Dean Baker's Blog, page 37

The McConnell Slush Fund — Size Matters

I routinely complain about reporters failing to put numbers in context. Their coverage of the stimulus being pushed through Congress is a huge FAIL. The $2 trillion deal is being compared to Obamas $800 billion stimulus package. This is an incredibly inadequate comparison.

First, the $800 billion includes a number of tax provisions that would have been passed even if the economy was doing great. The actual stimulus was around $720 billion. Some of this money was designated for later years but...

Donald Trump and Steven Mnuchin Are Not About to Become Law Abiding Citizens

It is more than a bit painful to see Chuck Schumer and Nancy Pelosi go through a silly charade of imposing conditions on the $500 billion slush fund that McConnell has made a centerpiece of the Senate bill. Those of us who have been alive for the last three years know that there is exactly zero chance that Trump and Mnuchin will comply with any oversight conditions.

It is the official position of the Trump administration (argued in court cases) that they dont have to turn over a damn thing to...

Quick Reminder That Progressives Have to be Prepared to See the Market Tank

We know that Donald Trump is obsessed with the stock market, seeing it as the main measure of the economys performance under his tenure. Unfortunately, many non-Trump supporters, who dont own lots of stock, seem to share his concern.

Lets be clear what the stock market measures. It is not designed to measure the well-being of a typical household or even the overall growth of the economy. Stock prices are ostensibly telling us the expected value of the future flow of profits to a company....

We Need an Economic Survival Package, not a Stimulus Package

I had planned to use my segment this week to outline an incremental approach to Medicare for All, since we are obviously not going to get there all at once, or at least not any time soon. (It starts with lowering the Medicare age to 64 and reducing payments to providers the pharmaceutical industry, the medical equipment industry, and doctors but youll have to tune in next week to get the full story.) But with the economy collapsing due to coronavirus and Donald Trumps gang tossing out...

Yes, This is an Emergency. No, That Doesn’t Justify a $500 Billion Trump/Mnuchin Slush Fund.

(This piece is co-authored with Jared Bernstein and is also posted on his site.)

While the indicators are lagging, the U.S. economy is in a recession that will very likely be extremely deep. Its likely that real GDP falls at double-digit pace in the quarter that begins next month and the unemployment rate more than doubles. If that sounds implausible, history shows that in sharp downturns, the unemployment rate takes the elevator up and the stairs down.

To their credit, after a slow start...

Quick Note on Stimulus and the Economy

Those of us at CEPR have been putting out a lot of material on what the appropriate response by Congress to the corinavirus crisis should be. We have said the immediate focus has to be containing the virus and finding the necessary resources (health care workers and equipment) to treat people. However, we also recognize the economy is taking an enormous hit and tens of millions of people will lose their jobs.

In this context, economists would usually think of ways to increase demand to boost...

The Work-Sharing Model for Sustaining the Economy through the Crisis

There have been a large number of ideas thrown out for sustaining workers and the economy through the downturn. To my mind, the Danish model is the best. It provides hard hit companies with 75 percent of workers ordinary pay up to a cap. The company is required to pay the other 25 percent. Workers have to give up five of their paid vacation days (seriously).

This is a good model both because it ensures that most people will have an income through the crisis and it also keeps workers attached...

Some Good News in Coronavirus Times: A Rise in the Labor Share of National Income

I would have blogged on this last week if not for the small distraction of a pandemic. Anyhow, we now have full year data on profits and income, and it turns out there was an increase in the labor share of roughly 0.7 percentage points in 2019. That took us to 64.2 percent of national income. That is still down from 66.2 percent in 2000 and 66.9 percent in 1979, before the period of upward redistribution began, but it is up from a low of 61.7 percent in 2014.

Source: Bureau of Economic...

The Great Failure of Donald Trump’s Big Tax Cut

The fact that Donald Trumps tax cut did not produce the investment and growth that was promised is widely known. There was a modest uptick in growth in 2018, from 2.4 percent the prior year to 2.9 percent in 2018, but this pace fell back to 2.3 percent last year. Virtually, all forecasts showed the growth rate falling still lower in 2020, even before the coronavirus began to impose large economic costs.

This is well below the 3.0 percent growth, for as far as the eye can see, promised by the...

Andrew Sorkin Gets the Bailout Basics Right, but Debt Is Not a Problem

Andrew Sorkin used his column to make the basic point about a bailout, it has to be centered on keeping workers attached to their jobs, by keeping the paychecks flowing. His proposal is a no-interest bridge loan to any business, including the self-employed, to stay in business and continue to pay their workers. The businesses would have five years to pay back the loans.

This is a reasonable plan, although I am somewhat partial to the Danish system where the government picks up 75 percent of...