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Home Publications Blogs Beat the Press News For the NYT: You Don't Know Anyone's Reason for Acting

News For the NYT: You Don't Know Anyone's Reason for Acting

Wednesday, 03 August 2011 08:29

Politicians don't always tell the truth. Most school kids know this, but apparently the NYT believes otherwise. That explains why it tells us that:

"the reason that many conservative Republicans refused to vote for the [debt] agreement" was that the debt to GDP ratio would still rise even with the proposed cuts. Actually, this is what many conservative Republicans said. That is how it should be reported, as in "many conservative Republicans said ......"

The NYT also said that this is the reason the bond rating agencies are considering a downgrade of U.S. debt. Again, a newspaper reports this as "this is the reason that the bond rating agencies have given ..."

The bond rating agencies do not have a great deal of credibility at the moment, having rated hundreds of billions of dollars of subprime mortgage backed securities as investment grade, and getting paid tens of millions of dollars in the process. No one can accept their claims at face value, especially since it is not even clear how they think the U.S. could ever default on its debt. (The debt is owed in dollars. The U.S. prints dollars. How could we be unable to pay our debt, apart from deliberate non-payment through failing to raise the debt ceiling?)

The piece also wrongly asserts that Social Security contributes to the debt. This is not true. Under the law, Social Security can only spend the money in its trust fund and not a penny more. If it runs short of money then payments would not be made. This is a very serious error that the NYT should not make. (It is clear that the article is referring to the on-budget budget, since it reports that CBO projects that the debt to GDP ratio will exceed 100 percent of GDP in 2021. This is only true if we look at the on-budget budget and add in the debt held by the Social Security trust fund.)

It would also have been useful if the article found at least one source who was not a deficit hawk. There are no shortages of economists, policy analysts and elected officials who fall into this category.


Comments (6)Add Comment
you overstate this argument
written by scottindallas, August 03, 2011 10:19
I grant you you're right; but, if we resort to paying our bonds by printing money, that will undermine our bonds, raising the cost of borrowing. Any rating should downgrade as this becomes more likely. Your denial if this is just as wrong as what you protest.
to be fair
written by scottindallas, August 03, 2011 10:21
We aren't there now by any sense, as the rate on the 10yr T-note has stayed below 3% for some time now.
You Are Kidding, Right Scott?
written by Paul, August 03, 2011 10:37
"if we resort to paying our bonds by printing money, that will undermine our bonds, raising the cost of borrowing"

Unless you have been in a coma for the past 3 years, you know that the Fed has "printed" $2 trillion of new money, yet the 10 yr T-Bond interest rate has fallen precipitously. Why is this relationship so hard to understand?
Reasons are Known Knowns, not Unknown Unknowns
written by izzatzo, August 03, 2011 12:20
Yet another error of basic logic by Baker. Any economist knows that the reason for acting is self interest that maximizes utility and minimizes disutility.

The NYT merely formalizes this by imputing reason that was already there based on the famous Rumsfeld Matrix of Cause and Effect:

Known Knowns
Known Unknowns
Unknown Knowns
Unknown Unknowns

Stupid liberals.
written by diesel, August 03, 2011 8:56
Didn't we go through all this before?....in the mid seventies? Doesn't anyone remember the same issues but with the "Arabs" playing the role of today's Chinese? The same arguments? That they would dump our bonds? But to go where? Where would they park their dollars? We're bad. We're evil. We're rotten devaluers. But so's everyone else. Where're you going to put all that money? Gold? Don't make me laugh. We will do it because they--them other dudes--don't have any choice. That's what your military bucks buy you--oil denominated in dollars. Think about that the next time you fill up with gasoline for which you pay "only" $3.85 a gallon. Factor in your taxes that go towards supporting our boys (and girls) in uniform and gas is probably par with what Europeans (or Canadians at any rate) pay.
What's Up With This Comment Section?
written by Union Member, August 03, 2011 11:09
You've all been playing liars poker too much; you all can't recognize the worst, most unconscionable, journalism when you see it - even it stole your life savings.

The NYT asserts that Social Security contributes to the debt, and Dean writes: " This a VERY SERIOUS error that the NYT SHOULD NOT make." And all you can prattle on about is T-bills?

What is important to you people? Or, better, do you know what is important to the country? Given what's gone on, since at least Sept. '08 till this past month, doesn't this country desperately deserve the finest journalism of the highest possible standards?

Is it necessary to point out that 70% of the people who watched Fox News thought that Saddam Hussein was involved in the attacks of 911? Egregious propaganda persists in mainstream media for two reasons: it works, and they get away with it.

And here the NYT has decided it's safer to err on the side of demagoguery regarding the issue most important, most dear, to the most humble, ignored, and forgotten among us; is it any wonder that the pejorative expression "conventional wisdom" was coined by an economist? (JKG:a full blooded Keynesian)

Note: Social Security is truly an entitlement program
because the most humble, ignored, and forgotten
among us pay for it.

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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.