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Did Canada’s Middle Class Just Get More Affluent Than the US’s, or Did That Happen Long Ago?

4:54 pm in Uncategorized by letsgetitdone

The New York Times and Dave Leonhardt’s Upshot section made a big splash a few days ago by reporting on a study showing that the Canadian middle class had caught the US middle class in median income and likely surpassed it since. The study is based on an effort to measure median income per capita after taxes, and its results are presented as something truly significant.
DSC_5097 - Reflections of Canada
However, I think the study is biased in that in median income per capita after taxes, it selected the wrong measure. What is needed is a measure of income or affluence that takes account of the value of cross-national variations in Government benefits delivered to the middle classes. Since the United States has lower taxes than most comparable nations, but delivers much less in safety net and entitlement benefits, it’s pretty clear that the measure used in the study reported on by The Times overestimates the real median income of the US middle class in comparison with the middle classes of other comparable nations and provides a misleading impression of the relative affluence of the American middle class. Read the rest of this entry →

Myths of Peter Orszag

10:50 pm in Uncategorized by letsgetitdone

Orszag’s maiden voyage at the New York Times entitled “One Nation, Two Deficits,” is full of myths, and that’s the polite way to say it. I’ll review these and comment on each of them one-by-one.

“The nation faces . . . . an unsustainable budget deficit over the medium and long term.”

This is an article of faith among deficit hawks and deficit doves too, but neither group has been able to explain what they mean by “unsustainable” budget deficits, or to explain why they are “unsustainable.” This statement applies to OMB, to CBO, to the Catfood Commission, to the Peter G. Peterson Foundation, to the International Monetary Foundation, and even to people like Paul Krugman who share the view that the United States has a medium and long-term deficit problem.

We can’t let them get away with this any longer. We need a clear definition of fiscal sustainability from them, and we also need to know what that definition implies about what levels of the deficit, the national debt, or the debt held by the public to GDP ratio, are, in their view, unsustainable. Until that is done the view that there are unsustainable budget deficits in any of the short, medium, or long-terms has to be considered a myth when it is applied to a nation like the United States, sovereign in its own fiat currency, able to create that currency by spending and marking up accounts at will, and owing no debts to anyone except debts denominated in the currency it has full authority to create to pay its obligations. In short, nations with monetary systems like ours have no solvency risk. So it is up to the deficit hawks, including Orszag to explain how a nation with no solvency risk can possibly have “a fiscally unsustainable deficit”, national debt, or public debt-to GDP ratio.

“. . . Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.”

Worth it? That really depends entirely on your point of view. In Orszag’s view, Government spending must be funded either through tax revenues or through borrowing. That’s another myth. I don’t hold it. I know it’s not necessary to end the tax breaks for the rich because we need the money for other things. The truth is that we don’t. We (the Treasury and the Fed) can always make more money.  . . . Read the rest of this entry →

A Hit Piece on a Hit Piece on Medicare for All

4:49 pm in Uncategorized by letsgetitdone

On September 19, Katherine Q. Seelye, a New York Times “reporter” provided one of the most biased “hit pieces” I’ve seen yet on Medicare for All. The piece is called “Medicare for All? ‘Crazy,’ ‘Socialized’ and Unlikely,” implying that Seelye thinks it’s all three. But what does she say to support her implied characterization. Well, “crazy” is mainly supported by a reference to a scene in the West Wing where Alan Alda, playing a right-wing Republican Presidential candidate refers to extending Medicare to every American as “crazy.”Just as scenes from the television series “24” are often cited by Republicans as an authoritative justification for torture, Seelye, too, appears to believe that right-wing opinions expressed by a fictional character, played by a Liberal, also deliver authoritative verdicts on a policy proposal like Medicare for All. Alan Alda must have gotten really annoyed when he read her piece. Right after her reference to Alda’s comment on Medicare for All, she says: Read the rest of this entry →

The Times Comes Out For Majority Rule

10:54 pm in Uncategorized by letsgetitdone

This past Sunday, the New York Times ran an editorial supporting the plan of some Democrats to use the reconciliation procedure to by-pass a filibuster of health insurance reform in the Senate by Republicans. Reconciliation requires only 50 votes from Senators plus an additional tie-breaking vote from the Vice-President to pass in the Senate. To have the Times taking this position was not, in itself, surprising. But the editorial agonized an awful lot over the contemplated move by the Democrats, and it is worth commenting on various aspects of this agonizing over the Democrats using reconciliation. Read the rest of this entry →