With the Republicans promising big tax cuts for their wealthy backers, we are again hearing talk about the budget deficit and national debt. Needless to say, most is pretty badly confused.

At the most basic level, insofar as there is a burden of the debt, it is the interest payments on the debt. This is the amount of money that the government has to cough up each year to pay bondholders as opposed to using for other purposes.

While the debt is high relative to GDP, interest on the debt is actually fairly low. It is currently around 0.8 percent of GDP, or roughly $160 billion a year. This is near a post-World War II low. In the 1990s, the interest peaked at more than 3.0 percent of GDP.

Many people overstate the interest burden because they ignore the money that the Federal Reserve Board refunds to the government, which is presently around $90 billion a year. The Fed is collecting a substantial portion of the interest paid by the federal government due to the fact that it holds a large amount of government bonds. It keeps some of the interest to fund its operations and then rebates the rest to the Treasury.

Incredibly, there has been literally no coverage in major news outlets of the budgetary implications of the Fed's plans to reduce its asset holdings. When the Fed sells off these assets, the interest will instead be paid out to the people who buy the bonds rather than refunded to the Treasury. The difference could come to as much as $600 billion over the next decade, roughly the amount of money at stake with Obamacare repeal, but no one seems to care.

Bryce Covert has an interesting column in the NYT arguing that Equifax and the other two private credit agencies be replaced with a public system. There does seem to be a good case here.

After all, what do we get from competition in this story? As Covert points out, the credit agencies don't work for consumers, they work for the people who buy the data. This means that they don't really have much incentive to ensure their information about us is accurate and to make sure their systems are not hacked.

What is difficult understand is how current laws allow these agencies to be profitable. Suppose these credit agencies were held liable for their mistakes. If a person is denied a job or is unable to buy a home because of an erroneous credit report, this would seem to warrant tens of thousands of dollars in damages.

Covert tells us that one in four credit reports contain a major error. Suppose that leads to 100,000 people a year to suffer serious consequences, that would be less than 0.25 percent of the people with serious errors in their report. If the average damages come to $15,000 (including legal fees), this would run to $1.5 billion in annual damage payments. If 1.0 percent of the people with erroneous reports suffered consequences, it would come to $6 billion a year.

In his column today (also discussed by Dean here), Eduardo Porter writes: “as Professor [Alan] Krueger noted, once workers stop looking for a job, it is tough to draw them back in. 'After they leave the labor market,’ he said, ‘people reorganize their liv

This is the second in a series of blog posts based on the CEPR report, Organizational Restructuring in U.S. Healthcare Systems: Implications for Jobs, Wages, and Inequality, that examines the experiences of healthcare workers over a decade of change from

Glenn Kessler, the Washington Post's Fact Checker, is trying to be even-handed in assessing the claim by advocates of single-payer health insurance of large potential administrative savings from switching to a universal Medicare-type system. Unfortunately, he gives too much credence to an insurance industry funded report (identified as such in the piece), which whittles away at the difference.

The basic story is that Medicare's administrative costs, as shown in the Medicare Trustees Report come to less than 2.0 percent of annual benefits. (Table II.B1 puts administrative costs for 2016 at $9.2 billion, with total payments at $669.5 billion.) The Centers for Medicare and Medicaid Services puts the administrative costs for private insurance at $216.3 billion for 2016 (Table 2), with total spending of $1,135.4 billion (Table 3) for a ratio administrative expenses as a percent of related outlays of 23.5 percent. (The administrative expenses are deducted from total spending to get health related outlays.)

While there is some room for fudging both of these numbers, it is pretty hard to make the difference go away. The industry funded study ups the Medicare costs to 5.2 percent by allocating a large amount of non-Medicare spending to Medicare administration. For example, it notes that the Treasury Department collects taxes for Medicare and the Justice Department pursues fraud cases in the system. As the report explains to get to this number:

"Medicare unreported costs include parts of salaries for legislators, staff and others working on Medicare, building costs, marketing costs, collection of premiums and taxes, and accounting, including auditing and fraud issues, etc."

While these costs are not detailed carefully, Table 4 in the appendix shows that the study allocated 14.5 percent of the salaries of members of Congress and staff, as well executive branch salaries, to the administrative costs of Medicare. It also allocated 14.5 percent of non-correctional judicial costs.

As we previously pointed out, the most disadvantaged segments of the labor market benefit disproportionately from low unemployment. This shows up both in terms of getting a disproportionate share of the job growth and also from seeing more rapid wage growth as a result of the tightening of the labor market they face.

The logic is straightforward. When the economy goes into a slump, it is more likely that a retail clerk or person on the factory floor will lose their job than a manager or a highly educated professional, like a doctor or dentist.

This means that when the unemployment rate soars, as it did in the Great Recession, it is the workers at the bottom of the ladder who are at greatest risk of losing their jobs. They are also the ones who see the largest loss in pay, as their bargaining power diminishes with their employment opportunities.

The Congressional GOP is taking one last shot at repealing the ACA. One of the negative consequences of repeal that has gotten little attention is the impact it would have on disabled people’s ability to work. Before the ACA, non-elderly adults had limite

Dean Baker
Truthout, September 18, 2017