Delighted to release a working paper with @_geoffliu and @Tris_Sainsbury on Australia's A$38b pandemic stimulus program in which people were allowed to withdraw up to $20k from their retirement accounts, normally inaccessible until retirement. Thread. 1/

static1.squarespace.com/static/59b0bb0… Australia has a private retirement saving system in which 10.5% of all wage earnings are contributed to retirement accounts and inaccessible until retirement. The government allowed eligible people to withdraw $10k by June 30 and $10k after June 30 in 2020. 1 in 6 withdrew. 2/

I continue to read lots of calls to embargo Russian oil and gas exports. Some claim the current sanctions “will not work”, “allow Russia to escape economic harm via oil and gas, and China” and “have not stopped war”, so we need to escalate. I have a lot of problems with this… Firstly, the notion that oil and gas exports will not be affected by the current sanctions is absolutely wrong on the basis of all evidence. Future oil contracts are failing to sell at massive discounts. Shipping has been disrupted. The sanctions have lots of spillovers.

I have heard this a bit and there are many problems with it. What do you imagine the trade restrictions brought on by sanctions and various other actions against Russia will allow Russia to buy with that surplus? And don’t imagine their commodity income won’t be heavily impaired.

https://twitter.com/RobinBrooksIIF/status/1499438042280517640

Moreover, the Russian economy is about to experience likely an unprecedented dislocation, causing a significant recession, all while macro-stabilization tools are unavailable. How does Russia produce things without crucial inputs? Hitting energy is worse but likely unnecessary.

To cripple a major country’s central bank is totally wild, and unprecedented. Particularly when that country is already facing a major economic and financial crisis. Perhaps difficult for those not versed in monetary and financial policy to comprehend just how significant it is. Quite shocked to see many people interpreted this tweet as support for Russia. I deliberately made no value judgments. It’s wild, unprecedented (Russia is very different to Iran, Afghanistan and Venezuela), and significant. That’s just my objective assessment of the measures.

Pizza night. 🍕

This wave has set off a new round of tribal warfare between the “let it rip” and “COVID-zero” people. It’s been very annoying. I don’t see myself as in either camp. Pre-vaccine, zero-COVID was obviously right. Post-vaccine, the benefits of mitigation fell. Some thoughts. 1/15 Ultimately, we should be weighing the costs and benefits to society of all the measures we take. In the first wave, hospitalisations and deaths were so high that fairly aggressive measures were justified to snuff out fires that started. Some of these were obviously costly. 2/15

I am strongly in favor of increasing IRS resources to tighten tax enforcement, but this article makes two critical errors of logic that no student in my public finance class would dare make! That thinking risks pouring way too many resources into IRS enforcement activities. 1/4

https://twitter.com/postopinions/status/1375426491467640833

The first correction to make is that we definitely don’t want to perfectly enforce the tax law. Extracting the last dollar owed is likely to incur a resource cost that far exceeds the social value of the revenue raised. Instead, we should think of enforcement as a trade-off. 2/4

Today, @hamiltonproj at @BrookingsInst is releasing my COVID-19 small business policy proposal. The proposal contains 14,500 words on literally everything you ever wanted to know about the small business experience over the past 6 months. A thread. 1/24

hamiltonproject.org/papers/from_su… I distilled my near-30-page proposal down to 800 words for @washingtonpost. Read my op-ed here: 2/24

washingtonpost.com/opinions/2020/…

I wrote a paper for a special issue of the @JournalTax on COVID-19. It combines two of my favorite things: comparing Australia and America, and small business support during COVID-19. The two countries make for a fascinating comparative case study. 1/16

static1.squarespace.com/static/59b0bb0… Notwithstanding the Melbourne outbreak, Australia has successfully suppressed the virus. America has... not. Australia is far more exposed to China. And I hadn’t realised the US and Oz tracked each other closely over the first 6 weeks. But in mid-March, the US pulled away. 2/16

The Parliament today passed the JobKeeper program, a $1,500 per-worker subsidy with a $1,500 wage floor for firms experiencing at least a 30% revenue decline. Some (e.g., @RabeeTourky and @PitchfordRohan) have said it’s corporate welfare. Here’s how I think of the economics. 1/12 Inside firms are many different workers engaged in many different labour markets. So a full examination would consider those markets with wages equal to or less than $1,500 and greater than $1,500. I’ll consider the former. Output is in “workers” and the wage is fortnightly. 2/12

Two days in a row the @smh has run a scaremongering article about the deficit. That’s before hardly any money has even gone out the door. @ErykBagshaw and @swrighteconomy, please stop! Now is *not* the time to be worrying about the deficit. Some facts over the fold... 1) We started this with net-debt-to-GDP of around 40%. The US started at over 100%. And they’re going *further* than us on stimulus.
2) The $130bn wage subsidy, the most expensive policy measure ever introduced in Australia, increases net debt by just a third.

I have... some views about the JobKeeper scheme. Here in a thread. 1/13

https://twitter.com/shamiltonian/status/1244510801920028672

This is a per-worker wage subsidy. @stanveuger and I called for a revenue-loss subsidy in our @FinancialReview op-ed on Wednesday, below. At that point the government had ruled it all out. I noticed some uncannily similar language in the presser. 2/13

afr.com/policy/economy…

I've heard the PM say he received advice from Treasury that paying firms for payroll would be infeasible. This seems completely inconceivable to me. There is a very simple policy proposal that the government could introduce immediately that would solve the problem entirely. 1/10 Since 1 July 2019, every Australian business (even those with fewer than 20 employees) has been using "single-touch payroll" to withhold tax from employees. This means every time they do a pay run, all payroll information is transmitted to the ATO. 2/10

ato.gov.au/Business/Singl…

OK, I’ve read the small business loan sections of the CARES Act (GOP senate bill) twice. It’s more or less everything I want *except* it needs to be 3 times bigger or they’ll run out of money fast. If adequately funded, this bill could avert economic catastrophe. Read more... 1/7 The bill allocates $350 billion for the program, which has steadily increased with drafting. @MichaelRStrain estimates that 80% of eligible firms’ revenues for 3 months amounts to $1.2tn. That’s not quite equivalent, but it gives you some sense of the required scale. T not B. 2/7

I've been asked many times in the past few days how to think about the various economic policy options in response to corona. In this short thread, I'll lay out the main ones and my take. I won't talk about speed of implementation because on that I think we all have no idea. 1/6 *Uniform stimulus checks*. The problem is the economy won't move the money where it is needed (business and poor). To give everyone the same check that would cover the worst off, the package would be $5tn. You could claw some back in '21, but not all would see it that way. 2/6

Today, @stanveuger and I are releasing a one-page plan to support businesses and jobs through the crisis. The economic crisis stems from a large fall in business revenues due to a contraction in demand and restrictions on supply. Our plan fills that gap.

static1.squarespace.com/static/59b0bb0… The government should provide immediate funding for emergency loans to any small- and medium-sized business in America. These loans would:

• be offered via private lenders but facilitated by the Federal Reserve;
• cover the shortfall in revenues by participating businesses;

People have asked if the distinction between a standard "Keynesian" demand-driven recession and a labor-supply-driven coronavirus recession, which will be paired with a fall in the marginal propensity to consume, is simply semantics. The distinction is critical for 2 reasons: 1/4

https://twitter.com/SHamiltonian/status/1238435129133010944

First, pumping up the economy with cash stimulus payments will be impossible because the spending response will be strongly impaired. So the goal of cash payments should not be to target those most likely to spend, but rather those who will be hit hardest by the downturn. 2/4

There’s a lot of confusion about the economic response to coronavirus. This won’t be a normal Keynesian-style recession. The normal policy levers are impotent. Putting money into consumers’ pockets will not pump up the economy because consumers can’t spend. They’re staying home. But obviously that doesn’t mean we should do nothing. In addition to boosting health services and slowing the contagion, we need to plug the income gap for vulnerable consumers and businesses caused by coronavirus. We should do that any way we can. Including mandated sick leave.

It’s weird how American liberals look to Northern Europe and completely ignore Australia. Australia is a better model for American progress. Every student gets a government subsidized, governnent-financed income-contingent loan. And many get an allowance:

servicesaustralia.gov.au/individuals/se… Medicare for all? We have that.

Twitter has been all about the wealth tax lately. Some have claimed that all capital taxes are bad. Others that Warren Buffett’s lower tax rate than his secretary is wrong. Underpinning it all is the theorem I think about more than any other: Atkinson-Stiglitz. A thread. 1/22 I teach A-S three times a semester: once when comparing the efficacy of income and consumption taxes, another when considering the efficacy of capital taxation, and last when considering the efficacy of estate taxation specifically. It’s a lot of A-S. But it’s important! 2/22

*Finally* an explainer about why the Saez and Zucman effective tax rates chart was flat not just compared to other studies but also their own research. A critical issue is the way capital returns are allocated to different capital owners and to workers. Recommend. Thread follows.

https://twitter.com/wwwojtekk/status/1183953723825020928

I’m proud of @wwwojtekk, @jmhorp and @jasonfurman for carefully scrutinizing what seemed to be a fairly radical departure from orthodoxy lobbed into the New York Times right in the middle of a Presidential primary featuring wealth taxes at the center. The stakes are high.