Paul Krugman

As you read this, Democratic presidential hopefuls are crisscrossing Iowa, trying to assure farmers that they share their concerns. Commentators are publishing opinion pieces about how Democrats can win back rural voters. Think tanks are issuing manifestoes about reviving heartland economies.

There’s nothing wrong with discussing these issues. Rural lives matter — we’re all Americans, and deserve to share in the nation’s wealth. Rural votes matter even more; like it or not, our political system gives hugely disproportionate weight to less populous states, which are also generally states with relatively rural populations.

But it’s also important to get real. There are powerful forces behind the relative and in some cases absolute economic decline of rural America — and the truth is that nobody knows how to reverse those forces.

Put it this way: Many of the problems facing America have easy technical solutions; all we lack is the political will. Every other advanced country provides universal health care. Affordable child care is within easy reach. Rebuilding our fraying infrastructure would be expensive, but we can afford it — and it might well pay for itself.

But reviving declining regions is really hard. Many countries have tried, but it’s difficult to find any convincing success stories.

Southern Italy remains backward after generations of effort. Despite vast sums spent on reconstruction, the former East Germany is still depressed three decades after the fall of the Berlin Wall.

Maybe we could do better, but history is not on our side.

What’s the matter with rural America? Major urban centers have always been magnets for economic growth. They offer large markets, ready availability of specialized suppliers, large pools of workers with specialized skills, and the invisible exchange of information that comes from face-to-face contact. As Victorian economist Alfred Marshall put it, “The mysteries of the trade become no mysteries; but are as it were in the air.”

But the gravitational pull of big cities used to be counteracted by the need to locate farming where the good land was. In 1950 U.S. agriculture directly employed more than 6 million people; these farmers supported a network of small towns providing local services, and some of these small towns served as seeds around which various specialized industries grew.

Nor was farming the only activity giving people a reason to live far from major metropolitan areas. There were, for example, almost half a million coal miners.

Even then, rural areas and small towns weren’t the “real America,” somehow morally superior to the rest of us. But they were a major part of the demographic, social and cultural landscape.

Since then, however, while the U.S. population has doubled, the number of farmers has fallen by two-thirds. There are only around 50,000 coal miners. The incentives for business to locate far from the metropolitan action have greatly diminished. And the people still living in rural areas increasingly feel left behind.

Some of the consequences have been tragic. Not that long ago we used to think of social collapse as an inner-city problem. Nowadays phenomena like the prevalence of jobless men in their prime working years, or worse yet, the surge in “deaths of despair” by drugs, alcohol or suicide are concentrated in declining rural areas.

And politically, rural America is increasingly a world apart. For example, overall U.S. public opinion is increasingly positive toward immigrants. But rural Americans — many of whom rarely encounter immigrants in their daily lives — have a vastly more negative view.

Not surprisingly, rural America is also pretty much the only place where Donald Trump remains popular; despite the damage his trade wars have done to the farm economy, his net approval is vastly higher in rural areas than it is in the rest of the country.

So what can be done to help rural America? We can and should make sure that all Americans have good health care, access to good education, and so on wherever they live. We can try to promote economic development in lagging regions with public investment, employment subsidies and, possibly, job guarantees.

But as I said, experience abroad isn’t encouraging. West Germany invested $1.7 trillion in an attempt to revive the former East Germany — more than $100,000 per capita — yet the region is still lagging, with many young people leaving.

Nor, realistically, can we expect aid to produce a political turnaround. Despite all that aid, in 2017 more than a quarter of East German men cast their ballots for the extreme-right, white nationalist Alternative for Germany.

I’m sure that some rural readers will be angered by everything I’ve just said, seeing it as typical big-city condescension. But that’s neither my intention nor the point. I’m simply trying to get real. We can’t help rural America without understanding that the role it used to play in our nation is being undermined by powerful economic forces that nobody knows how to stop.

This article originally appeared in <a id="cda87872-7789-4f1f-81d9-e78b0f1d8e1c" href="https://www.nytimes.com/2019/03/18/opinion/rural-america-economic-decline.html">The New York Times</a>.

Things clump together; the periphery cannot hold.

Getting real about rural America

<h1>Today’s column is about plastic straws, hamburgers and dishwashing detergent. Also Captain Marvel.</h1>

No, I haven’t lost my mind, or at least I don’t think so. But quite a few other people have — and their rage-filled pettiness is a more important force in modern America than we like to think.

My starting point is a weekend tweet from Rep. Devin Nunes of California, who headed the House Intelligence Committee until the House changed hands after the midterms. In that role, he basically acted as Donald Trump’s stonewaller in chief, doing everything he could to prevent any real investigation into possible collusion between the Trump campaign and Vladimir Putin.

But his tweet wasn’t about that. It was about a waitress who, citing the “straw police,” asked his dining party if they wanted straws. “Welcome to Socialism in California!” Nunes thundered.

If this seems like a weird aberration — he wasn’t even denied a straw, just asked if he wanted one — you need to realize that rage explosions over seemingly silly things are extremely common on the right. By all accounts, the biggest applause line at the Conservative Political Action Conference — eliciting chants of “U-S-A, U-S-A!” — was the claim that Democrats are coming for your hamburgers, just like Stalin. (They aren’t, and for the record, Stalin was a mass murderer, but objectively pro-burger.)

By the way, this isn’t a new phenomenon. I’m sure readers can come up with many examples, but I happen to remember a 2009 blog post by right-wing activist Erick Erickson that was practically an incitement to violence: “At what point do the people tell the politicians to go to hell? At what point do they get off the couch, march down to their state legislator’s house, pull him outside, and beat him to a bloody pulp?”

And what was the source of his rage? The observation that dishwasher detergent doesn’t work quite as well without the phosphates.

What do these things have in common? All of them involve cases where individual choices impose costs on other people. Plastic straws really are a source of ocean pollution. While nobody is planning to ban beef, flatulent cows really are an important source of methane, a powerful greenhouse gas. And phosphates contribute to toxic algae blooms.

But the rage seems to come from the suggestion that these costs imposed on others mean that white men — it does seem to always be white men — should consider changing their behavior, even a bit, in the public interest. Which brings me to Captain Marvel.

For those blissfully unaware of the issue, the latest superhero movie features a female protagonist, and the actress who plays her has expressed some mildly feminist views. So?

Well, for a significant number of men all of this is apparently extremely threatening. Mobs swamped internet sites like rottentomatoes.com with negative reviews before the movie opened, i.e., before they could even have seen it; YouTube filled up with attack videos and predictions that the film would be a disastrous failure.

Marvel rage recognizably drew on the same pathological pettiness as straw rage and hamburger rage. As it happens, the movie appears to be a big hit and is receiving favorable audience scores. This shows that the men afflicted with this syndrome are a fairly small minority.

But it’s not a minority without influence. Nunes was, for a time, among the most important politicians in Washington. CPAC sets the agenda for the party that controls the White House and the Senate. The recently revealed radio rants of Fox News’ Tucker Carlson could have come straight out of one of those bizarre anti-Brie Larson screeds.

The point is that demented anger is a significant factor in modern American political life — and overwhelmingly on one side. All that talk about liberal “snowflakes” is projection; if you really want to see people driven wild by tiny perceived slights and insults, you’ll generally find them on the right. Nor is it just about racism and misogyny. Although these are big components of the phenomenon, I don’t see the obvious connection to hamburger paranoia.

Just to be clear: To paraphrase John Stuart Mill, I’m not saying that most conservatives are filled with rage over petty things. What I’m saying instead is that most of those filled with such rage are conservatives, and they supply much of the movement’s energy. Not to put too fine a point on it, pathological pettiness almost surely put Donald Trump over the top in the 2016 election.

At this point you probably want to know what I think we should do about it. The truth is that I don’t know. I guess there’s some case for using taxes rather than regulations to control pollution, since you won’t be telling people directly what to do. But one suspects that the people I’m talking about will still find something to be hysterical about.

At the very least, however, we should realize what’s happening. It may be comforting to believe that politics is driven by more or less rational considerations of costs and benefits. But the reality is that a lot of it is driven by unreasoning rage.

This article originally appeared in <a id="890d87d7-eccf-4a63-b223-7bf9a03acad8" href="https://www.nytimes.com/2019/03/11/opinion/captain-marvel-republican-rage.html">The New York Times</a>.

My starting point is a weekend tweet from Rep. Devin Nunes of California, who headed the House Intelligence Committee until the House changed hands after the midterms.

The power of petty personal rage

Republicans in Congress spent the entire Obama administration inveighing against budget deficits, warning incessantly that we were going to have a Greek-style fiscal crisis any day now. Donald Trump, on the other hand, focused his ire mainly on trade deficits, insisting that “our jobs and wealth are being given to other countries that have taken advantage of us.”

But over two years of unified GOP control of government, a funny thing happened: Both deficits surged. The budget deficit has hit a level unprecedented except during wars and in the immediate aftermath of major economic crises; the trade deficit in goods has set a record.

What’s the significance of this tide of red ink?

Let’s be clear: Neither the budget deficit nor the trade deficit poses a clear and present danger to the U.S. economy. Advanced countries that borrow in their own currencies can and often do run up large debts without drastic consequences — which is why the debt panic of a few years ago was always nonsense.

Yet Trump’s twin deficits tell us a lot about both the tweeter in chief and his party — namely, that they’re both dishonest and ignorant.

About the dishonesty: Is there anyone left who believes that Republicans ever really cared about debt and deficits? The truth is that the phoniness of their fiscal posturing should have been obvious all along.

In any case, at this point it’s undeniable that their fire-and-brimstone debt rhetoric was nothing but a pose, an attempt to weaponize the deficit as a way to block and undermine President Barack Obama’s agenda.

The moment they had a chance, the very politicians who grandstanded about the need for fiscal responsibility rammed through a huge tax cut for corporations and the wealthy — a tax cut that is the main reason for the exploding budget deficit.

Oh, and the tax cut has utterly failed to deliver the promised investment boom. Companies didn’t use their giant windfall to build new plants and raise productivity, they used it to buy back a lot of stock, passing the gains on to wealthy investors.

What about the ignorance? As many people have pointed out to no avail, Trump is all wrong about what trade deficits do. True, at times of high unemployment deficits can cost us jobs. But in normal times they don’t reduce overall employment, nor do they make us poorer.

On the contrary, other countries are sending us valuable goods and services, which we’re paying for with pieces of paper — paper that pays very low interest rates. Who’s winning, again?

Beyond that, however, Trump is completely wrong about what causes trade deficits in the first place. In fact, his own policies have provided an object lesson in the falsity of his vision.

In the Trumpian universe, trade deficits happen because we made bad deals — we let foreigners sell their stuff here, but they won’t let us sell our stuff there. So the solution is to throw up barriers to foreign products. “I am a Tariff Man,” he proudly proclaimed.

The reality, however, is that trade deficits have almost nothing to do with tariffs or other restrictions on trade. The overall trade deficit is always equal to the difference between domestic investment spending and domestic saving (both private and public). That’s just accounting.

The reason America runs persistent trade deficits isn’t that we’ve given away too much in trade deals, it’s that we have low savings compared with other countries.

Tariffs can, of course, reduce imports of the goods subject to the tariff, and hence reduce the trade deficit in that particular industry. But it’s like pushing on a balloon: You can squeeze it in one place, but it will just inflate by the same amount somewhere else. The process through which this conservation of deficits takes place can vary, although a stronger dollar, which hurts exports, is usually one major channel. But the basic result, that tariffs don’t actually reduce the overall trade deficit, is clear.

Sure enough, the Trump tariffs of 2018 did, in fact, lead to a sharp fall in imports of the goods subjected to tariffs. But imports of other goods rose, while exports performed poorly. And the overall trade deficit went up substantially, which is exactly what you should have expected. After all, that big tax cut for the wealthy reduced national savings.

And the supposed cause of the deficit isn’t the only thing Trump gets wrong about trade policy. He also keeps insisting that foreigners are paying his tariffs. In reality, prices received by foreign exporters haven’t gone down. Prices paid by U.S. consumers have gone up, instead.

Again, the swelling trade deficit doesn’t pose any immediate threat to the U.S. economy. And even the Trumpian trade war has probably done only limited economic harm; the main damage is to U.S. credibility.

But Trump’s twin deficits show that his party has been lying about its policy priorities, and that he is completely clueless about his signature policy issue. Luckily, a great nation like America can survive a lot, including dishonesty and ignorance at the top.

This article originally appeared in <a id="7ce88fc7-1b63-4aa1-b20a-3ca4b51796e0" href="https://www.nytimes.com/2019/03/07/opinion/trump-deficit.html">The New York Times</a>.

Republicans hate deficits. Or at least that’s what they claim.

Tariff man has become deficit man

<h1>If you’re like me, you could use at least a brief break from talking about Donald Trump. So why don’t we talk about Ivanka Trump instead? You see, recently she said something that would have been remarkable coming from any Republican but was truly awesome coming from the Daughter-in-Chief.</h1>

The subject under discussion was the proposal, part of the Green New Deal, that the government offer a jobs guarantee. Ivanka Trump trashed the notion, claiming that Americans “want to work for what they get,” that they want to live in a country “where there is the potential for upward mobility.”

OK, this was world-class lack of self-awareness: It doesn’t get much better than being lectured on self-reliance by an heiress whose business strategy involves trading on her father’s name. But let’s go beyond the personal here. We know a lot about upward mobility in different countries, and the facts are not what Republicans want to hear.

The key observation, based on a growing body of research, is that when it comes to upward social mobility, the U.S. is truly exceptional — that is, it performs exceptionally badly. Americans whose parents have low incomes are more likely to have low incomes themselves, and less likely to make it into the middle or upper class, than their counterparts in other advanced countries. And those who are born affluent are, correspondingly, more likely to keep their status.

Now, this isn’t the way we like to see ourselves. In fact, there’s a curious disconnect between reality and perception: Americans are much more likely than Europeans to imagine that their society is marked by high social mobility when the reality is that we have considerably less of it than they do.

Much of this appears to reflect systematic misinformation. In some places hereditary members of the elite boast about their lineage, but in America they pretend that they pulled themselves up by their own bootstraps. For example, large numbers of Americans apparently believe that Donald Trump is a self-made man.

In any case, America’s exceptionally low social mobility is distinct from its exceptionally high income inequality, although these are almost surely related. Among advanced countries, there is a strong negative correlation between inequality and mobility, sometimes referred to as the “Great Gatsby curve.” This makes sense. After all, huge disparities in parents’ income tend to translate into large disparities in children’s opportunities.

And people do, by the way, seem to understand this point. Many Americans don’t realize how unequal our society really is; when given facts about income inequality, they become more likely to believe that coming from a wealthy family plays a big role in personal success.

Back to the “potential for upward mobility”: Where do people from poor or modest backgrounds have the best chance of getting ahead? The answer is that Scandinavia leads the rankings, although Canada also does well. And here’s the thing: The Nordic countries don’t just have low inequality, they also have much bigger governments, much more extensive social safety nets, than we do. In other words, they have what Republicans denounce as “socialism” (it really isn’t, but never mind).

And the association between “socialism” and social mobility isn’t an accident. On the contrary, it’s exactly what you would expect.

To see why, put it in a U.S. context and ask what would happen to social mobility if either the right wing of the Republican Party or progressive Democrats got to implement their policy agendas in full.

If Tea Party types got their way, we’d see drastic cuts in Medicaid, food stamps and other programs that aid Americans with low income — which would in many cases leave low-income children with inadequate medical care and nutrition. We’d also see cuts in funding for public education. And on the other end of the scale, we’d see tax cuts that raise the incomes of the wealthy, and the elimination of the estate tax, allowing them to pass all of that money on to their heirs.

By contrast, progressive Democrats are calling for universal health care, increased aid to the poor and programs offering free or at least subsidized college tuition. They’re calling for aid that helps middle- and lower-income parents afford quality child care. And they propose paying for these benefits with increased taxes on high incomes and large fortunes.

So, which of these agendas would tend to lock our class system in place, making it easy for children of the rich to stay rich and hard for children of the poor to escape poverty? Which would bring us closer to the American dream — creating a society in which ambitious young people who are willing to work hard have a good chance of transcending their background?

Look, Ivanka Trump is surely right in asserting that most of us want a country in which there is the potential for upward mobility. But the things we need to do to ensure that we are that kind of country — the policies that are associated with high levels of upward mobility around the world — are exactly the things Republicans denounce as socialism.

This article originally appeared in <a id="0492842c-c6fb-4969-891a-a6eb9a2a5531" href="https://www.nytimes.com/2019/02/28/opinion/ivanka-trump-social-mobility.html">The New York Times</a>.

The subject under discussion was the proposal, part of the Green New Deal, that the government offer a jobs guarantee.

Socialism and the self-made woman

<h1>There’s been some good news on global trade lately: A full-scale U.S.-China trade war appears to be on hold, and may be avoided altogether.</h1>

The bad news is that if we do make a trade deal with China, it will basically be because the Chinese are offering Donald Trump a personal political payoff. At the same time, a much more dangerous trade conflict with Europe is looming. And the Europeans, who still have this peculiar thing called rule of law, can’t bribe their way to trade peace.

The background: Last year the Trump administration imposed tariffs on a wide range of Chinese products, covering more than half of China’s exports to the United States. But that might have been only the beginning: Trump had threatened to impose much higher tariffs on $200 billion of Chinese exports starting this Friday.

What was the motivation for these tariffs? Remarkably, there doesn’t seem to be any strong constituency demanding protectionism; if anything, major industries have been lobbying against Trump’s trade moves, and the stock market clearly dislikes trade conflict, going down when tensions rise and recovering when they ease.

So trade conflict is essentially Trump’s personal vendetta — one that he is able to pursue because U.S. international trade law gives the president enormous discretion to impose tariffs on a variety of grounds. Predicting trade policy is therefore about figuring out what’s going on in one man’s mind.

Now, there are real reasons for the U.S. to be angry at China, and demand policy changes. Above all, China notoriously violates the spirit of international trade rules, de facto restricting foreign companies’ access to its market unless they hand over valuable technology. So you could make a case for U.S. pressure on China — coordinated with other advanced economies! — to stop that practice.

But there has been little evidence that Trump is interested in dealing with the real China problem. I was at a trade policy conference over the weekend where experts were asked what Trump really wants; the most popular answer was “tweetable deliveries.”

Sure enough, Trump has been crowing about what he portrays as big Chinese concessions, which all seem to involve China’s government ordering companies to buy U.S. agricultural products. In particular, the postponement of the trade war came after a Chinese pledge to buy 10 million tons of soybeans. This will please farmers, although it’s far from clear that it will even make up for the losses they’ve suffered from previous Trump actions.

The point, however, is that what China is offering doesn’t at all get at the real U.S. national interests at stake. All it does is give Trump something to tweet about.

Oh, and by the way: China’s biggest bank, which happens to be majority-owned by the Chinese government, occupies three whole floors in the Trump Tower in Manhattan. It has been planning to reduce its space; it will be interesting to see what happens to that plan now.

Meanwhile, the U.S. Commerce Department has prepared a report on imports of European automobiles that, according to the German press, concludes that these imports pose a threat to national security.

If this sounds ridiculous, that’s because it is. Indeed, while the Europeans aren’t angels, they do abide by global rules, and it’s hard to accuse them of any major trade sins. Yes, they do have 10 percent tariffs on U.S. cars — but we impose 25 percent tariffs on their light trucks, which makes us more than even.

But a department headed by perhaps the most corrupt commerce secretary in history will, of course, conclude whatever Trump wants it to conclude. And this report gives the president the legal authority to get us into a trade war with the European Union.

If it happens, this trade war will be immensely damaging. The E.U. is America’s biggest export market, directly accounting for around 2.6 million jobs. Moreover, our economies are very much intermeshed — which is why even the U.S. auto industry is horrified at the possibility that Trump will impose tariffs on cars.

But here’s the thing: Unlike the Chinese government, the E.U. can’t order private companies to make splashy purchases of U.S. goods. And it certainly can’t steer business to Trump Organization properties. As a result, the chances of spiraling trade conflict remain high.

The point is that when it comes to dealing with Trump and his team, autocracies have an advantage over democracies that follow the rule of law. And trade disputes are arguably the least of it.

Think about the push by financially conflicted Trump advisers to sell nuclear technology to the Bone Saw Kingdom, otherwise known as Saudi Arabia. Or think of the influence golf-playing expats seem to be having over Venezuela policy.

So while stock markets are happy about the prospects for trade peace with China, the broader picture is deeply disturbing. If we do manage to limit the damage from this confrontation, it will be for the wrong reasons. And the warped motivations governing U.S. foreign policy may yet have deeply destructive consequences, with a trade war far from being the scariest possibility.

This article originally appeared in <a id="45e0b310-937f-4ae0-a6ba-3a8c6e7aea80" href="https://www.nytimes.com/2019/02/25/opinion/trump-trade-china.html">The New York Times</a>.

Trump, trade and the advantage of autocrats

The bad news is that if we do make a trade deal with China, it will basically be because the Chinese are offering Donald Trump a personal political payoff.

<h1>For millions of Americans with children, life is a constant, desperate balancing act. They must work during the day, either because they’re single parents or because decades of wage stagnation mean that both parents must take jobs to make ends meet. Yet quality child care is unavailable or unaffordable.</h1>

And the thing is, it doesn’t have to be this way. Other wealthy countries either have national child care systems or subsidize care to put it in everyone’s reach. It doesn’t even cost all that much. While other advanced countries spend, on average, about three times as much as we do helping families — so much for our vaunted “family values” — it’s still a relatively small part of their budgets. In particular, taking care of children is much cheaper than providing health care and retirement income to seniors, which even America does.

Furthermore, caring for children doesn’t just help them grow up to be productive adults. It also has immediate economic benefits, making it easier for parents to stay in the workforce.

Over the past 20 years, women’s prime-age employment in the U.S. has lagged ever further behind the rest of the advanced world — at this point we’re well below even Japan. And lack of child care is probably one main reason.

So child care really should be an important part of the progressive agenda. Hillary Clinton had a serious plan back in 2016, but the news media was too busy obsessing over emails to pay attention. And if you ask me, Elizabeth Warren’s new proposal isn’t getting as much attention as it should.

For the Warren proposal is the kind of initiative that, if enacted, would change millions of lives for the better, yet could actually happen in the near future.

Among other things, unlike purist visions of replacing private health insurance with “Medicare for all,” providing child care wouldn’t require imposing big new taxes on the middle class. The sums of money involved are small enough that new taxes on great wealth and high incomes, which are desirable on other grounds, could easily raise sufficient revenue.

The logic of the Warren plan is fairly simple (although some commentators are trying to make it sound complex). Child care would be regulated to ensure that basic quality was maintained and subsidized to make it affordable. The size of the subsidy would depend on parents’ incomes: lower-income parents would get free care, higher-income parents would have to pay something, but nobody would have to pay more than 7 percent of income.

Warren’s advisers put the budget cost at $70 billion a year, or around one-third of one percent of GDP. That’s not chicken feed, but it’s not that much for something that could transform so many lives.

It is, for example, well under half the revenue lost due to the Trump tax cut, which seems to have been used mainly for share buybacks. And it’s a tiny fraction of what it would cost to replace all private health insurance with a public program.

So what are the objections to this plan?

I’m hearing from a few people on the left who complain that the plan doesn’t go far enough — that it should involve free, direct public provision of child care, not subsidies to private provision. There’s certainly a case for a more expansive policy. There’s also no chance that it will happen anytime soon.

The perfect here is the enemy of the good.

Meanwhile, on the right there are the usual cries of “socialism,” which these days means anything to the left of eating poor people’s babies.

More interestingly, I’m seeing at least some commentary on the right that doesn’t just push back against the whole idea of making it easier for mothers to work, it wants us to go back to the days when families could “live on one income.”

Realistically, of course, that’s not going to happen, and not just because 30 percent of U.S. children live in single-parent households. And bear in mind that even as conservatives bemoan the decline of the traditional male breadwinner, they’re pushing policies like Medicaid work requirements that basically force mothers out of the home.

The bottom line is that Warren’s proposal is impressive: It’s workable, affordable and would do a huge amount of good.

And while this isn’t a horse-race column — I’m not arguing that Warren necessarily will or even should be the Democratic presidential nominee — the field needs more policy ideas like this: medium-size, medium-priced proposals that could deliver major benefits without requiring a political miracle.

Right now, all the real contenders for the Democratic nomination are solidly progressive, but so far some seem either underbriefed on policy issues — there’s been far too much fumbling over Medicare for all — or too committed to sweeping, maximalist policy visions to think seriously about what they might truly be able to do if their party takes the White House and Senate next year.

Visions and values are great, but Democrats also need to be ready to hit the ground running with plans that might actually turn into legislation. And so far, Warren is setting the pace.

This article originally appeared in <a id="a1260c1d-d860-4b0a-95f5-2b896d1671f7" href="https://www.nytimes.com/2019/02/21/opinion/warren-child-care.html">The New York Times</a>.

Furthermore, caring for children doesn’t just help them grow up to be productive adults. It also has immediate economic benefits, making it easier for parents to stay in the workforce.

Democrats for family values

<h1>Whoever gets the Democratic nomination, she or he will run in part on proposals to increase government spending. And you know what that will mean: There will be demands that the candidate explain how all this will be paid for. Many of those demands will be made in bad faith, from people who never ask the same questions about tax cuts. But there are some real questions about the fiscal side of a progressive agenda.</h1>

Well, I have some thoughts about that, inspired in part by looking at Sen. Elizabeth Warren’s proposals on both the tax and spending side. By the way, I don’t know whether Warren will or even should get the nomination. But she’s a major intellectual figure, and is pushing her party toward serious policy discussion in a way that will have huge influence whatever her personal trajectory.

In particular, Warren’s latest proposal on child care — and the instant pushback from the usual suspects — has me thinking that we could use a rough typology of spending proposals, classified by how they might be paid for. Specifically, let me suggest that there are three broad categories of progressive expenditure: investment, benefits enhancement, and major system overhaul, which need to be thought about differently from a fiscal point of view.

So, first off, investment — typically spending on infrastructure or research, but there may be some room at the margin for including spending on things like childhood development in the same category. The defining characteristic here is that it’s spending that will enhance society’s future productivity. How should we pay for that kind of outlay?

The answer is, we shouldn’t. Think of all the people who say that the government should be run like a business. Actually it shouldn’t, but the two kinds of institution do have this in common: if you can raise funds cheaply and apply them to high-return projects, you should go ahead and borrow. And federal borrowing costs are very low — less than 1 percent, adjusted for inflation — while we are desperately in need of public investment, i.e., it has a high social return. So we should just do it, without looking for pay-fors.

Much of what seems to be in the Green New Deal falls into that category. To the extent that it’s a public investment program, demands that its supporters show how they’ll pay for it show more about the critics’ bad economics than about the GND’s logic.

My second category is a bit harder to define, but what I’m thinking of are initiatives that either expand an existing public program or use subsidies to create incentives for expanding some kind of socially desirable private activity — in each case involving sums that are significant but not huge, say a fraction of a percent of GDP.

The Affordable Care Act falls into that category. It expanded Medicaid while using a combination of regulation and subsidies to make private insurance more available to families above the new Medicaid line. Warren’s child care proposal, which reportedly will come in at around 1/3 of a percent of GDP, also fits. So would a “Medicare for All” proposal that involves allowing people to buy in to government insurance, rather than offering that insurance free of charge.

It’s harder to justify borrowing for this kind of initiative than borrowing for investment. True, with interest rates low and demand weak it makes some sense to run persistent deficits, but there are surely enough investment needs to use up that allowance. So you want some kind of pay-for. But the sums are small enough that the revenue involved could be raised by fairly narrow-gauge taxes — in particular, taxes that hit only high-income Americans.

That is, in fact, how Obamacare was financed: the revenue component came almost entirely from taxes on high incomes (there were some small items like the tax on tanning parlors.) And Warren has in fact proposed additional taxes on the wealthy — her proposed tax on fortunes more than $50 million would yield something like four times the cost of her child care proposal.

So benefit enhancement can, I would argue, be paid for with taxes on high incomes and large fortunes. It doesn’t have to impose on the middle class.

Finally, my third category is major system overhaul, of which the archetype would be replacing employer-based private health insurance with a tax-financed public program — the purist version of Medicare for all. A really major expansion of Social Security might fall into that category, too, although smaller enhancements might not.

Proposals in this category are literally an order of magnitude more expensive than benefit enhancements: private health insurance amounts to 6 percent of GDP. To implement these proposals, then, we’d need a lot more revenue, which would have to come from things like payroll taxes and/or a value-added tax that hit the middle class.

You can argue that most middle-class families would be better off in the end, that the extra benefits would more than compensate for the higher taxes. And you’d probably be right. But this would be a much heavier political lift. You don’t have to be a neoliberal tool to wonder whether major system overhaul should be part of the Democratic platform right now, even if it’s something many progressives aspire to.

My main point now, however, is that when people ridicule progressive proposals as silly and unaffordable, they’re basically revealing their own biases and ignorance. Investment can and should be debt-financed; benefit enhancements can be largely paid for with high-end taxes. Howard Schultz won’t like it, but that’s his problem.

This article originally appeared in <a id="c4dc1373-8257-486c-9ded-208205061093" href="https://www.nytimes.com/2019/02/19/opinion/on-paying-for-a-progressive-agenda.html">The New York Times</a>.

Well, I have some thoughts about that, inspired in part by looking at Sen. Elizabeth Warren’s proposals on both the tax and spending side.

On paying for a progressive agenda

<h1>Donald Trump isn’t the first president, or even the first Republican president, who has sought to define his legacy in part with a big construction project. Abraham Lincoln signed legislation providing the land grants and financing that created the transcontinental railroad. Theodore Roosevelt built the Panama Canal. Dwight Eisenhower built the interstate highway system.</h1>

But Trump’s wall is different, and not just because it probably won’t actually get built. Previous big construction projects were about bringing people together and making them more productive. The wall is about division — not just a barrier against outsiders, but an attempt to drive a wedge between Americans, too. It’s about fear, not the future.

Why isn’t Trump building anything? Surely he’s exactly the kind of politician likely to suffer from an edifice complex, a desire to see his name on big projects. Furthermore, during the 2016 campaign he didn’t just promise a wall, he also promised a major rebuilding of America’s infrastructure.

But month after month of inaction followed his inauguration. A year ago, he again promised “the biggest and boldest infrastructure investment in American history.” Again, nothing happened.

In January, there was reportedly a White House meeting to game out a new infrastructure plan. This time they mean it. Really. Would this administration ever lie to you?

The interesting question is why Trump seems unwilling or unable to do anything about America’s crumbling roads, bridges, water supplies and so on. After all, polls show that a large majority of the public wants to see more infrastructure spending. Public investment is an issue on which Trump could get substantial Democratic support; it would lift the economy, and also help repair the public’s perception that the administration is chaotic and incompetent.

Yet everything points to two more years of occasional bombast about infrastructure, with no follow-up. Why the paralysis?

Some news analyses suggest that it’s about money, that big infrastructure spending would happen only if Republicans and Democrats could agree on how to pay for it. But this is being credulous. Remember, in 2017 the GOP enacted a $2 trillion tax cut with absolutely no pay-fors; the tax cut is completely failing to deliver the promised boost to private investment, but there is no sign of buyer’s remorse.

So Republicans don’t really care about using debt to pay for things they want. And Democrats, whose top policy wonks have been telling them that deficit fears are excessive, would surely support a program of debt-financed infrastructure spending.

In short, money isn’t why we aren’t building infrastructure. The real obstacle is that Trump, his officials, his party or all of the above don’t actually want the kind of public investment the United States needs. Build they won’t.

In the case of Trump administration officials, what’s striking about the various infrastructure “plans” they’ve offered — they’re more like vague sketches — is that they involve very little direct public investment. Instead, they’re schemes that would purportedly use public funds as a sweetener to induce large amounts of private investment. Why not just build stuff? Partly, perhaps, to hold down the headline cost. But such schemes would also amount to a backdoor way to privatize public assets, while possibly generating little new investment.

And while a real infrastructure plan would gain a lot of Democratic support, an exercise in crony capitalism pretending to be about infrastructure wouldn’t.

Meanwhile, Republicans in Congress are aggressively uninterested in any kind of public investment program. During Trump’s first two years in office, they first bullied him into submitting a plan that actually provided hardly any money for new investment, then invented excuses for not dealing even with that emasculated proposal.

The truth is that modern conservatives hate the idea of any kind of new public spending, even if it would make Americans better off — or perhaps it would be more accurate to say especially if it would make Americans better off, because a successful spending program might help legitimize a positive role for government in general. And while Trump may not fully share his party’s small-government ideology, all his limited energy is going into finding ways to punish people, not help them.

So who will rebuild America? Trump and his party have had their chance, and clearly refuse to act, so it will have to be the Democrats. Their proposed Green New Deal is deliberately short on specifics, but its clear thrust is toward a revival of the U.S. tradition of public investment in the public interest.

And my guess, which is also my hope, is that if Democrats get the opportunity — if, in 2021, they regain control of both the White House and the Senate — they won’t let funding concerns block an infrastructure push. Major health reform will need new revenue sources, but given low interest rates, debt-financed public investment would be sound policy. Build we must, build we should, and hopefully build we will.

This article originally appeared in <a id="410d1ddd-a539-4ed6-add1-d463d43f6816" href="https://www.nytimes.com/2019/02/18/opinion/trump-infrastructure.html">The New York Times</a>.

Why isn’t Trump building anything? Surely he’s exactly the kind of politician likely to suffer from an edifice complex, a desire to see his name on big projects.

Why can't Trump build anything?

<h1>Much of Donald Trump’s State of the Union address was devoted to describing the menaces he claims face America — mainly the menace of scary brown people, but also the menace of socialism. And there has been a lot of discussion in the news media of what he said on those topics.</h1>

There has, however, been little coverage of one of the most revealing aspects of the SOTU: what Trump said about the menace of America’s historically large government debt.

But wait, you may object — he didn’t say anything about debt. Indeed he didn’t — not one word. But that’s what was so revealing.

After all, Republicans spent the entire Obama administration inveighing constantly about the dangers of debt, warning that America faced a looming crisis unless deficits were drastically reduced. Now that they’re in power, however — and with the deficit surging thanks to a huge tax cut for corporations and the rich — they’ve totally dropped the subject.

According to ABC News, Mick Mulvaney, Trump’s acting chief of staff, explained to GOP members of Congress why debt wouldn’t get a single mention in the SOTU: “Nobody cares.”

And you know, he’s kind of right. It’s not just Republicans who suddenly seemed to stop caring about debt. For years, deficit scolds dominated discourse inside the Beltway; much of the news media treated the urgency of fiscal austerity as an unquestioned fact, abandoning the usual rules of reportorial neutrality and plunging into outright advocacy. Yet since Trump’s election, those voices have become oddly muted.

What we’ve just seen confirmed, then, is what some of us were trying to tell you from the beginning: All that wailing about debt was hypocritical.

Republicans never actually cared about debt; they just pretended to be deficit hawks as a way to hamstring President Barack Obama’s agenda. And many centrists have turned out to have a double standard, reserving passionate concern about debt for times when Democrats hold power.

But while the about-face on debt has, as I said, been deeply revealing, there are still two big questions. First, how much should we care about debt? Second, will a double standard continue to prevail? That is, will the deficit scolds suddenly get vocal again if and when Democrats regain power?

On the first question: One surprising thing about the debt obsession that peaked around 2011 is that it never had much basis in economic analysis. On the contrary, everything we know about fiscal policy says that it’s a mistake to focus on deficit reduction when unemployment is high and interest rates are low, as they were when the fiscal scolds were at their loudest.

The case for worrying about debt is stronger now, given low unemployment. But interest rates are still very low by historical standards — less than 1 percent after adjusting for inflation. This is so low that we needn’t fear that debt will snowball, with interest payments blowing up the deficit. It also suggests that we’re suffering from chronic weakness in private investment demand (which, by the way, the 2017 tax cut doesn’t seem to have boosted at all).

So in the past few months a number of prominent economists — including the former chief economist of the International Monetary Fund and top economists from the Obama administration — have published analyses saying that even now, with unemployment quite low, debt is much less of a problem than previously thought.

It’s still a bad idea to run up debt for no good reason — say, to provide tax breaks that corporations just use to buy back their own stock, which is, of course, what the GOP did. But borrowing at ultralow interest rates to pay for investments in the future — infrastructure, of course, but also things like nutrition and health care for the young, who are the workers of tomorrow — is very defensible.

Which brings us to the question of double standards.

You don’t have to agree with everything in proposals for a “Green New Deal” to acknowledge that it’s very much an investment program, not a mere giveaway. So it has been very dismaying to see how much commentary on these proposals either demands an immediate, detailed explanation of how Democrats would pay for their ideas, or dismisses the whole thing as impractical. Was there the same pushback against Republican tax cuts? No.

Look, we’ve seen this over and over again — three times since 1980. Republicans rail against budget deficits when they’re out of power, then drop all their concerns and send the deficit soaring once they are in a position to cut taxes. Then when it’s the Democrats’ turn, they’re expected to clean up the Republicans’ red ink rather than address their own priorities. Enough already.

I’m not saying that Democrats should completely ignore the fiscal implications of their actions. Really big spending plans, especially if they don’t clearly involve investment — for example, a major expansion of federal health spending — will have to be paid for with new taxes. But if and when Democrats are in a position to make policy, they should be ambitious, and not let the deficit scolds scare them into thinking small.

This article originally appeared in <a id="44256330-5f36-4eee-a9a8-37da658cf2f0" href="https://www.nytimes.com/2019/02/11/opinion/democrats-federal-deficit.html">The New York Times</a>.

There has, however, been little coverage of one of the most revealing aspects of the SOTU: what Trump said about the menace of America’s historically large government debt.

Democrats, debt and double standards

<h1>In 1961, America faced what conservatives considered a mortal threat: calls for a national health insurance program covering senior citizens. In an attempt to avert this awful fate, the American Medical Association launched what it called Operation Coffee Cup, a pioneering attempt at viral marketing.</h1>

Here’s how it worked: Doctors’ wives (hey, it was 1961) were asked to invite their friends over and play them a recording in which Ronald Reagan explained that socialized medicine would destroy American freedom. The housewives, in turn, were supposed to write letters to Congress denouncing the menace of Medicare.

Obviously the strategy didn’t work; Medicare not only came into existence, but it became so popular that these days Republicans routinely (and falsely) accuse Democrats of planning to cut the program’s funding. But the strategy — claiming that any attempt to strengthen the social safety net or limit inequality will put us on a slippery slope to totalitarianism — endures.

And so it was that Donald Trump, in his State of the Union address, briefly turned from his usual warnings about scary brown people to warnings about the threat from socialism.

What do Trump’s people, or conservatives in general, mean by “socialism”? The answer is, it depends.

Sometimes it means any kind of economic liberalism. Thus after the SOTU, Steven Mnuchin, the Treasury secretary, lauded the Trump economy and declared that “we’re not going back to socialism” — i.e., apparently America itself was a socialist hellhole as recently as 2016. Who knew?

Other times, however, it means Soviet-style central planning, or Venezuela-style nationalization of industry, never mind the reality that there is essentially nobody in American political life who advocates such things.

The trick — and “trick” is the right word — involves shuttling between these utterly different meanings, and hoping that people don’t notice. You say you want free college tuition? Think of all the people who died in the Ukraine famine! And no, this isn’t a caricature: Read the strange, smarmy report on socialism that Trump’s economists released last fall; that’s pretty much how its argument goes.

So let’s talk about what’s really on the table.

Some progressive U.S. politicians now describe themselves as socialists, and a significant number of voters, including a majority of voters under 30, say they approve of socialism. But neither the politicians nor the voters are clamoring for government seizure of the means of production. Instead, they’ve taken on board conservative rhetoric that describes anything that tempers the excesses of a market economy as socialism, and in effect said, “Well, in that case, I’m a socialist.”

What Americans who support “socialism” actually want is what the rest of the world calls social democracy: A market economy, but with extreme hardship limited by a strong social safety net and extreme inequality limited by progressive taxation. They want us to look like Denmark or Norway, not Venezuela.

And in case you haven’t been there, the Nordic countries are not, in fact, hellholes. They have somewhat lower gross domestic product per capita than we do, but that’s largely because they take more vacations. Compared with America, they have higher life expectancy, much less poverty and significantly higher overall life satisfaction. Oh, and they have high levels of entrepreneurship — because people are more willing to take the risk of starting a business when they know that they won’t lose their health care or plunge into abject poverty if they fail.

Trump’s economists clearly had a hard time fitting the reality of Nordic societies into their anti-socialist manifesto. In some places they say that the Nordics aren’t really socialist; in others they try desperately to show that despite appearances, Danes and Swedes are suffering — for example, it’s expensive for them to operate a pickup truck. I am not making this up.

What about the slippery slope from liberalism to totalitarianism? There’s absolutely no evidence that it exists. Medicare didn’t destroy freedom. Stalinist Russia and Maoist China didn’t evolve out of social democracies. Venezuela was a corrupt petrostate long before Hugo Chávez came along. If there’s a road to serfdom, I can’t think of any nation that took it.

So scaremongering over socialism is both silly and dishonest. But will it be politically effective?

Probably not. After all, voters overwhelmingly support most of the policies proposed by American “socialists,” including higher taxes on the wealthy and making Medicare available to everyone (although they don’t support plans that would force people to give up private insurance — a warning to Democrats not to make single-payer purity a litmus test).

Here’s how it worked: Doctors’ wives (hey, it was 1961) were asked to invite their friends over and play them a recording in which Ronald Reagan explained that socialized medicine would destroy American freedom.

Paul Krugman

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