
Which is it is: (gift link)
President Trump and Congress are neither investing in long-term solutions nor offering short-term relief. If they paid attention to different indicators of Americans’ financial health, beyond top-line growth and other traditional measures of economic success, they might feel more urgency.
So we developed one: a model budget for a family of two parents and two children under 8. We set their annual income at $130,000 — well above the roughly $83,500 national median for all U.S. households, and right in the middle of the income distribution for a family of four.
According to our calculations, the math has stopped adding up for this family over the past 18 months. They had a small cushion in 2024. Now they are in the red after covering just the basics, such as housing, an Affordable Care Act marketplace health care plan and day care. The family has over $1,000 less than it did a year and a half ago. Rising costs have more than wiped out any gains from higher wages and recent tax cuts.
This family would have trouble paying for anything beyond the basics — say, a car breaking down or a kid breaking an arm. It could not budget for any of the things that a typical family might hope for: buying a new car, taking a summer vacation or welcoming a third child.
To mount an effective response, it helps to know what stresses Americans feel most sharply and what action they expect from their elected officials. So we asked people.
By almost four to one, Americans told us that rising prices, rather than paychecks that haven’t kept up, are driving a cost-of-living squeeze. Two-thirds say they are struggling today and need relief they can feel right away. And the most cited concern is grocery costs. Some 35 percent of Americans in our survey, which we conducted last month, identified food as the single biggest source of financial pressure — approximately 15 percentage points higher than the share who named housing, the second-most-chosen option.
Several things are going on here:
First, kids, and in particular small children, are incredibly expensive in this country, because the Bible says that it’s wrong to take money from the rich to help pay the child care costs of ordinary people.
Only slightly less facetiously, I read a piece somewhere recently in which a partner at a big law firm told a woman associate that he considered choosing to have a child like choosing to go on a round the world sailing trip, that is, an act of extraordinarily extravagant consumption. It’s a real mystery why birth rates are now well below replacement level in any country where women have any economic and social freedom.
Second, it’s really hard psychologically to adjust for inflation, especially for older people as I know from experience. $130,000 per year sounds like a really big income to me because 30 years ago it WAS a really big income (equivalent to $282,000 today). But now it’s only the median income for families of four. We’ve discussed the psychology of inflation quite a bit at LGM, and it’s a difficult political issue for all sorts of reasons.
Third, a bunch of expenses that are very heavily subsidized or socialized altogether in the developed world — child care especially, but also health care and higher education — aren’t in the US, because of the Bible and Confederate Jesus and Elon Musk.
Fourth, and related, even people with moderate to quite high incomes in the US are laboring under the constant and growing pressures of economic precarity, because of the Bible etc.
Fifth, housing costs vary wildly across the country, so $130K per year for a family with two young kids might be plenty of money in Ashtabula, but barely middle class in Pasadena (of course you’re living in Pasadena rather than Ashtabula but this is in many cases not really anything like an actual choice given where the jobs that pay that kind of money are).
Sixth, the Bible.
There’s also some interesting discussion in the piece about how the price of meat in particular is a huge burden for many people, which is a problem that has at least a superficially obvious solution, but I’m pretty sure the right to bear cheeseburgers is somewhere in the Constitution so maybe not.
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