Dean Baker

Recent Articles

On Generational Equity, Healthcare, and Keynesian Economics

Dean Baker responds to his forum counterparts. 

My co-authors made many useful points in their pieces. They also made some claims with which I disagree. Rather than address their comments individually, I will make three general points in response to issues that came up in several of the pieces.

Fiscal Policy, the Long-Term Budget, and Inequality

Fix the Economy, Not the Deficit

AP Photo/Charles Dharapak

It’s hard to be happy about the prospect of the sequester—the huge, automatics cuts to domestic spending set to take place if lawmakers can't reach a long-term budget deal—going into effect at the end of the week. Not only will it will mean substantial cuts to important programs; it will be a further drag on an already weak economy, shaving 0.6 percentage points off our growth rate. The end of the payroll tax cut, which expired on January 1, has already pushed it down to around 2.0, but the sequester cuts will depress it below the rate needed to keep pace with those entering the labor market. As a result, we are likely to see a modest increase in unemployment over the course of the year if the cuts are left in place.

Tax Tricks: Time to Go on Offense

Our current tax system rewards unproductive speculation and punishes the working middle class.

(Flickr/Steven Depolo)

For three decades, progressives have been engaged in a political contest where the range of the playing field runs between our own goal line and our own 20-yard line. During the period that we have been fighting over some version of the Bush-Reagan tax cuts, the other side has focused on wiping out the labor movement, locking in regressive monetary policy, pushing a trade and currency policy explicitly designed to redistribute income upward, creating a system of intellectual-property protection that serves the same purpose, and using huge deficits to wipe out public spending.

The Bipartisan Attack on Medicare

To fix Medicare, fix the larger inefficiencies in America's health-care system.

When people in the center-right in Washington come to agreement on policy, it is almost certainly a really bad idea. The War in Iraq is exhibit A. The current drive to slash Medicare, along with the companion effort against Social Security, falls into the same category.

The story is a simple one: The long-term budget projections paint a scary picture. While the latest baseline numbers from the Congressional Budget Office are relatively benign, the "alternative scenario," which CBO Director Douglas Elmendorf argues is more likely, paints a far darker picture. In this scenario, the deficit would be a whopping 9.8 percent of gross domestic product by 2025.