Dean Baker

Recent Articles

Great Political Caricature, Courtesy of David Brooks

In his New York Times column today, "Changing Bedfellows", David Brooks did a far better job describing the nanny state conservatives' framing of economics than I could ever hope to do in my book. Of course, he ostensibly was saying how the world actually is, rather than how the nanny state conservatives want us to see it. According to Brooks, we have the populist nationalists who argue against immigration and trade, and want to ensure workers' security through Social Security and national health care insurance. This group includes Pat Buchanan, Lou Dobbs, Al Sharpton and Kevin Phillips. On the other side, we have the progressive globalists, who want to expand trade and allow immigration in order to promote economic growth. This group includes Hillary Clinton, Mark Warner, John McCain and Rudy Giuliani. It's great caricature, a perfect example of the framing that I criticized in my book, The Conservative Nanny State : How the Wealthy Use the Government to Stay Rich and Get Richer [...

Is Alan Blinder a Protectionist?

Washington Post columnist E.J. Dionne is a decent person, whose views on many issues I share, but his column today is almost a caricature. It perfectly demonstrates why liberals/progressives are so lost on economic policy. Dionne notes the collapse of good-paying jobs in the auto industry, the manufacturing sector, and increasingly other sectors due to trade and outsourcing. He then cites a recent article by Princeton University professor and former Fed Vice-Chairman Alan Blinder (identified as "no protectionist") warning that the trend toward declining wages due to competition with the developing world is likely to spread to more sectors in the future. The implicit question that Dionne then poses is "how can we maintain middle class living standards without being hoary protectionists?" The answer of course is that Alan Blinder, Bill Clinton and the other "free traders" referred to in the article are in fact protectionists. They just don't own up to it. The competition that our...

Joe Six-Pack's Stock Portfolio?

"Experts" get away with saying almost any nonsense they like when it comes to talking about the stock market and the economy, but I think that we may have hit a new high today. A Times article today quotes Mark Cliffe, global head of financial markets research at ING Group in London, saying that the U.S. stock market has fallen 5-6 percent this year. The expert adds that if it falls another 5 percent, it could affect consumer spending and "‘Joe-Six' could start to cut back his stock portfolio." Okay, there could be a wealth effect from lower stock prices on consumption, but this usually takes some period of time. Furthermore, wasn't the purpose of supply-side tax cuts (as in President Bush's tax cuts) to increase saving? In other words, we are supposed to believe that less consumption is bad when it happens because the stock market falls, but good when it is due to a tax cut. (More savings MEANS less consumption.) But part 2 of this quote is the real fun -- Joe Six-Pack's stock...

Escaping With the Trust Fund

Folks, I am off for a weeklong vacation. I will not be back at my blogging duties until Monday, June 12th. In the meantime, my colleagues at CEPR, Heather Boushey, David Rosnick, John Schmitt, and Mark Weisbrot will be intermittently filling in. I should also warn that there may be somewhat more delay before your comments get posted. Comments to the blog are moderated, and I can't guarantee the pace at which items get posted in my absence. I am sorry to leave in the middle of a lively debate on the Social Security trust fund. I am sure that there will be no difficulty reaching consensus on this issue in my absence. --Dean Baker

Fiction on the Social Security Trust Fund

Nothing like some comments on the trust fund to get the blogging juices flowing. It is amazing how metaphysical these discussions on the trust fund get. I don't really see anything very complicated here. I am simply referring to the law as it stands. Under the law, Social Security can only pay benefits out of the money that it has in its trust fund. Yes, that means it has a separate account from the rest of the budget. If the budget has an enormous surplus, but the trust fund is empty, then no benefits get paid, that's the law. On the other side, if the government has an enormous deficit, but the trust fund still holds bonds, then Social Security benefits still get paid, that's the law. I have not commented on whether I like the law or not, I am simply describing the law. (By the way, Medicare is currently being financed in part by the bonds held in its trust fund, and I have not heard a single politician make an issue of this.) Under the law, there is absolutely nothing that would...

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