Just kidding, AP wouldn’t waste readers time on anything so frivolous as the future of the planet. No, it’s calling politicians irresponsible because they won’t run out and cut Social Security and Medicare.
The piece is headlined, “Medicare, Social Security finance woes.” The first sentence tells readers:
“The nation’s framework for economic security and health care in retirement is financially unsustainable, but you wouldn’t know it from listening to the presidential candidates.“
Yep, the programs are unsustainable in the same way that driving west in New Jersey is unsustainable. If you keep going west, you’ll end up in the Pacific Ocean. Yes, the programs face a projected shortfall, but if we waited a decade to do anything, and then put in place fixes comparable to what we did in the 1980s, the program would be fine for the rest of the century.
But hey, AP wants us to cut benefits now! You hear that, now! The piece only includes comments from advocates of cuts to emphasize that point.
Also, somehow AP failed to notice the enormous progress that has been made in reducing the projected shortfall for these two programs under President Obama. The combined shortfall has fallen by more than one-third over the eight years of the Obama administration. This is primarily due to slower growth in health care costs.
On this issue, the piece wrongly asserts that further savings in this area are unlikely. This is not true, our doctors get paid more than twice as much in doctors in other wealthy countries. There are enormous potential savings from bringing their pay in line with their counterparts in the rest of the world. There is also enormous room for savings on prescription drugs, medical equipment, and other areas.
Finally, it is striking how much ink AP and other news outlets devote to warning of the prospect of higher taxes for these programs when workers face far greater risks from the continuing upward redistribution of income. If most workers get their share of projected wage growth over the next three decades, any tax increases associated with sustaining Social Security and Medicare will be a drop in the bucket.
Just kidding, AP wouldn’t waste readers time on anything so frivolous as the future of the planet. No, it’s calling politicians irresponsible because they won’t run out and cut Social Security and Medicare.
The piece is headlined, “Medicare, Social Security finance woes.” The first sentence tells readers:
“The nation’s framework for economic security and health care in retirement is financially unsustainable, but you wouldn’t know it from listening to the presidential candidates.“
Yep, the programs are unsustainable in the same way that driving west in New Jersey is unsustainable. If you keep going west, you’ll end up in the Pacific Ocean. Yes, the programs face a projected shortfall, but if we waited a decade to do anything, and then put in place fixes comparable to what we did in the 1980s, the program would be fine for the rest of the century.
But hey, AP wants us to cut benefits now! You hear that, now! The piece only includes comments from advocates of cuts to emphasize that point.
Also, somehow AP failed to notice the enormous progress that has been made in reducing the projected shortfall for these two programs under President Obama. The combined shortfall has fallen by more than one-third over the eight years of the Obama administration. This is primarily due to slower growth in health care costs.
On this issue, the piece wrongly asserts that further savings in this area are unlikely. This is not true, our doctors get paid more than twice as much in doctors in other wealthy countries. There are enormous potential savings from bringing their pay in line with their counterparts in the rest of the world. There is also enormous room for savings on prescription drugs, medical equipment, and other areas.
Finally, it is striking how much ink AP and other news outlets devote to warning of the prospect of higher taxes for these programs when workers face far greater risks from the continuing upward redistribution of income. If most workers get their share of projected wage growth over the next three decades, any tax increases associated with sustaining Social Security and Medicare will be a drop in the bucket.
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“Britain’s exit from E.U. sends global economy into a tailspin.” That was the headline of a Washington Post article on the vote in the U.K.. If you missed the tailspinning economies that’s because this is just Washington Post hysteria. Obviously the Washington Post is referring to financial markets. They apparently don’t realize the difference between financial markets and the real economy.
And if you don’t realize they are very different then you must believe in the horrible recession of 1987. Of course there was no recession in 1987 (or 1988 or 1989), but that was when the stock market plunged more than 20 percent in a single day. This drop, which happened in every major world market, did not correspond to any identifiable event in the economy. Nor did it have any massive fallout on the world economy. But in Washington Post land it was undoubtedly a serious recession.
Unfortunately the headline did not misrepresent the nature of the piece. The first sentence tells readers:
“The global economy faces months — if not years — of slower growth as Britain’s stunning decision to abandon the European Union threw financial markets into a tailspin and darkened the outlook for corporate and consumer spending.”
While the UK’s departure from the EU will almost certainly have a negative impact on world growth, most of the impact will be on the UK, with a lesser effect on the EU (both will be worse if the EU imposes harsh protectionist measures as punishment — which should be the big story in the media), the impact on the U.S. economy and the rest of the world will likely be minimal.
In terms of hits to the world economy, the 2011 budget agreement that turned the U.S. sharply toward austerity was almost certainly far worse than Brexit. Of course, the Washington Post basically liked that deal so it is unlikely that it would ever make this sort of comparison.
“Britain’s exit from E.U. sends global economy into a tailspin.” That was the headline of a Washington Post article on the vote in the U.K.. If you missed the tailspinning economies that’s because this is just Washington Post hysteria. Obviously the Washington Post is referring to financial markets. They apparently don’t realize the difference between financial markets and the real economy.
And if you don’t realize they are very different then you must believe in the horrible recession of 1987. Of course there was no recession in 1987 (or 1988 or 1989), but that was when the stock market plunged more than 20 percent in a single day. This drop, which happened in every major world market, did not correspond to any identifiable event in the economy. Nor did it have any massive fallout on the world economy. But in Washington Post land it was undoubtedly a serious recession.
Unfortunately the headline did not misrepresent the nature of the piece. The first sentence tells readers:
“The global economy faces months — if not years — of slower growth as Britain’s stunning decision to abandon the European Union threw financial markets into a tailspin and darkened the outlook for corporate and consumer spending.”
While the UK’s departure from the EU will almost certainly have a negative impact on world growth, most of the impact will be on the UK, with a lesser effect on the EU (both will be worse if the EU imposes harsh protectionist measures as punishment — which should be the big story in the media), the impact on the U.S. economy and the rest of the world will likely be minimal.
In terms of hits to the world economy, the 2011 budget agreement that turned the U.S. sharply toward austerity was almost certainly far worse than Brexit. Of course, the Washington Post basically liked that deal so it is unlikely that it would ever make this sort of comparison.
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The Washington Post once again got in over its head as it tried to sort out the consequences of the UK’s exit from the EU. In article on the implications for the rest of the European Union it told readers:
“A strain of fear is already running through the German government as it contemplates the loss of Britain — whose conservative prime minister, David Cameron, largely backed Chancellor Angela Merkel’s austerity crusade. Berlin now fears a “ganging up” by nations including France, Spain and Italy, which may seek to overthrow Merkel’s austerity-first policy.
“Yet, if the Germans do not lead, who will? France is too distracted, a nation mired in economic stagnation and a war on terror. The Italians and the Spanish, meanwhile, are still struggling with financial hardship, political volatility and large-scale unemployment.”
See the problem here? The article tells us that France, Italy, and Spain can’t lead because they are all suffering from serious internal problems. But almost all the problems cited, except for terrorism in France, are a direct result of their economic situation. And, that’s right folks, the bad economic situation is the result of the austerity imposed on them by Germany with the backing of David Cameron.
So, if Germany is no longer in a position to impose its absurd austerity policies on the rest of the EU, then France, Italy, and Spain can again have normal growth and lower unemployment. Stronger economies would then make these countries much better situated to play a leading role in the European Union: problem solved.
Wasn’t that easy?
The Washington Post once again got in over its head as it tried to sort out the consequences of the UK’s exit from the EU. In article on the implications for the rest of the European Union it told readers:
“A strain of fear is already running through the German government as it contemplates the loss of Britain — whose conservative prime minister, David Cameron, largely backed Chancellor Angela Merkel’s austerity crusade. Berlin now fears a “ganging up” by nations including France, Spain and Italy, which may seek to overthrow Merkel’s austerity-first policy.
“Yet, if the Germans do not lead, who will? France is too distracted, a nation mired in economic stagnation and a war on terror. The Italians and the Spanish, meanwhile, are still struggling with financial hardship, political volatility and large-scale unemployment.”
See the problem here? The article tells us that France, Italy, and Spain can’t lead because they are all suffering from serious internal problems. But almost all the problems cited, except for terrorism in France, are a direct result of their economic situation. And, that’s right folks, the bad economic situation is the result of the austerity imposed on them by Germany with the backing of David Cameron.
So, if Germany is no longer in a position to impose its absurd austerity policies on the rest of the EU, then France, Italy, and Spain can again have normal growth and lower unemployment. Stronger economies would then make these countries much better situated to play a leading role in the European Union: problem solved.
Wasn’t that easy?
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Neil Irwin has an Upshot piece reporting on a study by Mark Zandi projecting that the Donald Trump agenda would be an economic disaster. The piece is a fair assessment (he sees Zandi’s projections as plausible, but certainly highly debatable), but it is worth making a couple of additional points.
First, much of the Zandi horror story is premised on the idea that the economy is at full employment and that any further stimulus from larger budget deficits would lead to higher interest rates and/or inflation. If folks believe this then they must also believe that stimulus from infrastructure spending would lead to higher interest rates and or/or inflation.
I am the last person to defend tax cuts for rich people, but I don’t do make-it-up-as-you-go-along economics. If you believe that the economy is actually well below full employment and that it would benefit from the boost given by an increase in the budget deficit, then this part of the Zandi horror story does not fit. (The argument that the rich won’t spend their tax cut goes the wrong way. The problem from deficits in this story is that they are creating demand in the economy. If the rich save all their tax cuts, then we don’t have this problem.)
The other point is that Zandi’s assumptions on the evil of Trump’s tariffs seem somewhat exaggerated as others, including Paul Krugman, have noted. More importantly, there is actually a serious policy that could be buried in the midst of Trump’s bluster.
It would be perfectly reasonable for the United States to try to negotiate a rise in China’s currency against the dollar. Yes, I know China is having troubles just now and has actually been trying to keep the value of its currency up by selling dollars. But its holdings of more than $3 trillion in reserves has the effect of keeping down the value of its currency against the dollar, just as the Fed’s holding of more than $4 trillion in assets has the effect of holding down interest rates. (Sorry, the logic is inescapable for those who don’t do make-it-up-as-you-go-along economics.)
Anyhow, it would make perfect sense to negotiate a path for a higher valued yuan. At the negotiating table it would be perfectly reasonable to threaten various forms of retaliation as pressure, including tariffs. It would also be necessary to put concessions on the table, since the U.S. can’t just dictate policy to China, even if Donald Trump is president. (When he makes me Treasury Secretary, my top candidates will be that China doesn’t have to pay Bill Gates for Windows or Pfizer for its drug patents, and that they need not worry about market access for Goldman Sachs.)
If China did raise the value of its currency, it would reduce the U.S. trade deficit, boosting demand and creating more jobs, especially in manufacturing. (It would also lower our budget deficits, making deficit hawks happy.) This is a perfectly reasonable policy which should not be banished from consideration because it is associated with Donald Trump. (I have no idea what Trump hopes to get from his tariffs on Mexico.)
Note: Typos corrected, thanks Robert Salzberg.
Neil Irwin has an Upshot piece reporting on a study by Mark Zandi projecting that the Donald Trump agenda would be an economic disaster. The piece is a fair assessment (he sees Zandi’s projections as plausible, but certainly highly debatable), but it is worth making a couple of additional points.
First, much of the Zandi horror story is premised on the idea that the economy is at full employment and that any further stimulus from larger budget deficits would lead to higher interest rates and/or inflation. If folks believe this then they must also believe that stimulus from infrastructure spending would lead to higher interest rates and or/or inflation.
I am the last person to defend tax cuts for rich people, but I don’t do make-it-up-as-you-go-along economics. If you believe that the economy is actually well below full employment and that it would benefit from the boost given by an increase in the budget deficit, then this part of the Zandi horror story does not fit. (The argument that the rich won’t spend their tax cut goes the wrong way. The problem from deficits in this story is that they are creating demand in the economy. If the rich save all their tax cuts, then we don’t have this problem.)
The other point is that Zandi’s assumptions on the evil of Trump’s tariffs seem somewhat exaggerated as others, including Paul Krugman, have noted. More importantly, there is actually a serious policy that could be buried in the midst of Trump’s bluster.
It would be perfectly reasonable for the United States to try to negotiate a rise in China’s currency against the dollar. Yes, I know China is having troubles just now and has actually been trying to keep the value of its currency up by selling dollars. But its holdings of more than $3 trillion in reserves has the effect of keeping down the value of its currency against the dollar, just as the Fed’s holding of more than $4 trillion in assets has the effect of holding down interest rates. (Sorry, the logic is inescapable for those who don’t do make-it-up-as-you-go-along economics.)
Anyhow, it would make perfect sense to negotiate a path for a higher valued yuan. At the negotiating table it would be perfectly reasonable to threaten various forms of retaliation as pressure, including tariffs. It would also be necessary to put concessions on the table, since the U.S. can’t just dictate policy to China, even if Donald Trump is president. (When he makes me Treasury Secretary, my top candidates will be that China doesn’t have to pay Bill Gates for Windows or Pfizer for its drug patents, and that they need not worry about market access for Goldman Sachs.)
If China did raise the value of its currency, it would reduce the U.S. trade deficit, boosting demand and creating more jobs, especially in manufacturing. (It would also lower our budget deficits, making deficit hawks happy.) This is a perfectly reasonable policy which should not be banished from consideration because it is associated with Donald Trump. (I have no idea what Trump hopes to get from his tariffs on Mexico.)
Note: Typos corrected, thanks Robert Salzberg.
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Steve Rattner had a column in the NYT warning that 401(k) accounts are proving to be an inadequate replacement for traditional defined benefit accounts. While the points he makes are exactly right (people lose too much money in fees, make bad investment choices, and don’t put enough money aside), one of the figures he cites may have misled readers about the state of workers’ finances.
Rattner cites a study by Alicia Munnell, the director of the Center for Retirement Research at Boston College, which finds that households have an average of $111,000 in retirement accounts. While the figure is accurate, it refers to an average which is skewed by the large holdings of the wealthy, and only includes people with retirement accounts.
A more meaningful figure can be found in the same report. It gives a summary of the assets of the middle decile of households with someone between the ages of 55 to 64. This shows holdings in 401(K)s and IRAs of just $40,100. In fairness, this group still has a substantial amount of assets in defined benefit accounts (the report puts the figure at $153,700), but if the question is the extent to which 401(k)s have been a successful replacement, it is appropriate to exclude these assets. (Yes, there will be some substitution, so people would have more money in 401(k)s if they did not have DB pensions.)
Anyhow, Rattner is right about the basic story, but the picture is somewhat worse than this $111,000 figure might lead people to believe.
Steve Rattner had a column in the NYT warning that 401(k) accounts are proving to be an inadequate replacement for traditional defined benefit accounts. While the points he makes are exactly right (people lose too much money in fees, make bad investment choices, and don’t put enough money aside), one of the figures he cites may have misled readers about the state of workers’ finances.
Rattner cites a study by Alicia Munnell, the director of the Center for Retirement Research at Boston College, which finds that households have an average of $111,000 in retirement accounts. While the figure is accurate, it refers to an average which is skewed by the large holdings of the wealthy, and only includes people with retirement accounts.
A more meaningful figure can be found in the same report. It gives a summary of the assets of the middle decile of households with someone between the ages of 55 to 64. This shows holdings in 401(K)s and IRAs of just $40,100. In fairness, this group still has a substantial amount of assets in defined benefit accounts (the report puts the figure at $153,700), but if the question is the extent to which 401(k)s have been a successful replacement, it is appropriate to exclude these assets. (Yes, there will be some substitution, so people would have more money in 401(k)s if they did not have DB pensions.)
Anyhow, Rattner is right about the basic story, but the picture is somewhat worse than this $111,000 figure might lead people to believe.
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That is what an article in the Washington Post seemed to imply, as it indicated that German Finance Minister Wolfgang Schäuble would have the European Union put up protectionist trade barriers as a way of punishing the United Kingdom if the country voted to leave the European Union. Such barriers would likely prove costly to the people in the European Union.
There have been a number of analyses showing that the UK could see a loss of between 2–5 percent in output if it left the European Union (EU) and suddenly faced substantial trade barriers. While the UK is less important as a trading partner for the EU as a whole than vice-versa, it is a very important trading partner for some members of the EU. For those countries, Schäuble’s plans would imply a substantial loss of income. It is striking that a German finance minister would have this sort of power. That could be one reason why people in the UK and other countries have an interest in leaving.
It would have also been worth pointing out that the economic policies imposed by Germany have cost the EU a decade of growth and needlessly kept millions of people out of work. This policies are based on some sort of quasi-religious belief in the virtues of balanced budgets and have been shown to be unmoved by evidence. It is reasonable to believe that if the European Union had pursued policies to promote rather than stifle growth, Europeans would have a more positive attitude toward it.
The article also wrongly refers to the Trans-Atlantic Trade and Investment (TTIP) pact as a “free-trade” deal. It isn’t. With few exceptions, the trade barriers between the U.S. and Europe are already very low and it would not be worth a great deal of time devising a pact to push them to zero. Rather the TTIP is about regulations and investment. Many of its provisions, such as stronger and longer copyright and patent protection, are actually protectionist in nature.
Politicians call pacts like the TTIP “free-trade” agreements because then quasi-intellectual types, like the people who write for newspapers, will then think they have to support them.
That is what an article in the Washington Post seemed to imply, as it indicated that German Finance Minister Wolfgang Schäuble would have the European Union put up protectionist trade barriers as a way of punishing the United Kingdom if the country voted to leave the European Union. Such barriers would likely prove costly to the people in the European Union.
There have been a number of analyses showing that the UK could see a loss of between 2–5 percent in output if it left the European Union (EU) and suddenly faced substantial trade barriers. While the UK is less important as a trading partner for the EU as a whole than vice-versa, it is a very important trading partner for some members of the EU. For those countries, Schäuble’s plans would imply a substantial loss of income. It is striking that a German finance minister would have this sort of power. That could be one reason why people in the UK and other countries have an interest in leaving.
It would have also been worth pointing out that the economic policies imposed by Germany have cost the EU a decade of growth and needlessly kept millions of people out of work. This policies are based on some sort of quasi-religious belief in the virtues of balanced budgets and have been shown to be unmoved by evidence. It is reasonable to believe that if the European Union had pursued policies to promote rather than stifle growth, Europeans would have a more positive attitude toward it.
The article also wrongly refers to the Trans-Atlantic Trade and Investment (TTIP) pact as a “free-trade” deal. It isn’t. With few exceptions, the trade barriers between the U.S. and Europe are already very low and it would not be worth a great deal of time devising a pact to push them to zero. Rather the TTIP is about regulations and investment. Many of its provisions, such as stronger and longer copyright and patent protection, are actually protectionist in nature.
Politicians call pacts like the TTIP “free-trade” agreements because then quasi-intellectual types, like the people who write for newspapers, will then think they have to support them.
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We usually like to think of people holding positions of responsibility in places like the United States and Europe as rational actors who make reasoned decisions based on the evidence presented them. Apparently this is not the case if the New York Times is to be believed.
According to the NYT, the leading figures in the European Union are prepared to act like spurned lovers if the people of the United Kingdom vote this week to leave the European Union. One might think that a rational course of action might be recognizing the decision of the people in the UK and then trying to negotiate terms for their future relationship that are mutually advantageous. Instead, the leaders of the EU are apparently planning punishment.
The article begins by telling readers:
“The rest of the European Union nations are looking at the possibility of a British departure from the bloc with disbelief, trepidation and anguish. But they are also preparing to retaliate.”
It goes on to give more details of the plans for punishment. Apparently a friendly divorce is out of the question for the EU honchos.
Rational people in the EU might also ask why people in one of the EU’s largest member states would think they are better off outside of the European Union. After all, the benefits of the federal government are evident to most people living in the United States, why is that not the case in much of Europe.
Somehow the leaders of the EU are apparently incapable of asking whether maybe they are doing something wrong. For example, perhaps the austerity that has cost the continent a decade of growth and needlessly subjected millions of people to unemployment and underemployment is not a good way to go. Given the competence and integrity of the folks running the EU it is certainly understandable that many in the UK would want to leave.
We usually like to think of people holding positions of responsibility in places like the United States and Europe as rational actors who make reasoned decisions based on the evidence presented them. Apparently this is not the case if the New York Times is to be believed.
According to the NYT, the leading figures in the European Union are prepared to act like spurned lovers if the people of the United Kingdom vote this week to leave the European Union. One might think that a rational course of action might be recognizing the decision of the people in the UK and then trying to negotiate terms for their future relationship that are mutually advantageous. Instead, the leaders of the EU are apparently planning punishment.
The article begins by telling readers:
“The rest of the European Union nations are looking at the possibility of a British departure from the bloc with disbelief, trepidation and anguish. But they are also preparing to retaliate.”
It goes on to give more details of the plans for punishment. Apparently a friendly divorce is out of the question for the EU honchos.
Rational people in the EU might also ask why people in one of the EU’s largest member states would think they are better off outside of the European Union. After all, the benefits of the federal government are evident to most people living in the United States, why is that not the case in much of Europe.
Somehow the leaders of the EU are apparently incapable of asking whether maybe they are doing something wrong. For example, perhaps the austerity that has cost the continent a decade of growth and needlessly subjected millions of people to unemployment and underemployment is not a good way to go. Given the competence and integrity of the folks running the EU it is certainly understandable that many in the UK would want to leave.
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