Money Spigots On
The money spigots are on as Biden Proposes $1.9 Trillion Covid-19 Relief Package.
Mr. Biden in a speech Thursday evening plans to lay out priorities related to the pandemic for the early days of his administration. He will urge Congress to back a round of $1,400-per-person direct payments to most households, a $400-per-week unemployment insurance supplement through September, expanded paid leave and increases in the child tax credit. Aid for households makes up about half of the plan’s cost, with much of the rest going to vaccine distribution and state and local governments.
“We will get right to work to turn President-elect Biden’s vision into legislation that will pass both chambers and be signed into law,” Sen. Chuck Schumer, the Democratic leader, and House Speaker Nancy Pelosi (D., Calif.) said in a joint statement.
Mr. Biden is also expected to release a second proposal focused on economic recovery that will also use jobs and infrastructure as a tool to combat climate change, the officials said.
Mr. Biden’s American Rescue Plan calls for additional stimulus checks beyond the $1,200 round approved in March and the $600 set approved in December, sending out an additional $1,400 per person to bring the amount sent to families in the past few months to the $2,000 mark he promised. He would expand eligibility to include adult dependents such as college students who were excluded from previous versions.
In a poverty-fighting move long sought by many Democrats, the child tax credit would rise from $2,000 to $3,000 for this year under his plan, with an additional $600 for children under 6 years old and new rules that would let the poorest households get the full benefit. The plan also includes money to help households with the costs of rent and child care, plus $350 billion for state and local governments.
Mr. Biden will propose to extend the eviction and foreclosure moratorium, which currently goes until the end of this month, through the end of September.
While Mr. Biden supports $10,000 of student loan forgiveness, the current proposal doesn’t include it, an official said. Instead the focus will be on extending student loan forbearance, which allows people to temporarily pause loan payments.
Biden just gave a speech that I watched. He took no questions.
Video Short Synopsis
Empathy and leadership. Such a breath of fresh air listening to @JoeBiden’s speech tonight.
Just 6 more days, friends!🇺🇸💙#BidenInauguration #BidenHarris https://t.co/t9befBNZoO
— Dena Grayson, MD, PhD (@DrDenaGrayson) January 15, 2021
Biden Finish
Biden wraps up his remarkably optimistic speech — one that made no mention of Trump or last week’s riot at the Capitol pic.twitter.com/eguZOvZW41
— Aaron Rupar (@atrupar) January 15, 2021
You can Replay the Full 25 minute Video on C-Span.
I will update this post with a transcript and more details of his package as soon as I have them.
Mish
Direct Monetary Distributism has been let out of the austerity box and will never go back in. …because it is the name of the new monetary paradigm that has been waiting to happen for the over 3500 years that the old monopoly paradigm of Debt Only, alternately exercised by the Palace or the financial elite, has been used to dominated every other actually legitimate economic business model and 95% of the populace.
And a 50% Discount/Rebate price and monetary policy at the point of retail sale is the means the implementing that paradigm change. Too simple for the intellectual vanities of economists and economic pundits….too beneficial and world changing not to be a paradigm change.
Yes, yes, money for nothing. I, personally, am waiting for the “chicks for free” part.
in all of history, only rock stars get ‘chicks for free’
“Chicks for free” does not exist in the real world anymore, if indeed it ever did. Maybe for Prince Andrew and Bill Clinton in the Epstein years…..
Even rock stars have that threat of a tell-all book…or being #metoo’ed….these days.
Sorry to disappoint.
You misheard. It is “hicks for free”.
Just wondering : Do the Gates, Bill, Linda, their kids and other priveleged mil- and billionaires get 1400$ each, too ?
No. Any American making over $75,000 has not been included in these stimulus checks at a graduated rate that decreases until you get nothing. Truly a form of redistribution of wealth.
And suddenly the Trump cult takes what Trump did before and applies the “socialist” label to it come next week when Biden starts governing like Trump with massive stimulus and redistribution of wealth. Funny how that works!
Get the printing presses ready at the Fed!
One hell of great way to ingratiate himself with the ‘deplorables’, I d say…..And as long as the $ Unlimited remains fit enough to create fairytales ….Like I said, GREAT !
As a childless adult, the child tax credit is very unfair. Since I don’t have children, my issue will never go to k-12 school or college (I pay property taxes for other people’s kids), will never be on welfare and will never spend a day in prison. Also, my generational carbon footprint is much lower than everyone with kids. How is that fair?
Consider it a downpayment on the nurses that will change your diaper later.
The economy is between a rock and a hard place until we get herd immunity. I’m still optimistic we get back to normal by summer. Biden should embrace the middle and seize the opportunity provided by Republicants who love to spend more than Democrats. Cut defense spending by 50% and then go to work on the real economy.
I d like to know how many people in the US are ‘parasiting’ on ‘defence’…must be impressive ….
Factor increased use of automation, robots, etc and the future of the minimum wage job isn’t looking to promising right now. Or those that need these kind of jobs. Socialists are idiots.
“I listened to a podcast interview of Stephanie Kelton where I thought I heard her say taxes were required to keep inflation in check. Maybe I misheard.”
Possible Kelton said that. Indeed I can find where Mossler discussed that as well. But the video I posted says it all.
Mosler thinks there are other ways to control inflation.
Mosler thinks he is an economic genius and visionary and he isn’t. He seems like a nice man though. Most of his writings make no sense to me. They won’t work in the ‘real world’. I did buy a ‘Mosler Economics’ tee shirt and coffee cup from his webstore a few years ago because I like the way they look. Nice products.
The MMT answer, not that it makes any sense: Taxes are used to control employment (not inflation)
I found it.
Precise Sentence: “The purpose of Taxes is to create unemployment”
Of course, if you taxed everyone 100% , no one would work. But the statement itself is totally nuts.
It confuses result with some sort of genuine purpose.
Most tax is income tax, if you don’t work, you don’t pay it. Most go to work to pay for enough food to eat and they have to earn enough to also pay the tax.
In his example about working to buy the card to exit the room, he refers to the card as the tax to exit the room. It isn’t, it’s the food to exit the room, not tax. Without the card you have no food to exit the room, so he can offer you food to exit the room in exchange for work. There’s 50 people in the room, he decides to spend only 40 cards, so ten people are unemployed & they’re stuck in the room because they don’t have enough food to exit. In other words if he decides to hoard the food by not offering it in exchange for work they’ll be unemployment. It’s nothing to do with tax, it’s all about food, and his willingness to supply food in exchange for work. So tax doesn’t create unemployment in my view.
$14,285 per person will be now how much stimulus we’ve gotten in the US. A family of 4, $57,142. How many Americans will actually see that?
The direct payments and aid to states/localities are temporary (until the next round). The $15.00 minimum wage and all the bennies for paid sick leave/family members ect. are permanent. Just more reasons not to hire any new employees.
Yup. The 15/hr is insane and typical government ‘one size fits all’ policy that won’t work.
You may not be able to live in big cities on 15/hr but in small towns that’s a fortune and businesses there can’t afford to pay that because they don’t generate that much revenue. It either won’t get implemented at the state/city level or else there will be massive inflation in small towns when this comes through.
If a high minimum wage reduces employment, then it also prevents the formation of companies
Soon $15 will not be enough to pay rent, the real discussion will be $20 minimum wage.
It is just so refreshing to listen to a cogent articulate speech.
Whether you agree with Socialist Joe or Fascist (Fat) Donnie, there is a remarkable difference in how they speak to the country.
I wore out the mute button on the tv remote these last four+ years.
Well, 1400 times 330 million is 462 billion. And that’s for the $1400 to go to every man, woman, and child in the US. Must be a lot of unemployment dough going out to get the bill up to almost 2 trillion.
Oh. Never mind. I just read they are sending the extra money to me. Well, at last we have good government. Is this a great country or what?
Gosh, if only there were a magical machine where you could ask the question, “what is the breakdown of the 1.9 trillion dollar plan proposed by Biden” and it would instantly come up with the answer on a screen….
In fact you probably had such a machine in your hand when you typed up your comment.
Try google….
Sorry about that. I was unclear. Let me try this:
Be careful. $1400 is frosting to sell a cake.
As to Google, I can’t use Google as my custom DNS server resolves Google queries to a local black hole. 🙂 And, if you believe that … well, it is partially true.
Not every one gets a check. I havent gotten even a little sniff of one.
Can anyone provide me a rational explanation why taxing the citizenry at all is necessary if as the MMT proponents insist we can have virtually unlimited fiscal and monetary stimulus/money creation with no downside??
That’s been a valid question since TARP. Not sure there’s a specific correct answer, but it seems that no change in taxation provides an illusion of normalcy. People can also make political arguments with righteous indignation, stuff like “my tax dollars shouldn’t pay for x”, when in reality nobody really pays for programs in a world where the printer goes brrrr.
The MMT answer, not that it makes any senses: Taxes are used to control employment
not inflation?
Mish can you expand a bit on that comment that taxes control employment. Trying to draw the connection line.
I listened to a podcast interview of Stephanie Kelton where I thought I heard her say taxes were required to keep inflation in check. Maybe I misheard.
That podcast made me sick to my stomach, but it really opened my eyes as to what is coming down the pipe soon. I had to listen to Luke Gromen twice to wash it off my soul.
I’m not trained in economics but their theory doesn’t pass my simple smell test. Then again, I’m yet to adequately wrap my ahead around quantum physics!🤣
The stock market does not pass the smell test either…..Look at Tesla….it just keep going up..
The American tax base is the underlying asset that is being leveraged here. The question is how much can you leverage it and get away with it. You can leverage it a lot for a short period of time and that can be helpful….that’s Keynes. He was right, But his ideas got married to a vicious spousal abuser called the congress.
So now we’re really pushing the envelope, right?
It’s much better imho to spend more to put food on the table for Americans in a pandemic..than it is to keep three foreign wars going at the same time. We just aren’t as used to it. We can pay ourselves back for overspending in a pandemic..which we are doing. We’re wasting money….but it’s for a good cause for once.
It is the ongoing long term deficits that are starting to really mushroom over decades…bigger and bigger. Looking like the debt service will go exponential….that’s the problem.
To assume that there are limits is wise….but to assume we are at those limits just now…might be naive.
I can kinda accept Keynes in principle. But it gets bastardised by politicians. Instead of putting something in the bank during prosperous times, it is in practice whether they extract a lot in good times vs gargantuan amounts in bad times
Two reasons for taxes from the MMT crowd:
Buying time…
Not health, not lives….
It would be instructive to have an estimate of the value of alternative course where the pandemic had been approached in a serious, coordinated and effective manner.
I doubt we could have kept the US fully shut down for 90 days like the Chinese did and then got an effective track and trace program implemented. Most Americans are free thinkers with individual decision making and responsibility and it takes a while to get the thinking aligned but once we do look out. We’ll do a lot better if another pandemic shows up in the next 20-30 years.
Probably decent policy based on where we are right now. It’s late, but way better than the current austerity plan that is doomed to fail.
As long as interest rates don’t go up than adding all this debt is not a big deal. Print and borrow all the money you want. Let future generations figure out how to pay it off.
The money spigots are on but for the past four year we spent four years we spent poorly and saw that not spending may have cost us far more. Biden is right, vaccine distribution has been a colossal failure. States need funds to deal with the crisis so they can better test and trace, vaccinate and deal with lost revenue due to Federal government mismanagement. When I look at the Budget deficit growth since Trump became President I’m left scratching my head what was accomplished. At least with Biden I get a sense of where the money is going.
Poor federal spending has been going on a lot longer than 4 years and seems to get worse with each administration (the housing/internet bubble boons to Clinton’s budget legacy notwithstanding).
Did you understand where the trillions went during the Obama administration? How much worse would the past decade have been if the fed funds rate wasn’t ~0%?
I agree. There was basically $32 trillion in bailouts during Obama terms. That is enough to give every citizen 100k or about 250k household.
Funding the wall takes the cake. Paying farmers because you engage in a pointless trade war and wanted to keep the farm vote almost as bad.
I agree someone is taking your cake, but “wall” spending in the past 4 years is orders of magnitude less than the destructive and less-than-justified military actions of the past 3 administrations. Did you know billions have been spent to kill, maim, and impoverish the population of Yemen alone over the past 5+ years?
A short search didn’t lead me to a comprehensive number, but this references a dated study that understates the amount as of today:
“According to CBP data provided to FactCheck.org, the Trump administration secured a total of $15 billion during his presidency for wall construction. Some of it was appropriated in annual budgets by Congress, and some was diverted by Trump from counternarcotics and military construction funding.”
As for those farmers, agree that the bribery effort to ameliorate the consequences of the “trade war” was a waste. However, the billions spent has been exceeded by pandemic relief and isn’t even a rounding error for the trillions thrown around after the Great Recession.
“In less than nine months, U.S. farmers and ranchers have collected a mammoth $23.5 billion in pandemic relief payments, said the USDA on Monday, more than matching the $23 billion spent by the Trump administration to mitigate the impact on agriculture of trade war with China. “
Trump took office with a weaker labor market than touted. Even with 8 years of improving labor markets under Obama, they were still near the worst levels at prior recessions.