“Well, Joe Manchin wasn’t intent on completely destroying Joe Biden’s economic agenda after all. After the bipartisan CHIPS Act passed, the recalcitrant West Virginia senator immediately announced that he was open to a reconciliation bill.”
I think this is unfair to Manchin. While Manchin’s first outburst over BBB seemed genuine (and somewhat sympathetic, given the fact that he made his wishes clear at the start of negotiations, and was dragged through the mud by lefties with no concept of how difficult winning is in West Virginia), I think it is quite likely that the second time Manchin “killed” the Democrat’s reconciliation hopes was a feint.
Mitch McConnell made it quite clear that Democrats would have to choose between CHIPS and a BBB-style reconciliation bill. He only assented to CHIPS being bipartisan because Manchin baited him into believing that the reconciliation bill was dead.
This is why Manchin announced the deal as soon as CHIPS was passed, and not before, and is a masterclass in political gamesmanship. Having a maverick on your side can be frustrating, but it is also a useful tool. Democrats could stand to be more grateful towards the Senator who wins in 70-30 Trump country.
Largely agree on the overall points here. Another relatively more minor change I'd love is for the EV incentives to extend beyond EVs to other forms of mobility, and notably eBikes. They're really starting to catch on, even in car-centric areas, and with even just a fraction of the help we're giving people to buy EVs, could accelerate that much faster.
"Government investment is inflationary in the short term and deflationary in the medium term"
The unspoken assumptions behind this statement speak volumes about Noah's worldview. Government investment in needed infrastructure can be deflationary. If there are no ports, and no private parties will build port facilities, government investment in building ports can indeed be deflationary by reducing costs for trade. But we already have quite a lot of ports, and I doubt we need more. If there are no decent roads connecting the country, government investment in roads can be deflationary by reducing costs of trade and transportation. But we already have a lot of roads, and returns from more roads will be marginal at best. If rivers move large amounts of potential energy that is not tapped, while posing flood risks, water projects can provide cheap electricity and flood control that protects property and lives. But, we've already done about all the water projects that are worth doing, and a lot of small projects are being dismantled to return rivers to more natural states.
But, most government "investment" is really just funneling large amounts of money to interest groups that are part of a political coalition. Obama's "investment" in education was really about giving colleges and education unions more money for more salaries and union members. Biden's "investment" in green energy is really about directing lots of money to the various companies and organizations that make "green" equipment. No amount of government subsidy will change the basic economics of energy: green energy is more expensive than conventional, and increasing the share of energy provided by "green" sources comes at higher and higher costs. It's true that massive subsidies for solar and wind energy will likely lead to more construction of solar and wind energy facilities. After all, we've seen this approach in Germany, Spain, and the UK as well as in the US. None of this has led to lower energy costs.
I must confess to being somewhat bemused at the way people in Noah's area treat "dealing with climate change". A few years ago, stopping warming at 1.5C was absolutely crucial to maintaining an livable world, and the only way to achieve this was by eliminating all greenhouse gas emissions by 2030. Now, the goal is to get to Net Zero by 2050, even though there's no strategy for doing so. Practically, most targets seem to aim for reductions of 10% or 20% in 10 years, which are actually pretty aggressive targets. But, if we need 100% reduction to avert catastrophe, why claim success at spending huge amounts of money to get only a fraction of what we need?
It seems to me that, for most people pursuing climate change strategies, the goal isn't to prevent climate change, or to mitigate the effects of climate change, but to pursue an anti-industrial, anti-consumer, anti-market agenda more reminiscent of 1960s hippies than anything else.
You did not mention the painfully obvious that there’s a trade off between unemployment and inflation.
We are having a very weird recession: the unemployment is extremely low at 3.6%, “help wanted” signs all over the town. And you and me are paying for their wages. You can’t completely blame inflation on Putin’s invasion on Ukraine or China’s “zero Covid” policy.
Both Trump and Biden administrations seem to prioritize and actively brag about having low unemployment. This really make me wonder, does America in 2022 still have enough social cohesion to handle, say, 10% unemployment without some prolonged nationwide riot? At least that’s my theory, a bit conspiratorial maybe, on the bipartisan obsession over low unemployment rate?
Maybe it’s a good time to deliberately make the 10% unemployment happen, just like a painful exercise that is ultimately good to the nation's health? . One good effect of the Great Depression is that US exposed and weeded out it’s extremist elements (Nazis, Communists) and maybe that laid foundation for its ultimate victory in WWII?
I like the deal overall, from both a politics and policy standpoint. It pushes us in the general direction of fighting costs, and not in the "dumb" way of disincentivizing consumption, but in the "smart" way of increasing supply. It's Supply-Side-Progressivism writ large.
But I am curious about how these individual provisions will hash out in terms of "unintended consequences". The stuff about drug price rebates hints that there are a number of kludge-y or kludge-ish policies that could end up undermining long-term reform.
Also of note is that it doesn't seem to include increasing the cap on med school slots, which could be the single biggest policy to reduce health care costs.
Love the 15% minimum corporate tax! I'm all for paid-for subsidies and maybe this will help rebuild trust (people hate seeing Amazon not pay taxes). I hope they will do the >$400k tax increases to do housing and other investments in their lame duck session. It's a real shame they didn't start out this way. They could have accomplished so much more. 2021 is going to go down as a historic political disaster and a complete misread of their mandate from the 2020 election.
One of the reasons Manchin called off BBB was its size causing inflation. This latest is quoted at 360 billion. I thought BBB was coming in at 3 trillion. So he has certainly gained there.
The Act could be called the Larry Summers' Redemption Act -- he has some moves to correct. Then, better than "telling" people to live differently, how about teaching them better, more fair, ways to live, K-16? Just think, it would circumvent those "ruinous costs", save the planet, and give people a better basis for decision-making than they get now, either from the markets or education! It's called Human Ecology.
Here’s *my* problem with all this concern specifically about inflation. (Not exactly targeted at you, Noah, but bear with me)
This round of inflation has had so many drivers, it’s been dizzying. But it hasn’t actually changed any of the fundamentals of the world or national economies. Once the drivers go away and the supply shocks lessen, inflation might disappear on paper, but we’re still going to be stuck with a general cost crisis.
If the war stops, COVID subsides, and China stabilizes by 2025, we’re basically just back to 2019’s baseline, with the only notable exception that the cost crisis actually got WORSE in the intervening years.
It’s entirely possible that none of those things happen, and the invasion represented the cementing of a regime shift in global economic trends that was kicked off by COVID. But either way, the answer for improving the future is to fix the cost crisis.
So I’m happy to brand it all as inflation-fighting right now if that’s what passes supply-side-progressive legislation, but we can’t let the branding exercise take our eyes off the ball just because inflation is a political third rail. Fighting inflation is a valuable long-term political goal only insofar as it keeps Mouthbreathing-Americans from doing stupid @%&*ing shit that worsens our long-running domestic political crisis (dysfunction+authoritarianism) or the global crisis of the Second Cold War.
> The best solution to this is to have a national health insurer that can negotiate down prices for every health service, the way Medicare currently negotiates down prices for the subset of services it buys. Another possible solution is price controls for health services, like those employed in Japan.
An obvious way this could fail (as it has in parts of Europe) is if the government sets the price controls/'negotiated prices' substantially lower than the international market rate (or, perhaps, just doesn't adjust them for inflation), causing many doctors to emigrate to somewhere with a higher salary and leaving the US with a large undersupply of doctors.
“Well, Joe Manchin wasn’t intent on completely destroying Joe Biden’s economic agenda after all. After the bipartisan CHIPS Act passed, the recalcitrant West Virginia senator immediately announced that he was open to a reconciliation bill.”
I think this is unfair to Manchin. While Manchin’s first outburst over BBB seemed genuine (and somewhat sympathetic, given the fact that he made his wishes clear at the start of negotiations, and was dragged through the mud by lefties with no concept of how difficult winning is in West Virginia), I think it is quite likely that the second time Manchin “killed” the Democrat’s reconciliation hopes was a feint.
Mitch McConnell made it quite clear that Democrats would have to choose between CHIPS and a BBB-style reconciliation bill. He only assented to CHIPS being bipartisan because Manchin baited him into believing that the reconciliation bill was dead.
This is why Manchin announced the deal as soon as CHIPS was passed, and not before, and is a masterclass in political gamesmanship. Having a maverick on your side can be frustrating, but it is also a useful tool. Democrats could stand to be more grateful towards the Senator who wins in 70-30 Trump country.
Gosh.
1. Good … but still has to pass
2. We need the housing elements!!
Largely agree on the overall points here. Another relatively more minor change I'd love is for the EV incentives to extend beyond EVs to other forms of mobility, and notably eBikes. They're really starting to catch on, even in car-centric areas, and with even just a fraction of the help we're giving people to buy EVs, could accelerate that much faster.
I'm not a representative conservative...but I really really really like this bill.
Almost everything in it is reasonable, and I think it will appeal to a lot of the middle-of-the-road voters.
Dems should be thanking Manchin for saving the progressives from themselves.
"Government investment is inflationary in the short term and deflationary in the medium term"
The unspoken assumptions behind this statement speak volumes about Noah's worldview. Government investment in needed infrastructure can be deflationary. If there are no ports, and no private parties will build port facilities, government investment in building ports can indeed be deflationary by reducing costs for trade. But we already have quite a lot of ports, and I doubt we need more. If there are no decent roads connecting the country, government investment in roads can be deflationary by reducing costs of trade and transportation. But we already have a lot of roads, and returns from more roads will be marginal at best. If rivers move large amounts of potential energy that is not tapped, while posing flood risks, water projects can provide cheap electricity and flood control that protects property and lives. But, we've already done about all the water projects that are worth doing, and a lot of small projects are being dismantled to return rivers to more natural states.
But, most government "investment" is really just funneling large amounts of money to interest groups that are part of a political coalition. Obama's "investment" in education was really about giving colleges and education unions more money for more salaries and union members. Biden's "investment" in green energy is really about directing lots of money to the various companies and organizations that make "green" equipment. No amount of government subsidy will change the basic economics of energy: green energy is more expensive than conventional, and increasing the share of energy provided by "green" sources comes at higher and higher costs. It's true that massive subsidies for solar and wind energy will likely lead to more construction of solar and wind energy facilities. After all, we've seen this approach in Germany, Spain, and the UK as well as in the US. None of this has led to lower energy costs.
I must confess to being somewhat bemused at the way people in Noah's area treat "dealing with climate change". A few years ago, stopping warming at 1.5C was absolutely crucial to maintaining an livable world, and the only way to achieve this was by eliminating all greenhouse gas emissions by 2030. Now, the goal is to get to Net Zero by 2050, even though there's no strategy for doing so. Practically, most targets seem to aim for reductions of 10% or 20% in 10 years, which are actually pretty aggressive targets. But, if we need 100% reduction to avert catastrophe, why claim success at spending huge amounts of money to get only a fraction of what we need?
It seems to me that, for most people pursuing climate change strategies, the goal isn't to prevent climate change, or to mitigate the effects of climate change, but to pursue an anti-industrial, anti-consumer, anti-market agenda more reminiscent of 1960s hippies than anything else.
You did not mention the painfully obvious that there’s a trade off between unemployment and inflation.
We are having a very weird recession: the unemployment is extremely low at 3.6%, “help wanted” signs all over the town. And you and me are paying for their wages. You can’t completely blame inflation on Putin’s invasion on Ukraine or China’s “zero Covid” policy.
Both Trump and Biden administrations seem to prioritize and actively brag about having low unemployment. This really make me wonder, does America in 2022 still have enough social cohesion to handle, say, 10% unemployment without some prolonged nationwide riot? At least that’s my theory, a bit conspiratorial maybe, on the bipartisan obsession over low unemployment rate?
Maybe it’s a good time to deliberately make the 10% unemployment happen, just like a painful exercise that is ultimately good to the nation's health? . One good effect of the Great Depression is that US exposed and weeded out it’s extremist elements (Nazis, Communists) and maybe that laid foundation for its ultimate victory in WWII?
I like the deal overall, from both a politics and policy standpoint. It pushes us in the general direction of fighting costs, and not in the "dumb" way of disincentivizing consumption, but in the "smart" way of increasing supply. It's Supply-Side-Progressivism writ large.
But I am curious about how these individual provisions will hash out in terms of "unintended consequences". The stuff about drug price rebates hints that there are a number of kludge-y or kludge-ish policies that could end up undermining long-term reform.
Also of note is that it doesn't seem to include increasing the cap on med school slots, which could be the single biggest policy to reduce health care costs.
Noah, are you sure that "reform[ing] the way permits are granted for new projects" is in the Inflation Reduction Act? I've read elsewhere (e.g. https://www.utilitydive.com/news/manchin-backs-bill-climate-spending-hydrogen/628303/) that this was a mere agreement by Schumer to advance unspecified legislation on that in the near future.
Love the 15% minimum corporate tax! I'm all for paid-for subsidies and maybe this will help rebuild trust (people hate seeing Amazon not pay taxes). I hope they will do the >$400k tax increases to do housing and other investments in their lame duck session. It's a real shame they didn't start out this way. They could have accomplished so much more. 2021 is going to go down as a historic political disaster and a complete misread of their mandate from the 2020 election.
One of the reasons Manchin called off BBB was its size causing inflation. This latest is quoted at 360 billion. I thought BBB was coming in at 3 trillion. So he has certainly gained there.
Spending is not investing no matter how you spin it
https://chrishedges.substack.com/p/the-dawn-of-the-apocalypse
what do you think of this guy?
The Act could be called the Larry Summers' Redemption Act -- he has some moves to correct. Then, better than "telling" people to live differently, how about teaching them better, more fair, ways to live, K-16? Just think, it would circumvent those "ruinous costs", save the planet, and give people a better basis for decision-making than they get now, either from the markets or education! It's called Human Ecology.
Here’s *my* problem with all this concern specifically about inflation. (Not exactly targeted at you, Noah, but bear with me)
This round of inflation has had so many drivers, it’s been dizzying. But it hasn’t actually changed any of the fundamentals of the world or national economies. Once the drivers go away and the supply shocks lessen, inflation might disappear on paper, but we’re still going to be stuck with a general cost crisis.
If the war stops, COVID subsides, and China stabilizes by 2025, we’re basically just back to 2019’s baseline, with the only notable exception that the cost crisis actually got WORSE in the intervening years.
It’s entirely possible that none of those things happen, and the invasion represented the cementing of a regime shift in global economic trends that was kicked off by COVID. But either way, the answer for improving the future is to fix the cost crisis.
So I’m happy to brand it all as inflation-fighting right now if that’s what passes supply-side-progressive legislation, but we can’t let the branding exercise take our eyes off the ball just because inflation is a political third rail. Fighting inflation is a valuable long-term political goal only insofar as it keeps Mouthbreathing-Americans from doing stupid @%&*ing shit that worsens our long-running domestic political crisis (dysfunction+authoritarianism) or the global crisis of the Second Cold War.
What do you mean “defeat Russia”? Defeat them militarily?
> The best solution to this is to have a national health insurer that can negotiate down prices for every health service, the way Medicare currently negotiates down prices for the subset of services it buys. Another possible solution is price controls for health services, like those employed in Japan.
An obvious way this could fail (as it has in parts of Europe) is if the government sets the price controls/'negotiated prices' substantially lower than the international market rate (or, perhaps, just doesn't adjust them for inflation), causing many doctors to emigrate to somewhere with a higher salary and leaving the US with a large undersupply of doctors.