Has U.S. Democracy Been Trumped?

[y66]

Online, Greene also has endorsed the idea of executing Democratic leaders. Kind of a bad look when you’re OK with your new co-workers getting murdered: ‘Hey guys, I cannot wait to join the team. Tell you what, I’m going to cut your hamstring and give you a 30-minute head start before I hunt you with a crossbow.’

[kenberg]

Perhaps I'll actually do this

 

https://www.washingt...tch-super-bowl/

 

 

When we watch football, we're watching the events as they take place, according to a 94-page book of rules. There are seven referees on the field in every NFL game, and even that's not enough: We accord such importance to exactly matching the facts on the field to the rules of the game that we have a whole system of instant replay and review for the close calls. I love those moments:

Yes, that's it … zoom in a little closer, slow down that motion a little more so I, leaning forward on my couch, can see if he had both feet in bounds when he caught the ball. Okay … now show me that four more times. It's important we get this right.[/color]

 

That's some deep need for a shared reality.

Shared reality. Yep, maybe we could have a bit of that.

Yes, I was until now unaware of who was playing. Possibly some voters are similarly unaware. It's difficult to explain some results otherwise.

 

[Chas_P]

Your ignorance is stunning, but completely expected.

 

Well darn Johnboy. I was trying to agree with you that life would be perfect under Democrat rule all the time. And now you've hurt my feelings. I was considering moving to Seattle to enjoy the Utopia with you. But I'm having second thoughts now.

[y66]

Mitt Romney’s child allowance is pretty great

 

Mitt Romney rolled out a plan on Thursday to provide a nearly universal child allowance to parents, $350 per month for kids under 6 and $250 per month for kids ages six to 17.

 

Per my Niskanen Center colleagues Samuel Hammond and Robert Orr, this has a fairly dramatic impact on child poverty, and as readers of “One Billion Americans” will know it probably has a meaningful impact on fertility as well.

 

In “What The Inflation Contrarians Get Right And How To Fix It,” I defend this general approach to the question.

 

But the politics and the details here are interesting. Democrats have been pushing for a while to do something very similar to this by making the Child Tax Credit “fully refundable” (i.e., available even to people with no taxable earnings). Joe Biden was a holdout on this idea, but he adopted a version of it as a temporary emergency measure and included it in his COVID-19 package. Romney improves on the Biden plan by making it a proper spending program administered by the Social Security Administration rather than a tax credit run by the IRS.

 

Romney’s plan is also a bit more generous than Biden’s, even when you consider that Biden pays for it in part by scrapping some existing anti-poverty spending like Temporary Assistance for Needy Families and most of the Earned Income Tax Credit. That’s because he also eliminates what’s left of the State and Local Tax (SALT) deduction to raise extra money. SALT is regressive, but Democrats tend to like it because it helps residents of blue states that have higher taxes. So Romney is owning the libs here, and then owning them again by doing it in a way that progressive wonks are likely to support. More on Romney and the criticisms of his plan from the left and right next week.

 

https://www.slowboring.com/p/biden-popularity

The bottom line: The Romney plan would make a real dent in poverty

 

Democrats do not, on their own, have 60 votes in the Senate, which means that Republicans opposing a bill can block it by filibustering. The only way around that, for the time being, is the budget reconciliation process, which enables 51 senators (or 50 and tiebreaker Vice President Kamala Harris) to pass legislation.

 

It’s hard to see Romney’s proposal gaining enough Republican support to get the plan above 60 votes, though I’d be thrilled to be proven wrong on that front. But it could easily, with Romney, Democrats, and maybe a few other Republicans on board, make it into a reconciliation package.

 

The difficulty with reconciliation packages is that they normally cannot increase the deficit after 10 years. When George W. Bush passed his tax cuts in 2001 through reconciliation, those tax cuts had to sunset in 2011. A permanent child allowance, without any pay-fors, would definitely increase the deficit. That’s part of why the Biden administration has so far only proposed a one-year variant of its plan to expand the child tax credit.

 

So Romney’s plan offers a plausible and appealing alternative. It’s almost as effective at reducing poverty, even when taking into account its pay-fors, as the Biden plan, and because it’s deficit-neutral, it can be enacted permanently as part of a budget reconciliation package. And obviously, a permanent plan is more valuable to poor families than Biden’s one-year package.

 

If Biden wants to tweak it by slightly changing the pay-fors, that’s fine; I’d prefer a more generous allowance paid for by higher taxes on the rich, to make up for the EITC cuts. But it’s important not to let the perfect be the enemy of the good. And as it stands, the Romney plan is better than the Biden plan, in my estimation, if only because it’s permanent. A Romney aide told me they have reached out to the president already on the topic and are hoping they can negotiate.

 

It might not be Chuck Schumer’s ideal plan, but it would help millions of families with children in a straightforward way. It would meaningfully slash poverty and provide a base from which to slash it more in the future. Programs that give families cash, according to UC Irvine economist Greg Duncan, result in better learning outcomes and higher earnings for their kids. One study found a $3,000 annual income increase for poor parents is associated with 19 percent higher earnings for their child once he or she grows up. That implies that a child allowance of that size could dramatically improve the lives of children decades later.

 

Romney’s plan presents an opportunity to enact that kind of profound change in the lives of millions of impoverished children. Congress shouldn’t pass it up.

 

https://www.vox.com/future-perfect/22264520/mitt-romney-checks-parents-4200

I'm happy to see we have two plans on the table that seek to improve the lives of millions of impoverished kids. Can Biden and Romney negotiate in good faith to come up with a decent compromise? I think so.

[kenberg]

I'm happy to see we have two plans on the table that seek to improve the lives of millions of impoverished kids. Can Biden and Romney negotiate in good faith to come up with a decent compromise? I think so.

 

Man, I really hope so. If the two of them, backed by others, can come together with a plan that gets implemented it would of course address a serious problem. It would also be a good start on a return to normalcy. One person says "Let's do this", another says "I agree with the goals but I suggest an alternative approach", they sit down and discuss it and come together on a plan.

 

I realize that such idealism does not always happen in practice but what we have had recently is beyond description. Reasonable people listening to each other and working together. What an idea.

[y66]

Seems like Denver added social workers without cutting cops, made everyone happy, and it’s working well.

 

In the first six months of health care professionals replacing police officers, no one they encountered was arrested

DPD Chief Pazen, who is fond of the STAR program, says it frees up officers to do their jobs: fight crime.

https://denverite.com/2021/02/02/in-the-first-six-months-of-health-care-professionals-replacing-police-officers-no-one-they-encountered-was-arrested/

[y66]

In just a few weeks, lawsuits and legal threats from a pair of obscure election technology companies have achieved what years of advertising boycotts, public pressure campaigns and liberal outrage could not: curbing the flow of misinformation in right-wing media.

 

Fox Business canceled its highest rated show, “Lou Dobbs Tonight,” on Friday after its host was sued as part of a $2.7 billion defamation lawsuit. On Tuesday, the pro-Trump cable channel Newsmax cut off a guest’s rant about rigged voting machines. Fox News, which seldom bows to critics, has run fact-checking segments to debunk its own anchors’ false claims about electoral fraud.

 

This is not the typical playbook for right-wing media, which prides itself on pugilism and delights in ignoring the liberals who have long complained about its content. But conservative outlets have rarely faced this level of direct assault on their economic lifeblood.

 

https://www.nytimes.com/2021/02/06/business/media/conservative-media-defamation-lawsuits.html?action=click&module=Spotlight&pgtype=Homepage

This suits me too.

[kenberg]

This suits me too.

 

As a general view, I hate to see it come down to the lawyers. But when you need it you need it. Sort of how I feel about an enema. It seems that we need it.

[pilowsky]

As a general view, I hate to see it come down to the lawyers. But when you need it you need it. Sort of how I feel about an enema. It seems that we need it.

 

Are you saying that lawyers give you the ...?

 

I think Trump should get Bridge Directors to defend him.

[y66]

My column on the stimulus sparked a lot of questions. Here are my answers.

https://www.washingtonpost.com/opinions/2021/02/07/my-column-stimulus-sparked-lot-questions-here-are-my-answers/

5. So what should the legislative package look like?

 

I have a lot of respect for the economic team Biden has assembled, and I know firsthand the difficult choices his officials are being forced to weigh in a critical moment in our history. There are no easy answers here. In my view, there is nothing wrong with targeting $1.9 trillion, and I could support a much larger figure in total stimulus. But a substantial part of the program should be directed at promoting sustainable and inclusive economic growth for the remainder of the decade and beyond, not simply supporting incomes this year and next. An approach of this kind, spending out more slowly, will reduce possible inflation pressures and also increase the economy’s capacity. We will be borrowing to finance sound investments rather than consumption. As Biden has emphasized, it will enable us to build back better.

[Winstonm]

I only have one quibble with Larry Summers's views:

 

We will be borrowing to finance sound investments rather than consumption corruption (of the previous administration).

FHP

[y66]

The death of American statesman George P. Shultz at 100, just before the second impeachment trial of Donald Trump … well, it’s hard to not see it as a symbol for everything wrong with today’s Republican Party.

 

Shultz was a good example of how a reasonably healthy party operates. Parties need governing professionals — people who actually know how to make things work after an election is won. And healthy parties look out for and promote talented people. Shultz worked for Dwight Eisenhower’s Council of Economic Advisers. He was Richard Nixon’s labor secretary, director of the Office of Management and Budget, and treasury secretary. Then from 1982 on, he was Ronald Reagan’s secretary of state.

 

By all accounts, he acquitted himself well in each of these jobs. Most notably, he played an important role in recognizing that Mikhail Gorbachev’s Soviet Union was very different from what had come before, and that real progress was possible on issues such as arms reduction. He refused to help Nixon’s corrupt plans during Watergate, while the schemers within the Reagan administration worked behind his back during the Iran-Contra affair. That’s not to say that none of his policy decisions over the years were without controversy. But he served the nation well, and the Republican Party was better off with him as one of its leaders.

 

It’s not the 1950s. Eisenhower, Nixon and Reagan (and Democrats of the time as well) recruited from a very narrow slice of the population. Shultz, who went from a Connecticut prep school to Princeton, then rose through the meritocracy to earn a Ph.D. before entering government service, traveled paths that were closed off to most Americans. Joe Biden’s administration, like Barack Obama’s before it, shows how a reasonably healthy party can be open to many previously excluded sources of governing professionals. Of course, we won’t know for some time which of Biden’s picks are Shultz-like successes and which are failures. But we do know that Democrats (like Republicans in the 1950s through the 1980s) keep replenishing their talent pool.

 

And then there’s the Trump Republicans. It’s hard to identify many veterans of that administration who appear ready to staff the next Republican presidency, let alone be a future George Shultz. And after George W. Bush made progress in diversifying the party’s governing professionals, Trump walked it back several steps. All this matters: Bill Clinton’s presidency, which came after a long stretch of mostly Republican administrations, didn’t have a lot of executive-branch experience to rely on — which helped to produce a wasted honeymoon.

 

Again, experience doesn’t necessarily produce success, but inexperience is a serious obstacle to any administration. And cultivating people willing to work with Trump doesn’t seem like a promising way to build a party’s governing capacity. So the current Republican Party might want to reflect a bit on George Shultz, a hero of the republic, and think about how to produce more like him.

[kenberg]

George Schultz inhabited a different world. I have spent some of the morning, and I will do more, reading about his life, his intelligence, his dedication. It's like reading history, politics, economics. all at once.

 

Just for starters, from https://www.washingt...309_story.html;

 

 

Mr. Shultz taught at the Massachusetts Institute of Technology, the University of Chicago and Stanford, where at his death he was emeritus professor at the Graduate School of Business. He also was president of Bechtel, the multinational construction and engineering firm, for eight years.

or

Mr. Shultz specialized at first in labor relations and employment. He held a succession of academic posts at MIT and the University of Chicago, where he became dean of the Graduate School of Business in 1962.

He interrupted his university career in 1955 for the first of many government posts, working for President Dwight D. Eisenhower as a senior staff economist on the Council of Economic Advisers.

 

 

 

And for amusement, from the Nixon years:

Mr. Shultz emerged unscathed from the Watergate scandal that enveloped the administration near the end of his tenure. He refused to allow the Internal Revenue Service to investigate Nixon's political enemies, and Nixon referred to him as a "candy-ass" in one of his taped White House conversations.

 

 

 

 

Candy-ass my ass

[johnu]

Well darn Johnboy. I was trying to agree with you that life would be perfect under Democrat rule all the time. And now you've hurt my feelings. I was considering moving to Seattle to enjoy the Utopia with you. But I'm having second thoughts now.

 

Seattle is one of the most expensive cities in the US, so you may find it difficult to afford the local housing. Fortunately, the Seattle activists are very friendly and will help you find a freeway underpass to pitch a tent.

[y66]

Seattle is one of the most expensive cities in the US, so you may find it difficult to afford the local housing. Fortunately, the Seattle activists are very friendly and will help you find a freeway underpass to pitch a tent.

Very accommodating. Freeway underpass sounds like the promised land for trolls.

[johnu]

Very accommodating. Freeway underpass sounds like the promised land for trolls.

A famous Seattle landmark, the Fremont Troll, located under a major highway bridge.

 

[Chas_P]

Fortunately, the Seattle activists are very friendly and will help you find a freeway underpass to pitch a tent.

Yes, I've read about the friendliness of the CHOP. It looks very inviting.

[y66]

A dozen years ago, just before Barack Obama was sworn in as president amid the Great Recession, I wrote a disconsolate column titled “The Obama Gap.” At a time when many viewed the president-elect as a transformational figure, I lamented the caution of his economic policy. His proposed stimulus, I argued, would fall well short of what was needed.

 

Sadly, I was right. And as I also warned at the time, Obama didn’t get a second chance; the perceived failure of his economic policy, which mitigated the slump but didn’t decisively end it, closed off the possibility of further major action.

 

The good news — and it’s really, really good news — is that Democrats seem to have learned their lesson. Joe Biden may not look like the second coming of F.D.R.; Chuck Schumer, presiding over a razor-thin majority in the Senate, looks even less like a transformational figure; yet all indications are that together they’re about to push through an economic rescue plan that, unlike the Obama stimulus, truly rises to the occasion.

 

In fact, the plan is aggressive enough that some Democratic-leaning economists worry that it will be too big, risking inflation. However, I’ve argued at length that they’re wrong — or, more precisely, that, as Treasury Secretary Janet Yellen says, the risks of doing too little outweigh any risk of overheating the economy. In fact, a plan that wasn’t big enough to raise some concerns about overheating would have been too small.

 

But how did Democrats get so bold? The answer is that they’ve learned some important things about both economics and politics since 2009.

 

On the economic side, Democrats have finally stopped believing in the debt boogeyman and the confidence fairy, who will make everything better if you slash spending.

 

There was a time when many Democrats — including President Obama — accepted the proposition that public debt was a huge problem. They even took seriously warnings from people like Representative Paul Ryan that debt was an “existential threat.” But predictions of an imminent fiscal catastrophe kept being proved wrong, and at this point mainstream economists have become much more relaxed about debt than they were in the past.

 

Some Democrats also used to worry that big spending programs would hurt the economy by undermining business and investor confidence, and conversely that caution would be rewarded with higher private investment. But this doctrine has also been belied by experience; austerity doesn’t instill confidence, it just imposes pain.

 

Obama came into office sincerely believing that he could reach across the aisle, that Republicans would help him deal with the economic crisis. Despite the reality of scorched-earth opposition, he continued to seek a “grand bargain” on debt. He regarded the rise of the Tea Party as a “fever” that would break in his second term. He was, in short, deeply naïve.

 

Many progressives worried that President Biden, who had served in the Senate in a less polarized era, who talks a lot about unity, would repeat Obama’s mistakes. But so far he and his congressional allies seem ready to go big, even if that means doing without Republican votes.

 

One thing that may be encouraging Democrats, by the way, is the fact that Biden’s policies actually are unifying, if you look at public opinion rather than the actions of politicians. Biden’s Covid-19 relief plan commands overwhelming public approval — far higher than approval for Obama’s 2009 stimulus. If, as seems likely, not a single Republican in Congress votes for the plan, that’s evidence of G.O.P. extremism, not failure on Biden’s part to reach out.

 

Beyond that, Biden and company appear to have learned that caution coming out of the gate doesn’t store up political capital to do more things later. Instead, an administration that fails to deliver tangible benefits to voters in its first few months has squandered its advantage and won’t get a do-over. Going big on Covid relief now offers the best hope of taking on infrastructure, climate change and more later.

 

Oh, and Democrats finally seem to have learned that voters aren’t interested in process. Very few Americans know that the Trump tax cut was rammed through on a party-line vote using reconciliation, the same maneuver Democrats are now pursuing, and almost nobody cares.

 

Finally, I suspect that Democrats realize that getting policy right is even more important in 2021 than it was in 2009 — and not just because of the economics. When much of the opposition party won’t acknowledge election results, condones insurrection and welcomes conspiracy theorists into its ranks, you really don’t want to pursue policies that might fall short and thereby empower that party in the years ahead.

 

Put it this way: Debt isn’t and never was an existential threat to our nation’s future. The real existential threat is an illiberal G.O.P. that looks more like Europe’s far-right extremists than a normal political party. Weakening policy in ways that might help that party’s prospects is a terrible idea — and I think Democrats realize that.

 

So this time Democrats are ready to seize the day. Let’s hope it will be enough.

[kenberg]

Lots of things have changed since Obama was first elected. Krugnan's arrogance is not one of these things. He is greatly pleased to see that the Dems have finally realized that he was right ion2009, he is right now, and he will always be right.

But of course my skepticism has also not changed.

I thought and still think that how much debt a country runs up actually matters. it's not the only thing that matters, but it matters.

It is good to be clear, and I don't require all statements to begin with the disclaimer "Of course I could be wrong", but Krugman?

Well, he does not lack confidence. Perhaps that's a virtue.

[shyams]

But of course my skepticism has also not changed.

 

I thought and still think that how much debt a country runs up actually matters. it's not the only thing that matters, but it matters.

Let me attempt to explain how incremental debt does not matter right now. Caveat: I am not an economist, an Econ major, or an expert in this field. Any economics courses I attended as a student have all faded from memory years ago.

 

Many have come across that analogy which equates debt with "borrowing on the nation's credit card". This pernicious analogy permanently distorts readers' mind which is one reason it is used by politicians and deficit-hawks. Our life experiences also help reinforce the negativity embedded in that analogy --- many have either personally borrowed on credit cards and found it to be painful OR know people who have experienced such pain. So it is very easy to have negative views about debt.

 

Let's amend the above analogy to something more aligned with current reality. Instead of "credit card", imagine a "special loan" where the effective interest rate is on amount borrowed is currently negative!! and is likely to remain negative for a few years. Imagine also that the borrower who can avail this loan is a 40-something year old with a steady source of income that is sure to rise (although slowly) in the coming years. Would this person wish to borrow? Even if the amount borrowed goes largely towards spending on vacations, clothes and such -- i.e. things that do not create long-term assets in the borrower's life?

 

I think a reasoned view would be: YES, let's do it. One can deal with the principal repayment in the coming years, especially as this loan will actually earn (not cost) interest in the first few years! This is what the US Federal Debt situation is at present (p.s. also true for the UK, the EU and other well-developed economies). The yield/coupon on borrowing is lower than the inflation rate --- which causes the Govt. to have to pay smaller amounts in future.

 

Now I know the analogy is not water-tight and it should be easy to poke holes in it. However, the essence is true. When interest rates are so low as they have been for over a decade, the Govt can err on the side of excess and yet be all right despite the incremental borrowing.

[Cyberyeti]

Now I know the analogy is not water-tight and it should be easy to poke holes in it. However, the essence is true. When interest rates are so low as they have been for over a decade, the Govt can err on the side of excess and yet be all right despite the incremental borrowing.

 

This is true, but in the past if you did this, the rate you could borrow at initially evaporated if people started worrying about whether you could pay it back. Why has this ceased to be the case ?

[y66]

The ability of the U.S. to pay back what it borrows is not an issue. The ability to pay back what it borrows without generating inflation may become an issue down the road but the bond market is saying that it's not an issue at the moment.

[y66]

Lots of things have changed since Obama was first elected.

For example:

 

You can fool all of the people some of the time ...

[kenberg]

Let me attempt to explain how incremental debt does not matter right now. Caveat: I am not an economist, an Econ major, or an expert in this field. Any economics courses I attended as a student have all faded from memory years ago.

 

Many have come across that analogy which equates debt with "borrowing on the nation's credit card". This pernicious analogy permanently distorts readers' mind which is one reason it is used by politicians and deficit-hawks. Our life experiences also help reinforce the negativity embedded in that analogy --- many have either personally borrowed on credit cards and found it to be painful OR know people who have experienced such pain. So it is very easy to have negative views about debt.

 

Let's amend the above analogy to something more aligned with current reality. Instead of "credit card", imagine a "special loan" where the effective interest rate is on amount borrowed is currently negative!! and is likely to remain negative for a few years. Imagine also that the borrower who can avail this loan is a 40-something year old with a steady source of income that is sure to rise (although slowly) in the coming years. Would this person wish to borrow? Even if the amount borrowed goes largely towards spending on vacations, clothes and such -- i.e. things that do not create long-term assets in the borrower's life?

 

I think a reasoned view would be: YES, let's do it. One can deal with the principal repayment in the coming years, especially as this loan will actually earn (not cost) interest in the first few years! This is what the US Federal Debt situation is at present (p.s. also true for the UK, the EU and other well-developed economies). The yield/coupon on borrowing is lower than the inflation rate --- which causes the Govt. to have to pay smaller amounts in future.

 

Now I know the analogy is not water-tight and it should be easy to poke holes in it. However, the essence is true. When interest rates are so low as they have been for over a decade, the Govt can err on the side of excess and yet be all right despite the incremental borrowing.

 

If Krugman said only that in this singular time of covid we need to prioritize helping the hard hit and we need to stimulate the economy I would agree. It's the condescending "On the economic side, Democrats have finally stopped believing in the debt boogeyman and the confidence fairy, who will make everything better if you slash spending." that I object to.

I am also not an economist (In college I took Econ 101 and 102 but let's not rely on that). But here is how I think. So far Becky and I have received two stimulus checks. The first one went in the bank and sat there, the second one we divided the money up among others who we thought would make better use of it, the third one who knows. But I don't need it and I won't spend it. I went to Burger King and got Whoppers for the two of us today, and I think I did the same last week. And an almond croissant at Starbucks. I fill the gas tank every two or three weeks. If the government wants to send us $2400 I'll take it, they can send me 10 or 20 grand if they want to, but I don't see why they would want to. This idea that we will just send out money to everyone, who cares, debt doesn't matter, sounds fishy to me.

 

Let's look at stock market gains during the Trump presidency. The Dow went up maybe 50% or so. So did the national debt, probably more than 50%. I could check the figures but I don't need to know them exactly to make a point here. I worry about the long-term shake-out of high stocks and high debt. I have stocks. I don't like thinking about that stuff and so I don't. I have no plans to make a killing in the market. I didn't bet on the SuperBowl either. And I know about as much about the stock market as I know about the SuperBowl . I now know who played and that Brady was the quarterback, for Tampa Bay, I forget the other guy's name. But even not knowing much, and I think that knowing when we don't know much is very useful, I worry that large deficit spending can trigger large market gains that are not really warranted by the basic economic structure. I haven't sold off and buried the money in the garden, but I worry.

I am not prepared to debate economics with Krugman, or with anyone. But the last time we moved housing prices had risen rapidly and I was determined to sell the old house quickly because I was confident prices would be dropping sharply. They did. You do not have to be a genius to see when something gimmicky is going on. I get uneasy when people get so certain that of course there is no need to worry about X, pretty much regardless of what X is. Krugnan is very very sure of himself and very very dismissive of anyone who thinks there might be a problem with too much debt. I admit he knows more than I do. That does not really calm me.

 

 

[shyams]

If Krugman said only that in this singular time of covid we need to prioritize helping the hard hit and we need to stimulate the economy I would agree. It's the condescending "On the economic side, Democrats have finally stopped believing in the debt boogeyman and the confidence fairy, who will make everything better if you slash spending." that I object to.

I am also not an economist (In college I took Econ 101 and 102 but let's not rely on that). But here is how I think. So far Becky and I have received two stimulus checks. The first one went in the bank and sat there, the second one we divided the money up among others who we thought would make better use of it, the third one who knows. But I don't need it and I won't spend it. I went to Burger King and got Whoppers for the two of us today, and I think I did the same last week. And an almond croissant at Starbucks. I fill the gas tank every two or three weeks. If the government wants to send us $2400 I'll take it, they can send me 10 or 20 grand if they want to, but I don't see why they would want to. This idea that we will just send out money to everyone, who cares, debt doesn't matter, sounds fishy to me.

 

Let's look at stock market gains during the Trump presidency. The Dow went up maybe 50% or so. So did the national debt, probably more than 50%. I could check the figures but I don't need to know them exactly to make a point here. I worry about the long-term shake-out of high stocks and high debt. I have stocks. I don't like thinking about that stuff and so I don't. I have no plans to make a killing in the market. I didn't bet on the SuperBowl either. And I know about as much about the stock market as I know about the SuperBowl . I now know who played and that Brady was the quarterback, for Tampa Bay, I forget the other guy's name. But even not knowing much, and I think that knowing when we don't know much is very useful, I worry that large deficit spending can trigger large market gains that are not really warranted by the basic economic structure. I haven't sold off and buried the money in the garden, but I worry.

I am not prepared to debate economics with Krugman, or with anyone. But the last time we moved housing prices had risen rapidly and I was determined to sell the old house quickly because I was confident prices would be dropping sharply. They did. You do not have to be a genius to see when something gimmicky is going on. I get uneasy when people get so certain that of course there is no need to worry about X, pretty much regardless of what X is. Krugnan is very very sure of himself and very very dismissive of anyone who thinks there might be a problem with too much debt. I admit he knows more than I do. That does not really calm me.

 

1. You are absolutely spot-on when you point out Krugman's condescending style and tone. I find him often annoying and occasionally boring. I read his stuff because his knowledge of economics is probably a million times mine.

 

2.A. I understand your assertion that a $1,400 cheque will make no difference to how & how much you spend. However, the $1,400 will matter hugely to some people on the lower end of the financial ladder. To them, it is almost a sink-or-swim situation.

 

It is worth noting that the US economy is largely driven by Consumer Spending and people who receive such an amount will spend more. People who don't really need the funds will likely contribute (statistically speaking) by spending more than usual.

 

2. B. I don't know how a "means-tested" programme can be administered efficiently while ensuring that deserving people definitely receive their cheque. There is a certain simplicity in keeping the programme more broad-based. I simply don't know enough about this topic to comment with any degree of certainty.

 

It is worth nothing that there is a known issue with "means-tested" programmes if they are based off your 2019 tax return. The adverse economic impact of Covid occurred in the 2020 or 2021 tax years and it is quite possible that incomes in these years for large swathes of Americans are well below their 2019 income. The Govt. risks not helping these people if they rely on a 2019-income based test.

 

3. Re. the stock market and other assets. You are absolutely correct to be worried about the bubble in a variety of asset classes and the impact of rising debt levels.

 

However, the debt levels causing this worry are not US Govt. debt. Instead there is a growth in the private sector borrowings for which the Federal Reserve's liberal monetary policy might be to blame. The US legislators authorised the Fed to "print money" in order to save the corporates during the first Covid relief bill which may have exacerbated the indebtedness levels.

 

In my opinion, there definitely is too much debt in the US Economy and there is also too much of money sloshing around artificially inflating all asset prices. One never knows how and if/when these risks will create a massive issue to the global economy.