Biden's anti-mobilization and big stimulus, Romney's child allowance. By Matthew Yglesias.

Biden's anti-mobilization and big stimulus, Romney's child allowance. By Matthew Yglesias. 

Slow boring.com

February 6, 2021. 

Hey folks, it’s Saturday and it’s time for some more quick takes.

Joe Biden is not-unpopular

According to 538’s tracker, Joe Biden is far more popular than Donald Trump ever was but still has an unusually low approval rating for a newly elected president — a sign of our polarized times in which achieving really high numbers is probably impossible.

What Biden has pulled off, and what may be the best one can hope for in this day and age, is achieving a low disapproval rating. He’s pretty low-key, he’s trying to avoid unpopular policy ideas, he’s going the extra mile to stay out of random controversies like GameStop, and even as Congress works very rapidly on a COVID-19 relief bill, he’s not all over the media spiking the football.

There’s a lot of political wisdom built around the idea that certain politicians can “rev up” or “mobilize” the base.

But an interesting 2015 paper by Andrew Hall looking at House candidates found the opposite. When relatively extreme nominees win a primary, they tend to mobilize unusually high turnout for their opponent, as people show up to oppose someone they hate. Does that Hall logic apply to presidential politics? There are reasons to doubt it. Trump lost the popular vote rather badly in 2020, but he did get very good turnout. On the other hand, Biden got good turnout too and we don’t really know what the counterfactual would’ve been if Trump had been running against Bernie Sanders or Elizabeth Warren. I do think it’s at least possible that demobilization opposition could be Biden’s political secret sauce.

Mitt Romney’s child allowance is pretty great

Mitt Romney rolled out a plan on Thursday to provide a nearly universal1 child allowance to parents, $350 per month for kids under 6 and $250 per month for kids ages six to 17.

Per my Niskanen Center colleagues Samuel Hammond and Robert Orr, this has a fairly dramatic impact on child poverty, and as readers of “One Billion Americans” will know it probably has a meaningful impact on fertility as well.

But the politics and the details here are interesting. Democrats have been pushing for a while to do something very similar to this by making the Child Tax Credit “fully refundable” (i.e., available even to people with no taxable earnings). Joe Biden was a holdout on this idea, but he adopted a version of it as a temporary emergency measure and included it in his COVID-19 package. Romney improves on the Biden plan by making it a proper spending program administered by the Social Security Administration rather than a tax credit run by the IRS.

Romney’s plan is also a bit more generous than Biden’s, even when you consider that Biden pays for it in part by scrapping some existing anti-poverty spending like Temporary Assistance for Needy Families and most of the Earned Income Tax Credit. That’s because he also eliminates what’s left of the State and Local Tax (SALT) deduction to raise extra money. SALT is regressive, but Democrats tend to like it because it helps residents of blue states that have higher taxes. So Romney is owning the libs here, and then owning them again by doing it in a way that progressive wonks are likely to support. More on Romney and the criticisms of his plan from the left and right next week.

Biden’s stimulus is really big

I’ll be honest — when Joe Biden rolled out a $1.9 trillion stimulus proposal, I took that to be a bargaining ploy. A common intra-party criticism of Obama was that his legislative asks were too reasonable, and he needed to leave room for moderates to arbitrarily lop stuff off. I thought maybe Biden was asking for $1.9 trillion in order to get $1 trillion or something. But the Senate really did pass a $1.9 trillion budget reconciliation measure.

How big is that? Well, the Congressional Budget Office’s current estimate of the output gap is that it’s running at about $50 billion per month. But that’s without considering the December stimulus bill, which will cut it to $20 billion per month. Biden is providing about $150 billion per month in stimulus, filling more than 100% of the output gap.

Is it bad to overfill the output gap? I don’t really think so. The CBO tries to estimate the “potential output” of the US economy — i.e., how much goods and services we can create per year without causing inflation — and then you can derive an “output gap,” which is the difference between our potential and our reality. If you look at this historically, it says that the economy was overheating all throughout 2018 and 2019.

I think that’s nuts,2 and Biden and congressional Democrats are completely correct to blow the CBO math off. But I’m not sure I’ve heard anyone in the administration explicitly say that’s what they are doing here. Instead, they mostly use the language of “better safe than sorry” and see a giant stimulus as a kind of insurance policy against future risk. That makes sense, but what I really hope is that we’re going to blow past the CBO’s inaccurate pessimism about our potential.

Public-sector unions and contracting out

I had Mike Konczal on the Weeds recently to discuss his book “Freedom From The Market,” but I wanted to pull out one thing from our conversation that only sort of occurred to me mid-podcast.

What the book is concerned with is the shift from a mentality in which you had direct government provision of public services to one in which we try to accomplish things through tax credits and indirect subsidies.

Public libraries are widespread in the United States because it’s an old idea and we take it for granted. But if we didn’t have libraries, it’s impossible to imagine them picking up steam under currently prevailing ideas. It would cost a bunch of money, it would compete with private interests who oppose it, and centrist and center-left people would produce distributional tables showing that libraries are very poorly targeted. In the 1990s, you’d have said we should have means-tested tax credits for book buying whereas today, I’m not sure the books would even be seen as important. Maybe there’d be a program to help poor people buy Wi-fi hotspots.

These days there’s a lot of interest in getting back to the library model and away from the neoliberal “everything is a tax credit” way of doing business.

I’m sympathetic to that perspective. But I think people often mistake the relationship between privatization of public functions, labor unions, and neoliberalism. Check out this chart disaggregating public sector vs private sector unionization.

Back in the “good old days” of a vigorous public sector, private sector union density was much higher than it is today, but public-sector union density was dramatically lower.

One possible interpretation of this is that it’s the rise of public-sector unions that created a large political incentive to contract out public functions. Conservatives might prefer contracting out in order to weaken unions. But progressives also might prefer it, because it lets them do things in a flexible way without needing to pick fights with union incumbents. The midcentury United States had very low levels of public sector unionization, FDR was clearly opposed to collective bargaining in the public sector, and public sector union density reached an apogee in the late 1970s just when the neoliberal era kicked off. To return to an era of much more direct provision of services might require much more flexibility from public sector labor.