Trump Tantrums the Dems Out of a Trap
S E E D E D C O N T E N T
I gotta say, it was very clever of Nancy Pelosi to steal Donald Trump’s strawberries, pushing him over the edge into self-evident lunacy.
As everyone knows, Trump stormed out of a meeting on infrastructure, apparently out of uncontrollable rage over Pelosi’s remarks pointing out that the administration’s stonewalling on all fronts, including raw defiance of the law requiring that it provide the president’s tax returns, obviously amount to a coverup of something (and maybe multiple things.) And Democrats should be grateful.
And I don’t just mean that they should be grateful to see Trump displaying his unfitness for office, which has long been clear to close observers, in such a dramatically unhinged way that only cultists can fail to see it. He’s also helped them with a political dilemma.
You see, a major infrastructure push is a very good idea, one that Democrats would find it hard to oppose in good conscience. Yet it would also be politically good for Trump, helping the economy, giving the public a sense of progress, and also making him seem more like a normal president. And Democrats would have had a hard time avoiding making him this gift.
True, Republicans seem able to get away with blatant economic sabotage when a Democrat is in the White House. But Democrats, in part because they don’t have Fox News to insist that black is white and up is down, are much less able to pull this off. Luckily, Trump has solved their problem.
First things first: Why is an infrastructure push such a good idea? Partly because we have been underinvesting for years. The state of our roads, rail lines, water systems, and so on speaks for itself. Beyond that, private investment demand remains weak, leading to low government borrowing costs; investors are effectively begging the government to take some of their money and do something useful with it.
On top of these considerations, infrastructure spending is especially desirable in a depressed economy, when it puts idle resources to work in a way that promotes long-run growth. But, you may argue, the U.S. economy isn’t depressed right now. Indeed it isn’t; but it’s more fragile than many realize. When the next recession comes – and there is always a next recession – the conventional response, cutting interest rates, will almost surely be inadequate. On average, when recession strikes, the Federal Reserve cuts rates by 5 percentage points. Currently, however, rates are only half that high, so the Fed doesn’t have enough room to cut.
And when recession does strike, it will be too late to get a major infrastructure program going. Better to have it already underway.
So a big infrastructure push makes a lot of sense; it would also be good politics for Trump. Yet 2 ½ years after Trump took office, and after a series of “infrastructure weeks” that seem to come almost as often as the president’s golfing trips, nothing has happened. Why not?
One answer is that Republicans in Congress have no interest in infrastructure spending. They see any form of public expenditure, no matter how justified in terms of narrow economics, as problematic because it may seem to legitimize a larger role for government in general.
Another answer is that until now Trump officials have been completely unwilling to consider a traditional, clean infrastructure program – you know, just build stuff. Instead, they have proposed complex public-private partnerships that would in effect subsidize the privatization of public assets. It has been easy for Democrats to reject such ideas, as not really being about infrastructure at all.
After the 2018 midterms, however, it began to look as if Trump, wanting a policy win, might finally be willing to talk about a genuine infrastructure plan. And this had the potential of becoming a trap for Democrats, who would have trouble denying him that policy win.
But it was not to be. Let’s not try to pretend that there was any clever political strategy in Trump’s walkout; it was just his immaturity and insecurity, but even more obvious than usual. And the attempt to portray Pelosi as out of control is so ludicrous that only totally deluded people – i.e., around a third of the country – could possibly believe it.
So if I were Pelosi and Schumer, I would be quietly expressing thanks to Trump for throwing a tantrum, and extricating them from a potential political trap.
Initial image: President Trump in the Rose Garden of the White House on May 22. Jim Lo Scalzo/EPA, via Shutterstock
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Major league lie. The lame stream media, CNN, MSNBC, every late night talk show host, and most comedians, are the Dems mouth pieces; and truth doesn't matter to them in the slightest. Obama won a second term despite an under performing economy. The media painted the Republicans as the problem daily.
Another lie, every Democrat and their pundits has been saying we are due for a "major recession" since Trump took office. Still no recession two plus years in. No thanks to the Dems that is; who have been arguing against Trump undoing all of Obama's economy killing environmental EO's; didn't vote for his across the board tax cut; and have been cheer leading for the economy to crash daily. Not to mention their never ending attempts to impeach Trump for everything and anything; their failure to accept the findings of the Mueller report; or the Dems economy killing Green New Deal- that the Senate Dems voted "present" for rather than admit it was a horrendous idea created and endorsed by morons within their party.
Don't worry, the infrastructure deal the Dems want wouldn't make it to Trump's desk. They would try to tack on a massive economy killing tax increase to pay for it. A non starter for any Republican. Besides, the Dems already had their massive infrastructure deal. Remember Obama's "shovel ready jobs" that turn out to be not so shovel ready? Rather than actually fix existing roads and bridges; the money was used for every last pork project the states could come up with. In Michigan it was massive new highway additions; that have quickly became part of the problem- as there wasn't money to maintain the existing roads to begin with (Thank you Jennifer Granholm).
The Dems really wanted something to take the focus offer their party infighting over impeaching Trump w/o any evidence; the failure of the Mueller report; and the investigations in the DOJ into Obama administration DOJ and FBI abuses of FISA warrants, illegally spying on an opposition campaign, and possibly paying a known Democratic propaganda company to be part of the investigation. Thank god for the Democratic mouth pieces willing to believe anything anti-Trump.
Oh...
Let's presume the worst, and on that basis, let's not do what we know we should. Sounds like a plan... A Republican plan!
I actually laughed out loud when I read that line. But then I saw that Ronin2 dealt with it correctly before I could.
I have no idea what you posted as a reply to me. All I get is a blank page.
It's just a stupid You Tube thing.
I'm sure Bob knows I could not open it so I guess he might have found a way to post something I would normally have been able to contradict but can't. [deleted]
Seriously, Buzz?
Do you really think that if someone doesn't find a way to get around your censorship problems, then they are cowards?
Well.......
[deleted]
I see.
Bye.
[deleted]
Sounds like you have a problem. Not us.
Paul Krugman isn't discussing infrastructure; Krugman is only discussing politics. And Dr. Krugman makes clear that the Democrat's impetus for infrastructure spending is to obtain a political benefit.
What sort of infrastructure? Urban infrastructure? The fossil fuel infrastructure? Infrastructure to increase dependence upon imports? If the idea is to just throw money into the economy to buy votes then let's be honest and recognize that infrastructure is just an excuse to spend public money for political purposes. Infrastructure has become nothing more than an ill-defined, open ended political game.
Paul Krugman isn't serious about infrastructure spending. Krugman is only interested in the politics.
Ummm... Yes. The politics of infrastructure is the topic of the article. Infrastructure itself is not the topic.
This is an Op/Ed, not a technical article. Krugman does both, so I'm careful to label his articles correctly.
Dr. Krugman unwittingly provides an explanation for why political government should not be involved in infrastructure. Krugman characterized infrastructure as a political trap for Democrats. But that also implies that infrastructure is pursued for political benefit. The desired result is political in nature. That's not a sound mechanism for investing public funds. Paul Krugman is making a clear statement that infrastructure is nothing more than a broad, ill-defined mechanism for throwing money into the economy for political purposes.
Dr. Krugman makes the backhanded argument that infrastructure spending should be managed by the private sector since that is who should derive the most benefit from infrastructure investments.
Why isn't Paul Krugman arguing that Democrats should be working on creating an infrastructure bank? That would provide a dedicated source of money that should allay Krugman's recession fears; a hedge against recession. Instead Krugman focuses attention on petty, self-serving politics that will only provide short term benefit for the deadwood in political government.
Where? I don't see it.
"On top of these considerations, infrastructure spending is especially desirable in a depressed economy, when it puts idle resources to work in a way that promotes long-run growth. But, you may argue, the U.S. economy isn’t depressed right now. Indeed it isn’t; but it’s more fragile than many realize. When the next recession comes – and there is always a next recession – the conventional response, cutting interest rates, will almost surely be inadequate. On average, when recession strikes, the Federal Reserve cuts rates by 5 percentage points. Currently, however, rates are only half that high, so the Fed doesn’t have enough room to cut.
And when recession does strike, it will be too late to get a major infrastructure program going. Better to have it already underway."
Dr. Krugman explains that infrastructure is merely a mechanism to throw money into the economy. What putting "idle resources to work in a way that promotes long-run growth" means is that infrastructure spending boosts consumption. It doesn't matter what sort of infrastructure is funded; the important thing is using infrastructure to throw money into the economy. Most government infrastructure spending is directed towards repair and replacement rather than toward creating any new infrastructure. Krugman is stating that speeding the repair schedule throws money into the economy faster.
The highways and bridges are already there, the national parks are already there, the airports and seaports are already there, the locks and dams are already there; repair and replacement won't create a new infrastructure that would contribute to long-term growth.
You said:
Where is this "clear statement"?
You're paraphrasing Krugman, in ways that you do not justify, and then you debate against your own paraphrase.
Krugman never said what you put in your paraphrase.
I quoted Dr. Paul Krugman. That's not paraphrasing.
You quoted him... and then ignored the citation in favor of a paraphrase.
What is your explanation of Dr. Krugman's quote?
He says... what he says.
Why do you want my explanation? Is there a portion that you don't understand? If you ask precise questions, I'll try to elucidate.
Precise questions? Here are two:
Does infrastructure cause recessions?
What is the role of infrastructure in political government's response to a recession?
Dr. Krugman provides an explanation in the cited quote. Paul Krugman is making a clear statement that infrastructure is nothing more than a broad, ill-defined mechanism for throwing money into the economy for political purposes.
Once again... that is a paraphrase. It doesn't agree with Krugman's words. It is false.
No.
In a recession, the need is to inject purchasing power into the economy. There are lots of ways to do this. Infrastructure has some advantages. It's labor-intensive, so a good part of the money goes to paycheck-to-paycheck workers who will spend most of it. An important objective is to get cash circulating.
There hasn't been any attempt to explain why the statement is false.
So, infrastructure is an expedient mechanism used by political government to throw money into the economy during a recession? Infrastructure spending during recession really isn't about the need for infrastructure?
What prevents using that mechanism to throw money into the economy for other political purposes?
OK. These are questions we can work with. The vocabulary is unnecessarily belligerent, but I'll ignore that..
It's not "expedient". It is "efficient", because the money is injected at a point where it is sure to circulate fast - an economist says "has a high velocity". The worker spends her paycheck, the grocer buys from suppliers, ...
Yes, it is. Infrastructure - roads, bridges, ... - is always underfunded, so when depression comes, it is a good moment to both prime the pump, and to catch up on needed infrastructure.
Nothing except careful oversight. Infrastructure is a domain where pork-barrel politics is rampant. Corrupt men can abuse the system for their own profit.
That sounds like a Keynesian rule-of-thumb. However, it is important to keep in mind that Maynard Keynes economic theories arose when the money supply was constrained by a metallic reserve and the United States was a producing nation. Today commercial credit businesses control the money supply and import dependence circumvents the multiplier effect of stimulative spending. Add to those changes that annual Federal deficits have grown much larger essentially establishing a constant stimulation of the economy; any new stimulus must be much larger than 'normal' deficits to have an appreciable effect. (BTW, I personally think that Keynesian economics is more correct than other economic theories.)
Infrastructure no longer utilizes pick and shovel labor. Mechanization has reduced the size of the workforce needed for infrastructure. The regulatory environment has greatly slowed the process of building new infrastructure so that stimulative spending must be directed toward repair projects to have any short term benefit. And import dependence means that increased consumption resulting from infrastructure will stimulate the economy of foreign suppliers more than the US economy. The mechanism of using infrastructure spending to stimulate the economy has become obsolete. Using infrastructure to throw money at the economy isn't very effective or efficient any longer.
Applying the Keynesian rule of thumb to today's economy suggests that retiring private debt would be the most efficient (and effective) mechanism to stimulate the economy. Import dependence and loss of multiplier effect from productive activities suggests that any stimulus must be a multiplier of the normative Federal deficit.
I doubt that very much. There would be no money injection at all - the money supply would be constant.
In today's economy availability of credit increases the velocity of money and using credit increases the money supply. That's why the Federal Reserve uses interest rates (rather than reserve requirements) to exert control over the money supply. The last several decades of stagnant wages have shown that credit has become the more efficient mechanism for distributing money rather than wages.
A job provides access to credit for purchases of durable goods. Wages (and savings) are no longer adequate. The fastest, most efficient, and most effective mechanism for stimulating today's economy is to increase access to credit. Inflation takes care of excess money supply; everything evens out as a recession recedes. That was the justification for TARP to maintain a supply of credit.
Exactly. Repaying that debt would therefore not expand the money supply.
Fractional lending increases the money supply. A consumer loan pushes money (that does not exist) into the economy and expands the money supply. The new money has already been injected into the economy before any debt payments are made. Repaying a debt increases access to credit that will inject new money into the economy.
The mechanisms for Keynesian-type stimulus have changed. In today's economy converting consumer debt to long-term public debt would be more stimulative than a jobs program paid for with public debt. The amount of public debt would be the same. That's still a Keynesian approach but utilizes a more efficient and effective mechanism within a service/finance based economy. The United States is no longer an industrial economy so the obsolete industry-based stimulative mechanisms aren't as efficient or effective.
it would stop the interest payments.
there is no reason we should pay interest to use OUR money.
im all for paying the debt and telling the international banks who run the federal reserve to fuk off.
let's make the federal reserve federal again - we can print money if we need it and we can burn it when we dont.
paying interest on our money is insane
I don't see any mechanism that could make that work. Could you explain, please?
It's the TARP mechanism. The Federal government purchased $700 billion of mortgage debt. Even though the debt had been packaged into derivatives, it was still mortgage debt. The mortgage debt had been taken off the books which allowed lenders more leeway to issue credit. What the government failed to do was alter payment schedules and interest on the mortgage debt. Since the government owned the debt, the government could have established a grace period for payments which would increase short term consumer access to credit. The grace period could have been phased out as the economy recovered.
The TARP program did not forgive debt or eliminate the risks of default. What TARP did was transfer the risk to the government. The government could have leveraged ownership of debt to provide a stimulative effect on the economy by establishing a grace period for paying the debt.
TARP cleaned up a mess. It didn't stimulate the economy.
There is no spoon. Banks do not lend the money people have deposited with the bank. Deposits are the bank reserves that are never loaned. OUR money just sits and collects dust in the bank's digital vault; it's not used for loans or investments.
The interest is being paid on money that bank's pulled out of their arses.
Didn't say TARP stimulated the economy. What I said was TARP could have been used to stimulate the economy. Political government failed to utilize TARP for Keynesian economic stimulus.
Once again... I see no possible debt-rédemption mechanism for stimulating the economy.
I specifically pointed out that debt redemption is not necessary. What I described would be a short-term diversion of debt repayment toward bolstering consumption. It would be more effective than a short-term tax reduction (which was also included in the stimulus efforts).
TARP really did speed the recovery of the Dow. Political government stopped with stimulating the financial sector which is consistent with supply-side theories of economics. That's why we experienced a slow trickle-down recovery.
Perhaps I misunderstood. Are you suggesting that the government assume private debt (credit card, mortgage, auto, ...)?
That would stimulate the economy by allowing the debtors to spend elsewhere... but it would be politically difficult to give money to debtors while not giving money to people whose family budgets are more healthy.
Let's not forget that the topic of the seed is infrastructure.
The TARP program assumed the risk associated with private debt; removing the risk from the private sector. The government did not take over debt payments; borrowers were still responsible for making debt payments. However, the government was in a position to provide a hiatus for debt payments and alter the terms of debt payment. The government was in a position to avoid the surge in foreclosures. That hiatus would have served the same purpose as short-term tax cuts (private debt payments work the same way as taxes). And would have provided more stimulus than infrastructure spending because the effect would have been immediate. Instead of trying to inject money into the economy (paid for with government debt), the government could have slowed the private debt payments to maintain circulation of money already in the economy.
Government injects money into the economy to provide monetary benefit to those whose finances are not healthy. Extended unemployment did not help workers. Jobs programs do not benefit those who are employed. The portion of the population most affected by recession is where government focuses attention to speed a recovery.
Deja vu. The topic of the seeded Op/Ed written by Dr. Krugman is politics, not infrastructure. Paul Krugman used infrastructure as a vehicle to deliver a political message. And Krugman uses the same sorts of rhetoric as does political government when infrastructure is vehicle for delivering a political message. The politics of infrastructure are obsolete.
We're talking past each other. Let's give it up.
Trump stormed out of a meeting on infrastructure
But, but, but, his two lapdogs (Sanders and Conaway) deny any TT happened.
Those two would drink his bathwater if he told them to.
I somewhat disagree with 'the premise' that the Trump tantrum somehow got the dems out of a trap.
My observations in these many things, large and small, that are unfolding everyday on a myriad of subjects concerning traps----Is the only one setting the traps are the Trump himself and he fails to realize that the traps set by him will end up being used against him.
Go to the 1:18 mark.
Okay, wait a minute .. as I may be confused about complex public-private partnership? Is that not what the former administration did with the 'shovel ready' jobs? Montana accepted the money, only to find out that Montana contractors were not part of the equation .. NO bid contracts were used - in fact, the money went to a private construction company from California to build a Montana border station north of White Fish .. when contractors in Montana had done said builds before...
In addition .. it was public land bridges that the money was ear marked for .. not highway bridges. Don't get me wrong Montanans love their public land, the back country and access to it .. but only a small amount of the stimulus money actually went into 'our' economy..
Here is the definition of Public Private Partnership:
Goods or services would be the building of a border station .. would it not?
The devil is in the details.
I don't know those details, but from what I've read, the primary effect of the Trump proposition would be to transfer ownership of infrastructure that is currently publicly-owned, to private ownership.
Aww okay .. so it would be along the lines of Candle Stick Park becoming QUALCOMM Stadium - except it would be things like the Brooklynn bridge that would become privately owned?
Do not know why somethings are just not making sense to me … thanks for answering questions
That's what I've read.
Thanks Bob .. I have booked marked some articles to dive into when I am done in the garden ...
Have a sweet day...