The Senseless Post-2008 Lost Decade
Hello again! After the 2008 crisis, America suffered over a decade of high unemployment and weak growth. In my latest video project (delivered in an off-the-cuff live recording, which it turns out is dramatically easier to do), I explain how this could have been avoided:
Last week at the Prospect we were closing the latest print issue, so I didn't have much time to write. However I did manage to knock out two pieces. First is about a new plan to boost Social Security funding by creating a social wealth fund:
This is not just a fair source of funding—the richest top 1 percent of Americans own over a third of American wealth—it’s also just plain common sense. As policy analyst Matt Bruenig points out in a People’s Policy Project paper advocating a broader social wealth fund: “Between 1990 and 2017, the average interest rate for a 1-year treasury bond purchased on the first day of the year was 3.17 percent. During the same time, the average total return of the S&P 500 was 11.3 percent.” Given how often politicians and commentators advocate for running the government like a business, it is remarkable how few have noticed this free 8.13 percent return sitting on the table. Any Wall Street trader would kill for that kind of opportunity—and if we had done so, Social Security would be in far better shape financially than it currently is.
Second, minting the platinum coin is Biden's most legally defensible option to deal with the debt ceiling:
Yet there is one aspect of the debt limit issue that has gotten little coverage: It would be just as illegal to obey the limit as it would be to ignore it. If Republicans refuse to raise the debt ceiling, they will put the president in a bind: requiring him to spend, but forbidding him from borrowing the necessary money. Biden would have no way out — unless he opts for the platinum coin loophole. Without the coin, the president would violate the law one way or another. It’s hard to see why he would choose the option that causes an economic crisis.
See you again soon!