U.S. Budget and Economy

Do Publications Have Any Responsibility to Screen Their Editorials? (Part 4) At the end of my last post , I said that it would be interesting to see if the Wall Street Journal finally corrects the online version of Brett Stephens's column, "Obama's Envy Problem" . As it happens, they have finally done so. I first noticed it when I rechecked the site after my last post late on January 20th. According to a blog post by Paul Krugman titled "Department of Corrections, and Not" , the column was still uncorrected when he checked it a few minutes before his posting at 1:40 PM on January 20th. Hence, the Journal may have corrected it shortly after that. I may have initially missed it because they posted the correction at the end of the column. The correction reads as follows: Corrections & Amplifications Inflation-adjusted income data from the U.S. Census Bureau show that incomes declined by 2.6% for the bottom quintile between 1979 and 2012, increase...

In my last post , I pointed out that the Wall Street Journal website is still displaying the same editorial with the same non-inflation-corrected numbers for which they had posted a correction. I concluded that it will now be interesting to see if the Wall Street Journal corrects it. As of this posting, the Wall Street Journal has still not corrected it and I was therefore happy to see Paul Krugman also take up this issue. On January 19th, a Krugman column titled "The Undeserving Rich" was posted on the New York Times website. In it, he stated: For an example of de facto falsification, one need look no further than a recent column by Bret Stephens of The Wall Street Journal, which first accused President Obama (wrongly) of making a factual error, then proceeded to assert that rising inequality was no big deal, because everyone has been making big gains. Why, incomes for the bottom fifth of the U.S. population have risen 186 percent since 1979! If this sounds wrong to...

At the end of my last post , I wrote: It will be interesting to see if Stephens or the Wall Street Journal publish a correction to this egregious mistake. That might give some indication as to whether they are concerned about their reputations or are simply pushing a point of view by whatever means possible. As it happens, a correction written by Stephens titled "About Those Income Inequality Statistics" was posted on January 3rd. In it, he admits his error in using data that had not been corrected for inflation, stating: In my Dec. 31 column on income inequality, I used a data set from the U.S. Census Bureau to make the case that incomes in the U.S. have been growing across the board, even if the incomes of the wealthy have grown faster than those of others further down the income scale. But I wrote those lines looking at a set of numbers that had not been adjusted for inflation. Professor Krugman, in a post on his New York Times blog, takes me to task for this. Had I...

On Dec. 30th, the Wall Street Journal ran an editorial titled "Stephens: Obama's Envy Problem" . The editorial was written by the WSJ's Bret Stephens and begins as follows: As he came to the end of his awful year Barack Obama gave an awful speech. The president thinks America has inequality issues. What it has—what he has—is an envy problem. Further on, Stephens states: Mr. Obama tried to prove that in his speech, comparing present-day income with that halcyon year of 1979: "The top 10 percent no longer takes in one-third of our income—it now takes half," he said, suggesting that the rich are eating a larger share of the national pie. "Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today's CEO now makes 273 times more. And meanwhile, a family in the top one percent has a net worth 288 times higher than the typical family, which is a record for this country." Here is a factual error, marred ...

Is Obama Rewriting Debt-Limit History? On October 3rd, the Wall Street Journal ran an editorial titled "Kevin Hassett and Abby McCloskey: Obama Rewrites Debt-Limit History" . The editorial begins as follows: As the government shutdown continues, the nation gets closer and closer to the day—probably Oct. 17—when Washington hits the debt limit, and with it the specter of default. President Obama may be getting nervous about what will happen to his negotiating position as that day approaches. He keeps asserting that the debt limit has never been used "to extort a president or a government party." Treasury Secretary Jack Lew is selling the same story, saying "until very recently, Congress typically raised the debt ceiling on a routine basis . . . the threat of default was not a bargaining chip in the negotiations." The editorial goes on to say that this is "simply untrue" and describes "the shenanigans of congressional Democrats in 1989 ove...

Is There a Debt/GDP Threshold at 90 Percent? (Part 2) As mentioned in my prior post , I have posted an Excel spreadsheet which is an extension of one included in a zip file posted by Herndon, Ash and Pollin (hereafter called HAP). I will use data from that spreadsheet to look at the HAP criticisms of the Reinhart and Rogoff (hereafter called RR) paper described previously . A good starting point is the now infamous Excel spreadsheet shown in my prior post and repeated below: After noting the coding error by which 5 rows were excluded, the first question that occurred to me was "where's the beef?". The number of countries on which the 90 percent threshold is based is a mere seven (Belgium having been left out by RR). The HAP critique points out that RR is using only 71 data points (110 after Belgium and 14 other excluded data points are added). Since there were relatively few data points, my first inclination was to try to look at that data so see how it was di...

In January of 2010, Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff released an NBER working paper titled "Growth in a Time of Debt" . The paper's abstract states: Our analysis is based on new data on forty-four countries spanning about two hundred years. The dataset incorporates over 3,700 annual observations covering a wide range of political systems, institutions, exchange rate arrangements, and historic circumstances. Our main findings are: First, the relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. This 90 percent threshold was cited by a number of public figures. For example, Paul Ryan stated the following on page 80 of the House Fiscal Year 2013 Budget Resolution titled "The Path to Prosperity: A Blueprint for American Renewal" . Even if high debt did not cause ...