Dean Baker's Blog, page 527

Will a Business With Profits of $1.1 Million Be Devastated by Another $5,000 in Taxes?

Apparently they would be, if we listen to the people interviewed in an NYT piece about the impact of a surtax on incomes above $1 million proposed by President Obama. The NYT interviewed people who own small businesses that occasionally have earnings that would put them over this $1 million cutoff.

It would have been helpful if the article had reminded readers that the tax is a marginal tax so that if a business owner  crosses the $1 million threshold they would only pay the tax on the...

Robert Samuelson Doesn't Think We Can Cut the Military Budget

Robert Samuelson told Washington Post readers that we cannot have large cuts in the military budget without jeopardizing the country's security. He seems to have forgotten the country spent 3.0 percent of GDP on the military in 2000 and was projected to continue to spend at that level or less. If the country were to return military spending to this level it would save more than $2.6 trllion over the next decade, before counting interest savings.

The Post Pushes More Demographic Fears

The Washington Post seems obssessed with pushing stories that old people will bankrupt the world. It had another front page article today warning that aging populations threaten disaster.

Among the lines in the article we are told that:

"China (1.5) is racing to get rich before it becomes old [The "1.5" refers to the birth rate per woman]."

It is difficult to see much of a race. China's rate of annual productivity growth has been close to 8 percent over the last three decades. This means...

Is Keynesian Economics Prohibited In NYT Discussions of the ECB?

The NYT had a discussion of the Mario Draghi and the situation he faces as he prepares to take over as head of the European Central Bank (ECB). The piece does not even mention the argument that the ECB is creating a downward spiral in euro zone economies by requiring deficit reductions, which have the effect of slowing growth, which thereby causes countries to miss deficit targets. It then demands more stringent cuts.

This is the logic that led to a second recession in the United States in...

Pearlstein on the Economic Policy Institute's 25th Anniversary

Okay, this is a bit indulgent, but Washington Post columnist Steve Pearlstein did a piece (unfortunately buried in the business section) on the 25th anniversary of the Economic Policy Institute. (I and several other CEPRites are EPI alums.) The piece is worth reading not just for its praises of EPI for a bit of recent Washington policy wonk history.

NYT Public Editor on Conflicts of Interest Among NYT Writers

NYT Public Editor Art Brisbane took up the issue of undisclosed potential conflicts of interest by the people who write for the NYT. It is a serious discussion. Presumably it means that the NYT should inform readers of things like the fact that former head of President Clinton's Council Of Economic Advisers, Laura Tyson, is also a board member at Morgan Stanley. It would have to do the same when it runs a column by Erskine Bowles, the former co-chair of President Obama's deficit commission.
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Washington Post Discards All Journalistic Standards In Attack on Social Security

News outlets generally like to claim a separation between their editorial pages and their news pages. The Washington Post has long ignored this distinction in pursuing its agenda for cutting Social Security, however it took a big step further in tearing this barrier in a business section story that would have been excluded from most opinion pages because of all the inaccuracies it contained.

The basic premise of the story, as expressed in the headline ("the debt fallout: how Social Security w...

When it Comes to Economic Growth, the Financial Times Doesn't Know Which Way Is Up

The Financial Times ran a piece on Italy's debt crisis. At one point it told readers:

"With Italy needing to roll over nearly €300bn of its €1,900bn debt  mountain next year, Mr Berlusconi is under intense pressure from the EU and ECB to push ahead quickly with measures to lift the stagnating economy"

Actually, the opposite is true. The EU has been pushing Italy to take measures to reduce its deficit, like cutting spending and raising taxes. These measures will slow growth, not increase it.

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A Declining Portion of Union Members are Young because ....... a declining share of workers are young

The WSJ ran a piece about unions are having increasing difficulty attracting young members. The article noted that in 1983, 39.6 percent of union members were between the ages of 16 and 34. This figure had fallen to just 24.6 percent in 2010, a drop of 15.0 percentage points. [I should point out that the source of these numbers is my colleague at CEPR, John Schmitt. I apologize for the CEPR promotion.] 

This might seem to suggest an alarming failure for unions in their ability to craft a...

The Mysterious Drop in the Saving Rate

The NYT told readers that the saving rate has fallen sharply in recent months, registering just 3.6 percent in September, down from rates of more than 5.0 percent earlier in the year. (In the pre-bubble era, the saving rate averaged more than 8.0 percent.)

The main reason for this decline was likely erratic income data. There are often erratic movements in these numbers that cannot be explained by actual developments in the economy. In the four months from January to May, a period in which...