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ProSense

(116,464 posts) Wed Jan 16, 2013, 11:27 AM Jan 2013

Dean Baker: Fiscal Cliff Fantasies # 2134: Retail Sales Were Up 0.5 Percent in December

Fiscal Cliff Fantasies # 2134: Retail Sales Were Up 0.5 Percent in December

For some reason it was hard to find news about December retail sales in the papers. The Census Department reported they were up a healthy 0.5 percent. Remember all those stories from worried economists that told us how the fiscal cliff was already taking a toll. They told us about plunging confidence levels and consumers who were putting off purchases because of uncertainty about the resolution of the standoff.

Yes, some of us did ridicule the cliff mongers at the time. Consumers are used to the boys and girls in Washington getting silly. They will adjust their spending when they actually feel the impact in their paycheck.

Anyhow, some of us were right. Get out a heaping helping of ridicule for everyone else.

http://www.cepr.net/index.php/blogs/beat-the-press/fiscal-cliff-fantasies-2134-retail-sales-were-up-05-percent-in-december

File under "reports deficit hawks ignore," along with this:

The Mostly Solved Deficit Problem

The Center on Budget and Policy Priorities has a graph:

The vertical axis measures the projected ratio of federal debt to GDP. The blue line at the top represents the projected path of that ratio as of early 2011 — that is, before recent agreements on spending cuts and tax increases. This projection showed a rising path for debt as far as the eye could see.

And just about all budget discussion in Washington and the news media is laid out as if that were still the case. But a lot has happened since then. The orange line shows the effects of those spending cuts and tax hikes: As long as the economy recovers, which is an assumption built into all these projections, the debt ratio will more or less stabilize soon.

CBPP goes on to advocate another $1.4 trillion in revenue and/or spending cuts, which would bring the debt ratio at the end of the decade back down to around its current level. But the larger message here is surely that for the next decade, the debt outlook actually doesn’t look all that bad.

<...>

So you heard it here first: while you weren’t looking, and the deficit scolds were doing their scolding, the deficit problem (such as it was) was being mostly solved. Can we now start talking about unemployment?

http://krugman.blogs.nytimes.com/2013/01/10/the-mostly-solved-deficit-problem/

4 replies

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Highlight:

Dean Baker: Fiscal Cliff Fantasies # 2134: Retail Sales Were Up 0.5 Percent in December (Original Post) ProSense Jan 2013 OP

Kick for ProSense Jan 2013 #1

Thanks! Scurrilous Jan 2013 #2

The preferred narrative. hay rick Jan 2013 #3

Exactly. I've ProSense Jan 2013 #4

ProSense

(116,464 posts)

1. Kick for

Reply to ProSense (Original post)

Wed Jan 16, 2013, 12:13 PM

Jan 2013

let it sink in.

Scurrilous

(38,687 posts)

2. Thanks!

Reply to ProSense (Original post)

Wed Jan 16, 2013, 12:52 PM

Jan 2013

hay rick

(7,633 posts)

3. The preferred narrative.

Reply to ProSense (Original post)

Wed Jan 16, 2013, 01:36 PM

Jan 2013

The media seems more interested in documenting the hardships associated with the expiration of the payroll tax holiday- it's an Obama tax hike, dontcha know!

Another part of the story the media doesn't love: http://www.democraticunderground.com/10022115611
Slowing growth in Medicare spending would significantly reduce future debt projections and that would definitely muddle the preferred fiscal cliff doomsday scenario.

Link to the CBPP article that Krugman pulled the graph from:http://www.cbpp.org/cms/index.cfm?fa=view&id=3885

K&R

ProSense

(116,464 posts)

4. Exactly. I've

Reply to hay rick (Reply #3)

Wed Jan 16, 2013, 01:44 PM

Jan 2013

"The media seems more interested in documenting the hardships associated with the expiration of the payroll tax holiday- it's an Obama tax hike, dontcha know! "

...noticed that. What's bizarre is that it has nothing to do with wanting the payroll tax holiday to come back, but the narrative attempts to keep alive the notion that the economy is ailing and this tax increase, which of course means, via twisted logic, more deficit reduction is needed.

Healthcare cost controls are a huge key to reducing the deficit.

It’s Health Care Costs, Stupid

<...>

In today’s column, I tried to emphasize a point that is weirdly absent from public discourse, at least among VSPs: the favorite VSP “solution” to the long-run budget deficit, raising the Medicare eligibility age, actually yields only minor savings. The point is that if you want to control Medicare costs, you can’t do it by kicking a small number of relatively young seniors off the program; to control costs, you have to, you know, control costs.

And the truth is that we know a lot about how to do that — after all, every other advanced country has much lower health costs than we do, and even within the US, the VHA and even Medicaid are much better at controlling costs than Medicare, and even more so relative to private insurance.

The key is having a health insurance system that can say no — no, we won’t pay premium prices for drugs that are little if any better, we won’t pay for medical procedures that yield little or no benefit

But even as Republicans demand “entitlement reform”, they are dead set against anything like that. Bargaining over drug prices? Horrors! The Independent Payment Advisory Board? Death panels! They refuse to contemplate using approaches that have worked around the world; the only solution they will countenance is the solution that has never worked anywhere, namely, converting Medicare into an underfunded voucher system.

- more -

http://krugman.blogs.nytimes.com/2012/12/03/its-health-care-costs-stupid/

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