I am guessing I’m not alone in my eagerness to watch you debate Tyler Cowen or Larry Summers on the appropriate size of additional stimulus. I’d like to see the other side steelmanned. All of your arguments in favor make sense, perhaps too much so, to the point where I have to think there ain’t no such thing as a free lunch so what’s missing ?
When they say fully refundable do they always mean “eliminates phase-ins”? bc I thought it just meant eliminating the plateau in CTC where families generally don’t have have tax liability so they can’t get the full 2k but they make enough to get the full 1400$ that is refundable.
I'm with you Matt - very excited to see this new direction. Hopefully Biden can use the leverage he has in the Senate over judiciary appointments to force McConnell to swallow some of this. My hope is that if Americans can just see their government working for them, providing things they need that businesses won't, that we can reverse this trend of anti-government sentiment that has led to bloodshed in the halls of congress.
If Matt's administration sources think they can get bipartisan support for these proposals, they're either delusional or else they read Jonathan Chait's piece in New York magazine.
I'm hopeful that it's the latter. We don't know if Chait's strategy will work until we try it, but it's at least *possible* that if you combine progressive policy initiatives with tax cuts for the rich, a fair number of congressional Republicans will vote for literally anything
One assumes (hopes?) their deflection on legislative strategy flows from, erm, political/strategic concerns (holding cards close to vest, etc) and not because of any squeamishness about using reconciliation (nor, needless to say, any illusions about wide GOP buy-in; there is zero doubt Republicans under McConnell will be in maximum obstruction mode).
(In a perfect world they've already held secret discussions with Joe Manchin about eviscerating the filibuster, and just don't want to give the game away!)
This is great reporting, and a real coup for Matt, but honestly I'm a bit concerned that senior transition officials would spend this much time laying their proposals out to someone whose Slow Boring site -- which is awesome!! -- only reaches some 7000 subscribers. That doesn't strike me as time-efficient for them, unless Matt was on a Zoom call with a *bunch* of other media types.
@Matt, I hope in some future Slow Boring you can go a little deeper on "interest rates are low so we can borrow." Clearly some people in the comments are concerned about debt and go "how do we pay it back"? Even those less concerned about debt might say "what if interest rates spike up"? If Larry Summers and Jason Furman are okay with debts when interest rates are low, I'm thinking there must be some economic theory behind this view.
Yeah - that WaPo article is sort of the "nagging voice".
It certainly does seem like a really big tail risk to put ourselves in such a levered state that a bump to US credit becomes a budget crisis almost instantly. For example, if the US loses its global reserve currency status, it drives up interest rates, people see that that will require austerity, which spooks bond holders, rates go up more...
(That's not an argument that we should be austere WRT fighting COVID - it's more of a long-term argument that we shouldn't just target debt levels based on interest rate costs.)
**If Larry Summers and Jason Furman are okay with debts when interest rates are low, I'm thinking there must be some economic theory behind this view**
The way I think of it in layman's terms is: when people are literally willing to pay the government to hold money for them, the market is signaling (really, flashing red) that the economy has a lot of unused capacity. And it's never a good idea to eschew trying to make use of excess productive capacity as long we humans (Americans, in this case) have unmet needs (which we always will!). Why would we ever want to refuse to help ourselves live better?
When it's no longer the case that we have plenty of excess capacity we'll know it (real interest rates will rise, among other signals) and we'll then do something different (namely, curb consumption).
The low yield could also represent that risk assets are too richly valued in the eyes of market participants. The mechanism of price discovery and a business cycle have been, and continue to be affected by QE.
I agree but I do hope that there is a willingness at sometime in the future, when the alternative is the Fed raising interest rates, to step up to higher taxes
$400 Billion for vaccine distribution and more testing (like, why?). If you assume roughly 350M Americans, that works out to $1142 per capita. Mind you that is to distribute/administer vaccine that was already paid for, and tests that the USG is currently reimbursing at $100 per.
Is anyone in the Administration actually looking at real costs, or have they just decided to hemorrhage money?
AP via the Guardian is reporting a figure of $160 billion for testing/vaccines, FWIW, so, there seems to be some confusion as to the price tags of the various elements:
I think Matt’s 400 number may be... not quite right. I’ve seen something like 160 for national vaccine distribution, additional workers and other things related to PPE and the like. The 400 number I’ve seen seems to be state relief, business loans and grants and other random stuff. But who knows really.
I am guessing I’m not alone in my eagerness to watch you debate Tyler Cowen or Larry Summers on the appropriate size of additional stimulus. I’d like to see the other side steelmanned. All of your arguments in favor make sense, perhaps too much so, to the point where I have to think there ain’t no such thing as a free lunch so what’s missing ?
I'm glad that Biden and his people are thinking in this scale as oppose to the Obama administration which was more modest in it's ambition.
I wonder how much can get passed through reconciliation since I don't really think you can count on significant support by GOP senators.
Also, the vaccine is key. Goal needs to be to vaccinate everyone in the US ASAP.
When they say fully refundable do they always mean “eliminates phase-ins”? bc I thought it just meant eliminating the plateau in CTC where families generally don’t have have tax liability so they can’t get the full 2k but they make enough to get the full 1400$ that is refundable.
I'm with you Matt - very excited to see this new direction. Hopefully Biden can use the leverage he has in the Senate over judiciary appointments to force McConnell to swallow some of this. My hope is that if Americans can just see their government working for them, providing things they need that businesses won't, that we can reverse this trend of anti-government sentiment that has led to bloodshed in the halls of congress.
Deese.
If Matt's administration sources think they can get bipartisan support for these proposals, they're either delusional or else they read Jonathan Chait's piece in New York magazine.
I'm hopeful that it's the latter. We don't know if Chait's strategy will work until we try it, but it's at least *possible* that if you combine progressive policy initiatives with tax cuts for the rich, a fair number of congressional Republicans will vote for literally anything
This is a testament to years of work by left economics writers to improve the consensus view, yourself prominent among them. Kudos and thank you.
Any idea if the $2k check amount (or $600 + $1400) also applies to child dependants? Or do they stay at the December bill's $600?
One assumes (hopes?) their deflection on legislative strategy flows from, erm, political/strategic concerns (holding cards close to vest, etc) and not because of any squeamishness about using reconciliation (nor, needless to say, any illusions about wide GOP buy-in; there is zero doubt Republicans under McConnell will be in maximum obstruction mode).
(In a perfect world they've already held secret discussions with Joe Manchin about eviscerating the filibuster, and just don't want to give the game away!)
So the Dems are going to need to make nice with Hawley? He was a supporter of the $2k checks iirc and you gotta get to 60 somehow.
Or maybe Sanders makes it work in reconciliation?
Plus senate has to debate the impeachment resolution and convict or not...
This is going to be some mighty interesting politics. Glad there’s a fun and informative comments section to read along the way.
This is great reporting, and a real coup for Matt, but honestly I'm a bit concerned that senior transition officials would spend this much time laying their proposals out to someone whose Slow Boring site -- which is awesome!! -- only reaches some 7000 subscribers. That doesn't strike me as time-efficient for them, unless Matt was on a Zoom call with a *bunch* of other media types.
I got the impression Matt was participating with other journalists. Perhaps their collective audience is more (like, way, way more) than 7k.
500k twitter followers isn't nothing
Maybe they are reading the comments to get early feedback from a particularly august group of intellectuals.
OK, I see now that they talked exclusively to Matt. And, uh, the New York Times and the Washington Post and . . .
Way to burst my bubble!
@Matt, I hope in some future Slow Boring you can go a little deeper on "interest rates are low so we can borrow." Clearly some people in the comments are concerned about debt and go "how do we pay it back"? Even those less concerned about debt might say "what if interest rates spike up"? If Larry Summers and Jason Furman are okay with debts when interest rates are low, I'm thinking there must be some economic theory behind this view.
The assumption seems to be that interest rates will remain low until the end of time. If that isn't the case, we get into a lot of trouble
https://www.washingtonpost.com/outlook/2020/12/08/debt-interest-rates-biden-budget/
Yeah - that WaPo article is sort of the "nagging voice".
It certainly does seem like a really big tail risk to put ourselves in such a levered state that a bump to US credit becomes a budget crisis almost instantly. For example, if the US loses its global reserve currency status, it drives up interest rates, people see that that will require austerity, which spooks bond holders, rates go up more...
(That's not an argument that we should be austere WRT fighting COVID - it's more of a long-term argument that we shouldn't just target debt levels based on interest rate costs.)
**If Larry Summers and Jason Furman are okay with debts when interest rates are low, I'm thinking there must be some economic theory behind this view**
The way I think of it in layman's terms is: when people are literally willing to pay the government to hold money for them, the market is signaling (really, flashing red) that the economy has a lot of unused capacity. And it's never a good idea to eschew trying to make use of excess productive capacity as long we humans (Americans, in this case) have unmet needs (which we always will!). Why would we ever want to refuse to help ourselves live better?
When it's no longer the case that we have plenty of excess capacity we'll know it (real interest rates will rise, among other signals) and we'll then do something different (namely, curb consumption).
The low yield could also represent that risk assets are too richly valued in the eyes of market participants. The mechanism of price discovery and a business cycle have been, and continue to be affected by QE.
https://www.slowboring.com/p/low-interest-rates-are-a-curse-we
Thanks for the clear summary of what the recovery money will be used for.
I agree but I do hope that there is a willingness at sometime in the future, when the alternative is the Fed raising interest rates, to step up to higher taxes
Weeds on this when?
$400 Billion for vaccine distribution and more testing (like, why?). If you assume roughly 350M Americans, that works out to $1142 per capita. Mind you that is to distribute/administer vaccine that was already paid for, and tests that the USG is currently reimbursing at $100 per.
Is anyone in the Administration actually looking at real costs, or have they just decided to hemorrhage money?
***$400 Billion for vaccine distribution and more testing (like, why?).***
The Washington Post article reads: "$400 billion for provisions to fight the coronavirus with more vaccines and testing..."
I reckon there should be a comma between "coronavirus" and "testing" for greater clarity:
"Provisions to fight the coronavirus" could mean lots of things.
AP via the Guardian is reporting a figure of $160 billion for testing/vaccines, FWIW, so, there seems to be some confusion as to the price tags of the various elements:
https://www.theguardian.com/us-news/2021/jan/14/joe-biden-coronavirus-stimulus-package
"Hemorrhaging money" doesn't matter when you possess an unlimited capacity to make more of the stuff you're hemorrhaging.
I think Matt’s 400 number may be... not quite right. I’ve seen something like 160 for national vaccine distribution, additional workers and other things related to PPE and the like. The 400 number I’ve seen seems to be state relief, business loans and grants and other random stuff. But who knows really.