Amid the desperate attempts by Fox News and its subsidiary, the Republican Party, to insist that Biden's true claims about GOP efforts to cut Medicare and Social Security are false, worth remembering some history 1/
Ronald Reagan tried to make significant cuts in Social Security in 1981, but backed down in the face of a huge public backlash 2/ nytimes.com/1981/05/13/us/…
In response the Cato Institute called for a "Leninist" approach (their term), setting the stage to exploit future crises to dismantle Social Security 3/ cato.org/sites/cato.org…
Cato also created a Project on Social Security Privatization, which drew up plans for that happy event 4/ ssa.gov/history/report…
In 2005 George W. Bush tried to move forward with that plan, although conservatives insisted that calling it "privatization" (which polled badly) was a left-wing smear; meanwhile Cato quietly changed the name of its project 5/
Stepping back a bit, in 1995 Newt Gingrich shut down the government in an attempt to force Bill Clinton to make major cuts in Medicare and Medicaid 6/ history.com/news/bill-clin…
After the Republican takeover of the House in 2010, Paul Ryan pushed a plan to convert Medicare into a voucher system, although as with "privatization" he insisted that calling vouchers vouchers was a left-wing smear 7/ khn.org/news/ryan-plan…
So now we have Rick Scott saying that just because he called for sunsetting Medicare and Social Security he wasn't calling for sunsetting them. Biden used the same words Scott did 8/
Let's also add that if you have absolutely no intention of ever cutting Social Security and Medicare, you don't set up a process where the entire programs have to be reapproved every five years. As Biden might say, c'mon, man 9/
So let's not act as if Biden was engaged in some kind of gotcha. For more than three decades Republicans have been trying to eviscerate SS and Medicare whenever they thought they had a political opportunity to do so 10/
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I suppose I should preregister some views about the upcoming CPI report, so I don't get accused of making excuses when (as seems likely) it shows a significant uptick. Because it probably will — for reasons that tell us little about how we're actually doing on inflation 1/
The key point: Some of the temporary factors that were holding inflation down, especially falling used car prices, are probably over. On the other side, official shelter prices are still rising fast, even though market rents are probably falling, because of known lags 2/
So we'll get headlines about inflation rising, especially given the BLS change in seasonal adjustment. But whether it's actually good or bad news will depend on the details — and may be very hard to discern 3/
I don't think anything I've written in the past year has generated as much hate mail as this newsletter saying that we weren't in a recession 1/ nytimes.com/2022/07/26/opi…
We should take today's employment report with a grain of salt — lots of people who know these numbers well warned in advance of statistical noise. But it's clear that we have, in fact, been experiencing a ... Biden boom 2/ nytimes.com/2020/11/19/opi…
Obviously inflation has been big problem, although diminishing. I've learned not to get too excited about monthly earnings numbers but the latest are more or less consistent with the ECI: wage growth well off its peak, but still 1-1.5% above level consistent with 2% inflation 3/
Some further notes on inflation in the wake of the ECI report. We can quibble about details on the numbers, but two things seem clear: compensation growth has fallen substantially, but is still probably too high to be consistent with 2 percent inflation 1/
But I'd argue that efforts to estimate underlying inflation, while of some value, are currently missing a lot of the point. If an inflation measure can change as fast as various core measures have lately, in what sense is it even "underlying"? 2/
The main question seems to me to be what disinflation requires — which is closely connected to why inflation rose so fast. At this point my working hypothesis is nonlinearity: inflation responds much more to demand when the economy is hot. Something like this: 3/
I'm not writing much about Mint the Coin etc, bc I think the Biden plan is to give Rs as much rope as possible to hang themselves, while keeping their contingency plans quiet. But I do think I should say something about 2 bad arguments against the coin and other strategies 1/
1 argument is they're gimmicky and undignified. Yes, they are. So is having a financial crisis because a faction in Congress refuses to allow the govt to pay bills it has already incurred. You don't refuse to wear a helmet in a construction zone bc you think it looks dorky 2/
The other is that the coin would be "printing money" and inflationary. No. It's true that the Fed would have to release funds if Treasury drew on a coin-backed account, but this wouldn't have to increase the monetary base; it could be offset by selling Fed-held securities 3/
Like many economic observers, I'm waiting anxiously for tomorrow's release of the Employment Cost Index. But there may be a big problem of interpretation, illustrated below (I'll explain in a minute) 1/
The ECI comes out only quarterly, which is annoying, but also means that it's lagging data. Many of us trying to assess underlying inflation have lately been focused on 3-month rates of change, which matched up with quarterly data. But ... 2/
Many (not all) of these measures have fallen off a cliff (in which case it's not clear how "underlying" they are, but never mind). In the measure shown above, the 3 months ending in Dec. were a lot lower than the 3 months ending in November 3/
What with everything else going on, haven't commented on proposed currency union between Argentina and Brazil. But it's a nice opportunity to apply the theory of Optimum Currency Areas — which tells us that it's a terrible idea 1/ ft.com/content/59cc26…
A shared currency may make sense between economies that are each others' major trading partners and are similar enough that they won't face large "asymmetrical shocks". So, here's the destination of Brazil's exports 2/
Argentina sends more to Brazil, because Brazil's economy is larger — but still only 15%. And the two countries' structure of exports is very different 3/