A segment on Morning Edition noted that 3 members of the Fed’s Open Market Committee (FOMC) opposed the plan to shift from shorter term debt to holding longer term bonds in an effort to drive down interest rates. It would have been worth mentioning that all 3 of the no votes came from the district bank presidents. The bank presidents are essentially appointed by the banks in the district.
The 5 bank presidents who are voting members of the FOMC split 3-2 against this measure. By contrast, the 5 Fed governors who were appointed through the political process (by both Presidents Bush and Obama) voted 5-0 in support further action.
This is a striking split between the FOMC members who essentially represent banks and the members who were appointed by democratically elected officials. It would have been worth mentioning this fact in this story. (The NYT and the Post committed the same sin.)
A segment on Morning Edition noted that 3 members of the Fed’s Open Market Committee (FOMC) opposed the plan to shift from shorter term debt to holding longer term bonds in an effort to drive down interest rates. It would have been worth mentioning that all 3 of the no votes came from the district bank presidents. The bank presidents are essentially appointed by the banks in the district.
The 5 bank presidents who are voting members of the FOMC split 3-2 against this measure. By contrast, the 5 Fed governors who were appointed through the political process (by both Presidents Bush and Obama) voted 5-0 in support further action.
This is a striking split between the FOMC members who essentially represent banks and the members who were appointed by democratically elected officials. It would have been worth mentioning this fact in this story. (The NYT and the Post committed the same sin.)
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The NYT noted that Germany’s unemployment rate is just 6.2 percent and told readers:
“One reason is a series of policies that loosened job protections and put more pressure on unemployed people to find work.”
That might be one reason, although most research shows that these measures have a limited impact on unemployment. The more obvious explanation for Germany’s low unemployment rate is its policy of work sharing. This policy encourages firms to reduce work hours rather than lay off workers. The result has been that Germany has met its reduced demand for labor primarily by shortening work hours.
The context for this comment was an assertion that Greece will have to take comparable measures to force people to find work. The prospect of work sharing in Greece and other countries facing demands for austerity might look like an attractive alternative to maintain employment during the downturn.
The NYT noted that Germany’s unemployment rate is just 6.2 percent and told readers:
“One reason is a series of policies that loosened job protections and put more pressure on unemployed people to find work.”
That might be one reason, although most research shows that these measures have a limited impact on unemployment. The more obvious explanation for Germany’s low unemployment rate is its policy of work sharing. This policy encourages firms to reduce work hours rather than lay off workers. The result has been that Germany has met its reduced demand for labor primarily by shortening work hours.
The context for this comment was an assertion that Greece will have to take comparable measures to force people to find work. The prospect of work sharing in Greece and other countries facing demands for austerity might look like an attractive alternative to maintain employment during the downturn.
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The Post reported that most House Democrats opposed a continuing resolution to keep the government running because it included cuts of $1.5 billion to partially offset an appropriation of $3.65 billion for disaster relief. It would have been worth telling readers that $3.65 billion is approximately 0.1 percent of the budget, whereas the $1.5 billion in cuts is equal to 0.04 percent of spending. Many readers would not know how large these sums are in total federal spending or relative to the deficit.
The Post reported that most House Democrats opposed a continuing resolution to keep the government running because it included cuts of $1.5 billion to partially offset an appropriation of $3.65 billion for disaster relief. It would have been worth telling readers that $3.65 billion is approximately 0.1 percent of the budget, whereas the $1.5 billion in cuts is equal to 0.04 percent of spending. Many readers would not know how large these sums are in total federal spending or relative to the deficit.
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Thomas Friedman joined the ranks of the Peter Peterson deficit hawks and criticized President Obama for not wanting to beat up the elderly. Specifically, he is upset that President Obama did not propose cuts to Social Security and Medicare.
Apparently Friedman is not aware of the upward redistribution of income over the last three decades. Nor does he seem to understand that the government just needs to spend money to create jobs now.
The current crisis is the result of the collapse of a housing bubble that he and his deficit hawk friends allowed to grow unchecked. The construction and consumption demand created by the bubble was driving the economy. Now that the bubble has collapsed there is nothing to replace this demand.
In the short-term this demand can only come from the government. In the longer term it will have to come from more a smaller trade deficit as domestic production replaces foreign production. This will only come about from a lower-valued dollar.
The long-term deficit is driven entirely by the broken health care system in the United States. If the United States paid the same amount per person for care as people in any other wealthy country we would be looking at large budget surpluses, not deficits.
Social Security is already largely in balance. According to the Congressional Budget Office it can pay all scheduled benefits until the year 2038 with no changes at all. After that date it can pay more than 80 percent of scheduled benefits indefinitely. A tax increase equal to 5 percent of the wage growth projected over the next three decades would be sufficient to allow it to make all scheduled benefits indefinitely.
Thomas Friedman joined the ranks of the Peter Peterson deficit hawks and criticized President Obama for not wanting to beat up the elderly. Specifically, he is upset that President Obama did not propose cuts to Social Security and Medicare.
Apparently Friedman is not aware of the upward redistribution of income over the last three decades. Nor does he seem to understand that the government just needs to spend money to create jobs now.
The current crisis is the result of the collapse of a housing bubble that he and his deficit hawk friends allowed to grow unchecked. The construction and consumption demand created by the bubble was driving the economy. Now that the bubble has collapsed there is nothing to replace this demand.
In the short-term this demand can only come from the government. In the longer term it will have to come from more a smaller trade deficit as domestic production replaces foreign production. This will only come about from a lower-valued dollar.
The long-term deficit is driven entirely by the broken health care system in the United States. If the United States paid the same amount per person for care as people in any other wealthy country we would be looking at large budget surpluses, not deficits.
Social Security is already largely in balance. According to the Congressional Budget Office it can pay all scheduled benefits until the year 2038 with no changes at all. After that date it can pay more than 80 percent of scheduled benefits indefinitely. A tax increase equal to 5 percent of the wage growth projected over the next three decades would be sufficient to allow it to make all scheduled benefits indefinitely.
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The major battle line in Washington budget debates is between those who want to cut Social Security and Medicare, the social insurance programs that the vast majority of low and middle income people depend upon, and those who believe that the wealthy should pay more to support the government. Since government policies have led to an enormous upward redistribution of income over the last three decades, the latter group would seem to have a good case.
While this seems a rather straightforward battle over money, in a front page story the Washington Post told readers that this battle is actually about, “contrasting visions of the American idea.” There is nothing obvious in this debate about “visions.” The debate is being conducted by politicians, not political philosophers.
It is certainly understandable that the wealthy and their allies would try to turn this debate into a battle over visions, since they are hugely outnumbered by the people who stand to lose if their agenda is followed. However, most immediately this is a battle over money. Real newspapers would call it that way and not try to distract their readers’ from the issues in front of their face.
The major battle line in Washington budget debates is between those who want to cut Social Security and Medicare, the social insurance programs that the vast majority of low and middle income people depend upon, and those who believe that the wealthy should pay more to support the government. Since government policies have led to an enormous upward redistribution of income over the last three decades, the latter group would seem to have a good case.
While this seems a rather straightforward battle over money, in a front page story the Washington Post told readers that this battle is actually about, “contrasting visions of the American idea.” There is nothing obvious in this debate about “visions.” The debate is being conducted by politicians, not political philosophers.
It is certainly understandable that the wealthy and their allies would try to turn this debate into a battle over visions, since they are hugely outnumbered by the people who stand to lose if their agenda is followed. However, most immediately this is a battle over money. Real newspapers would call it that way and not try to distract their readers’ from the issues in front of their face.
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President Obama made a simple and true statement in his speech on the budget Monday. He said that there were millionaires and billionaires who pay tax at a lower rate than middle income families.
Many news outlets went to town to point out that on average millionaires and billionaires pay tax at a higher rate than middle income families. Of course this is not what Obama said. He was pointing out that some of the richest people in the country (Warren Buffet was his model), get most or all of their income as capital gains and therefore only pay taxes at the 15 percent capital gains rate.
The NYT gets this right today. Other outlets could have saved a lot of trees and better served their readers if they didn’t work so hard trying to refute something that President Obama did not say.
President Obama made a simple and true statement in his speech on the budget Monday. He said that there were millionaires and billionaires who pay tax at a lower rate than middle income families.
Many news outlets went to town to point out that on average millionaires and billionaires pay tax at a higher rate than middle income families. Of course this is not what Obama said. He was pointing out that some of the richest people in the country (Warren Buffet was his model), get most or all of their income as capital gains and therefore only pay taxes at the 15 percent capital gains rate.
The NYT gets this right today. Other outlets could have saved a lot of trees and better served their readers if they didn’t work so hard trying to refute something that President Obama did not say.
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In an article discussing debt problems of euro zone countries the NYT told readers that a statement issued by the Italian government yesterday:
“said the government was preparing steps to lift growth and recently passed measures to control public finances through tax increases and spending cuts.”
It would have been appropriate to remind readers that spending cuts and tax increases slow growth by pulling money out of the economy. It is likely that whatever steps the Italian government might prepare to boost growth will be more than offset by the impact of its austerity package.
In an article discussing debt problems of euro zone countries the NYT told readers that a statement issued by the Italian government yesterday:
“said the government was preparing steps to lift growth and recently passed measures to control public finances through tax increases and spending cuts.”
It would have been appropriate to remind readers that spending cuts and tax increases slow growth by pulling money out of the economy. It is likely that whatever steps the Italian government might prepare to boost growth will be more than offset by the impact of its austerity package.
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That’s what readers of his column complaining about President Obama’s speech on the budget must conclude. He is upset that Obama:
“whispered about seriously reforming Medicare but then opted for changes that are worthy but small.”
If Brooks has heard about the Affordable Care Act (ACA), he would know that it actually provides for large cost controls in Medicare. According to the Medicare trustees report, these cost controls would eliminate almost 80 percent of the long-run deficit projected over the program’s 75-year planning horizon.
Brooks could read about these changes in the Congressional Budget Office’s (CBO) long-term budget projections. CBO projects that future deficits will be manageable if the controls in the ACA are allowed to take effect. However, CBO concluded that Congress will reverse itself and not allow the controls to bite. However, it seems odd to blame President Obama for the fact that future Congresses might reverse the cost controls that he put into the Medicare program and it is simply wrong to claim that he did not do anything to restrict costs.
It is also worth mentioning that Brooks misrepresents the relative tax burdens of the wealthy and the middle class. He excluded payroll taxes from his calculations, which are extremely regressive. Also, there are a small number of very wealthy people who do in fact pay very low tax rates because the bulk of their income comes from capital gains. This is exactly the situation that President Obama described.
That’s what readers of his column complaining about President Obama’s speech on the budget must conclude. He is upset that Obama:
“whispered about seriously reforming Medicare but then opted for changes that are worthy but small.”
If Brooks has heard about the Affordable Care Act (ACA), he would know that it actually provides for large cost controls in Medicare. According to the Medicare trustees report, these cost controls would eliminate almost 80 percent of the long-run deficit projected over the program’s 75-year planning horizon.
Brooks could read about these changes in the Congressional Budget Office’s (CBO) long-term budget projections. CBO projects that future deficits will be manageable if the controls in the ACA are allowed to take effect. However, CBO concluded that Congress will reverse itself and not allow the controls to bite. However, it seems odd to blame President Obama for the fact that future Congresses might reverse the cost controls that he put into the Medicare program and it is simply wrong to claim that he did not do anything to restrict costs.
It is also worth mentioning that Brooks misrepresents the relative tax burdens of the wealthy and the middle class. He excluded payroll taxes from his calculations, which are extremely regressive. Also, there are a small number of very wealthy people who do in fact pay very low tax rates because the bulk of their income comes from capital gains. This is exactly the situation that President Obama described.
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The NYT implied that shale oil production and new oil sources elsewhere in the western hemisphere will transform oil production and use in the United States. For example, it notes that production from shale oil could exceed 2 million barrels a day by 2020 and then adds:
“The United States already produces about half of its own oil needs, so the increase could help it further peel away dependence on foreign oil.”
Actually, this oil will largely replace declining yields from older fields in Alaska and elsewhere. The United States was not especially dependent on Middle East oil even before the new production in the hemisphere cited in this article. Only a bit over 20 percent of the oil imported in the United States came from the Middle East even a decade ago.
The NYT implied that shale oil production and new oil sources elsewhere in the western hemisphere will transform oil production and use in the United States. For example, it notes that production from shale oil could exceed 2 million barrels a day by 2020 and then adds:
“The United States already produces about half of its own oil needs, so the increase could help it further peel away dependence on foreign oil.”
Actually, this oil will largely replace declining yields from older fields in Alaska and elsewhere. The United States was not especially dependent on Middle East oil even before the new production in the hemisphere cited in this article. Only a bit over 20 percent of the oil imported in the United States came from the Middle East even a decade ago.
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The NYT missed much of the story in its report on the likelihood of a default by Greece. One of the main factors exacerbating the plight of Greece and other heavily indebted countries in the euro zone is the relatively contractionary policies pursued by the European Central Bank (ECB), ostensibly to fight inflation.
If the ECB had a more expansionary monetary policy, the additional growth would increase tax collections in Greece and other countries. It would also reduce payments for unemployment benefits and other transfer programs.
In addition, an easier monetary policy would reduce the interest burden on heavily indebted countries. For example, if the ECB followed the example of the Fed, the Greek government would be able to borrow at a near zero interest rate.
Finally, if the ECB allowed the inflation rate in the euro zone to rise to 3-4 percent it would facilitate the necessary adjustment process that would allow Greek goods and services to become more competitive in the euro zone. If prices and wages in the euro zone were rising at a slightly faster pace then Greece can improve its relative position by keeping its wage and price growth near zero.
By contrast, with very low inflation, wages and prices in Greece must actually decline for it to increase its competitiveness. It is very difficult and costly to bring about this sort of deflation. It usually requires many years of high unemployment.
The NYT neglected to mention these ways in which the policies of the ECB have contributed to the crisis in Greece and other heavily indebted countries.
The NYT missed much of the story in its report on the likelihood of a default by Greece. One of the main factors exacerbating the plight of Greece and other heavily indebted countries in the euro zone is the relatively contractionary policies pursued by the European Central Bank (ECB), ostensibly to fight inflation.
If the ECB had a more expansionary monetary policy, the additional growth would increase tax collections in Greece and other countries. It would also reduce payments for unemployment benefits and other transfer programs.
In addition, an easier monetary policy would reduce the interest burden on heavily indebted countries. For example, if the ECB followed the example of the Fed, the Greek government would be able to borrow at a near zero interest rate.
Finally, if the ECB allowed the inflation rate in the euro zone to rise to 3-4 percent it would facilitate the necessary adjustment process that would allow Greek goods and services to become more competitive in the euro zone. If prices and wages in the euro zone were rising at a slightly faster pace then Greece can improve its relative position by keeping its wage and price growth near zero.
By contrast, with very low inflation, wages and prices in Greece must actually decline for it to increase its competitiveness. It is very difficult and costly to bring about this sort of deflation. It usually requires many years of high unemployment.
The NYT neglected to mention these ways in which the policies of the ECB have contributed to the crisis in Greece and other heavily indebted countries.
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