Dean Baker's Blog, page 445

Obama Deserves Blame, not Credit for the First-Time Homebuyers Tax Credit

Mark Zandi is anxious to give President Obama credit for the first time homebuyers tax credit, arguing that it helped stop the free fall in house prices. Actually, blame would be more appropriate. The credit was offered at a time when the bubble was still far from having fully deflated. The credit was not going to maintain house prices at a permanently inflated level unless the government was prepared to go the route of a house price support program. (This would be sort of like out farm price...

Morning Edition Does PR Piece for the Coal Industry

The coal industry has spent tens of millions of dollars trying to convince people that the country should not take measures to stop global warming. NPR contributed to this campaign by running a piece on the politics of Ohio in the election which implied that coal was central to the state's economy or at least to the are around Akron.

According to the Bureau of Labor Statistics (BLS), Ohio has approximately 12,000 employed in mining and logging. Presumably the vast majority of these workers a...

A Heaping Helping of Ridicule for Ruth Marcus

Ruth Marcus commits just about every major error in budget analysis in her Washington Post column this morning. To start with, she warns of the fiscal cliff at the end of the year:

"a fiscal cliff looms at year’s end, when a cornucopia of tax cuts is set to expire and a $1.2trillion spending sequester kicks in. Like Wile E. Coyote, we are about to suddenly look down at a gaping void."

Wow, that sounds really scary. Of course this is the sort of nonsense that can only appear in the Washington...

People Get Paid for this Stuff?

David Brooks on raising the age of eligibility for Social Security and Medicare:

"Have you looked at 67-year-olds recently? They look the way 40-year-olds used to look."

Scary Durable Goods Numbers

The Commerce Department reported that durable goods orders fell by 13.2 percent in August, not surprisingly the Wall Street Journal chose to highlight this drop. While the number is dramatic, nearly all of the drop was in the highly volatile transportation component. Excluding transportation, orders fell by a considerably more modest 1.6 percent.

Within transportation, civilian aircraft stood out with a decline in orders of 101.8 percent. Yes, the number was over 100 percent, as apparently th...

Mulligan Tries Again to Blame the Drop in Employment on the Supply Side

Casey Mulligan takes another stab at explaining the drop in employment since the housing market crash on changes in incentives in the NYT today. The basic story is that the extension of the length of unemployment insurance (UI), the easing of eligibility rules, the increased generosity of food stamps and several other changes in tax and benefit structures gave people less incentive to work. As a result, more people opted to rely on these benefits rather than work, hence the large falloff in e...

The Budget Deficit and the Mysterious Forces That Determine Newspaper Headlines

The NYT notes that the deficit is likely to surpass $1 trillion for the fourth consecutive year. It then tells readers:

"Against that headline-grabbing figure, Mr. Obama’s explanation — that the deficit he inherited is actually on a path to be cut in half just a year later than he promised, measured as a percentage of the economy’s total output — risks sounding professorial at best."

Many people might have thought that newspapers control what goes into their headlines (the headline of this pi...

Money and Drugs in North Carolina

The Charlotte Observer has a nice piece on how the large hospitals in the state make big profits on chemotherapy drugs. Yes, this is the sort of thing one expects
when the government grants patent monopolies. Where are the foes of big government?

The Post Has Never Heard of Current Account Deficits

Those who wonder why the Post seems to focus obsessively on budget deficits when there are so many larger problems afflicting the country got part of their answer today in an article on the euro crisis. The article focuses exclusively on budget deficits and the risk of insolvency for the troubled economies of southern Europe. It never once raises the issue of the current account deficits that these countries are experiencing.

The fundamental problem in the euro zone is that costs in southern...

Charles Lane Is Unhappy That the Fed Is Taking Steps to Create Jobs

People are used to strange statements on the economy in the Washington Post, hence we have Charles Lane's column complaining about the Fed's "trickle down" economics. Lane somehow has the idea that the main way in which the Fed expects its latest commitment to low interest rates and quantitative easing to create jobs is by raising stock prices. He would know better even if he just read the Post's business section.

The main ways in which the action is supposed to boost demand is by reducing mo...