Ten Economics Pieces Worth Reading: January 10, 2010
Department of "Huh?"

Why the "Fiscal Times" is Off to a Very, Very Bad Start Indeed... (Why Oh Why Can't We Have a Better Press Corps?)

I write a letter:

Dear Mr Alexander, Mr. Pianin, and Ms. Povich:

I have read Mr. Alexander's piece beginning "Since the new year, The Post's integrity has come under withering assault from those claiming it took special-interest 'propaganda' and passed it off as a news story. That's false..." http://www.washingtonpost.com/wp-dyn/content/article/2010/01/08/AR2010010803589_pf.html and Mr. Pianin and Ms. Povich's note stating that they found the ombudsman's piece "a fair, balanced and dispassionate look at the controversy, in contrast to some of the more inflammatory and one-sided stories and blogs published by our critics..."

As a former Treasury staffer, an economist, and a sensible deficit hawk, I think that none of you get it.

I know that after reading the start of Povich and Pianin's "Support Grows for Tackling Nation's Debt" http://www.washingtonpost.com/wp-dyn/content/article/2009/12/30/AR2009123002576.html, I was extremely unhappy.

If, as you write, you truly do hope to provide "the best possible coverage and commentary on budget, economic, health care and other fiscal issues..." you have started out by shooting yourselves in the faces with a shotgun.

Let me tell you how I reacted to the first two paragaphs of the Pianin and Povich story:

Senate action late last week that increased the limit on the government's credit card..."

A credit card is a particular financial device that ought to be used for convenience only: it is something that you ought to pay off every month--and if you don't you are flushing money down the toilet by paying 18% interest a year and your finances are out of control. That's very different from the U.S. national debt, a thing that, as some-Treasury-Secretary-or-other once said, can under the right circumstances and if properly managed, be a national blessing. Especially at a time of record-low Treasury interest rates--when the U.S. government can borrow at truly extraordinarily advantageous terms--the analogy between raising the maximum amount of debt subject to limit and raising the spending limit on a trapped consumer unable to pay off his or her balance every month is deeply defective, and substantially misleading.

... to a record $12.4 trillion...

If you are going to give one debt number, and if you want to inform your readership, the number you give is not the amount of debt-subject-to-limit but rather the total debt held by the public, which is $7.8 trillion. Basic ethics seem to me to require that that phrase read "... to a record $12.4 trillion, $4.5 trillion of which is internal within-government accounting and $7.9 trillion is debt held by the public." As written, the phrase misinforms readers by giving them a greatly exaggerated idea of how big the national debt actually is.

This phrase leaves me wondering: Do Pianin and Povich understand the difference between debt-subject-to-limit and debt held by the public? Do they know that there is a bunch of debt that are true obligations of the government that are not in fact subject to limit--right now and most notably the liabilities of the Federal Reserve? They give no sign of knowing these things. Yet reporters who don't know these things and strain every nerve to inform their readers of them don't seem to me to have any business working for any publication called the Fiscal Times.

...gave a significant boost to a proposal to appoint a special commission..."

How did the Senate vote on the debt limit give a boost to the commission proposal? Pianin and Povich never say. By now I am skeptical not just of their knowledge not just of the substance of the national debt but also of the workings of the U.S. senate.

...to make the tough decisions that will be required..."

What powers will the commission have to actually make tough decisions? Pianin and Povich never say. Later in the article they talk about very similar past commissions that in fact did nothing at all, quoting Rockefeller and Danforth--how congress and the president then ignored their recommendations completely.

...to dig the nation out of debt...

One very knowledgeable budget analyst told me that they cringed when they read this phrase, for they would certainly never have used such a phrase in the lead." Eliminating the national debt is nobody's goal--not even Pete Peterson's: he would like to get us down to a steady debt-to-GDP ratio of 30% or so and stay there.

...President Obama has voiced support for such a plan, and 35 Democratic and Republican senators have signed on to legislation...

The antecedent of "plan" is "appoint a special commission to make make the tough decisions... to dig the nation out of debt." If you asked Obama and all 100 senators whether they have voiced support to delegate authority to enact a plan to eliminate the national debt to such a commission, all 101 of them would say: "No!" This could be sloppy writing: maybe they mean that the antecedent of plan is "appoint yet another budget commission that will, as every budget commission since the early 1980s has, almost surely spin its wheels." This could be sloppy thinking. In any case, it seems to me to be highly misleading.

...that would create a bipartisan commission with broad power...

And now I wait to learn what its powers are:

...to force painful spending cuts and tax increases through Congress...

And there we are at the end of paragraph two with something that I have to conclude is much worse than simply misleading but instead totally and flagrantly false. What are the commission's powers to "force" the Congress to do anything? It has none. And even if it were to have some, Pianin and Povich never even try to tell us what the commission's powers are.

Senator Conrad says that: "Fourteen of the 18 Task Force members would have to agree to report the recommendations. And final passage would require supermajorities in both the Senate and House..." So it turns out that the commission's recommendation's don't "force" anything. If Speaker Pelosi is onboard with the commission's recommendations she could enact them through the House with two reconciliation-process majority votes--one on a no-amendment rule and then one on final passage. If Senator Reid is onboard with the commission's recommendations he could do the same. The commission's byzantine procedures don't "force" anything through Congress, but rather give additional outs. And, of course, there is the question of what kind of commission recommendations will emerge if you have to, as Conrad says, get 14 of 18 commission members to agree. That is a very high supermajority requirement--and an immense bar to leap before the commission would recommend anything.

But Pianin and Povich don't tell their readers any of these things--not anywhere in the article. It is as if they never even bothered to read Senator Conrad's press release on what his proposal was

And Pianin and Povich don't tell their readers--not anywhere in the article--that Judd Gregg's credential as a deficit hawk are deeply, deeply suspect: real deficit hawks, after all, voted against the Bush 2001 tax cuts--as Alan Greenspan said at the time, they were "irresponsible fiscal policy."

I can see a place for a Fiscal Times. But a Fiscal Times that is worth reading would have to be one staffed by reporters who know and inform their readers about the past policy positions taken by the principals that they are writing about, who know and inform their readers about the substantive proposals they are writing about, who know and understand and inform their readers about congressional and executive-branch procedures, and who know and understand and inform their readers about the substantive issues of budget policy.

The Povich-Pianin piece fails along all four of these dimensions.

Sincerely Yours,

Brad DeLong