Must-Read: Alice Rivlin described how she, in the first Obama administration, successfully negotiated with Paul Ryan, a serious person interested in honest estimates of how policies would work. I remember it very differently. Worth flagging for everybody thinking of taking Ryan’s policy competence or Ryan-endorsed estimates seriously:

Ryan Avent (2011): Best Budget Ever: “PAUL RYAN has officially revealed the House Republicans’ budget proposal…

…Whatever your take on the policy proposals, it’s worth approaching the rosy claims made on its behalf with extreme caution…. Heritage analysis… [is] simply outlandish…. Ryan’s plan will bring the unemployment rate down to… 2.8% in 2021…. That’s unrealistic enough to be considered somewhat bizarre. Everyone puts a positive spin on their policy proposals. But fundamentally worthy policies shouldn’t need to promise laughably overoptimistic outcomes to win support…

Must-Read: The Republican House caucus led by mainstream media-acclaimed “policy wonk” Paul Ryan are best thought of as a bunch of 19 year old college frat boys who didn’t do the reading winging it in a Model Budget Simulation course:

David Kamin: How a Tax Cut Turns Into a Tax Increase: “In rolling out their plan, House Republicans focused on an example family…

…a married couple making $59,000 per year and with two kids… a tax cut of over $1,182 in 2018…. [But] that… family making $59,000 would face a tax increase by 2024 relative… potentially rising to $500 by 2027.. even as tax cuts for those at the top are maintained….”

Should-Read: Mark Thoma: Federal Reserve Independence: “After the FOMC cut interest rates to almost nil during the Great Recession, the committee took advantage of its independence to boldly go where no Fed had gone before…

…With its “quantitative easing” program, the Fed purchased vast quantities of securities other than Treasury bonds, flooding banks with loanable deposits. President Obama respected the Fed’s independence, probably because it was pursuing policies that his advisers found appealing in light of their own frustrations with being unable to use more fiscal stimulus to speed the recovery. But the reaction from Republicans in Congress was a familiar one: threats to intervene.

This was partly inspired by genuine fears that the magnitude of the quantitative easing initiative would unleash inflation, and partly by a partisan inclination to attack an institution seen as allied with the Obama administration. It’s hard to know the extent to which pressure from Congress constrained the Fed’s actions. But the threats to audit the Fed, monitor policy decisions and strip it of its regulatory powers, combined with the public’s anger at policies that served the interests of Wall Street, certainly motivated Bernanke to mount an unusually public campaign defending the Fed’s independence…

Should-Read: Elhanan Helpman, Oleg Itskhoki, Marc-Andreas Muendler, and Stephen J. Redding: From Theory to Estimation: “Trade and Inequality: While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors…

…more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and sectors…. [In] Brazil… much… overall wage inequality arises within sector–occupations and for workers with similar observable characteristics; this within component is driven by wage dispersion between firms; and wage dispersion between firms is related to firm employment size and trade participation. We then extend the heterogenous-firm model
of trade and inequality from Helpman et al. (2010) and estimate it with Brazilian data. We show that the
estimated model provides a close approximation to the observed distribution of wages and employment.
We use the estimated m…

Should-Read: Paul Krugman: Paul Ryan Is Choking On His Own Mystery Meat: “A cynic might have expected Republicans to go for full-on cynicism…

…“What, you took it seriously when we talked about fiscal responsibility? The joke’s one you! Ha ha ha!” And to a certain extent that is what they’ve done: after all the deficit-hawk posturing, they’re openly admitting that their intention is to increase the deficit by $1.5 trillion.

But they apparently didn’t feel free to cut completely loose: they did set a deficit target, and as I understand the mechanics of reconciliation, the budgets passed by the House and Senate, while they don’t actually set policy, kind of leave them stuck with an upper limit on just how much they can blow up the deficit.

And they have no idea how to get there. Try to cut one set of deductions, and the homebuilders get mad at you. Try to cut another, and upper-middle-class suburbanites in blue states who still vote GOP get mad. And so on.

The point is that these problems were always predictable, which is why the Ryan budgets were always obviously fraudulent. Ryan’s fakery may have fooled his naive constituents — by which I mean practically the whole Beltway pundit class — but never fooled anyone who could do the math.

So will the GOP pass something? Probably — but it’s more likely to be a miniature Christmas tree of handouts to the wealthy than the grand tax reform they’ve been promising.

?And let’s hope that whatever happens gets reported as the failure it is. Ryan and company promised big stuff, but never had any way to deliver. When it comes to big lies, Donald Trump is actually a very good, very normal Republican…

Must-Read: Martin Wolf: The challenge of Xi Jinping’s Leninist autocracy: “Xi Jinping[‘s]… claims… are bold: ‘Socialism with Chinese characteristics has crossed the threshold into a new era,’…

…’It offers a new option for other countries and nations who want to speed up their development while preserving their independence’. The Leninist political system is… yet again, a model…. Yet how has the system that failed in Moscow succeeded in Beijing?… Deng Xiaoping… freeing the economy… maintain[ing] party control…. Whether the Soviet Union could have followed such a path is open to debate. But it did not. As a result, today’s Russia does not know how to mark the October revolution…. Xi is… an autocrat… but… also an heir to the Leninist tradition. His legitimacy rests on the party’s….

China has indeed learnt from the west in economics. But it rejects modern western politics…. China has an ostensibly modern template for its ancient system of imperial sovereignty and meritocratic bureaucracy. But the party is now emperor…. Will this combination of Leninist politics with market economics go on working?… We do not know…. The system has worked spectacularly so far. Yet… the party… always above the law… makes power ultimately lawless… corruption… sap[ping] economic dynamism… as the economy and… education advance, the desire for a say in politics will become overwhelming….

All this is for the long run. The immediate position is quite clear. China is emerging as an economic superpower under a Leninist autocracy, controlled by one man. The rest of the world has no choice but to co-operate peacefully…. Those of us who believe in liberal democracy… need to recognise that China not only is, but sees itself, as a significant ideological rival. First, the west has to keep a margin of technological and economic superiority, without developing an unduly adversarial relationship with Mr Xi’s China. China is our partner. It is not our friend. Second and far more important, the west (fragile as it is today) has to recognise—and learn from—the fact that management of its economy and politics has been unsatisfactory for years, if not decades… financial crisis… under-invested in its future… yawning gulf… between economic winners and the losers… let lies and hatred consume its politics…. The west needs rejuvenation, too…. Autocracy is the age-old human norm. It must not have the last word.