This article is part of TPM Cafe, TPM’s home for opinion and news analysis. It first appeared at The Conversation.
This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=1398547
This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=1398547
But no one had any trouble with this:
Senate Passes $768 Billion Defense Bill, Sending It to Biden - The New York Times (nytimes.com)
And it was more than the military even asked for.
Our priorities have no resemblance to sanity.
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Manchin…fucking GOOBER!!!
Too bad there won’t be a massive oil spill in his front yard.
How about a rider to the bill that any oil spill clean up cost comes out of Manchin’s salary?
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Imagine the world wide spending on military stuff.
“Total military spending amounted to $1.981 billion last year, an increase of 2.6 per cent according to the Stockholm International Peace Research Institute. The five biggest spenders were the U.S. ($778 billion), China ($252 billion), India ($72.9 billion), Russia ($61.7 billion) and the U.K. ($59.2 billion) — all of whom increased their budgets in 2020.”
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I’m not much good at cypherin’, but that might could be “trillion”.
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Almost 2 of those trillions.
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2 is a lot of trillions.
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Prof. Klein is spot on, but could go further. We know that these measures stabilize economic life, because they reduce future uncertainty. Manchin is essentially asking the American people to play Russian Roulette with six in the chamber.
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I don’t really think the issue here is about numbers, it is about ideology. There are those in the GQP and the Democratic Party that do not want to have any programs that contribute to, as Manchin said, an “entitlement mindset.” The programs could be revenue neutral or even save money and it wouldn’t matter. This is why Democrats need to get out ahead of all this and sell their programs/bills. The GQP have their little one liners that resonate with a lot of people who, ironically, could be helped by many of the programs they end up voting against.
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They have detected another small spill off of Huntington Beach about 30 minutes north of me. That means we’ll be seeing tarballs on our beaches in the next day or two. Nothing like a fresh tarball squishing between your toes.
We really need to stop mitigating the damage from oil spills and offshore drilling and ban it once and for all.
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Not only won’t it increase inflation, if you take the entire bill to calculate the affect on the deficit, it will actually reduce it. CBO scores and some of the other analysis out there chooses to ignore increased enforcement by the IRS. They count the funding for the department, but not the expected results - which were based on past performance before their numbers were slashed.
They also point out that if programs like the child tax credit are extended, that would add more, but disregard the positive affect it will have on the economy with the added income and spending.
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Back in the 1950’s my family spent a couple years in the LA area. I remember wondering where those squishy tar balls came from on the beach. But I was a small kid then and it didn’t occur to me it might be environmental damage.
You are right, of course, that the Defense Appropriations bill almost certainly is more than we need, but I think that’s a different issue than the question of inflation. Every dollar in the Defense bill is buffered against inflation, because every dollar either goes to (1) statutorily established pay and benefits that have been set for the next two calendar years or (2) are subject to price controls imposed by the federal contracting process where the federal government is a powerfully placed customer. So, whether or not the Defense Appropriations bill is too big, it is not a driver of inflation.
Most of BBB, however, is very much more at risk of exacerbating inflation, because the federally appropriated money is being injected directly into the private sector where every stop in the chain from the initial provider to the ultimate consumer is a place where the provider will increase its price in the chain to its customers. That price increase will be the sum of two things: (1) the increased costs to that provider over the last two years and (2) a profit factor on top of the increased costs to it. That profit factor will be greatly determined by the ability of its customers to pay more for the service or product. And the fact of the matter is that millions of Americans have more money in their pockets and bank accounts than they did prior to the pandemic. They can pay more and they are.
In short, the BBB programs have a built-in inflation multiplier. That doesn’t mean these programs are a bad idea. I think most of them are good ideas. And some of them are fantastic ideas, like the expansion of the child credit. What it does mean is that there must be a rigorous and tough-minded prioritization, where this Reconciliation bill only includes the most immediately impactful programs that also will have a manageable inflationary blueprint. This is do-able, even with Manchin. Just keep the price tag to the $1.75 trillion that Manchin has agreed to.
Paul Krugman has recently written several articles on inflation and links to two are included below.
The first directly address BBB and its affect on both budget deficits and inflation and ends:
Is Build Back Better perfect? Of course not. But it’s the best legislation we’re likely to get for years to come. And claims that we should let this opportunity pass out of concern over fiscal responsibility or inflation are uninformed at best, dishonest at worst.
The entire article is at https://www.nytimes.com/2021/12/13/opinion/build-back-better.html
The second article by Krugman is one of the best articles I have ever read on current economic issues. It presents both sides fairly.
From the article:
“I recently participated in a meeting that included a number of the most prominent figures in the inflation debate — a meeting in which, to be honest, those of us still on Team Transitory were definitely in the minority. The meeting was off the record, but I asked Larry Summers and Jason Furman, a top economist in the Obama administration, to share by email summaries of their positions.”
Earlier in the article Krugman sets the stage for that discussion with:
"Inflation is an emotional subject. No other topic I write about generates as much hate mail. And debate over the current inflation is especially fraught because assessments of the economy have become incredibly partisan and we are in general living in a post-truth political environment.
But it’s still important to try to make sense of what is happening. Does it reflect a policy failure, or just the teething problems of an economy recovering from the pandemic slump? How long can we expect inflation to stay high? And what, if anything, should be done about it?
To preview, I believe that what we’re seeing mainly reflects the inherent dislocations from the pandemic, rather than, say, excessive government spending. I also believe that inflation will subside over the course of the next year and that we shouldn’t take any drastic action. But reasonable economists disagree, and they could be right.
To understand this dispute, we need to talk about what has caused inflation in the past.
Inflation stories
Inflation, goes an old line, is caused by “too much money chasing too few goods.” Alas, sometimes it’s more complicated than that. Sometimes inflation is caused by self-perpetuating expectations; sometimes it’s the temporary product of fluctuations in commodity prices. History gives us clear examples of all three possibilities.
Mainstream economists are currently divided between what are now widely called Team Transitory and Team Persistent. Team Transitory, myself included, has argued that we’re looking at a temporary blip — although longer lasting than we first expected. Others, however, warn that we may face something comparable to the stagflation of the 1970s. And credit where credit is due: So far, warnings about inflation have proved right, while Team Transitory’s predictions that inflation would quickly fade have been wrong.
But this inflation hasn’t followed a simple script. What we’re seeing instead is a strange episode that exhibits some parallels to past events but also includes new elements.
So how should policy respond?
To squeeze or not to squeeze, that is the question
I’m a card-carrying member of Team Transitory. But I would reconsider my allegiance if I saw evidence that expectations of future inflation are starting to drive prices — that is, if there were widespread stories of producers raising prices, even though costs and demand for their products aren’t exceptionally high, because they expect rising costs and/or rising prices on the part of competitors over the next year or two. That’s what kept inflation high even through recessions in the 1970s.
So far I don’t see signs that this is happening — although the truth is that we don’t have good ways to track the relevant expectations.
I almost shared this article on social media, but the headline stopped me. It frames the question badly, specifically, “…than it already is.” That frames inflation as already being terrible when it just isn’t. It’s higher, but 6% hardly seems like a big deal when remembering the 70s. In other words, this is hardly 1975, but that headline makes it seem like the article’s premise is that it’s already bad. What if I said you should do something because it won’t break your leg even worse? Fix the headline and I would have no hesitation, because the argument is right, but you can’t argue your way out of a bad frame.
It’s a pretty big leap to think that people who don’t see the logic in getting life saving medical treatment can grasp the vastness of multiple trillions of debt… Put it on paper with all those commas and zeros and eyes begin to glaze over. We’ve been numbed to the true impact of mountainous debt our DC friends incur while doling out the largesse to their pals…they ain’t doing so bad themselves…