Robin Loves a Tax Story

The United States is more than 20 years into a tax experiment – an era of a cumulative $7 trillion in tax cuts. So, asks economist Kathryn Edwards, how’s that working out? Well, we have worsening income inequality and public faith in the tax system is cratering. Meanwhile every social policy is conceptualized as some kind of tax cut/credit. The question for our optimistic future is, are you ready for tax fairness if that means you don't get that deduction? ✨ Support the Optimist Economy podcast at: https://optimisteconomy.substack.com/subscribe or https://buymeacoffee.com/optimisteconomy ✨ You can also find Optimist Economy on: TikTok https://www.tiktok.com/@optimist_economy YouTube https://www.youtube.com/@optimist_economy Instagram https://www.instagram.com/optimist_economy/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Mitt Romney and Ted Kennedy were about as different as two politicians could be. The lanky businessman and the stout old senator, the conservative darling and the liberal icon. But did you know they once teamed up to tackle an elusive challenge: universal healthcare?

• 0:16Speaker 01

  This is a politician's dream.

• 0:18Speaker 00

  In season four of the Big Dig podcast, we tell the story of Romney Care and the odd couple alliance behind it. Find Mitt and Ted wherever you listen.

• 0:34Speaker 02

  Hello and welcome to Optimist Economy. I'm Catherine.

• 0:37Robin Rauzi?

  I'm Robin.

• 0:39Speaker 02

  On this show, we believe the US economy can be better, and we talk about how to get there, one problem and solution at a time.

• 0:52Robin Rauzi?

  First up is retcon. Catherine, did you have any retcons this week? We talked about Social Security, you might remember.

• 1:00Speaker 02

  So my only retcon for Social Security is just to talk again about how awesome it is.

• 1:08Speaker 02

  And if you love it, you're in good company with 95% of Americans who also really love Social Security, who take pride in Social Security. And I went back and looked at more polling and some reports that have come out. I mean, Social Security has so many decades of polling data that people can now do research on the history of Social Security polling. And one of the recent reports I read on it talked about how remarkably consistent and bipartisan and high Social Security's support is. And I mean, my only retcon is just to say, like, isn't it great?

• 1:42Robin Rauzi?

  Right. Social Security polls better than any political candidate.

• 1:45Speaker 02

  Ever.

• 1:46Robin Rauzi?

  By a long ways.

• 1:47Speaker 02

  Ever. It is more popular than every politician that has ever existed in the history of the United States. And honestly, there's something really nice about that. Just thinking about, like, you see these people on TV, or they pass these ridiculous laws, or like, they put these writers into bills, and you're like, man, you know what? You'll be dead and Social Security will still be here.

• 2:10Speaker 02

  Which is a little dark, but I'm like-

• 2:11Robin Rauzi?

  That's all dark optimism.

• 2:12Speaker 02

  That's, hey, I'm doing my best.

• 2:15Robin Rauzi?

  Take it where you can get it.

• 2:16Speaker 02

  Take it where you can get it.

• 2:17Robin Rauzi?

  Seriously. So my retcon, and I don't know how much of this will wind up in the final cut, but we, we talked briefly about Mary McCarthy, who was the popularizer of the word Orwellian that Catherine had brought up last week. I sort of referred to her famous burn on Lillian Hellman, that every word she writes is a lie, including and in the, so it was a little bit of a, it was a literary insult, but their, but their feud actually went back to the late 1930s, when Hellman would, would not say she was a communist, but she was a supporter of Stalin. And McCarthy was a sort of fellow traveler, but more a

• 3:01Robin Rauzi?

  supporter of Trotsky. And when the, the show trials happened, they, they very much split over Stalin and Stalinism. So that was in the late 30s. But the literary burn comes in 1980. I mean, 40 years later, McCarthy is on Dick Cavett, and he's asking her about overrated writers. And she says this thing about Lillian Hellman. Now, Lillian Hellman was, was a very successful playwright and Dashiell Hammitt's partner. So she was pretty well off. And she sued McCarthy for about $2 million.

• 3:36Speaker 02

  Oh, my God, like Drake.

• 3:39Robin Rauzi?

  And it was like a huge deal. And it dragged on for four years until Hellman died. But the question was whether or not Hellman was a public figure, because that changes the legal standard by which you have to prove libel, right? Whether there was absolute malice. And Hellman actually won on that, that she was not so famous that they had to prove absolute malice. In this libel suit, and that was being appealed when she died. But what that meant was that the prosecution had to prepare essentially to prove that, in fact, Helman was a liar. And so people just dug into her memoirs, which were apparently full of fabrications. So Helman's reputation takes this huge hit. McCarthy's bank account takes a huge hit.

• 4:23Robin Rauzi?

  The whole thing was a gigantic disaster for both of them. Anyway, this is a pretty famous case. It became, their relationship was the basis of a musical play by Nora Ephron called Imaginary Friends. The whole history of the fight was a subject of a book called Just Words by Alan Ackerman. And they did a play called Helman versus McCarthy in Los Angeles here, and Dick Cavett played himself.

• 4:53Robin Rauzi?

  He's the only one who comes out of this looking good. Anyway, that's my retcon on Mary McCarthy.

• 4:59Speaker 02

  Oh, my God.

• 5:00Robin Rauzi?

  All right.

• 5:01Speaker 02

  It's time for the big one.

• 5:02Robin Rauzi?

  It's time for...

• 5:03Speaker 02

  Pitch meeting.

• 5:04Robin Rauzi?

  So we're flipping the table, I guess, this time where I'm coming to Catherine with something that I've sort of been thinking about and curious about. I just want to preface this by saying I am not an economist, one more time, not an economist.

• 5:18Speaker 02

  Get you a T-shirt. A lot of people could buy it. It's not a bad idea.

• 5:22Robin Rauzi?

  Merch.

• 5:25Robin Rauzi?

  So I love a tax story. I love stories that get into the nitty gritty of taxes. There's something that we all have to deal with and think about, particularly this time of year.

• 5:36Speaker 02

  And to be clear, in this pitch meeting, since Robin's pitching me, I'm going in cold.

• 5:41Robin Rauzi?

  That may be it. I mean, just taxes, what do you got, Catherine? No. One of the things that I have been thinking about, two things, I guess, that may or may not realistically creative end diagram.

• 5:55Robin Rauzi?

  And one was how much the tax code was written to incentivize certain kinds of behaviors. And then the second thing is the growing inequality in incomes and how as more people become ultra wealthy and more people kind of fall below the threshold of actually even like say itemizing their income tax, right? Whether or not we have crossed over to a point where the incentives we're building into the tax code can't really have any effect on people's behavior. Some people are too rich to care and some people are too poor to be motivated.

• 6:36Robin Rauzi?

  I think there's a philosophical question about whether or not that is a good or appropriate way to try to shape the economy or maybe to shape markets. Again, not an economist, don't have expertise in this, but I'm curious what you think.

• 6:51Speaker 02

  Okay, so part one was, we have a tax system that in lots of small ways and maybe large ways is incentivizing certain behavior or at least rewarding certain behavior and making it more lucrative. And that second, we have a growing inequality in income and wealth that is supporting that tax system. And so are these goals of incentivization lost there? Is that right?

• 7:20Robin Rauzi?

  Yeah, and I guess I'm thinking specifically about some things like, well, the mortgage interest deduction is one that comes up a lot, the electric vehicle tax credits. I mean, I only know about the ones that are probably related to individuals.

• 7:34Speaker 02

  Let's keep it on the household side because the business side is a whole other thing that has its own problems of how much can tax policy really change what businesses decide to do in a positive way. I mean, tax avoidance, I'm sure they do all kinds of stuff. So do humans, but can you encourage positive behavior? So. I don't know. I mean, I think there's a couple of strands here that I think could be really interesting to think about. So funnily enough, this actually is a callback to our very first introductory episode where I said, I got up to go to the bathroom and the Republican member of Congress tried to catch me with a question after he had kind of like denigrated me while I was off camera.

• 8:14Robin Rauzi?

  All right.

• 8:14Speaker 02

  This is, this question he asked me about was, do you think it's fair how much taxes the top 1% pay? It was something like that. And I clapped him back and said, how much income do you think they should earn? Because they're taking, I mean, they might be paying a quarter of taxes, but they're taking home a quarter of income. And part of the reason why the US tax system is being so tilted towards the top 1% or 0.1% contributing so much is because they are truly eating up so much of the income. So I have the statistics in front of me. So let's take the, the top 0.1%. And I'm going to compare two time periods,

• 8:53Speaker 02

  2001 and 2021. 2001 is a really important marker because in 2001, no, hold on, I'm, now I just have in the back of my head, you making that joke about how I like to start with like creatures coming out of the slime. And I'm like, how far back can I go? 1930, I'm trying so hard to keep it this century. It's like, I'm sitting on my hands dying to talk about the 19 teens here. So let's start with a quick frame of reference of the last 25 years, and I'm going to keep it at 25, and don't look at me like that. No, I can't. Okay, we're just, we're just gonna go back. We're just, no, no, Robin, we're.

• 9:33Robin Rauzi?

  It's okay. We can edit this after the fact.

• 9:35Speaker 02

  Come on. So I, let's start with this. The US tax code has lived a lot of lives.

• 9:41Robin Rauzi?

  Yeah.

• 9:42Speaker 02

  Starting with its origination and what was the, like, kind of the start of the tax base through today, when we have this incredibly complex tax system. And it has, like many pop divas, errors. The era that we are in now is one of unmitigated tax reductions that flow largely to the top that we have repeated four times this century, starting with the first one in 2001. It was accompanied by a little brother in 2003, and they were made permanent in 2012. 2017, we passed another tax cut, which is what we are debating now. And if you add up the four prior ones together, their bill is over $7 trillion.

• 10:25Robin Rauzi?

  Mm-hmm.

• 10:26Speaker 02

  So that's just an incredible amount of money, even for the federal

• 10:30Robin Rauzi?

  That's a good bit of

• 10:31Speaker 02

  Even for the federal government, $7 trillion is an incredible amount of money. So let's go before this, I'm going to call this the 7 trillion era. So we have this great data from the IRS that gives us a really good pre-picture, because they have information on the top 0.1% of tax filers in the year before the taxes went into effect. So our pre-photo shows that in 2001, the top 0.1% of tax filers earned 8% of all adjusted gross income, 8.1 to be exact. By 2021, at the end of our 7 trillion dollar era, it was 14.3%. So that means that these highest groups of people, the top 0.1% of filers, they're

• 11:16Speaker 02

  accounting for, in total, 14% of all income earned in the United States that is taxable.

• 11:22Robin Rauzi?

  And these are household filings?

• 11:23Speaker 02

  Yeah.

• 11:24Robin Rauzi?

  So, you know, what do we have?

• 11:25Speaker 02

  You're looking at basically like 150,000 households. So the top 150,000 households in the US went from earning 8% of all income that's taxable in the United States to 14%. And the share of tax revenue that they paid went from 15% to 24%. However, their average tax rate fell from 28 to 25. So they're taking home more of all of America's income, they're paying more in taxes, but their actual tax rate has fallen. The US has never had the progressive tax system it has now, to the depths of inequality it has now. The inequality in the US in wealth and income between the top and the bottom, it has really

• 12:09Speaker 02

  only ever been this severe, I think, in the 1920s. But we didn't have the same tax structure we have now. So this is, this is a stress test for the tax system that is happening in real time that we're not, we're not really looking at.

• 12:22Robin Rauzi?

  What do you mean by a stress, a stress test of the tax system? Just, I mean, its inability to raise sufficient revenue? I mean, we know we're not raising sufficient revenue.

• 12:31Speaker 02

  We're not raising sufficient revenue. I think it's the stress test of like, we have a progressive tax system, but how much can that progressivity really hold up when so much income and wealth and power are being concentrated at the top? And we're kind of seeing the progressive system being dismantled. If you look through the $7 trillion era, everybody pays a lower tax rate now than they did in 2001, but the biggest cuts were for the top.

• 12:56Robin Rauzi?

  Right. And we should be clear that when you're talking about a progressive system, you're not talking about progressive politics, you're talking about graduated marginal tax rates.

• 13:06Speaker 02

  Yes. So, that would be my first reaction. There's a whole thread there of this like philosophical question for the American tax code that is built on the idea that people who earn more should pay more into it. How tenable is that system and that philosophy when America is being pulled apart? Because on some level, it counts on the belief that people are actually paying more at the top, and that belief is really what's crumbling. So I hear all the time, people have support for a flat tax of like, just make everyone pay 15% because at least that way-

• 13:43Robin Rauzi?

  It seems fair.

• 13:44Speaker 02

  -the top will have to pay.

• 13:46Robin Rauzi?

  Mm-hmm. You, you believe that other people don't think that the top is paying anything at all?

• 13:53Speaker 02

  I think people think that people at the very top use very clever accounting and liability claiming to avoid paying taxes at all, or to decrease their tax burden. And this is something that you hear in popular press. I mean, Warren Buffett has said several times, "I pay a lower tax rate than my secretary." Because we have the highest taxes on labor income and the lowest taxes on asset and capital income.

• 14:16Robin Rauzi?

  Mm-hmm. Right. Do you feel like the fundamental philosophical question that we keep struggling with is fairness?

• 14:24Speaker 02

  Yes.

• 14:25Robin Rauzi?

  And how we define what fair is?

• 14:26Speaker 02

  Yes, but there's been polling on this too. I mean, if you ask, Gallup has been asking throughout the $7 trillion era, the share of Americans who think that their income tax is fair. And it peaked in 2003 at 64%, and now it's at 49. So we're now underwater in terms of the majority of Americans do not think their income tax is fair.

• 14:50Robin Rauzi?

  And I think you can also think that your income tax is fair, but not believe that the tax system is fair.

• 14:55Speaker 02

  How about this for if you wanted to put the problem with the US tax system into a single statistic, it would be this. Since 2001, the federal government has passed over $7 trillion in tax cuts. And yet, over that time, the share of Americans who think they were paying a fair portion has fallen. So even as this spigot is open, and I mean money is pouring out of the federal government that they use to collect some taxes, even as more tax dollars are being returned to Americans through lower rates, through different deductions, Americans are viewing the system as more and more unfair.

• 15:32Robin Rauzi?

  Yeah.

• 15:33Speaker 02

  That, to me, is all you need to know, that whatever policy they keep on pursuing with tax cuts is perceived as unfair, and they need to stop.

• 15:40Robin Rauzi?

  Yeah. I mean, it's interesting that this has been allowed to persist for so long. I mean, people weren't happy about the 2017 tax cuts when they passed. And people were marching in the streets in 2008 about the unfairness, not necessarily specifically in the tax code, but in income inequality.

• 15:59Speaker 02

  So your question about the tax system, though, I think you can go two ways. I think you can go big, or you can go small.

• 16:04Robin Rauzi?

  Right.

• 16:05Speaker 02

  So the big is, well, we have absolutely disgusting income inequality. And you have the bottom 60% of Americans barely making a real wage increase over the past 50 years. You've got a 25-year, $7 trillion tax cut era that is widely viewed as eroding the sense of fairness in the tax system. And at the same time, the US government is simply failing to collect enough in money, in revenue. And in fact, there was a 2005 bipartisan tax reform commission. So Bush passes two tax cuts and then creates a commission to fix the tax code. I think that's kind of incredible. But you know what? He got there. So, you know, whenever you get to the table, matters less than eventually you arrived.

• 16:50Speaker 02

  So after he passes two massive tax cuts, he then comes to, we should have a tax reform, and that the two things we just passed are not enough. The 2005 Tax Reform Commission is chaired by a Louisiana senator named Connie Mack. And the first sentence of the Tax Reform Commission is, "We have lost sight of the fact that the fundamental purpose of our tax system is to raise revenues to fund government." In fact, hold on, are we doing props?

• 17:19Speaker 02

  I have it right here. Simple, fair, and pro-growth. It's never more than an arm's reach away from me, people. I have proposals to fix America's tax system from the Bush era, literally within my reach at all times.

• 17:34Robin Rauzi?

  I'm so glad.

• 17:35Speaker 02

  I posted a photo to Instagram when it came in the mail. I was so excited. Where is your mind going?

• 17:41Robin Rauzi?

  Well, it's just this idea about that some of the fundamental ways that we use the taxes to shape behavior, that we act like the tax code is for behavioral economics and nudging people and rewarding behaviors and punishing others.

• 17:57Speaker 02

  Yes, so I think this is the two, like, there's the big picture, you know, go as big as possible. We are talking about like the fundamental failings of a tax system in a progressive structure and an increasingly unequal economy. So that's, I think that's one.

• 18:12Robin Rauzi?

  Yes.

• 18:13Speaker 02

  And it's like, yeah, how do you design a fair system? Nobody thinks the rich pays their fair. I don't, I mean, they don't pay their fair share. That's not a presumption. I mean, that's just, that is a conclusion. And they have more ability to reduce their share. So that's, that's one, like, kind of aspect of this, aspect of fairness. But then the other is how much of the US tax system has evolved? And if I could go back to the 1960s, I would love to, but that's okay. I don't need to. I'd prefer to go back to the 1910s. However, how much the tax system has evolved to become our social welfare system in disguise?

• 18:47Robin Rauzi?

  Yeah.

• 18:47Speaker 02

  Like, it's a sheep in wolf's clothing. It's not the tax system. It's the social welfare system being sent through the tax system because getting a spending program passed is basically impossible, changing the tax system is easier.

• 19:00Robin Rauzi?

  But what you started to say that really triggered part of my thinking about this was how we also incentivize things like investing in 401Ks, health savings accounts, all sorts of things that are designed to promote and reward saving behavior, particularly for retirement, but also for healthcare expenses. But even HSAs, I think, part of the idea is you're saving for the healthcare expenses you're going to face in old age. But that's not going to work for for people who don't have enough money to save. You know, it's creating rewards for, let's say, upper class, upper middle class people

• 19:39Robin Rauzi?

  who are already saving money and then starving the tax system to the harm of people who don't have the income to save money.

• 19:48Speaker 02

  There was an instinct in politics that I think is still there that if you want to do something, you just throw a tax cut on it. And these were not necessarily good decisions. So the the history of the 401k is an excellent example. They made a change to section 401k of the Internal Revenue Code. It was really related to bonuses and how bonuses were taxed. But various, you know, pretty clever people who work in benefits and private companies, you know, realized that you could create an account that if intended for retirement shouldn't be subject to tax exclusion. They send it, they send it up to the IRS and IRS is like, all right, I think that that's actually a fair reading and the 401k account is born. So at no point did the federal government sit down and say, you know what we should do?

• 20:33Speaker 02

  We should have employers create private accounts in the banking system and we should put a tax preference on that by not subjecting the contributions to a retirement account that an employer sets up to income taxes. They never made that decision. They made a separate decision that was interpreted as that and they never changed it. We're talking a trillion, I mean, this is, health and retirement are the two largest tax expenditures we have. They flow to the top half of the income distribution. They are gate capped by employers, exclusively by employers, and their results are pretty poor. I mean, we've had the 401k, I think that was, that change to the tax code was, I believe, in 1979 or 1980.

• 21:17Speaker 02

  So it's had 40 years of runway. What is it going to prove? Half of Americans don't have a retirement account and they never will. And yet we, we spend over, Jesus, I think the, it's some ridiculously large amount of money that goes to.

• 21:31Robin Rauzi?

  The tax benefit?

• 21:32Speaker 02

  The 401k tax benefit, the tax preference for retirement savings that some employers decide that some Americans get to have.

• 21:39Robin Rauzi?

  Does it rival or exceed the mortgage interest income?

• 21:44Speaker 02

  Uh, depends on when you're talking about because the 2017 tax cut changed the standard deduction.

• 21:49Robin Rauzi?

  Right.

• 21:50Speaker 02

  So before then, something like a third of people took an itemized deduction. Now it's just about eight or nine percent. But even now, you know, around 13 million people will claim the mortgage interest deduction to a tune of about $2,000 per person. It's an incredible amount of money. It's enough to, how about this, it's enough to fund universal paid family leave.

• 22:08Robin Rauzi?

  Yeah. I mean, I think there's something, I think there's a lot of things here. I don't know if it all fits into one newsletter or...

• 22:15Speaker 02

  Or story.

• 22:17Robin Rauzi?

  Story. But the tension between whether or not the intentions of changes to the tax code are producing what they were supposed to produce is maybe one side, but the other is whether they are effectual at all. Or whether, philosophically, whether that's actually ever been a use, the proper use for it, as our friends from the Bush administration point out in that beautiful book you have.

• 22:41Speaker 02

  But I wonder, like, the theme here is still fairness, right? It was the big picture problem of fairness in an unequal economy. But it's a small problem, too. I mean, what is the fairness of the mortgage interest deduction if not everybody gets it?

• 22:56Robin Rauzi?

  Yeah.

• 22:57Speaker 02

  And this is, I think, where these two things meet, is that the tax system, this is going to sound, I think, silly to say out loud, the tax system knows what you make. When you put something through the tax system, it's always going to tilt upward. If you put a tax cut in, it's going to tilt upward. If you put a tax benefit in, it's going to tilt upward. If you don't have to pay income taxes on your health insurance, if you don't have to pay income taxes on your retirement contributions or your mortgage interest, all of those things tilt upward because the US tax system is progressive. So you're pushing social policy through a progressive tax system, meaning that the benefits are going to accrue to the people who make the most. It's like a fundamental, you didn't have to do a single policy to know that this was going to happen.

• 23:39Robin Rauzi?

  Right.

• 23:40Speaker 02

  And yet, we keep pushing policy into the tax system because it's the only thing that seems to have any type of bipartisan ability to be changed.

• 23:46Robin Rauzi?

  Yeah.

• 23:47Speaker 02

  So we're, we are creating this Frankenstein tax structure that nobody likes, that doesn't raise enough money, and is unfair, top to bottom. But I wonder if the question here, you know, the angle for the column is, do you think people are ready for fairness?

• 24:06Robin Rauzi?

  Mm-hmm.

• 24:07Speaker 02

  I wrote a column last year about the mortgage interest deduction, in which I pointed out that when the US tax code was created, I believe it is in 1916, let me just check that.

• 24:19Robin Rauzi?

  I can't believe you don't have this tattoo down the inside of your arm.

• 24:21Speaker 02

  I know. In 1913, when our federal income tax system was born, all interest was deducted from income. And it was a policy that was meant to help farmers, which a lot of us were at the time. In this big 1986 tax reform that is passed in the Reagan era, that deduction goes away with the exception of mortgage interest and student loan up to a cap. It's kind of crazy to think about, but you could have a credit card debt for a year and you would be able to deduct from your income the interest you paid on credit cards. The IRS was pointing out that this created a lot of bad incentives for how people use borrowing to game the tax system.

• 25:05Robin Rauzi?

  Right.

• 25:06Speaker 02

  So their recommendation was you need to get rid of all the interest deductions. But Reagan was pressured publicly, as were members of Congress, by the National Association of Realtors and homeowners who enjoyed the deduction and thought that their taxes would go up without it. And so it was kept in.

• 25:22Robin Rauzi?

  We didn't create this as an incentive for home buyers. This is actually just a holdover.

• 25:27Speaker 02

  Yes, I think this is the story of the US tax system is just how much of it is not thoughtfully designed, but we back into it for not great reasons that then become massive windfalls for certain segments of the population that they will not let go of. And how do you tell people not paying taxes on our health insurance benefits has been pretty bad for our health insurance market and for health care in general in America? We should not be subsidizing employer-provided plans like this.

• 25:59Robin Rauzi?

  Right.

• 25:59Speaker 02

  Yeah, people would, you know, they would, I don't remember the 2010 town halls, but I mean, people were so upset. So this goes back to this notion of fairness of like, are you willing to give up something that you benefit from? I mean, maybe just going back to Optimist Economy, the broken tax system is you.

• 26:19Robin Rauzi?

  The call is coming from inside the house.

• 26:22Speaker 02

  Maybe the article is, are you ready to be fair?

• 26:25Robin Rauzi?

  Do you have a sense of what you think fairness looks like?

• 26:27Speaker 02

  I guess my version of fairness is one part predictability.

• 26:31Robin Rauzi?

  Yeah.

• 26:32Speaker 02

  And one part transparency. I mean, I think people should be able to understand the tax code.

• 26:38Robin Rauzi?

  Yeah.

• 26:38Speaker 02

  They should understand what they're paying for. I think our current system does neither of those things. But a transition to something fair require you and people have got to be ready to give up a lot and be willing to stomach a lot of disruption.

• 26:50Robin Rauzi?

  But when you say give up a lot, what do you mean?

• 26:53Speaker 02

  It is a symptom of deep economic insecurity that you would find yourself white knuckled, holding on to the mortgage interest deduction for dear life, as if that's the reason why you have a home.

• 27:03Robin Rauzi?

  Right.

• 27:03Speaker 02

  It doesn't help people buy a house.

• 27:05Robin Rauzi?

  Right.

• 27:05Speaker 02

  You need help with the down payment to buy your first house. That's the number one barrier to buying a home.

• 27:09Robin Rauzi?

  Right.

• 27:09Speaker 02

  So when I talk about these things, I think people are so insecure, they're scared to change what they view as the source of their economic insecurity. Even when there's some expert like me saying, y'all, we don't need it. Like, let's get rid of it.

• 27:24Robin Rauzi?

  But I also feel like people don't, they all assume that it, reform and fairness means that they're going to pay more.

• 27:30Speaker 02

  Well, oof, I don't want to be the bearer of bad news, but I don't know if you've seen what our debt looks like. We have to pay more.

• 27:36Robin Rauzi?

  Yeah.

• 27:37Speaker 02

  There's not a version of the US short of either dissolving our military or ending social security benefits, but keeping all the taxes in perpetuity. Like, we don't, we have to raise taxes. Right now, the economy, the unemployment rate is 4% and we are running a trillion and a half dollar deficit. It's not sustainable. I mean, something is going to break in our fiscal system and we will have to either make massive sacrifices. Like, sorry, no more Medicaid, or we've got to pay more in taxes. There is no future in the US that is not met with higher taxes to make up for this era that we have just been through. And so if we're gonna, if we're gonna actually design the future, we're gonna have to pay for it.

• 28:20Speaker 02

  We've been living off a credit card for 20 years, y'all. Like, times have got to change.

• 28:24Robin Rauzi?

  20 years, $7 trillion later, does anybody feel good about where we are?

• 28:29Speaker 02

  No one feels good about where we are, and it doesn't feel fair. But at the same time, are you ready to be fair? Like, yes, I want to soak the top 0.1% too, but are you ready to give up the mortgage interest deduction? Are you ready to give up your health insurance tax benefits from your employer? Like, what are you willing to change? Because the system is broken on a ton of levels, and we can't just fix the top. I think that's probably, like, fixing the top doesn't fix the system, because it's only part of the problem. So there's, sort of, there's that one. But then I think the other one is, what does the tax system need to do for you to feel better paying more? Because you will pay more. It's a question I'll have to ask myself when I'm not being recorded and can think about it in a way that I'm not naturally more nervous.

• 29:11Robin Rauzi?

  Yeah, me too, me too.

• 29:13Speaker 02

  Okay, so that's it. Is there optimism here?

• 29:17Robin Rauzi?

  Well, I think that it's an important question for all of us to ask ourselves. If we resent paying taxes, what is it that we want to be paying for? It's not always just, you know, schools and roads, but it's stability and security. And obviously, I don't think people feel like they've gotten that.

• 29:34Speaker 02

  I mean, yeah, childcare is going to cost a lot of money. It's why we don't have it already. So if we want to, if we want nice things, we have to pay for it. So it's, maybe this, in some ways, this is, this is a great pitch, because in some ways, this is a great start to whatever we're doing with this project by talking about the hard part first, which is we, everything we're going to talk about the show costs a ton of money. Not a ton of money, some of it's pretty affordable. I mean, it'd be affordable if we weren't in our $7 trillion era, that's for sure. But I mean, if you want to buy things, you can't just not have the conversation about money. So this was the conversation about money, and I think the optimism here is that we are mature enough to have it. It's not a hand wave. It's not a, oh, we'll just make the rich pay for it.

• 30:16Speaker 02

  Like, no, being, having a fair system in our economy that creates broad economic security and prosperity can't be built off of the back of a broken tax system at the top or bottom.

• 30:26Robin Rauzi?

  Yeah.

• 30:26Speaker 02

  So we'll do that, too. That's how optimistic I am that we're going to have a good change.

• 30:31Robin Rauzi?

  Love it.

• 30:32Speaker 02

  I got it, I worked it in. Every time I get optimism in, I wish that we had, like, some kind of, like, real time, where, like, a little, like, almost like Mario, like, like I get a life. Like, I worked optimism, or optimist, into our, the flow of our conversation, so then I get a little, like, boop, boop, boop.

• 30:48Robin Rauzi?

  I'll get a little bell. Ding. And the angel will get its wings.

• 30:53Speaker 02

  Okay. Third segment. Now, we need to go back to Republic of Rousey and the Edwards Republic Executive Orders. Do you have an executive order for us today?

• 31:03Robin Rauzi?

  I do, and it came from the state of Washington, where they're actually debating this bill, which is Washington House Bill 1739. And it has to do with self-checkouts at grocery stores, which I hate so much. Did I apply to work at your store? I did not. I did not. The rules that they're proposing is that the person who's monitoring self-service lanes can only have two lanes to supervise. That has to be their exclusive job, and that there has to be a regular customer checkout lane open. And basically, a self-service checkout can only be 15 items. I'm all for this, and I would sign this as an executive order in the Republic of Rousey tomorrow.

• 31:47Speaker 02

  This executive order I'm all for. I think mine, we don't need to belabor it, but I think pretty early on in our republic, we should set up that you don't have gas-powered leaf blowers or gas-powered lawn equipment of any kind. For whatever reason, there's gas, and then there's the super-concentrated gas that you have to throw in the air when you use anything gas-powered on the lawn. And it's like, oh, I mow my lawn. It reeks of gas for three days. In our republic that we're building, nobody gets to use gas-powered anything on the front lawn. It's electric all the way, and leaf blowers in particular. So I think that one's uncontroversial. I don't know anyone who's like, I love the sound of leaf blowers in the morning. So, leaf blowers, your basic goodbye.

• 32:31Speaker 02

  Before we end our show, we would like to thank our spiritual, if not financial, sponsors in life. The spiritual sponsor I would like to thank for the week is Coffee. I've got my favorites, but honestly, I just needed to be there. So, thank you, Coffee, for being there. And do I have a high-end and low-end taste? Runs the gamut. Just need my dark water.

• 32:51Robin Rauzi?

  On that front, yeah, I would like to really specifically thank Anvil Coffee Roasters in Spokane, Washington. I am still ordering my coffee from them to be delivered. They actually put a whole pound of coffee in a bag, none of this like 12-ounce bullshit. Look them up, they deliver, they ship.

• 33:07Speaker 02

  As a final note, we would like, as ever, to thank our producer and engineer, Sophie, who does the work that we find almost unfathomable of editing.

• 33:16Robin Rauzi?

  Editing our random ramblings.

• 33:19Speaker 02

  Editing our random ramblings and making us sound good. Thank you, Sophie. This has been the Optimist Economy. We are on all the platforms @optimist economy. We have an email account, [email protected], that we'd love to hear from you. You can find me, Keds Economist, on all the platforms, as well as my newsletter, Keds, and obviously you won't find Robin anywhere.

• 33:42Robin Rauzi?

  Nope.

• 33:43Speaker 02

  We are so happy to have you and hopefully converting you to an optimist, one listener or show at a time.