As tax day approaches, American taxpayers will wonder if they benefited from the Trump tax cut. Most people don’t think they did. Only 17% of Americans think the bill is reducing their taxes, even though the nonpartisan Tax Policy Center estimated that up to 80% would see some reduction in their federal taxes. There are five reasons for this mismatch between reality and impressions.

First, many people will technically have lower taxes, but the cuts are so tiny as to be hardly noticeable. The Tax Policy Center estimates the 60% of Americans at the lower end of the income distribution will have federal tax savings of less than $1,000. Also, most people believe the tax cuts didn’t benefit people like them but only the very wealthy. They are right. Those in the top 1% save $51,000.

Second, as Forbes contributor Howard Gleckman explained, the tax changes affected withholding through increases in the standard deduction and other provisions, especially the limit on deductibility of state and local taxes (SALT). But many taxpayers didn’t change their withholding allowances, so they may not have withheld the correct amounts in each time period. This means their tax refund is smaller than expected. The smaller-than-expected refund could be feeding a perception that taxes have increased even when they fell slightly.

Third, most Americans perceive the Trump tax cuts didn't benefit them because the highest income groups benefited the most . This is not only because of the rate changes, but because the drop in corporate taxes and rise in corporate profits ended up as higher incomes for the wealthiest households. The biggest winners in the Trump tax cuts were corporations and the households that get income from corporate profits—that is, the very wealthiest Americans. The top corporate income tax rate dropped by almost 40%, from 35% to 21%. And that cut is permanent, while the household rate cuts expire after 2025. The imbalance between household and corporate benefits is unpopular, with 62% of Americans saying it bothers them “a lot” that “some corporations don’t pay their fair share.” Even 42% of Republicans are bothered “a lot” about this.

Fourth, most Americans might doubt they benefited from the Trump tax reform because they believe the tax cuts are causing big deficits they will have to pay for sooner or later. Forbes contributor Chuck Jones showed the tax cuts were largely responsible for a 17% increase in the federal deficit last fiscal year. The Congressional Budget Office (CBO) estimates that deficits will average 4.4% of GDP between now and 2029, much higher than the average 2.9% from the previous fifty years. And federal debt—growing every year with the deficits—will reach an estimated 93% of GDP by 2029 (as CBO notes, this would be “a larger amount than at any time since just after World War II.”)

Fifth, most Americans might think they didn’t benefit from the Trump tax cuts because the cuts aren’t just an economic issue—they are political. Pew Research found that the two parties increasingly disagree about whether taxes are fair—64% of Republicans think so, but only 32% of Democrats agree. That’s the biggest gap since Pew began asking this question over twenty years ago.

Democratic presidential candidates are reading the polling data and are attacking the tax cuts as unfair. Senator Bernie Sanders (I-VT) wants to increase the estate tax. Senator Kamala Harris (D-CA) is proposing revisions to benefit lower- and middle-income households. And Senator Elizabeth Warren (D-MA) advocates a wealth tax on the super-rich. You know something is changing politically when a billionaire, in this case hedge fund manager Ray Dalio, says capitalism is unfair and the president should declare inequality a national emergency.

Bottom line: People aren’t feeling a benefit from the tax bill. And feelings matter in politics. Bill Clinton won the presidency with a theme of “It’s the economy, stupid,” while incumbent George H.W. Bush correctly noted (in vain) that the economic recession technically ended over a year before the 1992 election. But voters didn’t feel a recovery and voted to make a change. If the economy slows or stumbles, President Donald Trump may be vulnerable to similar voter feelings, even if most people technically got a small benefit from the tax bill.

Like Halley’s Comet, the idea that people are faking disability claims reoccurs with regularity. The recurrence doesn't happen seasonally, but politically: Republicans are more likely to propose to cut disability benefits. In 2019, it is Democrats opposing the Trump Administration’s proposed Fiscal Year 2020 Budget, which targets people with disabilities. Sadly, Trump may feel he can manipulate latent prejudice against people with impairments. That approach would not only hurt people with disabilities; it would hurt the economy overall.

Cutting Benefits Is Bad Economic Policy

By cutting funding to programs that directly aid people with certain kinds of disabilities,* research the causes of disability,** and help the disabled be fully engaged citizens,*** we are missing a chance to engage a productive workforce. Simply put, it does not make economic sense to cut programs that help people with disabilities work, live in their own homes, get to their jobs, and access the opportunities that all Americans enjoy.

Unfortunately, the Trump Administration is proposing to take a system that is already inadequate and make it worse. Integrating working-age adults who are disabled is part of an economic strategy and the choice is stark: Do we have a society and suite of policies aimed towards engagement or warehousing? Currently, the U.S. leans too much toward the latter.

Comparative studies find employment rates of disabled workers are relatively high in Nordic countries. In Sweden and Denmark the disabled are much more likely to work because these nations with social-democratic systems more successfully integrate individuals with adverse health conditions.

In the U.S. and U.K., meanwhile, disabled workers are more often unemployed and otherwise excluded from the labor force, thanks to an excessive focus on the development of workfare programs that encourage labor force participation as the principle means of achieving equality. Indeed, the cost savings sought by the Trump Administration have to do with a proposal to “test new approaches to increase labor force participation.” This approach has resulted in a limited policy focus that fails to account for all the economic and cultural steps needed to ensure parity of participation of people with disabilities. Investments in active labor market policies may improve the employment of chronically ill people.

U.S. policy has provided little incentive for employers to economically engage disabled people. First, we do not have a cultural commitment to ensuring that workers with disabilities have the opportunity to work in the paid labor market; in fact, research suggests that accommodating people with disabilities is sometimes seen as unfair. Second, U.S. employers have little financial incentive to help disabled workers stay on the job, since the government does not coordinate employer actions with the employees’ particular needs. 

Research shows the obvious: bad health is one of the main determinants of early retirement. But depending on the policies of a nation, bad health does not necessarily constitute a barrier to labor force participation. Working depends foremost on the broader context of an economy and policies which can either promote or hinder the employment of workers who are not entirely healthy.

Misplaced Blame

Included in the proposed $72 billion in cuts to disability programs are reductions in Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). Not only is this a betrayal of Trump's campaign promise, it hurts one of the most vulnerable groups in the country.

SSDI allows individuals under retirement age, after two years of demonstrated disability, to get disability benefits and Medicare. Since the disabled often quit their careers early, the benefits are quite low—the average is $1,234 per month. And despite perennial accusations of fakery from the right, the disabled are some of the most vulnerable in society. As a group they aren’t faking it—people on disability are three to six times more likely to die than people in their age group who are not on disability.

The U.S. has always had among the lowest levels of long term disability recipiency. It is quite difficult to get on SSDI—less than 4% of the working age population receives such benefits—though the rates have increased over the last thirty years. While opponents of disability benefits might see this as evidence of falling standards, the basic reason for the increase is that millions of women entered the workforce in previous generations, and thus became eligible to apply for disability.

Crucial to understanding the stubborn persistence of disability is to recognize that in determining disability, the SSDI program considers a number of factors in addition to a person’s health impairment, such as the level of accommodation offered in the workplace and the wages and working conditions of the jobs available. Disability means more than having difficulty with routine activities. Eligibility requires a worker be “unable to perform any substantial gainful activity on any job in the economy for at least one year.” The “substantial gainful activity” refers to any job that generates earnings of $1,180 per month for most people anywhere in the national economy.

The economic environment has a lot to do with whether a person applies for disability. Structural changes in the economy, including declining job and wage prospects for low-skilled workers, have made disability benefits more attractive, as the Economic Policy Institute has shown. This effect is difficult to quantify, however. It is much easier to get someone to stay in the labor market with their physical and mental disabilities than it is to get someone who has left back into the market. That is why programs that help the disabled stay engaged and be accommodated at work are important and practical.

What Is Next For the Disabled And Those at Risk of Disability?  

On April 2, Senators Bob Casey (D-Penn.) and Sherrod Brown (D-Ohio) wrote to Trump’s budget director Mike Mulvaney stating their concern about the cuts and asking to restore the recommendations for funding. As the Senators wrote:

“You have proposed $84 billion in cuts, chiefly, to Social Security Disability Insurance. These are funds that support hard working Americans who have developed disabilities over the course of their lives. The workers who would be denied benefits under your cuts are people who have not only contributed to our economy over decades but have also paid into the Social Security Disability Insurance fund. Our government promised American workers that if they work, grow our economy and they develop a disability – we will take the funds they have contributed in their taxes to provide some care, relief, and dignity.”

Trump's cuts won’t help the disabled work. And in the end that is exactly what a sensible policy should do.

_______________

* Examples include the Traumatic Brain Injury program, the Paralysis Resource Center, the Alzheimer’s Disease program, the Lifespan Respite Care program, the Autism Surveillance program, the Independent Living Centers, the Limb Loss Resource Center, Gallaudet University, and the state Council on Developmental Disabilities.

** Examples include the University Centers on Developmental Disabilities, the National Institute on Disability, Independent Living, and Rehabilitation Research.

*** Examples include the Voting Access for People with Disabilities program, state Assistive Technology programs, the National Family Caregiver Support Program, the Native American Caregiver Support Services program, the Interagency Autism Coordinating Committee, the Office of Disability Employment Policy, and Section 811 Housing for Persons with Disabilities.

Economists extol the theoretical virtues of competition. But in the practice of their own profession, they seem to oppose it, especially in opening up professional economics to women. A recent survey of economists about the profession's climate has documented widespread abuse, harassment and systematic exclusion of women. Almost every other social science and laboratory science has made more progress against these problems than economics.

Why does economics do so badly regarding women--are economists especially mean or sexist? I don’t think so, though there is some evidence studying economics will make you less generous. The best explanation is simple, and ironically consistent with economic theory. People will act in their own self-interest to limit competition and if women, or any group, are excluded there is less competition for coveted tenured professorships.

About a third of first-year graduate students and new PhD.s in economics are women, a share unchanged for twenty years. The percentage of undergraduate economics degrees awarded to women peaked at 35 percent in 2003 and has since fallen to between 30 and 33 percent even though the majority of college students--57 percent-- are now women, up from 39 percent in 1960.  And things are no better at the top of the food chain.  The share of women among full professors in PhD granting economics departments was 6% in 1993 and only 13.9% in 2017.  Compare this to senior women professors in science and engineering--14.2 % were women in 1993, rising to 36.9 % in 2013, over two-and-a-half times the level in economics.

Just 20 % of female economists surveyed said they were satisfied with the overall climate in economics, compared to 40% of men. And only 25% of women felt valued within economics compared to 47 % of men. That is a lot of undervaluation!  Compare these dissatisfaction scores to a broad survey of employees which found only 31% felt valued at work. Men in economics are happier than a broad national sample while women economists feel less so.

The recent attention paid by the American Economics Association dealing with abuse against women begins with a senior undergraduate economics thesis at the University of California at Berkeley. Undergraduate Alice Wu analyzed posts on the web site "Economics Job Market Rumors," a web forum focused on the job market for economics PhDs. Wu analyzed over a million posts and found that a reliable way to predict whether a post was about a woman was whether it contained explicitly sexual references – hotter, hot, tits, lesbian, bang. In contrast, posts about male candidates were much more likely to contain academic and professional terms – slides, motivated, philosopher, keen, textbook.

Economists ought to know best that cutting out the competition is a way to maintain privilege, income, and better jobs. So it is a good that the profession may finally be learning its own lessons. The American Economics Association (AEA), led by former Fed chiefs Janet Yellen and Ben Bernanke and former IMF chief economist Oliver Blanchard, is taking affirmative action steps within the profession to beef up the competition among economists, giving women a fair shake and limiting male privilege.

Here is what the AEA is doing to increase inclusion of a group it has excluded for many reasons – more on bigotry and exclusion later. The AEA Executive Committee has agreed to:

• approve a formal policy on harassment and discrimination;
• fund an ombudsperson, a referee to permanently record complaints and investigate harassment and discrimination in any professional context;
• use a vetting process to ensure candidates in the profession for leadership have not violated the Code or the policy on harassment and discrimination; and,
• work with committees with the profession aimed at promoting underrepresented groups, like the Committee on the Status of Women in the Economics Profession to develop a clearinghouse for best practices/training materials etc.

There are no quotas or dicta to hire women. The focus is on highlighting an exclusionary culture and working to change it.

These professional steps matter. When I interviewed for my first teaching job fresh out of U.C. Berkeley with my PhD at age 25, these processes could have helped me stop the practice of going to hotel rooms for job interviews. Hour after hour I was asked to sit on the bed while three or four male professors sat in chairs and interviewed me for an assistant professorship. A friend of mine told me she had it slightly worse--she was perched on an unmade bed. Questions about marriage, planning for children, and one's commitment to the profession were common.

She is now a dean at a major university and I hold an endowed chair--we are among that 13.9 percent of full economics professors who are women. But how many of our sisters drew the line and left the profession? And how much has this hostile climate discouraged women undergraduates from even pursuing graduate economics education in the first place?

Federal Reserve Governor, Lael Brainard wrote in February that evidence makes clear the contribution of economics to society will be greater when a broader range of people are engaged and that greater diversity results in better outcomes.

Bottom line: If economists are true to our teaching, the competition might help improve the field. That is not all the field needs, but allowing half the population to compete fairly should help.

A new report on retirement security from the Government Accountability Office contains what seems like a stunning finding: 48% of older households have “no retirement savings.” By “no retirement savings,” however, the GAO means only that they have no defined contribution plan, that is, an IRA or 401(k). As the report states in the next couple of lines, some of the 48% have a defined benefit plan (often called a pension). Of Americans nearing retirement, 29% have neither a DB nor a DC plan.

But by not stating clearly the issue about DBs, the new GAO report gave Andrew Biggs at the think tank, AEI, an easy opportunity to score a point in the debate between those who do and those who do not think Americans have enough retirement savings. Despite the GAO's inexact wording, Americans do not have enough retirement savings, even when considering DB plans.

True, if you have a DB benefit with enough years of service, it doesn’t matter so much that you don’t have what the GAO calls “retirement savings” (though even if you have a DB plan you may still need a supplement; some DB income levels are quite low). Everyone has a friend or relative who sacrificed relative wage increases for a generous teacher or union pension that is a lot more secure than someone’s 401(k).

On the other hand, people with lump-sum DC plans for retirement always worry about spending it down too fast—as they should. You need to save about 20% more in a DC plan than in a DB plan just to ensure you have enough money if we live to 90 (though most of us won’t live that long). People with DC accounts should be worried since they don’t have benefits-for-life, the longevity insurance that someone with a traditional plan has. Having a DC plan to insure against living to 90 is like having to fund your own kidney transplant. DB plans have longevity insurance; with DC plans you are on your own.

Although the GAO report is excellent—as are the previous entries in the series—the bigger picture is that the GAO understates the magnitude of the retirement savings crisis. This is because average DC account balances are wholly inadequate. A recent study from my research center at the New School found that the median DC account balance of workers aged 55-64 was $92,000—enough to provide an income of just $300 a month over the course of retirement. Including those with no retirement savings at all, the median account balance is a mere $15,000. 

These numbers make sense in light of the fact that most Americans do not expect to be financially secure when they retire. Stagnating wages make it difficult to save without getting ripped off, and both employers and the government have done next to nothing to help workers. Notably, there is no deep political divide on the issue of retirement income security. Seventy-six percent of Americans are concerned they won’t achieve a secure retirement; those numbers are 78% for Democrats and 76% for Republicans.

The widespread and bipartisan worry could have significant political ramifications, as Rachel Cohen reports in The New Republic:

There are signs that retirement will play a significant role in the 2020 race. In February, Bernie Sanders reintroduced the Social Security Expansion Act, with sponsorships from three other leading Democratic presidential contenders: Cory Booker, Kirsten Gillibrand, and Kamala Harris. They belong to a congressional caucus dedicated to increasing Social Security benefits. Formed last fall, it already has more than 150 Democratic members, and Sanders and Elizabeth Warren, another presidential candidate, are its co-chairs in the Senate.

Why not just expand Social Security to solve the retirement crisis? If we expanded Social Security to provide adequate retirement for the vast majority of Americans, workers' payroll taxes would rise to about 30% of pay—up from around 12% today. Rarely do nations secure pensions for all workers with a just a pay-go system. Nations that achieve widespread retirement security do so with both advance-funded and Social Security-type pensions.

Everyone needs an alternative to the crumbling 401(k) and IRA system, and something more than what is currently being proposed in Congress. An improved U.S. retirement system would mandate contributions, arrange for professionally managed investments, and pay out annuities. Blackstone Executive Vice Chairman Tony James and I have put together such a plan as a supplement to Social Security: Guaranteed Retirement Accounts.

The bottom line is that Americans do not have enough retirement savings. This is not because we drink too many lattes, as financial writer Helaine Olen has argued for many years, but because employers and workers are not required to contribute to retirement savings plans above and beyond Social Security. Many low-income workers once had some retirement security; janitors and ladies garment workers weren’t rich, but they had pension plans at work. Some gig workers, like job-to-job carpenters, also had pensions when they were in a union. What we need today is a portable universal pension system that supplements Social Security.

Some may still deny there is a problem. But the number of poor or near-poor people over the age of 62 is set to increase by 25% between 2018 and 2045, from 17.5 million to 21.8 million. If we do nothing in the next 12 years, 40% of middle-class older workers will be poor and near poor elders.  That is a problem.