate and were critical in pushing the measure through.

How Does California’s Tax System Work?

Includes our first original animation on California's tax system!

Taxes. Not too many folks like paying ‘em, and even fewer understand what they’re actually paying for. In November, California voters will decide on two major competing tax measures – Proposition 30 and 38. The initiatives are both intended to shield public schools from devastating budget cuts, although they each propose to do so in pretty different ways. Deciding which path makes the most sense requires first understanding the basics of California’s tax system. Pretty enticing, huh? Well, before we lose your attention to the latest gripping cat flick on YouTube, at least take a quick look at this animation produced by freelancer Josh Kurz. It’s a surprisingly digestible primer on a topic that’s admittedly pretty freakin’ dry … but one that’s also got some pretty huge real life consequences for almost all of us.
(Scroll down to see another KQED video and detailed summaries on both propositions)

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Following the Money: Who’s Paying for the Propositions?

Includes interactive funding chart
Individuals and organizations are spending millions in this election to win support for, or to defeat, a variety of propositions on California’s ballot. Anyone who’s watched even a smidgen of TV in the last two months can attest to the inundation of prop commercials out there. Often times, the names, affiliations, and locations of the big funders (who are oftentimes out-of-state groups) are left intentionally vague – organizations like Americans for Responsible Leadership, a conservative Arizona-based group that’s donated $11 million in favor of Prop 32. Such opaqueness makes it nearly impossible, from the ads alone, to decipher a funder’s political affiliation or long-term agenda. So, a little sleuthing can go a long way to find out who’s behind what. Bottom line: you always gotta follow the money! And the Vote’s Edge project at MapLight – a nonpartisan, nonprofit research firm – makes it pretty easy to do just that. Check out their cash flow tracking app.

Leaders of the (super) PAC: This Election, Who Are the Heavy Hitters?

Includes interactive maps and charts

Source: Center for Responsive Politics (www.opensecrets.org)

The 2012 presidential and congressional elections will cost roughly $5.8 billion, making it the most expensive in U.S. history. That’s according to estimates by the nonpartisan Center for Responsive Politics, which predicts about a 7 percent increase from 2008′s $5.4 billion price tag. The presidential race, alone, CRP estimates, will cost about $2.5 billion.

$5.8 billion! That’s nearly twice the state of Wyoming’s entire 2012 budget!

The biggest difference in this year’s election is the sharp rise in contributions – and influence – from outside groups, namely Super PACs. Remember that the current races – both presidential and congressional – are the first in which the new, post-Citizens United rules will be in effect. While outside spending groups did exist in previous presidential election cycles, significant legal developments, including the 2010 U.S. Supreme Court decision – which determined that political spending is a form of protected speech and lifted spending limitations for corporations and unions – have led to a rapid rise in super PACs and other outside spending groups that don’t have to disclose their donors. And that means a deluge of negative campaign ads paid for by organization’s you’ve probably never heard of. Continue reading

Eight Neighboring Nations with the World’s Largest Wealth Disparities (in GDP per Capita)

The world is not an equal place, and some places are a lot more unequal than others.

A national political border can have incredible significance; an abstract line separating neighboring peoples, economies, even life expectancies. Using GDP per capita as an indicator (sourcing the most recent Central Intelligence Agency data), the wealth divide between these four pairs of countries is vast … even though they geographically sit side by side.

(GDP defined)

Click on each country below to see the extent of the financial divide.
(I’ll leave it to you to figure out why this is.)

1.Kuwait and Iraq

Difference in GDP per capita: $38,300

2.United States and Mexico
Difference in GDP per capita: $34,200

3. Brunei and Malaysia
Difference in GDP per capita: $34,200 (tied with U.S.- Mexico)

4. North Korea and South Korea

Difference in GDP per capita: $30,000

Oh No He Didn’t! Wait, But What Does GDP per Capita Actually Mean?

Credit: Wikimedia Commons

During his recent trip abroad, Republican presidential nominee Mitt Romney caused a political stir in Israel (among other places he went) when he said that “culture makes all the difference” in explaining the vast difference in GDP per capita between Israel and its Palestinian neighbors.

And it’s not hard to understand why Palestinians might have been a bit ticked off by the remark: it’s basically saying that you’d be more financially successful if you changed your lifestyle. Harder to grasp, though, is the economic concept that Romney used in his comparison.

GDP per capita: One of those terms journalists and politicos throw out there as though it was something that normal humans conversed about at the dinner table. But what does it actually mean? And how is it relevant – or not – in determining a country’s well-being?

Put simply, Gross Domestic Product (GDP) is one (of many) ways to measure a nation’s income and level of productivity. The textbook definition will tell you: it’s the the market value of all goods and services that a country produces in a given period of time (generally a year).

In normal speak: it’s all the (legal) things that are produced and sold in a country, and all the wages and profits that are earned. Basically, an indicator of economic health and wellness.

GDP per capita, then, is the total GDP value divided by the number of people who live in that country.

So, for instance, let’s imagine your family’s house is a nation unto itself (work with me here): your dad’s a carpenter and makes, say, $50,000 a year selling his furniture. Your mom’s a lawyer and makes a salary of $70,000/year. You, however, are still in school and not working and thus, not making any income (freeloader!). So, the GDP of your household would be the sum of all those incomes: $120,000.

The GDP per capita, then, would be $120,000 divided by the number of people under your roof – the three of you. So … GDP per capita = $40,000.

GDP per capita is often used as a rough estimation of a nation’s general standard of living; the higher the GDP, the higher that standard. Of course, just looking at that figure alone can be pretty misleading, especially if there’s a lot wealth inequality within a particular country. Remember, that GDP per capita is just an average – it’s the income of a representative individual in a given country.

Take the United States, for instance: GDP per capita here is one of the highest in the world. And although the overall standard of living here is pretty high compared to a lot of other countries, there are also a lot of Americans who live in poverty.

Check out this explanatory animation on GDP per capita (I know, I know -  it’s econ – but it’s kind of interesting!)

The Cost of California’s Public Universities

Includes: interactive map

Click on each marker for undergraduate cost and debt information. California State University’s 23 undergraduate campuses are in blue. University of California’s nine campuses (excluding UCSF) are in red.

Sources: The California State University; University of California; Collegedata.com

The cost of knowledge at California’s public universities ain’t what it used to be.

About 600,000 college students attend one of the 32 California State University and University of California schools (UC San Francisco is the 33rd, but doesn’t have an undergraduate program). The state has, by far, the largest network of public four-year colleges in the country. And until fairly recently, going to school at a public school in California was a really good deal for in-state students.
But recent steep cuts in higher education funding have led to major spikes in the tuition tab. Just last year, California’s public universities enacted a tuition hike of 21 percent, the steepest increase of any state, according to the College Board.
The average in-state tuition and fees for a CSU school – at about $6,500 – is still relatively affordable compared to public universities in other states, but just ten years ago it was just about a third of the cost. Tuition increases in the UC system have followed suit; undergrads can now expect to shell out more than $13,000 a year. And of course, that’s before you even begin to consider books, supplies, and room and board, which more than doubles the cost. The result: fewer options for lower-income students and more loans and debt for graduates to pay off.