Dean Baker's Blog, page 412

Thomas Friedman Gets Lost South of the Border

In this century Mexico has had the slowest per capita GDP growth of any country in Latin America. It has made almost no progress in reducing poverty and it is plagued by drug gangs and corruption. But Thomas Friedman sees a Mexico that doesn't show up in the data:

"IN India, people ask you about China, and, in China, people ask you about India: Which country will become the more dominant economic power in the 21st century? I now have the answer: Mexico."

How does he come to this conclusion? W...

People Driving West Are Getting Closer to Falling Into the Pacific Ocean

That seems the obvious response to the comment by Federal Reserve Governor Jerome Powell on the prospect of the United States government facing a debt crisis:

“We don’t know where the tipping point is, but wherever it is, we’re getting closer to it.”

Needless to say, the concern seems more than a bit silly given the problem of unemployment facing the country and the fact that both interest rates and the interest burden of the debt are near post-war lows.

But hey, at least worrying about the d...

Economists Discover that Fed Bond Purchases Affect the Budget

Wow, you've got to give those economists credit. As Neil Irwin tells us, they figured out that the Fed's bond purchases affect the budget. Of course they put it on the negative side, noting that the Fed stands to lose money when it sells off its bonds at a loss later in the decade if interest rates rise as projected.

There are two important points that are worth pointing out on this one. First, the Fed does not have to sell off the bonds. It can simply hold its bonds until maturity as those o...

Post Lobbies for Defense Department in News Section

In an article on the impact of the sequester on the Defense Department the Post told readers:

"The $46billion dent to the Pentagon’s fiscal 2013 budget, long considered by the brass as nothing more than a political pawn, has taken on an air of inevitability, forcing commanders across the military to plan for painful reductions and argue that American lives and livelihoods are hanging in the balance" [emphasis added].

A real newspaper would of course reserve the adjective "painful" for the opi...

The Post Pushes Trade Agreement in News Section, Again

The Washington Post ran a major PR piece for the Trans-Pacific Partnership, headlining an article with the possibility that Japan might join the pact, "Japan’s economic turmoil may provide an opening for the U.S." As the article points out, Japan's trade barriers to U.S. exports are already very low. It is unlikely that the Trans-Pacific Partnership will increase U.S. exports to any substantial extent.

Towards the end of the article the Post tells readers;

"With similar talks underway between...

Someone Has to Tell David Brooks that Social Security and Medicare are Politically Popular

David Brooks is unhappy that:

"Voters disdain the G.O.P. because they think Republicans are mindless antigovernment fanatics who can’t distinguish good government programs from bad ones. Sequestration is a fanatically mindless piece of legislation that can’t distinguish good government programs from bad ones. Sequestration carefully spares programs like Medicare and Social Security that actually contribute to the debt problem. Sequestration will cause maximum political disgust for a trivial a...

Privacy Concerns Would not Prevent Bank of America from Talking About Bank Policy

A NYT article reporting on the fact that banks are proving much more willing to forgive debt on second mortgages than first mortgages highlighted the case of Danette Rivera, a 38-year-old single mother, who had $115,000 of second mortgage debt forgiven and is facing foreclosure by Bank of America over unpaid debt on a first mortgage. The piece told readers:

"The bank, citing customer privacy concerns, declined to comment."

It would have been helpful to remind readers that Bank of America has...

WAPO Uses News Section to Talk About "Revenue-Bleeding Entitlement System"

The Washington Post once again showed why it is known as "Fox on 15th Street" when it reported on a group of small business owners urging that Social Security, Medicare and Medicaid be protected from cuts. At one point the piece refers to plans for "overhauling the nation’s revenue-bleeding entitlement system."

"Revenue-bleeding" does not appear to be the official name for the programs in question. Most newspapers would try to constrain their enthusiasm for cuts to Social Security, Medicare,...

Does Dana Milbank Ever Notice the Unemployment Rate?

That is what readers of his column complaining that no one is listening to Morgan Stanley director Erskine Bowles and former Senator Alan Simpson. Milbank complains that Obama is only willing to cut Medicare by the $400 billion amount advocated in Bowles-Simpson initial plan. (Milbank mistakenly calls this the commission's plan. The commission did not issue a plan since no plan received the necessary majority vote.) Milbank attacks Obama on this points:

"But that proposal was made in 2010, an...

Charles Lane Doesn't Like the Minimum Wage (see addendum)

That's what he told us in his column today, because he sure didn't make much of an argument. Lane cites several recent papers showing that the minimum wage has no negative effect on employment (including my colleague, John Schmitt's paper). He then notes that these studies could be right, but he also refers to research by David Neumark of the University of California at Irvine and William Wascher of the Federal Reserve that shows the last minimum wage hike (from $5.15 an hour in 2007 to $7.25...