Washington Post reporters should have the time and expertise to evaluate the assertions on economic issues made by politicians. This is important, because readers almost certainly do not. The Post was seriously negligent in reporting Senator Arlen Spector's complaint about the inclusion of an expansion of Pell Grants in the stimulus. According to the Post, Spector is opposed to the inclusion of expanded grants in the stimulus, "because it would do little to spur short-term economic growth." The grants, which help to pay for college for people with low and moderate income families, actually would provide stimulus in roughly the same way as tax cuts to these families would. They provide them with more disposable income, which is likely to lead them to spend more. The Post should have told readers that Mr. Spector's assertion was wrong. The article also notes the opposition of Republicans and the banking industry to a measure that would allow bankruptcy judges to rewrite the terms of mortgages in a bankruptcy proceeding. The articles tells readers that they oppose the measure because, "it might cause mortgage interest rates to rise." This is the stated reason given by Republicans and the banking industry for their opposition, but it may not be the true reason. It is also possible that they oppose the measure because it would likely reduce the profit of the banking industry. It is virtually certain that lower bank profits would result if the measure is approved. It is far from obvious that higher mortgage interests rise, since the measure is likely to only apply to past mortgages not new ones. It is also not clear that Republicans and the banking industry would necessarily care much if mortgage rates did rise, especially since the plausible size of any increase would be in the neighborhood of 0.1 percentage point.
--Dean Baker
