Dean Baker

Recent Articles

Fix the Economy, Not the Deficit

AP Photo/Charles Dharapak
AP Photo/Charles Dharapak President Obama discuses the sequester last week surounded by emergency responders, whom the White House says could be affected if state and local governments lose federal money as a result of budget cuts. I t’s hard to be happy about the prospect of the sequester—the huge, automatics cuts to domestic spending set to take place if lawmakers can't reach a long-term budget deal—going into effect at the end of the week. Not only will it will mean substantial cuts to important programs; it will be a further drag on an already weak economy, shaving 0.6 percentage points off our growth rate. The end of the payroll tax cut, which expired on January 1, has already pushed it down to around 2.0, but the sequester cuts will depress it below the rate needed to keep pace with those entering the labor market. As a result, we are likely to see a modest increase in unemployment over the course of the year if the cuts are left in place. Of course, it could be worse. Half of...

Tax Tricks: Time to Go on Offense

Our current tax system rewards unproductive speculation and punishes the working middle class.

(Flickr/Steven Depolo)
For three decades, progressives have been engaged in a political contest where the range of the playing field runs between our own goal line and our own 20-yard line. During the period that we have been fighting over some version of the Bush-Reagan tax cuts, the other side has focused on wiping out the labor movement, locking in regressive monetary policy, pushing a trade and currency policy explicitly designed to redistribute income upward, creating a system of intellectual-property protection that serves the same purpose, and using huge deficits to wipe out public spending. We have to continue fighting for progressive taxation, but that is no cure for the rest of the conservative agenda. If we become obsessed with tax breaks for the rich and ignore everything else, the skewing of before-tax income will become so large that even the most redistributive taxes will still leave gross inequities. Furthermore, since money puts politicians in office, in a highly unequal society,...

The Bipartisan Attack on Medicare

To fix Medicare, fix the larger inefficiencies in America's health-care system.

When people in the center-right in Washington come to agreement on policy, it is almost certainly a really bad idea. The War in Iraq is exhibit A. The current drive to slash Medicare, along with the companion effort against Social Security, falls into the same category. The story is a simple one: The long-term budget projections paint a scary picture. While the latest baseline numbers from the Congressional Budget Office are relatively benign, the "alternative scenario," which CBO Director Douglas Elmendorf argues is more likely, paints a far darker picture. In this scenario, the deficit would be a whopping 9.8 percent of gross domestic product by 2025. The leading villain in this story is Medicare and other public-sector health-care programs, the costs of which are projected to increase by 2.9 percentage points of GDP by 2025 in the alternative scenario. Medicare alone is projected to cost 5 percent of GDP in 2025, up from 3.6 percent of GDP in 2010. Clearly, Medicare accounts for a...

And, I Am Out of Here! -- Thanks TAP -- See You at CEPR

Today is the last day that Beat the Press will be appearing on The American Prospect's website. You'll have to go to Beat the Press' new home page (or new RSS feed ) from now on to read it. Thanks again to TAP for hosting BTP and exposing it to its well-informed and thoughtful readership over the past four years, as well as for graciously redirecting readers to BTP's new page . I hope you will continue to check in at TAP for the important perspective that it provides. --Dean Baker

Which Country Got All the Royalties in February?

That might have been a good question for reporters to address when they reported on the February trade data released yesterday. The data showed that royalties and licensing fees had increased by $883 million from January, a rise of more than 40 percent. This has occasionally happened in prior months and presumably reflects one-time payments to a producer or set of producers. However, this was a big part of the $2.8 billion rise in the overall trade deficit from January and it deserved some mention in the coverage of the February data. --Dean Baker

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