Niall Ferguson is really upset. He heard about the conspiracy among progressive bloggers to pay Newsweek to print his error filled piece trashing President Obama. He fires back with this piece in the Daily Beast. It's just as much fun as the last one.

To start with, Ferguson is intent on digging himself deeper into a hole on his original claims:

"The president pledged that health-care reform would not add a cent to the deficit. But the CBO and the Joint Committee on Taxation now estimate that the insurance-coverage provisions of the ACA will have a net cost of close to $1.2 trillion over the 2012–22 period."

Ordinary people would presumably read the second sentence to be a refutation of the first. Obama said his plan would not add to the deficit, but two authoritative sources say the insurance provisions would cost $1.2 trillion. That's pretty damning, except that Krugman and others have pointed out that the CBO estimates show that the ACA will reduce the deficit, not increase it.

But Ferguson fires back:

"The point (still not grasped by Andrew Sullivan, who thinks I was just talking about the gross costs) is that the net effect of ACA on the deficit is not positive if you look at the likely costs and the likely revenues from the tax hikes that will finance it. To get to the Congressional Budget Office’s conclusion that, over 10 years, the ACA will reduce the deficit, you need to believe that the act will half the rate of growth of Medicare costs. I am not inclined to be optimistic about that."

Okay, now we have:

"net effect of ACA on the deficit is not positive if you look at the likely costs and the likely revenues from the tax hikes that will finance it."

But, this is not the authoritative estimates from CBO and the Joint Committee on Taxation promised in the original article. This is the Niall Ferguson assessment of the net cost of the ACA over the decade. This means that President Obama's health care plan is a net money saver by the assessment of CBO and the Office and Management and Budget (I haven't seen the JTC's assessment), but apparently not by Niall Ferguson's. I suppose they should be worried about that.

NYT readers must be wondering whether David Brooks believes in Santa Claus. After all, he repeatedly professes his belief in the serious Mr. Ryan. This faith persists in spite of all the evidence to the opposite, including evidence that Brooks cites in arguing his case.

Today in an Opinionator discussion with Gail Collins in the NYT, Brooks told readers:

"I don’t see how anybody can say that Ryan is unserious when, unlike most national pols, he actually has a budget detailed enough for C.B.O. to score."

Brooks was good enough to link to the CBO analysis so that readers could verify his assertion themselves. Those who did would find CBO's disclaimer in the first paragraph:

"Those calculations [the ones prepared at the request of Representative Ryan] do not represent a cost estimate for legislation or an analysis of the effects of any given policies. In particular, CBO has not considered whether the specified paths are consistent with the policy proposals or budget figures released today by Chairman Ryan as part of his proposed budget resolution.

Dean Baker / August 23, 2012

Last week Deborah Sontag of the New York Times reported in depth on the lack of sustainable housing solutions in Haiti since the earthquake:

Two and a half years after the earthquake, despite billions of dollars in reconstruction aid, the most obvious, pressing need — safe, stable housing for all displaced people — remains unmet.

In what international officials term a protracted humanitarian crisis, hundreds of thousands remain in increasingly wretched tent camps. Tens of thousands inhabit dangerously damaged buildings. And countless others, evicted from camps and yards, have simply disappeared with their raggedy tarps and rusty sheet metal into the hills.”

Sontag notes that $500 million was spent on transitional shelters that were “not built to last”, meaning “All the money spent on T-shelters will be melted away,” as H. Kit Miyamoto, an engineer working in Haiti, told Sontag. Meanwhile, although some 200,000 houses were damaged or destroyed:

international aid has led to an estimated 15,000 repairs and 5,700 new, permanent homes so far. Most of the new houses are outside greater Port-au-Prince, where it was easier to obtain land, and some have yet to be occupied.

Though many are quick to tout the decrease in camp population as a sign the housing and displacement crisis is being met, it is clear the number of new housing solutions can only explain a fraction of the camp population reduction. The lack of adequate housing has led 33 international organizations to sponsor the Under Tents campaign. Working with Haitian grassroots groups, the campaign seeks to win housing rights for the hundreds of thousands of Haitians who remain displaced or living in unsustainable housing.

Dean Baker
Al Jazeera English, August 21, 2012

The collapse of the housing bubble led to the downturn. However that does not mean that housing is the road out, or at least not unless we expect to see another bubble. Ezra Klein presents this mistaken view in his column today.

The basic story is very simple. (Remember, the purpose of economics is to make simple things complicated so as to exclude most of the public from debates on the most important policy issues that affect their lives.) The economy in the bubble years was driven by the bubble. The huge run-up in house prices led to an extraordinary building boom. Residential construction, which is ordinarily 3-4 percent of GDP rose to more than 6 percent of GDP at the peak of the boom in 2005.

Bubble-inflated house prices created close to $8 trillion dollars of housing equity. The housing wealth effect implies that people would spend between 5 to 7 cents on the dollar of this additional wealth, creating between $400 billion and $560 billion in additional annual consumption. The property taxes on inflated house prices also helped support perhaps $80 billion or so in state and local government spending. For good measure there was a bubble in non-residential real estate that followed in the wake of the housing bubble, which created a boom in this sector as well.

When the bubble burst, there was nothing to replace the lost demand. Residential construction fell by more than 4 percentage points of GDP ($600 billion annually in today's economy). It fell below normal levels because the boom of the bubble years had led to record vacancy rates. Consumption plunged because the housing bubble equity disappeared. When the wealth was gone, the consumption that it generated also vanished. And, we saw cutbacks in government spending at the state and local level in response to the lost tax revenue.

All of this seems clear and simple. We lost $1.2 trillion to $1.4 trillion in annual private sector demand. Some of this has been replaced by the federal government's budget deficits, but not enough to fill the gap. So what would have various plans to rescue housing done?

David Brooks makes one of his usual balanced pitches for the Romney-Ryan ticket. As usual, just about everything of substance in the piece is wrong.

He begins by bemoaning the fact that: "Entitlement spending is crowding out spending on investments in our children and on infrastructure." (Btw, "entitlements" is pundit speak for Social Security, Medicare, and Medicaid.)

Brooks tells us:

"In 1962, 14 cents of every federal dollar not going to interest payments were spent on entitlement programs. Today, 47 percent of every dollar is spent on entitlements. By 2030, 61 cents of every noninterest dollar will be spent on entitlements."

Yes, that sounds really horrible, except to those who know budget data. The vast majority of this entitlement spending has been paid for with designated revenue streams. Back in 1962 the Social Security tax rate was 6.2 percent (combined employer and employee). Today it is 12.4 percent. The Medicare tax was zero. That's because we didn't have Medicare. Today it is 2.95 percent.

These taxes together cover the vast majority of the cost of these programs. Voters have repeatedly shown themselves willing to pay higher taxes to support the programs. It is true that if we don't get health care costs under control, they will eventually wreck the economy and also lead to huge budget deficits.

Dean Baker
Truthout, August 20, 2012