Some Words From An Economist - who actually THINKS

This from Brad DeLong's blog. Please follow link to original -- bookmark, and read daily.
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For the Virtual Green Room: May 31, 2011

Things I want to have at the forefront of my brain--for when I am surprised, as I will be, by an unexpected question from an unexpected direction while talking to reporters, phone callers, passers-by, radio interviewers, cable TV interviewers, etc....

A baker's dozen:

On Paul Ryan's claim that "Obama-care kills Medicare as we know it. Obama-care raids $500 billion from Medicare to spend on Obama-care, puts in place a 15-panel board to ration Medicare by unelected bureaucrats. Our budget, repeals the raiding, gets rid of the rationing board, preserves this program, makes no changes for a person 55 years of age or older and saves Medicare": James Kwak: "Ordinarily this wouldn’t be worth responding to, except to point out, as Sam Stein did, that Ryan’s proposed budget also ”raids $500 billion from Medicare,” so the statement that “we stop the raiding” is, um, a lie. But it isn’t news that Paul Ryan has an issue with honesty, except perhaps for David Brooks."

On John McCain's claim that Sarah Palin can beat Barack Obama because she "inspires great passion, especially among the Republican faithful": David @ Crooks and Liars: "A recent Washington Post/ABC News poll found that only 17 percent of Republicans had a "strongly favorable" view of her."

On Republican claims that 51% of households don't pay any taxes: Mark Thoma sends us to Chuck Marr and Brian Highsmith: "The 51 percent figure is an anomaly that reflects the unique circumstances of 2009.... In a more typical year, 35 percent to 40 percent of households owe no federal income tax.... The 51 percent figure... ignores the substantial amounts of other federal taxes... households pay.... [O]nly about 14 percent of households paid neither federal income tax nor payroll tax in 2009.... Most of the people who pay neither federal income tax nor payroll taxes are low-income people who are elderly, unable to work due to a serious disability, or students, most of whom subsequently become taxpayers..."

Caroline Baum's claim that the upward-sloping yield curve means that we should be optimistic: Paul Krugman: "[T]he long-term rate is a prediction of future short-term rates. If investors expect the economy to contract, they also expect the Fed to cut rates.... If they expect the economy to expand, they expect the Fed to raise rates, making the yield curve positively sloped. But here’s the thing: the Fed can’t cut rates from here, because they’re already zero. It can, however, raise rates. So the long-term rate has to be above the short-term rate..." The normal relationship between the slope of the yield curve and expectations of growth simply breaks down when interest rates are very low.

Claims that only inflationistas want to turn us into Zimbabwe favor higher inflation: Ken Rogoff, a former advisor to John McCain, says that 6 percent inflation “for at least a couple of years” would be very good for the U.S. economy. It would help eliminate the debt overhang that he believes is hobbling the recovery.

Ruth Marcus's claim that Democrats are crying "wolf" and "Mediscare": Steve Benen: "It’s exasperating, but it’s worth reemphasizing what too many establishment types simply refuse to understand: Democrats are telling the truth... offering an accurate assessment of the Republican plan for Medicare. If voters find the GOP proposal frightening, the problem is with the plan, not with Democrats’ rhetoric. I’m at a loss to understand what, exactly, Ruth Marcus, David Brooks, and their cohorts would have Dems do. Congressional Republicans have a plan to end Medicare and replace it with a privatized voucher scheme. The proposal would... shift crushing costs onto the backs of seniors, freeing up money for tax breaks for the wealthy. The plan is needlessly cruel, and any serious evaluation of the GOP’s arithmetic shows that the policy is a fraud..."

RERUN: On the Republican claim that Obama has increased nondefense discretionary spending by 80%: Paul Krugman: "The number comes from taking nondefense discretionary spending as reported — which rose 26 percent from 2008 to 2010 (Table 8.7) — and then adding the entire discretionary spending part of the stimulus.... [N]ot all of the stimulus funds were spent in 2010... [and] stimulus spending is already in those discretionary spending numbers. So this GOP talking point is a complete fraud; it’s based on counting the same spending several times over." This is not a mistake you can make by accident.

RERUN: On Peter Wallison's claim that Fannie and Freddie caused the financial crisis: Mike Konczal: "The conservative talking point: half of all subprime and other high-risk mortgages were held by the GSEs!... This zombie argument finally got fully dismembered by Center for American Progress’ David Min in his recent report taking apart Wallison.... Wallison and Pinto claim that the GSEs were responsible for half of all subprime and subprime-like mortgages. They do this by making up a confusing definition of “subprime-like."... The fun part of making up your own definition is that it can be whatever you want it to be.... The three-card monte trick is pretty straightforward once you know where to watch. There’s a lot of statements that go: “Fannie and Freddie made a lot of subprime loans and other high-risk mortgages. And subprime loans had a 25% default rate!” And you naturally assume that the other high-risk loans must also have a gigantic default rate compared to regular mortgages. Except they don’t..."

RERUN: On Tim Pawlenty's claim that President Obama is setting up this false choice between default and raising the debt ceiling: Pawlenty claims "you can take away that false choice by ordering the Treasury to pay the obligations to outside creditors first..." Failing to pay people inside the United States to whom the U.S. government owes money has a name, Tim. It's name is "default." It's not an alternative to default, it's a type of default.

RERUN: On Glenn Hubbard's claim that Obama has "ruled out long-term entitlement spending restraint": Nancy Ann Min De Parle: "[T]he tools in the Affordable Care Act and other steps... already taken will save nearly $120 billion for Medicare over the next five yearss.... While we’ve made real and significant progress, there is more work to do... the President’s framework... includes reforms that would save at least an additional $200 billion for Medicare over the next decade. The framework would: (i) Bend the long-term cost curve by setting a more ambitious target of holding Medicare cost growth per beneficiary to GDP per capita plus 0.5 percent beginning in 2018, through strengthening the Independent Payment Advisory Board (IPAB). (ii) Reduce Medicare’s excessive spending on prescription drugs and lower premiums for beneficiaries without shifting costs to seniors or privatizing Medicare..."

RERUN: On Stephen Moore's claim that "in reality" the Democrats are proposing a 62% top income tax rate: Moore's op-ed is simply not reality-based. There is no such proposal for a 62% marginal top income tax rate, not from any Democratic office holder or advisor. Moore claims that "in the late 1980s, the U.S. was nearly the lowest taxed nation in the world, and a quarter century later we're nearly the highest." The U.S. today has a smaller tax share of GDP than every single other G-7 nation. The reason that the U.S. collects a larger share of taxes from the rich is that our incomes today are much more skewed toward the rich than those of other G-7 nations.

RERUN: On Republican opposition to raising the debt ceiling: Right-leaning Clive Crook: "Tea Party true believers may be salivating.... Shutting down the government [by blocking the debt-ceiling increase is a button [Republicans] dare not press.... To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it..."

SPEAKS FOR ITSELF: Tim Dickinson: '[Roger] Ailes' Reported "Personal Paranoia" About Muslims, Gays Mirrored On Fox: Inside his blast-resistant office at Fox News headquarters, Ailes keeps a monitor on his desk that allows him to view any activity outside his closed door. Once, after observing a dark-skinned man in what Ailes perceived to be Muslim garb, he put Fox News on lockdown. "What the hell!" Ailes shouted. "This guy could be bombing me!" The suspected terrorist turned out to be a janitor. "Roger tore up the whole floor," recalls a source close to Ailes. "He has a personal paranoia about people who are Muslim -- which is consistent with the ideology of his network"...'