1. “OK, who thinks sequestration would cause the Fed to boost QE?”
If you’re raising your hand, then you think the zero nominal bound on interest rates isn’t a zero nominal bound on looser monetary policy. And you think that the Fed still has the power to counteract a fiscal contraction.
2. “A key message of POTUS’s minimum wage proposal: We don’t have the money to boost the Earned Income Tax Credit.”
Back in the 90’s, economists mostly praised the expansion of the EITC, commonly noting that it was a better option than raising the minimum wage. Back then, it was an affordable alternative.
3. “Liberal opposition + conservative support for means testing of retirement benefits is a puzzle.”
Not that there’s no solution to the puzzle: But it’s a puzzle. Liberals often oppose greater government benefits for the rich, conservatives often oppose marginal tax rate increases.
READER COMMENTS
aretae
Feb 14 2013 at 10:09am
Not so much of a puzzle #3:
Right now, we have a fictitious link between retirement benefits and contributions. Folks have been bamboozled into thinking the government is a steward for “their” money. Means testing would burst that fantasy, thereby pushing retirement into another tax-redistribute program, which should massively decrease support for it. Bad deal for redistributionists.
JLV
Feb 14 2013 at 12:08pm
A corollary to number 2 is that statutory spending caps are a really bad idea as long as, you know, liberals still exist or whatever. Democratic/Liberal policy in a spending cap environment is likely to be of a much more economically inefficient variety (more regulation/mandates, etc.) Even though I’m in the CArd/Krueger camp on the minimum wage broadly, expansion of EITC would be better. But either way, we liberals get our way.
The ACA was already an example of what spending constraints do to liberal policymaking (the package of taxes, subsidies and regulations tilted more towards regulations to meet a deficit neutralality goal). Imagine what would have come out of it if there was not even the little wiggle room for spending that existed in 2009 – we would have gotten something much more like a completely unfunded mandate. Almost certainly worse, regardless of how you feel about ACA.
James Oswald
Feb 14 2013 at 12:55pm
1. *Raises hand* The liquidity trap doesn’t prevent debt monetization.
2. Oh, that makes sense now. Not that it’s acceptable to raise the minimum wage.
3. Perhaps they are framing this as attacking vs. defending the SSA. Liberal’s “ultimate goal” would be total control over all retirement accounts; conservatives “ultimate goal” is total destruction of SSA, except perhaps a token welfare benefit. If you means test it, that makes it a program for the poor, not the median voter, which makes it easier to defeat in the long run.
Joshua Wojnilower
Feb 14 2013 at 1:37pm
1. *Raises hand* but doesn’t think the Fed has power to counteract the fiscal contraction. The Fed has desire to support asset prices and feels need to “do something” regardless of effectiveness.
MingoV
Feb 14 2013 at 5:35pm
Re: #2
The Earned Income Tax Credit almost certainly is less costly than adding people to Medicaid and possibly welfare (TANF) rolls. Thus, I cannot agree with the “we don’t have enough money for EITC” argument.
Comments are closed.