What would the long-term federal deficit look like if the cost of the country's health care system continued to explode, so that in thirty years it costs four times as much per person as that of other rich countries? Well, if I had nothing else to do with my time, I might calculate these numbers. Fortunately, I have a busy life, so I really don't have a great deal of time for such trivia. Unfortunately, other economists are less busy and do calculate such trivia. Even more unfortunate is the fact that the St. Louis Federal Reserve Board publishes these calculations as though they are serious economics. However, the real problem is that columnists in the Times use this stuff to make the case for cutting Social Security. The story here is real simple. The U.S. has a broken health care system. If it is never fixed, it will have a devastating impact on the economy. It will also lead to severe budget problems. Any competent economist/ reporter would see these projections as another way of...

Financial bubbles breed accounting fraud. Those of us who warned of the stock bubble in the late nineties were not surprised by the Enrons and WorldComs that surfaced when the bubble deflated. Bubbles make it possible to paper over all sorts of questionable accounting or outright fraud. When the bubble deflates, these practices can no longer be hidden. The analogous problem in the housing bubble is with appraisals. The basic story is simple. Mortgage issuers make their money by issuing mortgages. Once the mortgage is issued they sell it to someone else (in many cases, the key figure is actually a broker who never holds the mortgage), so they have little interest in accurately assessing the quality of the mortgage. To get a mortgage issued, it is necessary to have a house appraised at a value that justifies the mortgage. The issuer generally chooses the appraiser. Okay, suppose an appraiser comes in with a low number and the mortgage can't then be issued? The issuer is very unhappy, no...

I believe that the Washington Post has a copyright on combining the words "Medicare" and "Social Security" in a single sentence. Anyone who writes on these issues on their editorial pages always seems to do it . Again folks, the numbers are real clear. Medicare is a big problem because U.S. health care costs are projected to explode, which means that Medicare costs will explode. The moral is fix the health care system. Social Security is not a problem. The story on aging is not very different in the future than in the past. We are living longer, that has always been true. I assume that some of the editorial and op-ed writers actually do look at the projections occasionally. This makes you wonder why they are so insistent on ignoring the projections when they discuss these issues. --Dean Baker

The NYT had a good article this morning highlighting a new Brookings report that details how people living in inner city areas often pay far more for goods and services than people living in more affluent areas. The report is worth reading and the NYT gets credit for calling attention to it. Unfortunately, the report suffers from a serious lack of imagination in its proposed remedies, highlighting greater public-private cooperation in bringing lower cost services to the poor. I have nothing against cooperation, but I always worry that these efforts end up being more of a subsidy to the industries involved than the poor people that they are supposed to help. My model nightmare is the accounts established to receive electronic payments from the government (e.g. disability or veterans benefits) for low income people. They cost the government a great deal in subsidies to the financial industry, and do very little for their intended beneficiaries. In some cases, I prefer good old fashioned...

The NYT had a good piece this morning reporting on how the medical supply industry pays top hospital executives thousands of dollars for advice on how to market their products. This is what you expect to happen when government patent monopolies allow these firms to sell their products at prices that are several hundred percent above the free market price. --Dean Baker

Back in the days of the Soviet Union, key facts were often excluded from historical accounts in order not to put the regime in a bad light. The NYT seems to be experimenting with this journalistic style. Today's article on the G-8 summit in St. Petersburg included a passing reference that described Russia's 7-year long economic recovery as "oil-fueled." Well, the rise in oil prices certainly has helped Russia over this period, but it is probably at least as important that Russia abandoned the economic straightjacket that had been imposed on it by the I.M.F. and then U.S. Treasury Secretary Robert Rubin (with help from his deputy Larry Summers). Until the summer of 1998, Russia had tied its currency to the dollar. In order to sustain this link, it was forced to raise interest rates to ever higher levels. The over-valued ruble, coupled with high interest rates, was strangling Russia's economy, bringing growth to a halt. The I.M.F. and the U.S. Treasury both insisted that Russia maintain...