Ezra Klein responded to criticisms raised by myself and others of his piece urging liberals to support Social Security reform. Ezra suggests that we over-rate the importance of editorials in shaping public debate.

For myself, I never meant to suggest that the main problem was the anti-Social Security diatribes that are regularly featured in the Washington Post and elsewhere. The problem is that the major news outlets (e.g. the Washington Post, National Public Radio, the Wall Street Journal) allow their editorial position to thoroughly permeate their reporting.

Their news sections are full of pieces that highlight the Social Security crisis and routinely feature prominent people saying the equivalent of "the earth is flat," without the reporter calling readers' attention to the vast body of evidence showing that the earth is not flat. At best, readers are allowed to hear the perspective of an expert saying that the Social Security is not in crisis, but even in this sort of he said/she said story, the flat-earthers typically out-number the reality based commentators.

"[T]he second round of the presidential and legislative elections was quite an improvement in many ways on the first round," according to the joint OAS-CARICOM observation mission. Yet reports are now emerging that a high number of tally sheets (PVs) have

March 29, 2011

March 29, 2011 (Housing Market Monitor)

The hottest sport these days in Washington is seeing how many incorrect or misleading statements about Social Security you can get in one column. All the major media outlets are fully on board, anxious to convey any misinformation that reflects badly on the program. And there are plenty of deep-pocketed funders like Wall Street investment banker Peter Peterson who are happy to finance the effort. Hence we are seeing a plethora of pieces decrying the high-living seniors who are getting fat on their Social Security checks.

The latest contestent to enter the fray is Republican political strategist Mark McKinnon with a column in the Daily Beast. Let's play along.

Mckinnon starts by warning that the United States could end up like Greece or Portugal, abandoned by the credit markets and forced to beg international organizations to buy our debt. Very nice -- this one always gets lot of points with political pundits. Of course it is not true. The United States has its own currency, that means it can never be like Greece or Portugal.

Ezra Klein criticizes Social Security supporters for being reluctant to have Social Security reform taken up by Congress at the moment. He argues that Social Security and the retirement system more generally could be restructured to better serve the bulk of the country's workers. Klein notes the fears of Social Security supporters that this could open the door to serious cuts and then responds to these fears, "this country is better than that."

Of course that is true, but also irrelevant. Social Security enjoys overwhelming support from the public. Polls repeatedly show that people across the political spectrum strongly support the program and would even be willing to pay higher taxes to protect the program, but the public as a whole will not directly decide the program's fate.

Congress and the president will decide the future of the program. These politicians live in a world where a willingness to cut Social Security is routinely referred to as a sign of seriousness. Those who do not support cuts are taunted as being unrealistic and weak. Politicians who want to protect the program can expect much less campaign funding from business groups and ridicule from the media.

Dean Baker
Truthout, March 28, 2011

The UN Office for the Coordination of Humanitarian Affairs’ (OCHA) latest “Humanitarian Bulletin” provides some insight into just how much the relief efforts have struggled to provide results over the last year. Despite grandiose aid pledges, complete wit

We know that arithmetic is not the strong suit of the Washington Post and Robert Samuelson drives this point home again today with his discussion of the TARP. Samuelson tells us that TARP is now projected to cost just $19 billion and that the final cost may actually be lower. He also tells us that the alternative to TARP, bank nationalization would have been far more costly. And, he said that without TARP the unemployment rate "would be 11 percent or 14 percent; it certainly wouldn’t be 8.9 percent."

Okay, let's take these in turn. First, the idea that the TARP cost almost nothing is based on some very shoddy accounting. Samuelson apparently does not understand the idea of money carrying an opportunity cost.

Suppose the government lent me $1 trillion for 10 years at 1 percent annual interest. In the Robert Samuelson world, the government is earning a $100 billion profit on this investment ($10 billion a year for 10 years). Economists familiar with opportunity costs would instead see this as a huge loss to the government, since it is giving me an enormous loan at an interest rate that is several percentage points below the market rate.

We saw how this worked with the TARP when Warren Buffett reported earning twice the money on his investment in Goldman Sachs which was half of the size of the investment from Treasury. Buffett got the market rate of return on his investment, the difference was a subsidy from taxpayers to the shareholders and executives of Goldman. The same story was true with the other TARP loans, as well as the even larger amount of money lent through the Fed as well as the guarantees provided by the FDIC.