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.

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13 thoughts on “The Blank Check Rant

  1. It’s a good rant. My wife is tired of hearing it from me so I tried it on my sister and her husband recently. Unfortunately I usually hit a wall when I’m told, “Well, I remember someone telling me something they learned about inflation in their college economics class once, and those professors can’t be wrong!!!”

    Empires throughout history have leaned on educational institutions (be it a light or heavy lean) to ensure the lessons learned are not antithetical to the empire itself. Why would the richest, most powerful civilization in the history of the world be any different?

  2. A psychologist told me the other day. Another strategy for changing the world, that is different from repetitions, is it just say it once. How does this work?

    She said oftentimes if you say something once to someone, they then often repeat it back as if it was their own idea. I would say maybe you have accomplished more changing minds if they think they were the genius who thought it up.

  3. “We capitalists like our seniors blind, deaf, and with dentures!” This line caused my in-laws to wonder what I was laughing about across the house.

    More soberly, after reading a lot of these pieces touching on the faith in the dollar, it strikes me as ironic that the one thing that might convince many Americans who have few dollars to lose faith is if they and their peers are admitted to the privileged “Beneficiaries of Socialism” club.

    Before the GFC we had the S&L crisis, which only taught the wrong people that the government would bail them out from crisis of their own making that devastated the lives of millions. Faith in the dollar could survive that. I wonder if it can survive a blank check that benefits ordinary people?

  4. Amen. It’s becoming clearer by the day that in the current environment, messaging trumps both policies and backroom political maneuvering. The Democrats continue to play checkers by the appropriate rules while the GOP flips the board and runs circles around them in the messaging department despite a near absence of policy proposals other than fiscal rectitude (except for tax cuts for corporations and wealthy citizens), voter suppression and heading off any sort of gun regulation or police reform and liberalizing of abortion.

    As a Democrat, I have grown weary of decorum and working the traditional channels, and thus feel strongly that a strong injection of new blood is needed to shore up the likes of Pelosi and Schumer. We need more flamethrowers like AOC or even Elizabeth Warren, yet they seem disproportionately subject to dismissal or at least quieting by their own party when it seems like they’ve never been more needed. Sometimes I even wonder if the DNC is a branch of the GOP.

    1. You still wonder about the DNC being a branch of the GOP? I thought that question was settled ages ago.

      Ever since the Republicans discovered the power of media demogoguery to wage a scorched-earth war on the American mind, rather than respond with solutions or progress, the Democrats have been accommodating, vying to see who does the best Ronald Reagan impression. Obama, tarred and feathered as a “Socialist”, openly referred to himself as “in terms of policy, a mid-80s Republican” (look it up, you can hear it come from his own mouth in 2012 on YouTube) and the only thing surprising about it at the time was his honesty.

  5. I mean this outside of the box thinking but, you’re not wrong H. We control the global sovereign currency and we can print or not print as much as we want. Limits on resources literally don’t exist in a green economy. Anyone worried about using too much sunshine for their plants probably also believes there’s a limit on the amount of data that your ISP can supply you with and thus that’s why data plan caps make sense. I think the issue a Bernie Sanders confronts is he’s trying to justify a plan to people who expect budgets and that things should have costs and debts associated with them. If he goes out there and says “I want a blank check budget to fix this place” everyone’s gonna go on the “Crazy Bernie” bandwagon again and just laugh him out of the room. Because let’s be honest, people want to fix all of these problems and they don’t believe in government but they are also largely all cult members in whatever political ideology they have decided is correct. Does a right winger care more about solving problems or sticking it to the Libs? I think we all sadly know the answer to that as well, Centrist Democrats are no better in that regard either. The far left are the sanest people in the room and yet most of their countrymen think they go too far. And this is where politics has completely failed us as a people, we are more interested in politics than we are survival and being right than being healthy and safe. All of this crap is meaningless which might explain why so many people are empty shells of humans trying to emulate other humans they view as successful to hopefully achieve acceptance by the other empty shell phony’s pretending to have life figured out as well as happiness. I don’t know that I personally qualify as an introvert, but I certainly don’t agree with the majority of the humans that occupy land near me or airwaves transmitted to me. I do like to socialize with people who use their brains and are open minded but they seem few and far between. I’ve often wondered if this all a function of Americanism or Humanism and maybe it’s just that I was never meant to fit in with either.

  6. Felt like I’d written this; man, who doesn’t love confirmation bias? Quarterly psilocybin is the ONLY way humanity might get through it all. I’m deadly serious. Without such recurring wake-up calls, we’re the proverbial frogs in slowly heating water. Ancient cultures understood this; we have lost the plot and descended into collective, real-time, 24/7 madness, seemingly unconnected to our substrate.

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