Dean Baker's Blog, page 475

The Post Says Obama's Campaign Staff is Delusional

It told readers that:

"The developments [recent economic developments] are casting a shadow over the Obama campaign’s hopes that the president will have the wind of a robust economic recovery at his back for his re-election run."

If President Obama's campaign ever had hopes that he would have the "wind of a robust economic recovery at his back" then they are seriously delusional. The best quarter of growth in the last year and a half was just 3.0 percent. According to the Congressional Budget...

NYT Editorializes Against Cuts in Military Spending in News Story

The second paragraph of a NYT news story on the cuts in military spending implied by the budget agreement from last summer told readers:

"On Jan. 2, national security is set to receive a heavy blow if Congress fails to intervene. That is when a 10-year, $600 billion, across-the-board spending cut is to hit the Pentagon, equal to roughly 8 percent of its current budget."

While the size of these cuts is not in dispute, it is far from clear that they would constitute a "heavy blow" to national s...

Germany's Neighbors Were Not More Profligate

The Washington Post still can't figure out who is on first in the euro crisis. It once again referred to debt-troubled countries as "profligate." Of course, the debt-burdened countries were not especially profligate. Italy's debt to GDP ratio had been falling before the crisis. Ireland and Spain had large budget surpluses. So the issue is not these countries were profligate, the issue is that these countries got hit badly by the collapse of housing bubbles across Europe.

This piece also misre...

I'm Back

Thanks to everyone for the nice comments. For anyone wondering, I did not use my vacation to hobnob with the one percent. My wife and I had a great time helping to care for dogs at Best Friends Animal Sanctuary. Now, back to work.

I Am Out of Here! (for now)

It's vacation time, folks. Beat the Press will be on vacation until Monday, June 4. Until then, don't believe anything you read in the newspaper.

David Brooks Gets Private Equity Wrong for the Team

It's clear that the impact of private equity on the economy is going to be one of the central issues in the presidential race given Mitt Romney's boasts about his performance as one of the partners in Bain Capital. President Obama and others have pointed out that private equity firms often leave large numbers of laid off workers and bankrupt companies in their wake.

To counter this image, David Brooks picked up the cause. He used his column to tell readers that private equity firms turned aro...

Glass-Steagall and the Economic Crisis

Andrew Ross Sorkin seems to be very proud of himself for having figured out that Glass-Steagall would not have prevented the economic crisis that hit the economy in 2007 and is still causing tens of millions of people to be out of work or underemployed today. He is of course right, except most of us knew this 4 years ago.

The crisis, which is an "economic crisis" not a "financial crisis" was caused by the collapse of an $8 trillion housing bubble. This bubble was driving the economy by sparki...

Ezekiel Emmanuel Doesn't Like Social Security and Medicare

That is what he told us in his New York Times column that was ostensibly about out of control Social Security and Medicare spending. Emmanuel begins by telling readers:

"If nothing is done about entitlement spending, and if our current tax breaks continue, then by 2025, tax revenue will be able to pay for Medicare, Medicaid, Social Security, interest on the debt and nothing else."

There are two big problems with this story. First there is the old trick of conflating Social Security with Medic...

The Arithmetic of the Minimum Wage and the Earned Income Tax Credit

The NYT had an article on efforts to raise the minimum wage in New York state. At one point the piece gives the views of

Russell Sykes, a senior fellow at the Empire Center for New York State Policy, who is identified as an opponent of a higher minimum wage. According to the article, Sykes argued that:

"raising the minimum wage would not be helpful to most poor families. The earned-income tax credit was more beneficial to them, he said, and an increase in the minimum wage could make some fami...

Thomas Friedman Presents Evidence of a Skills Mismatch in His NYT Column

Thomas Friedman did his usual Sunday morning stretch, waxing eloquently on a new era in:

"in which to be a president, a governor, a mayor or a college president will be, on balance, to take things away from people."

It's not clear why this would be the case. After all, productivity is growing at a rate of 2.0-2.5 percent annually. This should mean that we are getting richer, not poorer, through time. But Thomas Friedmanland bears little resemblance to the world of gravity and arithmetic that...