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What is wrong with these people who keep talking about a Bowles-Simpson Commission report? This one is not a debatable point. There was no Bowles-Simpson Commission report. That’s a fact, just like the fact that Governor Romney lost the election.
Look it up. The by-laws of the commission say:
“The Commission shall vote on the approval of a final report containing a set of recommendations to achieve the objectives set forth in the Charter no later than December 1, 2010. The issuance of a final report of the Commission shall require the approval of not less than 14 of the 18 members of the Commission.”
There was no vote on anything by December 1, 2010 and there was no report that had the approval of 14 of the 18 members of the commission. Therefore there was no commission report. The correct way to refer to the document in question is the report of the co-chairs.
Today’s guilty parties are David Leonhardt at the NYT and Steve Pearlstein at the Post. Come on folks, a lot of Republicans really wanted Romney to get elected, but that doesn’t make him president. And, no matter how much you guys like the Bowles-Simpson report, there was no report from the commission. Let’s get back to reality.
What is wrong with these people who keep talking about a Bowles-Simpson Commission report? This one is not a debatable point. There was no Bowles-Simpson Commission report. That’s a fact, just like the fact that Governor Romney lost the election.
Look it up. The by-laws of the commission say:
“The Commission shall vote on the approval of a final report containing a set of recommendations to achieve the objectives set forth in the Charter no later than December 1, 2010. The issuance of a final report of the Commission shall require the approval of not less than 14 of the 18 members of the Commission.”
There was no vote on anything by December 1, 2010 and there was no report that had the approval of 14 of the 18 members of the commission. Therefore there was no commission report. The correct way to refer to the document in question is the report of the co-chairs.
Today’s guilty parties are David Leonhardt at the NYT and Steve Pearlstein at the Post. Come on folks, a lot of Republicans really wanted Romney to get elected, but that doesn’t make him president. And, no matter how much you guys like the Bowles-Simpson report, there was no report from the commission. Let’s get back to reality.
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Former Federal Reserve Board Chairman Paul Volcker is a hero to the inside Washington crowd for having brought down inflation from its double-digit levels of the late 1970s. Never mind that this drop in the inflation rate occurred in every other country in the world also. We still must praise Volcker.
We also should not be bothered by the fact that his policy pushed the unemployment rate to almost 11 percent. This was necessary pain that those outside the elite just had to endure for the good of the country as a whole. We also are not supposed to be bothered by what his high interest policies did to heavily indebted developing countries.
But putting all this aside, the Volcker worshippers should at least be able to get the basic facts right. Steven Pearlstein flunks the test in a WAPO book review when he tells readers:
“By the time he stepped down as Fed chairman in 1987, Volcker had managed to wring inflation out of the American psyche and bring the country’s trade account and the government’s budget much closer toward balance.”
This is not true, the trade deficit in fact soared during the Volcker years as shown below.
Source: Bureau of Economic Analysis.
Expressed as a share of GDP, the trade deficit went from 0.8 percent in 1979 to 3.0 percent in 1987. It really shouldn’t be hard to get this one right.
Addendum:
In response to several comments below I have corrected the graph to show the “surplus” not deficit becoming more negative under Volcker. This was arguably the direct result of his Fed policy, since a predicted result of higher interest rates is a rise in the value of the dollar which makes U.S. goods less competitive internationally.
Former Federal Reserve Board Chairman Paul Volcker is a hero to the inside Washington crowd for having brought down inflation from its double-digit levels of the late 1970s. Never mind that this drop in the inflation rate occurred in every other country in the world also. We still must praise Volcker.
We also should not be bothered by the fact that his policy pushed the unemployment rate to almost 11 percent. This was necessary pain that those outside the elite just had to endure for the good of the country as a whole. We also are not supposed to be bothered by what his high interest policies did to heavily indebted developing countries.
But putting all this aside, the Volcker worshippers should at least be able to get the basic facts right. Steven Pearlstein flunks the test in a WAPO book review when he tells readers:
“By the time he stepped down as Fed chairman in 1987, Volcker had managed to wring inflation out of the American psyche and bring the country’s trade account and the government’s budget much closer toward balance.”
This is not true, the trade deficit in fact soared during the Volcker years as shown below.
Source: Bureau of Economic Analysis.
Expressed as a share of GDP, the trade deficit went from 0.8 percent in 1979 to 3.0 percent in 1987. It really shouldn’t be hard to get this one right.
Addendum:
In response to several comments below I have corrected the graph to show the “surplus” not deficit becoming more negative under Volcker. This was arguably the direct result of his Fed policy, since a predicted result of higher interest rates is a rise in the value of the dollar which makes U.S. goods less competitive internationally.
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The Washington Post is intensifying its push for cuts to Social Security and Medicare apparently hoping for action in the lame duck Congressional session. Today a story in the news section told readers:
“On entitlements, Obama has offered significant changes to Medicare, including letting the eligibility age to rise from 65 to 67.”
The passive tense in this sentence might confuse readers. President Obama proposed raising the eligibility age for Medicare from 65 to 67. This is not something that happens absent his effort to stop it, like the rise of the oceans due to global warming. Obama would be the agent of this increase in the age of eligibility. Experienced reporters and editors usually would not make this sort of mistake.
The next sentence tells readers:
“He has also supported applying a less generous measure of inflation to Social Security benefits.”
Okay, does everyone know what this means? I suspect that only a small minority of Post readers understands that “applying a less generous measure of inflation” implies a cut in the annual cost of living adjustment of 0.3 percentage points. This cut would be cumulative so that after being retired 10 years a beneficiary would see a cut of approximately 3 percent, after 20 years the cut would 6 percent and after 30 years it would be 9 percent.
Newspapers are supposed to be trying to inform their readers. It is difficult to believe that the Post’s terminology in this sentence was its best effort at informing readers of the meaning of this proposal. It is perhaps worth noting that this proposed cut in benefits is hugely unpopular.
At another point the Post discussed the contours of the budget dispute and told readers:
“one of the sticking points remains relevant: Although Democrats wanted to increase the tab [revenue increases] for taxpayers by $800 billion, Republicans wanted at least some of the money to come from economic growth, ….”
A real newspaper would write the second part of this sentence:
“Republicans wanted to claim at least some of the money would come from economic growth”
Undoubtedly both Republicans and Democrats would be happy if the government got additional revenue as a result of more rapid economic growth. The difference is that the Republicans want to score the additional revenue as part of the budget agreement, making assumptions about the impact of lower tax rates on growth that may not be warranted by the evidence. Most Post readers probably would not understand this fact.
The Washington Post is intensifying its push for cuts to Social Security and Medicare apparently hoping for action in the lame duck Congressional session. Today a story in the news section told readers:
“On entitlements, Obama has offered significant changes to Medicare, including letting the eligibility age to rise from 65 to 67.”
The passive tense in this sentence might confuse readers. President Obama proposed raising the eligibility age for Medicare from 65 to 67. This is not something that happens absent his effort to stop it, like the rise of the oceans due to global warming. Obama would be the agent of this increase in the age of eligibility. Experienced reporters and editors usually would not make this sort of mistake.
The next sentence tells readers:
“He has also supported applying a less generous measure of inflation to Social Security benefits.”
Okay, does everyone know what this means? I suspect that only a small minority of Post readers understands that “applying a less generous measure of inflation” implies a cut in the annual cost of living adjustment of 0.3 percentage points. This cut would be cumulative so that after being retired 10 years a beneficiary would see a cut of approximately 3 percent, after 20 years the cut would 6 percent and after 30 years it would be 9 percent.
Newspapers are supposed to be trying to inform their readers. It is difficult to believe that the Post’s terminology in this sentence was its best effort at informing readers of the meaning of this proposal. It is perhaps worth noting that this proposed cut in benefits is hugely unpopular.
At another point the Post discussed the contours of the budget dispute and told readers:
“one of the sticking points remains relevant: Although Democrats wanted to increase the tab [revenue increases] for taxpayers by $800 billion, Republicans wanted at least some of the money to come from economic growth, ….”
A real newspaper would write the second part of this sentence:
“Republicans wanted to claim at least some of the money would come from economic growth”
Undoubtedly both Republicans and Democrats would be happy if the government got additional revenue as a result of more rapid economic growth. The difference is that the Republicans want to score the additional revenue as part of the budget agreement, making assumptions about the impact of lower tax rates on growth that may not be warranted by the evidence. Most Post readers probably would not understand this fact.
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The issue arises because Morning Edition decided to lead off its top of the hour news segment by telling listeners of the number of days until we hit the “fiscal cliff.” While one could view this as a random fact, like the number of days until the winter solstice or Super Bowl XLVII, but that is presumably not how it was intended. Most likely this number would be viewed as a countdown against an important deadline.
Of course the end of the year is not an important deadline as every budget expert knows. If there is no deal by the end of the year, we will be subject to a higher rate of tax withholding come January 1, 2013. Since most of us will not get a paycheck on New Year’s Day, we will not be immediately affected by the higher rate of withholding. We would only see an impact when we got our first paycheck of the year in the middle or the end of the month. If Congress and the President work out a deal before that point, there will be no increase in withholding.
Even if a deal is not reached in time to affect the first paycheck, if they come to an agreement later in the month, the extra withholding can be paid back in the second or third paycheck. This is likely to have a minimal impact on the economy, since most people will not change their spending patterns if they expect to get any extra withholding refunded in the near future. For people literally living paycheck to paycheck the extra withholding will be a hardship, but the impact on the economy will be minimal.
There is a similar story with government spending. If it looks like a deal will be reached, President Obama need not adjust the flow of spending at all in January.
For these reasons, there is no special importance to the January 1 deadline. There are of course many political figures, such as the corporate CEOs in the Campaign to Fix the Debt, who are trying to create a crisis atmosphere in order to force an early deal. They hope that this crisis atmosphere can create an environment in which hugely unpopular actions, like cutting Social Security and Medicare, will be possible.
If people at NPR want to support this political effort then they should do it in explicitly labeled commentary. They should not hijack the news section to advance their political agenda.
The issue arises because Morning Edition decided to lead off its top of the hour news segment by telling listeners of the number of days until we hit the “fiscal cliff.” While one could view this as a random fact, like the number of days until the winter solstice or Super Bowl XLVII, but that is presumably not how it was intended. Most likely this number would be viewed as a countdown against an important deadline.
Of course the end of the year is not an important deadline as every budget expert knows. If there is no deal by the end of the year, we will be subject to a higher rate of tax withholding come January 1, 2013. Since most of us will not get a paycheck on New Year’s Day, we will not be immediately affected by the higher rate of withholding. We would only see an impact when we got our first paycheck of the year in the middle or the end of the month. If Congress and the President work out a deal before that point, there will be no increase in withholding.
Even if a deal is not reached in time to affect the first paycheck, if they come to an agreement later in the month, the extra withholding can be paid back in the second or third paycheck. This is likely to have a minimal impact on the economy, since most people will not change their spending patterns if they expect to get any extra withholding refunded in the near future. For people literally living paycheck to paycheck the extra withholding will be a hardship, but the impact on the economy will be minimal.
There is a similar story with government spending. If it looks like a deal will be reached, President Obama need not adjust the flow of spending at all in January.
For these reasons, there is no special importance to the January 1 deadline. There are of course many political figures, such as the corporate CEOs in the Campaign to Fix the Debt, who are trying to create a crisis atmosphere in order to force an early deal. They hope that this crisis atmosphere can create an environment in which hugely unpopular actions, like cutting Social Security and Medicare, will be possible.
If people at NPR want to support this political effort then they should do it in explicitly labeled commentary. They should not hijack the news section to advance their political agenda.
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The voters might have told the Republicans that they would have to compromise on their position on taxes, but the Washington Post told them that they don’t. The paper used a news article to imply that congressional Republicans are showing flexibility when they are just repeating the same position they have been putting forward for years. The article told readers:
“chastened Republican leaders have lined up behind Boehner to offer a compromise on taxes, until now a major stumbling block.”
Actually the Republicans are not offering a compromise, they are offering the same position that they offered before and that Governor Romney put forward in his presidential campaign. They are proposing to eliminate some loopholes in exchange for a reduction in tax rates. If the Washington Post is successful in convincing the public that this longstanding Republican position is a compromise, then there will be no need for them to offer a real compromise.
The voters might have told the Republicans that they would have to compromise on their position on taxes, but the Washington Post told them that they don’t. The paper used a news article to imply that congressional Republicans are showing flexibility when they are just repeating the same position they have been putting forward for years. The article told readers:
“chastened Republican leaders have lined up behind Boehner to offer a compromise on taxes, until now a major stumbling block.”
Actually the Republicans are not offering a compromise, they are offering the same position that they offered before and that Governor Romney put forward in his presidential campaign. They are proposing to eliminate some loopholes in exchange for a reduction in tax rates. If the Washington Post is successful in convincing the public that this longstanding Republican position is a compromise, then there will be no need for them to offer a real compromise.
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It is fashionable in elite circles to talk say that the aging of the population will bankrupt the country as a result of the higher costs it will impose on Social Security and Medicare (referred to as “entitlements.”) It makes you seem a knowledgeable and concerned person to issue dire warnings along these lines.
Of course it is utter nonsense as everyone familiar with the projections knows. The projected rise in Social Security spending due to aging would increase the annual cost of the program by 1.2 percentage points of GDP over the next two decades, roughly two thirds of the increase in military spending associated with the wars in Afghanistan and Iraq. The aging of the population would actually have less impact on Medicare’s costs, except that it is coupled with the expectation that per person health care costs will continue to rise much more rapidly than inflation. However, this means that the Medicare cost problem is a health care cost problem, not a problem due to the aging of the population.
Given this reality is difficult to see why the NYT allowed Jonathan Haidt to say in his oped column:
“we do face bankruptcy when the baby boomers retire and a shrinking percentage of workers must pay the ever growing expenses of a ballooning class of retirees. Yet the Democrats want to “protect” older Americans, students and almost everyone else from the need to sacrifice.”
Haidt obviously wants to make middle class workers sacrifice more than they already have with three decades of wage stagnation, but his rationale is entirely his own invention. There are no remotely plausible projections that show the retirement of the baby boomers bankrupting the country. Insofar as there will be budget problems they are due to the costs of a broken health care system. This requires fixing the health care system, for example by paying doctors and drug companies less.
It is fashionable in elite circles to talk say that the aging of the population will bankrupt the country as a result of the higher costs it will impose on Social Security and Medicare (referred to as “entitlements.”) It makes you seem a knowledgeable and concerned person to issue dire warnings along these lines.
Of course it is utter nonsense as everyone familiar with the projections knows. The projected rise in Social Security spending due to aging would increase the annual cost of the program by 1.2 percentage points of GDP over the next two decades, roughly two thirds of the increase in military spending associated with the wars in Afghanistan and Iraq. The aging of the population would actually have less impact on Medicare’s costs, except that it is coupled with the expectation that per person health care costs will continue to rise much more rapidly than inflation. However, this means that the Medicare cost problem is a health care cost problem, not a problem due to the aging of the population.
Given this reality is difficult to see why the NYT allowed Jonathan Haidt to say in his oped column:
“we do face bankruptcy when the baby boomers retire and a shrinking percentage of workers must pay the ever growing expenses of a ballooning class of retirees. Yet the Democrats want to “protect” older Americans, students and almost everyone else from the need to sacrifice.”
Haidt obviously wants to make middle class workers sacrifice more than they already have with three decades of wage stagnation, but his rationale is entirely his own invention. There are no remotely plausible projections that show the retirement of the baby boomers bankrupting the country. Insofar as there will be budget problems they are due to the costs of a broken health care system. This requires fixing the health care system, for example by paying doctors and drug companies less.
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