Dean Baker's Blog, page 524

Correction on Pew Report on Wealth of the Young and Old (Corrected version)

Earlier this week I did a post that criticized reporters for unquestioningly accepting the findings of report from the Pew Research Center that purported to a show a growing gap in wealth between people over age 65 and people under age 35. I argued that this report misrepresented this gap and gave numbers on the change in wealth by age cohort that did not show as marked a gap as the Pew numbers.

It turns out that the numbers I gave in that post were incorrect. I had used the Federal Reserve B...

Despite Solyndra, Most Republicans Still Support Alternative Fuel Subsidies

That could have been the headline of a Washington Post article reporting the results of a new poll on public support for subsidies alternative energy. The poll found that a large majority (68 percent) of those asked favored federal support for the development of alternative energy. It found that even 53 percent of Republicans supported funding for alternative energy.

These numbers are down from past polls, but this result would hardly be surprising given the attention that the media has...

The Recession Has a Lot to Due With Europe's Sovereign Debt Crisis

The NYT outlined the origins of Europe's sovereign debt crisis in a front page piece. The article leaves out a very important part of the story.

The prolonged downturn has substantially worsened the crisis. High unemployment and slow or negative growth has reduced tax collections and increased transfer payments, making deficits much larger than would otherwise be the case. This could be countered if the European Central Bank (ECB) had pursued more aggressive monetary expansion.

Also, the...

Correcting the Correction of the Big Lie

Barry Ritholz has a nice takedown of Mayor Bloomberg's claim that Congress forced the banks to make lots of money by selling bad mortgages. As Barry rightly points out, this is not a story that serious people can tell. It's like denying climate change or evolution.

However, there are two items worth correcting in Ritholz's account. First, the core problem facing the economy today is not the legacy of the financial crisis, it is the bursting of the housing bubble. While it was a lot of fun...

When it Comes to Cutting Medicare and Social Security High Income Ain't What It Used to Be

In an article on the deliberations of the supercommittee the NYT told readers that a Republican plan would raise money by charging "higher Medicare premiums for high-income people." While the article does not give exact cutoff for high income, it is likely that is no higher than $80,000 and possibly as low as $40,000. (Many proposals for reducing Social Security benefits for "high income" beneficiaries would lower benefits for people with incomes of just $30,000.)

It is worth noting that...

Wnen it Comes to Cutting Medicare and Social Security High Income Ain't What It Used to Be

In an article on the deliberations of the supercommittee the NYT told readers that a Republican plan would raise money by charging "higher Medicare premiums for high-income people." While the article does not give exact cutoff for high income, it is likely that is no higher than $80,000 and possibly as low as $40,000. (Many proposals for reducing Social Security benefits for "high income" beneficiaries would lower benefits for people with incomes of just $30,000.)

It is worth noting that...

The Sovereign Debt Crisis and the Problem of Political Culture In Europe

The New York Times has a front page piece that discusses the debt crises facing Greece and Italy and discusses them in the context of "unresponsive political cultures." While both countries have serious problems with tax evasion and political corruption, this is not the political culture that most immediately threatens the financial stability of the euro zone and the world.

The most obvious threat stems from the political culture in Germany, which is driving the policy coming out of the...

Housing Vacancies Still Near Record High

Perhaps I missed it, but I didn't see any coverage of the Census Bureau's release of data on vacancy rates for the third quarter. It's a mixed picture.

The vacancy rate for rental units had fallen sharply in the second quarter from 9.7 percent to 9.2 percent. However this was completely reversed in the latest data, which showed a 9.8 percent vacancy rate. This is still down from the peak 11.1 percent peak reached two years ago, but far above historic vacancy rates. The vacancy rate for...

David Brooks Has Not Heard of Medicare Advantage

That is what readers of his column touting Mitt Romney's Medicare plan would likely believe. Romney's plan calls for allowing people to opt for private insurers instead of the traditional Medicare system. This is already allowed, with beneficiaries being allowed to sign up with private insurers under the Medicare Advantage program. The Congressional Budget Office estimates that Medicare Advantage raises the per person cost by 5-10 percent.

The main difference between the existing Medicare...

All Things Considered Falls for Pew's Phony Generational War Story

All Things Considered did a major piece on a study from the Pew Research Center which showed substantial increase in the median wealth of people over age 65 from 1983 to 2009, while wealth among those under 35 actually fell. The Pew study was seriously misleading for several reasons.

First, the wealth of all groups except the young rose. In other words, it is not just the wealthy who saw an increase in their wealth over this period. The Federal Reserve Board's Survey of Consumer Finance (a...