President Biden’s proposals for investing in social and physical infrastructure signal a return to a budget-neutral policymaking framework that has largely been set aside since the outbreak of the COVID-19 crisis. According Yeva Nersisyan and L. Randall Wray, this focus on ensuring revenues keep pace with spending increases can undermine the goals internal to both the public investment and tax components of the administration’s plans: the “pay-for” approach limits our spending on progressive policy to what we can raise through taxes, and we will only tax the amount we need to spend.Levy Economics Institute
Nersisyan and Wray propose an alternative approach to budgeting for large-scale public expenditure programs. In their view, policymakers should evaluate spending and tax proposals on their own terms, according to the goals each is intended to meet. If the purpose of taxing corporations and wealthy individuals is to reduce inequality, then the tax changes should be formulated to accomplish that—not to “raise funds” to finance proposed spending. And while it is possible that general tax hikes might be needed to prevent public investment programs from fueling inflation, they argue that the kinds of taxes proposed by the administration would do little to relieve inflationary pressures should they arise. Under current economic circumstances, however, the president’s proposed infrastructure spending should not require budgetary offsets or other measures to control inflation in their estimation.
Yeva Nersisyan, Associate Professor of economics at Franklin and Marshall College, and L. Randall Wray, Professor of Economics, Bard College
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ReplyDeleteBlogger bug strikes again. It appears to be a default link substitution.
ReplyDeleteCan Biden Build Back Better?
Click on download link for PDF.
Build back better = back to square one in economic policy terms.
ReplyDeleteThis is one of the reasons for starting with a Job Guarantee rather than ending with one as the Kansas approach seems to imply.
ReplyDeleteOnce you have a Job Guarantee, everything can be treated as 'pay for'.
Politicians like 'pay for' in the same way project managers like 'balanced budget' accounting using built in profit costings. It saves them doing the hard thinking.
The challenge still remains though to get politicians to think about 'pay for' in physical terms rather than monetary. Ultimately Jeff Bezos doesn't have a secret stash of doctors, nurses or solar panel roofers in his warehouses.
I fixed the link.
ReplyDeleteAnyway, with respect to the statement "Yes, if he abandons pay-for," you can forget it. I can't believe these people still thinking he will do that or, that the Dems will do that.
Not only won’t they do it we are getting ready for what may be the most bitter “debt ceiling” fight of all times…
ReplyDeleteGOP is REALLY pissed over the blatant election fraud and many other subsequent Biden admin outcomes…
Manchin on the record opposing all the debt to China and the grandchildren…
https://www.manchin.senate.gov/newsroom/press-releases/manchin-capito-reintroduce-bipartisan-bill-to-rein-in-national-debt
It’s so bad maybe this time we actually default?
Debt ceiling in 30 days….
NeilW comments on Reddit under the name "aldursys". I have a bookmark folder of all the smart things he says in respect of MMT, which is pretty well every comment.
ReplyDeleteDespite the fact that I have multi-column bookmarks which spans my bookmarks across four columns, my "aldursys comments" folder is getting almost full. Soon, I will have to start adding additional folders, like "aldursys comments 1", "aldursys comments 2", etc.