President Trump’s budget director Mick Mulvaney was unusually blunt during an interview on CNBC. As Jonathan Chait notes, Republicans usually make some effort to justify tax cuts for the wealthy, for example by denying that they will cause the deficit to grow. But Mulvaney is candid about not caring whether the deficit grows.
“Bad spending, to me, in terms of its economic benefit, would be wealth-transfer payments. It’s a misallocation of resources. Infrastructure is sort of that good spending in the middle, where even if you do misallocate resources a little bit, you still have something to show for it. It’s tangible, it may help economic growth, and so forth. At the other end of the spectrum, at the very other end, is letting people keep more of their money, which — while it can contribute to the deficit in a large fashion — is the most efficient way to actually allocate resources. It’s a little less important to me if infrastructure adds to the deficit. And I’m really not interested in how tax reform handles the deficit.”
What I’d like to focus on is one turn of phrase: “wealth-transfer payments [are] a misallocation of resources.” Mulvaney essentially says that if you build a road or a bridge or a tunnel or an airport that you’ll have something tangible in the end even if there are cost overruns or the contracts are needlessly expensive. I think the idea is that maybe the government isn’t the most efficient source of funding for building stuff, but it can get the job done.
On the other hand, wealth-transfer payments get you absolutely nothing. So, by his reckoning, a subsidy to provide health coverage or financial assistance in getting a college degree or money set aside to assure kids aren’t malnourished, none of these things ever result in anything worthwhile.
I suppose there’s a broader ideology about efficiency here, in the sense that he’s framing this as a matter of using money in the most sensible way. But there’s also a value system on display. It’s not just that there is suddenly good deficit spending (tax cuts for the rich) but there’s also a belief that it’s a misallocation of money to invest in people. Maybe investment in people is a little harder to judge in “tangible” results than investment in physical infrastructure, but it’s not impossible. Because they were no longer hungry, someone could concentrate in class so their grades went up. A person became the first person in their family to get a college education. A doctor’s visit detected high blood pressure, which allowed the patient to take life-extending measures and medications.
We can debate the precise meaning of the word “tangible,” but it’s pretty clear that Mulvaney doesn’t value these kinds of positive results of wealth-transfer payments.
In any case, he provided proof that he doesn’t care about deficits. When it comes to deficits caused by failing to tax the rich, he says he really doesn’t care.
What he doesn’t want is for anyone to get something they haven’t earned, and the only way you can earn something is by making money.
Well, wealth transfer payments for THE WRONG PEOPLE are a problem for him–that’s the unspoken subtext.
Aren’t there calculations about how much $1 to a person who needs it helps the economy. It’s like worth $1.67 or something because it gets spent, and spent again, etc. Rich people save, and that doesn’t keep money flowing in the economy. I’ve forgotten what this is called or what the numbers are. But I remember when George Bush gave everyone $600 to stimulate the economy that there was talk of bang for the buck in this way. Upped GDP. That’s pretty tangible.
Stimulating consumer demand can boost production, which can cause job openings because more workers are needed to meet increased production needs.
People with jobs pay taxes and use less government resources.
So, it can be a virtuous cycle.
That’s Keynesian economics.
But that doesn’t mean that there can’t be poor allocations of resources if your metric is only whether your spending creates value or increased wealth. Giving someone a check that they use to avoid getting a job is not a good allocation by that metric. If it means that their children are fed, it’s better, but we still run into the problem of creating perverse incentives against work and self-sufficiency.
What the GOP does is to highlight the poor investments as if they are the rule, and to argue that a system that allows abuses isn’t worth having even if the net effect is positive.
So the question becomes: “How do we deal with diminishing scarcity if even liberals think that only people who work are not ‘poor allocations of resources?’
Because unless there’s some kind a unanticipated malign revolution that creates some hereto unknown scarce resource or complete collapse of economics or technology, technological advancements are going to lead us to a point where it becomes impossible for everyone who wants a job to have a job because it only takes a few thousand people to produce everything a hundred thousand people need and want.
I’ve repeatedly made the same point, I haven’t seen it distilled down to its essence as concisely as you managed.
It’s a problem. A huge problem.
You’d never know that from our media and public policy/political discourse, though.
My apologies Booman. While I was thinking this over and trying to understand what it meant, my brain edited out part of your statement that completely changes the context of your statement.
My brain and via it I, fixated on the poor allocation of resources part and skipped right over the “…if your metric is only whether your spending creates value or increased wealth.” part.
Oh another one of those times I will I’d read that a 10th time before posting and had an edit button.
Marginal Propensity to Consume, IIRC. If you give $1 dollar to a poor person they spend it, a rich person saves it.
Actually, the rich person spends it overseas or invests it overseas and creates jobs on the other side of an ocean.
A related concept is the diminishing marginal utility of the dollar. The utility of each additional dollar earned by an individual is less than the dollar before.
This has been said in difference ways many times before, but I thought it was well put:
It was a good piece.
The GOP really only cares about 2 things: tax cuts and not giving money to POC.
https://www.nytimes.com/2017/04/11/magazine/i-thought-i-understood-the-american-right-trump-proved-m
e-wrong.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=photo-
spot-region
.
Well, they are all banking on a formula that has worked for them almost every time. Give the rubes a little pittance. Let’s reduce taxes on them so that next tax year they get a small refund instead of paying that $1000 bucks like they did last year.
“WOO-HOO”!!!, cheers the rube. “Look at what Donald Trump did for me!! Making America great again, just like he promised”!!!
Meanwhile, the gazillionaires get their “pittance”, too. Hundreds of thousands, or millions, of dollars in tax cuts. But hey, job creators, right? Deficit explodes, so we have to reduce spending, too. After all, that goes hand in hand in the conservative world. Less money in, less money out. States lose funding. And they start slashing. So there are fewer services available in the rube’s commmunity. So when the rube or the rube’s children needs, ohhhh, mental health counseling or treatment because of an opioid problem, welllllll, the community mental health facility is closed. Sorry, out here in the sticks we just can’t afford to have that kind of thing available anymore. We used to have that here, but that big old, evil gubmint came along and closed it down. So, Mr. Rube, you just go ahead and set up that GoFundMe page. Hopefully your kid won’t die before you can collect enough money to afford to pay for that help.
And the rubes never make the connection between that tax cut they were so happy about and the loss of their local services. But don’t worry, Mr. Rube, the gazillionaires, they’ll be fine. And you, well, you just have to pull yourself up by your own bootstraps, my friend.
Ahhhhhh…..the smell of “freedom”!! Ain’t it great?
Conservative ideology in a nutshell: All-consuming selfishness. Nothing more or less.
I suppose this “conservative” goober has his Ivy League degrees all in a row and is “highly educated”, perhaps with Latin honors after his name as well. Yet it seems that not too much of this education has actually taken root. Pearls before swine, etc…
Let’s leave the Keynesian errors on display to the likes of Krugman, although he might note that what exactly falls into abusive “wealth transfer payments” is a matter of perspective, as in, ahem… agricultural price supports. And the idea that keeping all of one’s wages (or rents!) is the “most efficient way to allocate resources” is simply the Free Market Can’t Fail shibboleth. When in fact the multitudinous failures and problems abounding before us are nothing but the endless failure(s) of the market, which requires the government to intervene in various and sundry ways.
Suffice it to say that Mulvaney’s version of “conservative” economics and public finance has been tried again and again in the woeful Conservative Era (1980-present) and has always been found wanting. Indeed, it has proven a failure and a route to economic instability and governmental chaos every single time.
Also leave aside that this Repub extremist’s views on infrastructure spending weren’t so charitable when Obammy was the prez seeking some infrastructure spending. But we’ve dealt with “conservative” hypocrisy on another recent thread, haha.
The mendacious and hypocritical aspects of the Mulvanian “analysis” aside, the main point here is that (as predicted) Repubs from the Freedom Caucus on down are deficit hawks only under a Dem prez, and that the goal of the exercise (as always) is not “running the gub’mint like a business”, but instead rewarding the rich for their bribery payments by substantially cutting their taxes.
There was no real doubt that this was the “conservative” economic plan, but of course it’s always nice to see one’s predictions pan out. For the Right it’s back to “tax cuts trump all” and “deficits don’t matter!”*
*(under a Repub prez).
As one who is of 3/4 Irish ancestry, I’m really getting tired of all the crazy-stupid ass Irish Republicans. All these Bannons and Ryans and Pences and Mulvaneys are a goddamn disgrace to my people!
As a society, we go through this over and over and over, and somehow the obvious (and screamingly loud) conversation that would resolve it — or at least clarify it — never happens. Both sides talk past each other, in perpetuity.
I’ve encountered this first-hand (with well-to-do relatives and their earnest, idiotic “arguments” about wealth, race and class). Why take money away from people who “earned” it by “working” (since they have the anglo-saxon gene that makes them “job creators”) and give it to people who don’t — lazy blacks and Mexicans (although that’s implied or unsaid). If you take away all those subsidies people “will have to work for a living” and will stop playing their entrenched rôle as vampires leeching resources from the “hard workers.”
And it’s just so fucking easy to destroy this position — invariably the people saying this are standing on inheritances (and their failed ventures get bailed out by their parents over and over) or they’re part of that stupid scotch/steak/golf management class who sit around sucking money out of companies and jetting around while their wives go to spas or shop. The basic concept of social utility, of who produces and who takes, is reversed in their heads so crassly that it could, it seems to me, easily be overturned with a single srenuous argument the other direction. (They don’t want the reverse to be true, but that’s the point; that’s the real problem.)
But instead of sorting this out we go round and round in circles and Trump talks about deregulation and tax breaks “to create jobs” and it won’t work and they’ll blame liberals (and non-whites) for a fifth or sixth decade in a row. It’s extremely disheartening.
“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
He is asserting that the only values that the political system should adhere to are economic values of so-called efficiency in allocation of resources. I would very much like to see these guys prove their work and demonstration that what they advocate as policy is indeed the most efficient allocation of resources.
It is very easy to use that same value to argue that there should be zero restrictions on abortion.
That also means that political values like honesty and fair dealing by redistributing resources should not be the criteria of regulations.
Or cultural values like protection of children and families should have no place in laws and regulations.
It is the ideology of end-stage capitalism, and it is daft. It also collapses societies. Just watch. The Great Recession without a safety net and established local supply chains. What happens when the mortgage bankers are not the only ones under financial pressure as defaults race through college loans, credit card accounts, and other forms of personal credit? And rational managers lay off employees as markets drop and stores lose sales.
Oh, that’s what the army and police are for.
Like I said, daft.
The republican idea that the waelthy are entitled to keep what they “make” is becoming increasingly unworkable.
Looking to the future, the economy will eventually consist of owners, a few wage slaves, and robots doing almost all the actual work. This will be great for the owners, not so much for everyone else if the repub.s have their way. Mechanized farms, robot factories, self-driving trucks, and a few humans doing mechanical repair and higher level tasks. The government will be essential in redistributing the wealth of this system to us out-of-work slobs. Republicans don’t seem to understand that , in order to buy products, we slobs actually need some money. So they better get used to redistribution of wealth.
and completely unaddressed those facts regarding that future (rapidly turning into present) remain in our political/policy discourse.
Yes, I have to admit that I too don’t know how it’s all going to work out. But one thing I can say , to all those ex- factory workers and coal miners who voted for Trump because he was going to bring back their jobs: they’re gone. A machine is doing them now. It never asks for overtime, never gets sick or takes personal days, and doesn’t need retirement. Better learn to code., I guess. Or serve mocha lattes to rich owners.
These Goopers gotta lay off the Ayn Rand smelling salts and just move to the gulch already.
. . . good deficit spending . . . ” when GOPers take power from Dems, never more so than after 8 years of pretending government deficits are THE WORST THING POSSIBLE, EVAH!!!
This is how you can tell GOPers are shameless, lying hypocrites (well, one of an Everest of ways you can tell that).
It’s 36 years straight that the poor whites in the red states have fallen for this misdirection. It’s too bad they can’t envision themselves as more than feudal serfs in a system run by their betters.
That’s the real problem, they vote against unions even when the company supports the workers being represented, they vote for rich people getting all the income and getting as much of the tax cuts as possible, etc. It’s sad when people despise themselves so much that they think they aren’t entitled to decent things, basic dignity, or even an adequate education.
America has been coasting on it’s reputation built in the middle of the 20th century for a long time.
Wake me up when they actually start spending money on infrastructure in this country.
We’re missing the main thing here: He’s admitting that years of GOP rhetoric about free trade and making the pie bigger are lies. His POV depends upon the notion that there is a fixed amount of wealth available, and whoever gets it, well, gets it. It’s plain old laissez-faire that 7th grade social studies teachers used to present as obviously dumb and proven to be unworkable.
Now GOP dogma: fuck the poor. We got ours.