Dean Baker's Blog, page 400

Robert Samuelson Picks Up Misrepresented Claims on Single Parents from "Liberal " Third Way

The Washington think tank Third Way has managed to make a lot of news lately by misrepresenting its research. It put out a paper by David Autor and Melanie Wasserman with some tentative results concerning the impact on children of growing up without a father present in the household. The paper found weak evidence that boys were less likely to graduate college under such circumstances, while girls were less affected. While the piece itself notes the tentative nature of this finding (the impact...

Can We Reduce Deficits by "Changing" the Defense Department?

It is understandable that politicians would use euphemisms when they talk about cutting Social Security. After all, it is an incredibly popular program among all demographic groups and across the political spectrum. Therefore it is not surprising they would refer to "changes" to Social Security when they mean cuts to Social Security. But what is the Post's excuse?

NYT Exposes More Corruption in Corporate Governance

Corporate governance structures in the United States make the old Soviet Union look like a model of democracy. As it is, the voting structure is so rigged to favor insiders that it is almost impossible for shareholders to remove even the most incompetent directors and install better management.

This is mostly done through the structure of elections to give incumbents an almost unbeatable advantage. However the NYT tells us that even in the rare cases where the incumbents are voted out they do...

Retail Sales Fall and There is Another Outbreak of Surprised Economists

Retail sales fell in March and economists were surprised.

Charles Krauthammer is A Short Term Thinker

Charles Krauthammer is not impressed with President Obama's proposal to cut the cost of living adjustment for Social Security. He complains:

"First, the proposal — “chained CPI,” a change in the way inflation is measured — is very small. It reduces Social Security by a quarter of a penny on the dollar — a $2,000 check reduced by a five-dollar bill."

This is a correct statement (or almost correct statement, the Social Security Administration estimates the impact 0.3 percent annually) on the fi...

Correction for NYT Budget Piece: Economists Do Not Believe that a Chained CPI is a More Accurate Measure of the Cost of Living for the Elderly

The NYT had a major article on the budget today which told readers:

"While many economists say the new formula is more accurate, opponents say it does not adequately reflect the out-of-pocket health care expenses that burden older Americans."

This comment is misleading since the issue with Social Security benefits is whether the chained CPI better reflects the cost of living of the population drawing Social Security checks. That is actually distinct from the rate of growth of out of pocket he...

Another Front Page Washington Post Editorial on the Budget

The Washington Post showed yet again why it is known as "Fox on 15th Street," running a lead front page story headlined, "Obama eyes end to debt deadlock." (The on-line version is slightly different.) The piece begins by telling readers in the first sentence:

"In the first budget of his second term, President Obama set aside the grand ambitions that marked his early days in office and sent Congress a blueprint aimed at achieving a simple goal: ending the long partisan standoff over the nation...

Teaching the Wall Street Journal About Pensions and Stock Returns

The Wall Street Journal had a column this week that would terrify its readers, if they took its columns seriously. The piece, by Andy Kessler, derided the 7.5 percent return assumed by the Calpers, the public employer pension fund in California. Other pensions, both public and private, make comparable return assumptions.

The piece tells readers:

"Who wouldn't want 7.5%-8% returns these days? Ten-year U.S. Treasury bonds are paying 1.74%. There is almost zero probability that Calpers will earn...

Fareed Zakaria Fails to Appreciate the Fruits of Thatcherism

Fareed Zakaria failed to recognize the true fruits of Thatcherism in his column today. After telling readers that Thatcherism was the right remedy for the problems of the 1970s such as oil shocks, slow productivity growth and rising wages, he says that it is not the answer for economy now:

"Today, American and European workers struggle to keep up their wages as technology and globalization push them down. Western economies face global competition, with other countries building impressive infr...

Wall Street Journal Gets Taken for a Ride on Europe Wealth Survey

The European Central Bank (ECB) was a bit late with their April Fool’s joke, but they did come up a whopper. It produced a study of household wealth in the euro zone in 2009 and 2010 that came up with the startling news that:

“German households are among the poorest—on paper, at least—in the euro zone.”

The WSJ piece goes on to tell readers:

“Nevertheless, the report offers a reminder that citizens in some of the countries hardest-hit by Europe's debt crisis aren't as bad off as many believe....