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On March 28, 2012, Representatives [[Jim Cooper]] (D-TN) and [[Steve LaTourette]] (R-OH) put forward a bill modeled on the plan which, according to analyst [[Ezra Klein]], had "somewhat less in tax increases." The House rejected the proposal 382 to 38. 22 Democrats and 16 Republicans supported the bill.<ref>Ezra Klein, [http://www.washingtonpost.com/blogs/wonkblog/post/wonkbook-house-reaches-bipartisan-deal-to-reject-simpson-bowles/2012/03/29/gIQAfucdiS_blog.html Wonkbook: House reaches bipartisan deal to reject Simpson-Bowles] ''The Washington Post'' - WonkBlog, March 29, 2012.</ref> <ref>Andrew Taylor, [http://www.huffingtonpost.com/2012/03/29/simpson-bowles-plan-rejected-house-vote_n_1387601.html Simpson-Bowles Plan Rejected By House], ''The Huffington Post'', March 28, 2012.</ref>
==Reinhart-Rogoff Error Pulls Explodes Important Argument for Austerity== In 2010, Harvard economists Carmen Reinhart and Kenneth Rogoff released [http://www.nber.org/papers/w15639.pdf a study] (“Growth in a Time of Debt”) that presented empirical evidence from 44 nations over a 200 year time span to demonstrate that countries with a public debt over 90 percent of GDP have average growth rates one percent lower than other nations. When a team of economists at UMass Amherst got a hold of the data used by Reinhart and Rogoff, they uncovered numerous errors. In 2013, they released their own report which found that "coding errors, selective exclusion of available data, and unconventional weighting of summary statistics lead to serious errors that inaccurately represent the relationship between public debt and GDP growth." Adjusting for these errors, the Amherst team contends that "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent." <ref name="PeriUmass"> Thomas Herndon, Michael Ash, Robert Pollin, [http://www.peri.umass.edu/236/hash/31e2ff374b6377b2ddec04deaa6388b1/publication/566/ Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff], Political Economy Research Institute, University of Massachusetts , April 15, 2013. </ref> ====Study Used to Justify Harmful Cuts and High Unemployment====It is hard to understate the importance of the flawed Reinhart-Rogoff study. It has been [http://www.reinhartandrogoff.com/related-research/growth-in-a-time-of-debt-featured-in cited] around the globe by academics, politicians, and the mainstream media. In the United States, it is one of Paul Ryan's favorite justifications for his draconian [http://www.thenation.com/blog/173920/paul-ryans-austerity-agenda-relies-bad-math-coding-errors-and-significant-mistake Path to Prosperity budget], for GOP rejection of further stimulus, and the Fix the Debt crowd's frenzied calls for urgent action. Simpson-Bowles, Pete Peterson and "Fix the Debt" have all cited this study to justify harmful cuts and a stalemate on stimulus currently condemning millions to mass unemployment.In Europe, "R&R's work and its derivatives have been used to justify austerity policies that have pushed the unemployment rate over 10 percent for the euro zone as a whole and above 20 percent in Greece and Spain. In other words, this is a mistake that has had enormous consequences" for real people, says economist Dean Baker in a piece called [http://www.thenation.com/blog/173920/paul-ryans-austerity-agenda-relies-bad-math-coding-errors-and-significant-mistake "How Much Unemployment Did Reinhart and Rogoff's Arithmetic Mistake Cause?"]Time and time again, economists tried to replicate the Reinhart-Rogoff results, but to no avail. Now, Thomas Herndon, Michael Ash, and Robert Pollin at UMass Amherst [http://www.peri.umass.edu/236/hash/31e2ff374b6377b2ddec04deaa6388b1/publication/566/ show us why]. One mistake, admitted by the authors and gaining the most attention, is an Excel spreadsheet error. Check out the [http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems screen shot of the year].As the authors put it: "A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. [Reinhart-Rogoff] averaged cells in lines 30 to 44 instead of lines 30 to 49... This spreadsheet error... is responsible for a -0.3 percentage-point error in RR's published average real GDP growth in the highest public debt/GDP category." Belgium, in particular, has 26 years with debt-to-GDP above 90 percent, with an average growth rate of 2.6 percent (though this is only counted as one total point due to the weighting above). <ref name="PeriUmass"/> ''Mother Jones'' dubbed it "the Excel Error Heard Round the World.” But there are multiple errors in the study detailed here by financial writer Mike Konczal of the Roosevelt Institute. <ref>Mike Konczal, [http://www.nextnewdeal.net/rortybomb/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems], Next New Deal, April 16, 2013. </ref> ====Economists Continue to Make Errors Defending Themselves==== From the ''Huffington Post'': <ref>Mark Gongloff, [http://www.huffingtonpost.com/2013/04/22/reinhart-rogoff-mistakes_n_3133752.html Reinhart And Rogoff Make More Mistakes While Admitting To Research Flaws ], Huffington Post, April 22, 2013. </ref> <BLOCKQUOTE>In a [http://www.huffingtonpost.com/mark-gongloff/reinhart-rogoff-research-response_b_3099185.html?utm_hp_ref=mark-gongloff detailed response to Herndon], Reinhart and Rogoff copped to some mistakes, including an error in creating a formula in Excel. But they stood by the general gist of their paper, that high debt is associated with slower economic growth. They suggested that Herndon's paper backed up that view, in fact.And yet the mistakes just keep coming: In their response, Reinhart and Rogoff said that small differences in economic growth add up over time, saying a country growing one percent too slow for 23 years would end up with an economy 25 percent smaller than it should have been.But Phil Izzo of the Wall Street Journal points out that, actually, a growth deficit of one percent per year for 23 years would leave an economy 20 percent smaller, not 25 percent.Reinhart acknowledged the growth-rate error to the WSJ's Izzo, but said the number didn't mean much; she was only trying to illustrate a broader point, that small changes in growth have big effects over time.</BLOCKQUOTE> ====Ties to Pete Peterson and "Fix the Debt"==== The economists both have ties to Wall Street billionaire [[Pete Peterson]]. As the Center for Media and Democracy detailed in the online report, "The Peterson Pyramid," the Blackstone billionaire turned philanthropist has spent half a billion dollars to promote this chorus of calamity. Through the Peter G. Peterson Foundation, Peterson has funded practically every think tank and non-profit that works on deficit- and debt-related issues, including his latest 2012 astroturf supergroup, "Fix the Debt.”Reinhart, described glowingly by the ''New York Times'' as "the most influential female economist in the world," was a Senior Fellow at the [http://www.google.com/url?q=http%3A%2F%2Fwww.iie.com%2Fstaff%2Fauthor_bio.cfm%3Fauthor_id%3D86&sa=D&sntz=1&usg=AFQjCNHSTM_yK62gJP7x2mLnk25cJsjZqg Peterson Institute for International Economics] founded, chaired, and [http://www.pgpf.org/Issues/Grants/2010/12/16/~/link.aspx?_id=11E303D17D4444B0BC413A5E7211B658&_z=z funded] by Peterson. Reinhart is listed as participating in many Peterson Institute events, such as their [http://www.pgpf.org/Issues/Fiscal-Outlook/2012/05/050812-Fiscal-Summit-Media-Advisory.aspx 2012 fiscal summit] along with Paul Ryan, Alan Simpson, and Tim Geithner, and numerous other Peterson lectures and events available on [http://www.youtube.com/watch?v=MkcqBucVgSc YouTube]. She is married to economist and author Vincent Reinhart, who does similar work for the American Enterprise Institute, [http://www.pgpf.org/Issues/Grants/2010/12/16/Grants-American-Enterprise-Institute.aspx also funded by the Peterson Foundation].Kenneth Rogoff is listed on the [http://www.piie.com/institute/advisory.cfm Advisory Board] of the Peterson Institute. The Peterson Institute bankrolled [http://www.piie.com/publications/chapters_preview/6222/01iie6222.pdf and published] a 2011 Rogoff-Reinhart book-length collaboration, "A Decade of Debt," where the authors apparently used the same flawed data to reach many of the same conclusions and warn ominously of a "debt burden" stretching into 2017 that "will weigh heavily on the public policy agenda of numerous advanced economies and global financial markets for some time to come." (Note that not everyone associated with the Institute touts the Peterson party line.)
This article is part of the Center for Media and Democracy's investigation of Pete Peterson's Campaign to "Fix the Debt." '''Please visit our main SourceWatch page on [[Portal:Fix the Debt|Fix the Debt]].'''
