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Stephanie Kelton Profile picture
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2 Mar, 4 tweets, 1 min read
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In 2007, Congress amended the Fair Labor Standards Act of 1938 to gradually raise the federal minimum wage from $5.15 per hour to $7.25 per hour. The new minimum wage was phased in over two years. How did it happen? 1/4
The bill was introduced in the House on Jan 5, 2007 and passed on January 10. All 233 House Dems voted "Aye." 82 Republicans joined them in voting "Aye." 2/4
A cloture motion in the Senate failed after President G.W. Bush said he wanted tax cuts for small businesses that might be adversely impacted included in the. 3/4
Tax cuts were added to the bill, and on February 1, 2007, the amended bill sailed through the Senate with a vote of 94-3. 4/4

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More from @StephanieKelton

Stephanie Kelton Profile picture
3 Mar
Had some further thoughts on the Orzag intervention. 1/12
The big breakthrough will come if/when Congress changes the way it approaches the use of "offsets." Right now, offsets = pay-fors. The purpose of *offsetting* spending is to neutralize the impact of the spending on the budget outcome--i.e. to keep it deficit neutral. 2/12
That is not how we should think about offsets. In MMT, offsets are explicitly about inflation. You don't need a binder full of revenue-raisers--i.e. offsets--to neutralize the impact on the budget. 3/12
Read 12 tweets
Stephanie Kelton Profile picture
24 Feb
“In truth, the only bond vigilante the US faces is the Fed—Congress allows it to raise rates whenever it wants ... But even if the Fed abandons low rates, the Treasury can ‘afford’ to make all payments on debt as they come due, no matter how high the Fed pushes rates.” 1/5
“Affordability is not the issue, but rather the desirability of making big interest payments to bond holders and potential effects on aggregate demand and hence inflation.” 2/5

tandfonline.com/doi/full/10.10…
“[T]he US Fed is a creature of Congress, and Congress can seize control of interest rates any time it wants (and in WWII interest rate policy was essentially dictated by the treasury).” 3/5
Read 6 tweets
Stephanie Kelton Profile picture
23 Feb
“Someone” is and has been paying for the recovery from COVID-19. In the US, that “someone” is Uncle Sam. By all means, deal with inequality, but let’s not pretend that the government didn’t already foot the bill. 1/3
If you don’t already understand this, there’s a book that might help. 2/3
If you think “someone is going to have to pay for the COVID recovery,” you are absolutely barking up the wrong tree. You’re not going to end up with a wealth tax. You’re going to end up with austerity. Mark my words. 3/3
Read 4 tweets
Stephanie Kelton Profile picture
22 Feb
Consider this passage from CBO's August 2010 budget report:
"The amount of federal debt held by the public has
skyrocketed in the past two years: from 40 percent of GDP at the end of 2008 to nearly 62 percent at the end
of this year, CBO estimates."
cbo.gov/sites/default/…
1/8
CBO continues.... Next sentence: "Interest rates, however, have fallen to historically low levels, so despite the higher *levels* of debt, *interest costs* have not yet increased significantly." 2/8
Now consider this comment from Yellen earlier today. She seems to be invoking the sort of thinking found in this recent paper by Furman & Summers. 3/8 brookings.edu/wp-content/upl…
Read 8 tweets
Stephanie Kelton Profile picture
22 Feb
Something doesn't add up here. nytimes.com/live/2021/02/2…
The weirdest bit, for me, is noting that interest as a share of GDP is "roughly the same" as during GFC, but somehow we are supposed to have more fiscal space today compared to what was available back then.
Like, if this was always the right way to think about fiscal space--and I don't agree that it is--then why didn't these people tell us that back in 2008/09/10?
Read 5 tweets
Stephanie Kelton Profile picture
17 Feb
Suppose you grew up in Sioux Falls, SD. Your family didn’t have a lot of money. You never thought about public vs. private as you contemplated your options in high-school. You just knew you wanted to go to college. 1/8
You considered three options. (1) South Dakota State Univ, which is 70 miles north in Brookings, (2) University of South Dakota, which is 70 miles south in Vermillion, (3) Augustana University, which is right there in your hometown of Sioux Falls. 2/8
Augustana is private. SDSU and USD are public. You never gave a moment’s thought to any of this. Your family didn’t have a lot of money, so you received a fairly generous financial aid package from Augustana. 3/8
Read 10 tweets

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