Wednesday, July 26, 2017

Blogger Candidate Forum: Go For The Easy Win

Hello Everyone:

Time for the weekly edition of Blogger Candidate Forum.  First, a word about President Donald Trump's latest edict banning transgendered people from serving, in any capacity, in the United States military.  His reason, burdensome medical costs.  Really?  Is that the best reason he could come up with?  The additional medical costs of what?  Members of Lesbian, Gay, Bisexual, and Transgender community have been serving, with distinction, in the U.S. Armed Forces long before POTUS stopped playing with his toy soldiers.  Also, please tell everyone how LGBTQ military personnel are a disruption to their unit?  Your truly never understood that argument.  Bottom line,  at the end of the day, if someone is fit to hold a rifle and can shoot straight, it does not matter what their sexual orientation is.  That said, on to today's subject.

The Senate Health Care Bill has been dealt another setback.  Despite winning a a procedural vote to begin debates, Senate Republicans lost another vote to wholesale repeal the Affordable Care Act (Obamacare) when Senators Mike Lee (R-Utah) and Jerry Moran  (R-KS)  joined forces, vowing to vote against the latest version their party's health care bill.  (; date accessed July 26, 2017). Honestly, the Red team has been in control of Congress for seven years and have had more than ample time to come up a better version.  The manic activity surrounding this issue have equally important issues: Tax reform and something that resembling a working budget have been placed on the back burner.   This leaves Senate Majority leader Mitch McConnell (R-KY) slogging toward a vote that could ultimately repeal and replace Obamacare or open a round of debate.  Senator McConnell had to admit

The effort to "repeal and immediately replace " Obamacare " will not be successful. (; date accessed July 26, 2017)

Kriston Capps, in his CityLab article "Republicans Should Pivot to Infrastructure," suggests precisely what the title says, try focusing on an infrastructure spending bill.  Politically speaking, an infrastructure spending bill would be an easy win for the Republicans.  It would be something that members of Congress can take home to their states and districts as win.  Mr. Capps writes, "Passing a bill on infrastructure could deliver the kind of win that has been elusive for the 117th Congress so far."  In fact, a new report issued by the Economic Policy Institute states that an infrastructure bill would correct two long standing problems:

The first is a severe and chronic shortfall of spending by households, business, and government relative to the economy's productive potential...Second, problem is a rapid deceleration in the pace of productivity growth...  (; July 18, 2017 date accessed July 26, 2017)

According to Josh Bivens, director of research at the EPI, "Capital investments in infrastructure could sort out both of these problems."

The need for infrastructure spending is glaringly apparent, beyond the mind numbing wait for a Metro Rail train.  Mr. Capps report, "Public investment in infrastructure today is still well below 1980 levels." (see the chart at; July 18, 2017). The EPI report explains, "the cost of investment in water and transportation infrastructure is rising faster than overall prices, meaning that more spending is necessary simply to maintain existing quality."

That is the best reason for an immediate increase in infrastructure.  Mr. Bivens outlines the argument for infrastructure spending as "macrobooster: a way. To stave off the courage of secular stagnation." (; Nov. 16, 2013; date accessed July 26, 2017)  Secular stagnation is a freighted term that describes a plethora of chronic ailments, specifically slow or no growth "absent spectacular economic bubbles."

Josh Bivens writes,

Growing fear of 'secular stagnation'-a chronic shortfall of aggregate demand relative to the economy's productive capacity-seem justified by several data points... (

One of the grim indicators of contemporary secular stagnation is the snail-like growth of wages, even deep into the recovery from the Great Recession.  The EPI studied a number of financial policy  intervention that the federal government could use to jump-start wage growth.  Kriston Capps reports, "The report assigns a 'bang for the buck' multiplier for these interventions: temporary tax cuts, permanent tax cuts, and spending increases."  

While individual households can save the tax cut as and transfers they get, spending on infrastructure is an unparalleled type of stimulus because the money gets spent, full stop.  The report's conclusion is pretty clear:

Infrastructure investment is routinely estimated to be a much more efficient fiscal stimulus than almost any form of tax cut, and it is significantly more efficient than those tax whose benefits fall mostly on high-income households... (Ibid)

The big question is why should the Congressional Republicans find this or any argument for spending convincing?  "A key to productivity growth, according to Bivens, is capital deepening-meaning more and better tools for the workforce and the economy."  What kind of tools for the workforce and economy?  The tools includes utilities, highways, airports, and so forth."  Why not?  After all, President Trump loudly complained, during the campaign, that the United States has crumbling roads and bridges, third world-type airports, deteriorating utilities.  So rather than wasting time calling for pointless votes after pointless votes to repeal and replace Obamacare, why not vote on an infrastructure spending bill to fix those third world airports?  One other thing, private-sector productivity depends on on this kind of of investment.  "Infrastructure spending is an investment in the private sector."

The EPI report is also clear about how public investment in infrastructure would result in gains if it does not mean a direct increase in private-sector productivity.  Mr. Capps reports "Shorter commutes and cleaner air don't typically show up as measurable increases in wages, Bivens notes."  However there is a large return on the private-sector investment, which should attract the attention of Congress.  Josh Bivens writes,

The median and average estimates of a review of dozens of studies on infrastructure indicate that each $100 spent on infrastructure boosts private-sector output by $13 (median) and $17 (average) in the long run... (Ibid)

Therefore, after far too many rounds of Congressional Budget Office scores summing how many tens of millions of people face losing their healthcare, infrastructure spending would be a nice change of pace.  Memo to President Trump, Speaker of the House of Representatives Paul Ryan (R-Wis) and Senate Majority Leader Mitch McConnell, numbers do not lie, no matter how much you all try to come up with an acceptable way to repeal and replace the Affordable Care Act, millions of people will still lose their healthcare.  Instead of wasting your time debating whatever version of the bill, focus on fixing bridges and securing grids from cyber threats.  "Repairing roads and tunnels means doling out constituent services in the truest sense of the term, and hammering out those deals could remind Congress of the spirit of horse-trading that once motivated bipartisan compromise."

In the meantime, Speaker Ryan and the House Republicans have unveiled a 2018 budget plan that would set a course for ambitious tax reform legislation-however, in addition to a package of politically sensitive spending cuts that already threatens to upend tax reform before it begins.  (; July 18, 2017). These spending cuts could deeply affect Medicare and Social Security, setting the stage to repeal financial reform.  Mike DeBonis of the The Washington Post reports, "the House plan cuts federal non-defense discretionary spending by nearly a quarter, from $554 billion to $424 billion.

Be that as it may, an increase in infrastructure spending is not likely to happen this terms, even though POTUS has made said spending one of headline campaign promises.  To be fair, both POTUS and former Secretary of State Hillary Clinton vastly different proposals for large infrastructure spending plans.

Kriston Capps reports, "The Republican plans for balancing budget deficits depend on supply-side logic: great gains in economic growth to make up for the cuts in revenue. The House budgets for 2018 assumes a growth of 2.6 percent; the White House insists on a rosier 3 percent.  Neither figure gibes with the 1.9 percent figure used by the CBO."

This kind of growth may offset the type of tax cuts Republicans hold dear may not happened without the kind of spending the Red team disdains.  However, their constituents are not exactly averse to capital investments in their communities, even if it means a turnabout on spending.  Sounding an optimistic note, "A change might do the budget food in both the near and long term-and help Repbulicans going into 2018."

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