Good thread by Matt. I’d just add that it’s bizarre to watch smart people treat the size of this package as some kind of math error. This is not just a package to close the output gap. It’s not 2009, economically or politically (and we failed in 2009 by going too small then!)
https://twitter.com/mattyglesias/status/1357678562321584128
The point of the Build Back Better frame, which the Biden team has hardly been shy about, is coronavirus has shone light on savage, preexisting inequities in our society, and a moral response to this crisis requires addressing them too.
That will make the package bigger than the output gap because it is trying to do much more than close the output gap. And properly so.
Summers sort of addresses this, saying he’s worried this package will drain support for future investment. Maybe? This package betters people’s lives through giving them money, which has the benefit of being a popular thing to do. And popular things build political power.
Is that political theory wrong? Maybe. But since the 09 political theory of “don’t overdue it, you can always come back,” was also wrong, doing the opposite seems worth a try. What’s the worst that can happen? Struggling families get a bit more money in an awful time?
Related subtweet. As Austan says, the output gap is not the measure here!
https://twitter.com/Austan_Goolsbee/status/1357692540720467972
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