Dean Baker's Blog, page 554

Does the President's National Economic Adviser Not Know That Democrats Controlled Congress Last December?

He didn't seem to in his comments on CNN this morning. Gene Sperling, the head of President Obama's National Economic Council, explained the failure of President Obama to get a deal on the debt ceiling last December as being a problem of divided government. 

Actually, Democrats fully controlled both houses of Congress by large majorities at that time. It is possible that Republicans may have filibustered a debt ceiling deal in the Senate, but it is just wrong to say that we had divided...

The Impact of the Budget Deal for Those Who Don't Carry Around the Budget in Their Pocket

Many readers of the NYT and Post may not have a good sense of how much $2.4 trillion in cuts over the next decade is. Unfortunately, the major news outlets do not consider it their responsibility to tell us.

The government is projected to spend $46 trillion over the next 10 years. This means that the proposed cuts are a bit more than 5 percent of projected spending. However, large categories of the budget are protected. More than $27 trillion of projected spending goes to Social Security...

Another Front Page Editorial at the Washington Post

The budget deal has them really excited at Fox on 15th. It told readers:

"At several points, Obama and Boehner held out hope they could agree on a far-reaching bipartisan plan to tame the soaring national debt once and for all by raising taxes and cutting health and retirement spending. But House Republicans repeatedly walked away from the bargaining table, refusing to raise taxes. In the end, policymakers were left with a far more modest achievement that does little more than resolve...

Gretchen Morgenson Is Right: Bankers Have No Shame

Following the collapse of the housing bubble and the resulting financial meltdown there was widespread agreement that securitzers should be forced to keep "skin in the game," meaning a stake in the mortgages they issued. Dodd-Frank included a requirement to this effect.

While many were arguing for a 10 or even 20 percent stake, the rules that came out from regulators is that they have to keep just 5 percent. Furthermore, the regulators exempted traditional 20 percent down mortgages that have ...

With All the Excitement Around the Pending Debt Ceiling Deal Fox on 15th (a.k.a. the Washington Post) Gives Up All Pretext of Objectivity

The prospect of cutting Social Security and Medicare benefits really excites the folks who put out the Washington Post. That's why the paper, which completely missed the record share of corporate profits in GDP reported by the Commerce Department on Friday, referred to the desire of Republicans to have a constitutional amendment to "keep future sessions of Congress in line."

A real newspaper would have referred to Republican efforts to keep Congress from spending money. But the Post can't...

The NYT Wrongly Asserts That Economists Want to Cut Social Security

The NYT is starting to do the same sort of editorializing in news stories for which Fox and the Washington Post are famous. It told readers that President Obama had proposed a change in the Social Security cost of living adjustment formula that would reduce scheduled benefits and then adds that this cut was "long sought by economists."

Umm, which economists? All economists? Not this one, or many others with whom I associate. Is there a poll of economists that provides the basis for this...

Conservative Tea Partiers Oppose Cuts to Social Security and Medicare, not Just Liberal Democrats

The NYT wrote that President Obama risked alienating liberal Democrats with his willingness to cut Social Security and Medicare. While this is true, he also risks alienating voter across the political spectrum.

Polls consistently show that the vast majority of people in every demographic group, including Tea Party Republicans, are opposed to cuts to these programs. The only people who tend to support cuts to Social Security and Medicare are the Wall Street financial types and the elites who d...

People Don't Move for Jobs When There Are No Jobs

The Wall Street Journal claimed that a main reason that the economy is growing slowly and not creating jobs is that people are not willing to move because they are often underwater in their homes. The evidence that it presents to support this assertion is dubious.

First, it notes that only 2.9 million people moved for a job in 2009 compared to 4.5 million in 1999. There are two major differences between these years. First, the work force was considerably older in 2009 with most of the baby...

The NYT Wants the U.S. to Have Slower Growth

That would seem to be the implication of the advice in an article that we should follow Canada's model for dealing with our deficit. According to the NYT, Canada did things right when it decided to get its deficit down in 1994, doing a comprehensive review of its spending.

Since that was almost 20 years ago, we have some basis for assessing how things turned out. According to the OECD's data on productivity growth (the main determinant of living standards), it doesn't seem that Canada has...

While the Country Slept: Financial Industry Profits Go Through the Roof

Okay, the country wasn't exactly sleeping, it was watching the Boehner-Tea Party charade about whether we should default on the national debt. While this process captivated the nation, the Commerce Department released new data on GDP. The pathetic second quarter GDP number, combined with the sharp downward revision to the first quarter got some attention. The 0.8 average growth rate over the first half of the year is well below the 2.5 percent rate needed to keep even with the rate of growth ...