Dean Baker's Blog, page 561

The NYT's False Symmetry Between Republicans and Democrats

The NYT had an article on budget negotiations in which it implied a false symmetry on key issues in the debate:

"On Thursday, the leaders grappled with the most difficult issues politically for each party: cuts to Medicare and Medicaid, entitlement programs long defended by Democrats; and new revenues from the tax code, anathema to Republicans, who say they will not vote for anything resembling a tax increase."

This symmetry is misplaced because the Democrats' base actually wants to see...

Is David Brooks Really Clueless About the Inefficiency of the U.S. Health Care System?

David Brooks appears to have made a remarkable leap forward today. He told readers, "the fiscal crisis is driven largely by health care costs."

Yes, after writing endless columns about out of control government spending and the wild liberals in the Democratic Party, someone apparently got David Brooks to look at the budget numbers. And, he saw what every budget wonk knows. While the current deficits are overwhelmingly the result of the devastation caused by the collapse of the housing...

The NYT Makes It Up to Cover Up for Republicans

In an opinion piece that appeared as a front page news story, the NYT told readers that the debt ceiling battle is "a war over government." The first sentence tells readers that:

"intense exchanges this week between the two parties have made it clear that this is not so much a negotiation over dollars and cents as a broader clash between the two parties over the size and role of government."

This is 100 percent the interpretation of the reporter/editor. This is the sort of piece that...

The United States Will Never Be Like Greece, # 24,763

The Washington Post, which regularly uses both its editorial and news pages to push for budget cuts, has a front page article today that warns the United States could end up like Greece. The article includes a quote from University of Maryland economist Peter Morici, telling readers that:

"If Congress raises the debt ceiling without a long-term plan for reducing the federal deficit, he added, 'they'll never solve the problem, and we'll end up like Greece.'"

It would have been worth...

Amazon, the Leader of the Tax Cheat Industry

Amazon is known throughout the world as one of the most innovative tax cheats anywhere. It makes its profit largely by allowing customers to avoid state sales taxes and sharing the savings. States are now taking steps to crack down on this scam, requiring Internet retailers with any ties to in-state businesses to start collecting taxes on their sales in the state. California took this route this month.

The NYT had an article highlighting Amazon's efforts to fight back to protect its...

The New York Times Doesn't Like Medicare

That's what readers of the NYT's box on "issues holding up debt ceiling agreement" would conclude. The box tells readers that:

"Officials have said that the program, which provides health care to people 65 and older, is not sustainable in its current form."

This is not true. There is no, as in zero, none, official document that says the program is not sustainable in its current form. There are official documents that show the program will need additional revenue at some point. The ACA passed ...

China Threatens to Raise the Value of the Yuan

Yes, the United States has officially been asking (demanding?, begging?) China to raise the value of its currency against the dollar. Yet, the media continually threaten the country with the story that China may sour on the U.S. and stop buying U.S. debt if we don't get our budget deficit down.

However, if China stopped buying U.S. debt it would lead to a rise of the yuan against the dollar. This is exactly what the Obama administration has ostensibly been asking them to do.

In other words...

Kristof Perpetuates the Clinton Budget Myth

Nicholas Kristof is mostly on the mark in his column this morning, but he does repeat the Clinton fiscal responsibility balanced the budget myth. This is not true.

An examination of the Congressional Budget Office's (CBO) projections from the 1990s shows that in 1996 CBO still projected a deficit of 2.7 percent of GDP for fiscal year 2000. Instead, we had a surplus of 2.4 percent of GDP, a shift of 5.1 percentage points of GDP (@$750 billion in today's economy).

This shift did not come about ...

Post Does a Nice Job on Social Security and the Debt Ceiling

Glenn Kessler, the Post's Fact Checker, did a nice job trying to pin down the law on whether Social Security benefits can still be paid once we have hit the debt ceiling. This is a tough one because payment of benefits would draw down the trust fund, which is part of the $14.3 trillion debt, dollar for dollar. This means that they would not add to the debt and push the government over the ceiling. Still, it is not entirely clear that the payments would be kosher.

It's Supposed to be Funny, but Do We Really Need to Bring China Into the Debt Ceiling Clown Show?

That's what folks should be asking John Stewart. The United States as a country owes China money because it has a trade deficit. The trade deficit means that United States would be borrowing from China even if it had a balanced budget, as for example was the case in 1999 and 2000. The fact that China happens to hold a lot of Treasury bonds simply is the result of what U.S. assets they choose to hold. They could, and do, also buy private bonds, stock and other assets.

Of course the trade...