Dean Baker's Blog, page 496

ABC Does Unpaid(?) Commerical Announcement for the Republicans on the Evening News

ABC News took budget reporting to new levels of irresponsibility last night telling its viewers to think of the federal budget like the family budget by knocking off 8 zeros to make spending $38,000, instead of $3.8 trillion. While this approach could be useful to put some items in context (spending on TANF, the main welfare program, would be around $190; the $1 million Woodstock museum that served as a main prop for John McCain's presidential campaign would cost 1 cent), it is fundamentally ...

Dana Milbank's Bad Bust on the Obama Budget

The folks at the Washington Post have worked themselves up into the usual tizzy over the fact that President Obama has not proposed large cuts to Medicare and Social Security in his 2013 budget. In keeping with this spirit over at Fox on 15th Street, Post columnist Dana Milbank thinks he has nailed President Obama on a big increase in his deficit projections since last fall.

Milbank tells readers:

"The Washington Post's Lori Montgomery asked why the projected debt had swelled by $1 trillion s...

Remember When Alan Greenspan was Worried That We Would Pay Off the Debt Too Quickly?

Yes, that was back in 2001 when Greenspan was arguing for the virtues of President Bush's tax cuts. That concern turned out to be somewhat misplaced. However the inaccuracy of the projections being used at the time, which did show the country paying off its debt inside of a decade, should provide some caution in assessing long-range projections.

The inaccuracy of these projections might cause some to question the wisdom of the Washington Post's decision to headline a piece on President...

The NYT Says That a Steep Recession Is No Excuse for Deficits

Those familiar with economics know that government deficits can help sustain demand in a downturn, keeping GDP from falling and unemployment from rising as much as would otherwise be the case. This could mean that it would be desirable to have large deficits in response to a steep downturn like the one we have seen following the collapse of the housing bubble.

But the NYT doesn't buy it. A news story on President Obama's 2013 budget told readers:

"The one charge the White House has no...

Problems of the Volcker Rule and Glass Steagall

Andrew Ross Sorkin has a lengthy discussion of the complexities of the Volcker rule, which bans proprietary trading by banks that hold government guaranteed deposits. The point of the rule is that banks should not be taking risks with taxpayers' money.

While Sorkin ultimately comes down in favor of the rule, he neglects to point out that until 1999 there was a much stricter rule in the form of the Glass Steagall separation between commercial and investment banking. Up to that point...

David Brooks Denounces Economics, Is Biology Next?

David Brooks is upset that liberal economists keep harping on the loss of middle class jobs as the main factor behind the disruption of working class families and communities. In expressing his anger he creates a caricature, since there probably is no economist who would claim that the problems of working class people are exclusively their poor employment prospects.

Bad economic prospects lead to a variety of ills that cannot be simply reversed when the economy turns around. This is why many ...

Rising Disability Claims and Higher Productivity Growth

Robert Samuelson is unhappy that so many people without jobs are getting Social Security disability benefits. He notes the sharp rise in the number of beneficiaries over the last two decades. 

He misses one reason that the number of beneficiaries could be rising. Many companies have striven to downsize to save money and increase their productivity. This downsizing effort is often touted as one of the factors behind the uptick in productivity growth in 1995.

However an implication of this...

Fred Hiatt's Accountability Liberals Don't Know Arithmetic

It's always good to get a silly caricature to begin the week and Fred Hiatt at the Washington Post is happy to supply one. He presents us with the divide between "nostalgia liberals" and "accountability liberals."

The story is that nostalgia liberals are opposed to means-testing Social Security while accountability liberals say "the only way to protect benefits for the poor is to scale back expected benefits for the wealthy." Nostalgia liberals support traditional public schools, while...

Generational Battles and Politically Connected Construction Companies In Japan

The NYT had an article reporting on the rebuilding following last year's earthquake and tsunami in Japan. The article is devoted to what it describes as a generational conflict where older residents wanted even the smallest villages rebuilt whereas many younger residents preferred to save money by consolidating some of the smaller villages into large ones.

At one point the piece describes the rebuilding as a boon to "politically connected" construction companies. It would have been helpful...

Thomas Friedman Shows Some Low Imagination, or At Least Low Comprehension

Thomas Friedman gives the Republicans some well-deserved bashing in his column today, but he also unthinkingly repeats his standard lines:

"The second of our great long-term challenges are our huge debt and entitlement obligations."

Of course our debt has expanded substantially due to the economic devastation caused by the collapse of the housing bubble. It is not at level that poses any great harm to the country as witnessed both by the fact that financial markets are willing to lend the...