Running the numbers on deportation, interest rates and math

Summary

The Indicator from Planet Money: Running the Numbers on Deportation, Interest Rates, and Math

Release Date: January 31, 2025
Hosts: Waylon Wong & Darian Woods
Episode Title: Running the Numbers on Deportation, Interest Rates and Math
Produced by: NPR's Planet Money Team

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1. Federal Reserve’s Interest Rate Policy and Inflation Dynamics

Overview:
The episode begins with an analysis of the Federal Reserve's recent decision to maintain interest rates after three consecutive rate cuts. Hosts Waylon Wong and Darian Woods dissect the implications of the Fed's latest statement, particularly focusing on the nuanced language used regarding inflation.

Key Points:

• Fed's Decision: The Federal Reserve opted to keep interest rates unchanged, signaling a potential shift in monetary policy amidst fluctuating economic indicators.

• Language Analysis:

  • Waylon Wong highlights the Fed's omission of the phrase "has made progress" in their recent statement, noting, "inflation remains somewhat elevated." (03:10)
  • Amanda Roncik expresses confusion over the change in wording, questioning whether it indicates improving or worsening inflation: "Has made progress. Does that mean inflation is progressing and is worse? Is inflation better? Like, am I supposed to freak out?" (03:20)

• Consumer Price Index (CPI): The CPI saw a slight increase to 2.9% in December, contradicting expectations of decreasing inflation. Darian emphasizes, "So not in the right direction." (03:34)

• Fed Chair Jerome Powell’s Stance:

  • During a press conference, Powell was evasive about long-term strategies, asserting, "We are in wait and see mode. We look at a range of possible outcomes. We don't know what's going to happen." (04:08)
  • When pressed about potential political pressures, Powell stated, "He's had no contact with the President." (04:41), shortly before President Trump publicly criticized the Fed on social media.

Notable Quotes:

• "Inflation remains somewhat elevated." – Waylon Wong (03:10)
• "This was not meant to send a signal." – Jerome Powell (03:57)
• "Everything sends a signal." – Darian Woods (03:59)

Insights:
The hosts underscore the critical nature of the Fed's language, suggesting that even minor changes can have significant impacts on market perceptions and economic forecasts. Powell’s cautious approach reflects the complexities of navigating post-pandemic economic recovery.

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2. The Economic Toll of Mass Deportations

Overview:
Amanda Roncik delves into the hefty financial implications of President Trump's deportation agenda, revealing an internal ICE memo that outlines the extensive resources required to implement mass deportations.

Key Points:

• Funding Requirement:

  • Amanda Roncik presents the figure of $26.9 billion needed in the first year to support detentions and deportations, starkly contrasting with ICE’s annual budget of $8 billion (05:16).

• Breakdown of Costs:

  • 26 Airplanes: Essential for transporting detainees.
  • 7,000 Lawyers: For legal proceedings related to deportations.
  • 10,000 Enforcement Personnel: To execute deportation operations.
  • 110,000 Detention Beds: To house individuals during the process (06:46).

• Legislative Support:

  • The recent passing of the Lake and Riley Act broadens the scope of deportable offenses, including minor infractions like shoplifting, and reduces the necessity of prior convictions, thereby increasing the number of potential deportees (06:18).

• Budgetary Sources:

  • Potential reallocation of funds from other DHS agencies such as FEMA, Coast Guard, and TSA is discussed as a means to bridge the funding gap. Additionally, House Republicans are reportedly exploring methods to finance these deportation initiatives (07:01).

Notable Quotes:

• "It is 26.9 billion. You said it was large. How large compared to, like, the size of their budget and." – Waylon Wong (05:33)
• "This $20,000 loss is not just bad for the individual worker, but it speaks to the productivity of the country's entire workforce for the future." – Darian Woods (09:46)

Insights:
The segment paints a comprehensive picture of the logistical and financial challenges inherent in scaling up deportations, highlighting the strain on ICE’s already limited budget. The potential economic repercussions extend beyond immediate costs, impacting national productivity and economic competitiveness.

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3. Decline in Math Proficiency Among 8th Graders and Its Long-term Economic Impact

Overview:
Darian Woods addresses the concerning statistic that only 28% of American 8th graders met math proficiency standards, exploring the pandemic's lingering effects on education and the broader economic consequences.

Key Points:

• Current Proficiency Rates:

  • The National Assessment of Educational Progress (NAEP) reports a slight improvement over 2022 but a significant decline from 34% proficiency in 2019 (07:39).

• Pandemic’s Impact:

  • Amanda Roncik attributes the decline to disruptions caused by COVID-19, coining it a "Zoom hangover." (08:12)

• Economic Consequences:

  • A study indicates that if the decline in math proficiency is permanent, it could result in an average loss of $20,000 per student in lifetime earnings (09:00).

• International Comparisons:

  • The U.S. lags behind countries like Japan, the Netherlands, and Canada in math proficiency, potentially disadvantaging American competitiveness on the global stage (09:48).

• State-Level Success:

  • Alabama emerges as a beacon of hope, with 4th graders’ math scores surpassing pre-pandemic levels, possibly due to targeted legislative efforts in 2022 aimed at improving math education (10:09).

Notable Quotes:

• "Only 28% of American 8th graders met the standard of math proficiency." – Darian Woods (07:39)
• "This $20,000 loss is not just bad for the individual worker, but it speaks to the productivity of the country's entire workforce for the future." – Darian Woods (09:46)
• "We are still feeling effects from [the pandemic]. Zoom hangover." – Amanda Roncik (08:15)

Insights:
The decline in math proficiency is more than an educational concern; it poses a significant threat to the future economic vitality of the United States. The correlation between math skills and lifetime earnings underscores the urgent need for educational reforms and support, particularly in the wake of pandemic-induced disruptions.

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Conclusion:

In this episode of The Indicator from Planet Money, the hosts navigate through complex issues impacting the U.S. economy and society:

• Monetary Policy Uncertainty: The Federal Reserve's cautious stance amidst rising inflation and political pressures highlights the delicate balance central banks must maintain in steering economic recovery.

• Financial Strain of Deportations: The proposed mass deportations under the Trump administration necessitate substantial funding, raising questions about resource allocation and long-term economic implications.

• Educational Setbacks and Economic Future: The significant drop in math proficiency among middle schoolers not only affects individual futures but also the nation's competitive edge globally.

Through engaging discussions and insightful analysis, Waylon Wong, Darian Woods, and Amanda Roncik elucidate the intricate connections between policy decisions, economic indicators, and societal outcomes, providing listeners with a comprehensive understanding of pressing contemporary issues.

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Notable Quotes with Timestamps:

• "Inflation remains somewhat elevated." – Waylon Wong (03:10)
• "Has made progress. Does that mean inflation is progressing and is worse? Is inflation better? Like, am I supposed to freak out?" – Amanda Roncik (03:20)
• "This was not meant to send a signal." – Jerome Powell (03:57)
• "This $20,000 loss is not just bad for the individual worker, but it speaks to the productivity of the country's entire workforce for the future." – Darian Woods (09:46)
• "We are still feeling effects from [the pandemic]. Zoom hangover." – Amanda Roncik (08:15)

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Produced by Corey Bridges, with engineering by Gilly Moon. Fact-checked by Cierra Juarez and edited by Katie Cannon.

Transcript

[NPR Announcer]

Npr.

[Waylon Wong]

This is the indicator from Planet Money. I'm Waylon Wong.

[Darian Woods]

And I'm Darian Woods.

[Waylon Wong]

It has been an extremely busy week in the news, and we have got it all covered. On indicators of the week.

[Darian Woods]

We are here to recap a few of the top numbers in this slew of flooding the zone that we have seen.

[Waylon Wong]

That's right. And here to bail us out with a bucket is our Planet Money colleague, Amanda Roncik.

[Amanda Roncik]

I brought more than just one bucket. I brought a bunch of buckets.

[Waylon Wong]

You're here on the ark. You're gonna save us.

[Amanda Roncik]

Gonna try. It's been a lot of news this week.

[Darian Woods]

Today on the show, we're gonna parse some mysterious fed speak from the central bank. And we'll look to the costs of deportations, plus some bad math scores, y'all.

[Charles Schwab]

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[Darian Woods]

All right, indicators of the week. Let's start with you, Ellen.

[Waylon Wong]

All right, so the Federal Reserve. You might have Seen kept interest rates unchanged this week. This is a pause after three consecutive rate cuts. And here is what jumped out at me in the Fed statement about leaving rates the same. It said, quote, inflation remains somewhat elevated. Last month, the Fed statement, quote, inflation has made progress but remains somewhat elevated. Those three words has made progress were cut from the Fed's most recent statement. That's my indicator. Three words.

[Amanda Roncik]

Yeah. I don't understand what the Fed was trying to say with that. Has made progress. Does that mean inflation is progressing and is worse? Is inflation better? Like, am I supposed to freak out?

[Waylon Wong]

Yeah, I had yada, yada, yada. The progress part and what it said in the earlier statement was, has made progress towards the 2% target. I see out the reference to progress towards the target in its most recent statement.

[Darian Woods]

Yeah. And the Consumer Price Index is ticking up. In December, it was 2.9%. It was a smidge higher than the previous month. So not in the right direction.

[Waylon Wong]

Yeah. And Fed Chair Jerome Powell was asked about this change in wording during the press conference, and he said they just wanted to shorten the sentence and, quote, this was not meant to send a signal.

[Darian Woods]

Everything sends a signal. Does he not know?

[Waylon Wong]

At this stage, I'm surprised the briefing room didn't rise up in a great uproar and say, but everything you do sends a signal.

[Amanda Roncik]

Poor man, though. He can't even do an edit without it being evaluated.

[Waylon Wong]

No, it's true. And, you know, throughout the press conference, you know, because it's been such a chaotic week, obviously there were so many questions about, like, the new administration's policies and what do you think the impacts of tariffs and deportations on the economy will be? And Jerome Powell just had to hold the line and not make any big statements. And he was like, we are in wait and see mode. We look at a range of possible outcomes. He's like, I'm not going to comment on that. We don't know what's going to happen.

[Amanda Roncik]

Okay, but does he say, oh, yeah, Trump called me and asked me to lower interest rates. Is that one of the things that he said?

[Waylon Wong]

He was asked about this and he said he's had no contact with the President. And then after the press conference, Trump went on Truth Social and posted a diatribe against the Fed. The President said, quote, because Jay Powell and the Fed failed to stop the problem they created with inflation, I will do it, end quote. So, as Powell is fond of saying, we will wait and see on what the President does now.

[Darian Woods]

Deportations, a very big pillar of Trump's agenda and something that would really affect the country and the economy. Amanda, that's what your segment's about? Yes.

[Amanda Roncik]

My indicator of the week is a large dollar amount. It is 26.9 billion, which is how much Homeland Security says it is going to need in its first year to do all of the detainments and deportations that the Trump administration has promising. Otherwise, they say it will be impossible.

[Waylon Wong]

So it's 26.9 billion. You said it was large. How large compared to, like, the size of their budget and.

[Amanda Roncik]

Yeah, yeah, it is truly a lot. Immigration and Customs Enforcement, also known as ICE. ICE's budget is $8 billion a year. So that's quite a lot of money. And it's also like a much bigger number than has been floated out in the media. But NPR's Ximena Bustillo managed to get this internal memo from ICE, and in it, they detail how much they think the mass deportation is going to cost and what they're going to need.

[Darian Woods]

So deporting somebody is complex. There are arresting agents, local law enforcement, sometimes there's the courts. They have to hold people, maybe fly them somewhere. I can imagine the costs stack up.

[Amanda Roncik]

Yeah. And a lot of the old numbers that have been floating around were based on a calculation of a much smaller number of beds that would be needed to detain people. Plus, this week, the Lake and Riley act became law. This is going to expand the scope of who can be deported. So crimes like shoplifting now that can lead to deportation, plus you don't have to be convicted, necessarily. So all of these deportations, this is going to cost a lot of money.

[Waylon Wong]

And you said the memo was really detailed. Right. So what else was in there?

[Amanda Roncik]

They say they're going to need 26 more airplanes, more than 7,000 lawyers, another 10,000 people to enforce this law, and they think an additional 100, 110,000 detention beds.

[Waylon Wong]

And where's the money going to come from?

[Amanda Roncik]

That is a very good question. ICE is under the Department of Homeland Security, as are a bunch of agencies that I'm sure you've heard of, things like fema, the Coast Guard, tsa, which does, you know, airport security. And there's been talk for about a year now about moving money from these branches into ICE's budget. And of course, right now, House Republicans are reportedly working on figuring out ways to fund a variety of Trump proposals, including these mass deportations.

[Darian Woods]

And so, again, a big part of Trump's promises. And so not surprising that they're trying to find ways to fund it.

[Amanda Roncik]

That's Right.

[Darian Woods]

Thanks, Amanda.

[Amanda Roncik]

No problem. Darian, what's your indicator?

[Darian Woods]

My indicator is 28%. This week, only 28% of American 8th graders met the standard of math proficiency. That's according to the Department of Education's National Assessment of educational progress, or NAEP. And this number is a. A slight improvement over 2022, but it is still down from the pre pandemic times from 2019 when 34% of pupils were proficient.

[Amanda Roncik]

Oh, man. I had an eighth grader during this time period. I wonder if he took this test.

[Darian Woods]

Potentially.

[Waylon Wong]

Potentially. Oh, my gosh.

[Amanda Roncik]

Oh, man.

[Darian Woods]

So what's your insight, Amanda? As a parent of an 8th grader?

[Amanda Roncik]

My insight is that the pandemic was really hard. We're still feeling effects from it.

[Waylon Wong]

Yeah, yeah, for sure. For sure.

[Amanda Roncik]

Zoom hangover.

[Darian Woods]

Absolutely. And that's what educational experts seem to be saying. And you see this big break after 2019, but the slide actually started a lot earlier than that, over a decade ago. And you would hope that the country was building basic math skills and not just because math is intrinsically fun.

[Waylon Wong]

I do agree with you, but I will say that whenever I tell my kids, like, don't you like doing fractions? Fractions are so fun. She gets so mad at me.

[Amanda Roncik]

They don't understand.

[Darian Woods]

Okay, well, here's another argument. How good you are at math has pretty strong correlations with how much you earn later in life. You could try that, Waylon.

[Waylon Wong]

Okay. I think that she will find that motivating.

[Darian Woods]

So there's a study that looked at the 2022 results, and it compared the 8th graders test scores against census data historically. And it found that if the post pandemic decline in math scores were permanent, it would shave off around $20,000 from each student's lifetime earnings on average.

[Amanda Roncik]

Oh, my goodness. Wait, let me do the math on this. I think that's a 1.6% decline. Is that right?

[Waylon Wong]

Okay, comp.

[Darian Woods]

You may have. Amanda, you may be looking at the report. Not that I doubt your super math skills.

[Amanda Roncik]

Thank you.

[Darian Woods]

And you know, this $20,000 loss is not just bad for the individual worker, but it speaks to the productivity of the country's entire workforce for the future.

[Waylon Wong]

High stakes. This is dramatic.

[Amanda Roncik]

Really.

[Waylon Wong]

Okay, I am afraid to ask, but how do we compare to other countries?

[Darian Woods]

Yeah, so when you look at international comparisons of math scores, they typically show countries like Japan and the Netherlands and Canada. Amanda, you'll be happy. These countries typically do better. And this does mean that the US Is at a competitive disadvantage in this respect against these countries.

[Amanda Roncik]

Darian, Come on, end with a little bit of hope for us, please. Is there any hope to be had?

[Darian Woods]

So look, we have some hope. I'm going to spotlight Alabama. This is the only state where 4th graders math scores are actually higher than pre pandemic levels.

[Waylon Wong]

Oh, one state out of 50.

[Darian Woods]

It might have something to do with the 2022 law that was passed aiming to improve math proficiency for young learners.

[Amanda Roncik]

Yeah, maybe you could send me some of the paperwork to give to my eighth grader. My recently finished, my former eighth grader.

[Darian Woods]

Why don't you send your recent eighth grader for, I don't know, summer camp in Alabama.

[Waylon Wong]

There we go.

[Darian Woods]

Nice to me.

[Waylon Wong]

Summer math camp.

[Amanda Roncik]

Everybody loves summer math camp.

[Waylon Wong]

Every child wants.

[Amanda Roncik]

Everybody here clearly loves summer math camp. That's fun for us.

[Waylon Wong]

This episode was produced by Corey Bridges with engineering by Gilly Moon. It was fact checked by Cierra Juarez. Katie Cannon is our show's editor and the indicators of production of npr.

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