Posted on 10/14/2011 12:37:35 PM PDT by Tango Whiskey Papa
The Seven Biggest Economic Lies (Freepers, Please rebut!) Author: Robert Reich · October 12th, 2011 Source: http://www.economonitor.com/blog/2011/10/the-seven-biggest-economic-lies/
The President’s Jobs Bill doesn’t have a chance in Congress — and the Occupiers on Wall Street and elsewhere can’t become a national movement for a more equitable society – unless more Americans know the truth about the economy.
Here’s a short (2 minute 30 second) effort to rebut the seven biggest whoppers now being told by those who want to take America backwards. The major points:
1. Tax cuts for the rich trickle down to everyone else. Baloney. Ronald Reagan and George W. Bush both sliced taxes on the rich and what happened? Most Americans’ wages (measured by the real median wage) began flattening under Reagan and have dropped since George W. Bush. Trickle-down economics is a cruel joke.
2. Higher taxes on the rich would hurt the economy and slow job growth. False. From the end of World War II until 1981, the richest Americans faced a top marginal tax rate of 70 percent or above. Under Dwight Eisenhower it was 91 percent. Even after all deductions and credits, the top taxes on the very rich were far higher than they’ve been since. Yet the economy grew faster during those years than it has since. (Don’t believe small businesses would be hurt by a higher marginal tax; fewer than 2 percent of small business owners are in the highest tax bracket.)
3. Shrinking government generates more jobs. Wrong again. It means fewer government workers – everyone from teachers, fire fighters, police officers, and social workers at the state and local levels to safety inspectors and military personnel at the federal. And fewer government contractors, who would employ fewer private-sector workers. According to Moody’s economist Mark Zandi (a campaign advisor to John McCain), the $61 billion in spending cuts proposed by the House GOP will cost the economy 700,000 jobs this year and next.
4. Cutting the budget deficit now is more important than boosting the economy. Untrue. With so many Americans out of work, budget cuts now will shrink the economy. They’ll increase unemployment and reduce tax revenues. That will worsen the ratio of the debt to the total economy. The first priority must be getting jobs and growth back by boosting the economy. Only then, when jobs and growth are returning vigorously, should we turn to cutting the deficit.
5. Medicare and Medicaid are the major drivers of budget deficits. Wrong. Medicare and Medicaid spending is rising quickly, to be sure. But that’s because the nation’s health-care costs are rising so fast. One of the best ways of slowing these costs is to use Medicare and Medicaid’s bargaining power over drug companies and hospitals to reduce costs, and to move from a fee-for-service system to a fee-for-healthy outcomes system. And since Medicare has far lower administrative costs than private health insurers, we should make Medicare available to everyone.
6. Social Security is a Ponzi scheme. Don’t believe it. Social Security is solvent for the next 26 years. It could be solvent for the next century if we raised the ceiling on income subject to the Social Security payroll tax. That ceiling is now $106,800.
7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. There’s nothing unfair about it. Lower-income Americans pay out a larger share of their paychecks in payroll taxes, sales taxes, user fees, and tolls than everyone else.
Demagogues through history have known that big lies, repeated often enough, start being believed — unless they’re rebutted. These seven economic whoppers are just plain wrong. Make sure you know the truth – and spread it on.
This post originally appeared at Robert Reich’s Blog and is reproduced with permission.
EconoMonitor - A Roubini Global Economics Project
2. "Higher taxes on the rich would hurt the economy and slow job growth. False." Same reason as #1! Liberals love to give credit to FDR for all of his great economic policies but they ignore the fact that WW II saved him from his own stupidity. Reich himself states, “Yet the economy grew faster during those years than it has since.” Post WW II boomed, including the Eisenhower years, because of pent-up consumer demand after WW II, not because of a low or high top marginal tax rate. Secondly, the National Federation of Independent Business puts the number of small business owners in the highest tax bracket at 14%, not the minuscule 2% claimed by Reich. Regardless, it’s a given that small businesses generate the bulk of jobs in today’s economy. Why harass this viable source of jobs creation?
3. "Shrinking government generates more jobs. Wrong again." Reich totally misses the fact that the expense of teachers, fire fighters, police officers, government contractors, social-welfare workers, military personnel, bureaucrats, etc., are a negative drastic drain on our economy, especially when this sector has grown far faster than the private sector. The best thing that could happen to us taxpayers is to cut loose 700,000 bureaucrats Reich predicts as “losses” from the House GOP $61 billion in spending cuts.
4. “Cutting the budget deficit now is more important than boosting the economy. Untrue.” Reich totally ignores the fact that profligate government spending has run up a $14+ trillion bill due payable by our grandkids. Somebody has got to bite the golden fleece bullet and cut these runaway spending budgets in order for the generations to come to have any semblance of an economic future. Now is the time to do it, before the libs run up even higher deficits for my grandkids to face. I’d like for Reich to defend “getting jobs and growth” by the expense of the millions of dollars spent getting 15 jobs via most of these “Green Jobs” that Øbama's Energy Czar is foisting on us taxpayers.
5. “Medicare and Medicaid are the major drivers of budget deficits. Wrong.” I totally disagree with Reich’s contention that “drug companies and hospitals” are the reason’s for high health cost. Both Medicare and Medicaid are greatly abused; running to the ER for a hangnail or headache is not the way to lower health care cost. Until we make Americans accountable, involved in their own health care expenses and responsible for controlling their health care cost, medical cost is going to continue climbing astronomically. We need to outlaw defined benefit HealthCare plans and make “defined contribution plans” mandatory. This is the only way to stop abuse of healthcare; stop this seeking medical care with someone else having to pay their bills; namely me and ever other taxpayers for the Section 8 folks.
6. “Social Security is a Ponzi scheme. Don’t believe it.” This Berkeley professor has to be the only semi-intelligent individual in America that doesn’t understand that Social Security is the classic Ponzi scheme!
7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. With 47% of Americans paying absolutely NO income tax (rebates, returns, deductions, etc allowed) they have NO skin in the game. Therefore, they have no reason NOT to milk the system because it cost them absolutely nothing. As with defined contribution healthcare plans, unless they pay some amount (even minuscule), there is no reason to economize.
Lastly, one has to expect this sort of liberal, socialistic, progressive thinking out of any professor at the UC-Berkeley.
Bull!! If your empty left pocket owes your empty right pocket $5000 you are still insolvent.
Ping.
Strawman argument. Employment and growth are the targets of trickle-down. We entered 90+ months of uninterrupted growth in GNP because of the Reagan tax cuts. And unemployment fell to the lowest (we were essentially at full-employment) because of the Reagan policies.
Clinton gets ZERO credit for the sustained growth in the 90s in my book as the Republic Contract With America was THE determining factor in that decade's economic well being.
Social Security is now largely funded with new Debt treasury bills. See
A Liberal Democrat explains the why the Social Security Trust Fund is safe(video)
Democrats and the Social Security Trust Fund Lie Exposed today
7. It’s unfair that lower-income Americans don’t pay income tax. Wrong. There’s nothing unfair about it. Lower-income Americans pay out a larger share of their paychecks in payroll taxes, sales taxes, user fees, and tolls than everyone else.
Payroll taxes are entitlement taxes like SS above. That doesnt pay for itself let alone all the other crap Democrats demand. The other half of Americans need to learn that government is NOT FREE.
Per 2., the economy was in decline after 1981 or at least a steeper decline. Didn’t seem that way, and Carter had 1 term and Reagan 2. We must have been really stupid back then since we obviously couldn’t tell the economy was worse.
Reich/Roubini are wrong. From Zero Hedge:
Retail sales DOWN 5% for September, media reports UP 1.1%.
http://confoundedinterest.wordpress.com/
Really sad that we are so focused on media cheerleading that we ignore the REAL numbers.
Anyone who would even listen to this demented midget is beyond convincing of anything.
bfl
Pack the whole works into one statement. Borrow 40%+ on every dollar spent. Where at a cross roads.
The tech boom and the jobs created by the advent of Ecommerce and Y2K had a lot to do with it too.
Taxes on the rich are paid with funds that otherwise would have been saved and invested. These taxes reduce the demand for labor by business firms in comparison with what it would otherwise have been, and thus either the wage rates or the volume of employment that business firms can offer. For they deprive business firms of the funds with which to pay wages.
By the same token, they deprive business firms of the funds with which to buy capital goods. This, together with the greater spending for consumers' goods emanating from the government, as it spends the tax proceeds, cause the production of capital goods to drop relative to the production of consumer's goods. In addition, of course, they operate to reduce the degree of capital intensiveness in the economic system and thus is ability to implement technological advances.
These truths are discovered and demonstrated to be true by the process of reason and the process of deduction from elementary principles. The fact that empirical data show that the economy grew fast during those years of high taxes means that other positive economic forces were operating at the same time as the negative taxes on the rich which were able to overcome the negative effects of the taxes on the rich and were able to cause the economy to grow.This data does not falsify the basic principle about higher taxes harming the economy.
He also fails to mention that the US auto industry, due to the poor workmanship of its UAW built cars during the 70's and 80's, literally handed over half of its home market to foreign makes. If he is like most liberals I know, he himself drives a foreign car, yet blames Reagan and Bush for Americans losing their jobs.
This is as far as I got before I stopped because it indicates overwhelmingly that there is nothing in the piece worth reading or refuting. People who use logic like that cannot be refuted. They speak in non sequitur and false imputation. They do not and cannot reason. They string together phrases they have heard others use that do not relate to each other. These people cannot think as the more rational among us understand the process of thinking. They are immune to argument and "win" most arguments because they yell louder and and faster. It is harder to use or counter such a volume(both senses) of words when one is making logical argument.
Government is overhead. The purpose of America is individual liberty. Let’s keep the overhead as low as possible, OK?
Wages only tell a part of the story. What do costs look like over the same period?
You can have a flat or even falling income and still be better off, if prices for goods and services fall or fall faster.
Reich is a Marxist, and a pathological liar. He claimed many times on tv years ago that he was a PROFESSOR at Harvard, when he was a lowly “INSTRUCTOR” Harvard told Reich to cease & desist, or he would be fired!
Thanks Tango Whiskey Papa.
Thanks mjp. Excellent comment on the decreased availability of funds required for operating expenses, capital improvements, R&D, etc., that will result from “soaking the rich!” Øbama is so obsessed with his “wealth redistribution” that he could set capitalism back long after he is gone.
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