Dean Baker's Blog, page 556

Is Thomas Friedman Impervious to Facts?

The evidence suggests that he is. He gives yet another of his diatribes about the need to cut Medicare, Medicaid, and Social Security in order to advance his grand agenda for the country. Of course Social Security is financed by its own designated tax and is projected to be fully solvent for the next quarter century, so it is a bit bizarre to have this one on the list.

More importantly, the entire budget problem is the result of a broken health care system. This is why serious people point...

Is NPR Doing PR Work for the Credit Rating Agencies?

The major credit rating agencies, Moody's, Standard and Poors, and Fitch are best known for rating hundreds of billions of dollars of subprime mortgage backed securities as investment grade. (They got paid tens of millions of dollars for these ratings.) They are also famous for missing the shipwrecks at Bear Stearns, Lehman, Enron and many other major corporate bankruptcies.

This is important because NPR told listeners this morning that President Obama had to fear not just a default, but...

The Housing Bubble Was Visible in the National Data

Paul Krugman picks up on a blogpost by Mark Thoma, where the latter argues that academic economists should occasionally listen to those outside the temple. Thoma uses the example of the housing bubble as one case where those outside the temple got it right.

Krugman correctly notes that Robert Shiller, who as a Yale economics professor certainly qualifies as an academic economist, was one of the first (after me) to get the bubble right. He also reminds readers that he also had warned of the...

Chris Matthews Wants to Make the Guy Who Gave Us the Stock Bubble, the Housing Bubble and the Huge Trade Deficit Treasury Secretary

Yeah, we approaching the debt ceiling deadline, so folks are getting silly. And Chris Matthews is taking the lead. I guess he never heard about the bubbles or the massive trade deficit caused by the over-valued dollar. I suppose you don't have know much economics to be a news show host at MSNBC.

I suppose the know-nothing crowd might admire Bill Clinton's economic record, but I will always remember him as the guy who lectured the country on how enforcement of trade deals will create...

Wealth Losses, Percentages Do Not Tell Everything

The NYT wrote a piece based on a new study from Pew that finds that Hispanic families were the ones hardest hit by the economic downturn. The basis for this assertion is that they experienced the largest percentage decline in median wealth. 

This is somewhat misleading. According to the study, the median wealth for Hispanics was just $18,400 prior to the downturn. The collapse of house prices led this to fall to just $6,200 in 2009, a 66 percent decline. However, it is possible to have such a...

The New York Times Bemoans the Lost Opportunity to Cut Social Security and Raise the Age of Medicare Eligibility to 67

That's right, you can read about the "unique opportunity" that was lost right here. The complains that the likely deficit deals to be produced in the days ahead will not feature:

"significant future savings from Medicare, Medicaid and Social Security — the entitlement programs whose growth as the population ages is driving long-term projections of unsustainable debt."

As every budget analyst knows, Social Security is not a major driver of the deficit. Under the law, it cannot contribute to...

President Obama Doesn't Understand the Origins of the Deficit

This fact should have been highlighted in the news reporting on President Obama's speech last night. President Obama asserted:

"For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug
program were simply added to our nation's credit card.

As a result, the deficit was on track t...

Conventional Economics Works Fine, the Problem is That Robert Samuelson Doesn't Know Conventional Economics

Robert Samuelson gave one of his standard diatribes against the welfare state today. He told readers:

"They [economists] seem to have exhausted conventional policy approaches. Central banks such as the Federal Reserve have held interest rates low. Budget deficits are high."

Let's see we had about $300 billion in annual stimulus to offset a $1.3 trillion drop in annual demand due to the collapse of the housing bubble. Conventional policy approaches say that this is nowhere near enough to...

Marketplace Radio Warns That the U.S. Economy Will Be Harmed If China Agrees to Raise the Value of Its Currency

In its morning segment Marketplace Radio told listeners that China's response to the standoff over the debt ceiling may be to shift some of its dollar holdings into the euro and other currencies. It then said that this would be bad news for the U.S. economy.

Marketplace better tell President Obama about this. The official policy of the Obama administration is that it wants China to raise the value of its currency against the dollar. This would mean selling its dollar assets and instead...

Does the Post Have Polls Showing Centrists Want Cuts to Social Security and Medicare?

If so, they really should share them with readers. The Post told readers that Obama's decision to propose raising the age of Medicare eligibility to 67 and to cut Social Security is a way to appeal to centrist voters. This is difficult to understand since every poll done on this issue shows that people across the political spectrum, including Tea Party Republicans, overwhelmingly oppose cuts to Social Security and Medicare. The Post either has some polls that no one else knows about or it's j...