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Jared Bernstein

Jared Bernstein

Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

Articles by Jared Bernstein

Wait…wuh? Reflections and links after a totally crazy week…

3 days ago

…with an unbelievable ending.
First, links to stuff you may have missed.
–A joint oped with Ben Spielberg on why work requirements for Medicaid are a really bad idea. House R’s tried to win over their hard right colleagues by adding this to their benighted health care bill, which by now you know failed anyway. But I fear it ain’t going away.
–Speaking of Ben, here’s a link to our podcast episode #5, on health care, of all things, with an absolutely kickin’ musical interlude and a…um…long joke by Ben.
–I contend, and events suggest I may be right, that for the R’s, health care reform is a lot harder to pull off than tax cuts. So why did they start with health care? Here’s why.
–Finally, off the top of the old noggin’, I just scratched out a bunch of explanations as to why the R’s failed to

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Health care spending and health care costs: they’re not the same thing!

8 days ago

Health economist David Cutler offers sage thoughts on the R’s health care plan. I like where he starts. When Paul Ryan said that what his plan brings to the table is the “freedom” for healthy people not to have to subsidize the sick, many progressives pointed out that…um…that’s kinda how insurance works, Paul.
But as Cutler points out:
Critics were probably too quick to dismiss Ryan’s remarks as ignorant. What he said reflects a long-standing vision of many on the right about who should pay for the chronically ill. Spreading the costs so that healthy people pay more than their own care likely will warrant in a given year is one option. But that’s not the solution Republicans have traditionally favored. Their answer for health care, as for old-age support, is to put a greater burden on

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ICYMI: 8 problems with Trump’s ‘budget’ (with a side of thoughts about defense spending)

10 days ago

Over at WaPo.
One thought about point #7:
7) While analysis of this budget proposal has been extensive, there is one point on which I’ve seen too little analysis: Does the Defense Department really require an extra $54 billion to meet its mission? Lawrence Korb, who has street cred in this space, emphatically says no here. “Just as the sequester is a non-strategic and unwise way to limit a budget, increased funding that is not connected to a sound defensive strategy for the demands we face today will be non-strategic, wasteful, and do more harm than good.”
For someone who’s deeply interested in fiscal policy, I don’t research/write enough about defense spending. That’s a problem, and not just because it’s about 15% of the budget, but because it gets so little scrutiny. To be clear, this is

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My favorite remaining institutions: the justice system and the Fed

11 days ago

There are at least two American institutions that remain venerable, albeit vulnerable: the justice system and the Federal Reserve.
On my way in this morning, I learned some details about the Hawaiian judge’s rejection of President Trump’s travel ban v2.0. While team Trump believed they’d removed the problematic language from their first run at this executive order, the judge disagreed, in part—and this is what really moved me—due to Trump’s unequivocal anti-Muslim rhetoric during the campaign.
From the NYT, my bold:
Judge Watson flatly rejected the government’s argument that a court would have to investigate Mr. Trump’s “veiled psyche” to deduce religious animus. He quoted extensively from the remarks by Mr. Trump that were cited in the lawsuit brought by Hawaii’s attorney general, Doug

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Trump’s 2005 tax return: I’m more worried about his tax reform than his tax return

12 days ago

Just a quick note on the Trump tax return from 2005, the first few pages of which were released by the White House last night in advance of the much touted release on MSNBC.
To me, the thing smells like the dangle-the-key move–“look over here, not over there!”–I’ve come to expect from the Trump admin when things aren’t going their way. The House Republican’s health plan, which Trump was aggressively backing, is looking like a real dud (a “trap,” according to some fellow R’s), and I can see why the White House would like to quickly change the subject, as is their wont.
But isn’t his tax return a politically dangerous subject for President Trump to point at? Not in this case, because the pages he released do not appear to incriminate him much at all. He reportedly paid $38 million on income

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Hey, no fair! Governing is hard!

13 days ago

First, over at WaPo, check out my latest summary of the CBO score of the Republican’s just downright nasty, greedy “health care plan.”
Next, I agreed with David Leonhardt’s useful bit of history here, wherein he deconstructs the corner into which Republicans have painted themselves:
How did the party’s leaders put themselves in this position? The short answer is that they began believing their own hype and set out to solve a problem that doesn’t exist.
I agree, but I also think there’s something more prosaic going on here, and that is that it’s just way easier not to govern. That’s especially the case with health care, of which the politics are just wholly unforgiving.
Given today’s political dynamics, it is so much easier to be in permanent campaign mode, stoking your base, throwing

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Spinning out of control

14 days ago

Over at WaPo. One expects a certain amount of Sunday AM spin from politicians selling, in this case, the Republican health care plan. But this is a really bad plan–a hugely regressive tax cut attached to a bill that will leave millions uninsured. It is as if the problem they set out to solve is a) the rich need higher after-tax incomes, and b) the poor need less insurance coverage.
Speaking of spin, while I’m happy to crack wise all day, I’m with Paulie Walnuts Krugman on this incident with Sean Spicer on jobs day last Friday. Spicer told the press corps that his boss thought the jobs report “may have been phony in the past, but it’s very real now.” This just cracked up the press corps, who chortled at Spicy’s quip. But it got under my skin. Watch the video.

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Jobs Report: Strong report shows we’re closing in on full employment but not quite there yet.

17 days ago

In the latest edition of a long series of solid job reports, payrolls posted a strong 235,000 job gain last month, as the unemployment rate ticked down slightly to 4.7 percent and wages accelerated a bit.
Federal Reserve officials, many of whom had already been talking about getting back to their “normalization” campaign–raising the benchmark interest rate they control back up to more normal levels–sooner than later, will find very little in today’s report to wave them off a rate hike at their next meeting later this month.
The jobs day smoother, which averages out monthly noise over 3-, 6-, and 12-month periods, shows payroll growth at around 200,000 jobs per month at each one of these averages. Given the size and growth of the labor force, this healthy pace of employment growth is strong

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Trade, Trade Deficits, Secular Stagnation, and a Good Use for Excess Savings

19 days ago

Three recent articles caught my eye re international trade. First, there’s Neil Irwin reprising his theme, an important one, that the trade deficit isn’t a report card. Sometimes such imbalances are a problem, other times they’re not, so; as the balance of payments serenity prayer says: “Keynes, give us the wisdom to tell the difference.” Second, an oped by the Trump Administration’s trade guy Peter Navarro, who clearly does view the trade deficit as a report card that’s been bringing home F’s for about 40 years. Finally, an article about internal investment in China that needs to be seen in the context of the other two pieces.
First, Irwin’s correct that trade deficits can be harmful or benign. But how can we know which is which? A compelling answer, offered in this long essay by Michael

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Hey Peeps: On the Economy, Podcast #4 is Live!

20 days ago

In this episode, Ben and I talk about the increasing importance of the Labor Dept with one of our favorite advocates in this space, Judy Conti from the National Employment Law Project (an advocacy organization whose board I chair). If you’re thinking, “why do I need to learn about what the Labor Dept does?” then you’re our target audience, so hit play and check it out.
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Plus, there’s a musical interlude featuring one of my all-time favorite Motzartean melodies from his Serenade in D Major, aka the “Posthorn Serenade.” (What’s a posthorn? it’s this, but we’re losing the thread here;
Plus, another economics dad joke. I’ll bet you don’t know the three laws of economics…
As always, Ben and I welcome your feedback, suggestions, and

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The House ACA replacement plan will unwind the coverage gains of the ACA, part 1

20 days ago

Much as I worried about in an extended piece from yesterday on the problems with Republicans’ replacement ideas, their new bill to replace the Affordable Care Act will lead to less coverage and more cost shifting from government to moderate and low-income families.
I’m crunched for time this AM, so I’ll be adding to this post throughout the day, but here are a few initial impressions:
–The bill will lead to millions losing coverage, due to the repeal of the Medicaid expansion and to lowering the subsidies available to moderate- and low-income households.
–The key disconnect here is that their tax credits are no longer tied to the cost of coverage, so paying for health coverage will mean more out-of-pocket costs than under Obamacare. Once the CBO scores this aspect of the plan, along with

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Clashing with the Fed: Should they stay or should they go?

24 days ago

Should the Fed raise their benchmark interest rate at their meeting later this month?
As of this morning, financial markets put the likelihood of a March rate hike of another 25 basis points at 77.5 percent. That’s about twice what it was a few weeks ago, but since then, many Fed heads have suggested such a hike is on the table for their meeting later this month.
So, in the words of The Clash, should they stay or should they go?
Reasons not to raise:
–The job market is closing in on full employment, but it’s not there yet; both the underemployment rate and the prime-age employment rate remain elevated (btw, if you thought today was jobs day, you’re off by a week; this happens sometimes in March, as Feb is a short month). While a small brake tap won’t derail existing momentum, raising the

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Please don’t say “overhaul” when you mean “cut.”

25 days ago

I love my morning Budget Tracker update from Congressional Quarterly almost as much as I love my morning coffee. It provides that quick, efficient dive into the daily budget weeds that wonks like me crave (sorry, it’s behind a paywall).
So I was disheartened to see them fall into this trap that I’ve been pretty keyed up about of late (my bold):
Republican lawmakers made clear Wednesday that any efforts to overhaul entitlement programs like Social Security and Medicare are now on the legislative back burner.
Readers are somehow required to know that “overhaul” means “cut.” This being the Budget Tracker, most readers probably know the translation, but this is not the time for squishy, ambiguous language.
I’m not sure when that time will come, but until then, people writing about these issues

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Inflation?! We ain’t got no stinkin’ inflation!

27 days ago

This morning’s update to the GDP report from last quarter showed that the Fed’s preferred inflation gauge, the core PCE deflator, rose at an annual rate of only 1.2 percent in 2016Q4. Seasoned economists know that the technical term for such an increase is bupkis.
Now, OTE’ers know that I’m always going on about boosting the signal to noise ratio by looking at year-over-year changes instead of annualized quarterly ones. That holds here as well, as seen in the figure below: the yr/yr change cuts a smooth average through the noisier annualized quarterly change.
Source: BEA
Still, the deceleration in the noisier series could signal a slight slowing in an already low-pressure inflation environment. FWIW, a pure ARIMA forecast has the yr/yr change slowing from 1.7 percent to 1.5 percent over

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This AMs papers: stocks, bonds, and the budget parity principle

28 days ago

I’ve got a piece in WaPo this AM on the Trump stock market rally and what it tells you about the current dynamic, where the markets are just shaking off the fact that DC is pretty much in chaos. While I stress the skewed distributional implications of what’s going on…
But broadly speaking, to answer the question I posed at the top, yes, the markets know something, and it’s this: For all the chaos, gridlock, ethics violations, security breaches, and even threats to democracy from media suppression, the top few percent remain firmly insulated. Most of the economy’s pretax growth will continue to flow their way, and the forthcoming tax changes will probably see them doing even better in the after-tax distribution.
…I didn’t include this picture of the who owns stock market wealth by income

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Why we need a strong, activist, pro-worker Labor Department

February 25, 2017

Meant to link to this here. Obviously, we’re not going to get what we need in this space from this admin, but the downfall of Puzder is an unequivocal plus. The new nominee, Acosta, is a more serious candidate.
But my key point is that the economy is changing in ways that make the DoL more germane than ever.

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The On-the-Economy Podcast: Episode 3 is here!!

February 21, 2017

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Ben and I give an overview of what full employment is and why it’s important, then bring in Slate’s very insightful Jordan Weissmann to discuss some of the Trump Administration’s comments about the labor market and how policymakers should think about increasing employment opportunities for people.
Musical Interlude: “Driftin’’” by Herbie Hancock
Jared’s Reading Recommendation: “Why I Voted to Keep Rates Steady” by Neel Kashkari
Ben’s Reading Recommendation: “Why We Need a Federal Job Guarantee” by Mark Paul, William Darity Jr., and Darrick Hamilton
And don’t forget to write us at if you have any suggestions to improve the show or questions you’d like us to tackle in our mailbag section.

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Before you blame the robots, look to the policy (and the data)

February 21, 2017

This very incisive bit of work from the NYT editorial page makes two critical points:
The data do not support the claim that there’s been an acceleration in labor-replacing technology displacing US workers. To the contrary, measures of capital investment and especially and most persuasively, productivity growth, have slowed, trends that point in the opposite direction.
The adjustment to technological change (and trade, and every other structural shift) takes place in a policy context that can either help those hurt by the change, or ignore them. US labor policy used to be a lot more helpful.
Re point #1, here’s the relevant figure. If automation were increasingly displacing workers, we’d be seeing more output produced in fewer labor hours, aka, faster productivity growth. But we see the

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I don’t understand this graph

February 21, 2017

I’ll have a lot more to say about this later, but I don’t understand this figure from the front page of my WSJ this AM.
Source: Wall St. Journal
The idea, which has some merit but is easily abused, is that the Trump admin wants to refine the way we measure trade flows–imports and exports–by accounting for re-exports, goods made elsewhere that pass through our country en route to somewhere else.
There’s a cogent argument that these goods should not be treated as exports, since they were not made here, and thus did not involve the economic activity of regular exports (other than some port/warehousing activities, I guess).
But here’s the thing, and the reason I find the figure above confusing, though I may well be missing something and will read up on this ASAP: if you’re going to disregard

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If only we could apply dynamic scoring to the rest of life

February 19, 2017

“Dynamic scoring” is one of those phrases that sounds way more innocent than it is. It’s the process of guesstimating what impact your budget proposals will have on economic growth, and in turn, revenues flowing into the Treasury.
For example, if your budget includes big tax cuts, as Trump’s will, that’s obvious a revenue loser, which is exactly what the “static” scores show. But with dynamic scoring, you can claim to make back some share of that loss due to the growth effects spun off by your awesome, pro-growth tax-cut plan.
You see the problem. Economic models are dumb, or at least compliant, beasts who will give you whatever answer you want. Put such models in the hands of the purveyors of alternative facts, and the outcome is predictable, as the WSJ reported on Friday and budget nerd

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A look at a few recent articles that caught our attention: immigration, SNAP, ACA repeal.

February 16, 2017

First, Eduardo Porter of the NYT wrote a controversial piece about the negative impacts of immigration (not Porter’s view–he’s reporting, not endorsing). I’ll have a lot more to say about the research in the piece, but to put it mildly, I’m unconvinced.
The piece reports on research suggesting the increase in low-skill immigration has put downward pressure on productivity growth, by lowering the skill level of the workforce. This immediately triggered my BS meter, as no one really knows what makes productivity growth go up and down. Given the sharp slowdown in this key variable in recent years–which really is a problem–our ignorance enables people to plug in the thing they don’t like as the cause.
Neither does the pattern of immigrant flows make much sense in this regard, at least from

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Slack, inflation, and the Fed

February 15, 2017

What with Chair Yellen testifying in Congress over the last couple of days, I’ve been trying to dig into the case for forthcoming Fed rate hikes. Clearly, there is more price pressure in the system than in recent months, but there are also these factors to consider:
–The data-driven case for rate hikes is far from a slam dunk, according to evidence I present in the WaPo today.*
–Today’s inflation report is interesting in that it gives ammo to both hawks and doves. Here’s the figure from BLS:
Source: BLS
What’s happening here is that energy costs are normalizing, after being freakishly low for awhile (see figure below). From the perspective of Fed and monetary policy, the key insight here is that energy costs are set on global markets and thus not a reflection of US capacity constraints.

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CBO: There’s more slack in the labor market than you thought

February 14, 2017

[co-authored with Ben Spielberg]
OTE readers know that in the quest for full employment, we pay a lot of attention to the extent of slack in the labor market (and btw, our next podcast episode will focus on this concept of labor market slack—what is it, how much is there, etc. We know…we can hardly wait, too!). One way economists try to gauge this concept of slack is to compare the actual value of labor market indicators to the theoretical value of where they’d be at full employment.
So when a recent CBO revision pretty significantly raised the budget office’s estimate of the potential labor force, we took notice: their revision suggests there’s more slack in the job market than they previously thought.
What is “potential labor force?” It’s CBO’s estimate of what the labor force would be

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We’re wired to discount the future. That’s uniquely problematic in our system.

February 13, 2017

Over at WaPo.
The R’s attack on regulation writ large is clearly underway and is a profound threat. We can and should fight this on a case-by-case basis–Dodd-Frank, fiduciary rule, climate–but it’s equally important to puzzle out the thematics of why this is such an effective play for them.

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The dollar goes up and down and yet…life goes on.

February 10, 2017

The always thoughtful Neil Irwin has a good piece on why tax reform is so damn hard to pull off, citing a concept that’s big here at OTE: path dependency, or “where you end up is significantly a function of where you start out.”
His case study is about leading Republicans’ idea for replacing the corporate tax with a sales-based, border adjusted tax, or the BAT I recently wrote about.
The tax code has been flawed and inefficient for a very long time, precisely because fixing it could be so terribly disruptive. In a nutshell, the corporate tax issue provides an excellent case study of the problem of “path dependency” in public policy.
The United States might well have a better, more efficient tax code today if, starting a century ago, lawmakers had designed it so that businesses were

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Episode #2 of the OTE Podcast is up!

February 7, 2017

Get the skinny from Donna, Hannah, and Stacy on how block grants are a threat you need to know about, hear some kickin’ Hank Mobley, and I tell a kinda lame joke. It’s all on episode #2 of OTEpc at iTunes or Soundcloud.

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Trump’s revealing response to the block on his immigration ban

February 7, 2017

This is an incisive editorial from today’s NYT, on President’s Trump’s Twitter attack on the “so-called judge” who blocked his immigration ban. The piece argues that the role of courts, as upholders of rationality, has, in the age of Trump, become more important than ever, particularly as other key institutions, including Congress and significant swaths of the media, cannot be counted on to play their necessary roles in maintaining a civil, safe society.
No question that’s true, and the quick response of the courts to a ban that even I, a non-lawyerly observer, immediately viewed as unconstitutional, is extremely good to see (later today, a federal appeals court will hear the government’s argument to restore the ban).
But I saw something else in Trump’s attacks on the judiciary. Our

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