Seven Lies

Economist Mark Thoma in his blog today quotes from Robert Reich's analysis of "The Seven Biggest Economic Lies." He then adds seven more of his own.

It's worth reading the blog post to follow the comments.

Mark Thoma:

Robert Reich:

The Seven Biggest Economic Lies, by Robert Reich: ...Here’s a short ... effort to rebut the seven biggest whoppers now being told by those who want to take America backwards...:

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 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. ...

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. ...

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. ...

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. ...

Seven more: tax cuts pay for themselves, regulation and uncertainty are holding back the economy, there are plenty of jobs but people don't want to work, Fannie, Freddie, and the CRA caused the crisis, CEOs deserve their high incomes, most unemployment is structural, and regulating the financial sector will harm economic growth. (And, for good measure, global warming doesn't exist and if does exits it wasn't caused by people. Even if it was caused by people, carbon taxes are still bad.)