U.S. politics. thread

[Mr. Chatywin et al.]

14 hours ago, DMC said:

I think this may be his way of signaling he's gonna stop whipping votes, in which case we may see a vote similar to the clean CR vote in January.  But enough for veto proof majority?  Get outta here.  Even if we dream about that in the Senate, it's even less likely to happen in the House.

It has no chance in the House. Zero. But still, it will be interesting to see how large the defection is. Sen. Paul said he knows of at least 10 no votes.

[OldGimletEye]

I've watched for about ten years or conservatives talk bleating nonsense about monetary and fiscal policy. In my view, the left has generally earned some well deserved credibility over these issues.

But, it is about to piss it away with the nonsense that is basically MMT. And I think the only thing to do who here for those on the left that want a more progressive policy agenda is to raise hell about it. Policies based on fantasy aren't helpful.

For liberal and conservative sorts of people, that don't know, Krugman really likes the IS/LM model. 

Now I admittedly the basic IS/LM Model can be confusing, once you start to peer into the internals, because usually the basic exposition doesn't make it clear that stocks of assets are given, that the expectations of firms and consumers lurk in the background, and how the flow equilibrium in the IS curve relates to the stock equilibrium in the LM curve.

That said it explains basic ideas well enough and its temporary equilibrium approach (or temporary disequilibrium approach, depending on whether you want to do the fixed price version or the multiple equilibrium version) is helpful in understanding issues, even if we are quite aware, that expectations, prices, and stocks may and will likely adjust.

Kelton on MMT:

https://www.bloomberg.com/opinion/articles/2019-03-01/paul-krugman-s-four-questions-about-mmt

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There is a doctrine among mainstream economists holding that: (1) government deficits push interest rates higher and (2) rising interest rates crowd out private investment. The government can take more of the economy’s financial resources, but only at the expense of lost private investment. This means that running budget deficits has at least some downside.

Only at full employment of resources. When that doesn't occur, higher interest rates won't necessarily "crowd out private investment". In fact, higher interest rates just often means that firms have revised their expectations about returns to new investment, borrowing more in the process. 

Krugman has made the point several times that fiscal spending can actually crowd in private investment.

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Is there only one right deficit level? Answer: No. The right deficit depends on private behavior, which changes. MMT would set public spending always to the level required to achieve full employment, and then accept whatever deficit may result.

Except MMT theory itself admits that you might have to raise taxes in order to control inflation. Think of bond finance as being a future promise to raise taxes. If you get the point that bond holders think future taxes may not sufficient to pay them real returns, then they may dump the bonds, causing you either to raise taxes or print money to pay them.

I'm not saying our current level of debt is too scary. I am saying that the idea that you can have any level of debt (say like 500% debt/gdp ratio) is pretty shady.

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 Little to none. In a slump, cutting interest rates is weak tea against depressed expectations of profits.

I think most people who follow monetary policy understand that cutting interest rates primarily works through getting people to buy more durable commodities (which increases demand) and not through boosting investment by firms. Expected sales growth seems to be more important. And in fact, it was one reason to be skeptical of the Republicans Corporate tax cut.

There is nothing new here that isn't already known.

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Answer: Yes. Pumping money into the economy increases bank reserves and reduces banks' bids for federal funds. Any banker will tell you this.

Well sure if the government decided to money finance new spending, rather than bond finance it, and real income increases as a result of it, I'd expect people to buy more bonds through the income effects channel. And of course this completely ignores the opportunity cost that banks face when lending. If safe assets are at r*, then the cost of new lending has to take that into account.

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 No, because for one thing, MMT would establish a public option in the labor market — a federally funded job guarantee — thereby ensuring full employment across the business cycle. The deficit, then, would rise and fall with the cycle, as the job guarantee becomes a new stabilizer, automatically moving toward the “right size” in response to changes in the level of aggregate spending.

All this really is an argument for is that since we don't do fiscal policy intelligently, maybe we should pass legislation that does it automatically. It doesn't really bolster MMT's case.

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n the absence of a job guarantee, things get trickier. Leaving monetary (and exchange rate) policy aside, the government has to allow the deficit to go where it needs to go in order to accommodate the private sector’s net savings desires. If the private sector wants to spend less and save more, the public sector will need to accommodate that desire by running a bigger deficit or the economy will be pushed away from full employment. Krugman drew up the perfect schematic — based on the sector balance framework adopted by MMT — to explain all of this 10 years ago.

And nobody really agrees with this when it applies. Nothing new here.

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The evidence suggests that interest rates don’t matter much at all when it comes to private investment: J.P. Morgan (here and here), the Reserve Bank of Australia (here), the Federal Reserve (here) and the Bank of England (here). 

And there isn't much disagreement here for reasons explained. Still it doesn't get you to where you think you are going.

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It is even possible, as MMT has shown, that cutting rates could further slow the economy because lowering rates cuts government expenditures (interest payments), thereby exacerbating contractionary fiscal policy.

Let me ask this? Supposing you know there is no way, just no way, politically that additional fiscal spending is going to get done.  Knowing that, would you really recommend the Fed to raise the interest rate? Are you really going to endorse neo-fisherianism here? Seriously?

And guess what? If the government finds it having to expenditures because of higher interest rates, it isn't going to do it by printing off extra money.

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Yes, unequivocally. You won’t see it in Krugman’s stylized graphic (below), but it does happen in the real world, where the interbank market exists.

Can higher real income cause people to buy more bonds? Yes. That said, it is pretty ridiculous to deny that interest rates are procyclical.

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Imagine the government is running a trillion-dollar deficit, sending out checks for military weapons, contracting to do massive infrastructure projects, and so on. All of those checks get deposited into financial institutions across the country. And each time a check is deposited, the bank gets a credit to its reserve account at the Fed.

Imagine the increase in real spending causes people to buy more stuff. Then imagine, firms revising their profit expectations borrowing more money. Imagine eventually that additional output caused by money financing starts to decline quicker than the rate of money going into the economy.

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 It was designed for a fixed-exchange rate regime, and it is not stock-flow consistent.

Except there are stock flow consistent models that get the same results. The upshot of this complaint is that greater wealth cause greater demand for assets, which is supposedly supposed to offset the greater supply. Again, while it is true that greater income will likely lead to greater demand for financial assets, what this ignores is substitution effects.

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Keep this in mind: Higher deficits give rise to higher interest rates, which give rise to lower investment. The last bit is referred to as “crowding out.” This is the inherent tradeoff that MMT denies and Krugman defends

Except, only happens at full employment of resources. I've already explained that higher interest rates don't necessarily leading to crowding out, when you are not there. And Krugman doesn't believe what you are saying he believes.

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Keynes’s analysis was more nuanced. Investment decisions were forward-looking, heavily influenced by “animal spirits,” and overwhelmingly dependent on the state of profit expectations. When the profit outlook is sufficiently grim, no amount of rate cutting will entice businesses to borrow and invest in new plant and equipment (think Great Recession).

Yeah, we know this. Still it doesn't get you where you'd like to be.

 

Anyway, bottom line, Kelton needs to explain here what this all means from a policy standpoint. Does that mean we can just do single payer, the new Green Deal, and whatever else we'd like to do and just print money to pay for it all? I think that is some real horseshit. And don't get me wrong, I think we can run higher deficits, if we have too, without much worry. That said, saying that we can just print money to pay for anything we like is nonsense.

[Mr. Chatywin et al.]

12 hours ago, The Anti-Targ said:

I think it's going a bit far people saying Israel = apartheid South Africa. And it's really only the left that makes that connection. The right has its equal share of anti-Semites, but they all hate Muslims and Palestinians more, so they won't be going around calling Israel an Apartheid regime any time soon. There are similarities, but also significant differences. Perhaps people reading up on it will help them understand both the similarities and the differences.

I am not arguing that Israel is the same as apartheid South Africa, but they are slowly inching that way. If they were smart, they’d realize what they are doing and cut a deal to create a Palestinian state. Failing to do so may cost them more in the long run.

[DMC]

48 minutes ago, Tywin et al. said:

Sen. Paul said he knows of at least 10 no votes.

Saw that.  Now there's a reliable source.

[aceluby]

It really confuses me why a President can veto a bill to end emergency presidential powers he's given himself.  

[Fez]

10 hours ago, Kalbear said:

Sorry, it wasn't her campaign manager. It's her current chief of staff and formerly someone who ran a PAC. Which connecting that specific behavior to something AOC should know about and have done something about is...well, that's special. 

It does look a bit hinky, honestly - the PAC behavior - but it was a PAC that supported a bunch of progressive candidates. This feels akin to blaming AOC for climate change because she is in a car sometimes. 

The PAC certainly sounds like it was setup in an odd manner, but it doesn't necessarily mean that it was one of the many scam PACs that exist. It could be that, but from what I've read from experts, there were also some differences to it from the way the scams usually work too. So it could be that it was a legitimate operation that they thought would have some additional efficiency by being setup the way it was.

[Mr. Chatywin et al.]

30 minutes ago, DMC said:

Saw that.  Now there's a reliable source.

Eh, I think it just tells us what we already knew. It’s a lot easier to be the 52^nd vote, and I’m curious to see how many more will vote against the President.  

[S John]

I'm a little confused about the AOC thing.  I know she's the new Fox News boogey(wo)man, scaring America's retired and elderly.  But have they fully thought through tarring and feathering her over violations committed by someone in her campaign?  I can think of a guy who would never survive that standard....

[SpaceChampion]

 

[Larry of the Lawn]

50 minutes ago, S John said:

I'm a little confused about the AOC thing.  I know she's the new Fox News boogey(wo)man, scaring America's retired and elderly.  But have they fully thought through tarring and feathering her over violations committed by someone in her campaign?  I can think of a guy who would never survive that standard....

Well, they have nothing to lose - Trump's already getting investigated, they can now say "AOC does the same stuff".  Just more smokeshow, do the sidestep-and-bullshit until it passes.

[DMC]

2 hours ago, aceluby said:

It really confuses me why a President can veto a bill to end emergency presidential powers he's given himself.  

Because of SCOTUS.

[lokisnow]

On 3/1/2019 at 7:59 PM, Jace, Basilissa said:

Not a penny should be sent into Texas without an exhaustive analysis of how many dollars Democrats have to spend vs Republican to achieve comparable returns in that place. Not you in this instance, but a common theme is that turning Texas into a battle site forces Republicans to defend it. This is true, but such basic analysis refuses the realities. Republicans are institutionally ingrained in Texas. This is their prize jewel of the Electoral College. Like California for Democrats. 

It was mentioned upthread how quickly they mobilized a staggering midterm turnout in basically a month or two once it looked like Texas might be threatened. And they did it with ease. Because their dollar goes *further in Texas. People don't need to be courted or wooed to vote R in Texas, they just need to think their vote is needed. This isn't some proof "That we almost had 'em" it's proof that their defensive advantageous are so overwhelming that a last second effort is more than enough to comfortably kill a Democratic uprising in its cradle during a wave year.

ETA:*I wrote farther like some kind of fucking pleb. Sincere apologies.

circling back to this, before the thread turns over. I agree in the importance of value-over-replacement-investment, but VORI cannot be an excuse to do nothing--and politicians, analysts, advisors and party apparatus all suffer from severe-inertia-syndrome, and so any excuse to do nothing (like analyze "X" to death and then only post the analysis in the basement of a post office in a small town in england only open from 2PM to 2:45PM on the fifth thursday of months with 30 days when it doesn't conflict with tea time).

It is true that republicans staged a staggering midterm texas turnout in two months, but democrats staged a staggering midterm texas turnout in only three months (see previously posted exhaustive article from a week or two ago), and they basically reached parity.

And most of democrats turnout gains over previous democrat turnout was from new voters, while republican's success came from turning their presidential electorate into their midterm electorate, not in harvesting from the non-voting pool.

Given Texas' very bad turnout rate, and millions of non-voting (but eligible) young people, minorities and disenchanted white folk, within the state, there really is value to be mined in Texas. O Rourke spent three months scaling up campaign infrastructure to try and be able to reach a scale necessary to get a winning level of value out of that enormous non-voting eligible population, and then spent three months mobilizing them and had a shocking amount of success  for the time scale of his efforts. 

On the other hand, Texas swung left relative to 2016, by about two tenths less than the national average swing left, so you could argue O Rourke did nothing, but I think using averages skewed by big liberal states to discount localized successes in conservative states is simply another manifestation of severe-inertia-syndrome in action.

And perhaps more important than chasing the white whale is simply that it is crucial for democrats to invest in states they don't win. You need to give your allys within any conservative states an alternative. and you need to give your future (and current) recruits in any conservative state something to align with.

Because all elected politicians fundamentally crave, chase and care about power and nothing else. The actual leanings of any individual don't matter, every single politician gets into politics because of power and nothing else. if Paul Ryan was from Chicago, he'd be a democrat because he cares about power, not ideology, and he'll shape his career based on the path in front of him to power. There are no true believers, they are environmentally shaped not internally shaped. (this is why they all turn into horrible slugs after a certain amount of time in DC, the environment transmogrifies them into a dilatory and less recognizable and non empathizable form).

So to abandon states is to abandon the recruits and also to abandon your electorate, because they don't want to be totally shut out of self-government, and especially with minorities, if you're not willing to invest in being part of their community, they're going to turn to the party in power so they can have some representation of their interests--even if it's as loathsome as allying with republicans in texas. For democrats this means completely gutting a big base of power from which to build, and it's mostly a self-inflicted wound by not putting bigger efforts into these communities over the last twenty years.  Democrats decided to invest in southern california and central california latino communities and won enormously, the same could be true of texas, perhaps not resulting in a state wide vote, but there are seats to be won, and successes in more reach (for democrats) seats will inevitably fertilize additional opportunities for other successes at state wide elections. 

Another strategy that democrats really need is to staunch the bleeding on the rural vote margin. You can have only a 100,000 rural votes in a hypothetical state, and at a 75-25 split, it gives republicans a 50,000 vote cushion. at 1,000,000 surburban votes won only 51-49, that's another 20,000 vote margin for republicans, now they are winning by 70,000 votes--now you're forced to win the 1,000,000 urban vote by 54-46 to simply tie them, and you have to push the margins higher to have a chance at winning. Knocking down that rural margin is key to winning more elections--but with vote by mail becoming easier, the biggest barrier to voting in rural areas (long distances to voting locations) has more or less vanished, which will probably result in republican margins Increasing not decreasing, so the need for outreach policy in this respect is more dire than ever. and the policies that succeed aren't going to come from places like california or illinois where the paths to power are exclusively urban/surburban. We need investment in those republican states as laboratories experimenting to discover successful policies we can scale to distribute nationally and reduce the republican rural margins across the board.

[aceluby]

1 hour ago, DMC said:

Because of SCOTUS.

This was really enlightening.  Thank you!

[DMC]

9 minutes ago, aceluby said:

This was really enlightening.  Thank you!

[S John]

1 hour ago, larrytheimp said:

Well, they have nothing to lose - Trump's already getting investigated, they can now say "AOC does the same stuff".  Just more smokeshow, do the sidestep-and-bullshit until it passes.

Hell, I like AOC but if they want to play that game I'd sacrifice her for Trump (assuming she legit did something wrong).  I know they like to muddy the waters with whataboutism, but what if AOC actually stepped down or was otherwise punished for her wrongdoing?  Would totally undercut their argument and backfire.  Of course, that is assuming any of Trump's supporters actually care about equal standards and fairness, which I know deep down in my heart that they do not.  

[OldGimletEye]

2 hours ago, S John said:

But have they fully thought through tarring and feathering her over violations committed by someone in her campaign?  I can think of a guy who would never survive that standard....

I don't think the conservative clown crew cares too much about consistency. And in fact, I might even suggest that being mealy mouthed and fraudulent often works out well for them.

[DMC]

Bloomberg won't run.  Yay!

[Cpl. Tunny]

1st post! Hello all! 

I frequent this thread along with many others. A few observations.

1) AOC is great, and I hope that we get more and more like her in office. I love her approach and her policies she introduces are sound. 

2) Bernie, Bernie, Bernie please just realize your time is done. He is doing nothing but making it harder to defeat Trump. He will get votes that would presumably go to the Democratic nominee. I think his ego is on par with Trump, tbh.

And, lastly, I agree with others here that if a poster is a Republican or has right leaning views, they are attacked, belittled and not taking seriously. I am a Democrat, though my views do not lie in the Pacific Ocean. I believe there are those on the left that are so extreme,that they are just as bad as those on the right. We need to learn to respect others views and just because you dont agree, doesnt mean belittling needs to ensue. In short, this thread is a microcosm of what's wrong with the political climate of the U.S.. Its gotten out of hand, and I hope we can get over it. I do believe it all started with Obama(a man I voted for twice)because of the racists who hated seeing a black man in office, has reversed with Trump. But, in all honesty, Trump is a shit Prez and deserves it. There is just so much hate in this country at the moment, and I observe it in a smaller scale in this thread.

That being said, as I only said it to maybe open some eyes to that the only way we get over things is to come together for what is best for our country. Not what's best for you, or your wants. It's about making a better place. The biggest thing that bothers me is this hate that each side has for each other. There are truly great people on both sides of the political spectrum. And yes, there are shitty ones as well.

ETA: just observations and thoughts, and I'm sure I'll be attacked for pointing this out.

[Mr. Chatywin et al.]

2 hours ago, S John said:

Hell, I like AOC but if they want to play that game I'd sacrifice her for Trump (assuming she legit did something wrong).  I know they like to muddy the waters with whataboutism, but what if AOC actually stepped down or was otherwise punished for her wrongdoing?  Would totally undercut their argument and backfire.  Of course, that is assuming any of Trump's supporters actually care about equal standards and fairness, which I know deep down in my heart that they do not.  

There was this Senator that was forced to step down not that long ago. Al Franken. Ever heard of him?

Translation: of course they won’t apply their standards equally.

[The Anti-Targ]

7 hours ago, Tywin et al. said:

I am not arguing that Israel is the same as apartheid South Africa, but they are slowly inching that way. If they were smart, they’d realize what they are doing and cut a deal to create a Palestinian state. Failing to do so may cost them more in the long run.

I was trying not to accuse you of doing that. But I certainly know there are commentators out there who straight up say Israel is an apartheid state. It may yet get there, but it isn't for now.