New York Times Stirs Economic Fracas

Plus, with no budget deal, Congress turns to another stopgap ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Good Monday evening! Thanks for reading. As always, please send tips and feedback to yrosenberg@thefiscaltimes.com. House Democrats Offer Plan to Fund Government Through March 11 Facing a rapidly approaching February 18 deadline for keeping the government fully funded, Democrats in the House introduced a stop-gap bill on Monday that would keep the lights on until March 11. The House is expected to vote on the continuing resolution Tuesday. Negotiators have been unable to reach an agreement on spending levels for fiscal year 2022. As a result, spending has been frozen at existing levels for months. In the budget talks, Democrats are hoping to secure increased funding for a variety of programs favored by the White House. Republicans have shown less interest in increasing social spending, and some GOP lawmakers have indicated that keeping the budget at current levels is fine by them, reducing the pressure to reach a bipartisan agreement. However, some GOP lawmakers are eager to see an increase in defense spending and are motivated to reach an agreement in order to secure those funds. Both parties have more or less agreed to a $25 billion increase for defense as laid out in the annual defense authorization bill. Democrats want to increase social spending by more than that amount — a problem for Republicans who insist on parity for defense and non-defense spending increases. Policy riders dealing with contentious issues like abortion are also holding up negotiations, as usual. The bottom line: As the old saying goes, the best thing to do when you’re headed for a cliff is build more land. Struggling to agree on the 2022 budget, Congress looks ready to punt the problem into next month. Jill Biden Confirms Free Community College Won’t Be in Dem Plan President Joe Biden’s original Build Back Better agenda included two free years of community college for all Americans who want it, but that plan was put on the back burner as Democrats looked for ways to reduce the size and scope of their spending bill in order to please conservative members of their caucus, most notably Sen. Joe Manchin of West Virginia. Still, Biden promised to keep working on the community college plan, giving supporters hope when he told a CNN town hall last fall, "I’m going to get it done." In the original formulation, the federal government would spend $45.5 billion to cover the cost of two years of tuition at community colleges over a five-year period, with states having the option to opt-in to participate. But on Monday, First Lady Jill Biden told a gathering of educational leaders that the proposal has been abandoned, giving the clearest sense yet that it is off the table for any future negotiations on the stalled spending bill. "One year ago, I told this group that Joe was going to fight for community colleges," she said at the Community College National Legislative Summit in Washington. "But Joe has also had to make compromises. Congress hasn’t passed the Build Back Better agenda — yet. And free community college is no longer a part of that package." Has MMT Won? Or Failed? New York Times Profile Stirs Debate New York Times reporter Jeanna Smialek stirred up a hornet’s nest in the world of economics this weekend, publishing a profile of economist Stephanie Kelton, a leading proponent of a controversial school of thought known as Modern Monetary Theory, or MMT. As Smialek summarizes, MMT "posits that if a government controls its own currency and needs money — to make sure its citizens have food and places to live when, say, a global pandemic pushes many out of work — it can just print it, as long as its economy has the ability to churn out the needed goods and services. In the MMT view of the world, ‘How will you pay for it?’ is a vapid policy question. Real-world resources and political priorities determine how much lawmakers can and should spend." That line of thinking has drawn significant attention in recent years as lawmakers responded to the coronavirus with aggressive deficit spending meant to mitigate the economic impact of the pandemic. The strong economic rebound that followed led MMT proponents to claim victory, Smialek writes, but the subsequent surge in inflation has raised questions, including, "Did Congress ‘experiment’ with MMT, and does the run-up in inflation mean that MMT has ‘failed’?" Smialek’s piece drew some rather heated responses, as is usually the case when economists discuss MMT. Mainstream economists said they were disappointed by the Times piece and the credence it seemed to lend to what they call a fringe school of thought. "I am sorry to see the [@nytimes]( taking MMT seriously as an intellectual movement. It is the equivalent of publicizing fad diets, quack cancer cures or creationist theories," tweeted economist Larry Summers, the former Treasury secretary who is no stranger to fights with the left wing of the Democratic Party. "Serious leftist scholars submit their work to peer review, are willing to engage in public debate with their critics and carry out empirical work that others can try to replicate. Not the MMT movement." Neoliberal economics writer Noah Smith similarly [criticized]( the Times piece: "MMT is not a theory of the economy; it's a set of political memes to push for more deficit spending, backed up by some smooth-talking advocates and a vicious social media gang. But its star is falling." Smialek defended her work. "MMT is part of our national conversation, whether you find it valid of not," she wrote on [Twitter](. "Lawmakers flirt with it. Prof. Kelton’s book was a bestseller. Journalists buzz about it, [Fed] Chair Powell gets asked about it. 2020 + 2021 offered an interesting opportunity to take a closer look at it … We’re not saying MMT was victorious. We’re saying that the headlines saying that it ‘won’ in 2021 are now getting revisited and caveated - and that this moment is an interesting crucible for the idea. Read the story for a more thorough analysis of the arguments!" You can read the piece [here]( and see more reaction [here](. Heritage Foundation Embraces a Trumpier Republican Party: Report The Heritage Foundation, a prominent conservative think tank, last year named a new president, choosing Kevin Roberts, the chief executive officer of the Texas Public Policy Foundation, to succeed Kay Coles James, who had been the subject of repeated attacks by Fox News host Tucker Carlson. The Washington Post’s Jeff Stein and Yeganeh Torbati write that the new direction at the foundation — a "former powerhouse of GOP policy" — reflects the further Trumpification of the Republican Party and a shift from fiscal to cultural issues: "The leadership changes mark a retreat from traditional but stodgy fiscal and foreign policy issues in favor of the hot-button education and vaccine debates that increasingly defined the Republican Party in the era of Trump. … Heritage officials have long decried big government deficits, but Trump [added nearly]( $8 trillion to the national debt, the most by any president. Trump also imposed enormously controversial tariffs on foreign countries, while Heritage has long advocated free trade. Trump took direct aim at the Silicon Valley giants who donate heavily to conservative causes, and Heritage experts [criticized]( Trump’s attacks on China." Roberts last year told the foundation’s news outlet that his top three priorities are "education, education, and education," but in an interview with the Post he insisted that Heritage would continue to be focused on economic and fiscal issues. [Read the full story at The Washington Post.]( News - [House Democrats Introduce Legislation to Keep Federal Government Funded Until March 11]( – Washington Post - [Stopgap Funding Bill Introduced to Buy More Negotiating Time]( – Roll Call - [Retiring Senate Spending Chiefs Go for Broke]( – Politico - [I.R.S. to End Use of Facial Recognition for Identity Verification]( – New York Times - [Inflation Has Fed Critics Pointing to Spike in Money Supply]( – Washington Post - [Dems Abandon Jill Biden’s Free Community College Push]( – Axios - [New Jersey and Delaware Set Timelines to End Mask Mandates for Schools]( – NPR News - [A New Attitude Toward the Pandemic Seems to Be Taking Shape. But We’ve Been Here Before.]( – Washington Post - [Republicans, Wooing Trump Voters, Make Fauci Their Boogeyman]( – New York Times Views and Analysis - [The U.S. Needs More Immigrants and More Babies]( – Washington Post Editorial Board - [How America Stopped Caring About the Poor]( – Anne Kim, Washington Monthly - [It’s Time to Put Cities at the Top of America’s Economic Agenda]( – Richard Florida, Bloomberg - [Inflation and Price-Gouging]( – Robert Kuttner, American Prospect - [The IRS Should Not Make You Scan Your Face to See Your Tax Returns]( – Washington Post Editorial Board - [The Covid Policy That Really Mattered Wasn’t a Policy]( – Ezra Klein, New York Times - [The Case for Covid Vaccine Mandates in Schools]( – Elisabeth Rosenthal, New York Times Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. 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