The Coolest (And Silliest) Infographics From The White House’s “Enhanced” State Of The Union Broadcast

Last night, the White House offered an “enhanced broadcast” of the State of the Union address that had graphs, statistics, and other images playing alongside Obama’s speech. It’s a pretty cool concept, offering a way to make the speech more interesting and to provide important context on what was being said. The execution of the idea was a mixed bag – some of it was really valuable while other parts were irrelevant or downright silly.

The best graphics added important context to what Obama was saying, like this shot that played as Obama said, “We can’t just keep subsidizing skyrocketing tuition.” (22:45)

Or this graph showing increasing wealth inequality as Obama said, “Folks at the top saw their incomes rise like never before, but most hard-working Americans struggled.” (5:50

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5 States Where The Working Class Was Hit Hardest By Recession

It’s been well documented that low-skilled workers were more likely to lose their jobs during the recession than those with higher levels of education. The current unemployment rate is 14.0% for workers without a high school degree, 9.7% for those with only a high school degree, and 4.2% for those with a college degree. A new analysis by the Urban Institute identifies the states where low-skilled workers (those with less than a high school degree) were hit hardest by the recession in comparison to other groups: Tennessee, Virginia, Massachusetts, Oregon, and Arizona.

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Infographics Follow-up: Tax Rates Of The Super-Rich

On Tuesday I wrote about Warren Buffett’s recent op-ed in the NY Times arguing that the super-rich aren’t paying their fair share of taxes. Yesterday Roberton Williams at the Urban-Brookings Tax Policy Center posted an interesting graph that shows how preferential rates for dividends and capital gains income affect the overall tax rates households pay.

Source: Urban-Brookings Tax Policy Center, 2011

The graph is a bit complicated at first glance, so here’s a breakdown:

  • It shows effective tax rates (ETR), which sum individual income taxes and payroll taxes (I explained why payroll taxes matter in my previous post).
  • The blue bars show the average ETR a household pays if they earn less than 10% of their income from dividends and gains on investments.
  • The red, green, and purple bars show the average ETRs paid by households that earn more of their income from investments. The purple bars, for example, represent households that earn at least 2/3 of their income from these sources.

As I explained the other day and as the graph shows, the more of your income you earn from investments rather than wages, the lower your overall tax rate. And it’s almost exclusively the top earners who are making large shares of their money from investments and getting those lower tax rates shown by the red, green, and purple bars.

If this is still a little confusing, let’s consider two hypothetical families:

Family #1: An upper-middle class family earning $90,000 a year, which puts them in the fourth income quintile. 97% of families in this group make less than 10% of their income from capital gains and dividends. So this family is almost certainly going to be in the blue bar group and will likely pay an average effective tax rate of 16.1%.

Family #2: A super-rich family earning $5 million a year, which places them in the top 0.1% of earners. Almost half of families in this category make more than 10% of their income from capital gains and dividends. If our hypothetical family earns half of their income from these sources, they will be part of the green bar group and will be paying an effective tax rate of around 15%, lower than Family #1.

Why Investors Pay Less Tax than the Rest of Us
Urban-Brookings Tax Policy Center // Roberton Williams // August 31, 2011

FYI, these are the income groups shown in the graph:
Lowest quintile: < $17,000                                Top quintile: > $103,500
Second quintile: $17,000 – $33,500                Top 1%: > $532,500
Middle quintile: $33,500 – $60,000                 Top 0.1%: > $2,179,000
Fourth quintile: $60,000 – $103,500

Infographics of the Week: An Increasingly Diverse America and What It Means for the GOP

Almost half of all births in the U.S. are of children from racial and ethnic minority groups, according to a Brookings Institution analysis of 2010 Census data. This milestone is part of a demographic shift that has been happening for decades, as each successive generation of Americans becomes increasingly diverse (see the graph below). The trend results from variations in immigration patterns, fertility rates, and age distributions across different racial and ethnic groups.

Source: Brookings Institution, 2011

What I find most interesting about this analysis is a map Brookings created that shows which counties have the highest percentage of non-white births. You can see a band of high concentrations running along the bottom of the mainland U.S., particularly in the Southwest.

Source: Brookings Institution, 2011

This cool video, which illustrates how the population of people of color will grow between 1990 and 2040, shows the same geographic trend: the epicenter of America’s increasing diversity is the South and, particularly, the Southwest.

So what does this mean for national politics? Take a look at the Brookings map above and focus on the South, traditionally a key GOP stronghold. See the blue (which indicates high levels of diversity) along the western edge of Texas and winding through Mississippi, Alabama, Georgia, and South Carolina? Now look at the map below, which shows the 2008 presidential election results by county. You see the same blue areas (indicating votes for Obama) on the western border of Texas and winding through those four Deep South states.

Source: Los Angeles Times, 2008

As long as the GOP continues to be the party of, by, and for white people, it is fighting a losing demographic battle, because many of the states it has traditionally relied on winning are quickly becoming less white. North Carolina and Virginia went Democratic in the last presidential election for the first time in 32 and 44 years, respectively. Could someplace like Georgia be next?

America Reaches Its Demographic Tipping Point
Brookings Institution // William H. Frey // August 26, 2011

Infographics: Visualizing The Deficit & Proposed Solutions

Two cool debt ceiling/deficit-related infographics caught my eye today.

The first, by the Center for American Progress, shows the percentage of savings that would come from tax increases under various proposals to address the deficit, including those offered by Obama, the Gang of Six, and the Simpson-Bowles Commission. It backs up the assertion of Paul Krugman and other commentators that Obama has already given a lot to anti-tax Republicans and what he is now offering is actually right-of-center.

The second infographic, from this weekend’s NY Times, shows how our two most recent presidents contributed to the deficit. Policy changes under Bush cost $5.07 trillion while those during Obama’s tenure added $1.44 trillion (projected over ten years). To be fair, Obama’s term isn’t over yet and so far he has increased spending at roughly the same rate as Bush: on average he has added $580 billion in spending for each year of his term, compared to $630 billion a year under Bush. Much of Obama’s new spending, however, was in response to the economic crisis and I think it’s clear that he doesn’t plan to continue increasing spending at the rate we saw during his first two years in office.

Source: The New York Times, July 24, 2011

How To Teach The Recession? The Financial Crisis As Case Study

How do we teach economics students about one of the most fascinating case studies in our recent economic history and one they can probably relate to personally? Hoover Institution fellow John B. Taylor, a well-known economist who teaches at Stanford, has some ideas on how the recent crisis can be used to teach economic theory. As Taylor points out, the history of the recession is still being written so professors will have different views on what lessons it holds. He offers a few of his own in the form of slides from a recent talk he gave on the topic.

Two graphs I found particularly interesting:

Graph by John B. Taylor, Stanford University

Graph by John B. Taylor, Stanford University

The first graph shows the failure of increases in personal income due to the stimulus to increase spending on personal consumption. This data supports Milton Friedman’s personal income hypothesis (PIH) that people make their consumption decisions based on their long-term income expectations, and short-term changes in income (like tax rebates and other temporary stimulus measures) don’t have much of an impact on consumer spending. The second graph shows how targeted incentives – like the “Cash for Clunkers” program that offset the cost of newer, more fuel-efficient vehicles for people who traded in their old cars – can bend the PIH and increase personal consumption spending.

You can find more on Taylor’s blog.

Lessons From the Financial Crisis For Teaching Economics
John B. Taylor // Hoover Institution // June 6, 2011