Dean Baker's Blog, page 440

Hot Air from David Brooks on Clean Energy and Global Warming

David Brooks is trying to do his best to help the Romney campaign, but apparently he hasn't been getting the memos. Brooks' column today is a diatribe against measures to promote clean energy. (That would be socialist items like tax credits for retrofitting buildings, solar panels, or fuel efficient cars. The same sorts of policies that were promoted under President Bush, albeit on a smaller scale.)

There are a number of things that are not quite right in Brooks' piece, but my favorite is Bro...

Nice Washington Post Piece on the Recovery of the Housing Market

The Washington Post had a nice piece on the potential impact of the recovery of the housing market on the economy. The piece reasonably assumes that construction returns to its long-term trend share of GDP, rather than getting back to its bubble levels of the last decade. In this case it will make a substantial contribution to the recovery, although it still will not possible to return to full employment without large budget deficits, unless there is a substantial reduction in the size of the...

Washington Post Does China Bashing for Its Advertisers

Since the Washington Post decided to attack Mitt Romney for China bashing as part of his presidential race, it seems only appropriate to attack the Post's own China bashing in the same editorial. While the Post is almost certainly right about Romney's motives, it's wrong about the logic of the case.

The United States has a huge trade deficit. China has a huge trade surplus. This is 180 degrees at odds with the textbook story. A fast growing developing country like China is supposed to be borr...

Robert Samuelson Says That CBO Numbers Are Wrong!

In his column yesterday, Robert Samuelson expressed his unhappiness that the presidential debate didn't focus on the budget deficit, his pet peeve. Of course it is understandable that the questioners didn't want to waste the country's time on the topic since they probably all knew that the reason that we have large deficits is because the collapse of the housing bubble crashed the economy. If the economy had continued along with 4.5 percent unemployment, the deficits today would be fairly mod...

Germany Is Likely Concerned that a Greek Euro Exit Could Set an Example

A NYT piece that discussed negotiations between Greece and the "troika" over its budget deficit should have pointed out the risk to Germany and the other core euro zone from a Greek exit from the euro zone. The austerity policies demanded by the troika have led to 25 percent unemployment in Greece. With the economy projected to continue to contract for at least another year, the unemployment rate is almost certain to go higher.

By contrast, if Greece were to leave the euro and re-establish it...

Not Just Tax Increases, but ANY Deficit Reduction Will Cost Jobs

The Washington Post ran an incredibly confusing piece on the ending of the Bush tax cuts which was highly favorable to those wanting to keep the tax breaks for the rich. First, the piece repeatedly uses the term "fiscal cliff," which implies that there is some ledge that the country will hurtle over at the end of the year. This metaphor is completely wrong. The impact of letting the tax cuts expire on January 1 is in fact minor. There will only be a substantial impact if the higher tax rates...

If Manufacturing Jobs Aren't Coming Back, Will We Be Able To Produce Manufactured Goods Without Workers?

That what people who saw this NPR Planet Money piece must be wondering. The problem is that the United States as a result of its loss of manufacturing production, the United States now has a large annual trade deficit of $600 billion or 4 percent of GDP. If were closer to full employment it would likely be around 5 percent of GDP, or $750 billion.

At the moment we are able to run these deficits because countries like China are willing to subsidize their exports to the U.S. by spending hundred...

The How Many Wrong Statements Can You Find In Thomas Friedman's Column Game

It's always fun when Thomas Friedman writes a piece on economics. He likes to play a game with readers. He slips a number of false assertions into the column and readers are supposed to find them. (He probably does this with his columns on foreign policy also, but I don't have time to read through those columns.)

Today's column is just chock full of these false assertions. Early on Friedman tells us:

"many Americans understand something is very wrong, that we could go the way of Greece or Jap...

Post Misrepresents Story on Outsourcing

A Washington Post factcheck on the debate commented on a debate question on outsourcing:

"But economistsareunanimousthat trade, including outsourcing, is hugely beneficial to economic growth at home and abroad."

This is highly misleading for two reasons. First, economists are unanimous in agreeing that trade could have major distributional consequences. And some prominent economists, such as Paul Krugman, have argued that the recent pattern of trade for the United States has had negative dist...

NYT Decides to Start Blaming Medicare and Social Security for Bad Weather

There is a serious effort by corporate honchos to cut Social Security and Medicare in the lame duck session of Congress. As has been reporting in several major media outlets, this campaign has raised tens of millions of dollars for this purpose.

Readers of a NYT "fact-check" on the presidential debate were no doubt wondering whether the paper had sold space to this campaign. The fact-check was addressing the question of whether Governor Romney wanted to increase military spending by $2.3 tril...