What's actually happening on Democratic plans? I have no idea. We still seem to have a standoff between corporate Dems who won't say unambiguously that they'll vote for Build Back Better and progressives who won't vote for infrastructure without that assurance 1/
Assuming Dems get past this, one remaining question is whether the pay-fors will actually work — whether tax hikes and improved enforcement will actually cover the cost of new spending. But the key point here is that *it doesn't matter* 2/
The main reason Dems want a deficit-neutral bill — whereas Rs have no qualms about unfunded tax cuts — is that Joe Manchin seems to think deficits are important. But they aren't, in a world of negative real interest rates 3/
So the pay-fors are there to satisfy a political need, not to solve an economic problem. If they deliver as much revenue as promised, good; but if they don't, they'll still have done their job by making desperately needed spending politically possible 4/

• • •

Missing some Tweet in this thread? You can try to force a refresh

Keep Current with Paul Krugman

Paul Krugman Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!


Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @paulkrugman

27 Oct
As Joe says: we aren't having stagflation, we're having a (temporarily?) inflationary boom 1/
We talk a lot about supply-chain disruptions, but mostly what we have is supply chains delivering more than ever, but unable to keep up with demand 2/
That's what's happening at the Port of LA 3/ ft.com/content/f116d3…
Read 4 tweets
26 Oct
Friends tell me that this tweet was obscure — and it seems that many people, even in the finance world, don't get why velocity is unhelpful now. So, a thread 1/
Start with what happened in the first few years of the financial crisis and aftermath. Here's the monetary base, which is what the Fed controls directly, one measure of the money supply, and nominal GDP 2/
Obviously monetary base (M0) grew enormously, M2 some but not much, GDP even less. So as a matter of arithmetic velocity of either M0 or M2 fell. But why? Because M0 was in a fundamental sense disconnected from GDP 3/
Read 15 tweets
21 Oct
For reference: I'm revisiting the 2017 Tax Cut and Jobs Act, which was supposed to induce corporations to bring back the money they had invested overseas. For a few quarters it looked as if something was happening: 1/
On paper, overseas subsidiaries of U.S. corporations were disinvesting and sending funds back to their parent companies via dividends. But there was no real investment surge here 2/
What was really happening was almost surely just a rejiggering of the accounting. A large part of reported US investment abroad is just an accounting fiction, resulting from profit-shifting into tax havens 3/
Read 5 tweets
19 Oct
Scott Sumner has an interesting thread about his recent paper on the "Princeton school" of macroeconomics, which includes among others yours truly and a guy named Bernanke (what ever happened to him?) 1/
I mean, I have to like this thread and the paper ... 2/
Indeed, I think that 98 paper may be the best thing I've done. And it offers an occasion to maunder on a bit about doing economics 3/
Read 10 tweets
18 Oct
A bit more on fossil fuels and West Virginia. The thing that always strikes me is that the state stopped being a coal-fueled economy a *long* time ago. Here's the share of coal mining in total compensation (a better measure than share of GDP, as I'll explain) 1/
Joe Manchin began his political career in the state legislature in 1982; at that point coal was responsible for 16 percent of payrolls. But it plunged in the years that followed, thanks to strip-mined coal in Wyoming and automation 2/
So King Coal had been dethroned a generation ago. It's fallen even further since, but the big decline is far in the past 3/
Read 6 tweets
17 Oct
As always, Adam Tooze's latest, this time on coal and the West Virginia economy, is interesting and thought-provoking. But also, unusually, a bit credulous 1/ adamtooze.substack.com/p/chartbook-46…
Tooze's numbers rely a lot on a study I cited for direct coal employment; but a lot of the rest of that study is, well, dubious 2/ wvcoal.com/news-2/latest-…
First of all, the study counts coal-fired electricity generation as part of the coal industry. But think about it: if we phased out coal, WV would still be generating power, just from other energy sources. Including this sector indicates an attempt to inflate the numbers 3/
Read 7 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!