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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The NYT wants us to mourn the plight of business people in Denmark. As the headline tells readers, "Danish companies seek to hire, but everyone is working." The article then gives the assessment of several business owners and managers, as well as the director of labor market policy at the Confederation of Danish Industry, that the country simply doesn't have enough workers.

They all explain that they can't find workers with the skills they need and that this is causing them to lose business, thereby curtailing growth. It even tells us why raising wages won't work, recounting the experience of Peter Enevoldsen, a manager at a company that make precision tractor parts:

"He offered a salary bump of more than 2 percent, but raising wages further would crimp his margins."

Actually, this is the way an economy is supposed to work. If Mr. Enevoldsen can't pay the market wage and still get business, then he should not get that business. Firms that can pay the market wage and still make a profit obviously can use the labor more productively.

This is why most of the U.S. workforce is not still employed in agriculture. Workers had the opportunity to get better paying jobs in manufacturing. If farmers could not pay a comparable wage, then they lost workers and might have to shut down. This is the same sort of story that some Danish firms apparently now face. This is hardly a crisis, it is capitalism.

It also is of little significance that a limited supply of labor might limit growth. There is little reason for people to be concerned about aggregate growth, what they care about is improvements in their standard of living and for most people this will happen more quickly in a tight labor market.

The piece also includes the information that the current 4.3 percent unemployment rate "is about as low as it can go without provoking inflation." It doesn't tell readers where it got this information. It is worth noting that estimates of the non-accelerating inflation rate of unemployment (NAIRU) are hugely unreliable, so there is little reason to assume the source for this number is correct.

The piece also invents some new history to back up this story.

"During an economic boom a decade ago, joblessness fell as low as 2.4 percent, igniting an unsustainable spiral of higher wages and prices that the government desperately wants to avoid today."

According to data from the International Monetary Fund, the inflation rate never got above 2.5 percent in the last decade. It seems a bit hard to describe this as an "unsustainable spiral of higher wages and prices."

I suppose this piece is at least better than some of the NYT's past coverage of Denmark. A few years ago it was warning that no one was working in Denmark because of its overly generous welfare state. An earlier piece warned that Denmark could slip into a Greece-like crisis. So, at least seems to be looking up a bit for the country.

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The Washington Post left a very important fact out of an article on Republican efforts to ban voluntary state sponsored retirement plans. The Republicans are trying to make such plans impractical by reversing a Labor Department ruling that exempted employers with workers contributing to the plans from being subject to ERISA provisions. The basis for the Labor Department ruling is that the employers are simply mailing in a check on a worker's behalf, not running a plan.

The Republicans in Congress who want to insist that ERISA rules apply to employers, making it a substantial burden on them, say that they are doing it to protect workers' savings. These are the same people who are trying to reverse the Fiduciary Rule, which requires investment advisers act in the best interest of their clients, and to gut the Consumer Financial Protection Bureau.

Anyhow, the Post neglected to mention the difference in fees between 401(k)s and the state-sponsored plans. The average fee on 401(k) is around 1.0 percent of the money in a worker's account. Many plans charge more than 1.5 percent. By contrast, state sponsored plans are likely to have fees in the range of 0.2–0.3 percent.

The difference can easily come to $30,000 over the course of a middle-income worker's career. This is money that is being transferred from workers to the financial industry. Most people would likely consider this a substantial sum of money. It should have been noted in this piece.

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Apparently the paper is confused on this issue since it headlined a front page piece on the budget, "Trump budget sets up clash over ideology within G.O.P." The article lays out this case in the fourth paragraph:

"He [Trump] also set up a battle for control of Republican Party ideology with House Speaker Paul D. Ryan, who for years has staked his policy-making reputation on the argument that taming the budget deficit without tax increases would require that Congress change, and cut, the programs that swallow the bulk of the government’s spending — Social Security, Medicare and Medicaid."

Most of us recognize Donald Trump and Paul Ryan as politicians who hold their jobs as a result of being able to gain the support of important interest groups. It really doesn't make much difference what their political philosophy is. Contrary to what the NYT might lead us to believe, this is not a battle of political philosophy, it is a battle over money.

On this score, the NYT also gets matters seriously confused. First of all, it is wrong to describe Social Security, Medicare, and Medicaid as "the programs that swallow the bulk of government spending." Under the law, Social Security can only spend money raised through its designated taxes, either currently or in the past. For this reason, it is not a drain on the rest of the budget unless Congress changes the law.

Medicaid would also not rank among the three largest programs. The government is projected to spend $592 billion this year on the military compared to $401 billion on Medicaid.

The claim that Paul Ryan is concerned that these programs would "swallow the bulk of government spending" directly contradicts everything Paul Ryan has been explicitly advocating for years. Ryan has repeatedly put forward budgets that would reduce the size of the federal government to zero outside of the military, Social Security, Medicare, and Medicaid. (See Table 2 in the Congressional Budget Office's analysis.) It is difficult to understand how a major newspaper can so completely misrepresent a strongly and repeatedly stated view of one of the country's most important political figures.

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One of the candidates for Treasurer in North Carolina is proposing to the dump the investment advisors, private equity fund managers and hedge managers who all control a portion of the state's $100 billion public pension funds. Instead he proposes to do simple indexing of the pension fund assets. The lower costs could raise returns by as much as 1.0 percentage point a year.

This is huge money for the state. It is also huge money for Wall Street. That 1.0 percent comes to $1 billion a year of pure waste that goes into the pockets of Wall Street types. Add this up across all the state and local pension funds and we are talking about somewhere on the order of $60 billion a year being drained from taxpayers' pockets to make the Wall Street crew richer.

This is the sort of thing that would concern economists if they were interested in efficiency, instead of just redistributing upward.

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It might have been helpful if the Post made this point in a piece reporting on Republican efforts to replace the Affordable Care Act (ACA). The piece noted an article by National Economic Council aide Brian ­Blase, written before he joined the administration, that referred to the "need to reduce government bias towards comprehensive coverage."

This bias is hardly an accidental. The vast majority of people are relatively healthy with low medical expenditure. These people would be well-served in most cases with very high deductible policies that cost little. However, this would make the policies purchased by the roughly 10 percent of the population (33 million people) with high expenses extremely expensive.

The major goal of the ACA was to make it possible for people who really need health insurance because of serious medical conditions to be able to afford it. Eliminating the requirement for comprehensive insurance for healthy people will make health insurance unaffordable for tens of millions of people.

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The NYT had a front page article reporting on Donald Trump's plan to increase military spending and to make cuts in other areas to cover the costs. The piece told readers:

"Mr. Trump will demand a budget with tens of billions of dollars in reductions to the Environmental Protection Agency and State Department, according to four senior administration officials with direct knowledge of the plan. Social safety net programs, aside from the big entitlement programs for retirees, would also be hit hard."

It's not clear what information the piece intended to convey by referring to "tens of billions of reductions" to the EPA and State Department. The annual budget of the EPA is just over $8 billion, so this figure presumably refers to its budget over the next ten years. Since "tens of billions" presumably means at least two, Trump apparently wants a cut in the size of the agency (which is supposed to do things like ensure that the kids in Flint aren't getting lead in their drinking water) by at least a quarter. (The budget of the State Department for 2017 was $51 billion.)

It would be helpful if papers like the NYT expressed numbers in a context that made them meaningful to readers, almost none of whom has any idea of what the budgets of the EPA or State Department will be over the next decade. When she was the public editor at the NYT, Margaret Sullivan made exactly this point. She got then Washington editor David Leonhardt to agree. Apparently, this has not affected the NYT's reporting on budget issues.

This piece also asserts as a matter of fact that President Obama faced "the prospect of a second Great Depression" when he took office. While many people have made this assertion, no one has explained what would have prevented Congress from passing a large stimulus at any future point if the unemployment rate did in fact soar to the double digit levels that we would associate with a depression.

This is a very strong assertion about a decade of political behavior from people who almost without exception could not even predict the winner of the 2016 election. It would be best to qualify the assertion by noting that many people claim the country faced the prospect of a second Great Depression, rather than asserting it as a matter of fact.

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Yes, that is what he told readers in his column. In a column arguing for the need for more immigrants he referred to a figure from the National Association of Home Builders, that there are 200,000 unfilled construction jobs in the United States. Brooks then tells readers:

"Employers have apparently decided raising wages won’t work.

"Adjusting for inflation, wages are roughly where they were [before the crash], at about $27 an hour on average in a place like Colorado. Instead, employers have had to cut back on output. One builder told Reuters that he could take on 10 percent more projects per year if he could find the crews."

"Raising wages won't work." That's interesting. So if builders paid construction workers the same hourly pay rate as David Brooks, it wouldn't attract more people to the job? It's good that we have David Brooks to tell us this, because otherwise most of us wouldn't know it.

I'm going to take a pass on the larger issue of immigration here (except for the usual call for more immigrant doctors and other high end professionals), but this is just garbage. If builders paid higher wages they would get more people willing to work as construction workers. Can't Brooks make a more serious argument?

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The Associated Press ran a story, picked up by the PBS Newshour, that told readers:

"...factory jobs exist, CEOs tell Trump, skills don't."

The piece presents complaints from a number of CEOs of manufacturing companies that they can't find the workers with the necessary skills. The piece does note the argument that the way to get more skilled workers is to offer higher pay, but then reports:

"...some data supports the CEOs’ concerns about the shortage of qualified applicants. Government figures show there are 324,000 open factory jobs nationwide — triple the number in 2009, during the depths of the recession."

The comparison to 2009 is not really indicative of anything, since this was a time when the economy was facing the worst downturn since the Great Depression and companies were rapidly shedding workers. A more serious comparison would be to 2007, before the recession. The job opening rate in manufacturing for the last three months has averaged 2.5 percent, roughly the same as in the first six months of 2007, which was still a period in which the sector was losing jobs.

According to the Bureau of Labor Statistics, average hourly earnings of production and non-supervisory workers in manufacturing has risen by 2.4 percent over the last year. This means that manufacturing firms are not acting in a way consistent with employers having trouble finding workers. This suggests that if there is a skills shortage it is among CEOs who don't understand that the price of an item in short supply, in this case qualified manufacturing workers, is supposed to increase.

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Neil Irwin has a good piece this morning discussing the evidence on the economy's growth potential. As he points out, the key question is how much slack remains in the economy. The key issue in this debate is the extent to which we can expect employment to rise.

Most of the debate deals with the extent to which we can expect more people to enter the labor market. The current 4.8 percent unemployment rate is reasonably low by any measure. While it can go somewhat lower, that will not allow for much further expansion of the economy. The bigger question is the extent to which we should expect people who are not in the labor force, meaning they are neither working nor actively looking for work, to come back into the labor force if the job market improved. On this point, there is considerable debate.

The basic story is straightforward, if we focus exclusively on prime-age workers (ages 25–54), the labor force participation rates are close to 2.0 percentage points below pre-recession levels and 4.0 percentage points below 2000 peaks. Those who insist that we are near full employment argue that this is pretty much the best we can do and that these drops are permanent. Those like myself, who think we can do much better, argue that we should be able to return to past rates of labor force participation rates (LFPR) among prime-age workers.

In this respect, I would like to enlist the help of the ghost of forecasters past. The figure below shows projections of prime-age LFPR for men from the Congressional Budget Office (CBO) and the Bureau of Labor Statistics (BLS).

Book3 6110 image001

Source: CBO and BLS.

The first bar is a projection CBO made in 2000 for 2008. It projected a LFPR for 2008 of 90.9 percent. The second projection is also from CBO. In 2007 it projected a LFPR for prime-age men in 2014 of 90.5 percent. The third bar is a 2007 projection from BLS for 2016. It projected a LFPR for prime-age men of 91.3 percent. This compares to an actual LFPR last year of 88.5 percent, almost three full percentage points lower.

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As everyone knows, the fundamental principle of the Republican party is to redistribute as much income as possible from the rest of us to the rich. In keeping with this principle, Paul Ryan and the Republicans in Congress are pushing through a proposal to make workers pay larger fees on their retirement accounts. Unlike conventional taxes, which could be wasted on things like education or child care, these fees go directly into the pockets of the financial industry. This way people will be able to see the benefits of their fees in the form of expensive houses and cars for the bankers, as well as the folks going to expensive restaurants and flying first class.

The story here is a simple one. Few workers have traditional defined benefit pensions any longer. For most workers, 401(k) plans have not been an adequate replacement. They are unable to put much money into these accounts and much of the money they do put in is eaten up by fees charged by the banks and insurance companies that administer them. Furthermore, many people end up cashing out these accounts when they change employers, leaving little for retirement.

To address these problems several states are considering measures to allow workers to contribute to plans managed by the state. Illinois has a plan that is going into operation this year while California's will be up and running in 2020. Several other states are considering similar measures.

The advantage of these plans is that workers could keep the same account as they changed jobs. Also, the fees would be much lower, with state managed plans likely averaging fees in the range of 0.2–0.3 percent annually. This compares to fees averaging close to 1.0 percent in privately run 401(K)s, with some charging over 1.5 percent.

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The concept of "free trade" has acquired near religious status among policy types. All serious people are supposed to swear their allegiance to it and deride anyone who questions its universal benefits.

Unfortunately, almost none of the people who pronounce themselves devotees of free trade actually do consistently advocate free trade policies. Rather they push selective protectionist policies, that have the effect of redistributing income to people like them, and call them "free trade."

The NYT gave us yet one more example of a selective protectionist masquerading as a free trader in a column this morning by Jochen Bittner, a political editor for Die Zeit. Bittner contrasts the free trading open immigration types, who calls Lennonists (in the spirit of John Lennon's song, Imagine) and the Bannonists who are nationalists followers of Steve Bannon or his foreign equivalents.

The problem with this easy division is that the "free traders" wholeheartedly support very costly protectionist measures in the form of ever stronger and longer patent and copyright protections. These protections redistribute several hundred billions dollars annually (at least 3 percent of GDP in the United States) from the bulk of the population to the small group of people who are in a position to benefit from these government granted monopolies.

In the United States, the "free traders" in most cases also support the protectionist restrictions which severely limit the ability of foreign trained doctors and dentists and other high-end professionals from working in the United States. As a result of these protectionist measures doctors in the United States earn twice as much as their counterparts in other wealthy countries, costing us around $100 billion a year in higher health care costs.

The "free traders" in almost all cases supported the government bailouts of the financial industry which saved the banks from being held responsible for their own greed and incompetence. As a result of these bailouts a seriously bloated financial industry was protected from the market and was allowed to continue to siphon hundreds of billions of dollars annually out of the rest of the economy.

It is undoubtedly convenient for the self-professed free traders to ignore all the forms of protectionism that benefit them to the detriment of the rest of the society (including most of the "Bannonists"), but it is not accurate and it is not honest.

Yes, all of this is covered in my (free) book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer.

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There are an awful lot of things to really dislike about Donald Trump and his conduct as president to date, but that doesn’t mean everything his administration does is wrong. In particular, there is considerable truth to what he has said about trade costing a large number of good paying manufacturing jobs and hurting the living standards of the middle class.

Unfortunately, rather than acknowledging this point, the media show the same determination as global warming denialists in saying that trade cannot be a problem. We got two examples of this sort of denialism in recent days.

The first was a piece in the Washington Post criticizing Trump adviser Peter Navarro’s view of trade and the trade deficit. While Navarro makes many questionable arguments in pushing his views on trade, his point that the trade deficit can reduce growth and employment is absolutely correct.

Ever since the crash in 2008 the bulk of economics profession has agreed that we faced a situation of “secular stagnation,” where the economy faced a persistent shortfall of demand. In this context, anything that boosts demand, such as an increase in government spending, private consumption, or a reduction in the trade deficit, leads to more output and employment.

In this context, the piece’s comment, taken from Harvard University economics professor N. Gregory Mankiw, “that a smaller trade deficit means lower investment along with possibly higher interest rates and less consumption” is completely wrong. If the economy is operating below full employment, as it certainly has been through most of the period from 2008 then reducing the trade deficit certainly can be a net addition to growth. As Mankiw says, “even a freshman at the end of ec 10 knows that.”

In this context, Navarro’s claim that a lower trade deficit could bring in $1.74 trillion in tax revenue over the course of a decade cannot be so easily dismissed even though the Post tells us:

“Hooey, say economists across the political spectrum.”

The key question here is whether the economy is now at potential GDP and whether it is likely to be over the next decade, even with a trade deficit that is close to 3.0 percent of GDP ($538 billion in the most recent quarter). On this question, the Congressional Budget Office (CBO) might be on the side of Navarro.

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He uses his column today to tell us that "this century is broken." Much of his tale involves the old problem with men story.

"For every one American man aged 25 to 55 looking for work, there are three who have dropped out of the labor force. If Americans were working at the same rates they were when this century started, over 10 million more people would have jobs. As Eberstadt puts it, 'The plain fact is that 21st-century America has witnessed a dreadful collapse of work.'

"That means there’s an army of Americans semi-attached to their communities, who struggle to contribute, to realize their capacities and find their dignity. According to Bureau of Labor Statistics time-use studies, these labor force dropouts spend on average 2,000 hours a year watching some screen. That’s about the number of hours that usually go to a full-time job."

While it apparently makes folks like Brooks feel good to tell these sorts of morality tales about the failings of men today, it actually has nothing to do with reality. While fewer prime-age men (ages 25–54) men are working today than in 2000, the share of prime-age women has fallen by almost the same amount. Furthermore, the percent of prime-age women working had been rising prior to 2000 and was projected to continue to rise by most economists.

The fact that women's employment rates have fallen as well is important because it indicates that, contrary to what Brooks tells us, the problem is not a gender specific moral failing. The problem is most likely a good old-fashioned shortfall in demand in the economy.

This matters a great deal because we actually do know how to create more demand. It's called "spending money." This means that if the government spent more money on things like education, health care, and infrastructure, we could get more of these prime-age men and women employed. There are other ways to create demand. For example, if we got our trade deficit down by reducing the value of the dollar it would also generate more demand and employment.

If we are troubled by the large number of prime-age workers who are not employed there are policies that we could pursue that would address the problem. In other words, we should be more worried about the moral failings of people in a position to make economic policy than the moral failings of the folks not working.

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Yes, as Un-American as that may sound, Bill Gates is proposing a tax that would undermine Donald Trump's efforts to speed the rate of economic growth. Gates wants to tax productivity growth (a.k.a. "automation") slowing down the rate at which the economy becomes more efficient.

This might seem a bizarre policy proposal at a time when productivity growth has been at record lows, averaging less than 1.0 percent annually for the last decade. This compares to rates of close to 3.0 percent annually from 1947 to 1973 and again from 1995 to 2005.

It is not clear if Gates has any understanding of economic data, but since the election of Donald Trump there has been a major effort to deny the fact that the trade deficit has been responsible for the loss of manufacturing jobs and to instead blame productivity growth. This is in spite of the fact that productivity growth has slowed sharply in recent years and that the plunge in manufacturing jobs followed closely on the explosion of the trade deficit, beginning in 1997.

 Manufacturing Employment

manu emplSource: Bureau of Labor Statistics.

Anyhow, as Paul Krugman pointed out in his column today, if Trump is to have any hope of achieving his growth target, he will need a sharp uptick in the rate of productivity growth from what we have been seeing. Bill Gates is apparently pushing in the opposite direction.

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We all know about the need to make trade-offs in budgeting, most of us have to do it on a regular basis in our daily lives. But what about the trade-offs for the federal government? Arguably there is no need for trade-offs right now. Both interest rates and inflation are at low levels, so it is not obvious that there is any problem with larger deficits, but folks in both parties are fixated on the need to run low budget deficits or even to have balanced budgets, so these politics dictate the need for trade-offs.

In this context, it is worth making some comparisons as the Republicans seem prepared to slash a number of relatively low cost programs that have received considerable visibility. At the top of this list would be federal funding for Legal Services, a program that has provided legal assistance to low income people for decades. This program provides lawyers for people facing foreclosures or evictions, for people who need help with a divorce or will, or for many other situations that would typically require the assistance of a lawyer. The appropriation last year came to $375 million, or 0.011 percent of the federal budget.

Another item on the chopping block is the Corporation for Public Broadcasting (CPB). CPB helps fund National Public Radio as well as public television stations around the country. It got $445 million from the federal government last year or 0.013 percent of total spending.

Then there is the National Endowment of the Arts (NEA). The NEA supports a variety of education and cultural events around the country. It got just under $150 million last year or 0.004 percent of the total budget. There are a number of other small programs also on the chopping block, including AmeriCorps and the White House Office of National Drug Control Policy.

It is interesting to compare the spending of these programs that face cuts or may be eliminated altogether with spending of security for President Trump and his family. In the past, presidents have generally tried to limit their own travel and that of their families so as not to create large security bills for the country. Apparently, this is not a concern of President Trump.

Unlike past presidents, he has requested Secret Service protection for his adult children. Given their travel habits running President Trump’s business, this is likely to be a considerable expense for the government. For example, the Washington Post reported that one trip to Uruguay by Eric Trump to open a hotel there cost the government almost $100,000 in security expenses. In addition, Trump’s decision to take his weekends at his golf club in Florida, rather the White House or Camp David, costs us more than $3 million a shot. And the decision by Melania Trump to stay in New York with her son is apparently costing taxpayers close to $2 million a day.

People may want to ask where they get the most money for their tax dollars.


Book3 19072 image001

Source: See text.
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Pedro da Costa tells us in Business Insider that the Republican tax proposal, with its border adjustment, is going to be really bad news because it will lead to a spike in inflation. The story is that the 20 percent tax imposed on imports will lead to a one-time jump in the core inflation rate of between 1.4 and 2.1 percentage points.

The implication is that the tax will be almost fully passed on to consumers. With imports at 15 percent of GDP, these numbers would be plausible.

While this is not an impossible scenario, it is worth thinking back to what Neil Irwin told us in the New York Times last week. He warned that the tax would lead to a 25 percent rise in the dollar, which could lead to a financial crisis as a result of the increase in the size of the dollar denominated debt held by developing countries. This is also a plausible scenario, although the prospect of a 25 percent increase in the value of the dollar seems a bit out of line, as I noted at the time.

Anyhow, it is worth stepping back for a moment and thinking this one through. Both Pedro da Costa and Neil Irwin are very good reporters. Neither is just making things up, but they are telling us completely opposite stories about the impact of the Republican tax proposal. In da Costa's version, the dollar moves little, with almost all the adjustment being in price. (It's worth noting that this would lead to a large reduction in the trade deficit.) In the Irwin version, the dollar fully adjusts leaving import prices essentially unchanged for people living in the United States.

My guess is that the Irwin version is closer to reality (not the crisis part), but the more fundamental point is that we actually have very little idea what will happen if this tax is implemented. It seems that many folks are prepared to shoot at this tax because they don't like the people pushing it.

I'm not terribly fond of them either, but this does seem like a serious proposal, which deserves a serious look. For the record, it did not originate with either Trump or Republicans in Congress, but rather Alan Auerbach, a Berkeley professor who I have always taken to be a serious economist. (I don't know his political leanings.)

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Hey, no one said Speaker Ryan wasn't a smart guy. (Actually, many people have, but whatever.) Anyhow, the Republicans have published an outline of their proposal for an Obamacare replacement. It seems designed to ensure that tens of millions of people lose their health insurance coverage.

The basic story is that the plan is designed to fragment the market by both allowing a wider range of insurance policies and also by promoting health savings accounts in which people can place money tax free. (Oh yes, and the financial industry can make lots of money on fees.) This will mean that almost anyone in good health will get catastrophic policies that cover large expenses, but leave most normal expenses to the patient. Since most people are relatively healthy, this would be a good deal for most of the population.

The numbers on this are striking. The Centers for Medicare and Medicaid Services projects that health care costs in 2017 will average $10,800 this year. The average for cost for the ten percent of most expensive patients is $54,000. The average cost for the least expensive 50 percent is just $700. (These figures include seniors who are covered by Medicare. The skewing would be a bit less if the over 65 age group were pulled out of the calculation.)

Since most people have very little by way of health care spending, it would make sense for them to use the tax credit proposed in the Republican plan to buy a catastrophic plan, that may have a deductible of $10,000 or $12,000 or more. This plan would cost little and allow them to put most of the credit in a health savings account. 

This means that the only people who would be interested in buying conventional insurance policies would be people with high medical expenses. Insurers will price these policies to reflect the anticipated costs. This means that they would have to cost tens of thousands of dollars per person. Most of these people will not be able to afford these plans. The credit proposed by the Republicans (which is likely to be around $2,500 from the description in the plan), will not go far towards meeting the cost of policies for these people.

So, the Republicans deserve credit for devising a plan to reduce the cost of insurance for healthy people. It just means that tens of millions of people who actually need insurance won't be able to get it.

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The Washington Post warned readers that health care costs were about to start rising sharply again in an article reporting new projections from the Centers for Medicare and Medicaid Service (CMS). While there is definitely a risk that these projections may be right, and health care will impose a considerably larger burden on the economy over the next decade than it does now, it is worth noting that the projections from CMS have not proven especially accurate in the past.

For example, in 2007 it projected that health care spending would rise as a share of GDP from 16.3 percent in 2007 to 18.8 percent in 2015, the most recent year for which data are available. According to CMS, spending in 2015 was just 17.8 percent of GDP, a full percentage point less than had been projected.

It is also worth noting that we pay roughly twice as much for physicians, drugs, and other items used in providing health care than other wealthy countries. If we become less protectionist over the next decade then we might expect prices in the United States to fall towards world levels, which would dampen the pace of health care cost growth.

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Of course China could argue this, it would be really stupid, but nothing prohibits countries from making stupid arguments if they want to push their agenda. In this vein, the Wall Street Journal told readers that if the U.S. took actions against China and other countries for deliberately depressing the value of their currencies by buying dollars they:

"...could argue that Federal Reserve policies that weaken the dollar qualify as subsidies."

Obviously they could make this argument, but it makes little sense. There is a clear difference between central bank policies designed to affect the domestic economy and policies that are designed first and foremost to affect the value of the currency. It really is not hard for people to understand the distinction between a central bank buying its own country's bonds and a central bank buying the bonds and assets of other countries. This is about as sharp and clear a distinction as imaginable.

Central bank policy will affect will the value of the currency, but so will other policies. For example, a large reduction in government spending would be expected to reduce output and lower interest rates. Other countries could with equally good grounds contest this cut in government spending as an unfair subsidy.

This is a clear case where the Wall Street Journal does not like a policy and is inventing reasons for its readers to go along with its view.

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Robert Samuelson is unhappy that people continue to believe something that is true — that we bailed out the bankers — and happy that people still believe something that is not true — that we prevented a second Great Depression. In his column Samuelson complains:

"The real Dodd-Frank scandal is that this misinterpretation of events, widely embraced by both parties, has been allowed to stand. In many bailouts, banks’ shareholders suffered huge losses or were wiped out; similarly, top managers lost their jobs. The point was not to protect them but to prevent a collapse of the financial system."

Okay, let's imagine the counterfactual. We decide to take the free market seriously and let it work its magic on Citigroup, Bank of America, Goldman Sachs and the rest of the high rollers. These huge banks all go into bankruptcy with the commercial banking parts of the operations taken over by the FDIC. All insured deposits are fully protected, with the FDIC and Fed having the option to raise the limits to protect smaller savers.

The shareholders of these banks are out of luck. They have zero. Samuelson is right that share prices were depressed during the crisis, but that is different than going to zero. Furthermore, operating with the protection of Treasury Secretary Timothy Geithner's promise of "no more Lehmans," the share prices soon bounced back.

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This is really getting over the top. Republicans in Congress are debating an overhaul of the corporate income tax which would eliminate many of the opportunities for gaming the current tax code. To my mind this is great news, because the tax-gaming industry is where many of the richest people in the country, like private equity fund partners, make their money.

This means that the current corporate tax code is a mechanism for transferring money from the rest of us to the likes of Mitt Romney and Peter Peterson. It's understandable that these people would be very upset by a plan to end their tax-gaming windfalls, but why is Neil Irwin at NYT so upset?

The story he pushes is that border adjustability rules in the proposed reform would create enormous disruptions in the economy because it would lead to a sharp rise in the value of the dollar. Irwin tosses around a hypothetical 25 percent increase in the value of the dollar which he warns:

"...could shift trillions of dollars of wealth from Americans to foreigners; set off an emerging markets financial crisis; wreak havoc in global oil markets; and cause sustained harm to the American higher education and tourism industries (including, as it happens, luxury hotels with President Trump’s name on them)."

Okay, this is more than a little bit silly.

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