The NYT is pushing so hard for budget cuts that it is prepared to ignore journalistic standards to make its case. An article about the possibilities for collaboration between President Obama and the Republican Congress included a number of assertions that were just opinion or inventions.
The piece begins by telling readers:
“After years of clashes and a grudging truce, fiscal and economic policy was brought back to center stage by the wave of Republican electoral victories on Tuesday, with both President Obama and the new congressional leadership expressing hope that deals can be reached to simplify the tax code, promote trade and eliminate the budget deficit.”
It’s not clear where President Obama said that he wanted to “eliminate the budget deficit.” He didn’t say anything like this in his press conference. Since this would imply throwing millions of people out of work and slowing growth (sorry folks, elections can’t change the laws of economics any more than they can change the law of gravity), it’s not clear why he would want to eliminate the budget deficit.
When the piece reported that the Republican leadership is:
“considering turning to a parliamentary procedure called reconciliation to cut costs of entitlement programs like Medicare,“
it would have been useful to remind readers that Medicare costs have already fallen sharply relative to recent projections. In fact, the current projections for costs are far below the targets of deficit cutters from earlier in the decade.
The piece also later told readers:
“Fiscal rectitude and tax overhaul are matters that unite all wings of the Republican coalition, from the Tea Party right to the Big Business center. They also have strong adherents among good-government advocates in the Democratic Party’s center left.”
It apparently is defining “fiscal rectitude” as throwing people out of work and slower economic growth. This is a NYT definition, not the standard usage of the term.
In the same vein, at one point it tells readers that the national debt, “continues to grow though the annual deficit has receded,” implying that this is for some reason a problem. (It isn’t for any economic reason.)
This is not the only place where the piece invents its own language. It refers to the trade deals currently being negotiated, the Trans-Atlantic Trade and Investment Pact and the Trans-Pacific Partnership, as “free trade” agreements. These are not free trade agreements. A major goal of these deals is to increase the strength of patent and copyright protection, especially on prescription drugs. This is 180 degrees at odds with free trade. The paper could increase accuracy and save space by omitting the word “free.”
Thanks to Robert Salzberg for calling this piece to my attention.
Note: Typos corrected, thanks folks.
The NYT is pushing so hard for budget cuts that it is prepared to ignore journalistic standards to make its case. An article about the possibilities for collaboration between President Obama and the Republican Congress included a number of assertions that were just opinion or inventions.
The piece begins by telling readers:
“After years of clashes and a grudging truce, fiscal and economic policy was brought back to center stage by the wave of Republican electoral victories on Tuesday, with both President Obama and the new congressional leadership expressing hope that deals can be reached to simplify the tax code, promote trade and eliminate the budget deficit.”
It’s not clear where President Obama said that he wanted to “eliminate the budget deficit.” He didn’t say anything like this in his press conference. Since this would imply throwing millions of people out of work and slowing growth (sorry folks, elections can’t change the laws of economics any more than they can change the law of gravity), it’s not clear why he would want to eliminate the budget deficit.
When the piece reported that the Republican leadership is:
“considering turning to a parliamentary procedure called reconciliation to cut costs of entitlement programs like Medicare,“
it would have been useful to remind readers that Medicare costs have already fallen sharply relative to recent projections. In fact, the current projections for costs are far below the targets of deficit cutters from earlier in the decade.
The piece also later told readers:
“Fiscal rectitude and tax overhaul are matters that unite all wings of the Republican coalition, from the Tea Party right to the Big Business center. They also have strong adherents among good-government advocates in the Democratic Party’s center left.”
It apparently is defining “fiscal rectitude” as throwing people out of work and slower economic growth. This is a NYT definition, not the standard usage of the term.
In the same vein, at one point it tells readers that the national debt, “continues to grow though the annual deficit has receded,” implying that this is for some reason a problem. (It isn’t for any economic reason.)
This is not the only place where the piece invents its own language. It refers to the trade deals currently being negotiated, the Trans-Atlantic Trade and Investment Pact and the Trans-Pacific Partnership, as “free trade” agreements. These are not free trade agreements. A major goal of these deals is to increase the strength of patent and copyright protection, especially on prescription drugs. This is 180 degrees at odds with free trade. The paper could increase accuracy and save space by omitting the word “free.”
Thanks to Robert Salzberg for calling this piece to my attention.
Note: Typos corrected, thanks folks.
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The NYT had a piece discussing the extent to which small businesses are continuing to offer health care insurance to their workers through the exchanges created by the Affordable Care Act (ACA). Incredibly, the article never mentioned the prohibition on experience rating.
While many states had regulations that limited experience rating, prior to the ACA many small firms would see huge increases in premiums if one of their employees developed a serious illness. The ACA requires that insurers can only adjust rates in accordance with the age composition of the workforce, they cannot charge higher rates to a company because one or more of its employees has a serious illness. This will make insurance considerably more affordable for many businesses.
It would not be surprising if the ACA did cause fewer small businesses to offer insurance. The main purpose of the ACA was to create a well-working individual insurance market so that people who did not have insurance through an employer would be able to get affordable insurance through the exchanges. Insofar as the ACA succeeds, there is less reason for a small business to go through the effort of arranging its own insurance. This is not obviously a bad thing, since employers are not necessarily well-positioned to determine the best insurance for their workers.
The NYT had a piece discussing the extent to which small businesses are continuing to offer health care insurance to their workers through the exchanges created by the Affordable Care Act (ACA). Incredibly, the article never mentioned the prohibition on experience rating.
While many states had regulations that limited experience rating, prior to the ACA many small firms would see huge increases in premiums if one of their employees developed a serious illness. The ACA requires that insurers can only adjust rates in accordance with the age composition of the workforce, they cannot charge higher rates to a company because one or more of its employees has a serious illness. This will make insurance considerably more affordable for many businesses.
It would not be surprising if the ACA did cause fewer small businesses to offer insurance. The main purpose of the ACA was to create a well-working individual insurance market so that people who did not have insurance through an employer would be able to get affordable insurance through the exchanges. Insofar as the ACA succeeds, there is less reason for a small business to go through the effort of arranging its own insurance. This is not obviously a bad thing, since employers are not necessarily well-positioned to determine the best insurance for their workers.
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Eduardo Porter has an interesting discussion of inequality, based in large part on the views of M.I.T. Professor Robert Solow. Solow views it as unlikely that it will be possible politically any time soon to have tax and transfer policies that do much to lesson inequality. However he does hold out the hope that changes in corporate practices could lessen before tax inequality.
This is an extremely important point. There is considerable research showing that CEOs and other top management essentially ripoff shareholders, taking advantage of their insider power to give themselves pay that has little to do with their productivity, measured as the return they give to shareholders. (Lucian Bebchuk has a good summary of the issues.) If shareholders can better gain control of their companies, they might cut pay by 50 percent or more, bringing CEO pay in the United States in line with pay in other wealthy countries.
Since CEOs are among the very top earners in the U.S. economy, reductions in their pay will have a substantial impact on wage inequality. In addition, there is likely to be a spillover effect. If the CEOs of major companies earned $3-4 million, instead of $10-$20 million, then the pay of top management in places like universities, non-profit hospitals, and private charities might be similarly reduced. The lower pay of top executives in these institutions would also free up money for higher pay for those at the middle and bottom of the wage ladder.
The key to reducing CEO pay is to create a well-working system of corporate governance where shareholders can actually impose a check on top management. This is a soluble problem, as demonstrated by the fact that other countries have been able to rein in CEO pay.
Eduardo Porter has an interesting discussion of inequality, based in large part on the views of M.I.T. Professor Robert Solow. Solow views it as unlikely that it will be possible politically any time soon to have tax and transfer policies that do much to lesson inequality. However he does hold out the hope that changes in corporate practices could lessen before tax inequality.
This is an extremely important point. There is considerable research showing that CEOs and other top management essentially ripoff shareholders, taking advantage of their insider power to give themselves pay that has little to do with their productivity, measured as the return they give to shareholders. (Lucian Bebchuk has a good summary of the issues.) If shareholders can better gain control of their companies, they might cut pay by 50 percent or more, bringing CEO pay in the United States in line with pay in other wealthy countries.
Since CEOs are among the very top earners in the U.S. economy, reductions in their pay will have a substantial impact on wage inequality. In addition, there is likely to be a spillover effect. If the CEOs of major companies earned $3-4 million, instead of $10-$20 million, then the pay of top management in places like universities, non-profit hospitals, and private charities might be similarly reduced. The lower pay of top executives in these institutions would also free up money for higher pay for those at the middle and bottom of the wage ladder.
The key to reducing CEO pay is to create a well-working system of corporate governance where shareholders can actually impose a check on top management. This is a soluble problem, as demonstrated by the fact that other countries have been able to rein in CEO pay.
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The folks at the NYT apparently haven’t been reading much about the Trans-Atlantic Trade and Investment Pact (TTIP) or the Trans-Pacific Partnership (TPP), including what appears in the pages of the NYT. If they had done their homework, the paper wouldn’t be telling readers:
“This is one area [trade] where the Obama administration and Republicans should be able to find common ground. Republicans are enthusiastic advocates of increased trade, and the president is eager to get the added authority to negotiate new trade deals and win approval of a trade agreement with nations on the Pacific Rim.
“The main obstacle could be Democrats, many of whom are skeptical of trade deals that officials warn could cost American jobs. But a significant segment of Democrats back trade expansion, and a deal could probably be found if congressional Republicans and the White House both press for it.”
In fact, the TTIP and TPP (the two main deals currently being negotiated) will do almost nothing to increase trade and quite possibly could reduce it. As Paul Krugman (an economist and columnist for the New York Times) has pointed out, these deals do very little to reduce formal trade barriers, since these are already very low.
Both deals are primarily about imposing a business-friendly regulatory structure on the signatories to the agreements. One aspect of this regulatory structure is creating a quasi-judiciary system, investor-state dispute settlement councils, which would operate outside the existing legal structure of the countries in the agreements. The agreements, which are being negotiated in secrecy, also will have provisions on the environment, health and safety regulation, and copyright and patent protection. All of these provisions will supersede existing domestic law and regulation.
The increases in patent and copyright protection in these deals (yes, that is “protection” as in the opposite of free trade) will raise the price of prescription drugs and other items. These higher prices will reduce purchasing power and slow growth. They will likely lower, not raise, the amount of trade. This means that if Republicans are actually enthusiastic about increased trade, they probably would oppose both the TPP and TTIP.
On a different topic, in discussing Republican plans to change the Affordable Care Act, the piece told readers:
“At the same time, a bipartisan group of lawmakers has also called for returning the health law’s definition of full-time work to 40 hours from 30, arguing that the lower limit is forcing too many people out of work because of employers’ efforts to comply with the law.”
It is worth noting that there is zero evidence for this assertion. The provision described here requires that firms with more than fifty employees either provide insurance for their workers or pay a fine. For a worker to be covered by this provision, they have to be employed for more than 30 hours per week. There is no evidence that firms that don’t provide insurance and employ more than 50 people have reduced hiring relative to other firms.
Also, this provision has been suspended so that it actually has not taken effect yet. In the first half of 2013, when employers would have thought the provision applied, since it had not yet been suspended, they did not expand the share of the workforce working just under 30 hours to avoid having to pay the penalty. There was a very modest increase in the share of the workforce working 25-29 hours, but this was due to a reduction in the share working fewer hours.
In short, the claim that the ACA has cost jobs is just something Republican politicians say, like evolution may not be true, it is not a claim that bears a relationship to the real world. The NYT should have clarified this point for its readers.
The folks at the NYT apparently haven’t been reading much about the Trans-Atlantic Trade and Investment Pact (TTIP) or the Trans-Pacific Partnership (TPP), including what appears in the pages of the NYT. If they had done their homework, the paper wouldn’t be telling readers:
“This is one area [trade] where the Obama administration and Republicans should be able to find common ground. Republicans are enthusiastic advocates of increased trade, and the president is eager to get the added authority to negotiate new trade deals and win approval of a trade agreement with nations on the Pacific Rim.
“The main obstacle could be Democrats, many of whom are skeptical of trade deals that officials warn could cost American jobs. But a significant segment of Democrats back trade expansion, and a deal could probably be found if congressional Republicans and the White House both press for it.”
In fact, the TTIP and TPP (the two main deals currently being negotiated) will do almost nothing to increase trade and quite possibly could reduce it. As Paul Krugman (an economist and columnist for the New York Times) has pointed out, these deals do very little to reduce formal trade barriers, since these are already very low.
Both deals are primarily about imposing a business-friendly regulatory structure on the signatories to the agreements. One aspect of this regulatory structure is creating a quasi-judiciary system, investor-state dispute settlement councils, which would operate outside the existing legal structure of the countries in the agreements. The agreements, which are being negotiated in secrecy, also will have provisions on the environment, health and safety regulation, and copyright and patent protection. All of these provisions will supersede existing domestic law and regulation.
The increases in patent and copyright protection in these deals (yes, that is “protection” as in the opposite of free trade) will raise the price of prescription drugs and other items. These higher prices will reduce purchasing power and slow growth. They will likely lower, not raise, the amount of trade. This means that if Republicans are actually enthusiastic about increased trade, they probably would oppose both the TPP and TTIP.
On a different topic, in discussing Republican plans to change the Affordable Care Act, the piece told readers:
“At the same time, a bipartisan group of lawmakers has also called for returning the health law’s definition of full-time work to 40 hours from 30, arguing that the lower limit is forcing too many people out of work because of employers’ efforts to comply with the law.”
It is worth noting that there is zero evidence for this assertion. The provision described here requires that firms with more than fifty employees either provide insurance for their workers or pay a fine. For a worker to be covered by this provision, they have to be employed for more than 30 hours per week. There is no evidence that firms that don’t provide insurance and employ more than 50 people have reduced hiring relative to other firms.
Also, this provision has been suspended so that it actually has not taken effect yet. In the first half of 2013, when employers would have thought the provision applied, since it had not yet been suspended, they did not expand the share of the workforce working just under 30 hours to avoid having to pay the penalty. There was a very modest increase in the share of the workforce working 25-29 hours, but this was due to a reduction in the share working fewer hours.
In short, the claim that the ACA has cost jobs is just something Republican politicians say, like evolution may not be true, it is not a claim that bears a relationship to the real world. The NYT should have clarified this point for its readers.
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Yes that is the big scoop that the folks at AP uncovered today. According to a report from its Inspector General, $292,381 was paid out for HIV drugs after the patients were already dead. That undoubtedly sounds awful to many readers — yet another case of bungling bureaucrats in Washington throwing our hard-earned tax dollars into the garbage.
It turns out the situation could be even worse. According to the article, the $292,381 is just for one narrow program. If we add up the cost of all the drugs paid out to dead people, it could be in the millions. How horrible is that?
If AP wanted to treat this seriously instead of trying to create an Ebola panic over Medicare payments for dead people, it would have given some context for these numbers. The spending on dead people is from Medicare Part D, a program with an annual budget of $85 billion. That means the $292,381 that was identified as paying for dead people comes to 0.0003 percent of total spending. If the full amount for the whole program runs as high as $3-4 million then we might be looking at 0.004-0.005 percent of total spending.
Expressing these numbers in percentage terms might not make for as good a story, but it would actually be giving readers information. The incredible aspect to this issue is that there really is no disagreement about the basic point. Everyone knows that the numbers in the AP article are completely meaningless to almost everyone who reads them.
The question is why use them? Why would a news service not express the numbers as percentage so that the vast majority of readers would understand their significance. This was a point that Margaret Sullivan, the NYT Public Editor raised last year. She found David Leonhardt, then the Washington editor in complete agreement. Nonetheless, nothing changed at the NYT or anywhere else. Huge numbers are still expressed without any context even though everyone knows that almost none of their readers will understand them.
Naturally this creates an impression of massive fraud and waste even when the numbers are actually trivial compared to the size of the program. Just to be clear, any fraud and waste is bad. It would be nice if the money spent buying drugs for dead people were zero, but that is not going to happen in a program that spends $85 billion a year.
The goal would be to minimize the amount of fraud of this sort, but that does involve some common sense. It would be crazy to spend $1 million hiring investigators to eliminate $292,381 in payments for dead people. Furthermore, to let people in on a little secret, this sort of stuff happens in our ultra-efficient private sector as well. We are of course less likely to know about it, because private corporations don’t have inspector generals who publicly disclose evidence of waste and fraud.
Anyhow, this sort of inept economic reporting is the sort of thing that could be corrected if there were organizations in Washington that cared about protecting government programs like Medicare, Mediciad, Social Security, and the rest. They could pressure AP, the NYT, the WaPo to stop indefensible practices in reporting. Unfortunately, no such organizations seem to exist.
Yes that is the big scoop that the folks at AP uncovered today. According to a report from its Inspector General, $292,381 was paid out for HIV drugs after the patients were already dead. That undoubtedly sounds awful to many readers — yet another case of bungling bureaucrats in Washington throwing our hard-earned tax dollars into the garbage.
It turns out the situation could be even worse. According to the article, the $292,381 is just for one narrow program. If we add up the cost of all the drugs paid out to dead people, it could be in the millions. How horrible is that?
If AP wanted to treat this seriously instead of trying to create an Ebola panic over Medicare payments for dead people, it would have given some context for these numbers. The spending on dead people is from Medicare Part D, a program with an annual budget of $85 billion. That means the $292,381 that was identified as paying for dead people comes to 0.0003 percent of total spending. If the full amount for the whole program runs as high as $3-4 million then we might be looking at 0.004-0.005 percent of total spending.
Expressing these numbers in percentage terms might not make for as good a story, but it would actually be giving readers information. The incredible aspect to this issue is that there really is no disagreement about the basic point. Everyone knows that the numbers in the AP article are completely meaningless to almost everyone who reads them.
The question is why use them? Why would a news service not express the numbers as percentage so that the vast majority of readers would understand their significance. This was a point that Margaret Sullivan, the NYT Public Editor raised last year. She found David Leonhardt, then the Washington editor in complete agreement. Nonetheless, nothing changed at the NYT or anywhere else. Huge numbers are still expressed without any context even though everyone knows that almost none of their readers will understand them.
Naturally this creates an impression of massive fraud and waste even when the numbers are actually trivial compared to the size of the program. Just to be clear, any fraud and waste is bad. It would be nice if the money spent buying drugs for dead people were zero, but that is not going to happen in a program that spends $85 billion a year.
The goal would be to minimize the amount of fraud of this sort, but that does involve some common sense. It would be crazy to spend $1 million hiring investigators to eliminate $292,381 in payments for dead people. Furthermore, to let people in on a little secret, this sort of stuff happens in our ultra-efficient private sector as well. We are of course less likely to know about it, because private corporations don’t have inspector generals who publicly disclose evidence of waste and fraud.
Anyhow, this sort of inept economic reporting is the sort of thing that could be corrected if there were organizations in Washington that cared about protecting government programs like Medicare, Mediciad, Social Security, and the rest. They could pressure AP, the NYT, the WaPo to stop indefensible practices in reporting. Unfortunately, no such organizations seem to exist.
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The Washington Post has the answer. It devotes an article to Moody’s assessment of the financial situation of the U.S. government.
Most people probably know of Moody’s as one of the credit rating agencies that were paid tens of millions of dollars to rate mortgage backed securities as investment grade during the housing bubble years. It’s not clear when its assessment of creditworthiness supposedly became more credible.
Anyhow, the ostensible good news is that Moody’s says we don’t have anything to immediately worry about, the debt to GDP ratio is coming down for now.
“But — and you knew this was coming — there are dark clouds on the horizon. By 2018, the ratings agency expects annual deficits once again to surpass 3 percent of the size of the economy and to keep getting bigger. By 2030, debt held by outside investors is on track to rise from the current 75 percent of the size of the economy to 88 percent, an alarming increase that ‘likely would bring negative pressure’ on the nation’s sterling AAA credit rating.”
Moody’s then gives us a number of suggestions that include cutting Social Security and Medicare benefits in order to avert this rise in the debt to GDP ratio to 88 percent. If you were wondering how bad it is to have a debt to GDP ratio of 88 percent, it is not a difficult question to answer. It turns out that there are many countries who already have debt to GDP ratios that are higher than the ratio that Moody’s is warning we could hit in 2030 if we’re not good.
There is Italy with a debt to GDP ratio of 136.7 percent and Spain with a debt to GDP ratio of 98.6 percent, according to the I.M.F. Even worse, we have Japan with a debt to GDP ratio of 245.1 percent. Even our good friends across the pond in the United Kingdom have a debt to GDP ratio of 92.0 percent.
Needless to say the markets are punishing these countries for their fiscal recklessness. As of October 30th, Spain had to pay an interest rate of 2.16 percent on its 10-year bonds, profligate Italy paid 2.46 percent. The United Kingdom had to pay 2.23 percent and Japan, hold your breath, had to pay 0.47 percent interest.
Look, we have real problems. Millions of people still can’t find jobs and the weak labor market is redistributing income upward. And we should be worried about global warming. This stuff about long-term budgets is just brought to you by Jeff Bezos and his Wall Street friends because they want to cut Social Security and Medicare.
No one should be taking economic advice from folks who rate subprime mortgage backed securities AAA.
The Washington Post has the answer. It devotes an article to Moody’s assessment of the financial situation of the U.S. government.
Most people probably know of Moody’s as one of the credit rating agencies that were paid tens of millions of dollars to rate mortgage backed securities as investment grade during the housing bubble years. It’s not clear when its assessment of creditworthiness supposedly became more credible.
Anyhow, the ostensible good news is that Moody’s says we don’t have anything to immediately worry about, the debt to GDP ratio is coming down for now.
“But — and you knew this was coming — there are dark clouds on the horizon. By 2018, the ratings agency expects annual deficits once again to surpass 3 percent of the size of the economy and to keep getting bigger. By 2030, debt held by outside investors is on track to rise from the current 75 percent of the size of the economy to 88 percent, an alarming increase that ‘likely would bring negative pressure’ on the nation’s sterling AAA credit rating.”
Moody’s then gives us a number of suggestions that include cutting Social Security and Medicare benefits in order to avert this rise in the debt to GDP ratio to 88 percent. If you were wondering how bad it is to have a debt to GDP ratio of 88 percent, it is not a difficult question to answer. It turns out that there are many countries who already have debt to GDP ratios that are higher than the ratio that Moody’s is warning we could hit in 2030 if we’re not good.
There is Italy with a debt to GDP ratio of 136.7 percent and Spain with a debt to GDP ratio of 98.6 percent, according to the I.M.F. Even worse, we have Japan with a debt to GDP ratio of 245.1 percent. Even our good friends across the pond in the United Kingdom have a debt to GDP ratio of 92.0 percent.
Needless to say the markets are punishing these countries for their fiscal recklessness. As of October 30th, Spain had to pay an interest rate of 2.16 percent on its 10-year bonds, profligate Italy paid 2.46 percent. The United Kingdom had to pay 2.23 percent and Japan, hold your breath, had to pay 0.47 percent interest.
Look, we have real problems. Millions of people still can’t find jobs and the weak labor market is redistributing income upward. And we should be worried about global warming. This stuff about long-term budgets is just brought to you by Jeff Bezos and his Wall Street friends because they want to cut Social Security and Medicare.
No one should be taking economic advice from folks who rate subprime mortgage backed securities AAA.
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