Tag: GDP

Biden Edges Toward Repeating Obama’s Worst Mistake

President Biden is negotiating with congressional Republicans to raise the debt ceiling, and there are reports that progress is being made on a deal that involves “cutting spending.” There has been talk that Biden might try to avoid a deal by minting the coin or invoking the 14th amendment. But Biden has always emphasized that he values consensus and compromise. The conservative Supreme Court might not go along with an attempt to use the 14th amendment, and shoving the coin down his opponents’ throats has never really been Biden’s style. It all reminds me of the debate from a decade ago. This blog was young back then, and I wrote a lot about Obama’s negotiations. Let’s revisit that period, shall we?

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On the Relationship Between Infrastructure Spending and Corporation Tax

The Biden administration has come out with a $2 trillion infrastructure plan. The United States is very behind on infrastructure spending–according to the American Society of Civil Engineers, the US faces a $2.59 trillion infrastructure shortfall over the next 10 years. Biden’s bill isn’t large enough to fill that gap, and a significant percentage of its spending is for other purposes. $400 billion is slated to go to nursing home services, a pressing need in its own right, but not one of the needs which the ASCE tracks in its reports. If you add it up, it looks like roughly half the Biden bill’s spending directly addresses the needs identified by our civil engineers, while the other half funds other projects. There’s nothing inherently wrong with this–it’s very normal for politicians to attach pet programs to popular bills that meet essential needs, and many of Biden’s pet projects have value. But it does mean that this bill’s infrastructure spending is less substantial than it initially appears. It will still leave us with a significant infrastructure shortfall. The more interesting issue–and the one I wish to discuss at some length–is the decision to pair this infrastructure bill with an increase in the marginal corporation tax rate.

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Why Larry Summers is Wrong About $2,000 Stimulus Checks

Larry Summers, the former director of the National Economic Council under President Obama, has publicly spoken out against the $2,000 stimulus checks proposed by Bernie Sanders and President Trump. Summers’ argument is simple–the checks are projected to increase disposable personal income as a ratio of GDP to an unusually high level. For Summers, the fact that this figure would be elevated above normal levels is itself cause for concern. But the situation we are in is unprecedented, and it calls for an unprecedented response. Let’s run through some of the arguments.

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These Executive Orders Make No Sense

After weeks of failed negotiations between the House and the Senate, the President is attempting to provide additional stimulus through executive action. The orders are probably unconstitutional–all money bills must begin in the House of Representatives, per the “origination clause”. They will be challenged in the courts, and I doubt they come into force. That said, if the President had ordered a strong aid package, I would be willing to consider supporting a challenge to congress’ spending authority. Congress has neglected its duty to protect Americans from the economic consequences of our anti-coronavirus policies. The scale of the disaster is so immense that I would support trying anything that might help tens of millions of unemployed people stay in their homes and put food on the table. When wealthy senators sit on their hands and deny ordinary people the means of subsistence because they feel offering aid might diminish their “incentive” to take jobs that pay less than $600 a week, they get no sympathy from me.

Unfortunately, I don’t get to make a provocative argument that the President is justified in running over congress, because this President has taken action that doesn’t make any sense.

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