Beat the Press

The NYT Features the Views of the Mysterious "Many" Who Don't Understand Social Security's Finances

Serious newspapers don't pull down ghosts from the sky to present their views to readers. However, in an article discussing the implications of the health care plan, the NYT told readers:"many have come to believe that the system [Social Security] must change or go broke, the battle Mr. Bush fought and lost in 2005."

The NYT Does Not Like Social Security

That is what can be concluded from its decision to call the Treasury bonds held by the Social Security trust fund "IOUs."
This is not the normal term applied to government bonds in the New York Times or anywhere else. This is a pejorative term that has the effect of undermining the credibility of the trust fund. That is the sort of comment that is usually reserved for its opinion pages.

Robert Samuelson's New Economic History

While rightly blaming Greenspan for the economic downturn, Robert Samuelson gets a few things wrong in his Post column. First, he attributes the revitalization of the U.S. economy to the end of the double-digit inflation of the 70s. Actually, most of the drop in inflation had been completed by the early 80s. However, there was no uptick in productivity growth from the inflation-wracked 70s until the mid-90s. It is also worth noting that the whole world saw a sharp drop in inflation over this period with no noticeable uptick in productivity growth in the vast majority of countries.

Japan's Central Bank Holds Much of Japan's Debt

An AP story in the Washington Post on the IMF's warnings about debt levels told readers that: "Japan's debt is proportionately even bigger -- about twice its GDP -- but the impact is cushioned because most is held by Japanese households." Actually the fact that the debt is mostly held by Japanese households by itself is of little consequence. If Japan had been running large trade deficits and foreigners had bought private assets but not government bonds, then Japanese households and its economy would be in the same situation as if foreigners had bought its debt.

NPR Covers Up for Economists' Responsibility for Pennsylvania Pension Shortfall

A Morning Edition piece on the shortfall in Pennsylvania's public employee pension funds told listeners that just 10 years the funds were over-funded, then the good times went away. Actually, 10 years ago the stock market was in the middle of a huge bubble. This temporarily inflated the assets of pension funds, including the public pension funds in Pennsylvania.

$85 Billion is 2 Percent for the Pharmaceutical Industry

The NYT article on the passage of the health care reform package noted that the pharmaceutical industry had agreed to reduce their charges by $85 billion over the next decade. It would have been helpful to tell readers that this is a bit more than 2 percent of projected revenues over this period for the industry. The patent monopolies granted by the government on prescription drugs give them about three times as much money every year.

--Dean Baker

Does the Post Know How Patent Monopolies Affect Drug Prices?

It seems that they don't. The paper has a good article in the business section discussing how drug companies use illegal or unethical methods to push their drugs in order to take advantage of the huge patent rents available. However, the lengthy article never once notes that the patent system is at the heart of the problem. If drug research was financed through a mechanism that allowed drugs to sell at their market price, the incentives for this sort of corruption would disappear.

--Dean Baker

Bernanke, Who Engineered Huge Bank Mergers, Rails Against Giant Banks

The NYT reported that in a speech before the Independent Community Bankers of America Federal Reserve Board Chairman Ben Bernanke lashed out against the risks created by giant too big to fail banks. It would have been worth mentioning that Bernanke had helped to engineer several mergers that made very large banks even larger during the financial crisis in 2008.

China's "Human Face" on Opposition to a Higher Yuan

According to USA Today, China's government tried to put a "human face" on its opposition to raising the value of the yuan by presenting the case of a small business owner who is worried that he will lose his workers to better paying employers if the yuan rises in value. Of course, this is not exactly how the situation was described.

Are Auto Companies Really Worried that Financial Reform Will Prevent Them From Giving Consumers "Cheap Credit"?

That's what the Post told readers in noting opposition to Senator Dodd's bill. Of course just because they say that they are worried about their ability to provide cheap credit to consumers does not mean that this is actually their concern. Lobbyists sometimes do not tell the truth.

--Dean Baker

Greenspan Tries to Rewrite History of Housing Bubble

Alan Greenspan refused to acknowledge responsibility for the housing bubble again in a talk given at Brookings yesterday. It would have been helpful if the NYT had provided some additional history to point out to readers that what Greenspan was claiming was not true.

For example, Greenspan asserted that: "Unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible. ....Assuaging their aftermath seems the best we can hope for.”

Non-Story On Regulator Bonuses: A Mind Is a Terrible Thing to Waste

AP broke the big news -- better be sitting down: "During the 2003-06 boom, the three agencies that supervise most U.S. banks – the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency – gave out at least $19 million in bonuses"

Oh my god! oh my god! Just think, the money used to pay bonuses at these three agencies over this three year period would have been almost enough to pay the one-year bonus of a single top performer at Goldman or AIG. What an incredible waste of taxpayer dollars.

TARP Give Aways

The Post discussed the extent to which banks have repaid their TARP money, noting that small banks have been much slower to pay back the government loans than large banks. At one point the article discusses the sale of warrants on bank stock that the government received as part of the package. It comments that: "the goal of requiring the warrants was to ensure that taxpayers would see a return once the banks recovered."

Why the "Jobs Bill" Won't Creat Jobs

The NYT article on the jobs bill passed by the Senate yesterday included the views of economists Timothy Bartik and John Bishop as to why the bill will likely create few jobs. It would have been helpful to include the fact that the private sector adds roughly 4 million jobs a month, most of which are replacing jobs lost due to either workers quitting or being laid off.

Senator Simpson's China Bashing

The NYT ran a profile of former Senator Alan Simpson, who was selected as one of the co-chairs of President Obama's deficit reduction commission. The article quotes him as saying: “when Medicare, Medicaid and Social Security suck up the entire revenue stream, we will be going to China and others to finance two wars, and that means borrowing it.”

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