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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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As I’ve often noticed in the past, the WaPo apparently has difficulty getting access to government data at its location in downtown Washington, DC. If it did, it probably would not have run a Wonkblog piece by Steven Mufson touting the expansion of oil supply as the reason that oil prices have fallen sharply this year.
As I pointed out last week, the 2007 World Energy Outlook (the last projections from the Energy Information Agency before the economic collapse) projected output in 2015 of 98.5 million barrels per day (Table 1.3). The most recent projections put production at 92.7 million barrels per day, 5.8 million fewer barrels than had been projected before the slump. This means production has actually grown less rapidly than projected.
It may well be the case that potential production has grown due to large new investments, as Mufson claims, but the key story here is that demand is well below projected levels. This is due both to weaker than expected economic growth and to a lesser extent conservation measures. This drop in demand would be holding prices down even if there had not been any great breakthroughs on the supply side.
As I’ve often noticed in the past, the WaPo apparently has difficulty getting access to government data at its location in downtown Washington, DC. If it did, it probably would not have run a Wonkblog piece by Steven Mufson touting the expansion of oil supply as the reason that oil prices have fallen sharply this year.
As I pointed out last week, the 2007 World Energy Outlook (the last projections from the Energy Information Agency before the economic collapse) projected output in 2015 of 98.5 million barrels per day (Table 1.3). The most recent projections put production at 92.7 million barrels per day, 5.8 million fewer barrels than had been projected before the slump. This means production has actually grown less rapidly than projected.
It may well be the case that potential production has grown due to large new investments, as Mufson claims, but the key story here is that demand is well below projected levels. This is due both to weaker than expected economic growth and to a lesser extent conservation measures. This drop in demand would be holding prices down even if there had not been any great breakthroughs on the supply side.
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The Washington Post repeats the silly myth that we were in danger of a second Great Depression without heroic measures to save Wall Street. A piece on the path of quantitative easing (which was a good idea) told readers:
“But while economists generally agreed that effort [the Fed’s purchase of $500 billion in mortgage backed securities in 2008-2009] helped the country avert another depression, the swift recovery that has historically accompanied downturns remained elusive.”
It is quite fashionable among Washington elite types to insist that we would have had another depression if we didn’t save the Wall Street banks, but do any of them have any idea what they mean by this?
The first Great Depression was the result of not having enough demand in the economy. We got out of it finally in 1941 by spending lots of money. The motivation for spending lots of money was fighting World War II, but the key point was spending the money. It might have been difficult politically to justify the spending necessary to restore the economy to full employment without the war, but that is a political problem not an economic problem. We do know how to spend money.
In effect, the pundits who say that we would have had a depression if we did not bail out the banks are saying that our economic policy is so dominated by flat-earth types that we would have to endure a decade or more of double-digit unemployment, with the incredible amount of suffering it would cause, because the flat-earthers would not allow the spending necessary to restore full employment.
That characterization of our political process could be accurate, but it is important to be clear what is being said. The claim is not that anything about the financial crisis itself would have caused a depression. The claim is rather that Washington economic policy is totally controlled by people without a clue about economics. Apparently, the Post and others adhere to this view.
The Washington Post repeats the silly myth that we were in danger of a second Great Depression without heroic measures to save Wall Street. A piece on the path of quantitative easing (which was a good idea) told readers:
“But while economists generally agreed that effort [the Fed’s purchase of $500 billion in mortgage backed securities in 2008-2009] helped the country avert another depression, the swift recovery that has historically accompanied downturns remained elusive.”
It is quite fashionable among Washington elite types to insist that we would have had another depression if we didn’t save the Wall Street banks, but do any of them have any idea what they mean by this?
The first Great Depression was the result of not having enough demand in the economy. We got out of it finally in 1941 by spending lots of money. The motivation for spending lots of money was fighting World War II, but the key point was spending the money. It might have been difficult politically to justify the spending necessary to restore the economy to full employment without the war, but that is a political problem not an economic problem. We do know how to spend money.
In effect, the pundits who say that we would have had a depression if we did not bail out the banks are saying that our economic policy is so dominated by flat-earth types that we would have to endure a decade or more of double-digit unemployment, with the incredible amount of suffering it would cause, because the flat-earthers would not allow the spending necessary to restore full employment.
That characterization of our political process could be accurate, but it is important to be clear what is being said. The claim is not that anything about the financial crisis itself would have caused a depression. The claim is rather that Washington economic policy is totally controlled by people without a clue about economics. Apparently, the Post and others adhere to this view.
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The NYT had a Room for Debate segment on whether the Fed should be concerned about inequality. While many good points were raised in the exchange, none of the participants made the point that lower rates of unemployment are associated with faster real wage growth for those at the middle and bottom of the wage distribution.
This is the main point of the classic book, Getting Back to Full Employment: A Better Bargain for Working People, that Jared Bernstein and I wrote last year. We showed that workers at the middle and bottom of the wage distribution only saw wage growth when the unemployment rate was at low levels. This is an essential condition for these workers to share in the gains of economic growth.
The Fed may not always be able to boost growth and reduce unemployment by as much as it might like, but it certainly can keep the unemployment rate from falling. This is the point of raising interest rates. The idea is that higher rates will slow the economy and the rate of job creation, thereby keeping the unemployment rate higher than it otherwise would be.
If the Fed keeps the unemployment rate higher than necessary, then it is preventing most workers from sharing in the gains of growth, thereby worsening income inequality. This was very much an issue back in the 1990s when most economists thought the Fed should have kept the unemployment rate from falling much below 6.0 percent.
Fortunately, Federal Reserve Board Chair Alan Greenspan did not share this view. He allowed the unemployment rate to fall far below this level, reaching 4.0 percent as a year-round average in 2000. As a result, there was strong wage growth for workers at the middle and bottom of the wage distribution. These workers also had the opportunity to work more hours, further increasing their income gains. And, because unemployment disproportionately hits those at the bottom of the income ladder, these people disproportionately benefited from the jobs created in these years.
These fundamental points should have been included in the debate on the Fed and inequality.
The NYT had a Room for Debate segment on whether the Fed should be concerned about inequality. While many good points were raised in the exchange, none of the participants made the point that lower rates of unemployment are associated with faster real wage growth for those at the middle and bottom of the wage distribution.
This is the main point of the classic book, Getting Back to Full Employment: A Better Bargain for Working People, that Jared Bernstein and I wrote last year. We showed that workers at the middle and bottom of the wage distribution only saw wage growth when the unemployment rate was at low levels. This is an essential condition for these workers to share in the gains of economic growth.
The Fed may not always be able to boost growth and reduce unemployment by as much as it might like, but it certainly can keep the unemployment rate from falling. This is the point of raising interest rates. The idea is that higher rates will slow the economy and the rate of job creation, thereby keeping the unemployment rate higher than it otherwise would be.
If the Fed keeps the unemployment rate higher than necessary, then it is preventing most workers from sharing in the gains of growth, thereby worsening income inequality. This was very much an issue back in the 1990s when most economists thought the Fed should have kept the unemployment rate from falling much below 6.0 percent.
Fortunately, Federal Reserve Board Chair Alan Greenspan did not share this view. He allowed the unemployment rate to fall far below this level, reaching 4.0 percent as a year-round average in 2000. As a result, there was strong wage growth for workers at the middle and bottom of the wage distribution. These workers also had the opportunity to work more hours, further increasing their income gains. And, because unemployment disproportionately hits those at the bottom of the income ladder, these people disproportionately benefited from the jobs created in these years.
These fundamental points should have been included in the debate on the Fed and inequality.
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