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Home Publications Blogs Beat the Press David Brooks Doesn't Have Access to Much Data on Economics or Politics

David Brooks Doesn't Have Access to Much Data on Economics or Politics

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Tuesday, 26 April 2011 04:09

David Brooks is worried because:

"Raising taxes on the rich is popular, but nearly every other measure that might be taken to address the fiscal crisis is deeply unpopular. Sixty-three percent of Americans oppose raising the debt ceiling; similar majorities oppose measures to make that sort of thing unnecessary."

Actually this is not true. Insofar as it is necessary to deal with long-term budget issues there is is widespread support for most of the measures that would be required. Polls consistently show majority support for a quick end to the wars in both Iraq and Afghanistan, as well as sharp cuts in the military budget. Polls also show support for negotiating Medicare drug prices with the prescription drug industry, as well as opening up the Medicare program for anyone who chose to buy into it.

These measures and the others put forward in the Progressive Caucus budget last week would be sufficient to reach a balanced budget in a decade. Brooks apparently does not approve of the items in the Progressive Caucus budget, but that is not the case of the public at large.

This budget does not even include other items that would produce large budget savings that would almost certainly produce no negative public reaction. For example, Congress could require the Fed to buy and hold substantial amounts of government debt. If the Fed held $3 trillion in debt (a bit more than its current holdings) throughout the decade, it would save close to $1.5 trillion in interest. (The Fed refunds the interest on the debt it holds to the Treasury.) It can offset the potential inflationary impact of increasing reserves by raising reserve requirements.

There are also huge potential long-term savings from allowing Medicare beneficiaries to buy into the health care systems of countries that provide care more efficiently (i.e. everyone). The savings could be split between the government and the beneficiary. This would hand beneficiaries tens or even hundreds of thousands of dollars over their retirement while saving taxpayers an equal amount. It is difficult to see why there would be opposition from the general public to giving beneficiaries this choice.

In short, people who are familiar with the numbers know that the middle class can easily live with the changes that might be needed to address long-term budget problems. The wealthy and powerful interest groups, like the insurance and pharmaceutical industries, are the more obvious problem.

Brooks also gets some basic facts wrong. The stagnation of middle class incomes is not new. It dates from mid-70s. Furthermore, the middle class has not consumed lavishly, as he claims. They don't have the money to spend lavishly. It has been the wealthy, who have benefited from a huge upward redistribution of income over the last three decades, who have been spending lavishly.

It is also worth noting that Brooks is warning of a potential calamity if the deficit is not addressed. He apparently is not aware of the collapse of the housing bubble which has cost tens of millions of workers their jobs and wiped out much of the savings of tens of middle class families. If he were, he would know that the crisis is here now.

Comments (11)Add Comment
Brooks Really Stinks
written by izzatzo, April 26, 2011 7:35
If he were, he would know that the crisis is here now.


If Brooks applied his belief and logic to personal habits, say hygiene, he would never take a shower because of the coming crisis of the water suddenly becoming either scalding hot or ice cold.

Conservatives are risk averse you know, except when it comes to chest thumping about risks taken by free market entrepreneurs despite the oppression of the socialist nanny state they depend on for their success.
...
written by vorpal, April 26, 2011 9:25
David Brooks, another WPoS.
Krugman debunked this hide the debt myth
written by pete, April 26, 2011 11:12
Deano...you are usually spot on, but Krugman a while back poo pooed your notion that if the Fed buys the debt it disappears. Kind of the veil of money argument eh.
...
written by paine, April 26, 2011 4:33
"Congress could require the Fed to buy and hold substantial amounts of government debt"

wonderful thought

we could turn the debt game into one of those
matching funds set ups
mandate the fed to hold N% of outstanding uncle debt

--- my prefered N ??? 2/3

am i dreaming ??

was oedipus f-ed over ??? ---
...
written by paine, April 26, 2011 4:39
pete

you claim too much for st paul of nassau hall

yes he got into the MMT debate but only so far in
the notion uncle has unlimited fiscal space
obviously requires a close look at the price level impact
but who sez we have nominal constraints on where the price level might go

lots of folks believe weimar type wharp speeds take over quickly
when monetizing commences

not so

one needs to motivate the monetization
our motives today are two fold ...long run

a trade gap and a wealthy class that can effectively block their fair share of taxes
no MMT er has suggested these two motivations
require run away seniorage games do they ??

talk about a money illusion
nothing makes less sense then peak pegs on the price level
as opposed to its rate of change

...
written by paine, April 26, 2011 4:46
folks need to focus on the fed's actions from say 1940 to that evil hour when wall street retook control in the same winter
the chicoms gave us a nasty spanking
--1950-51---

if that is too remote
look at the 70's
the negative real return on rentier capital of that era did indeed raise the wall srteet living dead to brilliance
thru the tag team
cartoon policy act
of volcker and reagan

if we had just shrugged off these atlases of
rentier idiocy and kept at it ...
but that parallel universe is now in
global gosplan 2.0 now as i understand it
...
written by urban legend, April 26, 2011 5:05
thgis business of buying into the healthcare systems of other countries: How in the world would that work? Is the French system or NHS or Canadian Medicare going to pay American doctors or hospitals to give us care here? Or would we have to jet off to Paris for a flu shot? I just don't get it as a serious suggestion.
Globalized Trade in Health Care is So Simple Even Larry Summers Could Understand It
written by Dean, April 26, 2011 8:37
Urban Legend,

you get two options. Option 1 is that you take your savings on the cheaper system (which will run into the tens of thousands of dollars a year, according to the CBO projections) and move to Canada, Germany etc. Some people might want to do this because they have friends/family in these countries and the money could effectively double their standard of living.

Option 2 is you sign up for Germany, Canada etc. system but stay in the U.S. Then you pay for your flue shot out of your $20k in annual savings. If you have a serious health problem requiring an operation or ongoing treatment, then you make plans to get to the country that provides your care. It would be a similar situation for a U.S. citizen who gets sick while traveling overseas today. Most of us can hack it.
Move in their old age?
written by Melissa, April 27, 2011 6:47
Dean, I agree with a lot of what you write, but this just makes no sense to me. Do you have any evidence that there are any significant number of older people who would even contemplate moving to another country? Away from their families and everything they know? I know that you say they "might have family/friends" etc but really, how many people are in that situation and even if they have family somewhere else doesn't mean that they're willing to move. I'd like to see some data, a survey or poll or anything, that indicates that IF the govt offered such a program, the number of people to take it up would be anywhere near enough to have any dent in Medicare program costs.
Option 2?
written by Melissa, April 27, 2011 6:52
As to option 2, you also need to present data that shows that this situation happens enough to have an impact. From what I've seen of the people around me, most very expensive medical care is either chronic stuff that requires ongoing monitoring/treatment by local staff (you can't keep flying to Germany every week for dialysis or whatever), or is triggered by an urgent event that results in extremely expensive immediate intervention, like a heart attack that results in immediate triple-bypass surgery. Where's the data to prove that a significant portion of the US's medical costs is incurred via treatments that can be provided with an international round-trip flight preceding each treatment?
"Recovery"? What recovery?
written by Dave, April 27, 2011 1:57
He made the argument in his column that the changes to government policy the public is overwhelmingly demanding would threaten the ongoing economic recovery.

As many of the commenters quickly pointed out, any "recovery" is not remotely evenly distributed. If you're on Wall St, everything is hunky dory like the glory days of 2006. If you're working on Main St, the economy is still mostly functional but worse than it was 4 years ago. And if you're not working, you're now doing everything you can to fend of starvation and homelessness.

But then again, this is nothing new from Brooks: making fact-free generalizations, conveniently ignoring every fact that states that his point is completely wrong, and wrapping it all in a pseudo-intellectual gloss.

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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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