Consumption taxes reduce demand, and reduced demand decreases prices.
“We’ll fix our supply chain problems by just making it so no one wants to buy anything. There’s no way that could cause problems, right?”
The left in 2008:
"There is unemployment and slack demand, which means we should spend lots of money to shore up demand and hire more workers. Keynes tells us that we should be spending while the economy is slow and resources under-utilized. Then when the economy is overheating, you tax people and use the money to pay down the debt. We believe Keynes because we’re all about science.
Also, interest rates are near zero and projected to remain that way, so this is the best time to borrow and spend!"
The left in 2021:
"The economy is overheating, there are labor and material shortages, interest rates are rising, businesses cannot find enough workers to keep goods moving, we just printed and spent trillions of dollars we don’t have to pay people to lock down. This is the best time to borrow and spend lots more money and start large infrastructure projects that need to consume lots of resources and employ a lot of people who are already in short supply!
Keynes? Never heard of him."
Democrats today:
“We are in a global climate crisis, and we have to commit all our resources to fixing this problem within the next decade.”
Also Democrats today:
“Hey, let’s build a giant train network that will consume gobs of energy and materials to construct and not be available for 20 years, and when it is will have at least twice the CO2 emissions as the electric cars that we’ve also mandated everyone should be driving by then.”
Democrats today:
“We must rapidly decarbonize our energy infrastructure on a crash basis.”
Democrats in NY and California: SHUT DOWN ALL THE NUCLEAR AND REPLACE IT WITH GAS AND COAL!
Democrats in general: We need to learn to conserve and not consume so much.
Also Democrats: Yay! We’re going to lay tens of thousands of miles of copper cable underground to solve a problem already being solved without any Earth-based infrastructure required at all.
Gonna be a shortage of straw, at this rate.
Well the left wants to raise taxes to pay for this.
Yes - they want to tax the people who provide the goods, so they can stimulate demand for purchasing those goods, while the suppliers can’t keep up with demand as it is.
Brilliant.
Can you state what exactly you’re asserting here?
Are you saying they don’t want to raise taxes to offset the spending or are you saying they do want to raise taxes but in a way you disagree with?
Republican here. Although I admit that a lot of Republicans are just making it political and trying to be stubborn, and I support the idea of spending money on roads, bridges, and transit, there are specific things that myself and other Republicans object to
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We’re spending too much money already. It’s causing inflation and causing the deficit to go into the stratosphere. We should look at funding infrastructure by cutting government bloat, like paying welfare queens to be lazy and watch TV all day rather than get a job and earn an honest living and pay taxes to government. I get the idea that sometime we need to spend in a war or recession, but the problem is that we keep running a deficit even in times of surplus when we should be paying down the national debt instead of increasing it.
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This is more a criticism of the original bill, but a lot of things are either of dubious value (like rural broadband or a lot of the clean energy provisions) or related to “infrastructure” only by leaps of logic, like free community college. I paid for my own community college and don’t see a provision to give me a refund check for mine since I’m about to pay for everyone else’s now. Despite the line we’ve heard “companies will build in rural America if only there is broadband” I don’t see a town of 100 people that’s a hundred miles from the interstate that suddenly has 1 GB fiber to the premises suddenly being the next Tesla factory or Amazon distribution center.
Spending on roads, bridges, and rails I can support. I also support charging stations since there seems to be a clear market failure here that the government can remedy.
Man, it’s shocking to me how @Sam_Stone almost just regurgitates bad arguments and wild claims that get spewed on Fox News all day (while continually having slips of the tongue that suggest he either isn’t actually Canadian, or that he regularly forgets he is Canadian, which is more concerning probably than the former.)
Let’s debunk the long list of bad claims he made about the physical infrastructure bill:
Much of the bill is to funded needed repairs to existing infrastructure, simply letting them decay into nothingness isn’t a meaningful option, so saying it is going to make global warming worse is like saying “keeping the lights on and continuing to grow and eat food is going to make global warming worse.” Mitigating climate change can’t and shouldn’t shut down basic functions of society like maintaining roads and bridges. You mitigate it in areas where you can make reasonable changes, but just saying “well if we do any construction activity that emits carbon, so we have to stop” is beyond asinine. This claim also ignores that the bill invests billions of dollars into things like power grid and power system modernization which could reduce carbon emissions. It also provides billions of dollars in funding for superfund cleanups and etc which improve the environment.
Nothing about this infrastructure plan is instant, it will be some time before the RFP process etc is even completed, materials won’t start being bought, even in future contracts, for several years. Projects will not begin for even longer than that. If we are still in a state of labor shortage, material shortage etc 3-5 years from now when most of this stuff breaks ground, that would be very unfortunate and worse than most experts’ expectations. However even if we were, I would argue things like Superfund cleanup, road system maintenance, airport, seaport, bridge maintenance etc are the kind of things that are worth doing. If that means it puts a material squeeze on other construction projects, I question what sort of construction projects are going on that are more important? Build-outs of luxury condos? I think not.
As for inflation, given that the Fed was infusing around $550bn/yr averaged from 2008 to 2020 through four rounds of quantitative easing (we’re talking $6.5 trillion) and it had almost no impact on inflation, I am very doubtful that around $500bn in additional government spending over a number of years will account for, or even significantly influence inflation.
For what it’s worth, I think most people, including policymakers, tend to dramatically overestimate how well they understand structural inflation. It frequently doesn’t actually work the way policymakers think it should, and there are many instances of structural inflation that seem to correspond with global inflationary periods which itself severely questions if inflation is being caused by U.S. domestic policy. While Nixon got blame for the 1970s inflation with some of his economy pumping schemes, it’s interesting to note many economies around the world experienced steep inflation in the 1970s, and there’s significant evidence it may have simply been a function of rising energy prices that no one government controlled. Japan took actions which all but should have guaranteed inflation for almost 20 years in a desperate attempt to end stagflation/deflation, and it largely had no effect. Meanwhile the current bout of inflation is being seen all over the globe in economies that did significantly less stimulus generation than the United States.
There isn’t nearly enough evidence, nor even evidence that policymakers / economic experts can even understand inflation, to boastfully proclaim you know that something is going to increase inflation–you don’t.
And the public transportation funding AFAICT don’t really fund that. They primarily fund enhancements to the Mid-Atlantic and Northeast corridor tracks of Amtrak–the only areas that the rail system is generally healthy and has decent revenue generation, and it supplies funding for local projects like light rail systems etc. To my knowledge there is no grandiose funding for transcontinental high-speed rail or anything of that nature.
There’s something like $10bn in high-speed rail funding at least $4bn I believe is earmarked for a boondoggle project California has been working on for years; and that’s tragically throwing good money after bad–but $4bn is the amount we waste in like a few seconds in worthless wars in countries like Iraq or Afghanistan, so crying a river of tears over it seems a little melodramatic. If Sam actually is a Canadian, he should understand we’re a big boy country here in the United States, $4bn isn’t a big number in America. The rest as far as I can tell is going to already existing “high speed rail” lines for maintenance/improvements and a few local projects. If you were a zany high speed rail enthusiast there isn’t much to be happy about in the Biden infrastructure bill (which is good, high-speed rail isn’t a good system for the United States other than perhaps a few very local scenarios.) As for the environmental impact–again, the HSR money is primarily going to existing projects, there’s no real marginal environmental impact worth noting whatsoever. It’s such a small amount of money it will convert into no meaningful increase in carbon emissions.
Most infrastructure experts actually disagree with you here. The rural broadband build out is going to involve lots of core backbone build out that actually isn’t just easily offered up by SpaceX, SpaceX hasn’t shown that it is actually even making money at its current price point for its satellite internet swarm. Also, not all of that $65bn is being spent on building. $15bn is being given to a program to actually offer subsidize internet to poor people (which the government already does in some situations, this is improving that system), note that we’ve had subsidized telecom access for people for many decades in the United States, and for a rich country $15bn is very little to pay to continue those efforts.
The lion’s share of the funding is a $42bn grant to the Commerce Department, which will dole out grants as entities apply for the funding. This doesn’t remotely have to mean digging fiber to everyone who lives on a farm. It could mean improving the internet access of rural schools, improving back bone fiber in small towns and cities that often have trouble attracting business development without it (there was a fiber ring installed in a mid-size town I’m familiar with that immediately attracted several businesses.) SpaceX doesn’t magically replace all of the needs like this with Starlink.
Basically, irrelevant given the spending of recent President’s like Trump, Obama, Bush etc. Particularly since that number is over many years, we’ve spun off much larger lump sum increases to the debt like 15 different times since 2001.
Wherever there are human organizations there is waste, fraud and abuse. Governments are often much worse at this than other human organizations. Would you like to see Canada get rid of its road system? Its military? Its power grid? This is a nothingburger complaint. We get benefits of large organizations building societal infrastructure, the reality that here and there some of the money will be spent poorly or corruptly isn’t a good argument to basically stop funding needed societal infrastruture.
I like that this is the phrase you use for “repurposing unspent money.” That doesn’t sound much like “smoke and mirrors” to me, but fairly prudent use of money.
Covid relief programs that you call wasteful and unneeded, inflationary spending? Okay. Case in point that you don’t make serious points, you literally are just a partisan, you have nothing to offer in terms of real discussion, just partisan talking points that someone fed you.
The bill was called an infrastructure plan, not a “stimulus” plan. And infrastructure construction is all but uncontroversially acknowledged as being economically stimulative by basically every economist ever.
There’s a little bit of that sure, oh well. Like out of that $65bn broadband funding something like $2bn went to a couple pet causes of specific Senators. But the vast majority of the money has been allocated to Federal agencies or grantmaking authorities, which are not controlled by legislators at all.
The right for the last four years: “We need to invest massively in much badly-needed infrastructure spending!”
The right now: “Why are we spending so much money on infrastructure?”
Perhaps if the Republicans had actually invested in infrastructure spending as they repeatedly promised and failed to deliver, the Democrats wouldn’t have to spend the money now to fix the mess they were left. As usual.
But I’m sorry, Sam - you were trying to make a point about partisan hypocrisy? Tell you what - we won’t invest in infrastructure and when bridges and dams and the electrical grids continue to break down, we can tell people that you said it was the wrong time to fix them.
There is little obvious evidence recent government spending is causing inflation. Between four rounds of Federal Reserve quantitative easing (QE1, 2, 3 and 4) years of high deficit spending by Presidents Obama and Trump, and stimulus bills passed by Obama and Trump we had something like $15bn in money infused into the economy over a 12 year period. In all that time we saw very low inflation, but supposedly Biden’s covid stimulus and this infrastructure bill (which will dole money out over like a decade–and a lot of the money in Biden’s covid package hasn’t been spent yet either, and some never will) magically caused inflation to go up when all that previous spending didn’t? Did it also cause inflation to go up in China, Germany, Australia and most other countries on earth that are also experiencing inflation right now?
Or is it more likely that the surge in energy prices related to natural gas shortages in Europe and a demand spike for oil is probably driving most of it? That and supply chain shocks? Hm, hard to say.
As for “paying welfare queens to be lazy and watch TV all day”, that rhetoric is a good 30 years out of date, there are no welfare queens anymore. You can receive welfare for a total of 5 years of your life in the United States after the mid-90s Clinton welfare reforms, no one can simply live on it indefinitely. All other Federal benefit programs largely are structure so you need dependent children to qualify for them, other than disability and health care for the poor, neither of which magically enable someone to sit at home without a wage. Also the amount of money going into some of these programs would not fund a significant portion of our needed infrastructure improvements.
The left in 2021:
“Republicans held the Senate and the Presidency during the lockdown; why is some guy on the internet blaming us for the money that was spent?”
My WAG is that many Republicans are concerned with rising inflation and pouring more money into such a situation. That, and it’s knee jerk reaction to anything being proposed by the Democrats (I actually think this is the main objection).
AOC and her crowd are pissed that they didn’t get both bills at the same time and are concerned that now that this one has passed they have lost a lot of their leverage over the moderate Dems who seem to be objecting to the social spending bill, or at least the price tag.
I’m going to semi-agree with your initial comments about infrastructure, that ifmit’s actually needed it should be done regardless. I question how much is actually needed. A lot of these projects wind up being projects the states didn’t fund for their own reasons, but put up as critical when it will bring federal funding.
And these bills are heavily reliant on input from unions, professional associations and businesses who have vested interests in making the problem look as bad as they can. I’ve been hearing about the ‘infrastructure problems’ and all the bridges nearing collapse since I started following politics 40 years ago. Politicians love infrastructure bills because the public generally approves and they are great for rewarding constituents and money people. And, you can get your name on building and stuff. Lobbyists know this, so they constantly whisper in politician’s ears about the crumbling state of the infrastructure. That’s how you get bridges to nowhere.
I remain skeptical.
I agree with that, although I used those same arguments in 2008 to explain why infrastructure woildn’t be a reasonable stimulus, and got laughed at on this board.
However, Joe Biden is running around telling people that the infrastructure bill will ease supply chain issues. Are you saying he’s lying?
I think you need to look at what was different with Covid relief. Previous QE was done as transfers to banks to shore up liquidity. The money didn’t actually move, so velocity in the money supply dropped, offsetting the increase in liquidity. Milton Friedman said of stimulus before he died, “If you want the money to actually move, you should just drop it on the population from a helicopter.”
Well, the Covid relief was essentially that. We (‘we’ being both the U.S. and Canada and most of the developed world) printed money, and helicopter-dropped it on the country. It didn’t cause inflation early because it coincided with lockdowns and a general reduction in economic activity. But it was inevitable (and I predicted it here on this board) that once thr economy started to rev up again, inflation would rear its ugly head.
I will agree that this new bill will not be nearly as inflationary as the Covid relief under both Trump and Biden, mainly for the delay reasons you mentioned, and because it’s much smaller. But if inflation is long term (and I think at least the monetary aspect of it is), then this just pushes the problem down the road a few years.
I completely agree - if you’ll extend that to saying that most people, including economists and policymakers, don’t understand much of anything about what’s really going on in the economy. It’s a series of complex adaptive systems, and there is a fundamental limit to what we can know about its internal workings.
So, the precautionary principle should apply, just like it does with global warming. When you don’t understand something, be careful when trying to screw with it. That’s why people on the left who think we are capable of ‘fundamentally transforming’ the economy along planned lines are terrifying. They are the equivalent of people who want to geo-engineer the ecosystem, or people who think that just because we can’t exactly predict global warming it’s cool to just pump CO2 into tye atmosphere endlessly. Unintended consequences abound.
Nonetheless, some fundamental principles can apply. For example, it’s safe to assume without further evidence that the first-order result of pumping more CO2 into the atmosphere should be more warming. And dropping trillions of dollars of printed money on the population and encouraging them to spend it should increase inflation as more dollars chase the same goods. Those are the null-hypothesis positions that should be taken unless further evidence contradicts them.
I ask out of genuine ignorance - do you have a source that covid QE was directed differently than recession QE?
The covid relief money was distributed directly to businesses and individuals. Some of it went to states and tribes, but that was also supposed to be disbursed to individuals and businesses. Some of it didn’t get spent and that’s what’s being used to pay down the cost of this bill somewhat.
Here’s a link to the various programs:
AFAIK QE is only issued by the fed. The ARP was debt financed spending from congress. There was borrowing to inject money into the economy in the response to both the recession and covid, there was only a difference in scale. And I can verify but I think most of the deficit was caused by automatic stabilizers.
Why are we continuing to argue about inflation? The inflation rate hasn’t gone over 6% since 1982! And not over 4% since 1991. It is low when Republicans fuck up the economy and raise deficits and lower when Democrats rescue the economy and run surpluses.
Of course inflation can go up, and certainly short-term trends can make a difference. But this argument was discredited along with voodoo economics as a whole. Which means that there are no right-wing economic arguments that can be sustained in the face of 40 years of facts. Trying to debate specifics is like trying to debate relativity with someone who doesn’t believe in it.
Wow! That $1,200* a year sure sounds better than the massive tax increase I’d have to pay if the government does anything even vaguely similar that provide me with broadband . . . oh, wait, you didn’t say how much more in taxes this was going to cost me did you?
*And being given the opportunity to give $1,200 a year to the poor, impoverished, Mr. Musk warms my heart! I hear the guy doesn’t even have enough money to pay his taxes!
Sure, but there are plenty of examples where the telecom companies haven’t built out decent broadband to poor urban communities and/or communities of non-white people. Within urban areas.
We saw this starkly with the headlong shift to virtual school in the spring of 2020- many places had students attending school in their parents’ cars outside of coffee shops, libraries, etc… because that’s where the nearby internet access was.
There’s low-hanging fruit there- it’s merely low income that stopped it from already happening- the infrastructure is nearby, it’s already an urban area, the population density is high enough, but the people are poor.
But instead, they’re talking about running it out into extremely low population density areas that are by and large, centered around agriculture or service industries that serve agriculture and that aren’t really likely candidates for large manufacturing or tech industry facilities in any event, broadband or not.
I mean, let’s use a little tiny town I’ve driven through- Esbon, KS. It’s a town of 100 that’s 50 miles from the next town of any size (Hastings, NE ~25k). It’s entirely agriculture related, and is surrounded by a bunch of other small towns of more or less the same size- the closest of which is 5 miles away. So
Now what economic benefit is going to be gleaned by spending all the money to build out high speed reliable broadband to Esbon? And more importantly, is it worth the money? That’s the question here- nobody’s actually showed that the return on the investment for this kind of thing is even positive, much less sufficient to warrant that level of investment, especially versus doing it in areas already significantly closer to existing infrastructure, a lot more people, and existing right-of-ways for telephone/cable TV.
This seems very much to me to be a sort of sop to the rural white crowd- “Hey! We’re helping you too, by spending an inordinate amount of money to get you porn, TikTok and YouTube on the government’s nickel, so don’t vote Republican in the future!”