Beat the Press is Dean Baker's commentary on economic reporting. Dean Baker is co-director of the Center for Economic and Policy Research (CEPR).

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Morning Edition host Rachel Martin introduced an interview with Tom Nickels, spokesperson for the American Hospital Association by referring to Republican efforts to "fix" the nation's health care system. This implies that the Republicans are trying to make the system better. This is certainly not obvious since all of their proposals are likely to take away insurance from tens of millions of people.

It shouldn't be too hard to use neutral terms, like "change" or simply refer to efforts to repeal the Affordable Care Act. There is no reason for NPR to attribute good motives to the Republicans, especially when there is zero evidence to support this view of their actions.

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At a speech in Youngstown Ohio last night, Donald Trump talked about the loss of manufacturing jobs in the state and told his audience:

"They’re all coming back. They’re all coming back. They’re coming back. Don’t move. Don’t sell your house."

Actually, they were coming back (at least some of them) before President Trump took office, but the state is again losing manufacturing jobs.

Manufacturing Employment in Ohio

OH Man

Source: Bureau of Labor Statistics.

Employment in manufacturing in Ohio had increased by 4,700 in the year from January 2016 to January 2017. In the five months since January 2017, it has fallen by 5,400. If this rate of job loss continues, Ohio will lose almost 70,000 jobs manufacturing jobs, more than 10 percent of employment in the sector, over a two-term Trump administration.

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Neil Irwin had an interesting Upshot piece highlighting a new paper by J.W. Mason arguing that slow productivity growth is in large part due to slow GDP growth. The basic argument is that if growth were faster, labor markets would be tighter, and companies would have more reason to invest in labor saving equipment.

While this argument strikes me as undoubtedly true, there is another aspect to productivity growth that is often missed. One thing that is even easier than replacing workers with equipment is simply not replacing workers. In other words, most employers can run stores, restaurants, or other businesses with fewer workers. The cost of this is likely to mean that customers have to wait longer to be served.

This could mean, for example, that when you get to the checkout counter at a supermarket you have to wait ten or fifteen minutes in line rather than having someone immediately available immediately to serve you. The same would apply to lines at fast food restaurants or the pace of service at a sit-down restaurant. Instead of having workers available for customers at all times (which means they do nothing, some of the time), employers will make customers wait.

This would show up as an increase in productivity as conventionally measured. Output would be unchanged, but fewer workers are employed than in the good service scenario. In principle, if we have perfect productivity data, this would not be the case, since the longer wait times should be reported as a deterioration in quality and therefore a price increase, which would mean lower output. But we don't have perfect data, so in our productivity numbers, longer wait times mean higher productivity (and vice versa). 

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Binyamin Appelbaum had an interesting discussion of inflation in the NYT yesterday. As he notes, it has been below the Fed's target throughout the recovery and, contrary to expectations, it has been falling in recent months. This suggests that the economy could be operating at a higher level of output with more employment. That would put more upward pressure on wages and lead to somewhat higher inflation. That suggests that the Fed may have been wrong in its recent interest rates hikes which were intended to slow growth.

There are a few other points worth noting about inflation while we are on the topic. While it is common to say that inflation hurts investment, at least in the U.S. this does not appear to have been the case.



As can be seen the investment share of GDP peaked in the late 1970s and early 1980s when inflation was also running at its most rapid pace in the post-World War II era. Investment has been considerably lower as a share of GDP in the last three decades of moderate inflation. The one exception when investment got close to its peak of the high inflation era was at the end of the 1990s during the stock bubble.

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You know the person who commits murder and the dead person really are both victims in Robert Samuelson land. His latest column on health care shows his great expertise in obscuring everything he touches to say it's all just so complicated.

He tells readers:

"Still, there’s no moral high ground. Some Democrats have wrongly accused Obamacare opponents of murder. This is over-the-top rhetoric that discourages honest debate. It’s also inconsistent with research. Kaiser reviewed 108 studies of the ACA’s impact and found that, though beneficiaries used more health care, the 'effects on health outcomes' are unclear."

Yes, Kaiser was being very careful in its comments. The Affordable Care Act has been in effect for three and a half years. There is a lag between research and publication, that means that at this point in time we still have limited solid measurements of outcome measures. We do have data on diagnoses and treatment.

The study reports:

So we have evidence now that people with conditions like heart disease and cancer are being diagnosed earlier and getting treatment. We are not going to have good data on mortality rates at this point since the vast majority of people with heart disease and cancer do not die immediately from these conditions. But, if we make the huge leap that treatment might affect survival, then we can infer that the ACA is keeping people from dying.

But hey, we want to be cautious, unlike those irresponsible Democrats who are accusing the Republicans of murder. After all, it is possible that all the money we spend on treating heart disease and cancer is totally worthless.

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The Washington Post has devoted enormous resources to trying to convince its readers that the federal government's disability programs are in crisis. And it has no qualms about misrepresenting the data to make its case.

Today we got a great example in a question and answer session in reference to its latest major feature piece. In answer to the question, "what's the problem?" it tells readers:

"The program for disabled workers, which Congress had to rescue from insolvency in 2015, is estimated to go broke again sometime over the next decade or so. The government this year is expected to spend $192 billion on disability payments — more than the combined total that will be spent on welfare, unemployment benefits, housing subsidies and food stamps."

The assertion that the program will go broke is extremely misleading. Even if Congress never did anything it could still pay will over 90 percent of projected benefits for more than two decades into the future and even at the end of the 75-year planning period, it is still projected to be able to pay over 80 percent of scheduled benefits.

This is an important point since many politicians have advocated cutting benefits to keep the program fully funded. If the point is to ensure to prevent benefits from being cut due to a shortfall, cutting benefits to make up the gap doesn't help.

It is also worth noting that the $192 billion figure includes the Supplemental Security Income (SSI) program which is funded out of general revenue, not a payroll tax. While it can make sense to combine the programs as disability programs, in doing so it would be worth noting the third program in this category, workers' compensation. Most states have substantially reduced the generosity of their Workers Compensation programs over the last three decades. As a result, the total amount spent on disability as a share of GDP has not increased by very much over this period.

The comparison to "welfare, unemployment benefits, housing subsidies and food stamps" is also misleading, since we actually spend very little on these programs even though the public perception is that they comprise a large share of the budget. The Post presumably knows the public hugely overestimates the share of the budget spent on these programs so why would it use them as a base of comparison, unless the point is to create the impression that these disability programs are a very big share of the budget.

It actually would not be hard to convey the spending in a way that would be meaningful to most readers. It is equal to roughly 1.0 percent of GDP. It is a bit less than 5.0 percent of total federal spending. Alternatively, it is a bit more than 30 percent of projected military spending for 2017.

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Thomas Heath used his column to give readers some incredibly bad investment advice. The piece titled, "a first lesson on the stock market: don't run from a good sale," told readers that the recent dip in the market makes this a good time to buy stock. This makes no sense.

Whether or not it is a good time to buy stocks depends on the price of stock relative to the fundamentals of the market. This means current price-to-earnings ratios and the prospect for future earnings growth. Current price-to-earnings ratios, at well over 20 to 1 by most measures, are high by historical standards. Most economists are not projecting especially good profit growth in the years ahead, but a big tax cut may allow shareholders to keep a larger portion of their gains, which would make stock more valuable.

But the point is not whether it is a good or bad time to buy stock, the point is the fact that stock prices have fallen really doesn't tell you anything. In March of 2000, the Nasdaq peaked at just over 5000. It fell back from this peak, so that a month or so out it was at 4,000. By Heath's investment advice, everyone should have taken advantage of this big sale. After all, prices were down 20 percent from their peak.

If you followed the Heath investment strategy you would have lost more than two thirds of your money as the Nasdaq eventually bottomed out at just over 1200 in the fall of 2002. While the Nasdaq did eventually come back and is now near 6,400, this would not have provided much of a return if you bought in at 4,000. Adjusted for inflation, this would give a real return of just over 11.0 percent over a seventeen year period. Dividends would add to this modestly, but since most Nasdaq stocks pay little or no dividend, the return would still be extraordinarily low over this period.

The moral of this story is that if the price of an over-valued asset falls, it is less over-valued, but a drop in price does not mean that the asset is under-valued. An investment advice column should show a little clearer thinking on this issue.

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I know we all share that fear every time we are in a huge traffic jam or face a forever long line at the grocery store. This fear appears at the end of an Arthur Brooks column berating a country that just elected Donald Trump for being unwilling to take risks. (Okay, it was a foolish risk, but you can't argue it wasn't a risk.)

Brooks tells us that the reluctance to take risks:

"Family formation, perhaps the ultimate personal leap of faith, looks to be another victim of this imprudent hesitation. Census Bureau demographers recently reported that while only a quarter of 24- to 29-year-olds were unmarried in the 1980s, almost half of that age group is unmarried today. And delaying the jump to adulthood has real social consequences. Last August, the Centers for Disease Control announced that the United States fertility rate had fallen to its lowest point since they began calculating it in 1909."

I don't see the problem here. Certainly, it is important that people feel they have sufficient security and support to have children if they want them. This means secure incomes, access to health care, and access to child care so that parents of young children have the ability to work. But if large numbers of young people still choose not to have kids, so what? Brooks may be worried about running out of people, but fans of arithmetic don't share this concern.

It's striking that just last month the New York Times ran a column warning that we were going to be running out of jobs because robots were taking all of them. It speaks to the unbelievably bad state of economics that the country's leading newspaper somehow thinks that the arguments that we are running out of people and that we are running out of jobs are both plausible. This would be comparable to a situation in the medical profession in which, depending on the doctor we see, we will find out that we are 50 pounds overweight and desperately need to go on a diet or 50 pounds underweight and need to start eating more.

If the medical profession routinely produced such diametrically opposed diagnoses most people would probably stop seeing doctors and save their money for something more useful. Unfortunately, we seem destined to waste an ever large share of our money paying the salaries of economists.

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Everyone who has been through an intro econ class knows how bad a 20 percent tariff on steel or clothes is. So naturally, all economists are outraged by patent monopolies for prescription drugs, which are the equivalent of tariffs of thousands of percent. Okay, that's not true; economists seem to only get upset about the tariffs on steel and clothes.

Nonetheless, the textbooks are right: patent monopolies lead to massive corruption. The NYT has a good piece on their increased lobbying efforts in the era of Trump. 

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The Washington Post has been running a multi-part series on the country's disability programs. The premise, as stated in the most recent installment, is that we are seeing:

"...decades-long surge in the nation’s disability rolls."

The formula then involves profiling one or more families who depend on disability payments from the government instead of work for their primary source of income. Usually, the profiles show family members to be reluctant to work and to have drug problems and other unhealthy habits.

While this situation undoubtedly describes a substantial number of people in the United States, the idea that the number of people getting disability payments is exploding is a Washington Post invention, not a fact in the real world. The graph below shows disability payments as a share of GDP from 1980 to 2013.

Book4 18176 image001

Source: OECD.

While the share of GDP going to disability payments did rise over this 33 year period, the increase was just over 0.3 percentage points, a rise of 30 percent. Furthermore, Social Security disability payments, the largest component of this spending, has fallen by 0.07 percentage points of GDP over the years from 2013 to 2016, leaving an increase of less than 25 percent measured as a share of GDP over 46 years. (The Social Security Trustees project payments as a share of GDP will fall somewhat more this year.)

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Catherine Rampell has a nice column pointing out how Republican efforts to block suits against companies that abuse their customers effectively deny customers the opportunity to use the legal system when they are wronged. The argument is well-taken but it doesn't go far enough. Donald Trump and the Republicans are also encouraging waste that will be a drag on economic growth,

The point here is simple, although it always gets lost in the discussion. Good economists assume that people are motivated by money. If you're a reasonably competent lawyer you can write contracts in ways that the typical consumer will either not understand or not take the time to read. If you put in wording in these contracts that screws the consumer, then you make a lot of money for your employer which they will be happy to share with you.

The implication, for people who believe in free markets and economic incentives, is that if we allow people to make money by writing deceptive contracts that screw people, then they will write deceptive contracts that screw people. This means that instead of doing something productive for the economy, we will have many highly educated people devoted their skills to an activity with zero economic value. In fact, their work actually has negative economic value, since consumers will know they have to spend time scrutinizing contracts if they don't want to be screwed.

So the opponents of the Consumer Financial Protection Bureau and related measures to protect consumers are not just arguing for another way to redistribute upward, they are arguing for a policy that increases waste and slows economic growth. But hey, no one ever said that we couldn't get greater inequality without having to sacrifice economic growth.

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Most economists would probably agree that a tax reform that cleaned up loopholes could provide a boost to growth. Most would probably also agree that the 1986 tax reform was more good than bad in this respect. (Lowering the top individual tax rate to 28 percent would fall in the "bad" category for many of us.) But it is unlikely that many would endorse the claim in James B. Stewart's column that after the tax reform:

"The economy (and the stock market) soared."

This one is clearly wrong. Growth in the five years following the passage of the tax cut was considerably worse than in the ten years preceding it or the next ten years as shown below.

Book2 2174 image001

Source: Bureau of Economic Analysis.

Growth in the five years following the tax reform averaged just 2.6 percent. That compares to 3.5 percent in the five years preceding the reform and 3.4 percent in the subsequent five years. It accelerated to 3.7 percent in the next five year period. I suppose some folks may want to claim the late 1990s boom was due to the 1986 tax reform, but the price of that sort of delayed effect means that the Johnson-Nixon administrations deserve credit for the 1980s growth and the current weak growth should be laid at the doorstep of George W. Bush.

There are of course complicating factors and the tax reform could have been a boost to growth that was offset by other factors, but the simple claim that we cut taxes and the economy boomed is clearly not true.

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It would have been useful if the NYT had clarified the strategy being proposed by President Trump and Republicans in this piece headlined "'let Obamacare fail,' Trump says as G.O.P. health bill collapses." There is no reason to think that Obamacare as written into law with the Affordable Care Act would fail. The exchanges are actually working pretty well in the states with Democratic governors committed to making the law work. The problem of insurers dropping out of the exchanges leaving no competition is overwhelmingly a red state problem where Republican politicians have sought to sabotage the program.

It is also worth noting that often repeated claim that the system is suffering badly from a lack of young healthy people signing up, as implied by this Washington Post editorial, is badly confused. The number of uninsured has actually fallen by more than the Congressional Budget Office projected, so there is no story of a massive problem of people not signing up for insurance. There is a problem that more people are still on employer provided insurance and not in the exchanges. Since these people are relatively healthy (they are mostly working full time and many are older, meaning they would pay higher premiums), their loss to the exchanges may be an issue.

However, the arithmetic shows that more young healthy people signing up could not make that much difference to the program. Suppose another 2 million overwhelmingly healthy people signed up for the exchanges. This would be a massive increase, since there are probably not much more than 2 million young healthy people who are not currently insured. (They have to also be citizens or legal residents to qualify.) The average premium for a bronze plan (presumably what healthy people who don't really want insurance would buy) is $2,700 a year. If we assume that insurers would pocket half of this money as profit, that comes to a net gain to insurers of $2.7 billion a year.

We are supposed to believe this is what determines whether Obamacare sinks or floats?

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A news analysis in the NYT by Jennifer Steinhauer argued that Republicans were rediscovering an old truth in their effort to repeal the Affordable Care Act, that it is hard to take away benefits that the government has given. While the point is surely right, the piece left out an important point, the Republican effort was based on a lie.

Republicans, and especially President Trump, rallied public support for repeal of the Affordable Care Act (ACA) based on the complaint that it wasn't generous enough. They argued that the premiums and deductibles were too high, their plan would give people better insurance.

This was a complete lie, but many people who had legitimate complaints about ACA likely backed Trump and other Republicans with the expectation that they would give them better insurance. Since this is clearly the opposite of what repeal is about, it makes it especially difficult for the Republicans to tell the people who voted for them expecting better insurance that they will have to pay much more money for worse insurance.

This is the situation the Republicans now find themselves in. Essentially, they have to own up to the fact that they have been lying for seven years about the central item on their political agenda.

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The "Democracy Dies in Darkness" folks at the Washington Post somehow feel they have an obligation to print lies from the White House on their opinion page. How else can one explain the decision to run a column from Marc Short and Brian Blase that calls the Congressional Budget Office's (CBO) estimates of the impact of the Republican health care plans "fake news." (The authors are respectively, assistant to the president for White House legislative affairs and special assistant to the president for the National Economic Council.)

The column is chock full of lies. (Sorry, with this crew there is no point in trying to be polite. They are liars, let's not pretend anything else.) It starts by trying to generically discredit CBO's analysis of health care plans.

"When Obamacare passed in 2010, the CBO projected a healthy individual market with 23 million people enrolled in exchange plans by this year. The CBO predicted that by 2017, exchange plans would be profitable and annual premium increases low."


"But this never happened. Today, there are only 10 million people enrolled in exchange plans — about 60 percent fewer than expected. (Contrary to some claims, this is not because more people have maintained employer plans than the CBO expected; the reduction in employer coverage has been greater than the CBO projected, and overall about 9 million more people are uninsured now than projected.) Absent the projected bounty of young, healthy consumers, health insurers are abandoning the exchanges, leaving a third of American counties with only one insurer to choose from. As insurers continue to flee the exchanges, consumers will face even fewer options next year."

CBO was not overly optimistic about Obamacare, it was actually overly pessimistic. As I wrote a couple of months back:

"Actually, CBO was overly pessimistic about Obamacare. If we look to CBO's last report on the Affordable Care Act, before the exchanges began operation in 2014, it projected that there would be 29 million people uninsured as of 2017 (Table 3). In its most recent analysis, it puts the number of uninsured in 2017 at 26 million (Table 4). In other words, the number of people who are uninsured under the ACA is 3 million fewer than CBO had predicted back in 2012.

"In what world is overestimating the number of uninsured 'overly optimistic?' It is true that fewer people are in the exchanges than CBO expected. This is due to the fact that more people have qualified for Medicaid and also more people are receiving employer-provided insurance, as fewer companies than expected dropped coverage."

The premiums have risen more in the last few years than projected because they were originally lower than projected. Premiums for 2017 are pretty much right where CBO had projected. And in states run by Democratic governors who are trying to make the Affordable Care Act work, the exchanges are doing just fine.

In short CBO gets an A- for its record on forecasting Obamacare, the White House crew gets a big fat "L" for lying.

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The NYT shows us that the skills shortage is real in an interview with Sarah M. Smith, the owner of a roofing company in Nebraska. In the interview, Ms. Smith explains why she needs foreign workers, on H2-B visas, since she is unable to get native born workers or greencard holders for the $17 an hour she is offering.

Ms. Smith explains:

"We have offered the $17-an-hour wage because it is the prevailing wage determination for this type of work, according to the United States Department of Labor. We do offer incentives and bonuses above that. And just to note, Nebraska’s minimum wage is $9 an hour."

She is then asked why, if she can't find enough workers, she doesn't offer a higher wage. Ms. Smith responds:

"In response to the article, I got an email that said if we were to offer $35 an hour with health care benefits, we would definitely get people to apply; it said people who were highly qualified applicants with years of experience would probably line up at our door.

"My response is: We would love to be able to offer $35 an hour as starting pay, but are you in turn willing to pay premium prices for your next roof replacement? A lot of customers we get through online lead services like Thumbtack are people looking for the best deal. They want to collect proposals from four to five businesses and most of the time choose the cheapest one.

"We want to compensate our employees fairly for the work they do and the risk they take, but we wouldn’t be able to stay in business if we doubled the hourly rate. It’s not just their hourly wage that becomes a factor. Insurance in the roofing industry is extremely expensive. Not only are we required to carry expensive general liability insurance, we also have to have workers’ compensation insurance for employees on the roof. That comes to 40 percent of their wage. And on top of that, there’s payroll tax.

"We also do a lot of insurance restoration work like hail damage claims, and in those cases the insurance provider determines what they pay for labor and we work with it. If we come back saying it’s going to cost us way more on labor to do the job, the homeowner isn’t likely to want to cover the extra cost, especially not above their out-of-pocket deductible."

Okay, let's for the moment ignore the idea that Ms. Smith would pay $35 an hour as starting pay. Let's imagine that she offered $20 an hour, roughly an 18 percent increase over her current pay and presumably substantially more than her competitors.

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Office of Management and Budget Director Mick Mulvaney had a Wall Street Journal column highlighting the benefits of "MAGAnomics." The piece can best be described as a combination of Groundhog Day and outright lies.

In terms of Groundhog Day, we have actually tried MAGAnomics twice before and it didn't work. We had huge cuts in taxes and regulation under both President Reagan and George W. Bush. In neither case, was there any huge uptick in growth and investment. In fact, the Bush years were striking for the weak growth in the economy and especially the labor market. We saw what was at the time the longest period without net job growth since the Great Depression. And of course, his policy of giving finance free rein gave us the housing bubble and the Great Recession.

The story of the 1980s was somewhat better but hardly follows the MAGAnomics script. The economy did bounce back in 1983, following a steep recession in 1981–1982. That is generally what economies do following steep recessions that were not caused by collapsed asset bubbles. Furthermore, the bounceback was based on increased consumption, not investment as the MAGAnomics folks claim. In fact, investment in the late 1980s fell to extraordinarily low levels. It is also worth pointing out that following both tax cuts, the deficit exploded, just as conventional economics predicts.

By contrast, Clinton raised taxes in 1993 and the economy subsequently soared. It would be silly to attribute the strong growth of the 1990s to the Clinton tax increase; other factors like an IT driven productivity boom and the stock bubble were the key factors, but obviously, the tax increase did not prevent strong growth.

The outright lies part stem from the comparison to prior periods' growth rates. Mulvaney notes that the 2.0 percent growth rate projected for the next decade is markedly lower than the 3.5 percent rate that we had seen for most of the post-World War II era.This comparison doesn't make sense.

We are now seeing very slow labor force growth due to the retirement of the baby boom cohort and the fact that the secular rise in the female labor force participation rate is largely at an end. MAGAnomics can do nothing about either of these facts. Slower labor force growth translates into slower overall growth.

Mulvaney also complains about government benefits keeping people from working. The idea that large numbers of people aren't working because of the generosity of welfare benefits shows a startling degree of ignorance. The United States has the least generous welfare state of any wealthy country, yet we also have among the lowest labor force participation rates. The idea that we will get any substantial boost to the labor force from gutting benefits further is absurd on its face.

Mulvaney apparently missed the fact that energy prices have plummeted in the last three years. Oil had been over $100 a barrel, today it is less than $50. While it is always possible that it could fall still further, any boost to the economy from further declines will be trivial compared to what we have seen already. It would be amazing if Mulvaney was ignorant of the recent path in energy prices.

In short, there is nothing here at all. Mulvaney has given us absolutely zero reason that Trump's policies will lead to anything other than larger deficits, fewer people with health care, more dangerous workplaces, and a dirtier environment.

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Several news outlets have reported that the Congressional Budget Office (CBO) does not accept the Trump administration's claims that its program will lead to a big surge in growth. It is worth mentioning in reference to this dispute that the "robots will take all the jobs" gang agrees with Trump in this dispute. Many people in the debate are probably not aware of this fact because it requires an understanding of third-grade arithmetic.

Economic growth is the sum of labor force growth and productivity growth. There is not too much dispute about the rate of growth of the labor force over the next decade, since it is mostly due to population growth. Apart from large changes in immigration policy, we can't do much about the number of working-age people who will be in the U.S. over the next decade.

The main question in projecting economic growth is therefore the rate of productivity growth. CBO essentially projects that the slowdown of the last decade will persist, with productivity growth averaging roughly 1.5 percent annually. The Trump crew is betting on a more rapid pace of productivity growth, as are the robots will take all the jobs gang. After all, robots taking the jobs of workers is pretty much the definition of productivity growth.

So, there are many reasons for mocking Trump and his administration, but if any of the robots will take the jobs gang mock the Trump growth projections, they are showing their ignorance. They agree with Trump's projections of more rapid growth, they are just too confused about the arithmetic and economics to know it.

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I have often joked how when we have a political debate after we watch the candidates stake out various claims and positions, we then see reporters talk about their body language. They tell us who looked confident and sincere and who seemed cautious or in other ways unsteady.

This is infuriating because this is exactly the area in which reporters have no comparative advantage over the people viewing the debate. We all engage in conversations and negotiations with people in our everyday life. Most of us are used to assessing the sincerity and integrity of the people we deal with. When we are watching politicians put forward their case on television we can all judge their sincerity and confidence. There is no particular reason to believe that the reporters giving their commentary can do a better job at this than the rest of the people watching the debate.

On the other hand, the reporters could, in principle, know more about the truth of the politicians' claims. They could know about the background to their policy proposals, where they have been tried, and the issues that have been raised by various experts. Reporters almost invariably fail to provide this sort of analysis, which would be a useful service to their audience.

Anyhow, we got a full and explicit example of the body language treatment this morning on National Public Radio. Their discussion of the meeting between French President Emmanuel Macron and Donald Trump explicitly focused on the body language between the two leaders and assured us that they have struck up a genuine friendship.

I didn't have a chance to see the events on television, but let me record my skepticism here. At least we now know for sure the skills required of NPR reporters.  

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Senator Toomey is apparently too young to remember the financial crisis that resulted from the collapse of the housing bubble. He told the Washington Post that he thinks Medicare cost increases will lead to a financial crisis:

"'It’s a guaranteed financial crisis if we don’t do something about our entitlement programs,' said Sen. Patrick J. Toomey (R-Pa.), who has pushed for indexing Medicaid to a lower inflation rate. 'It’s not a question of whether that happens, it’s just a question of when, and how devastating, that is.'"

While it is possible to see how higher Medicare costs would lead to larger budget deficits, if Toomey and his Republican colleagues decide never to raise taxes or cut other spending, there is no obvious way that this leads to a financial crisis. The last crisis came about because a housing bubble was fueled by loans. When housing prices collapsed, trillions of dollars in loans went bad. While this is a fairly straightforward story, it is very difficult to see how rising Medicare costs are more likely to lead to a financial crisis than a Superbowl victory by the Cleveland Browns.

It might have been helpful to point out to readers that the Senator doesn't appear to know what he is talking about.

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Aaron Carroll had an interesting Upshot piece comparing the merits of Medicaid and private insurance. It focuses on the fact that Medicaid is largely free for beneficiaries, while private insurance typically has substantial co-pays and deductibles. The piece points out that these fees can provide a substantial disincentive for getting health care, especially for lower income people.

While this might be a good way to save the system money if it discourages unnecessary care, which was a major reason the Affordable Care Act encouraged such fees, research shows that people also put off necessary care as a result of such fees. As a result, private insurance may end up leading to worse health outcomes than Medicaid for many low- and moderate-income people.

While this discussion is useful, there is another aspect to the fees that it ignores. Insurers often make mistakes which require patients to spend many extra hours pursuing claims. In many cases, they may not be compensated for care which should be covered if they don't spend the necessary time. Even if they do get compensated, this is a needless waste of people's time which is not factored into standard analysis on health care costs.

While it is always dangerous to generalize from very personal experiences, my guess is that my wife and I had to follow up in some manner on at least 20 percent of our claims. In some cases, this could be a single phone call, in other cases it could mean extensive back and forth between the provider and insurer, requiring multiple documents and authorizations. It is hard to believe that our experience is all that atypical or that we are especially bad at filling out forms. (My wife is also an economist who is pretty good at dealing with forms and numbers.)

Anyhow, this is an aspect of co-pays and deductibles that can be especially annoying to patients. Remember, people are most likely to be dealing with large numbers of claims when they are suffering from a health problem. This is not the best time to add another problem to their life.

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