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Home Publications Blogs Beat the Press NYT Ends Separation of News and Editorial Section in Attack on Social Security

NYT Ends Separation of News and Editorial Section in Attack on Social Security

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Wednesday, 25 August 2010 14:46

The NYT has apparently decided to give up on the old-fashioned distinction between news and opinion. They recently ran a piece by Matt Bai insisting that there is no alternative to cutting Social Security to deal with the federal debt. The piece includes the bizarre assertion that Treasury bonds are "often referred to as i.o.u.’s."

This is, of course, absurd. The business pages of major newspapers are full of references to Treasury bonds all the time. The bonds are never referred to as "i.o.u.'s." The article then includes the bizarre assertion about government bonds that the only way for the government to make good on the bonds it has outstanding: "is to issue mountains of new debt or to take the money from elsewhere in the federal budget, or perhaps impose significant tax increases — none of which seem like especially practical options for the long term."

Bai's opinion is radically at odds with perceptions in financial markets. These markets view it as almost inconceivable that the government will not honor its bonds, which is why the interest rate on long-term bonds is near its lowest level in the last 60 years.

While presenting what is supposed to be a non-partisan view of Social Security, remarkably, Bai never once examines the program's finances nor the financial situation of the people who would experience the cuts that are being considered.  

Comments (21)Add Comment
...
written by cemmcs, August 25, 2010 3:12
It's getting pretty sickening, isn't it?
You can always count on Matt Bai
written by Denise, August 25, 2010 3:18
to present bias as news. It seems to be what he's there for.
Most Reporters Don't Understand Economics
written by Jerry Jones, August 25, 2010 4:03
As a former reporter, I can state with confidence that most reporters with whom I worked exhibited very little understanding of basic economics.

Matt Bai might oppose Social Security. That might explain why his article in the New York Times was so slanted.
..
written by purple, August 25, 2010 4:53
The New York Times is advocating default on US bonds.

A US default means the end of American super power status.

Martin Wolf write this himself, regarding bodn default, about a month ago.
thank you for writing about this
written by Brett, August 25, 2010 5:46
I was going to try to send this to your attention if you hadn't. Bai's explanation of how Social Security is funded in any given year is completely wrong. It shows a fundamental misunderstanding of the program, and it's evidence that he shouldn't be writing about it. I can't believe the editors let that piece through.
I would add
written by S Brennan, August 25, 2010 5:47
That the NYT's is advocating abridgment of the US Constitution.

Article Six holds the United States under the Constitution responsible for debts incurred by the United States under the Articles of Confederation:

"All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution"

So the NYT's propaganda not only advocates economic idioticy, it also advocates officers of the US commit treason.
Stop the nonsense about bond default
written by AndrewDover, August 25, 2010 6:41
Perhaps purple and Brennen can explain why they think lowering costs in Social Security is a default of U.S. bonds. Be sure to explain what entity holds the bonds, and when they won't be repaid.




Arthur Ochs Sulzberger, Jr is not working class
written by Scott ffolliott, August 25, 2010 9:10
An attack on Social Security is an attack on working class solidarity. Arthur Ochs Sulzberger, Jr is not working class. Raise the wages of working people. Thirty years is too long to wait.
Oh my God
written by S Brennan, August 25, 2010 11:01
AndrewDover asks:

"explain why...lowering costs in Social Security is a default of U.S. bonds"

Because paying back what you WANT to is very different than what a BOND stated worth is. it's formal default unless both party's agree.

AndrewDover, represents the failure of American education...whatever schools he went to should hang their collective heads in shame. It's disgraceful how poorly educated some people are.
Reporters Don't Understand Economics (or Much or Anything Else)
written by Hugh Sansom, August 26, 2010 7:46
The raw fact is that the route to a career in journalism is via the college newspaper and then (probably) an Institution of Indoctrination (like the Columbia Graduate School of Journalism).

The students I knew on the college newspaper 25 years ago (at least one of whom is now a reasonably successful Times reporter) let academics slide for the sake of the paper. Call them Paper Jocks. They took gut majors that they didn't pay much attention to. I have rarely met an American journalist who knew much of anything about the area they specialized in. They gain their "expertise" on the job, which would be fine if they were not so thoroughly indoctrinated in the myths of American history or so subject to the political agendas of editors like Bill Keller.

A quick Google of "treasury bills" and various combinations of "IOU", "I.O.U.", "IOUs", etc., returned fewer than 100 hits. So either Matt Bai just made that up (not at all uncommon among journalists) or someone like Mark Zandi fed him the line.
And, lo...
written by Hugh Sansom, August 26, 2010 7:52
Matt Bai went to the Columbia Graduate School of Journalism. Nothing like 'formal education' to rob a person of his wits.
Dean, my man....
written by b., August 26, 2010 9:57

Caveat: been reading CEPR since 2002; truly appreciate your work. That said...

You wrote: ‘The article then includes the bizarre assertion about government bonds that the only way for the government to make good on the bonds it has outstanding: “is to issue mountains of new debt or to take the money from elsewhere in the federal budget, or perhaps impose significant tax increases — none of which seem like especially practical options for the long term.”
Bai’s opinion, it is radically at odds with perceptions in financial markets. These markets view it as almost inconceiable that the government will not honor its bonds, which is why the interest rate on long-term bonds is near its lowest level in the last 60 years.’

I have to say, the rebuttal is as much originating from the arse as the original drivel. Bai is misrepresenting the government obligations to the trust fund, you are misrepresenting the implications of these obligations. That the bond market – and who cares? are we all vigilantes now? – has a low interest rate might well mean that everybody thinks the government will cut SS benefits to keep the trust fund cash-flow positive to not have to raise money for repayments.

Because you are really being disingenious: Social Security is not in crisis if the Treasury repays the money mis-appropriated from the trust fund. To do so, the government would have to (a) issue new debt, (b) cut discretionary spending, (c) raise taxes – any combination thereof. We can argue about whether the government can and should reimburse the trust fund instead of cutting payments, but to pretend that this is not an issue is the idiot’s approach to trying to save Social Security. There is a conflict of interest here, it involves movement of money, and it has to be laid bare – for fuck’s sake, the question of where the money will come from and where it will go is the very core motivation of the elites that have been creating the real crisis (and then pretended it is a Social Security “crisis”). The crisis is real, the crash-flow to the trust fund will be net-negative soon, and the government will have to pay back – or, if we let them, will change rules. Deal with it

The reason this pisses me off is two-fold. For one, it is too easy for the Bai's of the world to get away with their lies if the soundbite response can easily be characterized as "la la la everything is fine" - fair or not, if you don't nail the conflict that's all you have. More importantly, I don't see anybody trying to figure out the endgame - and hit the liars in the debate with it: Let's say they cut benefits, and cut them enough to be cash-flow positive to the trust fund as they have been since 1983, continuing the high life on a FICA subsidy to the general tax revenue. Then what? The trust fund will continue to increase, the surplus would - in this endgame - grow in perpetuity to ever more ridiculous numbers. Everybody talks about benefit cuts, but the cuts are just the means to an end - and the end is using aregressive tax to prop up an unsustainable (defense/security) budget. Once that is accomplished, how do they fix the paper trail? Obama will never have his fingerprints on any "actuarial adjustment" that involves explicitly shredding the "IOU's" Bush was waving in front of the cameras. But to succeed, the sheer size of the trust fund has to be diminished. And I do not believe for one second that the elites would like to simply rescue the less solvent parts of our social safety nets by re-purposing trust fund money to disability or medicare - not even on paper.

Dean, I have seen you do better than this. I'd say a lot depends on it, too.

You don't have your eye on the ball.....
written by Rachael, August 26, 2010 5:20
Markets may view it as almost inconceivable that the government will not honor its bonds in nominal terms (after all we, up to this point, have always been able to issue new bonds to pay off the old ones), but in terms of purchasing power the markets have a different perception entirely. If you don't understand that, you need to. If you do understand that and left that out.....I leave readers to draw their own conclusions......
...
written by firehawk, August 27, 2010 12:57
The Social Security Trust Fund is full of “funny money”?

It was real money when I earned it. It was real money when I sent it to Washington D.C.

It seems to be “funny money” only when I expect to get my benefits???

Also, Mr. Blumenauer says he vehemently opposes Privatization Plans for Social Security yet in the same article he seems to support “Price Indexing” instead of “Wage Indexing” of benefits which has been a MAJOR COMPONENT of all the Privatization Plans offered by Republicans including the Ryan Roadmap.

b's right
written by scott, August 27, 2010 5:27
"Everybody talks about benefit cuts, but the cuts are just the means to an end - and the end is using aggressive tax to prop up an unsustainable (defense/security) budget."

THE CUTS TO SS ARE TO CONTINUE OUR PENTAGON BUDGET. It is unsustainable! You're either naive or stupid. READ JANE MAYER"S ARTICLE ON THE KOCH BROS. This is a way to continue our profiteering off the Defense budget. The Pentagon needs to be focused on defense. We could do this with just the Rednecks and Gangs of America.

Yet, there is NO ONE advocating we cut defense spending. I suppose you're too cowardly to breach the topic either. Imagine, how does this get introduced in "serious circles?" You're no help, and miss the bigger picture.
Still no argument that can say when these "defaults" occur and to who.
written by AndrewDover, August 29, 2010 4:12
The problem with Brennan's thought is that the U.S. Treasury is paying back what and when they AGREED to, NOT WHAT IT WANTS.

And obviously the SS trustees agreed to invest their temporary surplus in government bonds.

Social security is running cash flow positive only with the help of the interest on those bonds. But it is accruing liabilities faster than than the positive cash flow, and the treasury will buy back those bonds as Social Security needs them.
I won't attack S Brennan personally, who I'm sure is a nice guy when you agree with him/her.

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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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