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Home Publications Blogs Beat the Press The New York Times Didn't Hear About the Stock Bubble

The New York Times Didn't Hear About the Stock Bubble

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Friday, 21 January 2011 06:04

The NYT ran a piece profiling Gene Sperling, the new head of President Obama's National Economic Council (NEC), that could have been a paid advertisement. The piece completely ignores the economic imbalances that developed under the Clinton administration and hit their peaks during Sperling's tenure as NEC head, most notably the stock bubble and trade deficit caused by an over-valued dollar.

The article gives Sperling credit for coming up with the idea of using the budget surpluses at the end of the Clinton years to "save Social Security," which thereby prevented this money from being either spent or given back in tax cuts. It would have been worth noting that the surplus eventually disappeared as a result of the collapse of the stock bubble and the stimulus measures necessary to get the economy back on its feet.

Comments (6)Add Comment
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written by izzatzo, January 21, 2011 5:46
The gives Sperling credit for coming up with the idea of using the budget surpluses at the end of the Clinton years to "save Social Security," which thereby prevented this money from being either spent or given back in tax cuts.


Exactly. It was Greenspan who saved Social Security, not Sperling. Greenspan didn't believe in surpluses because they created a moral hazard of government spending, so he saved SS instead, in preparation as the ultimate safety net for the coming Great Recession he was also planning at the time.
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written by foosion, January 21, 2011 6:08
Greenspan raised social security taxes, paid by the middle class, then supported cutting tax rates heavily on those with higher incomes. This effectively transferring large amounts of money from the middle class to those with higher income.
Stimulus?
written by bakho, January 21, 2011 6:44
How much stimulus did the Bush tax cuts provide?

Not much. Instead of aid to the states, UI extension, raising the minimum wage or other measures to deliver money to the lowest rungs of our economy, the huge tax cuts for the wealthy (who were already awash in unproductive investment capital) created a giant asset bubble and offshoring jobs by overseas investment.
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written by Ron Alley, January 21, 2011 9:30
When I read the NYT piece, the points that struck me were the characterization of Mr. Sperling's history of forging "bipartisan" compromise on trade and budget issues and the reference to Mr. Sperling's role as Sec. Geithner's advisor.

My first thought was the so-called bipartisan compromises on trade, bankruptcy and financial regulation are the root cause of the current economic problems.

My second thought was that if Sec. Geithner actually has been following Mr. Sperling's advice, then Mr. Sperling is politically tone deaf despite the NYT characterization of Mr. Sperling being a politically astute advisor to President Obama.
Indian newspapers in similar delirium
written by Stock Market India, January 22, 2011 1:32
Considering the yo-yo like situation of the Indian Sensex, one would expect that the Indian newspapers would be better able to report unbiasedly. However, with the PR agencies of Indian corporate working overtime, the news stories here appear to be advertisements and not editorials.
Who saved Social Security?
written by Matias Vernengo, January 23, 2011 10:17
Besides, I thought Monica Lewinsky saved social security, not Gene Sperling!

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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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