So is the Biden plan too big? We need to be clear about what it's for. IT'S NOT STIMULUS. This isn't at all like the ARRA, which was all about boosting demand; this is disaster relief. Or maybe it will help if we think of it as being like fighting a war against Covid fallout 1/
When you're budgeting for a war, you don't decide how much to spend by estimating what it would take to fill the output gap; you estimate what it would take to win the war. 2/
Is everything in the Biden plan well-targeted on our needs? No. But the controversial part, checks to most of the population, is just a fraction of the plan 3/
Mostly the plan is about directly fighting the pandemic, reopening schools, avoiding cuts in vital services, and helping families in dire need. Ideally we might achieve these goals at somewhat less cost, but speed and simplicity are more important than perfection 4/
Now, wartime spending isn't about stimulus, but is nonetheless stimulative, and overheating can be a real concern. But the Fed can contain inflation; and in any case the less-essential parts of the plan probably have low multipliers 5/
In particular, most of those "stimulus checks" will probably be saved, and aside from the fact that state/local aid is largely a way to head off fiscal contraction, any excess will probably be banked. 6/
So if you're worried about overheating, you shouldn't focus on the notion that the plan is too big; your real concern is that, like fighting a war, doing what needs to be done may be inflationary. And the answer in that case is not to do less, but to limit the inflation 7/
We'll see if we really do overheat. But the idea that this is a gratuitously large plan confuses the goals of the policy with the macroeconomics of getting it done 8/
ということで、バイデンプランは巨額過ぎるのだろうか? その目的についてはっきりさせておくべきだろう。これは刺激策ではない。これは、需要を支えることが至上課題だったARRAのようなものではまったくない。これは災害救助なのだ。あるいは、Covidがもたらす被害に対する戦争を遂行するようなもの、と考えると良いだろう。
バイデンプランにおいてはすべてが我々の需要に上手く応えているだろうか? 否、である。しかし論争の的となっている国民の大多数への小切手は、プランのごく一部に過ぎない。



My long form defense of going big on pandemic rescue. IT'S NOT ABOUT STIMULUS. It's like fighting a war (on pandemic fallout.) And you spend what you need to win a war, not just enough to close the output gap 1/
Fear of inflation are greatly exaggerated: the economy can probably run hotter than CBO thinks, the multipliers on a lot of the spending probably aren't that high, and the Fed is well able to contain inflation if it becomes a problem 2/
And the idea that we need to save fiscal ammunition for future programs is completely backwards. Remember 2009! The constraint is political, not financial; what we need is a program that delivers tangible benefits to voters, showing them that govt can do good. 3/
So go big. The risks of undershooting are too severe to do anything else 4/
それと、将来のプランのために財政の弾薬を取っておく必要があるというのは完全に後ろ向きである。2009年を思い出そう! 制約は政治的なものであって財政的なものではない。必要なのは、政府も良いことができる、ということを示す、有権者に目に見える恩恵を与えるプランなのだ。