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What Do Millennials Spend All Their Money On?

Mother Jones

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A few days ago, Australian real-estate mogul Tim Gurner had some harsh words for millennials who are unhappy that they can’t afford to buy a house:

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said. “We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.

“The people that own homes today worked very, very hard for it,” he said, adding that they “saved every dollar, did everything they could to get up the property investment ladder.”

This prompted a snarky, avocado-centric Twitter meme for a while, and the next day the New York Times even tried to fact check Gurner’s claim:

According to the Food Institute, which analyzed Bureau of Labor Statistics expenditure data from 2015, people from 25 to 34 spent, on average, $3,097 on eating out. Data for this age group through the decades was not readily available….As for Mr. Gurner’s second suggestion — skipping the European vacation — there is indeed an opportunity for savings, but research suggests millennials are the generation spending the least on travel.

This is some strange stuff. In its current form, the BLS Consumer Expenditure Survey goes back to the 80s, so this data is indeed available through the decades. Still, at least this is an attempt to take Gurner seriously: he’s not literally complaining about avocados on toast, but about a cavalier attitude toward money in general. So let’s take a look at that. First, here are total expenditures for 25-34-year-olds:

As you can see, millennials spend a smaller proportion of their income than 25-34-year-olds did a generation ago. In the Reagan era, this age group spent 91 percent of their income. Today’s millennials spend only 81 percent of their income.1 Still, thanks to rising incomes their total expenditures clock in about $3,000 higher (adjusted for inflation) than young households in the 80s.

But do they spend a big part of that income on fripperies, like lavish vacations and expensive dinners out? Let’s look:

Three decades ago, 18-34-year-olds spent 10.5 percent of their income on entertainment and eating out. Millennials spend 8.6 percent. In real dollars, that represents a small decline. In other words, millennials are more frugal about dining and entertainment than past generations.

So what do millennials spend their money on each year? They may have $3,000 more in disposable income than young families of the 80s and 90s, but they also spend:

About $1,000 more on health care.
About $1,500 more on pensions and Social Security.
About $2,000 more on overall housing (rent, maintenance, utilities, etc.).
About $700 more on education.

If they’re not buying houses, this is why. It’s not because houses are more expensive: the average house costs about a third more than it did in the 80s and early 90s, but thanks to low interest rates the average mortgage payment is about the same or even a bit lower. But it’s tough to scrape together a down payment when you’re already running a tight ship on dining and entertainment and paying more than previous generations for health care, education, retirement, and student loans.

That said, I’ll add one more thing: our perceptions are probably a bit warped about this. Millennials who write about this stuff tend to live in media centers like New York or San Francisco or Washington DC, where housing is extremely expensive. Even with a decent income it’s hard to afford anything more than a cramped apartment. In the rest of the country things are different, but we don’t hear as much about that. Caveat emptor.

1The share of income not counted as expenditures includes taxes, student loans, credit card payments, savings, etc.

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What Do Millennials Spend All Their Money On?

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Climate negotiators will meet to talk Paris agreement, while Trump team debates dropping it.

Kait Parker grew up the daughter of a math teacher and a storm-spotting firefighter, which likely explains her spitfire approach to explaining atmospheric science. Last year, when Breitbart attempted to disprove climate change by misleadingly poaching only a portion of her Weather Channel segment on La Niña, Parker fired back. She called out the alt-right site for its dubious methods in an online video. “Next time you’re thinking about publishing a cherry-picked article, try consulting a scientist first,” she zinged. The response brought a wave of social-media support and shout-outs from mainstream media like Elle.

Parker is currently doubling down on reaching her fellow millennials, producing and hosting shows on digital-only outlets like the Weather Channel app and Snapchat. Her YouTube series, “Science Is Real,” examines the consequences of a warming planet. And later this spring she’ll launch “The United States of Climate Change,” a massive 50-part series that will chart climate impacts in every state through short videos, written pieces, and even graphic novels.

“If 97 doctors told you you were dying of cancer, would you believe them, or the three that didn’t?” she says of climate change. “The more lives I can help save and communicate the risk, the better.”


Meet all the fixers on this year’s Grist 50.

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Climate negotiators will meet to talk Paris agreement, while Trump team debates dropping it.

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Trump Tax Plan Unveiled!

Mother Jones

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Last night I wrote that the Trump tax plan would be little more a than a rewrite of his campaign document. I was wrong. Here it is:

It’s not worth the 60 seconds it would take to check this, but I’m pretty sure this is less detailed than Trump’s campaign document. What a fucking embarrassment. It’s like something a high school class would put together. Even with only five days to work with, you’d think the Treasury Department of the United States of America could produce a little more than this.

But let’s go through the whole thing. There’s a little more than you see in the tweet above:

Three tax brackets instead of seven. However, there’s no telling how this affects taxes until Steve Mnuchin tells us where the cutoff points are.

Doubles the personal exemption from $12,000 to $24,000. This will help middle-class families, but it’s a little hard to know how much it will help them until we get details on….

Elimination of itemized deductions. Which ones? All of them? Good luck with that. But you can be sure that one of the targets will be the deduction for state income taxes, since that mostly benefits the hated blue states of California and New York.

Elimination of the estate tax. A huge boon for the super-duper rich.

Elimination of the AMT. A huge boon for the rich.

Elimination of Obamacare’s 3.8 percent tax on investment. A huge boon for the rich.

Reduce business tax rate to 15 percent. A huge boon for corporations and the rich, especially those with income from pass-through businesses. Apparently Mnuchin doesn’t care that Senate rules make this almost literally unpassable.

Tax repatriation holiday. A huge boon for corporations and the rich.

Territorial taxation system for corporations. There’s no telling what effect this would have. There are good territorial systems and bad ones. It’s all in the details—though it’s a pretty good guess that Trump will opt for one of the bad ones.

The driving force behind this appears to be Trump’s desire to call this the biggest tax cut in American history. The previous champ was Ronald Reagan’s 1981 tax cut, which cost 3.9 percent of GDP. That means Trump is gunning for 4 percent of GDP.

The Congressional Budget Office pegs GDP over the next ten years at $239 trillion. To get to 4 percent, Trump’s tax plan will need to cut taxes by $9.5 trillion. This is obviously ridiculous. Maybe Trump isn’t accounting for inflation or something. That would get him down to $4.3 trillion.

Really, who knows? I suppose Trump will call it the biggest tax cut in history regardless of how big it is. He doesn’t care. The one thing we can be sure of is that the rich will swoon. At a guess, something like 90 percent of that $9.5 (or $4.3 or whatever) trillion will go to the top 10 percent. The rest of us get a few crumbs.

Of course, this whole thing is DOA in Congress anyway, which will pretty much ignore Trump and create its own tax plan for the rich. This one-page “plan” is really just a publicity stunt so Trump can say he introduced it during his first hundred days. What a doofus.

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Trump Tax Plan Unveiled!

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Republicans Unveil Their Health Care Plan. It’s a Bloodbath.

Mother Jones

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Republicans have finally released their shiny new health care plan. It’s pretty much the same as the discussion draft that leaked a couple of weeks ago, and includes the following basic features:

Subsidies (in the form of advanceable tax credits) are age-based, starting at $2,000 for young people and going up to $4,000 for older folks.
The subsidies begin to phase out above incomes of $75,000 ($150,000 for households). This will affect about 10 percent of the population and probably reduces the cost of the bill by about 5 percent.
Obamacare’s Medicaid expansion is frozen in 2020 and then gradually phased out.
The bill allocates about $10 billion per year for high-risk pools run by states. This is far too little to work effectively.
The tax meant to pay for everything was removed.
Insurers are required to cover everyone who applies, even if they have pre-existing conditions. However, if you have a coverage gap longer than two months, insurers can impose a premium surcharge of 30 percent for one year. This “continuous coverage” provision is designed to motivate people to buy insurance, since the bill repeals the individual mandate.
The funding formula for Medicaid is changed to a “per-capita allotment,” which is a fancy way of saying it gets cut.
All the Obamacare taxes on the rich are repealed.

Oh, and the bill includes a one-year ban on funding for Planned Parenthood. Conservatives love this, but it’s also likely to generate some sure no votes in the Senate. Remember that Republicans can only afford two defections in the Senate. Any more than that and their bill fails.

Needless to say, there’s not yet an analysis from the Congressional Budget Office about how much the GOP plan will cost or how many people it will cover. It’s safe to say that on the cost side, it will be a lot cheaper than Obamacare. In fact, since the tax credits are so stingy, it’s likely that very few people in the bottom third of the income spectrum will use them. They leave insurance too expensive for most poor people to afford.

Because of this, my horseback guess is that the Republican plan will be used by about 3 million people, compared to 10 million for Obamacare. The Medicaid expansion will be unchanged for a while, continuing to cover about 10 million people. Total cost for subsidies + high-risk pools + Medicaid expansion will run about $25 billion per year, compared to $100 billion for Obamacare.

Three million is far too small a pool for any kind of successful program, and the pre-existing conditions clause ensures that the pool will be not just small, but very, very heavily weighted toward the very sick. It’s a disaster for insurance companies, who will almost surely refuse to participate.

That’s my guess, anyway. It’s a bloodbath. More detailed analysis from think tankers will be available soon, and the CBO will weigh in eventually too. It’s not going to be pretty.

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Republicans Unveil Their Health Care Plan. It’s a Bloodbath.

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Revolutionary New iPhone Set to Debut Someday

Mother Jones

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Steve Jobs may be dead, but his reality distortion field lives on:

The speculative frenzy that always precedes a new iPhone has been supercharged in anticipation of the 10th-anniversary release expected later this year. Analysts in research reports have predicted the phone will be one of Apple’s most revolutionary, with some suggesting it will come in three sizes instead of the usual two, with a case made almost entirely of glass and possibly wireless-charging capability.

At least one of the anniversary phones is expected to have an OLED screen, technology that would make the device thinner and lighter. The display, on top of its being an anniversary edition, has led to speculation that Apple could charge record prices for it, said Steven Milunovich, an analyst with UBS.

Three sizes! Wireless charging! An OLED screen! All for a mere thousand dollars.

The sleazy marketing part of me admires the hell out of Apple. They have somehow built up a customer base so loyal that they can explicitly follow a strategy of staying two years behind everyone else and then incorporating whatever features turn out to be popular. Their loyal customers are, apparently, OK with paying astronomical prices for the privilege of always lacking the latest and greatest features. Because it’s Apple.

When I switched from an iPhone to an Android phone several years ago, it took me literally no more than a day to get accustomed to the new UI. Phone interfaces, after all, are designed to be super simple, and the iPhone and Android UIs aren’t really all that different to begin with. But iPhone users remain fanatically loyal for reasons that escape me. I wonder if this bubble is ever going to burst?

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Revolutionary New iPhone Set to Debut Someday

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