The state of U.S. politics is horrifying.
Paul Krugman, Feb.12, 2021. New York Times.
A sustained campaign of lies on right-wing media — echoed by nearly half of the Republican senators — has convinced almost two-thirds of Republicans that the presidential election was somehow stolen. These lies set the stage for the Jan. 6 attack on the Capitol; but a great majority of Republican senators appear set to acquit Donald Trump for his undeniable role in promoting that attack.
Yet President Biden’s plans to rescue the economy command overwhelming, bipartisan support.
My sense is that the remarkably strong public consensus in favor of Bidenomics has largely flown under the radar. To be sure, I’m not saying that the surprising unity among voters (but not politicians) on economic policy compensates for the terrifying fact that one of our two major parties no longer accepts the legitimacy of elections it loses. But it’s still important for America’s future.
You might have thought that Democratic plans for a big rescue package, probably close to the $1.9 trillion the Biden administration has proposed, would lead to a Tea Party-style backlash. But a recent CBS News poll found that 79 percent of those surveyed either believe that the package is the right size or think that it’s too small. There are, of course, partisan differences, but even among Republicans, 61 percent support a plan as big as or bigger than the one in the works.
This broad public support for Biden’s signature economic policy is stunning given the depth of our political divisions. It’s also very different from what we saw in the early months of the Obama administration, during the Great Recession.
Biden has somewhat lower overall approval and much higher disapproval ratings than Barack Obama did at this point in his presidency. But Obama’s personal popularity didn’t translate into strong support for his stimulus plan, which only a narrow majoritysupported. Why is this time different? I’d suggest three reasons.
First, the Obama plan was sold as stimulus: deficit spending to boost overall demand. This was the right thing to do, but the Keynesian economic theory that supports deficit spending during recessions has always been hard for many people to grasp. When John Boehner, the House Republican leader, complained that “American families are tightening their belt, but they don’t see government tightening its belt,” he was peddling junk economics, but it resonated with many voters.
And at some level I think voters get that, and they support aid to those hurt by the pandemic.
Second, the Obama stimulus was conflated in many people’s minds with other policies, such as Wall Street bailouts, that were deeply unpopular. In particular, the Tea Party movement was not, despite many claims from commentators, mainly a protest against budget deficits. It began with outrage over the idea that “losers” might receive debt relief.
There isn’t anything comparable this time. Most Americans seem to realize that people who lost their jobs because of Covid-19 aren’t suffering for their own fecklessness.
Finally, Republican politicians have lost all credibility on fiscal matters. In 2009 many people believed them when they pretended to care about budget deficits. Since then, both the failure of the often-predicted fiscal crisis to materialize and the way the G.O.P. rammed through a huge, unfunded tax cut under Trump have made it hard to take such posturing seriously.
In fact, the only coherent objections to the Biden plan seem to be coming from some center-left economists who worry that it will lead to economic overheating. Many, perhaps most other economists, myself included, disagree, and the plan is likely to pass more or less as proposed. But it’s striking that G.O.P. politicians are barely even trying to challenge Democratic plans on the merits.
This intellectual vacuum won’t stop Republicans in Congress from voting against the Biden plan, quite possibly unanimously. But in so doing they’ll be at odds not just with the general public but also with many of their own voters. And that may matter.
In a better world, the Republican Party’s continuing fealty to a former president who tried to overturn an election with lies and violence would produce massive voter backlash; in America 2021, not so much.
But bread-and-butter issues still move voters. Low unemployment helped Republicans do better in the 2020 elections than most analysts expected; the promise of relief checks helped Democrats win the Georgia runoffs, and with them control of the Senate. Which is, by the way, one reason it would be foolish to scale back relief spending because some economists think it’s excessive.
This means that the refusal of Republicans in Congress to back highly popular economic policies may do the party more damage than their complicity in a violent attempt to reverse election results. It isn’t fair or right; but the G.O.P.’s ideological rigidity in a time of economic crisis may matter more, politically, than its rejection of democracy and rule of law.
https://www.nytimes.com/2021/02/11/opinion/biden-economic-plan.html
Have questions?
Keynesianism Explained.
Attacks on Keynesians in general, and on me in particular, rely heavily on an army of straw men — on knocking down claims about what people like me have predicted or asserted that have nothing to do with what we’ve actually said. But maybe we (or at least I) have been remiss, failing to offer a simple explanation of what it’s all about. I don’t mean the models; I mean the policy implications.
So here’s an attempt at a quick summary, followed by a sampling of typical bogus claims.
I would summarize the Keynesian view in terms of four points:
1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.
2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.
3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.
4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.
Is this a complicated, convoluted doctrine? It doesn’t sound that way to me, and the implications for the world we’ve been living in since 2008 seem very clear: aggressive monetary expansion, plus fiscal stimulus as long as the zero lower bound constrains monetary policy.
But strange things happen in the minds of critics. Again and again we see the following bogus claims about what Keynesians believe:
B1: Any economic recovery, no matter how slow and how delayed, proves Keynesian economics wrong. See [2] above for why that’s illiterate.
B2: Keynesians believe that printing money solves all problems. See [3]: printing money can solve one specific problem, an economy operating far below capacity. Nobody said that it can conjure up higher productivity, or cure the common cold.
B3: Keynesians always favor deficit spending, under all conditions. See [4]: The case for fiscal stimulus is quite restrictive, requiring both a depressed economy and severe limits to monetary policy. That just happens to be the world we’ve been living in lately.
I have no illusions that saying this obvious stuff will stop the usual suspects from engaging in the usual bogosity. But maybe this will help others respond when they do.
Hey Campbell can you figure out how to use that video ?
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