Dean Baker's Blog, page 526

Can WAMU Say "Cut Social Security?"

We know that politicians don't like to talk about cutting Social Security or Medicare because both programs are hugely popular across the political spectrum. Even large majorities of Republicans are strongly opposed to cutting these programs. This is why politicians like to use the term "entitlements" when they talk about cutting these programs. Entitlements are much less popular than Social Security and Medicare.

While it is understandable that politicians would like to conceal their...

Planet Money Is Off the Planet on Demographics and Retirement

Most people who report on economics have heard of productivity growth. Virtually all economists see it as the main determinant of living standards. However, NPR's Planet Money seems unfamiliar with the concept.

It had a piece on demographics and the problems of supporting retirees in the context of stagnant, or even declining, populations. Incredibly the piece did not even once mention productivity growth.

Economists would consider productivity central to this issue, since it would determine ...

$800 Billion in Tax Increases Are Equal to 0.4 Percent of GDP

It would have been helpful if the Washington Post gave readers some context in an article that discussed Morgan Stanley Director Erskine Bowles' appearance before the supercommittee. Mr Bowles suggested that the committee agree to $800 billion in additional taxes over the next decade.

This amount is a bit less than 0.4 percent of projected income over this period. It is also less than one fourth of the increase in annual military spending (measured as a share of GDP) in the years since...

Europe Asks China for Help Because of 2.0 Percent Inflation Superstition

The Washington Post reported on the bizarre situation in which the relatively rich European Union is asking China, a relatively poor country, with assistance in its bailout package. It would have been appropriate to remind readers that the only reason that Europe needs help from anyone is that the people running the European Central Bank (ECB) are part of a bizarre cult that worships a 2.0 percent inflation target.

If the ECB was managed in the same way as central banks have been managed...

It Doesn't Make Sense to Say GDP Growth Doubled in the Third Quarter

A top of the hour Morning Edition news segment told listeners that GDP growth nearly doubled from the second quarter to the third quarter, going from 1.3 percent to 2.5 percent. This is not a useful comparison.

The relevant comparison would be the percentage point change in the growth rate. For example, an increase in growth from 3.0 percent to 5.0 percent is far more meaningful then the rise from the first quarter to the second quarter, even though it is not a near doubling of the growth...

The IMF Will Wing it for Greece, Just Like They Did for Citigroup

The Washington Post is concerned that the referendum in Greece on the austerity plans will make it difficult for the IMF to approve the next tranche of a loan that will be needed for Greece to make a set of debt payments in December. It told readers:

"Papandreou's announcement could put the IMF in a difficult position. The agency is due to approve the latest disbursement of money to Greece under an earlier loan agreement. But IMF rules allow such disbursements only under programs that are on ...

Is Politico Giving Out Stock Tips? It Knows What Markets Want

People who have the ability to anticipate market movements can make enormous amounts of money running hedge funds and other investment vehicles. Apparently Politico is among the small group of analysts who know what will move markets.

It told readers that:

"If the committee were to take up changes to Social Security, it could show that Congress is looking for systemic changes to the nation's finances — something markets and credit rating agencies want to see."

While the credit agencies, who a...

NYT Wins Award for Misleading Headline for Article on G.A.O. Report on A.I.G. Bailout

The NYT headline told readers:

"G.A.O. Says New York Fed Didn't Cut Deals on A.I.G."

That should have us all reassured. After all, we don't want our government cutting deals when they bail out huge financial institutions.

Actually, the story says pretty much the opposite. The story tells how the Government Accountability Office (G.A.O.) found that the New York Fed made little effort to try to force banks to make concessions after it took control of A.I.G.

The point is that A.I.G. was...

David Brooks Complains That He Can't Get Access to Inequality Data

Actually he didn't complain about his lack of access to data, but he probably should have given the column he wrote today. Brooks purports to lecture the Occupy Wall Street crew about how they are focused on the wrong inequality.

He tells them that that there are two inequalities in the U.S. On the one hand we have the CEOs, the Goldman Sachs crew, the lobbyists and the other members of the one percent who have done incredibly well in the last three decades. Brooks calls this the "blue...

Bloomberg Turns Class War Into Generational War

The basic economic facts of the last three decades are smashing down around us like a ton of bricks. The bulk of the gains from economic growth have gone to the richest 10 percent and especially the richest 1 percent. The bottom 90 percent of the population has seen little benefit from three decades in which output per worker hour nearly doubled.

So how does Bloomberg News deal with this situation? It warns us of "generational war." It tells us that Social Security and Medicare benefits for s...