At Politico Jeff Greenfield remarks on the situation facing the House Democrats’ ambitious expansion of the “social safety net” following the bill having been “deemed” to pass, a legislative procedural veronica:
For Biden, Pelosi and Schumer, there remains one pesky problem in embracing a massive budget reconciliation package: they do not yet have the votes for anything like a $3.5 trillion bill. We don’t know what price tag Joe Manchin, Kyrsten Sinema, Josh Gottheimer and other centrist Democrats will find acceptable. We don’t know if House progressives will doom the infrastructure bill if the final Senate figure on the reconciliation package is unsatisfactory. We don’t know if a sliver of moderates will indeed tank the social safety net bill once infrastructure passes, in the belief that they cannot win in their districts if the cost is too high.
But give the Democrats credit on one front: if passing these bills was an Olympic event, it would come with the highest “degree of difficulty†rating in history.
As Mr. Greenfield notes earlier in his post, presently the Democratic margins in both houses of Congress are razor-thin. There is literally no “wiggle room”.
My own view is that the $3.5 trillion should have been paid for using actual revenue increases rather than accounting tricks or presumed growth. In the present state of the economy the additional spending is unlikely to stimulate it. Our problem is that aggregate product is too low not inadequate aggregate demand. We just don’t produce enough of what the additional spending will buy for it to increase aggregate product here although it could stimulate the Chinese, Japanese, South Korean, etc. economies.
I also wonder if resorting to procedural legerdemain doesn’t undercut the Congressional Democrats’ argument that they’re preserving democracy while the Republicans are undermining it. If you can’t get a majority to vote for something but have “deemed” it passed to save part of your caucus from having to commit themselves one way or another, it is de facto minority rule.
“My own view is that the $3.5 trillion should have been paid for using actual revenue increases rather than accounting tricks or presumed growth.”
I agree with that. That is how most budgets should work. What we often see is the assumption, which rarely happens, that tax cuts will pay for themselves or a large multiplier that wont happen.
Steve
I agree with Lord Keynes: during a recession when there is a shortfall in aggregate demand the length and/or depth of the recession can be reduced with a properly timed and allocated stimulus package by extending credit to ourselves. None of those is the case now. We are not in recession; there is no shortfall in aggregate demand; the timing is wrong; the allocation is wrong.
Ole’
I’m rather dubious about the ability of politicians, or economists, to properly or efficiently, fill demand gaps. But I digress.
This is the money line:
“If you can’t get a majority to vote for something but have “deemed†it passed to save part of your caucus from having to commit themselves one way or another, it is de facto minority rule.”
Even if we stipulate that Keynes was correct. I can’t imagine Keynes sufficiently allowed for the inexorable drift associated with the self interests of politicians. And they are so much worse today than then.
Off the record, or more likely, on their deathbed , all the legislators would agree with you, but there are three important reasons this bill must pass.
The first is cementing a permanent Democratic majority electorate.
Once an entitlement is enacted, and the public is used to it, it’s set in stone. And the voters know the Democrats are the party of entitlements.
The second is that it pleases Democratic benefactors. Green policies benefit the new electric, as a service auto industry of silicon valley.
Third, and maybe most importantly, it’s inflationary. No Democrat except maybe Bernie Sanders really wants to burn the billionaires with higher taxes. With interest rates as low as they can go, and QE pushing the limits of financial credibility, something must be done to make Federal debt servicing sustainable. (Sustainable=Green=happy:). Enter our old reliable financial policy of watering down the money. The more they say it ain’t happening, the more you can be sure it is a must for them.