Dean Baker's Blog, page 409

Washington Post Editorializes for Its "Big Deal" in News Pages, Again

As its readers know, the Washington Post really really wants to see big cuts in Medicare and Social Security and is happy to use its news pages to advance this agenda. In a budget piece today it told readers:

"In a flurry of meetings and phone calls over the past few days, Obama has courted more than half a dozen Republicans in the Senate, telling them that he is ready to overhaul expensive health and retirement programs if they agree to raise taxes to tame the national debt (emphasis added)....

Has NPR Joined Peter Peterson's Crusade Against Social Security and Medicare?

The most striking feature of the U.S. economy over the last three decades has been the upward redistribution of income. The top 1.0 percent of households has managed to pocket the vast majority of gains over this period. That is a sharp contrast with the three decades immediately following World War II when the benefits of much more rapid growth were broadly shared.

This pattern of growth might lead people to question the policies that have led to this upward redistribution (e.g. trade policy...

The Fed Is Still Way Out to Lunch on Financial Bubbles

The Federal Reserve Board disastrously missed and/or ignored two huge bubbles in the last decades: the stock bubble in the 1990s and the housing bubble in the 2000s. The collapse of both bubbles led to recessions from which it was difficult to recover. Neil Irwin inadvertently tells us today that the Fed is still utterly clueless when it comes to dealing with bubbles.

The problem is that, at least according to Irwin's account, no one at the Fed seems to understand how bubbles hurt the econom...

European Ministers Advocate Austerity as an End In Itself, not to End the Debt Crisis

The Washington Post began an article on a meeting of the euro zone finance ministers by telling readers:

"European leaders demanded that euro members press on with budget cuts to end the debt crisis."

At this point there is overwhelming evidence that the primary effect of the austerity being demanded by the finance ministers is to slow growth and increase unemployment. As a result of the negative impact on output, the budget cuts lead to little improvement in the financial situation of the af...

Washington Post's Fact Checkers Go On Strike

That's what readers of Marc Thiessen's column on the sequester would conclude. Theissen repeatedly touts the report of the Bowles-Simpson commission. Of course there was no report issued by the commission because no report received the necessary majority. The Post's fact checkers would have quickly caught Thiessen's error and insist that he correct it, but such is the price of labor discord.

Thiessen's piece is also striking for the lack of concern for the people will lose their jobs as a res...

Carried Interest: Shoe Salespeople Earn Capital Gains

It's extremely unfair that shoe salespeople have to pay taxes on their income at the same rate as other workers. After all, they must work with shoe buyers, achieve an alignment of interest, and then get them to buy the shoes. Clearly this means that they should be taxed at the lower capital gains rate rather than the ordinary earnings rate that factory workers and school teachers pay.

Yes this is nuts, but because very rich people who run pension and hedge funds the NYT feels the need to tre...

Republicans Are Not Telling the Truth When They Say that Government Spending Is Out of Control

It would have been helpful if the NYT had pointed out this fact in an article that included assertions from House Speaker John Boehner that spending is out of control.

"The president got his tax hikes on January the First. The issue here is spending. Spending is out of control."

In fact, spending as a share of potential GDP is near a 30-year low and is lower than at any point in the Reagan-Bush I administrations. The chart shows federal spending as a share of GDP and as a share of the GDP pro...

Robert Samuelson Identifies the Sequester Culprit: John Kennedy

I'm not kidding, it's right there in the Washington Post. And we thought Bob Woodward was creative.

But Samuelson's economic history is even more striking than the linking of Kennedy to the sequester. He notes the fiscal stimulus that was sparked by the Kennedy tax cuts (and the Vietnam War and Johnson's Great Society programs) and the boom that resulted, and tells us that "it was a disaster."

"High inflation was the first shock. An initial boom (by 1969, unemployment was 3.5 percent) spawned...

Time to Bury Pew Report on Wealth by Age Group

I realize that Pew is a very prestigious outfit, but Pew's garbage is still garbage. It's report on wealth by age group, or at least the interpretation that it and others have given this report, fits the bill.

A couple of years ago, Pew did an analysis that gave breakdowns of wealth by age group. It found that the median household over the age of 65 had $170,500 in net worth. I was actually pleased that they came up with this number, since it meant that the projections that I had done more th...

Tales on the Economy: Track Records Should Matter

A fortune teller who is constantly adjusting his predictions for the future when they are repeatedly falisfied by events is likely to lose credibility after a while. Unfortunately the same does not hold true among economists. That is why a Washington Post article on the prospects for future growth treats the varying perspectives among economists as carrying equal weight.

Some of the economists have had their predictions for the economy repeatedly falsified by events, starting with the initial...