Trump Accounts and the No Economist Left Behind Test

Dean Baker

 May 15, 2026

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Back when George W. Bush was doing his big drive to privatize Social Security, I got upset because he was using bogus numbers that grossly exaggerated what his private accounts would yield. The basic story was that his team assumed that stocks would provide the same returns they had in prior decades, even though the price-to-earnings ratios in the stock market were far higher than in the past, and projected GDP and profit growth were much lower. Given the assumptions being used on profit growth, their assumptions on returns were virtually impossible.

To illustrate this point, I developed the “No Economist Left Behind Test.” This challenged economists to write down two numbers, one for dividends and one for capital gains, that added to their 10 percent assumed stock returns (7 percent real returns). (For the young’uns, Bush had championed “No Child Left Behind” as the slogan for his education policy.)

I wanted to challenge the return assumptions to effectively take their money away. If the Bush Team could get away with promising an impossible bonanza from their accounts, privatization would look much better than it actually is. It was important to set the record straight.

The test is supposed to be insultingly simple. Economists who can do all sorts of complicated math and statistics should have no problem writing down two numbers that add to 7 percent real return. But no one could do it for the simple reason that they didn’t want to make themselves look stupid.

At that time, the price-to-earnings ratio (PE) in the stock market was around 25. This means that after-tax profits are equal to roughly 4 percent of the share’s price. GDP and profits were projected to grow roughly 2.0 percent annually for the 75-year Social Security planning period.

These were the key numbers. Do you want to say that stocks would give 7 percent returns by paying out dividends, including share buybacks, equal to 7 percent of their share price? That would mean paying out 175 percent of their profits to shareholders?

Companies that pay out more than all their profits as dividends are not going to be around long. Typically, companies pay out 60-70 percent of their profits to shareholders. With profits equal to 4 percent of the share price, this buys you annual returns between 2.4 to 2.8 percent, well below the 7.0 percent assumed by the Bush Team.

Do you want to make up the rest of the 7.0 percent return with a rising share price? Okay, then inflation-adjusted stock prices will have to rise between 4.2 percent and 4.6 percent a year.

If that doesn’t seem like a big deal, remember that profits are only growing 2.0 percent annually after adjusting for inflation. Using the lower 4.2 percent stock price growth figure, the PE would have to rise to 31 after ten years, to 38 after 20 years, and 73 after 50 years. No one wanted to put their names to these projections.

As I pointed out in a piece I wrote a few days ago, the current PE in the stock market is 33. This makes the arithmetic on stock returns even worse than in the Bush privatization days. The profits for an average share of stock are equal to 3.3 percent of its share price. If it pays out 60-70 percent of its profits to shareholders as dividends or buybacks, it would give a yield of between 2.0 percent and 2.3 percent between.

That would mean inflation-adjusted share prices would have to rise be 4.7 percent to 5.0 percent annually to give the assumed 7.0 percent real return. The current inflation-adjusted growth projections for profits are still roughly 2.0 percent. This would give us a PE of 43 in ten years, a PE of 56 in 20 years, and a PE of 122 in 50 years. Anyone want to put their name to those projections?

The key point here is, contrary to the way they are discussed in the media, stock returns don’t fall from heaven. They are related to the real economy. If someone is putting on a clown show, they can claim whatever stock returns they want, but if they want to be serious, they have to say where they come from. Do the No Economist Left Behind Test!

This first appeared on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

 

Americans: We’re Broke. 

Donald Trump: No, You’re Not.

Donald Trump and the Republicans are insisting the economy is great and unhappy Americans are deluded. Just like Democrats under Joe Biden, they’re lying to themselves and everyone else — and will eventually pay the price.

By Branko Marcetic

May 16, 2026

Source: Jacobin

Not long ago, when Joe Biden was running the show, I pointed out again and again (and again) that countless metrics showed Americans were not having a good time economically, and that Democrats fixating on glowing macroeconomic stats and telling themselves the public was deluded would not change this — in fact, that it would eventually lead the party to political ruin. This was exactly what happened, as Donald Trump and the Republicans rode the wave of public discontent with the economy to the White House and control of Congress.

Now it’s Trump and the GOP who are repeating the exact same mistake that led Democrats to lose to them two years ago.

“Look in their heart of hearts, they feel good,” Treasury Secretary Scott Bessent recently said when asked about Americans’ dismal view of the US economy. “I’m not sure what they’re telling the survey people.”

At various times, Trump himself has asserted that “everything’s doing really well” and gave the US economy under him the grade of “A-plus-plus-plus-plus-plus,” claiming that “prices are coming down substantially.”

“I don’t think the people really feel as bad as the Democrats are talking about. The economy is doing well,” one of Trump’s loyal media boosters, Fox News host Maria Bartiromo, insisted.

“It’s phenomenal! That’s a big number!” another one, former Trump economic adviser Larry Kudlow, told Fox viewers about a recent GDP growth figure, in response to news about price rises. “And shows you how resilient the economy is. Business is strong. Profits are booming. That’s why the stock market is hitting all-time records.”

But as Bessent alluded to, what Americans are “telling the survey people” is a very different story compared to what Fox News hosts are telling Americans.

A record 55 percent now tell Gallup that their personal financial situation is getting worse, the fifth straight year that number has ticked up, and worse than any year of the Great Recession. More than 70 percent of Americans told a CBS News poll they’re struggling to afford food, housing, and other essentials. More than half told CNN the word “uncertainty” describes what they think about their financial futures. Young people are particularly pessimistic, with 81 percent of them rating the economy “bad” or “terrible.”

Nearly two-fifths of Americans still can’t afford to cover a $400 emergency, according to the Federal Reserve’s most recent “Economic Well-Being of U.S. Households” survey covering 2025 — the same exact proportion that said they couldn’t in the bad old days of 2024, and that said this all the way back in 2022, a year that saw the weakest self-reporting of Americans’ finances in years. This is roughly the same share that also told Morning Consult last year they either couldn’t cover that amount (18 percent) or would have to turn to a noncash equivalent to do so (25 percent), like a credit card, a loan, or selling something.

It’s not just price increases that are a worry. The share of Americans who told the Fed survey that “finding or keeping a job” was a concern ticked up five points from a year earlier, including a four-point uptick among those who found it a “major concern.”

Americans’ anxieties about health care costs are as high as ever, according to the most recent Kaiser Family Foundation polling, and in some respects have actually grown. The share of adults reporting that they had cut back on medication in various ways due to costs grew to 43 percent this year, a ten-point rise from 2025.

Okay, but if Americans really are as deluded as Trump and his people say, then maybe they’re just not answering these questions accurately. They might feel like they’re struggling with their finances, but that doesn’t mean they really are. It’s an insulting and elitist view cribbed directly from the previous Democratic administration, but let’s indulge it for a moment.

Unfortunately, there’s plenty of data that suggests that’s not the case.

Foreclosure filings spiked 26 percent from the same time last year in the first quarter of 2026, hitting a six-year high. In other words, the last time Americans filed more foreclosures was when the pandemic forced the economy to practically shut down. This is being driven by the spiking cost of home ownership, not just higher house prices and interest rates but soaring condo fees and insurance rates.

Foreclosures on home loans backed by the Federal Housing Administration (FHA), a New Deal–era agency created to boost home ownership, leaped 28 percent over the year to this past March, after Trump ended several pandemic-era Biden policies helping homeowners who were behind on their mortgage payments. Trump essentially repeated a fatal mistake Biden himself had made.

At the end of last year, FHA loans hit their highest delinquency rate since 2021, though delinquencies were up across the board for every type of home loan, according to the Mortgage Bankers Association’s National Delinquency Survey. According to the Federal Reserve Board’s most recent Financial Stability Report, the early payment delinquency rate among near-subprime and subprime borrowers — meaning, the share of mortgages that went delinquent within a year of being opened by borrowers with poor credit scores — is above its historical median.

Delinquency rates in 2026 for auto loans (40 percent), mortgages (21 percent), and especially credit cards (57 percent) are way up from where they were during and before the pandemic. After a major dip, thanks to pandemic-era programs that eased the burden on student loan borrowers, delinquencies on that front are nearing their pre-pandemic numbers, with roughly 3.6 million defaulting over the previous two quarters alone. Survey data shows that these defaulted borrowers are increasingly older, over fifty years old, and were not behind on their payments before the pandemic — suggesting that it’s Americans who were doing okay financially before who are now increasingly struggling to keep their heads above water.

This lines up with data from the National Foundation for Credit Counseling, a nonprofit network of credit counselors. Earlier this year, the organization reported that the level of US financial stress is the worst since it started tracking it in 2018, and that the profile of the typical American seeking credit counseling had drastically changed. Before the pandemic, it had been a person earning roughly $40,000 a year, with a debt worth a quarter of their income. Today it’s someone making around $70,000 a year whose debt is half that number.

According to the most recent data, farm bankruptcies skyrocketed 46 percent in 2025 with 315 filings, likely indicating much broader suffering, as only certain farms qualify for Chapter 12 bankruptcy. Since Trump’s war on Iran choked off the supply of vital commodities, 70 percent of farmers say they can’t afford the fertilizer they need. Bankruptcies more generally went up 11 percent over the calendar year 2025, the third straight year they’ve increased, with the biggest growth happening among nonbusiness bankruptcies.

All of this suggests that metrics dating to 2024, which in a number of cases are the most recent data we have, are far from limited to that year. Harvard’s Joint Center for Housing Studies’ 2026 biannual rental housing report found that cost-burdened renters — meaning anyone spending more than 30 percent of their income on rent and utilities — hit another all-time high in 2024. (The 2025 and 2026 data won’t be released until 2028). That report found that higher-income households were increasingly falling into this category, with the biggest growth of cost-burdened renters taking place among those making $45,000–$74,999 a year.

Alongside this was what the National Alliance to End Homelessness called “an unprecedented rise in homelessness” of 18 percent from 2023 to 2024, also the most recent data from the organization. At the same time, the number of utility shutoffs nationally, collected for the first time in 2024 and published last month, outstripped by millions what analysts had estimated would be the total. It’s backed by a data analysis by the Washington Post of utilities in eleven states, which found there had been a rise in disconnections in at least eight of them from 2024 to 2025.

Maybe most ominous is what has been recently reported by businesses traditionally favored by lower-income consumers. Executives at Dollar Tree, Walmart, and McDonald’s have all said not only that they are seeing larger shares of high-income earners shopping at their stores but also that the low- and medium-income households that have traditionally been their bread and butter are struggling.

Dollar Tree CEO Michael Creedon said on a fourth quarter earnings call that the company “grew households across all income cohorts” and at an “accelerated rate,” but that “in the middle to higher income households, we see accelerated trade down.” In other words, more affluent shoppers who normally wouldn’t be caught dead in one of their stores are increasingly turning to low-cost retailers to spend less.

“We had a lot of growth with customers who are income bracket of $100,000 or above, and that’s pretty consistent with the last few quarters,” Walmart CEO John R. Furner said this past February. “The lower income segment $50,000 and below, we did see, of course, as we mentioned, some stress. In many cases, we see people living paycheck-to-paycheck.”

“We’re seeing, you know, solid growth, good growth with higher income and also gaining share with higher income for us,” McDonald’s CEO Chris Kempczinski said on an earnings call for the first quarter of 2026. “That lower income, while the declines are not as pronounced as they were, maybe, you know, six or twelve months ago when we were talking about high single digit, the low income is absolutely still declining.”

In other words, lower-income Americans are cutting back their spending on even low-cost consumer goods, and higher-income households, even those making six figures, are turning to those budget options, which they have tended to shun. This does not paint a picture of an economy that’s working particularly well for anyone, and in fact, suggests that the “K-shaped economy” — where low-income households cut back spending but high-income households keep the economy propped up by spending even more — may be slowly turning into a “backslash economy,” where everything is trending down.

That both Democrats and Republicans and their respective loyalists have just wholesale swapped talking points about this speaks to more than just the polarization that shapes how many Americans look at their country. It speaks to a political and media elite that is, no matter their party or ideology, blissfully out of touch with the lives of the people they’re meant to be serving, and which, owing to its own exorbitant wealth, simply experiences an entirely different economic reality from most of the US public.

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This article was originally published by Jacobin; please consider supporting the original publication, and read the original version at the link above.

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Branko Marcetic

Branko Marcetic is a staff writer at Jacobin magazine and a 2019-2020 Leonard C. Goodman Institute for Investigative Reporting fellow. He is the author of Yesterday’s Man: The Case Against Joe Biden.

Trump Is Making America Uninsured Again

The GOP is heading into the midterms as the party that made health coverage out of reach for millions of Americans.

By Sasha Abramsky

May 17, 2026

Source: Truthout

In 2025, the Trump administration successfully pushed Congress to enact nearly $1 trillion in health care cuts over the coming decade, which the Congressional Budget Office analysis estimated would result in 10 million people losing health coverage by 2034. More recently, it has blocked any and all efforts to extend the Affordable Care Act (ACA) tax credit subsidies for people buying insurance on the state exchanges. In demanding that the GOP leadership in Congress prevent at all costs a continuation of the expanded ACA tax credits, Donald Trump intimated that his administration was on the verge of proposing a better and more affordable health care reform to replace the ACA system.

Nothing of that nature has materialized. Instead, the administration’s health reforms have been shockingly small-bore — a handful of measures to lower the costs of prescription drugs, more incentives for consumers to create health savings accounts, a rollback of regulations on catastrophic coverage plans — thus, making it easier for younger, healthier, patients to buy junk insurance, but doing nothing for those who are older or suffer from chronic conditions.

Over the past months, even these baby steps have stalled out, with the GOP seemingly and inexplicably resigned to the fact that it will be heading into the midterm elections as the party that is putting health coverage out of reach for millions of Americans. Early in the Iran war, Trump was caught saying that the federal government could no longer afford its massive Medicare commitments now that the country was engaged in an expensive overseas conflict, and it would have to roll back responsibility for paying for this bedrock safety net program onto the states.

This represents a stunning reversal of government efforts to bring health care access to millions who had previously lacked it. In 2020, when Congress expanded tax credits during the pandemic for Americans accessing health insurance plans through the ACA, millions of Americans were finally able to access health insurance at reasonable rates through the state exchanges.

Expanding the tax credits patched a hole through which large numbers of Americans had fallen. Under the original provisions of the ACA, anyone at or under 138 percent of the federal poverty level would qualify for Medicaid; and anyone between 138 and 400 percent of the poverty level would be able to access tax credits on a sliding scale to help them cover the cost of health insurance. None of these recipients would be expected to pay more than 10 percent of their income on insurance.

Expanding tax credits did two things: It ended what advocates had taken to calling the “affordability or eligibility cliff” — a situation in which, if your income went even one dollar over the 400 percent of the poverty line limit, you suddenly lost all tax credits and your insurance costs soared virtually overnight. It also lowered the maximum payment for credit recipients from 10 percent of their income to 8 percent if they bought a so-called “silver plan” with relatively low deductibles.

Taken together, these new terms were enough to bring millions of families under the health insurance umbrella, and it allowed millions of additional families, who previously had to opt for catastrophic insurance with huge deductibles, to access the silver plans.

“It’s an advanceable, refundable tax credit,” Anthony Wright, executive director of the health advocacy organization Families USA, explained to Truthout. “And it was tied to the point of sale.” In other words, people buying health insurance wouldn’t have to fork out thousands of dollars and then wait for a tax refund. Instead, the calculated refund would be applied to the cost of insurance from the beginning.

Congress initially passed these credits in 2021 and then, under the Inflation Reduction Act, extended the credits for another three years in 2022. Last year, despite a congressional majority in support of extending the credits, GOP leadership, at Donald Trump’s urging, stood firm against marshalling the votes needed to ensure their continuation. The affordability cliff was suddenly resurrected. As a result, from January of this year, millions of people renewing their insurance policies suddenly found themselves facing far higher bills. According to Wright, for a young person just above the Medicaid cut-off, that meant finding an extra $50 or $100 a month, itself an oftentimes insuperable obstacle for someone scrabbling just to cover their basic bills. For many older persons at the higher income side of the subsidy spectrum, it in many cases meant monthly insurance bills rising by more than $1,000, according to Wright. For some families, he says, it rose by upwards of $2,000, the equivalent of adding a second mortgage payment to families’ monthly bills.

“Congress made deliberate decisions to have premiums spike, to have more people uninsured or underinsured,” Wright argued. “People who are older, they are the ones who got socked in a big way.”

Predictably, following Congress’s failure to renew the expanded tax credits, in the first months of 2026 state exchanges calculated that up to 2 million people dropped coverage, and millions more shifted to lower cost plans with far higher deductibles, some in the $10,000 a year range. “So it really is a different product; they’re paying more and getting less,” explained Wright.

More recently, as additional insurance plans come up for renewal, and as more and more people fall months behind on their premium payments and, in consequence, get dropped by insurers, the numbers predicted to end up uninsured have soared. The New York Times published data showing that over the next couple of years, those on ACA-backed insurance plans would likely decline from 24 million to 19 million, a drop of more than 20 percent. In some states, such as Georgia, the exchanges are already reporting falloffs far in excess of 35 percent.

California has stepped in to at least partially replace the lost federal tax credits for hundreds of thousands of lower-income ACA customers who use the Covered California marketplace. But even there, according to Jessica Altman, executive director of Covered California, as of March 2026, there were 135,000 fewer marketplace users than a year earlier. That represents a 7 percent drop in coverage, and Altman believes the numbers will only grow over the coming months. She said there are “farmers, gig workers, small businessmen who need the marketplace because they don’t have access to employment-based coverage,” and yet these are precisely the individuals now being hit by the rollback of subsidies: people too affluent to qualify for California’s partial subsidies, but income-insecure enough to be pushed into financial hardship by increases in premiums. “This middle-income group is the only part of the health care system where we are asking the consumer to pay the full price,” Altman argued.

Add up the cuts to Medicaid, the cuts to federal ACA tax credits, and the escalating rhetoric about further paring back Medicare — despite growing popular support for Medicare for All — and “collectively we are looking at millions of people going uninsured across the country as a result of federal policy. It has ripple effects through the economy and for health care providers,” said Altman. More people, she fears, will skip vaccines, go without preventative care, including cancer screening, forgo wellness checks. Eventually, as was the case before the ACA expanded health care access, those people will present at hospital emergency rooms with untreated diseases that, had they had access to regular doctors’ visits, would have been managed far earlier.

“Our system,” said Altman, “will bear the cost of less healthy people.”

This article was originally published by Truthout; please consider supporting the original publication, and read the original version at the link above.Email

Sasha Abramsky

Sasha Abramsky is a freelance journalist and a part-time lecturer at the University of California at Davis. His work has appeared in numerous publications, including The Nation, The Atlantic Monthly, New York Magazine, The Village Voice and Rolling Stone. He also writes a weekly political column.