5 ms·

It was the refutation to end all refutations that the reason we don't do $IMPORTANT_THING is "we can't afford it". Almost any utopian goal you can imagine is ac

by dTal 7y ago

It was the refutation to end all refutations that the reason we don't do $IMPORTANT_THING is "we can't afford it". Almost any utopian goal you can imagine is achievable with that budget. Switch the entire power infrastructure to solar? Easy. Food, houses for everyone? Petty cash. University education for all? Well within the budget. Essentially, it amounts to socialism for huge corporations, but not for little humans. "Too big to fail" for them - "too poor to survive" for us.

rayiner 7y ago
You're wrong on two fronts. First, you're ignoring the basic difference between expenditure and investment. When the government spends a dollar on healthcare, that may be an "investment" in an abstract sense, but the government is not directly getting that money back. In budgetary terms, it's expenditure. That is not true for the financial bailouts. There, the government didn't just spend money, it got assets in return. With respect to TARP, the government got most of that $400 billion back. It made a nominal profit, and adjusted for inflation maybe you can book it as a $24 billion loss: https://www.nationalreview.com/2015/01/overselling-tarp-myth-15-billion-profit-matt-palumbo https://www.nationalreview.com/2015/01/overselling-tarp-myth.... With respect to quantitative easing, what you're referring to is the Fed's SOMA operations. The Fed bought $3.5 trillion in assets (securities and treasuries--i.e. the right to be repaid money in the future). It is getting that money back as those assets mature. Right now, the Fed has about a $67 billion unrealized loss on those assets: https://seekingalpha.com/article/4225750-deterioration-fed-balance-sheet https://seekingalpha.com/article/4225750-deterioration-fed-b.... That means the fair market value of the assets is $67 billion less than the Fed's purchase price. So the actual cost of those programs is the $24 billion and $67 billion losses, not the $400 billion and $4 trillion it cost to purchase those assets. To put those numbers into perspective, the government has a portfolio of $1.5 trillion in student loans. Losses on that portfolio will cost the government $180 billion over the next decade: https://www.forbes.com/sites/prestoncooper2/2017/08/04/why-government-doesnt-profit-from-student-loans/#16db07f6eb63 https://www.forbes.com/sites/prestoncooper2/2017/08/04/why-g.... Second, you dramatically underestimate the cost of those social welfare programs. If we scaled up our welfare system to Swedish levels, that would cost an additional $2.2 trillion more per year.[2] That is five times the upfront cost of TARP ($400 billion), and 100 times the actual cost of TARP ($24 billion). Welfare is expensive. Even if universal healthcare reduces our healthcare spending to German or French levels, we're talking 10-12% of GDP, or $2.3 trillion: https://data.oecd.org/healthres/health-spending.htm https://data.oecd.org/healthres/health-spending.htm. Unlike the financial bailouts, that's (1) money you have to spend every year, not just once-in-a-generation; and (2) money you're not getting back. Put it another way. Together, all levels of government already spend about $7.4 trillion per year. $400 billion--what the government spent on a once-in-a-generation bailout, was just 6% of what it spends every year. $24 billion--the actual long-term cost of TARP, is just 0.3% of government's yearly expenditures. [1] Real-world example. Say in 2008 my parents house was worth $500k. The housing market collapses, and suddenly my parents need to sell their house. If they put it on the market, it would go at fire sale, say $200k. I bail them out, buying it for $450k. What was my cost of bailing them out? It wasn't $450k. It was $450k minus whatever I can ultimately sell the asset for. Say the market never recovers and I sell the house for $400k, 20% below the peak. The "bail out" cost me $50k, not $450k. [2] Swedish government spending is 49% of GDP, versus 38% of GDP in the U.S. https://data.oecd.org/gga/general-government-spending.htm https://data.oecd.org/gga/general-government-spending.htm. That 11% of GDP difference amounts to about $2.2 trillion.
- anigbrowl 7y ago
  Brilliant as you are Rayiner, I can't help noticing a certain Panglossian trend in your exegeses.
- lsc 7y ago
  >First, you're ignoring the basic difference between expenditure and investment. When the government spends a dollar on healthcare, that may be an "investment" in an abstract sense, but the government is not directly getting that money back. In budgetary terms, it's expenditure What does healthcare do for people of working age? It allows us to work more and more effectively, to make more money and either consume fewer subsides or to pay more taxes. Good healthcare means more and more effective workers.
  - rayiner 7y ago
    The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare. The government can book a mortgage-backed security it purchased as an asset that offsets the purchase price of the asset. Now, I think that universal healthcare certainly provides benefits that make it worthwhile, just as the bailout provided financial stability benefits that made it worthwhile. But those things are in the benefits column. I'm talking about how much an accountant would say that a government program cost.
    - dragonwriter 7y ago
      > The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare. From an MMT perspective, the government (any one using it's own fiat currency) creates and destroys money rather than spending and receiving it, even if it pretends otherwise in an outdated effort to ape a commodity-/representational-money system. So, viewed that way, it really has no need for such an asset. > Now, it is true that money spent on universal healthcare isn't being lit on fire--the government and the people gain some benefit from it. But that's in the benefit column, not the cost column. In the cost column is a reduction in private healthcare costs exceeding the I crease in public expenditures, as shown in every analysis (including ones from hostile sources), so if the government raised taxes so as to leave private taxpayers in the same position as they would be in with status quo policy, net government outflow would be reduced without any adverse impact on taxpayers.
deleted 7y ago
[deleted]

by dTal 7y ago

rayiner 7y ago

You're wrong on two fronts. First, you're ignoring the basic difference between expenditure and investment. When the government spends a dollar on healthcare, that may be an "investment" in an abstract sense, but the government is not directly getting that money back. In budgetary terms, it's expenditure. That is not true for the financial bailouts. There, the government didn't just spend money, it got assets in return. With respect to TARP, the government got most of that $400 billion back. It made a nominal profit, and adjusted for inflation maybe you can book it as a $24 billion loss: https://www.nationalreview.com/2015/01/overselling-tarp-myth-15-billion-profit-matt-palumbo https://www.nationalreview.com/2015/01/overselling-tarp-myth.... With respect to quantitative easing, what you're referring to is the Fed's SOMA operations. The Fed bought $3.5 trillion in assets (securities and treasuries--i.e. the right to be repaid money in the future). It is getting that money back as those assets mature. Right now, the Fed has about a $67 billion unrealized loss on those assets: https://seekingalpha.com/article/4225750-deterioration-fed-balance-sheet https://seekingalpha.com/article/4225750-deterioration-fed-b.... That means the fair market value of the assets is $67 billion less than the Fed's purchase price. So the actual cost of those programs is the $24 billion and $67 billion losses, not the $400 billion and $4 trillion it cost to purchase those assets. To put those numbers into perspective, the government has a portfolio of $1.5 trillion in student loans. Losses on that portfolio will cost the government $180 billion over the next decade: https://www.forbes.com/sites/prestoncooper2/2017/08/04/why-government-doesnt-profit-from-student-loans/#16db07f6eb63 https://www.forbes.com/sites/prestoncooper2/2017/08/04/why-g.... Second, you dramatically underestimate the cost of those social welfare programs. If we scaled up our welfare system to Swedish levels, that would cost an additional $2.2 trillion more per year.[2] That is five times the upfront cost of TARP ($400 billion), and 100 times the actual cost of TARP ($24 billion). Welfare is expensive. Even if universal healthcare reduces our healthcare spending to German or French levels, we're talking 10-12% of GDP, or $2.3 trillion: https://data.oecd.org/healthres/health-spending.htm https://data.oecd.org/healthres/health-spending.htm. Unlike the financial bailouts, that's (1) money you have to spend every year, not just once-in-a-generation; and (2) money you're not getting back. Put it another way. Together, all levels of government already spend about $7.4 trillion per year. $400 billion--what the government spent on a once-in-a-generation bailout, was just 6% of what it spends every year. $24 billion--the actual long-term cost of TARP, is just 0.3% of government's yearly expenditures. [1] Real-world example. Say in 2008 my parents house was worth $500k. The housing market collapses, and suddenly my parents need to sell their house. If they put it on the market, it would go at fire sale, say $200k. I bail them out, buying it for $450k. What was my cost of bailing them out? It wasn't $450k. It was $450k minus whatever I can ultimately sell the asset for. Say the market never recovers and I sell the house for $400k, 20% below the peak. The "bail out" cost me $50k, not $450k. [2] Swedish government spending is 49% of GDP, versus 38% of GDP in the U.S. https://data.oecd.org/gga/general-government-spending.htm https://data.oecd.org/gga/general-government-spending.htm. That 11% of GDP difference amounts to about $2.2 trillion.

anigbrowl 7y ago
Brilliant as you are Rayiner, I can't help noticing a certain Panglossian trend in your exegeses.
lsc 7y ago
>First, you're ignoring the basic difference between expenditure and investment. When the government spends a dollar on healthcare, that may be an "investment" in an abstract sense, but the government is not directly getting that money back. In budgetary terms, it's expenditure What does healthcare do for people of working age? It allows us to work more and more effectively, to make more money and either consume fewer subsides or to pay more taxes. Good healthcare means more and more effective workers.
- rayiner 7y ago
  The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare. The government can book a mortgage-backed security it purchased as an asset that offsets the purchase price of the asset. Now, I think that universal healthcare certainly provides benefits that make it worthwhile, just as the bailout provided financial stability benefits that made it worthwhile. But those things are in the benefits column. I'm talking about how much an accountant would say that a government program cost.
  - dragonwriter 7y ago
    > The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare. From an MMT perspective, the government (any one using it's own fiat currency) creates and destroys money rather than spending and receiving it, even if it pretends otherwise in an outdated effort to ape a commodity-/representational-money system. So, viewed that way, it really has no need for such an asset. > Now, it is true that money spent on universal healthcare isn't being lit on fire--the government and the people gain some benefit from it. But that's in the benefit column, not the cost column. In the cost column is a reduction in private healthcare costs exceeding the I crease in public expenditures, as shown in every analysis (including ones from hostile sources), so if the government raised taxes so as to leave private taxpayers in the same position as they would be in with status quo policy, net government outflow would be reduced without any adverse impact on taxpayers.

deleted 7y ago

[deleted]