Pushing back gently but firmly on Michael Strain’s non-stagnation argument

May 16th, 2019 at 2:08 pm

A few folks have asked me about my friend Michael Strain’s recent Bloomberg piece where he argues against wage stagnation (it’s “more wrong than right”). It’s an old argument but one worth having, and Michael makes some important points and misses some big ones too (5, to be precise).

Larry Mishel and I counter a much shorter-term version of Michael’s case here but similar issues pertain. Certainly, the evidence he presents doesn’t change the basic wage story that I and many others carry around in our heads.

I think Michael’s most germane point is that nobody defines “stagnation.” If you think stagnation means real wages for low-wage workers have never gone up in the past four decades, you’re wrong. The figure below, from a recent piece I published (one I’ll get back to re a key point Michael misses), shows real wages for low and moderate wage workers stagnated through the 1970s, 80s, and 2000s.

But, in periods of very tight labor markets—the latter 1990s and now—they grew at a decent clip. This is key insight #1 about real wage growth for too many workers. It’s not that they’ve never grown. It’s that their growth periods in recent decades have been few and far between. And it’s largely dependent of achieving persistent full employment, a condition that’s also been too rare in recent years (see this exciting new paper on precisely this point!).

Key insight #2 is that, sure, switching to a slower-growing deflator leads to faster wage growth and there are good arguments for various choices (see Mishel/Bivens’ cautions re Michael’s choice of using the PCE for wages). But it doesn’t wipe out long periods of stagnation. Here’s the real 20th percentile wage (2018 $’s) using both the CPI-RS (used in the figure above) and the PCE. Just like the above figure: periods of growth, but longer periods of stagnation.

Key insight #3 is especially important and I’d urge fair-minded conservatives to think more about it. If you’re trying to understand why a lot of people have long been unhappy about their paychecks, you can’t just look at wage trends, you must look at their wage levels. That’s what I do here, and I argue that given what a lot of people are taking home in their paychecks, it’s awfully hard for them to make ends meet when paying for child care, health care, housing, and maybe even saving a little afterwards.

Insight #4 is that non-wage benefits don’t change the story, and probably make it less favorable for the “no stagnation” argument. We know, for example (because Larry Mishel always tells us), that the average benefit share of compensation has not accelerated over the stagnation periods shown above. Thus, non-wage comp cannot have offset slower real growth.

But it’s also likely the case—we don’t have long time series on this—that low- and moderate wage workers are no more likely, and I suspect are less likely, to have improved benefit packages over time. That is, if the average hasn’t accelerated, my bet is that the median and below have done worse.

Insight #5 provides what I suspect is another big reason that many workers feel left behind: the rise of wage inequality. As Larry shows here, from 1979-2017, real earnings of the top 1% grew 135% faster than those of the bottom 90%. And such disparities would remain no matter which deflator you use (because both low and high wages would be deflated by the same values).

Finally, I’d urge the no-stagnation crowd to consider why, as Michael notes, stagnation is frequently asserted as fact, by “[p]residential candidates,” “commentators and other opinion leaders….” Why does this resonate with audiences, especially in places feeling the pinch of globalization and deindustrialization?

It could be that they’re using the wrong deflator. But I’ll bet it cuts a lot deeper than that. I’ll bet it’s because they’re right.

Jobs report: no one wants to be incautious re inflation, but…Laissez les bon temps rouler!

May 3rd, 2019 at 9:43 am

Payrolls rose by a larger-than-expected 263,000 last month and unemployment rate ticked down to a 49-year low of 3.6 percent. Yearly wage growth held steady at 3.2 percent, which is also its average over the past 12 months (raising the question: are wage gains on pause?). Since consumer inflation is running at around 2 percent, this implies real wage gains of a bit more than 1 percent, a welcome development for workers who are clearly benefiting from the persistently tight job market (see more on the wage story below).

The tick down in the unemployment rate is not, however, as positive a sign as it appears to be, because it fell in April for the “wrong” reason: people leaving the labor market, not people getting jobs. This negative change should be discounted because the household survey (from which the unemployment and labor force rates are derived) carries a lot more statistical noise than the payroll survey (the 90 percent confidence interval for payroll employment is 110,000; for the HH survey, it’s over 500,000).

Our monthly smoother, which averages monthly job gains over 3, 6, and 12 month intervals, shows that the recent trend in monthly gains is a relatively low 169,000, but because this value is influenced by the unusually low February gain of 56,000, the other bars are more representative of the underlying trend of a bit north of 200,000 per month.

That’s a very solid number for this stage in our 10-year-old expansion, suggesting a virtuous cycle wherein strong labor demand is providing many working families with jobs and wage gains, which in turn fuels robust consumer spending. Remember, such spending comprises about 70 percent of our GDP, meaning that barring an unforeseen negative shock, these solid labor market dynamics should keep the recovery rolling for the near/medium term. It is also important to recognize that employers’ demands for more workers are being met by ample labor supply (again, discounting the April HH labor force decline). That implies less inflationary pressure, supporting the patient stance by the Federal Reserve. That is, jobs, wage, and inflation numbers all point to an economy that is certainly closing in a full capacity but still has “room-to-run.”

There’s been renewed attention on wage gains in recent weeks, as tight labor markets and, at the low end of the pay scale, higher minimum wages in some places, have helped boost worker pay. The next two figures show the yearly percent gains in hourly wages for all private sector workers and for middle-wage workers (the 82 percent of the non-government workforce that hold production, non-supervisory jobs). They clearly show the aforementioned acceleration but if you look carefully at the end of each series (i.e., the series themselves, not the smoothed trend) they haven’t accelerated in the past 6 months. This bears watching as it could suggest a ceiling on wage growth of around 3 percent. In theory, that ceiling be explained by the sum of productivity growth of 1 percent and inflation of 2 percent. However, truly strong worker bargaining clout would mean faster wage gains supported by a squeeze on corporate profits, i.e., diminished inequality.

Here are some aspects of the wage story I find most germane:

–The key point is well understood: tight labor markets boost worker pay. Why? Because, especially in an economy where just 6.4 percent of private-sector workers are union members, most U.S. workers have low bargaining clout, meaning unless employers are forced to compete for them, there’s little to channel much of the gains from growth their way.

–But research finds that it’s not just tight labor markets that makes a difference to wage growth: it’s persistently tight labor markets. It wasn’t until year 10 of this expansion that we began to see notably stronger wage gains. In other words, the goal for creating high-pressure labor markets isn’t just getting to full employment. It’s staying there!

–Productivity growth, as noted, is a constraint on wage growth. Right now, it’s running at a trend rate of about 1 percent, compared to around 2.5 percent in the last full employment economy of the latter 1990s. That’s one reason real wage gains are slower now versus then.

–Also as noted, the share of national income going to workers remains low given where we are in this cycle and the tightness of the job market. Re-balancing “factor shares”–shifting income from profits to wages–is another source of non-inflationary wage gains.

–That said, as I’ve shown in lots of places, and as this next figure shows, there’s been virtually no evidence of wage gains bleeding into price gains. Again, this is critically important from the Fed’s perspective.

Thus, while one obviously doesn’t want to be incautious regarding the possibility of future inflationary pressures, the correct monetary policy for the moment is the one they talk about down in New Orleans: Laissez les bon temps rouler!

Sen. Warren’s debt cancellation plan: Should progressive policy aim for narrow targets or structural change?

April 29th, 2019 at 9:25 am

Introduction

Sen. Warren’s college debt cancellation plan, which I explain here, has gotten a mixed reception. While many progressives and, predictably, student debt holders give it high praise, it has taken flak from two broad groups: those who just don’t like cancelling debt and those who view it as insufficiently progressive. The latter group objects to the extent to which it helps higher income debtholders who, in their view, don’t need the help relative to those with lower incomes.

Their critique provides a microcosm of a major policy debate for Democrats between progressive targeting on one side versus a broader approach aimed at reducing structural inequalities that have grown to historical proportions. It’s an important debate, as it plays out in Medicare for All versus Medicare for More, subsidized jobs for targeted groups versus guaranteed jobs for all, universal income support versus targeted wage subsidies, and so on.

This essay starts by examining the rationale for college debt relief and then uses Warren’s higher education plan to try to garner some insights into the narrower-versus-broader policy debate. Warning: I do not conclude that one approach dominates the other. In the spirit of full disclosure, I’ll admit that as an older, technocratic, incrementalist who gives significant weight to opportunity costs, I’m congenitally more familiar and comfortable with narrow targeting. But as someone who has, for decades, watched increasingly concentrated wealth and power distort economic and particularly racial outcomes, I’m increasingly open to questioning my priors.

I’ll say little about those who can’t stomach debt cancellation. While I understand where they’re coming from, I wouldn’t let such resentment block useful public policy. Should the government not subsidize health coverage for those without it because the rest of us have long paid our premiums? Was the introduction of Social Security and Medicare unfair to those who had to retire without them? That’s not saying student debt relief is useful public policy or that Warren’s plan is the way to go. It’s saying that the fact that the introduction of any public benefit may be viewed as unfair to those who won’t receive it tells you little about the extent to which that benefit will improve social welfare.

Is college debt reduction good public policy?

Whether debt relief is good public policy and if so, how best to do it, is a more interesting question. The rationale for helping student borrowers is strong. First, K-12 education has long been viewed as a public good, meaning absent government support, the population would under-invest in it with negative economic, social, and political consequences. But, as I said in my earlier piece, 12 is no longer the right number for the high end of that range. Workplace skill demands have steadily increased, driving up the need for a more educated workforce (note that this is a different argument than the ubiquitous, and suspect, claims of skill shortages by many employers).

Second, college tuition (and the ancillary costs, like boarding and textbooks) has increased a lot faster than typical household income incomes (the BLS price index for college tuition and fees rose 63 percent, 2006-16, while nominal median income rose 22 percent). Yes, grants improve affordability, but at public four-year colleges, annual costs increased by $6,300 since 2000, while annual aid increased by less than half that amount. Meanwhile, states have significantly disinvested in higher education (the average state spent 16 percent less—inflation adjusted—per student on public colleges and universities in 2017 than in 2008).

At the same time, the return to college has also gone up and the evidence shows that for many students who complete their degrees, even with loans, college pays off. Still, these two facts—higher ed as a public good and the affordability challenges it poses for many families of limited means, especially for racial minorities—provides a rationale for helping at least some group of student borrowers. A third rationale is that the extent to which the historically large stock of student debt is a negative for the macroeconomy.

Here’s how (my old Obama-era pal) James Kvaal, now the president of The Institute for College Access & Success, recently put it (italics added):

For college to be affordable, students must be able to both make ends meet while enrolled and successfully repay their loans after leaving school. Unfortunately, for many students, one or both of those goals are not possible today. Financial barriers still keep many students from earning college degrees and—while the returns to college are high for those who succeed— there is a crisis for the many students who struggle to repay their loans. A million students a year default.

For these reasons, various debt relief programs already exist, though they are, as Kvaal’s comments suggest, insufficient. Few experts in this area of education policy view the status quo as adequate, and thus, we need to do more.

Critics of Warren’s plan argue it is not progressive enough

And yet, many criticized Warren’s plan for providing more debt relief than is necessary to too many debtors who don’t need the help. That is, they judged the plan to be too generous and not progressive enough because too much debt cancellation goes to upper income borrowers.

The claim is reflected in numbers released both by Warren and outside analysts. An Urban Institute analysis finds that 32 percent of the cancelled debt would go to the bottom 40 percent while 45 would go to the top 40 percent (a Brooking analysis yields similar results). Warren’s materials show that at least 80 percent of all borrower households up to the 80th percentile get full debt cancellation, though this share falls to about half of those in the top fifth.

Given that distribution, columnist David Leonhardt, who has long advocated for helping the neediest in their pursuit of higher ed, worries that the plan will help “a 24-year-old in Silicon Valley making $90,000” thereby confusing “the mild discomforts of the professional class with the true struggles of the middle class and poor.”

To be clear, even by these numbers, because its top benefit ($50,000 applied to debt cancellation) begins to phase down at $100,000 of household income, the plan maintains some degree of progressivity (to which Leonhardt gives a nod) and racial equity. The Urban analysis finds that 56 percent of the debt relief goes to families in the bottom 60 percent, with incomes below $65,000. Warren’s materials show total cancellation for about 90 percent of those with an associate degree or less compared to 25 percent of those with a professional degree or doctorate. Since student borrowing rises with income, and the plan cancels 40 percent of the outstanding debt of 75 percent of borrowers, the 60 percent it doesn’t cancel is mostly held by higher-income families (above the plan’s $250,000 cutoff) with high amounts of debt. Urban’s analysis finds the plan disproportionately helps African-American borrowers (black households are 16 percent of all households, but they receive 25 percent of all cancelled debt).

Still, the plan’s design could be tweaked so that more of its benefits would reach low versus higher-income borrowers. Because higher income families borrow more for college, lowering both the $50,000 forgiveness threshold—say, to $20,000—and more so, starting the phaseout lower—maybe at $60,000 instead of $100,000—would boost progressivity and lower the cost.

The challenge is that when you’re cancelling student debt, because high-end households are more likely to borrow for college and to borrow larger amounts, it’s hard to achieve high progressivity. That’s one reason why many critics of the plan prefer income-based repayment options (where borrowers pay 10 percent of their disposable income to service their debt, which is forgiven after 20-25 years of such payments) and/or, as Leonhardt argues, “an enormous investment in colleges that enroll large numbers of middle-class and lower-income students.”

Is the goal of college debt reduction to help low-income borrowers or to pushback on structural inequality?

Is targeting debt reduction to poorer households clearly the better policy choice in this space? The critics argument—a resonant one—is: in a world of limited resources, why aid “mild discomfort” when you can help those with “true struggles?”

But Warren is coming at the issue from a different perspective. Her purpose is not to parse these two groups. It is the more ambitious (and thus, more expensive and interventionist) goal of resetting the imbalances driven by the vast increase in wealth inequality. Her motivation comes from her oft-stated belief that concentrated wealth equals concentrated power, political influence, and the stripping of opportunities from broad swaths of Americans, most notably racial minorities, and not just the poor.

It is thus not incidental that her higher ed plan (which, as I discuss below, includes a lot more than debt relief), is financed by a tax on extreme wealth that hits the top 0.1 percent of wealth holders. The goal is to claw back some of this narrowly concentrated wealth to provide more opportunities for all the families who face some of costs of these extreme imbalances. No question, it will help some computer engineers and lawyers. But in so doing, the hope is that by reducing that engineer’s debt burden, she will have the freedom to start her own business. A lawyer who benefits from her plan will have the economic space to shun the corporation in favor of public service law.

Viewed through that lens, the Warren plan is not designed to target debt relief to the least well-off. It is instead designed to return some measure of economic security and freedom of choice to 42 million people from across the income distribution who, by dint of their current debt burdens, face economic constraints that she believes public policy should address.

There’s more to the plan, most importantly making two and four your public colleges tuition free. That’s a whole other discussion, though it raises all of these same issues. Re progressive targeting, I’ve seen too few references to the fact that her plan also calls for $100 billion in higher funding for Pell Grants—the program Kvall called “the most important federal commitment to college opportunity.” Given free tuition, these grants would pay non-tuition costs, which for many students outpace their tuition costs.

But none of that negates the opportunity costs invoked by this and other plans with such broad scope. A dollar spent on a $100,000 household is one that isn’t spent on a $20,000 household, and it’s undeniable that the latter needs more help than the former, especially when we consider those students whose upward mobility is most elastic to a quality, higher education are the ones least able to afford it.

But it is also undeniable that, in the face of levels of inequality that we haven’t seen in this country since the 1920s (which, for the record, did not end well), it will take more than narrowly targeted corrections to reset the balance of power and opportunity in America. I don’t know if this or any other big idea is part of the solution. Also, I’ve ignored politics, which I’ve argued elsewhere may be more conductive to targeted incrementalism than sweeping reforms. But those of us who seek economic and racial justice must entertain the possibility that relative to the sorts of ideas we’ve long promoted, it may take a policy agenda that’s bigger, more disruptive, and more ambitious, to start to repair the damage.

It takes two to tango: The complementarity of the derigging project and expanded tax credits.

April 14th, 2019 at 12:39 pm

In a hearing last week, an exchange between Rep. Katie Porter (D-CA) and JPMorgan’s CEO Jamie Dimon caught my eye. Dimon was touting the bank’s new minimum wage of $16.50, increasing to $18 in high-cost areas, for entry level workers. That’s a decent minimum wage, above the $15 that most progressive plans call for (and those proposals typically include a phase-in of numerous years). According to recent EPI analysis, $16.50 is well north of the national 40th percentile wage of just under $15.

To be clear, I’m not suggesting the highly profitable bank—market cap about $380 billion; Dimon made over $30 million last year—is fairly compensating its entry-level workers (Dimon says such workers tend to just out of high school). My point is an empirical one: given the nation’s wage structure, its (ridiculously low) federal minimum wage of $7.25, and the weak bargaining clout of low-wage workers, especially those without a college degree, a minimum/entry-level wage of $16.50 is actually pretty high.

Rep. Porter, however, pointed out that in pretty much any part of America you choose, a single mom with one child can’t make ends meet on that wage. She’s unquestionably correct, as she demonstrated after the hearing in this tweet (full disclosure: I’ve met Rep. Porter; she’s all that and a big bag of chips; whip-smart, data-driven…one of those new members with just the right recipe of heart, brain, conviction, analytics, etc…).

You can read more about their exchange here, but it led me to ask why is the US wage structure so insufficient and what can we do about it? It’s a question that all of us should have at the top of our minds when listening to the proposals from those who would lead the nation.

What can we do about this mismatch between earnings and needs?

One answer is to work on two tracks, near term and long term. In the near term, we need robust wage supports in the form of fully refundable tax credits (i.e., you get the credit whether or not you owe any taxes), along with other work supports, including child care, health care, and housing.

Over the longer haul we must correct structural imbalances that have, over at least the last 40 years, reduced the bargaining clout for workers relative to employers. The power shift is a function of many forces, including the decline of unions and collective bargaining, but it also relates to the way we’ve handled globalization, the rise of hands-off economics, specifically the notion that progressive interventions are anti-growth (a line of thought that’s led to supply-side policies like cutting taxes for the rich and benefits for the poor), austere fiscal policy, and the many other aspects of what is often labeled the “rigged economy.”

It is, however, easy to write “correct a structural imbalance” and much, much harder to do so. This new piece by the Roosevelt Institute offers a resonant diagnosis and prescription to this structural power imbalance, but it took a long time to get here. Moreover, our uniquely toxic money-in-politics problem has allowed the narrow group of big winners to worm their way into entrenched power. It will take time, energy, resources, and commitment to reduce their hold. Derigging the economy is the right goal, but it’s one that’s going to take awhile and, relative to many of my fellow progressives, I’m less certain of the political support for this project. That doesn’t make it any less urgent, but it does raise the bar we must clear.

Which brings me to a more immediate solution to the problem Porter raised. It comes in the form of a bill introduced last week by four D senators (Brown, Bennet, Durbin, and Wyden), and given the forces swirling around that I just described, it’s a proposal that hits a sweet spot, accomplishing ambitious, long-held progressive goals in a way that is inviting to more moderate Democrats (at this moment, 46 Senate Democrats have signed on).

I’m talking about the Working Families Tax Relief Act (WFTRA), a proposal designed to raise the incomes of low-income and working-class households, with and without kids, by expanding two existing tax credits: the Earned Income and Child tax credits (EITC and CTC). For details, see here, but according to analysis by colleagues of mine at the Center on Budget and Policy Priorities (CBPP), a group with deep expertise on these types of tax credits, the bill would raise the incomes of 46 million low and moderate-income households, more than a third of American households. While it wouldn’t close the whole gap shown in Porter’s tweet, it would close part of it.

In contrast to the regressively targeted Trump tax cuts, this bill would lift 29 million people, including 11 million kids, above or closer to the poverty line, lowering the child poverty rate from 15 percent to 11 percent. Its CTC changes would raise the incomes of families with over 40 million children, lifting 1.3 million children out of deep poverty (income below half the poverty line, or about $10,000 for a single parent with two kids), and thereby reducing the deep child poverty rate from 5 percent to 3 percent.

To put all these percentages in a more concrete context, consider some of CBPPs examples of the bill’s impact of the incomes of some families playing by the rules, doing their best to makes ends meet in corners of our labor market where, even at low unemployment, wages are just too low.

Consider a mom with two kids, 4 and 7, who makes $20,000 as a home health aide. WFTRA would raise her CTC by $2,210 and her EITC by about $1,460, for a combined gain of about $3,670. For a married couple where one spouse makes a more moderate income of $45,000 and the other cares for their two young children, their EITC/CTC goes up by $3,460.

Low-income workers without kids get very little from the current EITC, and, in fact, can be taxed into poverty. CBPP looks at the case of a full-time, fast-food worker paid the federal minimum wage. She earns $14,500 and pays more than $1,250 in combined federal income and employee-side payroll taxes. As a result, CBPP points out, “the tax code pushes her below the poverty line. The bill would increase her EITC by about $1,530, so she would no longer be taxed into poverty.”

The WFTRA accomplishes these goals mostly by tweaking the parameters and eligibility standards of the two existing credits it expands (importantly, given how much families with very young kids need the money, it adds an addition credit for families with kids under 6). The fact that it builds off successful, existing programs that maintain some bipartisan support is a strong selling point and probably responsible for all those Senate sponsors.

I reiterate that when it comes to pushing back on decades of inequality and much weakened bargaining power of lower paid workers, it’s critical to think big and outside the box. Progressives have welcomed calls for universal coverage, Sen. Warren’s wealth tax, and Sen. Bennet and Brown’s proposal for a child allowance of the type that exists in most other social democracies. But WFTRA adds real and much needed progressivity to our tax code, and it does so in a way that gets a sign-on from both Senator Elizabeth Warren, a highly progressive Democrat from Massachusetts, and Senator Manchin, a moderate from West Virginia.

Still, the structure of the WFTRA is insufficient for some on the left. Matt Bruenig objects to the phasing in of benefits with earnings, as this approach provides more help to higher earning families. Fair point, but one that undervalues WFTRA’s proposed change to the CTC which goes the other way: it’s fully refundable even to families with no earnings. In fact, families with incomes so low that they get nothing under the current CTC would come away with a few thousand under WFTRA ($6,000 if they had 2 kids under 6 and no earnings), giving it characteristics of the more progressive child allowance. Bruenig also implicitly assumes something about which I’m skeptical: that there’s political support for delinking the highly effective, bipartisan-supported EITC, from work.

In sum, the pursuit of economic justice requires us to work on various tracts. The overarching goal of derigging the economy and righting structural imbalances require new rules of the road, trade agreements forged by workers, not just investors, big changes to anti-trust, corporate governance, patents, and labor standards. We must run full employment economies so there’s pressure on the private sector to create jobs and raise wages. We must raise worker relative to corporate power. And we must recognize that even at full employment, markets still won’t solve the problems of poverty, racial discrimination, and unequal opportunity, thus requiring a progressive tax and transfer system.

The WFTRA offers what looks to me like a timely, politically viable answer to that last part.

Ch-ch-ch-changes! (Both personal and fiscal impulse)

April 10th, 2019 at 3:39 pm

Good changes: I continue to recover from the brain hemorrhage I sustained on March 23. Today’s my first meds-free day and I’ve been blessedly headache free. Thanks again for the outpouring of support–it’s been really uplifting.

Neutral Changes: As I slowly rev up Ye Olde Analysis Shoppe, I found the figure below (by GS fiscal analyst Alec Phillips) to be worth a close look. It underscores a point that even seasoned budget analysts sometimes miss: the role of fiscal impulse. 

One of the more important policy-driven determinants of near-term US growth is under debate right now: setting discretionary spending levels for 2020/21. Because of 2011 legislation that set caps for such spending, avoiding a sharp drop requires Congress to pass a bill approving spending above the caps. They’ve done so numerous times before and, while there’s a lot of squabbling going on about this both within and between the parties, it’s likely they’ll bust the caps again.

The point I wanted to underscore here is even were Congress to agree to keep the levels of discretionary spending stable over the next few years, the impact will be a fading of fiscal stimulus on real GDP growth, as the lines at the end of the figure below reveal. That’s because when it comes to fiscal impulse, it’s not the level that matters. It’s the change.

The last deal–the one that determined spending in 2018/19–went both well above the caps but, more important from an impulse perspective, went well above prior agreements. As far as I can suss out about what’s on the table in terms of the next round of spending, we’re unlikely to see numbers higher than the 18/19 deal (around $300 bill above the caps). Thus, Phillip’s projection of the fiscal impulse going forward under various scenarios if flat next year. Roughly speaking, that’s one reason to expect 2020 growth to be closer to 2 percent than 3 percent.

Source: Alec Phillips, GS Research

I don’t think the negative impulse forecasts from the WH or sequestration (“no caps deal”) are likely. And the House D’s line may get nudged up a bit based on proposals by the Progressive Caucus. But the larger point is that when you read analyses suggesting that these spending levels won’t drop, that doesn’t mean their impact on growth won’t drop. In fact, it will, as positive fiscal impulse downshifts to neutral.