Patterico's Pontifications

3/26/2014

Ezra Klein, 2011: Debt Held By the Public Is Not the Whole U.S. Debt

Filed under: General — Patterico @ 5:52 pm

Earlier today, I busted Ezra Klein’s Vox outfit for publishing a video that opened with the following statement:

The United States’s national debt is 12.5 trillion dollars.

As I noted, the actual U.S. debt is $17.5 trillion, not $12.5 trillion. When Matt Yglesias says in the video that the debt is $12.5 trillion, he is using a number for “debt held by the public.” An accompanying graphic accurately shows the $12.5 trillion number as “debt held by the public.” The effect of the statement — together with the graphic — is to falsely imply that “the United States’ national debt” is equivalent to “debt held by the public.”

In an email to me, Klein suggested that the graphic actually cures Yglesias’s misleading statement, rather than creating a false equivalence between two very different numbers, as I believe it does.

This all got me wondering: does Ezra Klein consider “debt held by the public” to be equivalent to the U.S. national debt? Put a different way: does Klein consider debt not held by the public — intragovernmental holdings of U.S. goverment bonds — to be an accounting trick that doesn’t truly represent a debt that must be repaid by the government?

Because today, Ezra Klein doesn’t seem to consider bonds held by Social Security to be a debt that Treasury has to repay.

How did Ezra Klein feel about this in 2011? Thankfully, we don’t have to wonder. Here he is from the Washington Post, his former employer, from March 2011:

There’s an interesting argument going on today between my colleague Charles Krauthammer and OMB Director Jack Lew. Krauthammer makes a case for both the ease and necessity of Social Security reform, and in particular a case against the Treasury securities that the Social Security program invests its surplus in. “They are worthless,” Krauthammer writes. “As the OMB explained, they are nothing more than ‘claims on the Treasury.’ ”

Lew fires back over at the White House blog, noting that “these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ‘worthless IOUs’ as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.

Klein says he is “sympathetic to arguments against trust fund accounting” but says that Lew has a point.

When you hear that investors are making a “flight to safety,” it means they’re buying Treasury securities. The same Treasury securities that the Social Security system purchases. If the government defaults on those bonds, the economy will fly into a tailspin.

Krauthammer knows this well. “You can’t not pass it,” he said of an increase in the debt ceiling. “It is catastrophic.” What would be catastrophic in that scenario is the Treasury failing to pay back holders of its securities. We won’t do that. We can’t do that. And that’s true for the bonds that Social Security holds as well as the bonds that investors hold. They are not worth less when the government buys them than when private investors buy them. And, incidentally, Treasury yields are very low right now, suggesting that investors think the government overwhelmingly likely to make good on its IOUs.

Now, that judgment is really saying that the market is confident that we’ll eventually make the decisions needed to bring total government revenue a lot closer to total government spending. That might require changes to Social Security, though it doesn’t strictly need to require changes to Social Security (Social Security could be funded through revenue from the income tax, for instance). Either way, the Treasury bonds that Social Security is holding aren’t worthless, or, if they are worthless, we’re in much worse shape than most people realize.

What he’s saying here is: individual investors hold government bonds (debt held by the public) but the government has an equal obligation to pay back the bonds that the Social Security “trust fund” holds (“intragovernmental holdings”).

Or, to put it in simple language: debt held by the public is not the entire U.S. debt.

That’s according to Ezra Klein from 2011, ladies and gentlemen.

Now, this is a very complex topic that 99% of Internet readers don’t understand.

What are the chances, do you think, that the unsophisticated target audience of Vox’s graphics-heavy two-minute cartoon are distinguishing between U.S. total debt and the smaller “debt held by the public” figure?

Ezra Klein Stands By Misleading Video

Filed under: General — Patterico @ 4:42 pm

Ezra Klein has written me to say that he stands by the video that opens with the phrase:

The United States’s national debt is 12.5 trillion dollars.

As I noted earlier today, the United States’s national debt is $17.5 trillion dollars. Only a portion of that — debt held by the public — is $12.5 trillion.

Here is Klein’s email:

Hey Patterico —

I get where you’re coming from on this, but I actually think we’re pretty clear that we’re dealing with public debt (which is the correct measure for these purposes). Indeed, in this e-mail, you note that we note that it’s public debt. It’s there on large letters on the screen. It seems to me that you’re looking at this as if the audio track and the video are somehow separate but the two exist only in concert — this isn’t published as a piece somewhere else on the site, because it wouldn’t make sense absent the visuals that are the core of the presentation.

If we did have an article we’d probably spend some time explaining the difference between public debt and other measures and conveying why this one makes the most sense, but for a quick explainer, just clearly labeling the measure we’re using made the most sense.

I appreciate you reaching out, and am glad you’re watching!

My response speaks for itself:

Ezra,

This video seems geared towards unsophisticated news consumers. Given the audience, the false impression conveyed is that “debt held by the public” (the phrase in the graphic) is the same thing as “the United States’s national debt” (the phrase used by Yglesias).

Your argument, and that of Yglesias, seems to be that if a relatively sophisticated news consumer knows the difference, so will your audience of twenty-somethings. In other words, if I can spot the sleight of hand going on here — your equating two measures that aren’t truly equivalent — then all is well.

But I think you’re misleading your target audience and you know you’re doing it.

P

UPDATE: More from our exchange. Ezra chides me for saying he knows he is misleading people:

Well, I can assure you that by using the correct debt measure and labeling it clearly in large letters we did not think we were misleading anyone. I think both unsophisticated and sophisticated readers will read the large words on the screen and come away with the right number in their heads.

Also, as a general point, you could be more generous. In my experience almost no one is ever trying to mislead their audience. I recognize you don’t agree with the point of this video. But it doesn’t hurt you to assume good faith, and it might even help you see where other folks are actually coming from!

My response:

Two points.

1) In 2011, you considered bonds held by Social Security to be real debt that had to be paid back.

So the “debt held by the public” is not really “the correct debt measure” according to your own previous analysis.

2) The “large words on the screen” accompany audio verbiage referencing “the United States’s national debt.” The natural conclusion drawn by anyone not previously aware of the distinction is that “the United States’s national debt” IS the “debt held by the public” — nothing more, nothing less.

The fact that *I* know the difference does not mean that a person who needs this stuff “explained” is going to think: hey, I know they’re saying “the United States’ national debt” but the accompanying graphic means they are referring only to a subset of that debt — the part held by the public.

Come on, dude. That is not a thought running through the head of *anyone* who doesn’t already know this stuff. You know that’s the case.

If people don’t already know this stuff, they’re going to think the two are the *same* — that the U.S. debt consists of the $12.5 trillion held by the public.

That is not true, you didn’t consider it to be true in 2011, and yet you are conveying that impression to unsophisticated readers now.

P

UPDATE x2: Klein’s latest response:

I don’t think you actually understand the dispute in the 2011 post – or perhaps in the video. Debt the government owes itself is debt it has to manage. But it doesn’t have the same effects, for all kinds of reasons, as public debt. There’s a reason when cbo does this it uses public debt.

http://www.cbo.gov/publication/45010

The video is about the effects of our debt load – which is to say, the effects of primarily of the Feds perception of our debt load, and of the markets perception of the Feds perception. Those effects, as watched by fed, by cbo, and others are based on public debt. As Matt says, the fed is the key actor here, and when bernanke talks about our debt, he also refers to cbo calculations of public debt:

http://www.federalreserve.gov/newsevents/testimony/bernanke20130522a.htm

All of which is to say that this is the right measure to be using and that doesn’t take away from my 2011 post on a different kind of debt question at all. And even if it did, the video is by Matt, not me.

I’ve tried in these emails to clearly lay out my take on the video because I want you to see that we’re trying to get this stuff right. But I can see from your posts that you don’t really want to hear it – you want to play a game of gotcha with me, and whip up your folks, which is of course your right. So I’ll leave it here. Have a good night!

Ah, I don’t understand what I’m talking about. And I’m not interested in an honest debate. Meanwhile, that video was wonderfully forthright and honest. OK, then.

Matt Yglesias Fails Big With Voxsplainer on the National Debt: The First Words Out of His Mouth Are Flatly False

Filed under: General — Patterico @ 3:06 pm

The new Voxsplainer from Ezra Klein’s JuiceBox Mafia team puts a Krugmanesque lefty spin on the national debt. The message: hey, it’s no big deal. The message is undermined, however, by the absurd factual sloppiness of the presentation. Indeed, the first words out of Matt Yglesias’s mouth in the video are wrong:

The video opens with Matt Yglesias telling his audience:

The United States’s national debt is 12.5 trillion dollars.

100% false.

Virtually everyone who follows these issues knows that the U.S. national debt is over $17 trillion. The U.S. Treasury issues daily statements on the national debt here. The latest report is that for March 25, 2014 (.pdf). It lists the closing balance for “Total Public Debt Outstanding” at $17,555,984,000,000, which is over $17.5 trillion dollars.

Of that amount, $4,976,757,000,000 (almost $5 trillion) consists of “intragovernmental holdings,” and $12,579,227,000,000 (over $12.5 trillion) is “debt held by the public.” That latter number is what Yglesias is citing, as you can tell from the chart that accompanies his narration, which has a bar on a chart labeled: “Debt held by the public.”

But the debt held by the public is not the U.S. national debt. And Yglesias didn’t say the debt held by the public is $12.5 trillion. Matt Yglesias said that “The United States’s national debt” is $12.5 trillion. That is false, and I believe Yglesias knows it’s false.

I could spend a lot of time talking about the relative merits of arguing about debt held by the public vs. the total national debt; or discussing the $111 trillion in unfunded liabilities stretching out into the future; or simply mocking the kindergarten presentation of the Vox team.

But let’s not get ahead of ourselves. Before we start a debate, let’s get the facts straight, shall we? And the facts are these: the very first words out of Matt Yglesias’s mouth in this video are false.

As soon as I publish this post, I am writing Yglesias and Ezra Klein and demanding a correction. I suggest every reader of this post do the same. This video needs to be withdrawn and corrected. It is utterly misleading.

Spread the word far and wide.

UPDATE: Prepare for a shock: Yglesias refuses to acknowledge his clear error:

Once again, his words were:

The United States’s national debt is 12.5 trillion dollars.

So he’s weaseling. Raise your hand if you’re surprised.

I see no hands.

UPDATE x2: Aaaaaaand now I am blocked by Yglesias:

Screen Shot 2014-03-26 at 3.53.58 PM

UPDATE x3: Ezra Klein stands by the video in an email to me. Details here.

UPDATE x4: Thanks to Hot Air and to Gabe Malor at Ace’s for the links. If you’re here for the first time, bookmark the main page and make sure to come back!

UPDATE x5: Turns out in 2011, Ezra Klein thought bonds held by Social Security were real debt that had to be repaid. How about that!

FBI Dumps Southern Poverty Law Center As Authoritative Source for Determining Who Is A Hate Group

Filed under: General — Patterico @ 12:26 pm

It is absurd that the FBI ever used them to begin with:

The Southern Poverty Law Center, which has labeled several Washington, D.C.-based family organizations as “hate groups” for favoring traditional marriage, has been dumped as a “resource” on the FBI’s Hate Crime Web page, a significant rejection of the influential legal group.

The Web page scrubbing, which also included eliminating the Anti-Defamation League, was not announced and came in the last month after 15 family groups pressed Attorney General Eric Holder and FBI Director James Comey to stop endorsing a group — SPLC — that inspired a recent case of domestic terrorism at the Family Research Council.

Here’s shooter Floyd Corkins discussing how he decided to go try to kill as many people as he could at a Family Research Council office. He had 15 Chik-Fil-A sandwiches which he hoped to smear in the faces of the people he hoped to kill:

The SPLC has long been a joke. It is refreshing, if surprising, to see the FBI acknowledge it.

Headline Suggesting Woman Was Totally Railroaded in Murder Case Turns Out to Be Very Misleading

Filed under: General — Patterico @ 12:16 pm

CBS News has this attention-getting headline:

Screen Shot 2014-03-26 at 11.51.39 AM

It certainly got my attention.

Before you go on, ask yourself: what does that headline suggest really happened? Formulate a specific answer in your mind, and then read on.

I clicked on the story (which is what they wanted, of course). Here is how it begins:

A 74-year-old woman was released from prison late Monday evening after serving 32 years for a murder committed by her abusive boyfriend.

Mary Virginia Jones walked out of Century Regional Detention Facility in Lynwood just before midnight to the tears and cheers of family and friends, The Los Angeles Times reports.

Jones was convicted of first-degree murder, kidnapping and robbery in a 1981 shooting death, but Los Angeles Superior Court Judge William Ryan set aside those convictions on Monday, reports CBS Los Angeles.

The district attorney’s office has agreed to accept a plea of no contest to voluntary manslaughter in exchange for Jones’ release. Jones has already served 11,875 days, which exceeds the 11-year maximum sentence for voluntary manslaughter.

So . . . it doesn’t quite sound like what the headline implies, which is: defendant accused of being murderer, prosecutors find out someone else did it and let her go, ergo, she was totally railroaded. It sounds like something else. To find out, you must read all the way to the end of the article. When I did, here’s what I learned. The woman apparently didn’t get a “Battered Women’s Syndrome” instruction, and some USC law students and their activist advisors argued she should have:

Law students at USC’s Post-Conviction Project argued Jones would not have been convicted if the jury had heard testimony on the effects of intimate partner battery, previously known as “Battered Women’s Syndrome.”

Again, that’s the last paragraph of the article.

Apparently the woman does not deny that she was the driver in a kidnapping in which her boyfriend had her drive himself and two drug dealers to an alley, where the boyfriend then shot the drug dealers to death. She just claims she was forced to do it.

So here’s what I now understand, based on reviewing the entire article. Activists say she should have gotten a Battered Women’s Syndrome instruction (despite the general rule that duress is not a defense to murder). A Superior Court Judge agreed and reversed her conviction and set it for a new trial. The D.A., rather than retry a 33-year-old murder case against the driver, decided to offer her a manslaughter offer, evidently (I’m guessing) deciding that was appropriate given the substantial amount of time she had already served for her conduct, together with the fact that the case would likely be difficult to retry after such a long time.

Not quite a case of “OMIGOD TOTALLY INNOCENT WOMAN WAS RAILROADED!!!!!1!!!!1!!” as the headline suggests.

Most people, of course, will just read the headline, and will come away with a totally skewed idea of what happened. This, in turn, will make them more cynical about the system.

The headline writers should be ashamed of themselves. But I bet they aren’t. I bet they are proud — because of all the clicks they got on the story.

ALL HAIL PROFESSIONAL JOURNALISM!

DISCLAIMER: As always, I comment on this story in my private capacity and not in my public capacity, and I do not speak on behalf of the office. I have no inside knowledge of this case whatsoever and am opining purely based on public reports.

From the “How Did I Miss This?” Files: Voters Will Not Be Asked to Repeal Prop. 209

Filed under: General — Patterico @ 11:50 am

Sometimes your humble blogger misses things. Could be work, could be whatever. Anyway, this story is nine days old, but better late than never:

California voters will not be asked this year to decide whether to roll back California’s ban on racial preferences in college admissions, Assembly Speaker John A. Pérez announced Monday.

At the request of Sen. Ed Hernandez, author of Senate Constitutional Amendment 5, Pérez said he is sending the measure back to the Senate without taking any action in the lower house.

“It really is driven most by my interest in making sure we come out with the best policy outcomes,” Pérez said.

Apparently there was a major backlash in the Asian electorate, as expressed to various state senators including the now-indicted Leland Yee. (That’s how I learned about this, from Dan Harlan on Twitter, commenting on the coincidence.)

Don’t get complacent, though. What does this mean?

Pérez said he and Senate leader Darrell Steinberg will form a task force to discuss whether California should change the way it admits students to public universities.

I’ll tell you what I think it means: “we are going to discuss back-door ways to get around 209.”

Well, they do that all the time. We all know they do.

Harry Reid: If You Can’t Get Through to HealthCare.Gov, It’s Because You’re Not Educated on Using the Internet

Filed under: General — Patterico @ 10:31 am

No more blaming the Obama administration officials who made the bad decisions, or even the contractors who built the Web site. No, America: if you can’t get through, it’s your own fault:

J.D. told us last night about the latest blown deadline: basically, the world is getting an extension on signing up. Why? Because the Web site was messed up for months? No. A press conference was called to explain. After talking up the virtues of setting up brick and mortar stores for people to sign up when they have been unablel to get through online, Harry Reid delivered this garbled gem:

These people need a little extra time. It’s not, the example they gave is a 63-year-old woman came into the store and she said: “I almost got it. But every time, I just about got there, it would cut me off.” We have a lot of people just like this, through no fault of the Internet, because people are not educated on how to use the Internet.

Stupid Americans. Please get educated on how to deal with a federal monstrosity of a Web site, will you? We’re giving you one last chance. Try not to screw it up this time.

Breaking: California Democrat State Senator Indicted for Public Corruption; UPDATE: Yee Detained

Filed under: General — Patterico @ 10:09 am

San Jose Mercury News:

SAN FRANCISCO — State Senator Leland Yee has been indicted for public corruption as part of a major FBI operation Tuesday morning spanning the Bay Area, according to law-enforcement sources.

Yee, D-San Francisco, highlights a string of multiple arrests that also includes infamous Chinatown gangster Raymond “Shrimp Boy” Chow, connected to a variety of charges including racketeering and drug crimes, sources said.

FBI agents and local police are serving arrest and search warrants throughout the Bay Area, with agents seen in locations in San Francisco and San Mateo, as well as Yee’s Capitol office in Sacramento. One of the searches was at the San Francisco Chinatown office of the Gee King Tong Free Masons and is linked to Chow’s arrest.

I think they mean “Wednesday morning” because my impression is that this is all going on right now.

Thanks to MM.

P.S. Perhaps my favorite tidbit:

Yee is the state’s third Democratic legislator recently tied to corruption allegations. In February, State Sen. Ron Calderon, D-Montebello, surrendered to authorities after being indicted on bribery charges. In January, Assemblyman Roderick Wright, D-Inglewood, was convicted of voter fraud and perjury stemming from a 2010 indictment.

Voter fraud? Why, voter fraud never happens!

Never fails. Republicans always have the sex scandals, while Democrats tend to have the corruption scandals.

UPDATE: Yee has been detained, per the L.A. Times:

State Sen. Leland Yee of San Francisco has been detained after a series of raids by FBI and gang task force officials Wednesday, according to various media reports.

FBI agents searched Yee’s state Senate office Wednesday morning but declined to comment to The Times on the nature of their investigation. News photos showed Yee, a Democrat who is also running to be California’s secretary of state, in the backseat of a patrol car as he arrived at a federal courthouse in downtown San Francisco.

Dan Lieberman, Yee’s press secretary, told The Times his office would not comment on the FBI raids, which were reportedly linked to the arrest Wednesday morning of Raymond “Shrimp Boy” Chow.

Somehow the L.A. Times declined to provide one of those photos. If a reader finds one, let me know and I will post it.

UPDATE x2: Here is the first photo I have found, from NBC Bay Area:

Screen Shot 2014-03-26 at 10.41.08 AM

UPDATE x3: Mayor of Charlotte, North Carolina also arrested on corruption charges today. Prepare for a shock: it’s another Democrat.

Charlotte Mayor, Patrick DeAngelo Cannon, was arrested today by FBI agents for alleged violations of federal public corruption laws, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal criminal complaint filed in U.S. District Court, charges Cannon, 47, of Charlotte, with theft and bribery concerning programs receiving federal funds, honest services wire fraud and extortion under color of official right.

Thanks to crosspatch.

UPDATE x4: Yee recently received an award for making government more transparent:

For his efforts to bring greater government transparency, Senator Leland Yee (D-San Francisco/San Mateo) will be honored with the Public Official Award by the Northern California Chapter of the Society of Professional Journalists (SPJ) on Thursday, March 20, at 6:00 PM, at the City Club in San Francisco.

“I am honored to receive this award from the Society of Professional Journalists,” said Yee. “I’m proud to share the stage with so many who have done so much to keep our government open and accountable.”

Yee received the award in recognition of his opposition to efforts to weaken the California Public Records Act by loosening disclosure requirements for local governments.

Yee has authored numerous bills designed to make government more transparent.

Thanks to K.T.


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