Dean Baker's Blog, page 362

Paul Ryan Wants to Save Money by Cutting Medicare, Change Is of Less Importance

The NYT is doing coverup work for Paul Ryan telling readers about his plan for:

"a debt ceiling increase tied to changes to Medicare and Medigap plans that would save more than enough money to ease some of the across-the-board cuts to domestic and defense programs ..."

Ryan is not going to save money from changing Medicare, he will save public dollars by cutting Medicare. In other words, Ryan wants seniors to pay more money for their health care. It's very polite of the NYT to assist Ryan in...

The Ravings of Niall Ferguson, the Real World, and the Needless Suffering of Tens of Millions

For reasons I cannot imagine, Niall Ferguson has achieved some standing as an intellectual with interesting things to say about the economy. Whenever I have read one of his pieces I almost always find it so confused that it would take a blogpost at least as long as the original to set it straight. This is why I generally ignore Ferguson, except when prodded by friends and readers.

For this reason I was struck to see that my occasional Niall Ferguson corrections got me on the list of Paul Krug...

The Inconvenienced Economist

In a blogpost at Econbrowser, Princeton Economist Angus Deaton complains about how his work on the impact of inequality on health outcomes was challenged by Michael Ash, an economics professor at the University of Massachusetts. He compares this challenge to the more recent challenge posed by Ash, along with Thomas Herndon and Robert Pollin to the work of Harvard professors Carmen Reinhart and Ken Rogoff. People may recall in this latter work, Herndon, Ash, and Pollin showed that the results...

NYT Says Concerns Over Debt Ceiling May Lead China to Stop Manipulating Its Currency

That's not exactly what the piece said. Rather it said that China raised concerns about the debt ceiling in discussions with Secretary of State John Kerry. It implied that such concerns may affect China's willingness to buy and hold U.S. debt.

The purchase of U.S. government bonds is the mechanism through which China "manipulates" the value of its currency. By buying U.S. bonds it raises the price of the dollar relative to the Chinese yuan, thereby making its exports cheaper to people living...

The Washington Post Wants Seniors to Take a Hit to Keep Doctors and Drug Companies Rich

The Washington Post ran an editorial endorsing Republican House Budget Committee Chairman Paul Ryan's proposal for ending the shutdown/debt ceiling standoff. It is apparently anxious to seize on yet another route to try to cut Social Security and Medicare benefits for seniors.

While the obvious crisis facing the country is a government that is not doing its job and an economy that is suffering enormously from a shortage of demand (i.e. too little government spending), the Post sees this as an...

Washington Post News Section Joins With Republicans In Minimizing Impact of Debt Ceiling

According to polling data the Republicans are taking a beating over their decision to shutdown the government and risk default on the debt to stop Obamacare. The Washington Post decided to help them out. Using their new journalism model, where there is no distinction between news and editorial views, they used the news section for this purpose.

In a front page article in the implications of missing the debt ceiling, the Post discussed a report from Moody's which argued that the government cou...

The Old Skills Gap Story

Eduardo Porter used his column today to point to a skills gap in the United States between the skills needed for the jobs being created and the skills of the people currently entering the workforce. The column rightly points out that this gap does not explain current unemployment and that employers could find more skilled workers if they offered higher wages. But it then refers to a study put out by the Brookings Institution:

"Mr. Rothwell says that the problem is getting bigger: while just u...

Is Raising Interest Rates the Fed's Only Tool for Bursting Bubbles?

That's what the NYT told us this morning in a piece on what the Fed does and can do. The piece turns to a discussion of bubbles. It notes regulatory efforts to limit bubbles, then comments:

"The outstanding question is whether the Fed should try to pop bubbles if those first lines of defense don’t work. The problem with popping bubbles is that the Fed really only has one way to do it: by raising interest rates for the entire economy, which is something like dropping bombs on cockroaches."

Hmm...

The Post Doesn't Scare Me

The Washington Post told readers that a chart showing a spike in the interest rate on Treasury bills coming due on October 31 should scare us. The rate on short term notes has gone from near zero to around 0.29 percent. This is a huge hike in own percent, but it is still a pretty damn low interest rate.

The story here is pretty simple. These short term bills get much of their value from the fact that they are hugely liquid. Because of concerns over the debt ceiling they are no longer hugely l...

Niall Ferguson and What Passes for Intellectual Argument at Harvard and the Wall Street Journal

I am not quite sure why, but apparently some people do take Niall Ferguson's pronouncements on economics seriously. I usually ignore his comments, since I can't imagine not having something better to do with my time. Nonetheless, I did note Paul Krugman and Brad DeLong beating up Ferguson for his failure to understand the Congressional Budget Office's projections for the long-term budget deficit.

But rather than having the decency to find some rock behind which to hide, Harvard Professor Nial...