Git Along, Little Doges

Watching King Abdullah and Marco Rubio squirm in their seats while Trump continues on about his Gaza plan is quite something.

“We’ll take Gaza, we’ll own it and cherish it” - boy oh boy pic.twitter.com/SLKBWnap5B

— Lani Refiti (@LaniRefiti) February 11, 2025

Wish there'd been more Rubio (or just more cowbell) in the video of that meeting a week ago, which Trump decided contrary to custom not  to hold in private before the photo op and public statements but did all three at once, presumably to prevent King Abdullah from screaming at him; but Rubio's face in this photo reminds me of that lady in the Hermès scarfs who used to watch Trump explaining virology to the nation from the standpoint of his transcendent ignorance—deeply panicked but trying not to show it. I didn't realize until that moment that Trump actually has no idea what the Gaza ceasefire deal (which he has endorsed) entails: the sequence of phase 1, releasing some hostages and prisoners to set the stage for phase 2, negotiating a final disposition of the territory and releasing all the remaining hostages, followed by phase 3, implementing the deal and permanent ceasefire (the Biden deal I've been telling you about for a year), as revealed by Trump's comment,

“As far as I’m concerned, if all of the hostages aren’t returned by Saturday at 12 o’clock, I think it’s an appropriate time. I would say, cancel it and all bets are off and let hell break out. I’d say they ought to be returned by 12 o’clock on Saturday,” Trump said.

No, it's not an appropriate time. Phase 2 hasn't even started yet. It would be nice for the hostages and their families, who I support, and no doubt also nice for Netanyahu, who I don't support, but it has no relation to the agreement painfully worked out over the past year. It's demanding that all the parties trash that agreement and start all over again, which clearly meant it couldn't be wrapped up on Saturday. It's just a completely new idea nobody else has ever heard of, because Trump just made it up on the spot and doesn't know enough about the situation to realize that it can't possibly happen, and there's a reason it can't possibly happen.

It's nothing but a big smelly turd deposited in the Oval Office that is of no relevance to anything, except to Trump's equally irrelevant fantasy of taking control of the Gaza Strip as his own, or Jared Kushner's, development project, with all the irritating Gazans cleared out of the way in Egypt or Jordan (I don't know who he thinks are going to be the housekeepers and waitstaff and caddies, perhaps they'll be imported from the Philippines), in spite of endless attempts by Jordanians and Egyptians and Saudis to explain to His Imperial Stupidity that it can't be done. A turd the existence of which nobody present dares to acknowledge, because Big Donald might get upset (Abdullah did have something to say about it once he got out of there, though he did lower himself to suggesting that the meeting might be described as "constructive"—he's far from the worst king in his neighborhood, not that I support kings, but diplomacy requires some dishonesty).

Things may have marched in a different direction since I started drafting these remarks with the development of a Trump policy on Ukraine, but I think Trump's stupidity remains the main factor. I'm sure I'll get back to that later.

For the Record: Quarrelsome

Monday got a text from the dentist reminding me of an appointment on Wednesday. Which seemed vaguely odd because the last visit wasn't very long ago, I didn't think. Woke up this morning in some anxiety about getting there in time, looked back at my phone, and the appointment was for Wednesday, February 16. What is the possible use of a reminder for an appointment four months away? Who does that??? 

Anyway if I seem unusually quarrelsome today, maybe you can chalk it up to that and forgive me.

My dentist is actually a very gentle and conversible Iranian, not this kind of dentist.

Scarcity mentality

"Oh," say some of my friends, "what's with this scarcity mentality?" This is one reason.

— Ghastreblyansky (@Yastreblyansky) October 12, 2021

Somehow we still don't have enough to cover the actual needs of our human population and the theoretical needs of our defense establishment. Why is that?

— Ghastreblyansky (@Yastreblyansky) October 12, 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:

Joe Did What? Not Deficit Hawkery.

 

Bathtub boats, via Walmart.

So, as promised earlier in the week, to the Biden program: one reassuring thing we've learned over the pandemic year is that the federal government has a lot of fiscal and financial tools for dealing with an out-of-the-blue emergency. We may not be totally able to rely on the people, in Congress, in the White House, at the Fed, but the tools are really there—we don't need to devise a whole new system, the way the Union did (and the Confederacy failed to do) at the outset of the Civil War. The Federal Reserve Bank can keep interest rates near zero for years at a time, it seems, and Treasury can borrow more or less unlimited funds to deal with it, if Congress allows them to. And indeed, they've borrowed $4.3 trillion for Covid relief since March 2020, the last $1.9-trillion tranche signed by President Joe Biden, in a bill passed without a single Republican vote.

Which is a sign that Democrats may not be simply reverting "back to the days of paygo politics," as David Dayen complains, when they propose they propose some $4 trillion in tax hikes, all of it on the top 0.3% earners and on corporations, to "pay for" the planned new spending of the American Jobs Plan and American Families Plan:

“So, how do we pay for my Jobs and Family Plan?  I made it clear, we can do it without increasing the deficits,” Biden said last night. “What I propose is fair, fiscally responsible, and it raises revenue to pay for the plans I have proposed.” This was in a section where Biden attacked trickle-down economics, but even there, he condemned Trump for adding “$2 trillion to the deficit” with his tax cuts.

Rarely Asked Questions: How Does Government Pay Its Bills?

Winner of my "Best Visual Illustration of Rarely Asked Questions" contest, via EntheoNation.

I'm crazy about the Biden proposals introduced in Wednesday's Joint Speech, or as Susan Glasser/New Yorker says, in what seems to me like the most accurate summary I've seen,

To anyone who remembered last year’s Democratic primaries, the President’s first address to a joint session of Congress sounded as if Elizabeth Warren, and not Biden, had won.

and I'm going to want to take issue with scoffers, not necessarily representing "Modern Monetary Theory", including the generally very estimable David Dayen at The American Prospect, complaining of "that old deficit hawkery" in the way the plan is being sold.

I don't think it's that at all. But before I get there, I'd like to lay down some basics on the nature of government spending in a modern state that I think aren't well understood. because most of us think we already know, and as I've been learning recently we don't:

Rarely Asked Questions:

Q: How does the government pay its bills?

A: It has a checking account, known as the Fund Balance With Treasury (FBWT).

Q: Where does the money come from?

A: Everyplace that gives the US government money, including tax collections by the IRS and other agencies, fees it collects from various enterprises (think parking at national parks. but there's lots more), and of course money it has borrowed from the private sector by selling bonds and other kinds of federal paper. Unlike your checking account, it also includes all the assets the government owns that it can't easily convert into cash, generally inventory, and isn't supposed to sell, like stocks of toilet paper and paperclips and nuclear weapons and land, plus the loans it issues to veterans, students, small business owners, etc.

Q: So that's a lot of money, right?

Think of a Household!

(Slightly updated 3 April)

Chapter 1 heading, "Don't Think of a Household", from Stephanie Kelton's 2020 The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy:

President Obama was being pretty pathetic when he said that, at one of many low points in the course of his endless struggle to make Republicans believe he wasn't a Communist (spoiler: they knew perfectly well he wasn't a Communist—they pretended to think he was because they thought it would advantage them politically to do so), but the fact is that families are a lot more like federal governments than the conventional wisdom tells you, though not for the reasons Obama was suggesting: namely,

Reaganomics With a Human Face

 

Free lunch, photo by Bob Pennell, the Medford Mail Tribune, via USA Today.

I think I need to say something about "Modern Monetary Theory", in particular in its vulgar form, as the idea that, caricaturing a bit,

• since we now know that deficit spending does not necessarily cause hyperinflation (at least since the gold standard for the US dollar was somewhat inadvertently dumped in decisions of the Nixon administration in 1971-73),
• therefore, there is no reason to think about deficits at all, in planning increased social spending for the purposes of doing economic justice, and—oh, also, cutting, or not raising, taxes on the very well-to-do, no reason to worry about that either.

It's that last bit that got my attention, because I'm not an economist, like most of you, but an amateur human with some training in social science in general, who sometimes thinks about political economy and political morality, and my fondest dream has long been to work toward equalizing our situation, through the tax system, by getting the very rich to pay more. Lots more. Ever so much more, since the appearance of Thomas Piketty's Capitalism in the Twenty-First Century in English in 2014 gave me the courage. I told some relatively liberal online advocates of MMT about it, over the Twitter, some time ago: if there's no good economic reason for raising their taxes, how am I going to get it done? And they said, Don't worry about it! There are other reasons for taxing the rich! But they didn't offer me any reasons that would have any political weight.

That is—in other words—I started feeling as if the idea was being pitched as a justification for unlimited government spending on the poor, but was in fact a justification for not taxing the rich, a kind of Reaganomics with a smiling, liberal face, and I didn't want the economics to work out. And I really didn't like the thought that progressives like Senator Sanders and Rep. Ocasio-Cortez were looking warmly at it.

For the Record: Stupid Economist Tricks

Nice example of what Bos called a "Marshall McLuhan moment" ("You know nothing of my work," said the Canadian sage, appearing out of nowhere in the ticket line):

How do you do policy right? You do the work like @BharatRamamurti and his staff. That he's more prepared to correctly interpret complicated research than the witness is stunning. https://t.co/aGAACGODfm

— Betsey Stevenson (@BetseyStevenson) September 17, 2020

Fairly clear what happened here: Chris Edwards of the Cato Institute (where he edits Downsizing Government) is testifying before the Congressional Oversight Commission, a new body set up in April to monitor the workings of the CARES act, of which Bharat Ramamurti, just off his service as one of the top economic aides to Elizabeth Warren's presidential campaign is the only so far appointed commissioner, and he is explaining that according to this extremely authoritative paper by Valerie Ramey, government spending does not grow the economy very much, and Ramamurti says well, how about this spot in the paper where it says it does, and Edwards says, approximately, "Homina homina homina—uncertainty!—homina homina," and Ramumurti, says, approximately, "Because I called her up the other night and she said, yeah, that's exactly what she meant."

But that's not how the economics frat boys saw it: they saw Ramamurti as having sprung some kind of dishonorable trap on the witness: