There was some discussion of PAYGO and its controversial presence in the Democrat’s rules package in yesterday’s comments, so I thought you might be interested in Jim Newell’s latest:
With all but one Republican expected to vote against the rules package, Democrats can afford only 19 defections on the floor. Khanna and Ocasio-Cortez’s opposition seemed to signal a potential flood of defections that could force a last-minute rewrite. But neither Khanna nor the Progressive Caucus were actively whipping against the rules package Wednesday, and few others seemed willing to publicly threaten votes against it. Progressive Caucus Co-Chair Mark Pocan, meanwhile, tweeted that he had gotten assurances from Democratic leaders that the new PAYGO rule “will not be an impediment to advancing key progressive priorities in the 116th Congress.” In other words: He had gotten assurances that the rule, when inconvenient, would just be waived by a simple majority vote in the House.
That gets to a bigger point that Pocan also makes in his tweets: The real pay-go problem for progressives is the pay-go law that Congress passed in 2010, not the House’s pay-go rule, which comes and goes and gets waived or circumvented over and over.
The Republicans regularly voted to waive the PAYGO law when voting through their tax cut agenda, but of course as soon as Democrats are in charge in the House, the Senate will have a change of heart. That’s why it’s smart politics to be against PAYGO – it’s just another leverage point that Republicans will use when they want to thwart the Democratic legislative agenda. Democrats used PAYGO to run a surplus in the 90’s and it got us nowhere politically. We don’t need to do that again.
Also, as a New Yorker as well as a Democrat, I’m happy that AOC is out making noise about this. She’s from a solid D district and she should act that way. There’s a double standard in the media on “disloyalty”. When you’re a purple district Democrat you can run to every TV camera in town and bleat about legislation you’re opposing because it’s “too liberal”, and nary a tweet is tweeted about how that’s backstabbing Pelosi. Yet when a deep blue district Democrat opposes a piece of legislation that’s not liberal enough, he or she endures a tinkle shower of tweets telling him or her to STFU and get back in their lane. I hope that AOC’s example of how they can be primaried from the left will encourage a few other safe seat New York reps (*cough* Brian Higgins *cough*) to be out and proud.
Cheryl Rofer
Pelosi has counted those 19 votes. Khanna and AOC take that down to 17. I would not be at all surprised if the three of them agreed on this.
Edited to clarify.
Xavier Onassis
Democrats need to understand that deficits aren’t what anyone should worry about, they are just a number. Whatever it takes to get to full employment and stable prices is the right number. Usually that will be a deficit, because a deficit spending adds more money to the private sector’s savings than taxes remove, and an economy growing due to productivity increases and population growth needs a commensurately increasing money supply to function efficiently.
swiftfox
Saw this (but did not click) in the Post yesterday. Described as a liberal rebellion to get clicks. K Drum pointed out how ridiculous it was.
Chyron HR
@Cheryl Rofer:
Yeah, I’m pretty sure when AOC tweeted “Death to the corporate bitch-pig Pelosi!” it was just fifty dimensional chess being played by Nancy Smash. It’s the most logical explanation.
Gin & Tonic
@Chyron HR: I can’t find that Tweet – do you have a link?
schrodingers_cat
@Chyron HR: These so called progressives and their cheerleaders are tiresome in the extreme.
tobie
@Xavier Onassis:
We are at full employment and have been so for some time. We also don’t have an inflation problem at the moment. I take a Keynesian position when it comes to deficits: When the economy is booming, pay the deficit down; when it’s tanking, run it up. Given that PayGo is so easily waived, I don’t see it as an impediment to much of anything. And I don’t see why it’s a bad idea to tie expenditures to revenues. Heck, I’d like to see the PayGo rule used to justify cutting the military budget and using the savings to build a high-speed rail line on the Northeast corridor.
[Individual 1] mistermix
@Gin & Tonic: I believe he’s trying to make a joke. Like many of his other “jokes”, it’s not funny and it reeks of misogyny.
[Individual 1] mistermix
@tobie:
The PAYGO rule is easily waived. The PAYGO law, not so much. That’s the problem.
BR
I agree on the merits of paygo being politically unhelpful, but I think there’s been too much focus on AOC lately. Case in point: the “green new deal”, which, if you look at the actual proposed text, is just an aspirational plan for a committee that is going to then put together a plan.
Instead she/they could be pushing something that would be simple, effective, and saleable politically: the Energy Innovation and Carbon Dividend Act that was just proposed. Instead of Rube Goldberg like climate policies, this bill would be effective and provide progressive redistribution to boot, and even can get a small amount of bipartisan support so it might actually pass some day.
Sorry, just frustrated that there’s been lots of posturing on this and so many things and policies of substance are getting ignored.
Yarrow
@Cheryl Rofer: Repeating what I said in the thread below: I saw Savannah Guthrie’s interview with Nancy Pelosi. Guthrie was awful of course, but the fire in Nancy’s eyes when she said it’s a new era was just wonderful to see. She loves the fight. So great to see.
tobie
@[Individual 1] mistermix: Agree…but why make a fuss about the rule when the law is the issue? Valued commenter “jl” said yesterday that Sweden has a very nimble PAYGO law. I don’t know much about it but it does strike me that an effective way to oppose something within the Democratic caucus is to propose an alternative. Maybe progressives like Grijalva and Jayapal are doing that behind the scenes. At the end of the day what matters is getting something done, and if you rail against PAYGO, then it seems like you’re caving when you would get a flexible PayGo rule a la the Swedish model.
Chyron HR
@[Individual 1] mistermix:
If you’re going to continue sending people unsolicited sanctimonious e-mails, maybe you could make it VAGUELY clear what you’re complaining about? Like at least mention the name of the website?
Go piss up a rope, also, too.
satby
@BR:
Posturing is all the purity bros have, when it comes to substance their policy cupboard is full of fairy dust and unicorns. It’s the first day of the new House, and like clockwork the Cenk Ungers and others are flooding social media with the “betrayal by the establishment Dems” memes.
They are as much our enemies as the Tangerine Traitor is.
oldster
Yeah, I have no problem with AOC making noise here, and educating people about the fact that PAYGO is anti-progressive.
I also have no problem with Nancy including it in the rules, because it looks Respectable, and will have no effect on any legislation that she can get through the Senate.
Nancy is doing the right thing for this session of Congress. AOC is doing the right thing for the future, when we have an opportunity to pass real progressive legislation.
The toothlessness of this session’s version of PAYGO also helps me to understand something that initially puzzled me:
Why did Tom Reed, the Trump-loving fascist from upstate New York, say that he’ll vote for Nancy’s rules? It sure is not because he has found a progressive conscience — he has no conscience at all.
But now I see that the rules are not terribly progressive after all (since there will be no room for genuine progressive action this session). So Reed, who has already been play-acting that he is a moderate, sees that he can buff his moderate credentials without making any real difference to legislative outcomes.
It is still interesting, though, because it shows that a very early Trump-supporter is already making plans for his post-trump survival. Reed wants to get re-elected in 2020, and he has decided to un-hitch his wagon from Trump’s star.
Yarrow
@satby: How much Russian money and is funding The Young Turks, I wonder? Hmmm….
tobie
@BR: This is music to my ears! I’ve been pointing out for weeks that there is no green new deal as such, only a proposal for a committee to draft a proposal for green new deal. Democrats will have to come up with an ambitious, comprehensive plan to deal with the climate crisis this session. But in the meantime they should also push forward with legislation that is ready to go like the Energy Innovation and Carbon Dividend Act.
Betty Cracker
There’s nothing the Beltway media loves more than a “cat fight.” In its endless pursuit of click-bait, it will omit relevant ideological factors altogether to frame more click-worthy narratives, like this fall’s “rebellion” against Pelosi, which was led by a small pack of mostly male Blue Dogs but characterized as as youngs vs. olds. I was glad AOC shot that bullshit down.
rikyrah
@Yarrow:
It would be irresponsible not to speculate….
john b
@BR:
I don’t see setting the table for talk about large actions on reducing our impact on the climate as a policy lacking in substance. And if you read AOC’s tweets and not the coverage of them, you’d see that she has numerous policies that she has been pushing. Also, it is objectively a good thing to have someone on the left who is loud and good at social media.
rikyrah
I just want to say this before folks get to be downers..
I’m talking to the ‘ manage your expectations’ crowd…..
I don’t expect miracles from the Democrats in the House, after all, the Turtle is still in control of the Senate..
But, what happened on November 6?
The American Social Safety Net was saved….
Period.
Beginning. Middle. End of the story.
The muthaphuckas who brought you the tax cuts, were already greasing the wheels about how the deficit is bad, and in order to get it in control
” We must begin to look at entitlements.”
Well, THAT SHYT IS DONE.
See you in 2020 muthaphuckas…you can run on it in 2020 GOPers. …..
so, whatever highs, lows, in betweens happen….
Whatever investigations we get or don’t get….
We accomplished something on November 6th.
Elections do have consequences……and, we helped out everyone not in the 1%.
Yarrow
@oldster:
I think we’ll be seeing a lot of this going forward. Romney’s editorial yesterday was a bit along these lines.
These are warning signs for Trump, although he probably doesn’t see them that way.
feebog
There is not a single substantive bill coming out of the House that McConnell won’t kill in the Senate. So PAY/GO as a rule is pretty much a kabuki dance anyway. We are in for two long years of gridlock legislatively.
Frankensteinbeck
So, despite how oh, so terribly unpopular the media assured me Nancy Pelosi is, she won the House Speaker vote after all?
satby
@john b: I remember another woman who had numerous detailed policy positions get completely submarined by her ostensible allies. And now they’re doing it to Pelosi.
Frankensteinbeck
@rikyrah:
You are so right, and it affects how I sleep at night. McConnell’s power to pass Hell Legislation is broken, and that power terrified me.
Xavier Onassis
@tobie: I’d like to see the defense budget cut too, but here’s a question: does cutting dollars out of defense free up real resources (labor, materials, infrastructure, technical know-how) that would contribute to say, high speed rail or early childhood education or whatever else? The point being, it’s utilization of real resources that is important, not utilization of dollars that can be printed by fiat. That’s a point I wish Democrats focused on.
rikyrah
In just over 3 Hours we will be assured that Trump will NEVER sign another bill into law without the approval of Democrats.
Celebrate!#DemsTakeTheHouse#116thCongress
— Brian Krassenstein (@krassenstein) January 3, 2019
Jim, Foolish Literalist
@oldster: if the goal is using broad slogans and goals to educate and move the broad public, I’m all for it. When slogans become litmus tests is when I get off the bus. How many of the discontented youths carrying NO TPP signs and being chased by MSNBC cameras in Philadelphia in 2016 could have explained what TPP was and why they objected to it? How many people screaming “Single payer or let it all burn” on twitter can explain the difference between UHC and SP? How many could correctly give a true/false response to the statement “Every in Europe has Single Payer”?
chris
@BR: Take heart that climate change is actually being talked about at all. It has been missing in action for a few years and it’s good to see it back in any form. This is only the beginning because the young people aren’t going to shut up about it.
Haroldo
@rikyrah:
This. This is the crux of the biscuit. This is the thing to always keep in mind throughout these next two years.
Yarrow
@rikyrah: Yep. It’s such a massive relief that Democrats have the House back. And I’m so excited to see Nancy SMASH back in her rightful seat. She is just amazing. She loves the fight, and I love that she loves it.
satby
@Jim, Foolish Literalist: thank you! That’s my point: all these strong opinions based on whatever slogans the self annointed leaders of the left spew, whether or not any actual facts are involved. They go all in on these positions without even understanding the details because “Wilmer says it’s antiprogressive”.
tobie
@Xavier Onassis: In some cases there is a direct transfer, in others not so much. In either case, the revenue we collect through taxes can be spent in ways that a Democratic House (and, god willing, a Democratic Senate and White House) deem appropriate. I’m not opposed to levying taxes for programs that promote the health and well-being of the nation. And, I do have questions about the strategy of “printing money by fiat.” If a country does this consistently, what kind of value/purchasing power would the currency have?
BR
@john b:
I know she and others have proposed candidate legislation for the “green new deal” but a lot of what I’ve seen has fallen into the idea that quantity of legislation makes up for quality of legislation, and that “we need to do a lot” for climate change means we need tons of bills and tons of complexity. I’ve spent a long time on climate policy and it’s always a disappointment when Dems fall into the old school mega complex approaches to something where we need a simple but aggressive policy that hits the root of the problem, which Fee and Dividend approaches do.
BR
@john b:
Plus, and we don’t want to talk about this widely, Fee and Dividend doubles as a universal basic income without anyone having to talk about it that way. Solving climate change and providing a bit of a safety net at the same time is a win win.
Mnemosyne
@oldster
Please explain why the idea of paying down the debt when the economy is good is “anti-progressive.” Thanks.
OzarkHillbilly
@schrodingers_cat: The paella instructional is up at #104 in the previous thread.
Barbara
I am totally okay with AOC and other true blue reps standing up and trying to get legislation reflect their principles. I just really don’t want them to become the kind of blockade that has been erected by the far right in the Republican Party, because that is really what has sowed the seeds of their inability to get anything done. Which, of course, I am fine with when it comes to advancing Republican Party policies, but I actually favor Democratic policies, so I hope we can have a more constructive party dynamic across the political spectrum.
Ceci n est pas mon nym
@rikyrah:
I said this yesterday and I’ll repeat it. The analogy that’s come to mind lately is your house on fire. You’re evacuated, but you can see the flames filling the top floor and pouring through the roof. And the Fire Department has just arrived.
You know it will take time and danger and hard work for them to put the fire out. You know more of your house is going to be damaged, and you have no idea what, if anything, will be saved when the flames are finally out.
But it is still better that they are there, than it was before they got there.
Jim, Foolish Literalist
Somebody at the NYT opinion office knows what they’re doing. Michelle Goldberg was a fantastic addition, and this, also too, is fantastic news for elevating a smart, progressive voice to a bigger platform.
Ceci n est pas mon nym
@OzarkHillbilly: I had no idea you were of Spanish-speaking stock. ¿De donde era su abuelita? I guess Spain, what with the paella and all.
My Mom’s family was from Mexico, and it’s a very complicated story, much of which we don’t know and will never know because most of the people who knew anything have passed on. Mom was always proud of her perfect American English but I never knew till late in life that that was because English was not her first language. And she never spoke Spanish to us or to anyone else in my hearing; part of the complicated mystery. So I’ve spent much of my life, on and off, trying to learn the language but knowing I will always be a gringo.
comrade scotts agenda of rage
@satby:
Agreed. I’d even go further that they are as responsible for the Popular Vote Loser being elected as any, standard issue, red-state wingnut. Our Progressive Betters are all about abrogating electoral responsibility for their (in)actions.
Barbara
@Jim, Foolish Literalist: Congratulations to Jamelle Bouie! Hiring Bouie and Goldberg goes some way to redressing the crime of giving any kind of space to the execrable Bari Weis (who, as we all know, was hired because of who she knew — Bret Stepehens).
Face
THIS. All this “Dems are going to own Mitch and Donny” are such horseshit memes. NOTHING aside from bland appropriation bills will be passed in the next 2 years, so who cares about the rules of either legislative branch? By definition, Mitch cannot pass House bills because he’d be labeled as “abetting traitors” or “assisting the enemy” or some such shit, so nothing at all will get done about anything.
Ceci n est pas mon nym
@Face: Yep. 116th Congress has been in session, oh, minus 50 minutes and it’s obviously a total failure. Pointless. Might as well just give the gavel back to Paul Ryan and send all the Democrats back home because there’s just no reason to be there, and no reason to be happy about the election outcome.
Mnemosyne
@mistermix up top:
Well, at least you’re finally admitting that the problem with PayGo is with our current political opponents and not that it’s an “anti-progressive” and/or “austerity” policy. That’s a start, at least.
I’m happy to talk about why PayGo is a bad strategy right now, but way too many people on the “progressive” side don’t seem to understand the difference between strategy and policy and love to declare that something that is currently a bad strategy is automatically a bad policy that must be banished from the political landscape forever. See also, PPACA.
And any “progressive” who thinks that their pet policy can’t possibly be undermined by the Republicans the way that PayGo and PPACA were is living in a dream world. If an arsonist is setting fire to all of the houses in your neighborhood, changing the building codes isn’t going to solve the underlying problem, no matter how “progressive” they are.
Hob
Don’t know if someone already linked to this elsewhere, but it may be of interest:
http://yastreblyansky.blogspot.com/2019/01/my-unpopular-opinion-in-favor-of-paygo.html
Victor Matheson
@Xavier Onassis: Economics professor here. I don’t really want to be an asshole, but your first comment is complete word salad.
“Democrats need to understand that deficits aren’t what anyone should worry about, they are just a number.” ***No deficits are not just a number. They just happen to be a number that is probably not as important as other numbers like unemployment or inflation.
“Whatever it takes to get to full employment and stable prices is the right number.” ***Fair enough. Except that normally deficits have opposite effects on inflation and employment. Higher deficits should generally lead to higher employment and higher inflation. You can’t hit both targets at once using fiscal policy. This is basically one of the biggest rules in macroeconomics and one of the most problematic policy issues. And the failure of fiscal and monetary policy to cure stagflation in the 1970s was one of the real moments of reckoning for the profession.
“Usually that will be a deficit,” ***No. There is simply no reason whatsoever to believe that the natural state of the economy should be to run a federal budget deficit.
“because a deficit spending adds more money to the private sector’s savings than taxes remove,” ***I have no idea what this means. It is nonsense.
“and an economy growing due to productivity increases and population growth needs a commensurately increasing money supply to function efficiently.” ***True, except that deficits have absolutely nothing to do with money supply. Money supply is monetary policy that is controlled by Mr. Powell and the Fed while Pelosi and McConnell and Trump control fiscal policy and the deficits.
Sorry, don’t like to crap on people in the comments, but this is really way off.
Ruviana
@rikyrah: You ain’t never lied!
Xavier Onassis
@tobie: In the short term, there’s generally some resources freed up, in the long term lots.
Government spending is financed by printing money. Taxes do not fund the government, they motivate people to accept the dollars that the government prints (because they need those dollars to pay the IRS) and they control the supply of dollars in the hands of people, and thus the value of those dollars.
I realize this explanation is not conventional wisdom, but if you think through the underlying functionality of money it becomes clear that other explanations devolve into absurdities. Money comes from somewhere (anything else is an absurdity). I didn’t create it, my employer didn’t create it, our customers didn’t create it, our customers’ employers didn’t create it, etc. (more absurdities). We’re left with the government creates it at will in order to spend, and taxes establish its value. Since the ultimate purposes of money creation and taxation are not inherently related, there is no logic that says that they must balance, over a fiscal period or business cycle or ever. Whatever it takes to achieve full employment and stable prices is the “right” budget condition.
tobie
@Barbara: I think the fear comes from what Wilmer did to generate antipathy toward the party in general, and if you take a look at DailyKos you see that every time a member of the party opposes AOC they are automatically lambasted as neoliberal shills, corporate lackeys, Wall Street lapdogs, etc. Some of this obviously comes from trolls and individuals prone to see a conspiracy everywhere. Some of it comes from AOC herself who pitches herself as the virtuous warrior fighting a sclerotic establishment. A lot of it comes from politics by tweet, which has reduced our political discourse to slogans in ways that not even the sound-byte master Ronald Reagan could have imagined. We have our Tea Party. It’s called Justice Dems.
OzarkHillbilly
@Ceci n est pas mon nym:
I’m not (pure Slovenian on my father’s side, Anglo American mutt on my mother’s) My wife however is. Born and raised on the Mediterranean island of Majorca (Valencia, the birth place of paella? Has “the worst paella in all of Spain.” ;-) )
I used to know enough Spanish of the Mexican variety to be able to navigate the country on my own with little difficulty. Sad to say, it isn’t that way anymore. I suppose it would come back given a chance but I do not foresee more than a few trips to the Latin speaking countries of the world in my future.
Mnemosyne
@Face
You say that like it’s a bad thing. And I’m only partly snarking.
Mitigating the amount of damage the Republicans can enshrine into law is a positive good in and of itself. The more Trump has to do through departmental rule-making and executive orders, the easier it will be to reverse them.
Face
@Ceci n est pas mon nym: Huh? I can be happy that the Dems can prevent more damage to the country caused by unified GOP rule. That’s a real reason to be happy for Pelosi and Co. However, you’re a fool if you believe that the Dems will be allowed to actually fix the problems that have already manifested. There’s zero percent chance that the Senate would pass, and DT would sign, anything that sniffs of progressive legislation.
But thanks for twisting my observations of reality into a strawman’s argument that Dem control of the House is a bad thing.
tobie
@Xavier Onassis: I have to think about this some but what I will say is I’m more comfortable with funding projects through taxes and conventional debt instruments like bonds, whose value comes from the fact that people buy them. Prior to the Euro, Italy routinely devalued the lira by printing more money, and this worked for them, but the lira was never the world’s reserve currency as the US dollar is. That fact changes everything.
ETA: If you have time, send me some links to the currency theory you’re advocating so I can read up.
[Individual 1] mistermix
@Mnemosyne:
“Finally”? What? I’ve written one post about PAYGO and I’ve always thought it was bad strategy.
The way you use “progressive” is as a meaningless ad-hominem. It’s just whatever you think is bad about a set of Democrats who you don’t like for whatever reason.
In general, I think these legislative handcuff laws (like PAYGO) are bad policy and bad politics. If you don’t want to increase the deficit, don’t introduce, advocate or vote for legislation that does. Don’t use a handcuff law that will just be leveraged by Republicans when convenient. As a matter of policy, I don’t think that deficits have been shown to be automatically bad – we should be free to run them or not run them depending on what the economy is doing as well as the needs of the moment.
Jim, Foolish Literalist
@tobie: there’s a small but committed and noisy– and getting noisier– contingent of left twitter who are convinced that the only meaningful opposition to True Progressivism are Obama, Hillary Clinton and the people too dumb to hate them. The old fart in me is tempted to dismiss them cause I still can’t use the word “tweet”, noun or verb, without wincing, but the Stein vote in IIRC PA, MI and WI was larger than trump’s margin of victory.
schrodingers_cat
New nym espousing ridiculous economics theories, misguided “progressive” or Russian troll?
Ceci n est pas mon nym
@Face: Don’t think I said “bad”, I think I said “pointless”. (Re-reads post). Yep, the word “pointless” is right there.
Speaking of pointless, I’ve already lost interest in this back-and-forth. If you need to have the last word, feel free.
Afterthought: Maybe there’s something in translating into the Russian that causes the distinction between “bad” and “pointless” to be lost?
Betty Cracker
@Barbara: That is my hope as well, and I think we have an advantage over Republicans in that we’re not the Party of Stupid. I believe John Stuart Mill was correct when he said (paraphrasing) that not all conservatives are stupid people but most stupid people are conservative. That’s why you’re more likely to find, say, a Louie Gohmert sitting on the right side of the aisle. For that reason, I’m optimistic that no bloc of Democrats will form a Freedom Caucus-like obstructionist faction. What I do worry about is Democratic voters — with an avid assist from Russian troll farms, etc. — becoming entrenched in factions (“neoliberal shill!” “purity pony!”) and tearing the party and nominee apart in 2020.
khead
I’m old enough to remember when the United States was doing that moon thing.
I’ll see you on the dark side of the moon.
Chris T.
@tobie: It’s a little bit complicated, because nations don’t necessarily just print currency.
In the US system, we have the Treasury, which can mint coins and hence “print money”, and the Federal Reserve, which is not directly part of the government but does set conditions for banks. Then we have private banks, and those are actually where money is created! Money—or what we like to think of as money—is created by individual consumers, or businesses, or (yes) even the government, borrowing.
Here’s how it works. Imagine a small-ish closed system, with Builder Barbara, Plumber Pete, and (prospective) Homeowner Howard, plus other players as needed. Howard has his down payment saved up (by whatever outside magic). He borrows, from the bank, the remaining 90%. For simplicity (and silliness) the house price is $100, i.e., he has $10 and borrows $90. Howard owes the bank $90, but now he gives the $100 to Barbara. She buys supplies, including plumbing, from Pete with the $100, and starts building. That $100 is now money! $90 of it came out of nowhere (well, out of the bank, which has Federal Reserve dispensation to lend out dollars they don’t actually have in a vault). As Howard pays off his loan, over 30 years or so, he’s actually destroying the $90.
The same thing happens with the US Govt: Congress decides to spend $700 billion on war toys. They borrow the money (by selling bonds). They fork over the cash, or some of it, to military industrial complex contractors, who spend it on hookers and blow or whatever. The borrowing (bonds) actually created the money, but destroyed the same amount of money by having the lenders hand it over, unless the lenders are banks. As the govt collects taxes and use it to pay off the bonds (and bond-holders), they destroy the same dollars but re-create them in the lenders’ pockets (plus interest, which must be covered via more taxes or from more bond-selling).
Hence, selling T-bills and T-bonds (10 and 30 year bonds) to get the $700 billion in war toy money is actually neutral. So are the taxes. The Treasury could mint coins to create fiat money, but they do very little of that in reality (circulating coinage is pretty static). It’s the private banks that create money, in our system.
Xavier Onassis
@Victor Matheson: No offense taken, honest disagreement. Question, though. If the government spends a dollar and taxes 90 cents, what happens to the 10 cent difference? Conventional wisdom says it must be borrowed from someone who has 10 cents, but where did that 10 cents come from? Conventional wisdom seems to lead to an inevitable absurdity, doesn’t it?
“because a deficit spending adds more money to the private sector’s savings than taxes remove,” When I pay taxes, it comes out of my savings. When I get my government benefit check, it adds to my savings. This is simple accounting. It applies in aggregate too. When the private sector pays taxes, their savings decline. When the private sector accepts government payment for goods and services they have produced, private sector savings increase. In total, a government deficit adds to private sector savings, to the penny. I may not understand economics, but I do understand accounting. And if economics disagrees with accounting, so much the worse for economics.
Mnemosyne
@mistermix
Sorry, my ears are still ringing from all of the people on Twitter who have been screaming “centrist!” at me because I think that immigration reform and not putting refugee families into prison camps is more important than legalizing pot. Almost like “centrist” is a meaningless ad-hominem against people who don’t think that slogans are a viable substitute for actual policies and legislation.
Take a look at Hob’s link at #48. It does a good job of explaining PayGo and how Democrats used it to raise taxes on the rich to fund Democratic priorities. I have ZERO problem with current Democrats using it for that. How about you?
schrodingers_cat
@Xavier Onassis:
Bullshit on steroids.
@Victor Matheson:Thank You.
khead
Printed by fiat? That’s a serious tell. C’mon folks.
Mnemosyne
@Xavier Onassis
Wait, what? Do you not have an actual job? My taxes, and the taxes of most ordinary people, are withheld from my paycheck each week, so it never gets into my savings at all. It goes straight from my employer to the federal and state governments, which hang onto the money until I file my tax return and they see if I owe them anything additional or they owe me a partial refund.
Mnemosyne
@Betty Cracker
The current slam is “centrist,” like in “old centrist white woman.” Get it together! ?
Betty Cracker
@Mnemosyne: You’re having imaginary arguments with people in your own head. If Twitter is causing that, maybe get off Twitter.
daveNYC
@Victor Matheson:
We haven’t run surpluses since the late 90s, and the last one prior was a short bit in the late 60s. With that track record, and there are heaps of programs that either need to be started (infrastructure week ho!) or have their funding increased (VA, edumacation, EPA, you name it), I don’t think that saying there will usually be a deficit is some sort of crazy talk. It’s not an economic certainty, but politically we’re looking at deficit spending for the next decade or so, at least.
I’d assume he’s talking about the multiplier effect of government spending. I’m not sure the multiplier is that high, especially if you count state and local taxes in the mix, but it is up there.
@Mnemosyne:
I think that PayGo is pretty clearly anti-progressive, though it’s not targeted specifically at progressives. A progressive set of policies is going to involve a lot of new spending. Even the most basic reforms like increasing the ACA subsidies or medicaid nursing home payments will involve spending a lot of money. Passing those bills is difficult under the best of circumstances, and becomes even more so if you need to include cuts to other programs or tax increases in the bill.
H.E.Wolf
Yes, we seem to have a couple of Negative Newcomers visiting this thread. There are always a few ants at a picnic, and this is a feast day for Democrats, so it’s not really a surprise.
Everybody else, please enjoy the delicious aroma of Congressional Oversight simmering in the kitchen, soon to be presented by some excellent chefs!
Face
@Ceci n est pas mon nym: Ahhhh….disagreement/dissension now gets the new “Russian troll” hand-wave. Got it! Thanks.
The smell of epistemological relativism is strong in this thread.
Xavier Onassis
@tobie: Tobie, here’s where I got started: http://moslereconomics-kg5winhhtut.stackpathdns.com/wp-content/powerpoints/7DIF.pdf
Xavier Onassis
@Mnemosyne: Retired. Eat your heart out.
Origuy
@OzarkHillbilly: Did your wife grow up speaking Catalan or was that when Franco was suppressing minority languages? I got around Spain with my high school Spanish in 1995. I use it occasionally here in San José and I’m trying to improve it with Duolingo.
Xavier Onassis
@schrodingers_cat: Again, any other explanation of money that I’ve heard (and I’ve looked) devolves to absurdity. Unless you’ve got one I haven’t heard that doesn’t. Serious question.
Mnemosyne
@Betty Cracker
No, I’ve had actual “progressives” ban me from their Facebook page for being an “old centrist white woman.” I think that Major^4 made a screenshot if you don’t believe me, but I definitely told him and ruemara about it in real time. I don’t want to post it here because it has my real name attached.
So, yeah, between that and people on Twitter telling me that I’m a morally corrupt “centrist” for thinking that refugee kids should be a bigger priority than pot legalization, I’m not feeling too great about people who spout “progressive” slogans right now. YMMV.
Quinerly
@Betty Cracker: ?
ruemara
I’m glad you like AOC. I’ve found myself liking her less and less. I have no problem with PayGo because I know that it will be waived when convenient. I think “progressives” just like people who make stinks, regardless of if they actually have solutions. In fact, solutions aren’t preferred, because there’s a taint of actually doing things, which might involve compromise on the ideas.
@Mnemosyne: I’ve given up on them. Bernistas, AOC-stans, M4A, Green New Dealers. All of them. You can’t argue with the faithful and they certainly don’t put any of that energy into things involving identity politics, so, done with them.
rikyrah
“We treat every person with respect not because they are Democrats, but because we are Democrats.” – @NancyPelosi pic.twitter.com/hw6ioVgrDh
— Ben Wikler (@benwikler) January 3, 2019
Betty Cracker
@Mnemosyne: I’m not doubting you run into many assholes on Twitter and Facebook; so do I. But since I was recently one of them, I can’t help but notice that sometimes you light into people HERE for positions they haven’t espoused and, when called on it, reply that it’s due to attacks you’ve experienced on Twitter and elsewhere. I’m not butt-hurt about our recent run-in or anything — I promise. I’m just kinda worried about you because I believe you are a good person whose heart is in the right place. Maybe all that social media negativity is bleeding over into spaces where it shouldn’t. That’s all I’m saying.
rikyrah
New Muslim congresswoman to be sworn in with Thomas Jefferson’s centuries-old Quran https://t.co/kBHfoAPoPZ
— McClatchyDC (@McClatchyDC) January 3, 2019
tobie
@Chris T.: @Xavier Onassis: Thanks for these explanations and the link! I will follow up on this. I’m not an economist, statistician, or anyone with any expertise in this mode of analysis and thought, so it takes me a long time to digest material. But right now I’ve got to go to my day job. Thanks again for the dialogue and the questions raised.
khead
@tobie:
You are being played. Take it from someone you know in Elkton.
rikyrah
I know that I am suspicious by nature, but, here it is..
I don’t believe the story about the guy snatched up in Russia.
At first, I thought that he was CIA or some other intelligence person who got caught up. But, after looking around twitter at what folks have discovered about him..
Nope. Uh uh. He’s not genuine intelligence. I think it’s part of a scam to get Butina returned.
Mnemosyne
Okay, finally had to switch browsers since not being able to @ people was driving me nuts.
@daveNYC:
Again, this is a strategy difference, not a policy difference. There’s nothing wrong with raising taxes on rich people to pay for programs that benefit everyone else, especially since rich people are paying ridiculously tiny taxes thanks to Trump’s tax cut. Cuts to existing parts of the budget can be discussed individually, but there’s no reason those cuts have to be made only from liberal priorities.
@Xavier Onassis:
Oh, that explains why your view of how taxes work is completely opposite from how they actually work for the vast majority of people. People with an actual income don’t need to pay their taxes from savings unless something really odd happened that year. They pay taxes from their income.
Chyron HR
@daveNYC:
Isn’t “Tax the rich and/or cut military spending to pay for Medicare for All” literally the position currently being espoused by self-proclaimed progressives?
Jim, Foolish Literalist
THere’s a good chunk of the internet left who understand politics as emo performance art, so you get boomlets for Alan Grayson, Anthony Weiner and Michael Avenatti, and of course a full-on boom for the Great Bellower himself. This is the crowd that has convinced itself that Obama could have turned us into the fabled Scandanavian social democratic state if only he had screamed more. I admit it’s a tricky thing, successful politicians need to inspire some kind of emotional energy, but the notion that volume passes legislation has gained a bit too much currency in our side these days.
OzarkHillbilly
@Origuy:
Yes and yes. She grew up speaking Majorcan which is a dialect of Catalan, in the household, but because of Franco’s fuckery she still can’t write it (given time she can work out enuf to read it).
tobie
@khead: I dunno…anything that gets the gray cells working. I feel like I should get a beginner’s textbook on macroeconomics just to understand some debates. And, now, I really do need to go to work. Have a great day!
Mnemosyne
@Betty Cracker:
FWIW, this is a continuation of a discussion I was having with mistermix on one of his threads yesterday about why it’s silly to call PayGo “anti-progressive.” And, yes, Twitter and Facebook are making me allergic to the sloganeering that will be used as litmus tests to hobble Democrats in next year’s primary. People (not meaning you personally!) who say that they will refuse to vote for a candidate who doesn’t support #Medicare4All need to explain what they fucking mean beyond that slogan.
I am very nervous that there’s going to be another war for the Democratic Party in 2020, but I am unwilling to accept all of the blame for it this time around. I didn’t defend Hillary Clinton’s or the Democratic Party’s policies strongly enough last time. I won’t make that mistake again. Sitting back and playing nice with the people trying to destroy the Democratic Party from the inside gave us Donald Trump.
On the other hand, this may all be a hangover from the last couple of years of stress and I could mellow out a bit once the House gets down to work and there are some actual investigations happening. We’ll have to see, I guess.
opiejeanne
@Mnemosyne: :-)
Mnemosyne
@Betty Cracker:
Anyway, I have a nasty cold that kept me home from work today that’s probably not helping my mood, so I’m going to have a breakfast scone and then try to nap some more. Later!
Quinerly
@OzarkHillbilly: totally OT. Did you see where City Museum has sold to a company that runs amusement parks? Ugh
https://m.riverfronttimes.com/newsblog/2019/01/03/city-museum-announces-sale-to-new-owner-and-operator-says-existing-staff-will-remain
Leto
@rikyrah: If this doesn’t cause Steve King and Louis Gohmert to spontaneously self combust, I don’t know what will.
[Individual 1] mistermix
@Mnemosyne:
Yes, but I’m not one of those people. I agree with others who say that you should get off Twitter if it bothers you. And why not reform immigration and legalize marijuana? We should be able to do both. We’ve just become so used to a dysfunctional Congress that does next to nothing all year that we think that legislative bandwidth is a precious resource. Then we have pointless arguments about which X should be the only X that we push through the narrow Congressional pipeline (since only one thing can go through the eye of that needle). One of the refreshing things about AOC and the other new MOCs is that they are willing to challenge accepted DC “wisdom”.
I did read Yasterblansky’s piece – basically he says a very narrowly targeted PAYGO could work. I wasn’t convinced that it is worth the bother. I also don’t think that PAYGO is the worst evil ever perpetrated on the body politic.
schrodingers_cat
@tobie: You can read Keynes’ General Theory of Employment, Interest and Money, it is a slim book, lucid and readable and not too mathy.
schrodingers_cat
@rikyrah: Pray tell what did you find?
khead
@tobie:
Just search MMT.
Jay
@Mnemosyne:
It’s debt and deficit, which is skyrocketing, because the ReThugs gave Billionaires and Corporations a massive tax break.
The “economy” is not evenly distributed.
Pay-Go rules, ( it’s more of a guideline in the House), hold that before you can spend money on something, you have to save money on something or generate new revinues.
So if you say, want to increase food stamps, you have to tax or cut somewhere else. It’s a sensible rule, ( sort of) except how it is applied.
Pay-Go has never been used to take money from the Pentagon, and put it into school lunch programs. Instead, textbook subsidies were cut to raise school lunch subsidies. The Farm Bill wasn’t cut to increase Food Stamps, HUD subsidies were cut.
Like we were talking last night, The Nature of Work has changed and is changing. The “progressive” thing to do, would be have a New Marshall Plan/ Guarenteed Income program to address that. The time to do it is while the economy is doing well, as that in theory, gives the “new work” workers a place to go and funding for programs like a New CCA.
Pay-Go prohibits that, because nobody’s gonna cut funding to the Pentagon to pay for it.
And as the ReThug’s keep pointing out, every time they are in power, but Democrats never seem to learn, the debt and deficits don’t matter, except as an excuse to cut the social safety net.
When the economy is doing well, that’s a good time to “invest” in the future. Eg. Norway.
Burnspbesq
@Xavier Onassis:
I’m at a loss to understand how you could have passed Econ 101.
Xavier Onassis
@Burnspbesq: @Burnspbesq: Do you have another explanation for why the government prints money???
Victor Matheson
@Xavier Onassis:@Xavier Onassis: You’re understanding of public finance and monetary economic is simply deeply wrong and informed by hacks and cranks, not actual scientists.
Two major points here. In the United States, the government has no legal ability to create money other than minting coins, which it does in only very small amounts. The US has specifically given that right away to the Federal Reserve, although they could theoretically take it back. And they gave that right away for good reason.
Should the government decide to take back that right and print money instead of taxing people in order to pay for things, you would instantly have more dollar bills chasing around a fixed pile of goods leading to inflation. There is a strong reason why governments don’t simply print all of the money they need instead of raising it through taxes as this quickly makes currency worth less and less. And it is why many economists call printing money “the inflation tax.”
Victor Matheson
@Xavier Onassis: “In total, a government deficit adds to private sector savings, to the penny.” Totally untrue in the real world.
An increase in government deficits can be due to an increase in government spending or a decrease in taxes.
If government spending increases, that spending will eventually wind up in people’s pockets where they can either consume it or save it. If taxes fall, people can either take their windfall and consume it or save it. The only way your example works is if every person’s consumption level is totally unaffected by the actions of government. This is obviously absurd.
Again, simply wrong. And enough of my time spent here today.
Victor Matheson
@Xavier Onassis: In the US (and Europe and most other developed economies) the Government doesn’t print money. The Federal Reserve does. Since the Federal Reserve has no need to pay for Trump’s (or Clinton’s or Obama’s or Bush’s) deficits, the Federal Reserve prints money in order to best fulfill its dual mandate of full employment and stable prices. Of course, they can’t always meet this goal for a variety of practical and theoretical reasons.
And in the current economy, as Trump is increasing deficits, goosing the economy, the Fed is actually printing less money (indirectly by raising interest rates) in order to slow the economy. We have an actual, real-world example happening right now in the US where expanding deficits are being accompanied by a contraction in the money supply not by government printing more money.
Whoever you are reading, just stop.
goblue72
@john b: All lot of the objection to AOC and other incoming young progressives seems nothing more than knee-jerk Boomer whining that a younger generation has different PRIORITIES and has grown completely frustrated with the total lack of action by the Baby Boom generation on climate change. Seriously, “the get off my lawn” schtick is at best tiresome, at worst morally objectionable.
As for the progressives “posturing” – its effing politics. Theater, framing, and oratory are all part of the basic goddamn program. For a blog ostensibly about politics, a number of folks seem to get allergic to politics whenever politics means pushing back on their own totebagger priorities.
Chris Johnson
@Victor Matheson:
Funny, most of what ‘Onassis’ (and for that matter, mistermix) is saying, is very congruent with the position of Professor Mark Blyth (Brown). Anyone saying ‘oh, I am an Economics Professor On The Internet therefore you are a bozo and wrong’, are you Ivy League? Blyth outranks you.
Blyth is the one who says recent economics (as in quantitative easing) is a ‘class-specific put option’, in effect. He’s the one saying with real authority that austerity measures have invariably led to economic contraction and a higher debt/GDP ratio than before, in countries that have tried it. PAYGO is just more deficit hawking from the same old suspects, whether it’s largely symbolic or a serious obstacle to economic expansion. Blyth is also the one who called Trump’s victory before it happened: his predictive ability is not bad.
Blyth also has said in recent years that he’d expected capitalism to go ‘boom’ over shenanigans like the bank bailouts, but has observed that capitalism isn’t doing any such thing. He was forced to conclude capitalism is more resilient than he thought, and when it’s him saying it, I have to listen. However, this remains within the context of an overall anti-austerity narrative.
Thanks, Jay, for mentioning that this country will NEVER FUCKING CUT THE MILITARY BUDGET in order to pay for food stamps or Green New Deal or anything else. It’s disingenuous to support austerity-style PAYGO bullshit and claim, ‘it’s not a problem. All you have to do is cut the military budget!’
Yeah right. In other words, the fifth of Never.
Wow, lots of old nyms and unfamiliar nyms about. I really think we’re getting some troll pressure entirely dedicated to punching left. This is a correct website to mess with our politics by punching left, because it’s over-represented for older Democrat liberals who are already not particularly trustful of radicals.
Xavier Onassis
@tobie: khead is absolutely right, MMT (Modern Monetary Theory). Here’s my short explanation of MMT, which I hope is easier to read than the existing textbooks you can find, although you’ll probably want to follow up with them. Also, it’s a good idea to read one of the popular macro books, for example Greg Ip, just to see their perspective on things. Keep in mind that the mainstream perspective totally missed the financial crash and recession in 2008-2009. I think you’ll find much more clarity from understanding what money is, how it is created, and how it works in the real world.
https://docs.google.com/document/d/1VAyIXMpY1ZYz2ShUgdZf1IqifkmNWIbpxoviNngnSxU/edit?usp=sharing
Xavier Onassis
@Victor Matheson: Prof. Matheson, you didn’t answer my question, so I’ll ask again. If the Government spends a dollar and taxes 90 cents, where does the other 10 cents come from? Conventional wisdom is that the government borrows it from someone who already has 10 cents. But that person must have got the 10 cents from someone else who already had it, and that person got it from some other person who already had it, etc etc etc. The inescapable conclusion of conventional wisdom is that the 10 cents has always existed. And that conclusion is absurd.
J R in WV
@tobie:
This is just wholly incorrect, wrong, false. While some companies are having trouble filling positions at the wages offered, too many people are vastly underemployed — working two or three jobs and still not making a living wage.
If the minimum wage was linked to what it costs to rent a home, support children, transportation and eat well, then we could be talking about full employment. Talking about it, not there in the midst of it.
janesays
@Gin & Tonic: No, because it doesn’t exist.
Ella in New Mexico
@rikyrah:
OMG I have been thinking the same thing. The whole “he’s a big fan of Russia and Trump” was the first clue. Have you seen the details about just how he was Bad Conduct Discharged from the Marines? He frigging committed fraud. Also about how he kept the fact secret from his family who just found out the other day on TV? How he has worked in “security” positions for years, traveling all over the world and particularly Russia?
This thread was educational.
Something stinks here, no doubt about it.