Friday, July 23, 2021

Stupid Economist Tricks: Sex, Lies, and Deficit Terror

Tom Toles did not cite a source for that 97% figure. Then again, unlike Michael Strain, he is paid to be a cartoonist.

Actually, no, no sex, just Michael Strain of the American Enterprise Institute, warning readers of The New York Times that

Biden Is Asking for $4 Trillion. Congress Shouldn’t Give It to Him.

He seems to like this headline format. Last time I had reason to deal with him, in 2015, it was with reference to a WaPo piece recommending the repeal of the Affordable Care Act:

End Obamacare, and people could die. That's okay.

Spoiler: my commentary concluded that it was not okay. And the GOP Congress, failing to end Obamacare, sort of agreed! I mean not exactly, but we won.

Anyway, the reason Strain would like Congress to refuse Biden the money, or at least the $3.5 trillion of it to be appropriated through the budget reconciliation process without requiring any Republican votes, is ostensibly the raging inflation he (Michael Strain) sees and expects to see continuing through next year even without this extra spending, and which would surely be aggravated by the increased demand for stuff (where "demand" means, as it usually does in this style of economics, "ability to pay for things you really need that you couldn't afford before") that the spending on the expanded child tax credit in particular will bring on by yanking people out of their God-appointed poverty, while the Biden administration makes no plans for increasing the supply of stuff, other than by PROVIDING THE UNIVERSAL FREE PRE-K EDUCATION that recipients of the child tax credit are most likely to be spending it on, but you can't expect Strain to make that connection.

So in the course of his argument he gives a lot of attention to an analysis of the Biden program by Moody's, in which for some reason he doesn't offer a link to it:

The $3.5 trillion plan [as opposed to the half-trillion or so designated for bridges and tunnels and roads] is another story. Though the details of this package are still being debated, Moody’s Analytics calculates that the plan would contain more than $500 billion in tax credits from 2022 to 2026 for low- and middle-income households. Such payments would increase consumer demand for goods and services, pushing up their prices.

For that five-year period, Moody’s also expects more than $400 billion of spending on social programs like nutrition and housing assistance, child care and education. Much of this would add to inflationary pressures.

Overall, even though taxes would go up under the Democrats’ plan, it would add nearly $1 trillion to the deficit over the five years beginning in 2022, according to Moody’s. Given the composition of much of this deficit spending, this would be another big boost to the demand side of the economy.

Again, he fails or refuses to notice that the spending on nutrition (subsidies to agriculture), housing (subsidies to builders and landlords) and child care and education (subsidies to providers) are designed to increase supply. He also fails or refuses to notice the effect $2.5 trillion or so devoted to other things, particularly healthcare and combating global warming, will have on increasing supply of health services and things like renewable energy and electric vehicles, but let that pass. He also pulls a fast one by talking in five-year terms to make "$1 trillion" added to the deficit sound like a lot when it's in fact $200 billion a year and a drop in the bucket by today's standards. But the thing that gets to me most is the way he glosses over the tax increase for personal incomes over $400,000 and corporations as "taxes would go up" with no numbers attached.

And why didn't he link to a source for Moody's analysis? I just happen to have Moody's right here with me, via CNN, and:

"Worries that the plan will ignite undesirably high inflation and an overheating economy are overdone," Mark Zandi, the chief economist at Moody's Analytics, wrote in the report released Wednesday.

And not only that, people, but very specifically:

Rather than inflame inflation, the analysts point out that new spending on items such as rental housing for low-income Americans, reducing prescription drug costs and making childcare more affordable is aimed at cooling prices off and easing shortages. "Much of the additional fiscal support being considered is designed to lift the economy's long-term growth potential and ease inflation pressures," Zandi wrote.
Indeed, economists, including Zandi, have told CNN Business that Biden's Build Back Better Agenda is unlikely to cause inflationary problems because it is largely focused on adding much-needed supply, not boosting demand.
Crucially, Moody's Analytics notes that the Biden plan does not call for enormous deficit spending that could boost inflation. "The legislation is more-or-less paid for on a dynamic basis through higher taxes on multinational corporations and the well-to-do and a range of other pay-fors," Zandi wrote.

Not only that I am right, which of course I always enjoy more than is good for me (that's why I added all the bold up there), but Strain is really being remarkably dishonest, even for a rightwing economist,. He is pulling the wool over the eyes of the Times readership. He is citing Moody's as an authority for something Moody's explicitly denies. He is LYING THROUGH HIS FUCKING TEETH, not to put too fine a fucking point on it. Because as ever he doesn't give a fuck about inflation—he's concerned with that tax hike on him and his patrons that he avoids mentioning at all. That's all I wanted to say, feel free to pass it around. 

Cross-posted at No More Mister Nice Blog.

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