Who is writing that $1000 check?

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I hate to be rude, but I have to ask that question. Let’s say I get a check in the mail, for $1000, payable to me. But I look at the check closely and I see that the payer is also me. I have written a check to myself. Am I stimulated?

If the government were forced to run a balanced budget, then in order to write a $1000 check to me, it would have to tax someone else by $1000. (Or it could cut other spending. As you know, I would favor a Universal Basic Income that replaces food stamps, Medicaid, etc., if I thought that the political process would make that trade.) With deficit spending, the government borrows the money from some future taxpayer. See Lenders and Spenders. Or the government can just print the money. See Modern Ponzi Theory.

I often describe myself as the last fiscal hawk in America. The rest of you have been ignoring me for years, and nothing has gone wrong. Yet.

15 thoughts on “Who is writing that $1000 check?”

  1. Thank you. This is something that probably deserves a blog of its own, done by you. If you were Bruce Charlton you could start another blog every year and this topic could have its own blog. You’d have a dozen blogs going for different topics.

    What are some of the underlying factors?

    (1) risk homeostasis and

    (2) short time horizons can explain a lot.

    Additionally there is

    (3) the US dollar’s role as a reserve currency, and

    (4) historical illiteracy.

    Thomas Jefferson said education for citizens in country such as ours should be “chiefly historical,” but instead we seem to educate consumers and people with marketing genius. We have all kinds of geniuses in this country, but fiscal genius may be hard to find here.

    5. The lack of genuine obvious military threat seems to contribute. “Money is the sinews of war”–but in the meantime borrowing is just a way to kick the can down the road.

    Tim Blanning talks about hard-headed fiscal policy for military strength in Britain, to be compared to fiscal irresponsibility which progressively weakened France during the 1700s. It’s in his big book _The pursuit of glory: Europe 1648 – 1815_.

    6. As a final thought, perhaps the people who think there is a problem plan to land on their feet, and plan to just be “incorrect with everyone else,” rather than being correct in isolation. As a career strategy that seems to work

    Thanks for listening.

  2. Fiscal stimulus now will be wasted, unless it focuses on unemployment benefit extensions and paid sick days for hourly employees. We want to discourage sick people from spreading the virus by showing up to work or interviewing for new jobs.

  3. It’s a strange situation because the government is forcing people to not work, while at the same time financial obligations continue on their remorseless schedule.

  4. I think the idea is closer to the ponzi scheme than to a check written to oneself. There is a legitimate *intergenerational* transfer of wealth in sending $1,000 checks: We benefit, future citizens pay. Perhaps that thinking is,

    Dear future citizens, we are facing a crisis and, recognizing that you will be much wealthier than us and likely to benefit from measures that insulate the economy today, are asking you to pay for our preventive measures. We cannot ask permission, but hope to earn your forgiveness when you understand our decisions.

  6. My Presidential Platform

    1. Implement a nationwide VAT to replace all taxes.
    2. Replace all social welfare spending with cash payments to EBT cards.
    3. Repurpose IRS and State tax agents to ensure compliance.
    4. Adjust VAT rates and cash payments as needed (pandemics, recessions, unemployment).
    5. All politicians convert to part time work schedules to limit the damage.

  7. I am really furious at the payments going to everyone. As a teacher, I’m working from home as much as possible, and otherwise getting a free paid sabbatical. Most federal and state workers are in the same position. Many tech workers are actually working.

    It is insane to give all of us money. Make it an unemployment benefit.

    • Employment Insurance (EI) is one of the mechanism Canada announced in response to COVID-19.

      The tradeoff is that EI is mostly needed in response to the mandated shutdown. As far as I can tell, everything is tentatively scheduled to re-open on Mon. April 6. I think it will probably be obvious a week from now (~ March 26) whether or not the Travel cases are on track for full containment.

  8. Who pays? As you say, some mix of future taxpayers, future dissapointed entitlement non-recipients, and future dollar-denominated-asset holders.

    Good! There are people who need it now more than those unidentified richer future folk.
    and letting the government try to decide who gets it never goes well – I fully support removal of discretion in such things.

  9. Gotta agree with the other commenters who say that now is a good time to borrow from future taxpayers. I do wish I could see some results from models of many QALYs we get from the spending. My suspicion is that it looks like a pretty good return in terms of QALY per dollar, and you benefit people in the here and now.

  10. Here’s an idea: If the Congress votes to give “everyone” a bunch of money, it should follow up by using the tax code to claw the money back from those who shouldn’t need it, based on reported income. Like me, for instance.

    Ken

  12. I often describe myself as the last fiscal hawk in America. The rest of you have been ignoring me for years, and nothing has gone wrong. Yet.

    This is unreasonable. Lots of people believe that the national debt is a serious growing problem.

    Fiscal responsibility is politically unpopular and unexciting. Politicians compete hard for whatever political leverage and success they have, and they don’t want to throw it away on a losing issue. Lots of op-ed type pundits lecture their audiences on fiscal responsibility, and they take no risk or compromise or sacrifice to do so.

    • > Fiscal responsibility is politically unpopular and unexciting.

      It’s also empirically… difficult, if not outright false. I don’t know of a better story for why the Depression ended than that World War II created a fisc-fueled basis for activity. It seems ot be a subject in which we can’t tell the symbols from that they represent, so it’s fraught with symbol-reification.

  13. Write thousand dollar checks today to everyone that will be paid by the upper half of earners over the next 10 years. It’s a loan from the future. Or at least that’s how it should work.

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