USA 2020 Elections: Thread

[grarpamp]

Biden Democrats are a FRAUD upon your wallet.
Biden Democrats are BRIBING VOTERS.



Obama's Chief Economic Advisor Blasts Biden's "Reckless" Student Debt Bailout

https://twitter.com/jasonfurman/status/1562503985529233410

Consider the source...

Jason Furman is an American economist and professor at Harvard
University's John F. Kennedy School of Government and a Senior Fellow
at the Peterson Institute for International Economics.

On June 10, 2013, Furman was named by President Barack Obama as chair
of the Council of Economic Advisers.

Ok so having explained the "who", here is the "what"...

    Pouring roughly half trillion dollars of gasoline on the
inflationary fire that is already burning is reckless. Doing it while
going well beyond one campaign promise ($10K of student loan relief)
and breaking another (all proposals paid for) is even worse.
    — Jason Furman (@jasonfurman) August 24, 2022

Furman's thread continues...

    The White House fact sheet has sympathetic examples about a
construction worker making $38K and a married nurse making $77,000 a
year.

    But then why design a policy that would provide up to $40,000 to a
married couple making $249,000? Why include law and business school
students?

    BTW, those examples also contradict the baseline some have
concocted to claim that this won't raise inflation. The claim it won't
raise inflation is based on the construction worker going from
permanently paying $0 interest to paying $31 a month at an annual cost
of $372.

    You can't use one baseline (interest payments suspended) to argue
this will constrain demand & then a different baseline (interest
payments restored) to describe the benefits. That is incoherent,
inconsistent & indefensible cherry picking--I hope the White House
doesn't do it.

    Also need to be careful with all of the distributional numbers
because the beneficiaries will tend to have higher lifetime incomes
than current incomes. A 24 year-old making $75,000 is likely to be at
a relatively high percentile on a lifetime basis.

    There are a number of other highly problematic impacts including
encouraging higher tuition in the future, encouraging more borrowing,
creating expectations of future debt forgiveness, and more.

    Most importantly, everyone else will pay for this either in the
form of higher inflation or in higher taxes or lower benefits in the
future. I did a thread on this last night but given the new
announcement you need to double everything in it.

        3 possibilities if transferring $250b to a group:

        1. They raise their consumption (now and/or in future). Total
output unchanged or rises by less--consumption of others falls.

        2. Same but total output rises commensurately--others held harmless.

        3. They never raise consumption.
        — Jason Furman (@jasonfurman) August 24, 2022

    The stimulus is relatively small (a multiplier of ~0.1). So the
inflation impact is likely to be about 0.2-0.3pp. That is $150-200 in
higher costs for a typical household.

    If the stimulus matched what advocates used to argue the inflation
would be higher.

        1. Biden-Harris can cancel billions of dollars in student loan
debt, giving tens of millions of Americans an immediate financial
boost and helping to close the racial wealth gap. This is the single
most effective executive action available for a massive economic
stimulus.
        — Elizabeth Warren (@SenWarren) November 12, 2020

    That is a relatively small inflation number. But would take about
50-75bp on the fed funds rate to extinguish that much inflation. Is
the Fed going to try to offset this? Or will it do what it did with
the American Rescue Plan and ignore that rapidly changing fiscal
landscape?

    Finally, it's not obvious to me that this is reasonable for a
President to do unilaterally. A number of lawyers (and political
leaders) have argued inconsistent with the law. Even if technically
legal I don't like this amount of unilateral Presidential power.

We look forward to hearing Biden's chief economic adviser Jared
Bernstein's arguments 'for' the vote-buying bailout... once again,
consider the source.