ES EN
Menu Menú

Publications

Publicaciones

Search Publications

Buscar publicaciones

Filters Filtro de búsqueda

to a

clear selection Quitar los filtros

none

Article Artículo

Steve Rattner: Stop Stealing from Our Kids!

Steve Rattner wants someone to stop stealing from our kids according to the headline of his blog post in the NYT. The finger should be pointed backwards in Rattner's case because if anyone is going to jeopardize the living standards of our kids, it is wealthy people like Mr. Rattner.

We have seen an enormous upward redistribution of income over the last three decades. As a result most workers have seen little of the benefits of economic growth. If this upward redistribution continues, then our children are unlikely to see much of the gains of growth in the future.

Rather than have people focus on the policies that have led to this upward redistribution (trade policy, too big to fail banks, patent policy etc.), wealthy people like Rattner use their money and power to try to divert attention to the cost of Social Security and Medicare. They have thrown enormous resources into trying to scare people with the prospective burdens posed by these programs. For example, Rattner today tells us that with Social Security:

"The present value of the unfunded liability is 'only' $9 trillion."

Are you scared yet? After all, it's "only" $9 trillion. Didn't you love that sarcasm? Yes, $9 trillion is a lot of money, none of us will ever see that much money, even Bill Gates or Warren Buffet. But if we are having a serious discussion, we would talk about this as a share of future income. It's about 0.7 percent of future GDP. Does that scare you?

That's a bit less than half of the cost of the wars in Afghanistan and Iraq over the last decade, that's hardly trivial, but that expense would not impoverish our kids. Medicare and Medicaid are projected to cost more but that has nothing to do with the old stealing from the young, their higher costs are the result of doctors, drug companies, medical supply companies and other providers in the industry charging us two to three times as much as their counterparts in other wealthy countries. If we paid the same amount per person for our health care as people in other wealthy countries then we would be looking at long-term budget surpluses rather than deficits.

Dean Baker / March 14, 2013

Article Artículo

Economists Generate Confusion About Poverty: Old and Young

Given the disastrous failure of the economics profession to warn of the housing bubble, it is amazing that the country has not rounded up the lot of us (I'll go too) and chased us out of the country. Unfortunately, we still have a profession continuing to use its authority to spread confusion rather than enlightenment. 

Thomas Edsall and his readers are the victims today. In an interesting discussion of trends in poverty, Edsall includes a reference to work by Bruce Meyer and James Sullivan that shows poverty among the elderly has fallen to just 3.2 percent using a consumption based measure of poverty. There are many issues that can be raised about this analysis, as my colleague Shawn Fremstad has pointed out.

However perhaps the most fundamental point for purposes of Edsall's analysis, which explicitly compares poverty rates among the young and the old, is the fact that Meyer and Sullivan:

"report results using an adjusted CPIU-RS that subtracts 0.8 percentage points from the growth in the CPI-U-RS index each year (p 17)."

Okay, if the meaning of this line is not immediately clear, Meyer and Sullivan are assuming that actual rate of annual inflation is 0.8 percentage points less than official data show. This claim is debatable, but its implications are not. If we have been overstating inflation by 0.8 percentage point each year, then we have been understating real income growth by 0.8 percentage points.

This claim lies at the center of Meyer and Sullivan's claim that poverty has fallen sharply. Their adjustment would mean that income has risen by roughly 8 percent more over the last decade than official data show and 16 percent more over the last two decades. (I'm ignoring compounding to keep this simple.) This additional rise in income (or consumption) gets a lot of people over the poverty line.

The Meyer and Sullivan assumption has another important implication which they do not discuss in this paper and apparently did not discuss in their conversations with Mr. Edsall. If income is growing more rapidly than the official data indicate then people were much poorer in the recent past than official data indicate.

Dean Baker / March 14, 2013

Article Artículo

The Congressional Progressive Caucus Budget: A Serious Budget That the Serious People Won't Take Seriously

For those upset that the budget debate is getting ever further removed from the real world problems of an economy that is suffering from a deficit of 9 million jobs, there is good news. The Congressional Progressive Caucus (CPC) has produced a budget that is intended to make the unemployment situation better rather than worse.

The story of course is that we are still in a situation where we need the government as a source of demand in the economy. This is independent of how much we like the government or the private sector. The private sector does not expand and create jobs just because governments want it to, as is being discovered now by leaders in the United Kingdom, Greece, Italy, Spain and everywhere else where deficit reduction is now in vogue. In the current economic situation, loss of demand from the government is a loss of demand to the economy. That is why recent steps to reduce the deficit, such as the ending of the payroll tax cut (which put money in consumers' pockets) and the sequester, will lead to slower growth and higher unemployment.

The CPC decided to produce a budget that recognized this reality. It provides for a mix of short-term measures aimed at immediate job creation, such as jobs programs and additional money to defray state and local government revenue shortfalls, along with an ambitious long-term infrastructure agenda. According to estimates from the Economic Policy Institute this agenda would create 6.9 million additional jobs by the end of next year compared to the CBO baseline scenario.

CEPR / March 13, 2013

Article Artículo

Does Paul Ryan Want to Change the Relationship Between Americans and Their Government or Give Money to Rich People?

Ezra Klein looked at Paul Ryan's latest budget and told readers:

"Ryan’s budget is intended to do nothing less than fundamentally transform the relationship between Americans and their government. That, and not deficit reduction, is its real point, as it has been Ryan’s real point throughout his career."

Well, that is one possibility. There is another option: Paul Ryan wants to makes rich people richer. I think the evidence supports the latter view.

Let's look at some of Ryan's trademark policies. Ryan repeatedly has proposed replacing Medicare with a voucher system or "premium support" as he likes to say. Note that Ryan has not proposed just eliminating Medicare and telling people when they turn age 65 (or 67) that they are on their own. 

What's the difference between handing people a voucher to buy insurance from private insurers and giving them access to a government-run Medicare system when they turn age 65? Over Medicare's 75-year planning period the difference is tens of trillions of dollars in additional money for private insurers and the health care industry, according to the Congressional Budget Office (CBO). 

As CBO and many other independent analysts have documented, using private insurers raises rather than lowers costs. We can believe that Representative Ryan is ignorant of this research or alternatively we can believe he knows and understands the findings, but still wants to use private insurers anyhow.

Dean Baker / March 13, 2013

Article Artículo

Chávez in Haiti, a Clear Alternative to the “International Community”

Last week, after the passing of Venezuelan president Hugo Chávez, Haiti declared three days of national mourning. President Martelly stated that Chávez was a “great friend of Haiti who never missed an opportunity to express his solidarity with the Haitian people in their most difficult times.” It’s not the first time Martelly had such kind words for the Venezuelan president. Last year, Martelly told the press that it was Venezuelan aid that was “the most important in Haiti right now in terms of impact, direct impact." In February, Martelly attended the 11th summit of the Bolivarian Alliance for the People of Our Americas, a regional political organization spearheaded by Venezuela, and announced that Haiti was debating joining the group as a full member. While most of the coverage around Chávez’s legacy in Haiti and the greater Caribbean has focused on the Petrocaribe initiative, which provides subsidized fuel to the region, Chávez developed close ties to the Haitian people well before Petrocaribe. Following the earthquake of 2010, Chávez, in cancelling Haiti’s debt to Venezuela, declared, “Haiti has no debt with Venezuela -- on the contrary, it is Venezuela that has a historic debt with Haiti." As Chávez was quick to point out, it was Haiti that provided a vital safe-haven for Latin American independence hero Símon Bolívar before he went on to liberate much of South America from Spanish rule.

Opposition to 2004 Coup

In 2004, following the U.S.-backed coup against Jean-Bertrand Aristide, Chávez was one of only a few voices in the region condemning what had taken place and refusing to recognize the coup government. Chávez told the Organization of American States that, “The President of Haiti is called Jean-Bertrand Aristide, and he was elected by the people." He formally extended an offer of asylum to Aristide in March of 2004. Perhaps the solidarity was in part due to the fact that just two years previously Chávez had been temporarily ousted in a coup, and similar actors were involved in both the Venezuelan and Haitian coups. As detailed in a 2004 investigation by Mother Jones, the International Republican Institute was active in both organizing and training those involved in the 2004 coup in Haiti as well as opposition factions before the 2002 coup in Venezuela, and its point man in Haiti at the time – Stanley Lucas, now an advisor to Martelly – had been in Venezuela some seven times prior to the coup.  Senior Bush administration officials Roger Noriega and Otto Reich also actively supported both the Venezuelan and Haitian coups.

One with the People

In 2007, President Chávez traveled to Haiti; Brian Concannon and Mario Joseph described the scene at the time:

Venezuela’s President Hugo Chávez found a hero’s welcome when he visited Haiti on March 12. People from Port-au-Prince’s poor neighborhoods lined the streets of the capitol to cheer, to chant, to dance and sing, with the infectious enthusiasm of Haitian celebrations. President Chávez returned the affection. He jumped from his motorcade and joined the party, marching, even running with the crowd. At the National Palace, Mr. Chávez climbed up on the perimeter fence to shake and slap hands, like he had just scored a World Cup goal. He publicly thanked the Haitian people for their hospitality and enthusiasm, and for their historic support for liberty in the world.

President Chávez and the Haitian people hit it off so well for reasons of principle and of practice. Haitians consider Chávez a leader in the global fight against the global power inequalities that keep people in Haiti, Venezuela and the rest of Latin America poor, hungry and uneducated. They see him standing up to the most powerful leader in today’s world- President Bush (whose name was frequently invoked that day, not charitably) – and to the World Bank and other powerbrokers. Even better, unlike their President Aristide (whose name was frequently, and charitably, invoked), Chávez keeps getting away with standing up to the powerful.

Petrocaribe

Of course, while the solidarity between Chávez and the Haitian people has long existed, the more recent direct impact of this solidarity has been through the Petrocaribe initiative. The agreement, which was nearly blocked by the U.S. government and major oil companies, has provided Haiti with 23.6 million barrels of oil since 2008. Through the agreement Venezuela finances part of Haiti’s fuel import bill, allowing for a portion to be paid up front and the remainder to be used as a loan with a long maturity and low rates. Since the program’s inception, Venezuela has provided oil worth nearly $2.5 billion. Haiti has paid back over $1 billion of that and although Venezuela cancelled nearly $400 million in debt after the earthquake, Haiti retains a debt of roughly $950 million to Venezuela.  Most of this will be paid back over a period of 25 years at a 1 percent interest rate. In the meantime, there is a two-year grace period. The IMF estimated fiscal year 2012/2013 external debt payments to be 0.1 percent of GDP, or less than 0.5 percent of government expenditure. 

Jake Johnston / March 12, 2013