Dean Baker's Blog, page 553

News For the NYT: You Don't Know Anyone's Reason for Acting

Politicians don't always tell the truth. Most school kids know this, but apparently the NYT believes otherwise. That explains why it tells us that:

"the reason that many conservative Republicans refused to vote for the [debt] agreement" was that the debt to GDP ratio would still rise even with the proposed cuts. Actually, this is what many conservative Republicans said. That is how it should be reported, as in "many conservative Republicans said ......"

The NYT also said that this is the...

The Washington Post Confuses the Stock and Bond Market

No one expects sophisticated economic thinking from the Washington Post (a.k.a. Fox on 15th Street), but they really surprised readers with an article on the debt ceiling where they took the fall in the stock market as evidence that investors did not have confidence in the debt deal. After making assertions that investors believe the deal did not go far enough in cutting the deficit, the Post told readers:

"The lack of enthusiasm among investors for the deal was reflected in the U.S...

Washington Post Continues Its Crusade for Cutting Social Security and Medicare

Fox on 15th Street had another front page editorial calling for cuts in Social Security, Medicare, and Medicaid. It told readers:

"Foreign investors and economic analysts see further action as crucial to restoring the United States' financial reputation."

Without actually citing any investors or analysts it then added:

"On Tuesday, critics in China and elsewhere warned that the initial debt-reduction package, which would cut about $1 trillion from agency budgets over the next decade, is...

What Does a Downgrade of U.S.Debt Mean?

The NYT had a great opportunity to raise this question, but for some reason chose not to. A lengthy piece discussing the possibility and implications of a downgrade never asked the fundamental question, how could the United States ever be unable to pay off its debt?

This a simple but important point. The debt is issued in dollars. That means that the U.S. government is committed to paying it off in dollars. The U.S. government also prints dollars. So does a downgrade mean that Moody's thinks ...

Clinton's Surpluses Were Because the Economy Grew, Not the Other Way Around

The sky is up, grass is green, and Clinton got budget surpluses because the economy grew much more rapidly than expected. We know this because the Congressional Budget Office (which passes for God in Washington budget debates) told us in 1996 that the deficit in the year 2000 would be $244 billion or 2.7 percent of GDP ($405 billion in 2011). CBO calculated that the net impact of legislated changes between 1996 and 2000 was to raise the 2000 deficit by $10 billion.

Therefore when Bloomberg

Dana Milbank Ridicules People Who Don't Work for Wall Street

Dana Milbank, a Washington Post columnist who doubles as a fashion critic, devoted today's column to ridiculing progressive members of Congress who complained about the deal on the debt ceiling. He presents a number of quotes from progressive members of Congress who complained about cuts that may mean that people cannot afford housing, heat, food or medical care.

While these were all very funny, it would be much easier to find ridiculous comments from deficit hawks. For example, Mr. Milbank c...

The Post Tells Us It's About "the Size and Role of Government"

In a front page news article the Post told readers that the debt ceiling battle was really a battle over "the size and role of government." Is this something their mother told them?

I didn't see anyone in this debate arguing for "big government." If there is anyone in the country who supports big government as a matter of principle, they have a seriously losing electoral position.

In the real world the battle is over specific programs. And, apart from the military, there is overwhelming...

How Does the Post Know That the Debt Is Becoming "Crushing?"

Yes, it was just a throw away line. But serious newspapers do not say in front page story that:

"Over the long term, the deal could help free the nation from what is fast becoming a crushing debt."

Lines about a "crushing debt" should appear in quotations or left to the opinion pages. They should not be assertions of fact to readers.

Beat Up Your Favorite News Reporter, What Would It Mean for the U.S. to be Unable to Pay Its Debt?

Okay boys and girls, this stuff about a credit downgrade has gone far enough. We know that all the important people in Washington and on Wall Street are warning us about the possibility that the credit rating agencies will downgrade the U.S. government if we don't reduce the debt to their standards. But what could this possibly mean?

The U.S. debt is denominated in dollars. The government issues dollars. Do Moody's and Standard and Poor's think that there will be some point in the future...

Did President Obama Want to Give the Kidnappers Hostages?

Joe Noccera and Paul Krugman both see President Obama as having been taken for a ride by a Tea Party gang who were prepared to blow up the house if they didn't get their way. This is one possibility, but there is another way to interpret recent events.

President Obama had other options all along the way. As Krugman notes, he could have insisted last December that the debt ceiling was part of the deal to extend the Bush tax cuts. After all, contrary to what his National Economic Adviser seems...