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That’s what readers of today’s Washington Post column by Michael Gerson must conclude. After all, he tells readers that President Obama has done nothing to reduce the cost of government health care programs. If he had heard of the Affordable Care Act, then he would know President Obama had actually done a great deal to control the costs of these programs, as shown in the Congressional Budget Office’s (CBO) baseline budget projections which show spending if the cost control mechanisms in the ACA are left in place. These had the effect of reducing the projected 75-year shortfall in Medicare by more than 75 percent.
It would also be worth reminding readers that Representative Ryan’s Medicare plan is projected to hugely increase the cost of providing health care to seniors. CBO’s projections imply that Representative Ryan’s plan would increase the cost of providing Medicare equivalent policies to people over age 65 by $34 trillion over Medicare’s 75-year planning period.
That’s what readers of today’s Washington Post column by Michael Gerson must conclude. After all, he tells readers that President Obama has done nothing to reduce the cost of government health care programs. If he had heard of the Affordable Care Act, then he would know President Obama had actually done a great deal to control the costs of these programs, as shown in the Congressional Budget Office’s (CBO) baseline budget projections which show spending if the cost control mechanisms in the ACA are left in place. These had the effect of reducing the projected 75-year shortfall in Medicare by more than 75 percent.
It would also be worth reminding readers that Representative Ryan’s Medicare plan is projected to hugely increase the cost of providing health care to seniors. CBO’s projections imply that Representative Ryan’s plan would increase the cost of providing Medicare equivalent policies to people over age 65 by $34 trillion over Medicare’s 75-year planning period.
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Yes, that it is the way that the media reported the Labor Department’s release of new unemployment claims yesterday. Strictly speaking, this is true. The 359,000 claims reported for last week is the lowest number in almost four years.
However, it is worth pointing out that last week’s number was originally reported as 348,000. It was revised up this week to 364,000. There has been a very consistent trend with claims numbers be revised upward over the last couple of years. (I don’t think this is a deliberately rigging; it just suggests a bias in the methodology.) This upward revision makes the “lowest in four years” line somewhat less meaningful.
Yes, that it is the way that the media reported the Labor Department’s release of new unemployment claims yesterday. Strictly speaking, this is true. The 359,000 claims reported for last week is the lowest number in almost four years.
However, it is worth pointing out that last week’s number was originally reported as 348,000. It was revised up this week to 364,000. There has been a very consistent trend with claims numbers be revised upward over the last couple of years. (I don’t think this is a deliberately rigging; it just suggests a bias in the methodology.) This upward revision makes the “lowest in four years” line somewhat less meaningful.
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Binyamin Appelbaum has a NYT blogpost suggesting that the economy may be growing more rapidly than the GDP imply based on the fact that national income has grown more rapidly in recent quarters. In principle, GDP, which measures the goods and services the economy produce, should be equal to national income, which measures the income generated in the production process. (Every cost to a buyer is income to someone.)
However, they never come out to be exactly equal. They measures of GDP and national income are done independently. The difference, the extent to which GDP exceeds output, is called the “statistical discrepancy.”
Appelbaum’s post points to a new paper that suggests that we should be taking an average of GDP growth and income growth as our actual measure of economic growth. If we go this route, then it implies that the recovery has been somewhat stronger (and the recession steeper) than the standard measure of GDP growth.
There is an alternative story. David Rosnick and I analyzed the movement of the statistical discrepancy and found a strong inverse correlation between the size of the statistical discrepancy and capital gains in the stock market and housing. This meant, for example, there was a large negative statistical discrepancy in 1999 and 2000 at the peak of the stock bubble (i.e. income exceeded output) which disappeared after the bubble burst.
The same thing happened in the peak years of the housing bubble, 2004-2007. In that case also, the large gap between the income side measure and the output side measure disappeared after the bubble burst.
The logic is simple. Some amount of capital gains will get misclassified in the national accounts as ordinary income. (Capital gains should not count as income for GDP purposes.) While this may always be true, when we have more capital gains, the amount of capital gains misclassified in this way will be greater.
This story fits the data pretty well. If our analysis is correct, then we are better off sticking with our old friend GDP as the best measure of economic growth.
Binyamin Appelbaum has a NYT blogpost suggesting that the economy may be growing more rapidly than the GDP imply based on the fact that national income has grown more rapidly in recent quarters. In principle, GDP, which measures the goods and services the economy produce, should be equal to national income, which measures the income generated in the production process. (Every cost to a buyer is income to someone.)
However, they never come out to be exactly equal. They measures of GDP and national income are done independently. The difference, the extent to which GDP exceeds output, is called the “statistical discrepancy.”
Appelbaum’s post points to a new paper that suggests that we should be taking an average of GDP growth and income growth as our actual measure of economic growth. If we go this route, then it implies that the recovery has been somewhat stronger (and the recession steeper) than the standard measure of GDP growth.
There is an alternative story. David Rosnick and I analyzed the movement of the statistical discrepancy and found a strong inverse correlation between the size of the statistical discrepancy and capital gains in the stock market and housing. This meant, for example, there was a large negative statistical discrepancy in 1999 and 2000 at the peak of the stock bubble (i.e. income exceeded output) which disappeared after the bubble burst.
The same thing happened in the peak years of the housing bubble, 2004-2007. In that case also, the large gap between the income side measure and the output side measure disappeared after the bubble burst.
The logic is simple. Some amount of capital gains will get misclassified in the national accounts as ordinary income. (Capital gains should not count as income for GDP purposes.) While this may always be true, when we have more capital gains, the amount of capital gains misclassified in this way will be greater.
This story fits the data pretty well. If our analysis is correct, then we are better off sticking with our old friend GDP as the best measure of economic growth.
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In order to advance inter-Atlantic dialogue, we’ve encouraged some of our friends in Europe to put together a list of useful European economic blogs. Here is a list compiled by Henning Meyer, the editor of Social Europe Journal. You can find his post here.
European Economic Blogs
Blog Centre for European Reform
Thomas Fricke@ Financial Times Deutschland
In order to advance inter-Atlantic dialogue, we’ve encouraged some of our friends in Europe to put together a list of useful European economic blogs. Here is a list compiled by Henning Meyer, the editor of Social Europe Journal. You can find his post here.
European Economic Blogs
Blog Centre for European Reform
Thomas Fricke@ Financial Times Deutschland
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It’s always good to get the perspective of the people on the ground when reporting on a policy. However, when they say things that are clearly not true, reporters should provide readers with the correct information. The NYT fell down on the job in a piece that presented the views of a number of people in Massachusetts who were unhappy with the mandate and employer penalties in its health care law, which is the model for Obamacare.
The piece begins by telling us about Wayde Lodor, a 53 year-old independent product development consultant from Leominster. Mr. Lodor says that he is in good health and therefore does not want to buy insurance for himself and his college age daughter. The article tells us that Lodor estimates the cost of this insurance at $1,200 a month.
A quick visit to the Massachusetts insurance exchange reveals that the lowest cost plan for a 53-year old with one dependent child would be $685. This is only a bit more than half of Mr. Lodor’s estimate of what he would have to pay to comply with the mandate. It would have been helpful to tell readers that Lodor had seriously over-estimated the cost of complying with the mandate.
The piece then talks to Teofilo Cuevas, who it tells us earns about $40,000 a year as a meat cutter at a grocery store. Mr Cuevas has apparently dropped his employer provided insurance because he could not afford the co-payments. It would have been useful to note that Mr. Cuevas’ income would qualify him for subsidies under the Massachusetts plan. He would not be required to pay more than $235 a month. That may still be a serious burden, but it would have been useful to provide this information.
The next source is a small business owner, Ronn Garry Jr., owner of Tropical Foods, a grocery store in the Roxbury section of Boston. Mr Garry complained that the $295 per worker penalty for firms cost him nearly $30,000 a year. Actually, 70*$295 = $20,650. This would usually be thought of as close to $20,000, rather than nearly $30,000.
The piece also relies on Garry’s claim that he faces this fine only because not enough workers signed up for his employer provided plan. It is possible that Garry provides little subsidy with this plan so that it is unaffordable for most of his workers.
Finally, the piece turns to William Fields, who is described as “a consultant in Boston who helps employers comply with the law.” Mr. Fields is quoted saying:
“You have some of those who are truly bad guys and should be fined,. … But the ones that are personal to me are the $50,000 fine that puts my client out of business.”
Fields does not give any examples of businesses that were closed because of this fine. It would have been worth pressing him on the topic because it is not clear what he thinks he is saying.
Any business that goes under is by definition marginal. This means that any expense can be seen as putting it under. This could mean its electric bill, a dry-cleaning bill, or any other item. To owe a $50,000 fine the business would need to have 170 employees. A firm with 170 employees would typically have sales of at least $5 million a year. The odds are that if a $50,000 penalty caused such a firm to close, it probably would have gone out of business in any case. In other words, this firm was on its way down and paying the fine really did not affect its fate.
It would have been helpful to readers if this article had made an effort to determine the accuracy of the assertions these people were making rather than just reporting them unquestioningly.
It’s always good to get the perspective of the people on the ground when reporting on a policy. However, when they say things that are clearly not true, reporters should provide readers with the correct information. The NYT fell down on the job in a piece that presented the views of a number of people in Massachusetts who were unhappy with the mandate and employer penalties in its health care law, which is the model for Obamacare.
The piece begins by telling us about Wayde Lodor, a 53 year-old independent product development consultant from Leominster. Mr. Lodor says that he is in good health and therefore does not want to buy insurance for himself and his college age daughter. The article tells us that Lodor estimates the cost of this insurance at $1,200 a month.
A quick visit to the Massachusetts insurance exchange reveals that the lowest cost plan for a 53-year old with one dependent child would be $685. This is only a bit more than half of Mr. Lodor’s estimate of what he would have to pay to comply with the mandate. It would have been helpful to tell readers that Lodor had seriously over-estimated the cost of complying with the mandate.
The piece then talks to Teofilo Cuevas, who it tells us earns about $40,000 a year as a meat cutter at a grocery store. Mr Cuevas has apparently dropped his employer provided insurance because he could not afford the co-payments. It would have been useful to note that Mr. Cuevas’ income would qualify him for subsidies under the Massachusetts plan. He would not be required to pay more than $235 a month. That may still be a serious burden, but it would have been useful to provide this information.
The next source is a small business owner, Ronn Garry Jr., owner of Tropical Foods, a grocery store in the Roxbury section of Boston. Mr Garry complained that the $295 per worker penalty for firms cost him nearly $30,000 a year. Actually, 70*$295 = $20,650. This would usually be thought of as close to $20,000, rather than nearly $30,000.
The piece also relies on Garry’s claim that he faces this fine only because not enough workers signed up for his employer provided plan. It is possible that Garry provides little subsidy with this plan so that it is unaffordable for most of his workers.
Finally, the piece turns to William Fields, who is described as “a consultant in Boston who helps employers comply with the law.” Mr. Fields is quoted saying:
“You have some of those who are truly bad guys and should be fined,. … But the ones that are personal to me are the $50,000 fine that puts my client out of business.”
Fields does not give any examples of businesses that were closed because of this fine. It would have been worth pressing him on the topic because it is not clear what he thinks he is saying.
Any business that goes under is by definition marginal. This means that any expense can be seen as putting it under. This could mean its electric bill, a dry-cleaning bill, or any other item. To owe a $50,000 fine the business would need to have 170 employees. A firm with 170 employees would typically have sales of at least $5 million a year. The odds are that if a $50,000 penalty caused such a firm to close, it probably would have gone out of business in any case. In other words, this firm was on its way down and paying the fine really did not affect its fate.
It would have been helpful to readers if this article had made an effort to determine the accuracy of the assertions these people were making rather than just reporting them unquestioningly.
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The NYT reported on a revision to 4th quarter GDP data in the UK that showed the economy shrinking at a 1.2 percent annual rate rather than the 0.8 percent rate previously reported. Unfortunately, the article reported the data giving quarterly rates, so most readers probably did not recognize that the 0.3 percent decline from the third quarter translated into a 1.2 percent annual rate.
Since this is written primarily for an audience in the United States, and GDP growth numbers are always reported as annual rates, the NYT should have converted the quarterly rate so that readers would understand what the number.
The NYT reported on a revision to 4th quarter GDP data in the UK that showed the economy shrinking at a 1.2 percent annual rate rather than the 0.8 percent rate previously reported. Unfortunately, the article reported the data giving quarterly rates, so most readers probably did not recognize that the 0.3 percent decline from the third quarter translated into a 1.2 percent annual rate.
Since this is written primarily for an audience in the United States, and GDP growth numbers are always reported as annual rates, the NYT should have converted the quarterly rate so that readers would understand what the number.
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