Dean Baker's Blog, page 365

More Evidence that Income Inequality Is Due to the Loss of Middle Class Jobs

Yes, we all know that income inequality is due to the hollowing out of the middle. Technology is destroying the jobs that used to support the middle class. Somehow technology doesn't destroy the jobs that pay people in the financial industry millions and tens of millions a year to do absolutely nothing useful as consultants to pension funds. It's hard to believe that anyone would take this technology story seriously if it were not so appealing to the rich and powerful.

House Prices in the United Kingdom are 25 Percent Higher Than in the United States

That fact might have been worth mentioning in a NYT article that discussed a new program by U.K. Prime Minister David Cameron to offer government guarantees on mortgages where homeowners made down payments equal to just 5 percent of the price of the home. The article noted that the average house price in the U.K. is already $274,000.

While it pointed out that a recent rise in house prices brought them back to their pre-crash level it also might have been worth noting that the average price in...

Social Security Does Not Redistribute From Young to Old, It Is a Public Pension System

One of the most pernicious myths of the Fix the Debt Gang and other Peter Peterson type outfits is that Social Security redistributes money from the young to the old. This is bizarre because people pay for their benefits with the taxes they contribute during their working lifetimes. In fact, the average return current beneficiaries receive is not especially high (less than 2.0 percent real).

If workers contributed the same amount to a privately managed pension fund and then collected an annui...

George Will Shoots at the Fed and Misses, Big Time

George Will is apparently still obsessed with inflation and very disappointed that the Fed's policy of quantitative easing has not led to hyperinflation thus far. This led him to write a seriously confused column condemning the Fed and its Chairman Ben Bernanke.

Will complains:

"A touch on the tiller here, a nimble reversal there — these express the fatal conceit of an institution that considers itself capable of, and responsible for, fine-tuning the nation’s $15.7 trillion economy."

This ass...

Wapo Busts Ag Department for Spending 0.000004 Percent of the Budget on Toner Cartridges

See, nothing gets by those vigilant super-sleuths at the Washington Post. In yet another front page story highlighting government waste the paper told readers that the Agriculture Department spent almost 0.000004 percent of the budget on toner cartridges, the Department of Veterans Affairs spent 0.000014 percent of the budget on artwork, and the Coast Guard spent 0.000004 percent of the budget on cubicle furniture. Of course the Post didn't tell people how large these items were as a share of...

Does the Data Show that Having More Rich People in New York City Benefits the Poor?

The New York Times told readers that Mayor Bloomberg is right, the data show that the poor have benefited by having more billionaires in the city. The basis for this assessment is that rich people pay a disproportionate share of the city's tax revenues. Therefore by having more rich people, the city has more tax revenue to help out poor people. 

The article even gives readers some basis for quantifying this gain. It tells readers that households with incomes of more than $10 million a ye...

More Context for Republican Proposal to Cut Food Stamps

Last week I blamed the media in general and the New York Times in particular for the battle over the Republican proposal to cut food stamps. The logic is that the media routinely report that the Republicans want to cut $4 billion from the program. Undoubtedly many people hearing this number believe that it constitutes a major expense for the federal government.

The proposed cut to the program is actually equal to just 0.086 percent of federal spending. In other words, it could make a big diff...

More Mind Reading at the Washington Post

If you ever wondered where all the psychics came from who hang their shingles around DC, the answer is that they are probably former Washington Post reporters. The paper again told readers what people think. In an article on how the latest battle over Obamacare has re-energized the Tea Party, the Post told readers:

"Obamacare, which seeks to extend health coverage to millions of uninsured Americans, is viewed by tea party activists as a dangerous new government intrusion. They fear it will re...

Moody's, Which Rated Hundreds of Billions of Dollars of Subprime Mortgage Backed Securities As Investment Grade, Claims Public Pension Liabilities are Much Higher Than Previously Reported

The Washington Post ran an article highlighting new calculations of city pension liabilities from Moody's, the bond rating agency. Moody's is probably best known to most people for rating hundreds of billions of dollars worth of subprime mortgage backed securities as investment grade during the housing bubble years. It received tens of millions of dollars in fees for these ratings from the investment banks that issued these securities.

The new pension liability figures are obtained by using a...

The Washington Post Is Busy Trying to Save Us 0.00005 Percent of Federal Spending

We all should be thankful for the vigilance of the Washington Post, otherwise we might not know about an agency in Alaska that could be wasting around $1.8 million a year in federal spending. The Post decided to do a major story on the inspector general of a small development agency in Alaska who wrote a letter to Congress saying that the agency was a waste of money and should be closed.

According to the piece, the agency, the Denali Commission, was the creation of former Alaska Senator Ted...