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

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.

Information or propaganda? More Cowen on minimum wages

Today Tyler Cowen posted this:

Remember the proposals for a $15 federal minimum wage?

Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate…

That is from the new CBO report.

Here is a bit more context:

In an average week in 2025, the year when the minimum wage would reach $15 per hour, 17 million workers whose wages would otherwise be below $15 per hour would be directly affected, and many of the 10 million workers whose wages would otherwise be slightly above
that wage rate would also be affected. At that time, the effects on workers and their families would include the following:
Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate; and
The number of people in poverty would be reduced by 0.9 million.

We can debate whether to raise the minimum wage, how far, whether to use wage subsidies or a negative income tax, etc. But debate is difficult when one side refuses to participate in good faith. Furthermore, when right-wing economists spread obvious half-truths to bolster the case for their preferred but unpopular policies they undermine trust in the economics profession as a whole. This makes it more difficult for economists to get a hearing when they have something important to say. I really don’t know what Cowen thinks he is accomplishing by doing this.

Prior post here.

Tyler Cowen does political romance on minimum wages and covid relief

James Buchanan, one of the most influential free-market conservatives of the past half century, chastised liberals (progressives) for being romantic about politics.  His work on Public Choice Theory urged us to look at “politics without romance”.

Buchanan was right.  Being overly romantic about politics can lead to serious error, but this error is by no means limited to liberals. 

Case in point:  Tyler Cowen has recently been criticizing Democratic proposals to raise the minimum wage to $15 per hour, and the $1.9 trillion covid relief/stimulus package proposed by President Biden.  In both cases, he treats complicated questions of political strategy as if they were blackboard exercises in economic theory, totally ignoring politics.

Let’s start with stimulus.  Cowen has been echoing recent arguments by Larry Summers that the covid bill is too large and may lead to a surge in inflation and/or a Fed-induced recession.  No doubt this is possible; a more prudent approach to fiscal policy might be to spend, say, $1 trillion now (to increase vaccine production and distribution, help state and local governments, etc.), and to keep the rest in reserve in case the economy stalls.  But this overlooks politics in several ways.  It overlooks the high probability – close to 100% – that if the economy does not recover rapidly this year that Congressional Republicans will block any further assistance.  This would give Republicans a good shot at gaining control of at least one house of Congress in 2022, and it would likely doom Biden’s presidency.  Similarly, it overlooks the fact that Democrats have endorsed $2,000 stimulus/relief checks, and that reneging on that promise might hurt them and help Republicans.  Does Cowen think this would be good for the country, given the current degraded state of the GOP?  Let’s not romanticize the fact that the GOP has become a threat to democracy and is thoroughly uninterested in effective governance.  Of course, Democrats could try to pass a complicated bill with triggers or automatic stabilizers.  But Democrats need to pass a bill quickly, they need to craft a bill that can be passed through reconciliation, and they only get one bite at the reconciliation apple.  They also must pass a bill that is acceptable to all 50 members of their caucus.  Criticizing the bill for falling short of economic perfection is fine if one is clear that an imperfect bill is still fully worthy of support, but Cowen lets an imaginary ideal be the enemy of the good.  This is political romanticism.

The Democrats and the filibuster

Ezra Klein has moved to the New York Times, and he has a very good piece up today.  His argument is familiar to anyone who follows his work, but well-argued and definitely worth reading. 

He begins with this:

President Biden takes office with a ticking clock. The Democrats’ margin in the House and Senate couldn’t be thinner, and midterms typically raze the governing party. That gives Democrats two years to govern. Two years to prove that the American political system can work. Two years to show Trumpism was an experiment that need not be repeated.

Two years.

This is the responsibility the Democratic majority must bear: If they fail or falter, they will open the door for Trumpism or something like it to return, and there is every reason to believe it will be far worse next time. To stop it, Democrats need to reimagine their role. They cannot merely defend the political system. They must rebuild it.

Klein believes that Democrats understand the need for bold action that provides clear benefits to people who are struggling and skeptical of government.  And he thinks they know what needs to be done.  However, he is worried that good policy intentions will die in the Senate unless the filibuster is eliminated, which he believes is unlikely:

But none of these bills will pass a Senate in which the filibuster forces 60-vote supermajorities on routine legislation. And that clarifies the real question Democrats face. They have plenty of ideas that could improve people’s lives and strengthen democracy. But they have, repeatedly, proven themselves more committed to preserving the status quo of the political system than fulfilling their promises to voters. They have preferred the false peace of decorum to the true progress of democracy. If they choose that path again, they will lose their majority in 2022, and they will deserve it.

Klein makes the case for structural democratic reform as well as anyone, I recommend his piece.  Here I just want to add two additional perspectives.

Trump on his own terms

David Hopkins has an interesting take on the failure of Trump’s presidency:

Regardless of these challenges, the general verdict on Trump among historians and political scientists, reporters and commentators, and most of the Washington political community (including, at least privately, many Republicans) is guaranteed to range from disappointment and mockery to outright declarations that he was the worst president in American history. And there is little reason to expect that the information yet to emerge about the internal operations of the Trump administration will improve his reputation in the future. Instead, it’s far more likely that there are stories still to be told about the events of the last four years that history will find just as damning as today’s public knowledge.

Trump’s defenders will respond that the scholars and journalists who claim the authority to write this history are fatally corrupted by hostile bias. It’s certainly true that these are collectively left-leaning professions, and that the Trump presidency treated both of these groups as political opponents from its earliest days. So what if we tried for a moment to give Trump the benefit of the doubt by attempting to evaluate his presidency as much as possible on its own terms? Did Trump succeed in achieving what he wanted to do, even if it wasn’t what others wanted him to do?

Recommended.

Impeachment, again

I want to revisit my earlier post on impeachment.  I am more inclined to support impeachment today than I was 6 days ago, although it is still far from clear that impeachment makes sense. 

Trump has done great damage to this country by making clear that congressional Republicans will allow a lawless, authoritarian president who is popular with Republican primary voters to get away with almost anything.  Many of them would have let Trump subvert the 2020 election.  Our goal should be to prevent another Republican from using the Trump playbook. 

Given the current alignment of forces in U.S. politics, to prevent another Trump from attacking our democracy our priorities should be 1) to help Democrats win elections by discrediting the Republican party, especially its Trumpiest members, and 2) to discredit the right-wing conspiracy mongers and especially the terrorist groups that have thrived with Trump’s encouragement.  These are the factors that should drive our thinking about impeachment.  (If you think that impeachment should be judged without taking these broader political consequences into account, here’s a question for you:  would you really prefer impeaching Trump and having Democrats lose the House and Senate in 2022 to letting Trump scamper away unimpeached but having Democrats keep control of Congress?)

It is far from clear that impeachment will help safeguard our democracy. 

Will impeaching Trump prevent another Republican authoritarian from using Trump’s playbook?  This seems unlikely.  Impeaching Trump does little to prevent another Republican from using Trump’s playbook.  Punishing Trump because he attempted to overthrow an election in a violent but inept and buffoonish way at the end of his term when many in his party consider him a liability and are ready to be done with him will not deter future authoritarians.  Future authoritarians may have better opportunities to undermine democracy (a closer election, more popular support).  Or they may be better able to exploit opportunities to undermine democracy.  (Think President Cruz or Hawley, both of whom undoubtedly think of themselves – probably rightly – as much more strategic and operationally capable than Trump.  What makes them less likely than Trump to successfully subvert an election is lack of charisma and populist appeal.)

Libertarian David Henderson on Trump

Yesterday, David Henderson, a libertarian economist associated with Hoover and econlib, had a post at econlib suggesting that Trump has been unfairly accused of fomenting violence.  I was going to stick a link to Henderson’s piece in the comments to my earlier post on the libertarian reaction to storming of the Capitol.  But when I looked this morning, the post was gone.  I believe this has happened before with Henderson (I am almost certain this has happened at econlib, I am not sure the author was Henderson, but I believe it was him). 

In any event, the now missing post was captured by my blog reader, and I thought I’d share Henderson’s disingenuous, obtuse, narrow, decontextualized, and legalistic defense of Donald Trump here for the record.  Libertarianism is not an abstract set of ideas that exists outside of partisan politics; libertarians are the intellectual front for the plutocratic wing of the Republican party, and they know who their coalition partners are. They don’t care.

“Today’s violent assault on our Capitol, an effort to subjugate American democracy by mob rule, was fomented by Mr. Trump,” Mattis wrote. “His use of the Presidency to destroy trust in our election and to poison our respect for fellow citizens has been enabled by pseudo political leaders whose names will live in infamy as profiles in cowardice.”

This is from Lara Seligman, “Mattis blames Trump for inciting ‘mob rule’“, Politico, January 6, 2020.

I was playing pickleball Wednesday morning Pacific time and so I didn’t see Trump’s speech. I think I had my priorities right.

As a result, I made a mistake I make too often: I took people’s word for what Trump said.

I wonder if my Hoover colleague Jim Mattis did too.

What I’ve always liked about Ann Althouse, an emerita professor at the University of Wisconsin Law School, is that she’s independent: she thinks for herself.

Professor Althouse read the whole transcript, looking for where Trump incited the crowd. She listed the 7 most violence-inciting statements in Trump’s speech. Check the list of 7 and see if you can see “incitement” or “fomenting.” Or possibly she missed something. So go to the transcript and see if you can see something important she missed.