As Republicans go around claiming that the Biden agenda is job-destroying and whine about deficits, worth remembering that Trump policy was, in effect ... Keynesian. Here's a key picture, explained below 1/
Annual fiscal impulse is the change in CBO's estimate of the cyclically adjusted budget balance; it's a rough measure of stimulus, but good enough to make the point 2/ cbo.gov/publication/56…
Basically, after Rs took the House in 2010, they forced austerity on the Obama administration, delaying recovery. Then they cheerfully presided over both tax cuts and spending increases under Trump 3/
In fact, given the scale of the shift from austerity to stimulus, it's surprising that the Trump economy wasn't stronger. It may have been held back by trade-war uncertainty, and/or poorly targeted stimulus 4/
In any case, when Rs start thumping the table about how deficit spending is bad, look at what they did, not what they say 5/
• • •
Missing some Tweet in this thread? You can try to
force a refresh
Thread. The rush to austerity in 2010 was NOT policymakers responding to the best available analysis. Standard macroeconomics said that it was a terrible idea; people like Simon and, yes, me tried desperately to head it off 1/
To the extent that the Very Serious People relied on economists at all, they cited ideas about expansionary austerity and red lines for debt that were actually heterodox — and have since been discredited 2/
So claiming that the push for austerity was based on advice from economists, who have since changed their minds, is an evasion of responsibility. VSPs, including the FT, chose to ignore the mainstream and go with the economic equivalents of Scott Atlas 3/
Gonna do a brief (?) wonkish thread on debt sustainability, and why we shouldn't worry about it. Start with the reason many people think it's terrible: they imagine that debt snowballs, because the more debt you have the higher your interest payments, so you run up even more 1/
This happens to individuals and businesses! And it could in principle happen to the U.S. government. But the arithmetic is all wrong — so wrong that even if borrowing costs rise in the future it's just not likely to be an issue 2/
One reason is that the real value of debt is eroded by inflation. Real interest rates are currently negative, and overall real interest payments, as Furman and Summers point out, are at historic lows 3/ piie.com/research/piie-…
Exactly. The most important reason Ds got shellacked in 2010 was that the Obama stimulus was underpowered given the severity of the crisis, largely because of the desire to be bipartisan and not use reconciliation 1/
Voters don't care, or by and large even know about, process. They won't be outraged if Biden uses aggressive tactics to enact stimulus. They will, however, punish his party if they don't see concrete economic gains 3/
Scott Sumner has an interesting (to me at least) podcast with David Beckworth on the "Princeton School of macroeconomics," which included yours truly and a guy name Ben Bernanke (whatever happened to him?) 1/ mercatus.org/bridge/podcast…
I am still proud of the 1998 paper that sort of started this. It holds up pretty well — and it was also an illustration of the case for economic modeling 2/ brookings.edu/bpea-articles/…
I began working on this issue because I was disturbed by Japan's apparent inability to break out of deflation. I started with a strong intuition that the Bank of Japan just wasn't trying hard enough — that if it just printed enough money that would work 3/
The economic consequences of the putsch: very far from the most important thing, but the markets seem remarkably sanguine given what just went down. Bonds, in particular, are signaling new optimism about recovery 1/
Is this crazy? Not really. For one thing, last week also included the D upset in GA, which greatly increased the odds for adequate economic relief. Predictit on Senate control 2/
Also, political turmoil, even violent, doesn't have much economic impact unless it turns into actual civil war. Race riots and Vietnam coincided with a middle-class boom 3/
A really good question. Someone should do a careful archival study of when pedophilia became the go-to accusation; did it start with Q or was it already there? But in a way it fits a pattern 1/