Dean Baker's Blog, page 376

Chicago's Public Employees Do Not Get Social Security

That little tidbit would have been useful information to include in an article on Chicago Mayor Rahm Emanuel's plans to cut public employee pensions. The piece reports that retired workers receive:

"average annual benefits ranging from about $34,000 for a general-services retiree to $78,000 for a former teacher with 30 years of service." 

These payments will in most cases be the vast majority of retirees' income since workers who spent their entire careers working for the city will not b...

Which Way Is Up? # 5467

Greg Sargent catches PolitiFact being out to lunch big time. On one of the Sunday talk shows House Majority Leader Eric Cantor said the deficit is growing. Politifact examined the claim and rated it "half true." Its logic was that even though the deficit has been falling sharply over the last 4 years, and is projected to fall more over the next two years, it is projected to rise later in the decade.

This one is a real mind bender. After all, the rapid pace of deficit reduction has been a big...

President Obama Comes Out for Subsidizing Mortgage Backed Securities

President Obama is going to announce a plan whose main goal appears to be subsidizing mortgage backed securities. Unfortunately the readers of the Washington Post article on the piece probably would not realize this fact.

The article simply repeats the Obama administration's assertion that government backing is needed for 30-year mortgages to exist, which it asserted are the backbone of home ownership.

"Traveling to Phoenix on Tuesday, Obama is planning to call for a new system, built in part...

Paul Krugman Gets Food Stamps Wrong by a Factor of Ten, Ha Ha!

Okay, I am not really writing this to make fun of my friend Paul Krugman for whom I have enormous respect. The point here is that reporters should be trying to express budget numbers in terms that are understandable to their audience.

Krugman was apparently misled by news accounts (like this one) reporting that the Republicans wanted to cut food stamps by $40 billion which did not point out that this cut was over ten years, not one year. I have been ranting about this point for a while. If re...

Quick: What Does a $40 Billion Cut to Food Stamps Mean? (And How Many Years Is That Over?)

I have been harshly critical of budget reporting in the media for being uninformative to readers. I think the NYT is trying to help me make my point. It ran an article telling readers about GOP plans to have a $40 billion cut in food stamp spending. 

Okay how much money is that? Will all of us taxpayers see big savings if we cut back food stamps by this amount?

Well, if we go to the Center for Economic and Policy Research's new super neat budget calculator we would see that $40 billion...

Bringing Arithmetic to Public Pensions

The NYT ran a column by former Los Angeles Mayor Richard Riordan and Tim Rutten which purports to present a plan to "avert the pension crisis." The piece hugely exaggerates the funding problem faced by pensions because of a simple logical error in its assessment of discount rates.

At one point it tells readers:

"America’s state and municipal pensions concede that they are underfunded by more than $1 trillion. If a more realistic expectation of returns on investment is pegged at 5 percent, the...

Robert Samuelson Says It's Schools vs. Banks

Sorry, I misread the piece, it was "schools vs. nursing homes." In a 35-year period in which we have seen the most massive upward redistribution of income in the history of the world, Robert Samuelson tells us that the only way that we can pay for our kids' education is by breaking contractual obligations to public sector workers and cutting Social Security and Medicare. Yeah, where else could we possibly find money?

The starting point here is the bankruptcy of Detroit, which Samuelson tells...

Will Medical Trade Be Included in the EU Trade Deal and the TPP? If Not, Why Not?

The NYT has an article today on the enormous savings available to people who had major surguries performed in Europe rather than the United States. The piece reports that the cost of hip replacement or knee replacement surgery in the United States are more than five times higher than they are in comparable quality facilities in Europe. (The gap would be even larger with facilities in Thailand and India.)

This shows the enormous potential gains from increased medical trade. In effect, our hosp...

Don't We Need a Fed That Is Independent of Wall Street?

Steven Pearlstein had a strange piece in the Post today arguing that Janet Yellen would be a better Fed chair than Larry Summers because Summers is too closely tied to the Democratic Party and we need a chair who is politically independent. While a politically independent Fed chair might be desirable, the Fed's biggest mistake over the last two decades has been its unwillingness to take steps to burst bubbles: the stock bubble in the 1990s and the housing bubble in the last decade. The countr...

"Savings Glut" Means Much of Economics Is WRONG

This exchange (here, here, and here) between my friend Jared Bernstein and Casey Mulligan is worth a brief comment. As I've told several people who followed it, Mulligan is absolutely presenting the mainstream position in the profession, but Jared is right.

The question, if we ignore silly semantics, is whether the economy typically faces a problem of insufficient demand. In other words, if companies, families, or the government went out spent $500 billion tomorrow would this boost growth or...