Measuring a tax cut is all about the framing

Summary

Marketplace Podcast Summary: "Measuring a Tax Cut is All About the Framing"

Release Date: March 21, 2025
Host: Kai Ryssdal
Episode Title: Measuring a Tax Cut is All About the Framing

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Introduction

In this episode of Marketplace, host Kai Ryssdal delves into the intricate debates surrounding the expiration of the 2017 Trump tax cuts. The discussion navigates through the complexities of economic forecasting amid uncertainty, the Federal Reserve's evolving role, and Congress's contentious framing battle over how to measure the impact of tax policy. Additionally, the episode touches upon the looming labor shortages in the home healthcare sector and the Federal Reserve’s recent financial statements.

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Federal Reserve's Uncertainty on Economic Forecasting

The episode opens with Kai Ryssdal addressing the Federal Reserve's recent decision to hold interest rates steady. He highlights the apparent uncertainty voiced by Fed Chairman Jay Powell during a press conference.

Kai Ryssdal [01:47]: “Jay Powell... literally nobody trusts their forecast.”

Courtney Brown from Axios Citi and Bretti from Politico join the conversation, expressing concerns over the Fed's inability to provide clear economic forecasts.

Bretti [02:18]: “Chair Powell kind of challenged... We don't know what's going on. We don't know what's going to happen. It's anybody's guess.”

This uncertainty underscores the challenges economists face in predicting economic trends, especially amidst unprecedented policy changes proposed by the administration.

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Impact of President's Tariff Policies on the Fed's Role

Courtney Brown references her column, emphasizing the shift in the Federal Reserve's influence over the economy, now relegated to the "backseat" while President Trump takes the "driver’s seat."

Courtney Brown [04:35]: “The Fed now really is in the backseat... President Trump driving.”

Bretti echoes this sentiment, noting the Fed's limited ability to counteract the economic repercussions of aggressive tariff policies.

Bretti [05:04]: “Monetary policy can't do anything in a trade war. It's not the tool that can be used or the tool you want to use.”

This dynamic places the Fed between a rock and a hard place, struggling to maintain economic stability amid external policy pressures.

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Congress' Debate on Measuring the 2017 Tax Cuts' Impact

The conversation transitions to the crux of the episode: Congress's debate over how to measure the impact of the 2017 tax cuts set to expire. The central issue revolves around the "current law baseline" versus the "current policy baseline."

Chai Cheng Huang [10:15]: “My streaming subscription struggle is basically what is happening in Congress right now. Except instead of 10 bucks for Apple TV, it is trillions of dollars for tax cuts.”

Neil Bradley from the US Chamber of Commerce advocates for the current policy baseline, which treats the tax cuts as a continuation of existing policy without additional cost.

Neil Bradley [11:33]: “Most people and businesses saw their taxes go down in 2017 and they've stayed down. That is the policy we're living under now.”

Conversely, John Tucker from tax firm KBKG supports the current law baseline, which views the tax cut extension as a new government expense of approximately $4.5 trillion over the next decade.

John Tucker [12:53]: “Current law baseline means... Economic impact of these tax cuts is a major blow to the... deficit.”

This framing battle significantly influences budget projections, deficit assessments, and the political rhetoric surrounding tax policy.

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Implications for the Deficit and Economy

The choice between baselines has profound implications:

• Current Policy Baseline: Republicans argue it reflects an ongoing policy continuation, mitigating the appearance of increased deficit spending.

  Courtney Brown [13:23]: “Current policy is kind of the funny math, if you will, to make it look like it's not going to cost anything.”

• Current Law Baseline: Democrats assert it presents a clear picture of increased deficits due to renewed tax cuts.

  Chai Cheng Huang [11:35]: “If current policy baseline wins out... They are adding trillions to the deficit with these tax cuts.”

The debate is less about numbers and more about framing, influencing public perception and legislative outcomes.

Sudeep Reddy [12:10]: “The economic impact... Current policy baseline could make passing the tax cuts easier and they wouldn't necessarily have to come up for a vote again in the future.”

Ultimately, the framing chosen will affect how the tax cuts are perceived in terms of fiscal responsibility and economic impact.

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Labor Market Story: Home Healthcare Worker Shortage

Shifting focus, the episode addresses a critical labor shortage in the home healthcare sector, projected to require over 700,000 new workers annually for the next decade.

Elizabeth Troval [23:00]: “Every year for the next 10 years, the United States is going to have more than 700,000 openings for home healthcare workers.”

The sector's reliance on immigrant workers is highlighted, with 80% of staff at Cambridge Caregivers being foreign-born, predominantly from Africa.

Elizabeth Troval [25:20]: “Roughly a third of home health and personal care aides in the US are foreign born.”

Economists like Pia Arrhenius from the Dallas Fed and MIT’s Jonathan Gruber emphasize that increasing legal immigration is a viable solution to mitigate the labor shortage.

Jonathan Gruber [25:43]: “We're looking at a looming labor problem.”

The discussion underscores the intersection of immigration policy and labor market needs, advocating for reforms to sustain essential caregiving services.

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Federal Reserve’s Financial Statements and Monetary Policy

In a concluding segment, Kai Ryssdal examines the Federal Reserve’s recent financial statements, revealing a significant loss of $77.6 billion in the previous year.

Kai Ryssdal [27:55]: “The Federal Reserve... lost $77.6 billion last year.”

This loss stems from paying more in interest on bank deposits than earning from treasury bonds and other assets, highlighting the complexities of the Fed's monetary policy in a fluctuating interest rate environment.

Kai Ryssdal [29:23]: “The Federal Reserve... not actually like us because once interest rates are lower for longer, it's going to run a surplus and all that red ink is going to disappear.”

The segment illustrates the intricate balance the Fed must maintain in managing interest rates while ensuring financial stability.

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Conclusion: Key Takeaways

The episode of Marketplace meticulously unpacks the multifaceted debates surrounding tax policy measurement, economic forecasting uncertainties, labor shortages in essential sectors, and the Federal Reserve's evolving financial landscape. Through informed discussions and expert insights, listeners gain a comprehensive understanding of how framing impacts fiscal decisions and the broader economic implications therein.

Notable Quotes:

• Jay Powell on Trust: “[Powell] literally nobody trusts their forecast.” (01:47)
• Bretti on Fed's Knowledge: “We don't know what's going on. We don't know what's going to happen.” (02:18)
• Chai Cheng Huang's Comparison: “My streaming subscription struggle is basically what is happening in Congress right now.” (10:15)
• John Tucker on Deficit Impact: “Economic impact of these tax cuts is a major blow to the... deficit.” (12:53)
• Jonathan Gruber on Labor Shortage: “We're looking at a looming labor problem.” (25:43)

This episode serves as a deep dive into the nuanced interplay between policy framing and economic outcomes, offering listeners valuable insights into the current state and future trajectory of the U.S. economy.

Transcript

[Sponsor Voice]

This podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth. Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable. And some describe Odoo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite. So Odoo is fertilizer Magic Beanstalk building blocks for business Odoo exactly what small businesses need. Sign [e-mail] that's o d o o.com this Marketplace podcast is supported by Remarkable. If you're looking to get organized, work smarter and stay focused without distractions, the Remarkable Paper Tablet might be just what you need. Remarkable Paper Tablet feels just like writing on paper, but has powerful digital features like handwriting, conversion, reading, light colors, productivity templates, and more. No apps, no social media, and no distractions, just pure focus. Visit remarkable.com to learn more and grab your Remarkable Paper Pro today.

[Kai Ryssdal]

All right, you got seven minutes. What slice of this economy do you want to talk about, huh? From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Rysdal. It is Friday today. This one is the 21st of March. Good as always to have you along, everybody. With the stipulation that there is honestly too much going on in this economy to cover in a single segment, we're going to try real hard. Courtney Brown is at Axios Citi. Bretti is at Politico. Hey, you two.

[Courtney Brown]

Hey, Kai.

[Sudeep Reddy]

Hey, Kai.

[Kai Ryssdal]

Courtney Brown, let me begin with you and Jay Powell. Obviously, the Federal Reserve this week, as we know, decided not to do anything with interest rates, blah, blah BL the nuts and bolts of what the chair said. Here's the thing that interests me. I think the word uncertainty was mentioned seven or eight times in this presser, and Powell said literally nobody trusts their forecast. Now, he kind of shrugged when asked what was going to happen. Is that at all concerning that of the 400 plus economists at the Federal Reserve, not one of them can say to Jay Powell, here's what we think is going to happen.

[Bretti]

I think that says so much about this moment. I mean, they aren't, you know, they aren't magicians, they aren't mind readers. These economists, as smart as they are, they know what everyone else knows, and all they have to go on is history. But when what the administration is proposing from a tariff standpoint is pretty much unprecedented, it's hard to rely on history. My favorite moment from the press conference was when Chair Powell kind of challenged, you know, reporters in the room, like, what would you write down in the summary of economic projections? We don't know what's going on. We don't know what's going to happen. It's anybody's guess.

[Kai Ryssdal]

Sudeep, let me ask you this. In that summary of economic projections, the dot plot, it is called in the vernacular, GDP estimates were moved a little lower, inflation estimates were urged or moved a little higher. Powell said almost literally, you know, know, sometimes you just go with the inertia. And the inertia right now is to keep rates steady, which I thought was the safe choice.

[Courtney Brown]

That is the safe choice. They're all probably like writing the shrug emoji down and trying to figure out, like, how do you estimate what's going on? This is, this is a scale of policy change that we have not seen at the start of any administration. It is dizzying and it hasn't really taken effect yet in any, like, huge way.

[Kai Ryssdal]

Key point right there. Key point hasn't really kicked in yet.

[Courtney Brown]

The president is talking about deliberation day in a couple of weeks. He's got all these things with tariffs coming up. He wants to create this moment. We'll see if that actually yields the thing that he's looking for in, in, in reordering the global economy. At the very least, higher tariffs would mean a momentary burst of higher inflation. But that's sending the stock market down and that means there will be less money for consumer demand and that will actually send prices down in some areas. So how do you balance that out in making a projection a year ahead or even months ahead? Who knows?

[Kai Ryssdal]

I was interested, Courtney, to read your column either yesterday or the day before. I don't really know in which, maybe it was today, actually, in which you pointed out that the Fed now really is in the backseat in, in, in terms of controlling this economy for, for decades. The Fed, which set interest rates and, and managed monetary policy, and it was in the driver's seat, it is now firmly in the backseat with President Trump driving. And in that back seat, the Fed is between a rock and a hard place.

[Bretti]

Exactly. I think that's the big picture takeaway from the summary of economic projections and the press conference. I mean, as you say, there is kind of this shrug, I don't know, feeling at the bed. And I think that just, that says so much about what it's going to be able to do if all of these tariffs that President Trump has threatened ultimately do go into place. Actually, the bank of Canada, the governor of the bank of Canada I think said it best like monetary policy can't do anything in a trade war. It's not the tool that can be used or the tool you want to use. So yeah, I think we've come off this decade plus of monetary policy ruling all and that doesn't seem like it's going to be this the case.

[Kai Ryssdal]

Let's go around Sudeep I feel like we have to say that again to make sure people really get it. With the President of the United States doing all that he can with chaotic tariff policy to destroy consumer and business confidence and precipitate a recession, the Federal Reserve cannot save us.

[Courtney Brown]

The Fed is not going to be able to counteract everything here. The Fed obviously can lower interest rates in a crisis and step up and do all sorts of things in a crisis. But usually the Fed gets to that point once the crisis has already started due to other reasons. It's rare that the crisis, that the mess begins entirely because of the Fed though sometimes it has in the past and so they have to react to, to the conditions. I don't think we want a Fed that is going to be playing this guessing game far in advance and imagining what could come. It's a highly volatile, uncertain world. Lots of things can happen and the, the expectation that the Fed is going to be all knowing should have been erased many years ago.

[Kai Ryssdal]

Courtney, let me ask you this. You know the vibe coming out of that presser and the Fed decision was that the President really ought to be pretty happy about what Powell had to say and about the decision that the Fed made. The President of course, because he kind of can't help himself, came out on his social and said rates ought to be lower because rates ought to be lower. I don't know what the question is. Are you surprised that he's piling on the Fed? Even though the Fed kind of soft.

[Bretti]

Pedaled the damage he's causing, he, he really fooled us. I think there were some reporters that thought that this time was different. He wasn't going to antagonizing the Fed. And when he talks about interest rates, as the Treasury Secretary has said, the President is referring to yield on the 10 year yield on the 30 year that's going to directly affect consumers. No, no, it's not the case. He's back to attacking the Fed when really as you say, he should be pretty happy with what happened. I mean we could be like the bank of Canada or the central bank in Korea to shield the economy from inflation, shield the economy from the downturn. The Fed is kind of in wait and see mode and I think that's the best possible outcome for Trump.

[Kai Ryssdal]

Courtney Brown at Axios Sudeep Reddy at Politico on Friday of Where are we? Sudeep Week nine.

[Courtney Brown]

Isn't that what you were saying end of week nine?

[Kai Ryssdal]

End of week nine. All right, have a nice weekend you two.

[Courtney Brown]

Thanks guys.

[Bretti]

Thanks guy.

[Kai Ryssdal]

Wall street at the end of week nine, Traders kind of shook off some early morning gloom and doom. Ended on an up note. Details, numbers. When we get there with no small amount of trepidation, and I really mean that, we take you now into the very dark heart of the congressional policymaking process, specifically what lawmakers want to do about the 2017 Trump tax cuts, which are set to expire at the end of this year unless Congress decides otherwise. And therein lies the rub, because Congress is caught up in something of a war of words over how exactly to measure the impact of tax policy. As I said, we take you into this debate cautiously because it is kind of dry and convoluted. But for our special correspondent Stacey Vanek Smith, it echoes a personal dilemma that is just coming to a head.

[Sudeep Reddy]

I really love this TV show Severance and I am having an internal struggle about it, not unlike the current struggle in Congress over how to measure tax cuts. So in Severance, an evil company has found a way to sever employees minds when they're at work. They don't remember the life they have outside of work. It is so dystopian.

[Stacey Vanek Smith]

Do you know if I'm happy up there?

[Sudeep Reddy]

What? I'm definitely not happy about the 10 bucks a month I have to pay to watch Severance on Apple tv. But I love the show. So I signed up just temporarily just to watch Severance and the finale just aired, which means it's decision time. So you have a month to month subscription, right? Chai Cheng Huang is the Executive director of the Tax Law center at nyu. She says Congress is also at a decision point with the 2017 tax cuts which expire this year. And you get to the point where you're deciding, oh, do I, do I keep the subscription service or do I cancel it? Here is my dilemma and Congress'I could look at the situation like my show is ending. Time to cancel Apple TV and save some money. That is the kind of measurement Congress uses now. It's called the current law baseline. But there is another part of my brain, the current policy baseline part of my brain. It says you've been paying for Apple TV for months. This is not some new expense you have to figure out, just keep it. My streaming subscription struggle is basically what is happening in Congress right now. Except instead of 10 bucks for Apple TV, it is trillions of dollars for tax cuts.

[Kai Ryssdal]

The way to think of current policy.

[Courtney Brown]

Is what's the policy today?

[Sudeep Reddy]

Neil Bradley is executive vice president of the US Chamber of Commerce. He thinks the way taxes are calculated in the budget should be changed to use current policy baseline. He says most people and businesses saw their taxes go down in 2017 and they've stayed down. That is the policy we're living under now.

[Courtney Brown]

Absent a current policy baseline, you're going to have to sunset all of these tax provisions. And so you end up with this huge tax cliff that no one believes.

[Kai Ryssdal]

Actually that we should send the economy over.

[Sudeep Reddy]

If the tax cuts expire, most households would see their taxes go up by at least $500. For the top 1%, it would be more like $60,000. Bradley says keeping the tax cuts in place is not a new cost. It's a continuation of current policy. But right now, Congress does not calculate things that way. Right now it uses current law baseline.

[Courtney Brown]

So current law baseline is exactly how it sounds. It's how the law is written.

[Sudeep Reddy]

John Tucker is a partner at tax firm kbkg. He is firmly in the current law baseline camp.

[Courtney Brown]

These tax cuts would increase the deficit, right? Current law is the reality, right?

[Sudeep Reddy]

The actual economic impact. Current law baseline means if Republicans want to extend the 2017 tax cuts this year, it will show up in the budget as a new government expense, an expensive expense, roughly $4.5 trillion over the next 10 years. Tucker says the economic impact of these tax cuts is a major blow to the already worrisome deficit. He says the current policy camp basically just wants to sever that expense away.

[Courtney Brown]

Current policy is kind of the funny.

[Kai Ryssdal]

Math, if you will, to make it.

[Courtney Brown]

Look like it's not going to cost anything. But I'm a tax accountant, so I tend to like to deal with real numbers.

[Sudeep Reddy]

But this fight isn't really about the numbers. It is about the framing of those numbers. The GOP's majority in Congress means the tax cuts will most likely be renewed no matter who wins the war of the words. So why the fight? NYU's Chai Cheng Wang says the framing matters. That changes the rhetoric. The current law baseline means Democrats can point to the tax cut extension and say the GOP is preaching cutting government waste, but they are adding trillions to the deficit with these tax cuts. If current policy baseline wins out, Republicans can say we are not adding to the deficit. The Democrats are just trying to raise everybody's taxes. Plus current policy baseline could make passing the tax cuts easier and they wouldn't necessarily have to come up for a vote again in the future, says Huang. But the reality for how the federal budget and how people will experience it is really the key thing to keep focused on. And the reality is this. The tax cuts will add trillions to an already crippling US Debt load. But if they expire, most businesses and individuals will see their taxes go up at a moment when a lot of people are struggling. The ultimate decision will be made by a nonpartisan appointee. Her job is to wade through wonky word policy debates like this one.

[Courtney Brown]

The work is mysterious and important.

[Sudeep Reddy]

Meanwhile, I have to make the call about whether to sever my ties with Apple tv, though I did hear Severance just got renewed for a third season in New York. I'm Stacey Vanek Smith for Marketplace.

[Kai Ryssdal]

Don't me here gang, but I don't really do severance. But you know what I do do? I do listen to this program on a podcast. You can get it at our website, marketplace.org or of course the platform of your choice. Just follow us there. Coming up, 80% of our staff are foreign born. Most of them 90% are African immigrants. Turns out they really do get the job done. First though, let's do the numbers. Dow Industrials ticked up 32 points today, just under a tenth percent 41,985. The Nasdaq rose 92 points. Points about a half percent 17,784. The S&P 500 inched up four points. Call that flat 56 and 67. For the five days gone by, the Dow gained 1.2%. The Nasdaq added two tenths of 1%. The S&P 500 grew about a half percent. Carnival Corporation reported earnings today and the results were not smooth sailing cruise company reported a loss of $78 million in the first quarter. Carnival down 1.2% today. Royal Caribbean or Caribbean I can never decide which, crested 1/3 of 1%. Norwegian Cruise Lines expanded about 1 1/2% today. March is women's history month, so let's have a look at some position of women in the workplaces. According to the Census Bureau, women make up 48% of the civilian labor force. 2019 27% of positions in science, technology, engineering and mathematics were held by women in 1970. That figure 8%. Bonds fell. Yield on the 10 year t note rose 4.25% for the 10 year. You're listening to Marketplace.

[Stacey Vanek Smith]

This podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth. Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable. And some describe Odoo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite. So Odoo is fertilizer Magic Beanstalk building blocks for business Odoo exactly what Businesses need sign [e-mail] that's o d o o.com Trust isn't just earned, it's demanded. Whether you're a startup founder navigating your first audit or a seasoned security professional scaling your GRC program, proving your commitment to security has never been more critical or more complex. That's where Vanta comes in. Businesses use Vanta to establish trust by automating compliance needs across over 35 frameworks like SoC2 and ISO 27001. Centralized security flows complete questionnaires up to five times faster and proactively manage vendor risk. Vanta not only saves you time, it can also save you money. A new IDC white paper found that Vanta customers achieve $535,000 per year in benefits, and the platform pays for itself in just three months. Join over 9,000 global companies like Atlassian, Quora and Factory who use Vanta to manage risk and prove security in real time. For a limited time, get 1000 off [e-mail] marketplacepm that's vanta.com marketplacepM for $1000.

[Sudeep Reddy]

Off this is a message from sponsor Intuit. TurboTax Taxes was getting frustrated by your forms. Now Taxes is uploading your forms with a Snap and a TurboTax expert will do your taxes for you. One who's backed by the latest tech which cross checks millions of data points for absolute accuracy. All of which makes it easy for you to get the most money back guaranteed. Get an Expert now on TurboTax.com only available with TurboTax Live full service. See guarantee [e-mail] guarantees this is Marketplace.

[Kai Ryssdal]

I'm Kai Ryssdal. If you took anything from the conversation that Sudeep McCartney and I had, I hope that it's that nobody up to and including the Chairman of the Board of Governors of the Federal Reserve System of the United States. That's Jay Powell's actual title. Nobody from Powell on down knows where this economy is going. Economists don't know, the stock market doesn't know. Ain't nobody knows. That said, the hard data has been holding up pretty well. Jobs and consumer spending, all of that. The soft data, maybe not so much. Business and consumer sentiment is not great right now. Remember, most of the data that we get soft and hard is lagging. It tells us where we've been, not where we're going. But we got the Conference Board's index of Leading Economic Indicators this week. Leading it's right in the Name tries to predict where the economy is going. And last month the Lei saw its third straight monthly decline. Here's Marketplace's Mitchell Hartman.

[Sponsor Voice]

The Leading Economic Index crunches together 10 key data points, including manufacturing orders, jobless claims, consumer confidence, stocks. A falling LEI from December to February signals the economy is slowing and faces headwinds, says Justina Jablinska Lamonica at the Conference board. But she says what matters the most is the six month trend and that's been gradually improving. It has not been as negative as.

[Elizabeth Troval]

2023 or at the beginning of 2024, not triggering recession signals now.

[Sponsor Voice]

One big caveat here, February's LEI doesn't include what happened in March, rising fears of a global trade war and a big sell off in stocks.

[Kai Ryssdal]

So the market has pulled back from its all time high.

[Sponsor Voice]

But Paul Christopher at the Wells Fargo Investment Institute says in the overall economy we're not seeing a cascade of weakness where one thing leads to another leads to another. Instead, things just seem to gradually be getting a little worse, says Thomas Martin at globalt Investments. Employment has been weakening, sort of, but.

[Sudeep Reddy]

Not too much consumer spending.

[Sponsor Voice]

It's still okay.

[Kai Ryssdal]

The odds of a recession have increased, but they're not alarming.

[Sponsor Voice]

Lower income consumers are increasingly pulling back in the face of high prices, says Eric Friedman at U.S. bank. Still, with incomes rising faster than inflation and business balance sheets strong, we do.

[Sudeep Reddy]

Retain a glass half full perspective.

[Kai Ryssdal]

We concurrently recognize that that glass could.

[Sponsor Voice]

Spill quite quickly with the next wave of unsettling news on tariffs, inflation, government spending cuts and all the rest. I'm Mitchell Hartman for Marketplace.

[Kai Ryssdal]

The Bureau of Labor Statistics says that every year for the next 10 years, the United States is going to have more than 700,000 openings for home healthcare workers. 700,000 every year. But those jobs, they don't pay a lot and there is related a lot of turnover and they don't show up on a lot of most desired jobs list. Here's where I remind you though, that immigration is a labor market story. Marketplace's Elizabeth Troval takes it from there.

[Elizabeth Troval]

John Bouache is prepping dinner for the family he's helping today in Dallas. He grabs spices to add to a plastic bag of raw chicken and shakes the bag to get it grill ready.

[Kai Ryssdal]

And this one, you put it on the grill.

[Elizabeth Troval]

Bouachie is a caregiver. Right now he's helping Dale and Gene Fuller who are part of the silent generation.

[Kai Ryssdal]

I cook for them.

[Sponsor Voice]

I make sure papa, I take him.

[Kai Ryssdal]

Through exercises, stuff, and I do with the wives too.

[Elizabeth Troval]

Bochi immigrated from Ghana around eight years ago and earns $15 an hour which helps pay rent on a house where he lives with his wife and another family from Ghana. He and two other caregivers help 91 year old Dale Fuller manage life. His wife has a brain condition which causes short term memory loss.

[Kai Ryssdal]

If you were to meet my wife today, she would have no recollection of having met you.

[Elizabeth Troval]

The next day I sit with Fuller in his study lined with books, VHS movies and DVDs. He gets to spend more time with his children, grandchildren and great grandchildren because he gets help with his wife.

[Kai Ryssdal]

The caregiver becomes sort of a second brain for her since hers doesn't work so well.

[Elizabeth Troval]

The at home help from Cambridge caregivers costs around $16,000 a month. Fuller says they're lucky it's covered by long term care insurance, which most don't have. All three of the Fuller's helpers are immigrants from Africa. Adam Lampert is Cambridge caregiver CEO and employs roughly 300 people.

[Sponsor Voice]

80% of our staff foreign born. Most of them, 90% are African Americans. Don't want to do this job.

[Elizabeth Troval]

Roughly a third of home health and personal care aides in the US are foreign born. According to the American immigration council, around 100,000 are from African countries.

[Sudeep Reddy]

Our labor force is generally more skilled.

[Elizabeth Troval]

Than is required by that type of job. Pia Arrhenius is an economist with the Dallas Fed.

[Kai Ryssdal]

Our kids are growing up with more.

[Elizabeth Troval]

Education than ever before.

[Sudeep Reddy]

They're not aspiring to those types of jobs.

[Elizabeth Troval]

But someone still has to do this work and it ain't gonna be AI. And as the US population ages, MIT's Jonathan Gruber says we're looking at a looming labor problem.

[Kai Ryssdal]

America's gonna be Florida.

[Courtney Brown]

We have no plan for credibly meeting that massive change in the long term care needs of our population.

[Elizabeth Troval]

It may be unrealistic in this political environment, but he says one obvious solution is increasing legal immigration.

[Sponsor Voice]

There's a natural trade to be made which is to let people who would like to come live in America and.

[Kai Ryssdal]

Be happy to work for the low.

[Courtney Brown]

Wages we pay our care providers to.

[Kai Ryssdal]

Come and ride the care we need.

[Elizabeth Troval]

And without immigration reform, it'll be boomers, their kids and taxpayers who will pay for the labor shortage. Adam Lampert says take what happened during the pandemic.

[Sponsor Voice]

Prices went up almost 30%. When I say prices, I mean the wages that we had to pay went up and we turned around and charged.

[Courtney Brown]

That to our client.

[Elizabeth Troval]

The COVID labor shortage meant immigrant wages went up because there weren't enough other workers to compete for those caregiver roles. Lampert worries about a similar effect. Under a policy of mass deportations, he says his employees are working legally, but that's not true everywhere.

[Sponsor Voice]

There are these undocumented workers in the invisible part of the market. They're working privately for people.

[Elizabeth Troval]

Andy says even the threat of mass deportations could cause workers to stay home, removing a chunk of this workforce.

[Kai Ryssdal]

That is the definition of the labor.

[Elizabeth Troval]

Shortage, which would make caregiving services more costly at a time when the ranks of people who need care are growing. I'm Elizabeth Troval for Marketplace.

[Kai Ryssdal]

This final note on the way out today in which the Fed it's just like us. The Federal Reserve, in addition to setting interest rates, is subject to them, too, which I mention because the central bank published its audited 2024 financial statements today in which we learned that it lost $77.6 billion last year. Long story short, it had to pay out more in interest on the deposits that banks keep at the Fed than it earned in interest on all the treasury bonds and other assets that it holds. Ironic, no, since the Fed is in charge of interest rates anyway. Turns out the Fed's not actually like us because once interest rates are lower for longer, it's going to run a surplus and all that red ink is going to disappear. It's more complicated than that, but trust me on this one, would you? Our theme music is composed by BJ Lederman, Marketplaces executive producer. Producer is Nancy Fargoli. Donna Tam is the executive editor. Neil Scarborough is vice president and general manager. And I'm Kai Rezdal. Have yourselves a great weekend, everybody. We will see you right back here on Monday. All right, this is APM.

[Elizabeth Troval]

Consumer confidence had its sharpest monthly decline since 2021, which means we're all in.

[Sudeep Reddy]

Our feels about money. And while uncertainty is the only constant.

[Elizabeth Troval]

These days, it's also a great reason.

[Sudeep Reddy]

To get serious about understanding personal finance.

[Elizabeth Troval]

I'm Janelie Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers dealing with money and friendship and love, entrepreneurship and student loans. Get serious about your money and build.

[Sudeep Reddy]

A life you've always dreamed of.

[Elizabeth Troval]

Listen to financially inclined wherever you get your podcasts.