Print money, give it to poor people

Well, you heard it last week: Both Joe Biden and President Obama, talking about their beloved Simpson-Bowles plan. (Austerity! Shared sacrifice!) But here comes economics blogger Matt Yglesias pointing out just how pointless all this austerity talk is during a time of massive unemployment (and is a variation of Atrios’ suggestion to give free money to the people who need it):

Matt Welch at Reason makes the good point that none of the downballot mayors and governors who spoke last night at the Democratic convention grappled with the reality that a lot of them have been dealing with the thorny-but-necessary work of closing budget shortfalls, rolling back pension promises, and trying to wrestle with the limitations imposed by public sector labor agreements. He then concludes on a terribly wrongheaded note:

One of the great ironies of this convention already is that speaker after speaker denounces Republicans for being unable to tell the truth or get their facts straight. Meanwhile, one of the most important truths of modern governance—we are well and truly out of money—sits neglected in the corner. This might be a great way to rally the Democratic base, but it’s thin gruel for the majority of Americans who think, correctly, that the nation’s finances have spun out of control.

As Mark Schmitt wrote last year regarding a book from Welch and co-author Nick Gillespie, this assertion that America is “out of money” has become an all-purpose crutch through which Reason can push an ideological agenda of skepticism about programs without actually making the case in its particulars. But it’s simply not true that we’re out of money. Many states and municipalities are up against hard budget constraints, but the US government has the ability to create US currency in unlimited quantities. It hasn’t run out of money and won’t ever run out of money. It would be nice for people to understand this point separately from controversies over whether public sector programs are wise or just.

In principle, the US government could print up or borrow a ton of money, hand it to state governments, and then have all the money used to cut taxes rather than to finance programs. This would not be possible in a world where the US government faced a hard budget constraint but, fortunately, we don’t face any such constraint. The possible downside to a policy of greater reliance on money-finance or debt-finance is that it might make holding dollar-denominated financial assets less attractive to foreigners. That, in turn, would make imported goods more expensive domestically and American-made goods cheaper on foreign markets. If the United States were already at full employment that would be a very bad tradeoff, amount to a decline in average American living standards.

But at a time of mass unemployment, it looks like a pretty good tradeoff that should raise per capita output and average incomes. It’d be a bad deal for me personally (or for Welch) since there isn’t going to be a writing-on-the-Internet export boom, I buy lots of stuff that’s made abroad, and the DC regional economy that Welch and I participate in has no meaningful manufacturing sector. But for America as a whole it could be a boon.

But whether you think that would be a good idea or not, the important thing is that the question of whether we should be borrowing more is entirely separate from the question of whether the borrowing should finance additional spending or lower taxes.

Also good reading: “Seven Ways To End The Deficit Without Throwing Grandma Under The Bus.” [donate]

Medicaid block grants

This week on This Week, George Stephanopoulos did a slightly less awful job this week. Not good – but not as bad as usually, pointing out the effect of Medicaid block grants (still using the fig leaf of “President Clinton said,” which is why I won’t say it was good) upon the poor and needy:

STEPHANOPOULOS: President Clinton also took aim at the savings you do propose in Medicaid — $800 billion — the largest specific savings in your plan. That’s about a 35 percent reduction over the next decade.

And the president argued that it’s going to be devastating for seniors who rely on Medicaid for nursing home care, middle class families challenged by disabilities, children with autism. How can you squeeze that much money of a program, $800 billion without cutting benefits or restricting eligibility?

RYAN: Here’s the secret on this one. Medicaid spending still goes up under what we’re proposing. What we’re saying is we want to repeal ObamaCare because we think it’s a terrible law. And so we’re taking away the massive increases in ObamaCare that are attributable to Medicaid. About a third of the people that ObamaCare is supposed to serve, they’re just pushing people on Medicaid.

Here’s the problem, George. Medicaid’s not working. More and more doctors are less likely to even take people with Medicaid. It’s a system that needs reforming.

So we don’t want to put more money and force more people on a program that’s failing, that’s not working. We want to reform Medicaid. And so what we’re saying is, don’t expand this program as dramatically as ObamaCare does. Keep it like it is, increase its funding and send it to the states to the states can fix this problem. I think government closest to the people, especially in providing health care for the poor, works the best.

STEPHANOPOULOS: But The Urban Institute has estimated that between 14 million and 27 million people will — fewer people will be covered under that plan and won’t [that be] block granting this program, sending it to the states mean that low-income and disabled people will lose their guaranteed right to coverage?

RYAN: No, not at all, of course not. Look, governors are asking us all the time for more flexibility on Medicaid. There are a lot of different —

RYAN: — ideas out there on how best to cover the low-income populations of various states. And look, every state has different issues and different problems. So we want to be able to give the states the tools they need, make sure that they spend this money on their Medicaid population, but give them the ability to fix the problems in their unique state —



STEPHANOPOULOS: — individuals will not have a federal —

RYAN: — (inaudible) —

STEPHANOPOULOS: — guarantee under a block grant. That’s correct, isn’t it?

RYAN: Sure. No, it — with maintenance of that — I won’t get into the details, but with maintenance of effort requirements, which is what we’ve done in the past, they still have to serve this population. They just get more flexibility on how to serve this population instead of all these rules and strings from Washington that make it really hard for them to make sure that they can meet the mandate and provide the best possible quality care to low-income populations.

Ah yes, the block grant idea so beloved of conservatives. Now, with increased storms, wildfires, tornados and floods, how do you suppose that would work out in practice?

Surprisingly, Governor Jindal, who is seeking 100 percent federal support from the federal government from the Federal Emergency Management Agency (FEMA) and will be undoubtedly grateful for increased federal Medicaid support in response to Hurricane Isaac, is supporting the idea of a Medicaid block grant. It is surprising because, under a block grant such as that proposed by House Budget Committee Chairman and Vice President Candidate Paul Ryan, Louisiana would be responsible for 100 percent of any increased costs associated with any hurricane or disaster.
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Chicago teachers on strike

Talk about Wisconsin redux! All of a sudden, teachers are the enemy of the state. All of a sudden, our public schools are worthless and need to be overhauled by CEOs and people who have never taught a day in their lives (except the shock troops of Teach for America, which is to teaching what McDonald’s is to food). But many, many so-called liberals have been sucked into this argument, enabling what is little more than an elite union-busting, money-making operation.

Because you know what? The “problem” with our schools is the same as it always was: Poverty. Schools are funded by local property taxes instead of state or federal taxes, and that means if your parents are poor and don’t read, you probably won’t, either. It means that your district becomes a political football when teachers can’t quite weave straw into gold, and are punished by CUTTING THE SCHOOL FUNDING. As if that makes sense.

America is not falling behind in math and science in the rich districts. Only the poor ones. One might think there’s a message in there, but it doesn’t fit the corporate schools agenda.

There are a lot of straw men set up in this argument, and desperate parents will grab at any of them if they think it will help their kids. But study after study finds the same thing: For-profit charter schools do not perform better, and in many instances, they perform worse. Yes, well, adding a profit motive to something will do that.

So when the media tries to paint this teacher strike as greedy unions vs. “reform,” don’t buy what they’re selling. Read this instead:

From the Chicago Sun-Times:

Chicago Teachers Union members will go on strike Monday morning after talks failed to yield a new contract, the head of the union announced late Sunday.

“In the morning, no CTU member will be inside our schools,” Karen Lewis said at 10 p.m. “Please seek alternative care for your children. …

“We have failed to reach an agreement that will prevent a labor strike.”

Lewis said progress was made, but no deal was hammered out during talks on Sunday. That set the stage for a teachers strike at midnight — and no classes Monday morning, the first chance the teachers had to strike after announcing strike plans 10 days ago.

“We assume we’re basically done for today,” School Board President David Vitale said before Lewis spoke.

Asked what parents should know, Vitale said: “More than likely, they’re going to have to take care of their kids tomorrow.”

Oh, and Rahm? Good luck counting on the teachers unions to get out the vote this year:

Emanuel is pushing for big changes: a longer school day and year, a new system for evaluating teachers and a whole new way to pay teachers. At the Democratic National Convention last week, he defended many of his reforms.

“For the first time in a decade, [students are] getting a very rigorous academic standard,” he said. “For the first time, we’re getting five new high schools all dedicated to science, technology, engineering and math. Six thousand more kids are going to magnet schools. We’re making major changes.”

The union wants Emanuel to pay teachers more for what amounts to more work.

Teachers are also pushing back on some reforms that the mayor didn’t tout at the DNC.

They want smaller class sizes, more art and music, and job protection when the district shuts down low-performing schools and opens privately run charter schools, which are not typically unionized.

Quote of the day


It seems to me that it is a minority that ever gets the true and full Gospel. We just keep worshiping Jesus and arguing over the exact right way to do it. The amazing thing is that Jesus never once says, “worship me!”, but he often says, “follow me” (e.g., Matthew 4:19).

Christianity is a lifestyle—a way of being in the world that is simple, non-violent, shared, inclusive, and loving. We made it, however, into a formal established religion, in order to avoid the demanding lifestyle itself. One could then be warlike, greedy, racist, selfish, and vain at the highest levels of the church, and still easily believe that Jesus is “my personal Lord and Savior.” The world has no time for such silliness anymore. The suffering on Earth is too great.

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