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I saw this in a comment (hat tip to TheMomCat) and thought it deserved a diary. Turns out, the two economists busted for producing a phony report on debt and economic growth both had strong ties to billionaire bankster and austerity obsessive Pete Peterson.

Sourcewatch, a branch of the Center for Media and Democracy, has the scoop:

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 astroturf supergroup, "Fix the Debt," which has set a July 4, 2013 deadline for securing an austerity budget.

Reinhart, described glowingly by the New York Times as "the most influential female economist in the world," was a Senior Fellow at the Peterson Institute for International Economics founded, chaired, and funded by Peterson. Reinhart is listed as participating in many Peterson Institute events, such as their 2012 fiscal summit along with Paul Ryan, Alan Simpson, and Tim Geithner, and numerous other Peterson lectures and events available on YouTube. She is married to economist and author Vincent Reinhart, who does similar work for the American Enterprise Institute, also funded by the Peterson Foundation.

Kenneth Rogoff is listed on the Advisory Board of the Peterson Institute. The Peterson Institute bankrolled 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.)

Bankrupt Analysis
The authors have issued two rebuttals to the Amherst study. In their latest, they object that anyone would think they were "misconstruing analysis to support austerity" or a political agenda. Perhaps it had to do with pieces like this one entitled "Too Much Debt and the Economy Can't Grow" that warns against further stimulus at a time when mass unemployment is wreaking devastation on the lives and livelihoods of workers young and old.

Economists like Herndon, Ash, Pollin, Baker, and Krugman have never bought the argument that economies can cut their way out of a crisis, and now data from the Reinhart-Rogoff study, from numerous European countries, from the IMF, and even from CMD's home state of Wisconsin (now ranked an astonishing 44th in job creation), support their contentions.

If only they had half a billion to spread the word.

I was already suspicious that this study was deliberately manipulated to support a desired political outcome. These "errors" were so glaringly obvious that it simply defies plausibility to think that two highly esteemed economists didn't catch them. But then, why would two academics do such a thing?

The ties to Pete Peterson cast a whole new light on this question. Peterson and his groups have a history of lying and fudging their numbers to sell their agenda. These are not neutral, objective academics. They are economist operatives in a long running PR campaign to advance a right wing economic agenda.

One of my favorite parts of Charles Ferguson's movie "Inside Job" is his going after what has now become a widespread, pervasive corruption of the economic establishment. Watch a few of these clips of Ferguson putting it to a few of these tools. It's delightful footage.

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Get the Academy Award winning documentary Inside Job

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