Tag: Austerity

Why Do We Talk About “Helicopter Money”?

Posted on by Brad DeLong

Why do we talk about “helicopter money”? We talk about helicopter money because we seek a tool for managing aggregate demand–for nudging the level of spending in an economy up to but not above the economy’s current sustainable productive potential–that is all of:

  1. Effective and successful–even in the very low interest rate world we appear to be in.
  2. Does not excite fears of an outsized central bank balance sheet–with its vague but truly-feared risks.
  3. Does not excite fears of an outsized government interest-bearing debt–with its very real and costly amortization burdens should interest rates rise.
  4. Keeps what ought to be a technocratic problem of public administration out of the mishegas that is modern partisan politics.

Right now the modal projection by participants in the Federal Reserve’s Open Market Committee meetings is that the U.S. Treasury Bill rate will top out at 3% this business cycle. It would be a brave meeting participant who would be confident that we would get there–if we would get there–with high probability before 2020. That does not provide enough room for the Federal Reserve to loosen policy by even the average amount of loosening seen in post-World War II recessions. Odds are standard open market operation-based interest rate tools will not be able to do the macroeconomic policy stabilization job when the next adverse shock hits the economy.

The last decade has taught us that quantitative easing on a scale large enough to rapidly return economies to full employment is one bridge if not more too far for central banks as they are currently constituted–if, that is, it is possible at all. The last decade has taught us that bond-funded expansionary fiscal policy on a scale large enough to rapidly return economies to full employment is at least several bridges too far for our political systems, at least as they are currently constituted.

If we do not now start planning for how to implement helicopter money when the next adverse shock comes, what will our plan be? As a candidate for a tool capable of doing all four of these things, helicopter money–giving the central bank the additional policy tool of printing up extra money and either mailing it out to households as checks or getting it into the hands of the public by buying extra useful stuff–is our last hope, and, if it is not our best hope, then I do not know what our best hope might be.

The “Confidence Fairy” and the Ideology of Economic Theory and Policy: Alas! Still Preliminary Little More than Notes…

Posted on by Brad DeLong

I promised more on this in August.

Last August.

August 20125.

I am, clearly, very late:

Paul Krugman: Fairy Tales:

Mike Konczal, channeling Kalecki, pointed out…

…arguments rejecting Keynes and declaring that only business confidence can achieve full employment serve [the] very useful political purpose… [of] empower[ing] plutocrats and big business…. And this speaks to the wider point of the politicization of macroeconomics. Why did freshwater macroeconomists refuse to learn from the lessons of the Volcker recession and recovery, which clearly refuted their approach and supported some kind of Keynesian view on monetary policy? Why has the overwhelming recent evidence for a Keynesian view of fiscal policy been ignored? You might think that business, at least, would welcome policies that boost sales; but the ideology of confidence must be defended.

At the level of academic economics it is a huge puzzle–after all, Ed Prescott and Bob Lucas decide that downturns are driven not by monetary but by real factors just at the very moment when Paul Volcker hits the economy with a brick, and demonstrates not just that contractionary policy has contractionary effects on the real economy, but that doing everything he could to make his contractionary policy anticipated and credible did not materially lessen those real effects. A bigger example of “who are you going to believe, me and Ed or your lying eyes?” would be hard to imagine.

The best excuse I have found takes off from Marion Fourcade et al.‘s analysis of the American economics profession, especially their observations on the rise of business schools and business economics in shaping what economists think about and how they think it. That they are predisposed by their social location into believing that bankers (and the businessmen) are key value-adders in the economy creates an elective affinity with the macroeconomic doctrine that the bankers and businessmen have got us by the plums, and so the only durable way to create a strong and healthy economy is to keep them confident and enthusiastic about investing in new capital equipment now–which means keeping them very confident and very secure in their expectations of future profits.

My current (very imperfect) thoughts about this are contained right now in: The Confidence Fairy in Historical Perspective.

I was going to revise it into a proper paper before letting it out of the gate into the public. But that has not yet happened. So let me at least put the slides below the “fold”, if “fold” has any meaning anymore. Or, rather, below the next “fold”:

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What Was Herbert Hoover’s Fiscal Policy?: Hoisted from Five Years Ago

Posted on by Brad DeLong
Herbert hoover as president Google Search

What Was Herbert Hoover’s Fiscal Policy?: In his Budget Message setting out his plans for taxes and spending for fiscal year 1932, Herbert Hoover begged Congress not to embark on any ‘new or large ventures of government’. He admonished congress that even though ‘the plea of unemployment will be advanced as reasons for many new ventures… no reasonable view of the outlook warrants such pleas’. And he boasted that he was proposing a balanced budget–even though revenues were mightily depressed by the Great Depression:

This is not a time when we can afford to embark upon any new or enlarged ventures of Government. It will tax our every resource to expand in directions providing employment during the next few months upon already authorized projects. I realize that, naturally, there will be before the Congress this session many legislative matters involving additions to our estimated expenditures for 1932, and the plea of unemployment will be advanced as reasons for many new ventures, but no reasonable view of the outlook warrants such pleas as apply to expenditures in the 1932 Budget.

I have full faith that in acting upon these matters the Congress will give due consideration to our financial outlook. I am satisfied that in the absence of further legislation imposing any considerable burden upon our 1932 finances we can close that year with a balanced Budget. When we stop to consider that we are progressively amortizing our public debt, and that a balanced Budget is being presented for 1932, even after drastic writing down of expected revenue, I believe it will be agreed that our Government finances are in a sound condition…

Over at the Atlantic Monthly, Megan McArcle claimed that ‘Hoover was no budget-cutter’:

Hoover Was No Budget-Cutter: Hoover did not tighten up on spending.  According to the historical tables of the Office of Management and Budget, spending in 1929 was $3.1 billion, up from $2.9 billion the year before. In 1930 it was $3.3 billion. In 1931, Hoover raised spending to $3.6 billion.  And in 1932, he opened the taps to $4.7 billion, where it basically stayed into 1933 (most of which was a Hoover budget)…

In his Budget Message for fiscal year 1933, Hoover wrote:

In framing this Budget, I have proceeded on the basis that the estimates for 1933 should ask for only the minimum amounts which are absolutely essential for the operation of the Government under existing law, after making due allowance for continuing appropriations. The appropriation estimates for 1933 reflect a drastic curtailment of the expenses of Federal activities in all directions where a consideration of the public welfare would permit it….

The welfare of the country demands that the financial integrity of the Federal Government be maintained…. [W]e are now in a period where Federal finances will not permit of the assumption of any obligations which will enlarge the expenditures to be met from the ordinary receipts of the Government….

To those individuals or groups who normally would importune the Congress to enact measures in which they are interested, I wish to say that the most patriotic duty which they can perform at this time is to themselves refrain and to discourage others from seeking any increase in the drain upon public finances…

That is not a man who wants to open up the taps. That is not a man who thinks that he is opening up the taps.

So what is going on here?

I think that Megan McArdle’s major problem is that she is looking at one table–Table 1.1 in OMB’s Historical Tables. She is not reading Hoover’s Budget Messages or any other documents from the Hoover administration, not reading histories of the Hoover administration, not identifying how what congress finally enacted and what Hoover signed differed from what Hoover had originally proposed–or indeed, at how as the Great Depression deepened Hoover decided at the very start of calendar year 1932–halfway through fiscal year 1932–to push for measures (Reconstruction Finance Corporation, Home Loan Bank, direct loans to fund state Depression relief programs) that increased spending–but did so alongside the Revenue Act of 1932 that increased taxes.

After he decided that he was President and that the Treasury Secretary Andrew Mellon whom he had inherited from Coolidge worked for him and that Mellon should go off to be Ambassador to the Court of St. James, Hoover did decide to do something to fight the Great Depression. Tax increases to try to balance the budget in order to call down the confidence fairy made up the biggest part of his plan. But Hoover also sought to fund state relief. And he sought to set up GSE’s (RTC, HLB) to restart broken capital markets.

But to say that ‘Hoover was no budget-cutter’ misses most of the story. Hoover would have been a budget-cutter in normal times. Hoover was a budget-balancer. Hoover held the line against powerful political forces that sought to increase government spending in the Great Depression for fully 2 1/2 years before endorsing what seem to us to be half-measures.

The Need for Expansionary Fiscal Policy

Posted on by Brad DeLong
Sisyphus Greek mythology Britannica com

I understand that we are Sisyphus here. And I accept that:

Je laisse Sisyphe au bas de la montagne! On retrouve toujours son fardeau. Mais Sisyphe enseigne la fidélité supérieure qui nie les dieux et soulève les rochers. Lui aussi juge que tout est bien. Cet univers désormais sans maître ne lui paraît ni stérile ni futile. Chacun des grains de cette pierre, chaque éclat minéral de cette montagne pleine de nuit, à lui seul, forme un monde. La lutte elle-même vers les sommets suffit à remplir un coeur d’homme. Il faut imaginer Sisyphe heureux.

But would people who ought to know better please stop adding weights to the stone that we are trying to roll uphill?

Thus I find myself quite annoyed by the sharp and usually-reliable Greg Ip this morning…

Let me back up: Here’s the story so far:

(1) They say that North Atlantic governments cannot afford to spend more to boost their economies via expansionary fiscal policy right now. We point out that current interest rates on Treasury debt are so low low private company would pass up the ability to borrow to stimulate and invest.

(2) They then say that maybe interest-rate will jump up a lot, soon, and thus make borrow to spend to stimulate and invest a bad deal. We point out that financial markets certainly do not expect any such thing. And we points out that, if you are truly worried about longer-run debt sustainability, the standard calculations tell us that debt- and amortization-to-GDP ratios will be lower with aggressive borrow and spend to stimulate and invest policies then with austerity.

(3) They then say that financial markets are irrational and wrong–it interest-rate will go up, will go up soon, and will go up far. We point out that fearful financial markets have been better forecasters then their hopes of imminent normalization every year for the past decade.

(4) They then say: let’s ignore those interest rates and pretend they are not telling us anything about the benefits and costs right now of fiscal expansion. We reply: you are economists–economists are supposed to take prices seriously, not throw the information in them away.

(5) They then say: nevertheless, running up the nominal debt through expansionary fiscal policy is somehow risky. We say: do helicopter money, which does not run up the debt.

(6) They then say: but even a half booming economy will take the pressure off of governments and bureaucrats to undertake urgent and important structural reforms. We ask: what evidence can you point to to support any claim that useful structural reform is easier and I low-pressure that in a high-pressure economy?

And we are met with silence.

And then they go back to parroting their talking point (1) again.

Greg Ip: Needed: A Contingency Plan for Secular Stagnation: “What if Larry Summers is right…

…[and there is] a chronic deficiency of investment relative to savings that has trapped the world in a state of low economic growth largely resistant to monetary policy[?] Events… have strengthened Mr. Summers’s case…. Formerly skeptical economists are less so: Both the International Monetary Fund and the Federal Reserve have implicitly warmed to Mr. Summers’s thesis. With yields taking another leg down after Britain’s vote to leave the European Union, the evidence of secular stagnation, Mr. Summers says, is stronger than ever. If he’s right, the world needs a contingency plan. The most direct response is more expansionary fiscal policy (i.e. lower taxes or higher spending), which would bolster demand and push interest rates up.

But policy makers are rightfully wary about acting in the face of so many contradictory signals. In the U.S., unemployment is moving lower and stocks are hitting new highs. Bonds could be pricing in secular stagnation, or merely a greater bias toward hyper-stimulative monetary policy by central banks…

Why are policy makers rightfully wary? All Ip says is:

Paolo Mauro of the Peterson Institute for International Economics notes that countries have often overestimated their long-term potential growth, resulting in too-high deficits and debts…

Um. No. The arithmetic tells us that at current interest rates fiscal expansion right now will not raise but lower the debt- and amortization-to-GDP ratios. Unless Mauro wants to take that on–which he does not–his piece is irrelevant for that reason alone. Moreover, Mauro seems to think that we have been overestimating long-term potential growth and correcting estimating long-term interest rates. That is wrong. We have been overestimating both long-term interest rates and long-term potential growth. If you overestimate both by the same amount, the biases induced in your estimates of the right current debt-to-GDP ratio are offsetting. The right level of the debt-to-GDP ratio is primarily a function of r-(n+g), the difference between the real interest rate r on Treasury debt and the real growth rate g of productivity plus the real growth rate n of the labor force. A reduction in r accompanied by an equal or smaller reduction in (n+g) is not a first-order reason to reduce government spending or the deficit right now. And that is what we have.

Here Larry Summers is right. Greg Ip is wrong. Larry has by now written a huge amount about his. Yet Ip counterposes his body of work to one working paper by Paulo Mauro that is, as best as I can see, irrelevant to secular stagnation arguments and concerns.

Why is it irrelevant? Mauro does correctly point out that lower future growth is a reason to slow the future growth of real government spending. But what Mauro does not point out is that such a fall in projected future growth is a reason to cut the level of spending now–or to avoid increases in the level of spending that would otherwise be good policy now–only if the slower expected growth is unaccompanied by an equal reduction in Treasury interest rates. Our reduction in expected future economic growth appears to have accompanied by a larger reduction in Treasury interest rates.

This opinions-of-shape-of-earth-differ-both-sides-have-a-point framing is… beneath what Greg ought to be writing. If he thinks Larry is wrong–or even that the anti-Larry case is arguable–he needs to find and quote real arguments that have real relevance here, and more than one of them, not a single piece from the Peterson Institute that is off-point.

Must-Read: Storify: The Puzzling Aversion to Expansionary Fiscal Policy: ‘Low interest rates are not really low’, or something…

Posted on by Brad DeLong

Must-Read: Storify: The Puzzling Aversion to Expansionary Fiscal Policy: ‘Low interest rates are not really low’, or something…

Time to Play Whack-a-Mole with the Expansionary-Austerity Confidence-Fairy Zombie Once Again!

Posted on by Brad DeLong

Four readings on the expansionary austerity zombie:

Reading #1: Paul Krugman (2015):

Paul Krugman: Views Differ on Shape of Macroeconomics (2015): “The doctrine of expansionary austerity…

…the claim that slashing spending would actually boost demand and employment, because it would have such positive effects on confidence that this would outweigh the direct drag–was immensely popular among policymakers in 2010, as the great turn toward austerity began. But the statistical underpinnings of the doctrine fell apart under scrutiny: the methods Alberto Alesina used to identify changes in fiscal policy did not, it turned out, do a very good job, and more careful work found that historically austerity has in fact been contractionary after all. Moreover, the experience of austerity programs seemed to confirm what Keynesians new and old had warned from the beginning–that the negative effects of austerity are much larger under conditions where they cannot be offset by conventional monetary policy. So at this point research economists overwhelmingly believe that austerity is contractionary (and that stimulus is expansionary)…. For now at least expansionary austerity has virtually collapsed as a doctrine taken seriously by researchers. Nonetheless, Simon Wren-Lewis points us to Robert Peston of the BBC declaring

I am simply pointing out that there is a debate here (though Krugman, Wren-Lewis and Portes are utterly persuaded they’ve won this match–and take the somewhat patronising view that voters who think differently are ignorant sheep led astray by a malign or blinkered media).

Wow. Yes, I suppose that ‘there is a debate’ — there are debates about lots of things, from climate change to evolution to alien spaceships hidden in Area 51. But to suggest that this debate is at all symmetric is just wrong — and deeply misleading to one’s audience. As for the claim that it’s somehow patronizing to suggest that voters are ill-informed when (a) macroeconomics is a technical subject, and (b) the media have indeed misreported the state of the professional debate — well, this is sort of an economic version of the line that one must not suggest that the Iraq war was launched on false pretenses, because this would be disrespectful to the troops. If you’re being accused of misleading reporting, it’s hardly a defense to say that the public believed your misinformation — more like a self-indictment…

The question to which “expansionary austerity” was relevant was never: can one substantially reduce the budget deficit without risking substantial recession? The answer to that was always yes: if fiscal contraction is supported by monetary expansion a outrance the decline in government purchases from spending reductions and in consumption spending from tax increases can be offset and more than offset by higher exports and higher investment spending. That is and has been standard Keynesian doctrine since the 1950s, at least. (Cf. the Economic Report of the President chapter that Robert Solow drafted in the early 1960s.)

The novelty of Alesina’s claim was not that monetary offset can neutralize the short-run contractionary effect of fiscal austerity. It was, rather, that summoning the Confidence Fairy could and many times had neutralized the short-run contractionary effect of fiscal austerity.

The question to which “expansionary austerity” purported to give the answer was: At the zero lower bound, where attempts to stimulate the economy through expansionary monetary policy have greatly reduced traction and are fraught, is the connection between lower deficits and more optimistic business animal spirits strong enough that one can one substantially reduce the budget deficit without risking substantial recession?

And back in 2010 Alberto Alesina very strongly said that the answer to that was “yes”: Reading #2:

Alberto Alesina: Fiscal Adjustments: Lessons from Recent History

Many even sharp reductions of budget deficits have been accompanied and immediately followed by sustained growth rather than recessions even in the very short run. These are the adjustments which have occurred on the spending side and have been large, credible and decisive…. Governments which have initiated thorough and successful fiscal adjustment policies have not systematically suffered at the polls… especially… when the electorate has perceived the sense of urgency of a crisis or in some cases in the presence of an external commitment. On the contrary, fiscally-loose governments have suffered losses at the polls…. Thus relatively painless (economically and politically) fiscal adjustments might be possible; whether government will take the opportunity remains to be seen…

“Many” and “even sharp” have been “immediately followed” because adjustments that “have been large, credible and decisive” and “have occurred on the spending side” have summoned the Confidence Fairy. Thus governments should “take the opportunity” for the “relatively painless (economically and politically) fiscal adjustments” that “might be possible” via expansionary austerity.

This was pretty much completely wrong. Many of Alesina’s adjustments were not policy adjustments at all–but rather unplanned side-effects of booms driven by other factors. The rest appeared, to me at least, to be due to the kind of expansionary monetary policy offset that the Clinton administration had planned and carried out over 1993-6 and that was not possible at the zero lower bound.

Nevertheless, it appears that Alesina is sticking to his guns here: Reading #3:

Alberto Alesina (2016) Fiscal Policy and Austerity: “Well, I think Paul Krugman has rather extreme views…

…But more importantly, he talks about his views as if they were obviously true, and anybody who would disagree with him was obviously wrong. And he exaggerates. And that I really prefer not to go into a discussion about his quotes.

But I think that the idea that the work about austerity that I and others have done has been discredited is wrong. In fact, the IMF, in 2010 wrote a rather pointed criticism about my work…. [The IMF’s] second point is whether whether there are cases where spending cuts accompanied by other policies can be expansionary, and the confidence argument that he makes fun of is actually confidence, one of the many aspects; and we can elaborate on that. But I think that there are several episodes in which fiscal spending cuts have been accompanied not by a recession, but by an expansion. So, I think that those kind of statements by Krugman are trying to push a view which is respectable but they are not proven by the facts. Or at least they are not supported by research….

I do think that confidence is important, because we have empirical evidence suggesting that when there are spending cuts, the confidence of investors actually goes up, and the confidence of consumers goes down very little; while with tax increases, confidence of both consumers and business investors goes down quite a bit in many countries. So confidence has played a role. And then, there are many–as I said, austerity plans are a combination of many, many other policies. So, it matters what monetary policy does. It matters that sometimes, particularly in European countries, when there is a crisis and austerity is called for, then there is a productive opportunity to engage in other so-called “structural reform”–labor market reform and goods market reform, liberalization of various sectors, which help and that indeed has spurred growth. And of course monetary policy matters–we are saying in a situation which monetary policy is supportive and expansionary, that helps fiscal adjustment. So these are just the more important of many other factors which are left out from the basic Keynesian model…

My view: Alberto should simply not be saying this. If you want to claim that the Confidence Fairy channel–rather than the monetary offset channel–is important, you bring forward at least one regression or at least one case study in which a sharp, large, credible, and decisive policy of fiscal austerity has been rapidly followed by a substantial improvement in business confidence which then immediately drives sustained growth. If you don’t have that regression or that channel–if what you have is monetary-policy offset plus misspecification of your right hand-side variable–you do not have an economic argument.

Reading #4:

Franklin Delano Roosevelt (1933): First Inaugural Address: “our distress comes from no failure of substance. We are stricken by no plague of locusts…

…Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated…. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish…

Must-Read: Paul Krugman: Is Our Economists Learning?

Posted on by Brad DeLong

Must-Read: Paul Krugman: Is Our Economists Learning?: “Brad DeLong has an excellent presentation on the sad history of belief in the confidence fairy…

…and its dire effects on policy. One of his themes is the bad behavior of quite a few professional economists, who invented new doctrines on the fly to justify their opposition to stimulus and desire for austerity even in the face of a depression and zero interest rates.vOne quibble: I don’t think Brad makes it clear just how bad the Lucas-type claim that government spending would crowd out private investment even at the zero lower bound really was….

Two things crossed my virtual desk today that reinforce the point about how badly some of my colleagues continue to deal with fiscal policy issues. First, Greg Mankiw has a piece that talks about Alesina-Ardagna on expansionary austerity without mentioning any of the multiple studies refuting their results. And… as @obsoletedogma (Matt O’Brien) notes, he cites a 2002 Blanchard paper skeptical about fiscal stimulus while somehow not mentioning the famous 2013 Blanchard-Leigh paper showing that multipliers are much bigger than the IMF thought.

Second, I see a note from David Folkerts-Landau of Deutsche Bank lambasting the ECB for its easy-money policies, because: “by appointing itself the eurozone’s ‘whatever it takes’ saviour of last resort, the ECB has allowed politicians to sit on their hands with regard to growth-enhancing reforms and necessary fiscal consolidation. Thereby ECB policy is threatening the European project as a whole for the sake of short-term financial stability. The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics.” Yep. That ‘catharsis’ worked really well when Chancellor Brüning did it, didn’t it?…

[In] the 1970s… stagflation led to a dramatic revision of both macroeconomics and policy doctrine. This time far worse economic events, and predictions by freshwater economists far more at odds with experience than the mistakes of Keynesians in the past, seem to have produced no concessions whatsoever.

Must-Read: Paul Krugman: When Virtue Fails

Posted on by Brad DeLong

Must-Read: Paul Krugman: When Virtue Fails: “There are two narratives about the euro crisis….

…One… shocks happen, and when you establish a common currency without a shared government, you give countries no good way, fiscal or monetary, to respond…. The other narrative, however, favored by Berlin and Brussels, sees the whole thing as the wages of sin. Southern European countries behaved irresponsibly, and now they’re paying the price. What everyone needs to do, they say, is institute a reign of virtue, of fiscal responsibility with structural reform, and all will be well. So it’s important to note that the euro area’s locus of trouble is moving from the south to an arc of northern discomfort–to countries that don’t at all fit the stereotype of lazy southerners…. Finland is the new sick man of Europe. And the Netherlands… is doing slightly better than Italy but significantly worse than France and Portugal….

Finland has been hit by the fall of Nokia and the adverse effect of digital media on newsprint exports. The Dutch are suffering from a burst housing bubble, severe deleveraging, and an extra burden of austerity mania. But the overall point is that when things go wrong there’s no good answer. So maybe the woes of the euro reflect a bad system, not moral failure on the part of troubled nations? Das ist unmöglich!

Slides For: The Confidence Fairy in Historical Perspective

Posted on by Brad DeLong

History of Economics Society :: June 17, 2016 :: Geneen Auditorium, Fuqua School of Business, Duke University, Durham, NC:

https://www.icloud.com/keynote/00033GAKBnIHC53Sv0UDhbqEw#2016-06-17_HES_Confidence_Fairy_in_Historical_Perspective | http://delong.typepad.com/2016-06-17-hes-confidence-fairy-in-historical-perspective.pdf

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Must-Read: Matthew Yglesias: Financial markets are begging the US, Europe, and Japan to run bigger deficits

Posted on by Brad DeLong

Must-Read: Matthew Yglesias: Financial markets are begging the US, Europe, and Japan to run bigger deficits: “The international financial community wants to lend money this cheaply…

… [so] governments should borrow money and put it to good use. Ideally that would mean spending it on infrastructure projects that are large, expensive, and useful–the kind of thing that will pay dividends for decades to come…. But if you don’t believe there are any useful projects or if your country’s political system is simply too gridlocked to find them, there are easy alternatives. Do a broad-based tax cut…. The opportunity to borrow this cheaply (probably) won’t last forever, and countries that boost their deficits will (probably) have to reverse course, but while it lasts everyone could be enjoying a better life instead of pointless austerity.