Dean Baker's Blog, page 158

The Paul Ryan Small Savers Tax

As everyone knows, the fundamental principle of the Republican party is to redistribute as much income as possible from the rest of us to the rich. In keeping with this principle, Paul Ryan and the Republicans in Congress are pushing through a proposal to make workers pay larger fees on their retirement accounts. Unlike conventional taxes, which could be wasted on things like education or child care, these fees go directly into the pockets of the financial industry. This way people will be ab...

The "Free Traders" Do Not Believe in Free Trade: #46,765

The concept of "free trade" has acquired near religious status among policy types. All serious people are supposed to swear their allegiance to it and deride anyone who questions its universal benefits.

Unfortunately, almost none of the people who pronounce themselves devotees of free trade actually do consistently advocate free trade policies. Rather they push selective protectionist policies, that have the effect of redistributing income to people like them, and call them "free trade."

The...

Trump and Trade: He’s Largely Right

There are an awful lot of things to really dislike about Donald Trump and his conduct as president to date, but that doesn’t mean everything his administration does is wrong. In particular, there is considerable truth to what he has said about trade costing a large number of good paying manufacturing jobs and hurting the living standards of the middle class.

Unfortunately, rather than acknowledging this point, the media show the same determination as global warming denialists in saying that t...

Yes Folks, David Brooks is Making Up His Own Facts Again

He uses his column today to tell us that "this century is broken." Much of his tale involves the old problem with men story.

"For every one American man aged 25 to 55 looking for work, there are three who have dropped out of the labor force. If Americans were working at the same rates they were when this century started, over 10 million more people would have jobs. As Eberstadt puts it, 'The plain fact is that 21st-century America has witnessed a dreadful collapse of work.'

"That means there’...

Bill Gates Wants to Undermine Donald Trump's Plans for Growing the Economy

Yes, as Un-American as that may sound, Bill Gates is proposing a tax that would undermine Donald Trump's efforts to speed the rate of economic growth. Gates wants to tax productivity growth (a.k.a. "automation) slowing down the rate at which the economy becomes more efficient.

This might seem a bizarre policy proposal at a time when productivity growth has been at record lows, averaging less than 1.0 percent annually for the last decade. This compares to rates of close to 3.0 percent annually...

Paying for Legal Services or Keeping Melania Trump in NYC: Choices for Taxpayers

We all know about the need to make trade-offs in budgeting, most of us have to do it on a regular basis in our daily lives. But what about the trade-offs for the federal government? Arguably there is no need for trade-offs right now. Both interest rates and inflation are at low levels, so it is not obvious that there is any problem with larger deficits, but folks in both parties are fixated on the need to run low budget deficits or even to have balanced budgets, so these politics dictate the...

Republican Corporate Income Tax Proposal: Press Has No Idea of Its Impact, but Knows It is Bad

Pedro da Costa tells us in Business Insider that the Republican tax proposal, with its border adjustment, is going to be really bad news because it will lead to a spike in inflation. The story is that the 20 percent tax imposed on imports will lead to a one-time jump in the core inflation rate of between 1.4 and 2.1 percentage points.

The implication is that the tax will be almost fully passed on to consumers. With imports at 15 percent of GDP, these numbers would be plausible.

While this is...

Paul Ryan Has a Plan to Take Away Insurance from Tens of Millions of People

Hey, no one said Speaker Ryan wasn't a smart guy. (Actually, many people have, but whatever.) Anyhow, the Republicans have published an outline of their proposal for an Obamacare replacement. It seems designed to ensure that tens of millions of people lose their health insurance coverage.

The basic story is that the plan is designed to fragment the market by both allowing a wider range of insurance policies and also by promoting health savings accounts in which people can place money tax free...

Scary Health Care Cost Projections: They Aren't New

The Washington Post warned readers that health care costs were about to start rising sharply again in an article reporting new projections from the Centers for Medicare and Medicaid Service (CMS). While there is definitely a risk that these projections may be right, and health care will impose a considerably larger burden on the economy over the next decade than it does now, it is worth noting that the projections from CMS have not proven especially accurate in the past.

For example, in 2007...

Wall Street Journal Says That China Could Say Use of Educated Labor by U.S. Is a Subsidy in Retaliation for Charges of Currency Management

Of course China could argue this, it would be really stupid, but nothing prohibits countries from making stupid arguments if they want to push their agenda. In this vein, the Wall Street Journal told readers that if the U.S. took actions against China and other countries for deliberately depressing the value of their currencies by buying dollars they:

"...could argue that Federal Reserve policies that weaken the dollar qualify as subsidies."

Obviously they could make this argument, but it m...