Dean Baker's Blog, page 520

German Concerns About the Euro's Credibility Do Not Make Sense

The NYT should have pointed this fact out in a discussion of the crisis facing the euro zone. The article includes a quote from Wolfgang Schäuble, Germany's Finance Minister:

"I'm convinced that if we abandoned the promise of euro stability, we would have a few weeks, maybe a few months of relief on the financial markets. But after a few months the problem would return. It is all about trust."

If the European Central Bank (ECB) is buying debt issued by euro zone countries and explcicitly...

The New York Times Runs an Editorial on the Deficit in the News Section

The NYT ran a piece in the news section bemoaning the failure of the supercommittee. The piece includes numerous assertions expressing the paper's unhappiness with the failure of the supercommittee that have no basis in reality.

For example, it told readers:

"The failure of the committee — which had been dubbed, with typical inside-the-Beltway grandiosity, the "supercommittee" — led to predictable, if bitter, kryptonite jokes. But it also prompted wrenching questions about whether Congress...

NPR Does Market Analysis

In its top of the half hour news segment on morning edition (sorry, no link), Morning Edition told listeners that the stock market plunged on Monday because of the fallout from the failure of the supercommittee. Of course the stock market does not tell us why it moves the way it does. This was NPR's assessment of the reason for the market's movement.

NPR's assessment suffers from two problems. First, the failure of the supercommittee was widely expected by the end of last week. This means...

Joe Nocera Tells Why We Should Not Use Patent Monopolies to Finance Drug Research

Actually he never mentioned patent support for drug research. However, his column did a good job of showing the waste and corruption that result from the monopoly rents created by patent monopolies.

In this case, the drug Avastin was determined to be ineffective as a treatment for breast cancer by the food and drug administration. Nonetheless, many insurers are likely to continue to pay for the $90,000 a year treatment. This is in part driven by the views of researchers who are on payrolls...

Column from Another Planet: David Brooks Talks About the Sun and the Moon

David Brooks devoted a column today to the weak political support for either political party. He never once mentioned the recession and the prolonged period of high unemployment. (He literally does talk about the sun and the moon.) While this may not explain the failure of one party to achieve dominance in the 90s or the first part of the 00s, the theme of his piece, it is undoubtedly the central feature of the political scene at present.

The closest that Brooks comes to mentioning...

Robert Samuelson Does the Old Social Security and Medicare Trick

Medicare costs are projected to soar over the next two decades, more than doubling as a share of GDP. This means that anything you put together with Medicare in a sentence will also have explosive growth, as in the cost of "Medicare and national park maintenance are projected to more than double as a share of GDP over the next two decades."

For this reason, honest people don't lump together other programs, like Social Security, with Medicare. Social Security's costs are projected to rise at a...

Republicans Plan to Lie on Tax Policy in the 2012 Election

That should have been the headline of a Washington Post piece on the future of the Bush tax cuts. The piece quotes Grover Norquist as saying:

"And GOP strategists say the White House's position makes the president vulnerable to charges that he would impose what many Republicans are already calling the 'biggest tax increase in American history' if reelected. 'We'll run against their tax increase,' said GOP anti-tax activist Grover Norquist, 'and we'll crush them.'"

President Obama is not...

Representative Jeb Hensarling Doesn't Know About the Recession

This should have been the headline of a front page Washington Post piece on the likely failure of the supercommittee. At one point the piece quotes Hensarling:

"It wasn't so much of a failure as it was a failure to seize an opportunity. . . . This nation better seize another one or we will be in big economic trouble."

This comment seems to imply that Mr. Hensarling does not realize that we are already in big economic trouble. The unemployment rate has been above 9 percent for most of the...

The Supercommittee Was Considering "Cuts" to Social Security and Medicare, not "Changes"

A NYT piece on the failure of the supercommittee repeatedly referred to plans to "change" Social Security and Medicare. The supercommittee was not considering random changes to these programs, they were proposing cuts. The purpose was to save money, not make the programs better.

These programs are incredibly popular across the political spectrum as even large majorities of conservatives and Republicans oppose cuts to them. It is therefore understandable that politicians would use euphemisms t...

Laying Off Government Workers in the Middle of a Recession Costs Jobs

A NYT piece on the likely failure of the supercommittee included a quote from Senator John Kyl:

"You can't grow if you raise taxes in the middle of a recession."

It would have been worth pointing out that according to the Congressional Budget Office and most standard economic models, it also hurts growth to have budget cuts in the middle of a recession. In fact, these models generally show that a dollar of spending cuts is considerably more harmful to growth than a dollar of tax increases...