William K. Black — AOC# and MMT Spook the AEI

Strain and Veuger never try to meet the burden they set for themselves with their frenzied rhetoric. The key test of a theory’s validity is its predictive ability. A theory that is so weak that it is a “joke” made by “luna[tics]” should collapse as soon as its predictive ability is tested. What predictive failures do Strain and Veuger demonstrate MMT scholars have made? None. What predictive failures do they attempt to show MMT scholars have made? None. That failure even to attempt to show MMT scholars’ predictive errors is extraordinarily telling. First, you know they would have attacked even a minor predictive error by MMT scholars – if they could find such an example. Second, that means they could not find even a minor predictive failure by MMT scholars. Third, the AEI’s failure to find any predictive failure by MMT scholars is fatal to their assertion that the MMT – the basis for MMT scholars’ macroeconomics predictions – is such a “joke” that it invariably produces “lunacy.”...

New Economic Perspectives
AOC# and MMT Spook the AEI
William K. Black | Associate Professor of Economics and Law, UMKC

Benjamin Lascia — The American Enterprise Institute releases a proposal for a universal basic income

The paper’s proposal is a budget-neutral form of a UBI, meaning instead of implementing a basic income in addition to the existing American social welfare system; most existing programs like Medicaid, Veteran’s Benefits, and Social Security for the elderly over 65 are repealed and replaced with a UBI. Using data from the Federal government’s budget outlays from 2014, the paper finds that the repeal of large programs in America would yield about $2.54 trillion dollars. In addition to this, the proposal repeals 23 different tax benefits like the Student Loan interest deduction and Earned Income Tax credit, bringing in more revenue and freeing up a grand total of about $3.21 trillion for a UBI.

With additional taxes coming in from the UBI itself, and increased tax liabilities on all income tax brackets, the proposal finances and prescribes a basic income of $13,788 for individuals over the age of 18 and $6,894, or half the income of adults, for individuals under the age of 18.

Using Federal government tax data, the paper analysis the net benefit gain or loss by tax bracket and age. Using the parameters described, the findings show that some of the most adversely affected by this system are in the lowest tax bracket ($0-$10,000). This is unsurprising, because many of the programs this proposal had repealed to finance the basic income are concentrated on this tax bracket.

Another group adversely affected by this proposal are individuals 65 and older, also because their benefits, such as Social Security, have been repealed and distributed among the rest of the population. When excluding age groups of 65 and older, however, nearly all tax brackets see a net benefit in this proposal, with the brackets seeing the greatest benefits being those in the middle.…

The important findings in this proposal from the American Enterprise Institute show that, if a UBI were to merely replace the existing social welfare system in the United States, by repealing existing welfare programs and tax benefits, there would be an overall redistributive impact from the old to the young, and from the poor to the middle class; though there would be a gain in efficiency overall.

BIEN

UNITED STATES: The American Enterprise Institute releases a proposal for a universal basic income

Benjamin Lascia

Matt Bruenig — Kevin Hassett Misrepresents Piketty

AEI’s Kevin Hassett knew Piketty was wrong before he ever read him. There is no possible world in which Kevin Hassett did anything else but say Piketty was wrong. That’s fine, but what’s not fine is this shit: 

If you look at what’s been going on in his data, then the share of income going to capital in the United States has gone up over time. And what he does is he gives a theory for why that is going to continue. And eventually capital is going to have everything unless we have 80 percent tax rates and so on. 

As with Larry Summers, Justin Wolfers, and so many countless others, Hassett is just not accurately describing Piketty. Like those others, his confusions/misrepresentations are extraordinarily basic. 

Here are the errors:

AEI says it all.

MattBruenig | Politics
Kevin Hassett Misrepresents Piketty
Matt Bruenig