parrot rips tariffs

Tariffs Rip Us Off: How About the P50L EITC Instead?

END DEAD-END PAY: Tariffs cause way more inflation than they create better wages, jobs, status, profits, and wealth. But every country needs to be self-sufficient in a pinch. What if more people could afford to buy American? Welcome to Puzzle Drop Monday for increasing the Earned Income Tax Credit.

The problem is there will always be less expensive goods available from other countries. It’s great for consumers but not for some workers and companies.

This week’s solution rebuffs tariff myths and grows our middle class instead with an increase in the Earned Income Tax Credit for FULL-TIME workers to P50L, halfway (50%) between the Poverty line (P) and the Living wage (L).

Crime reduction will more than pay for it, the middle class will boom, higher labor participation rates will lower inflation, and we all can afford to buy more American-made products.

Summary

The societal cost of crime has annual direct costs of $690B and $3.41T in secondary harm. It’s shocking and should be intolerable.

There is an almost perfect correlation between the drop in crime since the 1990s and the increase in household income. People making a living wage don’t need a crime side hustle. If the free market can’t help the remaining full-time working poor, the P50L EITC can.

Currently, the Earned Income Tax Credit brings recipients up to the poverty (P) level, which is well below the Living (L) wage for an individual or family.

Globalization and competition provide us with abundant cheap goods and services, but the flip side of that coin is low-paying jobs.

The cost of the P50L ($411B)* is way less than the cost of crime to society.

Instead of fighting a trade war with inflationary tariffs against 200 countries to protect our workers and industry, why not expand the EITC so workers can afford to buy American —and- end involuntary poverty simultaneously?

P50L Recap

  • Work full-time
  • No change in the EITC for part-time
  • No marriage penalty
  • A single worker is a few hours of OT away from a Living Wage (LW)
  • Married couples working full-time meet the LW for a family of four

The Tariff
Myth

There are 21 million US importing jobs and only 9 million export jobs.

The argument goes that there are more good-paying jobs in the export business than in the import business. But, historically, import wages are 15% higher than export jobs. Who benefits from this folklore? Not US workers or consumers or importers.

Tariffs may be called for if an industry is essential to our national security. But, if free trade affects other industries negatively, that’s creative destruction in a free market.

Q. Why would we willingly drive up inflation, drive down wages, lose jobs, and lower GDP for 340 million Americans with tariffs?

A. It raised $100B for the US budget in 2022, and some industries win (while others lose). In other words, politics as usual.

WELCOME &
the P50L

A previous week’s flight of articles gave us a bird’s eye view of the WELCOME (Willing Employer Living Compensation Exemption) that would have employers get a 100% tax credit to pay a living wage in the first place. All the government does with those taxes is destroy the money and change a number on a computer.

It’s ALL About
the Middle Class

The middle class has shrunk by 11% in the past 40 years. Good job, duopoly.

Alone, either WELCOME or the P50L will likely miss a large portion of Americans working below the living wage, but together, they will essentially end involuntary poverty in America overnight.

What about inflation, you ask? There is more evidence that inflation is an under-supply problem, not an over-demand problem. A famous chart shows that in the twenty years before COVID, only Healthcare, College, and Childcare costs outpaced wage growth*. COVID-19 severely disrupted the supply chain. The world is fantastic at producing things, but restocking inventories takes a while. *And housing in overheated markets.

One thing’s for sure: a coin flip on the P50L or WELCOME would be better than political parrots squawking about high crime, inflation, and a shrinking middle class for yet another decade.

*EITC P50L
Cost Increase

31M People are now in the EITC.

85% are Full-Time Workers in Rural, Urban, and Suburban areas.

26.5M Full-Timers qualify for the P50L.

The average annual paid is $3099.

The current Poverty Line (P) is $14,580.

We’ll use an average Living wage (L) of $25/hour or $52,000/yr.

$52,000 – $14,580 = $37,420 * (50%) = $18,710.

The increase is $18,710 – 3,099 = $15,611

$15,611 × 26,350,000 = $411,349,850,000.

The P50L would cost $411B

Expenditure
Multiplier, Kicker

People below a living wage will spend almost the whole $400B, and the businesses that get that will likely spend that again, and some of that will cycle again before the money goes to sleep in savings accounts, spent overseas, and taxes.

Using round numbers of an expenditure multiplier of 2.5x, the P50L will increase GDP by about $1T (on almost $28T in 2023), and the historical average tax receipts on GDP are 17%, or $170B.

More than tariffs, and lowers the actual cost of the P50L to $241B. Remember, crime costs the economy between $690B and $3.41T.

Why not just raise
the minimum wage?

The problem is that many industries don’t have the margin to pay more, whether from unfair foreign competition or declining industry. Also, costs of living vary widely from state to state.

The pre-score on raising the federal minimum wage didn’t make the US Public Policy Leaderboard (US-PPL), as it is not popular with small and medium-sized businesses in many places in the country. (More on the US-PPL in the Methodology section below)

Small businesses are the largest employers in the country.

Half of small businesses fail in their first five years; their lives are already complicated enough.

The minimum wage is a better state issue than a Federal one because of the vastly different costs of living.

Why not
Universal Basic Income?

We also pre-scored UBI, which had an even lower nonpartisan score than raising the Federal minimum wage.

Businesses are suffering from a severe labor shortage in the US, and paying people not to work isn’t going to increase supply enough to tame inflation.

More workers producing things increases supply and lowers inflation.

And full-time work should net, one way or another, a living wage.

Politics 4.0
PolicyKeys Values

  1. Be open to private and/or public sector solutions.
  2. Talk about public policies, not public figures.
  3. Score any solution (but leaderboard-worthy solutions first).
  4. Show our work (be transparent).

This Week’s
Political Puzzle
End Dead-End Pay

Should We Raise
the Earned Income Tax Credit for
Full-time Workers
to P50L?

Expanded
Key ‘YES’
Reasons
In-Favor of the
P50L EITC

  • Effectively ends most wage discrimination (1) because it levels the playing field, diminishing wage disparities prevalent across various demographics.
  • Ends the marriage penalty (3) because it eliminates financial penalties for married couples, promoting family formation.
  • Will reduce domestic abuse over money (5) because it addresses economic factors contributing to domestic conflicts and violence.
  • US firearm homicides are 9x Canada’s (7) because income inequality has been shown to correlate with increased crime.
  • Big economic boost (9) because increased spending will make for healthier companies.
  • Increases adult labor participation (11) because it makes it worthwhile to get off the couch and work FT.
  • An incentive to get PT to go FT (13) because working a few more hours will make a big difference in income.
  • More consumers feel empowered (15) because they have more options to follow their conscience.
  • Will dramatically lower civil unrest (17) because income inequality correlates with crime and unease.
  • Should lower drug & alcohol abuse (19) because people turn to substances from hunger, anger, loneliness, and fatigue.
  • Singles are a few OT hours away from LW (21) because their base pay is much closer.
  • Working couples crest the living (L) wage (23) because it ensures that dual-earner households exceed the living wage threshold.
  • Ups home ownership and local taxes (25) because a larger middle class can afford a better lifestyle.
  • Helps onshore lost US jobs (27) because it is easier for companies to make the numbers work with domestic production.
  • Protects the US from unfair foreign competition (29) because it safeguards American workers from cheaper labor abroad.
  • Lower taxes from lower crime (31) because we’ll need less police and correctional officers.

Expanded
Key ‘NO’
Reasons
Against the
P50L EITC

  • Congress may flip-flop on the payments (2) because the program is at the whim of every new Congress.
  • Effects the free market too much (4) because it may excessively disrupt market-driven wage determinations.
  • Allows employers to lower pay (6) because it could inadvertently permit employers to reduce baseline wages.
  • The P50L may not pay for itself (8) because much of the savings is in the private sector’s opportunity costs.
  • The dollar might devalue (10) because of concerns over our deficit spending.
  • The P50L is income redistribution (12), and that’s not considered fair in a free society.
  • It is hard to draw the line between PT and FT (14) because it could be based on hours and/or dollars.
  • Commerce is terrible for the planet (16) because increased consumption increases atmospheric carbon.
  • Widespread fraud is possible in filing (18) because it will be too easy and tempting.
  • Discriminates against single tax filers (20) because being coupled has an economic benefit.
  • Doesn’t help PT workers (22) because the P50L only helps full-time workers.
  • Job losses in crime and poverty industries (24) because the P50L will reduce both.
  • This adds to the deficit in the short term (26) because it will take time to recoup the government expenses and for those furloughed to shift to providing other goods and services.
  • It is more challenging to fill unglamorous jobs (28) because the P50L makes easier jobs preferable without a significant pay differential.
  • Increases inflation until supply can catch up (30) because it takes time to rebuild inventory levels.
  • Governments tend not to cut budgets (32) because a government in motion tends to stay in motion.

Random
Thoughts

  • No more tipping cashiers.
  • No more working two and three jobs. (unless you want to)
  • No more losing great team members to crony industries.

PolicyKeys
Four Ways

Here’s the PLAN: For you People-people, you can enjoy real-life political role-playing at PolicyKeys.com. Sit awhile in each role’s chair and decide whether most people in that role would be for or against the solution. Empathy is power. In the classroom, PolicyKeys is a team sport.

For you Letter-people, we publish daily on this Super Nonpartisan Public Policy Blog. It’s like a color commentary on the big game. Or a juicy menu to order up your favorite solutions. You can check out the US Public Policy Leaderboard (US-PPL) and the sweet sixteen updates every SuperMajority Sunday.

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Last Week’s
Political Flap
Flight of Articles
the Shared FATE STOCK ACT

Should we go ahead and let Members of Congress trade stocks on nonpublic information so we can get the Social Security Fund in on the action and keep it safe and liquid?

You can read about last week’s political flap in our Monday Puzzle Drop. On Tuesday, we broke the ties on all the roles that were too hard for POLI THE AI to call. Wednesday, we dished on all the politically strange bedfellows for and against the Shared FATE. Thursday, we demonstrate how our Political Digital Twin tool can issue a Personal Public Policy report on any solution. Friday, like in baseball, here’s the BOX Score from the PolicyKeys Puzzle of the Week. Saturday is the weekly Keystone to top off what the change-folks and status-quo types might agree on.

Methodology

Politics 1.0 is each party wanting to be a one-party system. Then, Politics 2.0 is the two-party gridlock that blocks the silent supermajority from getting what it needs. Next, Politics 3.0 is all the noise from special interest groups trying to influence us to see things their way. Finally, Politics 4.0 ranks solutions with a nonpartisan score and lets the best ideas rise up the leaderboard so people can choose.

The Four Laws of
Public Policy Formation

The First Law of Public Policy Formation is that people with short-term focus will naturally protect their wages, jobs, status, profits, and wealth.

The Second Law of Public Policy Formation is that people with a longer-term focus place bets to make life better, longer, easier, or different.

The Third Law of Public Policy Formation states that the short- and long-term clash causes noise, angst, conflict, and harm.

The Fourth Law of Public Policy Formation is that nonpartisan scoring can rank ideas.

(OPNT) One-Page
Narrative Tool

Uses the following ground truth:

There’s a time to save
and a time to spend,
a time for freedom
and a time for laws.
Where can we agree?”

This yields four legs of the political table: Abundance, Thrift, Governance, and Commerce, poetically our Political DNA, ACGT.

A Level
Playing Field

The four sides of the table are…

Abundance Governance (AG)
National Public Sector and NGOs,

Abundance Commerce (AC)
Technology and New Businesses,

Thrift Government (TG)
Local Municipalities, Guilds, and Consumers, and

Thrift Commerce (TC)
Established Supply Chains and Jobs.

Each side has a bias for change and a bias for the status quo. We scan these eight Information Walls for Key YES and NO Reasons, no cherry-picking.

Treasure
Hunt

The Political Parrots have a key reason they don’t want us to know about because it ruins their argument. We search for these, like a treasure hunt, and sort them using our EMIT format: Emotions, Money, Information, and Timespan. We listen for these key signals in the political noise.

Key Reasons can look similar, so we edit for redundancy and look for errors, omissions, and innovations.

We search for solutions with the highest hypothetical nonpartisan rating. Something that would solve 80% of the problem with the simplest 20% solution. The Pareto principle, hence a Parrotopia.

Definition of
Political Parrots

Are you making up your own mind or marching to the beat of a political parrot?

  1. Political Parrots get paid to squawk the same thing over and over again.
  2. They don’t listen if you’re not paying.
  3. They don’t fully understand what they’re saying.
  4. They are charming and sport every color.

We look to filter out the GRIFTERS, Gaslighting, Red-herrings, Idolizing, False-dilemmas, Tunnel-vision, Exclusions, Reductions, and Straw-man arguments. 

You can make up your mind. Where can we agree?

Birds of a Feather
AI

Once the 32 Key Reasons are set, we use the Birds of a Feather AI for loose ties to beliefs, attitudes, values, and ethics. Over 16 million combinations are possible for the 128 roles. The game board starts balanced at zero, with an equal bias for change and the status quo.

We then prescore the puzzle using 56 arch-type roles that most embody each of the 56 loose ties. This yields a general bias for change or status quo and reveals ties.

The editors break the ties and review all 128 roles for specific reasons to overrule the general AI where necessary. These are noted in the Tuesday Tiebreaker article.

Then, we finish the puzzle by applying the most fitting YES or NO reason per role on all four sides of the Political Table: eight Information Walls, sixteen Subcultural Windows, sixteen Bias Columns, and sixteen Influence Rows.

SAT9
AI

When the scoring is done, a second AI looks for inconsistencies using the SAT9 AI filter (Situational Assessment Tool). This is 256 ‘supreme courts’ where each role is the chief justice in a presumed 5-4 and 4-5 bench. This generates a ± error margin.

The engine for the AI is our One-Page Narrative Tool (OPNT), which we gamified for role-playing at policykeys.com. We call our AI, POLI for Political Omnibus Leadership Initiative. Soon, you can use it as your Political Digital Twin and generate a personal public policy advisor report on any PolicyKeys puzzle.

You can read more about PolicyKeys™ in the upcoming book, Politics 4.0: How Gamification, AI, and National Idea Leaderboards Can Help You Depolarize the World. The Observatory of Public Sector Innovation (OPSI) at the Organization for Economic Cooperation and Development (OECD) has recognized PolicyKeys™ for digital engagement.

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Weekly
Puzzle

new PolicyKeys™
Where Can We Agree?® puzzle 
drops every 
Monday at 7 a.m. Eastern at PolicyKeys.com.

PolicyKeys™ Where Can We Agree? is a real-life role-playing game. Each week, there are sixteen sets of eight ‘rival’ roles. Sit awhile in each of their eight chairs and predict whether a majority of people in those roles would say Yes or No to the week’s question.

The best ideas land on the US Public Policy Leaderboard (US-PPL) if a majority of each of the four sides of the political table agree. You can play this week’s puzzle at PolicyKeys.com.

YOU CAN PLAY THIS WEEK’S PUZZLE AT POLICYKEYS.COM.

Cue the
Patriotic Music

Imagine a world not paralyzed by political squawking. A Parrot-otopia oasis in a desert of division. Where the sounds of the silent super-majority drown out the droning of the hyper-partisan parrots.

We’ll be freed from the cages of entrenched ideology to fly higher in the big sky of American beliefs, attitudes, values, and ethics. To boldly go where no political parrot has gone before—ranking solutions with a nonpartisan score.

Anthem

Where Can We Agree? 
(Why Don’t You Want To Know?)

Fly
higher

Double the EITC
Fortune Interview

As the Federal Debt Rises, So Did the Dollar
First Trust

9 Million US Jobs Supported by Exports
International Trade Association

21 Million US Jobs Depend on Imports
National Retail Federation

Import Wages in the US are Higher than Export Wages
Economic Policy Institute

Chart of the Day, or Century?
American Enterprise Institute

Trade Wars: Episode 2
The Economist

$100B Tariff Revenues in the US in 2022
Statista

Amid Trade Wars, Few Industries Support Tariffs
Council on Foreign Relations

Higher Tariffs Cost the US Consumer $31B
National Retail Federation

This is who pays the price for tariffs
NPR

Three Reasons to Be Very Skeptical about US Carbon Tariffs
CATO

How the Middle Class Has Changed in Five Decades
Pew

Corporate Tax Hit an All-Time High in 2021
Tax Foundation

Income Inequality: Most Disturbing Side Effect: Homicide
Scientific American

What is a Living Wage?
Global Living Wage Coalition

Living Wage Calculator
MIT

Four-Sided Facts About Poverty in America
Civil Majority News

The Curious Case of the Missing Expenditure Multiplier
Civil Majority News

Does Lower Income Inequality Lead to Lower Crime?
World Bank Blogs

Gini Coefficient by US State
US News & World Report

Why American Exceptionalism is Different
Heritage Commentary

Bridge Funding for the P50L
Civil Majority News

Foreign Trade Barriers
USTR

The Middle Class Has Shrunk by 11% in 40 Years
Pew

US Firearm Homicides are 9x Canada’s
Heathdata.org

Aggregate Cost of Crime
from the University of Chicago

Government Accountability Office on Cost of Crime
GAO

The Underground Economy of Unreported Income
NOLO

The Greatest Wealth Transfer in History
Forbes

The Impact of US Tariffs (Lowers GDP)
Lost Wages, Jobs, and GDP
US Tax Foundation

Understanding the $1T+ Welfare System and How to Reform It
Heritage Institute

Where can we agree?
Finding out takes guts from all four sides of the political table
[::]


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