In it for the Money: #My2K is $17,000
Editor’s note: Nelson’s “In it for the Money” opinion column appears regularly in The Chronicle, roughly around the third Wednesday of the month. Sometimes, like this month, he’ll deviate from that schedule and write two columns in one month. FYI, Nelson has a story in the latest issue of “Asimov’s” (which hits newsstands this week). It’s your basic crappy-jobs/labor-relations/time-travel tale – possibly of interest to speculative Chronicle readers.
David Erik Nelson
Last week I insisted you write some letters.
This week I’m urging you to once again take to the keyboard but, after that, I promise: You’ll be free of my nagging until 2013 – at which time we’ll all be sailing together over the “fiscal cliff,” which is sort of an economic Doomsday Device that will automatically cut federal spending and bump up taxes on Jan. 1, 2013 unless Congress pulls together a workable budget.
According to the President, if Congress does nothing, then middle class families will see a tax bump of as much as $2,200. He’s encouraging folks to drop him a line explaining what $2,000 means in your household budget.
Many folks have taken to tweeting brief glosses of these letters using the hashtag “#My2K” – which has also become a tag for carping about the fiscal cliff generally.
Below the fold is what I wrote to the President (and forwarded to my congressfolk).
Dave-o’s 2K
Dear Mr. President (et. al),
I’m writing at your urging to explain what $2,000 means to me. After running a few numbers, I was shocked to learn that it means roughly $17,000 to me and my family.
Listen: I’m a married freelance writer and editor with two kids – or, in GOP terms, I operate a small business as a sole proprietor, am a member of several LLCs, file jointly, and have two dependents. One of these is school age, and thus leaches off the publicly funded socialist education system.
The other is a baby. She’s the problem. Childcare is expensive. It costs no less than $10 per hour for someone to hold, feed, and diaper my new baby while I furiously drink tea and pound on the keyboard. In a year, that $2,000 translates to roughly 200 hours of childcare – or one work-day per week (my workdays are pretty short – remember, I’ve got a baby to care for).
Because my business is project based, it’s hard to pin down an hourly rate for my work, but it likely floats somewhere around $75 per hour. (This is below my quoted rate, but reflects the fact that more than a few projects end up being more complicated than one might have first imagined. If I think something will take me 20 hours and it takes 25 instead, I eat the difference.) Assuming my $75-per-hour is accurate, 200 hours of work translates to another $15,000 of gross income. Right now I’m fortunate that my problem is too few hours, not too little work. Having another $2,000 in my budget would mean seeing some – if not all – of the added $15,000. I would then turn around and spend $3,000 of that on the installation of a liner that I just learned my root-choked sewer line desperately, desperately needs. I saw the video of the inside of this pipe, Mr. President. The situation … it’s not good down there, sir.
Added bonus: My $2K would mean one more day per week of employment for our sitter, an underemployed college student. This is a perfect example of how tax policy can fuel economic growth: I’m not a “job creator” (the GOP euphemism for a millionaire, regardless of how many jobs he creates); I’m an actual job creator: You give me money, and I dole it back out to the butcher, the baker, the candlestick maker, the plumber, the sitter, and the goddamned mortgage servicer.
Give me more money, and I dole more of it out to these folks – Hell, give me enough money, and I’ll have contractors out here replacing our collapsing garage and crumbling patio, trimming back the sickly old oak that wants to crush our house, and re-grouting our bathroom before the walls and floor completely rot out. There’s no end to the jobs I can create with my $2K. And trust me, sir, not a penny of that $2K will get socked away in a Cayman account, sunk into a private-equity hedge fund, or even saved in a tax-deferred IRA. It’s basically all going to go right back into buying goods and services right here in the community where I live.
But, of course, no one is talking about giving me even one extra dollar – they’re talking about not taking away dollars I currently have. What the fiscal cliff really means to me is gutting my household budget, by pulling another $2,000 out of it. This likely means cutting back the sitter – after all, what else can I cut? I can’t choose to pay $166 less on the mortgage every month, and I can’t choose for my family to eat 25% less food. We already don’t have cable TV, I already bike or ride the bus instead of driving, and when we drive we already drive a fuel-efficient hybrid (which, thank God, we own outright).
Cutting 200 working hours from my schedule means leaving $15,000 on the table. By hitting us for another $2,000 in taxes, Congress nearly cuts my earnings in half. It means hoping the sewer pipe doesn’t collapse. It means no wiggle room to add anything, to buy anything, to hire anyone.
And then, of course, I have to actually pay that $2,000 on top of not earning the $15,000 – so there we sit, $17,000 in the hole.
I’m not whinging, sir. I’m answering your question. I’m telling you what my $2K means to me, to my family. If, in the end, you all decide that this is what the nation needs from me – a check for $2,000 written to the treasury on April 15 instead of $15,000 doled out to other middle class citizens over the course of the year – then that’s where the ball lies, and I’ll play it.
But I want to be clear that I agree with Robert Reich on this one: No deal is better than a stupid deal. Don’t rush something through to avert the scary, scary fiscal cliff. I’m talking to three Michiganders and a fella who cut his teeth in Chicago: I know that you know how to be hard. So play hard ball now.
Don’t save me $2,000 by cutting a deal that guts education or sends my neighbors to the food bank.
All for the Best in this Best of All Possible Worlds,
David Erik Nelson
P.S. I hope you don’t mind, sir, but I’ve forwarded this to my representative – John Dingell – and Senators Levin and Stabenow. If you haven’t had a chance yet, I hope you all take two minutes and 30 seconds to watch Mr. Reich’s video, and heed his eight-point advice to you.
So, Dear Readers, take a sec out of the Holiday Season to maybe meditate on what $2K means to you and yours, then tell your senators, reps, and the President.
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I’m confused. I understand that you don’t have a lot of free time, but shouldn’t your reaction to a tax increase be to work more, not less? For instance, at $75 an hour, you would need to work about 35 more minutes a week to make up the lost $2000. I normally love your articles, but in this case your math is worse than that of a politician.
Of course, I forgot to count taxes on the extra money you would need to earn. An extra hour a week, instead of 35 minutes.
I find this confusing. You seem to be concerned about your $2K but then revert to some points about how government does serve you (us) at the end. Mixed messages.
As an aside: how do you pronounce “whinging”? I’ve only recently started to see that where I would put “whining”. Is this a Michigan thing?
I hope that what you mean is that the money is important to you, but you don’t want President Obama to give away our social safety net and award the rich a much bigger benefit just to save your $2K.
I didn’t understand this one at all. Why wouldn’t you work the extra 200 hours and use part of the $15,000 to pay the babysitter?
The article made perfect sense to me.
“I lose $2K, and in effect the community loses more than $2K.”
And since it costs David Eric Nelson more to get the same amount of work done, he’s losing more than $2K and his sitter is losing maybe all of $2K.
Working more won’t solve the problem; the problem is he won’t be able to afford a sitter so he can work effectively, period. Much less more.
Re: #3: Whinge is an old English (British) variant of whine. It’s pronounced to rhyme with hinge.
Once, I would like someone to do an article such as this without bringing Democrat/Republican into it. Granted, I mush rather it be out in the open when someone writes slanted towards their party affiliation; in your case Democrat.
I myself am an Independent. This means when I write, the Democratic minds label me a Conservative Republican and the Republicans label me a Liberal Democrat. Crazy to think that a person could be supportive of gay marriage and limited government, no?
Anyway… in your article you talk about how having increased costs (such as your 2k tax) will result in your loss of ability to spend on daycare.
This example illustrates your complete inability to relate to the government issue at hand.
Why not, pay the $2k in taxes and keep paying the student? (By the way, are you paying the student under the table or is she paying taxes?) Our government has no problem paying for things without the income to cover it, so why should you do it different?
Seems stupid, no?
Then why not flip it around and have the government only spend what it has?
It ain’t brain surgery. [link]
To those confused by the math, or by the author’s response to the $2k tax hike, remember that it might not be feasible for him or most people to simply work more to cover the difference. I’d be surprised if most of your employers would simply say “Sure, work 5 hours of OT each week, no problem.” So, perhaps making up that $2k isn’t possible, in which case, cuts have to be made in many households – in this one, the sitter, which has additional consequences.
If he is already perfectly balanced between income and expenditures, then cutting out working hours will make his problem far worse than simply paying $2000 a year in additional taxes. Maybe he should raise his rates by a few percent.
@Alan, I don’t think this is what the multiplier effect means. The multiplier effect refers to the negative effect on the college student from working fewer hours, but I have never seen it applied to a multiplication of gains or losses for a single person.
@Sabra, the difference between his hourly rate and the sitters is huge ($50 minimum), so working more hours is still a net benefit.
He said, “my problem is too few hours, not too little work.” So I assumed he would make up the shortage by working more hours. But let’s consider what happens if that’s not the case, and he can’t work any more hours.
He now has $2000 less than he had last year, due to the tax increases. What should he do? Unless he wants to go into deficit spending, he must cut $2000 from his expenditures.
He has listed several possibilities. He could eat 25% less food. He could stop paying the mortgage. He could stop paying the sitter. None of these alternatives are good, but he must choose one.
If he eats 25% less food, his kids go to bed hungry. If he stops paying the mortgage, he presumably loses the house and must sleep in the gutter. So he stops paying the sitter. Now he must work 200 hours less, and ends up losing $15000.
He now must now cut another $15000 from his spending. So he gets rid of the car, eats 25% less food, and stops paying the mortgage. He ends up starving, carless, and sleeping in the gutter.
If instead he had kept the sitter and cut the food he would be starving but could have kept the car and house. Still a bad situation but better than losing everything. Or he could sleep in the car and have enough to eat. Or keep the house and food, and sell the car.
None of these alternatives are good, but for some reason I can’t comprehend, he has chosen the worst alternative, and lost everything. That’s the part I don’t understand.
I think one of the points missed is that Dave works a lot of hours caring for his children. He is uncompensated financially for that time. He could spend more hours writing for money, but he and the rest of his family would suffer for it.