Good morning, and welcome to the Tuesday edition of what I'm reading on the U.S. economy:
Pivoting to income inequality
Harvard economist Greg Mankiw says President Obama has changed the national conversation to income inequality, in an effort to distract attention from the "disastrous rollout" of his health-care reform. Any conclusions on the degree of income stagnation in the U.S. depend a lot on the data set one chooses. For example, from 1979 to 2007 median real income as measured by "pre-tax, pre-transfer cash income of tax units rose by only 3.2 percent," Mankiw writes on his blog. Include government transfer payments (half of American households receive government benefits) and taxes; substitute households for tax units; adjust for household size, and that 3.2 percent increase becomes 36.7 percent, just like that! Mankiw says the "latter measure is more relevant, but the former measure of income often gets more attention than it deserves."
In case you didn't hear it the first time
The Washington Post's Ezra Klein unleashed a tsunami with a column last week challenging Obama's assertion that income inequality is "the defining challenge of our time." Klein had countered that persistently high unemployment and anemic growth were bigger challenges. Yesterday he responded to his responders. He explained that he never said income inequality was unimportant. He said he wasn't convinced that it caused unemployment, even though it makes it worse. He was very clear about that in his Dec. 13 column. Klein's responders, members in good standing of the liberal intelligentsia, should read and digest what he's saying before they fire their bullets.
Remember peak oil?
It's somewhere over the horizon. The U.S. Energy Information Agency released its Annual Energy Outlook for 2014 yesterday and revised its estimates for crude output sharply higher. Improvements in horizontal drilling and hydraulic fracking techniques have unleashed nothing short of an energy revolution. By 2016, the EIA expects crude output of 9.5 million barrels a day, close to the 1970 high and almost double 2008 output. Oil production, it seems, has a way to go before it actually peaks.
What to expect from the activist Janet Yellen
The National Journal's Michael Hirsh has a long article on Janet Yellen, with lots of quotes from those who know her well. Here's the essence: Yellen "represents a strain of interventionist thinking that has not found expression at such a high level in Washington in decades —- at least since Ronald Reagan and his Milton Friedman-inspired attempt to shrink the size of government." She has devoted much of her research to studying unemployment, which she views as an economic problem and a personal challenge. And she's likely to be more aggressive on regulation -- and tougher on Wall Street -- than her immediate predecessors.
Obama gets top honors for his 2013 whoppers
PolitiFact gave President Obama its 2013 Lie of the Year Award for his pledge that "if you like your health-care plan, you can keep it." Now the Washington Post's Glenn Kessler (aka the Fact Checker) weighs in with his picks. Obama can boast "three of the most misleading claims of the year." In addition to his health-care promise, Kessler gives the president top honors for these gems: "The Capitol Hill janitors just got a paycut;" and "The day after Benghazi, I acknowledged that this was an act of terrorism."
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)