A DAMMED WATER CONSERVATION POLICY

Water is the driving force of all nature. ~ Leonardo da Vinci

Californians hopefully now know Governor Jerry Brown mandated on April Fool's day that the state's urban water users reduce their water consumption by 25%. His mandate has produced a fair amount of media attention, which is a good thing, since most of us are blithely unaware of how much freshwater we actually use or why we should care, especially the multitudes of customers whose usage isn't metered at all.

But the governor's new water policy is fundamentally flawed; dammed to failure. It mandates a 25% reduction in urban water usage without requiring increases in the all too low price of water or creating incentives for water-efficiency. The governor's mandate completely sidesteps imposing any limitations for the state's biggest water users – farmers, agricultural (ag) growers and irrigators. And we are not conserving much water at all, despite the governor's recommendations and mandate. On Apr 7, state officials announced that California’s water conservation efforts slowed markedly in February, with water use declining by a miniscule 2.8%, which they correctly called "dismal."

I urge the governor to immediately amend his Apr 1 mandate so it's more comprehensive and far more effective. He can do this by adding 4 important actions:

1.       The state will create a "conservation fee" administered through water districts for all users' water consumption, including ag irrigators that will supplement the customer's local water district prices. The more water you use, the higher the fee will be. Virtually all water rates now don't change no matter how much water is consumed. The conservation fee will employ a 3-part "inverted block" structure. There will be no fee on the "baseline" amount of water consumed. This baseline amount will equal 75% of the state's average customer monthly usage in 2013. Average customer usage will be separately calculated for each group of customers (e.g., residential, commercial, ag). The second block of the fee will be charged on water used – between 75% and 135% of average monthly usage in 2013 will be charged at 140% of the baseline price. Any water usage greater than 135% of 2013 average monthly usage will be charged at 175% of the baseline price. These new water conservation fees should be put into effect by year-end.[1]

2.       The state will provide rebates of up to 30% for residential, non-residential and ag customers who purchase approved water-conservation equipment during the next 12 months, starting on Jul 1. The rebate will be reduced to 20% for purchases of such equipment that occur for 12 months, starting Jul 1, 2016. Examples would include low-water use washers, "grey water" systems and low-pressure, drip irrigation systems.

3.       The more than 250,000 California water users who are not now metered – a dispiritingly large number, reflecting those bygone days of "too cheap to meter" – will have meters installed by their water district/provider within the next 9 months and be subject to the above supplemental conservation fees.

4.       Water districts will be required to reduce water losses due to leaks by at least 50% over the next 12 months, and by 90% over the next 24 months. Customers who use wells for their water will be subject to groundwater withdrawal regulation.

The water conservation fees will incent water users to reduce their consumption. With the fees farmers will curtail growing crops like low-value, water-thirsty alfalfa and cotton. With these higher fees and incentives, ag and other customers will finally have a clear economic incentive to switch from water-inefficient irrigation techniques like flooding and high-pressure sprinklers to those that reduce water usage, like low-pressure and drip technologies.

The New York Times has provided an informative, interactive map , based on work by the Pacific Institute, that shows what the average residential customer's winter and summary use is for many water districts in the state. The map states that an average residential customer uses 57 gallons per customer per day (gpcd) in the winter and 110 gpcd in the summer at the East Bay Municipal Utility District (EBMUD) my provider and one of the largest non-agricultural water distributors in the state. EBMUD's residential customers reduced their water consumption between 2014 and 2015 by only 3%. Clearly, even in the SF Bay Area – one of California's more "water aware" areas – there's a lot more water conservation that is both possible and needed.

The 4 above-mentioned actions are needed because even if ALL residential, commercial and industrial water consumers drop their usage by the mandated 25% (as the governor stated), how much water will be "saved" in California? Very little, at most only 6%. Because Gov. Brown's conservation mandate says absolutely nothing about agricultural irrigators, who consume 75% to 80% of the state's freshwater. Ag users are the giant, water-leaden elephant in the room of California water users that the governor somehow didn't mention in last week's announcement.

Should we be surprised at this egregious omission? No. Ag water users – which include virtually every farmer and grower in the state – have always exercised disproportionate power in California, including when Gov. Brown's father, Pat Brown, was governor. The first Gov. Brown approved the construction of the State Water Project (SWP) in 1960, a massive series of dams, aqueducts and power plants that principally move water from Northern California to farmers and to people in parched Southern California. The SWP's construction cost over $2.2 billion in the 1960s and early 1970s.

In 2013, California's ag sector produced $46.4 billion in sales, which although larger than any other state's ag output represents only 2.3% of this state's GDP. Think about this; 80% of our water usage accounts for just 2.3% of economic output. A sterling example of how water power has flowed uphill from the Central Valley to the state capitol in Sacramento.

It's true, a number of ag users have recently been cut off from state and federal water allocations, but as these cuts have occurred, growers have deeply expanded the overdrawing-depletion of the state's groundwater aquifers, at a rate far greater than they have for decades. This switch to groundwater has allowed farmers to idle only 5% of irrigated ag land because of the drought. At this point, well water heights in the southern San Joaquin Valley have dropped more than 100ft, mainly due to huge withdrawals for irrigation. The governor's plan for regulating and limiting groundwater usage so it's "sustainable" won't be finalized until the 2040s. Come on!

The only real solution to our latest (but not likely to be last) drought is to align water's cost with its true value, for all users, including farmers and growers, as I've mentioned above. Stop providing huge subsidies to ag irrigators that allow them to grow and export low-value "surplus crops" like alfalfa to Chinese feedlots. Holy cow!

For more than half a century, through intense ag sector lobbying and significant government subsidies, federal and state water policy has been established in California to keep irrigators' water prices very, very low. As Marc Reisner states in Cadillac Desert, his classic book about water policies in the mostly arid West, ''What federal water development has amounted to, in the end, is a uniquely productive, creative vandalism." This vandalism references the large difference between what irrigators and other large-scale water users have paid for using water (the private, regulated price) compared to its social value (which, as a common resource, is much higher).

Here's a prime example of preposterously low ag water prices, taken from Reisner's book. Through the 1980s the Westlands Water District, one of the largest in California and therefore in the US^[2], charged its ag customers between $7.50 and $11.80 per acre-foot of water. Economists estimated the actual cost of delivering this water at the time was $97 per acre-foot. Thus, these customers were paying only 8% to 12% of the cost of providing this resource. This degree of public financial support is at the very deep end of the subsidy pool. Who paid (and continues to pay) the remaining 90% of the cost? Us taxpayers. Adding more water to this vandalism conflagration caused by super-low prices, the dominant planted crop at the time in Westlands was cotton – a very water-thirsty, "surplus crop" whose price is itself heavily subsidized by the federal government. Talk about going from worse to terrible.

With its all too slight cost, California ag irrigators (and virtually every other water user) have had no economic incentive to conserve or efficiently use water. They have continued to greedily guzzle as the rivers, reservoirs and wells are drying up during this latest drought. Unsurprisingly, this unsustainable water gluttony itself has also created significant environmental damage in the Central Valley.

California's appropriate use of our water supply requires that all 38.8 million Californians face water costs that actually reflect its true value. These conservation fees, together with incentives to induce customers to install more water-efficient techniques and repair water pipe leaks, will reduce wasteful usage and hopefully allow us to live sustainably with our available and limited water supply.

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[1] These conservation fees are necessary to comply with Calif. Prop 218, which states that water districts cannot charge prices that cross-subsidize water customers' prices. Some readers will recognize the first 2 actions as consistent with how California electric utilities – under considerable pressure from the CPUC and other parties – changed their electricity rates to encourage customers to use less kWh and install more energy-efficient appliances and equipment. These price changes and rebate programs have been very successful in promoting energy efficiency. The same will happen for water users with my recommendations.

[2] Reisner states that in the 1980s, just 1/4^th of Westlands Water District's annual available water would completely accommodate New York City's total annual water needs.

IS IT DRY ENOUGH TO RAISE THE PRICE OF WATER? Apparently Not.

Years of drought and famine come and years of flood and famine come, and the climate is not changed with dance, libation or prayer. ~John Wesley Powell


Let's consider water, perhaps the most precious resource that sustains our lives, next to oxygen in the atmosphere. Fresh water is a finite resource needed by every living organism on a daily basis. Despite occasional droughts, we have taken its availability for granted for a long, long time. Our assumption that water will be accessible for everyone's unlimited uses at near benthic prices needs refreshing.

I believe that California's current drought is caused in large part by market failure in the water market. This failure is a fine example of a liquid "Tragedy of the Commons" in the making, coupled with misguided government policies. These policies have allowed the price of water to be too low for way too long. Simply put, the price of water that's charged to users everywhere – including you and me– usually does not cover the private or social-environmental costs of providing it. For example, analysts have estimated that over the years farmers have paid just 15% of the capital costs of the federal system that delivers much of their irrigation water.

At such prices the quantity demanded exceeds the available supply, primarily in (but not limited to) recurring drought conditions. Federal government subsidies for agricultural water use in the US – which accounts for over 75% of all freshwater use in California – reach a staggering $4.2 billion to landowners since 1997.

The market for freshwater in California and elsewhere is highly regulated by public agencies. But the regulated price of water has never reflected the actual private cost of using it. Public regulation and sizeable subsidies have kept water prices very low, so there has long been over-consumption and inefficient usage. Generations of residential and non-residential water users have benefited from these continuing subsidies, which we are barely aware of. That is, until they disappear.

The Irish are rebelling at having to actually pay for the water they use for the first time. A growing number of Irish citizens have assembled in large protests against their government's plan to begin charging many of them a flat $285/year fee for their water consumption. That works out to less than $24/month. In the face of stiff and vocal resistance, the government rapidly abandoned their initial plan to install water meters to determine how much to charge each customer. The flat-rate $285/year price was recently sweetened when the Irish government provided households with a €100 (~$109) payment as an inducement for households to register for the water fee. Despite the offer, few households have registered.

Meanwhile back in parched California where our now 4-year old drought continues, the idea of a residential customer paying a mere $24 a month for whatever amount of water you use seems downright cheap, especially for folks whose water use is actually metered. Over 250,000 water users in California do not even have meters to determine their actual water usage. These unmetered customers are charged a flat fee, sometimes as low as $20/month. Cities and areas where unmetered water usage is significant include South Lake Tahoe (62% unmetered), Merced (52%) and Sacramento (47%).

Today (Apr 1st) marks the end of the "water-year" in terms of measuring seasonal rain and snowfall in California. This past year has been as dry as previous years in our continuing drought. How bad is our current drought? California has 12 major reservoirs from which water is distributed to all users. These reservoirs are no more than 45% filled; versus an average of 65% over the pre-drought past. As of yesterday, the California snowfall is an all-time low of 6% of normal. Last month the California's State Water Resources Control Board (SWRCB) renewed its restrictions on water use because of the continuing drought. Residents of California have had to restrict their water usage as a way to conserve the limited amount of water available. People have been advised to reduce watering plants, grass and washing cars, and be mindful of water usage in daily tasks (brushing teeth, taking showers, and doing laundry). In the face of the severe drought, these restrictions are so feeble that Felicia Marcus, chairwoman of the SWRCB stated, "We are not seeing the level of stepping up and ringing the alarm bells that the [drought] situation warrants." Few if any residential, commercial or industrial consumers are now paying more for their water.

Thus, it's no surprise that we haven't reduced our water consumption much, in spite of Gov. Jerry Brown's declaration to cut water use by 20%. Last summer, statewide water usage was cut 7.5%, compared to a year ago. Southern California consumers reduced their usage a trifling 1.7%. Is it time also to raise non-irrigator water prices as well as that of irrigators? Yes, but it's also time to further incentivize water conservation by giving bill credits to customers who have reduced their usage more than 15% to 20% and/or installed water-saving methods that will reduce future usage. Surprisingly, very few local water districts that set local prices have created such conservation credit or rebate programs.^[1]  Are they waiting for the major reservoirs to be completely bone dry before initiating such programs? Seems so.

Water policy economists are not at all popular when they support such needed price increases. Every water user is completely comfortable with their long-time, subsidized, all too miniscule water prices. But water pricing policy must change from a subsidy-based system for 2 reasons: (1) if we are to avoid a true liquid Tragedy of the Commons; and (2) if existing water resources can ever sustainably accommodate both the arid West's significant population growth and increasing agriculture needs. Appropriately set market-based, subsidy-free prices can make every user recognize that water is indeed a precious, common and limited resource that must always be used wisely.

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[1] Only 21 water districts or water utilities were listed – out of the 600 operating in California – as having a water conservation rebate program for their customers.

GETTING TO GREXIT…Turning left at Athens

Happy trails to you, until we meet again. ~ Dale Evans

The Greek economy is in serious trouble. Of the 19 Euro-zone (EZ) nations, Greece now claims the most precarious fiscal position. This is not a new situation. Ever since we found out almost 5 years ago that previous Greek governments had been cooking their national books with far worse than grape leaves and lamb, the nation's finances have been at best "fragile."

From the fiscal fallout of these mega-errors Greece received a huge bailout from its 3 primary creditors – nicknamed "the troika" – the European Central Bank (ECB), the 19 Euro-zone finance ministers (the Eurogroup), and the International Monetary Fund (IMF). This bailout allowed the Greek government to stay functioning, but required Greece to seriously reform its wayward approach to doing the public's business and its fiscal accounting. Since 2012 Greece has received total bailout loans of more than €270 billion (B). At the current euro/dollar exchange rate, that's $310B which Greece owes to 7 different groups of international creditors.

Despite being the larger-than-life birthplace of public democracy, Greece is a fairly small nation. Its 2013 GDP was $267.1B, which represents only 2% of the EZ GDP and makes the country's economic output worth about the same as that of the state of Tennessee. Greece has almost twice as many people as Tennessee, offering a perspective on Greek citizens' overall productivity. Greece's GDP has fallen 25% since it initiated the austerity requirements imposed by the troika as a condition of receiving its fiscal bailout. Greek unemployment hovers around 25%, youth unemployment exceeds 50%.

In large part, these austerity reforms spurred Greek voters to elect a new government last month lead by the left-wing Syriza party. Syriza pledged to unilaterally dismiss the loathed "reforms" that increased taxes, forced government agencies and businesses to dismiss workers and generally made economic life worse for many citizens, all in the name of improving Greece's economic productivity and becoming more worthy of the loans. The Eurogroup ministers and Greece have been negotiating before Mar 5, the first of Greece's many days of fiscal reckoning, when Greece will need to repay €1.7B. Because Greece's economy has taken a nosedive – in part due to the imposed reforms – everyone realizes, but is unwilling to publicly state now, the country will not be able to repay all of the loans on time without additional loans.

The first round of these negotiations has been as much public posturing as private negotiations. If all goes badly, it's possible that Greece will exit the Euro Zone, which is termed the "Grexit." Nevertheless, on Feb 20 the Eurogroup announced that despite big, bad Germany's vocal trepidations, the Eurogroup offered a conditional 4-month extension of the Greek fiscal bailout. On Feb 24 the Eurogroup accepted the Greek government's latest bailout (extension) plan. The clamor surrounding these negotiations has heightened because of the size of the debts owed, the political divergence between the new, anti-austerity Greek government and the powerful EZ austerians (primarily the Germans, with strong support from Finland and the Netherlands) and the symbolism surrounding the euro currency's viability.

Unlike America's 2007-08 credit crisis that was initially founded on real-estate speculation, the troika cannot just foreclose on Greece's delinquent bankers (including the government's central bank) and, in effect, put the nation up for sale. Given the intricate rules and procedures involved with all euro-zone policies, the Greek negotiations weigh euro-zone credit regulations against Greek accountability. On principle, every European politician, including even Germany's Chancellor Angela Merkel the queen of austerity, has stated Greece should not abandon the euro. And, after admitting to excess fiscal expenditures, Spain, Portugal and Ireland have each swallowed the bitter austerity policy pills administered to them by the Eurogroup. Really, why should Greece get special treatment just because the Olympics began there?

Ironically, Germany may particularly benefit from Greece's travails because the euro has depreciated more than 13% in the last 5 months relative to the dollar, in part because of this latest "euro crisis." So travelling to Europe for Americans will be much less expensive this summer than it has been in years; and the cheaper euro will mean more German-made and exported Porsches, BMWs and Mercedes (as well as exports from other euro nations) will continue to grow. When they think about it, having Germany's net exports rise on the shoulders of still-unemployed Greeks will not likely sit too well with Athenians. Interestingly, there is no other major economy that can top Germany's exports as a share of GDP, at 46.6%. China's is 26.4%; the US's is 13.5%.

Although this latest 4-month extension agreement seems to offer some timely political expediency, it really just kicks the fiscal can down the viaduct. At some point the Eurogroup ministers and Greece will have to acknowledge and face three fearsome, related realities. First, significant structural reforms will need to be quickly and irrevocably implemented in Athens and the rest of Greece – and not merely discussed. Given their electoral platform, how the leftists of Syriza can get their political compatriots – and citizen-voters – to swallow these changes is very uncertain. If Syriza sticks to its perceived mandate, a Grexit won't be so far away. Second, even with such reforms, it's very hard to imagine Greece's creditors not eventually getting a haircut (not receiving all of their loans due to be paid back). No one wants to be first in the fiscal haircut line. And third, austerity policies even if they could improve public efficiency (which is not at all a given), have created such wide-spread wreckage that it's not clear the pain is worth the possible gain.  

The trails ahead for Greece and the rest of the Eurogroup are unlikely to be happy ones in the next year, no matter how many times they meet again.

THE MIDDLE CLASS. WHY VIRTUALLY EVERYONE'S IN IT.

Upper classes are a nation's past, the middle class its future. ~ Ayn Rand

President Obama's January 20th State of the Union speech (since every action in Washington seems to require an acronym, his speech is the SOTUS) was characterized by the White House and then the media as addressing "middle-class economics." It's a politically smart focus, especially because there have been lots said about the denouement of the middle class, its "hollowing-out" and its on-going struggles. Even Republicans are extolling "middle class economics," since they (mistakenly) believe they've been vaccinated against shameless duplicity – endemic to GOPers.

Because it's once again a focus of our political nobility, being middle class is in the news. So how does one qualify as a "middle-class" American? Alas, there is no single definition of "middle class," a social, cultural, economic, and of late, political concept that has been central to American's self-image for a long time. A recent survey by the Pew Research Center indicates that nearly 90% of respondents judge themselves to be some version of "middle class," which defies math and statistics, but is a truly-held belief for lots and lots of folks. This survey result echoes Garrison Keillor's Lake Wobegon residents who are all "above-average." It also reflects the ever-broadening characterization of who is middle class, especially at the top end. At this point, almost everyone's middle class, which suits politicians just fine.

One traditional foundation of our middle class is to define it by one's annual income. By calculating what the median income^[1] is for the US we can determine a central point of the middle-class. So what is the median income in the US? Excellent question; unfortunately there are multiple answers, depending on how you measure income, as shown in the following table that shows 3 different median income calculations.

Table 1:  US Median Income

Measure of Median Income	Amount	Year	Source
Household income	$52,250	2013	US Census
Annualized real weekly earnings	$40,768*	2014Q1	Dept. of Labor
Adjusted gross income	$36,055	2012	Tax Foundation

* In 2013 dollars.

Median household income is the most often used way to gauge middle-class income, and provides the highest measure of median income, $52,250. But weekly earnings for full-time workers (there now are 104.3 million full-time workers according to the Department of Labor) and adjusted gross income (AGI) from your Federal income tax form 1040 are well-known and -regarded alternative measures of income. As Table 1 illustrates, even determining a mid-point of middle class income is perplexing as there's a 40% difference between $36,055 (AGI) and $52,250 (Household Income).

One gloomy finding is that real median weekly earnings have not increased in 10 years; they're now virtually the same as they were in 2004. Adjusted gross income includes not just wages and salary but income from interest, dividends, capital gains (that collectively comprise "investment income"), business and pension/retirement and other sources. Unsurprisingly, personal income from investment is 46% of total 2012 AGI for those with income exceeding $1 million. For people whose total AGI is less than $100k, investment income is 3%. With AGI between 100k to 200k, investment income is almost 4% of their AGI. Why median AGI is so much lower than Household Income is puzzling.

But there is a range of income that encompasses the middle class, not just the mid-point (the median). An often-cited income range for the middle class is $25,000 to $100,000/yr. The lower bound of being "middle class" frequently employs the federal "poverty-level" income (FPL) or a multiple of FPL, which varies by family size. In 2015, the FPL for a 4-person family is $24,250. This poverty-level income is used as a basis to determine eligibility for certain public programs and benefits. For example, the federal Affordable Care Act defines a lower and upper AGI range for people to receive premium savings (e.g., subsidies, discounts or tax credits). If a family of 4 people has an AGI of $23,850 to $95,400, they can qualify for lower premiums at the Health and Human Services' federal marketplace healthcare website.

Defining what the upper-end of middle-class income is far more fraught. Politicians, among others, offer an expansive view. In speeches during his run for his second term, President Obama has said “the rich” are those who make $200,000 or more as individuals and $250,000 or more as households; adeptly implying that those households making less than $250k are not "rich," and thus middle class. Remarkably, this upper-range was also cited by Mitt Romney when he was a presidential candidate. Stretching the middle class to include households whose income is $250k means the middle class includes families within the top 3% of all income earners. It may be good politics, but it's wholly unsound economics and math.

After his election, when President Obama and the Republicans were negotiating how the government would not push itself off the infamous "fiscal cliff," they agreed that "the rich" really made a lot more money and raised the definition of “rich” to $400,000 for single people and $450,000 for couples. Making $450k places a household in the top 1% of all earners, nationally. Whether it's $200k or even $450k, that's a very spacious upper-end definition of middle class.

Culturally, being part of the American middle class is tied to several keystone fixtures beyond income. These fixtures include owning a home and sending one's children to college. Home ownership peaked in 2004, when 65% of Americans were paying mortgages for their domicile. Now, after the housing bust, just 64% own their homes, and a rising 34% of middle-class people say they'd rather rent than own if it were time to move.

However, a college education remains highly-sought after. It is closely intertwined with the American Dream, prominently wished for by all of us perhaps especially by middle middle-class folks. Sending our kids to college to improve their future prospects has become more of a perceived necessity rather than an option, given the lethargic growth in even middle-skilled jobs and wages. Thus, the president's middle-class economics plan included proposals to broaden the affordability of college education.

Any change federal tax policy to strengthen the middle-class' economic situation and make college education more affordable should be a bipartisan slam dunk. Nope. Exhibit A is the response to the president's proposed change to benefit middle-class citizens in their efforts to save for their kids' college expenses. He briefly mentioned this proposal in his SOTUS, which was to reform tax-free higher-education savings (aka, 529) plans so more benefits would be focused on "true" middle-class folks.

The president's proposal was to eliminate the tax-free status of 529 plans and instead broaden an existing educational tax credit – the American Opportunity Tax Credit (AOTC) – that would provide more money than 529 plans for lower- and middle- middle-class families to cover their kids' college costs. The AOTC would be phased out for families with incomes greater than $180,000. The AOTC is used far, far less than 529 accounts. And that's saying something because less than 3% of US households even have a 529 account. Not mentioned at all was that about 70% of all undergraduate college students use loans to finance their educations. Thus, reforming student loan policies – like making the loans' payments depend on the income of the newly-graduated person (so-called Pay-As-You-Earn (PAYE) loans) – would likely have a more pronounced benefit for true middle-class families for lowering the costs of higher education than changing 529 plans. Oh well.

The White House stated that 70% of balances in the college accounts were held by families making at least $200,000 a year. Others stated that more than 70% of the total number of accounts are owned by households with incomes below $150,000. The average 529 account balance in 2013 was $19,584, which as all you tuition-payers know might cover, at best, one year at an in-state public college/university.

This White House proposal was the target of vehement criticism across a broad political spectrum, with lightning-quick disapproval from both John Boehner and Nancy Pelosi. Less direct condemnation was spread by the financial industry, which manages 529 accounts and often receives hefty fees for that service. Why? Because 529 plans are popular, despite their low numbers. There is over $240 billion in 529 accounts, and to listen to the criticism, each and every one of these accounts are held by certified middle-class citizens. Certainly many "middle-class" folks have money in 529 accounts, but as the White House pointed out, the benefits of such accounts disproportionately accrue to people in the upper reaches of the middle-class.

Unfortunately, there is enough of a middle-class patina on 529 plans to ensure the president's proposed 529-plan educational benefit reform entered face down into the political waters without even getting its toes wet.

This episode illustrates several inter-related issues in dealing with the "middle class economics." First, there's the difficulty that I've discussed above: defining who resides (or more to the point, who doesn't reside) in the middle-class. From a political perspective, we're virtually all middle class, even families who make $450,000. Silly me; I thought the middle class was a state of economics, not of mind. Second, paying for tax reform that can assist "middle class" people, a goal virtually all politicians pay at least lip service to achieving, is fiendishly difficult. Because tax reform usually means some folks will be winners (who get the benefits) and some will be losers (who pay more taxes).

If the middle class embraces virtually everyone – each of whom want to be tax reform winners – then it's next to impossible to offer benefits to households whose income is far closer to the $52,250 median income. There are simply not enough families who earn over $250k to provide tax revenue to assist middle-middle-class families, whether it be for college education or any other fiscal benefit to make their lives less fraught.

P.S., If you're interested in seeing where in the middle class your income places you, go here.

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[1] Median income is the numerical value separating the higher half of a distribution of income from the lower half.

GIVING CREDIT WHERE IT'S UNDUE? NO.

Austerians want tribute for doing nothing.

Republicans demand praise for the US's modestly-growing economic pie, despite trying to shrink it. It's an Olympian level of chutzpah. Several news reports, including this one, recently stated that the GOP wants some credit for getting the US economy growing once more. To me it's an unassailable example of the GOP leadership suffering from political Alzheimer's. John Boehner, Mitch McConnell and their congressional amnesiacs expressed upset that President Obama has received (deserved) praise for helping to lower the unemployment rate – now at 5.6% - and increase the GDP's growth – now at 5%.

In my book, their consistent efforts to thwart the Obama administration's every attempt to increase government spending and offer vital economic benefit for middle- and working class citizens earns them a leaden medal, certainly not a bronze one.

Speaker Boehner actually criticized the administration for average hourly wages failing to increase. It's yet another example of the GOP's empty fiscal pot calling the economic kettle black. After all, the Republicans have stymied any rise in the federal minimum wage, as well as predominantly opposed increases in state-based minimums. Ominously, their new control of Congress will likely result in Congress doing nothing to help the majority of Americans escape continuing economic challenges. Why? Because they're "austerians."

Austerian is an inventive term applied to politicians (and economists) who have dogmatically stuck to austerity-focused public policies – ones that reduce debt and government expenditures – despite elevated unemployment and frail growth. Austerians in Congress have prevented needed expansionary fiscal policy efforts from being enacted during the past 5 years and regularly raised the fearful specter of high inflation if the government spends more on unemployment support, infrastructure or education. Their fears are completely unfounded. How much have overall prices increased during our fragile recovery? The latest Consumer Price Index increased 1.3% on an annual basis. That's almost 50% lower than the Federal Reserve's 2% inflation rate target. With broader austerian policies in place, Europe is actually experiencing deflation, elevated unemployment and an incipient recession.

Austerians include virtually all GOP and Tea Party members in Congress, as well as several governors; including Sam Brownback in Kansas whose disastrous fiscal efforts have burdened everyone in the Sunflower State. Other members of the austerian alliance include foreign heads of state like German Prime Minister Angela Merkel. In 2 weeks she'll likely face another show-down with a new Greek government. This face-off could lead to the Grexit (the departure of Greece from the Euro-zone), if the European Community (economically lead by Germany) doesn't re-negotiate with Greece and it defaults on its loan obligations. Once again, we'll see who blinks first, and whether her long-standing austerianism bends at all. I bet not.

The nascent Austerian school of economics, just across the philosophical border from the Austrian school of economics, is populated with conservative economists and similarly-minded politicians, who aren't burdened by the facts of recent history. In sum, the austerians have done nothing to get the economy growing again (or improving the lives of 99.5% of its citizens). Austerians have been myopically focused on halting the Affordable Care Act, increasing income and wealth disparity and ending nonexistent inflation.

Yet they want credit for doing worse than nothing. It's enough to turn a skeptic of American politics into a true cynic.