Dean Baker's Blog, page 519

The Double Taxation of Corporate Profits and Other Fairy Tales

The usually insightful Steven Pearlstein swallowed a big one today in pushing the line that the taxation of corporate profits when they are paid out as dividends amounts to "double taxation." The problem with this story is that the corporation really is a distinct entity from the individual who receives dividends. In fact, according to the Supreme Court, they are actually distinct persons.

This is not a philosophical question; it is a very concrete economic one. No one is forced to organize a...

George Will Is Confused by Numbers at the Post Office

I know, everyone is saying that "George Will" and "confused by numbers" is repetitive, but it is nonetheless necessary to say in reference to his latest piece calling for privatization of the United States Postal Service (USPS). The point is supposed to be that the USPS is hopelessly inefficient compared to its private sector competitors and that if it were required to be run at a profit it would soon be out of business.

Actually, the data don't really make this case. In 2006 Congress...

The Philanthropy of the Rich Does Have a Cost to Taxpayers

The NYT reported on a new philanthropic trend among the wealthy, where rich people try to use their money to deliberately influence public policy in part by funding pilot programs that can serve as a model for larger public programs. At one point the article refers to funding for various education projects in New York and Newark and told readers:

"Officials in New York and Newark say the money from private sources will not replace existing public programs, but will instead allow rapid...

Matt Miller on the Decadence of the Western Intellectual Class

Actually Matt Miller was ostensibly writing in the Washington Post about the "decadence of the Western governing class," but he was inadvertently telling readers much more about the failure of people who pass for intellectuals in public debate. Miller passes for somewhat of an expert on economic and budget policy, yet this column asked posed two amazing questions for readers:

"According to the IMF, China's GDP per capita is about $8,400. The United States' is about $48,000. How can it be...

Washington Post Helps Senator Corker Spread the Big Lie on Fannie and Freddie

When a newspaper abandons journalistic standards in its news pages one hardly expects to find much commitment to truth on its opinion pages. Therefore it is not surprising that the Washington Post opened its pages to Tennessee Senator Bob Corker to spread the story that government support for homeownership through Fannie Mae and Freddie Mac was the cause of the housing bubble.

Corker tells readers:

"During the boom years, the GSEs' affordable housing goals were coupled with a Congress and an ...

NYT Claims Increasing Bipartisan Support for Plans that Could Raise the Cost of Medicare Policies by $34 Trillion

The NYT claims that plans that could raise the cost of Medicare equivalent policies for seniors by $34 trillion are gaining increasing support in Congress. These plans involve replacing Medicare with a voucher. This leads to higher costs both because the administrative costs of private plans are far higher than Medicare and they are likely to be less effective in controlling costs.

The Congressional Budget Official projected that a Republican plan along these lines, that was approved by...

Washington Post Tries to Ruin Thanksgiving With News Section Editorial on Supercommittee

The Washington Post is continuing its habit of ignoring journalistic standards by carrying its Social Security and Medicare cutting crusade to its news pages. A Thanksgiving day piece began by ominously warned readers:

"Will the "supercommittee" turn out to be a useful failure?

Two days after its death, this idea is the committee's last chance to matter. There is hope that its debacle could pave the way for some deal — by clarifying the issues and suggesting new areas of common ground."

Of...

Thomas Friedman Goes Big Getting It Wrong, Again

There are many people in the country that have very little understanding of economics. As an economist, I would like to see everyone be at least somewhat literate in the area, but this is the way of the world. It's not really that big of a problem in most cases, but it is when they write pieces on economic policy for the New York Times.

Yes, Thomas Friedman is at it again, bemoaning the fact that President Obama hasn't embraced the big cuts to Social Security and Medicare proposed by former s...

The Left and Right Can Agree That NPR Completely Misled Listeners About the Supercommittee and the Deficit

NPR badly needs donations of paper bags, because a lot of people there need to be wearing them over their heads after this piece. The piece ostensibly tells listeners that both left and right agree that things can't keep going as they are going and that the problem is Social Security, Medicare, and Medicaid.

This is hugely wrong. First, the budget deficit first became large when the economy plunged because of the collapse of the housing bubble. The deficit in 2007 was just 1.2 percent of GDP ...

Firms Buy Back Shares, Exactly As Economic Theory Predicts

The NYT had a piece that implied surprise that firms are cutting back production and investment plans at the same time that they are using billions of dollars to buy back shares of stock. It is difficult to understand the cause of the surprise. Demand and growth are very weak. In such circumstances, it would be expected that firms would cut back investment. Firms invest to make money, they don't invest to help the economy.

The only surprising item in this piece is the claim that:

"But...