Dean Baker's Blog, page 429

Post Confuses "Cliff" and Deficit Reduction

It's getting harder and harder to figure out what the Washington Post wants us to be worried about as the budget standoff approaches some sort of resolution. A front page Post article today warned readers that some tax increases and spending cuts are still likely to take effect on January 1, even if there is an agreement to extend the Bush tax cuts for the bottom 98 percent of households and to fix the alternative minimum tax and some other expiring provisions. The Post accurately points out...

Post Chooses Debt Fixers Over Commerce Department Data

The Washington Post has been an unofficial partner in the corporate sponsored Campaign to Fix the Debt's efforts to cut Social Security and Medicare, devoting much of its news and opinion sections to advancing its agenda. This political position explains an article that examined the prospects for the U.S. economy after the budget impasse (a.k.a. the "fiscal cliff") is resolved. The piece relied extensively on assertions from David M. Cote, a prominent deficit hawk and the CEO of Honeywell.

Th...

The First-Time Homebuyers Tax Credit Helped Sink the FHA

The NYT had an article on a new study by Edward Pinto at the American Enterprise Institute which found that a high percentage of the loans the FHA insured in 2009-2010 were high risk loans that are likely to end in foreclosure. Based on its findings, the study criticized FHA lending practices. It argued that they were both leading to large losses for the program and resulting in large numbers of homes in foreclosure, which is devastating both to the homeowners and the communities in which the...

Serious People Could be Seriously Embarrassed: Why It's Important that We Not Go Off the "Fiscal Cliff"

Much of the media has spent the last month and a half hyping the impact of the "fiscal cliff," the tax increases and spending cuts that are scheduled to take effect at the end of the year. They have been warning of a recession and other dire consequences if a deal is not struck by December 31st. As we are now getting down to the final two weeks and the prospect that there will not be a deal becomes more likely, many in the media are getting more frantic.

What they fear is yet another huge emb...

Social Security Does Not Contribute to the Deficit: Lessons for the Washington Post

The Washington Post is getting very upset that people refuse to accept its assertion that Social Security contributes to the deficit. An editorial today angrily referred to the "mythology that, though the pension and disability program is facing ever-widening shortfalls, it isn’t contributing to the overall deficit."

It's not clear why the Post thinks of the law (even as acknowledged by Republican Social Security trustee Charles Blahous) that Social Security can only spend its designated rev...

Post Misinforms Yet Again on Budget Negotiations

The Post again misled readers in an article on the budget standoff, which it calls the "fiscal cliff" to exaggerate the urgency of reaching a deal before the end of the year. It reported on a possible deal which it said:

"Senior Senate Republicans, meanwhile, were at work on a fallback plan that would not significantly restrain the national debt but would at least avert widespread economic damage by canceling tax increases scheduled to take effect next year for the vast majority of Americans....

Washington Post Misrepresents Economic Projections to Push Its Agenda

The Washington Post continues to ignore standard journalistic practices in its effort to push its agenda for cutting Social Security and Medicare. In an effort to maintain pressure on President Obama to reach a budget deal before the end of the year, when his bargaining power will be strengthened by the end of the Bush tax cuts, the paper inaccurately asserted:

"Economists have warned that going over the fiscal cliff — the set of sizable tax increases and spending cuts mandated to take place...

Taxing Problem May Not be That Taxing

The NYT ran an article noting that President Obama and many progressives seem prepared to let the Bush tax cuts remain in place for the vast majority of the population. The rationale is that most of the income gains of the last three decades have gone to those at the top of the income distribution. The piece points out that this decision could leave the government seriously short of revenue, concluding with a quote from former Obama administration economist, Jared Bernstein [a friend and co-a...

Brooks Jackson Uses Annenberg FactCheck to Push for Cuts to Social Security

The Very Serious People have taken off the gloves. There are no rules when it comes to the battle over Social Security and Medicare as Brooks Jackson shows in his "FactCheck" on the use of the chained CPI to index the Social Security cost-of-living adjustments (COLA).

Jackson strongly endorses the use of the chained CPI, describing it in the first sentence as "a more accurate cost-of-living adjustment." The chained CPI would have the effect of reducing the annual COLA by approximately 0.3 per...

Capital Gains on Homes Are Tax Exempt (see correction)

At least the first $250,000 of gains is exempt for individuals and $500,000 for couples. For this reason, the Post is likely off the mark in telling readers about middle class homeowners rushing to sell their homes to take advantage of the lower capital gains tax rate.

A couple would have to have a gain of at least $500,000 for this to be an issue. That would imply a gain that is a bit less than three times the median house price nationally. That doesn't sound like a middle class couple. Furt...