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

Still skating in front of the breaking ice

A couple of months ago I drafted up a post arguing that Trump was becoming yesterday’s news.  He was off Twitter and Facebook, and responsible for a highly unpopular attack on Congress.  Stripped of the powers of the presidency he would be forced to spend his time whining about the election and playing victim.  The insurrection would give Republican officeholders the excuse they needed to distance themselves from Trump.  (I certainly was not alone here; McConnell seemed to think this as well.)  Gradually, Trump would come to be seen as an impotent failure.

This could still happen, but at this point it seems likely that I was wrong.  I am surprised at the way Republicans are rallying around Trump and attacking Liz Cheney. 

What does this mean for the future?  An obvious problem is that Trump may win the presidency again in 2024.  At this point it seems likely that he can secure the nomination if he stays healthy and throws his hat in the ring.  He may not be the strongest Republican nominee in the general election, but if he gets nominated he could win, which would be a disaster.  In any event, with Trumpism running rampant in the GOP any Republican nominee is quite likely to further inflame dangerous social tensions and threaten the integrity of our elections and the survival of our democracy.  Also worrying, the Democrats may well lose control of Congress in 2022, and if this happens Republicans will take obstructionism to new heights to damage Biden and prevent his re-election.  The bottom line is that American democracy is still skating in front of the breaking ice. 

Voter fraud in black and white

The battle to save democracy continues.

White man commits intentional voter fraud:

A Marple Township man who illegally registered his dead mother as a Republican and cast a vote on her behalf in the 2020 presidential election has been sentenced to five years of probation, Delaware County prosecutors said.

Bruce Bartman, 70, pleaded guilty to felony counts of perjury and unlawful voting last December after investigators discovered he had successfully cast a mail-in ballot for his mother, who died 12 years ago. He also attempted to obtain a mail-in ballot for his dead mother-in-law, but the request was flagged by state officials. 

Bartman used an old driver’s license number to request the mail-in ballot for his mother and sneak through Pennsylvania’s Statewide Uniform Registry of Electors system. He used the ballot to cast a vote for former President Donald Trump on Oct. 28. 

Black woman accidentally violates arcane voting rule:

A Texas appeals court on Thursday upheld a five-year prison sentence for a woman who was convicted of illegally voting even though she didn’t know she was ineligible when she went to the polls in 2016. The punishment for the Fort Worth woman, Crystal Mason, stirred national outrage because of its severity, prompting accusations that prosecutors were trying to intimidate Texans from voting.

Four years ago, Mason was on supervised release, similar to probation, for a federal felony conviction related to tax fraud. She didn’t know that  Texas  prohibits felons from voting until they finish their sentence entirely. Mason voted in the last presidential election at the urging of her mother and cast a provisional ballot when poll workers couldn’t find her name on the voter registration rolls. The ballot was never counted because Mason was not an eligible voter.

During her 2018 trial probation officials testified that they never told Mason she could not vote, but the appeals court said that didn’t matter. Mason was guilty, the court said, because she knew she was on supervised release. “Contrary to Mason’s assertion, the fact that she did not know she was legally ineligible to vote was irrelevant to her prosecution,” Justice Wade Birdwell wrote for a three-judge panel on Texas’ second court of appeals.

Seems fair.

The politics of research: parental incarceration and child welfare

The American Economic Review is publishing an article by Samuel Norris, Matthew Pecenco, and Jeffrey Weaver that suggests parental incarceration has benefits for children:

Every year, millions of Americans experience the incarceration of a family member. Using 30 years of administrative data from Ohio and exploiting differing incarceration propensities of randomly assigned judges, this paper provides the first quasi-experimental estimates of the effects of parental and sibling incarceration in the US. Parental incarceration has beneficial effects on some important outcomes for children, reducing their likelihood of incarceration by 4.9 percentage points and improving their adult neighborhood quality. While estimates on academic performance and teen parenthood are imprecise, we reject large positive or negative effects. Sibling incarceration leads to similar reductions in criminal activity.

The authors have been criticized not for the substance of their conclusions, but because their findings will serve to legitimize mass incarceration.

Noah Smith has an excellent post discussing the controversy and arguing that scholars should not be constrained by political considerations when deciding what to publish. 

I want to make two different points.  First, I don’t think the main message of the paper is pro-incarceration at all.  My initial reaction reading the abstract (that’s all I’ve read) is that it adds to the growing body of evidence that children are very sensitive to their environments, and that we need to think hard about what we can do to help disadvantaged children have decent childhoods and reach their potential as adults.  You could read this article and think we need to make the Biden family allowance permanent.  You could read it and think that we need to provide paid family leave.  You could read it and think we need better schools.  You could read it and think that we need to make it easier for women to leave abusive relationships.

Second, I don’t think the paper will torpedo criminal justice reform efforts.  Democrats are certainly not going to change their views on the desirability of criminal justice reform as a result of this study.  More importantly, I doubt Republican politicians will either.  The fact is that there is modest support among some Republicans for criminal justice reform, based on years of advocacy and attitude-shaping by libertarians and fiscal conservatives.  Getting to yes on reform will be difficult, but that’s just politics.  One paper isn’t going to change the balance of forces; that’s not how politics works. 

What proponents of criminal justice reform really need to worry about is rising crime rates.  A rise in crime will not just destroy support for reform, it will help Republicans gain control of government at all levels.

The politics of vaccine-stretching

When the Pfizer and Moderna vaccines were first approved, it was clear that they were highly effective at preventing covid and that they would be in short supply for months.  The clinical trial data also suggested that, at least in the short-run, one dose of the vaccines would provide almost as much protection against covid as the two-dose protocol that was tested and approved by the FDA. 

This led a number of economists and public health professionals to argue that we could gain an edge in the fight against covid – and likely save tens of thousands of lives – by prioritizing first doses and delaying second doses (“first doses first”).  We could also stretch existing supplies by giving people half-doses, and by giving one dose to people who have recovered from covid and have some degree of natural immunity to reinfection, or simply by delaying their vaccination until more vulnerable people have been protected.

Most of the debate over vaccine stretching policies has been technocratic.  Proponents argue that first-doses-first and other vaccine stretching policies will save lives, and opponents point to various risks.  In my view the technocratic case for first-doses-first and other vaccine stretching policies is strong, but the politics are difficult.  Unfortunately, proponents of these policies have failed to think creatively about how to overcome political obstacles to vaccine stretching.  So let’s think about the political challenges and ask how the Biden administration might have been persuaded to try using first-doses-first, half-doses, and similar policies

The politics of first doses first are challenging

Summers ignores politics, unfairly blames progressives

Larry Summer is still criticizing the American Recovery Plan.  Summers:

In his latest attack on the recent rush of stimulus, Summers told David Westin on Bloomberg Television’s “Wall Street Week” that “what was kindling, is now igniting” given the recovery from Covid will stoke demand pressure at the same time as fiscal policy has been aggressively eased and the Federal Reserve has “stuck to its guns” in committing to loose monetary policy.

“These are the least responsible fiscal macroeconomic policy we’ve have had for the last 40 years,” Summers said. “It’s fundamentally driven by intransigence on the Democratic left and intransigence and the completely irresponsible behavior in the whole of the Republican Party.”

Summers, a top official in the past two Democratic administrations, has emerged as one of the leading critics among Democrat-leaning economists of President Joe Biden’s $1.9 trillion pandemic plan. Summers warned in the interview the U.S. was facing a “pretty dramatic fiscal-monetary collision.”

He said there is a one-in-three chance that inflation will accelerate in the coming years and the U.S. could face stagflation. He also saw the same chance of no inflation because the Fed would hit the brakes hard and push the economy toward recession. The final possibility is that the Fed and Treasury will get rapid growth without inflation.

I don’t have any expertise on the macroeconomic issues, but I do disagree with his exclusive focus on macroeconomic policy, and with his view of the politics, especially his criticism of the Democratic left. 

Let’s assume that the ARP steps too hard on the gas pedal and creates some risk of inflation/stagnation/recession.  That could happen, and in a perfect world Congress might have passed a smaller bill today focused on preventing immediate suffering, and then passed additional stimulus if needed in 6 or 12 months.  I think Democrats had two good reasons not to do this.

Good decision, big institutional problem on minimum wage work-around

From WAPO:

Senior Democrats are abandoning a backup plan to increase the minimum wage through a corporate tax penalty, after encountering numerous practical and political challenges in drafting their proposal over the weekend, according to two people familiar with the internal deliberations. . . .

Economists and tax experts have said that the tax outlined by Sanders and Wyden could be easily avoided and difficult to implement, with large corporations able to reclassify workers as contractors to avoid potential penalties. “I would be extremely nervous about trying out a brand new idea like this with virtually no vetting,” Jason Furman, a former Obama administration economist, said on Twitter on Friday.

The good news here is that the Democrats care enough about policy – or perhaps political blowback – that they decided this idea wasn’t ready for prime time.

But there is another story here that is less visible but more important. The institutional capacity of Congress is so limited that Democrats didn’t have a well-vetted tax proposal waiting in the wings when, predictably, Senate Parliamentarian ruled that a straight-up minimum wage increase could not be passed in reconciliation.

How is a Congress that lacks the institutional capacity to vet a relatively simple tax proposal like this supposed to tackle an issue like climate change? My sense is that the Democrats know this is a big problem, but increasing spending on Congressional staff is a political liability, so . . .

Let’s take a big, second bite at the mass testing apple

We made many mistakes in our response to the coronavirus over the past year.  One of the most critical was our failure to massively expand our capacity to produce coronavirus tests and masks and other PPE.  As many economists including Paul Romer noted last spring, mass testing and wide distribution of high quality masks would probably have allowed us to crush the virus and return to something close to normal life even in the absence of a vaccine.  Given that it was far from clear when or even if an effective vaccine would arrive, a large investment in mass testing and PPE production seemed like a no-brainer, but we didn’t do it.  This was one of the most serious and easily avoidable errors in our covid response. 

But what about now?  President Biden asked for $50 billion in his American Recovery Act to expand rapid testing, to help schools reopen.  This investment is critical, although the rationale is much too limited.  There is a real chance that the coronavirus will evolve in a way that lets it escape the current vaccines.  I don’t know how likely this is.  But even a small risk of viral escape would justify a large investment in testing and PPE production to let us keep a new variant of the virus under control while new vaccines are developed. 

Congressional Democrats should make this a high priority in the covid package they are working on.  A major investment in vaccine development and creation of accelerated vaccine testing procedures is also critical.  A protracted outbreak of a new covid strain will be a disaster for the country – a health disaster first, then an economic disaster, and finally a political disaster when Democrats get blamed for the never-ending hardships.

(I looked for information on the status of the legislation but didn’t find anything on point.  Anyone know of something?)

Economic insecurity, redux

Several comments on my last post on the economic difficulties of the people who attacked the Capitol took aim at their characters in one way or another.

I certainly do not want to defend the Capitol invaders in any way.  I think they should be vigorously prosecuted.  However, it is critically important to step back from the violent horror of the assault and think strategically about how we can use public policy to reduce the risk of political violence and democratic failure.  And that means thinking about conditions that influence people, not simply focusing on their character defects (they’re stupid, they’re selfish, they’re racist, etc.).  Whatever character flaws the insurrectionists have, they or others like them will have the same flaws next year, and the year after that, and on and on.  The crooked timber of humanity is . . . crooked.  Politics is not a morality play.

This is the reason that we should hope that economic factors played an important role in fostering the discontent that led to the election of Trump and eventually to the attack on Congress.  Researchers and journalists should actively look for economic causes.  It is not about professional bragging rights for economists.  It’s about looking for solutions.  We have some ideas about how to cure problems like economic insecurity and downward mobility.  We have, I think, fewer politically viable ideas about how to cure anxiety over demographic change or outright racism.  (I would be happy to be wrong about this.  And my point is not that we have no ideas about how to reduce prejudice.  We do.  For example, promoting interracial contact may lessen prejudice and anxiety.  But many policies to promote interracial contact, such as integrating schools, would be exceedingly difficult to pass into law and implement on a large scale, and any effort to do so might provoke a backlash that hands control of the government to Republicans.  Politics is the art of the possible.)

Take the article I quoted from in my earlier post.  Many people who stormed the Capitol have had trouble with debts, taxes, and bankruptcy.  There are policies we can adopt that might make their lives go better.  One obvious idea suggested by the article is to make it easier to declare personal bankruptcy.  We could implement a wage insurance program.  We could try to foster regional economic development.  We could limit the cost of college.  We could raise the minimum wage or try wage subsidies.  We can make Obamacare more generous.  We can pay child allowances.

These policies might or might not quell the anger, fear, resentment, and polarization that contributed to the insurrection on January 6.  They might or might not preserve our democracy.  We are skating in front of the breaking ice, and there are no magic bullets.  But at least they are concrete policies that could plausibly get passed through Congress. 

This is why the article quoted in the earlier post was interesting to me.

Score one for the economic insecurity theory of Trump . . .

From the WAPO:

Despite her outward signs of success, Ryan had struggled financially for years. She was still paying off a $37,000 lien for unpaid federal taxes when she was arrested. She’d nearly lost her home to foreclosure before that. She filed for bankruptcy in 2012 and faced another IRS tax lien in 2010.

Nearly 60 percent of the people facing charges related to the Capitol riot showed signs of prior money troubles, including bankruptcies, notices of eviction or foreclosure, bad debts, or unpaid taxes over the past two decades, according to a Washington Post analysis of public records for 125 defendants with sufficient information to detail their financial histories.

The group’s bankruptcy rate — 18 percent — was nearly twice as high as that of the American public, The Post found. A quarter of them had been sued for money owed to a creditor. And 1 in 5 of them faced losing their home at one point, according to court filings.

. . .

“I think what you’re finding is more than just economic insecurity but a deep-seated feeling of precarity about their personal situation,” said Cynthia Miller-Idriss, a political science professor who helps run the Polarization and Extremism Research Innovation Lab at American University, reacting to The Post’s findings. “And that precarity — combined with a sense of betrayal or anger that someone is taking something away — mobilized a lot of people that day.”

When Trump was elected in 2016 there was a big debate over whether victory reflected economic or cultural factors. A lot of the initial research downplayed the influence of economic factors, although subsequent research shows a more complicated picture. This article shows how difficult economic and social factors are to disentangle . . .

Three cheers for child benefits!

Let’s discuss something worth getting really excited about, the Biden/Romney child tax credit/child allowance proposals.  These proposals would make life much better for poor children and their parents.  A lot better.  Neither proposal goes as far as I would like, but they would be a real improvement and could be made more generous over time.

I will briefly describe the proposals and then discuss the political changes that may have paved the way for a major shift in social policy.

What the proposals do

To see just how exciting these proposals are, it helps to remember what is wrong with our current system of support for families with children, which is centered on a partly refundable Child Tax Credit (actually, two credits) and the Earned Income Tax Credit.  Matt Bruenig emphasizes these difficulties with the current system:

  • Our Child Tax Credit is not fully refundable, which means that children in the poorest households do not benefit from it.  
  • The Earned Income Tax Credit is only available to families with significant labor market income.  This again excludes the poorest households.
  • The current child tax credit and the Earned Income Tax Credit are paid to families once a year, when they file their taxes.  This makes it hard for families to budget.
  • With the EITC, many eligible families (around 22%) do not apply, presumably because of the complex eligibility rules.  It is likely that the same is true for the child tax credit.

The Biden and Romney proposals make full payments available to families without any labor market income.  They would reduce the number of children living in poverty by a third, and reduce deep child poverty by 50%.  They also pay families every month.  For further discussion of the proposals see this from Hammond and Orr or this by Bruenig.

The politics of child payments

Part of the reason these proposals are so exciting is that they reflect a sea change in how we think about poverty, work, government.  The poorest families were excluded from the CTC and EITC intentionally.  The purpose was (depending on your point of view) to create incentives for poor people to work, to punish the non-working poor, to avoid giving the undeserving poor an incentive to have children, and, of course, to do all these things to poor Black people, especially women.  A secondary factor in the structure of the current system was the tendency to run cash benefits through the tax code, to disguise them as tax cuts rather than just admitting they are benefits.  These ideas and impulses have shaped our thinking and limited our options for decades, yet today we may be ready to send monthly checks to poor parents – often single mothers – who do not work. 

Why might we be ready to give modest amounts of unconditional cash to poor families today, assuming we are?  What changed?  I can only guess, but here are some ideas.