Two good ones in the news today:
(1) Brother Joe: (via Mark Calabria via the WSJ)
Speaking before a group of protesters in Zuccotti Park, Nobel economics prize winner Joseph Stiglitz urged on the crowd, telling them they are “right to be indignant.” Professor Stiglitz goes on to explain, correctly in my view, that we have a financial system of socialized losses and privatized gains.
What the good professor fails to mention is only a few years ago . . . he was denying this very fact. In 2004, along with Jonathan and Peter Orszag, Professor Stiglitz wrote a paper for Fannie Mae in which he “estimated” that the “risk to the government from a potential default on GSE debt is effectively zero.” The paper goes on to argue “that the expected cost to the government of providing an explicit government guarantee on $1 trillion in GSE debt is just $2 million.” Now I understand his Nobel is in economics, not math, but $2 million sounds nowhere near the actual cost so far of $160 billion.
(2) Keep it CLASS-y:
Last week, I wrote about the CLASS act. As you may recall, this long-term health insurance program was scored as a big 10-year deficit reducerbecause it combined early taxes with late expenditures. It was obvious that the late expenditures would quick overwhelm the early taxes but the CLASS act added some $80 billion to projected health-care savings which helped to pass the bill. Now the bill is passed, however, reality is setting in and the program has been scrapped. House Republicans are upset:
“Make no mistake,” Chairman Fred Upton (R-Mich.) said in announcing the hearing, “the CLASS program was tucked into the health care law to provide $86 billion in false savings, and this budget gimmick is a prime example of why Americans are losing faith in Washington. We plan to hold this hearing to get answers about why this sham was carried on for as long as it was, and what cancellation of the program means for the law’s growing price tag.”
I am sure the Occupiers are headed right for Stiglitz’s home (isn’t he in the top 1% too) and then for Washington, DC. Yep. By the way, my favorite quote from an Occupy Wall Streeter came from someone who “disputes” the IRS data which shows that the top 1% pay something close to 40% of all federal income taxes and that the “bottom 50%” pay something close to zero. She seriously said, “well, that’s what the government says.”
And her solution, like all the others, is to give that same institution more authority? Seriously, they are all talking about “changing the system.” What do they mean? I KNOW for a fact that none of them mean, “make it a truly competitive and voluntary system” and if that is not what they mean, what else could it mean. In any case, she refers us to “inequality.org” for the “real” data. Of course, most of that data is from … the government.