Optimist Economy: Q&A Part 1 – Tax Philosophy, Liberal vs. Conservative Economists, Marriage vs. Poverty and More
Hosted by Kathryn Anne Edwards and Robin Rauzi
Release Date: July 29, 2025

Overview

In this engaging Q&A episode of Optimist Economy, economists Kathryn Anne Edwards and Robin Rauzi delve into pressing economic questions submitted by their listeners. Covering a wide range of topics—from the regressiveness of student loan interest rates to the intricate dynamics between marriage and poverty—the hosts provide nuanced insights into how economic policies impact everyday lives. Their thoughtful discussions aim to shed light on the fundamentals of the U.S. economy and explore potential solutions to enhance its effectiveness for all Americans.

1. Student Loan Interest and Economic Equity

Question from Melissa in Michigan
Timestamp: [03:15 - 05:50]

Melissa raises concerns about whether student loan interest rates are regressive, particularly affecting those with less family support, and questions why U.S. students don't opt for more affordable education abroad.

Key Points:

• Regressiveness of Student Loans: Kathryn acknowledges that student loan interest can be regressive, disproportionately impacting students from lower-income backgrounds who rely more heavily on loans. "[...] if it increases with the size of the loan reflecting need, then, yeah, student loan interest is going to be regressive" (04:03).

• Domestic Education Options: The discussion highlights that the U.S. offers a vast array of colleges and universities, reducing the necessity for students to study abroad, especially in states like Texas where in-state tuition is affordable and options are abundant.

• Systemic Challenges: Kathryn emphasizes that while the current system isn't perfect, government-backed loans are preferable to a purely private lending market, which would likely offer less favorable terms to younger borrowers. She suggests that enhancing federal support and financial aid could mitigate some of the regressive aspects of student loans.

Notable Quote:
Robin summarizes the issue with enthusiasm: "Descant on my Friend descant on."

2. Liberal vs. Conservative Economists: Diverging Perspectives

Question from Corky Garco of Colorado
Timestamp: [05:52 - 08:21]

Corky seeks to understand why economists with similar academic backgrounds often hold opposing views on politically charged issues, such as the child tax credit.

Key Points:

• Human Element in Economics: Kathryn explains that personal values and risk preferences play a significant role in shaping economists' viewpoints. "It's not about there being a winner, it's about the trade offs and risk that are palatable to you" (06:30).

• Interpretation and Bias: The hosts discuss how differing interpretations of data and inherent biases contribute to the formation of ideological camps among economists. Kathryn mentions, "Where there's interpretation, there's bias and preference" (07:00).

• Complexity of Economic Policy: They acknowledge that many economic policies involve gray areas where consensus is hard to achieve, leading to varied opinions even among experts with rigorous training.

Notable Quote:
Kathryn candidly states, "We are sometimes human beings," highlighting the influence of personal experiences and values on economic analysis (06:30).

3. Tax Rates: Labor vs. Investment Income

Question from Brad Nelson in Denison, Iowa
Timestamp: [08:21 - 14:38]

Brad questions the current tax structure, which he perceives as favoring investment income over earnings from labor, and suggests reversing the rates to encourage work over investment.

Key Points:

• Payroll Taxes and Eligibility: Kathryn explains that payroll taxes fund programs like Social Security and Medicare, tying these taxes to earned income to determine eligibility. "If you earn from investments, you wouldn’t be eligible for these programs" (09:47).

• Double Taxation Debate: The discussion touches on the argument that taxing both labor and investment income constitutes double taxation, though Kathryn counters that similar logic could be applied to investment, potentially discouraging savings and investment.

• Policy Choices and Trade-offs: Kathryn emphasizes that tax policies involve trade-offs, such as balancing revenue needs against incentives for saving and investment. She notes, "The evolution of the tax system has moved to favor investment wealth" (14:10).

Notable Quote:
Robin captures the essence of the issue: "Shouldn't we encourage people to utilize their skills and labor to earn money? Why do we encourage martini sipping and discourage earned income?" (08:42).

4. Marriage Before Parenthood and Poverty

Question from Shelley Gardner in Utah
Timestamp: [14:38 - 21:09]

Shelley, a high school financial literacy teacher, inquires about the effectiveness of promoting marriage before having children as a strategy to avoid poverty.

Key Points:

• Income Dynamics in Households: Kathryn explains that dual-income households are generally less likely to experience poverty simply because two earners contribute more financially than a single income. "Two incomes are greater than one" (15:22).

• Historical Context: The hosts discuss how past policies aimed at reducing teenage pregnancy have impacted current poverty rates, noting a significant decline in teenage pregnancies as an economic and social success.

• Complex Relationship Between Marriage and Poverty: Kathryn points out that while marriage can be beneficial for economic reasons, it also intertwines with broader gender dynamics and labor market outcomes. She mentions, "Men benefit from earlier family formation, whereas women face motherhood penalties" (19:04).

• Policy Implications: The conversation suggests that focusing solely on marriage as a solution oversimplifies the issue and that improving labor market policies, such as raising minimum wages, might be more effective in addressing poverty.

Notable Quote:
Kathryn passionately states, “We shouldn't have an economy that has a success sequence. That’s a failure for the economy,” emphasizing the problematic nature of prescribing a one-size-fits-all path to economic success (20:29).

5. Congressional Budget Office (CBO) Credibility and Tax Policy

Question from Lauren Henry in Helena, Montana
Timestamp: [21:09 - 25:57]

Lauren seeks clarity on House Representative Troy Downing’s claims that the CBO is "historically wrong" regarding deficit projections from new tax bills.

Key Points:

• Role of the CBO: Kathryn clarifies that the CBO provides Congress with cost estimates for legislation, not precise predictions of the future economy. "The CBO can’t predict the future, and that’s not their job" (21:50).

• Dynamic Scoring Limitations: She explains that while dynamic scoring attempts to factor in economic growth effects, the CBO’s simplified approach ensures consistency across different pieces of legislation. Kathryn emphasizes that even dynamic scoring often shows tax cuts to be fiscally unsustainable without significant economic growth.

• Criticism from Politicians: The hosts note that political motivations often drive skepticism towards the CBO's assessments, particularly when projections do not align with desired policy outcomes.

• CBO’s Integrity: Kathryn defends the CBO, highlighting their role in providing accountability and reliable benchmarks, despite facing frequent political pushback.

Notable Quote:
Katherine firmly asserts, “What the CBO does in order to produce a set of comparable statistics [...] is that they just do for all legislation what they can do for all legislation” (24:10).

6. Adjusting Social Security to Address Economic Inequities

Question from Sarah Lyons in Walden, Vermont
Timestamp: [25:57 - 29:50]

Sarah proposes modifications to Social Security to rectify racial and gender pay gaps and support those who provide unpaid care for children and elders.

Key Points:

• Progressive Formula: Kathryn explains that Social Security already incorporates progressivity, providing higher relative benefits to lower earners. "We put progressivity into the formula" (26:27).

• Additional Adjustments: While Social Security could theoretically be adjusted to further address specific inequities, Kathryn notes potential political resistance due to the program’s broad support. Possible adjustments include caregiving credits and differential retirement ages based on job physicality.

• Historical Context and Racial Impact: The hosts touch on Social Security’s history, acknowledging past exclusions but recognizing its current role as a crucial retirement asset for Black Americans.

Notable Quote:
Kathryn highlights existing progressivity: "Social Security is based on your highest 35 years of earnings [...] lower you earned, the more your benefit replaces that amount" (27:33).

7. Incentives for Achievement vs. Social Support Programs

Question from Bob in Nevada
Timestamp: [29:50 - 38:07]

Bob expresses concern that uniform rewards and benefits might undermine incentives for personal achievement and work, questioning the effectiveness of current social support programs.

Key Points:

• Targeted Support Systems: Kathryn argues that most social support programs in the U.S. are designed for specific groups, primarily the elderly and those with severe disabilities. "After those two groups, there is really not a set of people who this applies to" (30:18).

• Effectiveness of Assistance Programs: The hosts discuss how programs like SNAP (food stamps) and Medicaid support individuals by removing barriers to economic success, such as ensuring children have adequate nutrition and access to healthcare.

• Addressing Persistent Poverty: Kathryn points out that able-bodied adults without children have seen little progress in poverty reduction over decades, suggesting that current policies inadequately address their needs.

• Structural Barriers vs. Personal Responsibility: They emphasize that poverty often results from systemic barriers rather than personal failings, advocating for comprehensive policy solutions that go beyond incentives.

Notable Quote:
Robin articulates a core issue: “It's not about incentives, it's about barriers” (35:00).

Closing Reflections and Acknowledgments

Timestamp: [38:07 - End]

As the episode wraps up, Kathryn and Robin share personal anecdotes about their spiritual sponsors, reflecting on the importance of mentorship and support in their professional journeys. They also extend gratitude to their producers, Sophie and Andy, highlighting the collaborative effort behind the podcast.

Notable Quote:
Kathryn shares a heartfelt story about her mentor: “He truly is the reason why I am an economist because he was the first person to tell me you could do this” (40:27).

Conclusion

This episode of Optimist Economy offers a comprehensive exploration of complex economic issues through listener-submitted questions. Kathryn and Robin adeptly balance technical analysis with relatable insights, making intricate topics accessible to a broad audience. Their commitment to fostering a better economic future shines through as they critically assess existing policies and propose thoughtful considerations for improvement.

Resources Mentioned:

• Optimist Economy Website: optimisteconomy.com
• Support the Podcast: Subscribe on Substack | Buy Me a Coffee
• Email for Questions: optimist.economy@gmail.com

Thank you for tuning into Optimist Economy. Join Kathryn and Robin in their mission to build a better economic future, one problem and solution at a time.