Can't Get By On $250K? Try Leaving Your Bubble!

The Washington Post ran a story how hard it is for a family making only $250K a year. Just who could a story like this be written by and for? How many ways does this story mislead its readers? If you want to write about hardship write some stories about and for the rest of us!

Over the weekend the Washington Post carried a story labeled as a "Fiscal Times" piece, Where does $250,000 a year go? [1] Summary:

It's the annual income that President Obama and others have repeatedly used to define what it means to be "rich" in America today. ... Just how flush is a family of four with a $250,000 income?

... The bottom line: Living in high-tax areas on either coast can leave our $250,000-a-year family with little margin.

Richard Eskow hit the nail on the head in his post, A Quarter Of A Million Little Pieces: Pete Peterson & The Washington Post Have A New Fiscal James Frey [2], writing,

This "analysis" was written by someone named Karen Hube, and it's based on two phony premises: First, that "President Obama and others have repeatedly used (that level of income) to define what it means to be 'rich' in America today," and second, that it's a hardship to get by on $250,000 a year.

(Please read Richard's post [2], because he gets into what the Fiscal Times is, and why it carries stories like this one.)

The story claims that President Obama and others label them as "rich" because $250K would be the lower borderline if the Bush “tax cuts for the rich” expire. But this misleads readers because the family making $250,000 will NOT see any tax increase at all. If you understand how tax brackets work [3] you know that only amounts above $250K get taxed the additional 4.6%, so someone making $250,001 will pay an additional tax of $0.046. Yes, that’s right, four point six cents. The amounts become large only with very (very) high incomes, but those incomes are so high that the additional tax is still almost nothing. A person making $1,000,000 would pay an additional tax of $2,875 a month on their $83,333 a month of income. (Sorry, it's hard to write a number like that without shouting.)

So Who Is The Story For?

Just who is going to feel the pain of the people who "only" make $250K? The Joneses in the story actually have retirement savings and life and disability and health insurance! They have student loans to pay off because they went to expensive universities and they will have the high expenses to send their kids because their kids will, too. 98% of us understand that when we read this story. Since anyone who makes less than $250K is going to know better from their own experience than to believe what they read in this story, who is this story written for? Hint: the Washington Post is in ... wait for it ... Washington!

What about the rest of us? If $250K a year -- the borderline for entering the top 2% -- leaves the Joneses "with little margin" then shouldn't there be 49 articles for every article like this, explaining how people who make less than $250K are doing -- since that is almost all of us? Shouldn't there be 49 articles about how 98% of us are not getting by, and have no margin at all?

Anti-Government

The story tries to make an anti-government point by claiming that taxes are squeezing the Joneses, complaining that the Joneses "only" take home $173K after all taxes (incl cell phone tax). (That is "only" $14.4K a month take-home.) But a careful reading shows that the opposite might be the case. It might really be limited government that is squeezing them:

College Costs: One of the factors in the cost analysis is college costs. They are paying off high student loans, and are getting ready to send kids to expensive colleges. But college costs are so high because we have less government, because of tax cuts. This is clearly true in California, for example.

Child Care: Child care costs are high because government is "limited" in our conservative on-your-own society.

Health Care: The Joneses health insurance bill is another product of our on-you-own limited government here. Health care is covered anywhere else.

Retirement: The Joneses are saving a lot for their retirement. This drain on their income is high because in conservative America you are on your own. Corporations got rid of most pensions through the 401k scam [4], while the Social Security system is inadequate.

There are many other areas where limited government puts a squeeze on people: insufficient transportation options and high energy costs due to fossil-fuel reliance among them.

They Did One For The Rest Of Us

To their credit the Post also has a story this weekend, In the U.S., Christmas remains a great divide [5], but the story misses the point by blaming the recession for the difficulties regular people face,

A new division is emerging in America between those who have moved on from the recession and those still caught in its grip.

This holiday season, those two worlds have been thrown into stark relief: At Tiffany's, executives report that sales of their most expensive merchandise have grown by double digits. At Wal-Mart, executives point to shoppers flooding the stores at midnight every two weeks to buy baby formula the minute their unemployment checks hit their accounts. Neiman Marcus brought back $1.5 million fantasy gifts in its annual Christmas Wish Book. Family Dollar is making more room on its shelves for staples like groceries, the one category its customers reliably shop.

But many, many people with jobs are having a hard time buying baby formula, too, these days. It was like this for more and more people before the recession. In fact, many say that is why there is this bad economy. Where I live people go through my recycle bin looking for cans - and were doing so before the recession. People living on Social Security are having a very, very hard time while the people making $250K "with little margin" can talk casually about cutting the program in order to avoid having the cap lifted causing them to pay a bit more into the system.

The Post story attributes the divide to the “grip” of the recession and not to the problems caused by policies that have led to our intense concentration of wealth. The problem is that our economic system for thirty years has been increasingly rewarding a few at the very top, and not the rest of us. Tax cuts, bailouts and bonuses for them, government cutbacks and stagnant wages for us.

But flawed as it is, that is one down, only 48 more stories about the other 98% to go to catch up with the one about getting by on only $250K.

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