"Paul Ryan Declares War on Math"

More Jonathan Chait:

Paul Ryan has emerged from his long post-election period of repositioning, soul-searching, and secretly but not secretly visiting the poor. He had been caricatured as an Ayn Rand miser and attacked as a social Darwinist, merely for proposing the largest upward transfer of wealth in American history. Ryan has identified the root cause of his difficulties, and it is fiscal arithmetic.

The new Ryan, now fully formed, emerges in an interview with Philip Klein that

is revealing precisely for its evasiveness. The overview of Ryan’s new strategy must be pieced together from several elements.

1. Tax cuts for all! Ryan has found himself caught between his career-long obsession with cutting taxes for the rich and the problem of what happens to the revenue that would be lost. During the 2012 campaign, he swept aside the problem by couching his plan as “tax reform,” promising not to cut taxes for the rich. Ryan’s new plan is just to go ahead and cut taxes.

He tells Klein, “Those of us who live in the tax system want to lower everybody’s tax rates.” If you lower everybody’s tax rates, then everybody will be paying less in taxes, and then the government will have less revenue, right? That’s where Ryan’s solution comes in: He plans to press the government budget agencies to adopt the optimistic assumption he prefers, which is that cutting tax rates for the rich creates faster economic growth. Ryan spent much of the Bush years assailing what he called “static scoring,” which is the standard budget practice of measuring the fiscal impact of tax cuts as if they do not contain magic pixie dust.

As Danny Vinick has noticed, Ryan has announced his intention to change the rules. Ryan reaffirmed that plan in his interview with Klein: “I’d like to improve our scorekeeping so it better reflects reality,” he said. “Reality” is Ryan’s description for a world in which Bill Clinton’s punishing tax hikes on the rich hindered the economy, which was restored to health when George W. Bush cut taxes.

Credit where credit is due - conservative tells right-wing inflation hysterics to accept the fact of low inflation and shut up !

American Enterprise Institute economist James Pethokoukos calls out his fellow conservatives as inflation cranks: 

Are conservatives forever and always doomed to be obsessed by fear that inflation is perpetually just around the corner? Perhaps, since it was the Great Inflation of the 1970s that helped give rise to Reagan and Thatcher and the conservative revival. Even worse, this inflation obsession spawns conspiracy theories that government is manipulating the data to hide skyrocketing prices.

The Heritage Foundation's epic "data" fail

 Media Matters catches the current state of intellectual credibility among conservative economists:

Heritage Foundation chief economist Stephen Moore was caught using incorrect statistics to mislead readers about the relationship between tax cuts and job creation in the United States.

On July 7, Moore published an op-ed in The Kansas City Star attacking economic policies favored by Nobel Prize-winning economist Paul Krugman. The op-ed claimed that "places such as New York, Massachusetts, Illinois and California ... are getting clobbered by tax-cutting states." Moore went on to attack liberals for "cherry-picking a few events" in their arguments against major tax cuts, when in fact it was Moore who cited bad data to support his claims. 

Stephen "Pants On Fire" Moore

 On July 24, The Kansas City Star published a correction to Moore's op-ed, specifically stating that the author had "misstated job growth rates for four states and the time period covered." The editorial board of the Star inserted this annotation to Moore's inaccurate claims:

Please see editor's note at the top of this column. No-income-tax Texas gained 1 million jobs over the last five years, California, with its 13 percent tax rate, managed to lose jobs. Oops. Florida gained hundreds of thousands of jobs while New York lost jobs. NOTE: These figures are incorrect. The time period covered was December 2007 to December 2012. Over that time, Texas gained 497,400 jobs, California lost 491,200, Florida lost 461,500 and New York gained 75,900. Oops. Illinois raised taxes more than any other state over the last five years and its credit rating is the second lowest of all the states, below that of Kansas! (emphasis original)

On July 25, Star columnist Yael Abouhalkah explained the correction in more detail. Abouhalkah wrote that Moore had "used outdated and inaccurate job growth information at a key point in his article" and that Moore should have used data from 2009 to 2014, rather than from 2007 to 2012. Abouhalkah also argued that "the problems with Moore's opinion article damaged his credibility on the jobs issue."

Rand Paul is either an idiot or a calculated propagandist...or both

More Krugman on The Crazy:

I can easily understand it when people don’t know the facts about economic statistics; you need a fair bit of background knowledge even to know how to look these things up. It’s more surprising when people don’t know what they don’t know — when they make confident assertions that can be proved false in a few seconds by anyone who does know these things.

I had a one-on-one encounter with Rand Paul over such a case; there our heads were, talking on TV, and he insisted that government employment had risen under Obama. (It has actually plunged.) At the very least, you’d think he would have learned a lesson from the experience.

But no. There he goes, saying, "When is the last time in our country we created millions of jobs? It was under Ronald Reagan … "

Hmmm:

It’s not just that more jobs were created under Clinton, who raised taxes on the rich, than under Reagan; I wonder how many people know that more jobs were created under Jimmy Carter than under either Bush?

But I guess I really do understand it: according to right-wing theology, The Blessed Reagan’s tax cuts must have created far more jobs than the policies of evil redistributors. And so that’s what must have happened. Hey, Clinton was probably cooking the books.

Liberal Facts and "Conservative" Crazy

Krugman @ NYTs on The Crazy:

“The facts have a well-known liberal bias,” declared Rob Corddry way back in 2004 — and experience keeps vindicating his joke. But why?

Not long ago Ezra Klein cited research showing that both liberals and

conservatives are subject to strong tribal bias — presented with evidence, they see what they want to see. I then wrote that this poses a puzzle, because in practice liberals don’t engage in the kind of mass rejections of evidence that conservatives do. The inevitable response was a torrent of angry responses and claims that liberals do too reject facts — but none of the claims measured up.

Just to be clear: Yes, you can find examples where *some* liberals got off on a hobbyhorse of one kind or another, or where the liberal conventional wisdom turned out wrong. But you don’t see the kind of lockstep rejection of evidence that we see over and over again on the right. Where is the liberal equivalent of the near-uniform conservative rejection of climate science, or the refusal to admit that Obamacare is in fact reaching a lot of previously uninsured Americans?

Another terrible David Brooks column

Dean Baker @ CEPR Beat the Press challenges the ignorant ramblings of one David Brooks, Big City Newspaper Columnist and Pop Sociologist:

David Brooks is sweating hard trying to defend the one percent against the rest of the country and reality. His column today desperately warns readers:

"Some on the left have always tried to introduce a more class-conscious style of politics. These efforts never pan out. America has always done better, liberals have always done better, when we are all focused on opportunity and mobility, not inequality, on individual and family aspiration, not class-consciousness."

Funny, I thought Social Security, the Fair Labor Standards Act (i.e. the 40-hour workweek), the National Labor Relations Board, and other products of the New Deal were pretty big accomplishments. Much of this was done quite explicitly with a sense of class consciousness. These were all measures that were backed by mass movements that sought to ensure that working people got their share of the economic pie. Good thing we have David Brooks to tell us the opposite.

This is far from the only place where Brooks seems to be at odds with reality. Brooks condemns focusing on inequality because it leads to ineffective policies like raising the minimum wage. He then cites a study by Joseph J. Sabia and Richard V. Burkhauser telling readers:

"Consistent with some other studies, they find no evidence that such raises had any effect on the poverty rates.

"That’s because raises in the minimum wage are not targeted at the right people."

Actually the Sabia and Burkhauser study goes against the overwhelming majority of other studies on the topic as summarized in this analysis by University of Massachusetts professor Arin Dube.

A Tale of Two Rands - Unemployment Benefits and Economic Illiteracy

Rand Paul - well-known foe of economic illiteracy - arguing that "extending unemployment benefits to two years does a disservice to the unemployed.":

Economic illiteracy condemns us to well-intentioned, big-hearted, but small-brained

responses to real problems.

Millions of people are out of work. We all have sympathy for those who are unemployed and I believe it is our moral obligation as a society to take care of those who cannot take care of themselves. Liberal pundits try to argue that Democrats are the only ones who care about the poor and unemployed, but the truth is, caring doesn't help unless it is linked to good policy...

According to a study by Rand Ghayad and William Dickens for the Federal Reserve Bank of Boston, employers will choose a less-skilled worker who has been unemployed for two months over a worker with more skills who has been unemployed for two years. So yes, extending unemployment benefits to two years does a disservice to the unemployed...conservatives who argue for shorter unemployment benefits actually have more concern for the worker than liberals who believe in no limits... (Bold added)

Rand Ghayad, the economist Paul cites, @The Atlantic, countering that based on his research "there's no reason to cut unemployment benefits:

Rand Paul says he cares about the unemployed."...

So why does he want to end unemployment benefits for people who have been out of work for 6 months or longer? Well, Paul cites my work on long-term unemployment as a justification—which surprised me, because it implies the opposite of what he says it does.

"Debt Threat" nonsense from academic clown Niall Ferguson

Niall Ferguson, the egregious blowhard Harvard professor who gets everything wrong, strikes again via the Wall Street Journal with remarkable stupidity. Increasingly it appears Ferguson isn't simply in error, so much as a right-wing troll of the FOX & FRIENDS school of aggressive disinformation. UC economist Brad DeLong takes Fergie apart:

Niall Ferguson: The Shutdown Is a Sideshow. Debt Is the Threat:

Only a fantasist can seriously believe "this is not a crisis." The fiscal arithmetic of excessive federal borrowing is nasty even when relatively optimistic assumptions are made about growth and interest rates. Currently, net interest payments on the federal debt are around 8% of GDP…

DeLong responds:  Um…. No. Not 8. Only 1/6 of 8.

Look at: http://www.cbo.gov/sites/default/files/cbofiles/attachments/44521-LTBO2013.pdf. Currently, net interest payments on the federal debt are not 8% but only one-sixth that--1.3% of GDP:



The fantasy is the 8% number, and the belief that the debt is, right now, a crisis.

Moreover, 1.3% is the wrong number to look at. We want to adjust for inflation at 2%/year, and that gets us to 1.3% - 2% x 80% = -0.3% of GDP. We want our concept of budget balance to be not a stable real value, but a constant debt-to-GDP ratio. Making that adjustment tells us that right now the U.S. could run a primary deficit of 0.3% + 2.5% x 80% = 2.3% of GDP without seeing any increase in the debt-to-GDP ratio.

That's right: rather than the debt forcing us to cut spending on programs below the level of taxes (i.e., run a primary surplus) in order to keep the debt-to-GDP ratio from growing, right now the United States can have spending on programs exceed taxes by 2.3% of GDP (i.e., run a primary deficit) and still keep its debt-to-GDP ratio stable. In terms of real resources, right now the debt is not a burden. It does not reduce how much the U.S. can afford to spend on programs. It is a profit center. It is providing a net addition to federal resources to the tune of 2.3% of GDP.

That's how far the federal debt is today from being a burden on the economy.

OMFG - Niall Ferguson opens his mouth again!

Niall Ferguson, that stain on Harvard University's increasingly shaky reputation, was last seen attacking John Maynard Keynes for "the gay." He's back - Dean Baker does the debunking:

Harvard's standing in economic policy debates took a big hit when the famous Reinhart-Rogoff 90 percent debt-to-GDP growth cliff was shown to be the result of a simple spreadsheet error. Niall Ferguson's strange rant in the Wall Street Journal about the United States becoming the land of government regulation continues the downhill slide.

The gist of the piece is that the country is going down the road to economic stagnation and suffocating bureaucracy because of excessive regulation. The Affordable Care Act (ACA) is the main villain in this story.

It's fair to say that just about everything in the piece is wrong. Starting with the meat, rather than being some horrible burden for small businesses, the main effect of the ACA on the vast majority of small businesses will be to provide them with a subsidy if they offer their workers insurance. The mandate only applies to firms that employ more than 50 workers, most of whom already provide insurance that would meet the mandate anyhow. So these engines of innovation will grind to a halt if the government offers them subsidies for insurance? Interesting theory.

Reinhart And Rogoff's Pro-Austerity Research Now Even More Thoroughly Debunked By Studies

Mark Gongloff @ Huffington Post:

The debunking of Carmen Reinhart and Kenneth Rogoff continues.

The Harvard economists have argued that mistakes and omissions in their

influential research on debt and economic growth don't change their ultimate austerity-justifying conclusion: That too much debt hurts growth.

But even this claim has now been disproved by two new studies, which suggest the opposite might in fact be true: Slow growth leads to higher debt, not the other way around.

In a post at Quartz, University of Michigan economics professor Miles Kimball and University of Michigan undergraduate student Yichuan Wang write that they have crunched Reinhart and Rogoff's data and found "not even a shred of evidence" that high debt levels lead to slower economic growth.

And a new paper by University of Massachusetts professor Arindrajit Dube finds evidence that Reinhart and Rogoff had the relationship between growth and debt backwards: Slow growth appears to cause higher debt, if anything.

More fake data promoting deficit hysteria

Ezra Klein:

You’ve heard about all the problems with Reinhart and Rogoff. But how about the problems with Baker, Bloom and Davis?

On Sunday, Bill McNabb, Chairman and CEO of Vanguard, published an op-ed in the Wall Street Journal arguing that “since 2011 the rise in overall policy uncertainty has created a $261 billion cumulative drag on the economy (the equivalent of more than $800 per person in the country).” This is proof, McNabb says, that “developing a credible, long-term solution to the country’s staggering debt is the biggest collective challenge right now.”

Specifically, the policy uncertainty McNabb is looking at comes from “the debt-ceiling debacle in August 2011, the congressional supercommittee failure in November 2011, and the fiscal-cliff crisis at the end of 2012.” There’s no doubt that these episodes hurt the economy.

But the Vanguard study. McNabb says, is based on the “invaluable work” of Stanford University’s Nicholas Bloom and Scott Baker and the University of Chicago’s Steven Davis. The Bloom, Baker and Davis measure of policy uncertainty gets a lot of attention — but it’s shot through with holes.

Policyuncertainty.com

"The drive for austerity has lost its intellectual fig leaf"

 Professor Krugman sees some light @ NYTs:

Those of us who have spent years arguing against premature fiscal austerity have just had a good two weeks. Academic studies that supposedly justified lost credibility; hard-liners in the European Commission and elsewhere have softened their rhetoric. The tone of the conversation has definitely changed.

austerity have

My sense, however, is that many people still don’t understand what this is all about. So this seems like a good time to offer a sort of refresher on the nature of our economic woes, and why this remains a very bad time for spending cuts.

Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family.

Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too.

And that’s what happened after the financial crisis of 2008. Many people suddenly cut spending, either because they chose to or because their creditors forced them to; meanwhile, not many people were able or willing to spend more. The result was a plunge in incomes that also caused a plunge in employment, creating the depression that persists to this day.

Krugman v. "The World"...again

The Professor explains - @ NYTs - why our "smart people" - who among other things claim to listen to "the market" as arbiter of their reality - pretty much don't have a clue about much of anything other than their recycled insider-elite ideology:

Four years ago, as a newly elected president began his efforts to rescue the economy and strengthen the social safety net, conservative economic pundits — people who claimed to understand markets and know how to satisfy them — warned of imminent financial disaster. Stocks, they declared, would plunge, while interest rates would soar.

Even a casual trawl through the headlines of the time turns up one dire pronouncement after another. “Obama’s radicalism is killing the Dow,” warned an op-ed article by Michael Boskin, an economic adviser to both Presidents Bush. “The disciplinarians of U.S. policy makers return,” declared The Wall Street Journal, warning that the “bond vigilantes” would soon push Treasury yields to destructive heights. 

Sure enough, this week the Dow Jones industrial average has been hitting all-time highs, while the current yield on 10-year U.S. government bonds is roughly half what it was when The Journal published that screed. 

O.K., everyone makes a bad prediction now and then. But these predictions have special significance, and not just because the people who made them have had such a remarkable track record of error these past several years. 

No, the important point about these particular bad predictions is that they came from people who constantly invoke the potential wrath of the markets as a reason we must follow their policy advice. Don’t try to cover America’s uninsured, they told us; if you do, you will undermine business confidence and the stock market will tank.

Don’t try to reform Wall Street, or even criticize its abuses; you’ll hurt the plutocrats’ feelings, and that will lead to plunging markets. Don’t try to fight unemployment with higher government spending; if you do, interest rates will skyrocket. 

And, of course, do slash Social Security, Medicare and Medicaid right away, or the markets will punish you for your presumption. 

Joe Scarborough is an idiot

 Jon Chait @ New York magazine makes the case:

The deficit scold cause has suffered significant intellectual erosion over the last year or so. In the short run, the interest rate spike they keep insisting will happen keeps not happening. In the long run, the health-care-cost inflation that is at the root of the long-term fiscal predicament is growing markedly less dire. The case for prudent fiscal adjustment remains strong, but the case for  bug-eyed, table-pounding terror is growing increasingly ridiculous.

But bug-eyed, table-pounding terror is the stock-in-trade of the fiscal scold movement. And so they are striking back by labeling anybody with a calmer view of the deficit as a “debt denier.” Joe Scarborough, who may have launched the new catchphrase on Twitter, has a new op-ed in Politico brandishing the epithet. Meanwhile, the anti-deficit lobby “Fix the Debt” — for whom Scarborough has served as one of many media spokespersons — has taken up Scarborough’s favorite label with a new campaign, debtdeiners.com, which, alongside its latest attempt to generate a viral dance video, amounts to a concerted counteroffensive against Paul Krugman and others who have ever so slightly mitigated the tone of apocalyptic hysteria surrounding the fiscal debate. They even have their own debt deniers hashtag. They are trying very hard to make “debt deniers” happen.

Let’s examine their case on the merits, not merely as an attempt to create a viral meme.

Analyzing the argument in a Joe Scarborough–authored op-ed is inherently challenging. (The written word in general is just a terrible medium for Scarborough, hiding his winning personality while exposing his inaptitude for analysis.) It mainly consists of using variations of “debt denier” repeatedly to describe his opponents. To his credit, Scarborough finally cites one actual economist who shares his view, a welcome departure from his usual method of answering charges that he is in the grips of an incestuous groupthink driven by non-economist elites by citing the agreement of his non-economist elite friends.

"The Right's Latest Tax Lie"

 Michael Lind @ Salon:

The Heritage Foundation in Washington, D.C., has always had a special place in my heart. In the late 1980s, during the presidency of George Herbert Walker Bush, the right-wing think tank provided me with my first job as a young conservative intellectual. My first assignment was to write a policy brief about presidential war powers. I was removed from the project after I wrote a draft that began with the observation that the U.S. Constitution divides war powers between Congress and the president, and gives the most important war powers — the power to declare war and to fund it — to Congress. The higher-ups at Heritage reassigned the paper to a Wall Street Journal staffer, who provided them with what they wanted: a brief arguing that the president has absolute, uncontrollable power in foreign affairs.

One of my next assignments was to write a policy paper justifying a forthcoming bill from the late Sen. Jesse Helms, a belligerent reactionary from North Carolina. When I met with the senator’s staff, I was told to wait because Helms wasn’t sure what he was going to put in the bill. After I failed to turn in the policy brief on time, I received an official reprimand from my supervisor, which I treasured until I lost it during a move. The reprimand said, in effect, that at Heritage we write policy papers first and add the facts later.

Things went downhill. I soon left Heritage and, a few years later, the conservative movement altogether. When several colleagues and I founded the New America Foundation in the late 1990s, I held up Heritage as a model of what a genuine think tank ought not to be.

I am amused to report that my former colleagues at the Heritage Foundation have lost none of their willingness to sacrifice truth to propaganda. The Heritage Foundation has published an “Index of Dependence on Government” by William W. Beach and Patrick Tyrrell that seeks to bolster Mitt Romney’s theme that at least 47 percent of Americans are parasitic, government-dependent “takers” rather than “makers” (hat tip to Thomas B. Edsall):

Romney campaign doesn't pass the test on jobs plan

The Professor @ NYT:

(The Romney) campaign is claiming that Romney’s assertion that his plan would create 12 million jobs is backed by three economic studies — and none of the studies actually says what the campaign says it does. The (implausible) claim that tax cuts would add 7 million jobs was a 10-year estimate, not a 4-year estimate; the 3 million jobs figure for energy was a prediction of what would happen under current policy, not what Romney would add; the 2 million “get tough with China” estimate had nothing to do with what Romney is proposing.

So they’re just faking it — the same way they have with the “six studies” supposedly validating the tax plan, four of which aren’t studies and one of which actually validates the critics.

What’s amazing here is the contempt the campaign is showing for the voters and the media. 

Sorry, but Professor Krugman has given you guys a well-deserved "F" for "faking it."