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.
- 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!
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.
"$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
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.
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.
"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.
"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.
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.
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.
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.
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.
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%
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.
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!
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.
"$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
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.
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.
"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.
"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.
Man, you just keep putting out great posts.
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.
great summary, thank you
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.
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.
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.
UBI has never worked on a large scale before. Why would we think it would in the US?
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%