We’re Talking $3.5 Trillion

Is the debate over the cost of the "infrastructure" bill a distraction from its content?

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Responding to Senator Joe Manchin‘s WSJ op-ed “Why I Won’t Support Spending Another $3.5 Trillion,” Kevin Drum argues, “We need to stop talking about the $3.5 trillion spending bill as a $3.5 trillion spending bill.”

Sen. Joe Manchin has published a manifesto in the Wall Street Journal saying that he won’t support the Democrats’ $3.5 trillion spending bill because he’s worried about its effect on inflation. This is nothing new from Manchin, and it’s no less crazy than it’s ever been. The spending bill amounts to only $350 billion per year and is mostly paid for, which means that its effect on inflation will be negligible.

Part of the problem here is that everyone, including me, keeps referring to this legislation as a “$3.5 trillion bill,” as if its size were the main thing that defines it. But it’s not meant as a stimulus bill or a recovery bill or anything like that. It’s just a bill that funds a bunch of progressive programs. This means the questions we should be asking about it are less about its raw size and more about which of these programs you support.

The problem with this is manifold. First, $350 billion over ten years, even if it’s “mostly paid for,” is still $3.5 trillion. It’s a lot of money! Second, both sides have a strong incentive to emphasize that fact. Most obviously, the bill’s opponents are using its size to scare voters. Emphasizing the ticket price rather than the annual payments is more effective. (It’s the converse of the car salesman’s trick of emphasizing the low, low monthly payments.) But President Biden and Congressional Democrats want credit for doing something big and bold. So, they’re shouting from the rooftops how much they’re spending, while also arguing that somebody else—the rich!—will pay for it.

But, yes, the cost of a government program has to be balanced against the rewards reaped. If improved infrastructure grows the economy, we should rightly factor that against the up-front cost. And few people, indeed, question how we’re going to pay for various military adventures—we just do it and figure it out later.

So, here’s Drum’s “rough list” of what’s in the bill:

  1. Makes the increased Obamacare subsidies from January’s coronavirus bill permanent.
  2. Provides universal pre-K for 3- and 4-year-olds.
  3. Provides funding for long-term care done at home.
  4. Provides two years of free community college.
  5. Makes the increased child tax credit permanent.
  6. Adds dental, hearing, and vision benefits to Medicare.
  7. Funds various climate initiatives.

He argues that, “if you think its price tag is too high then you should fess up about which ones you would prioritize the highest” and adds, “if I had to cut programs out of this bill, I’d probably choose the climate stuff, the Medicare benefits, and the child tax credit.”

I haven’t studied some of the programs enough to have a strong opinion but I’m probably most dubious of universal pre-K, free community college, and the child tax credit. I’d prefer some sort of “Medicare for all” or other universal baseline health program rather than the current hodgepodge of subsidies but, given that it’s a political non-starter right now, it seems reasonable to expand access where we can.

I’m somewhat surprised that “the climate stuff” is Drum’s first cut. Combatting climate change is almost certainly the issue area here that’s most pressing and most obviously in need of federal intervention. But I haven’t studied the particular climate-related initiatives in this bill to have a strong opinion as to whether they’re worth the cost.

FILED UNDER: *FEATURED, US Politics
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. HarvardLaw92 says:

    Honestly, meh. I’d caution that “paid for” rarely means “actually funded with new revenue or redirected revenue from other programs for which actual spending cuts have been implemented”. It usually means “we have this cool scheme that works on paper. Don’t fuss about details. GOSH…”

    Which means more borrowing and more debt. That would be OK if this were actually an infrastructure bill. (It isn’t.) It’s the opening payment on perpetual social spending programs that will have to be somehow funded again in a decade. The amount of debt the US already carries is a terrible vulnerability, and despite whatever manner of “we can borrow forever, it’s not a thing” posts which will inevitably follow, we can’t really, and it is a thing. At some point, people have to be willing to stand up and say “now wait a minute…”

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  2. Scott says:

    In other “fun with numbers”, $350M out of a $20T economy is just 1.75%.

    Personally, I would pull back most of the pretty much universally wrong Tax Cut and Jobs Act as a source of revenue. And start cleaning up the kludged up tax system that the so-called “tax reform” bill didn’t do. Adding child tax credit doesn’t go in that direction.

    I’m with you in going with universal healthcare and saving the huge amounts in administrative costs and friction that most today’s healthcare so expensive. Probably make most of the $260B/year VA obsolete in the process.

    Let’s face it universal pre-K is just enhanced daycare

    Climate initiatives should go in the infrastructure bill.

    And I believe UBI is inevitable. May as well start heading in that direction.

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  3. SKI says:

    $350 billion over ten years, even if it’s “mostly paid for,” is still $3.5 trillion. It’s a lot of money!

    Is it though? I mean, yes it clearly is for any individual entity but as a country?

    It is about 1.6% of our $21.4T GDP. So it is the equivalent of a family making median income ($69K) choosing to spend $100 more per month on the their kid’s education and the family’s health. It isn’t nothing but it isn’t unreasonable.

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  4. HarvardLaw92 says:

    @Scott:

    We have to be careful tossing around things like “a $20T economy”. GDP doesn’t mean what that usage of the term implies (i.e. a 20t pot we can withdraw 20t from), not least because one enormous component of GDP is… government spending.

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  5. SKI says:

    @HarvardLaw92: True it isn’t a pot of money but it is our collective economy and we can decide how to allocate it.

    AND it isn’t mostly “new” spending. Only a small fraction isn’t paid for.

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  6. Scott says:

    @HarvardLaw92: GDP is a monetary measure of goods and services in an economy. Whether provided by private sector or government sector, it doesn’t matter. It is still measuring transactions. I indirectly trade my services, through an intermediary called money, for, let’s say, legal services. This is fundamentally the same concept as trading my services, through money in the form of taxes, for goods and services delivered by a entity called government.

    What we are arguing in these bills is whether we act collectively to provide specific services to the population as a whole or make that an individual decision and responsibility.

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  7. HarvardLaw92 says:

    @SKI:

    That’s just my point – GDP doesn’t equate to “dollars we can spend” on a 1:1 basis. Sure, it’s a quibble, but one that does have import and one that almost always gets barreled over in these discussions. At the end of the day, even I have to admit that 1) we have a spending problem relative to taxation and 2) current tax policy is, and has been for decades now, destructive to longer term economic well being.

    In that context, one in which every dollar of new spending (I’ll need to see the detailed breakdowns of exactly where this “paid for” money is coming from before I’ll buy that it isn’t going to be underpinned by newly issued debt) has a direct effect on M2, and by association inflationary pressures. We won’t even get into this current economy being bolstered by enormous capital injections on an ongoing (but soon to taper) basis and our apparent inability to maintain functional backoffice funding / clearing without daily intervention. We are teetering much closer to the edge of the abyss, and staying on the “we’re gonna live today, gentlemen” side of that only by extraordinary manipulation, but still believe that we can’t possibly slide over the railing. It’s hope as a tactic.

    I’m not even taking issue with the magnitude of this proposal in particular – it’s indeed relatively small in the larger picture, but it is a reflective example of a larger problem – namely the tendency to believe that we can spend, essentially without limit, as long as we are “doing good”. I’m just using it to draw attention to that problem and suggesting, by association, that maybe Manchin being willing to say “hit the brakes a little, let’s look at this before we sign the mortgage” isn’t necessarily a bad thing.

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  8. HarvardLaw92 says:

    @Scott:

    Yes, thank you. I took macro too. You’re leaving out a bit.

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  9. Mu Yixiao says:

    @Scott:

    You can’t look at it as percentage of GDP. You need to look at it as percentage of the US budget. A more accurate way would be to look at it as percentage of income.

    The problem with your analogy is that the family that’s spending the extra $100 isn’t making $69k. The entire neighborhood is making that much, the family is only making $16.5k–including the available credit on their cards.

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  10. drj says:

    @HarvardLaw92:

    It’s the opening payment on perpetual social spending programs

    That’s a very simplistic (i.e., wrong) perspective.

    For instance:

    Provides universal pre-K for 3- and 4-year-olds.

    This measure will allow more parents to work instead of staying home and care for their children.

    This is allows a couple of things:

    1) increased labor supply: since in a pre-K setting fewer people are able to take care of the same number of children, allowing other people to return to the workforce.

    2) more specialization: working parents can do what they are good at rather than be an average caretaker, thus increasing economic productivity.

    Both of these things should normally increase the government’s tax haul, which should, in principle, more than offset the costs.

    So it’s much more of an investment in order to increase labor productivity than spending that’s just costs.

    Of course, one could argue whether, ultimately, it will be a worthwhile investment (based on relevant economic models), but that’s a rather different discussion.

    Which is also why this:

    including the available credit on their cards

    is an analogy that is rooted in a fundamental lack of understanding of what Biden and the Democrats are trying to do.

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  11. Kathy says:

    If the big accumulators of capital paid decent living wages, so their employees could afford all these services the government doesn’t provide, then the government wouldn’t have to provide them.

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  12. HarvardLaw92 says:

    @drj:

    I understand the whys and hows, and wasn’t questioning the potential utility of the programs (hence no need for the reflexive unnecessary defense of them).

    That having been said, you didn’t seem to take issue with (or at least didn’t functionally rebut) the characterization of this bill being the first in what will likely be a perpetual flow of payments to support them.

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  13. Tony W says:

    Ah yes, the fake “fiscal conservatism” debate that always comes up when the spending is on programs that help ordinary people instead of military contractors.

    Sudden pearl-clutching over the deficit while the F35 program goes on unencumbered. I don’t recall this level of concern when Trumpy was giving away billions to his wealthy cronies.

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  14. drj says:

    @HarvardLaw92:

    this bill being the first in what will likely be a perpetual flow of payments to support them.

    Assuming these programs provide a net financial benefit, why would this even be a problem?

    Why care about the future costs of something that is ultimately profitable?

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  15. Scott F. says:

    Cool. Can we do the approx. $7 trillion we will appropriate over 10 years to the military budget next? Make a rough list of what that pays for, then name what we’d cut back on?

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  16. HarvardLaw92 says:

    @drj:

    Because those are always the assumptions used to sell these programs. If they’re presumed to be solid, then they wouldn’t suffer from being subjected to detailed examination. I’d think, given your faith in their surety, you’d welcome the examination as a validation of your premise, no?

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  17. HarvardLaw92 says:

    @Tony W:

    Your assumption is in error. That boondoggle needs to be examined in excruciating detail as well.

    On the other hand, it does employ a whole lot of people. We should be realistic that pretty much the entire defense budget is an enormous jobs program, so cutting it inevitably will put people out of work.

    The problem here is that people – all people … liberals, conservatives, whomever – tend to believe that “there is more than enough money to pay for everything I want. All you have to do is cut those things I don’t want”. Both sides hate – with a consuming passion – the reticent folks who have the temerity to ask “how do you propose to pay for it?”

    The problem is that there isn’t enough. Keep spending without constraint and eventually you become Weimar Germany. If you dislike the comparison, I’d suggest paying close attention to M2 since last February.

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  18. Kathy says:

    Everything costs more and takes longer than planned.

    That’s not a value judgment, nor a valid reason not to approve a spending bill.

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  19. Andy says:

    @Scott F.:

    Cool. Can we do the approx. $7 trillion we will appropriate over 10 years to the military budget next? Make a rough list of what that pays for, then name what we’d cut back on?

    We ought to do that for sure. What do you propose?

    @Kathy:

    Everything costs more and takes longer than planned.

    That’s not a value judgment, nor a valid reason not to approve a spending bill.

    My principal goal is to get good value for the money we send to the government and for government spending generally. And I also think that spending can’t become unmoored from revenues and it definitely has at this point.

    I think it’s objectively the case that we do not get good value for our spending. But that gets largely ignored by partisans and our political class. It’s much easier to debate about topline amounts and make rosy assumptions about how great it will all be, than it is to do the difficult and messy work that would bring a modicum of efficiency.

    Part of that is because federalism comes with inefficiencies. But most of it is that we don’t really care if money is wasted as long as the intentions appear to be good.

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  20. Just nutha ignint cracker says:

    As I look at the list, I have the following reactions:
    1. This is a little outside my wheelhouse and I am open to economic but not moral or philosophical arguments as to the pros and cons.
    2. If South Korea can afford to do this, we can, too. South Korea does it, why don’t we?
    3. Almost 40 years ago, a friend of mine was being paid by the State of Washington to provide nursing home care for his parents in their house. It was a good idea then, it still is. (And funding should be more generous than at that time, too.)
    4. I okay with means testing this. Fortunately, the means for doing so is already in place–FAFSA.
    5. From what I have seen so far this looks to be a good idea that we should keep. If capital won’t lift working people out of poverty by paying them, the gubmint (that’s us) will have to do it. I’m normally against subsidizing capital, but I guess I have to hold my nose in this case.
    6. I seem to already have had this for the past two years (maybe from some program started by FG), but I’m ambivalent about keeping it (for me). And, again, the means testing system for it seems to already be in place.
    7. I believe we’re past the tipping point, but doing something is better than doing nothing. I’ll disagree with Mu in that the fact that I don’t see or can’t quantify the impact with certainty does not also mean it’s unimportant. We’ve been using that model for my entire lifetime. Color me skeptical.

    Beyond that, yes, it should be paid for proactively by taxation. But we’re not going to be proactive about anything beyond shoveling capital into the top fraction of a fraction of a percent for the rest of my lifetime (“say hello to the new boss; he’s the same as the old boss”), so we’re stuck with whatever accounting game the people in power decide to go with.

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  21. Just nutha ignint cracker says:

    @Scott F.: “Cool. Can we do the approx. $7 trillion we will appropriate over 10 years to the military budget next? Make a rough list of what that pays for, then name what we’d cut back on?”

    Sounds fine to me, but I won’t be holding my breath waiting for it to happen.

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  22. Scott F. says:

    @HarvardLaw92:
    To be consistent, most of the items in Drum’s rough list of what is in the reconciliation budget bill would constitute an enormous jobs bill as well. Jobs making wind turbines or providing home care for the elderly fuel the economy in the same way jobs making fighter jets and providing logistical services for the Army do.

    And yes, it’s true that all people disagree on broadly what the US budget should go to. It’s a healthy debate. But, it is concerning that the scrutiny given to the various line items in the budget is unbalanced and inconsistent, especially so in the public square and in political discourse. If you disagree, then please supply the link to a WSJ editorial from some Republican pushing back on the size of the defense budget in the way that Manchin has done here.

    Also too, in the context of our national economy, this budget bill is a long way from “spending without constraint.” It seems much closer to the bill you’d have to pay for dental work had you neglected to brush your teeth for a couple of decades. For the richest country in the world, there are large swaths of our society and investments in our future position in the world that we have been sorely neglecting for some time.

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  23. HarvardLaw92 says:

    @Scott F.:

    It’s another pebble added to the pile. This bill in itself, in its magnitude, is innocuous, or should be viewed that way from the standpoint of its being implemented in a healthy economy with sound fiscal policy underpinning it.

    We have neither of those. We are not even close to having either of those, and we are already in a mess with existing “oh they’ll pay for themselves” programs that are headed for the brick wall at highway speeds as we speak, so it seems to me that every additional pebble somebody wants to toss in at this point needs to be subjected to scrutiny.

    It’s the fallacy of the folks across the street with their 20mil house and brand new cars every year, vacations to exotic locations, etc. It seems like they are doing great, right up until the moment they get hit with foreclosure and tossed out into the street (because it all was, it always was, underpinned by a mountain of hidden debt). It works beautifully, right up until it doesn’t.

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  24. Michael Reynolds says:

    @Andy:

    We ought to do that for sure. What do you propose?

    Maybe I’m crazy (though I suspect you agree) but I’d like to know WTF our grand strategy is before we start picking out weapons. Do we, for example, really propose to go to war with China in the event that they attack Taiwan or try to close the straits? If the answer is yes, that suggests to me we need better ways to cope with land-based anti-ship missiles. I assume we aren’t going to fight for Ukraine, but are we prepared to defend Estonia? If so then we may have a use for some of those tanks driving around the desert by Twenty-Nine Palms.

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  25. Mu Yixiao says:

    @Scott F.:

    There’s an inordinate amount of inefficiency in military contracts. That can be cut back very easily.

    Back in the late 80s, the Navy had a new RFP coming up for their hard-bottom landing craft (those inflatable ones you see in all the commando movies). The then-current spec book was over 300 pages, and each craft cost around $35k. The put together a team to rewrite the spec book. It consisted mostly of the people who actually use the boats. By specifying “it should do this” rather than “it must be built this way”, the spec book shrunk to about 30 pages, and the cost dropped to about $3500 (engine not included in either cost, if I recall).

    Previously, the boats were all custom hardware. The new plan allowed for off-the-shelf wherever possible, and allowed the contract bidders to modify the structures to make them cheaper–while still doing everything they had to do–and often better.

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  26. Gustopher says:

    The moderates in the House have been getting squishy on the reconciliation bill as well, so long as they get their bipartisan physical infrastructure bill, and the progressive caucus has been saying that they won’t support the bipartisan bill without the reconciliation bill.

    The two-tract infrastructure plan is likely to tear itself apart.

    I think the answer is to fold the bipartisan bill back into the reconciliation bill. Word-for-word, line-for-line, as an amendment that Republicans can vote for if they are still inclined.

    If Manchin wants his bipartisan bill, he has to support the reconciliation bill.

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  27. Scott F. says:

    @Andy:

    We ought to do that for sure. What do you propose?

    Since you’ve asked, I’d start with the 2018 Defense Strategy and a serious reconsideration of our military ambitions.

    Restraining our ambitions would allow for reducing military units – you could consolidate geographic command structures and reduce bases. Reducing military units would allow further savings in personnel, operations and maintenance, intelligence, and real estate costs. Strategic restraint would also allow us the opportunity to reconsider our need for multiple weapons programs like the F35.

    Let’s start there. We could probably save enough to pay for elder home care.

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  28. Gustopher says:

    I’m somewhat surprised that “the climate stuff” is Drum’s first cut. Combatting climate change is almost certainly the issue area here that’s most pressing and most obviously in need of federal intervention. But I haven’t studied the particular climate-related initiatives in this bill to have a strong opinion as to whether they’re worth the cost.

    A lot of it is hardening our infrastructure, so when we get massive hurricanes, tornados, flash floods and the west on fire, the future payouts to repair them are lower. That absolutely will pay for itself, unless we are so overwhelmed by climate change that even that isn’t good enough (in which case, we’re kind of fucked)

    But that might not be the specific “climate stuff” Drum is referring to.

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  29. Andy says:

    @Michael Reynolds:

    Maybe I’m crazy (though I suspect you agree) but I’d like to know WTF our grand strategy is before we start picking out weapons.

    I do agree, and think most approach this issue from the wrong direction or believe we can, for example, cut personnel and programs while not changing our optempo or treaty commitments to our allies.

    @Scott F.:

    Restraining our ambitions would allow for reducing military units

    That’s the rub. Restraining our military ambitions how and to what effect?

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  30. HarvardLaw92 says:

    @Scott F.:

    We could probably save enough to pay for elder home care.

    Not so fast.

    1) Where are all of those subsequently unemployed persons now going to work?
    2) How do you propose to replace the lost tax revenue that you will no longer be recouping from their (relatively) well-paid paychecks? From their lost spending?

    We could take it further into the second & third order effects, but I think you get the point.

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  31. Scott F. says:

    @HarvardLaw92:

    It works beautifully, right up until it doesn’t.

    I would say the same thing about our response to climate change.

    The items in the Democrat’s proposed reconciliation package are not fancy homes, expensive cars, or exotic vacations. They are some pretty basic social services that would get us closer to on par with our peer nations in the first world, plus some overdue investments in our future.

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  32. Gustopher says:

    @Just nutha ignint cracker:

    I okay with means testing this

    Means testing is primarily a means to separate the middle class from the poor, and make the former resent the latter — “I’m paying for their X! I don’t get X! Why should I pay for theirs?”

    If we have a progressive tax system, I don’t think we should worry about means testing at all — the wealthier will just be paying more for a service already.

    I should be getting food stamps.

    And, when I discover they can’t be used on lobster or non-ground meat or booze, I’ll be in the same boat as our poor people (who are traditionally alcoholics enjoying surf and turf)

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  33. HarvardLaw92 says:

    @Scott F.:

    Yet again, for what seems like the 900th time today:

    I am not questioning the utility of these programs. I am questioning the wisdom of implementing yet more perpetual liability streams premised on nebulous (at best) predictions of net economic benefit within the context of an economy and a fiscal base that is teetering as we speak. There is a limit to what we can do, however much people want / wish / are determined to believe otherwise.

    For purposes of stipulation, you could be referring to a program here which would end cancer and allow every person on Earth to live to be 150 with perfect health, and I would still be asking you “but how do you propose to pay for it?” I don’t care about the do-good, nor do I doubt its sincerity. I care about the numbers, because somebody has to (or at least should), and those are out of whack.

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  34. Scott F. says:

    @Andy & @HarvardLaw92:
    Thank you both for making my point about unbalanced scrutiny when it comes to what government should pay for.

    Restraining military ambitions is complicated…

    I found this with a quick Google search. It is a little old and it wasn’t showcased on the WSJ editorial page, but it seems a reasonable place to start the discussion.

    What about the jobs…

    Green energy jobs will be relatively well-paid as well, and the world could really benefit if we made it as lucrative to address climate change as it was to kill foreigners abroad. There will be second & third order effects from having better foundational education for the citizenry and more humane treatment of seniors.

    I won’t go on.

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  35. HarvardLaw92 says:

    @Scott F.:

    I won’t go on.

    It would be pointless. We’re speaking different languages.

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  36. Scott F. says:

    @HarvardLaw92:
    You’re being mealy-mouthed about it, but you are absolutely questioning the utility of these programs when in your framing they are just another pebble on the pile, but the pile itself is set in cement.

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  37. Scott F. says:

    @HarvardLaw92:
    Fair enough…

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  38. EddieInCA says:

    Top Marginal Tax Rate in 1960: 91%
    Top Marginal Tax Rate today: 37%

    And this top line tax rate is a joke. I make more than 15X my assistant**, yet she pays a percentage of her income in taxes than I do. Why? Because the government has decided that I can form a corporation, pay myself through it, while buying all these wonderful things added to my life that become tax deductions: streaming services, movies, plays, music, travel (in certain instances), books, gasoline, my home office. I actually pay more in taxes than I should, because I don’t have my accountant look for every single little deduction I can take. Last two years I’ve paid less than 17% in federal income tax on a salary barely above the threshold for the 37% bracket.

    ** My assistant makes close to $60K per year, which seems to be a horrible bracket for taxes. Not enough to really take advantage of Corps and LLCs, but too much to get much help in other ways – unless you have kids.

    Bottom line is that compared to other countries in the West, we don’t tax our rich people enough. Alot of our fiscal problems would go away if we followed the California model. Tax the wealthy an appropriate amount, and cut spending where it needs to be cut.

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  39. Lounsbury says:

    As a proper financial economist…. I have to say I am baffled by the current mishmash of propositions (and I have the impression that it is not merely from being on the other side of the Atlantic, in USA it seems there is much confusion as to which is which…)

    But taking Drum’s list

    Makes the increased Obamacare subsidies from January’s coronavirus bill permanent.

    While typically I would classify healthcare subsidy as Current Consumption rather than Investment, in the US case I can see some potential if this is something that can drive change from the bizzare mess of a system with employer basis to something more universal enabling more smooth employment changes (really quite the serious issue in USA by many analyses), could see it as at least arguably Investment or benefit producing from a productive PoV, economic lens without touchy-feely arguments. Given as well rather poor peer comparative health outcomes and patchy health coverage, an argument for overall improved economic efficiency include less morbidities eventually in workforce is very plausible.

    Provides universal pre-K for 3- and 4-year-olds.

    Hard to say but seems somewhat dubious as Investment versus Current Consumption.
    Although if the argument is based on return to improved overall HR capacity…

    Provides funding for long-term care done at home.

    Current Consumption.

    Provides two years of free community college.

    While investment in education one can parse as Investment, a broad untargetted mandate given historical waste in your system makes one dubious unless it has some focus. Which one rather suspects will not be done given the Left is driving it.

    Makes the increased child tax credit permanent.

    Current Consumption (as international track record of these efforts suggest that natalist arguments fail to hold true and there is no discernable real impact on overall births).

    Adds dental, hearing, and vision benefits to Medicare.

    Unclear.

    Funds various climate initiatives.

    Normally this would be expected to be the investment area to focus on (devils though in the details of course).

    Family pocketbook thinking for national spending including debt is a terrible basis to think about developed country deficit spending.

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  40. drj says:

    @HarvardLaw92:

    I’d think, given your faith in their surety, you’d welcome the examination as a validation of your premise, no?

    Of course.

    FYI: There has been tons of research into the average loss in lifetime earnings due to parents (usually mothers) “taking a few years off to care of the kids.”

    Of course, these lifetime earnings are taxed.

    So I would be surprised if this was just some random handout.

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  41. HarvardLaw92 says:

    @drj:

    Fair enough. Let me be clear that if “it pays for itself” turned out to be as advertised, I’d get right on board. I just think we are at a point, and in a fiscal state, where these questions are going to have to be asked going forward. We’re a good deal closer to “oh shit?!” than people want to believe.

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  42. Daryl and his brother Darryl says:

    Manchin, who is a tool of the fossil fuel industry, says he is concerned that this level of spending will hinder us in dealing with future crises.
    Moron.
    A major part of the bill is climate change, the BIGGEST threat we face in the future. The people of New Orleans will tell you that the future is NOW.
    I’m so tired of these idiots in DC.

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  43. Michael Reynolds says:

    I could not begin to count the number of times we’ve been told we were just about to be economically destroyed by domestic spending, but it’s at least ten times more common than warnings that we’re about to be economically destroyed by defense spending. There’s never enough to improve the lives of Americans, and there’s always plenty to blow someone up.

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  44. SC_Birdflyte says:

    Back in those dear, dead days of a 91% top rate, Ronald Reagan is said to have remarked that he decided to become a Republican when he learned that he could get by doing just three movies a year, instead of four. I guess no one ever told him that the average working American who reduced their work hours by 25% would wind up living hand to mouth, not having a better lifestyle.

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  45. wr says:

    @Michael Reynolds: “I could not begin to count the number of times we’ve been told we were just about to be economically destroyed by domestic spending”

    And yet, oddly, whenever Republicans gain power, those warnings somehow magically disappear, even though spending doesn’t go down and taxes to pay for it are cut.

    It’s almost as if the people giving the warnings aren’t acting in good faith.

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  46. HarvardLaw92 says:

    @Michael Reynolds:

    If you examine the trendines with respect to debt, spending growth, growth in mandatory spending outlays, and the money supply necessary to keep it moving, they all go in only one direction and have since the mid 60s. Moreover, the rate is escalating. It doesn’t take advanced education to see where that factset leads. Of course, we could try just pretending it’s not a problem and keep loading up with yet more spending. I hear that works pretty well.

    Meanwhile, here in the real world, Medicare goes projected insolvent in five years. Tick tock… Tick tock…

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  47. JohnSF says:

    Interesting discussion, to which a thing I posted in the general forum seems relevant (reworded a bit)
    It’s often forgotten that from the 1940’s to the 1980’s European states quite often ran defence spending at north of 5% GDP, funded welfare and health systems, and still had generally fairly good levels of economic growth.

    In the UK in the early 1970’s the demands of defence and welfare required running taxes at basic income tax 35%,
    higher rate income tax 75%,
    investment income tax up to 90%,
    goods purchase tax 25%, etc..
    And other European countries had similar burdens.
    The burdens were borne, but there were costs in terms of economic dynamism and massive shortage of investment funds.

    And it raises the question: what trade-offs re. taxes and defence spend might Americans consider?
    Would, could, the US impose those sorts of tax levels today?

    To those who say, it can all be debt funded: that works until it doesn’t.
    And “doesn’t” can be very unpleasant.
    The US has a lot more room for maneuver, as the dollar is the global reserve currency.
    But that status is not a universal law of physics.

    The fundamental thing (as any old Marxist will tell you) are the overall productive forces of society, and whether the surplus product utilisation is reinvested, consumed, hoarded or wasted.

    As to the rest, debauching the currency is liable to have major issues re. economic information = severe and chronic inflation, and to say it can be corrected by tax policy is one thing.
    Doing it, in a democracy, full of ingenious accountants and lawyers, is another.

    Oh, and categorising current expenditure as investment is just daft.
    Stop it!
    It can sometimes make sense to spend x current to avoid cost y, and so you can sort of view that as investment.
    But, say, an extra couple of thou on (say) teachers salaries is NOT investment, and it doesn’t matter how lovely said teachers are, or what it says about social values.
    Assuming you can recruit teachers needed at salary a, increase to b is not investment, and never will be, no matter how many damn times to try to make “social investment” a thing.
    It ain’t a thing.

    Just to be clear, a fiat currency state with modern central banking and a massive base economy can, and therefore should, run massive deficits for a variety of reasons (investment, cyclical, egalitarian, political) so long as they are sensible.
    That is, said deficit is covered long term by growth plus inflation-within-reasonable-limits, and also the political economy of the tax system you can set up, and the growth you can expect.

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  48. Lounsbury says:

    @JohnSF: Largely agreed although certain kinds of rationalisations such as in the US healthcare which on face appear to be current expenditure can rationally be analysed as an intangible and restructuring.

    But you are quite right that relabelling willy nilly current social expenditure as investment to give it a pass really is essentally an act of financial self-deception.

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  49. Mu Yixiao says:

    @JohnSF:

    The US has a lot more room for maneuver, as the dollar is the global reserve currency.

    Which could change in a heartbeat. The dollar only holds that position because of inertia.

    The Euro is probably the best contender. It’s established, secure, and already the official currency of 19 nations.

    The Renmenbi (RMB) is a likely underdog. It’s already the #3 reserve currency, with more than 70 countries using it as a reserve. With the Belt and Road initiative and the resulting heavy investment in developing countries, the RMB could easily become the default reserve currency for most of South America and all of Africa. As more countries in SE Asia shy away from the US, the RMB could easily take hold as their reserve currency (even in the shadow of political and territorial disputes).

    For a country and culture that absolutely loves underdogs and expects them to win, the US is pretty blind to the two big underdogs nipping at their heels.

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  50. Just nutha ignint cracker says:

    @Gustopher: As soon as we get a tax system that’s progressive enough again, come back and see me. 😉

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  51. Just nutha ignint cracker says:

    @Michael Reynolds: If it helps any, the reading I’ve done of right wing economic disaster theory is that economic disaster is closer/more urgent or impending than fusion power–and that’s (still, 50 years later) less than a decade away.

    I’d run screaming and tearing my hair but I’m hoarse from having started using a nebulizer, have trouble running since my right side L-5 started shrinking faster than the rest, and my hair’s too sparse and short to grab anymore. Panic’s not easy for me.

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  52. JohnSF says:

    @Mu Yixiao:
    There are other factors in play
    – the petrodollar; one reason why “disconnect from the Middle East” is easier said than done so long as Gulf oil is a key global factor (c. 25 more years IMO)
    – the hegemon; military power and especially naval dominance = security; see British Empire c 17oo-1943
    – the technopower; America is still the technological cutting edge
    – the internal economy; USA remains the largest very high GDP per capita economy

    Euro has the problem that it’s basis is not a state, and can be paralyzed by tensions of German demands for a hard currency and “southern” pressures for depreciation.
    China has the problems of Party/Executive lack of constraint, and related chronic issues of unproductive investment and population structure.

    So long as the US refrains from raping its investors with an inflation/depreciation crisis, it’s probably still the best bet of the three.

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  53. Michael Cain says:

    Unless the argument is that the economy can’t produce the specified level of goods and services, then what’s the problem?

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  54. JohnSF says:

    @Michael Cain:
    Problem can be your estimates are off; production can be “sticky” for a variety of reasons.
    Then if (very, very basically) your money overshoots your productive base faster than the growth of production it achieves, and beyond what you claw back in taxes (cause they’re problematic politically) = inflation.
    Mild inflation = meh.
    Severe inflation = oopsie!

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  55. Andy says:

    @EddieInCA:

    Top Marginal Tax Rate in 1960: 91%
    Top Marginal Tax Rate today: 37%

    Marginal tax rates are meaningless, you have to look at effective tax rates.

    @Scott F.:

    I won’t go on.

    Well, ok. Then I feel no obligation to waste my time on something you found via a “quick google search.” If you rely on google to make your arguments, then I think we are done.

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  56. Andy says:

    @Michael Reynolds:

    I could not begin to count the number of times we’ve been told we were just about to be economically destroyed by domestic spending, but it’s at least ten times more common than warnings that we’re about to be economically destroyed by defense spending. There’s never enough to improve the lives of Americans, and there’s always plenty to blow someone up.

    I agree about the hypocrisy, but at the present time, there seem to be no principles when it comes to any limits on financing government – it’s purely what can be justified politically.

    It should be obvious to anyone with a 6th-grade math education that tax cuts don’t pay for themselves and “the Rich” are not an infinite money tree for the laundry list of liberal desires. Yet this is where we are politicaly – in a bizarre fantasyland.

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  57. Andy says:

    @JohnSF:

    And it raises the question: what trade-offs re. taxes and defence spend might Americans consider?
    Would, could, the US impose those sorts of tax levels today?

    To those who say, it can all be debt funded: that works until it doesn’t.
    And “doesn’t” can be very unpleasant.
    The US has a lot more room for maneuver, as the dollar is the global reserve currency.
    But that status is not a universal law of physics.

    This is what I was getting at with my response to Michael.

    Conservatives live in this fantasy that tax cuts pay for themselves and that “starve the beast” will result in a smaller government. Hasn’t worked for 40 years.

    Liberals live in this fantasy that they can create European-style social programs without European-style tax rates by making the “rich” pay for everything. But the reality is the “rich” probably couldn’t eliminate the current budget deficit.

    We really have turned into an unserious nation full of unserious people.

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  58. Jim Brown 32 says:

    @Scott F.: Your platform is that the US Military, a source of pride of the American People, should be a Regional power like UK, France, Australia, etc….

    Good luck getting votes on that….

    We’ve already seen what happens in a world of Regional powers when one of those powers decides to develop trans-regional Military capabilities.

    Your suggestions are the very definition of Generational amnesia. This is not to say that every dollar spent by DOD is a righteous dollar…but the United States should absolutely maintain military global reach.

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  59. Scott O says:

    @HarvardLaw92: Got a book recommendation for you, Bankruptcy 1995: The Coming Collapse of America and How to Stop It

    “Meanwhile, here in the real world, Medicare goes projected insolvent in five years. Tick tock… Tick tock…”

    Insolvent if congress does nothing. They could reduce benefits, increase funding for Medicare, or some combination. People will complain either way but I’m pretty sure the complaints will be much louder if Medicare goes away. The elderly are a big part of the GOP base so they will support socialized health care wholeheartedly in that event though calling it something else.

    Want to know another big government program that is facing imminent bankruptcy? The military. If congress doesn’t provide funding for it next year it’s gone. I’m being a bit silly I know but just because Medicare was set up with a different funding source doesn’t mean that it’s set in stone.

    I share your concerns about debt. I thought things were approaching the limit 20 years ago. Then 2008 happened, trillion dollar bailouts on the credit card. And another trillion for the next few years. Yet we’re not all living in caves eating rats.

    I’m much more worried about creeping fascism right now than bankruptcy or inflation.

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  60. Console says:

    Damn, HarvardLaw in fast with the “a stack of trillion dollars can reach to the moon!” boomer logic. There is debt in the sense that we may or may not pay ourselves at some mysterious point in the future. And maybe or maybe not paying ourselves may or may not involve getting rid of the spending programs that caused the need to possibly pay ourselves… at some mysterious point in the future.

    I get it, no free lunch blah blah blah, but let’s not pretend the “that’s a lot of money” folks are doing anything more than divining visions of our fiscal apocalypse out of chicken bones in the dirt. Numbers sound smart, that’s about as far as the fiscal conservative contingent has gotten for the last few decades.

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  61. LeperMessiah says:

    @Mu Yixiao: I think the term infrastructure is being thrown around pretty loosely here. And I love math and economics as much as the next person on this thread, but my issue is with the ever extending reach of the Federal government and the shrinking emphasis on personal responsibility and accountability. Infrastructure, in it’s actual meaning and not the bill’s definition, should be, at least in part, a responsibility of the Federal government and state and local governments jointly. With the exception of the climate change consideration portions of the bill, everything else listed in the article should, at best, be considered for another bill or bills. Leave the “human infrastructure” fluff for another bill and stop holding up the line. Congress is a joke.

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  62. JohnSF says:

    @Console:
    You know, that’s probably what the leaders of Argentina said to each other, just before everything went sideways.
    “Oh, but the USA isn’t Argentina…”
    True. You have more room to maneuver, but if your monetary side gets sufficiently out of line with your actual productive base, it can still end in tears.
    And as for “we owe the money to ourselves”; correct, but if say the people it’s owed to are relying on it for their pensions, they are unlikely to be happy if you vape the bonds to deal with the debt.

    The MME approach to debt management sounds nice.
    Doesn’t mean it will end well in practice.
    You may want to take a while to reflect that so far it has not been successfully implemented by anyone anywhere at any time, and consider the possibility that the reason may not be that they just wimped out.

    N.B.: this does not mean the conservative fiscal hawk balanced budget types are right, either. Deficits are fine, as long they’re discountable over time.

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  63. Lounsbury says:

    @Mu Yixiao: No change from USD to other reserve can’t change in a heartbeat. There are far too many institutional and other considerations for there to be a rapid change in reserve curency, not the least of which the sheer number and volume institutioal contracts using dollar, as well as regulation that bakes in dollar. Short of a system collapse moving international trade and reserve currency which is driven by that from dollar to something else is an evolutionary process.

    @JohnSF: It is worth noting that these errors take time to build up. The 1970s stagflation was not a short-term error phenomena but deriving from the prior decades long-run over-priming.

    The discourse on the American Left around these subjects rather reminds of willful blindness that has gotten other countries in trouble.

    This deliberate bit of ignorant innumeracy being an example
    @Console:
    “the spending programs that caused the need to possibly pay ourselves… at some mysterious point in the future.”
    As a point of order, unlike the Japanese who indeed owe themselves, the USA sells significant (~40-50% [of which about half of that is sovereign holders]) of its debt to non-resident owners. So you are not paying yourselves, you’re paying about half to overseas.

    And the maturities are not a mysterious point in the future, they are precisely defined. As many countries learn to their chagrin, rolling over is easy until it’s not… hit a tipping point on roll-over dates with not enough demand. This is not theoretical, it’s a real world thing one seems in bonds. See you have to have people buy the things and while that seems like No Problem for the USA now, foreign demand and savings is not unlimited nor completely inelastic.

    Of course the USA does repay in USD which simplifies, but also at high loads becomes a risk where a significant amount of holding is held by foreigners, and they have eye both on Treasuries price and dollar relative to other currency. A failed sale or short-fall on buyers in the face of concerns can set-off a cycle and suddenly tip – and as John has noted, there are plenty of examples in real world.

    US Lefties blithely and innumerately hand waiving away risk here are rather rerunning a slightly modified version of the intellectual errors of the 1960s.

    None of this is to say the reactionary US right’s balance budget nonsense or 30 odd years of crying wolf over minimal inflation risks are correct. But neither is current Lefty magical thinking in the fiscal realm

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