Self-Sufficiency Standard continued ...

When I read the CCLP article and saw the statistic pointing out that a single-parent household would require approximately $50,000 per year in order to be self-sufficient, I was truly skeptical.  That number just sounded way too high!

However, years ago I worked on a similar "self-sufficiency" study for the University of Colorado.  We referred to our research project as the Denver Cost-of-Living Study and just like the current self-sufficiency study, our goal was to estimate a minimally-adequate budget for a single-parent, female-headed, Denver-area household without any public or private assistance.  Our 1988 long-run, minimally-adequate monthly budget estimate was $19,611 (excluding taxes and saving) needed by a single-parent, female-headed household with two young children (Augostine 95).  Using the online CPI calculator to adjust for inflation, today's estimate for the Denver area would be $41,052.76 (again, excluding taxes and saving).

Note that the concept of a minimally-adequate standard of living means essentially that --- no luxuries!  It's somewhat above what one would consider a "subsistence level" standard, but by no means extravagant in any way.  Minimally-adequate is essentially the predecessor to what we might consider "minimalist" living today, I suppose.  The family's food budget is derived from the government's Thrifty Food Plan, transportation is a small, used-car, no cable TV, no pets, no restaurant meals, no vacations, mostly thrift-store clothing, etc.

The 2015 CCLP self-sufficiency index study indicates a before-tax estimate and also includes a minimal and emergency savings plan.  Comparing the two studies in 2015 dollars, the before-tax Denver Cost-of-Living Study would fall within the same range as the CCLP calculation of $47,914 for a one-child household, and $57,409 for a household with two children living in Denver county (Pearce 8).

How realistic is the current CCLP self-sufficiency study?  Reliable and right-on!

                                                         Works Cited

Augostine, Daurie R., MA., Modern Poverty: An Investigation of Current Needs Standards and Their Relation to Subsistence Requirements and Public Policy., 1988.  

Pearce, Diana M., Ph.D., The Self-Sufficiency Standard for Colorado 2015., 2015.

The Self-Sufficiency Index

An interesting concept -- the Self-Sufficiency Index -- about which I will have more to say shortly.

A new semester! Some advice ...

Simple successful semester advice ...

1. Show up for class

2. Purchase the text

3. Be proactive about learning the material

4. Ask questions

5. Don't procrastinate

It's only money ...

Whether the national debt or household debt, the major concern about its existence should be the "redistribution of income" resulting from that debt.  With household debt, it's easy to recognize the transfer of wealth that occurs --- who benefits, who loses.  If a household doesn't mind paying 20% more (e.g., principle + interest) for the things they buy, then debt really isn't an issue.

With the national debt, the winners and losers aren't quite so transparent, but the same type of "redistribution of income" occurs between winners/losers.  Who might these two groups be?  Who benefits? Who loses out?

                                                                     Source:  Google Images

$$$ = $$$

Even if we could balance the federal budget going forward (i.e., revenue = spending), our national debt would continue to automatically rise due to the interest on that debt. Currently, interest on the U.S. national debt is the third largest component of government spending, following national defense spending.  Why so high?  Well, consider the amount of interest associated with a $17.5 trillion debt, which is rising automatically as well.

Conclusion:
To balance the budget, revenue must equal spending + additional interest on the expanding debt.

Macro Foundations

The following links (Macroeconomics by Paul Krugman and Krugman and the New York Times) coincide well with our recent and upcoming classroom topics regarding the Classical/Keynesian debate, and also represents a nice conclusion to our course.

War on Welfare

It should come as no surprise that the latest macroeconomic policy issue seems to be the "War on Welfare".  Though the following quote was written during the 1960's "War on Poverty", in my opinion, it applies equally well in today's circumstances.

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a moral justification for selfishness."
                                                                -- John Kenneth Gaibraith

It's fascinating that the increase in transfer payments (e.g., on welfare, food stamps, unemployment compensation as well as student grants, farm subsidies, corporate bailouts, etc.) is a direct result of a poorly-functioning economy, though somehow the perception of the "deserving" vs. "undeserving" poor has always existed, and serves to differentiate the legitimacy of the transfer payment categories above.

Why?