14 thoughts on “A Bold Proposal”

  1. I have a better idea:

    Congress should not raise the debt ceiling. PERIOD. AT ALL.

    In fact, Congress should start trimming the budget and reducing the debt ceiling.

      1. Hell, lowering growth of that debt to below inflation rate would do. Biden has helped us a lot with that.

        2. I think you just answered that question along with the question on another thread on whether Modern Monetary Theory (MMT) is dead.

          In our system based on fiat currency and fractional-reserve-banking where debt is money and money is debt, we are stuck with the system that MMT describes, whether or not we believe some of its tenets.

          Mid 2021, former Treasury Secretary and Harvard University president Lawrence Summers was warning that the “one more round of COVID relief is going to jump-start inflation”, and sure enough it did.

          Dr. Summers has this habit of speaking inconvenient truths. He was as much as saying that the rounds of COVID relief engineered by Treasury Secretary Steven Mnuchin were both necessary to prevent economic collapse as well as non-inflationary, but the last round was both unnecessary, and it was going to kindle inflation because it was in excess of what was necessary.

          Laurence Summers “believes” in MMT, and all of his predictions are consistent with MMT. The problem is not that MMT is wrong but that the powers-that-be only believe in it when convenient, and ignore it when it suits their aims.

          So yes, there are fallouts to MMT. One couldn’t give Mr. Trump and Mr. Mnuchin credit for Saving the World from Economic Collapse, so there had to be one more round of COVID relief/stimulus, with Mr. Biden yelling at us about its necessity, as if him yelling into the microphone makes it so.

          There are other fallouts to it. On the “supply side”, creating money by expanding debt at effectively zero or even negative interest rates, taking inflation into account, has the effect of misallocating real, physical resources, whether it is Mr. Musks’s resource-intensive activity of building out a production capacity for electric cars or even,yes, the oil and gas fracking industry that were drilling beyond what was economically supported by falling oil and gas prices, no matter how beneficial these are to the economy.

          The demand-side fallout is something that Herbert Hoover worried about and was excoriated for, namely that direct cash payments to consumers and workers would discourage work. Herbert Hoover went down in history as a meanie who wanted the common man to shiver standing in bread and soup lines, but his concerns are prophetic regarding current-day labor shortages in the wake of the COVID relief payments.

          I don’t have the answers apart from “our political and governmental financial leaders (cough, Secretary Yellin, cough) should exercise more discipline, but the temptation to “tax and spend, elect and elect” runs strong in our MMT economy, and it also was a factor back when we had a gold standard. Maybe MMT makes the governmental (mis)allocation of resources seem less painful and hence more likely, but how do we impose financial discipline in our current poltical-economic climate? Without people calling you Herbert Hoover?

    2. Flight-ER-Doc for Speaker!

      I will throw out a hybrid. If supposedly the total dollar value of the debt isn’t as important as its ratio to GDP; then set a ratio, one that actuaries can show is usually reasonable for an A credit rating and let that raise the debt ceiling. I much prefer the Dave Ramsey no debt philosophy, but I understand used properly, debt isn’t always a bad thing.

      In the meantime, I would Don Surber today. 2 months in 1855 to elect a Speaker of the House and no other legislation happens until that happens. I’m failing to see the downside. After all, since the Omnibus already funded the 87,000 IRS agents, and none of them just because of a House vote, no time is being lost at all.

    4. Indeed, it sounds like they’re promising to spend like drunk sailors once they get that Republican president!

  2. Congress hasn’t bothered to actually complete the budgetary process in years. The result is a series of continuing resolutions and omnibus porkfests. If they can’t complete one of their most important responsibilities, I have no faith and little interest in anything else they say they’re going to do.

    1. This is the result of going to a full-time Congress. Everybody’s so busy making up useless laws nobody has time to do the jobs the Constitution explicitly lays on the Legislative Branch.

      1. They aren’t even passing much legislation that creates new laws, and basically that’s a good thing. Passing a budget along with the appropriations legislation is one of the most important functions of Congress. Ideally, the budget would be in place before the start of a new fiscal year. I may be wrong, but I think the last actual budget was passed sometime around 2008. I think the last time a budget was in place before the start of a new fiscal year was early in the Reagan administration.

        For a long time, it seems Congress is saturated with investigatory hearings like the Jan 6 Committee. Hearings have their place, but they shouldn’t be the only thing they do.

  3. If the Speaker indecision isn’t resolved tomorrow, at least Congress can’t make a big deal out of “J6”. In a sane world, that would have been the whole intent of the 20 Republican House never-McCarthy renegades….

    1. What happened was a reprise of Jan 6, 2020.

      Only this time, it was coming from inside the House.

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