Blog postings by CEPR staff and updates on the latest briefings and activities at the Center for Economic and Policy Research.

Larry Rohter, whose attempt to discredit our documentary “South of the Border” took up most of the front page of the New York Times Arts section last Saturday, is not backing down. We responded by showing that every one of his alleged “questions of accuracy” was actually a mistake on his part. But facts apparently do not mean much to this guy. In a letter posted June 29, he writes that the filmmakers:

“are offended and embarrassed at having their many errors and inaccuracies disclosed. Rather than owning up to those mistakes, they’ve chosen to double down and up the ante. Where they might merely have been mistaken before, they are now lying outright, the letter you link to below being the prime example.”

He is digging himself a deeper hole. Let’s look at the claims he is stubbornly defending, just so there is no ambiguity here about who is completely wrong, and being dishonest in this debate.

Add a comment

Oliver Stone’s new documentary, “South of the Border” – co-written by CEPR’s Mark Weisbrot – opened in U.S. theaters last week, starting with New York last weekend where it had the highest average theater earnings for a U.S. film in the country. Now audiences in LA, Pasadena, Santa Ana and Northern Virginia will get a chance to see the film, with Q and A sessions with Stone in LA today and Mark in Arlington today and tomorrow.

The film explores themes familiar to readers of Mark’s op-ed’s and columns: the new independence of South American nations from Washington, most notably from the U.S. State Department and international financial institutions (most importantly, the International Monetary Fund). The film also focuses on why U.S. relations with the region have deteriorated to such a degree; U.S. involvement in the 2002 coup d’Etat against Hugo Chavez – documented in the film and the film’s website – is contrasted with statements from leaders such as Brazilian president Lula da Silva and Ecuadorian president Rafael Correa on their request for respect and treatment as equals by the U.S.

This background, meanwhile, is complemented by a number of clips from major U.S. TV news programs that refer – in many cases in straight reporting (not opinion) – to Chavez and Bolivian president Evo Morales as “dictators”, assert that Chavez is a “declared enemy” of the U.S., and other jingoistic statements. As the audience sees these clips, Stone ponders why the U.S. seeks to “create enemies”, with a short summary of the U.S. media’s complicity in allowing the Bush administration to mislead the country into war as a reminder of how the State Department sets the tone in international relations. The parallels between this event and relations with Venezuela are further explored in an interview of Chavez in which he suggests that both the U.S. invasion of Iraq and U.S. support for the 2002 Venezuelan coup had the same motive: oil.

Not surprisingly, the film is not a favorite of many major U.S. media outlets so far, but interest in the film is growing, with new theater showings being booked and several recent TV and radio interviews with Oliver Stone, Mark, and other filmmakers taking a closer look at the film and the important issues it covers. As some reviewers and commentators have noted, the film explores a topic that the major U.S. media has largely missed so far: the new and enduring independence of much of Latin America from the United States. Go see the film and decide for yourself whether you think this is a story worth telling.

Follow this link to see when South of the Border is playing near you.

Add a comment
If you regularly read CEPR co-director Dean Baker's columns, you already know that the President's National Commission on Fiscal Responsibility and Reform (a.k.a. the Catfood Commission on FireDogLake) is stacked with deficit hawks (a.k.a. Zombies on Paul Krugman's blog) who are intent on gutting Social Security, under the guise of reducing federal budget deficits.  This Saturday, the billionaire deficit hawk Pete Peterson is largely bankrolling an organization called AmericaSpeaks to conduct Town Hall meetings in 20 cities across the nation to "find common ground on tough choices about our federal budget." 

Even worse, AmericaSpeaks will be presenting the results of these meetings just four days later at the next meeting of the Fiscal Commission in Washington DC.  Groups such as MoveOn, AARP and the AFL-CIO are planning to leaflet outside the Town Hall meetings on Saturday.  And experts across the nation, including Dean Baker, are expressing their misgivings about these Pete Peterson-funded events.

A closer look at the  discussion materials for the Town Hall meetings shows that Saturday's game will be played with a stacked deck.  They claim to include input from a broad range of view points in order to frame an intelligent discussion of the nation's long-term budget problems.  But, as CEPR's analyses of AmericaSpeaks' Federal Budget 101 and Options Workbook detail, their guides do not live up to their hype. 

For example, the materials do not discuss the cause of the recent explosion of the deficit, the collapse of the housing bubble -- the downturn resulting from this collapse will add more than $4 trillion to the national debt between 2007 and 2017. And while the guides note that most of the growth in future budget deficits is due health care costs, they do not explain the full extent to which the deficits are the result of the inefficiency of our health care system. If our per person health care costs were the same as any for any other wealthy country, then the U.S. would face huge surpluses rather than deficits. Add a comment

When Bolivian Foreign Minister David Choquehuanca and U.S. Assistant Secretary of State Arturo Valenzuela met at the beginning of the month, it appeared that relations between the US and Bolivia were on the verge of being normalized following an 18-month diplomatic chill. Choquehuanca announced to the press that "the two sides are 99% done with a pact that would allow the exchange of ambassadors." President Evo Morales declared his own hope that the two countries would now "advance with this new framework agreement for full diplomatic, trade and investment relations."

But hope for improved relations appeared to be dashed two weeks later when President Morales angrily accused the US Agency for International Development (USAID) of financing groups opposed to his government. "If USAID continues working in this way," he said, "I will not hesitate to expel them because we have dignity and sovereignty, and we are not going to allow any interference."

Some may see Morales' recent statements as evidence that he isn't serious about seeing the agreement with the U.S. finalized and signed and, instead, is more interested in stoking nationalistic sentiment and strengthening his anti-imperialist image among his supporters. However, it is worth noting that Morales' latest statements are consistent with criticism that the Bolivian government has directed at USAID since at least 2006. Declassified documents uncovered by investigative journalist Jeremy Bigwood through the Freedom of Information Act (FOIA) show that, as early as 2002, USAID funded a "Political Party Reform Project" designed to "serve as a counterweight to [Evo Morales'] radical MAS [party] or its successors." Though USAID has refused to reveal which political organizations have received funding since Evo Morales' election in 2006, the FOIA documents point to possible funding of opposition groups that engaged in violent tactics and sparked an explosive political crisis in September of 2008. Moreover, given the US government's record for funding opposition groups in Venezuela, the country with which Bolivia has the closest relations, it is perfectly understandable that President Morales is deeply suspicious of USAID's Bolivia program.

Add a comment

Social Security Works' Alex Lawson had a wonderful exchange with former Senator Alan Simpson, the co-chair of President Obama's deficit commission, about Social Security. Alex politely peppered the former senator with reasonable questions about his views on Social Security, which led Mr. Simpson to alternately curse and lecture Lawson about the structure of the program.

In the course of an 8 minute exchange, Mr. Simpson repeatedly expressed the view that the government was somehow unaware (at least until recently) of either the baby boom cohort's existance or that life expectancy was increasing. He kept repeating, as though he had just discovered it, that life expectancy had increased from 57 when Social Security was started in 1937 to 78 years for today's newborns.

But the best part of the show was Mr. Simpson's discussion of the bonds held by the trust fund. Simpson was anxious to tell Lawson that we had spent the money. They had a bit of back and forth over what the money was spent on. (Simpson emphasized spending on highways and infrastructure, Lawson pointed to the money spent on wars in Iraq and Afghanistan and the Bush tax cuts.) But, both agreed that the money had been spent.

Simpson then implied that Social Security was broke because the money had been spent. Lawson pointed out that the trust fund held U.S. government bonds that are backed up by the full faith and credit of the U.S. government. Simpson acknowledged this point, even completed Lawson's sentence.

So, if the bonds held by the trust fund are backed up by the full faith and credit of the U.S. government, then what is the problem? The trust fund contains bonds that must be repaid just like the bonds held by Citigroup, Goldman Sachs, and rich people like Peter Peterson.

Where will the government get the money to repay the bonds held by Social Security? It will probably get the money from the same place it gets the money to repay the bonds held by Citigroup, Goldman Sachs, and rich people like Peter Peterson. We never ask where the government will get the money when Goldman Sachs or Peter Peterson want to cash in their bonds, why on earth would we ask that question when the issue is cashing in the bonds held by Social Security?

So, we have the land of non-sequitors where we keep hearing about an issue that has nothing to do with the health or solvency of Social Security. I just keep thinking of that old Billy Preston song.


Add a comment

Sunday, the Cato Institute's Michael Tanner wrote, "[T]he Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs."

This is no less true for any other government bond. When billionaires like investment banker Pete Peterson buy government bonds, nothing is said about where the government will get the money to pay back Pete Peterson.

At the same time, it is doubtful that Peterson views his bonds as mere IOUs, but rather purchased with the understanding that the government would pay him back later with interest. Similarly, for 27 years Social Security taxes paid for both current beneficiaries and government bonds with the understanding the bond money would be paid back later, with interest.

Tanner continues, "Even if Congress can find a way to redeem the bonds..." implying that the government is likely to default on some or all of this debt. If the government is faced with the possibility of default, there is nothing special about the bonds held in the Trust Fund that would make them more vulnerable to default than any other bond. Tanner could instill the same fear in Pete Peterson, Goldman Sachs, or any other holder of government debt.

Finally, Tanner asserts that "Thanks to the economic downturn, Social Security is running a temporary cash-flow deficit." While payroll tax receipts have been low on account of high unemployment, Tanner's assertion is incorrect. Social Security paid out more than it received in February and March because its income is not evenly credited on a monthly basis. To say that Social Security is running a cash-flow deficit is like saying that I am running a cash-flow deficit because I haven't been paid since the end of May.

Add a comment
The World Cup kicks off today in South Africa at 10am Eastern Time. The whole world will be watching and there is no shortage of good online guides. One I particularly like is at The Guardian site. And, here's the schedule as posted at the official FIFA web site.

But, if you're wondering how the 32 nations with teams in the tournament compare off the field, there is really only one place to turn. Thad Williamson has pulled together data on the participating countries' level of political freedoms (well, at least as judged by Freedom House), their level of "Human Development" (as measured by the United Nation's Human Development Index), per capita GDP, economic inequality, and life expectancy.

Williamson concludes: "While ... real world inequalities of income and development impact the likelihood of nations qualifying for the tournament, the World Cup is far more egalitarian and inclusive than other prominent international arenas in which real power is wielded." Add a comment

In a paper released earlier today, John Schmitt, Sarika Gupta, and I looked at the issue of incarceration in the United States. In 2008, more than 2.3 million people were behind bars in U.S. prisons and jails. This translates to a rate of 753 per 100,000 people, which is more than seven times higher than the median (102) in rich countries that make up the OECD. (Iceland has the lowest rate at 44, while Poland has the second-highest at 224.) This is also much higher than rates that we have seen in our own past. In 1980, when the U.S. incarceration rate was already at a historical high, it was 220 per 100,000 people.

This dramatic increase has not come cheaply: in 1982, state and local governments spent nearly $17 billion (in 2008 dollars) on corrections. In 2008, they spent just over $67 billion. (In fact, just the rise over this period in state-level expenditures on incarceration amounts to one-sixth of CBPP’s projected state budget shortfall in 2010.) What is going on?

You might think that rising crime might be behind the big jump in incarceration. However, the data just don't make the case. The graph below shows the change in violent and property crime along with the incarcerated population and the overall population, all indexed to their level in 1980. While both violent and property crime did increase until the early 1990s, from that point on, crime dropped off even as the incarceration rate continued its steady climb. If the incarceration rate were simply a function of crime, then it would have decreased as well.


On the other hand, could the higher incarceration rate be causing the drop in crime since the early 1990s? This does not appear to be the case either. Don Stemen of the Vera Institute for Justice conducted an extensive review of the existing literature in 2007 and came to this conclusion: "The most sophisticated analyses generally agree that increased incarceration rates have some effect on reducing crime, but the scope of that impact is limited: a 10 percent increase in incarceration is associated with a 2 to 4 percent drop in crime. Moreover, analysts are nearly unanimous in their conclusion that continued growth in incarceration will prevent considerably fewer, if any, crimes than past increases did and will cost taxpayers substantially more to achieve."

Where does that leave us? All indications point to deliberate policy choices – a politically safe "tough on crime" approach created an inflexible legal framework that simply locked people up and kept them there longer.

We prefer a "smart on crime" approach. Mandatory minimum sentences, three strikes laws, and truth-in-sentencing laws have contributed substantially to the growing numbers of non-violent offenders in prisons and jails. Repealing these laws and reinstating greater judicial discretion would allow non-violent offenders to be sentenced to shorter terms or to serve in community corrections programs (such as parole or probation) in lieu of prison or jail. We estimate that if 50% of non-violent offenders were placed on probation or parole, $14.9 billion – about one quarter – could be shaved off the current state and local corrections budgets.

Add a comment

Maggie Haberman and Ben Smith have a piece at Politico on how politicians seeking to cut state budgets are taking aim at state and local government workers.

One of the political footballs here is whether state and local employees are paid "too much." The right and, increasingly, the mainstream media have emphasized that, on average, state and local workers make substantially more than private-sector workers.

On average, this is true. But, just over 50 percent of state and local workers have a four-year college degree (or more), compared to only about 30 percent in the private sector. And the typical state and local worker is about four years older (and therefore has about four years more labor market experience) than the typical private-sector worker. Once you control for just these two factors, the average state and local worker earns *less* than a comparable private-sector worker. (For details, see (1) Keith Bender and John Heywood, "Out of Balance?" and (2) my recent report for CEPR, "The Wage Penalty for State and Local Government Employees.")

These analyses refer to wages and salaries only. There are no data that would allow a comparable analysis that includes benefits, but Bender and Heywood do a good job showing that factoring in benefits doesn't change the picture much. (I make the same argument less formally here, too).

There are a lot of reasons that benefits don't change the picture that much, but one is that about 30 percent of state and local workers do not participate in Social Security. As a result a significant chunk of S&L pension spending goes just to make up for their employees' loss of Social Security income in retirement.

Add a comment

In 2002, the Bush administration decided that the federal government needed to get in the business of promoting (heterosexual) marriage and proposed a new federal program—the Healthy Marriage Initiative—dedicated to that purpose. In 2005, the Republican-controlled Congress authorized the program and appropriated $500 million for it over five years. Although some conservative libertarians opposed the program, other conservative think tanks, including the Heritage Foundation, lobbied strongly for it as part of a conservative approach to welfare reform.

The first rigorous evaluation of a program funded with these dollars has just come out, and shows—surprise, surprise—that it's a failure. Conducted by Mathematica Policy Research, the evaluation assigned 5,000 unmarried couples—ones who were romantically involved and either expecting a baby together or already had a baby younger than three months—to program or control groups in eight U.S. cities. The program group received three services: 1) group sessions on relationship skills; 2) individual support from family coordinators; and 3) assessment and referral to support services. The group sessions were the core of the program—in essence, program participants received roughly 20 hours of "relationship skills education" that control group participants did not. The random-assignment structure of the evaluation allowed the researchers to isolate the effects these services had outcomes including marriage, living together, domestic violence, and relationship quality.

The researchers found that the program had no effect on the likelihood of couples staying together or getting married, and no effect on relationship quality (measured by variables including subjective relationship happiness) or other measured variables. There was some difference in effects by location—one of the eight sites had generally positive effects, while another had generally negative ones (including an increase in domestic violence). The researchers note that the site with positive effects (Oklahoma City) differed from the other ones in that it included already married couples, while the site with the negative effects (Baltimore) served a higher share of couples in less committed and more tenuous relationships than other sites.

There were some reported positive effects for couples in which both partners are African American, but, on closer examination, these turn out to be underwhelming. The program did not increase the share of African American couples who were romantically involved, living together, or married. Of the six statistically significant positive impacts for African Americans, most were related to "relationship quality," only one was significant at the .01 level, and the effects themselves don't look particularly large. For example, the one outcome significant at the .01 level was an increase in the "use of constructive conflict behaviors," which, as measured by a 4-point scale, was 3.22 for the program group compared to 3.14 for the control group. Moreover, the Baltimore site, which had negative results, had the highest share (92%) of African Americans. In sum, I'm pretty skeptical that the overall apparent positive results for African American couples are real rather than random.

The Healthy Marriage Initiative was funded through 2010 with money originally diverted from other more productive uses, including child care assistance and social insurance for low-wage workers. That was a mistake then, and, given these findings, one that shouldn't be repeated going forward.

Add a comment

The deficit hawks have been working themselves into a frenzy in recent weeks over the prospect that the country will come out of the recession with a huge debt. They have convinced much of the policy elite (admittedly, a very gullible crew) that the United States is on the edge of becoming Greece, unable to pay its bills and forced to negotiate with the IMF, Moody’s, or other creditor creatures to avoid bankruptcy.

There is more than a little absurdity in this picture. The United States has about as much in common with Greece as it does with the robot in the old television show, “Lost in Space,” in other words, basically nothing. Greece is a relatively small economy that is very dependent on imports and does not print its own currency. The U.S. is a huge, still largely self-contained economy that does print its own current. If we’re looking for comparisons, Greece is much more like Arkansas than it is like the United States.

But, there is at least a grain of truth in the deficit hawks scare stories. If we follow the deficit path projected by the Congressional Budget Office, by 2020 we will have a debt to GDP ratio of close to 90 percent. This is far from a crisis – we have had higher ratios in the past and many countries currently have far higher ratios and have no problem whatsoever servicing their debt in international financial markets.

However, we will be paying out a much large share of our budget in interest payment on the debt in this scenario, with interest payments rising from less than 2 percent of GDP at present to close to 5 percent by 2020 – roughly the same share as at the beginning of the Clinton administration. Other things equal, it would be better not to have to pay so much interest to bondholders.

There is a simple way to prevent this rise in the interest burden. We can simply have the Federal Reserve Board buy and hold large amount of the debt issued to finance the recovery. The Fed is already buying much of the debt, but as a matter of policy Congress could dictate that it buy more and continue to hold the debt indefinitely.

This would mean that the interest on these bonds would be paid to the Fed, which would in turn refund the money back to the Treasury, thereby creating no net interest burden. If the Fed bought and held an amount equal to 20 percent of GDP (approximately $3 trillion), it could save the country $150 billion annually in interest payments.

In ordinary times this would be considered a dangerous practice since it could lead to inflation. However, few economists see inflation as a serious threat with the unemployment rate near 10 percent. In fact, we would almost certainly be better off with a somewhat higher inflation rate (3-4 percent) than the very low rate we are now seeing, since it would reduce the debt burden on homeowners and lower real interest rates.

Over the longer term, if inflation did appear to be a problem, the Fed could respond by gradually raising banks’ reserve requirements, thereby preventing the extra reserves in the system from leading to excess demand and higher prices.

In short, there is no reason that the county need bear an additional interest burden as a result of measures taken to pull the economy out of the downturn. This spending is creating demand for otherwise idle resources, not leading to excess demand in the economy.

This is a serious discussion that Congress and the country should be having right now rather than the absurd debate about plans for cutting Social Security and other important programs. But, we are not having this discussion because the deficit hawks are trying to convince us that we are like Greece and the financial markets have given us no alternative to these cuts. As the robot on Lost in Space used to say: “warning! Warning!”

Add a comment

Israel’s deadly storming of the Gaza Freedom Flotilla in international waters has unleashed a wave of criticism of the Netanyahu government’s actions from nearly every country in the world. Turkey deplored the killing of several of its citizens on board the Mavi Marmara and referred to the incursion as “inhumane state terror.” A number of Israel’s closest friends joined the chorus of protests with, for instance, UK’s conservative prime minister calling the raid “completely unacceptable” and France’s foreign minister saying that he was “profoundly shocked.” In contrast, the US reaction to the incident has been remarkably subdued. The White House issued a release expressing President Obama’s “deep regret about the loss of life” but was careful to avoid any direct criticism of Israel’s actions. A statement read by a U.S. representative to the United Nations even appeared to shift the blame for the incident to the flotilla organizers.

It is interesting to compare the US administration’s position on this tragic event with the positions expressed by its Latin American neighbors. In the past, Latin America has been generally friendlier to Israel than most developing regions of the world, and countries of the hemisphere considered to be solidly within the orbit of U.S. influence – for instance most of Central America – have been more reluctant to criticize Israel’s policies in the occupied territories of the West Bank and Gaza. In this case, though, the vast majority of Latin American reactions to the Israeli raid are fundamentally at odds with the U.S. position.

The first surprise, as we look south of the border, is Mexico’s response to the incident. Mexico and Israel have traditionally been close friends and signed a bilateral free trade agreement in 2000. But on May 31st Mexico’s foreign ministry condemned the Israeli “attack” “in the most energetic terms” and called on Israel to lift its embargo on Gaza. Mexico’s reaction is undoubtedly of particular concern to both Israel and the U.S. as it is a temporary member of the UN Security Council and is in charge of the presidency of that body until the end of June. According to CNN, Mexico has spoken of possibly seeking UN sanctions against Israel.

Add a comment

The Cato Institute wishes to erase away an entire recession, but the facts are simply not on their side. "You never heard of it because it never happened. However, the 'Depression of 1946' may be one of the most widely predicted events that never happened in American history."

If true, this would have been a truly heroic feat on the part of the private sector, given that government spending fell by $56 billion dollars from 1944 to 1947. GDP was just over $200 billion in 1944. Today such a cut would be equivalent to $3.4 trillion, or 132 percent of government expenditures.

While the private sector did pick up much of the slack, the downturn from 1945 to 1946 alone was far more severe than the current recession.

In the current recession, real GDP fell 3.8 percent peak to trough. By comparison, real GDP fell 10.9 percent from 1945 to 1946, did not begin to rise until the fourth quarter of 1947, and still did not reach 1945 levels until the third quarter of 1950.

Employment figures show a similar story. From 1945 to 1946, combined employment in nonfarm payrolls (the standard measure of employment at the Bureau of Labor Statistics) and the armed forces fell by 6.7 million, or 13.0 percent. By comparison, from the peak in December of 2008 to the trough in December of 2009, nonfarm payrolls fell 6.1 percent while the number of active-duty military personnel increased slightly.


Cato is entitled to argue that the private sector did a fair job of picking up where the government left off. However, it is wholly illegitimate for the Institute to pretend that the largest economic downturn since the Great Depression "never happened."

Add a comment

In a critical commentary on the Obama Administration's proposed supplemental income poverty measure (SIPM), a proposal based almost exclusively on recommendations made by the National Academy of Sciences in the 1990s, Robert Samuelson makes the puzzling claim that "the administration is defining poverty up." As usual, Samuelson gets things precisely wrong, not surprising given that in a commentary that has the chutzpah to close with a call for "political neutrality," Samuelson cites only two "poverty experts", both of whom are conservatives at right-wing think tanks. In fact, the official poverty measure has defined deprivation down over the last few decades, moving it further and further away from mainstream living standards over time, as well as from majority public opinion of the minimum amount needed to "get along" at a basic level. As I detail in a recent paper, the biggest concern we should have with the SIPM is that it will lock in this defining down of the poverty standard, not that it will "define poverty up."

The extent to which the current poverty measure has defined deprivation down can be seen by comparing the poverty line's movement over time with public opinion on the minimum income families need to make ends meet. For several decades, Gallup has asked adults: "What is the smallest amount of money a family of four (husband, wife, and two children) needs each week to get along in this community?" When it was initially developed, the official poverty line was equal to about 72 percent of the average response to this "minimum get-along" question. By 2007, the poverty line had fallen to 41 percent of the average response to the get-along question (the 2007 poverty line was $21,500; the minimum get-along average was $52,087). If the poverty line had kept pace with public opinion on the minimum get-along amount over time (that is, remained equal to 72 percent of that amount), the poverty line would have been $37,500 in 2007 rather than $21,500.

Samuelson might respond that the American people don't have a very good sense of what it takes to make ends meet. But other concrete evidence suggests otherwise. In a 2008 paper, James Lin and Jared Bernstein of the Economic Policy Institute (EPI), using a fairly standard methodology for computing "basic family budgets", estimated that on average nationwide, working families with two parents and two children need an income of $48,778 to maintain a "safe but modest standard of living," a number quite consistent with public opinion.

Add a comment

CEPR's kicking off the summer vacation season with an appearance by CEPR Senior Economist John Schmitt on CBS Sunday Morning this weekend (click here for airtimes). He'll be talking about paid vacation and holidays in the United States -- or lack thereof.

In No-Vacation Nation, CEPR finds that we're the only advanced nation that doesn't guarantee its workers and paid vacation or holidays. In fact, 1 in 4 U.S. workers do not receive any paid holidays or vacation -- see the grim picture below.

No Vacation Nation

Click for larger image

But it's not just vacation. CEPR research shows that the United States comes in last when when it comes to paid sick days and paid parental leave as well. And while some argue that paid leave leads to less competitive economies, CEPR also finds that paid sick days don't cause unemployment rates to rise.

So how can America get out of last place? The Healthy Families Act, which would provide paid sick days to millions of American workers, is being promoted by Sen. Christopher Dodd and Rep. Rosa DeLauro -- with the blessings of the Obama Administration. There are also state and local campaigns for paid sick days across the country.

And Rep. Alan Grayson has proposed the first-ever paid vacation law in Congress. He asks:

Why are paid vacations good enough for the Chinese, French, Japanese and German employees, but not good enough for us?

So as many of us enjoy a well-deserved paid holiday this Monday, let's not forget the millions of American workers who don't get Memorial Day, nor any other, paid time off.

Add a comment

When we become seriously ill, we put our lives in the hands of our doctors. We hope that the doctor has the knowledge to diagnose and treat our illness; and if not, will refer us to a specialist who does.But are patients getting the best standard of care, or even decent standard of care? Doctors look to treatment guidelines to guide them when making their decisions. Treatment guidelines are developed by medical associations, and they are thought to be based on the best available science.

The Infectious Diseases Society of America (IDSA) has developed treatment guidelines for a long list of infectious diseases, including Lyme disease. In their treatment guidelines for Lyme disease, the IDSA recommends very restricted treatment of 2 to 4 weeks of antibiotic therapy. Though many patients fail this treatment (treatment failure rates range from 15 to 69% in patients with neurologic Lyme disease), the IDSA recommends against additional treatment in patients who continue to be sick.

For the IDSA to make such a radical recommendation of no additional treatment for patients who fail recommended treatment, one would expect that several large clinical trials have been conducting to support it. But that is not the case. In fact, the recommendation is based on one single study by Klempner et al. (2001) that found no treatment effect in two trials they had conducted on a total of 114 patients. And the study was not even a good one. It suffered from design defects, and the statistical analysis was seriously flawed.

Patients enrolled in the study had been sick for a long time – 4.4 years on average – and had been treated with multiple rounds of antibiotics prior to entering the study. In fact more than 25 percent of the treatment group had already received more than 116 days of antibiotic treatment before the trial, including intravenous antibiotics. So the study was not, as claimed, set up to evaluate the effect of treatment in patients who failed 2-4 weeks of treatment. It is unlikely that 90 days of additional treatment administered to patients in the study would permanently cure patients who were still sick after having received an even longer period of treatment.

Add a comment

Last week, the CEPR March CPS Uniform Extracts, Version 0.9, for 1980-2009 was added to CEPR's consistent database of the Current Population Survey (CPS). The March CPS (also known as the Annual Social and Economic Supplement), collected by the Census Bureau every March, contains a series of supplemental information on income, non-cash benefits, health insurance, and work experience. Please visit the Census Bureau's website for more information on the CPS.

Available for download from the CEPR database are the uniform data or underlying Stata program files that were used to extract the data. You can also download our recently updated 2009 CEPR CPS ORG and Basic Monthly Uniform Extracts, Version 1.5.

CEPR makes wide use of the CPS extracts in our publications, available here. For example, CEPR recently published a study using the March CPS extracts, looking at the health-insurance coverage rates for U.S. workers in the past three decades. CEPR's CPS ORG extracts are frequently used to examine changes in the labor market.

***Note that this is a beta release. Please feel free to send us any comments or questions about the release.***

Add a comment

Almost the whole of the U.S. economics profession missed the build-up of the housing bubble that caused the Great Recession. So, it may surprise many non-economists to learn that for the last two decades U.S. economists have used standard tools to predict many of the economic problems currently facing the European Union.

The January 2010 edition of the Econ Journal Watch contains a fascinating review of U.S. economic research from the late 1980s through the early 2000s on the likely outcome of a single European currency. The authors of the paper --Swedish economist Lars Jonung and Irish economist Eoin Drea examined about 170 publications written between 1989 and 2002 by U.S. economists in academia and at the Federal Reserve.

The title of the new paper, which does a remarkable job of summarizing its main findings, is drawn from a quotation from the late MIT economist Rudiger Dornbusch. In 2001, Dornbusch described the U.S. economic profession's views on the euro as generally taking one of three positions: "It can't happen"; "It's a bad idea"; and "It can't last."

Add a comment

After a brief hiatus, trade popped back into the headlines this week, on two accounts.

First, several of the races in this past Tuesday’s primaries and elections focused on trade, with the critics of the past failed model coming out winners with the public. For example, as Mike Elk notes:

Democrat Mark Critz ran on a much more progressive platform of job creation through trade reform. He blasted his Republican candidate for being in favor of tax loopholes that favor companies that outsource jobs, even as the Obama Administration just this week used a lobbyist memo to claim that outsourcing created jobs.”

Since being critical of our job-killing and wage-depressing failed trade policy has been a boon for Democrats in both 2008 and 2006 elections, it seems natural that President Obama would want to make good on his campaign commitment to renegotiate NAFTA. This was the reason for the second airing of trade issues this week: the visit of Mexican President Calderon to Washington DC. While his “war on drugs,” which has resulted in the deaths of over 23,000 people, garnered significant media attention, the 6.5 percent contraction in Mexico’s economy last year should be an equally troubling statistic in terms of its impacts on most Mexicans’ daily lives.

Add a comment

Welcome to the May, 2010 edition of the CEPR NEWS. This monthly newsletter highlights CEPR's latest research, publications, events and much more.

CEPR celebrates two important victories on Financial Reform
Last week, the Senate passed two amendments to the financial system reform legislation that CEPR has been championing for a long time. The first, an amendment offered by Bernie Sanders to audit the Federal Reserve, passed by a vote of 96-0. Under the amendment, the Government Accountability Office (GAO) would undertake a one-time audit of the emergency lending programs created by the Fed since December of 2007 and report the findings to Congress. The amendment would also require the Fed to make public by December 1 important details about these lending facilities.

According to CEPR Co-Director Dean Baker, "The country is best served by having an independent Fed, but one that is nonetheless accountable to Congress in the same way that the Food and Drug Administration is or any other government agency. This action by the Senate is an important step towards increasing the level of Fed accountability". Baker has written extensively in support of the audit the Fed measure throughout the past year, most recently signing on to an economist letter supporting the amendment. His most recent piece can be found here.

The second CEPR victory came in the form of an amendment offered by Senator Al Franken. Called the "Restore Integrity To Credit Ratings" amendment, it is aimed at preventing the securities industry from shopping around among credit rating agencies. Under the amendment, which passed by a 64-35 vote, the Securities and Exchange Commission would appoint a panel to develop a system that would independently match ratings agencies with firms that have securities that need to be rated. Dean Baker proposed this obvious fix to the conflict of interest in the current rating agencies system in his book Plunder and Blunder: The Rise and Fall of the Bubble Economy. He also mentions it here.

Add a comment

Earlier this month, as the US loudly complained about Venezuela’s decision to purchase arms from Russia, South America’s ministers of defense came together in Guayaquil, Ecuador and put the finishing touches on an agreement to develop common mechanisms of transparency in defense policy and spending. The agreement, which also calls for the creation of a multilateral Center for Strategic Defense Studies, is the most recent example of the growing effectiveness of the Union of South American Nations (Spanish acronym UNASUR) as a forum for addressing the most urgent and sensitive issues on the regional agenda. Though the group remains unknown to most of the US public - and is rarely referred to by US policy makers - it has, in the space of a few years, emerged as one of the Western Hemisphere’s leading multilateral bodies and, in the process, is rapidly undermining the regional clout of the Washington-based Organization of American States (OAS).

UNASUR first began to take form in 2004 when South American leaders signed the Cusco Declaration that committed their governments to creating “a politically, socially, economically, environmentally and infrastructurally integrated South American area.” Despite the diverging political agendas of the region’s governments, the leaders agreed on prioritizing the group’s role as a geopolitical actor or, in the words of the declaration, pursuing “concerted and coordinated political and diplomatic efforts that will strengthen the region as a differentiated and dynamic factor in its foreign relations.”

Add a comment