The seven biggest economic lies

I got this from here: http://www.csmonitor.com/Business/Robert-Reich/2011/1012/The-seven-biggest-economic-lies

Here’s a short effort to rebut the seven biggest whoppers now being told by those who want to take America backwards. The major points:
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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.
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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.

2. The best question to ask is is it fair? Is it fair to tax the rich 91% and the middle and lower class 20%? Absolutely not. Also, it would hurt the economy in the long run because wealth redistribution will do nothing but discourage people from pursuing the wealth.
3. Just because one part of the economy gets downsized doesn't mean the economy as a whole loses. Nice try
4. Having a full workforce employed won't do much when the dollar collapses.
5. Lol@bargaining over drug companies. That's funny.
6. Somehow a ponzi scheme that can last for 25 more years isn't a ponzi scheme? Bernie Madoff ran his ponzi scheme for 39 years before he got caught.
7. Absolutely is unfair because we all live in the same country and enjoy the same benefits and services of our government. Therefore if one pays taxes every one else should too. You're too poor to pay that income tax? Well go get another job and improve your life. It's called motivation.

sync0s said:

2. The best question to ask is is it fair? Is it fair to tax the rich 91% and the middle and lower class 20%? Absolutely not. Also, it would hurt the economy in the long run because wealth redistribution will do nothing but discourage people from pursuing the wealth.

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No one is proposing we tax the rich at 91% though, most liberals when asked would point to the Clinton era rates as acceptable and sufficiently progressive.

3. Just because one part of the economy gets downsized doesn't mean the economy as a whole loses. Nice try

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In a depressed economy reducing the size of government only serves to weaken aggregate demand, and therefore worsens the economy. At full employment and over a long period of time, however, most sectors of the economy can dwindle and be replaced elsewhere.

4. Having a full workforce employed won't do much when the dollar collapses.

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It's funny because the inflationistas (like those on WSJ for example) have been making this argument for several years now. My response? 10 year interest rates are still well below 3%... where are the bond vigilantes? Give up, the Keynesian view has won out on this particular argument - the bond vigilantes are no where to be found.

5. Lol@bargaining over drug companies. That's funny.

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Not funny, it's true. The French system, for example, is much cheaper per capita(less than half the cost) than the American system and they use a single player system.

6. Somehow a ponzi scheme that can last for 25 more years isn't a ponzi scheme? Bernie Madoff ran his ponzi scheme for 39 years before he got caught.

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It's not a ponzi scheme and it's really a waste of time to even argue that it is.

7. Absolutely is unfair because we all live in the same country and enjoy the same benefits and services of our government. Therefore if one pays taxes every one else should too. You're too poor to pay that income tax? Well go get another job and improve your life. It's called motivation.

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The poor actually do pay a fair percentage of their income in taxes. For example, 40% of people in the 30-40k income bracket pay 12.9% effective tax or more; Meanwhile 25% of those in the 1M+ bracket pay equal to or less than 12.6%(and those those in the top 10% of millionairs pay 4.2% or less on average). That's a lot of secretaries of whom make less than their millionaire boss and are taxed at a higher rate. Want to see what our tax system looks like with payroll and income taxes taken into account?

1. Not sure, what do people do when they have even more money than before? Do they spend it or save it? Answer that question and you will know the truth. Probably a bit of both, most assuredly no one spends more when they have less, so the opposite action would be even worse, tax increases on anyone will cause less aggregate spending across the board.

2. Higher taxes WILL hurt the economy in its current condition. The reason it worked after WW2 is because the USA was the Number 1 manufacturer in the world, BY FAR!!! Our Economy was unstoppable, HUGE trade surpluses, HUGE amount of loans given to other countries who paid us back with interest. Citing the golden age of America vs the toxic age of today and thinking the same policies will work the same way is illogical.

3. Of course shrinking government causes people to lose jobs, but in the long run it's beneficial for the nation because the private market is almost exclusively more efficient.

4. The economy can be boosted without spending one more dime of the public trust. It is disingenuous to propose that the economy can ONLY be repaired by more public money going to government.

5. Combined Medicare and Medicaid spending are OVER $950 Billion PER YEAR. Total personal Tax income by the government is $1.3 Trillion, Those 2 programs use up 73% of all personal income tax levied. Leaving 350 Billion left over for everything else.

6. SS IS a Ponzi scheme, there is no account from which the System draws, there is no money, the people that work are paying for the people who are retiring. IE exactly as a Ponzi scheme works.

7. Agreed.

http://www.csmonitor.com/Business/Robert-Reich/2011/1012/The-seven-biggest-economic-lies

The sign at the top of the article says it all. It's totally WRONG but it illustrates the division in the US ideology. Was the American Revolution about the common good or the sovereignty of the individual?

mame said:

The poor actually do pay a fair percentage of their income in taxes. For example, 40% of people in the 30-40k income bracket pay 12.9% effective tax or more; [/IMG]

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The poor don't make 30-40K per year. Whatever that table is trying to so it doesn't say it very well. The median taxpayer making less than $30,000 a year pays almost no taxes. With deductions people can make almost $40,000 a year and pay no income tax at all. And that is just for the Individual. The table shows that the 10th percentile of the lowest wage earners are actually getting money back that they never put in. The reason the rich pay less than the middle class is because the rich aren't making only income, they have lots of Capital gains and invest heavily in tax free sovereign investments. It isn't so cut and dried.

A few year's ago,,,A "Millionaire",,,was big Money,,,Now some of those "millionaire's",,,are Billionaire's,,,Not hard to figure out why. It's easy to make money when you have money,,,But I'll give you a Minimum wage job and this economy and see how long it take's you to be like the rest of us,,,You will never be big,,,without Help,,,from your someone with money. The Divide between the "Rich and Poor",,,Has never been greater,,,and it's really easy to see why.

Pretty good list but you would have to include the liberal economic lies in there also to be fair. The lies involving the middle class, unions, energy, and jobs being exported overseas....this is a game played on both sides of the isle, they are both a bunch of crooks.

PeachOibleBoiblePeach#1 said:

A few year's ago,,,A "Millionaire",,,was big Money,,,Now some of those "millionaire's",,,are Billionaire's,,,Not hard to figure out why. It's easy to make money when you have money,,,But I'll give you a Minimum wage job and this economy and see how long it take's you to be like the rest of us,,,You will never be big,,,without Help,,,from your someone with money. The Divide between the "Rich and Poor",,,Has never been greater,,,and it's really easy to see why.

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Having money only gives you more opportunities, it is no guarantee of future earnings. Just ask all those millionaires that invested with Bernie Madoff or all those wealthy people that lost money on Enron stock or Bank of America Stock how much money they made.

I totally agree,,,But some people actually work to make money and it does no good,,,Me included,,,kinnda?,,,If you have the money to begin with and invest without knowledge or understanding you deserve to be ripped off,,,But with million's the only investment would be my investment's!,,,Which would also include Worker's,,,Taxes,,,etc...,,,But Tossing money at other ??? mark's is the same as going to Vegas IMO. For quick profit's and no work or worth.

NoDrama said:

The poor don't make 30-40K per year. Whatever that table is trying to so it doesn't say it very well. The median taxpayer making less than $30,000 a year pays almost no taxes. With deductions people can make almost $40,000 a year and pay no income tax at all. And that is just for the Individual. The table shows that the 10th percentile of the lowest wage earners are actually getting money back that they never put in. The reason the rich pay less than the middle class is because the rich aren't making only income, they have lots of Capital gains and invest heavily in tax free sovereign investments. It isn't so cut and dried.

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You're right, it's not so cut and dry. I mean, for one thing the table shows that as a whole our tax system is indeed progressive and for the most part the system looks pretty good. My problem is with the whole bottom left of the table, where the 10th and 25th percentiles of the upper income groups have lower effective tax rates than almost all the other income groups. As for the poor, I dont expect them to pay taxes and in some cases I'd expect people to actually receive from the system more than they contribute - because it's by design. The whole point of a progressive tax system is the necessary task of wealth redistribution for the sake of economic stability, after all.

mame said:

No one is proposing we tax the rich at 91% though, most liberals when asked would point to the Clinton era rates as acceptable and sufficiently progressive.

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For this I was responding to his Dwight Eisenhower remark. I absolutely agree with you that the rich get an unfairly low tax, but I think we need a flat income tax. Throw away brackets.

mame said:

In a depressed economy reducing the size of government only serves to weaken aggregate demand, and therefore worsens the economy. At full employment and over a long period of time, however, most sectors of the economy can dwindle and be replaced elsewhere.

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Yes, yes, we've been over and over this. Hypothetically (and economically speaking), what if we got rid of income taxes and due to that we downsized the IRS. You think this would hurt the economy?

mame said:

It's funny because the inflationistas (like those on WSJ for example) have been making this argument for several years now. My response? 10 year interest rates are still well below 3%... where are the bond vigilantes? Give up, the Keynesian view has won out on this particular argument - the bond vigilantes are no where to be found.

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I never said inflation. The only thing I worry about inflation is the value of my damn IRA when I retire. I'm talking about international community (China, for example) no longer backing the dollar. The debt is a very real issue that does need to be handled at some point. We can't just keep inflating our currency and the national debt and expect 25 years from now the next generation to be able to handle it just fine.

mame said:

Not funny, it's true. The French system, for example, is much cheaper per capita(less than half the cost) than the American system and they use a single player system.

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I was laughing at drug companies. The fact that we even deal with them in the first place [It was a marijuana thing ]

mame said:

It's not a ponzi scheme and it's really a waste of time to even argue that it is.

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Pon·zi schemenoun /ˈpänzē/
Ponzi schemes, plural
A form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors

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mame said:

The poor actually do pay a fair percentage of their income in taxes. For example, 40% of people in the 30-40k income bracket pay 12.9% effective tax or more; Meanwhile 25% of those in the 1M+ bracket pay equal to or less than 12.6%(and those those in the top 10% of millionairs pay 4.2% or less on average). That's a lot of secretaries of whom make less than their millionaire boss and are taxed at a higher rate. Want to see what our tax system looks like with payroll and income taxes taken into account?

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I agree fully, you are missing my point. All americans should pay the same rate in taxes. You should not be taxed higher for being more successful, just as you shouldn't be taxed lower for being so called "job creators."

NoDrama said:

1
3. Of course shrinking government causes people to lose jobs, but in the long run it's beneficial for the nation because the private market is almost exclusively more efficient.

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At what? I see this line over and over again - private industry is held as some sort of ideal. The truth is far different. There is nothing "efficient" about 100 million dollar golden parachutes where the CEO gets a bonus even when his company suffers. There is nothing ideal about the fact, proven over and over again that unregulated companies cut corners, abuse their employees and pollute. Show me how efficient companies like Enron and Global crossing actually were.

Finally, people tend to think that the business of government can be identical to the business of business - often it is not. Try privatizing the justice system and see how much more efficient it would be We WANT it to be inefficent in fact. We see what happens when we privatize portions of our defense, we see what happens when we privatize prisons. The point is that there are places where this idilic notion of a "free economy" and "competition" fails miserably. Business is in it for profit alone but it can be and often is subverted. Government is in the business of order (it as well can be subverted, most often - by business). these often are two separate things.

mame said:

The whole point of a progressive tax system is the necessary task of wealth redistribution for the sake of economic stability, after all.

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Necessary task? Economic stability? I have long known this to be the ultimate goal but am rendered nearly speechless that someone has the audacity to admit it.
If that is the case then why don't we have the government just take everything and dole it out as they see fit? Because we all know that politicians know better how to spend our money than we do, ourselves, right?

Mr Neutron said:

Necessary task? Economic stability? I have long known this to be the ultimate goal but am rendered nearly speechless that someone has the audacity to admit it.
If that is the case then why don't we have the government just take everything and dole it out as they see fit? Because we all know that politicians know better how to spend our money than we do, ourselves, right?

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It's not about class warfare, or lifting the poor - it's about economic stability, plain and simple. I've tried to explain this several times and I'm getting tired of it... Here we go again:

1) over time, the natural tendency of the money supply is an upwards redistribution - because the more money you have the easier it is to make money and even when you consider it's also easy to lose lots of money - overall it's still an upwards redistribution.

2)progressive taxation can put a drag, stop completely or reverse that process - with limits and I'll explain...

the economy can suffer from upwards redistrubution, but it can also suffer from too much downwards redistribution (case and point: the late 70s - early 80s recession which was very much created by high costs on employers). My view is that it's important to respect and take into account the lessons we learned during that time - that aggressive redistribution of wealth to the poor can just as easily have a drag on the economy - but we cannot ignore the economic stability that comes with upwards redistribution... So the solution is a moderately progressive system which only seeks to preserve economic stability(which in a perfect world, would not entail any NET redistribution at ALL as the competing effects from the market and progressive taxation would cancel each other out).

economic stability preserves the economic ladder, after all... and that's what really makes a primarily capitalist market economy the best economic system in the world.

ALL taxation in a modern society is "redistribution of wealth". I doubt I use any more of governmental resources than any of you and yet I likely pay more, perhaps far more taxes than most on this board. For one to object to the lack of "fairness" is absurd. Government is not obligated to institute fairness but it is obliged to provide ORDER to our society. Instituting and maintaining order requires that the poorest be provided for even if it isn't "fair". It requires that some of us be placed in small barred rooms at cost to the rest of us. It requires a baseline of provisions for the weak, the disadvantaged and the challenged and these things aqre inherently unfair and they demand a "redistribution of wealth". One of the ways to provide this order is to take more from those who have more as they have benifited more from this society and they either through their own cunning and hard work or through simple luck are less likely to become one of the disadvantaged and more capable, even if they are taxed (unfairly), to continue to fend for themselves. The rich do not need the help of the poor and order is not served by ignoring those who need help.

Taking away from person A to give to person B is THEFT. I don't care what kind spin you put on it, it is WRONG. Furthermore, our founding fathers, CLEARLY were against this.

Why do you insist on re-inventing the wheel? How did the government exist before income tax?
"NEW HI-TECH MOUSE TRAP: A mouse snatches the cheese bait, thereby tripping a motion sensor. The motion sensor triggers a satellite, tracking the mouse and warms up the particle beam weapon. When the mouse stops to enjoy his dinner, ZAP, he's goes up in a puff of smoke."
That's what your redistribution and stabilization sounds like to me. When it would be much simpler and much more efficient to let the free market reign and let people be responsible for themselves.
The first and foremost responsibility of the federal government is to protect the rights of the individual.
It is not a coincidence that the Federal Reserve Act and the income tax were passed at nearly the same time. They are linked. Both of which are not only unConstitutional but both are immoral.
I'm getting tired of reminding you that a progressive income tax, centralized credit by way of a state/central bank and a so-called free, public education are 3 of the planks in the communist manifesto. Is America a communist nation? Are you a communist? Why do you promote communist ideas?

canndo said:

At what? I see this line over and over again - private industry is held as some sort of ideal. The truth is far different. There is nothing "efficient" about 100 million dollar golden parachutes where the CEO gets a bonus even when his company suffers. There is nothing ideal about the fact, proven over and over again that unregulated companies cut corners, abuse their employees and pollute. Show me how efficient companies like Enron and Global crossing actually were.

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The large Corporations are able to rape and pillage because of governmental lobbying influence and corrupt government employees. While Big Time CEOs of multi billion dollar companies may be getting large bonuses and TBTF banks are gorging in tax payer funded slop troughs, it still isn't close to the occasional $2.3 TRILLION in missing funds from just one sector of government alone. You could have 23,000 different companies give their CEO's $100 million dollar bonuses for that kind of waste and fraud.

mame said:

It's not about class warfare, or lifting the poor - it's about economic stability, plain and simple. I've tried to explain this several times and I'm getting tired of it... Here we go again:

1) over time, the natural tendency of the money supply is an upwards redistribution - because the more money you have the easier it is to make money and even when you consider it's also easy to lose lots of money - overall it's still an upwards redistribution.

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Over time the money goes to the smartest players, period. The smartest players generally tend to be able to make more money than the idiots. Ever see how long those stupid people who win the lottery turn out?

when it comes to taxation your on one of 2 sides. robin hoods or the kings.