Emily Stewart | Vox

Dental insurance isn’t a scam — but it’s also not insurance

2025-11-04T11:22:28-05:00

The thing about dental insurance is that it isn’t really insurance — it’s more like a half-helpful discount plan with a maximum. And once you reach the maximum, you’re on your own, often to the tune of hundreds and thousands of dollars. As though going to the dentist needed to be less fun.

In the realm of all things health care, dental exists as a sort of overlooked stepchild. The American medical system doesn’t really consider dental care an essential service, despite mounds of evidence linking a healthy mouth to the well-being of the rest of the body, from better pregnancy outcomes to a healthier heart. Dentistry has always been siloed off.

Dental coverage has been off in its little — largely unregulated — corner, too. According to the American Dental Association, more than one-third of US adults don’t have any benefits at all. (For comparison, just 8.2 percent of Americans lack health insurance.) Many patients put off dental care and cite cost as the main reason they don’t go to the dentist — including those who are insured.

Even if you do have dental benefits, they’re often less than beneficial. Insurers may cover 100 percent of a cleaning or a checkup, but once you get into other more complicated services, they start to cover less, so patients have to pick up some or much of the cost. Plans have annual maximums ranging between, say, $1,000 to $2,000, after which the insurance covers nothing.

“When you look at the dental insurance model, it doesn’t protect the patient from financial risk. It’s the opposite,” said Marko Vujicic, chief economist and vice president of the Health Policy Institute at the American Dental Association. “Once the benefit runs out, the $1,400 or whatever it is, all of that financial burden is on the patient. So it protects the insurer, they’re limited on their exposure.”

Imagine being told your health insurer will only pay for 50 percent of your heart bypass surgery, and that it only covers $10,000 of all your health services each year. That would be considered unacceptable in this day and age. But that’s what would happen if I needed a crown — my insurance covers half, and it only pays out $1,500 total all year. My dentist screwed up on a filling last year. It didn’t take long before I hit my limit.

Confused about your benefits?

Medical costs keep going up, and yet our two political parties are stuck in an impasse over what to do about health care policy — while patients hang in the balance. And now, here again is that stressful time of the year — even without government chaos — to sign up for your health insurance and other benefits for next year. Health care costs and the cost of living keep rising, making these decisions all the more important for your financial well-being.

We’ve covered open enrollment from every angle in the Vox guide to using your benefits to make sure you know why the system works this way and how you could make it work the best for you. Read on to learn:

Why dental insurance also isn’t included in your health plan

The bizarre backstory of flexible spending accounts

You can also read the whole package here.

None of this is to say you should nix dental insurance and just go it alone. Insurers are often able to get patients better prices for services than patients would get on their own, and a $1,500 help on dental costs isn’t nothing. It’s just hard not to look at the landscape and wonder whether it can’t be better.

Your mouth is definitely part of your body, and yet that’s not how America treats it

To back up a bit and then some, dentistry was for centuries performed by barber surgeons, which is pretty much what it sounds like — the guy who cut your hair also pulled your rotten tooth (and did a lot of procedures you’d probably prefer your hairdresser not get into anymore). Dentistry wasn’t recognized during the establishment of medical schools in the US in the 1700s and 1800s. Eventually, the country’s first dental school was founded in 1840.

“From the beginning of the modern era, there has been debate about dentistry’s proper place in the wider health system, but what has evolved is clear: Dental education, regulation, and practice are isolated from the rest of health care,” wrote Elizabeth Mertz, associate director of research at Healthforce Center at the University of California, San Francisco, in a 2016 paper on the dental-medical divide.

In the 1960s and 1970s, she notes, consumers largely paid their own dental costs, while most of the public had some sort of hospital or surgical insurance for medical care. A prepaid dental plan should incentivize dental visits, since it at least covers some of the costs. But it became a valid business model for insurers only after they realized that not everyone would take advantage of the benefit — people and employers would pay for the insurance but not necessarily go.

So today, America’s got a system where we separate out dental care into its own separate little realm. We then do the same with dental insurance and treat it like it serves a different purpose.

“Medical is structured to help you most when you’re sickest,” said Michael Adelberg, executive director of the National Association of Dental Plans, a trade group representing dental insurers. “Dental insurance is focused more on preventative care and helping people — many of whom are not naturally inclined to go to the dentist — get to the dentist by being most generous on preventative care and regular checkups.” Even though, again, having dental insurance doesn’t always equate to taking those biannual recommended trips to the dentist.

Medicaid and Medicare, designed in the 1960s, excluded dental services from coverage and continue to do so.

Dental isn’t included in regular Medicare, except for in specific circumstances where it’s considered part of some other medical procedure (like certain cardiac or organ transplant procedures). While 90 percent of Medicare Advantage plans offer some sort of dental coverage, the quality of that coverage can vary greatly. Patients often don’t realize the limitations on those add-on plans when signing up, so they think they’ve signed up for a robust service and ultimately all they’ve got covered are cleanings. “You have to read the fine print of the plan,” said Michelle Rosenberg, director of the Government Accountability Office’s health care team.

States are required to cover dental for all children in Medicaid. Most states offer at least emergency dental services for adults, but many don’t offer much beyond that. The Affordable Care Act declared pediatric dental care an essential health benefit (though it’s a little complicated, depending on the state), but it didn’t do much for adults. Untreated dental issues can result in some scary negative consequences, including gum disease and undiagnosed oral cancers.

Because dentistry isn’t governed as an essential service, there are a bunch of patient protection regulations that don’t apply, Vujicic explained. “Under the Affordable Care Act, we protected consumers from health care costs, we said you can’t be denied care because of pre-existing conditions, there’s a limit to how much a family is going to pay out of pocket each year for their medical care, it doesn’t matter how sick you get,” he said. “All of those things don’t apply in the dental world, because it’s not regulated as a core service. So we have a little bit of a Wild West when it comes to what type of insurance is out there.”

There are no heroes here, nor are there clear-cut villains

Study after study shows Americans with and without insurance forgo dental visits and treatments because it’s so expensive. That decision can wind up being even more costly — hundreds of thousands of people land in the ER each year because of often preventable dental conditions, costing, by one estimate, $2 billion.

There’s not a lot of political energy around addressing dental benefits, and when there is, there’s plenty of resistance among those who prefer the status quo.

There’s plenty of evidence that moving away from the status quo on dentistry and dental benefits would be a positive development for patients. One study found that low-income people who gained access to dental coverage through Medicaid did start to go to the dentist more. Another found that embedding dental coverage in medical plans (in this specific case for children) reduced costs for beneficiaries.

So what’s stopping change? There’s not a lot of political energy around addressing dental benefits, and when there is, there’s plenty of resistance among those who prefer the status quo.

“Organized dentistry itself has actively and expensively campaigned to keep things the way they are,” said Lisa Simon, a dentist and physician at Brigham and Women’s Hospital and Harvard Medical School. “There have been plenty of opportunities for dental insurance to be, more recently, integrated into Medicare and Medicaid in various ways, and those who have been vociferously opposed by many dentists.” Simon noted that many dentists still work in private practice with their own offices and tend to accept public insurance at low rates, if at all. “[They] tend to be very reactionary in any attempts to update the insurance industry,” she added.

In 2021, the ADA fought against a proposal from Democrats to provide dental coverage for all Medicare recipients under President Joe Biden’s Build Back Better agenda, arguing the focus should be on low-income seniors, not everyone.

“As an association, we’re not against it, it’s a question of how it’s structured,” said Mark A. Vitale, dentist based in New Jersey and the former chair of the council of government affairs at the American Dental Association. He said introducing dental benefits for everyone over 65 could be “cost prohibitive” for the federal government and noted that there are structural differences between the Medicare system and dentistry. “We use different codes, different qualifiers, different types of fee schedules.”

“The [ADA] is a trade group that defends the interests of its members who are private practice dentists who have done very well under the current system and have perceptions that Medicare may increase their administrative burden or provide lower reimbursement that they’re not interested in participating in,” Simon said.

The White House eventually dropped the plan as part of a broader decision to pare back the package.

The dental insurance industry is lightly regulated and on many measures would like things to remain that way. One recent battle has been over medical loss ratios (MLR), which measures how much of the revenue insurers get from premiums goes toward medical claims and improving care quality compared to, for example, administrative fees. The ACA required health insurers to keep their MLR to 80/20, but it didn’t touch dental.

In 2022, voters in Massachusetts said yes on a ballot initiative that would make dental insurers spend at least 83 percent of premiums on caring for and improving care for patients. Dentists are keen on MLR rules. Dental insurers and the NADP, which represents them, not so much. They argue low-premium products like dental insurance naturally have a higher percentage of their operating costs eaten up by costs that are fixed. “My industry views the application of a medical-level medical loss ratio on any low-premium products, without considering the fundamental economic differences of medical and dental, as just kind of silly,” Adelberg said.

One common theme here is that all parties involved would like more money in their pockets.

Some dentists also note that insurance maximums haven’t gone up in recent decades, even though the price of dentistry has. “Forty years ago, $1,500 bought you a lot of dentistry,” said Vitale. “Today, $1,500 doesn’t buy you a lot of dentistry. My question to the insurance carrier is why haven’t you increased the benefit level?”

The result of all of this is that going to the dentist — and paying for it — can be really hard to navigate

When people are picking out dental insurance plans, what they need to understand, really, is that it’s not insurance. Richard Manski, chair of dental public health at the University of Maryland’s School of Dentistry, said to think of it more like Amazon Prime — you hand the company money, and in return they go out into the marketplace, find sellers (in this case, providers), and try to get you deals that are better than what you would get in your own. “When you buy dental insurance, and you buy the kind of dental insurance where the dentist is part of a network, that means the dentist has agreed to a set pricing for all these procedures,” he said. “So even if the insurance company didn’t pay a dime for anything, you’re already getting back a really valuable service, which means you don’t have to negotiate with the dentist.”

Indeed, if you’ve got a painful tooth infection or something, you’re probably not in the position to talk discounts with the doc.

There are ways to strategize around dental care and insurance. If a patient hits their annual max, they can consider moving certain procedures to the following year. People can also try to decipher ahead of time whether dental insurance is even worth having. Say someone’s never had a cavity, just goes twice a year for a cleaning and checkup — the cost of that might be less than the insurance premium. Or maybe the insurance they’re offered doesn’t pay much or anything on more complex issues, anyway.

It’s not realistic to expect people to try to do their own health care math.

“I give talks on why you don’t need dental insurance to go to the dentist,” Vitale said. “Offices today will have office loyalty plans, they’ll have various financing modalities available.” He also noted people can try to negotiate discounts with their dentists, which, as mentioned, your mileage may vary on that one.

This scenario where people are supposed to try to anticipate what sort of care they’ll need and essentially hope it isn’t too much is far from ideal. It’s not realistic to expect people to try to do their own health care math, said Simon, “because it requires a level of such sophistication in terms of understanding health care pricing, health care access, and all these other things, which makes it super inequitable.” If English is someone’s second language, or they’re working multiple jobs, or the bus ride to the dentist is really long, deciphering the basics of insurance and whether it’s worth the financial burden is even harder to do. “That’s why one of the things that is so bad about the way our dental ‘insurance system’ works is that it’s really unjust for most people,” Simon said. “For anyone, but it works the worst for the people who need the most help.”

It’s worth noting that patients can also have a hard time deciphering what procedures they really even need at the dentist — some offices recommend the basics, it can feel like others suggest doing everything under the sun. (The Invisalign push at some dentists is real.) “The consumer has an obligation to press their provider and say to them, ‘Is this necessary?’” Manski said. “Patients should be much more involved in their caretaking decisions.”

Of course, all of this is easier said than done. Most people don’t have the time or energy to be gaming out their dental care or dental insurance, nor should they. From a patient perspective, it’s not hard to look at this and wonder whether there isn’t a better way to approach oral health in America than the way we do now. The thing is, a lot of that would require legislation and a different regulatory framework.

That might mean congressional action to expand dental coverage in Medicare and Medicaid. It’s something the dental community would likely resist, though Manski said he believes there’s some sort of deal both sides can probably “live with.” One could also envision ACA-like requirements that, for example, get rid of maximums on dental insurance and protect consumers from high costs. Dental, perhaps one day, could be covered as part of everyday medical insurance — once the country stops treating people’s teeth like some separate bodily entity.

Update, November 1, 10 am ET: This story was originally published in 2023 and has been updated with more current figures for coverage among US adults.

The GameStop stock frenzy, explained

2024-05-13T14:35:55-04:00

A pedestrian wearing a protective mask walks past a GameStop store in the Herald Square area of New York City on November 27, 2020. | Gabriela Bhaskar/Bloomberg/Getty Images

Editor’s note, May 13, 2024, 2:35 pm ET: On May 12, 2024, Keith Gill, a.k.a. Roaring Kitty, returned to social media, with a post on X indicating his possible reentry to the investing space, and set off a spike in so-called meme stocks, including GameStop and AMC theaters. GameStop’s stock had risen nearly 80 percent by mid-day May 13.

Who knew the first big 2021 stock market story would be … GameStop? But here we are.

Day trading and individual investing have boomed over the past several months, with activity often taking place or being discussed on platforms such as Reddit and Robinhood instead of in more traditional arenas. And one big question amid the frenzy has been how much the little guys really matter. Sure, small-time investors trade a lot, sometimes to the annoyance of more traditional institutions, but are they really consequential?

In the GameStop saga, at least, the answer is yes. An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop’s stock price in recent days, forcing halts in trading and causing a major headache for the short sellers betting against it and banking on the stock falling. It’s a captivating David vs. Goliath story, where David — at least on some fronts — appears to be winning.

Famed investor and CNBC personality Jim Cramer called the GameStop drama the “squeeze of a lifetime.” Bloomberg opinion columnist Matt Levine posited that one possible explanation for what happened could be “utter nihilism” on the part of the Reddit crowd, a story “perhaps best told with a series of rocket emojis.” Or maybe one of the WallStreetBets moderators put it best to Wired: “It was a meme stock that really blew up.”

There has been a lot of hand-wringing about the day-trading trend and this new crop of investors playing the markets, many of whom are treating stocks more like a spin at the roulette wheel than a long-term strategy to build wealth. It’s not clear how many of them are looking at the underlying fundamentals of companies, or whether they’re just “YOLO-ing” themselves across the market.

On GameStop, the answer is probably a mix. There’s a reasonable business case to make for (some of) the game retailer’s valuation; there’s also a case that this whole thing has just been quite fun for everyone — the possible trolls of Reddit, market watchers, commentators, and certainly GameStop — except for the short sellers, who have been in for a pretty miserable ride.

“It’s dramatic, and you don’t see this magnitude very often,” said Nick Colas, the co-founder of DataTrek Research. “But when it happens, it’s spectacular.”

More traditional investors (and those with a lot of money) have wagged fingers. But giant banks and hedge funds aren’t exactly a bastion of responsibility — take a look at the role they played in the 2008 financial crisis.

The animosity flows both ways. In a January 25 post titled “An open letter to CNBC,” one WallStreetBets Redditor pointed out that much of the network’s audience is composed of the retail traders who are now being criticized. “Your contempt for the retail investor (your audience) is palpable and if you don’t get it together, you’ll lose an entire new generation of investors,” the Reddit user, RADIO02118, wrote.

The user pointed out that the hedge funds that take on big risks can get a bailout — as one of the ones shorting GameStop did — whereas everyday investors generally can’t: “We don’t have billionaires to bail us out when we mess up our portfolio risk and a position goes against us. We can’t go on TV and make attempts to manipulate millions to take our side of the trade. If we mess up as bad as they did, we’re wiped out.”

And it’s far from certain GameStop’s stock price will stay high forever. On Thursday, January 28, its price began to fall, and trading platforms such as Robinhood began to clamp down on the trading frenzy around this and other volatile stocks — a move that sparked fury among some traders. That evening, Robinhood announced it would reinstate limited trading on those stocks the next morning.

An attempt to explain what is going on here, for people who don’t follow markets at all

Let’s back up a bit to go over the basics of what is going on here.

GameStop is a video game retailer headquartered in Grapevine, Texas, that operates more than 5,000 stores. Between malls dying out and the pandemic, if you forgot the company existed, that would be fair. But it’s still out there, trucking along. GameStop has become a popular play among short sellers, who are basically investors who think a stock will go down. In Wall Street terminology, these investors are bearish on a stock’s prospects. Again, dying malls plus pandemic. You get the reasoning. (Plus, GameStop has had a rocky history and faces a long-term threat from digital game downloads.)

Though the buying frenzy around GameStop hit in January, this one has been in the making for a while. Brandon Kochkodin at Bloomberg recently laid out how GameStop, which isn’t expected to even turn a profit until 2023, has seen its market skyrocket, and what Reddit has to do with it.

By Kochkodin’s recounting, a bull case for GameStop (basically, an argument that its stock is good) started showing up on WallStreetBets about two years ago and has, off and on, been bubbling up. Scion Asset Management, the hedge fund run by Michael Burry, who you might know from The Big Short, revealed he had a position in the company, which inspired some confidence, and then Ryan Cohen, the co-founder of the pet e-commerce company Chewy, disclosed last August that he had a big stake in GameStop. Earlier this month, he was added to its board. That’s been interpreted as positive for GameStop.

As Reddit and retail traders started to take notice of GameStop, they also took notice of how heavily shorted the stock was — information that’s generally pretty easy to get. And they figured out a way that, if they acted all together, they could sort of screw the shorts over and make a profit doing it. Kochkodin points to a post from four months ago as an instigator. Its subject: “Bankrupting Institutional Investors for Dummies, ft Gamestop.”

How a short squeeze is making Reddit happy and short sellers sad

GameStop’s stock price has skyrocketed from where it was at the start of the year, at under $20, to nearly $350 at market close on January 27. The stock slid to under $200 at market close on January 28, the day Robinhood clamped down on buying it, and after that was lifted, the stock shot up again. The stock’s volatility is the result in no small part of Redditors and the short sellers they went after. WallStreetBets has an antagonistic relationship with shorts — many retail traders are betting stocks will go up, not down.

Lots of hedge funds and investors are shorting GameStop, but at the center of the current saga is Citron Research, which is run by famed short seller Andrew Left. Last week, Citron announced on Twitter that it would be hosting a livestream event laying out the short case against GameStop and arguing people buying the stock were “suckers at this poker game.” They predicted shares would go back to $20. The event was put off, first because of the presidential inauguration, then because of attempts to hack Citron’s Twitter. Eventually, they got the video out, and the battle has continued. Left said he’ll no longer comment on GameStop because of the “angry mob” that’s formed against him and complained he’d “never seen such an exchange of ideas of people so angry about someone joining the other side of the trade.”

Retail traders have been able to orchestrate what’s known as a short squeeze against Citron and the others betting against GameStop, which screws up the short trade and drives the stock price up. (Don’t worry, we’ll explain what that is.)

When a hedge fund or investor shorts a stock, they basically speculate that its price will go down. They do that by borrowing, usually from a broker-dealer, shares of a stock that they think will lose value by a set date and then selling them at the market price. “It’s a much more sophisticated investor kind of play,” Colas said. “[The bet] has to work pretty quickly, because what you don’t want is your short stock at $10 and it goes up to $100, because you can lose more than 100 percent of the capital that you put down.”

When you short a stock, you have to at some point buy back the shares you borrowed and return them. If the trade works, you buy them at a lower price and get to keep the difference. But if the price of the stock goes up, it doesn’t work. At some point, you’ve got to buy the stock back and return it, even when the price is higher and you’re going to lose money.

What happens with a short squeeze is that when the price of the stock being shorted starts to climb, it forces traders betting it will fall to buy it, to try to stem their losses. That drives up the price of the stock even higher, so it’s a bit of a double whammy for shorts. The worst-case scenario is, theoretically, unlimited.

“The short squeeze is when somebody says, ‘Oh, I know a lot of guys are short. I’m going to go long and make them buy the stock back even higher,’” Colas said.

To add another layer to this, a lot of the activity around GameStop hasn’t been people directly buying the stock, but also buying call options, where they basically gamble that it will go up. It’s complicated, but the takeaway is that call option buys may have also driven up the stock because the market maker selling those options hedges by buying more stock. And there was a lot of options buying, namely among day traders — volumes have skyrocketed, and one WallStreetBets trader claimed to have turned $50,000 into $11 million playing options.

Levine summed up what amounts to a snowball effect:

Something started the ball rolling—the stock went up for some fundamental or emotional or whatever reason—and then the stock going up forced short sellers and options market makers to buy stock, which caused it to go up more, which caused them to buy more, etc.

The shorts are definitely hurting: Melvin Capital Management, a hedge fund betting against GameStop, was down 15 percent in just the first three weeks of 2021, according to the Wall Street Journal. It’s had to call in some help and finally closed out its position altogether. Left, the Citron short-seller, announced his shop would stop publishing “short reports,” ending a practice it’s undertaken for 20 years.

Meanwhile, many big names are following along. On Tuesday, January 26, Chamath Palihapitiya, a venture capitalist and the founder of VC firm Social Capital, tweeted that he was buying GameStop calls. And Tesla’s Elon Musk, whose tweets often move stocks, tweeted, “Gamestonk!!” with a link to r/WallStreetBets.

Gamestonk!! https://t.co/RZtkDzAewJ
— Elon Musk (@elonmusk) January 26, 2021

The White House said it was monitoring the GameStop situation, and the Federal Reserve and Sen. Elizabeth Warren weighed in as well. On January 27, the Securities and Exchange Commission said it was “monitoring market volatility.” Two days later, it put out a lengthier statement warning that “extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.” It also said it would “protect retail investors when the facts demonstrate abusive or manipulative trading.”

“They’re smarter than we think”

The GameStop episode is a mix of factors serious and silly — part retail traders demonstrating some actual power in the market, part accepting that some of this just makes no sense. Whether GameStop took off because it’s a meme stock — a stock in which interest is as much cultural or social as it is financial — or because there is something to the business case is unclear. There is a business case, there is a cultural interest; the balance between the two in driving the price is indeterminate. Part of it might basically be a joke. What is clear is that a lot of what’s happening with the stock now isn’t because of a potential turnaround; it’s because the trade went viral.

“It doesn’t make business sense,” Doug Clinton, co-founder of Loup Ventures, told Bloomberg. “It makes sense from an investor psychology standpoint. I think there’s a tendency where there is heavy retail interest for those types of traders to think about stocks differently than institutional investors in terms of what they’re willing to pay.”

Day traders are hardly a monolith, including the ones at WallStreetBets, which boasts nearly 3 million members, or as they refer to themselves, “degenerates.”

But though this is a bit of an odd (and somewhat inexplicable) episode, it still involves some bigger issues.

For one thing, it seems like the WallStreetBets crowd has learned a tactic that it can replicate in orchestrating short squeezes. “What they’ve done is target large short positions,” Cramer said on CNBC on January 25. “They’re smarter than we think. They’re after the ones that are too shorted.”

Following the GameStop episode, retail traders have also piled into stocks such as AMC, BlackBerry, Express, and even Tootsie Roll. Robinhood and other trading platforms have begun to restrict trading on certain volatile stocks, including GameStop and AMC. That has prompted blowback from retail traders and some high-profile figures, such as Barstool Sports’s Dave Portnoy, who say platforms are unfairly barring them from opportunities and siding with hedge funds and institutions.

The reasoning for clamping down on trading is unclear; Robinhood’s stated mission, after all, is to democratize finance. The company could be trying to protect traders from taking on too much risk (though the accessibility of its platform arguably pushed those traders toward risk in the first place). Or there may be concern about potential legal repercussions from users if stocks go south. There’s also been some speculation about Robinhood’s relationship with a major investment fund being a factor.

Robinhood raised $1 billion from investors overnight on Thursday, January 28, and drew on bank credit lines to shore up its operations and make sure it has enough money to let people keep trading. Robinhood CEO Vlad Tenev also appeared on CNBC to address the matter. “We just haven’t see this level of concentrated interest market wide in a small number of names before,” he said. In other words, individual investors haven’t worked together to impact specific stocks like this before, at least not to this magnitude and with this level of technology.

Robinhood did not respond to a request for comment.

Some observers have raised questions about whether what’s happened with WallStreetBets and GameStop might draw regulatory scrutiny around possible market manipulation. Colas said he’s doubtful there’s much of a case for that. “Everything is known. There’s no insider information here,” he said. If a hedge fund shorting a stock can put out a presentation and video about why a company is bad, why can’t random people talking to each other on the internet talk about why a company is good? But of course, on the legal front, reasonable minds might disagree.

One of WallStreetBets’ moderators addressed the impression that the community is “disorderly and reckless” in a post on January 24, while pushing back against any suggestions there is an organized effort among moderators to promote or recommend any stock. “What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,” the moderator wrote. “Some of these guys [who] traditionally used the media as a tool for them to manipulate the market have failed to further line their pockets and now want to accuse you guys as being manipulators.”

GameStop has been the perfect storm for the current retail trend. It’s a recognizable name, there’s some business case for it, and it’s turned into a meme. And it’s heavily shorted, which is bound to irk the recent crop of retail traders who subscribe to the mantra that “stocks only go up.”

On January 26, I reached out to the moderators of WallStreetBets to see what they make of what’s happening. One moderator, Stylux, suggested there wasn’t much mystery. “We aren’t looking at anything other than what is right in front of us, which is the same thing you are seeing. It’s up to the user base to pick stocks — we only moderate a forum for them to do that,” they wrote, adding that they have made efforts over the years to enforce rules aimed at preventing schemes and barring certain investment vehicles. “Everyone plays by the same rules,” Stylux wrote. Their takeaway:

What you are seeing is conviction from some traders in the subreddit coupled with the pure greed of short sellers who had an opportunity to cover and refused to do so. It looks to me that institutional money is now moving against the short sellers.

An example of this is the breaker that occurred shortly before close which looked like a 2.3M share market sell to me. The stock plunged instantly, and when trading resumed it was right back to where it was before that sale. I would be very skeptical of anyone who tries to tell you that retail is making GME move at this point. Some users got the ball rolling and here we sit — with $GME at $209 after hours. Some of the users can now pay off their car notes, student debts, feed their kids and pay their mortgages. Who can feel bad about that?

WallStreetBets has been feeling the heat, too. The Reddit forum briefly went private on January 27, and the messaging platform Discord shut down the WallStreetBets server in its app the same day due to “hateful and discriminatory content.” The Verge reports that Discord is now working with WallStreetBets to help moderate its content.

This isn’t the first time day trading has become trendy, nor is it the first time day traders have been accused — often rightly — of being a little bit reckless. Last summer, some of them piled onto bankrupt Hertz, for which there was really no good case. Many of them treat trading like a game, which can obviously be dangerous. But it’s hard to root against them. Plenty of hedge funds, short sellers, billionaires, and institutional investors treat investing like a game, too. And every once in a while, they’re bound to lose, too, even to the little guys.

Seriously, what is Aaron Rodgers’s deal?

2024-01-12T14:24:55-05:00

Aaron Rodgers belongs in the Hall of Fame of football — not so much of opinions. | Kathryn Riley/Getty Images

The first time I found myself wondering what the deal was with Aaron Rodgers was when his brother Jordan appeared on season 12 of The Bachelorette, which aired back in 2016. The quarterback skipped the all-important family visit, raising some questions, but instead of glossing over it, the show insisted on leaving an open seat at the table where he could have been. Reality TV’s gonna reality TV, I guess.

Before that, in my world, Rodgers had simply been my team’s star quarterback, the one who took us to a Super Bowl victory in 2011. I do not claim to be the world’s biggest football knower, but when you grow up in Wisconsin, you sort of have no choice but to love the Green Bay Packers. Sundays in the Badger State are for two things: church and the Pack … and also beer and cheese, so, like, four. (As an aside, the Packers are the NFL’s only publicly owned team, another reason to love them.)

Family dynamics can be hard, I thought at the time, and really it was none of my business. But at the very least it seemed a little sad to think Rodgers was estranged from his family, and I did wonder why.

Cut to about eight years later, and the quiet suspicion that maybe Aaron Rodgers is a bit strange has morphed into a very public, very loud conversation, now that we know, well, a whole lot more.

Rodgers didn’t get the Covid-19 vaccine and misled people about it by saying he was “immunized.” He’s talked openly about getting into psychedelics and doing whatever a “darkness retreat” is. He’s had a string of relatively short-lived public romantic relationships, which is normal and fine, though his last girlfriend was maybe a witch? He regularly spouts conspiracy theories about Covid and vaccines and UFOs, among other items, and is chummy with Robert F. Kennedy Jr., an anti-vaxxer and presidential candidate. Last year, he challenged Kansas City Chiefs tight end and Taylor Swift’s boyfriend Travis Kelce to a debate about vaccines that was also supposed to include RFK Jr. and Dr. Anthony Fauci. Kelce declined.

Much of this oddball activity and commentary has taken place on The Pat McAfee Show, where Rodgers appears for “Aaron Rodgers Tuesdays.” Disney reportedly paid $85 million for a licensing deal to air the daily sports talk show on ESPN, which it owns.

The Pat McAfee Show was the setting of the latest “Aaron Rodgers said what now?” incident, when on January 2 he basically implied that ABC late-night talk show host — and also a high-paid Disney employee — Jimmy Kimmel is a pedophile. It’s been a whole thing, with back-and-forth between Rodgers and Kimmel and ESPN and Disney, for days. Kimmel called Rodgers a “hamster-brained man” and threatened to sue him. An ESPN exec called Rodgers’ comments “dumb.” Rodgers refused to say sorry and responded that the exec’s comments weren’t “helping.” None of it was.

On Wednesday, January 10, McAfee said that Rodgers was off the show for the rest of the NFL season, explaining that the controversy around it all was just too much. Was Rodgers back on the show the very next day to talk about outgoing Patriots coach Bill Belichick? He was. He called in from the woods.

Rodgers is an avatar for a certain slice of the current culture wars. He’s one of those types of guys who’s maybe a little too online, is doing a little bit too much of his “own research,” and is becoming extra out there in his opinions — and defensive if anyone disagrees or takes offense. He’s not the only type of this guy. See: Elon Musk, Bill Ackman, Joe Rogan.

Still, like those guys, Rodgers is an enigma. He is excellent at football. He is also an eccentric guy with some bad opinions. The ego and the football genius that make him such a sports star do not always help him navigate society, at least in the way that many people find to be acceptable. He may be the smartest guy on the football field, but he’s not the smartest guy in every room he walks into, though he seems to feel that way. (That being said, he did win Celebrity Jeopardy! in 2015.)

As they used to say in Green Bay, Rodgers is “a complicated fella”

“As we’ve kind of learned, especially in the Trump era and even before the Trump era, any time an NFL quarterback steps out of their lane, especially into really, really wacky stuff … it’s quite, first of all, dangerous, because people listen to them, but also annoying,” said Mark Leibovich, the author of Big Game: The NFL in Dangerous Times and a staff writer at the Atlantic.

As they used to say in Green Bay, Rodgers is “a complicated fella.”

If you are not a football fan, listen, Aaron Rodgers is really good

Before we get to whatever Rodgers’s whole deal is personality- or opinion-wise, we should get this out of the way: he is a phenomenal football player and incredible quarterback. I am biased here; also, I am right.

“He is and will rightfully be in the conversation of one of the greatest quarterbacks who’s ever played the game,” said Kavitha Davidson, a sports writer who has worked at ESPN. “His situational awareness is wild.”

It wasn’t always clear things were going to work out this way for Rodgers. As Mina Kimes described in a 2017 ESPN profile of Rodgers that paints a quite different picture of the future Hall of Famer, his biography is “a long list of slights.” He got to be a good quarterback in high school, but Division I schools didn’t want him, so he played at a junior college near where he grew up in California for a year before transferring to the University of California, Berkeley. He excelled at Cal and seemed on track to be a top draft pick in 2005, but then he wound up being picked 24th by the Green Bay Packers. There, he watched former star Packers quarterback (and more problematic guy) Brett Favre play for a few years. He took over as starter in 2008.

With the Packers, Rodgers won the Super Bowl in 2011. He is a four-time MVP and was named to the NFL’s 2010s all-decade team, among other accolades. Of his generation, he’s up there with Tom Brady and Peyton Manning (and, for a long time, was seen as more benign and innocuous than both, especially Brady). His public image was, for much of his career, quite charming.

Rodgers has been generally liked by his teammates, though he’s had a reputation of having “his guys,” Davidson said. “That makes sense, a quarterback is going to have receivers that you trust, and a lot of that is personal trust,” she said. “For a lot of those guys, the stuff on the field matters the most. And he’s an extremely good leader.” However, he has been criticized for not developing as close of a relationship with younger players, and not everyone who plays with him has loved him or had the nicest things to say.

Rodgers’s last few years with the Packers and its leadership were strained, especially after the team drafted quarterback Jordan Love in 2020. The idea from the team’s perspective was that Love could watch and learn from Rodgers, as Rodgers did with Favre, but Rodgers wasn’t into it. “He was a little salty about it, and he kind of felt that, ‘I’ve earned the right not to be looking over my shoulder,’” Davidson said.

He played a will-I-stay-or-will-I-go game for his last couple of seasons in Green Bay — a stressful and frustrating situation for all parties involved. “Right after the season ends, he basically goes into a press conference and says, ‘I don’t know if I’m going to be back next year, that might have been it.’ That’s a very weird thing for any athlete to do,” said Justis Mosqueda, producer for SB Nation’s Acme Packing Company, a site dedicated to the Green Bay Packers. (SB Nation is also owned by Vox Media.)

Finally, in 2023, Rodgers was traded to the Jets. Even though he was 39 at the time — now 40 — there was real speculation he could get them to the Super Bowl. However, he suffered a season-ending injury just minutes into his first regular-season game. He’ll almost certainly be back again next year to give it another run, and the Jets, who have literally had four different quarterbacks play this season, will welcome him with open arms.

“They built a team around what Aaron wanted to do on the offensive side of the ball,” Mosqueda said. But that injury also means he has a lot of time on his hands, for talking.

The Jimmy Kimmel dustup is really just the latest in a stream of ??? what is up with this man

So, let’s get back to the Kimmel thing. In early January, Rodgers suggested the comedian had ties to the disgraced financier and late sex offender Jeffrey Epstein. Referring to a since-released set of court filings about Epstein that have been branded the “Epstein list,” Rodgers said, “there’s a lot of people, including Jimmy Kimmel, that are really hoping that doesn’t come out.”

There’s previously never been any speculation that Kimmel had ties to Epstein — but he has been trading barbs with Rodgers for a while, focused on the athlete’s anti-vaccination stance. Kimmel was not thrilled at Rodgers’s little Epstein theory. He clarified on Twitter/X he never had any contact with Epstein, said the remarks had put his family in danger, and threatened to sue. Kimmel also did a monologue about the sports star. Rodgers responded on McAfee. He said he was glad Kimmel wasn’t on the Epstein list and isn’t “stupid enough” to actually accuse someone of pedophilia without evidence.

Rodgers didn’t apologize, but he did offer up a strange but fairly accurate self-assessment. “I’m not a super political person, okay? Do whatever you want. Conspiracy theorist? That’s fine, because if you look at the track record of conspiracy theorists in the last few years, they’ve been wrong about a lot of things,” he said. And then he complained about the media and cancel culture and said he does not “give a shit” about what people say about him, which … sure.

Finally, on Wednesday, January 10, McAfee said that Aaron Rodgers would no longer be appearing on his show for the rest of the NFL season. He said the show was “very lucky” to get a chance to talk to Rodgers and that he’s obviously a “massive piece of the NFL story” and acknowledged “some of his thoughts and opinions … do piss off a lot of people.” McAfee sounded relieved to be away from the drama. “I’m pumped that that is no longer going to be every single Wednesday of my life, which it has been for the last few weeks of my life,” he said.

As mentioned, Rodgers did appear on the show the very next day to talk about Belichick, the explanation being that he was the last person the outgoing Patriots coach talked to on the football field. In a tweet on Wednesday, McAfee had said that Rodgers would make “random surprise welcomed pop ins during big events or offseason adventures.” Belichick’s breakup with the Patriots is, indeed, a big event, but you have to admit the timing is funny.

An ESPN rep declined to comment for this story.

Aaron Rodgers is kind of unexplainable, and whatever the case, he’s not going anywhere

For someone who is a passive football fan, I spend an inordinate amount of time thinking about Aaron Rodgers. And I guess that where I land often is that he’s a weird guy — sometimes in a way that’s harmless, sometimes in a way that’s offensive, and sometimes in a way that’s dangerous.

Rodgers is also overly sensitive and touchy. In 2012, he complained about a 60 Minutes profile of him, saying that he felt the editing of the piece “could have been done in a way that was maybe a lot more respectful of myself.” One part of the piece showed a fan telling Rodgers, who is 6’2”, that he thought he’d be taller, and Rodgers replying, “I don’t appreciate that.”

Mosqueda, from Acme Packing Company, told me that what specifically seemed to irk Rodgers in the latest Kimmel fight was that the comic made fun of him for going to junior college and not graduating from college. “He’s mentioned before that college professors at California treated him differently because he was an athlete, and he resented them for that,” he said.

Rodgers is skeptical of the media — the 2017 ESPN profile describes him pulling out a recorder just as his interviewer does so he won’t be taken out of context. “There’s some horrible media outlets that … you say something or do something, where there’s a story, and they just go with it and run with it,” he said at the time. He also seems to have gone on quite a journey about religion.

His estranged relationship with his family is a mystery. Bleacher Report reported in 2016 that Rodgers hadn’t spoken with his family since 2014. His father talked to the New York Times about it in 2017, telling the publication that “fame can change things” and acknowledging it wasn’t ideal that the family’s private business had become public fodder. “Airing public laundry is not what I would have chosen,” he said. Rodgers has said he doesn’t think it’s really appropriate to talk about the issue publicly. “A lot of people have family issues,” he told ESPN in 2017. “I’m not the only one that does.”

Would ESPN, Disney, the NFL, and the Jets rather not be putting out AR-sparked fires big and small this much? Sure.

It’s not really clear whether the relationship has started to be repaired in any meaningful way over the years, though Rodgers’s father, a chiropractor, supported his vaccine stance. “I think he tried to probably treat himself naturally, like a lot of folks do. And there’s a lot of great natural things out there, which helps mitigate the virus. So I’m proud of him. I’m proud that he went that route,” he said.

None of this is to defend Rodgers. His anti-vaccine stance is troubling. He mischaracterizes and questions established science, and buys into and propagates conspiracy theories that range from bizarre to scary. (He’s also joked that he’s “defying science.”)

Would ESPN, Disney, the NFL, and the Jets rather not be putting out AR-sparked fires big and small this much? Sure. But as the saying goes, all press is good press, at least to some extent.

“Any team and any league says that obviously they prefer the game to speak for itself and all of that. I think that, realistically, headlines are headlines,” Davidson said. Rodgers going down in the first game of the season was the worst thing that could have happened to the Jets, marketing-wise, and there was always going to be news about his comeback timeline. “The fact that he has had this platform on Pat McAfee’s show to keep him generating headlines beyond just his injury recovery, I think, has been a positive thing for Jets marketing.”

Many fans say they would prefer teams and players to just stick to sports (your mileage may vary on whether you agree with that). However, of all the controversies the NFL and ESPN have to deal with — the danger of the sport, sexual assault, race issues — a quarterback saying bizarre stuff is not on the top of its crisis list. “What the Aaron Rodgers thing brought to bear was that there is a very specific type of politics that’s okay to bring up in the context of sports, even when some of the things are wild and unfounded,” Davidson said. “Bringing up race too much or bringing up sexual assault too much, that has been heavily clamped down on.”

And so Aaron Rodgers is just going to be out there Aaron Rodgers-ing indefinitely. On the football field, that will hopefully mean great things — or at least a fitting end to an impressive career that he feels at peace with. As for everything else, we’ll just have to wait and see. I am sure there will be more episodes of the Aaron Rodgers show both on and off the field.

Trump says a lot of stuff about the economy. What would he actually do?

2024-01-11T09:28:10-05:00

Former President Donald Trump at a campaign rally in Reno, Nevada, on December 17, 2023. | Photo by Justin Sullivan/Getty Images

2024 is here and, with it, elections. Wild, frankly! Must we? We must.

Given this less-than-fun fact, it would probably be useful to understand what the front-running presidential candidates — President Joe Biden and former President Donald Trump — would try to do about the economy. It touches everyone’s lives, and it matters when it comes to voting — there’s a reason “It’s the economy, stupid” is a thing.

Biden has been pitching “Bidenomics,” laying out his theory of the economy and touting a record that is rather strong. Said pitch has not been suuuper successful in breaking through, though — poll after poll shows voters tend to trust Trump more on the economy. But should they?

There’s only so much the president has to do with the performance of the economy in the first place, at least in the near term. Some of the biggest economic disruptions of the past few years — Covid-19, the supply chain crisis, Russia’s invasion of Ukraine — are not things a president whipped up overnight.

The economy was strong under Trump, and not that dissimilar to where it’s at now under Biden in terms of, say, unemployment. During his tenure, Trump had some luck, contextually: Because of where the United States was in the business cycle, he caught the extended upswing after the long recovery from the Great Recession. He definitely did stuff — signed the Tax Cuts and Jobs Act into law; took a more aggressive stance on trade; attempted to repeal Obamacare — though it’s not clear how much of an impact any of it had in the short term. It takes time for those sorts of changes to work their way through the economy.

“You can’t claim that the tax cut was what was driving wage and income growth in 2018 or something like that,” said Oren Cass, the executive director of American Compass, a conservative economic think tank. Now, years later, the beneficiaries of the tax bill have largely been the wealthy and corporations anyway. Cass affirmed the short-term point on trade: “The benefit of that is not something you see in year one.”

It’s also worth remembering that before the pandemic hit, people were beginning to worry that a recession might be on the horizon in 2019.

All that said, what would Trumponomics 2.0 even be? A disclaimer here is that Trump’s economic policy is nearly as hard to predict as the economy itself (which is to say: impossible). Almost all of the 10 experts, observers, and economists across the political spectrum I spoke to for this story clarified that many of their estimations had to come with a bit of a shrug. Trump says a lot of things, and it’s not always clear how of it much he means.

“Even as president, Trump was difficult to pin down”

“Even as president, Trump was difficult to pin down, because you can never figure out whether his last utterance is some sort of tactic or strategy or is actually what he wants,” said Douglas Holtz-Eakin, president of the American Action Forum, a right-center think tank, and the former director of the Congressional Budget Office.

Much of what Trump said on the 2016 campaign trail that he was going to do, he did accomplish to some extent, if not fully. This time around, Trump is likely to be able to move faster, especially if Republicans sweep the House and Senate. Even Trump’s own camp was caught somewhat off guard when he pulled off a victory in 2016; it took him a while to get his footing in office. He also brought more traditional Republicans in with him to the White House.

“Essentially, what he did, notwithstanding what he might have been talking about as a candidate or what he actually believed, is brought in a bunch of standard-issue cabinet secretaries and then adopted [former Republican Speaker of the House] Paul Ryan’s legislative agenda,” Cass said.

The 2025 landscape could look quite different. Right-wing groups have put together much more specific plans for a second administration, and it’s not clear how many of those more conventional GOP-ers who kept things more in line last time are coming back.

“Trump has basically said he wants to use the power of the presidency to get revenge, so how much damage that inflicts, who knows?” said Dean Baker, senior economist at the Center for Economic and Policy Research, a progressive think tank. “He had a lot of people in his first administration that were at least somewhat deferential to precedent, to the law. And he’s quite explicitly saying, ‘No, I’m getting my people in there and they’re going to follow my orders.’”

Under Trump, the country would probably have A Time with trade

During his first term, Trump tried to take a tough stance on trade, putting tariffs on items such as steel and aluminum and taking aim at China specifically. He also oversaw the creation of a sort of new NAFTA in the United States Mexico Canada Agreement (USMCA). The former president is talking about much bigger — and perhaps damaging — measures if he lands in the White House in 2025.

Trump has called for a 10 percent tariff on imports for all countries, meaning anybody trying to import anything from anywhere would have to pay a tax equal to 10 percent of whatever the thing is. The idea is that it would boost domestic production — which is an idea many people like — and that in the long term it would incentivize people to invest in making more in the United States.

The question of whether Trump can do this on his own, without Congress, is a tricky one. The president does have emergency and other powers to impose tariffs unilaterally without Congressional approval. Depending on the sector and the reasoning for the tariffs, the president could be taken to court to challenge ones that go beyond the emergency duration of six months or that go against the intent of previous legislation, explained Adam Posen, president of the Peterson Institute for International Economics. “But in recent years, under Biden and Trump, Congress has not pursued such cases, and other legal challenges have proven rare and unsuccessful. Thus, the tariffs once in place in practice continue indefinitely.”

“Trump likely would argue that IEEPA (International Economic Emergency Powers Act) gives him the authority to raise tariffs. Indeed, he threatened to use this authority to raise tariffs on Mexico when he was unhappy with its lack of cooperation on migration,” said Michael Smart, managing director at Rock Creek Global Advisors, where he focuses on trade and investment policy. “In that case, he could argue that the ‘emergency’ at issue was the flow of migrants across the southern border. It is hard to fathom what kind of emergency could justify the 10 percent baseline tariff on global imports.”

There are drawbacks to this broad-based tariffs approach. Other countries aren’t just going to say, “Oh, okay, fine, you all do that and we’ll just keep on keeping on.” They’ll retaliate with tariffs of their own. That will mean less sales for US products abroad, which would impact people and businesses in export-oriented industries in the US.

In an inflationary environment where prices are already high, tariffs would likely nudge them up even more, many experts say. It might be a onetime nudge, and just how much prices change will vary across products, but given the current state of economic affairs, it’s not ideal.

“Your import tariff may protect one or several industries, but it’s going to come at the expense of the broader economy”

“If the only thing you do is impose a 10 percent tariff on goods broadly, that’s bad for economic efficiency, because business and consumers have to pay more for finished goods and businesses for intermediate inputs. It will make us less competitive in world markets,” said Jeffrey Miron, an economist at Harvard and the libertarian Cato Institute. It’s not necessarily “catastrophic,” he added, until you get to the part where other countries start imposing their own retaliatory tariffs and world trade shrinks overall.

“Higher tariffs mean higher prices by definition. Imports of everything from consumer electronics to apparel to vehicles are going up. Businesses are going to try to pass that through,” said Mark Zandi, chief economist at Moody’s Analytics. “They’re not going to pass all of that through, but they’re going to pass some of that through.”

As with everything in life, basically, there are trade-offs here. “Your import tariff may protect one or several industries, but it’s going to come at the expense of the broader economy,” said Kyle Pomerleau, senior fellow at the American Enterprise Institute, a right-leaning think tank, who focuses on tax policy.

Remember the 2017 tax bill? It’s coming back in 2025, whoever’s in charge.

One of Trump’s signature legislative achievements was the Tax Cuts and Jobs Act (TCJA), which made a number of changes to the US tax code, many of which disproportionately benefited corporations and the wealthy. Some of the changes were permanent, such as reducing the corporate tax rate from 35 percent to 21 percent. Others were not, including many individual provisions, which are set to expire at the end of 2025. That means whoever is on Capitol Hill and in the White House will have to figure out what to do on that front.

Steve Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute, said that the path forward for the TCJA might not look that different under a Democratic versus a Republican regime. “Once in place, tax cuts for individuals are hard to reverse,” he said.

Some experts told me Democrats would likely be inclined to take a look at tax rates for higher-income individuals, but they note that Biden has pledged not to raise taxes on anyone making under $400,000 a year. “A package that deals with the expiring individual tax cuts will look very different under unified Democratic control and a Democratic White House and unified Republican control with a Trump White House,” Pomerleau said.

Trump, on the other hand, could seek even deeper cuts. Jeff Stein at the Washington Post reported in September that the former president and his associates are weighing even more aggressive slashes to taxes than in the 2017 bill on both the individual and corporate fronts. They say that maybe those cuts could be paid for with the aforementioned import tariff.

For many voters, tax talk can feel like a bit of a snoozefest, but it’s a big deal. Rosenthal pointed out that middle- and low-income Americans weren’t the winners of the 2017 bill — foreign investors, wealthy individuals, and corporations were. “The Trump tax cuts ironically put a lot of foreigners first, and they’re not contributing to paying for US social needs,” he said. “These different regimes really provided windfalls to the wealthiest of Americans.”

The money raised from a broad tariff could be directed somewhere other than another tax cut for those who, arguably, don’t really need it — such as infrastructure (remember perpetual “Infrastructure Week?”), industrial policy, or some sort of family support.

Many Republicans appear to be hell-bent on stripping the IRS of extra funding for tax enforcement put in place under Biden, which Trump would surely go along with. The point of funding the IRS more is to try to close the “tax gap,” meaning the difference between what the government collects in taxes each year and what it’s owed. One estimate puts the tax gap at a loss of $7 trillion in revenue over the course of a decade. In other words, getting people — specifically rich people — to pay what they owe could go a long way in the budget, an idea Trump and the GOP are not into.

“I think this rollback of IRS modernization . . . that is actually something that directly affects how much money the government has to spend, whether you want to spend it on paying down the deficit or spend it on increased childcare supports,” pointed out Felicia Wong, president and CEO of Roosevelt Forward, a sister organization of the progressive think tank the Roosevelt Institute.

Implementing more and deeper tax cuts and slashing IRS funding would likely worsen the federal budget deficit — the difference between the money it brings in and what it spends. Concerns about the issue have already been creeping up in recent months. Would Trump really lose sleep about the deficit if he were in office? It’s not likely. He didn’t last time, and Republican regimes, when they cut taxes, generally don’t.

“Trump does not care about the deficit,” Rosenthal said. There is one thing that might change that: if markets start to freak out. That could force him to pay more attention, but it’s unclear now if any of that is on the horizon.

The thing about Trump is the wild card(s) of it all

Most experts I spoke to agreed that Trump is likely to take certain lines on the economy similar to what he did in his first term — tougher rhetoric on legal and illegal immigration, which many say would be bad for the economy; more of a focus on deregulation; energy policy that focuses on oil and gas and has little to do with any efforts at green energy or climate. They noted that he does have some overlap with Biden — both have more of a protectionist bent, and both are likely to at least extend some of the 2017 tax cuts. And they pointed out that much of what Trump brings with him is traditional Republican fare, though not all of it.

“In a lot of ways, Trump has combined some traditional Republican orthodoxy on economics with — the easiest way to describe it is early-’90s trade skepticism of the Democratic Party,” Pomerleau said.

“It’s populist rhetoric and elite economics,” Wong said.

Some progressives I spoke to worried that Trump would take efforts to gut agencies such as the Federal Trade Commission and Consumer Financial Protection Bureau and undermine labor. They noted that if Republicans get a trifecta — meaning the White House, House of Representatives, and Senate — a lot of GOP dreams of making cuts to discretionary spending programs could become reality.

“His budgets contained extraordinary cuts to discretionary spending, to the types of programs that Republicans traditionally try to cut,” said Bharat Ramamurti, former deputy director of the National Economic Council under the Biden administration. “There’s a set of circumstances in which there are big changes to discretionary spending programs that are really bad news for lower- and middle-income people.” That could translate to cuts on food stamps, housing support, and education support, among others.

Trump, like Biden, has promised no cuts to Medicare and Social Security. While most experts I spoke to said they believed he’d stick to that, Ramamurti said he wouldn’t be so sure given the current mood of the Republican Party. “I think it’s very much on the table for there to be big cuts to Social Security and Medicare,” he said.

Antitrust enforcement has been ticking up since the Obama administration, said Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, a progressive think tank. The question with Trump, however, is whether in his next administration he would try to use antitrust laws and agencies to go after perceived enemies.

“He weaponized antitrust for sure, which I think will happen again should he come back into power,” Moss said. She pointed to reports of Trump’s attempts to block the AT&T-Time Warner merger because of his hate for CNN and to the Trump Department of Justice’s investigation into automakers that made a deal with California on emissions (the investigation was later dropped).

Trump can’t do much on inflation (nor can Biden) — much of that is in the hands of the Federal Reserve. The Fed is supposed to be completely politically independent, though Trump may try to pressure the central bank to keep interest rates low to shore up the economy, as he’s done before, even if inflation starts to once again take off.

“One of the best things America has going for it is the rule of law”

“A bedrock of a well-functioning market economy is a well-functioning central bank where they can make tough choices,” Zandi said.

Ultimately, Trumponomics has parts that may be good for the economy, parts that are not so good, and parts whose effects, ultimately, would pale in comparison to much broader forces. In an environment where people are already concerned about inflation, tariffs that increase prices even more — not to mention risk a trade war — may not be the way to go. Many economists argue that tight labor markets call for more immigration, not less. But it’s not like the business community or the entire economy is going to have a meltdown if Trump returns to the Oval Office in 2025. The stock market was fine with Trump winning the White House in 2016, and it was good with Biden winning in 2020, too. (The stock market is not, of course, the economy.)

The thing about Trumponomics is a lot of it is a bit of a black box — it’s never entirely clear what he really believes. But it is true that if he gets a second go at the White House, he’ll likely be able to move faster and potentially in a less restrained way. Beyond the economy, there’s also the whole issue of him being a threat to democracy. If Trump really is able to undermine institutions, delegitimize and gut longstanding tenets of the political system, and destabilize the country, that’s bad on a lot of fronts — including from an economic perspective.

“One of the best things America has going for it is the rule of law,” Ramamurti said. “If you talk to investors, the thing that scares them about putting money into some other countries is corruption: Are the courts going to treat you fairly, or do you get caught up in a political maelstrom that is unpredictable and undermines the value of what you’re investing in?”

With Trump, that’s a risk — and one worth weighing as November 2024 approaches.

You don’t need everything you want

2024-01-03T13:45:21-05:00

I am tired of talking about money. I recognize how that sounds, given that I talk about money for a living. Still, it feels like an inordinate number of conversations I’m involved in lately end up about how much more expensive everything is now (which is true) and how much the economy sucks (which is false). Can you believe how pricey that restaurant was? I’m shocked at the cost of my wedding. Tipping culture is so out of control.

It’s not that these issues aren’t painful, it’s just that they’re also exhausting. Some of them have simple solutions, too, just not fun ones. You can cook at home. A fancy wedding is not compulsory. Tips are optional, and if you’re that upset over giving the barista a dollar or two, there are cheaper alternatives for your morning coffee.

Part of the issue is that we seem to have blurred the distinction between a want and a need. Child care and a place to live and a tank of gas to get to work are necessities. The latest iPhone, not so much. On this, some people — and I include myself here — have lost the plot. If you took a European vacation this year, what a delight. Also, it was a privilege, not a right. It’s a choice, too, and one that might make your financial goals later down the line harder to attain.

The American economy remains one of abundance. Said abundance isn’t equally distributed, of course, and lots of people really are struggling. But as angry as consumers say they are about the economy, they’re not, on aggregate, changing their spending habits. For many people in the country, life is pretty good. And yet, they often don’t feel that way. No matter how much we’ve attained, we always want more.

The landscape has gotten me thinking about expectations lately — what is fair to expect out of life, financially, and what is not. It sometimes makes me wonder if part of the answer here is that we need to scale back expectations. Things may not turn out as perfectly as everyone wants, but fine is also, you know, fine. Just because something doesn’t feel great doesn’t mean it’s fundamentally unfair. (Sometimes, the most unfair things are the ones that feel really great — as long as you’re on the right side of the trade.)

I say all of this recognizing that I am in a bubble — I am a millennial living in New York City and surrounded largely by middle- and upper-middle-class people, though many of them don’t see themselves that way. I also say this as someone who is upwardly mobile from a solidly working-class background. If I could tell the child version of myself how things were going to turn out — that I’d be living in a big city, be able to afford to rent an apartment in said city, and have the chance to regularly take trips that involve a plane — she would not believe it. I am aware this is not the case for everyone in my generation or those before or after me. Still, I sometimes catch myself feeling like it’s not enough.

All that being said, why are we like this? Why do so many of us feel like whatever we have, it’s not sufficient?

A lot of it isn’t our fault, really. We live in a consumer economy that tells us that more is always better. We’re constantly being bombarded by more and more choices, which leads us to chase the latest version of the “best” of everything — an enthralling but impossible quest.

There is nowhere you can look in society that isn’t screaming at us to spend, spend, spend

“When there are lots of options, one consequence is that your expectations go up,” said Barry Schwartz, Dorwin P. Cartwright professor emeritus in social theory and social action at Swarthmore College and the author of multiple books on psychology and the economy. “When [businesses] start making all this variety, it’s just inevitable that your expectation is something up there is the one that’s going to be perfect. If that’s your standard, then everything you ever choose is going to end up disappointing.”

There is nowhere you can look in society that isn’t screaming at us to spend, spend, spend — and, frankly, we view it as un-American to live any other way. It causes us to conflate nonessentials with essentials; we don’t just want the thing, we feel like we have to have it.

Modern technology puts all of this on overdrive. To “keep up with the Joneses” means contemplating an expanding universe of Joneses, because we’re not just comparing ourselves with our neighbors but also with that TikTok mom and YouTube hustler who seem to have everything figured out. The availability of so much information makes what’s possible a presence in our daily lives in a way that was much less salient a generation and two generations ago. If XYZ is possible for someone, you get to thinking, well, why isn’t that possible for me?

Credit cards and smartphones make spending money easier than ever without having to do the math. “We just have a lot of people that really don’t know how to budget, and this is because of the credit card society,” said David Mick, a professor of commerce at the University of Virginia who focuses on a mix of consumer behavior, marketing, and mindfulness. “People have ready access to buy a lot of things quickly without a lot of thought.”

It all feeds into the hedonic treadmill, where we’re constantly chasing down the next dopamine hit but ultimately return to our baseline level of happiness, whatever happens. The pursuit of constant pleasure or fulfillment is enticing, but it’s also not wise — eventually, that Big New Thing just doesn’t have the same kick. Even if we can buy that $40 bottle of wine to have with dinner, it’s genuinely often better to stick to the $15 bottle and keep the pricier option for special occasions. Really good and special experiences in life should be rare, Schwartz said, so they don’t become commonplace and can still deliver satisfaction. (He joked that as far as he knows, “no one on Earth” has ever taken this advice.)

“Money is a zero-sum game”

Some of the ugliest truths about the economy are the ones that we prefer to keep from ourselves. The future may not be rosier — you might never land that perfect job or make that “right” salary. A college degree will certainly help you in the labor market, but even a Harvard MBA isn’t a guaranteed ticket to an ideal life. The lifestyle you aspire to may not be compatible with the cost of living in the city you want to be in. That down payment for your dream house may be out of reach, not just because of economic forces but also because you didn’t save in your 20s. Maybe you couldn’t because of student loans; maybe you were a little frivolous. If you do get what you think you want, it may not feel sufficient; you can’t have it all, unless you are Elon Musk or something.

“There is always a trade-off, because money is a zero-sum game. If you’re spending it on X, you’re not spending it on Y,” said Kelly Goldsmith, a marketing professor at Vanderbilt University who studies consumer psychology and behavioral science. “Unless you’re increasing the pie,” she added, which isn’t guaranteed.

I don’t want to undercut anyone’s hardships, whatever their income level. Part of the reason many of us feel such pressure in the economy is because everything is so unequal — the 99 percent are left fighting over the leftovers of the 1 percent who are indeed in a real-life, permanent fantasyland. This makes it easy to want to say screw it and just spend whatever.

“It’s hard to deprive yourself ever, and it’s especially hard to deprive yourself when it seems like the economy has turned in a way that is not favorable to your current situation for reasons that have nothing to do with you,” Goldsmith said.

Still, it would do us a favor to take a step back. Sometimes a simpler life is a better one, Mick said, despite all the social pressures to the contrary. “There’s a lot of entitlement out there,” he said, particularly in American culture.

Life shouldn’t be entirely absent of some treats. But if you’re boxed out of necessities because of spending on extras, it’s something to consider. It’s completely fine and wonderful to want to see Taylor Swift and Beyoncé live. What a joy! Just know that if you’re not in the 1 percent, it’s likely going to cost you, possibly even at the expense of something you need later down the line. Lucky for you, Taylor and Bey also have movies out, which are much cheaper to see and also, hopefully, fun.

We live in a world that’s constantly trying to sucker us and trick us, where we’re always surrounded by scams big and small. It can feel impossible to navigate. Each month, join Emily Stewart to look at all the little ways our economic systems control and manipulate the average person. Welcome to The Big Squeeze.

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Have ideas for a future column or thoughts on this one? Email emily.stewart@vox.com.

It’s okay to be optimistic about the economy next year

2023-12-20T10:36:21-05:00

Pssst ... there’s a case for feeling good about money in 2024. | PM Images via Getty Images

I’m going to throw out a wild idea here: What if the economy is good in 2024? I know, I know, prices are still too high. Everybody hates everything so much that we’ve coined the term “vibecession.” The pandemic fallout is still reverberating. But hear me out — maybe it would be neat to head into the new year without all the doom and gloom.

There is a case for hope here. I mean, look at what happened in 2023. We came into the year with the lowest of expectations. Tons of economists, including some big names, thought a major downturn was inevitable in the United States. Many people were sure the Federal Reserve’s fight to get inflation down would mean a significant spike in unemployment; the logic was preordained. In fall 2022, Bloomberg ran a headline forecasting a 100 percent chance of a recession within a year.

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As it turns out, there’s never a 100 percent chance of anything. That surefire 2023 recession never came. Despite the negative sentiment around the economy — sentiment that mayyybe is starting to turn around — things this year were really good. Inflation came down. The jobs market stayed strong. Consumers, in aggregate, kept spending. The US economy grew at a surprisingly strong rate. After a tough 2022, stock market investors had a solid time.

“2023 wasn’t supposed to happen,” said Claudia Sahm, the founder of Sahm Consulting and a former economist at the Federal Reserve. “For inflation to come down that much, unemployment’s been below 4 percent for the longest stretch since the 1960s, and growth — inflation-adjusted consumer spending is just knocking it out of the park.”

There definitely are worse ways to head into 2024.

Come over here, let me tell you a nice little story about next year

The US economy is not out of the woods. We haven’t yet reached that coveted “soft landing,” where inflation gets back to the Fed’s 2 percent target without tipping the economy into recession. That outcome does seem possible — I’m not saying it’s going to happen, but there’s some room for optimism.

The stock market is feeling really excited about the year ahead — arguably, maybe a little too excited

Predictions obviously can be wrong — again, see 2023 — but many economists feel quite positive looking ahead. Goldman Sachs sees just 15 percent odds of a recession over the next 12 months and thinks the economy is on its “final descent” to a soft landing. Bank of America is making a similar call. The Fed likes what it’s seeing and is hoping for more of it in 2024. It’s anticipating three interest rate cuts next year.

“It should be a good year. Probably not as good as 2023,” said Mark Zandi, chief economist at Moody’s Analytics. (Seriously, by most traditional economic measures, the 2023 economy was very good.) He pointed out that he wasn’t among the group expecting a recession this past year — when you’re on the right side of a bet, you may as well enjoy it — but that even he wasn’t anticipating this. “The big surprise was the supply side of the economy. Productivity growth revived and labor force growth surged, so that allowed the economy to grow a lot more and still get inflation back in the bottle.”

Inflation is on track to continue to cool. That doesn’t mean prices will go back to where they were in 2019, though they may decline in some areas. If the labor market stays robust, wages should keep rising, too, and at a pace faster than inflation.

“Wage growth for all income groups is stronger than the rate of inflation, so people’s real purchasing power should improve. They should feel a lot better about the buying power of their income a year from now than they do today,” Zandi said. The relief will be most welcome for low-income households, he added, which are under the most pressure right now.

Even though the Fed hasn’t cut interest rates yet, they’ve started to fall in some areas in anticipation of what’s ahead. Mortgage rates are back under 7 percent, which has inspired some hopefulness around the housing market. The stock market is feeling excited about the year ahead — arguably, maybe a little too excited.

After the Fed’s latest interest rate decision and Fed Chair Jay Powell’s news conference, “markets got a little giddy,” Sahm said. In the subsequent days, some Fed members tried to temper some of that giddiness, to limited effect, as investors remain pretty amped.

This nice little story has to come with some buts

Nothing is guaranteed in life, and certainly not a good economy. Even if the US avoids recession in 2024, someday, there will almost certainly be a recession. It’s just the way the business cycle goes. There are plenty of risks that could put a recession on next year’s agenda.

Some economists still think a downturn is likelier than not. Andrew Patterson, senior international economist at Vanguard, has a base case that the US and other developed markets will see mild recessions likely in 2024. Even if the US economy doesn’t turn completely negative, he anticipates some job loss. “Fed policy [needs to] bring inflation fully back down to 2 percent, and we believe that is going to require some labor market loosening,” he said. “That’s going to come with some pain.”

Larry Summers, former treasury secretary and one of the pre-2023 doomsayers, told the Financial Times that it’s “premature” to call this a soft landing, given where inflation is. “We may soft land on the aircraft carrier, but the landing may be hard, and we may overfly,” he said.

The main risk for 2024 is the Fed. It might keep interest rates too high for too long, pushing the economy under, or it could cut them too early, allowing inflation to take off again and necessitating even harsher hikes later. It could confuse markets with its decisions. “They’re threading a difficult needle,” Zandi said. “I think the odds of a mistake are certainly receding, but we’re not across the finish line.”

“Definitely by this time next year, we’re either landed, or we’re in a recession”

There could be dangers lurking elsewhere that observers don’t see yet, such as an issue in the banking system. Silicon Valley Bank’s collapse earlier this year, which was related to the Fed’s interest rate hikes, felt like it came out of nowhere, even though it didn’t. If the past few years have taught us anything, the economy can also take big hits from really uncontrollable forces, like the pandemic and Russia’s Ukraine war. A sudden change in oil prices is always a possible risk, too. “Nothing does more damage to the economy than higher oil prices very quickly,” Zandi said.

There is also the fact that inflation coming back down without a recession would be a unique scenario. For inflation to come down fully to 2 percent while maintaining a strong labor market and avoiding broader macroeconomic weakness would be quite unprecedented, Patterson said. “It’s not out of the realm of possibility,” he added. “It’s not our base case by any means. But it is also something that we’re keeping an eye on.”

Honestly, maybe we just kind of need a hopeful nice story sometimes

The US economy is far from perfect. Increases in the cost of living are painful, and even before this latest bout of inflation, things were far from great. Higher interest rates to fight inflation have made things worse. There’s no denying that people say they do not feel good about the state of affairs, macroeconomically speaking, even if their spending says otherwise, and many admit that, personally, they’re doing okay. We’re in a weird and far-from-ideal economic scenario.

Still, it might be nice to at least try to be modestly optimistic. If objectively good things keep happening for long enough, maybe people will start to feel it more, too.

In 2023, we sort of turned a corner on inflation. Turning that corner took too long, but it happened, nonetheless. “I understand why people are angry. I’m just happy that more people have paychecks, the paychecks are bigger, and they’re out there spending,” Sahm said. She thinks that by the middle of next year, we should know whether we’ve gotten a soft landing or not. “Definitely by this time next year, we’re either landed, or we’re in a recession,” she said. Let’s all aim for the former.

So it’s come to this: We might have to worry about the deficit

2023-12-14T18:03:12-05:00

The government might be in a smidge of a pickle with deficits and debt. | PM Images via Getty Images

As though there were not enough things in the world to worry about at the moment, a perennial issue has once again been percolating: Is the United States’ financial house in order? Talk about the federal government’s deficit — meaning the difference between what it spends and what it collects in taxes — has started to pick back up. The same goes for chatter about the country’s debt. Deficits are a gamble — a wager that the government paying out more than it’s taking in, especially as time goes on, is worth the risk. Not everyone thinks it’s such a good bet.

Some prominent economists who were once pretty laid back on the matter have started to change their tune. Not everyone is setting their hair on fire, but it has been a bit of a “Wait, what?” moment in terms of deciphering just how much to worry, or whether to worry at all.

The federal deficit officially clocked in at $1.7 trillion in fiscal year 2023 (the government’s fiscal year runs from October 1 to September 30), up from almost $1.4 trillion in 2022. Thanks to some wonkiness around the Supreme Court-thwarted attempt to cancel student loan debt, it was actually likely closer to $2 trillion for 2023 and $1 trillion for 2022. In other words, the gap between what the government spends and what it makes is a big one — and about doubled from one year to the next.

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There are some 2023-specific reasons that the deficit was particularly high; namely, the government saw a big dip in tax revenue. However, there are plenty of trends that aren’t limited to this specific year.

What’s further spooked onlookers are higher interest rates, which have made the country’s debt more expensive because of higher interest costs. Interest rates on US Treasury bonds started to climb over the summer and into the fall, and while they have come down from some of the highs they were at in October, they remain elevated overall, making people a little more nervous.

“You know the meme that’s like mess around and find out? That’s a little what happened here,” said Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, a think tank focused on fiscal responsibility. Years of low interest rates, low inflation, and strong global savings, among other factors, made deficits palatable and easy to ignore in practice on both the right and the left (except when politically convenient). Now, the landscape has shifted.

Lawmakers have made the bet that deficits are worth the trade-off and the debt is manageable, and these soaring rates and their attendant anxiety show just how high the stakes of that gamble are. That risk also calls attention to how difficult the issue is, politically. While many experts say there’s next to no chance of balancing the budget, getting revenue and spending back in line would require compromises few people on Capitol Hill are willing to make. Republicans don’t want to raise taxes and keep cutting them instead, seemingly worrying about deficits largely only when they’re not in office. Democrats don’t want to curb spending, and raising taxes isn’t easy. It’s not clear what, if anything, would make anyone budge.

“I don’t think you’re going to get a solution to this [deficit] until it really is something quite salient to the public, to politicians, and the thing that I’ve been saying for years is … that will happen when markets start to care, when interest rates start to rise,” said Louise Sheiner, a senior fellow at the Brookings Institution and policy director of the Hutchins Center on Fiscal and Monetary Policy. Despite high interest rates, she’s still not sure if this will prove to matter now. “This may be just this little head-fake where interest rates went up and then they came back down and it was no big deal, or we may turn around and may look back at this moment in 10 years and say, ‘That was the moment when people did start to worry about the deficit again and we started doing stuff.’ I don’t know which one it will be.”

2023 is unique, and it isn’t

The 2023 deficit wasn’t necessarily outlandishly high. The deficit also topped $1 trillion in the years following the Great Recession. It was over $3 trillion in 2020 and more than $2 trillion in 2021 because of the pandemic and related spending under Presidents Donald Trump and Joe Biden. “You had Donald Trump go on a huge tax cut and spending spree, and then Joe Biden went on a spending spree,” said Brian Riedl, senior fellow at the Manhattan Institute.

But the deficit being so high in a relatively normal period in 2023 — no recession, no war the US is fighting — is a bit different. What exactly were we spending money on, and why didn’t we have the funds to cover it?

The main culprit this year is taxes (spending was only slightly higher than where it was in 2022). As Jim Tankersley at the New York Times explains, the government brought in an especially low amount of revenue. The IRS extended tax-filing deadlines for people because of natural disasters, including for most people in California, the country’s most populous state. A lot of firms took advantage of a pandemic-era tax credit for retaining workers — some of those claims may be fraud. Capital gains taxes, which come when an asset, like a stock, is sold, also fell from 2022, when they were abnormally high. The decline in capital gains taxes is an effect of high interest rates from the Federal Reserve, which contributed to stock market declines and a downturn in companies going public. (This is a big issue in California’s budget.)

“The trajectory of debt has not fundamentally shifted in the last few years”

“The 2023 deficit was certainly anomalous, and I think people are using a ‘that’s weird’ as a point of proof, but I don’t think it actually has much to do with genuine concern over fiscal risk,” said Michael Linden, senior policy fellow at the Washington Center for Equitable Growth. “The trajectory of debt has not fundamentally shifted in the last few years.”

Still, the trajectory is one that some people find to be uncomfortable.

Tax revenue as a percentage of GDP was abnormally high in 2022 and in 2023, it reverted closer to what it was pre-pandemic. Tax cuts, including those put in place by George W. Bush (and made permanent under Barack Obama) and Donald Trump, are taking a bite out of revenue and will continue to do so. The Trump tax cuts are set to expire in 2025, and it’s not clear whether they might be extended.

At the same time, government spending is on track to continue growing. As baby boomers age, programs like Social Security and Medicare are getting costlier. Defense is always an expensive line item, and there’s demand for more in order to help Israel and Ukraine. And there’s the question of interest costs, too.

“People have changed their views because the aging population is starting to hit — the pre-programmed rise in Social Security and Medicare is happening, and people are looking at it in 10-year projections where it wasn’t before, because baby boomers are retiring. The second issue is interest costs,” said Danny Yagan, an economics professor at the University of California, Berkeley. “The truth is that the interest costs are a much smaller deal now than people think they are, because economic growth has edged out interest rates for years and is generally projected to for some time.”

How big of a deal this is isn’t really clear

America’s debt and the potential implications of high deficits were pretty easy to ignore in the lower interest rate environment the country has been in for the last several years. As borrowing costs rise, paying interest on America’s debt load becomes pricier, especially if those higher costs persist.

“The debt used to appear costless, because the interest rates were, in many cases, below inflation and almost always, for the last 15 years, below economic growth,” Goldwein said. The debt issued when borrowing that was more or less free is now being rolled over, meaning renewed, at higher interest rates, he said. The Center for a Responsible Federal Budget notes that more than half of the country’s debt matures over the next three years.

There are a number of factors potentially playing into interest rate increases on Treasury bonds in the financial markets, but there’s no one single factor to pinpoint. The Federal Reserve has hiked interest rates to fight inflation and is expected to perhaps keep them there for a while. The New York Times points out strong growth, fewer buyers of American debt from abroad, and overall worries about debt sustainability as contributing factors. Sheiner, from the Brookings Institution, said brinkmanship over the debt ceiling, threats of a government shutdown, the overall political environment, and a downgrade on US credit could be part of it as well. “Markets aren’t always 100 percent rational, and you can’t predict every day why it’s doing stuff,” Sheiner said.

“Why did we see a spike of interest rates on federal debt over the last six months, and why is it coming down now? I don’t think it’s obvious what the right answer is,” Linden said.

If the economy grows faster than interest rates, the general line is that running a deficit is more or less okay, because the debt-to-GDP ratio, an indicator of the country’s ability to pay back its debts, doesn’t increase. The problem would come if interest rates outpace economic growth.

Many economists and experts say it’s not time to panic — interest rates have come back down. “Growth is definitely still higher than interest rates, but it’s closer than it was in the past,” Linden said. “If the 10-year Treasuries were sustained at 5, 6, 7 percent for more than six months or something like that, I would start to be like, ‘Okay, is there something really going on here?’ Especially if that happened at the same time as a Fed cut.”

“All else being equal, lower debt is better, but all else is never equal”

Bobby Kogan, senior director of federal budget policy at the Center for American Progress, a progressive think tank, emphasized that it’s also important to take a look at what a high deficit is paying for. Kogan — who is in the camp that believes the Bush and Trump tax cuts are largely responsible for the issues of today — pointed out that the spending side of the equation is one that is popular. Most people don’t want cuts to Social Security and Medicare. “All else being equal, lower debt is better, but all else is never equal,” he said. “All else being equal, we probably would want lower debt, but if you gave me an option between the current path and eviscerating the social safety net, that’s a different question.”

When it comes down to it, the political will to fix this is roughly zero

The country isn’t necessarily careening toward financial ruin because of its deficits and debt. To quote Kogan, “our current level of debt is manageable because we’re managing it.” But it’s something that probably has to be addressed eventually.

The worst-case scenario here would be something like a debt spiral, where higher interest rates and a growing debt mean the costs of servicing the debt get higher and higher, eventually spinning out of control and pushing deficits up more and more. But the worst-case scenario isn’t the only undesirable one. There could be other consequences around slowing economic growth or “crowding out” investment, meaning the government’s needs on borrowing and spending impact borrowing and investing in the private sector. “You don’t need a crisis for debt to be bad,” Goldwein said.

“Neither party is remotely serious about either spending cuts or tax increases”

Given the landscape, one might find themselves asking why the government doesn’t take a look at the deficit before it gets out of hand. That’s where there’s an awkward standoff. The GOP generally wants to cut taxes, and certainly not raise them, and would rather cut spending instead. Democrats do not want to cut spending, especially on vital programs such as Social Security and Medicare. Many Democrats would be into raising taxes, especially on corporations and the wealthy. They haven’t had the numbers to do so in a big enough way, though the Biden administration has implemented some tax changes on corporate minimum tax and stock buyback tax, and is pushing for more funding for the IRS to collect more of what’s owed.

“Neither party is remotely serious about either spending cuts or tax increases,” Reidl said. “The momentum has shifted that people are at least talking about the deficit and they’re not proposing a big expansion, but they’re nowhere close to actually solving the deficit.”

“Not only do you not have to balance the budget, but it’s not clear that you could,” Goldwein said. Even if there were a “staunch Paul Ryan-type figure,” referring to the former budget hawk Speaker of the House, who was looking to go after spending, it’s unlikely the issue could be addressed without looking at revenue, he added. “The bottom line is either the middle class is going to have to contribute … on the tax side or on the spending side,” he said. “There really is no path if they’re not part of it and realistically even that, I think, would be very hard.”

The runway isn’t endless. The Social Security trust fund is expected to run out of money in about a decade, which means taxes or benefits would need to be cut or the government would have to find money somewhere else.

Republicans often claim that they’re serious about addressing the deficit. This year, some hardline members of the House GOP have been fighting for spending cuts, proclaiming concerns for the budget. But when in power, the GOP has slashed taxes. Efforts even now seem insincere — many Republicans are also pushing to take funding away from the IRS, which would lower revenue, not increase it.

Democrats have taken a more complex approach to deficits. There’s an argument to be made that during the Obama years, Democrats were too worried about them. That resulted in a reluctance to spend and ultimately dampened the recovery from the Great Recession.

Part of what’s disturbing about the situation is that nobody really knows the answer to what level of deficit is truly sustainable, what level of debt would be completely destabilizing, and if or when that day will arrive. Nobody can really predict the future here.

“We will have to do something eventually. What does that mean? Nobody really knows what [that] eventually means, the longer you wait, the more you are shifting costs onto the future generation,” Sheiner said. “It’s always about intergenerational equity.”

Starbucks has lost $11 billion market value, and not because of boycotts

2023-12-13T16:14:34-05:00

Pumpkin Spice season was great for Starbucks. The holiday season not so much. | Nicolas Economou/NurPhoto via Getty Images

Starbucks’s value is down billions of dollars. People online are calling for a boycott of Starbucks. The extent to which these two things are related, if they are at all, is not clear.

One thing is true here: The Seattle-based coffee company is not having a bang-up time heading into the end of the year. Its share price has seen a sharp decline since mid-November, falling by about 9 percent, meaning a decline of some $11 billion in its market cap.

“Starbucks’s stock is experiencing a historic losing streak, influenced by a confluence of factors,” said Siye Desta, equity analyst at CFRA Research, in an email.

Data collected by third parties suggests its foot traffic and sales may be falling short of Wall Street expectations. It’s not necessarily that sales aren’t growing, it’s that they’re not growing as much as investors thought.

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Starbucks has seen negative headlines over how it’s handling relations with workers attempting to unionize, many of whom walked off the job in November on its annual Red Cup Day, when it gives out free reusable seasonal cups. In addition, it has found itself caught in the crosshairs of the Israel-Hamas war after a pro-Palestine tweet from the union that prompted calls for a boycott on the right and on the left, though analysts say it’s hard to know the impact these calls are having on the actual business or its stock price.

“I don’t think it’s the protests that are driving this,” said Sara Senatore, senior research analyst at Bank of America. The timeline on foot traffic declines doesn’t really line up with the boycotts, she said. Plus, Starbucks is no stranger to controversy. “This is not the first time that we’ve seen this kind of activity, and so it’s hard, in my view, to conclude that’s the reason that traffic has been so slow.”

Nick Setyan, an equity research analyst at Wedbush, echoed the point. “The boycotts … could be making a little bit of a difference on the margin, a very small impact. I don’t see that having a lasting impact,” he said.

The explanation of what’s happening with Starbucks is actually kind of boring

I will make a quick disclaimer here, which is that nobody ever entirely knows why the stock market does what it does. There’s not some group chat for all the Starbucks investors where everyone talks about the game plan of when to buy or sell. The general rule is that share prices are based on expectations of future earnings, and those expectations can change for a multitude of reasons.

The long and short of what’s happening with Starbucks right now is that investors believe things aren’t going as well as they thought they would. The company had a strong quarter in the July-September period. Same-store sales in the United States were up by 8 percent over the prior year, and it saw an increase in store traffic and average ticket sizes. It got a sales boost on its beloved Pumpkin Spice Latte and other seasonal specialties for the late summer and early fall.

In the following months, in this October-December quarter, some data suggests Starbucks isn’t doing as well, or at least not as well as expected. It appears its deals and specials just aren’t hitting as well as anticipated.

“During the last month or so, foot traffic hasn’t been all that great, and given the high expectations Starbucks went into the quarter with, we’re seeing a little bit of a slowdown versus those high expectations,” Setyan said. “Last quarter, they had some very successful seasonal and limited-time offers, and currently, we’re not seeing the same kind of traction with the current seasonal and limited-time offers.”

Starbucks’s Red Cup Day, held November 16, saw just a 32 percent boost in foot traffic, compared to 81 percent in 2022. According to data provided to Vox by Memo, a media tracking and insights company, readership on news about Starbucks related to Red Cup Day was much higher in 2022 than it was in 2023. Workers walked off the job in both years, and readership about that news declined, too, though to a lesser extent.

“Last year’s success with Red Cup Day was likely partially driven by increased awareness around it as an event — as indicated by the public’s higher engagement with news about the promotion,” said Allison Horton, head of insights at Memo. “We do not see news readership data indicating that this year’s downturn is closely correlated to worker walkouts or boycotts, but rather due to lower consumer awareness and interest in general.”

Starbucks has raised its prices in recent years in response to inflation and the rising cost of labor. Some have argued that Starbucks’s value proposition is a driver of the slowdown, Senatore said, though it’s not a position she agrees with, as Starbucks has taken prices up less than competitors. Still, if consumers — who largely haven’t pulled back on spending despite high inflation — start to finally hold on to their wallets a little tighter, that could be having an impact on the coffee company. Some consumers may view a Starbucks coffee as a “luxury” item they can forgo, especially if they are looking to cut non-essential items. There’s a reason “skip your morning Starbucks to save money” is a bit of a financial advice trope. However, many people see it as an essential part of their daily routine.

In its early November earnings call, Starbucks didn’t indicate a slowdown had been a problem. “Customer demand for us remains strong. We’re not really seeing any change in the sentiment in our customer base at this time,” Starbucks CEO Laxman Narasimhan said. The issue may not yet have been on the company’s radar. Keep in mind too that third-party data on traffic and sales is not always completely reliable, and a clearer picture won’t come until its next earnings release in February 2024.

Starbucks has anticipated growth could moderate over the next year, though that’s not really what’s spooking investors now. It really is they thought same-store growth was going to be something like 6 percent up from last year and it’s not.

To be sure, this isn’t all about the United States, it’s also about China, which is a major chunk of Starbucks’s business. Any concerns about the Chinese economy, of which there are many, are a negative for Starbucks, too. “The question of China is always in the back of investors’ minds,” Senatore said.

The Starbucks boycott stuff is important (and confusing), but it’s not clear it’s that big of a deal, financially speaking

If you are on social media platforms like TikTok, Instagram, or Twitter, you may have come across the recent hullabaloo over calls to boycott Starbucks in relation to the Israel-Hamas war. Both Israel supporters and Palestine supporters have called for consumers to spurn Starbucks over the last couple of months. Bear with me while I try to map this one out.

Soon after Hamas launched its deadly terrorist attack on Israel on October 7, Starbucks Workers United, which represents Starbucks workers pushing to unionize, tweeted out, “Solidarity with Palestine!” above an image of a Hamas bulldozer tearing down a fence along the Gaza Strip. The tweet was quickly deleted, and the union has distanced itself from the message, which it says wasn’t authorized by it or its workers.

Starbucks and the workers union have since sued each other over the matter. Starbucks doesn’t want Starbucks Workers United using its copyright and trademark, and it says the union’s actions have led to complaints because people mistakenly tied the tweet, which it says many people interpreted as support for the October 7 violence, to the company. The union sued back, claiming defamation and saying it’s been using the name Starbucks Workers United since 2021. Both parties say they’re concerned for workers’ safety.

The kerfuffle has caused a sort of boycott-palooza. Some Republican lawmakers, including Sen. Rick Scott of Florida, called for a Starbucks boycott over its workers’ position as represented by the union tweet. Jewish organizations called for a boycott as well. Starbucks and its former CEO Howard Schulz reached out to the Orthodox Jewish Chamber of Commerce to try to reassure them. The OJCC said that Starbucks gave the organization a list of unionized stores for them to boycott. Starbucks has denied the claim, which the union has picked up on.

Palestine supporters are calling for a boycott of Starbucks over its reaction to the union tweet and a contention that the company supports Israel. Pro-Palestine protesters have also gathered outside of some Starbucks stores. Starbucks has said that neither it nor Schulz provide financial support to the Israeli government or army.

It’s a Bud Light-light situation: People are upset about perceived slights by the corporation, but they’re mad in competing directions, and they’re not entirely clear on the facts. Starbucks’s handling of the situation, arguably, hasn’t been great, either. It’s also unclear whether people are changing their behavior and seriously boycotting.

Some people on social media are claiming victory, given Starbucks’s recent Wall Street woes, and saying the pro-Palestine boycotts, specifically, are responsible. There’s just no evidence that’s the case.

The Memo data shows that rather than indicating an engaged boycott, people aren’t paying attention to what’s going on. Analysts acknowledge that boycott calls are happening online, but they say it’s generally tough to tell if they’re making a real difference in sales or investor sentiment. Starbucks has had its fair share of public upheavals over the years after all — over guns, over bathrooms, over red cups, over its approach to union efforts — that it’s made it through just fine before.

“Starbucks has seen various types of boycotts for various reasons, everything from their LGBTQ stance to their gun stance,” Setyan said.

McDonald’s, which has also been a focus of boycotts over the Israel-Hamas war, has seen its share price rise over the past month.

Starbucks vs. the union continues

Much like it’s not clear boycott calls are doing much to Starbucks’s share price, it’s hard to say whether its union push is making much of a dent, either. Union organizing, though, is undoubtedly having an impact on the company.

Starbucks workers first voted to unionize at a store in Buffalo in late 2021. Since then, the company has been engaged in an often contentious push and pull with many of its workers. On December 13, Starbucks released a labor report to shareholders — which shareholders requested in March — on its approach to workers’ rights. The report found that unionization efforts took Starbucks by surprise and said Starbucks needs to better communicate and train employees around the issue.

Even though a relatively small fraction of Starbucks stores have voted to unionize — 382 of over 9,000 in the US — their efforts have prompted changes at the company overall.

In 2022, Starbucks introduced a reinvention plan that aims to, in part, improve pay, benefits, and the overall experience for workers, which it calls partners. (It has a 2023 reinvention strategy, too — Starbucks does a lot of reinventing.) It has expanded digital tipping and implemented a number of other benefits and improvements, many of which it has not offered to unionized stores. It’s making it easier for overwhelmed or short-staffed stores to put a pause on mobile orders. Desta, from CFRA, said the shift may also be impacting investor sentiment, as it could have a negative impact on sales.

“I think they’re seeing that the things that we’re wanting are not impossible or egregious or out of the realm of possibility, because the things that [the union] proposed they have freely granted to non-unionized stores,” said Jasmine Leli, a Starbucks barista based in Buffalo, New York.

Starbucks spokesperson Jaci Anderson said that the changes required to implement improvements such as digital tipping “may modify the terms and conditions of employment” for workers, so they have to bring it to the bargaining table before launching it in unionized stores.

Starbucks Workers United, which represents some 9,000 workers, appears to have the company annoyed — and to have its attention. On December 8, Starbucks sent a letter to union president Lynne Fox asking to resume bargaining in January 2024. Fox in a statement said the union would review and respond to the letter. “We’ve never said no to meeting with Starbucks,” she said. “Anything that moves bargaining forward in a positive way is most welcome.”

“I’m excited and ready to bargain with the company,” Leli said. “I’m glad to see that they made it public that this is what they want to do.”

It’s perhaps a more hopeful look toward 2024 as Starbucks endures a rocky end to 2023.

Update, December 13, 4:15 pm ET: This story has been updated with the release of Starbucks’s labor report.

What makes a good cat?

2024-07-14T22:43:48-04:00

I have absolutely no idea what makes Vincenzo a good cat. It’s a fact I keep to myself when I meet his owner, Donna Dzurishin, at the Garden State Cat Expo in New Jersey in mid-July. At one of the biggest cat shows in the country, my ignorance puts me in the minority. Plus, Donna’s got that warm kind of energy that almost compels you to hug her — it’s not clear if you need it, she needs it, or maybe you both do. You definitely can’t hug Vincenzo or any of the cats competing. The first rule of the cat show is that you don’t touch the cats (unless you ask first, and, as I come to learn, are prepared to be turned down).

Vincenzo is a solid black Persian — a black cat dusted in gray, with a long fluffy tail and round copper eyes that are hard to make out amid all the fur. People sometimes tell Donna, who has long black hair, that they look alike. Her daughter makes fun of her for it. Vincenzo is an “absolutely beautiful boy,” per Donna, and her first show cat — they’ve only been competing since February. There’s been a learning curve in navigating the show circuit, not to mention Vincenzo’s high-maintenance grooming routine, which rivals that of a Kardashian. “I’m obsessive-compulsive, so I put everything into it,” Donna says.

The idea that someone — let alone hundreds of people — would put their cat into a contest is foreign to me. I cannot fathom caring about ranking cats or undertaking the apparent effort being put in here. Why one cat might be “better” than the next is a mystery.

Donna describes what it is that makes Vincenzo special — his stocky body, his short legs, his nice round head. “Did you see him?” she asks. I don’t want to admit that the visual isn’t helping much in terms of my personal comprehension. Our conversation is cut short because the pair have been called to the ring. Donna pulls a nonplussed Vincenzo from his tent, fluffs him up as best she can, and hurries off. I wish her luck but then decide to follow — in the ring she’s headed to, Vincenzo is in the running for best cat, and I may as well see what happens.

As we walk over, Donna’s friend pulls me aside. She tells me Donna’s husband passed away recently, and cat shows have given her new life. The stakes suddenly feel high.

I am not a cat person. Whenever friends ask why I don’t have one — after all, I am a single woman in her 30s — my response is always the same: There’s too big a risk your cat hates you. Cat owners’ stories are basically, “Oh my God, you won’t believe what Fluffy just did! So cute!” And then they tell you about something objectively destructive and, occasionally, gross. Even if your cat likes you, it’s sometimes distant and perhaps kind of an asshole — most cats are. It’s not a bad thing, really. (See: Grumpy Cat, a cultural icon.) They’re semi-wild animals we have as pets, which is a whole separate complicated issue on its own. The main expectation you can have of a cat is that you can’t have a lot of expectations.

Cats are the ones that got themselves into this situation in the first place, historically speaking. They’ve been living with humans for 4,000 years, dating back to the ancient Egyptians, who deeply admired them, and probably even earlier. (In the Middle Ages, they were associated with witches and devilry, so ancient times were probably a much better era to be a cat.)

Unlike other pets, cats are self-domesticated, because humans — and their crops and grains and food — attract rodents. Cats figured out that where there are people, there are rats and mice, so they started hanging around. They came to America as furry little colonists, on ships.

Today, cats — along with dogs — are the most popular pets in the world. According to the American Veterinary Medical Association, there are some 58 million pet cats in the United States, and a quarter of American households have at least one cat. They have cemented themselves as our begrudging companions, here for the snacks and the safety.

“The whole question of cats is less about the cat and more about the human. A cat is going to be a cat, and they’re very funny and affectionate,” says Ella Cerón, an author, friend, and owner of two black cats — Holly and Olive — when I tell her via text that I’m working on this story. “You as a person also have to understand that there are things in this life you cannot control, and one of those things is a cat.”

What even makes a “good” cat? Do we want them to be loving? Aloof? Friendly? Beautiful? Strong? Or is the idea mainly for them to catch critters? Are they supposed to bend to our will, or are we supposed to bend to theirs?

I decided to go to a cat show to find out. A show cat is different from a pet cat, but as Mark Hannon, former president of the Cat Fanciers’ Association, tells me, “A good pet cat doesn’t necessarily make a show cat, but a show cat should also be a good pet cat.” So, I figure it’s a start.

I know what you might be thinking here. A cat show?? Everybody at the cat show knows you’re thinking that, too. They’ve all had to tell their friends and coworkers that their Saturday plan is to take their cat to a beauty pageant; they’ve gotten the looks. But cat shows are, indeed, a thing.

The first recorded cat show took place in 1871 in England, and cat shows landed in the United States not much later. The Cat Fanciers’ Association (CFA), a nonprofit that licenses shows and governs their rules, was founded in 1906; its mission is “to preserve and promote the pedigreed breeds of cats and to enhance the well-being of all cats.” It currently recognizes 46 breeds. Its rival, the International Cat Association (TICA), recognizes 73. There’s not even agreement about what type of cat counts.

What makes a good cat, show-wise, is quite cut and dried, at least in theory. Cats are intended to adhere to what everyone refers to as “the standard,” meaning an ideal version of the breed, as rated by a judge. Cat shows are a way to proofread cats. Breed councils set the standards and can change them by vote, including whether to allow for different colors or change requirements from “medium to large” to “large to medium.” This seems astonishingly mundane; I’m told the debate can be very heated.

The current CFA standards are outlined in a booklet that spans 132 pages. To insiders, it’s the cat bible. To outsiders, it’s a goofy, arbitrary document. Both the Birman and the Cornish Rex get points for having a “Roman nose.” For RagaMuffins and Ragdolls, that’s penalized. The only cat where temperament is listed as a criterion is the Siberian: It’s supposed to be “unchallenging.” The Chartreux is supposed to have a smile.

The cat show world is both big and small. If you wanted to hit up a show every weekend, you could, though you might have to travel far for it — there are shows all over the country and the globe. Yet, it’s a contained community. Competitors see the same people over and over; they get to know one another and make friends. They see the same judges, too, and if certain judges don’t like your cat, you’re in a pickle until you get a better cat. “Oh, everybody gets mad if you think your cat deserved to be up there and it’s not up there,” Hannon, the former CFA president, says.

To judge a cat is to love a cat. When judges evaluate a cat, they hold them, caress them, whisper to them, coo at them, even kiss them. Becoming a cat judge takes years, with all the studying, training, and testing, and it’s not for the cash. Show organizers generally cover judges’ flights, hotels, and meals. Otherwise, judges make a dollar and a quarter per cat.

“We do it because we enjoy handling these cats,” says Nancy Dodds, a cat judge who flew in from Arizona for the weekend. “They’re like artwork.”

Dodds puts on a bit of a show when she judges. She plays along when one of the cats gets frisky and sinks its claws into her table pole, refusing to let go. She spins one lackadaisical cat around on the table as it lies down and jokes about the heft of another, remarking, “I tell people I lift weights every weekend.”

The vibe of a cat show can only be described as semi-managed chaos — I guess the phrase “like herding cats” exists for a reason. A muffled voice over a loudspeaker calls out for cats to report to their assigned ring, each with its own judge (there are multiple categories and multiple “best cats” per day). Their owners deposit them into numbered cages behind the judge and wait for them to be pulled out and appraised.

There is no prize for best cat, just glory. Rankings are supposed to be objective and based on a points scale. “I don’t like to say we take points off, I like to say we put them all together, and the total is bigger than the sum of the parts because you can put all those parts together, and each point is worth something, and then you can have an ugly cat,” Dodds says. It sounds to me like dating: Someone can check all the boxes and still not be the right fit.

Judges really shouldn’t take into account a cat’s demeanor, but they’re only human, so it’s an inevitable consideration. Most people I speak to say that the highest-performing cats are the ones that (allegedly) want to be there. Peter Vanwonterghem, a judge who had flown in from Belgium, tells me, “You really see which cats feel comfortable on the table and which make an issue.”

Not all cat conduct is tolerated. Another rule of the cat show is no biting allowed. Three strikes and you’re out, banned for life.

Luckily for Donna, Vincenzo is not a biter, and he comes from a long line of good cats. The breeder Donna bought him from took a chance on her — you don’t hand out a show-quality cat to just anyone, let alone to someone who’s never shown before.

At its core, this isn’t really about winning. Donna’s husband died in February 2020 after a battle with cancer, and the loss left her deeply depressed. Vincenzo has been a blessing. Beyond competing in the shows, she’s made two close friends through her cats and cat show hobby, including the woman she considers her mentor. They met on Facebook when Donna posted a photo of her other Persian cat, Cupcake, on a page and asked for help with grooming — even a non-show Persian requires upkeep. “When I tell you I had her a mess, I had her a mess,” she says when we catch up on the phone a couple of months post-show.

While this has been a life-changer for Donna, she’s aware of how ridiculous it can sound. “I call him my son. People laugh at me. I say I love him like I gave birth to him myself,” she says.

She puts time into caring for Vincenzo every day, and on big days, the bathing and blow drying and brushing can take several hours. “It’s more baths than I take,” she quips of his bathing routine. There’s the sculpting of the face, which she’s just learning to do, including making sure his smile is right and, believe it or not, tending to his … eyebrows? … though she’s not sure that’s the correct terminology. Donna has spent thousands of dollars on Vincenzo, between the products and accessories and his multiple blow dryers. “To get the perfect show cat, they’re not inexpensive, I’ll tell you that,” Donna says.

Vincenzo is indeed a fancy cat. Donna’s other cats, of which there are three, not so much.

She bought Cupcake as a therapy cat for her grandson during her husband’s illness. She isn’t show quality (there’s something wrong with her eyes). Then, her daughter wanted an Exotic Shorthair, so they got Lila, who failed out of a breeding program in Russia. (All three generations of Donna’s family live in the same house.) Lila is adorable, but she’s got a lot of issues — she has anxiety and a heart murmur. “Probably the best thing that happened to her is that she got here with us,” Donna says. Giovanni, also an Exotic Shorthair, was next, at Donna’s grandson’s Christmas request. He’s registered with the CFA, but he’s too skinny to show. Vincenzo is the last arrival, coming in December 2022. “I said to my family, ‘I’m doing something for myself,’” Donna says.

She loves them all, but Vincenzo is her favorite.

Shows take a narrow view of what a cat should be — the whole shebang is pretty much looks. But what about cats as pets or just as living beings with which we coexist? How would one even begin to set real-world standards for a cat? What do we get out of our relationships with them?

Many people consider their cats to be members of their families, their kids. They often say their pets help them with stress and loneliness, though problems and anxieties can arise with pets, too.

Jessica Austin, a PhD candidate in the Department of Sociology at the University of Colorado Boulder who studies the dynamic between people and cats, explains that cat owners like having a relationship with a being that is fairly independent and content to be on its own. “They see the cats as having their own interests, having their own needs, having their own desires, and that’s fine,” she says. “If you are a person who needs validation from your pet, maybe a cat is not the best pet for you.”

Cats provide a quiet kind of companionship. Austin quoted one of her research subjects — a cat dad — on their unique appeal: “It’s somebody who is content being alone together.”

Societally, cats can be misunderstood. You often hear people say they are uncomfortable around cats or that they flat-out don’t like them. That’s for a multitude of reasons, experts say — they’re wilder, they’re more skeptical and standoffish. And, to put it plainly, they are not dogs.

“It’s basically what I call looking at cats through dog-colored glasses, so in that respect, cats are failed dogs, you know? We hold up this ideal,” says Jackson Galaxy, a cat whisperer, television host, and YouTuber, in an interview.

We’ve got a sense of what makes a good dog. It’s a loyal companion. It loves you unconditionally. Maybe it has a job, like hunting, herding, or being a cop. Even if it doesn’t, it probably knows a trick or two. With cats, it’s fuzzier.

Cats aren’t here to serve us; the relationship is more of a push and pull. They require boundaries. They are an exercise in consent.

“They’re still primarily predatory, they’re also a prey animal,” says Mikel Delgado, a scientist and cat expert. They have a need for safety and comfort in new environments, and we often don’t recognize that. “We are looking at our companion animals through a very human lens, and we don’t really think about how they experience the world.”

When a cat is dissatisfied, owners will know it, and its surroundings are often at fault. If you’ve got a “bad” cat, the bad is on you — your cat is scratching the couch because it doesn’t have anywhere else to scratch. Cats are not as eager to make people happy in the way dogs are, nor are they as motivated by food. People can only give them so many treats before they’re over it. “We are responsible for their emotional well-being, but they’re not responsible for ours,” Delgado says.

Back at the Garden State cat show, I have abandoned all journalistic integrity and am firmly Team Vincenzo. I’ve followed him and Donna to the ring where they’re naming best cat.

There are 10 finalists in cages behind the judge. She pulls each out in descending order, Miss America style, talks about their attributes, and compliments them before she returns them and places a ribbon on their holding spot.

Tenth best cat is named, then ninth, then eighth, and so on, and Vincenzo still hasn’t been called. The tension builds. With two cats left, the judge pulls Vincenzo from his cage. Team V breathes out a sigh — second isn’t bad. But then, when the judge puts him back, she doesn’t hand out a ribbon to indicate his placing. Vincenzo is still in the running! She then takes out the other cat, a white Persian, his competition.

It’s Vincenzo, the black poof, versus his unnamed opponent, the white poof. The judge says that both are, in reality, the best cat and asks the audience to clap for their favorite. It sounds like Vincenzo gets less applause, but it’s hard to tell. Whatever the case, Vincenzo wins. He is named best cat. Donna cries. Her friend cries. If I’m being honest here, I almost cry a little bit, too.

“I’m ecstatic. I was very nervous. This is a hard competition here,” a still-emotional Donna tells me in what amounts to a post-game interview. Vincenzo has won best cat before, but not at a show as big as this one.

The stakes in life don’t always have to be high for them to feel like it. Joy comes from truly unexpected places. And if it’s a cat — because it’s your reluctant pet, your show animal, or whatever else — so be it.

It’s just a tip

2023-12-06T16:24:43-05:00

If you haven’t heard it or felt it yourself, people are angry about the state of tipping. Consumers have noticed that they’re being asked to tip more often and for higher amounts than before. They buy their morning coffee and the barista flips around a screen that nudges them to add on a little more, or they go to pick up lunch and they’re prompted to leave an extra $1. In particularly confounding situations, some people have found themselves being asked to tip their dermatologist or an e-commerce website. In the media, story after story has been written, recorded, and televised about the current state of affairs in tip culture in America.

To describe this culture, we’ve coined terms like “tipflation” and “guilt-tipping.” Many of the conversations I find myself in about high prices these days end with someone saying, “And then you’re supposed to tip on top of it.”

Contrary to the high emotions around it, tip requests aren’t that big a deal. What every frustrated consumer seems to forget is that you can just say no — plenty of people do. (Whether you should is a separate question, especially for workers whose livelihoods depend on tips.) Tipping in the vast majority of cases is optional. Maybe that tip jar was a little easier to ignore than the tablet, but I’m going to let you in on a little secret here: The worker behind the counter hoped you’d put money into the jar, you just didn’t feel as icky about not doing it.

“There are bigger things in this world going on to get frustrated about,” said Dianne Gottsman, a national etiquette expert.

So why does this rile people up so much? Tipping has become a sort of proxy for frustrations about the economy; it’s a small thing that often feels easier to focus on than the bigger things, like inflation. It can pit workers, consumers, and even businesses against one another in a way that’s uncomfortable for all involved.

It’s also an issue with no easy solutions. Some service workers don’t want tipping to go away, even if it means they’ll be paid a higher base wage. And while it’s easy to suggest businesses simply pay their workers more, that extra pay will come from somewhere — often in higher prices being passed on to consumers.

Why tipping gets people in such a tizzy

One thing is true: Tipping is different from what it used to be, even a few years ago. During the pandemic, there was a groundswell of support for service workers and small businesses, and practically everyone who could overtip did. That support hasn’t lasted — society has pretty quickly given up on worrying about essential workers — but some of the tipping changes have. “That emboldened a lot of companies to be more aggressive in asking for tips,” said Ted Rossman, a senior industry analyst at Bankrate. “It was followed pretty quickly by this big bout of inflation, and now we’re starting to see the backlash.”

The unwritten rules of the game have changed, and even though those rules are merely suggestions, many people don’t like it

Irritation with tipping can be both financial and emotional. Consumers don’t like surcharges, whether it be airline fees or an extra $1 to pick up your meal at the local burrito place. Adding an extra 20 percent onto a price that’s quite a bit higher than it used to be is a hit to the wallet.

It’s also jarring because many consumers aren’t entirely sure what to do. The unwritten rules of the game have changed, and even though those rules are merely suggestions, many people don’t like the change. Technology is a factor here, too — now, a computer screen is often asking people what they want to do, sometimes in circumstances where tipping didn’t used to be a factor at all.

“People are feeling social pressures to leave tips in circumstances that they wouldn’t ordinarily expect to tip,” said Michael Lynn, a professor of consumer behavior and marketing at Cornell University and an expert on tipping. What’s more, they’re being asked for money in an information vacuum — the point-of-sale tablet gives no indication of how the person in front of them in line tipped or didn’t. “We’ve had counter tip requests before in the form of tip jars, but that contains information about what other people are doing. Those current tip screens don’t give us that,” Lynn said. (There’s a reason why before the tablets, some workers put their own money into tip jars to try to encourage customers to drop cash in. This is not not something I have done in the past when bartending.)

One Bankrate survey from 2023 found that 66 percent of American adults have a negative view of tipping, though just 16 percent said they would be willing to pay higher prices to do away with tipping. A research article from 2021 found that requesting a tip before a service instead of after was perceived as manipulative, with consumers saying they were less likely to return to the establishments, leaving lower online ratings, and tipping less.

As frustrated as many people say they are with tipping requests, it’s not entirely clear how many of them are changing their behaviors. While consumers may say they won’t go back to businesses because of a perceived unfair tip ask, it’s not clear whether they follow through, Lynn said. People don’t appear to be tipping a great deal more in light of the nudges, either, according to some of the companies behind the tablets.

“If tipping culture had really exploded as some people may think, you would expect restaurant workers to be really wealthy”

According to data on payrolls from commerce technology company Square, restaurant workers are making more overall, but it’s largely due to increases in their base wages, not an explosion of tipping. “While tipping … may have increased modestly, it’s definitely not doing so at the rate that some of the more clickbait-y headlines I’ve seen would have you believe,” said Rachel Deal, a spokesperson for Square. (You can see some examples here and here.)

“If tipping culture had really exploded as some people may think, you would expect restaurant workers to be really wealthy,” said Ara Kharazian, research and data lead at Square. “They’ve definitely had a lot of wage growth, but it’s been pretty modest, all things considered.”

Data from Toast, a Square competitor, shows something similar. Tips at full-service restaurants and quick-service restaurants are actually down slightly from 2018. Toast suggests tipping fatigue, inflation, and service charges may play a role, as well as beliefs companies should just pay their workers better. The latter is a nice sentiment, but forgoing tipping your server after a meal at a restaurant isn’t going to magically lead to an overnight pay raise for them.

For workers, the tip thing can be tricky

Reporting for this story, I decided to reach out to some workers who are on the other side of the tablet to hear what they think about the current state of tipping culture in America. The general sentiment: yes, it has gotten to be a lot, but also, tips are really helpful in getting them through the day-to-day.

Helen, a barista in Seattle, understands people’s frustration with tipping culture in general, even though it does make a “huge difference” for her pay. (Vox granted her a pseudonym so she could speak candidly about her job.) She doesn’t understand why consumers get weird, specifically, about tipping a barista. “I’ve worked as a server, and servers keep most of their tips even though they don’t make the food,” she said. People like to say with baristas it’s a quick transaction, “but the difference is we’re actually producing something for you.”

She tries not to pay attention to what people do when she spins around the Square device that prompts people to tip, though sometimes she overhears people discussing what to do. “Sometimes, they’ll talk about how much they want to tip and whether or not they think they should tip, but never to me,” she said. When I asked if that was awkward, she laughed and replied, “Oh, yeah.”

Charles, a ride-hail driver in California, said his pay for rides is often so low that it wouldn’t be worth it to drive if not for tips. He’s become strategic about how to try to up tips from riders. He tries to focus extra on customer service; he started carrying water in his car before realizing that was an extra cost to him that wasn’t really helping. Now, he asks for a tip directly in his driver profile.

“It makes a difference because you’re not making ends meet the way Uber pays you or Lyft pays you by themselves,” he said. “[People] see it as tipping culture is overdone, but they don’t see it as Uber has cut your wages to the point you need it.”

Another Uber driver I talked to for this story said he wished the company did pre-tipping. When I pointed out that might make riders unhappy, he didn’t respond. DoorDash has started to adopt the practice, warning customers that their food orders might take longer if they don’t add a tip ahead of time.

Michelle Eisen, who works for the first Starbucks to unionize, in Buffalo in 2021, explained that adding credit card tipping was one of the first acts she and her coworkers campaigned around. It wasn’t something the company had previously offered, and with the rise of credit cards over cash payments, workers were losing out on money they’d made before. The company has since granted credit card tipping, but not for stores that unionized ahead of a certain date, including hers. “They used it as punishment for the workers that were organizing, which is pretty sickening,” she said.

Adding credit card tips has made a “significant difference” for the workers whose stores have it, Eisen said, which is why it’s such a sticking point. She gets it can also be a sticking point for consumers. “In the case of Starbucks, I do think if you’re already spending $7 to $10 on a beverage, which is pretty insane, that throwing another $1 or $1.50 on there so that the worker who made that drink can put gas in their car, I’m in favor of that,” she said. “Do I think a company like Starbucks that makes that much money a year should be able to just pay their workers $2 more an hour so it doesn’t fall to the customer? Yeah. Absolutely.”

We might just have to learn to live with the tablet for a while

Maybe someday tipping culture in America will be abolished, workers will be paid fairly, and everybody will be happy. Businesses will figure out how to make their margins without raising their prices (margins which, for businesses like restaurants, are very low). Service workers won’t feel like they have to do a special song and dance hoping a customer will leave them an extra-nice tip. Consumers will not feel pressured by the dreaded tablet.

Tipping is a fixture of the American economy. It can create both enemies and allies.

However, that day is not today. The world we currently live in is one where a DoorDash driver goes viral after commenting that a woman who ordered a $20 pizza lives in an awfully nice house for a $5 tip. The driver, who was fired, has a right to be frustrated over the low pay and hard work many people in the gig economy deal with. The customer has a right to feel like a 25 percent tip is perfectly acceptable — and is also perhaps wondering whether that pizza didn’t used to be $15 not too long ago.

Tipping is a fixture of the American economy. It can create enemies and allies, and who exactly is benefiting and how isn’t entirely linear. “People assume that tipping is to the benefit of the business, that they’re getting lower labor costs and that just goes to their bottom line. But no, it goes to consumers in the form of lower prices,” Lynn, the tipping expert, said. “So effectively it’s not the consumer subsidizing the business, it’s consumers subsidizing other consumers.”

Gottsman, the etiquette expert, issued a reminder that people have choices in tipping. “It’s a nice gesture if you want to leave it, but that’s called discretionary,” she said, though she also noted there are parameters — when you sit down at a restaurant, you should generally know that unless told otherwise, gratuity is expected. “We can monitor our own daily routine or spending, we can curtail it or go someplace else, or we can decide that, okay, it’s not necessary to leave a tip at the counter, it makes me feel uncomfortable,” she said.

You probably should tip that barista $1 (and, yes, Starbucks should just pay them more). But you can say no. And at the self-service checkout that prompts you to tip without a single worker or explanation in sight, you can say no, too. It really is just a tip.

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Have ideas for a future column or thoughts on this one? Email emily.stewart@vox.com.