Good news! Biden says to hell with deficits!
Larry Summers says $1.9tr is too big.
Therefore it's either the right amount or too small.
The White House doesn't want to hear from Larry Summers.
“Low-income families spent their stimulus checks.
Before the stimulus checks arrived, patterns in spending among families living in high-income and low-income neighborhoods closely matched. But after checks went out on Jan. 4, spending by low-income families spiked and stayed high for days, indicating the checks allowed purchases they had been putting off.”
...
Within just three weeks after the checks were deposited, low- and middle-income households immediately spent a significant portion of the money they received. But our early estimates show that households making more than about $75,000 per year have spent less than $45 out of the $600.
...
Based on our analysis of the impacts of the $600 checks, we predict that sending higher-income households $1,400 would cost the government $200 billion — but generate only $15 billion in new economic activity. Hence, targeting stimulus checks to lower- and middle-income households and using the money that is saved for programs to support those who need the most help is likely to yield greater economic benefits.”
Earlier in this thread I had mentioned how the Fed used to prioritize anti-inflation measures at the expense of lower unemployment numbers. i.e. The Fed kept unemployment high because they were afraid of "overheating" the economy.
I came across this post (excerpt below) which further expounds on that subject. The anti-inflation measures had been policy since the early 80's, and by some estimates have cost the lower quintiles hundreds and hundreds of billions in potential wealth since that time - maybe a trillion. (I don't have a cite for that number but I'll try to find one. Forgot where I came across it.)
=============================================================
This analysis was tendentious at the time, and has become more dubious in the decades since. But the Fed’s decision to de-prioritize full employment both reflected and perpetuated a right turn in American politics that consolidated the new anti-inflationary economic orthodoxy. This would ultimately constrain the ambitions of the Clinton and Obama administrations, with the Fed pressuring the former to slash the deficit, and pursuing premature rate hikes that slowed economic recovery under the latter.
But times have changed — and so has the Fed.
Under Jerome Powell, the central bank has brought American monetary policy into belated alignment with federal law and empirical economics. Instead of attempting to preempt high inflation by sustaining a cushion of unemployment, Powell has waited for inflation to actually show itself before deliberately cooling the economy, a posture he has justified by emphasizing the myriad economic and social benefits of maximizing employment.
As a result, the Fed’s role in America’s fiscal policy debates has flipped. This week, Joe Biden’s $1.9 trillion stimulus plan took on some friendly fire from center-left economists Larry Summers and Olivier Blanchard. While both endorsed the necessity of significant stimulus spending, they suggested that Biden’s package was excessively large, and would risk “overheating” the economy — which is to say, the stimulus would risk injecting more demand into the economy than the nation can satisfy, given the size of its labor force and the productive capacity of its capital stock. And when demand outstrips supply, the result is inflation.
On Wednesday, the Fed effectively intervened in this debate on Biden’s behalf. In remarks to the Economic Club of New York, Powell argued that America’s actual unemployment rate is not 6.3 percent (as official data suggest) but 10 percent, once classification errors are accounted for; that it will take “continued support from both near-term policy and longer-run investments” to restore maximum employment; and that had the pandemic not intervened, there is “every reason to expect that the labor market could have strengthened even further without causing a worrisome increase in inflation.” That last statement is key. Not only does it suggest that Powell believes the U.S. economy can support an unemployment rate significantly below the 3.5 percent we saw in early 2020, the statement also implicitly rebukes the Congressional Budget Office’s official estimate of how much more demand the economy can accommodate without overheating. Which is significant, since Summers built his “overheating” argument around the CBO’s (historically unreliable) estimate of that figure
Here's an informative post by economist Dean Baker on our debt burden for the foreseeable future.
https://cepr.net/how-will-our-children-know-they-face-a-crushing-debt-burden/
tl;dr there's not too much to worry about.
Can't wait until his economic stimulus package passes. Despite R talking points it has a lot of popular support. And unlike Trumps & GOP's 2017 tax give-away, it helps Blue states and Red states alike.
here's a good article on the leading deficit hawk group in Washington, and why they're full of b.s.
https://newrepublic.com/article/161549/maya-macguineas-crfb-pandemic-austerity
They have caused enormous harm to the U.S.
Why doesn't the American Rescue Plan include any rescission of the 2017 tax cuts? Is that not part of Biden's plans.
drummerboy said:
Why doesn't the American Rescue Plan include any rescission of the 2017 tax cuts? Is that not part of Biden's plans.
Right, not part of his plans.
Biden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to Stay (NYT)
DaveSchmidt said:
drummerboy said:
Why doesn't the American Rescue Plan include any rescission of the 2017 tax cuts? Is that not part of Biden's plans.
Right, not part of his plans.
Biden Wants to Raise Taxes, Yet Many Trump Tax Cuts Are Here to Stay (NYT)
Did you read the article?
DaveSchmidt said:
drummerboy said:
Did you read the article?
Yes.
hmmm
I thought it answered the question you had — why including any recision in the American Relief Act wasn’t part of Biden’s plans. If it didn’t help, pay it and me no mind. In case it’s useful to others, here’s the section that seemed relevant:
Mr. Biden is now in the White House, and his party controls both chambers of Congress. Yet he and his aides are committing to only a partial rollback of the law, with their focus on provisions that help corporations and the very rich. It’s a position that Mr. Biden held throughout the campaign, and that he clarified in the September debate by promising to only partly repeal a corporate rate cut. ...
Mr. Biden still wants to raise taxes on some businesses and wealthy individuals, and he remains intent on raising trillions of dollars in new tax revenue to offset the federal spending programs that he plans to propose, including for infrastructure, clean energy production and education. Much of the new revenue, however, could come from efforts to tax investment and labor income for people earning more than $400,000, in ways that are not related to the 2017 law.
Mr. Biden did not include any tax increases in the $1.9 trillion stimulus plan he proposed last week, which was meant to curb the pandemic and help people and companies endure the economic pain it has caused.
His nominee for Treasury secretary, Janet L. Yellen, told a Senate committee this week that the president would hold off on reversing any parts of the tax law until later in the recovery ...
I guess my initial question was unclear. I didn't mean to ask if it was his plan to put it in the ARP. It obviously wasn't. By "plans" I meant to ask if it was still a policy goal. My point was that if he intends to roll back some of the tax cuts, this would seem to be a perfect opportunity to do so since they could do it under reconciliation. The fact that he didn't do so led me to question whether he still intends to roll back the cuts. The article (which is kind of all over the place) says that he does want to roll back some of the tax cut. So my question is how does he intend to do this? It obviously won't get past the filibuster, and my understanding is that they have one more reconciliation bill left for the year, which will be used for the infrastructure plan, I think.
Delaying the rescission until "later in the recovery" is horsesh!t if you ask me. Rescinding the cuts that went to corporations and the top 1% will have no effect on the economy, but I guess that's gonna be their rationale. It doesn't make me hopeful that it will ever get done.
btw, this American Rescue Plan/American Recovery Act (they seem to change the name daily) is a big effing deal, as a former VP once said about the ACA.
Biggest expansion of the welfare state since Medicare, I think.
drummerboy said:
btw, this American Rescue Plan/American Recovery Act (they seem to change the name daily) is a big effing deal, as a former VP once said about the ACA.
Paul Krugman has a word for it - Wasn't quite ready to believe it until it actually happened. This is a big Bidening deal.
drummerboy said:
oh, and F**K JOE MANCHIN
thank you
He voted "Yes". Not 1 Republican did.
How do you think he stays alive in WVA?
He's still an ahole. And I doubt his b.s. maneuvering actually buys him any votes. Why WVA votes for him is a mystery. I could understand if he maneuvered in order to get something for WVA, but that's not what he does. Do you think he's gonna campaign on "Hey, WVA, I got unemployment benefits cut! Yay me!".
I understand that under the current circumstances we're better off with him than without, but he's still an insufferable ah.
And his Epipen daughter sucks too. Great parenting there Joe.
I suppose in comparison to a scenario where WV is represented by a senator closer to the center or left of the Democratic party that makes sense. I think the far more plausible alternative scenario is that both of WV's senators are Republicans.
I suppose that could change. Perhaps the pandemic ends up normalizing remote work to the extent that many of the kinds of voters who currently make up the Democratic base leave high priced metros for scenic, low priced WV. Or maybe Biden succeeds in channeling his Scranton roots to connect with working class voters while delivering lots of popular policies and ends up reviving some of the old WV Democratic roots.
Though, Manchin's a pretty good politician. I suspect that if and as his state changes, he'll change with it.
funny thing, the R's were actually right when they said the ARP was filled with a progressive wish list not strictly related to COVID.
The only problem the R's had was that they could not get specific - arguing that ARP would decrease childhood poverty as if it was a bad thing probably wouldn't get them too far.
And good on the Dems for loading up ARP will all those extra goodies.
The more I read about this stimulus bill, the more I like it. We need bigger government, not smaller.
Not a bad start. President Biden’s American Rescue Plan “is, with no exaggeration, the single most important piece of anti-poverty legislation since Lyndon B. Johnson’s Great Society,” writes @jbouie. https://t.co/YqnxOTzpFw
interesting story by politico that says Mnuchin had built up a trillion dollar Treasury surplus which Biden can now use for the ARP.
https://www.politico.com/news/2021/03/14/covid-relief-package-federal-debt-475622
drummerboy said:
interesting story by politico that says Mnuchin had built up a trillion dollar Treasury surplus which Biden can now use for the ARP.
https://www.politico.com/news/2021/03/14/covid-relief-package-federal-debt-475622
another illustration of GOP hypocrisy. If Trump had won, the relief bill probably would have passed Congress in November, and the money would have long ago been in the hands of individuals and small businesses.
Just finished The Deficit Myth, and I was a bit disappointed. First was the tone, which had a good amount of MMT as something orthodox economists are too scared, stupid, or ill-intentioned to grasp. As regular readers of my posts know, the brave heretic pose is not one I'm particularly fond of. I was surprised as I wasn't really expecting this based off podcasts and interviews I've heard with Dr. Kelton.
It may well be that MMT advocates are indeed brave thinkers able to see things lesser economists and policymakers could not, but I'm always called to mind of Chesteron's Fence in such situations. Surely all the people worried about deficits have at least some reasonable basis for their concerns? Simply dismissing those concerns as wrong and ill-formed leaves me suspicious that some important, overlooked details have been suppressed or missed.
I also still can't quite figure out how MMT is all that different than plain old Keynesian economics. I mean, sure, currency issuers by definition can't run out of their own currency, but this just doesn't strike me as the paradigm-shifting insight MMT makes it out to be. We're still just talking about deficit spending. Perhaps it's really Keynesianism I don't know well enough, and if I did the innovations of MMT would be more readily apparent to me.
Kelton does repeatedly stress that MMT doesn't mean we can just spend without limit, but that the real limit is the economy's productive capacity, and that exceeding this shows up as inflation. That's only half useful though. First, I'm still unclear if this is really that different from standard economics -- isn't inflation the same thing everyone else worries about? Second, at least in this book, she doesn't really get into how you can tell if you're approaching the economy's limits. That's kind of the whole question though, isn't it? I mean, I support the covid relief bill and the upcoming infrastructure bill, but if someone asks at what point we have to worry about inflation, what's the answer? Does MMT give us some tools for finding that answer that other approaches don't?
On that last point, I do wonder if part of the answer is "taxes." She talks about taxes as being used to counter inflation and redistribute resources, but says they are not used to fund the government, as the government creates currency rather than uses it, which, fair enough. But those of use who pay taxes are currency users, and we pay based off income, which is generated off the productive capacity of the economy, so I do wonder if spending to taxes actually does end up being a way to help keep spending from exceeding economic capacity. Increasing spending while raising taxes does at least keep some relationship between observed economic output and adding more money into the economy. re Keynes, here's a comment by Bill Mitchell a leading MMT economist (from 2015, which explains the Corbyn reference):
But for me the real sticking point against Keynes was his view that
fiscal deficits should be balanced over the business cycle and that
would allow governments to pay back debt incurred in the deficit years.
That view has crippled progressive thought ever since and is
antithetical to MMT. The debate also has resonance with the current
leadership struggle within the British Labour Party about fiscal
deficits and the claims by the ‘socialist’ candidate, Jeremy Corbyn that
he will “balance the budget” when unemployment is low so as to avoid
inflation. This view derives from the adoption by progressives of
Keynes’ views, whether they know that or not. It is a mistaken view and
retards progressive policy development.
More at the link
Putting aside my criticisms of Kelton's book, I do have to admit that I've largely bought into her broader point around reframing the way we talk about budgets. In this Washington Post article talking with Republican voters skeptical of the infrastructure bill, for instance, we see quotes like this:
“It’s got too much junk in it,” said Phyllis Pringle, 89, a retired elementary school principal. “It’s garbage. We are all in favor of helping people who are suffering but not in favor of the other pieces the Democrats want. And the amount of indebtedness is unconscionable.”
I think Kelton would argue, and I would agree, that this doesn't really make sense as away to think of government spending. The US isn't really "indebted", or if it is, it's mainly "indebted" to itself. Deficit spending is just balancing spending in such a way that the non-government sector has a surplus.
And truth be told, I think on some level we actually all agree with this. In the statement above, I suspect it's the opposition to what the money is being spent on, rather than actual levels of indebtedness, that's driving that voter's opposition. And when you get quotes focusing more on economic issues, again it's really less actual levels of indebtedness than fears of inflation you see as the driving concern.
Would reframing the conversation away from "debt" actually help? Maybe, as talking about debt levels does seem to be a way to dramatize the question and induce FUD. OTOH, if I'm right and people aren't really talking about the debt when they talk about the debt, but rather using that as a way of talking about other things, then such a reframing might be less politically salient than expected.
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HUGE Rummage sale to benefit the Bloomfield High School Robotics Team Sale Date: Apr 27, 2024
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This is just dumb. The amount that would be "saved" is trivial in the grand scheme of things. It's a waste of energy to assuage some weird need that really accomplishes nothing other than soothe someone's conscience. Plus, if the standard is different than that for the $600 checks, some people are gonna be pissed at the Dems for no good reason.
Joe, please pay no attention to this.