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The distinction between *relief* and *stimulus* is critical, and should be part of bill messaging. Thanks for this Noah. It helps intuitively drive home the idea of closing an output gap to those who aren't going to dig into those details, or understand just how deep the gap actually is. Been going back this week to read macro posts and pods from Jan and Feb 2020 when folks were talking about secular stagnation and scratching their heads wondering where inflation was and who these long-term unemployed were (largely disabled) who were coming back into the labor force. If we're lucky, we'll be back to pre-pandemic output gap, which was probably still under-estimated.

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Yeah!!

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One Thing:

- Thanks for the concise, straightforward summary! I've been busy with school this past week, so I didn't have time to review what actually got approved. Feel like I should be able to fend off some of the superficial criticism - "too big", "hyper inflation", etc. - at the dinner table now. Thanks!

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Mar 7, 2021Liked by Noah Smith

So when we finally get to that infrastructure bill, I am expecting fossil fuel interests to put a HUGE amount of pressure on Manchin to vote against the investments in green energy / electrification / transmission upgrades that we actually need.

What do we think the odds are that we can get him onboard? Possibly we need to write formulas for how money gets distributed that lavish excessive amounts on West Virginia (and perhaps coal country more broadly). Another possibility would be wasting a bunch of money on research into smokestack carbon capture, which hypothetically could make continuing to burn fossil fuels viable. (Every expert I follow agrees this is a waste of time, because with wind and solar prices already beating coal, there's no plausible future where the cost of clean coal makes sense. But what the heck, if we have to bribe the industry with tens of billions of research funding to get a $2T-over-the-decade infrastructure bill through, fine.)

These both also seem like possible strategies with regard to Murkowski / Alaska, and Collins / Maine.

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"What do we think the odds are that we can get him onboard?" the same odds that they brought him onboard the rescue plan.

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"$300 for each child under the age of 6, and $25 for each child between the age of 6 and 17". You missed a 0, it's $250 for each child between the age of 6 and 17

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Thanks, fixed!

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Mar 7, 2021Liked by Noah Smith

I've always liked you but good to see you make the same kinds of typos i do!

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The worst was when I typoed "trillion" as "billion" and Bloomberg had to correct!

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Mar 8, 2021Liked by Noah Smith

You were just using the Britishism.

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Now that the bill has safely passed the Senate, I can express my misgivings without fear of aiding the opposition. The bill was needed, the people who have borne the brunt of this pandemic needed help, state and local governments needed help, and we all needed a quick recovery under a Democratic government to blunt the coming MAGA counteroffensive.

But this is not social democratic legislation. For most households, it's just a massive tax rebate. The American public has always been far too supportive of tax cuts regardless of how they're justified or financed. Social welfare legislation, however desirable, will not sink deep roots if it's financed through crisis deficits. In a sense, the Dems just took a page out of the Republican playbook-- give massive tax rebates and you'll be popular, don't worry how they're financed. In fact, if you're lucky (from the Repub viewpoint), the resulting pushback on the deficit will "starve the beast."

People have to be willing to pay for social welfare programs because they want to live in a good and just society, not because they're financed with helicopter money. Tax rates in the true social democratic countries like Sweden and Denmark are twice what they are in the US. The ARP does not move the ball in that direction whatsoever. Support for the child credits, or for the redistribution generally, will evaporate as soon as people are asked to actually pay for it.

I realize that now is not the time for tax hikes, it's the time for stimulus. But Noah, you hit the nail on the head with your post "No one knows how much the government can borrow." I do not pretend to know either theoretically or practically. However, one thing almost all reputable economists will agree on-- we cannot borrow as much as we did in the past year indefinitely.

So for me to believe that the long-term prospect for social democracy in the US is looking better, I'll need to see some theoretical and political consensus on how much deficit spending is sustainable, and for American voters to support redistributionist taxation as well as redistributionist spending.

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Biden has been surprisingly progressive ever since he signed a slew of executive orders on his first few days in office. He's outflanking the Obama administration from the left - and leftist hardliners aren't giving him credit for it. Instead, they're calling him "Republican lite" for bombing terrorists in Syria.

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"No Show" Joe, who lets his work stand for itself, is turning out to be just the person America needed. The failures of the Obama presidency, their mistakes, their errors, must be helping him now.

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"A lot of people are going to pooh-pooh this bill, either because they were really hoping it would include a minimum wage increase, or because they have it in for Biden and the Democratic establishment, or simply because it’s been a really tough year and people are stuck in a rut of despair."

Or because elected Democrats promised $2000 checks and didn't deliver (no, playing games by counting the Trump administration's latter $600 as part of the $2000 is specious; see https://splained.substack.com/p/yes-the-democrats-promised-a-new for ample documentation), and it's bad when politicians lie and take $600 out of people's pockets during a pandemic. (Plus it just strikes me as scummy that Biden and the other Senate Democrats have left Raphael Warnock, who's up for re-election literally just next year AND is Georgia's first black Senator, out to dry after he helped win a Senate majority by campaigning, in apparent good faith, on those $2000 checks.)

Or because other Biden campaign promises (https://twitter.com/LolOverruled/status/1368288879074246656) were cut out of the bill, too. Vague reassurances that they're coming later are a hell of a promissory note to fulfil — perhaps enough to drive Biden, the Democratic Party and Noah into credibility bankruptcy if they're not good for it.

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It's not playing games. Democrats wanted to give $2000 payments but Republicans wanted only $600 payments. Nobody promised $2000 ON TOP of the $600.

Your lack of reading comprehension is your problem, not everyone else's, and not the Senate's.

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Again, that's false, as I amply document at the link. If you're going to lecture me about a supposed "lack of reading comprehension", actually read my comment — and my documentation — and engage with the evidence I present. Don't just repeat partisan "derp" (to use a Noah-ism).

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I read your link. You clearly write what Jake Thompson says, “Democrats, once upon a time, did demand a $2000 check in lieu of a $600 check.”

The Republicans agreed to $600, so the Democrats added $1400 onto that getting the total to $2000, which is what the Dems have been saying since December. AOC, Bush and Jayapal are the ones who moved the goalposts.

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Your quote-mining is transparent.

Jake Thompson wrote that "Nobody promised $2000 ON TOP of the $600". That is a factual claim, stated with beautiful clarity, and IT IS FALSE. I explicitly wrote that it's false in my post: "Democrats promised a new $2000 check, not just $1400 on top of last year’s $600". And then I documented how I knew it to be false.

None of that is negated by the fact that, "once upon a time" (to quote you quoting me), Democrats had EARLIER demanded $2000 in lieu of $600. LITERALLY THE NEXT SENTENCE I wrote after the mid-paragraph snippet you quote was, substituting uppercase for italics, "However, THAT WAS IN DECEMBER.". The Democrats' December effort to replace the $600 checks with $2000 checks was ended by Trump and the Republicans IN DECEMBER, and the $600 checks began going out IN DECEMBER.

So when Democrats promised $2000 checks the NEXT month, JANUARY, they must have been talking about $2000 checks DISTINCT FROM the $600 checks ALREADY PASSED AND EVEN DISBURSED in DECEMBER. (The timing isn't the only evidence demonstrating this, but you claim to have read my post, so you shouldn't need me to repeat everything.)

You even left a clue revealing your quote-mining in the snippet you mined: "once upon a time"! Like, even if you stopped reading my post right after that sentence, so that you never saw the rest of my post and its evidence, how would "once upon a time" not tip you off that when I wrote that "Democrats" "did demand a $2000 check in lieu of a $600 check", I was referring to that happening far enough in the past as to be superseded by later events?

The totality of the evidence demonstrates that Democrats promised a freestanding $2000 check in January. Cherry-picking literally 1% of my 1500-word post and wrenching it from its context as an excuse to ignore the remaining 99% (plus embedded tweets and videos) doesn't mean you're right. It means that you're ducking and weaving around the public body of fact.

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How did they take $600 from anyone? Doesn’t it seem just a little presumptuous, that now not paying people money they never had, never had any right to, (and which would have been paid eventually out of their own tax money) is now *taking* people’s money?

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Well, if you write me an IOU for $2000, that shows up as an asset on my balance sheet — I'm immediately $2000 richer, at least if you're a trustworthy debtor. If you then give me $1400, state that you've paid in full, and tear up the IOU, you've replaced the $2000 asset (the original IOU) with $1400 in cash, making me $600 poorer. Though I never had the $2000 in cash, it doesn't seem unreasonable to me to call that "taking".

It's just accounting. Admittedly, accounting can be a little presumptuous, but we're on an economist's blog so I think I'll get away with it.

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The idea that Biden took $600 out of people's pockets is just flat-out insane.

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"Well, you know, you can't spend what you ain't got

You can't lose what you ain't never had"

- Muddy Waters

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Try that line on the IRS next month, or on the doorsteps of Georgia next year!

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It's a weird argument that this bill is an apparent Warnock-killer. Essentially all polling shows a large majority of Americans, and even a plurality of Republicans, support it.

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What is presumptuous is the strange flipping around of who has what. If I decide that I am going to steal $2000 from a stranger - but, after I change my mind, am now only going to steal $1400 - does that mean that the person being stolen from has taken $600 from me?

Also, thank you Noah for the excellent Muddy Waters quote. Very apropos. :)

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No, the person being stolen from has not taken $600 from you because that stranger never made a commitment to let you steal $2000 from them. That's a fundamental point of disanalogy in your hypothetical. Democrats promised $2000; your hypothetical stranger didn't.

Like, are we denying the notion of fraud now? If I go around promising people $2000 in exchange for writing an "X" next to my name on a slip of paper, I ultimately have to cough up the money or risk getting into big trouble. I could literally end up in court. The judge might even say in their summing-up that I've illicitly "taken" money from people. Would you be up in the court's gallery going "nuh uh"?

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That's actually not how the law works. Very false analogy. Show's a lack of understanding of the law. If what you say is true, all politicians throughout American history would be in jail for committing your version of fraud.

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I think that you think that I think that Joe Biden can literally be convicted of fraud for his $2000-check lie. If so, no, that's not what I was getting at with my second paragraph. What I was trying to do was probe how far Nicholas Decker was willing to take their insistence that you can't describe broken promises of money as taking money.

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Your view of politics is so exhausting and wrong. The inability or unwillingness of a certain segment of the left to grapple with the fact that most families are going to get far more than $2000 in direct cash payments from this bill, in addition to all the other amazing, progressive stuff in the bill, is so frustrating. And refusing to acknowledge that they managed to do it with a so-called moderate in the White House, when the deciding vote was a conservative Senator from West Virginia, and with barely a compromise outside of the minimum wage issue (which isn’t even a fight that’s over yet, like Noah said in the piece) is ridiculous and counterproductive. This bill is an amazing piece of political gamesmanship, is exactly the type of hardball that the left has been trying to get the Democrats to play for years, and consists of wishlist items that progressives have only dreamed about for years.

You seem to think that voters are idiots who don’t understand how politics works. That they don’t understand that sometimes what people run on has to get watered down because two Senators from Georgia don’t get to control the entire Senate. But I don’t think voters are idiots. I think they’re going to, correctly, understand this as an amazing accomplishment. But for that to happen, we have to tell them the truth about the amazing things we managed to accomplish in the face of an extremely uphill battle. So if Warnock loses his Senate race in 2022, it will be because people like *you* are downplaying his accomplishments and the accomplishments of the Democratic Party as a whole. Even Bernie Sanders is messaging this bill as the most important, progressive piece of legislation enacted in well over a generation! And he’s right, that IS the messaging we should be doing now, not least of which is because it has the benefit of being 100% accurate.

If you want to complain that you didn’t get every single thing you wanted in this one bill and that Biden hasn’t managed to fulfill every single one of his campaign promises in the first **six weeks** he’s been in office, then I can’t stop you. But I can tell you that you’re hurting your chances for getting the things you want done by doing so and I can encourage you to stop doing that so we can keep helping the people who we need to help.

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It is indeed exhausting to watch out for when politicians renege on their promises, but I don't agree that it's wrong.

The rest of your first paragraph doesn't directly address points I've actually made, so I'll focus on your 2nd and 3rd paragraphs.

I don't assume or claim "that voters are idiots" (what would that even mean, in concrete terms?). I do think that their understanding of politics isn't great. Look up those civics and history surveys that ask voters to identify the 3 branches of government, or which country has used nuclear bombs as a weapon of war, that sort of thing.

I also think that voters like income growth and income support in a pandemic, and dislike lies and broken promises. That's why I see Democrats as shooting themselves in the feet when they lie about how big their checks are going to be. I really don't think that "voters like income growth" is a controversial idea (see the models illustrated at http://www.douglas-hibbs.com/ for an idea of its relevance to presidential and House races).

Apparently you not only disagree, but think that my Substack post and comments are a bigger danger to Warnock and other elected Democrats than said Democrats pretending $1400 equals $2000. ("So if Warnock loses his Senate race in 2022, it will be because people like *you* are downplaying his accomplishments", "you're hurting your chances", "stop doing that so we can keep helping the people who we need to help".) To be blunt, it's hard for me to read that as anything but a threat, and a laughably empty threat at that.

Seriously, what's the mechanism you're picturing here? Maybe a few hundred people are seeing my comments here (and most of those people apparently find my comments unconvincing!). Meanwhile, I can disclose that my Substack post criticizing Biden's lie has an amazing...40 views. How will that have a bigger impact on the 2022 Georgia race than voters simply remembering what was promised versus what was delivered, or the hay that Republican ads will make out of Democrats' backtracking? Are you planning to robocall Georgians with a speech synthesizer reading out my posts?

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"The hay that Republican ads will make out of Democrats' backtracking?" --Please elaborate on how a Republican ad might point out that the Dems didn't give $2k checks, while ignoring that not a single Republican voted for the bill giving $1.4k checks.

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I mean, you pretty much figured it out: broadcast ads in Georgia harping on how Ds didn't give out $2000 checks, including a screenshot of Warnock's online ads with a visual mockup of a $2000 check, maybe throw in relevant clips of Biden and Ossoff in Georgia, and just don't mention Republicans not voting for $1400 checks. Why wouldn't the R Party be selective with the facts in one of their ads?

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Your lack of faith in the intelligence of the Georgia electorate is stunning.

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Changing the subject (from the assumed shamelessness of Georgia's Republican Party to "the intelligence of the Georgia electorate") so that you can affect vicarious offense on behalf of Georgia's voters isn't an argument.

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What does Warnock being black have to do with anything?

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It may, or may not, have to do with the United States's history of racism against black people. One manifestation of that racism is a relative lack, on the average, of politically powerful black people. Another is that those blacks in positions of power are, on the average, concentrated in more-insecure positions of power.

So I get a bit suspicious when a 32%-black state's first black Senator is one of the first Democratic Senators who'll have to run for re-election after this $2000-as-$1400 gambit. Especially as he was one of only two Senators who campaigned very very explicitly on a $2000 check! To my eye, even from the perspective of self-interest, Biden and his bloc have taken Warnock for granted to a strange degree.

It crosses my mind as a bit of an Unfortunate Coincidence that it's this one black Senator who'll end up as the Democrats' foremost shock absorber for any backlash against this Joe Biden bullshit artistry. (Biden said in 2019 that he won't run again in 2024, in which case he doesn't have to worry about his own re-election. Presumably the presidential candidate who'd have to pick up the pieces would be Kamala Harris — who, I gotta mention, is black like Warnock.)

This really could just be an unfortunate coincidence! Or: it might not be. I'm operating on a hunch here. You're of course free to take it or leave it.

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And if you like that, you'll love this encore.

When I was collecting my documentation, I saw 3 Congresswomen mentioned on Twitter who called for $2000 on top of the $600 passed in December: Pramila Jayapal, Alexandria Ocasio-Cortez, and Cori Bush. And I saw that Cori Bush was the one who provoked the most people to start spamming tweets pointing out that 600 + 1400 = 2000.

Jayapal, Ocasio-Cortez, and Bush are all Representatives in the House. That controls for political rank. They're all women. That controls for gender. They're all Democrats, which controls for partisanship, and they're all progressive Democrats solidly on the party's left, which mostly controls for ideology. They were elected in relatively quick succession (Jayapal in 2016, Ocasio-Cortez in 2018, Bush in 2020), which controls for presidency (and tenure to some extent).

Nonetheless, Bush plainly provoked more people on Twitter to splain basic arithmetic in her direction than Jayapal or Ocasio-Cortez. What was different about her?

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The thing is, to be angry about this you have to have wrapped yourself around the axle of a totally bonkers convolution of logic while sniffing glue in the leftist fever swamps. Most voters haven't. They'll cash the $1400 check, remember they cashed a $600 check earlier, know that adds up to $2000, and know that the Republicans voted against most of it.

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If they'd have gotten everything you asked for, you'd still find the three things on the cutting room floor to bitch about -- if you want to know why you're never happy with outcomes, start asking why the "you" is the common theme there.

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You have serious brain worms if you think this will *hurt* Warnock

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Man, you just keep putting out great posts.

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Serious question that I promise is not in jest (this is a great piece of legislation):

Why are we giving $1,400 checks to people who make $60-80k/year and never lost their job in the first place? I know many people who fit in this bucket and kinda respond with “yea I mean I’ll take the money, but I’m no worse off than I was pre-Covid”.

The only vague explanation I’ve really heard is “pandemic relief for potential uncertainties and increased costs that came with Covid (working from home, additional childcare, etc”, however this seems to be much better solved w/ the child credit.

The first round of checks to this group ($70k, still employed) made a lot of sense because it wasn’t clear who was going to be losing their job or not. While I’m fine with them (though think I’d rather see the checks be smaller, an child credit larger), I struggle to follow the rationale.

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Think about it as a “pain and suffering” damages payout for the past year of misery.

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I guess this is just the “stimulus portion” of the package, which is fine. It just seems like its no different than giving out $1,400 checks in any random year.

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Giving out $1400 in any year when we have an economic recession caused by a demand shortfall is a good idea - it’s called automatic stabilizers. See Claudia Sahm.

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great summary, thank you

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An important strategic reason for Republicans to vote against this bill is that only one spending bill per year can be passed via reconciliation. By forcing Democrats to use reconciliation on this bill, they strengthen their position for the rest of the year.

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It seems like an important change is we discovered people like free money. I don't know if this was true, but for the longest time welfare was designed assuming people would rather not get anything if it meant they had to see black people getting something.

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Paying for someone to have kids was a policy Israel tried 20 years ago.. It had catastrophic consequences. Poor communities, ultra orthodox and Bedouin, made their women a kind of ATM with terrible consequences for the status of women and for the demographic future of the country.

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Why frame it as “paying for someone to have kids” rather than “making sure kids have money to eat”?

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Because there is this nice word called "incentives"

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And the incentives-brigade are finally realizing...they're wrong. Which is why they've quickly pivoted to "cultural" and "societal" plays. Do you actually think people are consciously deciding "I will have children solely to get the child tax credit". Never mind that children are faaaar more costly than that and are much more likely to make you poorer?

This isn't paying people to have kids. It's making sure the kids that are born aren't left destitute. I get people like you want people to be poor and in poverty, but that's just not a good thing. Healthier kids will lead to better long-run outcomes.

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The nordic countries have done this for way more than 20 years with out any terrible consequences for the status of women.

Norway 1946, Sweden 1947, Finland 1948 and Denmark 1984.

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I don't know how much money is allocated to this. There is a difference between 50$ per child and 300$ per child.

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UBI has never worked on a large scale before. Why would we think it would in the US?

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Social Security's like a BI for old people in the US, and it works pretty nicely? https://www.cbpp.org/research/social-security/social-security-lifts-more-americans-above-poverty-than-any-other-program

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Mar 8, 2021Liked by Noah Smith

Alaska already has something like a UBI: https://en.wikipedia.org/wiki/Alaska_Permanent_Fund . It was found to actually slightly increase employment. However, at $1600 per year, it's substantially less than what the UBI proponents are advocating.

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If Dems actually follow your advice and don't do things like, IDK, take away my guns or look a little too comfortable with single-payer healthcare, I can see them actually making gains in 2022.

Alas, after seeing a vocal contingent of democrats in the house voice support for "Defund the Police," which is both bad politics and bad policy, I'm not confident that they will take your or Matty Y's advice, so my unconditional probability of them losing the House and Senate in 2022 is still >50%

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The Democrats just passed a bill that gives massive funding to the police by giving aid to state and local governments!

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Dems are not going to defund the police or take away anyone's guns. However they are still likely to lose seats in '22 because Republican local governments will do whatever they can to exacerbate the pandemic (blaming Biden of course) and restrict voting.

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