Beat the Press is Dean Baker's commentary on economic reporting. He is a Senior Economist at the Center for Economic and Policy Research (CEPR). To never miss a post, subscribe to a weekly email roundup of Beat the Press.

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Charles Lane used his column today to take potshots at Tesla, the electric car company. While I actually share much of Lane's skepticism on Tesla (I suspect Tesla is taking lots of people for a ride, but not in their cars) his dismissal of liberals' interest in Tesla type projects is off the mark. He starts his piece by telling readers:

"Tesla epitomizes the mutation of modern American liberalism. Once an ideology whose central concern was the plight of lunch-bucket working stiffs and oppressed minorities, liberalism is increasingly about environmentalism and related 'quality of life' issues."

Lane's distinction between issues concerning lunch-bucket working stiffs and oppressed minorities and environmentalism is just silly. When Sandy hit New York and New Jersey last year a lot of people who looked like lunch-bucket working stiffs had their homes and businesses destroyed. This will be largely the story of global warming. The rich mostly have their homes on more protected areas and when their property does get hit they have insurance that protects them financially from the impact. The people who will mostly risk life, injury, and homelessness from rising oceans and extreme weather event will be lunch-bucket working stiffs and oppressed minorities.

Furthermore, spending on measures to counter global warming are essentially costless in an economy that is below full employment, which all projections show will be the case for many years into the future. (I am referring to real world accounting, not to the nutty deficit hysterics we get in Washington.) This means that spending money on measures to slow global warming are a way to give jobs to lunch-bucket working stiffs and oppressed minorities who would otherwise be left unemployed by the economic policies of the Washington crew.

Lane isn't clear what "quality of life" issues he has in mind, but if these are items like paid family and sick leave, these are also very much issues for the benefit of lunch-bucket working stiffs and oppressed minorities. Lunch-bucket working stiffs and oppressed minorities, especially of the female persuasion, often lose their jobs because they have to care for a sick child or relative and the boss refuses to give them a day off. This is about as bread and butter an issue as you can get. The concern of liberals over such issues reflects a change in the reality of the workplace, not a change in their priorities.

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That's the question that readers of Lori Gottlieb's column must be asking. Ms. Gottlieb claims that her Blue Cross policy was cancelled and that now she would have to pay an additional $5,400 a year for insurance that complied with the Affordable Care Act. Really?

Unless the Kaiser Family Foundation got its numbers badly messed up, Ms. Gottlieb is just making stuff up. Its website shows that a silver plan, which is mid-grade, not lowest cost, would cost a person living in Los Angeles with one kid $5,244 a year. That is less than $5,400 addition to her health care costs claimed in the piece. Let's assume that Blue Cross in California does not give away insurance to people who are 46, even if they are in excellent health. If Blue Cross charges $250 a month for insurance for a healthy 46 year-old with one kid then Ms. Gottlieb is currently paying $3,000 a year for insurance.

That means that Obamacare is raising Ms. Gottlieb's insurance costs by just over $2,200 a year or less than half of the amount claimed in her piece. It would be nice if the NYT would have fact checkers examine the claims made in its op-eds instead of just giving them a license to make facts up to advance their argument. 

Note: cost of insurance numbers under Obamacare corrected. Thanks to Robert Salzberg.

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Glenn Kessler, the Washington Post fact checker, again took a swipe at the Obama administration over its claim that under the ACA people would be able to keep their insurance if they liked their plan. (He earlier had given Obama the maximum of four Pinocchios over the issue.) The proximate cause is the administration's efforts to blame insurers for cancelling plans, pointing out that the plans that were in place at the time the ACA was passed would be grandfathered and therefore would not be eliminated due to the requirements of the ACA. 

Kessler responds by noting that the vast majority of plans in the individual market are for short periods of time. He presents evidence showing that 48.2 percent of individual plans are in effect less than 6 months and 64.5 percent are in effect less than year. Extrapolating from this evidence on the rate at which individuals leave plans, Kessler calculates that less than 4.8 percent of the people in the individual market have a plan that would be protected by this grandfather provision. Based on this assessment, he awards the Obama administration three Pinocchios for trying to blame the insurers for dropping plans.

While Kessler is undoubtedly correct in noting that few people would be protected by the grandfather provision, there are two important points worth pointing out. First, the vast majority of people hearing President Obama's pledge would be covered by insurance through their employer. For these people it is absolutely true that the ACA allows them to keep their insurance.

As far as the minority in the individual market, while Kessler is correct that the grandfathering protects relatively few people because policies tend to be short-lived, this data also raises an issue about the pain caused by earlier than expected cancellations. Kessler's data show that almost half of the plans will be held by people for less than six months and almost two-thirds will be held for less than a year. This means that most of the people being told that their plans are being cancelled probably would have left their plans in the first half of 2014 anyhow. While no one wants to buy insurance more than necessary, it hardly seems like a calamity if someone expected to leave their policy in March and will now have to arrange insurance through the exchange for two months.

Furthermore one has to ask about the role of insurers in this process. Kessler's data imply that more than three quarters of the people in the individual market signed up for their policies for the first time in the last year. Didn't insurers tell people at the time they sold the policies that these plans would only be in effect through the end of December because they did not comply with provisions in the ACA? If the insurers did inform their clients at the time they purchased their policies then they would not be surprised to find out now that they will need new insurance. If the insurance companies did not inform clients that their plans would soon be terminated then it seems that the insurers are the main culprits in this story, not the Obama administration.  

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The NYT had an article on a conference at the International Monetary Fund with the headline, "Candid Criticism of the Fed That Wasn't On the Agenda." The piece promises blunt criticism of the Fed from former Treasury Secretary and top Obama adviser Larry Summers:

"Now that he is no longer a candidate to head the Federal Reserve, Mr. Summers — who withdrew from consideration this fall in the face of stiff resistance in Congress, with the White House ultimately nominating Janet L. Yellen — was perhaps freer to speak in his trademark blunt style. And he didn’t disappoint, arguing that by many important metrics, policy has failed.

"Mr. Summers underscored how weak the economy remains, despite the extensive stimulus and the Fed’s continuing campaign of asset purchases, with the labor market slack and inflation subdued.

"'My lesson from this crisis is, my overarching lesson is that it’s not over until it is over, and that is surely not right now,' he said.

"He noted that short-term interest rates had remained close to zero for years, with no end in sight: 'We may well need in the years ahead to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity.'

"'There’s no evidence of growth that is restoring equilibrium,' Mr. Summers added. 'One has to be concerned about a policy agenda that is doing less with monetary policy than has been done before, doing less with fiscal policy than has been done before,' and is 'taking steps whose basic purpose is to cause there to be less lending, borrowing and inflated asset prices than there was before.'"

This appears to be more a criticism of the Obama administration and Congress for failing to run more aggressive fiscal policy than a criticism of the Fed. The Fed is clearly in uncharted territory in using monetary policy to try to boost the economy out of a severe slump. If Summers suggested a way in which the Fed could be more effective in boosting demand this NYT article neglected to mention it.

That would seem to imply that Summers directed the criticism at himself and his former colleagues for failing to push for more aggressive fiscal policy. Presumably he also regrets allowing bubbles to develop in his reign as Treasury Secretary, the eventual collapse of which led to the downturn. Summers likely also now would recognize that the high dollar policy that he and his predecessor pushed in the Clinton years was a serious mistake since the over-valued dollar led to a huge trade deficit. That in turn created a shortfall in demand that could only be filled by bubble generated demand.

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Along with Alan Greenspan, Robert Rubin is the person most responsible for the country's economic downturn. He helped steer the country on a path of bubble-driven growth and massive trade deficits. The latter was the result of the IMF engineered bailout from the East Asian financial crisis. The outcome of this bailout was a rush by developing countries to accumulate dollar reserves in order never to have to be in the situation that the East Asian countries faced in dealing with the IMF. This sent the dollar soaring, making U.S. goods and services uncompetitive internationally, causing the trade deficit to explode.

The lost demand from the trade deficit was offset in the 1990s by the stock bubble. The wealth created by the bubble led to a boom in consumption. Also, the ability for hare-brained Internet start-ups to raise billions by issuing stock led to an investment boom in hare-brained Internet start-ups. The bursting of the stock bubble gave us the longest period without job growth since the Great Depression. However the economy did eventually recover on the back of the housing bubble. The collapse of that bubble has given us an even longer stretch without job growth, ruined millions of lives, and will likely cost us tens of trillions of dollars in lost output.

In addition to steering the country to disaster, unlike Alan Greenspan, Robert Rubin managed to directly profit from the calamity. He personally pocketed over $100 million from his stint as a top executive at Citigroup. Citigroup was at the center of the housing bubble and meltdown. It required hundreds of billions in below market loans from the government, along with implicit and explicit guarantees to stay afloat. Naturally we should value the economic opinions of such a person, hence the Washington Post gave him space for a column telling us how China and the United States can have a mutually beneficial relationship. 

Not surprisingly much of what Rubin says is just flat out wrong. He tells readers:

"The United States criticizes Chinese interest-rate, land and other subsidies that support investment and exports, including a managed exchange rate (though that has less effect, for now, because China’s current-account surplus has declined substantially). U.S. officials also fault significant shortfalls in China’s protection of intellectual property rights, including cyber-appropriation.

"China has long expressed strong concern that U.S. fiscal deficits could lead to unduly high interest rates, a U.S. or global financial destabilization or, alternatively, serious inflation."

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Folks at the Washington Post generally don't like to have facts interfere with their stories about the world. We got another example of this behavior in its article on the Labor Department's job numbers for October. The Post told readers:

"In addition, Chudars [Judy, Chudars, the president of a job placement firm in Washington] said, more people are voluntarily leaving their jobs for lateral positions — a key characteristic of a healthy labor market that economists call 'churn.'"

Contrary to Ms. Chudars assertion, the Labor Department's report showed a sharp drop in the share of unemployment due to people who had voluntarily quit their jobs, which would imply a decline in churn.

The article then repeated comments from Labor Department Secretary Thomas Perez:

"“I’m heartened by the numerous conversations I have with employers who say, "I want to grow my business,"' Perez said. But they often add that 'too many people coming through the door don’t have the skills that I need.'"

In fact the data show no evidence of any major skills shortage. Since the beginning of the downturn wages of non-production supervisory workers have actually risen on average somewhat more slowly than the generally less-skilled production and non-supervisory workers. In other words, the data imply that we just have a shortage of demand, not the skills shortage claimed by the WaPo's friends.

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The news media have been eagerly joining in Republican attacks on President Obama for having broken his pledge that people could keep their insurance if they liked it. Of course people can keep plans in existence as of 2010, if the insurers opt to offer them. However many insurance companies have cancelled these plans because they no longer consider them profitable.

This outcome can be seen as a violation of President Obama's pledge if people understood him as pledging to effectively take over the industry and require insurers to offer plans even if they were losing money. Is this what the media is claiming was the understanding conveyed by Obama? If so, it should tell us that the public is angry that President Obama is not nationalizing the insurance industry. (President Obama also said that people could keep their doctors. Did people think that Obama was going to prohibit doctors from retiring or dying?)

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Most economists probably would not put France as one of the worst basket cases in the euro zone. While its unemployment rate is over 11 percent, it still less than half of the 20 percent plus unemployment rates being experienced by Spain and Greece. In fact if we focus on employment rates, the percentage of prime age workers who have jobs, France is doing considerably better than the United States. Its employment rate is down by less than 1.0 percentage point from the pre-recession level, while in the United States it is down by more than 4.0 percentage points.

And, unlike many countries in the euro zone, France has at least seen some growth over the last five years. By contrast, the countries under the tutelage of the troika (the IMF, the ECB, and the EU) all have lower output today than they did before the crisis. Even worse, the IMF thinks that their potential output is less today than what they actually produced in 2007.

Given this reality, readers of a NYT article on Standard & Poor's decision to downgrade France's credit rating must have been surprised to read the view of Holger Schmieding, the chief economist at the German Bank, Berenberg:

"there had been 'hardly any progress at all in France' and that the country 'urgently needs to reform its economy if it does not want to fall ever further behind Germany.' ...

The ongoing progress in countries like Spain, Portugal, Ireland and Greece, Mr. Schmieding said, 'makes it ever more obvious that France is Europe’s real problem.'"

I guess it's useful to know that the NYT could find an economist who would trash the state of France's economy. Of course Mr. Schmieding's view is probably not shared by many economists since it is not supported by the data.

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Does that seem surprising? After all, people do choose to buy into the market voluntarily, why would African Americans and Hispanics buy stocks if the result was just to make white people richer? Well, I'm not talking about market manipulations, which may well have this result. I'm actually referring to an Urban Institute analysis of Social Security which was highlighted in an Economix blog post by Eduardo Porter.

This methodology compares the benefits that each group receives by decade, starting in the 1970s, with the taxes they pay into the system. It ignores the taxes that they paid into the system in prior decades. The result is that whites, primarily because they are older, receive more back relative to what they pay in each of the decades from the 1970s to 2030s.

While this is presented as a surprising result, it really should have been pretty self-evident. Imagine that we did the exact same sort of analysis with the stock market starting in the 1970s. We counted every dollar that a group received in dividends as a benefit as well as any net sales of stocks. In other words, the benefits for whites in the 1970s would be their dividends receipts, plus their net sales of stocks. Their payments into the system would be the net purchases of stocks.

Since whites already held large amounts of stock by the 1970s, their net purchases were probably small. It's possible they were even negative. In this case, whites would be getting money back from the stock market even though they paid nothing into it. For both African Americans and Hispanics it is likely that they were net purchasers of stock, since relatively few African Americans and Hispanics owned much stock before 1970. Their dividend payouts in the 1970s would also be quite small.

If we looked at this ratio of benefits to payments into the system through the purchase of stock, it is virtually certain that the trade-off for whites would look much better for non-whites through the present and long into the future. By the Urban Institute methodology, non-whites are getting a bad deal from the stock market.

Is the comparison between the stock market and Social Security inappropriate? Suppose we had a privatized system where people were required to put 6.2 percent of their wages in a private account. We would be telling the exact same story.

Unfortunately there are many real issues of discrimination against African Americans and Hispanics in today's economy. This story with Social Security is not one of them.

 

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NPR did a piece on the pattern of subsidies created by Obamacare. It rightly noted that the Affordable Care Act restructures the individual market so that healthy people will subsidize less healthy people, just as is now the case in the market for employer provided insurance.

However it may have misled listeners about the size of the subsidies. It gave an example of a person who is being made worse off by the change in the structure of insurance under Obamacare:

"Dentist Aaron McLemore of Louisville, Ky., makes more than $100,000 a year and doesn't qualify for any subsidy on the Obamacare exchange. The 31-year-old's current policy is being canceled. A new policy from the exchange will more than double his monthly premium and boost his annual deductible to $7,000."

Okay, the problem here is that the piece is telling us Mr. McLemore's deductible, not his premium. If we assume that Mr. McLemore is healthy (he is supposed to be an example of a healthy person subsidizing the less healthy), then the size of the deductible is not likely to be of much relevance. He will most likely not incur expenses that would push him over a deductible floor. The item that would be most relevant to McLemore would be the premium he pays, since this is the money that actually comes out of his pocket.

Kentucky's exchange will not give prices unless you actually register, but DC's exchange lists bronze plans available for as little as $125 a month or $1,500 a year. While this may be more than McLemore was paying with his current plan, it still implies that he will be paying less than 1.5 percent of his annual income for health insurance. It would have been useful to report the premium on the plan that McLemore chose, since that would be the upper limit on the amount that he would subsidizing less healthy people -- if he did not value the insurance at all.

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