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Reducing Oil Imports to Lower Prices: Is President Obama a Neanderthal Protectionist? Print
Thursday, 31 March 2011 05:14

The description of his strategy in a Washington Post article suggests that he is. According to the article, President Obama wants the United States to reduce its dependence on foreign oil because the price is high.

This strategy makes no sense in the current context because there is a world market for oil. Increased production of oil in the Gulf of Mexico or Alaska has no more impact on the price that people in the United States pay for their gas than increased production in Venezuela or Saudi Arabia. The only way that focusing more on domestic production would substantially reduce the price of oil relative to the rest of the world would be if President Obama plans to put export restrictions on U.S. oil.

Of course since the U.S. doesn't have enough oil to ever be close to self-sufficient, this would be impossible in any case. The Post should have pointed out to its readers that President Obama's strategy for reducing the cost of oil does not make sense.

 
Is It Plausible That Michelle Rhee Really Never Considered the Possibility that Teachers and/or School Administrators Cheat? Print
Thursday, 31 March 2011 04:51

Washington Post reporter Jay Mathews had a column on former DC school chancellor Michelle Rhee's initial response to a USA Today article that finds evidence of widespread cheating on the exam scores reported by one of the District's star schools. Ms. Rhee denounced the article and described the reporters who researched it as flat earthers who opposed school reform.

The next day Rhee apologized for her previous comments and acknowledged that there were important questions about the integrity of the test scores that need to be examined. Mathews praised Rhee's reversal and commented that:

"I sensed from my talk with Rhee that one reason she misspoke on Monday was that she had not had time to read either the USA Today story or the investigators’ reports, or to probe the weaknesses of test security protocols in Washington and other districts."

If true, this would be astounding. There have been major testing scandals in many cities around the country dating back to the mid-90s. In the wake of these scandals it is difficult to believe that a school administrator who substantially increased the importance of standardized tests in the assessment of teachers and schools had not given careful consideration to test security protocols.

 
Distressed Sales are Simply Part of the Process of a Deflating Bubble Print
Thursday, 31 March 2011 04:45

USA Today had a piece that reported that distressed house sales are likely to depress house prices for years to come. The piece never refers to the housing bubble. This is remarkable since it is impossible to understand the housing market without reference to the bubble.

At its peak, the bubble pushed house prices more than 70 percent above their long-term trend values. The fall in prices to date has brought prices closer to their long-term trend, but the market still has to fall another 15-20 percent to return to its trend level. Distress sales are part of this process, but the main point is that house prices are still well above the level that would be supported by the fundamentals of the market in large parts of the country.

 
Leonhardt Gets it Right on the Fed Print
Wednesday, 30 March 2011 05:05
David Leonhardt has a nice column making the point that the Fed faces a lot of pressure to keep inflation under control, but it does not have the same lobby pushing it on unemployment.
 
Is There Anyone in the World Who Is Demonstrably Less Competent Than Alan Greenspan to Pass Judgment on Financial Reform? Print
Wednesday, 30 March 2011 04:54
The Financial Times featured a column from former Federal Reserve Board Chairman Alan Greenspan arguing that the reforms in the Dodd-Frank bill will make financial markets less stable. Just in case you have forgotten, we have 25 million people who are unemployed, under-employed or have given up looking for work altogether because Alan Greenspan did not understand financial markets and the economy. Perhaps the FT will have a column offering advice on disaster management from Michael Brown.
 
Can Someone Get Dana Milibank a Teddy Bear? Print
Wednesday, 30 March 2011 04:48
We have almost 25 million people unemployed, under-employed or who have given up looking for work altogether and he is worried about the "$14 trillion debt crisis." Yeah, this is the crisis that has pushed the interest rate on 10-year Treasury bonds all the way up to 3.4 percent. Pretty scary.
 
The Problem Is the News Reporting, Not Just Editorials: More From Ezra Klein on Social Security Print
Wednesday, 30 March 2011 04:11

Ezra Klein responded to criticisms raised by myself and others of his piece urging liberals to support Social Security reform. Ezra suggests that we over-rate the importance of editorials in shaping public debate.

For myself, I never meant to suggest that the main problem was the anti-Social Security diatribes that are regularly featured in the Washington Post and elsewhere. The problem is that the major news outlets (e.g. the Washington Post, National Public Radio, the Wall Street Journal) allow their editorial position to thoroughly permeate their reporting.

Their news sections are full of pieces that highlight the Social Security crisis and routinely feature prominent people saying the equivalent of "the earth is flat," without the reporter calling readers' attention to the vast body of evidence showing that the earth is not flat. At best, readers are allowed to hear the perspective of an expert saying that the Social Security is not in crisis, but even in this sort of he said/she said story, the flat-earthers typically out-number the reality based commentators.

Read more...

 

 
Mark McKinnon Plays "How Many Things Can You Get Wrong About Social Security in One Column" Print
Tuesday, 29 March 2011 07:07

The hottest sport these days in Washington is seeing how many incorrect or misleading statements about Social Security you can get in one column. All the major media outlets are fully on board, anxious to convey any misinformation that reflects badly on the program. And there are plenty of deep-pocketed funders like Wall Street investment banker Peter Peterson who are happy to finance the effort. Hence we are seeing a plethora of pieces decrying the high-living seniors who are getting fat on their Social Security checks.

The latest contestent to enter the fray is Republican political strategist Mark McKinnon with a column in the Daily Beast. Let's play along.

Mckinnon starts by warning that the United States could end up like Greece or Portugal, abandoned by the credit markets and forced to beg international organizations to buy our debt. Very nice -- this one always gets lot of points with political pundits. Of course it is not true. The United States has its own currency, that means it can never be like Greece or Portugal.

Read more...

 

 
In Reforming Social Security the Problem is Not How Good the Country Is, the Problem is How Good the Political System Is Print
Tuesday, 29 March 2011 04:19

Ezra Klein criticizes Social Security supporters for being reluctant to have Social Security reform taken up by Congress at the moment. He argues that Social Security and the retirement system more generally could be restructured to better serve the bulk of the country's workers. Klein notes the fears of Social Security supporters that this could open the door to serious cuts and then responds to these fears, "this country is better than that."

Of course that is true, but also irrelevant. Social Security enjoys overwhelming support from the public. Polls repeatedly show that people across the political spectrum strongly support the program and would even be willing to pay higher taxes to protect the program, but the public as a whole will not directly decide the program's fate.

Congress and the president will decide the future of the program. These politicians live in a world where a willingness to cut Social Security is routinely referred to as a sign of seriousness. Those who do not support cuts are taunted as being unrealistic and weak. Politicians who want to protect the program can expect much less campaign funding from business groups and ridicule from the media.

Read more...

 

 
Downsized Products Don't Escape the Consumer Price Index Print
Monday, 28 March 2011 21:47
The NYT had an interesting article on the downsizing of food products by manufacturers in order to conceal price increases. It is worth noting that these price increases would be picked up by the Bureau of Labor Statistics (BLS) in constructing the consumer price index (CPI). The BLS price checkers carefully assess the quantities in products and if these change, they adjust the price charged accordingly.
 
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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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