Dean Baker's Blog, page 227

Why Is It Worse to Use Temporary Visas to Outsource Jobs Than Trade Agreements?

The NYT apparently thinks it has a big news story in its article telling readers that companies use temporary visas to bring over tech workers who learn skills and then transfer them to workplaces in India and other countries. The jobs are then shifted overseas to take advantage of lower cost labor.

This is one of the main goals of the trade agreements the United States has signed over the last three decades. The point has been to allow U.S. firms to take advantage of lower cost labor in the...

Trump World and the Fed

Yesterday, Republican presidential candidate Donald Trump released his plan for changing the tax code. The basic story is that he would give big tax cuts across the board, with the largest tax cuts going to the wealthy. He assured everyone that it will be revenue neutral since it would lead to a huge spurt of economic growth. (His number was 6.0 percent, topping Jeb Bush's 4.0 percent by two full percentage points.)

Many of the reports on the plan did note the growth assumption and pointed ou...

CBS Is a Basket Case, More on Social Security

In his interview with Donald Trump on 60 Minutes, CBS reporter Scott Pelley felt the need to assert that Social Security is "a basket case." Actually, according to the latest Social Security trustees report it can pay all scheduled benefits through 2033 with no changes whatsoever. If nothing is ever done to the program it is always projected to be able to pay retirees a larger real benefit than what they get today, or more than 75 percent of scheduled benefits. If we put in place tax increase...

The Post Follows Industry Trade Group in Telling People Drug Prices Held Steady

It must be nice to have a trade group that is so powerful that it can get newspapers like the Washington Post to parrot your line even when it is not true. The folks at Pharma will presumably be toasting a Wonkblog piece that told readers:

"The drug industry trade group keeps reminding the public that drug spending has been holding steady for years, at about 10 percent of the total health-care pie. They point to that as evidence that drugs are a special area of the health care indus...

Robert Samuelson Considers It a Serious Problem of Generational Inequity If Our Kids After-Tax Wages Are Only 45 Percent Higher Than Ours

Yeah, we all want our children to enjoy a more comfortable life than we do, but how much more comfortable does it have to be before we feel we have failed them? The Social Security Trustees project that before tax wages will be on average 55 percent higher in real terms than they are today. Suppose that we have a huge 5 percentage point increase in taxes to pay for Social Security and Medicare? That still leaves wages in thirty years more than 45 percent higher than they are today. Would that...

How Did the Washington Post Determine that President Obama "Craved" Cuts in Social Security and Medicare?

Everyone knows that the Washington Post wants to see Social Security and Medicare cut. The paper is constantly pushing this agenda in both its news and opinion pages. But how did the Post decide that President Obama shares this agenda? 

It made this assertion in an article headlined, "Obama and Boehner both craved compromise -- but could never reach it."  The piece tells readers:

"Those virtues [a desire to compromise for the national good] never resulted in progress, though, even o...

What Is the Magic of a Stable 2 Percent Inflation Rate?

Federal Reserve Chair Janet Yellen gave a speech yesterday in which she referred to the value of the Fed's 2.0 percent inflation target and warned of the uncertainty caused by any effort to raise the target to a higher rate. While having more stable prices is undoubtedly better than having less stable prices, it is a bit bizarre how this 2.0 percent has become the object of worship.

First, to those who care about such things it should be disconcerting that the inflation rate has been consiste...

When It Comes to Drug Prices, Who Are You Going to Believe?

Your choices are a professor holding a chair endowed by a pharmaceutical testing company and the Bureau of Economic Analysis (BEA). The professor, Darius Lakdawalla, holds the Quintiles chair at the School of Pharmacy at the University of Southern California. In a NYT "Room for Debate" piece on pharmaceutical prices (I was also a contributor), Lakdawalla told readers:

"drug spending has been growing no faster than overall health care spending over the past 10 years."

That is not what the good...

What Is This "We"Jazz, Robert Samuelson?

There is an annoying tendency among elite types to assume that their ignorance on important issues is shared by others. Washington Post columnist Robert Samuelson gave us a great example of the effort to project his misunderstanding of the economy when he told readers:

"Over the past decade, there has been a profound shift in its public standing. Before the 2008–09 financial crisis, the Fed enjoyed enormous prestige and freedom of action. All the Fed had to do, it seemed, was tweak short-term...

The Argument for Higher Interest Rates: Are the Bankers Evil or Stupid?

I see my friends Paul Krugman and Brad DeLong are arguing over whether the pressure from the banking industry for the Fed to raise interest rates is the result of their calculation that higher interest rates would raise their profits or is it just ignorance of the way the economy works. Krugman argues the former and DeLong the latter. I would mostly agree with Krugman, but for a slightly different reason.

I don't see the clear link, claimed by Krugman, between higher Fed interest rates and hi...