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Home Publications Blogs Beat the Press There Are 25 Million People Unemployed, Underemployed or Out of the Workforce Altogether and NPR's Presidential Debate Moderator Just Wants to Talk About the Budget Deficit

There Are 25 Million People Unemployed, Underemployed or Out of the Workforce Altogether and NPR's Presidential Debate Moderator Just Wants to Talk About the Budget Deficit

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Monday, 30 July 2012 11:09

NPR seems to want listeners to ignore the economic downturn, by far the largest cause of the deficit, and to focus on cutting spending programs and raising everyone's taxes. That was certainly the theme of its interview with David Wessel, an economics reporter with the Wall Street Journal, which discussed his new book, Red Ink.

The first sentence of the piece refers to the "ballooning deficit." In fact the deficit is actually shrinking. While NPR can argue that the deficit is larger than it would like it to be, the direction of change is wrong. It cannot accurately be described as "ballooning."

The piece included Wessel's unchallenged assertion that the deficit probably cannot be closed without cutting spending and raising taxes across the board. It would have been helpful to note that the deficit is projected to get to a level that is almost consistent with a stable debt to GDP ratio if the economy were simply to get back to full employment. If health care costs were contained by reducing protectionism in the sector and a tax was imposed on financial speculation, the deficit would be at a sustainable level.

The segment also included the bizarre claim that there is widespread resentment against low and moderate income people who do not pay income taxes. It would be interesting if it presented evidence that supported this view. It is undoubtedly true that many people resent millionaires who use tax shelters in order to pay very low taxes, it is not clear that there is widespread anger over the fact that families earning $20,000-$30,000 a year are not paying income taxes (they do pay payroll taxes).

Comments (16)Add Comment
...
written by JSeydl, July 30, 2012 1:10
While NPR can argue that the deficit is larger than it would like it to be, the direction of change is wrong. It cannot accurately be described as "ballooning."


Haha, nice. We could actually take this one step further and say that "NPR Argues That Economic Growth Is Picking Up." Because, of course, a ballooning budget deficit would imply that the demand gap is shrinking, which would be a good thing.
...
written by Last Mover, July 30, 2012 1:52
Does this mean National Private Radio is not fair and balanced?
idiots
written by joe, July 30, 2012 2:49
Why's it so hard to understand that your income is someone else's spending, so if you want to accumulate savings (earn more than you spend), someone else must spend more than they earn? Every deficit is match exactly by an equal surplus, to the penny. In the long run, for the public to accumulate savings, there must be a federal govt deficit. The federal govt deficit is the private sector's surplus. This should be blatantly obviously. The federal govt makes the money, it neither has nor doesn't have money, and it can't possibly run out (unless we pretend it can and we stop spending, the economy will crash, but oh well).
...
written by Daniel, July 30, 2012 2:52
I listened to the interview. I did not really know how to take it. What I felt was left out entirely was the fact that those with moderate and low incomes are subject to a number of taxes which take up a larger percent of their income than it does for those with higher incomes. The sales tax just to get the ball rolling.
sustainable deficit
written by joe, July 30, 2012 3:02
Whether a federal govt deficit is sustainable or not has absolutely nothing to do with anything financial. It has to do with the relation of productive capacity and utilization to the deficit. As long as the govt doesn't spend past the economy's capacity, then it's sustainable. A growing population and growing economy needs a growing amount of money to function. Govt makes the money and it's deficit adds money to the private sector. Govt deficit pushes DOWN interests rates (unless bonds are sold to drain reserves from the system). Again, this should all be obvious. It boggles my mind how Dean can recognize that all deficits are matched by an equivalent surplus (he explained it to robert samuelson in National Income Accounting C + I + G + (X-M) = 0), yet somehow he never puts the pieces together.
err
written by joe, July 30, 2012 3:12
Oops C+I+G+(X-M) = Y, I usually think of it in as Private sector balance + foreign balance + govt balance = 0, it makes the implications clearer that way, for me anyways.
Living on $20-30K
written by Bart, July 30, 2012 3:41

Dean wrote: "...it is not clear that there is widespread anger over the fact that families earning $20,000-$30,000 a year are not paying income taxes..."

If Wessel were to read your piece he would assume a missing zero in the above figures.
the deficit
written by mel in oregon, July 30, 2012 7:17
one thing conservative bloggers or responders never mention is how we got a huge deficit. the wars in iraq & afghanistan have cost us trillions. so has the irrational waste that's been going on for decades on weapons systems that have no possibility of ever working like "star wars". also the bailout of wallstreet & the almost interest free loans of many trillions they get which no ordinary citizen could ever hope to get. the wasted healthcare private enterprise bureaucracy also contributes indirectly by making our industrial capacity uncompetitive internationally as baker & others have pointed out repeatedly. & don't you think the $10 trillion stored offshore by folks like romney to escape the IRS has a great deal to do with creating this artificial deficit hysteria by the wingnuts? you see bernanke, summers & the rest of the administration's wallstreet cabinet never have worried about unemployment or a sluggish economy. their only purpose is to make sure the big financial houses & giant american outsourcing corporations are extremely well taken care of. if a side effect is large unemployment, huge losses of equity for ordinary citizens, mostly in the form of lower home worth, why that's okay. why, heck, we'll just blame the whole damn thing on granny, & reduce her social security. where is FDR when we really need him?
Bugaboos
written by dweb, July 30, 2012 7:34
And meanwhile on CNBC we had the requisite daily interview today with someone who thinks we are in "the foothills" of inflation.

Yeah...that is a real worry
...
written by JSeydl, July 30, 2012 7:43
I love it whenever mel in oregon comments. His opinions are always so blunt and true.
Evidence
written by Robert Waldmann, July 30, 2012 9:42
There is and there has been overwhelmingly strong evidence on whether there is widespread resentment of the low taxes paid by low income people. For 20 years Gallup has been asking if the respondent, middle class people, high income people, corporations and low income people are paying their fair share of taxes, less than their fair share or more than their fair share.

In every poll a solid majority responded that high income people and corporations pay less than their fair share. In the latest poll only 21% said that low income people pay less than their fair share while 40% said that low income people pay more than their fair share.
http://www.gallup.com/poll/147152/Americans-Split-Whether-Taxes-High.aspx
(go to "View methodology, full question results, and trend data" and get a pdf to see how long Wessel has been wrong.

21% is a very low fraction of the population. There are few issues where such a small fraction agrees with the Republican party line (google 27% crazification factor).
Write to the NPR Ombudsman
written by Andy Olsen, July 30, 2012 11:10
That includes you, Dean.

I heard this interview this morning and it got my day off to a grumpy start. Thanks for "documenting the atrocities."

Share it with the Obudsman.
http://www.npr.org/blogs/ombudsman/

Can't wait for the presidential candidates to talk about healthcare
written by Robert Salzberg, July 31, 2012 6:45
From Mitt Romney in Israel:


  "When our health care costs are completely out of control. Do you realize what health care spending is as a percentage of the GDP in Israel? 8 percent. You spend 8 percent of GDP on health care. And you’re a pretty healthy nation. We spend 18 percent of our GDP on health care. 10 percentage points more. That gap, that 10 percent cost, let me compare that with the size of our military. Our military budget is 4 percent. Our gap with Israel is 10 points of GDP. We have to find ways, not just to provide health care to more people, but to find ways to finally manage our health care costs."

Is there something in the water in Israel? This could be a rant from Dr. Baker. Maybe somehow in Israel, Romney thinks it's blasphemy to not tell the truth. Will be verrrrry interesting how Romney wrangles the Israeli system into an example of the primacy of the Free Market.
Obamney are all talk on health care costs and no action
written by fairleft, July 31, 2012 8:22
Every four years we hear many of the right words on this issue. Unfortunately, there's too much money on the side of 18% of GNP going to health care. So behind closed doors, or with a subtle nod or wink, the Republicrat candidates let the medical-industrial complex know it will have nothing to worry about. Our American 'democracy' at work.
Israeli healthcare
written by jjcomet, July 31, 2012 8:59
For Mitt's information, here is the reason Israel spends only 8% of GDP on healthcare:

"Israel has maintained a system of socialized health care since its establishment in 1948, although the National Health Insurance law was passed only on January 1, 1995. The state is responsible for providing health services to all residents of the country, who can register with one of the four health service funds. To be eligible, a citizen must pay a health insurance tax."

In other words, they have a socialized heatlhcare plan in which all citizens are required to participate. Hmmm...sounds very similar to a healthcare plan that Romney and the GOP have spent the last 4 years demonizing.
...
written by Susan Jeffries, July 31, 2012 1:37
Just what can we expect from David Wessel, an "economics reporter"? He is not an economist; although he has a bachelor's degree from Haverford College in economics, he has never practiced in the field. Rather he has written about economics for decades. When Wessel writes an article, an opinion piece, even a book, he's simply passing along what practicing economists are saying out loud - or what he assumes they're thinking. Wessel seems to prove the view that real economists need to clean out their profession, banishing the ideologues who can't be bothered by evidence as well as those who are paid to hawk the opinions of ideologues outside the field of economics.

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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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