Dean Baker's Blog, page 268

The Cost to Savers of the Democrats' Wall Street Sales Tax

The Washington Post reports that the Democrats have a new plan for middle class tax cuts that will be financed in part by a 0.1 percent tax on financial transactions like stocks, bonds, and derivatives. Since the financial industry and its employees will undoubtedly be pushing tirades telling us that this tax will kill middle class savers, BTP decided to call in Mr. Arithmetic to get his assessment of the issue.

Mr. Arithmetic points out that the amount of the tax born by savers will depend i...

Robert Samuelson Wants to Give Reagan Credit (see addendum)

Robert Samuelson uses his column today to tell readers that he is very unhappy with Paul Krugman. The specific complaint is that Krugman gives Paul Volcker credit for reducing inflation in the early 1980s, rather than Reagan. (Actually, I thought Krugman was giving Volcker credit for the recovery from the recession, which Krugman said was primarily due to lower Fed interest rates rather than Reagan tax cuts.)

Anyhow, Samuelson insists that Volcker has to share credit with Reagan, since Reagan...

Robert Samuelson Wants to Give Reagan Credit

Robert Samuelson uses his column today to tell readers that he is very unhappy with Paul Krugman. The specific complaint is that Krugman gives Paul Volcker credit for reducing inflation in the early 1980s, rather than Reagan. (Actually, I thought Krugman was giving Volcker credit for the recovery from the recession, which Krugman said was primarily due to lower Fed interest rates than Reagan tax cuts.)

Anyhow, Samuelson insists that Volcker has to share credit with Reagan, since Reagan gave h...

More on Pay by the Mile Auto Insurance

Earlier in the week I took the environmental movement to task for its lack of interest in pay by the mile auto insurance. I consider it a major failing because this one should be a relative freeby in the effort to reduce greenhouse gas emissions.

In contrast to a carbon tax or cap and trade mechanism, it doesn't raise the price on average, it just changes the incentive structure. And in doing so, it can have a large impact in reducing driving. If the average insurance policy costs $1,000 a ye...

David Leonhardt Is Badly Confused: The People Running the Economy Had Far More than 13 Years of Education

David Leonhardt has a good discussion of many of the issues surrounding President Obama's proposal to make community college free. He concludes the piece by noting that we likely need a more educated work force now than in the last century, then adds:

"If nine years of free education was the sensible norm for the masses in the 19th century and 13 years was the sensible norm in the early 20th century, what is the right number in the 21st century?

"Our current system suggests that the answer is...

David Leonhardt Goes Off the Deep End in Creating False Equivalence

As Paul Krugman likes to point out, conservative leaders have a bad habit of just making things up: global warming isn't happening, tax cuts pay for themselves, quantitative easing will lead to hyper-inflation etc.. David Leonhardt tells readers that at the Upshot section of the NYT, which he edits, they are committed to calling both sides out when the facts don't support their claims.

And he is taking the occasion to beat up on liberals on the relationship between marriage and happiness. He...

Economists Should Not Have Been Surprised by the December Drop In Wages

The Washington Post article on the December jobs numbers told readers:

"Though there were nascent signs of wage growth in November, the data from December showed average hourly earnings slid backward by five cents, to $24.57.

"That wage decrease over the past month, a surprise to economists, indicates that the nation has not yet reached 'full employment' — a condition in which demand from employers is broad enough that workers have a degree of leverage and a chance to see pay raises."

This co...

Obama Tries to Fix a Housing Market That Is Not Broken

The NYT badly misinformed readers by telling them that Obama was easing up on Federal Housing Authority lending rules to fix a "lagging" housing market. Actually home sales are slightly above their population adjusted pre-bubble level. In fact, if we took account of demographics (the increasing portion of elderly that is constantly used as a justification of low employment rates) then house sales are above pre-bubble levels. Also, inflation-adjusted house prices are 15-20 percent above trend...

Japan's Declining Population: More Which Way Is Up Problems at the Post

Yes, Japan looks like it is becoming less crowded and the folks at the Post are terrified. A Wonkblog piece warned readers that, "Japan's birth rate problem is way worse than anyone imagined."

The basic story is it seems that Japan has consistently over-projected its birthrate. As a result, its population is now declining and the rate of decline may be even faster than is now projected.

The question is why is this a problem? First, just to take an issue off the table, it is important that J...

E.J. Dionne and Dynamic Scoring: Getting the Story Backward

E.J. Dionne is upset about Republican plans to have the Congressional Budget Office (CBO) use dynamic scoring in assessing the effects of tax cuts. He tells readers that dynamic scoring:

"will make it easier for the Republicans to shower money on their favored constituencies while pretending to be fiscally responsible. Dynamic scoring, the Center on Budget and Policy Priorities noted, 'could facilitate congressional passage of large rate cuts in tax reform by making the rate cuts appear — on...