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Dean Baker

Dean Baker

I am a senior economist at the Center for Economic and Policy Research (@ceprdc). I also run the blog Beat the Press (@beat_the_press)

Articles by Dean Baker

The DeFazio Bill: Reducing the Financial Industry’s Tax on Retirement Savings

2 days ago

Representative Peter DeFazio, along with seven House co-sponsors, introduced the “Wall Street Tax Act” today. This bill would impose a tax of 0.1 percent of sales of stocks, bonds, options, and other derivatives. According to the Congressional Budget Office, it would raise almost $800 billion over the course of the next decade. This would be more than enough to cover the entire food stamp budget over this period. It would be almost enough to fully replace the annual research spending of the pharmaceutical industry, which would mean that all new drugs could be sold as cheap generics from the day they approved by the Food and Drug Administration. In short, this is real money.
The financial industry is already screaming bloody murder over this bill for an obvious reason – it comes out of

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Even In the Face of Coup Attempt, NYT Continues Propaganda for Upward Redistribution Through Trade

2 days ago

I have repeatedly raised the point that media accounts routinely use the term “free trade” when they can more accurately say simply “trade” or trade policy. It is amazing to me that this practice continues.
We saw it yet again in a NYT article on how many Republicans continue to be faithful to Trump even after last week’s coup attempt. The article told readers:
“Anthony Sabatini, a Florida state representative, described Ms. Cheney and other Republicans who voted for impeachment as ‘artifacts,’ saying they were out of step in a party that has embraced a more populist platform opposed to foreign interventions and skeptical of free trade.”
As I have pointed out endlessly, we do not have a policy of “free trade.” We do not allow foreign trained professionals, such as doctors and dentists, to

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Debt and Deficits, Yet Again

4 days ago

With a Democrat in the White House, the season of the deficit hawk has returned. So, it’s worth going through the old arguments just to remind everyone that the best response to these people is ridicule.
It looks like President Biden will propose a robust stimulus package of well over $1 trillion. According to press accounts, the package is likely to include another check for $2,000. (I believe it is supposed to $1,400 above the $600 in the last package.) It is likely to include a refundable child tax credit that will do much to reduce child poverty.
It will also include money to state and local governments to make up massive pandemic induced shortfalls. There will also be money for mass transit and a down payment on green new deal programs. Biden also plans to increase the subsidies

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New York Times Joins Trump’s Anti-China Crusade

18 days ago

There is no doubt that bureaucratic bungling and authoritarian practices slowed China’s response to the coronavirus. A New York Times piece documents many of these failings. But, it is a big step to go from the evidence presented in the article to the assertion in the first paragraph:
“Beijing acted against the coronavirus with stunning force, as its official narratives recount. But not before a political logjam had allowed a local outbreak to kindle a global pandemic.”
The clear implication of the second sentence is that if China’s leadership had responded effectively to the pandemic, it could have been quickly contained in Wuhan and not spread around the world. The biggest problem with this assertion is that there is evidence that the pandemic was already present in Europe before the end

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End of the Year Thoughts on Inequality and Its Remedies

19 days ago

The approach of the end of the year seems a good time to sum up thoughts. My comments here will not be news to regular readers, but may be to others. Also, this exercise is helpful for me to keep my thoughts clear. (I also expect to take next week off, so you won’t be hearing from me for a while.)
Most of my work for the last several years has been focused on ways to reduce before tax inequality by reducing the amount of before-tax income that goes to those at the top of the income distribution. For better or worse, there don’t seem to be a lot of progressives that share this beat. There are a few points that are worth making.
First, my focus on reducing income at the top doesn’t mean for a second that I don’t see efforts at raising income for those at the bottom (and middle) as being

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All In for $2K

19 days ago

A few weeks ago I had exchanges with people on Twitter in which I argued against across the board payments to individuals. I was concerned that these were likely to come out of other provisions (most importantly unemployment insurance) in the pandemic relief package. Since most people have actually not seen their income cut from the pandemic (they are still working) and many are saving on commuting costs, there is no obvious reason they need another check.
On the other hand, the people who have lost their jobs or are unable to work because of care giving responsibilities or health, really do need their unemployment benefits. (One item often overlooked in these exchanges is that the Pandemic Unemployment Assistance Program gives benefits to more than 9 million people who would not

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Is the Distribution of Vaccines the Biggest Trump Screw Up Yet?

20 days ago

The Washington Post tells us that 7.7 million first doses of vaccines have been shipped to date (two million shots have been given), with a target of 16 million by the end of the year. This is warp speed?
By comparison, we manage to get over 170 million flu shots in people’s arms every year, without any heroic efforts by the government and the military. Most of those doses are given over roughly a four-month period, which means a bit less than 1.5 million a day. That puts our flu shot delivery system ahead of Donald Trump’s warp speed. What the f**k?
Last week I wrote a piece asking why we didn’t have 400 million doses of vaccines on hand by the start of December. Of course production takes time, and we didn’t know back in the summer which vaccines would prove effective, but so what?
We

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China Has the World’s Largest Economy: Get Over It

22 days ago

It is more than a bit annoying to hear reporters endlessly refer to China as the world’s second largest economy. It isn’t. It’s the world’s largest economy and has been since 2017. Here are the data from the International Monetary Fund.

Source: International Monetary Fund.
As the chart shows, China’s economy first passed the U.S. in 2017. It is projected to be more than 16 percent larger this year, and by 2025 is projected to be almost 40 percent larger by 2025. 
Purchasing power parity (PPP) measures of GDP are based on applying a common  set of prices for all goods and services produced across countries. While it is difficult to measure accurately, most economists view PPP as being the better way to calculate GDP, since it reflects living standards and does not fluctuate with currency

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The New York Times Hasn’t Heard About China’s Vaccines

22 days ago

That is the implication of a major piece on how the coronavirus vaccines are leading to greater worldwide inequality, since the rich countries have reserved the vast majority of the 2021 supplies of vaccines of the leading U.S.-European vaccines. While this is in fact a serious problem, as my co-authors and I have noted, China also has produced several effective vaccines and is distributing them too developing countries.
China has already made commitments to supply hundreds of millions of doses to Brazil, Morocco, Indonesia and other developing countries. While it would be best if every country with manufacturing capacity could produce any vaccine, without regard to intellectual property rules, it is bizarre that a piece on access to vaccines in the developing world would fail to mention

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Quick Note on the Federal Reserve Board

25 days ago

When Pennsylvania Senator Pat Toomey, at the last minute, insisted on adding language to the pandemic rescue package, stripping the Fed of emergency powers, I was among those screaming “No Deal.”  I have not always been a huge fan of the Fed, but I felt this plan was a deliberate effort to sabotage an effective response to any financial/economic crises that may arise in a Biden administration.
Just for background, we know that the Republicans are perfectly fine with sabotaging the economy in order to hurt the political prospects of a Democrat in the White House. This is exactly what they did under President Obama, as they demanded recovery killing austerity as they feigned concern about deficits. Republican Senate Leader Mitch McConnell openly said that his job was to make Obama a one-term

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Vaccines, Vaccines, Vaccines – Why Doesn’t Everyone Have One or Two?

26 days ago

David Dayen, at The American Prospect, raises the question of why we didn’t do more planning, five, or six months, ago to ensure that when we had safe and effective vaccines, they could quickly be produced in huge quantities. Now we are being told that it won’t be until the summer or even fall until most people have been inoculated.  
If it’s not obvious, every day we delay mass availability of a vaccine comes with an enormous cost. We are seeing over two hundred thousand infections a day and close to three thousand deaths. Large sectors of the economy are being shut down to slow the spread. Disseminating a vaccine would take some time even if we had four hundred million doses sitting in a warehouse today (that’s two hundred million people, since they need two doses), but surely in that

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Bloomberg Is Concerned that Janet Yellen’s Dollar Policy May Lessen Wealth Inequality

27 days ago

You don’t have to look far, it’s literally the first sentence in a Bloomberg piece on dollar policy under incoming Treasury Secretary Janet Yellen.
“Janet Yellen once touted the benefits of a weaker greenback for exports, but as the incoming Treasury secretary, she faces pressure to return the U.S. to a “strong-dollar” policy — and may cause trembles on Wall Street if she doesn’t.”
For folks who don’t know, the vast majority of U.S. stock is held by the richest 10 percent of households in the country, with the richest 1 percent holding close to 50 percent of all stock wealth. The run-up in the stock market over the last four decades has been the main factor behind the rise in the inequality of wealth over this period. A drop in the stock market would reduce wealth inequality, which is

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Helping the NYT Understand Its Reporting: China’s Coverup Was Not the Cause of the Worldwide Spread of the Coronavirus

29 days ago

The NYT had a very interesting piece on efforts by China’s government to conceal and downplay the threat posed by the coronavirus. The piece reports on a number of Chinese government documents and directives that sought to minimize the threat posed by the pandemic.
However the paper seriously misrepresents the meaning of its research, telling readers:
“It may never be clear whether a freer flow of information from China would have prevented the outbreak from morphing into a raging global health calamity. But the documents indicate that Chinese officials tried to steer the narrative not only to prevent panic and debunk damaging falsehoods domestically. They also wanted to make the virus look less severe — and the authorities more capable — as the rest of the world was watching.”
The

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Getting Serious About Repealing Section 230

December 18, 2020

Section 230 of the 1996 Communications Decency Act has been getting considerable attention lately for almost all the wrong reasons. Donald Trump has been yelling that he wants the provision repealed, and even threatened to veto the main military spending bill for next year if it does not include the repeal of Section 230. (It doesn’t.)
Trump apparently believes that repealing Section 230 would prevent Facebook from pulling down posts from Trump and his racist friends. He also is upset that Twitter labels his absurd lies as being subject to dispute. In fact, repealing Section 230 would in no way prevent Facebook from pulling down posts it found objectionable or stop Twitter from putting warning labels on Trump’s nonsense tweets.
There are others who seem to believe that repealing Section

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China, Christmas, and the Coronavirus

December 17, 2020

As we hunker down this holiday season, waiting for our vaccines, or at least until the diffusion of the vaccines has slowed the spread of the pandemic, it’s worth thinking for a moment about an opportunity lost. Specifically, we lost an opportunity to have worldwide cooperation in the development of vaccines, bringing in not only Europe, but China.
While we now have two vaccines (counting Moderna’s) that have been approved by the FDA, China has one vaccine that has already been approved by the licensing agencies in the United Arab Emirates and Bahrain, and a second that is likely to soon be approved in several countries. Russia also has a vaccine to which it gave approval several months ago. It would be worth asking whether these vaccines could be saving lives here.
To be clear, no one

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And Now, for Something Somewhat Different

December 15, 2020

Dear Beat the Press Readers,
It’s that time of year again, when I hijack Dean’s blog to ask you to consider making a year-end donation to the Center for Economic and Policy Research. As many of you know, Dean pretty much gives his work away for free, which is great for the public but not so great for CEPR’s bottom line. Plus, it makes my job as CEPR’s Development Director a really difficult one. 
On the other hand, it’s inspiring that Dean lives up to the values he promotes. He doesn’t stray far from his principles, which are in line with his policy prescriptions – things like replacing patent monopolies with direct public funding for drug research, for example. So please consider donating to CEPR in Dean’s honor so that we can continue to share his work widely. As we look to recover from

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Important Addition to Edsall Column on the Politics of Resentment: Downward Mobility Was by Design

December 13, 2020

Thomas Edsall had an interesting piece last week on the politics of resentment. The gist of that a large portion of non-college educated whites are voting based on their fear of losing their social status.
While there is undoubtedly much truth to Edsall’s argument, there is an important point that Edsall leaves out. He tells readers:
“Voters in the bottom half of the income distribution face a level of hypercompetition that has, in turn, served to elevate politicized status anxiety in a world where social and economic mobility has, for many, ground to a halt: 90 percent of the age cohort born in the 1940s looked forward to a better standard of living than their parents’, compared with 50 percent for those born since 1980.”
The key point is that this level of hypercompetition, which is

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Choice in Health Care Plans and Medicare: It’s More Complicated

December 11, 2020

Margot Sanger-Katz had a very good NYT piece on the difficulty of choosing among health insurance plans. The gist of the piece is that people have a very difficult time choosing among plans, and even well-educated people often make choices that are bad for them. (The highlight is that Nobel Prize winning economist Paul Krugman could not sort through the plan options at his university job.)
After presenting evidence that most people make bad choices, and low-income people do worst, at the end of the piece she turns to Medicare and notes that over a third of the people receiving benefits choose a private Medicare Advantage plan rather than the tradition government plan. Sanger-Katz takes this to mean that people do value choice in health care plans.
However, it is inaccurate to present the

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Big Pharma Strikes Back

December 11, 2020

By Dean Baker and Arjun Jayadev
On Monday, we, along with Achal Prabhala, had a column in the New York Times arguing in support of a resolution put forward before the WTO by India and South Africa, which would suspend intellectual property rights related to vaccines and treatments during the pandemic. The main point is that these rights are slowing the diffusion of life-saving medicines in a crisis. Furthermore, since much or all the cost of developing these vaccines and treatments were picked by up by various governments, the drug companies would still be earning back their investment, plus a healthy profit, even with this suspension.
Not surprisingly, the pharmaceutical industry is not letting this proposal go unchallenged in public debate. Thomas Cueni, the director-general of the

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Beating Up on Finance

December 7, 2020

When I do one of my diatribes about how our protectionist barriers allow U.S. doctors to earn twice as much as doctors in other wealthy countries, I invariably get complaints from doctors and their friends asking why I don’t go after the really big bucks people on Wall Street. The answer of course is that I do, but the bloated paychecks on Wall Street are not a reason to pay an extra $100 billion a year ($750 per household) to doctors in the United States. But it is true that I haven’t beaten up on the financial sector for a while, and with Biden now putting together his administration, this would be a great time to take a few shots. 
First, we need some important background. Finance is an intermediate good, like trucking. It does not directly provide value to people like housing or health

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Journalism Lesson for Ron Elving at NPR’s Weekend Edition: You Don’t Know What Republican Members of Congress “Think” About Aid to State and Local Governments

December 5, 2020

I’m not sure why it is so hard for reporters to just tell us what politicians say and do, instead of telling us what they think and believe. This may be news for reporters, but politicians don’t always believe the things they say. For example, almost 90 percent of the Republicans in Congress will not say that Joe Biden won the election (2 say Donald Trump won), however I am quite certain that the overwhelming majority of these politicians understand that Biden’s 306 electoral votes give him the presidency.
Anyhow, our latest episode of reporters telling us what politicians “see” and “think” came on NPR’s Weekend edition, where Ron Elving told us that many Republican members of Congress are opposed to opposed to another pandemic relief package because they don’t “see” the need for more

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Repeal Section 230 and Never Again Have to Worry About What Mark Zuckerberg Thinks About Anything

December 3, 2020

Apparently Donald Trump has gotten into his head that he wants to repeal Section 230 of the 1996 Communications Decency Act. Apparently he is upset that Facebook and Twitter have pointed out that much of what he posts is not true.
It’s not clear what Trump thinks he would accomplish by repealing this provision of the law. Section 230 exempts Facebook and other Internet intermediaries from being liable for material that is passed along through their systems, either as ads or through individuals’ or groups’ posts. The loss of this protection would actually make it more likely that Facebook and Twitter would restrict false information coming from Donald Trump and his allies.
But the consequences of repealing Section 230 would go far beyond its impact on Donald Trump’s ability to spew crazy

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Lessons for Steve Rattner from Folks Who Actually Remember the 1990s

December 2, 2020

Steve Rattner used his NYT column to tell progressives that they should not try to pressure President-Elect Biden to implement progressive policies with noisy protests. He argues that compromise with the Republicans is necessary and argues that the Clinton presidency after the 1994 Republican takeover of Congress is a good model.
“Progressive history has not treated kindly President Bill Clinton’s decision to work with Republicans after their enormous midterm victory in 1994. But taxes got cut, the budget was balanced for the first time in decades, and the late 1990s is remembered as a period of strong prosperity.”
There are several important points here that apparently Mr. Rattner has forgotten. First, the economy was driven in the late 1990s by a stock bubble that crashed in 2000-2002.

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NYT Wants to Talk About Higher Wages, but Doesn’t Want to Talk About the Real Reasons Wages are Low

November 29, 2020

It’s good to see the New York Times making the case for higher wages in an editorial. Unfortunately, they get much of the story confused.
First off, the essence of the case is that higher wages will lead to more consumption, which will spur growth. This is true, but higher pay is not the only way to generate more demand. We also get more demand with larger budget deficits, lower interest rates, and a smaller trade deficit.
But that is the less important problem with the piece. The bigger problem is the assertion that the failure of pay to keep pace with productivity growth over the last four decades is due to higher profits.
“Wages are influenced by a tug of war between employers and workers, and employers have been winning. One clear piece of evidence is the yawning divergence between

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More Bad News About the Pandemic Recession: Longer Hours

November 28, 2020

We know that the economy is likely to get worse in the immediate future as the pandemic is spreading out of control in most parts of the country. However, the latest data on average weekly hours indicates we may be facing a longer-term issue that has not generally been anticipated.
In a normal recession, we see both a loss of jobs and a reduction in hours for those who managed to keep their jobs. The shortening of hours is a better way for employers to deal with reduced demand for labor since it keeps workers attached to their jobs. (This is the argument for work-sharing as an alternative to unemployment.) However, in this recession, we are actually seeing some lengthening of the average workweek, not the usual shortening.
The chart below compares the change in the average workweek from

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Why are the Free Traders All Protectionists? Vaccines and Sharing Knowledge (Fun for Thanksgiving)

November 25, 2020

After having Donald Trump in the White House for four years, we have gotten used to being lied to by people in high positions. Trump and his top staff have no qualms about telling us night is day, black is white, and two plus two equals five.
But we expect better from Team Reality: you know, the folks who write newspaper and magazine articles and opinion pieces, teach at major universities, and pass themselves off as great thinkers on the important issues of the day. But when it comes to discussions of the development of vaccines against the coronavirus, Team Reality is not doing much better than the Trumpers.
For the last couple of weeks, we have seen the celebration of reports of successful vaccine trials by Pfizer/BioNTech, Moderna, and Oxford-Astra Zeneca. Their success in such a short

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News for Bill Gates: Capitalism Is Still Capitalism Without Patent Monopolies

November 23, 2020

Like Donald Trump, Bill Gates apparently has a hard time understanding some things. The NYT had a major article on Gate’s role in developing vaccines against the coronavirus. At one point, the piece notes critics of Gates, who complain about how he has promoted patent monopoly financing of the development of vaccines and drugs, which allow these items to sell at prices that can be many thousand percent above the free market price.
The piece then presents Gates’ rejoinder:
“This capitalism thing — there actually are some domains that actually works in, …. North Korea doesn’t have that many vaccines, as far as we can tell.”
Gates apparently is not aware that the U.S. government paid for Moderna’s research and testing costs for its vaccines. While it also granted Moderna a patent monopoly on

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Fighting Disinformation: Maybe Reporters Can Try Putting Big Budget Numbers in Contexts that Make Them Understandable

November 22, 2020

Margaret Sullivan, the Washington Post’s media columnist, had a good piece on how reporters can try to combat the nonsense that right-wing politicians and media sources are spewing. I would like to add one item to her list, writing big-budget numbers in ways that are meaningful to readers.
While this seems stupidly simple, for some reason reporters refuse to do it.  The point is that when readers see that we are spending $70 billion on food stamps or $15 billion on foreign aid (roughly last year’s numbers), they think that we are spending lots of money in these areas. These sums are hugely larger than what most of us will see in our lifetime. This leads people to believe that a large portion of their tax dollars are going for these purposes. (Yes, I know some people are racist and want to

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How Many Lives Would Have Been Saved if We Had Collaborated on Vaccines With China?

November 21, 2020

We know that Republican office holders are not allowed to say that Joe Biden won the election. Apparently, there is a similar ban in place for news outlets when it comes to the question of the United States collaborating with China, and other countries, in developing vaccines against the pandemic.
In recent days, there have been articles in several major news outlets about how China vaccinated close to 1 million people, under an Emergency Use Authorization, for vaccines that are currently in Phase 3 clinical testing (here, here, here, and here). While the large-scale distribution of vaccines, that have not completed testing for safety and effectiveness, is probably not a good public health practice, none of these pieces raised any questions about whether the United States and other

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The Krugman Boom: Don’t Bank on It

November 20, 2020

I have largely been in agreement with Paul Krugman in his assessment of the economy over the last dozen years or so, but I think in his latest column he let the promise of a post-Trump era get the better of him. Krugman notes that the distribution of effective vaccines should allow people to return to their normal lives.
He argues that this will lead to a spending boom, as consumers have accumulated savings through the slump and will now be in a position to spend lots of money. As a model he points to the boom in 1983 and 1984 after the Fed lowered interest rates.
While I have not been one of the doomsayers predicting economic collapse, I can’t be as optimistic as Paul on this one. First, just to be clear, Krugman does not at all question the need for immediate and substantial stimulus. In

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