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.

Please also consider supporting the blog on Patreon.

Follow on Twitter Like on Facebook Subscribe by E-mail RSS Feed

The Washington Post noted the 6.0 percent rise in business investment in the first quarter and said that it seems to contradict the drop of 0.1 percent in capital goods orders (excluding aircraft) in March. There actually is no contradiction.

Capital goods orders are forward-looking, indicating businesses' intentions for how much they want to invest over the next year or two, sometimes longer. Their investment in the first quarter is mostly the outcome of investment made in prior quarters.

If we are looking for the impact of the tax cut on investment, we should be focused on orders. The growth figures touted by the Republicans imply growth of roughly 25 percentage points over baseline growth. The 6.0 percent figure is consistent with the recent trend; if the tax cut leads to anything like the growth promised by the Republicans, we should be seeing growth well into the double digits.

Add a comment

We all know how upset some folks get at the idea that people get food stamps from the government. So let's get some of the righteous outrage directed at Robert R. Redfield, Trump's pick to be the new head of the Center for Disease Control and Prevention (CDC).

According to an NYT article, Dr. Redfield will earn $375,000 a year in this post. According to the article, Redfield is able to get this high pay through a loophole that allows the government to pay more money to people who are uniquely qualified for their position. Redfield's predecessor earned $197,300. It seems difficult to argue that Redfield is uniquely qualified for this position since he has no experience running a large bureaucracy and limited background in public health.

If people would like some context for this overpayment, the average annual benefit for a food stamp beneficiary is $1,512. This means that the overpayment to Redfield (compared to his predecessor's pay) is equivalent to 110 years of a typical beneficiary's food stamps.

Note: An earlier version had incorrectly identified the director of CDC as "Dr. Redford."

Add a comment

Many progressives, including this one, have worked to come up with ways around the Republican tax laws limits on the deduction for state and local taxes (SALT). The reason is that we worry that the increased cost of these taxes will reduce the ability of states like New York and California to maintain and expand relatively generous social safety nets and support for education, health care, and child care.

When these taxes were fully deductible, the federal government effectively picked up 40 cents of each dollar of taxes on these states higher income residents. With the cap, these taxes will be borne 100 percent by the states' residents. This is likely to make them more resistant to taxes. (This is the hypothesis that rich people are more resistant to higher taxes than to lower taxes.) It may also cause some to leave the state or find ways to avoid/evade their taxes.

For some reason, the Post was unable to find anyone to make these points until most of the way through its piece on efforts to work around the tax. It also misrepresented these efforts by implying that only very high-income people would benefit from them.

The first workaround to be passed into law was an optional 5.0 percent employer-side payroll tax in New York, which could apply to wages above $40,000. This would be a substitute for the state income tax.

A person who earns $100,000 a year (apparently now a high-income person in Washington Post land) would pay $3,000 in state employer-side taxes under this plan. That would be expected to come out of their wages, meaning that their taxable income for federal tax purposes would now be $97,000 instead of $100,000. Since this person (assuming a single individual) is in the 22 percent tax bracket, this switch would save them $660 dollars on their federal income taxes. This is the case whether or not they itemize.

Since their pay is $3,000 less, they would also save their Social Security and Medicare taxes as well. This is a 7.65 percent on the employee's side, which gets them another $230 in savings, bringing their total savings to $890 a year.

It is obvious that the Post doesn't like this sort of workaround but usually, pieces like this are reserved for the opinion pages and also try to be more accurate.

Add a comment

The NYT had a seriously confused column by Lan Cao on U.S. trade policy. The piece touts the dollar's role as the world's leading currency, highlighting the fact that most oil is traded in dollars.

In reality, the need for countries to get dollars to buy oil is trivial. If a country does not otherwise want to hold dollars, it can hold its assets in any major currency. Since there are massive currency markets in which trillions of dollars worth of currency change hands every day, it can sell whatever currency it chooses to hold half a second before it needs the dollars to pay for oil. It would then be the oil seller's decision as to whether to keep the dollars or to change to a preferred currency.

The half-second demand for dollars created by the purchase of oil has a trivial impact in currency markets. If 60 million barrels of oil a day are traded and the price of oil is $70 a barrel, this comes to $4.2 billion a day. If this were done all the same half-second, it would be a minor blip in the currency market. Over the course of a day, it would not even be noticeable. 

The piece also refers to China's massive accumulation of dollars in the last decade as a positive for the US economy. China did not accumulate dollars because it in any way needed dollars. It accumulated dollars to keep down the value of its currency. This allowed it to run a massive trade surplus that peaked at more than 10 percent of GDP in 2007. (Fast-growing developing countries are expected to run trade deficits, as capital flows in.) 

China's trade surplus was associated with an explosion of the trade deficit in the United States. This led to the massive job loss in manufacturing in places like Pennsylvania, Ohio, and Michigan. It is difficult to see how this is a good story for the United States.

The gap in demand in the economy that resulted from the trade deficit was filled by the housing bubble. The collapse of the bubble gave us the Great Recession, from which we are just now recovering.

If this is "winning" the trade war, as the piece claims, it is difficult to imagine what losing would be like.

Add a comment

The NYT had an interesting column on the impact that the location of Amazon's new headquarters would have on rents in the finalist cities. The column reports projections from Zillow on how much more the median rents would rise over the next decade due to the presence of Amazon.

Topping the list is Los Angeles, where Zillow projected that the median monthly rent will be $740 higher in 2028 if Amazon puts its second headquarters there. This means that the median renter in the city will be paying an Amazon tax, in the form of higher rents, of almost $9,000 a year for the privilege of having Jeff Bezos company located in her city. 

If Bezos chooses Denver, the median tenant will be paying an extra $720 a month, or $8,600 a year to enjoy Amazon's presence. Bostonians would have to pay $485 a month or $5,800 a year to have Amazon as a neighbor.

While this analysis is very speculative, it shows how many residents of the city "winning" the Amazon location game show could be big losers. This is especially true if the city's secret concession package costs large amounts of future tax revenue and/or commits the city to large Amazon-specific subsidies.

The point about the location of businesses and the cost of housing is an issue that comes up in other contexts as well. For example, the explosion of the financial sector in New York has sent rents through the roof there. This likely means that New Yorkers who do not derive their income directly or indirectly from the industry lose from its presence. (That would not be the case for property owners.)

It is worth noting that the piece reports Amazon says it contributed $40 million to support affordable housing in Seattle. If a new unit costs on average $200,000, this means Amazon's contribution was sufficient to build 200 units.

Add a comment

Erik Loomis had an NYT column arguing for a government jobs guarantee by telling readers:

"Employment numbers may look solid now, but economists, physicists and industrial engineers all say that automation will, in the not-so-distant future, drive higher unemployment."

This is not true. Productivity growth (a.k.a. "automation") has been very weak for the last decade, averaging just over 1.0 percent annually. Most projections assume that productivity growth will remain slow, implying a relatively limited amount of displacement. (The Congressional Budget Office assumes growth of less than 1.8 percent annually over the next decade.)

Furthermore, if productivity growth did accelerate, there is no reason to believe that it will lead to large-scale unemployment. Productivity growth averaged 3.0 percent annually from 1947 to 1973. This period was one of low unemployment and rapid wage growth.

This doesn't mean that Loomis is wrong to argue for a job guarantee, but the case should not rest on a massive surge in productivity growth leading to widespread unemployment. That is not a very plausible scenario.

Add a comment

There seems to be a big market for analysis that argues upward redistribution did not play a role in the switch of many voters from Democrats to Donald Trump in 2016. The NYT wrote up the latest effort in a major article headlined, "Trump voters driven by fear of losing status, not economic anxiety, study finds."

The study, by Diana C. Mutz, a professor of political science and communications at the University of Pennsylvania, focused on the change in people's economic circumstances between 2012, when Obama comfortably won the election, and 2016 when Trump carried several states that had gone Democratic in the prior election. Mutz found no link between a deterioration in people's economic circumstances and their switch to voting for Trump, arguing that this switch was instead driven by whites (mostly men) fearful about losing their status to blacks and immigrants.

It is worth noting that most analyses attributing this switch to economics look at a longer-term deterioration in economic well-being, not the change from 2012 to 2016. For example, a paper by David Autor, David Dorn, Gordon Hansen, and Kavah Majlesi found a strong link between the areas that lost jobs due to the explosion of imports from China in the period 2000 to 2008 and switching from voting Democratic to voting for Trump. If this explanation is correct, then the economic causation would be largely missed by Mutz's analysis.

Add a comment

A NYT article on Finland's plan to end its experiment with a basic income for its citizens, noted its attraction, including to some rich people in Silicon Valley:

"In much of the world, the concept of basic income retains appeal as a potential way to more justly spread the bounty of global capitalism while cushioning workers against the threat of robots and artificial intelligence taking their jobs."

There would be less need to be concerned about spreading the bounty if the government did not give out patent and copyright monopolies. These monopolies make robots and artificial intelligence expensive and allow people to collect billions of dollars in rents.

In the absence of these monopolies, the products of new technology would be cheap. We would all be able to get a robot for a few hundred dollars (the materials and energy required to assemble a robot would almost certainly not be expensive) that would mow our lawns, clean our houses, do our laundry, cook our dinner, and do all sorts of other things for us.

Robots can only make some of us poor and unemployed and others very rich because of a government policy that gives some people ownership of the technology. The inequality is the result of the policy, not the technology.

Add a comment

Those of us pushing the Federal Reserve Board to hold off on raising interest rates have pointed out that the members of the Fed's Open Market Committee, like other economists, have repeatedly over-estimated the non-accelerating inflation rate of unemployment (NAIRU), the unemployment rate at which inflation would start spiraling upward. In 2014, they had put it at 5.4 percent. Today the unemployment rate stands at 4.1 percent, with no evidence of acceleration in the inflation rate.

If the Fed's inflation hawks had their way, there would have been sharper increases in interest rates over the last four years. These would have slowed growth and prevented millions of workers from getting jobs and tens of millions from getting pay hikes. For this reason, we have argued for caution in raising rates until there is clear evidence that inflation is becoming a problem.

It turns out that the United States is not the only place where economists have trouble projecting floors to the unemployment rate. The figure below shows the IMF's projection of unemployment rates from April of 2014 for the calendar year 2018. It also shows the most recent measure from the OECD.

Book2 31124 image001

Source: IMF and OECD.

In the vast majority of cases, the most recent month's unemployment measure is well below the 2014 projection. For example, Belgium would have an unemployment rate of 8.3 percent in 2018. The most recent month's data put the unemployment rate at 5.2 percent. For Germany, the projection was 5.2 percent unemployment; the most recent number was 3.5 percent. For the UK it projected 5.7 percent; the most recent number is 4.2 percent.

In some cases, the gaps are dramatic. The IMF projected an unemployment rate for of 5.5 percent for the Czech Republic; the actual rate is 2.4 percent. For the Slovak Republic, the projection was 12.2 percent; the actual figure is 7.5 percent. In the case of Spain, the projection was 22.6 percent; the most recent figure is 16.1 percent. On the whole, the average projected rate was 8.0 percent, the average current rate is 6.6 percent.

There are six countries in which the actual rate is worse than the projected rate. The actual rate in Finland is 0.9 percentage points higher than the 2014 projection. The rate in Italy is 1.2 percentage points higher. But, Greece is the big winner in this category. Its 20.8 percent unemployment rate is 4.5 percentage points higher than the 16.5 percent rate projected four years ago.

The moral of this story is that economists have a very bad track record in projecting unemployment rates. If a central bank wants to raise interest rates to head off inflation, it would be well-advised to look at what is happening to prices rather than relying on projections of NAIRUs. (The 2014 projections can be seen as NAIRU projections since the IMF assumed that the cyclical component of unemployment would be largely gone by that point.)

Add a comment

The NYT had a very good article on the deterioration of the quality of public sector jobs over the last two decades. The piece notes the decline in pay and benefits for teachers, prison guards, and a wide variety of other public sector workers. As a result, many workers are leaving the public sector and vacancies are often left unfilled.

At one point the piece comments:

"Short of money, many states have also privatized services like managing public water systems, road repair, emergency services or prisons, transferring jobs from the public sector to private companies that have reduced salaries and benefits to increase their profits."

While saving money is usually given as a motive for privatization, it often does not result in savings. The politicians who push privatization often receive campaign contributions from the companies that stand to profit. In such cases, it is at least as likely that they are acting out of a desire to pay back political benefactors as a desire to save money.

Add a comment

The NYT ran a piece about a revised trade pact between the European Union and Mexico with the headline, "In a message to Trump, Europe and Mexico announce trade pact." The piece tells readers:

" sends a message to Mr. Trump that some of America’s closest trading partners are moving ahead with deals of their own — potentially leaving American exporters on the losing end in foreign markets."

This is not how this treaty would be viewed in standard economics. While some US exporters may lose markets in Mexico's relatively small market, as a result of better treatment for EU exporters, other exporters would gain markets due to expanded growth in both regions. In addition, the US should benefit insofar as increased trade between the EU and Mexico could lead to lower prices for items that we import from these countries.

This is how the same logic by which the United States gained from the formation of the European Common Market and later the EU. By making the region stronger economically, it became a more valuable trading partner. It is striking that the NYT apparently is so unfamiliar with basic economics.

It is also worth pointing out that the paper wrongly referred to the pact as a "free trade" agreement. Politicians like to call their deals "free trade" agreements because intellectual-types then think they have to support them. In reality, this pact includes the imposition of a number of regulatory measures that have nothing directly to do with free trade and enhanced patent, copyright, and related protections, which are explicitly protectionist.

The paper should not see it as its responsibility to help politicians promote their agenda by adopting their language. It would be more accurate and save space simply to refer to the pact as a "trade agreement."

Add a comment

The papers are full of pieces deploring the debt the US government is accumulating under the Trump administration. However, we can know that these people are not serious because they never take into account the implicit debt created by the granting of patent and copyright monopolies.

The story here is a simple one. The government grants these monopolies as a way of paying for research and creative work. What is at issue here is a simple logical point that cannot be disputed by honest people.

Suppose the government were to spend another $400 billion this year on biomedical and other research and creative work. This means that the deficit and debt would be $400 billion larger because it paid out more money to corporations and individuals for this work. That's very straightforward and all our deficit hawk friends are running around yelling and screaming over this additional debt burden.

Now suppose it grants patents and copyrights this year that will add an average of $50 billion a year over the next decade to the price of prescription drugs, software, and other protected items. Ignoring interest and discounting, how is that different from adding $500 billion to the debt?

In the case of the debt, we are obligating the government to make payments to the bondholders. In the case of patents and copyrights, we are requiring taxpayers to pay more money to drug companies and software makers. That is in effect a privately collected tax.

Perhaps people feel better about being taxed by Pfizer and Microsoft than by the government, but if we care about the impact on living standards as conventionally calculated, the two are the same. (To head off one excuse, no, the patent/copyright rents are not optional in any way, as taxes, in general, are not optional. After all, the government could have excise taxes on drugs and software. No one would say that changes the debt story at all.)

Anyhow, any deficit/debt monger who doesn't talk about the cost of patent and copyright monopolies is just being a political hack. They are not making serious economic arguments.

Add a comment

The Washington Post decided to give us "Finance 202" to tell us that tax cuts at this point in the business cycle are a bad idea. The gist of the argument is that the economy is approaching full employment, so there is little room left for further stimulus. The piece also tells us that because of increase indebtedness, the government will be less will positioned to provide stimulus to the economy in the next recession.

There are several points worth noting on this one. First, the Washington Post has no clue whether we are close to full employment right now. We know this because no one has a clue. The experts at places like the Congressional Budget Office (CBO) have been repeatedly proven wrong. Just four years ago, CBO put the non-accelerating rate of inflation rate of unemployment (NAIRU), the effective measure of full employment in conventional terms, at 5.4 percent.

The unemployment rate is now 4.1 percent with no evidence of rising inflation. As a result of the unemployment rate falling below CBO's estimate of the NAIRU, millions of more workers have jobs, with the main beneficiaries being blacks, Hispanics, and less-educated workers. The tighter labor market has also allowed tens of millions of workers to get pay increases.

Given this history (we can tell the same story about the late 1990s boom and the mis-measurement of the NAIRU), how does the Post know that the unemployment rate cannot get down to 3.5 percent or even 3.0 percent? If this is possible, and we pursue policies that prevent the unemployment rate from falling (e.g. higher interest rates from the Fed or fiscal tightening by Congress) we will needlessly be keeping millions of the most disadvantaged from getting jobs and pay increases. Instead of the government fighting poverty and inequality, it will be causing it.

It is also important to note that we have already paid an enormous price for having deficits that are too small. We have needlessly kept the unemployment rate higher than necessary, with a cost to our children of a permanently smaller economy, to the tune of $1 trillion to $2 trillion annually. For some reason, the deficit hawks are never forced to acknowledge the enormous damage they have inflicted on the country.

The argument that the government won't be able to have stimulus in the next recession because of the debt, ignores what is taking place in the world. Japan has a debt-to-GDP ratio of more than 200 percent, over twice the US ratio. Until recently, investors were paying the Japanese government to lend it money, as its long-term interest rate was negative in nominal terms. Japan's inflation rate has consistently been near zero, although it recently has been inching up to its 2.0 percent target. In other words, there is little economic reason to believe that the US will not be able to finance stimulus in the next recession.

The Post piece does point to the political obstacles to stimulus, noting that only two Republicans voted for the 2009 stimulus. But the Republican opposition had little to do with debt levels. The big problem was there was a Democrat in the White House, as many Republicans, including Senate Minority Leader Mitch McConnell said explicitly.

This is not an argument for giving more tax cuts to rich people. However, the objection is that the money could be better used, not that the deficit is too large. Although there is one possible benefit to giving still more money to the rich after the massive upward redistribution of the last four decades; maybe they will explode.

Add a comment

The NYT had yet another piece about the potential political fallout if China retaliates for Trump's tariffs by imposing tariffs of its own on US agricultural exports. It noted that farmers in some states could turn against the Republicans, highlighting the Senate race in North Dakota in today's paper.

It is striking that it seems no one is mentioning the benefit to US consumers from lower food prices that would be implied by lower farm prices. While the actual savings may not be very large, the higher prices that consumers would likely see as a result of Trump's tariffs on steel and aluminum also are not very large. Nonetheless, there have been many news articles on the costs of these tariffs, it is peculiar that the NYT and other papers have no interest in discussing the flip side of the coin when it might show a positive side to the tariffs.

As I have noted elsewhere, the actual impact on farm prices is likely exaggerated. If China reduces its purchases of a particular crop from the US, then it presumably increases purchases from another country. If this third country shifts its exports from somewhere else to China, then there is a market opening up to our farmers in somewhere else. The net effect is still likely to be negative for US farmers (the trade story in a world without tariffs is almost certainly more efficient than the world with tariffs), but it is just not true that if China doesn't buy the stuff, they have to throw it in the garbage.

None of this to say that I think Trump's tariffs are a good idea (I don't), it just would be best if we could try to keep the discussion of them serious.

Add a comment

Donald Trump was apparently angry about the value of the Russian ruble and the Chinese yuan against the dollar. He complained in a tweet that both are playing the "Currency Devaluation game" in a tweet yesterday.

Neil Irwin rightly points out that the complaint against Russia is bizarre, both because we don't have much trade with Russia, but also because the most obvious reason its currency is falling is sanctions pushed by the United States and other western countries. The story with China is a bit more complicated.

China's currency has actually been rising against the dollar over the last year, with the yuan going from 14.5 cents to 15.9 cents. So the claim that China is devaluing its currency is pretty obviously wrong.

There is, however, an issue of whether China is still deliberately depressing its currency against the dollar. As Irwin notes, China is no longer buying large amounts of dollars and other reserves, as it did in the last decade. This buying raised the value of the dollar and kept down the value of the yuan.

However, China still holds a massive stock of foreign reserves, with its central bank holding more than $3 trillion in reserves and its sovereign wealth fund holding another $1.5 trillion in foreign assets. These huge stocks of assets have the effect of holding down the value of the yuan in the same way that the Fed's holdings of assets keep down interest rates.

The vast majority of economists accept that the Fed's holdings of more than $4 trillion in assets have lowered long-term rates. It is inconsistent to argue that the Fed's holdings of assets keep interest rates down, but China's holdings of excessive amounts of foreign exchange don't have a comparable effect on the value of the yuan.

In short, Trump is clearly wrong in claiming that China is currently devaluing its currency. However, he does have a case that China is still keeping down the value of its currency. Interestingly, he never made this complaint in the context of his threatened tariffs. This is the sort of well-specified policy goal that might warrant the threat of tariffs.

Add a comment

The Associated Press had a fact check on Donald Trump's promise of a simplified tax form. The piece noted that the IRS has had a simplified "1040EZ" form for decades and it is not clear that the form will be any shorter or simpler with the new tax law. It did correctly point out that many fewer people will itemize their deductions, which will make filing simpler for them.

It would have been worth pointing out that the Trump administration could have made the filing process much simpler but chose not to. It could have had the IRS fill out people's tax forms for them. For the vast majority of people who take the standard deduction, the IRS already has the information necessary to determine their tax liability.

This means the IRS could fill out their forms and then send them to taxpayers for their review. If the person feels the IRS made a mistake, they correct the form with the necessary documentation. Otherwise, they accept the refund calculated by the IRS or pay the additional tax being assessed. This has been the practice in several European countries for decades.

The likely reason that Trump and the Republicans in Congress chose not to go this route is that it would wipe out H&R Block and other tax services and software companies who get tens of billions of dollars in revenue each year from people for doing their taxes. This seems the only plausible explanation since Trump and his team couldn't be that much more incompetent than the folks running tax agencies in other countries.  

Add a comment

One of the main reasons that I and others have given for leaning on the Fed to keep interest rates down is that low unemployment disproportionately benefits those at the bottom. While we can and should try to help the disadvantaged through increased education, training, child care and other programs necessary to give them a foothold in the labor market, the easiest thing is allow them to get jobs.

When the Fed raises rates it is deliberately slowing the economy and thereby reducing the number of jobs available. The people who are then denied jobs are disproportionately the most disadvantaged groups, such as blacks, Hispanics, and less educated workers. These workers are hurt not only because fewer have jobs, but also because the bargaining position of those employed weakens when there is higher unemployment. In this telling of the story, wage gains for those at the bottom should be strongest during periods of low unemployment, as we have been seeing in the last few years.

For this reason, the latest data on median wages for black workers is somewhat surprising. The Bureau of Labor Statistics Usual Weekly Earnings series showed real median weekly earnings for full-time black workers in the first quarter of 2018 were up just 0.6 percent from the first quarter of 2017. Furthermore, taking the last three years together, it showed real weekly earnings for blacks were up by a meager 1.1, trailing the 2.8 percent rise in real earnings for the median white worker. The racial gap seems to be increasing even in this period of relatively low unemployment.

Add a comment

Yes, we know how hard it is for rich people like Jeff Bezos to get by in a free market. That is why George Will argues that taxpayers must subsidize Internet sellers by exempting them from having to collect sales taxes on out of state sales.

While Will argues that the market should decide which retailers win or lose, in fact, he is pushing a position that is 180 degrees opposite the free market one he claims. He is arguing that the state should require brick and mortar stores to collect taxes, but allow Internet sellers to avoid taxes — apparently, because George Will likes Internet sellers. So family-owned book and clothing stores have to collect taxes, but Internet retailers that could be one thousand times their size, do not.

Will seems to think that the prospect of collecting taxes that differ across 12,000 state and local jurisdictions pose an insurmountable problem. Actually, since we have had spreadsheets for four decades, most sellers should be able to easily deal with this issue, and if they can't, they probably should not be in business. (As a practical matter, no one gives a damn if a seller occasionally makes a mistake in assessing taxes.  Getting 99-plus percent right should be easily doable.)

Will also wrongly claims that Amazon collects sales taxes in all 45 states which have them. While Amazon collects taxes on its direct sales, it does not collect taxes on the sales of its "affiliates," which account for more than 40 percent of its total sales.

As is noted in this piece, Amazon's founder Jeff Bezos owns the Washington Post. It would be interesting to see if a similarly misleading statement that reflected badly on Amazon would be allowed to stand uncorrected in the paper.

Add a comment

Dalton Cooney argues in a Washington Post column that capping the deduction for state and local income taxes (SALT) is a good thing in a Washington Post column today. He makes the valid point that if wealthy suburbs want to tax themselves to have better schools than lower income inner city areas, there is no reason the federal government should subsidize this decision with a deduction on federal income taxes.

However, this misses the fact that the tax that is most likely to be affected by the loss of deductibility is the state income tax. In more liberal states like New York and California, this tax runs to more than 8 percent for high-end earners. (California has a top bracket of 13.3 percent.) These taxes are not paying for better schools for the children of the wealthy, but for redistributive policies that benefit lower-income people.

With the near-term prospect for federal measures in areas like extending health care coverage, quality child care, or free college very poor, if such measures are to advance anywhere it will be at the state level. By capping the deduction for SALT, the new tax bill will make it more difficult politically to pay for such initiatives. For this reason, the workarounds recently passed by New York, including replacing a portion of the income tax with a full deductible employer-side payroll tax, are a good thing.

Add a comment

There has been an ongoing battle in major media outlets against public sector pensions. Papers like The New York Times and The Washington Post have regularly featured pieces telling readers that these pensions are unaffordable.

This crusade, carried on mostly in the news pages, has often taken bizarre twists. Back in 2011 the Washington Post had a front page article complaining about generous pensions that highlighted the story of former employer who was getting a pension of $520,000 a year. People who read through the article discovered that this former employee was a former administrator who was under indictment for fraud at the time, not the typical California employee.

In this vein, The New York Times had a piece on pensions in Oregon that highlighted the pension of an eye surgeon who had formerly been employed by the government who receives a pension of $76,000 a month. It then goes on to discuss the $46,000 a month pension of a former University of Oregon football coach.

While these pensions do sound exorbitant, there are two important points to keep in mind. First, pensions are part of worker's pay, just like their health care insurance and the money they get in their paycheck every month. The second is that these pensions are far from typical for either Oregon or public sector employees in general.

Add a comment

We get that the Washington Post likes policies that redistribute income upward, but they should be able to argue the case for making the rich richer without turning logic on its head. Apparently, the paper lacks confidence in its position.

This piece also tells readers about a new initiative to promote women's businesses in Latin America:

"Among the members of the US delegation was Trump’s daughter and adviser, Ivanka, who on Friday morning announced a new $150 million US initiative to help women in Latin America access credit for businesses."

It would be useful if the piece explained something about this initiative. For example, is this $150 million (0.004 percent of annual federal spending) a grant that will have to be appropriated by Congress? Is it a loan fund, which would also require legislation? Is it a commitment from the Trump Foundation?

If the paper was not prepared to provide any information about this initiative, it should have explained why.

Add a comment