The national debt is rising—not declining

By James D. Agresti
October 31, 2013

In a recent Los Angeles Times article entitled “Four facts about the national debt you may not know,” assistant managing editor David Lauter claimed that “the U.S. debt burden is starting to decline. That’s right – it’s going down, not up.”

Likewise, Michael Hiltzik, a Pulitzer Prize-winning business columnist of the Los Angeles Times, soon thereafter wrote that the national debt has “been falling recently as a percentage of gross domestic product and is expected to keep doing so for the next few years at least.”

These statements are demonstrably false, and they are accompanied by other misleading claims that mirror partisan talking points.

First, for clarification, note that Lauter and Hiltzik don’t refer to the full national debt but only to the debt that is “publicly held.” This is a partial measure of the national debt that excludes money owed to federal programs with independent budgets, like Social Security. Lauter and Hiltzik also measure debt as a portion of the nation’s annual economic output (gross domestic product or GDP), which is a common practice among federal agencies and economists. For the sake of consistency, all of the data below on the national debt uses these same measures used by the LA Times.

Both Lauter and Hiltzik linked to reports from the Congressional Budget Office (CBO) as alleged proof for their claims that debt is falling, but as shown in the graph below of CBO data from September 2013, federal debt is currently at the highest levels of the past 50 years and is still growing:

Ironically, the cover page of the CBO report cited by Lauter features a chart that clearly shows the debt is rising, and the same is true of the CBO report cited by Hiltzik.

Looking into the future, Hiltzik declared that the debt will keep declining “for the next few years at least,” according to CBO projections. Similarly, Lauter stated that CBO projects the debt will stay level for the next year and then decline by four percentage points by 2018.

Both of those assertions are misleading, and they echo rhetoric used by President Obama and Paul Krugman. The problem with these claims is that they are based on CBO’s “baseline” projections, which employ certain assumptions that require significant changes in current policy.

For example, CBO’s baseline projections assume that Medicare will implement a 25% cut in payment rates to physicians starting on January 1, 2014. This cut is required under a 1997 federal law, but as the 2013 Medicare Trustees Report explains, “it is a virtual certainty that lawmakers … will override this reduction as they have every year since 2003.” This is because Medicare already pays doctors 20% below private insurance rates, and another 25% reduction would cause many doctors to stop accepting Medicare patients, as has occurred with Medicaid.

CBO also produces projections based upon “current policy,” which don’t include the unrealistic assumptions inherent in the claims of Lauter, Hiltzik, Krugman, and Obama. When CBO accounts for the economic effects of taxes, government spending and debt, these projections show the debt growing in 2014, staying level in 2015, declining in 2016 and 2017, and then climbing to unprecedented levels:

In total, CBO’s more realistic projections show that the federal government’s current policies will leave the next generation of Americans with an escalating debt that permanently dwarfs the previously unprecedented debt spike from World War II.

Because of “unanticipated changes in economic conditions” and “a host of other factors that affect federal spending and revenues,” CBO has emphasized that actual budget outcomes could be different from projections. Nevertheless, CBO has also explained that “under a wide range of possible assumptions about some key factors that influence federal spending and revenues, the budget is on an unsustainable path.”

Another patent falsehood in Lauter’s article is his claim that “the debt grew rapidly during most of President George W. Bush’s tenure and President Obama’s first term as the government borrowed money to fight two wars and the deepest recession in more than half a century. But the rapid growth ended more than a year ago.”

In reality, as the CBO data shown above reveals, the debt grew more rapidly over the recently-ended fiscal year (Oct 1. 2012 – Sept. 30, 2013) than it did in seven of the nine fiscal years that overlapped Bush’s presidency. Also, during one of those two years, Barack Obama was president for more than two thirds of the year. Nevertheless, linking the national debt to any particular president fails to account for the actions of Congress, the impacts of preexisting laws, and numerous other variables.

Finally, Lauter repeats a talking point of Krugman and other left-leaning professors who claim that there is little need for concern over the debt, because rapid economic growth in the wake of World War II indicates that “a large debt doesn’t necessarily strangle an economy.”

What Lauter and the others neglect to mention is that the debt from World War II (1941-1945) was fleeting because it was quickly addressed through drastically reduced government spending. For example, by 1951, federal debt was already 11% lower than our current debt, and federal spending was consuming 27% less of our economy than in 2012.

In contrast, the federal government has currently accumulated more than $67 trillion in debts, liabilities, and unfinanced obligations. This amounts to $215,311 for every person living in the U.S. and is greater than the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles. As CBO projections show, if the federal government continues its current polices, these liabilities and unfinanced obligations will become concrete debt.

Moreover, politicians and others who have supported increased government borrowing can easily deflect the blame for their actions because the consequences of government debt can manifest in ways that are not obvious to many voters, such as lower wages, weak economic growth, inflation, higher taxes, reduced government benefits, or combinations of such results. In the words of the U.S. Government Accountability Office, “the costs of federal borrowing will be borne by tomorrow’s workers and taxpayers” and “ultimately may reduce or slow the growth of the living standards of future generations.”

Has government turned us into a nation of makers and takers?

By James D. Agresti
September 16, 2013

In a recent article and accompanying video produced by the Tax Policy Center, tax analyst Roberton Williams reports that 43% of Americans won’t pay federal income taxes this year. Williams, a former deputy assistant director for the Congressional Budget Office, also states that “many commentators” have twisted such statistics to suggest “that nearly half of all households paid no tax at all when, in fact, nearly everyone pays something.”

He emphasizes that regardless of whether someone pays federal income taxes, almost all Americans pay “Social Security and Medicare payroll taxes, state and local sales taxes, excise taxes, or some other levy.” In the video, he adds that “pundits and politicians” have misused data about those who don’t pay federal income taxes “to portray a world of makers and takers,” where roughly half of Americans pay for benefits that go to the other half.

The article and video have been widely cited by organizations such as CNBC, Fox News, the Drudge Report, the Committee for a Responsible Federal Budget, and the Illinois Policy Institute.

Williams is correct that the federal income tax is just one of many taxes, and hence, it is misleading to ignore other taxes when discussing makers and takers. However, he ignores another crucial aspect of this issue, which is that the person who pays $1,000 in taxes and receives $10,000 in government benefits is a taker on net. Even though this person pays “something,” as Williams notes, he receives far more from government than he pays in taxes.

A 2012 report from the Congressional Budget Office (CBO) provides data that speaks to this issue. These are estimates of the household distribution of federal taxes, market income, and government transfers from 1979-2009. To define these terms, market income comes from work and investments, while government transfers include “cash payments and in-kind benefits from social insurance and other government assistance programs.”

The report is not fully inclusive because it does not account for state and local taxes due to “the difficulty of estimating them for individual households.” Also, the analysis excludes about 5% of federal taxes (estate and gift taxes, customs duties, and other miscellaneous receipts). Nonetheless, the report accounts for virtually all government transfers and two thirds of all taxes paid in the U.S. from 1979-2009. Notably, three quarters of government transfers over this period came from the federal government. Thus, the report accounts for the vast majority of taxes that fund government transfers.

The CBO data, which is analyzed below, shows that in 2009 roughly half of U.S. households received more in government transfers than they paid in federal taxes. For example, the lowest-earning 20% (or quintile) of households earned an average of $7,600 in market income, received $22,900 in government transfers, and paid $0 in federal taxes. Similar data for all the quintiles are graphed here:

It is important to note that the figures above are averages, and not every household in these income groups receives or pays what is shown. It is also important to note that there are substantial changes among individual households over time. People tend to pay more taxes during their working years and receive more transfers as they become eligible for Social Security and Medicare.

Nonetheless, over the past three decades, there has been a clear trend of increasing government dependency. In 1979, only the lowest-earning 20% of households paid less in federal taxes than they received in government benefits. Since then, both the second and middle quintiles have moved into this territory:

In an email to Just Facts, CBO stated that it currently does not have a “specified release date” for such data in more recent years. However, when the data is released, it will likely show that the 2011/2012 payroll tax holiday created markedly larger proportions of government transfers to taxes for the lower income groups.

Conversely, in 2013, the expiration of the payroll tax holiday and other tax breaks, along with the waning of the Great Recession, may move the middle quintile back into the category of those who pay more in federal taxes than they receive in government benefits.

The modern increase in government dependency is even more vivid when comparing changes in market income with changes in government transfers. Between 1979 and 2009, all quintiles saw larger percentage increases in government transfers than market income. For example, over this period (while accounting for inflation):

• the lowest-earning quintile of households increased their market income by 13%, but their gross income rose by 60% due to a 135% increase in government transfers.
• the middle quintile increased their market income by 7%, but their gross income rose by 21% due to a 235% increase in government transfers.
• the highest quintile increased their market income by 63%, but their gross income rose by 64% due to a 173% increase in government transfers.

These increasing government transfers have been caused by many factors, such as general economic malaise from the Great Recession, escalating healthcare expenditures, more people receiving Medicaid and disability benefits, and increases in life expectancy that have raised spending on Social Security and Medicare. Accordingly, during the past half century, social programs have consumed a rising share of the federal budget, and CBO projects that this trend will continue for the foreseeable future.

In summary, when addressing the issue of makers and takers, statements about how many Americans don’t pay federal income taxes can be misleading if further context is not provided. Likewise, declaring that “nearly everyone pays something” can be just as misleading if one does not also consider how much they pay and how much they take.

Additional reading:
High-income earners pay a much higher federal tax rate than the middle class
What portion of the federal budget is spent on the military?

Can we prevent a debt-driven economic collapse without reforming entitlements?

Debt versus deficit: Obama’s bait and switch

By James D. Agresti
August 26, 2013

In a recent speech at Binghamton University in which he lobbied for spending on various welfare programs, President Obama claimed that “we don’t have an urgent deficit crisis. The only crisis we have is one that’s manufactured in Washington, and it’s ideological.”

Continuing, he declared that his political opponents fabricated this crisis so they can argue “that we shouldn’t be helping people get health care, and we shouldn’t be helping kids who can’t help themselves and whose parents are under-resourced — we shouldn’t be helping them get a leg up.”

To support his point, Obama compared the current annual deficit to those of recent years. “The deficit has been cut in half since 2009 and is on a downward trajectory,” said Obama to his audience’s applause. However, a broad factual perspective shows the situation is not as rosy as the president paints it out to be.

The deficits of recent years have been the largest in modern history, peaking at 10.1% of the entire nation’s economy (GDP) in 2009. For context, the 2009 deficit was 68% larger than any other deficit since the World War II era, and it was 6.1 times larger than the average deficit from 1947-2008 (see graph below).

So although the White House’s projected deficit for 2013 (4.7% of GDP) is less than half of the 2009 deficit, it is still 3.6 times higher than the average of the past 20 years, 3.2 times higher than the average of the past 40 years, and 4.2 times higher than the average of the past 60 years.

More importantly, Obama dodged the crux of this issue by avoiding any mention of the national debt. This is crucial because the financial condition of the federal government is not just a function of how much it borrows in any given year, but more significantly, how much it has borrowed in total.

In the same Binghamton University speech in which Obama claimed that federal finances are healthy, he repeatedly addressed the issue of student loan debt. Concerning this subject, it would have been ridiculous if he had told his audience, “There is no need to worry about this debt because once you get out of college, your annual student loan deficit will quickly decline.” Such reasoning is transparently illogical, but it is implicit in the President’s portrayal of the federal government’s finances.

In striking contrast, on March 16, 2006, then-Senator Obama gave a speech on the floor of the U.S. Senate in which he denounced “reckless fiscal policies” that had driven federal deficits to “historically high levels.” Among other things, he stated that:

• “America’s debt weakens us domestically and internationally.”
• “America has a debt problem and a failure of leadership.”
• “Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren.”

On the day Obama gave that speech, the national debt was $8.3 trillion or 61% of the nation’s economy. The national debt now stands at $16.7 trillion or 101% of GDP. Thus, even after adjusting for economic growth (which accounts for population increases and inflation), the current debt is 66% larger than the debt Obama condemned in 2006.

Regarding the implications of this debt, in March 2013, the Congressional Budget Office (CBO) reported that the current national debt is “very high by historical standards” and threatens “serious negative consequences” for the following reasons:

If the amount of debt held by the public remains so large, federal spending on interest payments will increase substantially when interest rates rise to more normal levels. Because federal borrowing generally reduces national saving, the stock of capital assets, such as equipment and structures, will be smaller and aggregate wages will be less than if the debt were lower. In addition, lawmakers will have less flexibility than they ordinarily might to use tax and spending policies to respond to unanticipated challenges. Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.

In sum, CBO cautioned that the national debt—if left unaddressed—is going to suppress workers’ wages, degrade the government’s capacity to weather challenges, and may trigger a financial crisis. Furthermore, the same report projected that under current polices, publicly-held federal debt is going to rise by 20% of GDP over the next 10 years. Nevertheless, the President characterized CBO’s projections by stating, “We don’t have an immediate crisis in terms of debt. In fact, for the next 10 years, it’s gonna be in a sustainable place.”

Additional reading:
Blame for the national debt
Do large national debts harm economies?

Federal government finances deteriorated by $6.5 trillion in 2012

Has global warming turned the North Pole into a lake?

By James D. Agresti
July 29, 2013

Last week, Forecast the Facts, a self-described “grassroots human rights organization dedicated to ensuring that Americans hear the truth about climate change,” published the following picture of the “North Pole” taken on July 22, 2013:

In addition to inserting the text shown above, Forecast the Facts (FtF) publicized this picture by asserting that the “lake” had formed “due to unprecedented melting Arctic sea ice,” and by issuing an appeal on its Facebook page that says, “Let’s make sure this is one for the history books.”

The organization’s Facebook fans and their friends responded by sharing this picture more than 15,000 times—many times more than the New York Times’ 3.3 million Facebook fans share most of its posts. This is even more shares than Barack Obama’s 36 million fans and Lady Gaga’s 58 million give to the majority of their posts.

Despite the enthusiasm for FtF’s post, conditions like those shown in the picture are not “unprecedented.” They have been observed for as long as mankind has had the technology to visit the North Pole in the summer. Furthermore, the picture actually does not show the North Pole but an area that is more than 300 miles from it.

The first individuals to visit the surface of the North Pole region during summer were the crew of the USS Skate, a nuclear submarine that surfaced 40 miles from the North Pole in August of 1958. In the May 4th, 1959 issue of Life magazine, James Calvert, the captain of the Skate, described the ice cover by saying that “we repeatedly found open water where we could surface.”

Likewise, in the June 13, 1963 issue of New Scientist, Dr. Waldo Lyon, a U.S. Navy sonar specialist and onboard scientist for several submarine missions to the Artic and North Pole, described the summertime ice conditions as such: “During the summer, open water spaces appear everywhere between the floes and form holes in the ice canopy through which the submarine can readily reach the surface.”

To wit, below is a picture of the Skate and the USS Seadragon at or very near the North Pole in August of 1962. Several credible sources place this historic meeting of submarines “at the North Pole,” but odds are they were at least a few miles away. Just Facts has requested the exact coordinates from the Naval History & Heritage Command and is awaiting a response.

Beyond the fact that the picture touted by FtF as “one for the history books” is nothing out of the ordinary, the organization offered no documentation for the picture. Just Facts was able to locate it among the webcam archives of the North Pole Environmental Observatory at the University of Washington.

Per correspondence with the observatory, the relevant webcam is installed on “PAWS Buoy 819920.” The tracking data for this buoy shows that the picture was taken while it was located at a latitude of 84.838°N, which is 310 nautical miles or 356 miles from the North Pole. This is about the latitudinal distance between Washington, DC and Brunswick, Maine.

Along with FtF, a number of media outlets have promoted this story or published others in the same vein:

Huffington Post: “North Pole Melting Leaves Small Lake At The Top Of The World”
Huffington Post Facebook page: “Now THIS is a wakeup call!”
Newsmax: “Lake Forms as Ice Melts at the Top of the World”
Common Dreams: “The Scariest Lake in the World Sits at the North Pole”
New York Post: “North Pole is now a lake”
Daily Kos Facebook page: “Global warming pollution has melted the Arctic and created a lake at the top of the North Pole sea ice.”
Forbes: “Melting Polar Ice Cap Created A Lake On Top Of The World”
Relevant magazine: “[A]t some point, temperatures at the North Pole got balmy enough to create a lake where there should be a brick of frozen ice.”
Yahoo News: “In what has now become an annual occurrence, the North Pole’s ice has melted, turning the Earth’s most northern point into a lake.”
Toronto Star: “Startling images show melting North Pole turning into a lake.”

Most of these stories avoid the explicit falsehoods of FtF, but none of them explain that such conditions have prevailed for at least half a century and possibly much longer.

Interestingly, the New York Times and other media outlets made a very similar error 13 years ago. In the summer of 2000, James J. McCarthy, a Harvard oceanographer, co-chair for Intergovernmental Panel on Climate Change, and a lead author for the Arctic Climate Impact Assessment, was serving as a guest lecturer on an Arctic tourist cruise. The cruise ship encountered an area of open ocean at the North Pole, and McCarthy informed the New York Times, which ran a front-page story claiming that:

• “an ice-free patch of ocean about a mile wide has opened at the very top of the world, something that has presumably never before been seen by humans….”
• the “last time scientists can be certain the pole was awash in water was more than 50 million years ago.”
• this “is more evidence that global warming may be real and already affecting climate.”

The day after that story was published, other news outlets like the Associated Press and U.K. Guardian followed suit with headlines declaring, “Extraordinary sight greets North Pole visitors: Water,” and “First ice-free North Pole in 50m years.”

The next day, the London Times published an article stating that “a leading British Arctic scientist said that the emergence of ice-free areas was nothing new and that it had been happening for thousands of years.” The scientist, Dr. Peter Wadhams, director of the Scott Polar Institute in Cambridge, stated, “Claims that the North Pole is now ice-free for the first time in 50 million years [are] complete rubbish, absolute nonsense.”

Eight days later, the New York Times issued a correction affirming that:

• the original article “misstated the normal conditions of the sea ice” at the North Pole.
• a “clear spot has probably opened at the pole before….”
• 10% of the “high Arctic region” is “clear of ice in a typical summer.”
• “The lack of ice at the pole is not necessarily related to global warming.”

It remains to be seen whether the latest purveyors of this misinformation will issue a correction like the Times.

Additional reading:
Global warming facts
Will global warming flood the coasts of the United States?

Do those who doubt climate catastrophism lack scientific credibility?

When do humans begin to feel pain?

By James D. Agresti
June 25, 2013

The U.S. House Of Representatives recently passed a bill that would restrict abortions starting at 20 weeks after fertilization, or the stage of development shown in the picture on the right. Formally called the “Pain-Capable Unborn Child Protection Act,” the legislation has stirred debate over when humans begin to feel pain. The act passed with 97% of Republicans voting for it, and 97% of Democrats voting against it. President Obama has issued a veto threat.

The bill states “there is substantial medical evidence that an unborn child is capable of experiencing pain at least by 20 weeks after fertilization, if not earlier.” However, Dr. Stuart Derbyshire, the director of Pain Imaging at the U.K.’s University of Birmingham and a frequently cited authority on this issue, has affirmed that humans cannot truly feel pain until one year after birth. Contrastingly, Dr. Maureen Condic, an associate professor of neurobiology and anatomy at the University of California, Berkeley, recently testified before a congressional subcommittee that humans feel pain “in some capacity” starting “from as early as 8 weeks of development.”

In sorting out these conflicting assertions and others on the continuum between them, there are certain scientific facts about human development that provide a basic foundation for understanding this issue:

• In the 6th and 7th weeks after fertilization, the brain’s “cerebral hemispheres and cerebellum are developing.” [Gray's Anatomy: The Anatomical Basis of Medicine and Surgery]
• By 7 weeks, pain “sensory receptors appear in the perioral [mouth] area.” [New England Journal of Medicine]
• By 10 weeks, “All components of the brain and spinal cord are formed, and nerves link the stem of the brain and the spinal cord to all tissues and organs of the body.” [Encyclopedia of Human Biology]
• By 12 weeks, “the fetus sucks its thumb, kicks, makes fists and faces, and has the beginnings of baby teeth.” [Human Genetics: Concepts and Applications]
• By 14 weeks, “Limb movements, which occur at the end of the embryonic period (8 weeks), become coordinated….” [Before We Are Born: Essentials of Embryology and Birth Defects]
• By 16 weeks, “Eye movements begin.” [Embryology: Board Review Series]
• By 18 weeks, pain sensory receptors spread to “all cutaneous [skin] and mucous surfaces….” [New England Journal of Medicine]
• By 20 weeks, the fetus “now sleeps and wakes and hears sounds.” [American Medical Association Complete Medical Encyclopedia]

Additionally, evidence from the burgeoning field of fetal surgery has shown that preborn humans react to physical provocations (like being jabbed with a needle) in the same ways as children and adults, which includes releasing stress hormones, shunting blood to the brain, and pulling away from the source of the provocation. Per a 2012 paper in the journal Fetal Diagnosis and Therapy, “A physiological fetal reaction to painful stimuli occurs from between 16 and 24 weeks’ gestation on.” Likewise, a 2001 paper in the journal Anesthesiology explains that “the human fetus from 18-20 weeks elaborates pituitary-adrenal, sympatho-adrenal, and circulatory stress responses to physical insults.”

Taken together, the facts above would seem to imply that by 20 weeks or earlier, humans have the capacity to feel pain. However, some scientists have argued otherwise using two main lines of reasoning. Both of these have critical flaws.

The first argument centers upon the development of the cerebral cortex, which is the portion of the brain associated with functions such as reasoning, language, and memory. In the words of a panel convened by the U.K.’s Royal College of Obstetricians & Gynecologists, the cortex is essential to “perception or awareness,” and therefore, a connection from the body’s pain receptors to the “cortex is necessary for pain perception.” Since these connections “are not intact before 24 weeks of gestation,” the “fetus cannot experience pain in any sense prior to this gestation.”

This issue gets complicated, but in short, there may well be communication between the body’s pain receptors and the cortex long before 24 weeks; it’s just that the connections and cortex are not fully developed. As explained in a 2012 paper in Fetal Diagnosis and Therapy, “From 16 weeks’ gestation pain transmission from a peripheral [pain] receptor to the cortex is possible and completely developed from 26 weeks’ gestation.” Per correspondence with an author of this paper, these developmental milestones (16 weeks and 26 weeks) are measured from the last menstrual period, which equates to 14 weeks and 24 weeks after fertilization.

Far more importantly, the claim that the cortex is essential to “perception or awareness” has been undercut by recent research, which has shown that children born with little or no functional cortical tissue (a condition called hydranencephaly) do, in fact, have perception and awareness. Although the cortex is commonly called the “organ of consciousness,” a 2006 paper in the journal Behavioral and Brain Sciences has shown that:

• “An infant born with hydranencephaly may initially present no conspicuous symptoms,” and “occasionally the condition is not diagnosed until several months postnatally, when developmental milestones are missed.”
• These children are not only awake and often alert, but show responsiveness to their surroundings in the form of emotional or orienting reactions to environmental events…. They express pleasure by smiling and laughter, and aversion by ‘fussing,’ arching of the back and crying (in many gradations), their faces being animated by these emotional states. … The children respond differentially to the voice and initiatives of familiars, and show preferences for certain situations and stimuli over others, such as a specific familiar toy, tune, or video program….”
• “The evidence and functional arguments reviewed in this article are not easily reconciled with an exclusive identification of the cerebral cortex as the medium of conscious function. … The tacit consensus concerning the cerebral cortex as the ‘organ of consciousness’ would thus have been reached prematurely, and may in fact be seriously in error.”

In summarizing the above evidence along with other facts relevant to this issue, a 2006 article in Pain: Clinical Updates states, “Multiple lines of evidence thus corroborate that the key mechanisms of consciousness or conscious sensory perception are not dependent on cortical activity. Consistent with this evidence, the responses to noxious stimulation of children with hydranencephaly are purposeful, coordinated, and similar to those of intact children.”

The second argument, as articulated by the Royal College of Obstetricians & Gynecologists (RCOG), is that “the fetus never experiences a state of true wakefulness in utero and is kept, by the presence of its chemical environment, in a continuous sleep-like unconsciousness or sedation.” Ten pages into RCOG’s study, it is disclosed that this conclusion is “derived largely from observations of fetal lambs.”

Opposing that line of evidence are studies of humans that have found conscious, deliberate behaviors from as early as 14 weeks gestation. Revealingly, in a 2010 study published in the journal PLoS ONE, a cross-disciplinary team of scientists used 4-D ultrasound to record and scrutinize the interactions of preborn twins. They found that:

• “Starting from the 14th week of gestation twin fetuses plan and execute movements specifically aimed at the co-twin.”
• These “early contacts do not occur accidentally, but reflect motor planning.”
• “These findings force us to predate the emergence of social behavior….”

An article in the journal Science summarized the study as follows: “The findings suggest that twin fetuses are aware of their counterparts in the womb and prefer to interact with them.”

In summary, the scientific evidence converges upon the conclusion that preborn humans can feel pain from 20 weeks after fertilization or earlier. While this does not rise to the level of 100% certainty, it rests upon factually solid ground.

Additional reading:
Most late-term abortions are not done for medical reasons
Abortion, the Bill of Rights, and the Constitution

Does the Obama mandate force you to pay for abortions?

Social Security Trust Fund to begin declining in 2014, not 2021

By James D. Agresti
June 6, 2013

The newly released Social Security Trustees Report—which is the authoritative source for the program’s finances—states that its trust fund will “continue to grow through 2020.” This claim has been repeated by the likes of US News & World Report, the National Academy of Social Insurance, the Center on Budget and Policy Priorities, and the Strengthen Social Security Coalition.

That claim, however, is misleading because it ignores the effects of inflation, which are projected to overrun all trust fund gains and contribute to an ongoing decline that begins in less than a year. This is seven years earlier than what is being reported.

When discussing long-term financial projections, it is vital to account for inflation in order to paint an accurate picture. Per the Journal of Accountancy, financial statements that fail to account for inflation do “not deliver a message that is completely true and fair.” Likewise, the textbook Cost Accounting: Principles and Practice explains that “inflation accounting presents a true and correct view of the financial state of affairs of a firm.” Similarly, the academic work Quantitative Investing for the Global Markets affirms that “we should be concerned not with nominal quantities [i.e., those not adjusted for inflation] but with real ones.”

The Social Security Trustees Report presents inflation-adjusted trust fund projections on page 207 of this 274-page report. These projections reveal that the trust fund will start dwindling in 2014. However, the first 11 pages of this report state three times that the trust fund will grow through 2020. The same message is reinforced in a Social Security Administration press release, which states that “trust fund reserves are still growing and will continue to do so through 2020.”

This graph of trust fund assets shows the difference between accounting for inflation and ignoring it:

As shown above, the difference doesn’t affect when the trust fund is exhausted, but rather, when it begins deteriorating. This has practical implications for who will bear the financial burden of fixing Social Security. Generally speaking, the longer a fix is delayed, the more this burden will fall on younger generations, and the greater it will be.

Allegations that the trust fund will rise for the next seven years tend to weaken support for timely reform, but as Don Fuerst, a senior fellow of the American Academy of Actuaries, recently explained to Congress:

Addressing the program’s solvency now would allow a fuller range of options to be considered, many of which could be more modest in their adjustments, such as slow phase-ins over many years. Deferring efforts to address the program’s solvency to the next decade or beyond will more profoundly affect beneficiaries and the taxpaying public.

It is important to note that all of the projections above are based upon the Social Security Administration’s intermediate projections, which are tenuous. Although these projections “reflect the Trustees’ best estimates of future experience,” the Trustees emphasize that “significant uncertainty” surrounds these projections. This means that the trust fund may start declining at an earlier or later date.

Regardless of when the decline actually begins, those who claim that the trust fund is projected to grow through 2020 are spreading a misleading narrative that may bring financial harm to younger Americans.

Additional reading:
Raising payroll taxes to save Social Security will cost the average worker $73,000
Trust Fund Assets Consist of Federal Debt

Do those who doubt climate catastrophism lack scientific credibility?

By James D. Agresti
May 20, 2013

Heat-Trapping Gas Passes Milestone, Raising Fears,” declared a recent front page headline in the New York Times. The event that served as the catalyst for this article was the atmospheric concentration of carbon dioxide reaching 400 parts per million (ppm), up from 288 ppm or by 39% since the dawn of the industrial revolution in the mid-1800s.

Painting an ominous picture of the situation, the reporter, Justin Gillis, quoted scientists who proclaimed that:

• reaching this milestone “feels like the inevitable march toward disaster,”
• “we are quickly losing the possibility of keeping the climate below what people thought were possibly tolerable thresholds,”
• “we have failed miserably in tackling this problem,”
• “I feel like the time to do something was yesterday,” and
• “It’s scary.”

Amidst these dire assessments, Gillis quoted and quickly rebutted a lone dissenting voice to these scientists: Dana Rohrabacher, a Republican congressman from California. Simultaneously, Gillis alleged that “climate-change contrarians” have “little scientific credibility.” Based upon such reporting, one would think that no credible scientist doubts that manmade global warming is a grave threat to the future of the planet.

That narrative, however, is at odds with the fact that 9,029 Ph.D. scientists, including 3,805 atmospheric, earth, and environmental scientists, have signed a petition stating, “There is no convincing scientific evidence that human release of greenhouse gasses is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate.”

In this article, Gillis made no attempt to support his allegation that “climate contrarians” have “little scientific credibility,” but in reply to an email from Just Facts, he referred to “the Anderegg study and several more.” These studies, however, do not substantiate his storyline. At best, they show that the most frequently published climate scientists think the earth has warmed over the past century, and human activity is responsible for most of this warming. Furthermore, even those relatively modest conclusions are undermined by significant flaws in the studies.

The Anderegg study

In 2010, the Proceedings of the National Academy of Sciences published a study by Bill Anderegg and others entitled “Expert credibility in climate change.” For this study, the authors compared the scientific expertise of 1,372 climate researchers that they labeled as either “convinced by the evidence” for manmade global warming or “unconvinced by the evidence.”

They defined “convinced” researchers as those who embrace the views that manmade “greenhouse gases have been responsible for ‘most’ of the ‘unequivocal’ warming of the Earth’s average global temperature over the second half of the 20th century.” Those words are paraphrased from a massive 2007 report on the science of climate change by the Intergovernmental Panel on Climate Change (IPCC).

The Anderegg study found that more than 90% of “convinced” researchers had at least 20 publications listed in Google Scholar under a search for the word “climate,” as compared to only 20% of “unconvinced” researchers. They also found that among those with at least 20 publications, convinced researchers had an average of 119 climate publications in Google Scholar, as compared to an average of 60 publications for unconvinced researchers.

If one uncritically accepts the results of this study, it shows clear numerical superiority in Google Scholar for convinced researchers, but this is a far cry from Gillis’ claim that “climate contrarians” have “little scientific credibility.” There are hundreds of Ph.D. scientists that Gillis could have cited in opposition to the scientists that he quoted, but instead, he selected a Republican congressman. This propagates a misleading narrative that all scientists are on one side of this issue, while Republican politicians are on the other side.

Moreover, the Anderegg study does not show that “convinced” researchers embrace the calamitous views of global warming quoted by Gillis. In fact, a number of the researchers categorized by the authors as “convinced” may not even embrace the more moderate views that the study ascribes to them. This is because the authors presumptuously assigned 619 researchers to the “convinced” category based solely on them being contributors to the above-mentioned 2007 IPCC report.

That methodology is questionable because being a contributor to this 996-page report does not necessitate accepting its conclusions. As the technical summary of the report states at the outset, “the material has not been subject to line-by-line discussion and agreement, but nevertheless presents a comprehensive, objective and balanced view of the subject matter.”

For example, John Christy, one of the authors of this report, has explicitly rejected the view that the Anderegg study attributed to the report’s contributors. As Christy explained, the IPCC report “says we are 90 percent certain that most of the warming in the last 50 years was due to human effects. I don’t agree with that. I think things are much more ambiguous.”

In addition to the IPCC report, Anderegg and company compiled their list of “convinced” researchers from four public statements about global warming that expressed clear positions on this issue. These statements were signed by 499 researchers (including duplicates). Why the authors felt the need to go beyond these people and incorporate all contributors to the 2007 IPCC report does not bode well for the study’s credibility. In short, it is highly dubious to assign views to scientists that they have not expressed.

The Anderegg study is also plagued by other issues, but this one alone is enough to call the results into question. And again, even if one blindly accepts the results, the study does not show that all credible scientists see global warming as a serious risk, which is the clear message of Gillis’ article.

The Doran study

Another frequently cited study about scientists’ views on global warming was published in Eos, “the premier international newspaper of the Earth and space sciences.” This article is entitled “Examining the Scientific Consensus on Climate Change” and was written by Peter Doran and Maggie Zimmerman of the University of Illinois. This study purports to show that “an unbiased survey of a large and broad group of Earth scientists” found that:

• 90% think average global temperatures “have generally risen” since the 1800s.
• 82% think “human activity is a significant contributing factor in changing mean global temperatures.”

The study also categorized a subgroup of respondents as “the most specialized and knowledgeable” if they reported that climate science was “their area of expertise,” and “more than 50% of their recent peer-reviewed papers” were about this subject. These stringent criteria restricted this subgroup to 2.5% of all respondents and less than 1% of the scientists who were sent the survey. Among these individuals, 96% and 97% agreed with the statements above.

Tacitly referring to this study, Gillis wrote in an April 2012 article that “polls say 97 percent of working climate scientists now see global warming as a serious risk.” As with his recent claim about “little scientific credibility,” he provided no link to substantiate this assertion. Nonetheless, this clearly references the Doran study, as evidenced by the “97 percent” figure and the prominence of this study.

Once again, Gillis stretched his reporting far beyond the study’s findings. The Doran study says absolutely nothing about global warming being a “serious risk.” Also, Gillis labeled every scientist not categorized by this study as “the most specialized and knowledgeable” as not being “working climate scientists.” In other words, he used a capricious definition of “working climate scientists” that includes only 2.5% of the scientists who responded to the survey.

This is especially problematic given that 8.5% of the scientists who responded to the survey indicated that “more than 50% of their peer-reviewed publications in the past 5 years have been on the subject of climate change.” Furthermore, there is no rational basis to assert that scientists don’t qualify as “working climate scientists” unless more than half of their papers are about climate change. It is not uncommon for scientists to have multiple areas of expertise and to be highly knowledgeable on a wide range of associated topics.

Beyond this, the Doran study has a major flaw, which is that the results are based on an internet survey that yielded a 31% response rate. The authors point out that this is “a typical response rate for Web-based surveys,” but this has no bearing upon whether the poll is credible. The issue is not how the Doran survey compares to other internet surveys but whether internet surveys are even reliable. As it turns out, internet and mail surveys often suffer from a phenomenon called selection bias or nonresponse bias, which frequently makes them untrustworthy.

Selection bias can take different forms, but for the type of poll used for the Doran study, it typically occurs because certain people are more likely to respond, specifically those who are opinionated or not very busy. As explained in the textbook Mind on Statistics, “Surveys that simply use those who respond voluntarily are sure to be biased in favor of those with strong opinions or with time on their hands.” Suitably, after stating this, the textbook analyzes a poll of scientists that had a 34% response rate, and it explains that “with only about a third of those contacted responding, it is inappropriate to generalize these findings” to most scientists.

Summary

In his recent article about CO2 levels reaching the numeric milestone of 400 ppm, New York Times environmental reporter Justin Gillis painted a picture of impending doom and casted all who differ as lacking in scientific credibility. However, thousands of Ph.D. atmospheric, earth, and environmental scientists have explicitly stated there is “no convincing scientific evidence” that manmade greenhouse gases will “cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate.”

Gillis has cited at least two popular studies to support his claim, but these studies don’t prove what he asserts. Instead, they show near-universal support among the most frequently published climate scientists for the more moderate views that the earth has warmed over the past century and human activity has contributed significantly to this. However, these studies have substantial flaws that cast doubt on their credibility, and thus, it is misleading to cite them without qualification.

Additional reading:
Will global warming flood the coasts of the United States?
Activists and journalists mislead the public about carbon pollution

The Associated Press on greenhouse gases, the United States, and the Kyoto Protocol

Do large national debts harm economies?

By James D. Agresti
May 6, 2013

Advocates for higher government spending are abuzz over a new working paper that disputes a famous paper often trumpeted by conservatives. The famous paper found that high levels of national debt are associated with lower economic growth, a result that conservatives have repeatedly cited to argue that governments should stop accumulating debt.

This new working paper exposes calculation errors in the famous paper, critiques its methodology, and presents competing findings. Liberals have latched onto these findings to argue that nations should be less concerned with government debt and should increase government spending to “stimulate” their economies.

While the authors of the working paper make significant contributions to this debate, they and numerous commentators who are citing their work have used their findings to mislead rather than inform. They have done this by leveling false accusations, ignoring an important follow-up paper written by the same authors, and failing to reveal that the new findings are similar to that of the famous paper: high levels of national debt are associated with slower economic growth.

Primary Findings

For a 2010 paper published in the American Economic Review, Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard University researched and tabulated the national debt and economic growth in 20 advanced economies (such as the United States, France, and Japan). Using 2,000+ data points from over 200 years, the authors found that “high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes.” Relevantly, U.S. federal debt surpassed 90% of GDP in 2010 and has now reached 105% of GDP.

However, Reinhart and Rogoff’s paper has come under withering criticism in a working paper written by Thomas Herndon, Michael Ash, and Robert Pollin of the Political Economy Research Institute at the University of Massachusetts, Amherst. Herndon, Ash, and Pollin [HAP] assert that the Reinhart and Rogoff [RR] paper suffers from “coding errors, selective exclusion of available data, and unconventional weighting of summary statistics,” which “lead to serious errors that inaccurately represent the relationship between public debt and GDP growth….”

The existence of at least one coding error is a reality that RR admit is “a significant mistake in one of our figures….” Furthermore, this coding error appears to pervade the entire paper, a point that RR have yet to formally acknowledge. Beyond this, the other issues raised by HAP boil down to subjective interpretations of how data should be averaged and the use of data that was not verified until after RR’s paper was published.

Most importantly, even if one uncritically accepts all of HAP’s methods, their primary results are basically similar to RR’s: countries with debt/GDP ratios higher than 90% have notably lower economic growth. HAP’s results are graphed here:

Misrepresenting the Results

Despite the association between debt and economic growth found by HAP, reporters and commentators have been leading their audiences to believe no such relationship exists. For example, Ben White and Tarini Parti of Politico reported that RR’s paper underwent a “very public demolition” at the hands of HAP, who found that economic growth “in countries with debt over 90 percent of GDP was around 2.2 percent, not much different from lower debt countries.”

In fact, HAP found that advanced countries with national debts over 90% of GDP had 31% less economic growth than when their debts were 60-90% of GDP, 29% less growth than when their debts were 30-60% of GDP, and 48% less growth than when their debts were 0-30% of GDP. As explained further below, these are significant differences with important implications, and Politico is not alone in masking these realities.

The Washington Post‘s editorial board wrote that HAP’s paper “debunks” RR’s “famous 2010 finding that a national debt-to-gross domestic product ratio above 90 percent may substantially retard economic growth.” A headline in the American Prospect has declared that “Reinhart and Rogoff’s Theory of Government Debt is Dead,” and Mike Konczal of the Roosevelt Institute has claimed that “one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.” Countless other individuals and organizations have made similar claims.

These misrepresentations are somewhat understandable given the manner in which HAP present their findings. Their abstract denies any association between debt and economic growth, claiming that “average GDP growth at public debt/GDP ratios over 90 percent is not dramatically different than when debt/GDP ratios are lower.” What do they mean by “dramatically different?” One has to read ten pages into HAP’s paper before they provide a side-by-side comparison of the figures they arrived at for economic growth under different levels of debt: “The actual growth gap between the highest and next highest debt/GDP categories is 1.0 percentage point (i.e., 3.2 percent less 2.2 percent).”

To those unfamiliar with this issue, “1.0 percentage point” may not sound like much, but in this context, it amounts to 31% less economic growth per year. Compounded over time, this can cause genuine harm to people. For example, if economic growth in the U.S. were reduced by 1.0 percentage point per year over the past 20 years, GDP would have been $13.1 trillion in 2012 instead of the $15.7 trillion that it was. This portends far-reaching negative consequences, such as more poverty and reduced life expectancy. As explained in the textbook Microeconomics for Today:

GDP per capita provides a general index of a country’s standard of living. Countries with low GDP per capita and slow growth in GDP per capita are less able to satisfy basic needs for food, shelter, clothing, education, and health.

In a recent New York Times op-ed, Pollin and Ash (two thirds of HAP) write that a “coding error and partial exclusion of data” by RR altered one of their results for economic growth by 0.6 percentage points. They perceptively note that this difference “is quite substantial when we’re talking about national economic growth.” Yet, in their paper, HAP characterize a much larger 1.0 percentage point difference in national economic growth as “not dramatically different.”

Cause and Effect

One of the most important critiques of RR and those who have favorably cited their research concerns the issue of causality. In basic terms, HAP and company argue that slow economic growth causes high debt and not vice-versa. In the words of Mark Gongloff of the Huffington Post, RR “imply strongly that high debt causes slow growth, when there is no evidence for that.”

In truth, there is prominent evidence for this, but HAP and many others have ignored it. In 2012, the Journal of Economic Perspectives published a paper by RR and Reinhart’s husband, Vincent R. Reinhart, the chief U.S. economist at Morgan Stanley. In this paper, these scholars (hereafter referred to as RRR) specifically addressed the issue of cause and effect. Yet, from reading HAP’s paper and many news reports and commentaries about this issue, one would never even know that this paper existed.

RRR took a straightforward approach to the matter of cause and effect by limiting their analysis to “prolonged periods of exceptionally high public debt, defined as episodes where public debt to GDP exceeded 90 percent for at least five years.” They found that these countries averaged 1.2 percentage points or 34% less economic growth than when debt was below 90% of GDP. Note that this figure is very close to the 31% difference found by HAP. RRR explain the significance of this with regard to cause and effect:

Following Reinhart and Rogoff (2010), we select stretches where gross public debt exceeds 90 percent of nominal GDP on a sustained basis. Such public debt overhang episodes are associated with lower growth than during other periods. Even more striking, among the 26 episodes we identify, 20 lasted more than a decade. The long duration belies the view that the correlation is caused mainly by debt buildups during business cycle recessions.

RRR emphasize that the cause-and-effect issue has not been “definitively addressed,” but they assert that “the balance of the existing evidence” from their study and other recent studies “certainly suggests that public debt above a certain threshold leads to a rate of economic growth that is perhaps 1 percentage point slower per year.” This is precisely the figure arrived at by HAP.

This does not mean that cause and effect can’t run in both directions. No one disputes that economic recessions can increase government debt, and constructive debate over this matter will surely be ongoing. Nonetheless, there is a clear association between high debt and slow growth, and substantial evidence that the former can cause the latter.

A Universal Rule?

According to Thomas Herndon in an op-ed for Business Insider, he and his coauthors (HAP) “show that, contrary to R&R, there is no definitive threshold for the public debt/GDP ratio, beyond which countries will invariably suffer a major decline in GDP growth.” Likewise Mike Konczal of the Roosevelt Institute has claimed that “Reinhart-Rogoff was supposed to establish a universal rule that there was a speed limit where debt above 90 percent of GDP became dangerous. Now I think that’s out the door.”

Those statements border on defamatory. RR explicitly state in their original 2010 paper that “there is considerable variation across the countries, with some countries such as Australia and New Zealand experiencing no growth deterioration at very high debt levels.” Furthermore, Table 1 of HAP’s paper details the average economic growth rates under differing debt levels for each of the 20 advanced economies they study, and the values range from -1.8% to 4.6%. On top of this, in a 2011 Bloomberg op-ed, RR wrote:

We aren’t suggesting there is a bright red line at 90 percent; our results don’t imply that 89 percent is a safe debt level, or that 91 percent is necessarily catastrophic. Anyone familiar with doing empirical research understands that vulnerability to crises and anemic growth seldom depends on a single factor such as public debt.

Yet, in their New York Times op-ed, Pollin and Ash claim that RR in their 2012 paper “partly backed away from” the claim that “countries will consistently experience a sharp decline in economic growth once public debt levels exceed 90 percent of G.D.P.” How can RR possibly back away from a claim that they repudiated from the start? Moreover, anyone even vaguely familiar with economics knows that numerous factors affect economies, and thus, no single factor can possibly produce a consistent outcome for all economies. To claim that RR said or implied otherwise is a patent falsehood.

How Robust are the Results?

Other elements of the debate between RR and HAP concern the use of different mathematical methods, the inclusion/exclusion of certain data, and the significance of RR’s coding errors. RR and HAP have been battling over these issues in various venues, and links to their respective commentaries can be found here and here.

The views of other economists about the competing mathematical approaches of the scholars vary greatly. Nobel Prize-winning Princeton professor Paul Krugman has referred to RR’s statistical methods as “very odd” and “dubious.” Conversely, University of California professor James D. Hamilton, who is the author of a prominent graduate textbook about the types of mathematical issues involved here, has written that HAP’s method of handling such data is “less widely chosen” and “in my opinion less to be recommended.” Hamilton also stated that yet another approach is preferable, and it would produce results that fall in between RR’s and HAP’s.

Nonetheless, regardless of which mathematical techniques are used, once the coding errors are corrected and all available data are included, the results up to this point have been basically the same: high debt and slow economic growth go hand in hand. The exact figures that inform the strength of this relationship differ in material ways, and this needs to be sorted out in a comprehensive and methodical manner. The graph below, which compares RR’s and HAP’s results for advanced economies since World War II, is a modest start toward this end. Given that there is no objective “best way” to compute this data, all these results collectively serve to enlighten the issue.

In addition to the above, RR’s 2010 paper also contains average and median results for the period from 1790-2009 and for emerging economies (such as India, Brazil, and Nigeria). HAP’s paper only contains average results for advanced economies from 1946-2009, but Just Facts requested additional results from them, some of which they published in a New York Times op-ed and appendix. These results are incorporated above. Just Facts also requested corrected results from RR for all other results affected by their coding error, but a response is not yet forthcoming.

In their paper and subsequent commentaries, HAP present results for progressively shorter time periods to as little as a decade. In the New York Times, they assert that the “pattern for the most recent decade” is “especially significant” because it is “more informative and useful for assessing present-day policy concerns than data from the post-World War II era or, say, the Industrial Revolution.” For this period (2000-2009), they find “no evidence in these most recent years for any drop-off at all in economic growth when public debt exceeds 90 percent of G.D.P.”

Whether intended or not, restricting the observation period to 2000-2009 has the effect of reducing the sample to a relatively small dataset that happens to cut off near the end of one of the worst global recessions in modern history. This is precisely the type of scenario that would produce anomalous results. In contrast, the extensive dataset compiled by RR (2,000+ observations) has the advantage of being little affected by anomalies. This is necessary for robust results, although it is not an inherent guarantee of such.

Austerity?

In the closing statement of their paper, HAP assert that “RR’s findings have served as an intellectual bulwark in support of austerity politics,” and the “fact that their findings are wrong should therefore lead us to reassess the austerity agenda itself in both Europe and the United States.” Likewise, writing about HAP’s findings, Paul Krugman asserts that the “main reason our economic recovery has been so weak is that, spooked by fear-mongering over debt, we’ve been doing exactly what basic macroeconomics says you shouldn’t do — cutting government spending in the face of a depressed economy.”

Such claims are belied by actual data on government spending from the U.S. Bureau of Economic Analysis (BEA). The Great Recession lasted from December 2007 through June 2009, and from 2007 to 2009, the portion of the U.S. economy consumed by local, state, and federal governments increased by 17%. This higher level of spending was supposed to be a temporary response to the recession that would speed recovery, but in 2012, government was still consuming 9% more of the U.S. economy than in 2007, and the economy was still sputtering.

From a long-term perspective, since 2008, total government spending has consumed more of the nation’s economy than at any time since 1960, which is as far back as this BEA data goes. BEA also tracks a slightly less inclusive measure of government spending (called current expenditures) that dates back to 1929. By this measure, government spending consumed more of the nation’s economy during 2009-2011 than ever recorded in the history of the nation, including the peak of World War II. In 2012, current spending was just a hair below the peak of World War II.

Over the past several years, prominent journalists, commentators, and public policy organizations have misled their audiences into believing that government spending had fallen while it had actually risen. They have done this by making palpably false assertions, redefining government spending to exclude large portions of it, and cherry-picking misrepresentative baselines from which to make calculations.

Many of these same individuals have also blamed a host of ills on reduced government spending. As RR revealed in a recent New York Times op-ed responding to HAP’s criticisms, they have been receiving threatening emails blaming them “for layoffs of public employees, cutbacks in government services and tax increases.” This is despite the reality that the unemployment rate for government workers is 3.3%, as compared to 7.5% for the entire population.

Likewise, an October 2012 poll commissioned by Just Facts found that 23% of all voters (including 43% of Obama voters and 6% of Romney voters) did not know that government spending was consuming a larger portion of the economy than it was ten years ago, notwithstanding the fact that it was consuming 12% more.

On top of all this, politicians and reporters are now advancing the narrative that the national debt is going to be stable for the next ten years, when in fact, this claim is based upon an unrealistic scenario that requires major departures from current policy. All of this serves to mislead people into believing that the national debt does not pose a significant problem, even though the Congressional Budget Office recently reported that the U.S. government is on a path of “high and rising debt” that will have “serious negative consequences.”

Summary

Condensing the key points above, there is a clear relationship between high levels of debt and slow economic growth. This is a not a universal rule but a robust association based upon extensive observations and disparate mathematical methods. The precise strength of this relationship is debatable, but existing results center around the outcome that growth in countries with debt over 90% of GDP is about 30% lower than when debt is below this level. There is also considerable but not definitive evidence that high debt can cause slow growth, as well as vice versa.

The current U.S. debt is at 105% of GDP and is projected to keep growing under current polices. This elevated level of debt may be a factor in weak economic growth that the U.S. has been experiencing, but advocates for increased government spending are blaming this and other problems on reduced government spending. This is in spite of the fact that since 2008, government spending has been much higher than it has been for the vast majority of U.S. history.

Hunger Games: Reporters and pundits greatly exaggerate hunger in America

By James D. Agresti
April 11, 2013

Journalists and commentators are misleading the public to believe that a large portion of Americans are going hungry. Following in the footsteps of Paul Kurtz of CBS News, Bob Beckel of Fox News, and Paul Krugman of the New York Times, Stoyan Zaimov of the Christian Post recently made it seem that hunger is far more common than reality. In an article entitled, “Child Poverty, Hunger Rates in US Remain Alarmingly High,” Zaimov reported:

Alarming statistics released by the U.S. Census Bureau and U.S. Department of Agriculture earlier this month revealed that hunger and poverty rates in the country remain high, particularly among African-American children.

The U.S. Census Bureau determined that 25.1 percent of African-American households and 29.2 percent of households with children are food insecure. …

The high rate of children going hungry in America is notable, especially considering that the U.S. regularly ranks high in global lists measuring quality of life.

In stark contrast, the latest USDA/Census data on hunger (page 12) reveals that 1.3% of households with children had a child who was hungry at least once during 2011. The same report (page 19) also shows that on any given day, an average of 0.18% of households with children had a child who was hungry. This first measure of hunger (at least once during 2011) is 22 times lower than the “29.2 percent” figure cited by Zaimov, and the second measure (the average on any given day) is 162 times lower.

Like Kurtz and Beckel, Zaimov misinformed his audience by equating the term “food insecure” with “hunger.” In fact, most food-insecure households never experience hunger during any point of the year. As the USDA has explained, “Households classified as having low food security have reported multiple indications of food access problems, but typically have reported few, if any, indications of reduced food intake.” Revealingly, prior to 2006, the USDA labeled this same category of household “food insecure without hunger.”

USDA surveys on food security classify households into three main categories: “food secure,” “low food security,” or “very low food security.” In 2011, 85.1% of households were food secure throughout the entire year, while 9.2% had low food security, and 5.7% had very low food security. Households with very low food security were previously labeled “food insecure with hunger,” but even among these households, 35.4% of survey respondents reported that they had not been hungry during any point of the year (page 17).

Furthermore, a footnote in the latest USDA report reveals, “Not all individuals residing in food-insecure households were directly affected by the households’ food insecurity. … Young children, in particular, are often protected from effects of the households’ food insecurity.”

Although Zaimov wrote that the “25.1 percent” and “29.2 percent” figures were “released by the U.S. Census Bureau and U.S. Department of Agriculture earlier this month,” these figures actually come from the same USDA report referenced above (pages 11 and 13), which was published in September 2012 and contains survey data from 2011.

Zaimov, like Kurtz and Krugman, did not provide a link to support the figures he cited, making it difficult for readers to verify his claims. Zaimov responded to an email about this matter, acknowledging that the figures he cited were from the September 2012 report and stating that his editors will correct this error. However, Zaimov signaled no intent to correct the misleading presentation of hunger rates, writing:

I contacted World Vision (and a few other organizations) regarding the report and statistics, and they focused their answers less on the numbers and more on efforts to address the problem: http://www.worldvision.org

Krugman and Obama mislead on debts and deficits

By James D. Agresti
March 18, 2013

In a March 10th New York Times column, Nobel Prize-winning economist Paul Krugman wrote, “we do not, repeat do not, face any kind of deficit crisis either now or for years to come.” Citing recent projections from the Congressional Budget Office (CBO), Krugman insisted that “the case for making the deficit a central policy concern … has now completely vanished.” Three days later, President Obama echoed these sentiments on ABC’s “Good Morning America,” stating, “We don’t have an immediate crisis in terms of debt. In fact, for the next 10 years, it’s gonna be in a sustainable place.”

Those assertions are based on federal budget projections in CBO’s latest “Budget and Economic Outlook, but Krugman and Obama misrepresent these projections and ignore what this report explicitly states—which is that the U.S. government is on a path of “high and rising debt” that will have “serious negative consequences.”

First, the claims of Krugman and Obama hinge upon an unrealistic assumption that future budgets will follow CBO’s “baseline” scenario. When CBO analysts produce budget projections, they typically calculate a “baseline” scenario (which approximates current law) and an “alternative fiscal” scenario (which approximates current policy). These can be markedly different because certain current laws require future policy changes that are either impractical, untenable, or place significant burdens on the American people. The claims of Krugman and Obama are based on projections that assume these policy changes occur, when in fact, some of them have practically no chance of happening.

For example, less than a year from now, current law requires a “25 percent cut in Medicare’s payment rates for physicians,” but as the Medicare Trustees Report emphasizes, it is a “virtual certainty” that congress and the president will not allow these cuts to occur. This disconnect between current law and current policy stems from a 1997 law that was intended “to limit growth in spending on physician services to a sustainable rate, roughly in line with the rate of overall economic growth.” However, the law failed to work as planned, and in 2002, the New York Times reported, “For the first time, significant numbers of doctors are refusing to take new Medicare patients, saying the government now pays them too little to cover the costs of caring for the elderly.” Hence, legislators have overridden this law through a provision known as the “doc fix” for every year since 2003, and this is widely expected to continue in the future.

Significantly, the “doc fix” is not about maximizing profits for healthcare providers but ensuring that Medicare beneficiaries have access to care. Medicare pays hospitals an average of 10% below their costs of caring for Medicare patients, and Medicare pays physicians about 20% below private insurance rates. Cutting Medicare physician payments to 25% below this would bring these rates to levels proven to cause major problems with access to care. Government cannot consistently pay healthcare providers less than their costs of treating patients and expect them to keep treating them. The current-policy projections account for this reality, while the current-law projections that Obama and Krugman cite do not.

Exactly how large is the divide between current law and current policy? Under current law, CBO projects the budget deficit in 2015 will be $430 billion, whereas under current policy, CBO projects the deficit will be $644 billion—or 50% higher. Likewise, under current law, CBO projects that publicly held federal debt will grow from 72.5% of GDP to 77.0% during fiscal years 2013-2023, which is a 6.2% increase. In contrast, under current policy, CBO projects that publicly held debt will rise to 87% of GDP over this period, which is a 20% increase. This fact deflates Krugman’s claim that “budget office projections show the nation’s debt position more or less stable over the next decade.”

Worse yet, even under the unrealistic current-law scenario that Krugman and Obama assume, CBO is clear that “the projected path of the federal budget remains a significant concern,” because debt is already “very high by historical standards” and will remain so. CBO details the ramifications of this:

If the amount of debt held by the public remains so large, federal spending on interest payments will increase substantially when interest rates rise to more normal levels. Because federal borrowing generally reduces national saving, the stock of capital assets, such as equipment and structures, will be smaller and aggregate wages will be less than if the debt were lower. In addition, lawmakers will have less flexibility than they ordinarily might to use tax and spending policies to respond to unanticipated challenges. Moreover, such a large debt poses an increased risk of precipitating a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.

In simple terms, even under the highly optimistic current-law scenario, federal deficits and debts will suppress workers’ wages, degrade the government’s capacity to weather challenges, and could trigger a financial crisis. Furthermore, CBO states that these projections “do not fully reflect long-term budgetary pressures” caused by an aging population, rising healthcare costs, and subsidies of the Affordable Care Act. In the words of CBO, these factors “will substantially boost federal spending on Social Security and the government’s major health care programs, relative to GDP, for the next 10 years and for decades thereafter.”

Regarding these long-term budget stresses, Krugman writes, “I have yet to see any coherent explanation of why these longer-run concerns should determine budget policy right now.” For this, he need look no further than CBO’s latest long-term projections, which explain that “postponing action would substantially increase the size of the policy adjustments needed to put the budget on a sustainable course.” Likewise, CBO’s latest short-term projections state that making changes now “would allow for gradual implementation, which would give households, businesses, and state and local governments time to plan and adjust their behavior.”

CBO also emphasizes that actual budget outcomes could be far removed from projections because of “unanticipated changes in economic conditions” and “a host of other factors that affect federal spending and revenues.” To underscore this point, CBO notes that “even relatively small deviations can have a substantial impact on budget deficits.”

Contrary to what Krugman and Obama claim, CBO projections indicate that federal deficits and debts threaten workers’ wages, government’s ability to fund its programs, and the overall health of the economy. Thus, when politicians and commentators mislead citizens into thinking that “we don’t have an immediate crisis in terms of debt,” they hinder public support for actions that could stem the negative consequences of this debt.

Additional reading:
Blame for the national debt

Consequences of the national debt

Federal government finances deteriorated by $6.5 trillion in 2012