Relevant and even prescient commentary on news, politics and the economy.

Trade and income distribution…who benefits, who loses

by Dan Crawford (Rdan)

Voxeu carries a post on research into increasing global trade, technology, and wages patterns:

The theoretical case for the potential effect of trade on the distribution of income has a long and distinguished history. It starts with the first musings of David Ricardo and has advanced to now include models with heterogeneous firms, heterogeneous workers, and labour market imperfections, which have shown the consequences of trade for income distribution across different sets of individuals (e.g. Helpman et al. 2009, Egger and Kreickemeier 2009).

The practical relevance of these insights, however, continues to be controversial. In the 1990s, there was a heated debate about the possible contributions of trade to income inequality, with some eventual consensus among trade and labour economists that rising inequality was more likely a reflection of technological change rather than the growth of trade.

The ongoing increase in inequality, however, has brought the question back to the top of policy agenda stoked by the continuing expansion of exports from low-wage countries. Perhaps most notably, Paul Krugman has shifted his view from one contending that trade was too small to influence wages significantly (Krugman 1995) to one arguing for an important role for the contribution of trade to inequality due to the increasing role of China and other rapidly industrialising countries (Krugman 2007, 2008).

The sense that there could be a renewed and empirically important link between trade and inequality, along with recent developments in the availability and means to analyse large matched employer-employee datasets, has renewed research on this topic.

* Munch and Skaksen (2008) find that wages are higher in Danish firms with high export intensity and highly educated workers but lower in high-export-intensity Danish firms with workers who have lower levels of education.
* Schank et al. (2007) estimate separate regressions for blue-collar and white-collar German manufacturing workers while controlling for a range of individual characteristics including age, gender, level of education, and nationality. In contrast with much of the other literature, they find a higher export wage premium for blue-collar workers than for white-collar workers.

Both of these studies use longitudinal data sets that match workers with firms, enabling the researchers to control for characteristics of both establishments and individuals. This is important because it goes a long way towards distinguishing between the role of exporting and the role of other, possibly confounding factors like firm size or the skill or education level of particular workers.

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Intelligent trade policy

by Stormy

Those that have been responsible for intelligent trade policy have “other irons” in the fire, namely, representing companies that have made a fortune outsourcing to China.

From the EPIs Robert E. Scott (Senior International Economist and Director of International Programs, Economic Policy Institute) post at Huffington Post:

“An op-ed published in New York Times last week (August 23) claimed that revaluation of the Chinese yuan would “make barely a dent in America’s trade deficit.”

This ludicrous assertion flies in the face of basic economic theory and our own economic history. The U.S. trade deficit with China displaced 2.4 million U.S. jobs between 2001 and 2008 alone. Treasury Secretary Geithner should identify China as a currency manipulator, and Congress should pass legislation that would authorize the president to impose substantial tariffs on Chinese goods if they fail to substantially revalue the yuan by the end of 2010. “

The authors of the Times op-ed, Massey and Sands, “ are former U.S. trade negotiators with China…Massey and Sands have substantial business interests in China. They direct Sierra Asia, a consulting firm that “has represented more than 50 major corporations in China from the U.S., Europe, and Japan,” who are “establishing and maintaining successful operations there.”

The U.S. should insist that the yuan float freely. Additionally, the U.S. should insist that Chinese labor be allowed honestly to collectively bargain.

Free trade is simply not possible if sweatshop labor is allowed. I am constantly surprised how little economists—from the right and the left—ignore labor’s rights. One would suspect that they all yearn for the antebellum plantation when profits and efficiency were high and labor was appropriately chained. Has capital co-opted an entire discipline?

(Dan here…slight editing for readability)

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SS Actuary’s "Bombshell" Fizzles: Krasting Lays Egg

by Bruce Webb

Regular readers of Angry Bear will be familiar with bond trader turned blogger Bruce Krasting and his, can we say non-standard conclusions about Social Security solvency. Well he is at it again today under the provocative title of SSTF – Steve Goss’s Bombshell – What Could it Mean?. SSTF means Social Security Trust Fund, Steve Goss is the Chief Actuary of Social Security, and I am going to tell you what it could mean. Below the fold (because the answer is ‘not much’ and I hate to waste the screen space.

Those who choose can start with Krasting’s piece then return, or you can start with my deconstruction of the back story.

My version. Edward Schumacher-Matos, an Op-Ed columnist for the WaPo penned a column called How illegal immigrants are helping Social Security. An interesting piece well worth reading, I have no bone to pick with Mr. Schumacher-Matos. He sets up the story with this in paragraphs 2 and 3.

In response to a research inquiry for a book I am writing on the economics of immigration, Stephen C. Goss, the chief actuary of the Social Security Administration and someone who enjoys bipartisan support for his straightforwardness, said that by 2007, the Social Security trust fund had received a net benefit of somewhere between $120 billion and $240 billion from unauthorized immigrants.

That represented an astounding 5.4 percent to 10.7 percent of the trust fund’s total assets of $2.24 trillion that year. The cumulative contribution is surely higher now. Unauthorized immigrants paid a net contribution of $12 billion in 2007 alone, Goss said.

First thing to note is that the initiative in on the part of the columnist who in the process of research asked a question of the Office of the Chief Actuary which has the final word on such things. And Steve answered using 2007 numbers. Why 2007? Well because the last time that Social Security took a deep look at this subject was during the preparation of the 2008 Report. And they found that the positive impact on long-term solvency from ‘other immigrants’ (i.e. illegals) was much larger than previously estimated, enough to move the actuarial gap a positive 0.30%, a VERY big change in the Social Security context and enough to offset other changes so that the overall gap dropped from 1.95% in 2007 to 1.70% in 2008, good news for those of us who were bracing for bad news in 2009 and 2010. The technical discussion from the Report can be found here: 2008 Report Sec IV.7: 7. Reasons for Change in Actuarial Balance From Last Report. What was the import of this finding? Well it significantly altered the cost of a long-term fix. And as Schumacher-Matos points out might have this think a little deeper about the actual economic effects of illegals who are more often thought of as drags on social spending rather than subsidizers of middle class retirement. But it didn’t really have any impact on the Trust Funds in the short run, FICA taxes were collected on illegals performing work that in their absense would have largely been done by legal immigrants or citizens who themselves were paying taxes (and because of the wage suppression enabled by hiring illegals probably at a higher rate).

Well as far as I can see the story could stop there. Columnist asks question of Chief Actuary, Chief Actuary supplies publicly available data mostly from the 2008 Social Security Report, columnist writes story pointing out the positive impact of immigration in this relatively narrow area of policy.

But that is not what Krasting sees. Oh no this is a “bombshell” dropped by Goss at the instigation of the Obama WH to advance the latter’s immigration agenda.

SS has been collecting money from illegal aliens for years. They will keep the money they have collected and they will not pay out any benefits (except fraud) in the future. So this money is “free”. I have often wondered how big the numbers on this are. Now we know. The numbers are enormous. Without the Free Money coming in from illegal aliens SS would look much different than we “think” it does.

Krasting maybe you should have asked. It is called the ‘Earnings Suspense File’ and while I didn’t know the number off the top of my head reader Nancy Ortiz certainly did when asked awhile ago, and this thing called ‘Google’ turns up all kinds of relevant results. This wasn’t the big secret you imply and its release was not remotely in the realm of a bombshell. But no matter, our hero presses on.

The WaPo had an article on this today. They had hard numbers (sort of) in the article. I was absolutely stunned that the source of this information was Steve Goss, the chief actuary of the SSTF. Some thoughts/numbers:

-Steve Goss does not reveal information of this significance unless he has a political agenda of his own, or he was told to.

Or unless he is asked by a columnist for a national newspaper of record for freely available public information for the purposes of writing a book. These aren’t state secrets, I have copies of the 2008 Report lying around somewhere and on my hard drive. Finding the resultant totals in the Trust Fund is not difficult. And this is where Krasting goes right off the rails.

-This information is an unmitigated disaster for SS. It comes a month after the release to Congress of their annual report that suggested that things had actually improved for SS over the past 12 months. The report did not highlight the fact that over $300b of assets held by the Fund were in fact contributions from illegal aliens. As much as 13% of the Funds holdings are tainted. Without this funny money the Fund would today be running substantial deficits. That red ink would force major changes in both payouts and taxes.

In what way is this money ‘tainted’? At least from Social Security’s standpoint. Social Security collects taxes from all kinds of people it knows will never qualify for benefits, just about everyone that works for wages pays FICA, and if you are a Briton who over the course of your career only worked 32 quarters or the equivalent of eight years in America, well then we take your money and say ‘Thanks’. Same if you are a stay-at-home spouse who only occassionally have taken employment outside the house, that five years you worked before the kids started coming along? Well that’s FICA under the bridge. If the case of illegals most if not all of the work would have been performed by legals or citizens, many of whom might equally not compile 40 quarters of eligibility. Would that money have been equally ‘tainted’?

Look we know that American employers have been exploiting illegals for their own financial benefit for decades. Now it turns out that that exploitation is also good for the bottom line for Social Security solvency and delays the time when income tax payers are going to have to start paying back the money they borrowed from the Trust Fund. And citizens and legal immigrants bear the cost in current wages not earned and future benefit reductions due to the crowding out of the labor market due to illegals. And for the long term health of labor maybe we need to press forward in an effort to transform illegals into legals either by naturalization or replacement so that every American worker gets every dime of Social Security they worked for. And yeah that might cost the system a few hundred billion over the next century or so. But somehow Krasting makes the jump from the inequity, if such it is, of retaining this income to claim that it is actually not income at all.

-Goss provided a range of the cumulative impact to SS of $120-240b (as of 2007). He said that the overstatement was $12b in 2007. Those numbers do no not add up in my opinion.

Danger Wil Robinson! Danger! Krasting math ahead. So BK does his own calculations and dismisses the opinion of the Chief Actuary in favor of his own calculated number of $350 bn.

I won’t (now) go into the longer-term impacts to SS of having overstated its surplus by $350b. That number is 13.5% of the assets of the Fund. I will say that this is a sea change event for how we look at SS. All prior analysis and all future expectations must now be revisited. I assure you that the results after excluding the illegal taxes will be will prove to be a major blow to the solvency of the Fund. It will change the debate on SS. It is that significant.

In Krasting’s mind. But how is this even an ‘overstatement’? Whether you peg the total at $120 bn or $350 bn, it exists and is legally available to pay benefits going forwards.

-We know that the actuaries at the Fund have been aware of the magnitude of this issue for a very long time. The question I have is, “What did they do about it?” We need to understand what this means in terms of anticipated future benefit payments. There are two possibilities:

(1) The Fund knew the money was from illegal workers but chose to close their eyes. For the purposes of calculating future liabilities they assumed that everyone, including the illegal workers, would someday get benefits. But they won’t. This would imply that the future liabilities of the Fund are much smaller than has been projected. This “good” news would have to be offset with the reality that the “true” assets of the fund are significantly overstated.

(2) The Fund knew all along that the benefits that are associated with these illegal receipts are never going to be paid and therefore it has reduced the liabilities associated with this to some degree. This would essentially make a fraud of all of the SS accounting. I doubt (hope) that this is not the case. To restate both assets and liabilities would create a very big credibility gap for SS.

“What did they do about it?” Well they publicly reported the results of their new analysis in the 2008 Trustees Report and then adjusted the projected actuarial gap by a massive (in context) 0.30% of payroll. The combined change of 0.25% of payroll (1.95% to 1.70%) dwarfed adjustments in previous Reports, (though matched in the other direction by the initial impact of ongoing recession with the 2009 Report). To equate the 2008 restatement with “chose to close their eyes” is ridiculous, instead everything happened in the light of day. At least if you were paying attention all along. Krasting then finishes up by proposing a couple of scenarios about how the “$350 billion” over-statement could be handled, ignoring only two things:

One the $350 bn is his number and not anyone elses. And two it would see that the ‘restatement’ was already done in 2008 with the adjustment in actuarial gap due to this new finding being 0.30% of payroll, which is a big number indeed when projected over the 75 year actuarial window. Sorry BK, those horses got out of the barn two and a half years ago.

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The True Cost of the Iraq War

originally posted at Economist’s view by Mark Thoma

Stiglitz and Bilmes: The True Cost of the Iraq War

Joseph Stiglitz and Linda Bilmes:

The true cost of the Iraq war: $3 trillion and beyond, by Joseph E. Stiglitz and Linda J. Bilmes, Commentary, Washington Post: Writing in these pages in early 2008, we put the total cost to the United States of the Iraq war at $3 trillion. This price tag dwarfed previous estimates, including the Bush administration’s 2003 projections of a $50 billion to $60 billion war.

But today, as the United States ends combat in Iraq, it appears that our $3 trillion estimate (which accounted for both government expenses and the war’s broader impact on the U.S. economy) was, if anything, too low. For example, the cost of diagnosing, treating and compensating disabled veterans has proved higher than we expected.

Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict’s most sobering expenses: those in the category of “might have beens,” or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only “what if” worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe?

The answer to all four of these questions is probably no. … […continue reading…]

There are some costs — the harm that something like torture does to our collective sense of morality for example — that I have no idea how to evaluate.

Mark Thoma

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HEALTH CARE thoughts: Nursing Shortage Issues

by Tom aka Rusty Rustbelt

HEALTH CARE: Nursing Shortage Issues

As Labor Day approaches it is a good time to think about health care labor issues, some good news, some bad news.

A phenomena many of us have noticed over the years (hard to exactly quantify though) is that recessions pull nurses back into the labor market. Nurses (about 94% female) often have husbands or significant others who lose jobs or hours.

Also, some of the staffing pressure is off at the hospital level because elective procedures are down and that takes pressure off the nursing staffing.

Recessions are not the desired means of correcting the shortage though.

My files on the shortage go back at 20+ years, and amazingly little progress has been made during that time.

There are some new and expanded programs, but a big problem now is the lack of nursing faculty. Unlike many PhD qualified professors, nursing professors are in big demand for management positions, usually in hospitals and health systems. So we are cannibalizing our own nursing pipeline.

University nursing programs are labor intensive, resource intensive and not nearly as prestigious as producing more MBAs, lawyers and economists.

While universities will get into bidding wars over top flight business, science or law professors, the willingness to play in the nursing salary market seems muted (perhaps if nursing was 94% male???).

The shortage will persist; the average age of RNs is climbing, the boomer nurses are heading for the exit while the boomer patients are becoming seniors, clinical skill requirements are accelerating, tighter reimbursements leave providers with less flexible budgets, and at times up to half of all licensed nurses are not working in direct care nursing – – all which seems to be a perfect storm.

We can send a man to the moon, but we can’t figure out how to solve this problem in a country where lots of people need new careers (and yes, lots of people are not suited for nursing). Maybe when we have to shut a lot of hospitals?

Tom aka Rusty Rustbelt

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The Medicare Headline You Didn’t See (and won’t)

For years we have been regaled with scary, scary numbers about how Medicare’s projected unfunded liability was in the TENS OF TRILLIONS. And sure enough if you consulted the Medicare Report and examined the actuarial projections for Medicare Part A you would find that number. But a funny thing happened with the 2010 Report and is shown in the data table above: the 75 year number is down to $6.9 trillion, a big number but only 0.5% of projected GDP over that period, and the infinite future number is actually a $600 billion SURPLUS.

Oddly this multi-multi trillion dollar turnaround did not result in banner headlines in the NYT or the WaPo, nor did congratulatory telegrams pour into the offices of Nancy Pelosi, Harry Reid and dare I say it Barack Obama from the folk at Cato and Concord that have been weeping bitter, bitter tears about ‘intergenerational inequity’ and begging us to ‘think about the grandchildren’. Because that is not how they roll nor was any of this what the kerfluffle has been about. The fundamental hostility to Medicare among the self-style deficit hawks is not because it is broken, but instead because it works. For them that infinite future $600 billion SURPLUS is terrible, terrible news. Which is why it never made it to the inboxes of Lori Montgomery and Perry Bacon at the WaPo, though you can bet big that any deterioration would have. Funny that.

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The Schizophrenia of Social Security Reporting

by Bruce Webb

When I first started paying serious attention to Social Security reporting back in 1997 I was struck by its curious mix of precision and fluidity and how that mix moved from the latter to the former as you went from the data tables to the top line numbers and then on to whatever coverage the Report received by the media. That is by the time the numbers hit the New York Times everything was in declarative mode “The Trustees project the Trust Fund WILL go to Depletion in year X unless taxes are increased by 2.xy%”. But when you examine the actual Report in detail you find that ‘year X’ and ‘2.xy%’ are simply mid-points of a probability distribution. Worse when you examine the Reports on a year over year basis you find that that mid-point changes in ways that can whip the long-term probability tail significantly. Yet in the reporting there is always the unstated assumption that THIS year’s data set is closer to projecting the next 75 years than last year’s set. And there are pragmatic reasons for that, for one thing we have that extra year of historical data to work with and for another you have to start with something but the downside is that it installs a certain sense of fatalism, that the numbers are what they are and that we are all more or less helpless victims of them. Well the truth is a little different, there are reasons why the mid-point number falls where it does each year and why it changes year over year, and some of those reasons are subject to intervention, we can and do make changes in the present that move those future numbers.

So between changes in policy and variations in the economic inputs the uncertainty going forward simply gets wider and wider both within OAS and DI projections and between them, by the time you get thirty and forty years out you are talking very wide probability bands. Yet the rules of the game are set in a way that we are more or less forced to work with the 75 year projection. Which is frankly a little silly particularly in the case of Social Security where the danger of a fix that is too big is actually greater than one which is too small, something I discussed in number 10 of the original Angry Bear SS series The Danger of Low Cost

The first step towards curing this schizophrenia is in recognizing that it is mostly induced. The economists who fuel the studies that drive the apparent need for Social Security ‘reform’ are fully aware of the uncertainties but choose to ignore them because the longer time frames allow them to use scarier numbers to urge more drastic solutions. But we don’t have to be bound by that, instead we can sit down, examine the models and determine pragmatically when they begin to diverge enough to call for different initial policy choices. If I had to pick a number it would be fifteen years out. By that point each of the three models deployed by the Trustees has reached its ultimate numbers when expressed in percentage form, the Office of the Actuary not deceiving themselves into thinking they can model precise changes to things like productivity on a year to year basis after even year eight or nine. And the Reports give us enough numbers that we could choose 2025 as our planning horizon, but since after ten years the data is only reported at five year intervals going fifteen years out from 2011 or 2012 gets more problematic. On the other hand the Trustees do supply a convenient moving 25 year number, and one where there is already enough variation between the top and bottom of the models to justify drawing the line for planning purposes. See Table IV.B4 below the fold.

I think it is apparent why I would prefer fifteen year planning windows, already by 2034 the distribution is from -1.86% of payroll for High Cost to +1.12% for Low Cost. Also worth noting is that OAS in isolation is under Intermediate Cost in almost perfect balance over 25 years at +0.05%, additional evidence that a solid short to medium term plan of ‘Nothing’ is still ideal for OAS. On the other hand even under the most optimistic model entertained by the Trustees DI barely would inch into positive territory, the chance of a 0.30% fix now sending it into overfunded territory before we could rebalance things being pretty remote indeed.

But in any event it is pretty crucial to get analysts and reporters to grasp that these models are not static and that successive Report years don’t necessarily get us closer to a full understanding, instead the inherent uncertainty of future economic developments will always swamp refinements of the methodology. While we can expect the Office of the Chief Actuary to do their best, we have to keep in mind that every pronouncement about the future outlook of Social Security needs to have a whole set of “if and only if”‘s attached to it and the best we can do is to lob solutions somewhere near the center of the spread.

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The monthly employment report roughly showed the economy to be still stagnated as the trends that have been in place so far this year continued. Private payrolls increased modestly by some 67,000 jobs. But the drop in census temporary employment caused total nonfarm payroll employment to fall 54,000.

The year over year gain in jobs as reported by both the payroll and the household survey is now near zero.

The unemployment rate at 9.6% was essentially unchanged and has remained in a range of
9.5% to 9.7% for several months.

The average workweek was unchanged so hours worked increased 0.3% from 99.2 to 99.5. On a smoothed basis the three month growth rate of hours worked slipped to 1.4% versus the recent peak of a 3.7% growth rate in June.

Average hourly earnings growth continued to moderate and average weekly earnings actually ticked down this month. With energy prices and overall inflation weakening this low level of wage growth is generating some modest gains in real earnings. As of last month the year over gain in real average hourly earnings of production and non supervisory
employees was 0.7% and real weekly wage were up 1.6%. While encouraging, by historical norms this is very weak for the first year of a recovery.

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Politically Feasible Stimulus

Robert Waldmann

Is going to disagree with Barack Obama and Paul Krugman (alternative title “which one here is not like the others”). Krugman writes and Obama implies that no large stimulus will pass congress.

I think a proposal to send a $500 check to every US citizen containing family would pass congress. In particular some allegedly Democratic Senators (cough Conrad) are arguing for a temporary extension of Bush tax cuts for the rich. My proposal dominates Conrads both as effective stimulus and as popular politics.

Update: However, it is not gonna happen

the top White House spokesman on Thursday said a large spending measure is not being considered.

“Some big, new stimulus plan is not in the offing,” White House press secretary Robert Gibbs said.

Note that Sam Youngman at The Hill uses “spending” and “stimulus” as synonyms, supporting the mistaken belief that the ARRA did not include tax cuts for the vast majority of Americans. I almost wonder if no one in the White House considered doing it with just tax cuts. I consider it a no brainer.

update II: this is weird. A trial balloon in the Washington Post. The possible proposal is a payroll tax holiday. I think that is better policy than an income tax rebate, but it is much worse politics. People in the USA are angry and want to soak the rich and especially hate hate hate tax cuts for corporations (proof at search for “Gallup Poll. April 6-9, 2009. N=1,027 adults nationwide. MoE ± 3.”). Somehow the Obama administration is determined that they express their populist rage by electing Republicans.

They will get no political benefit from the bill. If it passes people won’t believe that they cut payroll taxes. Only a check in the mail will convince many many US voters that some taxes were cut.

Also an anonymous source has decided to basically assert the false claim that the stimulus bill did not include huge tax cuts

More spending on infrastructure, particularly transportation projects, is also under discussion. But it would be easier for a package composed purely of tax cuts to “avoid the stain of a ‘bailout’ or ‘stimulus’ label,” said one official familiar with the talks, speaking on the condition of anonymity because the deliberations were private.

Check the quotes. A Obama administration source linked the words “stimulus” and “bailout”. I think that’s a firing offence. The line must be “This time we will propose only tax cuts as, for some reason, many people didn’t notice the huge tax cuts in the stimulus bill.” And if the reporter asks for explanation, repeat slowly.

Can anyone there play this game ?
My thoughts based on less solid evidence after the jump.

Krugman argues that there is no way to get significantly more stimulus out of congress (he began writing this when arguing that the ARRA stimulus was too small).

He writes “the Republicans will oppose him regardless” and “we need another round.
I know that getting that round is unlikely: Republicans and conservative Democrats won’t stand for it …”

Obama clearly agrees. In the latest comment on the economy (which I could find) The Whitehouse doesn’t go far beyond supporting the small business helping bill which Republicans are filibustering in the senate. In particular, the White House almost declared that they are not going to propose another really large stimulus “Now, no single step is the silver bullet that will reverse the damage”

I will explain why I think my proposal is political dynamite. Republicans might oppose it suddenly discovering their concern for the deficit (while arguing for extensions of Bush’s tax cuts). I am sure this is political suicide. Or they can go along and Americans get a nice check in the mail soon before they vote (before the end of October — I would call it the trick and treat bill).

They and the Washington Post editorial board and similar scolds will denounce it as a transparent attempt to buy votes. This will publicize the measure.

I am very dismayed by Obama’s “no silver bullet claim.” First I think it’s false as applied to stimulus. The form of the stimulus matters, but right now the main issue is that it should be large. Yes money giving money state governments is better than giving money to consumers who might just save it, but congress will give no more money to state governments.

Another key thing is that the bill be simple. When asked in a poll, only 12% of US adults correctly stated that the Democrats had cut taxes for the vast majority of US families (in ARRA). 12% !!!

Assuming I’m right (a big assumption) what’s wrong with Obama ? I think partly he is too pure to buy votes — he will propose a stimulus which he thinks is efficient. Partly he is cautious (which is insane given the polls, when you are behind you have to gamble). Partly the ghost of Ira Magaziner haunts the White House (this was the guy who loved complexity for its own sake and designed the horrible Clinton Clinton and Magaziner health care reform fiasco). A simple, simple bill doesn’t appeal to people who want to show they are smart (I am not thinking of Obama here).

Mostly, I bet they just can’t stand admitting that Paul Krugman was right. No one likes doing that, but it is, alas, part of the human condition.

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