Thread by @MarkVinPaul

Everyone in the West Wing should instead read this @Groundwork paper which puts people at the center of the economy in estimating how much stimulus is needed. Our finding? The economy needs $2-3T on top of the $900B passed to bring back a healthy economy groundworkcollaborative.org/wp-content/upl…

https://twitter.com/politico/status/1357670672307277825

In the paper, we ask a simple question: How much stimulus does the economy need to run a high pressure labor market that will bring widespread employment and rising real wages? We found the economy needed $3-4.5T in stimulus for that. Since, Congress passed $900B.

That was a good down payment. But the economy needs more if we want to prevent a lackluster recovery like we saw in the Great Recession. Taking our foot off the stimulus pedal back then resulted in an entire decade where workers fell further and further behind.

Right now, the unemployment rate sits at 6.7%. BUT this is a terrible measure since it misses millions of workers who have fallen out of the labor market due to a lack of available jobs. We're 10 million jobs down from 1 year ago - and that doesn't account for pop growth.

The goal should be to push unemployment down below 3.5% and to bring back a healthy labor force participation rate—2007 or 2000 are a reasonable baseline.

The concerns Summers is raising are 2 fold: 1) low and middle income people will finally get a raise. IDK about you, but this is good in my book!

Second, he's concerned about inflation. This is, honestly, laughable. The Fed is worried about too little inflation, not too much. Plus, when we had unemployment at 3.5% Inflation was nowhere to be found (expectations were that it would remain too low).

Finally, will Biden's proposed $1.9T in stimulus eat up all the "economic space" leaving us no room to address crumbling infrastructure and most importantly the climate crisis? Absolutely not.

As my coauthors (@JWMason1 & @anfrafrem) and I argue in this @rooseveltinst report on the economics of deep decarbonization, we can go full speed ahead on decarbonization. We're not going to run out of $$, workers, factories etc. to meet climate goals rooseveltinstitute.org/wp-content/upl…

But OK Larry, I'll bite. What if we do push the economy to WWII levels of macroeconomic heat (aka an economy on 🔥). Well, unemployment was just 1.7% from 1943-45. Union membership doubled over a decade. Real wages doubled over a decade. This sounds like a dream!

And what about that inflation you're so concerned about (for reasons that are truly beyond me)? Well, we have tools for that! First, we've been undershooting inflation for a very, very long time. It's a target. If you're under the target for yrs, no reason not to go beyond it.

Second, if inflation does really get going (it wont), we have tools for that. One of the most straightforward would be to pass a sizable tax on the wealthy. @BernieSanders & @SenWarren have a plan for that. Then, let's increase top marginal tax rates on the rich.

In short, Larry seems scared of giving a bit of power and $$$ to the working class of this country. Perhaps he should be.