The Federal Budget: Young Workers and Old Baby Boomers

If the proficiency scores of US workers are low and the safety net spending for baby boomers is high, then we have what Barron’s calls the “baby boom budget bomb.” In a just-released report, the Organization for Economic Cooperation and…

The Federal Budget: Sequester Déjà Vu

Today’s sequester is not the first. Just like now, in 1985, cutting the deficit was popular…in theory. The question, though, was how to get legislators to do it. The answer was Gramm-Rudman (aka the Gramm-Rudman-Hollings Act or the Balanced Budget…

Opposing Austerity

Thinking about our fiscal woes, I keep returning to the fallacy of composition. Here it is: When one farmer harvests a huge crop and sells it, her profits soar. But if every farmer grows more and sells more, then the…

Greek (Debt) Myths

Maybe sell some islands and an ancient ruin or two? In Boomerang, Blind Side author Michael Lewis repeats what German politicians were suggesting in 2009 when they heard that the Greek debt was much larger than previous estimates. How much…

Heed the Herd

By Mira Korber, guest blogger. Just the other day, I walked outside to find all six of my horses facing the exact same direction, muscles tensed, ears pricked, nostrils flared…Clearly their horsey intuition was picking up on some obscure, equine-eating…

If You Were the Supercommittee…

This simulation from Pew is a great way to understand what the supercommittee is trying to do. Called “the Pew Budget Challenge,” it presents close to 100 revenue and expenditure alternatives for bringing the debt down to 60% of GDP…

A Surprising Deficit Worry

Who do you think is the biggest holder of U.S. government debt? The U.S. government. Whenever Social Security collects more payroll tax money than it needs, it buys U.S. securities. Retaining cash would mean no return, buying stock could be…

A First For Denmark

Denmark just became the first country in the world to have a fat food tax. That means butter, milk, pizza, any food with more than 2.3% saturated fat content is more expensive. To be precise, for every 2.2 pounds (one…

Benford’s Law and Greece

Does it matter that low first digits occur more frequently? First some history. During the 1920s, Frank Benford, a physicist at GE, noticed that “one” appeared more frequently as the first digit of a number. To test his thesis, he…

“Deficit Bias”

If anyone asks you about the “fiscal woes” facing the U.S., Japan and the EU, just say, “deficit bias.” The 13th Geneva Report on the World Economy explains “deficit bias.” In the U.S., think about voting constituencies and how the…