Dean Baker's Blog, page 441

The Fiscal Cliff, It’s Just Like the Holocaust

Yes, that is absurd and even offensive, but since the NYT is going in for gross exaggeration to scare its readers about the budget, I thought I would play along. A NYT piece on the budget deficit told readers that:

“But even if Democrats and the financial markets go along with the delay [a decision to put off any longer term plans on taxes and spending if Romney wins the election], the months before Mr. Romney’s swearing-in could be as crucial to his presidency as the transition period was fo...

Andrew Ross Sorkin Sheds Tears for Socially Minded Wall Street Chieftains

Andrew Ross Sorkin uses his column today to highlight to troubles of those suffering the most from the downturn: the CEOs of major banks who bought up failing competitors in the midst of the financial crisis. Jamie Dimon, J.P. Morgan's CEO, get centerl stage for having to deal with Bear Stearns' legal liabilities, but Sorkin also has some tears for Wells Fargo, which bought up Wachovia, and Bank of America, which took over Merrill Lynch.

While Sorkin apparently feels sorry for the burdens imp...

Thomas Edsall’s Productivity Fears

In his NYT blog, Thomas Edsall took off from a recent paper by Northwestern university economist Robert Gordon and warned that we may see a future of very slow economic growth. While Gordon is a good economist, with many useful insights (including in this paper), it is worth throwing in a few words of caution.

First, economists’ ability to predict trends in productivity is virtually zero. There were two major shifts in productivity trends in the post-World War Ii period: the slowdown that beg...

Final Thoughts on the Baker-Rowe-DeLong-Krugman Deficit Debate

After having provoked a debate that subsequently involved Nick Rowe, Brad DeLong and Paul Krugman, I will assert blogowners’ privilege and throw out some summary thoughts.

First, we all seem to agree that in a situation where the economy is clearly operating well below its potential, governments can run deficits to boost employment and output. I believe we all agree that in principle the government can also use these deficits to increase future output through productive investment in either p...

Tax Deductible Speeding Tickets?

I wouldn't try taking the deduction, but apparently banks and other corporate crooks are often able to deduct the settlements in civil actions from their taxes. Good piece in the Post calling attention to this issue.

Brad DeLong Beats Me to Responding to Nick Rowe

I saw that Nick Rowe was unhappy that I was saying that the government debt is not a burden to future generations since they will also own the debt as an asset. I had planned to write a response, but I see that Brad DeLong got there first. I would agree with pretty much everything Brad said. The burden of the debt only exists if there is reason to believe that debt is somehow displacing investment in private capital, which is certainly not true at present.

I would probably argue the case even...

The Washington Post Doesn't Know that the Trade Deficit Is Affected by Imports

This is what readers of an article on the U.S. trade situation would conclude. The article notes the large U.S. trade deficit, but then focuses exclusively on the role of increased exports in reducing the deficit. In fact, in order to get the deficit down to a more sustainable level we will almost certainly need both higher exports and lower imports.

Incredibly, the article never once mentioned the value of the dollar. This is by far the most important determinant of both our exports and our...

Ryan on Medicare: More Mind Reading at the NYT

Is everyone in the news business a frustrated mind reader? Given their often demonstrated tendency to tell us what politicians think, we might believe this to be the case.

The NYT was doing some mind reading in its coverage of the vice presidential debate when it told readers:

"Mr. Ryan believes competition will drive down the cost of health care, keeping the voucher’s value up to date."

("Up to date" in this context means large enough to cover the cost of a Medicare equivalent policy.) Of co...

Martha Raddatz on Social Security: What Would You Do About the United States' Imperialistic Foreign Policy?

During the vice-presidential debate Martha Raddatz used her position as debate moderator to ask the candidates about the impending bankruptcies of Social Security and Medicare. It was incredibly irresponsible to use such a loaded term to refer to the financial problems facing these programs.

Both Social Security and Medicare are projected to face shortfalls over their 75-year planning horizon, however these shortfalls are not accurately described as "bankruptcy." This phrase undoubtedly leads...

Bad Arithmetic on the Battle Against Poverty

As part of the NYT's affirmative action program for right-wingers, it ran an oped column by Gary E. MacDougal, a former business consultant and executive and advisor to former Illinois Governor Jim Edgar. The main point of the piece is that we spend almost $1 trillion a year on anti-poverty programs (combining spending at all levels of government), yet we still have 46 million people in poverty. MacDougal does the arithmetic and points out that this comes to over $23,000 a year for each perso...