"did I mention that deficits attract foreign capital Inflow which pushes up the value of the dollar and does no favors for manufacturing output that Noah likes."
Thomas, I mentioned this question on one of your comments on a Noah post some days ago but I don't think you saw it.
Your macro is far better than mine. How much do you think this is really happening to the USD today? Macro theory says that large trade imbalances and large deficits should both cause a currency to appreciate, and yet our trade deficit has run about 3% annually and our govt deficit has tripled in the last 10 years with little effect on our currrency.
The preppers all think we're standing on an economic ice shelf that's ready to collapse, but my grandfather thought the same thing from 1975 until he died 20 years later. Is the theory wrong? Am I wrong about what is says? Is it just a case of "in the long run we're all dead"? Are we being insulated by our reserve currency status? By something else?
I'd suppose that with a good model you would be about to pickup the defects => appreciation, but macro modeling is not my thing. I am making a theoretical, ceteris paribus statement. I do know that in general equilibrium models, trade restrictions lead to appreciation (NT prices rise more than non-restricted goods, which is sort of the same thing.)
Unfortunately a carbon tax seems to be completely impossible to accomplish, as a matter of politics. I completely agree that if you want to reduce the deficit (which we should) a carbon tax is a better choice in theory than almost anything else. I am a metaphorical card-carrying member of the Pigou Club. But AFAIK everywhere that has tried to impose a reasonable version -- high enough to actually make a difference -- has seen the public revolt. (The notable examples I know of are Australia, where rejection of the carbon tax was part of what swept in a truly terrible rightist government, and Washington state in the US.)
Some kind of cap-and-trade (either annual auctions, or permanent tradable permits that have a small annual fee attached, and that "shrink" over time as the cap comes down) seems like it might more plausibly be accomplished, and arguably is a better idea, since it allows the actual price to float to whatever level will accomplish the appropriate quantity reduction, and science is better equipped to estimate the relationship between the quantity of emissions and impact on climate, than to guess at what price will be necessary to accomplish a given amount of reductions. Maybe use the money for a mix of deficit reduction and rebates, to buy public support. (California does an annual climate rebate, and while it doesn't help with folks who are actively climate denialists, it does seem to help with the broad middle of low-information voters, and it seems like getting low-info people to broadly agree that climate change _is a thing_ helps make GOP deniers look crazy, hence helping to maintain California's Dem super-majority. Of course if the GOP wanted to embrace folks like Steve Poizner and move back to the center, I'm sure they could significantly cut into that super-majority. But so far the whole party has just kept driving out its moderates, marching ever farther off into Cloud Cuckoo Land.)
I agree as a politics first strategy. I think the path is to get the environmentalist community behind it. And a carbon tax at a state level really does not make much sense. Another advantage of the "environmentalists first" approach is that it stops them from proposing things that are _more_ costly than CO2 taxation. Reform IRA to mimic a carbon tax.
The reality is tax hikes are politically unpopular at the moment, And the Republican party has completely abdicated its role as being a fiscal hawk the way it did in the 90s that forced to compromise. I imagine that we will have to get serious with the deficit. The next few years interest payments were crowd out other spending.
The reality is the United States to expand the tax base and that means raising taxes on most people. Since I don’t think that’s going to happen directly, it’ll probably manifest itself in stealth taxes And letting the tax cuts expire in 2025 and not necessarily renewing them.
The same can be said about immigration. The reality is there has been an attempt for comprehensive reform for the last 20 years and we’ve never gotten really close. Immigration is too much of a salient issue and a real reform can only happen if Americans feel that the immigration system is working, and there is a bipartisan coalition (usually business Republicans).
I totally agree -- the US has always needed immigrants.
The ones to "suggestively export - like tha MAGA is screaming" -- are those that - for whatever reason - have been drinking the Trump / MAGA / "...make America great again..." cool-aid.
The US is, and also has been a magnet for people that want to do better.
But now there is a bunch of spoiled brat "retro-bates" - that don't care what their families have giving them.
And they, in their self-centered crap - could sink this Country in this next election: - even though anyone that works toward overthrowing the existing Government
Hi Thomas -- that was exactly the point that I wanted you to come up with. Also -- my position is that we all come from immigrants here in the US . It's just wrong to take the baseless position that because "I've got mine" / you can't come in and get yours". --
John Mauldin did a few articles on trying to solve the deficit by combinations of higher taxes and higher productivity/growth and nothing really worked out--its too big ($250,000 per working taxpayer). That's why no one talks about it. The Fed would like to inflate our way out of it but that is disastrous to the middle and lower classes. What's left is defaulting on the debt which is equally disastrous.
Wrong way to think about it. We should not be focused on paying off or not paying off the debt, but optimizing/doing the best one can year my year to keep deficits =< Σ(expenditures with NPV>0)
Hi Thomas, a couple of questions that I'm curious as to what your take is:
Immigration -- where to "you" make the distinction between an immigrant today Native Americans - because besides them -- all of us here are immigrants -- and to that -- the new ones take the jobs that no one else will.
Second: -- where does political reality come in -- because everything accomplished is a compromise - requiring two parties - which the Republicans have been a party do a scant few times in the last almost 4 years.
I'm not sure understand the first question. I agree that low skill immigrants "take jobs that no one else will do" but that does not (except in a few isolated cases) reduce anyone else's wages. immigrants expand both supply and demand.
Politically I think Democrat's should keep holding out the offer of better border control as part of a comprehensive merit-based system and in the meantime (Lord knows how long THAT will take) push the H1B and student visa system to their legal limits to bring in more high-earning immigrants. And keep talking about the economic benefits of more immigrants
"did I mention that deficits attract foreign capital Inflow which pushes up the value of the dollar and does no favors for manufacturing output that Noah likes."
Thomas, I mentioned this question on one of your comments on a Noah post some days ago but I don't think you saw it.
Your macro is far better than mine. How much do you think this is really happening to the USD today? Macro theory says that large trade imbalances and large deficits should both cause a currency to appreciate, and yet our trade deficit has run about 3% annually and our govt deficit has tripled in the last 10 years with little effect on our currrency.
The preppers all think we're standing on an economic ice shelf that's ready to collapse, but my grandfather thought the same thing from 1975 until he died 20 years later. Is the theory wrong? Am I wrong about what is says? Is it just a case of "in the long run we're all dead"? Are we being insulated by our reserve currency status? By something else?
I'd suppose that with a good model you would be about to pickup the defects => appreciation, but macro modeling is not my thing. I am making a theoretical, ceteris paribus statement. I do know that in general equilibrium models, trade restrictions lead to appreciation (NT prices rise more than non-restricted goods, which is sort of the same thing.)
Also you always hear a lot of moaning about capital outflow from LDCs when the Fed raises interest rates.
Unfortunately a carbon tax seems to be completely impossible to accomplish, as a matter of politics. I completely agree that if you want to reduce the deficit (which we should) a carbon tax is a better choice in theory than almost anything else. I am a metaphorical card-carrying member of the Pigou Club. But AFAIK everywhere that has tried to impose a reasonable version -- high enough to actually make a difference -- has seen the public revolt. (The notable examples I know of are Australia, where rejection of the carbon tax was part of what swept in a truly terrible rightist government, and Washington state in the US.)
Some kind of cap-and-trade (either annual auctions, or permanent tradable permits that have a small annual fee attached, and that "shrink" over time as the cap comes down) seems like it might more plausibly be accomplished, and arguably is a better idea, since it allows the actual price to float to whatever level will accomplish the appropriate quantity reduction, and science is better equipped to estimate the relationship between the quantity of emissions and impact on climate, than to guess at what price will be necessary to accomplish a given amount of reductions. Maybe use the money for a mix of deficit reduction and rebates, to buy public support. (California does an annual climate rebate, and while it doesn't help with folks who are actively climate denialists, it does seem to help with the broad middle of low-information voters, and it seems like getting low-info people to broadly agree that climate change _is a thing_ helps make GOP deniers look crazy, hence helping to maintain California's Dem super-majority. Of course if the GOP wanted to embrace folks like Steve Poizner and move back to the center, I'm sure they could significantly cut into that super-majority. But so far the whole party has just kept driving out its moderates, marching ever farther off into Cloud Cuckoo Land.)
I agree as a politics first strategy. I think the path is to get the environmentalist community behind it. And a carbon tax at a state level really does not make much sense. Another advantage of the "environmentalists first" approach is that it stops them from proposing things that are _more_ costly than CO2 taxation. Reform IRA to mimic a carbon tax.
The reality is tax hikes are politically unpopular at the moment, And the Republican party has completely abdicated its role as being a fiscal hawk the way it did in the 90s that forced to compromise. I imagine that we will have to get serious with the deficit. The next few years interest payments were crowd out other spending.
The reality is the United States to expand the tax base and that means raising taxes on most people. Since I don’t think that’s going to happen directly, it’ll probably manifest itself in stealth taxes And letting the tax cuts expire in 2025 and not necessarily renewing them.
The same can be said about immigration. The reality is there has been an attempt for comprehensive reform for the last 20 years and we’ve never gotten really close. Immigration is too much of a salient issue and a real reform can only happen if Americans feel that the immigration system is working, and there is a bipartisan coalition (usually business Republicans).
to continue -- is a traitor.
There is no difference between a handling a firearm - or a "vote" in overthrowing a Government.
I totally agree -- the US has always needed immigrants.
The ones to "suggestively export - like tha MAGA is screaming" -- are those that - for whatever reason - have been drinking the Trump / MAGA / "...make America great again..." cool-aid.
The US is, and also has been a magnet for people that want to do better.
But now there is a bunch of spoiled brat "retro-bates" - that don't care what their families have giving them.
And they, in their self-centered crap - could sink this Country in this next election: - even though anyone that works toward overthrowing the existing Government
Hi Thomas -- that was exactly the point that I wanted you to come up with. Also -- my position is that we all come from immigrants here in the US . It's just wrong to take the baseless position that because "I've got mine" / you can't come in and get yours". --
As a moral position I agree, but my point is that immigrants help non-immigrants get "more of theirs" too. That's the point of non-zero sum thinking
John Mauldin did a few articles on trying to solve the deficit by combinations of higher taxes and higher productivity/growth and nothing really worked out--its too big ($250,000 per working taxpayer). That's why no one talks about it. The Fed would like to inflate our way out of it but that is disastrous to the middle and lower classes. What's left is defaulting on the debt which is equally disastrous.
Wrong way to think about it. We should not be focused on paying off or not paying off the debt, but optimizing/doing the best one can year my year to keep deficits =< Σ(expenditures with NPV>0)
"The Fed would like to inflate" ???
Hi Thomas, a couple of questions that I'm curious as to what your take is:
Immigration -- where to "you" make the distinction between an immigrant today Native Americans - because besides them -- all of us here are immigrants -- and to that -- the new ones take the jobs that no one else will.
Second: -- where does political reality come in -- because everything accomplished is a compromise - requiring two parties - which the Republicans have been a party do a scant few times in the last almost 4 years.
What say you?
I'm not sure understand the first question. I agree that low skill immigrants "take jobs that no one else will do" but that does not (except in a few isolated cases) reduce anyone else's wages. immigrants expand both supply and demand.
Politically I think Democrat's should keep holding out the offer of better border control as part of a comprehensive merit-based system and in the meantime (Lord knows how long THAT will take) push the H1B and student visa system to their legal limits to bring in more high-earning immigrants. And keep talking about the economic benefits of more immigrants