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Article Artículo

Glenn Hubbard is Unhappy About the Budget Deficit

Glenn Hubbard, along with Tim Kane, had a column in the NYT today decrying the budget deficit. The column begins by repeating the warnings of that well known economic expert, Admiral Mike Mullen, that the debt is the “single biggest threat to our national security.”

There is more than a bit of irony in Hubbard writing this sort of piece. Hubbard was the chief economic advisor to President George W. Bush when he pushed through his tax cuts in 2001. The tax cuts, along with the recession and the wars in Afghanistan and Iraq, pushed the budget from a surplus of 2.5 percent of GDP in 2000, to deficits of more than 3.5 percent of GDP in 2003 and 2004. While running large deficits was the right move for the economy in response to the recession created by the collapse of the stock bubble (although there were far better uses for the money than tax cuts to rich people and fighting unnecessary wars), there is more than a bit of inconsistency in Hubbard's apparent willingness to use deficits to boost the economy out of a recession in the last decade while at the same time disparaging President Obama's efforts to use deficits to lift the economy out of a far deeper hole.

The double standard in this piece is explicit. It tells readers:

"When Reagan was sworn into office, gross federal debt equaled 32.5 percent of G.D.P. Under President Obama’s leadership, it has risen above 100 percent."

Readers may not have realized that the debt to GDP ratio had been a consistent downward path from the end of World War II, when it was over 110 percent of GDP, until President Reagan took office. It then began to rise quickly in the 1980s and early 1990s, reaching more than 70 percent of GDP when the first President Bush left office in early 1993. (This is the total debt, which includes the bonds held by Social Security and other government trust funds.)

Dean Baker / August 12, 2013

Article Artículo

Washington Post Myths About Its New Owner, Jeff Bezos

In a piece that was ostensibly intended to dispel myths about Jeff Bezos, the new owner of the Washington Post, "Five myths about Jeff Bezos," the paper seemed intent on creating new myths. Its list of myths included two items which are largely true.

Myth # 1 is "Jeff Bezos is destroying independent booksellers." The piece implies that independent booksellers were already well on their way to collapse before Amazon came into existence telling readers:

"The year before, Barnes & Noble and the Borders Group captured nearly a quarter of all revenue from book sales."

With the two big chains getting less than a quarter of revenue, this means that independent stores and smaller chains got more than three quarters of revenue. By contrast, last year on-line sales, the bulk of which went to Amazon, accounted for 48 percent of total sales. While some of this growth came at the expense of the two big chains (Borders has gone out of business), most of it was at the expense of independent book stores.

It is possible to debate whether the loss of independent book stores is a net positive or negative (obviously consumers value buying items at Amazon or they wouldn't do it), but it is absurd to contend that Amazon did not hugely hasten the decline of independent book stores as his newspaper does here.

The other major non-myth on the list is myth #4 that:

"Amazon's key advantage is that it doesn't collect state sales tax."

Dean Baker / August 11, 2013