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.
Dr. Reich should take a course in Econometrics, although I have a feeling the math might be a bit much for him. Real wages are not an appropriate metric.
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.)
So, we presume that GDP Growth is in a simple linear relationship with tax rates?
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.
Government jobs do not create productivity. Only private sector jobs do that. Government jobs are overhead that suck money out of the economy. Government can't create productive jobs.
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.
Getting jobs growing again should be the priority. Unfortunately, there is never, throughout our history, any evidence that government can cause job growth. At best, it can create an environment that doesn't hamper it.
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 need only look at a pie chart of budget expenditures to see that this statement is demonstrably false.
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
Except we're already doing this and costs are just shifted to private insurers. We know that and have known it for decades now.
And since Medicare has far lower administrative costs than private health insurers, we should make Medicare available to everyone.
Medicare's admin costs are not lower when measured according to the standards used in the industry (PPPM or PMPM). Only when measured in total, which is not a useful measure (and the reasons PPPM and PMPM were developed).
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.
Of course it is. Anyone can look at it and see it is. And he says, "Don't believe it?"
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.
Everyone can have his/her own view on this. Reich is entitled to his, which is from the POV of a socialist. Others will see it differently. |
