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That could have been the title of a Washington Post editorial that criticizes the budget produced by Senate Democrats because it doesn’t address the possibility that we will have a rising debt to GDP ratio in 2023. After all, millions of lives are being ruined by the high unemployment that resulted from the ineptitude of the people that the Post views as experts on the economy. The Post is completely unconcerned about this crisis. Instead it is very upset that Senate Democrats are not worried about projections for 2023 and beyond of a rising debt to GDP ratio.
It is worth remembering that back in 2000 there was a major debate in Washington over the date at which the federal government would pay off the national debt. The Washington Post was a major actor in this debate.
Btw, the Post has this classic included in its list of ways to deal with Social Security:
“a more realistic inflation adjustment.”
Of course the Washington Post does not have a clue as to whether its preferred price index better reflects the rate of inflation seen by Social Security beneficiaries. All it knows is that it will show a lower rate of inflation and therefore cut benefits. You’ve gotta love these folks.
That could have been the title of a Washington Post editorial that criticizes the budget produced by Senate Democrats because it doesn’t address the possibility that we will have a rising debt to GDP ratio in 2023. After all, millions of lives are being ruined by the high unemployment that resulted from the ineptitude of the people that the Post views as experts on the economy. The Post is completely unconcerned about this crisis. Instead it is very upset that Senate Democrats are not worried about projections for 2023 and beyond of a rising debt to GDP ratio.
It is worth remembering that back in 2000 there was a major debate in Washington over the date at which the federal government would pay off the national debt. The Washington Post was a major actor in this debate.
Btw, the Post has this classic included in its list of ways to deal with Social Security:
“a more realistic inflation adjustment.”
Of course the Washington Post does not have a clue as to whether its preferred price index better reflects the rate of inflation seen by Social Security beneficiaries. All it knows is that it will show a lower rate of inflation and therefore cut benefits. You’ve gotta love these folks.
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The NYT had an interesting piece on new research from the Urban Institute showing that young people are faring very poorly in the economy. In presenting the list of problems facing young workers it included the collapse of the housing bubble.
In fact this was great news for young people in terms of their ability to buy homes. (The impact on the economy was of course devastating.) Since the overwhelming majority of young workers were not homeowners prior to the collapse of the bubble, the drop in prices means that they can buy a home for close to 30 percent less than what they would have paid 6 or 7 years ago. This is effectively a transfer of tens of thousands of dollars from older generations to the young. This is very good news for them.
The NYT had an interesting piece on new research from the Urban Institute showing that young people are faring very poorly in the economy. In presenting the list of problems facing young workers it included the collapse of the housing bubble.
In fact this was great news for young people in terms of their ability to buy homes. (The impact on the economy was of course devastating.) Since the overwhelming majority of young workers were not homeowners prior to the collapse of the bubble, the drop in prices means that they can buy a home for close to 30 percent less than what they would have paid 6 or 7 years ago. This is effectively a transfer of tens of thousands of dollars from older generations to the young. This is very good news for them.
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Paul Howard celebrates the lower than projected cost of the Medicare prescription drug program and attributes it to the role of private insurers. In fact, the main reason that Part D has cost less than projected is that the rate of increase in drug prices overall has been far less than projected. This in turn is attributable to a sharp fall in the number of breakthrough drugs.
If Howard wants to blame the collapse of innovation on the use of private insurers to deliver the Medicare drug benefit then he may have a case that the private insurers were central to controlling costs. Otherwise, he’s killing electrons for nothing.
Thanks to Robert Salzberg for calling this one to my attention.
Paul Howard celebrates the lower than projected cost of the Medicare prescription drug program and attributes it to the role of private insurers. In fact, the main reason that Part D has cost less than projected is that the rate of increase in drug prices overall has been far less than projected. This in turn is attributable to a sharp fall in the number of breakthrough drugs.
If Howard wants to blame the collapse of innovation on the use of private insurers to deliver the Medicare drug benefit then he may have a case that the private insurers were central to controlling costs. Otherwise, he’s killing electrons for nothing.
Thanks to Robert Salzberg for calling this one to my attention.
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The Washington Post had an article that touted Ireland’s success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:
“In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?”
While it is undoubtedly good news that the Irish government can re-enter credit markets, it is worth noting that the unemployment rate in Ireland is still 14.7 percent, down very slightly from its recession peak. This is still 10 full percentage points above the pre-recession level. This is supposed to prove that austerity works?
The Washington Post had an article that touted Ireland’s success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:
“In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?”
While it is undoubtedly good news that the Irish government can re-enter credit markets, it is worth noting that the unemployment rate in Ireland is still 14.7 percent, down very slightly from its recession peak. This is still 10 full percentage points above the pre-recession level. This is supposed to prove that austerity works?
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Yes, boys and girls and Arnold Schwarzenegger fans everywhere, a strong dollar does not mean a healthy economy, contrary to what Neil Irwin told us today in the Washington Post. In fact, fans of arithmetic and believers in accounting identities know that an over-valued dollar is at the root of our current economic problems. While believers in the Confidence Fairy think that investment will reach new highs as a share of GDP, and/or consumers will spend even when they have little wealth, those of us who follow data know that the only way to make up the demand shortfall created by trade deficit is with a large budget deficit. However, the Serious People say that we can’t have a large budget deficit, so that means we get high unemployment.
The only serious way to get the trade deficit down is get the dollar down. That will make our exports cheaper to people living in other countries and make imports more expensive for people in the United States. That means more exports and fewer imports, and therefore a smaller trade deficit. (For those folks who were looking to the trade agreements, the idea that these will reduce the trade deficit is just something that the Serious People tell to children.)
Anyhow, it is easy to show there is no direct relationship between the health of the economy and the strength of the dollar. In fact, the recovery in the first half of the Clinton administration was based to a substantial extent on the idea that a lower deficit would lead to a lower valued dollar and therefore more net exports. And, this largely worked as shown below.
Then Robert Rubin took over at Treasury and pushed his high dollar policy giving us record trade deficits along with a stock and housing bubble. You know the rest of the story.
Yes, boys and girls and Arnold Schwarzenegger fans everywhere, a strong dollar does not mean a healthy economy, contrary to what Neil Irwin told us today in the Washington Post. In fact, fans of arithmetic and believers in accounting identities know that an over-valued dollar is at the root of our current economic problems. While believers in the Confidence Fairy think that investment will reach new highs as a share of GDP, and/or consumers will spend even when they have little wealth, those of us who follow data know that the only way to make up the demand shortfall created by trade deficit is with a large budget deficit. However, the Serious People say that we can’t have a large budget deficit, so that means we get high unemployment.
The only serious way to get the trade deficit down is get the dollar down. That will make our exports cheaper to people living in other countries and make imports more expensive for people in the United States. That means more exports and fewer imports, and therefore a smaller trade deficit. (For those folks who were looking to the trade agreements, the idea that these will reduce the trade deficit is just something that the Serious People tell to children.)
Anyhow, it is easy to show there is no direct relationship between the health of the economy and the strength of the dollar. In fact, the recovery in the first half of the Clinton administration was based to a substantial extent on the idea that a lower deficit would lead to a lower valued dollar and therefore more net exports. And, this largely worked as shown below.
Then Robert Rubin took over at Treasury and pushed his high dollar policy giving us record trade deficits along with a stock and housing bubble. You know the rest of the story.
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This is what reporters/columnists are supposed to do. His column is not an endorsement, it just lays out the benefits and downsides of a serious budget. What a novel idea.
Addendum:
I noted the comments below on Zandi’s concern that stimulus is not needed because the economy is kicking into a higher gear. FWIW, Zandi has seen the economy kicking into a higher gear numerous times over the last four years.
For example, in December of 2010 he told David Leonhardt:
“In my previous baseline I expected real G.D.P. growth of 2.8 percent in 2011 and 4.2 percent in 2012, … I’m now expecting real G.D.P. growth of 3.9 percent in 2011 and 3.4 percent in 2012.”
Actual growth in 2011 was 2.0 percent and in 2012 1.6 percent.
An NYT article in April of 2012 told readers:
“‘I’m relatively optimistic,’ said Mark Zandi, the chief economist at Moody’s Analytics, who released a note this week showing unemployment dropping faster than he previously forecast. As for the more dire claims about an economy on the brink, ‘I don’t really take those seriously.'”
The average growth rate over the next three quarters was 1.5 percent.
It is worth taking this track record into account in assessing Zandi’s view of the benefits of stimulus at present. He has been seriously overly optimistic in his past forecasts.
This is what reporters/columnists are supposed to do. His column is not an endorsement, it just lays out the benefits and downsides of a serious budget. What a novel idea.
Addendum:
I noted the comments below on Zandi’s concern that stimulus is not needed because the economy is kicking into a higher gear. FWIW, Zandi has seen the economy kicking into a higher gear numerous times over the last four years.
For example, in December of 2010 he told David Leonhardt:
“In my previous baseline I expected real G.D.P. growth of 2.8 percent in 2011 and 4.2 percent in 2012, … I’m now expecting real G.D.P. growth of 3.9 percent in 2011 and 3.4 percent in 2012.”
Actual growth in 2011 was 2.0 percent and in 2012 1.6 percent.
An NYT article in April of 2012 told readers:
“‘I’m relatively optimistic,’ said Mark Zandi, the chief economist at Moody’s Analytics, who released a note this week showing unemployment dropping faster than he previously forecast. As for the more dire claims about an economy on the brink, ‘I don’t really take those seriously.'”
The average growth rate over the next three quarters was 1.5 percent.
It is worth taking this track record into account in assessing Zandi’s view of the benefits of stimulus at present. He has been seriously overly optimistic in his past forecasts.
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New York Governor Andrew Cuomo has been bragging about job growth on his watch. The NYT has a piece challenging Cuomo’s claims. It tells readers:
“The number of private-sector jobs increased by 4 percent in New York State from January 2011 to January 2013, according to the State Labor Department. Nationwide, over the same period, private sector jobs grew by 4.4 percent.
“Those figures come despite the fact that New York State lost fewer jobs, as a percentage, than the nation did in the Great Recession.”
Actually the fact that New York lost fewer jobs in the downturn would be an argument as to why it would create fewer jobs in the upturn.
Every state will have some amount of normal job growth consistent with the growth of the labor force. It will also have additional job growth associated with a backlog of unemployed workers who are looking to find work. In the extreme case where a state lost no jobs in the downturn this backlog would be zero. In that case, the only source of job growth will be the normal growth of the labor force.
Obviously New York did lose jobs in the downturn, but the fact that it lost a smaller number relative to the size of its labor force would be argument as to why we would expect slower job growth now, not an argument as to why growth would be faster.
I’ll let Cuomo’s crew argue their own case on their record, but on this particular point the NYT got it wrong.
New York Governor Andrew Cuomo has been bragging about job growth on his watch. The NYT has a piece challenging Cuomo’s claims. It tells readers:
“The number of private-sector jobs increased by 4 percent in New York State from January 2011 to January 2013, according to the State Labor Department. Nationwide, over the same period, private sector jobs grew by 4.4 percent.
“Those figures come despite the fact that New York State lost fewer jobs, as a percentage, than the nation did in the Great Recession.”
Actually the fact that New York lost fewer jobs in the downturn would be an argument as to why it would create fewer jobs in the upturn.
Every state will have some amount of normal job growth consistent with the growth of the labor force. It will also have additional job growth associated with a backlog of unemployed workers who are looking to find work. In the extreme case where a state lost no jobs in the downturn this backlog would be zero. In that case, the only source of job growth will be the normal growth of the labor force.
Obviously New York did lose jobs in the downturn, but the fact that it lost a smaller number relative to the size of its labor force would be argument as to why we would expect slower job growth now, not an argument as to why growth would be faster.
I’ll let Cuomo’s crew argue their own case on their record, but on this particular point the NYT got it wrong.
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