I used to think CNN’s Lou Dobbs – the Bill O’Reilly of Mercantilism – was as awful as it gets as far as business or economics commentary. His tirades against free trade have gotten so bad that I can no longer watch his show. But I do wake up Saturday mornings to CNN’s On The Story, which is the all gals team with some of the reporters being rather good – especially when they invite Christiane Amanpour on their show. However, Kathleen Hayes has yet to do a report that proves to that she learned any economics even if she supposedly got a masters degree from Stanford.
Yesterday’s show had two incredibly low points. The first had to do with the Social Security debate:
CROWLEY: But don’t even conservative investments beat what — the Social Security gain? I mean, isn’t — hasn’t that always been — the selling point was even if you invest conservatively…
HAYS: In government bonds, for example…But the other question is a big picture question. It’s going to cost money to do this, as you point out. Because if I am paying taxes to the government, my Social Security tax, and now I can take some of that tax and invest it, that’s money that’s not going into the general revenues, which is what all Social Security goes to and it gets paid out.
Candy Crowley’s praise of the Bush plan is just silly for a simple reason. The Trust Fund already puts the reserves into government bonds so if individuals do the same thing, how does Ms. Hays think the return on government bonds is higher than the return on government bonds? Of course, what she did was to change the subject.
Let me take one shot at this and then give a hat tip to privatization proponent and Ricardian Equivalence reviving Robert Barro who had this rather honest refutation of the return argument. Note to Ms. Hays, Social Security contributions go to the Trust Fund not to the General Fund, but let’s concede that the unified deficit will temporarily look larger if we move to partial privatization. But would not Dr. Barro argue that reducing contributions and benefits by the same amounts in present value terms (assuming this is what Bush intends to do) would have no effect on the long-run solvency of either the Trust Fund or the General Fund?
But maybe I expect too much of Ms. Hays given an earlier discussion of the jobs report. As the ladies were gushing how strong the economy was in light of the October increase in employment, I could only imagine that your internet savvy eight-year old was finding table B-1 here and noticing employment in October (call this B) was 132.017 million versus employment in January 2001 was 132.388 million (call this A). So Ms. Hays said:
HAYS: Well, let me – yes, because I did the math yesterday. If you go from January 2001 to October 2004, he is still down 371,000 jobs. I worked through this with somebody at the Labor Department.
She needed to bother some staff economist at BLS to help here do A minus B? I’m sure your eight-year old did this without bothering anyone. If she needs help with this, why does CNN have her opining on something complex like the Social Security issue?
I used to question why any sane person would bother with the hacks at FNC such as Neil Cavuto. Given CNN’s business correspondents are Lou Dobbs and Kathleen Hays, I think I just answered my own question.