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July 27, 2009

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Well, I'm not saying the stimulus is a failure. IN fact, the state aid has already paid dividends. I'm saying it's too soon to know.

But yes, I think it should get out quicker.

But I'm still not sure on your ultimate position. Are you pro-stimulus but you just wanted it bigger and more upfront?

Or are you anti-stimulus. Because from what I recall about your early posts, you were generally anti-stimulus.

Publius, I wrote eight posts on this subject, many before the ultimate bill was passed. I consistently argued for breaking up the front and back end components of the bill, and disputed those who argued that the back-end parts of the bill could be accurately called a "stimulus." I also consistently argued for more in the front end, via, e.g., a payroll tax, and for a greater debate (and more boldness) in the back end.

So, yes, I wanted a larger stimulus, which included most in tax cuts (e.g., a payroll tax holiday) and more in direct payments to states (to close budget gaps, as well as cover unemployment insurance and health care).

What I didn't want was a "stimulus package" that had less front end spending, but still cost an emormous amount because it included a bunch of spending that wasn't stimulus. But that's what we ended up getting, because that's what the Democratic leadership wanted.

Rather, the lesson may well be that y'all need better Democratic leadership.

unfortunately, that's been common knowledge since 2006. especially when it comes to the Senate.

I'm sorry who exactly has been up to sing the praises of the Democratic Leadership? Anyone? Anyone? Beuller? Beuller?

Seriously, Harry Reid's incompetence and spinelessness in the face of Republicans' merest whisper of the word fillibuster is what gives the grandstanding "moderates" and the obstructionist Republicans their power.

Which doesn't mean we can't be mad at the grandstanding "moderates" for grandstanding and actively trying to make bills worse (e.g. cuts to state aid in the stimulus, the nonsense about cutting costs and cost-cutting measures in health care, etc). And again, the grandstanding "moderates" wouldn't have their power to grandstand if the Republicans weren't lock-step in obstruction of EVERYTHING.

There's plenty of blame to go around. We wouldn't be in this mess without all three of them. If the grandstanding "moderates" were actually interested in making things better, they wouldn't be making things worse. If the Republicans weren't lock-step obstructionists, and actually negotiated in good faith, negotiation might actually be worthwhile, and the grandstanding "moderates" wouldn't be able to grandstand the same way. And if Harry Reid had the spine to say "Try it, punk" to the Republican "fillibusters", or crack down on the "moderates" who are making spectacles of themselves, we could get stuff passed without letting them actively make it worse.

This applies to the stimulus and health care, and everything else that's going on. Obama's faith in negotiating with people of good faith would work if there WERE any people of good faith to negotiate with in the Senate. Which it looks more and more like there's not.

If the grandstanding "moderates" were actually interested in making things better, they wouldn't be making things worse.

I think most moderates don't understand the term, or the term gets misapplied. A true moderate doesn't just water down the ideas of other folks. A true moderate has his or her own policy agenda.

So, I agree with the critcisims as applied to many in the current crop of "moderates." We would have been much better served by moderates who challenged the premise of the bill, rather than shaved a few points off its impact as executed.

unfortunately, that's been common knowledge since 2006. especially when it comes to the Senate.

So do something about it.

Right now, lots of folks on the left and right think it's a good idea to de-link health care from employment by creating an individual tax credit (or deduction) for health care. The idea is that one's health care should depend on having a job. Variations on this plan are features of the Wyden bill (D), the Ryan bill (R), and McCain's plan. And, pace concerns regarding consumer confusion, all of these bills require that insurers meet certain federally-mandated standards.

Is a health insurance credit a feature of the bill that was introduced in the Democratic House? No; HR 3200 goes the exact opposite direction. It further ties health care to employment by mandating -- at considerable cost to small businesses (payrolls as low as 205k) -- employer-based health care coverage.

Agreed, we need better Democratic leadership.

But, this is what kills me about these types of discussions in the blogosphere: Powerless Publius points out the pointlessness of trying to cooperate with the other side. Powerless Von takes said point and thinks its directed at him somehow, when powerless Publius obviously means "Republicans in Congress" when he writes "other side".

Let's stipulate that if Von were in the Republican Party leadership in Congress, the stimulus bill would have better (just so if Publius was in the Democratic leadership)

But they are not.

We have a craven Republican Party (that, when in power, shut the Democratic Party out of the rooms where discussion took place) that craves the failure of all liberal, Democratic, commie, unAmerican initiatives (even if the initiatives are moderate -- it doesn't matter).

We have a cravenly weak Democratic leadership that is unwilling to tell the 40% minority to shut its craven twittering mouth (it's Congressional mouth and its media mouth) and get lost if they don't plan on constructive cooperation.

Good faith argument ends at the Obsidian Wings' edge.

von:
So, yes, I wanted a larger stimulus, which included most in tax cuts (e.g., a payroll tax holiday

A conservative-leaning guy wanted more tax cuts? Stop the presses! :) Tax cuts: they fix everything! We can cure cancer, put an end to autism, and resolve the Israel-Palestinian conflict, if only we could pass more tax cuts!

and more in direct payments to states

Say, I seem to remember that there was supposed to be a lot more aid to the states in the stimulus. What happened to that, anyway? Oh yeah, moderates and Republicans insisted that it get yanked.

Also, as a more general note, it's important to point out the difference between FY2009 and calendar 2009. FY2009 ends in just a couple of months. Now whether you think delaying a lot of the spending until FY2010 makes sense depends on whether or not you expect a short recession or a long one. If you expect a long one, then having the money spread out over time makes a lot of sense. And lookie here, the Democrats actually got that one right for once!

von: I agree with your definition of moderate, which is why I always put the word "moderate" in quotes when talking about these kinds. Actually making a workable definition of moderate is kind of hard, though, which is why the David Broders of the Washington journalism circuit take the shorthand of "somewhere between the Democrats and the Republicans" rather than even looking at the whole spectrum of political ideas out there. What would be moderate? What the median person thinks? Some kind of "objective" scale or grid or three-dimensional ranking? The problem with all of these is defining the origin, of course.

But shaving money off a bill to make it a nice round number sure ain't "moderate".

And unfortunately because Obama negotiated with himself, and the "moderates" just want to grandstand, and the Republicans have got nothing, the range of policies on this goes from the current bill to the status quo. Single payer or anything that would sever the link between employment and insurance is straight out. But that's out because Obama thought he might be able to get Republicans to go along with the bill if he pre-preemptively accommodated some of the things they'd claimed they wanted in a bill. Which didn't work, of course.

I seem to recall most of the lefties around this blog objecting to cutting employer payroll taxes, whether it preserved employment or not.

"Stimulus" wasn't about stimulus. It was about getting long-standing Democratic spending priorities done under cover of a crisis.

I don't believe the stimulus could be unsuccessful. BHO, quoted
here

"Some of the choices that we make are going to be difficult,” Obama said at the Hilton Chicago. “And I have said before and I will repeat again: It is not going to be quick. It is not going to be easy for us to dig ourselves out of the hole that we are in.”

Lays out the expectation that the stimulus will take a long time. He consistently talked about passing stimulus NOW, and having the economy back on track by the end of his first term.

The stimulus bill was not designed poorly, or gutted by the Republicans. It supports the larger Democratic agenda while delivering essentially what was expected in 2009.

Or, you might expect a bill called the recovery and reinvestment act would have a combination of money that could accurately be called "stimulus" (the recovery part) and money dedicated to pursuing long term goals. You can argue that there should have been more money in the recovery part and less in the reinvestment part. I know that you wanted to decouple the two sides, but the reality is that there is very little chance that congress would pass two large spending bills in quick succession.

An unrelated question: are health insurance premiums not deductible if you are self employed? I ask because, in addition to the employer contribution not being taxed, my contribution is taken out of my pay pre-tax. It seems that the same thing should be possible if one is self employed (or your employer does not provide insurance). Is this not true?

So do something about it.

Ok. I emailed Harry Reid and Nancy Pelosi and said "Do a better job on that stimulus bill that is already law." Do you have any other suggestions as to a "something" we could do to improve the stimulus bill?

So do something about it.

That's the rub, isn't it.

I don't have any strong suggestions for what to do about the quality of the Democratic leadership, but I do think that scapegoating Harry Reid and Nancy Pelosi is not the answer. Both enjoy the overwhelming support of their caucuses. Reid was unopposed in November when Senate Democrats unanimously reappointed him Senate Majority Leader.

In short, Harry Reid is only a symptom. If his leadership isn't doing what you'd want it to do, your argument isn't with Harry Reid. It's with the Democratic Party.

Von, I respect your arguments enough to read and digest them, whether or not I agree with them. But I think you're missing the point here.

Publius is talking about politics, not policy. The Republican party leadership has clearly adopted a political strategy to sabotage anything Obama, policy and country be damned. So from a political standpoint, bargaining with them is a fools game. From the outside looking in, it really doesn't look like the Democratic leadership gets this.

That's not to say there aren't genuine policy concerns with what's been offered (there always are), but those have been co-opted by some as part of the same political strategy. So in addition to undermining the Democrats and Obama, these immoderate and destructive tactics are actually also undermining the arguments forwarded by those with actual policy concerns.

What John Thullen said.

"Publius is talking about politics, not policy. The Republican party leadership has clearly adopted a political strategy to sabotage anything Obama, policy and country be damned. So from a political standpoint, bargaining with them is a fools game. From the outside looking in, it really doesn't look like the Democratic leadership gets this."

So when we aren't reading excerpts from cofidential memo's, etc. this is what Sen. Jim DeMint told George Stephanopoulis Sunday on This Week:

"On "This Week" DeMint defended his recent war of words with the president -- arguing the health care issue could be Obama's "Waterloo" and will "break him."

"This is not personal against the president. I like the president. But he's out of control and he's been leading a stampede of more spending, and debt, and taxes and government takeovers," DeMint told me this morning.

"Republicans want to protect the right of Americans to make their own health care decisions, to pick their own doctors and their own plans," DeMint said.

"We could have a plan in a few weeks, George, if the goal is not a government takeover," DeMint said, adding, "this is about the most personal service that Americans have. We don't want to a bureaucrat [in charge]."

Behind every political battle is policy. It is easy to say the Republicans are being obstructionist, it's just as easy to say the Democrats aren't listening. Neither is probably quite true.

Von,

Yes. The stimulus package, at least as originally introduced, could have been bigger and better. Whether it wouldhave neded that way is a different matter.

Yes. Reid is a poor Majority Leader.

No. Your opinions, attitudes, and intelligence are not remotely similar to those of most Republican legislators. As Anna says, the Republicans in Congress have no interest in anything but opposition.

If Obama says "Night" they will say "Day" without even bothering to look out the window. Any assessment of what might be accomplished by Congress has to take that into account.

It's been five months since the stimulus bill became law.

Did they redefine short term since I graduated college. It used to be a year.

How long would your payroll tax cut plan have taken to fix the economy? Five weeks? Is it too late to do it now? My neighbor can't sell her house. If payroll tax cuts can change that then let's do it.

Maybe you should get some new leadership for your party. If they had a silver bullet to fix the economy why didn't they get it included in the bill? They failed us all. At least you guys can blame the Democrats. So it isn't all bad.


" And here we are, with a stimulus that virtually everyone concedes hasn't worked yet "

i didn't get that memo.

"Republicans want to protect the right of Americans to make their own health care decisions, to pick their own doctors and their own plans," DeMint said.

"We could have a plan in a few weeks, George, if the goal is not a government takeover," DeMint said, adding, "this is about the most personal service that Americans have. We don't want to a bureaucrat [in charge]."

Ironically, if all this is true, they have shown an awful disregard for their own wishes. They have offered nothing except the status quo. And the status quo is exactly what they say they want to protect the country against.

And there is absolutely nothing in anything that has been rposed regarding health care coverage which is anything like a government takeover.

DeMint is lying through his teeth. And I don't use that word lightly. This is not about a difference in policy because he is not describing any current policy that he is in opposition to.

And he either knows that what he is describing is not the policy of the Dems or he is completely illiterate. Since I do consider the latter extremely unlikely, he knows what he is saying is not true. That is lying.

Von, the best I can say for your argument is that it's atypical and therefore of little consequence--except to underscore what might've been if moderates/centrists/republicans were on average as reasonable, well-informed, and responsible as you.

Sadly, the prevailing moderate/centrist/republican m.o. is more about resisting whatever liberals offer up either by saying "Nyet!" or "Not yet!" or by splitting the difference; liberals, in turn, tend now to oblige by beginning with an already-compromised position and then throwing in more concessions as it becomes apparent that nothing else will attract cooperation from your colleagues.

I wish there were more of you.

A conservative-leaning guy wanted more tax cuts? Stop the presses! :) Tax cuts: they fix everything! We can cure cancer, put an end to autism, and resolve the Israel-Palestinian conflict, if only we could pass more tax cuts!

Actually, given that Israel is experiencing its worst recession in decades, a tax cut would probably help. People who are working have less time to fight. :-)

More on point: I didn't just advocate any old tax cut. I advocated a payroll tax cut. A payroll tax cut would have had all the ordinarily stimulative effects of a tax cut, as well as encourage worker retention. All in all, a pretty good idea in the midst of a recession.

Say, I seem to remember that there was supposed to be a lot more aid to the states in the stimulus. What happened to that, anyway? Oh yeah, moderates and Republicans insisted that it get yanked.

That's the problem, isn't it? Moderates indiscriminately shave a few points off everything -- weaking the good without correcting the bad. (And, really, only so-called "moderates" [R & D] are responsible for that particular mistake.)

"Ironically, if all this is true, they have shown an awful disregard for their own wishes. They have offered nothing except the status quo. And the status quo is exactly what they say they want to protect the country against."

This is getting to be a handy argument. So all those weeks in committee meetings and discussions and, oh well. They only really discuss the bills that have gone in or come out of committee, etc. otherwise they are half baked without CBO numbers so, of course, the bills that the Dems put forward are the ones being discussed.

I think the process has been that non Blue Dog Democrats draft things, Blue Dogs and Republicans say "thats too much": too much money, too much government control, too much risk to the current insured, and then there is the inevitable "they just say no" accusation.

I don't believe that they haven't discussed alternatives, they just haven't discussed any that the Democrats would accept. BTW, then they all go to lunch together and see how it played in Peoria.

Right now, lots of folks on the left and right think it's a good idea to de-link health care from employment by creating an individual tax credit (or deduction) for health care.

Because a tax credit does a lot of good for the unemployed.

Also, while I agree that the Democratic leadership needs to be stronger, let's say what this really means: they need to crush the Republican strategy of the omnipresent filibuster. Is that really what you want, von?

von:
I advocated a payroll tax cut. A payroll tax cut would have had all the ordinarily stimulative effects of a tax cut, as well as encourage worker retention.

While I was not and am not ideologically opposed to a payroll tax holiday, I believe its stimulative effects would be limited at best (and I believe I said so in one of your previous threads). Basically, it only benefits those who actually HAVE jobs, and I think the purported job saving effects were vastly overstated. I do like its progressiveness, however. Are you aware of any serious impact analyses that put numbers on how many jobs would be saved by temporarily cutting the payroll tax? (To be fair, you may have already linked something in a prior post and I missed it.)

That's the problem, isn't it?

Ayup.

Good faith argument ends at the Obsidian Wings' edge.

That's why we exist. And I think that you underestimate the impact.

"Stimulus" wasn't about stimulus. It was about getting long-standing Democratic spending priorities done under cover of a crisis.

Exactly. Well said.

I know that you wanted to decouple the two sides, but the reality is that there is very little chance that congress would pass two large spending bills in quick succession.

You're right: Congress would have passed an actual stimulus package that was, most likely, larger than the package it passed. And then we would have had an actual debate over the kind of spending priorities that we should have as a country, and items would rise or fall on their own merits ... rather than passed because someone put them in a so-called "stimulus package."

Adam, you can deduct your health insurance payments if you are self employed.

Publius is talking about politics, not policy. The Republican party leadership has clearly adopted a political strategy to sabotage anything Obama, policy and country be damned. So from a political standpoint, bargaining with them is a fools game. From the outside looking in, it really doesn't look like the Democratic leadership gets this.

Anna, I don't think that this is across the board true. McCain and other Republicans, for instance, proposed a payroll tax cut. That was a credible argument, and a credible bill. Indeed, the so-called "Republican bill" that was presented on liberal web sites garnered less support than the McCain bill.

Why was that? In part, it's because the crazy part of the Republican party makes an endearing foil for the Democratic leadership. A straw man, in a sense, albeit one of the Republican party's creation. But it also allows many Democrats to avoid examining their own viewpoints, and provides a ready excuse when a Republican raises a legitimate problem with a Democratic initiative.

Yes. Reid is a poor Majority Leader.

Bernard, Reid didn't introduce the stimulus bill; Pelosi did. You can't confine this failing to Reid alone.

Just for curiosity, von, what would a payroll tax cut do to the Social Security Trust Fund? I mean, how would the various proposals have handled the accounting?

Suppose you had the choice between a payroll tax holiday pushed by "conservatives", and a temporary bottom-end income tax cut pushed by "liberals". Suppose the revenue hit (and therefore the magnitude of 'stimulus') were scored by the CBO to be the same amount of money.

Which of those would you prefer?

Between the "liberal" option and no stimulus at all, which would you prefer?

--TP

Adam, you can deduct your health insurance payments if you are self employed.

Sort of. There are limits, and you have to be profitable.

If not, or if you are simply unemployed, these count as regular medical expenses, so are deductible if you itemize and to the extent medical expenses exceed 7.5% of AGI.

So no. Employers shouldn't deduct your contribution from pre-tax pay, because that makes your effective decudtion bigger than it would otherwise be.

Because a tax credit does a lot of good for the unemployed.

The tax credit would be refundable. That is, if you had no income, the tax credit would function as a subsidy.

Sort of. There are limits, and you have to be profitable.

True, and that's part of the problem. A refundable credit would work much better.

I just realized that my 11:56 a.m. post on 7/27 was unintentionally misleading on this point, because it seemed to suggest that a credit was the same as a deduction. For clarity:

A tax credit is a credit towards taxes due. It can be refundable or non-refundable. A refundable tax credit can reduce your taxes to less than zero. A refundable tax credit cannot.

So, if you are entitled to a $1000 refundable tax credit and you owe $500 in taxes, the government pays $500.

Ummm...

A refundable tax credit can reduce your taxes to less than zero. A refundable tax credit cannot.

One of these things should not be like the other, methinks.

"I am a bit surprised by the lesson offered in Publius' post, The Fool's Errand of Political Cover. Contrary to Publius, the lesson from the debates over the Democratic stimulus package is not that it's pointless to try to cooperate with the other side (i.e., folks like me)."

Few of the Republican representatives or Senators in Congress are people like you, Von.

Tony P,

The social security "trust fund" is an accounting fiction, so you could do whatever you want with it. You could pretend, for instance, that the general fund was paying social security contributions on behalf of employers and employees during the holiday, so the "trust fund" would show the same "money" it did before.

"IN fact, the state aid has already paid dividends."

To Create Jobs, Tennessee Looks to New Deal Model:

Critics elsewhere may be questioning how many jobs the stimulus program has created, but here in central Tennessee, hundreds of workers are again drawing paychecks after many months out of work, thanks to a novel use of federal stimulus money by state officials.

Here in one of Tennessee’s hardest-hit areas, some workers were cutting down pine trees with chainsaws and clearing undergrowth on a recent morning, just past the auto parts factory that laid them off last year when it moved to Mexico. Others were taking applications for unemployment benefits at the very center where they themselves had applied not long ago. A few were making turnovers at the Armstrong Pie Company (“The South’s Finest Since 1946”).

The state decided to spend some of its money to try to reduce unemployment by up to 40 percent here in Perry County, a small, rural county 90 miles southwest of Nashville where the unemployment rate had risen to above 25 percent after its biggest plant, the auto parts factory, closed.

Rather than waiting for big projects to be planned and awarded to construction companies, or for tax cuts to trickle through the economy, state officials hit upon a New Deal model of trying to put people directly to work as quickly as possible.

They are using welfare money from the stimulus package to subsidize 300 new jobs across Perry County, with employers ranging from the state Transportation Department to the milkshake place near the high school.

As a result, the June unemployment rate, which does not yet include all the new jobs, dropped to 22.1 percent.

“If I could have done a W.P.A. out there, I would have done a W.P.A. out there,” said Gov. Phil Bredesen of Tennessee, a Democrat, referring to the Works Progress Administration, which employed millions during the Great Depression.

“I really think the president is trying to do the right thing with the stimulus,” Mr. Bredesen said, “but so much of that stuff is kind of stratospheric. When you’ve got 27 percent unemployment, that is a full-fledged depression down in Perry County, and let’s just see if we can’t figure out how to do something that’s just much more on the ground and direct, that actually gets people jobs.”

Tennessee is planning to pay for most of the new jobs, which it expects will cost $3 million to $5 million, with part of its share of $5 billion that was included in the stimulus for the Temporary Assistance for Needy Families program, the main cash welfare program for families with children. The state did not wait for the federal paperwork to clear before putting residents of Perry County back to work.

There's more there.

I'm sorry who exactly has been up to sing the praises of the Democratic Leadership? Anyone? Anyone? Beuller? Beuller?

Seriously, Harry Reid's incompetence and spinelessness in the face of Republicans' merest whisper of the word fillibuster is what gives the grandstanding "moderates" and the obstructionist Republicans their power.

Ground-level Democrats keep personalizing the blame on Harry Reid. As someone noted in an earlier thread, Reid was elected and re-elected unanimously by the Democratic Senate Caucus. He seems very popular. He seems to be doing what they want. They seem to like his methods.

If they did not, they're free to elect someone else.

It seems to me the blame needs to be spread around much of the Senate Democratic Caucus, rather than focused on Harry Reid as a person. I don't see much evidence for his personal "incompetence" as opposed to the notion that what the majority of the Senate Democrats want to do, and how they want to operate, is not in accord with most activist Democrats (of whom I am one, to whatever small extent I can claim).

I'd like to have Bernie Sanders, or Russ Feingold leading the Senate in pursuit of my goals, but they're not going to be elected Majority Leader because few fellow Democratic Senators want them. Etc.

A good thing that von and the congressional Republicans are simpatico. I doubt you'll find many fans of the Dem leadership here, but perhaps von can take over the GOP? For starters, perhaps show them that budgets generally contain numbers.

You could pretend, for instance, that the general fund was paying social security contributions on behalf of employers and employees during the holiday ...

Yes, we could pretend that. But I don't know whether any of the "conservative" proposals would pretend that.

And it makes a big difference whether we "pretend that" or not, because the SS Trust Fund is not, in fact, an accounting fiction. It's a stockpile of government bonds owned by American wage-earners, and owed by America's general tax payers. Those two groups are not the same, even though they overlap.

In any case, a bottom-end income tax cut would make the point about "pretending" moot. FICA collections would continue as usual. Workers (including self-employed workers) would get their 'stimulus' from lower withholdings (or quarterly estimated payments) except the change would show up under 'federal income tax' rather than 'FICA'.

So we don't need to pretend anything. We just need von's answer to my original question.

--TP

Von, "I don't think that this is across the board true."

I didn't say it was across the board. I said, "but those have been co-opted by some as part of the same political strategy." And those who have adopted that strategy are doing long-term damage to good-faith policy discourse. But I guess that's not really news.

Marty, "So when we aren't reading excerpts from cofidential memo's, etc. this is what Sen. Jim DeMint told George Stephanopoulis Sunday on This Week:"

When did Twitter feeds become confidential memos?

Gary: Good on Tennessee. I don't know why hiring twice as many people to staff all the unemployment offices wasn't one of the first things done. Too simple, I guess?

I think one of the differences between Democratic Senators and Republican Senators is the Dems put the emphasis on the Senator part, while the Reps put the emphasis on the Republican part.

"There's more there."

Reinvestment and Recovery money is paving route 128, the loop round around Boston.

It makes my commute a PITA, but it's keeping a bunch of folks employed.

And, the highway is getting repaved, which needed doing.

But highway construction is an evil Nazi thing ;-).
Btw, I recently read a wing-nut commenter on another forum that claimed that the highway system is actually a purely military/national security thing and civilians are just allowed to use them in peacetime (in order to 'refute' the argument that government has successfully spent money for the public good in the past and could do so again).

"And it makes a big difference whether we "pretend that" or not, because the SS Trust Fund is not, in fact, an accounting fiction. It's a stockpile of government bonds owned by American wage-earners, and owed by America's general tax payers. Those two groups are not the same, even though they overlap."

Uh, no: It's a stockpile of government bonds owned by one hand of the government, and owed by another hand. America's taxpayers are on the hook whether those bonds exist, or not, and America's wage earners don't own the bonds, or they could sell them.

You don't prove an accounting fiction isn't one, by reiterating the fictional account. The point is, those bonds provide the government with absolutely no resources with which to pay the obligations, because they're an entirely internal transaction, like piling up IOUs to yourself in a jar when you spend the rent money on a new jetski.

Brett, pretending that US treasury bonds are an "accounting fiction" is a very silly idea.

How would the individual investors, and other countries, who buy those bonds backed with the "full faith and credit" of the United States of America react if we told them the bonds are just an "accounting fiction"?

Yes, taxes will have to go up to pay them back. But you know what? Those payroll taxes have already been used to subsidize massive tax cuts for the wealthy, who obviously then won't complain when they're asked to pay the rest of America back, right?

"Btw, I recently read a wing-nut commenter on another forum that claimed that the highway system is actually a purely military/national security thing and civilians are just allowed to use them in peacetime"

The grain of truth in that is that the national highway system was sold by Eisenhower to Congress as necessary to national security in order to move military items during a time of war, rather than purely as a vehicle of commerce. That rationale helped win the bill enough votes to pass.

The rest of it is the usual nutbarism.

"The point is, those bonds provide the government with absolutely no resources with which to pay the obligations, because they're an entirely internal transaction, like piling up IOUs to yourself in a jar when you spend the rent money on a new jetski."

Except that, as we continually point out, you can't analogize a private budget to a government budget; they work on different principles. Insisting they don't is a fiction.

"Except that, as we continually point out, you can't analogize a private budget to a government budget; they work on different principles. Insisting they don't is a fiction."

This isn't correct.

They work on exactly the same long term principles. The main difference between a private budget and a public one used to be that in a private budget you couldn't borrow ridiculous amounts of money unless you were rich. But since the advent of credit card popularity I would suggest that the difference between private budgets and public budgets is actually very small. In both you can spend more than you take in for medium periods of time, but not forever.

Sorry, Slarti: A nonrefundable tax credit stops at zero.


I agree with Gary's general points -- or what I'm going to ascribe to Gary as a general point -- viz., that Reid is more effective than many Democrats give him credit for. The Senate is just a different animal from the House.

On the larger point: Even if there is not one Republican with whom you can negotiate, there still should be internal pressure on the Democratic leadership to craft good bills. That pressure exists vis-a-vis individuals members and the Senate leadership, but seems completely absent in the House. The result has been, IMHO, a series of just plain bad House bills: first on the stimulus, and more recently on health care (as I discuss on the front page).

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