No walk this morning – light rain. As I checked in periodically with cable news yesterday to see whether there was any possibility of the $2000 checks being approved by the Senate, it occurred to me to wonder just how great a burden this would place on the federal budget were it to be passed. I asked Google what interest was being paid these days on treasury notes and came up with the following information: 0.38% on the two-year Treasury note. 0.54% on the 10-year note. 0.99% on the 30-year Treasury bond. Thus if the United States government were to borrow enough money to permit it to distribute $2000 checks to each of the 200 million least well off Americans, thereby assuming an additional debt of $400 billion, and if it were to raise this money by selling $400 billion in 30 year treasury bonds, it would find itself burdened each year with an additional cost of just a tad less than $4 billion. Since it would receive back a good deal more than $4 billion a year in tax revenues from the increase in economic activity stimulated by these payments, the expenditure would clearly pay for itself. It is a mystery to me why this point is not made by the proponents of the payments in response to the hectoring by the deficit hawks who have newly rediscovered their inner stingy.
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Here's Krugman in a recent NYT op ed:
But why is there a limit on the amount of aid?
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That trillion-dollar cap, however, makes no sense. The amount we spend on emergency relief should be determined by how much aid is needed, not by the sense that $1 trillion is a scary number.
For affordability isn’t a real issue right now. The U.S. government borrowed more than $3 trillion in the 2020 fiscal year; investors were happy to lend it that money, at remarkably low interest rates. In fact, the real interest rate on U.S. debt — the rate adjusted for inflation — has lately been consistently negative, which means that the additional debt won’t even create a major future burden.
I take it that he's making your point. His explanation of what's going on is pretty plausible:
Of course, we know what’s going on here. While Republicans have made the political calculation that they must cough up some money while control of the Senate is still in doubt, they’re clearly getting ready to invoke fear of budget deficits as a reason to block anything and everything Biden proposes once he’s finally sworn in.
It should go without saying that the coming G.O.P. pivot to deficit hawkery will be completely insincere. Republicans had no problem with rising deficits during the pre-pandemic Trump years; they cheerfully passed a $1.9 trillion tax cut, mainly for corporations and the wealthy.
January 6, 2021, is going to prove to be the darkest day in the history of American democracy since the Civil War. Missouri Rep. Senator Josh Hawley has indicated that he will join House Republicans in refusing to certify Joe Biden as the elected President of the United States. This is a craven move by Hawley to advance his own presidential ambitions. It will force a vote in both the House and the Senate, requiring each Senator and each Representative to declare whether s/he believes Biden was properly elected President. The stunt is certain to fail, because under the Electoral Vote Act of 1886, both the House and the Senate must agree not to certify the vote by any State’s electors. Since the Democrats control the House, they will not vote not to certify the vote of any State’s electors. But imagine if the Democrats had not won the mid-term election in 2018 – Trump, despite losing both the popular vote and the electoral college vote, would have been re-elected.
The proposed solution to avoid this kind of imbroglio in the future is to amend the Constitution to remove the electoral college. But this is not going to happen, because an amendment requires the 2/3 vote of both the House and the Senate, so all it takes to defeat a proposed amendment in the Senate is the amendment’s rejection by 16 senators. By my count, there are at least 19 rural and less populous states which would reject such an amendment, since it would dilute the power which the Electoral College provides them by counter-balancing their lower population. (The 19 states are: Vermont; Maine; New Hampshire; S. Carolina; Alabama; Mississippi; Louisiana; W. Virginia; Kentucky; Tennessee; Oklahoma; N. Dakota; S. Dakota; Nebraska; Montana; Wyoming; Utah; Nevada; Idaho)
Another proposal to counter-act the effect of the Electoral College is to have each state pass legislation requiring that the electors vote in accordance with the state’s popular vote in the election. At the current time, 11 of the 19 states listed above have such legislation (Alabama; Maine; Mississippi; Montana; Nebraska; Nevada; Oklahoma; S. Carolina; Tennessee; Vermont; Wyoming). However, this would only guarantee that the electors would vote in accordance with the state’s popular vote. It would not prevent in the future the kind of stunt which Hawley is proposing to pull, which would allow a renegade political party to refuse to certify the electors’ vote if that party controlled both houses of Congress. The only way to ensure that a repetition of Hawley’s stunt does not have a deplorable outcome in the future is to ensure that such a renegade party never obtains control of both houses of Congress.
MS
I believe that in the interstate vote compact, the signatories agree to cast their electoral votes for whichever candidate wins the national popular vote--regardless of their own state vote.
David,
You may be right about that, but this would not prevent the kind of scheme which Sen. Hawley is pulling, which depends on the House and Senate overriding the vote of the electors, and in the case of a renegade party like the present Republican Party, which has sworn fealty to Trump regardless how the people have voted, would not prevent the nightmare scenario such a scheme trades on.
It is a mystery to me why this point is not made by the proponents of the payments in response to the hectoring by the deficit hawks who have newly rediscovered their inner stingy.
As that sage, George Carlin, put it, “Conservatives say if you don't give the rich more money, they will lose their incentive to invest. As for the poor, they tell us they've lost all incentive because we've given them too much money.”
I love your online lectures on Marx. Watching the ones on Ideological Critique. Please post more :-)
One longs for the days of a principled inner stinginess, if ever such there were. Conservatives don't mind deficit spending over-much. Their strategy has always been clear enough. Driving up debt in some quarters provides them cover for scaling back social safety-net spending.
Perhaps we have not heard the argument Dr. Wolff presents because the Democrats are still afraid of contradicting Lafler’s laughable lunacy.
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