ABCDE Business sunday, december 12, 2010 CARPAGES
Luxury on wheels The 2011 Audi A8 4.2 FSI Quattro sedan is the standard by which other cars in its class should be judged, Warren Brown writes. l Plus, thousands of ads for cars.
SLATE
Why you pay more To outwit comparison shoppers online, merchants use browsing history and other data to change prices. G2
OUTLOOK
An expensive legacy Washington adds laws and extends them, but rarely snuffs them out. They clog the system and drive up the debt. B1
MARKETS
Another run of gains The Obama-GOP tax cut agreement and solid consumer confidence data lift stocks. G6
YTD: Dow NASDAQ S&P 500 +9.42% +16.23% +11.24% EZRA KLEIN Economic and Domestic Policy the tax-cut deal T
he temperature inWashington dipped into the 20s last week, and here in the capital, that seems to
be the point when hell freezes over: President Obama reached an agreement on the Bush tax cuts with the Republican Senate leader who said “the single most important thing we want to achieve is for President Obama to be a one-term president.” Sen. Bernard Sanders, a socialist from Vermont, and Sen. JimDeMint, an arch-conservative from South Carolina, threatened to filibuster the agreement. Liberal Democrats said they’d prefer a permanent extension of most of the tax cuts, and the architect of those cuts said the country couldn’t afford anything more than a temporary extension. It’s been a little confusing. But it’s also been clarifying. The tax-
cut deal, in which the Republicans will give the WhiteHouse about $300 billion in stimulus in return for the White House giving Republicans about $130 billion in tax cuts for the wealthiest Americans, laid bare some old and new realities of howWashington works— and doesn’t work—right now. It’s worth going through them one by one. 1) No one really cares about the
deficit.No sooner had Alan Simpson and Erskine Bowles completed their work on the deficit reduction package than Democrats and Republicans reached a bipartisan accord to add $900 billion to the debt. Republicans wanted their unpaid-for tax cuts for the rich, Democrats wanted their unpaid-for stimulus measures and both sides wanted the unpaid-for tax cuts for income under $250,000. I think it’s
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Six lessons revealed by
$250,000 A YEAR GO? WHERE DOES G EZ
MICHELLE SINGLETARY The Color of Money
She’s thewatchdog consumers will thank
surprise to find, among the leaders, unemployment, foreclosures and the Dow Jones flash crash, the termcoined for when the Dow droppedmore than 600 points in one day inMay. At No. 7 on the Yahoo list, behind the
W
tea partymovement, was Elizabeth Warren. WhatmakesWarren stand out is her
assignment to set up the new Consumer Financial Protection Bureau. If I know Warren, the agency will fundamentally change a financial industry that has long taken advantage of consumers with only an occasional and not nearly hard enough smack on the knuckles. Warren, who is serving as assistant to
President Obama and a special adviser to the secretary of the Treasury, sat down withme recently in her Treasury office for a discussion about the initial plans for the watchdog agency created to protect consumers fromthe abusive lending practices that contributed to the financial crisis. “I wouldn’t have guessed in amillion
years that I would be putting forth this agency . . . working to get it started and setting its first priorities,” saidWarren, who has taken a leave fromteaching at Harvard Law School. There has been lots of opposition to
Warren heading or setting up the bureau. Critics argue that the bureau would stymie the creation of credit products and thatWarren would
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hen Yahoo put out its top 10 searches in the financial category for 2010, there was no
MARCO MARELLA FOR THE WASHINGTON POST
It’s been used as the magic number signifying ‘the rich.’ For a two-career couple with two kids, here’s the breakdown.
BY KAREN HUBE The Fiscal Times
I
n the heated battle over extending the expiringBush-era tax cuts, a single number has emerged from the crossfire: $250,000. It’s the annual income that President Obama and others have repeatedly used to define what it means to be “rich” in Ameri- ca today. And even though a tentative deal
hasbeenreachedonthe cuts,$250,000isetchedin the minds of policymakers and pundits as the number that separates the middle class from the wealthy. By any measure, a $250,000 household income
is substantial. It is six times the national average household income, and just 2.9 percent of couples earn thatmuchormore.“For theaverage person in this country, a $250,000 household income is an unattainably high annual sum—they’ll never see
it,” says Roberton Williams, an analyst at theTax Policy Center, a nonpartisan think tank in Wash- ington. Just how flush is a family of four with a $250,000 income? To find the answer, this analysis considers the household budget, piece by piece, from housing costs to health care, Internet service to summer camp for kids, and even the cost of the dog. And of course: taxes. BDO USA, a national tax accounting firm, com-
puted the total state, local and federal tax burden of a hypothetical two-career couple with two children, earning $250,000. To factor in varying
Hube contributes to the Fiscal Times, an independent news organization that specializes in fiscal and econom- ic matters. It is funded by Peter G. Peterson, who separately supports groups that advocate for long-term debt reduction.
stateandlocal taxes, as well as drastically different costs of living, BDO placed the couple in eight locales across the country—including the District, Alexandria and Bethesda—with top-notch public school districts using national data on spending. The outtake? They’re comfortable. They’re se-
cure. But they’re not Donald Trump. Theanalysisassumesthat this couple—let’s call
them Mr. and Mrs. Jones — are both working professionals. They take advantage of all tax bene- fits available to them, such as pre-tax contribu- tions to 401(k) plans and medical, child care and transportation flexible spending accounts. They have no credit card debt, but Mr. Jones
racked up $40,208 in student loan debt in under- graduate and graduate school, and Mrs. Jones borrowed $22,650 to get her undergraduate de- gree (both amounts are equal to the national averages for their education levels).They alsohave
rich continued onG5
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