This is preliminary, and probably being floated in part to get reactions. But for what it's worth, it sounds as if the Biden plan will be too deficit-averse 1/…
The stimulus from the American Rescue Plan will be largely in the rear-view mirror by the time infrastructure ramps up; we'll probably be back in an environment of weak demand and low interest rates 2/
Under those conditions sustained deficit spending on investment is actually good — which was the case Larry Summers was ably making before he began his crusade against the ARP 3/
Of course, one possibility is that the administration expects some parts of the ARP — child tax credit and ACA enhancements — to become permanent, adding sustained stimulus 4/
Anyway, I hope that the slight Very Serious People vibes I'm getting don't end up doing too much damage 5/

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More from @paulkrugman

24 Mar
What is Yellen talking about here? Look at the data 1/
Was there any break in the trend in business investment after a very large tax at end 2017? No 2/
Real nonresidential fixed investment ex mining (which is noisy because of oil price/fracking stuff) 3/
Read 4 tweets
24 Mar
So actually I think Noah, unusually, has this mostly wrong. These macro wars are very different from those of 2011; the debates are about numbers, not principles — basically because the big conceptual issues were settled when one side won 1/…
This time we really are all Keynesians now — or at any rate nobody is listening to the people who insisted austerity is expansionary, all unemployment is structural, etc. Summers, Blanchard, Yellen and yours truly are working in pretty much the same framework 2/
And that framework is IS-LM-ish macro, where deficit spending is expansionary at a given interest rate. The question is how expansionary. And that's a subject for dispute mainly because we are in uncharted policy territory 3/
Read 6 tweets
24 Mar
As Biden moves toward Phase 2, infrastructure spending paid for in part by taxes on the rich, he'll once again be doing very much what the public wants. Infrastructure is very popular 1/…
So are higher taxes on the rich 2/…
So when Democrats give in to the 70-80% of voters who think we should be spending more on infrastructure, th 62% who think the rich should pay more taxes (69% say the same about corporations), will they be lambasted for not being bipartisan? 3/
Read 4 tweets
23 Mar
A lot of this is reversing the Trump tax cut; McConnell is already denouncing it as "job-killing". So maybe worth looking at recent effects of tax changes for the 1% 1/
Significant rise in 2013, bc Obama allowed some Bush cuts to expire and new taxes for ACA. Then significant cut in 2017 as TCJA went into effect. I use CBO projections for 2021 as basis for post-2016 2/
And here's what we get. See the job-killing effect? Neither do I 3/
Read 5 tweets
21 Mar
Now that the big Biden package has been enacted, we're hearing warnings from some economists — well, one economist — about stagflation. As always, history is extremely useful in thinking about such things; and I've been reviewing the great inflation panic of 2010-11 1/
My sense is that this episode has been widely forgotten, but it's very relevant. Here's what happened: as the economy began to recover from the 2007-9 recession, headline inflation picked up to almost 4% 2/
Producer prices — basically wholesale prices — were rising at a double-digit clip 3/
Read 9 tweets
20 Mar
Defense of inherited privilege, of all kinds, is the logical consequence of where U.S. conservatism has been heading for a long time. That's what estate-tax repeal is all about! 1/
It was already obvious in the Bush years 2/…
And we started to see books praising nepotism 3/…
Read 4 tweets

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