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6 Nov, 4 tweets, 1 min read
Question: Why was "infrastructure week" a joke under Trump, who could have gotten the votes at any time, only to become reality now despite razor-thin Dem majority? It wasn't just incompetence, although that too 1/
I think two factors. 1st, the McConnell wing of the GOP doesn't want a successful spending program, even under an R president, because that might help legitimize an increased govt role in general. That is, they opposed infra not bc it might fail but bc it might succeed 2/
2nd, Trump team was addicted to crony capitalism. They couldn't do a clean bill; it had to offer privatized stuff that would mean big bucks for their friends 3/ nytimes.com/2016/11/21/opi…
Not ready to celebrate until or unless we also get BBB. The case for investment in people — and climate! — is even stronger than the case for steel and concrete. But amazing how much can happen once you can push the ideologies and crony capitalists to one side 4/

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More from @paulkrugman

Paul Krugman Profile picture
5 Nov
A week of terrible political news for Democrats has also been a week of good news on the economy and Covid. But will the objectively good news move public sentiment? A few thoughts 1/
The employment report was almost all good news, confirming surveys suggesting that the third-quarter air pocket was behind us. Labor force participation still low, but overall recovery very much on track 2/
Aside from Delta receding, good news on the effectiveness of vaccine mandates. NYC at 91 percent compliance, not facing the crunch widely predicted 2/ nytimes.com/2021/11/01/nyr…
Read 8 tweets
Paul Krugman Profile picture
28 Oct
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/
Read 4 tweets
Paul Krugman Profile picture
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
Paul Krugman Profile picture
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
Paul Krugman Profile picture
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
Paul Krugman Profile picture
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

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