Monday, November 14, 2016

Progressive Nightmare?


Looks like the Trump people are thinking about using USD tax credits to fund some infrastructure:

Trump’s advisers say his plan for infrastructure spending would employ a tax credit scheme that would supposedly mean it costs the government nothing — which is debatable

Aren't USD balances in possession of the non-govt sector more or less a tax credit? So the Trump people will issue direct USD system tax credits to infrastructure vendors without a simultaneous issuance of Treasury securities in equal amounts... so what?

So this is now a progressive nightmare?  Doesn't sound like it should be a progressive nightmare to me....  maybe a monetarist nightmare... or a Democrat nightmare...




20 comments:

Tom Hickey said...

US dollars are tax credits as Warren Mosler keeps repeating. Tax credits can be issued in a variety of ways.

The issue here is not so much how the credits are issued as the details of the programs and the multipliers.

Matt Franko said...

So what is the nightmare?

Why is this a nightmare?

No bonds issued so no "welfare for the rich!" either so the ZIRP people should be happy too...

Why is this a nightmare?

Tom Hickey said...

Why is this a nightmare?

It's a tweet with clickbait. He explains it in his WaPo article, citing Mike Konczal, for example.

beowulf said...

He means it's a political nightmare. That is, Trump will get credit for something Obama and Congressionaln Dems have tried to do for five years. Democrats can either support him (in which case they piss off their base for helping Trump) or oppose him (and piss off independents/swing voters for hypocrisy). In other words, their dilemma is about political appearance and not policy substance.

Tom Hickey said...

@beowulf

Nice to see you again.

beowulf said...

One other point, the first thing the Democrats did when they took over Congress in 2006 was handcuff their own agenda with pay-go rules that required any new spending or tax cuts to be offset w/ spending cuts or tax hikes. That's the reason Obama had to raise taxes to create Obamacare when GW Bush didn't to expand Medicare. The GOP Congress changed Pay Go rules to exempt tax cuts (while still collaring new spending), one advantage of Trump using infrastructure tax credits is he won't have to "pay for it "on the budget.

beowulf said...

Thanks, busy with work (and a year of marriage!) so the real world has kept me offline more than I would have liked.

Matt Franko said...

Right I dont see how is it a 'progressive nightmare' if Trump imposes progressive policy?

I could see if he said it was going to be a Democrat (political) nightmare...

Or else he is assuming Democrats is synonymous with progressives... which is obviously false...



Matt Franko said...

POTUS should have done the coin... BIIIIIIIIG miss...

Tom Hickey said...

@ beowulf

Belated congratulations.

Carlos said...

Interestingly it's a similar scheme to Mefo bills, issued by the Nazi's to covertly rearm before the war.

Carlos said...

Interestingly it's a similar scheme to Mefo bills, issued by the Nazi's to covertly rearm before the war.

Carlos said...

Interestingly it's a similar scheme to Mefo bills, issued by the Nazi's to covertly rearm before the war.

Tom Hickey said...

Interestingly it's a similar scheme to Mefo bills, issued by the Nazi's to covertly rearm before the war.

Very good point.

Shades of Hjalmar Schacht!

Mefo bills

Matt Franko said...

Peterson heads exploding.... now calling it 'relying on gimmicks!"...

Greg said...

Agree with Beowulf completely. This is all about political optics.

However its not really bad for "progressive economics", its bad for conservative/monetarist/gold standard econ, its ....bad for progressive politics. In a way the progressives earned it by not defending public finance strongly enough....... Neoliberalism

I remember being told when I was very new to the working world by a very wise man that there are many powerful people for whom "receiving credit" for something is of paramount importance. They will obstruct a good idea when it is someone elses and if given the chance to make the decision them selves they will take the other guys idea and claim it as their own. He referred to them as bosses instead of leaders. Leaders lead and dont seek credit first, bosses have to be seen as in charge. The GOP is full of these kind of guys today, bosses not leaders. Trump is the quintessential boss. American politics has usually wanted people to be leaders, or look like leaders but that is no more. We are going to "full boss mode" now.

While some criticism is warranted for democrats who are fretting DJT getting credit for something they have tried to do for years ( it should only matter that the right thing get done.... right?) its also a reality that the more they build their image with these positive things the more they are able to successfully push other harmful policies. I hope there are media members who remind people that these were things Obama and co wanted but GOP obstruction won the day...... but I wont hold my breath.

It is good to see Mr Mucha commenting again.

God I hope Trump pulls this off exactly as described. Will bring the whole mechanics of govt finance right into view for all to see.

Matt Franko said...

Greg he is listening to Navarro and Ross on this... so he is open to new ideas that are not his own...

I think he thinks he has figured out a way to outfox the "debt!" and "deficit!" issues via this accounting for his programs... the guy knows accounting for sure and how to manipulate it he's done it his whole life....

I dont think his mathematical aptitude is strong enough for him to think like we do... but it IS strong enough for him to figure out an alternative accounting that avoids the political obstacles presented by the "debt!" morons... he's going around these morons instead of fighting them head on like we would probably want to do...

Peterson heads are exploding they are calling it "a gimmick!" as they are too stupid to even figure out Trump's ex post accounting proposals here...

Were going to have to figure out how to gauge this activity....

Greg said...

" he is listening to Navarro and Ross on this... so he is open to new ideas that are not his own..."

Yeah but wake me up when he doesn't take credit for it. He wont cite Ross and Navarro on this.

Again though, it really doesn't bother a big part of me that Trump gets credit for this but it will bother me if this isnt pointed out to be absolutely counter to every other GOP idea from the last decade plus.

Matt Franko said...

He's got a big ego no doubt ...

beowulf said...

Navarro is an interesting guy, he's a Newt Gingrich acolyte who's proposed 1. a guaranteed job for anyone who shows up at state unemployment office by 9am AND 2. block granting social spending to the states (which would straightjacket automatic stabilizer spending). The combination of insight and obliviousness there is rather, well, Trumpian.