This assertion is strange for two reasons. First, since prices generally rise through time (we have modest rates of inflation, not deflation), most prices will be at record highs most of the time. In other words, it is likely that the price of tables, hair cuts, bread and most other goods and services are at or near record highs.
The other reason why the assertion is strange is that it does not appear to be true. The Bureau of Labor Statistics (BLS) price index for used cars actually shows that they are lower, in nominal terms, than they had been in the late 90s (the graph shows nominal prices).
It is possible that the measures followed by USA Today do not track the BLS data closely because BLS makes quality adjustments in comparing prices. For example, if a car comes with a better braking system or sound system than the prior year’s model, this will be factored into the price. A straight price comparison of the newer car with the older car may show a price increase, but when a value is assigned to these improved features, it may turn out that the price has remained the same or even fallen.
This assertion is strange for two reasons. First, since prices generally rise through time (we have modest rates of inflation, not deflation), most prices will be at record highs most of the time. In other words, it is likely that the price of tables, hair cuts, bread and most other goods and services are at or near record highs.
The other reason why the assertion is strange is that it does not appear to be true. The Bureau of Labor Statistics (BLS) price index for used cars actually shows that they are lower, in nominal terms, than they had been in the late 90s (the graph shows nominal prices).
It is possible that the measures followed by USA Today do not track the BLS data closely because BLS makes quality adjustments in comparing prices. For example, if a car comes with a better braking system or sound system than the prior year’s model, this will be factored into the price. A straight price comparison of the newer car with the older car may show a price increase, but when a value is assigned to these improved features, it may turn out that the price has remained the same or even fallen.
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A front page Washington Post article included an assertion from Roger Altman, who is identified as “a private-equity investor who served in the Clinton Treasury Department,” that defaulting on the national debt would be the “financial equivalent of suicide.”
It is worth noting that Wall Street would be especially hard hit by a debt default. While a default would almost certainly lead to a severe financial crisis, even worse than the one in the fall of 2008, the rest of the economy would most certainly recover. We would have the same capital stock, infrastructure, state of technical knowledge and skilled labor force after the crisis as before.
However, the Wall Street banks would almost certainly not recover. They would almost certainly end up in bankruptcy. Their successors would probably never be as powerful in international finance as the current group of institutions. For this reason, Altman and other Wall Street financiers have far more to fear from a default than does the rest of the country. It would have been useful to include a wider range of perspectives on the impact of a debt default.
A front page Washington Post article included an assertion from Roger Altman, who is identified as “a private-equity investor who served in the Clinton Treasury Department,” that defaulting on the national debt would be the “financial equivalent of suicide.”
It is worth noting that Wall Street would be especially hard hit by a debt default. While a default would almost certainly lead to a severe financial crisis, even worse than the one in the fall of 2008, the rest of the economy would most certainly recover. We would have the same capital stock, infrastructure, state of technical knowledge and skilled labor force after the crisis as before.
However, the Wall Street banks would almost certainly not recover. They would almost certainly end up in bankruptcy. Their successors would probably never be as powerful in international finance as the current group of institutions. For this reason, Altman and other Wall Street financiers have far more to fear from a default than does the rest of the country. It would have been useful to include a wider range of perspectives on the impact of a debt default.
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The NYT reported on the effort by congressional Democrats to take back $20 billion in tax breaks for the oil industry over the next decade. The article tells readers that this is an effort to reduce the budget deficit. It would have been helpful to point out that this amount comes to less than 0.3 percent of the deficit projected over this period.
These tax breaks are arguably an unwarranted subsidy to hugely profitable oil companies, however it is not plausible that they will have a notable effect on the deficit over the next decade. This fact should have been pointed out to readers, just as reporters should point out that Republican efforts to increase drilling cannot plausibly be expected to have a noticeable impact on gas prices.
The NYT reported on the effort by congressional Democrats to take back $20 billion in tax breaks for the oil industry over the next decade. The article tells readers that this is an effort to reduce the budget deficit. It would have been helpful to point out that this amount comes to less than 0.3 percent of the deficit projected over this period.
These tax breaks are arguably an unwarranted subsidy to hugely profitable oil companies, however it is not plausible that they will have a notable effect on the deficit over the next decade. This fact should have been pointed out to readers, just as reporters should point out that Republican efforts to increase drilling cannot plausibly be expected to have a noticeable impact on gas prices.
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The NYT tells us that the states are competing with each other and Bermuda to attract shell insurance companies with weak regulation. The deal is that insurers will establish a legal entity in your state, which can then be taxed, if you don’t make them hold much in reserve. (AIG is one of the beneficiaries of this type of deal.)
Haven’t we seen this movie before?
The NYT tells us that the states are competing with each other and Bermuda to attract shell insurance companies with weak regulation. The deal is that insurers will establish a legal entity in your state, which can then be taxed, if you don’t make them hold much in reserve. (AIG is one of the beneficiaries of this type of deal.)
Haven’t we seen this movie before?
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That is what the projections from the Congressional Budget Office (CBO) imply. And, just to be clear, this is the additional waste that CBO projects would result from running the program through private insurers. The figure does not include roughly $5 trillion in expenses that would be transferred from the government to insurers.
The $34 trillion figure comes to $110,000 for every man, woman, and child in the country. It is almost 7 times the projected Social Security shortfall. While the Post has devoted endless space (in both its news and opinion sections) hyping the need to fix Social Security, it has never once mentioned this much larger cost to the country projected by CBO. Instead its articles on the Republican Medicare plan have been entirely of the he said/she said variety and discussions of its political prospects.
A serious paper would discuss the substance. The Post’s readers don’t have more time to look into this issue than its reporters.
That is what the projections from the Congressional Budget Office (CBO) imply. And, just to be clear, this is the additional waste that CBO projects would result from running the program through private insurers. The figure does not include roughly $5 trillion in expenses that would be transferred from the government to insurers.
The $34 trillion figure comes to $110,000 for every man, woman, and child in the country. It is almost 7 times the projected Social Security shortfall. While the Post has devoted endless space (in both its news and opinion sections) hyping the need to fix Social Security, it has never once mentioned this much larger cost to the country projected by CBO. Instead its articles on the Republican Medicare plan have been entirely of the he said/she said variety and discussions of its political prospects.
A serious paper would discuss the substance. The Post’s readers don’t have more time to look into this issue than its reporters.
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David Brooks told readers that:
“Over the past months, there has been some progress in getting Americans to accept the need for self-restraint.”
This should have hundreds of millions asking who needs “self-restraint?” Does Brooks thinks that the 14 million unemployed need more self-restraint? Do the 8 million people who want full time work but who can only find part-time employment need self-restraint? Do the millions of people who are facing the loss of their home need more self-restraint?
Brooks isn’t very clear on who he thinks needs to restrain themselves but he praises Senator Alan Simpson, Representative Paul Ryan and President Obama for helping to lecture us on this need. Those familiar with the basic economic data know that the richest 1 percent have used their control of the political process to hugely increase their share of national income over the last three decades. The bottom 90 percent has seen little gain from economic growth over this period. Of course Representative Ryan wants to give more tax breaks to the richest 1 percent, so he doesn’t seem to be preaching self-restraint to those who have been showing the least in recent years.
If Brooks’ concern is making the welfare state sustainable, then he should be talking about fixing the health care system. It is easy to show that if per person health care costs in the United States were comparable to any other wealthy country then we would be projecting huge budget surpluses, not deficits.
If Brooks bothered to take a few minutes to study the issues he writes about then he would know this. Fortunately for him, he has job for which this skill is not required.
Brooks also claims that there is an inherent tension between economic dynamism and economic security, telling readers:
“Republicans still mostly talk about incentives for growth, and Democrats still mostly talk about economic security.”
Actually many Democrats have been actively talking about more stimulatory fiscal policy, monetary policy and currency policy (i.e. a lower valued dollar). All of these policies would boost growth. It is remarkable that Brooks is apparently unaware of the large number of Democrats, including several of his colleagues at the New York Times, who have been vigorously pushing these positions.
David Brooks told readers that:
“Over the past months, there has been some progress in getting Americans to accept the need for self-restraint.”
This should have hundreds of millions asking who needs “self-restraint?” Does Brooks thinks that the 14 million unemployed need more self-restraint? Do the 8 million people who want full time work but who can only find part-time employment need self-restraint? Do the millions of people who are facing the loss of their home need more self-restraint?
Brooks isn’t very clear on who he thinks needs to restrain themselves but he praises Senator Alan Simpson, Representative Paul Ryan and President Obama for helping to lecture us on this need. Those familiar with the basic economic data know that the richest 1 percent have used their control of the political process to hugely increase their share of national income over the last three decades. The bottom 90 percent has seen little gain from economic growth over this period. Of course Representative Ryan wants to give more tax breaks to the richest 1 percent, so he doesn’t seem to be preaching self-restraint to those who have been showing the least in recent years.
If Brooks’ concern is making the welfare state sustainable, then he should be talking about fixing the health care system. It is easy to show that if per person health care costs in the United States were comparable to any other wealthy country then we would be projecting huge budget surpluses, not deficits.
If Brooks bothered to take a few minutes to study the issues he writes about then he would know this. Fortunately for him, he has job for which this skill is not required.
Brooks also claims that there is an inherent tension between economic dynamism and economic security, telling readers:
“Republicans still mostly talk about incentives for growth, and Democrats still mostly talk about economic security.”
Actually many Democrats have been actively talking about more stimulatory fiscal policy, monetary policy and currency policy (i.e. a lower valued dollar). All of these policies would boost growth. It is remarkable that Brooks is apparently unaware of the large number of Democrats, including several of his colleagues at the New York Times, who have been vigorously pushing these positions.
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In policy circles the worst thing you can do to a leading expert is to hold him/her accountable for their views. Remember all those folks who thought the economy and the housing market were just fine in 2006? They’re all still there, using their expertise to opine on and guide economic policy. It is considered excessively cruel to point out that these experts somehow could not see the biggest downturn since the Great Depression until we were in the middle of it.
Anyhow, there is a subset of policy types who had been complaining about the rising price of oil and other commodities as evidence of runaway inflation. This in turn was usually attributed to the Fed’s quantitative easing policy.
Now that these prices have fallen sharply, these experts presumably fear deflation. Hopefully we will be reading articles in coming days in which these experts insist on the need for more aggressive monetary policy in order to protect the economy against this threat.
In policy circles the worst thing you can do to a leading expert is to hold him/her accountable for their views. Remember all those folks who thought the economy and the housing market were just fine in 2006? They’re all still there, using their expertise to opine on and guide economic policy. It is considered excessively cruel to point out that these experts somehow could not see the biggest downturn since the Great Depression until we were in the middle of it.
Anyhow, there is a subset of policy types who had been complaining about the rising price of oil and other commodities as evidence of runaway inflation. This in turn was usually attributed to the Fed’s quantitative easing policy.
Now that these prices have fallen sharply, these experts presumably fear deflation. Hopefully we will be reading articles in coming days in which these experts insist on the need for more aggressive monetary policy in order to protect the economy against this threat.
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