The Blank Check Rant

It’s nice to see some initiative, but I’ll admit to being a bit annoyed when I read headlines about US lawmakers being “threatened” with work and “warned” that they may be compelled to legislate.

“Senators should be prepared for the possibility of working long nights, weekends, and remaining in Washington into the previously scheduled August state work period,” Chuck Schumer told his colleagues, in a Friday letter. “My intention for this work period is for the Senate to consider both the bipartisan infrastructure legislation and a budget resolution with reconciliation instructions, which is the first step for passing legislation through the reconciliation process.”

In other words, Schumer is gearing up for a legislative sprint to pass both the bipartisan infrastructure package unveiled last month and a reconciliation bill containing the rest of the White House’s economic agenda.

As a quick reminder: Lawmakers are ostensibly elected to legislate. Or, at the least, to stymie efforts on the part of the opposing party to legislate. As things currently stand in America, the party that controls the government is beholden to one recalcitrant lawmaker, hell-bent on undermining his own party’s agenda in a quixotic (and, some argue, plain dumb) effort to win at least one Republican vote before agreeing to green light bills the thrust of which he claims to agree with. That means the opposition’s “job” is already done, leaving everyone free to do absolutely nothing other than engage in petty social media quarrels and (apparently) eat spaghetti on Joe Manchin’s Potomac houseboat.

In that kind of environment, people have to be reminded to work. “Please be advised that time is of the essence and we have a lot of work to do,” Schumer said, in the same letter mentioned above.

This is a pitiful state of affairs and underscores why Americans have so little trust in their own government. That distrust feeds on itself and creates the kind of acrimony that paves the way for demagogues to seize power by selling false narratives to a justifiably disillusioned electorate.

As budget committee chair, Bernie Sanders is in charge of shepherding a package of measures aimed at addressing priorities not covered under the infrastructure plan through the Senate. He wants a $6 trillion price tag, which he reckons is “the appropriate amount of money to address the crises facing this country.”

He’s wrong. $6 trillion isn’t “appropriate.” Because it’s not even close to enough.

Sometimes I wonder if I’m the only person who steps outside of the house. I’m supposed to be the guy who lives in a bubble. And I do. But even when I venture to adjacent islands to shop, I notice myriad things that need to be addressed. A precarious boardwalk. Neglected stretches of beach in desperate need of — I don’t know, something. Public parks in the early stages of disrepair. And these are resort islands! If you’ve ever lived in a big city (or even visited one), you know you can’t turn around or walk without falling into a hole (sometimes literally).

The current political conjuncture inside the Beltway offers a chance to help ameliorate this situation, but it’s clearly not going to happen. And not just because Manchin is naive, disingenuous or both. Just read the following selected passage from a Bloomberg piece published Friday:

To succeed, the 79-year-old Vermont independent needs the votes of the entire Democratic caucus, including moderates like Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, to overcome almost certain opposition from all 50 Republicans in the chamber. It’s a task before a lawmaker known less for give-and-take compromises than for staking out far-left, unyielding positions.

With apologies to the journalist (who I imagine meant no ill will) that’s the kind of accidental propaganda that’s dooming America to also-ran status in the race with China to claim the title of 21st century global hegemon.

Bernie’s proposals are only “far-left” in the American context. As the same linked article goes on to note, “besides the [Biden] administration’s proposals for expanded tax credits for lower- and middle-income families, universal pre-kindergarten, more health care premium subsidies for Obamacare and more funding for public housing and infrastructure, Sanders wants more for climate change, electric buses and cars, improvements in the power grid and residential solar technologies.”

Forgive me, but what kind of lunatics are we? In what sense do fighting climate change, investing in electric buses and improving the power grid count as “radical,” “far-left” agenda items? Do you think “Nicolás Maduro!” when you flip on the lights in the kitchen or get in a Prius?

Bernie also wants better healthcare for seniors, including enhanced dental, vision and hearing benefits. Is that “radical” too? Are healthy teeth and working ears for the elderly things that only an unhinged, far-left ideologue would want? We capitalists like our seniors blind, deaf and with dentures!

Little wonder Bernie “declined an interview” for the linked Bloomberg piece.

I’m not arguing for a blank check. Actually, I am. I’m arguing for a blank check. May as well just put that out there.

Frankly, all the arguments against a blank check rest on highly specious rationales. MMT included. I skip straight to MMT because the other arguments are predicated on old dogma about debt and deficits, most of which is simply false. I’ve debunked “conventional wisdom” so many times in these pages that I’m weary of it by now.

How about MMT? It correctly describes what money is and how federal government finance works, but there are problems. And not the kind its critics claim for it.

MMT considers inflation and, more specifically, productive capacity, as practical constraints. “The key to responsibly spending vast sums of money lies in carefully managing the economy’s real productive limitations,” Stephanie Kelton wrote, in an April Op-Ed for The New York Times. She (verbally) illustrated the point: “Just as my son’s Lego projects are limited by the amount of bricks we have bought for him, we can’t squeeze more goods and services out of our economy once we’ve made use of all available resources.”

Yes, we can. The planet is resource constrained, but economies are usually only constrained by a lack of ingenuity which, in turn, is directly linked to research, development and education, all things the government can fund.

Consider this: Human history is, in part anyway, the story of our species “squeezing more” (to use Kelton’s language) once we’ve hit what we previously thought were resource limitations. What is economic development and progress if not that?

I suppose there’s some final limit on how much even hyper-advanced humans could extract from our giant, shared biome. But we’re not hyper-advanced. And every ostensible constraint isn’t about physical resources. Either way, it’s safe to say we’re nowhere near that final limit.

Indeed, that’s the whole point of investing in a greener future and things like biotech, AI and nanotechnology, is it not? There’s more than a little irony inherent in Progressive economists talking about exhausting “available resources,” when one of the very things Progressives are attempting to do with big spending programs is fund renewable energy initiatives because by persisting in outdated means of production, we’re bumping up against environmental constraints.

As far as inflation goes, at least some MMT economists will be the first to tell you that textbook economic models aren’t good for much. And yet, they assume (tacitly or otherwise) that we’ll be able to identify the precise moment when we’ve hit capacity constraints and thus slam on the brakes before inflation kicks in. That’s no more plausible than suggesting the Fed is capable of precisely timing rate hikes to curtail inflationary pressures.

I’ll reiterate my position on this: Nobody knows when runaway inflation kicks in for advanced economies with sufficient monetary sovereignty. It’s a confidence game that hinges on shared faith in an inherently worthless unit of account. That’s it. That faith can “live forever, or die this second,” to quote George Clooney’s “Seth,” from Quentin Tarantino’s campy, cult classic “From Dusk till Dawn.”

Of course, we know that if we try to build a billion houses out of wood in the space of nine months we’ll run out of wood in the short-term, thus driving up prices. But that’s hardly a revelation. Here’s a thought: Maybe we should invest in R&D aimed at finding a more sustainable way to build houses, instead of playing Paul Bunyan until all the trees are gone and then shrugging our shoulders: “Welp, I guess we’ve hit the speed limit. We chopped down all the trees, lumber prices have quintupled and we can’t breathe. Constraints hit. Time to tax the economy back to a sustainable speed.”

I’m either the only sane person on the planet, or I’m completely insane. But if sane is the way things work right now, I’d rather be insane.