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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:
- 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.
- 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.)
- 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.
- 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.
- 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.
- 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.
- 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.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.
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109 Comments so far
Show All0. Capitalism supports Democracy, Growth is Sustainable, War is Peace
Sustainability requires growth. The body is constantly manufacturing new cells to replace the old, worn-out ones, yet it stays pretty much the same. If a stronger, healthier body is pursued, then even MORE cells must be manufactured to suplement existing cells, PLUS replace the old , worn-out ones. FDR's infrastructure projects served us well enough. This infrastructure is now worn-out. Its' maintenance has been neglected over the decades, and trillions of dollars (in "greenback credit"), millions of workers are now required to just restore it to "status quo ante". To actually upgrade it and make it even MORE servicable and appropriate for the 21st century will require even MORE trillions of dollars ("greenback credits" ala Lincoln) millions of workers to do it (to go BEYOND its' mere restoration "status quo ante"). To cease growth, in THIS context, is to die. And death is indeed an eternally sustainable condition requiring no growth inputs.
You are confusing development with growth; not the same thing.
I would add an eighth economic lie to Reich's list: FDR's New Deal financial industry regulations are outdated and stifle innovation.
The New Deal financial industry regulations created structural changes that controlled greed and the industry for more than 50 years, creating the wealthiest middle class the world has ever seen. The "innovation" has never helped the Main Street economy and continues to enrich the wealthiest 1% at the expense of the 99%. 30 years of overturning New Deal regulations is rapidly turning the US into a third world nation.
New Deal regulations will become outdated only when greed disappears. Greed will not disappear until humans are extinct. The regulations will therefore never be outdated.
The 99% will make no progress until restoration of New Deal financial industry regulations is complete.
isn't it obvious that removing the wall between investment banking and commercial banking simply heightens the risks banks take with the public's money? In savings and in taxes? Calling regulations, such as Glass Steagall, "old fashioned" is simply a self serving lie these Wall Street operators brought forth to make if possible to gamble with our money.
Also obvious that if you allow speculation on commodities, add in 0% Federal Reserve loans to speculators, you are fueling the fires of inflation and setting up the next bubble and its inevitable bailouts that will consume additional trillions of taxpayers' dollars.
Right. The whole point of the scam being to make money out of money. A great deal of money. Legally if possible. Relying upon a blind eye or upon everyone doing it too. For there is always a sense of safety and reassurance in numbers until the whole houses of cards finally collapse. Today we seem to be in the latter stage, turning a blind eye on what really went on - in the White House, the MSM, and in the Congress.
Understood. I was actually just "stating for the record", because there are MANY who do confuse the growth meme with development. Sorry about making it sound personal.
What is the difference between development and growth? And what does development have to do with producing a thriving economy? What kind of growth are you referring to. Growth in gross national product? Jobs? Money supply?
I like your analogy of the body constantly needing to replace cells.
Development, what does that mean anyway? I mean really, what does it mean? Does it make things better? Does it make things more useful? If so for who?
Here's one we heard here in the northwest: 'We need to develop that forest" - which means cut it down. I suppose if there was a plan that would allow a 600 year rotation so we could have old growth forests all the time, I could support that.
In the economic sense there is no real difference between development and growth, 1st world nations simply grow while 3rd worlders need some develpment first. The steady replacement of cells is a good analogy, in our case however, we seem to be missing the "turn off" switch, we've become a cancer. Exactly like a tumor -expanding until there is no room left on the planet but people. I wonder what we'll eat then.
Don't let anyone fool you, the only "sustainable" growth (for the health of the land base) is negative growth by human beings. As things stand now the only hope for the planet and all its dwindling non-human beings is that we run out of oil before we destroy the planet.
The source of our cancer is pretty simple. Civilization. It may be that once we've gone back to the stone age things will get better around here. But then again, maybe not. There was a lot more "nature" before civilization started eating it.
Bottom line, there is nothing sustainable about civilization.
Definition of civilization: The practice of people living in cities. (as opposed to villages.) Definition of city: any grouping of humanity dense enough to require the importation of food and other necessities of life.
Read Derrick Jensen "Endgame"
If we don't get a steady state economy soon mother nature, in the form of ecological collapse, will punish us for endless growth which is the ideology of the cancer cell. Big Federal government Kenysian booster shots are as dead as finance capitalism.
I hope you remember to explain this to your neighborhood out of work construction man if you live in one of those many areas with substandard roads, bridges, electric grids, etc. I'm sure the unemployed with hungry children, etc. will understand the need for their sacrifices. We're all in this together. There is no need for the rich to help out with higher taxes. There is no need to have more efficient infrastructure. Let it collapse. The 'old' days were the best. Grow more oats. Shovel more horse manure.
Yes I do say let the highways collapse, and lets put the "construction workers" to work building bike lanes, windmills, solar roofs, LOCAL trains, local wireless internet for ALL, and other LOCAL infrastructure. The problem with many Federal government supporting libs is you are just as clueless as the neo-cons about the FACT that infinite growth is NOT possible on a finite planet.
Despite what the MSM drums into our heads the only choices aren't A predatory market, or B leviathan government building giant unsustainable dams and highways. I choose, choice C, local cooperation, and learning and creating culture close to home in a sustainable fashion, of that blows your mind then good Rachel Maddow watching "liberals" need to not there are decentrlist anti statist anarchists out there WAY to the left of you.
________________________________________
I agree, and finance the energy transformation infrastructure with debt-free money created by the people. The Keynesian and New Deal nonsense is outdated because we can no longer afford to pay usurious interest rates to banks that create money out of thin air, nor should we want to even if we could afford it. It's INSANE, and it needs to stop.
By the way, Roosevelt did the New Deal to SAVE capitalism, a predatory system that is the main driver of economic inequality and ecological destruction. We should not want to save capitalism from itself again, and on the backs of tens of millions of wage slaves.
In an ideal world, I believe that money should be created out of thin air, by the government, as a public utility, in moderation, and interest-free. Banks are a parasitic anachronism. However, how do you get the gov't to do >>anything << in moderation? How do you prevent the elite from hijacking the money creation process for the exclusive benefit of their class, the "economic royalists", as FDR described them? How do you win arguments with the gold-bugs who say the gov't can't be trusted with such immense economic power? (As if bankers and the financial markets are doing such a great job for the public welfare.)
9. "Investments" in the stock market are more akin to speculation, especially for outsiders. Remember the huge losses in the stock market in 2007 and 2008. Remember that when politicians want to privatize Social Security - the only winners in that scheme will be the stock brokers.
10. "Free trade agreements" stimulate domestic job creation.
Oops.
Thanks for playing, Robert. We have lovely parting gifts.
No. 11
Vote Democrat--the party that is for the middle class, blue-collar workers, unions, and the poor.
you're a congenial enough fellow robt.. but in all you're telling of you're truths about economic lies, etc., couldn't you just once juxtapose that list with the role obama has played in that lying? what kind of grade professor do you think you deserve on this paper?
If a tangental, off-topic rant about Obama (well deserved, but an entirely different topic) were injected into this article, it would deserve an "F" grade. Let's let electoral politics rest. The important things happen in the street.
It's very relevant considering Reich is a Dim party shill. This article is just more CD propaganda trying to herd the cattle towards the Dim party slaughterhouse. THAT is why CD has taken the odious Reich on as a columnist despite pretending to support OWS.
Focusing on the economy is a mistake. We should be focusing on the integrity of government. http://www.gpln.com/udhr.html
If they have to, they will give up just enough to get us off their backs. But what we really need is a government that we run, not one that they run. That's what a democracy is... of, for, and by the People. Don't settle for less.
http://www.gpln.com/whatwewant.htm
Reich: "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."
Again, to all the Reich fans, it isn't that Reich doesn't understand economics. It is that he uses his economic articles to nearly alway only make political attacks against the Republicans (inferred here but explicit in other articles) and ignore Obama's and the Democratic Party's complicity in continuing the Republican economic agenda. Both parties are responsible.
The Obama Tax Cuts had more tax cuts than the Bush Tax Cuts because Obama expanded the cuts. Obama's recent Jobs Bill proposal also has tax cuts that Corporate leaders came out afterwards and deployed some of the cuts (hiring incentives) because they rightly stated that the hiring is down because of lack of demand, not because the employees are too expensive.
Obama's additional cuts included his "payroll tax holiday" that defunds Social Security for the first time in history ( $113 billion of defunding in 2011, more in each subsequent year).
The only part of Obama's current "jobs bill" that is likely to pass will be an expanded "payroll tax holiday" that further defunds Social Security, and will create no more jobs than the initial "holiday" did.
Exactly!
And to take your point further, health care costs are part of the "approved" national debate, whereas Imperial Expenses are not.
Anyone who so conspicuously sticks to the "approved" debate when their argument is simply crying out to leave it is not to be trusted.
Yes, exactly; there is NO validity to his points becasue he either once supported Obama, or he refuses to rant on nerotically and endlessly about how bad Obama is.
I didn't see the word "Republican" (or Democrat) anywhere in this article.
Please stop obsessing about electoral politics and get in the street.
Would be nice if he fessed up on his errors, instead of continuing to promote them. Oh, and are you on the street?
B.S. the Goldman Sachs funded Oily Bomber is the biggest financier class shill of all:
http://www.opensecrets.org/pres08/contrib.php?cid=N00009638
http://my.firedoglake.com/fflambeau/2010/05/08/an-updated-list-of-goldman-sachs-ties-to-the-obama-admin-including-elena-kagan/
Why can't one be on the street AND behind a keyboard?
Hello...WiFi. ;)
True dat!
pjd412, Rather than knee-jerk react to my comment, why not actualy read it and understand it? I actually gave Reich credit for understanding economics so for you to suggest that I said there is no validity to his points is hogwash. The fact is Reich is obsessed with politics as he is continuously on political talk shows and endlessly writes about the political parties and leaders. These comment boards are made to comment on articles. For you to spend time commenting on the comment boards and then tell others to get off and get in the street is hypocritical.
Thank goodness that a number of reasonably intelligent people choose to serve rather than merely going for the big 'wall street $s.'
#8 Shipping your jobs out of the country is good for Americans.
'member that one Rob?
Of the things not included in this article, unless I missed it somehow is that the very same issues are happening all across the globe....that's not coincidence and that to me, is relevant. So what conversation should we be having about the bankers pulling all these global strings?
Unfortunately these seven deadly whoppers Mr. Reich highlights are articles of faith to those who believe them and counterarguments will simply pass through believers like weak beer.
"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.)"
although i agree w/ the point (#2 tax the rich) - i believe that one of the primary reasons the us economy blossomed from 1950-1975 was access to cheap petroleum that was drilled by governments controlled by the US govt.
http://www.feasta.org/2007/09/01/peak-oil-the-end-of-economic-growth/
...peace...
But the high taxes on the highest brackets drove that access to that petroleum and made it cheap.
Remember that the US itself was the global swing producer for the first 20 years of the period you describe.
It is not an either/or question.
A few more lies for fun:
-All Americans are greedy, selfish, and want to be obscenely rich.
-Unemployment Insurance turns formerly-employed Americans into lazy bums living la vida loca on the taxpayer dime.
-Worker unions caused our present financial crisis. Especially those money-grubbing public school teachers.
-God blesses America.
Taking Robert Reichs name off the article, are there really any people that disagree with his stated points?
His stated points, not some projection to include something he didn't say or state or even allude to in his seven points.
The problem is the entire notion of conflating refutation of the lies of the Red Party -and only the Red Party- with the refutation of "economic lies" in general.
Doesn't matter to me who wrote it.
What matters is that they wrote it in an attempt to frame the debate against reality.
"Demagogues through history have known that big lies, repeated often enough, start being believed." Let me amend that--If 25% of a population believe the lies, and propogate them with heart felt sincerity no matter how often they are rebutted, they will eventualy prevail and make their opinion orthodoxy. There is no batteling intensity from the other side. Big liars they are, but the right does much better with the fickle and uinformed middle than the left does with its tepid, intellectual truth.
More lies:
--We will always need representatives to make laws because We the People are too dumb to make our laws.
--All gun owners are stupid troglodytes and you can't beat the government when it comes to weaponry even if you are the 99%.
--There will always be rich and poor and we can't do anything about it.
--We don't need to curb population growth because the earth has enough resources and we can move to Mars if it gets too crowded here.
--Life is suffering so we have to die and go to heaven to end the suffering.
--We won't go to heaven unless we abide by the oligarchy's laws that make us suffer.
--Conservatives good, liberals bad
--Eventually if the unarmed and defenseless 99% whine, yell, scream, shout, blog and demonstrate long enough, the oligarchy with all the money, power and guns will stop destroying the world.
--If we change some politicians around, but leave the system intact, everything will be fine.
--If we elect the right politician(s), he or she will save us.
--Direct democracy doesn't work because the 51% will rule over the 49% and we will have a tyranny of the majority. ( Better to stick with a tyranny of a minority.)
--Direct democracy works for the Swiss but it couldn't work here because we are too big.
--California's corrupted Proposition system shows that direct democracy doesn't work.
--If we keep getting beat up we will finally win.
Ask the Afghan resistance to U.S. imperialism fool, what do you think they using slingshots?
We are as oppressed as the Afghanis fool. While I support non violence for now as it's less easy to co-opt with provocateur tactics, IF OWS fails I would also like to have a plan b, I don't just intend to be herded passively into a cattle car like the other nicey, nice "liberals," IF the non violent revolution fails.
Needless to say one thing I think we can agree is to hope the non violent revolution wins, eh?
However, I can also walk and chew gum and imagine MANY different tactics of which non violence is ONE of them, and the best for now, can you do that too, or is that too many variables for you to handle?
I agree. Well put.
"Actually, this one is true:
"All gun owners are stupid troglodytes and you can't beat the government when it comes to weaponry even if you are the 99%."
- Or would you seriously like to claim that the govt can be "beaten with weaponry?"
Would you call our forefathers "troglodytes"? Do you think that an armed 99% could not beat an armed 1%, or at least make them stop beating you?
"No free man shall ever be debarred the use of arms. The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government"
-- Thomas Jefferson, 1 Thomas Jefferson Papers, 334
"The very atmosphere of firearms anywhere and everywhere restrains evil interference - they deserve a place of honor with all that's good"
-- George Washington
[The disarming of citizens] has a double effect, it palsies the hand and brutalizes the mind: a habitual disuse of physical forces totally destroys the moral [force]; and men lose at once the power of protecting themselves, and of discerning the cause of their oppression.
-- Joel Barlow, "Advice to the Privileged Orders", 1792-93
A man who has nothing which he is willing to fight for, nothing which he cares about more than he does about his personal safety, is a miserable creature who has no chance of being free, unless made and kept so by the exertions of better men than himself.
-- John Stuart Mill, writing on the U.S. Civil War in 1862
You need only reflect that one of the best ways to get yourself a reputation as a dangerous citizen these days is to go about repeating the very phrases which our founding fathers used in the great struggle for independence.
-- Attributed to Charles Austin Beard (1874-1948)
"Certainly one of the chief guarantees of freedom under any government, no matter how popular and respected, is the right of the citizens to keep and bear arms. [...] the right of the citizens to bear arms is just one guarantee against arbitrary government and one more safeguard against a tyranny which now appears remote in America, but which historically has proved to be always possible."
-- Hubert H. Humphrey, 1960
Swiss Direct Democracy has been debated here before. Your being new to this forum can explain your ignorance on that subject. If you would be more specific on what you consider "irrelevant assertions, non-issues and jumbles of debatable ideas" I will answer your questions with as much civility as our anonymity requires.
"Do you think that an armed 99% could not beat an armed 1%, or at least make them stop beating you?"
And what will the 99% be armed with? Shotguns and hunting rifles? How about the 1%? Have you checked out the new drones?
http://www.wired.co.uk/news/archive/2010-02/10/future-police-meet-the-uks-armed-robot-drones
"Police forces all over the UK will soon be able to draw on unmanned aircraft from a national fleet, according to Home Office plans. Last month it was revealed that modified military aircraft drones will carry out surveillance on everyone from protesters and antisocial motorists to fly-tippers, and will be in place in time for the 2012 Olympics.
Surveillance is only the start, however. Military drones quickly moved from reconnaissance to strike, and if the British police follow suit, their drones could be armed -- but with non-lethal weapons rather than Hellfire missiles."
Me, I want a Kalashnikov.
You are confusing "the 1%" with their servants amongst "the 99%".
The Rich and the Generals don't build, maintain, and operate the drones by themselves y'know. ;)
You are confusing "the 1%" with "the US government".
Virtually no one in the armed forces is part of "the 1%".
As long as we are debating whose fantasies are better than whose, why can't we imagine that "the 99%" of the military folks are with us too?
The Rich and the Generals by themselves wouldn't stand a chance against the rest of us even if they had nukes and we had sticks.
"The 1%" are entirely dependent upon "the 99%" for their power.
Exacto