Dean Baker, Yog-Sothoth Professor of Political Economy at Miskatonic University, on the Washington Post and the Stimulus

Beat the Press Archive | The American Prospect: Given the quality of the economics reporting, parents would be well-advised to prohibit their children from reading the Washington Post so that they don't get confused on basic arithmetic concepts. The Post doesn't want more stimulus and is willing to say anything to push its case.

The lead editorial tells readers that: "government has managed to blunt the recession, but at a cost -- a higher national debt burden, which future Americans must pay off by working harder and saving more than they otherwise would have." Actually, future Americans will own the debt that will be paid off. This is not a generational issue, it can be a distributional one.

There is a point that some of the debt is held by foreigners. This will be a burden on the country, but the issue here is the trade deficit, not the budget deficit. If we had no government debt, but foreigners bought up $4 trillion of private capital in the United States, it would pose the same burden on future generations as if foreigners bought up $4 trillion of government debt. Remarkably, the Post is not concerned about the trade deficit and the burden it poses on future generations and actually does not want the cause of the deficit -- the over-valued dollar-- to be fixed.

The Post also gives the bizarre argument that:we should wait on further stimulus because "the government still hasn't run through half of the $787 billion in tax cuts and spending increases enacted this year." Of course, for those of us who passed our third grade arithmetic class this argument is just plain silly.

The stimulus is already being disbursed at its maximum rate and therefore having its full impact on the economy. The additional spending will provide no further boost.

To see this point, imagine my rich uncle promises to give me $2,400 over two years in installments of $100 a month. I may originally be slow to change my consumption, but after 3 or 4 months I will likely have fully adjusted my spending in accordance with this monthly gift of $100. Once I have reached the 8th month, I will almost certainly be at my maximum spending rate, even though two thirds of the gift is yet to come.

This is where we stand right now. We have spent close to 40 percent of the stimulus with more than 60 percent yet to come, however the rate of spending will not be increasing from this point forward. Therefore, it will provide no further net boost to the economy. People who write editorials for major newspapers should understand this fact.

It is worth noting that the Congressional Budget Office (CBO) projections showing a 10.2 percent unemployment rate for 2010 and a 9.1 percent rate for 2011 include the impact of the stimulus. Perhaps the Post's editors know something that CBO doesn't, in which case they should share this information with their readers.

Miskatonic University Bulletin: Fall 2009

The leaves are turning here in Arkham, Massachusetts, as we welcome to his padded cell our new Dread Cthulhu Professor Health Policy, Thomas Levenson. Watch his mad ululations beneath the uncaring stars:

It’s not that McArdle can’t read... it’s that she can’t (won’t) think: part four (and last, thank FSM). « The Inverse Square Blog: OK, by now it’s clear that this is overkill.  One post by Megan McArdle does not need this kind of rant; it’s like using a howitzer to plink a tin can off a fence.  [For grotesque demonstration of my logorrhea problem, check out parts one, two, and three of this series]

But in some sense, all I’m doing is channelling my inner John Foster Dulles:  McArdle, and her ilk are not going away.  Sadly, no amount of day-by-day debunking seems able to evoke the kind of respect for their claimed craft that would produce even a smidgeon more care and honor in their ongoing attempt to write into reality their unexamined assumptions.  So, after Dulles, consider this a kind of blogospheric massive retaliation, an attempt to shock and awe the recalcitrant into the virtues of intellectual honesty.

Which brings us to one more thing that McArdle did not do in her attempt to recruit what she claims as the gold-standard of authority, the academic literature, to bolster her assertion that any attempt to control drug expenditures in the US medical system is tantamount to a pact to kill nice old people...

Ph'nglui mglw'nafh Levenson R'lyeh wgah'nagl fhtagn!!

David Frum is Shrill!

Former Bush speech-writer David Frum is, dare we say it, Shrill and Unbalanced!

All this hysterical and provocative talk invites, incites, and prepares a prefabricated justification for violence.

And indeed some conservative broadcasters are lovingly anticipating just such an outcome.

...

Newt Gingrich tweeted: "The person who drafted the outrageous homeland security memo smearing veterans and conservatives should be fired."

I don't think the former speaker could tweet such a thing today in good conscience. The person who drafted that homeland security memo has gained very good reason to be worried. The guns are coming out. The risks are real.

It's not enough for conservatives to repudiate violence, as some are belatedly beginning to do. We have to tone down the militant and accusatory rhetoric.

David, welcome!

Joe Klein is losing it

Time was we'd expect Joe Klein to reliably mutter something about being liberal before launching into a broadside against everyone to the left of Atilla the Hun. This time is past:

...The most liberal members of the Democratic caucus — Senator Russ Feingold in the Senate, Representative Dennis Kucinich in the House, to name two — are honorable public servants who make their arguments based on facts. They don't retail outright lies. Hyperbole and distortion certainly exist on the left, but they are a minor chord in the Democratic Party.

It is a very different story among Republicans. To be sure, there are honorable conservatives, trying to do the right thing. There is a legitimate, if wildly improbable, fear that Obama's plan will start a process that will end with a health-care system entirely controlled by the government. There are conservatives — Senator Lamar Alexander, Representative Mike Pence, among many others — who make their arguments based on facts. But they have been overwhelmed by nihilists and hypocrites more interested in destroying the opposition and gaining power than in the public weal. ... There is no Republican health-care alternative in 2009. The same people who rail against a government takeover of health care tried to enforce a government takeover of Terri Schiavo's end-of-life decisions. And when Palin floated the "death panel" canard, the number of prominent Republicans who rose up to call her out could be counted on one hand.

A striking example of the prevailing cravenness was Senator Johnny Isakson of Georgia, who has authored end-of-life counseling provisions and told the Washington Post that comparing such counseling to euthanasia was nuts — but then quickly retreated when he realized that he had sided with the reality-based community against his Rush Limbaugh-led party. ... Why are these men so reluctant to be rational in public?

Nonpartisan Tax Professor Dan Shaviro Is Now Shrill!

Welcome, Dan! Phnglui mglwnafh Cthulhu Rlyeh wgahnagl Ftagn!! The deep-fried shoggoth tentacles are on the right. And the 65 million B.C. vintage of the chardonnay is from Hastur the Unspeakable's private cellars...

Start Making Sense: Healthcare reform: The current debate's lack of coherent content has been quite startling, and indeed dismaying insofar as one naively hoped for better. I generally support what the Obama Administration is trying to do (though sometimes what that is, isn't entirely clear). In 1993, I was unsympathetic to the Clinton plan, but since then my view of how well the U.S. healthcare market functions has darkened. More on that in a moment. Unfortunately, I don't think the Administration has conveyed any clear sense of what it is trying to do, or why. Concerning the other side in the debate, perhaps the less said, the better. I really can't say anything temperate at this point. What is the set of problems to which the Administration's healthcare reform proposals might, with luck, be an at least partial solution? Brad DeLong once put the point quite crisply (in his moderate rather than shrill persona). To liberal economists, the big problem is adverse selection. To conservative economists, the big problem is moral hazard. And I myself would say they're both right, plus there also are externalities. On adverse selection: Anyone who is facing uncertain healthcare expenses ought to want insurance, smoothing out the actual cost towards the expected cost. Our healthcare market does not work well to solve this problem, and that's a big reason for the millions of uninsured. The tax subsidy for employer-provided insurance contributes to this, by making risk pooling much harder for the people left over after these generally healthier groups have been cherry-picked out of the pool (so to speak). Adverse selection, making fairly priced insurance unavailable, is inherently a big problem in healthcare if the government doesn't somehow mandate pooling, given that people often will know more about their expected future health than insurance company doctors will be able to learn. But the system created by tax benefits certainly has made things worse. Myopic or irrational failure to insure (until it is too late) when one should have also is a problem. Likewise, the prospect of free care in the ER if one has a crisis may create an individually rational reason for under-insurance, but involving a fiscal externality. When you count as well the adverse effect on risk-pooling of people's staying out of the insurance market (contributing to adverse selection), there's a good case for mandating health insurance coverage, just as Social Security effectively mandates retirement savings. >There is an argument on the other side - why give me (or make me buy) something that costs $X if I value it at less than $X - but while that's often a good argument I personally would reject it on balance here. Note, however, that this argument applies equally to making me buy something for $X and giving it to me for free (since in that case we could simply have given me the $X instead). And the question of whether I pay the $X or get it for free is simply an input to the overall issue of post-tax and transfer wealth distribution in the society (which is not to diminish its importance, but just to put it in the proper larger context). >And finally, mixed in with adverse selection (though conceptually distinct) is that we may favor redistribution from those facing low expected healthcare costs to those facing high expected costs, in particular to the extent that brute luck rather than choice underlies the difference. Thus, mandatory insurance for which everyone was charged the same amount might be defended as combining a solution to adverse selection with a deliberative redistributive policy. By the way, lest this sound a bit lefty, it is distributionally equivalent to what the George H.W. Bush Administration would have proposed it if Bush I had won the 1992 election, via risk-adjusted subsidies for the purchase of private health insurance. >OK, on to moral hazard. One key reason the U.S. healthcare system is so wildly expensive relative to the benefits provided (where the comparison is other economically advanced countries, where people get comparably good healthcare for much less) is that we have half of a free market system, in effect - which can be worse than no market system at all. Consumer demand drives the market, but it is largely the demand of subsidized consumers who are not actually paying at the margin for what they get. Suppose that in the market for groceries or cars we had consumer demand in the driver's seat (as we do), except that people didn't actually have to pay for what they purchased (or maybe they just had a small co-pay). Whole Foods and GM might like this, but it wouldn't be good socially. Yet in healthcare, that's effectively what we have, much of the time, for people on Medicare, Medicaid, or employer-provided health insurance that overpays at the margin (relative to the optimal insurance level) due to the distorting effect of the tax subsidy. Perhaps the food or cars analogy overstates the problem in a couple of respects. Good food and cars are fun in themselves, getting healthcare isn't and hence I'd generally only do it out of the belief that my health will benefit. Plus, doctors to a large extent tell healthcare consumers what to do. But the latter is actually a big part of the problem - they don't bear the marginal costs either, and have some reasons of both ideology and self-interest (earn more fees or practice overly defensive medicine) for recommending treatments that aren't actually worth their cost to the patient. So we have a terrible healthcare system that surely could be vastly improved. I take the Administration to be addressing the adverse selection problem by extending health insurance to the uninsured population. Also, it may want to address under-treatment of this population (which exists alongside over-treatment of others), which I think of as a distributional issue, because being sick and treatable, but unable to afford the treatment, should raise one's estimate of the marginal utility that a transfer via free provision of the needed service would provide. The Administration would also perhaps like to address the moral hazard problem, which is a key input to the horrendous problems of long-term fiscal unsustainability that the U.S. currently faces. Many observers are skeptical, I would guess rightly, of the progress that the current proposal would make on this front. Unfortunately, addressing it really requires bipartisanship, since cutting benefits is politically unpopular. And the Republicans couldn't make any clearer their unwillingness to cooperate in any sort of good faith effort to address waste and put healthcare outlays on a sustainable path. One of the many offensive and odious aspects of the Republicans' hateful lying about death panels and the like is that they are actually the ones who want to provide less treatment. For those among them who are sane and believe in civil society, this mainly reflects concern about moral hazard and/or a libertarian distributional view. The rest, apparently a large majority of their number, do not bear discussing.

Spencer Ackerman's Sober, Measured Take on John Yoo

A measured, appropriate, sober take: >John Yoo’s Defense of Himself Is as Persuasive as Most of His Legal Opinions: This is your horrible, dystopian future: John Yoo, the former Office of Legal Counsel official who had a hand in crafting the Bush administration’s detentions, interrogations and warrantless surveillance abuses, writes endless and endlessly misleading defenses of himself. Some people die because of Yoo’s cavalier relationship with the law — about 100, actually — and others get law school sinecures and limitless op-ed real estate to explain away what they did. Few people write so much for so long with so little self-reflection. You’ll be reading these op-eds in the nursing home. Yoo’s latest comes in response to Friday’s report from five inspectors general about the warrantless surveillance and data-mining escapades of the Bush administration. Welcome to your future. >Yoo starts things off with his typical flourish of disingenuousness: >>Suppose an al Qaeda cell in New York, Chicago or Los Angeles was planning a second attack using small arms, conventional explosives or even biological, chemical or nuclear weapons. Our intelligence and law enforcement agencies faced a near impossible task locating them. Now suppose the National Security Agency (NSA), which collects signals intelligence, threw up a virtual net to intercept all electronic communications leaving and entering Osama bin Laden’s Afghanistan headquarters. What better way of detecting follow-up attacks? And what president — of either political party — wouldn’t immediately order the NSA to start, so as to find and stop the attackers? >>Evidently, none of the inspectors general of the five leading national security agencies would approve. >Those inspectors general, in Yoo’s imagination, aren’t overworked bureaucrats in wrinkle-free shirts, cotton Dockers and overgrown haircuts, buried under endless reams of paper. They’re useful idiots for Osama bin Laden. In truth, the reason why the inspectors general don’t entertain that scenario is because it’s absurd. If the intelligence community knew what the “electronic communications” signatures heading into and out of Osama bin Laden’s Afghanistan headquarters were, they could very easily obtain warrants under the Foreign Intelligence Surveillance Act of 1978, because they’d possess individualized suspicion. This is an unproblematic case, fitting easily under the aegis of the law on Sept. 12, 2001.  It has absolutely nothing to do with what the inspectors general call the “President’s Surveillance Program.” That’s also why the battery of Justice Department leaders like Acting Attorney General Jim Comey, Associate Attorney General Jack Goldsmith, FBI Director Robert Mueller and Associate Deputy Attorney General Patrick Philbin fought to rein in the surveillance activities — because they were overbroad and outside of FISA, which Congress explicitly made the “exclusive means” for conducting legal foreign surveillance. Yoo continues: >>It is absurd to think that a law like FISA should restrict live military operations against potential attacks on the United States. >Actually, it’s absurd to think that a law like FISA does. Yoo cites the 9/11 Commission, saying it found that “FISA’s wall between domestic law enforcement and foreign intelligence” proved to be such a hindrance, but that’s a misrepresentation. FISA has no such wall. The “wall” was an invention of the Justice Department under Janet Reno to separate foreign-collected surveillance from criminal investigations, nothing even close to “live military operations,” and in practice that bureaucratic restriction went too far and inhibited necessary FBI-CIA collaboration. The Bush administration’s response wasn’t to get Congress to change FISA; it was to entirely circumvent it. >>Clearly, the five inspectors general were responding to the media-stoked politics of recrimination, not consulting the long history of American presidents who have lived up to their duty in times of crisis. More than a year before the attack on Pearl Harbor, President Franklin Delano Roosevelt authorized the FBI to intercept any communications, domestic or international, of persons “suspected of subversive activities . . . including suspected spies.” >You know what law, passed in 1978, didn’t exist when FDR was president? Yoo goes even further, and takes selective quotations from Jefferson and Hamilton to suggest that his long-discredited theory that presidents have king-like powers during times of war, and yet he never comes out and says it, because even in The Wall Street Journal people can recognize absurdity. >What’s amazing about Yoo’s caustic attack on the inspectors general report is that the report itself embarrasses Yoo but does little else. There’s no suggestion of prosecution, no recommendation of additional investigation, no harsh language. It says simply that Yoo says what he says in this op-ed and that his superiors at OLC were cut out of that loop. That’s all. Yoo’s not even in danger, if reports about Attorney General Eric Holder’s potential new investigation are to be believed, of moving into the crosshairs of the Justice Department. Today’s attack on the inspectors general is Yoo’s response to having his own words quoted back at him. Which, perhaps, is insult enough. It’s like seeing the next 30 years of your life unfold before your horrified eyes.

Tom Levenson, Driven into Shrillness by Tom Friedman Once More...

Dog Bites Man: Tom Friedman Mischaracterizes US Interventions. « The Inverse Square Blog: Atrios sent me in search of Tom Friedman’s latest, and, like its author, it’s a bizarre piece of work. Backstory:  back in the dawn of time, when giants still walked the earth (Mays in center field; McCovey at first base, Marichal on the mound), and humans preserved their communications in scratches on clay, Tom Friedman was a real reporter and a good one.  He spent time in country, he worked sources, he could write. Somewhere along the line, though, during the Clinton years, I believe, he seems to have convinced  himself that his wealth of experience had given him the key to all mythologies. Hence such trifles as his “argument” that we should invade Iraq to show that the US could punch somebody,[1] the endless iteration of “Friedman Units” and so on. And now, with the war in Iraq now in its Pilate phase... Friedman comes up with a column that captures so many of his deficiencies in one place.  There is the complete abandonment of the reportorial function. He doesn’t talk to folks, he tags along (his phrase) with US JCS Chairman Admiral McMullen.  Nice company, to be sure, but not that in which you will find unvarnished opinions being expressed. He doesn’t seem even interested in testing his assumptions against any possibility of contrary information anymore: >In the dining hall on the main base, I like to watch the Iraqi officers watching the melting pot of U.S. soldiers around them — men, women, blacks, whites, Asians, Hispanics — and wonder: What have they learned from us? Wonder?  WONDER? You’re a journalist — or rather you used to be!  You don’t blow wonder through your ass.   You go find out what they have learned from us.  But no…that would be (a) heavy lifting and (b) dangerous... so much so that it might render this kind of conclusion not merely pathetic, but simply unsayable: >We left some shameful legacies here of torture and Abu Ghraib, but we also left a million acts of kindness and a profound example of how much people of different backgrounds can accomplish when they work together. Well, how much have we and they accomplished?  Some, I’m sure…... ut given this kind of news, buried in what used to be called the b section, but popping up with depressing regularity, perhaps not as much as Friedman’s breezy tour with the brass may indicate. And in any event — how is it possible that a Serious Foreign Policy Thinker™ no matter how burnt out, overly comfortable, and generally hackified could actually bring himself to write such a Hallmark Card notion:  that the events of the last six years (12 F.U.s, if you’re counting) are coming to rest in a satisfactory state because, hey, we can all work together? I guess there is a thread of naivete left to me.  I grew up thinking that there was something special about the New York Times. I met Tony Lukas when I was 18, Tony Lewis some time later — and people like that impressed me for the fire they had, that seemed to come from that newsroom.  You didn’t get comfortable there, it seemed to my juvenile eyes.  Even when you got big, you felt the pressure the place forcing you to make that last call to get it right. I know that’s a fantasy, and I’m sure it was never as true as I wanted it to be.   And even with the decline of the Times (Judith Miller, anyone... Ross freaking Douthat?) it’s still better than the whatever that other emblem of journalistic moxie, the Post has become.  But that’s kind of like saying that liver is better than spam… But still... Friedman could once actually do the job he mails in now.  It’s painful to watch.  He should pack it in.  Otherwise it’s just going to go ever further down hill.  For, in this column as in this post, he and I save the best/worst for last.  If Friedman hopes to hang on above Kristol territory, he has to find a way to stop writing stuff like this: >After we invaded and stabilized Bosnia, we didn’t just toss their competing factions the keys. Except, of course, we did not invade Bosnia.  The American led NATO intervention in the Bosnian War occured in 1995, just as Friedman was making his ultimately disastrous move to the NYTime’s Opinion pages, so he perhaps may have been distracted, but the military action taken by the US and its allies consisted of 3515 aerial sorties:  a hellacious bombing campaign. If this seems like a distinction without a difference, think again:  many DFHs without Friedman’s bully pulpit tried to suggest that the range of analogies being drawn to justify the Iraq War back in 2002-2003 were false.  Iraq wasn’t Japan in August 1945; Bagdad was not Berlin; displacing Saddam was more like witnessing Tito’s death and the start of the Yugoslav disintegration than it was our ratification of Balkan partition in 1995 — and not much like that either.  Friedman chose then not to know any historical complexity.  He still does.  And as he continues to scrabble to find justifications for his own disastrous cheerleading for the Iraq war,  he’s willing to get basic facts wrong to prevent the slightest dissonant fact from disturbing the eternal sunshine of his mind. If it were me, or any other mere blogger, or even one of the deranged commenters at Redstate thus deluded — who cares.  But despite the evident decline of even the flagship mass media organizations, the power that comes with the NYT platform and the inertial weight of Friedman’s own brand means that when he says stupid sh-t, he can get people killed.  And that’s why this matters. ---- [1] From Wikipedia: >In an interview with Charlie Rose in 2003, Friedman said: >>What they needed to see was American boys and girls going house to house, from Basra to Baghdad, um and basically saying, “Which part of this sentence don’t you understand?” You don’t think, you know, we care about our open society, you think this bubble fantasy, we’re just gonna to let it grow? Well, Suck. On. This.[23][24][25] ..We could have hit Saudi Arabia. It was part of that bubble. Could have hit Pakistan. We hit Iraq because we could. That’s the real truth... >Similarly, in NPR’s Talk of the Nation, September 23, 2003: >>...and sometimes it takes a 2-by-4 across the side of the head to get that message.