Claudia Sahm: $2,000 tariff checks are a good idea badly planned

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President Donald Trump is promoting the idea of sending a $2,000 check to most Americans funded by revenues brought by his tariffs on imports.

The scheme has received a frosty reception from Trump’s fellow Republicans in Congress and economists alike, and they are unlikely to happen. If the White House really wants to ease the burden that tariffs have created for lower-income households, then it might want to look to our neighbor to the north, Canada, which has become a global leader in making consumption taxes more equitable.

Tariffs, which total around $200 billion this year through October, are essentially a regressive consumption tax. The duties are paid by importers, which then try to pass their added costs to their customers, which typically increases the prices of imported goods paid by consumers. That’s the tax.

Even when the prices paid are the same across all consumers, the loss of purchasing power is greatest for those with the least income. Because lower-income households already spend a higher share of their income, they must spend an even greater percentage of their incomes when prices rise due to tariffs.

The regressivity of the Trump administration’s tariffs is substantial. The Budget Lab at Yale estimates the costs to consumers in the near term will be 2.4% of annual income for households in the bottom earnings decile. For the top decile, it’s only 0.8% of income. The burden is three times larger for the bottom than the top, so tariffs reinforce the “K-shaped” dynamics in the economy. In addition to being less equitable, regressive taxes magnify the severity of a recession, since a household’s after-tax resources fall faster than their income.

Tariffs are clearly not an ideal way to raise tax revenue. But a better design could mitigate some of the economic harm to lower-income households. Several countries use targeted payments to offset the regressivity of consumption taxes. Canada is a prime example. It pairs a value-added tax on most goods and services with quarterly payments to low- and moderate-income households based on family income, marital status and the number of children.

The purpose is to counteract the regressivity of the tax. The total credits accounted for 12% of consumption tax revenues, according to a government evaluation in 2017. The credits more than offset the cost of the tax for the lowest decile of households by income and reduced the cost for other low and moderate-income households with the relief tapering off as income rises. Pairing the consumption tax with the quarterly credits almost entirely reversed its regressivity. In 2022, the Canadian government doubled the credit for six months to help offset the rise in inflation rates.

A revamp of Trump’s $2,000 payments, guided by Canada’s experience, would require several changes. First, payments should be much smaller and calibrated to the burden caused by the tariffs. The tariffs, according to the Budget Lab, cost households in the lowest decile less than $1,000 annually, and the median household cost is $1,400. Next, to compensate for the regressivity of tariffs, the payment should be tied to household income and phased out as income rises.

Also, a quarterly payment or a monthly payment would be better than a large one-time payment. The smaller, recurring payments would more closely match the extra costs incurred from regular purchases of goods. It would also be less inflationary because it would have a smaller effect on aggregate demand. Research on prior stimulus programs showed that consumers spend more from a large one-time payment than from smaller repeated payments. Smaller, repeated payments also spread the boost to aggregate demand out over time, limiting the risk of inflationary supply-demand imbalances.

Easing the burden of tariff policy on lower-income households is particularly important given other regressive policy changes this year. The Congressional Budget Office estimated how the provisions in the One Big Beautiful Bill Act would affect different income groups. While, on average, households were expected to see an increase in resources during the next 10 years from the legislation, those of low-income households were expected to decrease largely due to cuts in Medicaid and food stamps.

The $2,000 checks would be attention-grabbing, but they are poorly targeted and could end up creating even larger affordability problems than the tariffs. The White House needs to be clear about the burden that tariffs as a consumption tax impose and craft policies to lessen the harm on the least well-off. Canada won’t ever be our 51st state, but it can be a role model for our national policy.

Claudia Sahm is the chief economist at New Century Advisors and a former Federal Reserve economist. She is the creator of the Sahm rule, a recession indicator

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Readers and writers: A story of fighting real-life evil, plus holiday picks for kids

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A son whose father fought Nazis with his brain instead of a gun, and suggestions for children on your holiday gift list brighten our newly white landscape today.

“My Father Against the Nazis”: by Steven E. Mayer (Calumet Editions, $21.99)

There are many books about German Jews fleeing their country as Hitler gained power. But what happened to those who stayed until their last chance to leave?

(Jane Lake Birt / Calumet Editions)

Steven Mayer tells the story of his parents, Paul and Margo, as they grew up, fell in love and married. They finally left Nazi Germany in 1939, eventually making their way to the U.S. In his book, aptly subtitled “Part memoir, part history, part biography, part prophecy,” Mayer’s focus is mostly on his father, with whom he had a difficult relationship.

Paul Mayer was obviously a brilliant man whose future was taken from him by the Nazis. Just when he had received a law degree that would have allowed him to sit on the highest courts, Hitler’s rules against the Jews slowly took effect. It’s heartbreaking to read of how the anti-Jewish laws slowly tightened. Paul would tell of returning his academic robes still in the box because he wasn’t permitted to practice law.

It is hard to read of educated, well-to-do Jews, whose families had lived in Germany for centuries, thinking the Nazis wouldn’t take away their rights. They thought it was Jews from the East who would be targeted. But the Nazis didn’t care. Their laws applied to all who were Jewish.

Taking inspiration from John Dos Passos’ trilogy, Mayer provides a “newsreel,” styled like headlines, to help the reader understand the political events of the period he’s writing about through five generations from the early 1900s to the present day. If you follow his excellent timelines you will have the history of war and politics in the 20th century.

Steven Mayer was 16 in 1959 when he performed in “The Diary of Anne Frank” in the Twin Cities, wearing his father’s coat from his parents’ escape from Germany. When he asked about his paternal grandparents’ fate in a death camp, his father was so overcome with emotion that he revealed depths of trauma that would take decades for Steven to understand.

After the war, when Paul was a U.S. citizen, he was able to help the Jewish cause by becoming part of the intelligence group called “the Ritchie Boys” who helped interrogate Nazi prisoners. This secret U.S. military intelligence unit, composed mostly of Jewish refugees, was trained at Camp Ritchie, Md. Later in life Paul sought justice by working for reparations for Jews who had lost everything under the Third Reich.

“He understood that defeating fascism is not a one-time victory; it is generational work,” Mayer writes of his father.

Mayer, who wrote this book in his Amsterdam canal house, the same city where his parents debated whether to flee Germany, is a consulting psychologist and founder of Minneapolis-based Rainbow Research, dedicated to healing society. His previous book is “How to Save the World: Evaluating Your Choices.”

Mayer will discuss “My Father Against the Nazis” at 6 p.m. Tuesday at Inkwell Booksellers Company, 426 E. Hennepin Ave., Mpls.

Teaser quote: A huge part of Paul’s story is the context of growing up in Germany in the first half of the twentieth century, one of the most tumultuous and consequential fifty-year periods in Western Civilization.

For the little ones

“All the Stars in the Sky”: by Art Coulson, pictures by Winona Nelson (Simon & Schuster Books for Young Readers, $19.99)

(Simon & Schuster Books for Young Readers)

What does it mean to be “important”? In this intelligent and thoughtful story, Clay wants to be named by his teacher the most important person in the school, but his wise grandma says no one person is more important than his family and community. So begins this story of individualism and responsibility. Told from an indigenous writer’s perspective, it discusses one’s place in the world and how we all light up the sky together.

Coulson’s many books and short stories for children include “Chasing Bigfoot.” After a career in journalism he served as first executive director of the Wilma Mankiller Foundation in the Cherokee Nation of Oklahoma. He divides his time between Minneapolis and the North Woods of Wisconsin. Winona Nelson is a fine artist and illustrator of comics and children’s books. A member of the Ojibwe of Minnesota, she lives in Pennsylvania.

“Read Me a Story: Later I’ll Read You One!”: by Donna Lagorio Montgomery (St. Johns Publishing, $16.95)

(St. Johns Publishing)

Donna Montgomery has written books on a variety of subjects, including “Surviving Motherhood.” In her first illustrated children’s book, she says she wants to let children know the feeling of having a nice family and to give them an idea of happiness.

Her topics range from loving grandparents to how kids entertain themselves when Mom is distracted. We meet the neighborhood woman who gathers kids for walks, and smile at the way Mom embarrasses her child by popping up to take pictures during a school event.

This is a sweet story collection, filled with colorful sketches by the author, aimed at the little ones who still need someone to read to them.

“Go Away, Rock Snot!”: by Story Scouts of Grand Marais (Minnesota Children’s Press, $14.99)

Yes, there is such a thing as Rock Snot. And leave it to the Story Scouts to tell us about it in this paperback published by Anne Brataas, former Pioneer Press science writer and founder of Minnesota Children’s Press. It was co-created by 38 Story Scouts, ages 5 to 10.

(Minnesota Children’s Press)

We learn that Rock Snot is a recently discovered invasive species in northern Minnesota waters, a kind of algae that creates on rocks “gloppy, gross things” called didymo or Rock Snot. It pollutes streams by making thick mats that smother things like insect larvae that fish such as trout love to eat and need to survive.

The book explains the problem, the kids’ science solution (be sure it’s not stuck on boats or anything that goes in the water), and an imaginary solution. There is also an index of science terms and concepts. Color photos and drawings are sure to capture young readers attention.

If you have curious children on your holiday gift list, this is the book for them. It also has impeccable credentials, with collaborating mentors from the Science Museum of Minnesota, Minnesota Department of Natural Resources and the University of Minnesota-Duluth.

The mission of Minnesota Children’s Press is to mentor rural students’ writing and illustration skills. Story Scouts is its publishing club for work by young people.

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Vikings vs. Commanders: What to know ahead of Week 14 matchup

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What to know when the Vikings host the Washington Commanders on Sunday afternoon:

Vikings vs. Commanders
When: Noon Sunday
Where: U.S. Bank Stadium
TV: FOX
Radio: KFAN
Line: Commanders -1.5
Over/Under: 43.5

Keys for the Vikings

— Asked what he wants to see off out quarterback J.J. McCarthy moving forward, head coach Kevin O’Connell reduced it down to the decisions McCarthy makes with the ball in his hands. That can read as O’Connell freeing McCarthy of the teaching points that have defined this season. That can also read as O’Connell challenging McCarthy to stop turning it over. The latter will be extremely important if the Vikings want to upset the three-win Commanders. There should be opportunities for the Vikings to move the ball against the Commanders’ aging group of defenders. That advantage means nothing, however, if McCarthy can’t take care of the ball.

Keys for the Commanders

— The return of quarterback Jayden Daniels provides the Commanders with a huge boost heading into the game. Though he will likely be playing with some caution while returning from a dislocated elbow, Daniels is still capable of making a huge impact on every snap. That will be the difference in the game. If he can get off to a hot start and have the Commanders playing from ahead, they will put themselves in the driver’s seat to come away with a win.

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Skywatch: Jumpin’ Geminids

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Next weekend you can catch one of the best meteor showers of the year. It’s the annual Geminid meteor shower, and if the clouds stay away it should be a good one this year because the moon will be mostly out of the sky.

Meteor showers occur when the Earth runs into a debris trail of dust and small pebbles as it orbits around the sun. For most meteor showers, the debris is left behind by a passing comet, but the Geminids are unusual because the debris trail was left behind by an asteroid dubbed by astronomers as 3200 Phaethon. This asteroid was discovered in 1983 and is thought to have a diameter of around three miles. It has a highly elliptical orbit that swings it by our part of the solar system every year and a half. Each time it passes it refreshes the debris trail. It’s a real cosmic litterbug.

(Mike Lynch)

By the way, 3200 Phaethon is not one of those killer asteroids that’s expected to bash into the Earth someday, at least not for now. Eventually, though, a large asteroid will hit the Earth, maybe in 10 years, 100 years, or several million years from now. Who knows? An asteroid or comet that hit the Earth 65 million years ago wiped the dinosaurs out and cleaned the slate for life forms on Earth.

Enough destruction talk. Getting back to the Geminid meteor shower, it will peak next Saturday night into Sunday, Dec. 13-14, but you’ll also see some Geminids this coming week and a few days after the peak next weekend. The best time to look for the meteors is between midnight to just before morning twilight begins. If you’re lucky enough to already be in the countryside or able to jump into the car to the darker skies, you may see well over 50 meteors an hour and maybe even 100. Even if you’re challenged with suburban light pollution you’ll see enough of them to make losing a little sleep worth it. Some of these meteors are slamming into our atmosphere at over 40 miles a second. These bits of dust and pebbles get incinerated at altitudes anywhere from 40 to 60 miles up. Most of the light you see from meteors though, is not because of combustion but from how they temporarily destabilize or excite the small column of air they’re charging through. That’s why you see meteors as streaks in the heavens, and some of the streaks stay visible for a second or two after they pass, as the column of air they came through stabilizes. Meteor streaks can also be different colors depending on their chemical composition and how fast they’re moving. In general, the reddish-tinged meteors tend to be slower meteors, and faster meteors are more bluish.

A meteor. (Mike Lynch)

This shower is called the Geminid meteor shower because all of the meteors from our vantage on Earth appear to be coming from the general direction of the constellation Gemini the Twins, which starts out the evening in the eastern sky and by morning twilight it’s stretched across to the low western heavens. By no means though should you restrict your viewing to the immediate part of the sky around Gemini because the meteors will be all over the heavens. The best thing to do is to be well layered in clothes, coats and blankets and lay back on a fully reclining lawn chair, rolling your eyes all around the sky and keeping count of how many meteors you see. Meteor shower watching is especially fun with a group of people because the more sets of eyes you have patrolling the sky, the more meteors you’ll see. Dress warm and enjoy the show.

Mike Lynch is an amateur astronomer and retired broadcast meteorologist for WCCO Radio in Minneapolis/St. Paul. He is the author of “Stars: a Month by Month Tour of the Constellations,” published by Adventure Publications and available at bookstores and adventurepublications.net. Mike is available for private star parties. You can contact him at mikewlynch@comcast.net.

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