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I was blissfully oblivious to all the bad economic news that came out today, until this evening when I got to read and watch the news…  Wow.

The unemployment spike is especially troubling, and now five straight months of job losses.  And then there’s the price of oil and, gee, the stock market pretty much freaked out today, didn’t it?  Maybe we really are in a recession, after all…  Economists keep changing their minds about this, and any official call from the National Bureau of Economic Research (NBER) doesn’t typically come until after the recession’s over.  Want to know more?  Go visit the NBER’s business cycle dating page (…sounds intriguing, doesn’t it?).

I spent the day driving to Pittsburgh for the first day of a yoga conference (I’m a yoga teacher in one of my other lives), so instead of fretting about today’s bad economic news, I was getting in touch with my inner self.  Then tomorrow I start a few days of commuting between yoga in Pittsburgh and visiting my parents in the Cleveland area.  While I’m visiting with my parents, I’ll be pretty oblivious to the longer-run economic problems our country faces as well, because our family faces no such demographic challenge.  My mom is celebrating her 75th birthday on Sunday, and my dad is almost 76 and is still working full time.  They don’t yet need me or my sister to support them–in fact, I doubt they ever will need my financial support.  (They’ll always need me for technological and other miscellaneous “support.”)  And of course, I have four children, which is not just good for supporting my own old age but is also my little contribution toward the Social Security crisis.  In fact, kid #1 is already paying Social Security taxes at her Baskin-Robbins job.  (I’m pretty confident she’ll eventually have an even better, more productive job later in her life, but she already views her job as much more productive than mine.  By the way, she highly recommends the “tropical ice” flavor.)

And getting back to today’s bad news, economists are saying (on Wall Street Journal blog) that my daughter’s recently acquired Baskin-Robbins job is actually related to the spike up in the unemployment rate, as more teens and young adults are looking for summer jobs and entering the labor force.  But that doesn’t necessarily soften the bad news–because the fact that so many of these young people are suddenly desperately seeking summer work, compared with years past, could just be yet another sign of a recessionary economy and the financial straits American families currently find themselves in. 

An article from the front page of the Business section in today’s Washington Post highlights how some people spend amazing amounts of money on their pets.  (The article emphasizes veterinary bills, proving that the rising health costs problem, featured in my Friday post, is not confined to human health care.) 

Sometimes these people spend that much money on their pets because their pets are effectively their only “kids.”  Others of us spend that much money on our pets because our pets are a lot like additional kids.

So have 4 human kids and 3 canine kids (and 2 hamster kids and 1 bird kid)…

Here are my 3 canine kids on Rehoboth Beach during spring break:

We take them with us when we can.   When we go to Arizona later this month, we cannot bring them.  So I’m in the process of investigating pet sitting options, including sending them to a “spa-like” vacation at a doggie resort.  It turns out there are many doggie resort options in the northern VA area (including a place called “Dogtopia”–really, check it out), because people around here have a lot of money, and some people don’t have human kids and so have even more money.

I’ll keep you posted on what I find in terms of pricing and what I end up deciding to do.

So, I bought this book several months ago, but I haven’t yet had time to read it.  And if I did have the time to read it, would I have bought the book?…

Doesn’t it make you wonder how big the gap is between the number of copies sold and the number of testimonials/success stories? 

So let me add a quick “Mom” perspective to my earlier, clearly “economist” post, below (on the Ryan plan)…

Suppose I’d love to go out to Arizona this weekend.  I hear Sedona is really lovely this time of year (as well as the place to be this weekend if one wants to bump into Senator McCain or any of his VP hopefuls)…

I haven’t made any plans– don’t know if I’d fly there, drive there, walk there!…  

But I know I’d have an absolutely fabulous time once I got there–why, the benefits would be huge…

Does this mean my trip would be worthwhile (”pass the cost-benefit test”), no matter which way I choose to get there, and no matter what the cost?

EconomistMom says:   I think not.

Anyway, I’m staying home.  (Our family’s Sedona trip is in late June!)

The other day I took my two younger kids for their regular dental checkup, and our long-time dental hygenist, Sue, said to me, in disbelief, that kid #3’s teeth actually looked pretty straight, compared with kids #1 and #2, who have already been through two palate expansions and three sets of braces between them, and compared with kid #4’s dental situation, which Sue always refers to as something like a “major excavation and reconstruction project” ahead…  

Let me pause here to say that having already paid for three sets of braces on just two kids, I often wonder if orthodontics are a way of giving families “practice” in paying outrageous bills–i.e., practice for (or prevention of?) paying for college.  It was at the time kid #2 was about to get her second set of braces, that  I first realized that this “double braces” treatment that I had agreed to before she got her first set of braces, was going to be double the cost.  Of course, I had to swallow hard and pay the bill, but as an economist and not just a mom, I was left wondering if early orthodontic treatment makes economic sense for anyone but the orthodontist.  Does one end up spending double the money for the same ultimate result?  Or is the result that much better that it’s worth paying for the early treatment?  Anyone out there know?

…Well, back to kid #3’s story:  Sue the hygenist asked what the orthodontist had said about kid #3, because although kid #3 looked pretty good, it wasn’t completely perfect, and I happily reported that the orthodontist said this kid would NOT need braces, and if the orthodontist himself is saying that, you know it would be totally frivolous to spend all that money to correct very minor imperfections in kid #3’s teeth.  I went on to say, with a laugh, ”well, I’d get braces for myself before I’d get braces for her–you know how messed up my teeth are.”

But afterwards I realized that no, I wouldn’t really get braces for myself before I’d get braces for my almost-orally-perfect kid #3.  I wouldn’t do that, because that would seem even more frivolous–not because my teeth couldn’t objectively use some fixing, but because I’m too old and far along in my life to make straightening my teeth a wise investment.  Heck, my teeth are awful in more ways than how far from straight they are; I’ve had so many root canals and crowns since age 40 that I’m convinced I’m not that far away from having all my teeth fall out.  And how would I ”use” straight teeth?… I know I’m not going into a career in show business, despite the unusual movie stardom of my boss, Bob Bixby.

(My own parents had already done the cost-benefit analysis on my orthodontic situation when I was a kid, and when my younger sister was so obviously in greater need of braces than I–so she got them, and I did not.  My parents were not economists, but they’ve always been better at family/home economics than I am.  They knew how to budget as if there were constraints, because they had them (they were working in academia as underpaid scientists)…) 

But kid #3, well, she could very well become a movie star someday….she’s danced at the Kennedy Center twice after all (I’m sneaking in the brag book)… or even if she doesn’t, she’s young and has her whole, pretty life ahead of her!  The marginal lifetime benefit to perfecting her teeth is way higher than the marginal lifetime benefit to fixing mine, if only because she has a lot more lifetime left.

All parents know that spending money on one’s children never feels quite as frivolous as spending money on oneself.  I know that pretty much anything that my kids don’t immediately consume–and I mean literally consume, as in EAT–I think of as worthwhile investments.  (Come to think of it, I justify buying that more expensive, organic food for them at Whole Foods, as an investment, too.)  The thousands of dollars spent on my kids’ music lessons, ballet school, sports, all sorts of camps, their hobbies (kid #2 is a great photographer), etc.–all wise spending that gives my kids a “richer experience” with life that will make them better, more productive, happier adults.  (That is why the term “enrichment” is such a great way to get parents to spend money.)

There might be a little bit of irrationality in how parents do the cost-benefit analysis when it comes to their kids (more on this in many future posts), but I think parents do the intergenerational math much better than the government does.  Becoming a parent makes one a lot more far-sighted and forward-looking (even with the occasional banana-peel slip ups), while the politicians and policymakers seem to only see as far as the current electorate and immediate distractions (banana peels all around).  As a public finance economist and a mom, for years I’ve felt that the government invests too little in the human capital of the young (i.e., in their education and health care), while government spends too much on the pure consumption of the old, whether that be subsidies for old industries that don’t need them, or tax cuts for really rich, old people who have just transitioned to being really rich, dead people.  As a society, it’s not a wise investment strategy and doesn’t maximize social, lifetime net benefits.  It makes as much sense as my getting braces.

I didn’t post yesterday because I was distracted.  I locked my keys in my minivan in what turned out to be a failed attempt to do too many things at once.  With a great plan for how I could: (1) teach one yoga class in the morning, (2) quickly change clothes, (3) drive straight to daughter #3’s ballet venue while eating “breakfast”, and then (4) leave her performance a little early to get to the second yoga class of the day, I celebrated the success of the plan prematurely–at step #3–and got so unfocused that I managed to lock my keys in the car–and not notice until I was to implement step #4 (instead of hours earlier at step #3 when I could have had time to remedy it).

See, my tragic downfall was that I picked up the banana peel.

Arriving at the ballet theatre, I was rushing out, opened the door, hooked my purse over my arm, then realized I needed to grab my cell phone.  So I grabbed the cell phone in one hand, keys in another, and then locked the car door from the door lock.

Then I noticed the banana peel I had left on the floor.  Oh, better pick that up, or the car will reek of banana by the time I get back here, hours later…

So I picked up the banana peel in one hand, cell phone still in the other, purse still hooked over one arm, and then closed the car door, running toward the theatre focused on finding a trash can along the way for my banana peel.

Somehow with two hands full (cell phone in one, banana peel in the other), I didn’t notice I didn’t have my keys… not until I had to implement step #4, hours later.  Step #4 failed.   

Of course, this was just another of the regularly-occuring signals to me that I try to do too much.  It also served as a lesson:  “don’t pick up the banana peel”–meaning, don’t let minor distractions and trivial things get in the way of accomplishing one’s major tasks “at hand.”   (ha ha)

I suppose a lot of you people out there (but especially parents) have your own picking-up-the-banana-peel moments, and I know that this applies big time to the way the government conducts business.  Why, government has tons of banana peels lying around them!  I suppose next week I will find a way to talk about the “banana peels” in the congressional budget resolution.

What do you think are good examples of ”picking up the banana peel” and “locking the keys in the car” that you see in the public policy arena?  Or in your own daily lives? 

Having just read the string of comments left on the Seattle P-I website in response to my Mother’s Day column, I noticed many readers were more fascinated by what happened in my household than interested in how I was trying to relate family budgeting to the federal budget.  So I feel compelled to explain that:

• No, my four kids did not drive my au pair (literally) crazy.  It turned out she was schizophrenic.  What I had interpreted from the first day as her just being an unusually uptight person (a “worrier”), turned out to be symptoms of a person hovering precariously over a schizophrenic cliff.  Apparently if one is predisposed to schizophrenia, one of the surest ways to trigger its onset is to put that person in a foreign country where their native language (in her case, German) is not spoken.
• We decided not to replace her with another au pair, because we could not find a “part time” au pair (there are such au pairs these days, called “EduCare au pairs”), and we had managed with so little help since she had arrived that we realized it would not make economic sense to pay for a full-time caregiver… especially given that our oldest was just a couple months away from getting her full drivers license and just two years from going to college, plus teenaged daughter #2 is very capable on the home front and also conveniently doesn’t have a lot of extracurricular activities.   (We realized the money we would have spent on child care would be really nice to have to save for college.)
• I decided to leave my Hill job not because the hours were bad in terms of average hours per week (they were not), but because the hours were not very flexible or predictable.  I needed to find a job where I could spend a lot of time working at home in the after-school hours, where I could be around my kids and not worry about them, and hence actually be more productive at my work, not less, than if I were stuck in my office.  And as I’d look around the Hill at the typical staffer, I realized that I didn’t really know anyone else with as many responsibilities back home as I had.  Plus most are a lot younger than I and have some ambition to move up to more powerful and prominent government positions–or to a lucrative lobbying job on K Street–and I wanted neither at this stage in my career and family life. 
• When my kids were younger, I never felt like they missed me or needed me that much during the workday.  The au pairs we’ve had over the years were wonderful with them, and you know how little kids like anyone with a bright, smiling face who will feed them and play with them.  But as my kids got older, I realized that the au pair wasn’t as great of a substitute for mom or dad during that after-school time.  The kids got busier with their own activities, which I wanted to be a part of, and had more going on in their own lives, which I wanted to be around more to hear about and help them through.

So we are now a household completely without hired household help, with one teenager who serves as our ”driver” when she’s not working at her Baskin-Robbins job, with a house that’s a mess from months of housekeeping neglect (there’s a clear downside to having had 14 years worth of au pairs who picked up after the kids), and lots of evenings of carryout or frozen meals.  We’re still transitioning and figuring out what we’re willing to do without to save money, versus what we need to replace in terms of all the tasks around home that aren’t now getting done–to either newly do it ourselves, or to hire help.  Two things that have helped me already that I’ll plug here:  Let’s Dish (seems a little better than microwave and carryout meals) and Google calendar (a life saver for coordinating 6 people’s schedules from different locations).  (No, they’re not paying me for advertising…)   So stay tuned if you’re interested in the “home economics” of the EconomistMom household.  In the future you may hear about 1-800-GOTJUNK, new vacuum cleaners, and who knows what else.

This is the “chaos I call home.”

Welcome to EconomistMom.com and my premiere post!   Please visit my “About…” and “Special Thanks” pages (linked at the top bar) to see how this blog was born.  I hope you will bookmark this site and visit and comment often! 

This morning (Mother’s Day) the Seattle Post-Intelligencer published my “guest column” announcing this blog. Special thanks to Seattle P-I Editor Mark Trahant for making this possible, and for his general commitment to the issue of fiscal responsibility. Here it is:

http://seattlepi.nwsource.com/opinion/362479_economistmom11.html

‘Economistmom’ wakes up to fiscal reality

Last updated May 9, 2008 5:01 p.m. PT

DIANE LIM ROGERS
GUEST COLUMNIST

The day after our au pair had been committed to a psychiatric facility, I walked into my staff director’s office and told him I had to leave Capitol Hill. The two months of living with a person falling into mental illness had served as an exhausting yet startling wake-up call that forced my family to re-evaluate both our child care needs and our budget. For 14 years, we had been on autopilot — each year renewing our contract with the au pair agency, finding our next au pair and paying for full-time care. With the oldest of our four kids now 16, circumstances and common sense told us it just wasn’t worth it anymore.

It was a wake-up call for my professional life as well. I had to leave the Hill, but I wanted to continue working on the policy issues I’d focused on throughout my career — the economics of government budgetary policy and more specifically, the wisdom of fiscal discipline. In that respect, my chief economist position at the House Budget Committee had been an ideal fit. But I had been disappointed in how difficult it proved to sell the members of Congress on “doing the right (fiscal) thing.” Although fiscal responsibility appeals to common sense, many policymakers feel it lacks political sense.

A couple years ago, I worked at The Brookings Institution and participated in The Concord Coalition’s Fiscal Wake-Up Tour, traveling across the country to advocate for fiscal responsibility, with then Comptroller General David Walker, Concord’s Bob Bixby and other scholars from Brookings and The Heritage Foundation. The tour has been going on for nearly three years now. Cynics can point to continued budget deficits, but the tour is making a difference exactly where it was intended — from the ground up — and the public is now more supportive of politicians who do the right (fiscal) thing than the politicians themselves yet realize.

So, faced with my own personal and professional wake-up calls, I accepted an invitation from The Concord Coalition to join its staff as chief economist and reunite with the Fiscal Wake-Up Tour. Related to my official duties on my new job, today I launch a blog using my dual credentials as a Ph.D. economist and a mom. EconomistMom.comis a place where analytical rigor meets a mother’s intuition.

EconomistMom.com will discuss a wide variety of issues from this dual perspective, with fiscal responsibility figuring prominently. Here’s a sample of some fiscal policy lessons that emerge from the EconomistMom.com perspective:

• There is no such thing as a free tax cut (or spending program). A theory known as the “Laffer Curve” says that if marginal tax rates are high enough, a cut in tax rates could actually produce higher revenues. The problem is that we’re nowhere near the level of tax rates that put us on this portion of the theoretical curve. For federal budget policymakers to count on tax cuts paying for themselves because there’s some very tiny probability it could happen is like my counting on my son’s dream of becoming an NBA basketball player coming true — and deciding there’s no need to save for his college education or for my retirement!
• Deficit-financed tax cuts or spending today promise many-fold tax increases on our children. Deficit financing is a cost-maximizing budget strategy — because of the curse of compound interest. The choice is simple: Pay for it now, or our kids pay even more for it later. For example, the balance on a $1,000 loan swells to more than $3,000 when repayment is put off for 20 years, even under a relatively low interest rate of 6 percent. If as parents we aren’t willing to go on a personal spending spree, run up our credit card balances and leave the bills for our kids to pay, why should we put up with (or even clamor for) deficit-financed tax cuts and programs?
• Lack of fiscal discipline is costly beyond the costs of debt service, because it undermines the need to set priorities. With budget rules easily bypassed, the federal government’s fiscal policy decisions are often made as if there are no constraints. This is akin to my family being turned loose in a shopping mall and told we can keep whatever we can grab in five minutes. How much would we think about the usefulness or desirability of what we were putting in our cart? More tragic, how would we feel if we were later handed the bill? Acting “economically” (and responsibly) means understanding and working within our constraints to make thoughtful decisions, so that we end up choosing the things that provide us the greatest net benefits, rather than the things we saw first at the store.
• To adequately consider those fiscal priorities, policymakers need to take the government budget off “autopilot.” Just like my family had to take our spending off autopilot and reevaluate our needs and our means as our circumstances changed, so will the government in order to handle the challenges associated with the aging of the baby boomers.

If the federal government is going to turn around the fiscal train before it wrecks, it will need to start to budget more like responsible parents do — heeding the basic math, using common sense and being good stewards. EconomistMom.com will promote this way of thinking, and it’s my Mother’s Day wish that such “waking up” will be contagious.

© 1998-2008 Seattle Post-Intelligencer