Robert Reich Debunks 6 Big Right-Wing “Lies” About The Economy (CC)

Is Social Security a Ponzi scheme as Republican Presidential candidate Rick Perry claims? Noted author and former U.S. Labor Secretary Robert Reich debunks that claim and five other lies the right-wing tells about taxes, government and the economy.

The lies Reich debunks:

1) Tax cuts to the rich and corporations trickle down to the rest of us. (No it doesn’t and it never has.)

2) If you shrink government you create jobs. (No, you get rid of jobs that way.)

3) High taxes on the rich hurts the economy. (No, the economy grew when the US did this under Eisenhower.)

4) Debt is to be avoided and it is mostly caused by Medicare. (No, if debt is properly used to grow the economy, it becomes a smaller part of the budget because of increased revenue and Medicare has the lowest overhead of any health insurance plan out there.)

5) Social Security is a Ponzi scheme (No, its solid for 26 years. Rick Perry is “lying through his teeth” says Reich. Social Security is solid beyond that if the rich pay the same percentage in social security taxes as the rest of us do.)

6) We need to tax the poor. (This is what Republicans have been proposing when they say any “tax reform” needs to involve all Americans because poor people pay no income tax. The poor have no money and taxing them will not solve our budget problems.)

The worst thing is, because these “facts” from the right-wing are repeated over and over, the media repeats them without challenging them and people accept them as truth. Reich says this is intentional.

“The greatest enemy we have is mass cynicism”, said Reich. “When people really get to the point where they think nothing can be done, the other side wins. That’s what they want, by the way. That’s what they want. They want government because it is starved for money, because it is going to be underfunded — all the regulatory agencies—they want government at all levels to function so badly that people say ‘well government can’t work. I told you.’

“And they also want politics to be so bad and so paralyzed that most Americans say ‘nothing can be done. I’m going to give up on our democracy.’ ”

Reich was speaking at the “Summit For A Fair Economy” in Minneapolis, Minnesota on September 10, 2011.

Transcript of Robert Reich debunking 6 big right wing “lies” about the economy.
One of the big lies that we’ve been told over and over again for years, and again some Americans start to believe it because they hear it over and over again, is that if you give tax cuts to the rich and to the corporations everybody will benefit. It will all trickle down to everybody else. A lie. It has not happened. It has never happened. They don’t need more tax cuts. Big corporations are now sitting on two trillion dollars of cash. There are higher corporate profits now then that we have seen in 35 years. The ratio of corporate profits to wages is now higher than its been since before the great depression of the 1930s.

And so when you hear somebody say the corporations need tax cuts or they need regulatory so-called relief, they need to cut their costs, they need in other words to have even more profits to create jobs, don’t you believe them. That is a downright bold faced lie.

Now another lie you hear over and over again: If you shrink government you’ll create more jobs. This is unbelievable, how it is by shrinking government you create jobs. I still… I debate a lot of people, a lot of conservative economists and others on television who keep on saying this. And I keep on saying tell me your theory, how is it that if you lay off teachers and social workers and firefighters and police officers, if you have fewer people building the roads, building the highways, building the infrastructure, fewer people re-building our schools, fewer people doing all of the public’s work, how can that create more jobs?

And the answer I get is: ‘Government always gets in the way’.

I say, ‘But tell me exactly how is it that if you shrink government you’re going to create more jobs, particularly when consumers are holding back because they can’t do it.’

And the answer I get is: ‘Government always gets in the way’.

In other words there is no intellectual basis for the ideology, and it is purely an ideology that says you shrink government you get more jobs. If you shrink government you get fewer jobs.

You remember the baby boomers? How many of you were born between 1946 and 1964? All of you. No. (laughter)

Well we boomers had the advantage of huge investments in public education and higher education, in public higher education. Huge expansion. We invested in infrastructure, we invested in education. We had a tax structure in those years in which the top income earners never paid below a marginal income tax of 70 percent. 70 percent. In fact under Dwight David Eisenhower, who nobody would call a socialist, I don’t think we would. Some would now? Yes. (laughter) The top marginal income tax rate on the top earners was 91 percent. And even with deductions and tax credits that still meant that they were paying an effective tax rate of hugely higher than they are today. And yet the economy grew faster.

That lie about trickle down, the lie that we must not tax the rich because that would deter them from working hard and investing and creating jobs is nothing but a bald-faced lie, based on ideology rather than facts. (applause)

And just like the 1950s when I was told by my father the debt is going to be the biggest… no! The debt, if you get growth back, if you get jobs back, the debt shrinks as a proportion of the national economy. It becomes more and more manageable.

And by the way, here’s another lie. They are saying that the long term debt that’s out there ten years from now is all because of Medicare and Social Security and all of the spending, it’s not. The long term debt out there is because of rising health care costs. Medicare is the most efficient system we have. (applause)

The administrative cost of Medicare are so tiny relative to private insurance that what we really need, if we want to get Medicare and medical costs down in the future is Medicare for all. (applause).

And then we could move from a fee for service system to a fee for healthy outcomes system and that’s what we need to do. (applause)

Now anybody who tells me that Social Security is a Ponzi scheme, I’ve heard that recently. Can you imagine the irresponsibility, I mean look it, putting partisanship to one side, how… I’ve never heard a public official running for national office who lies through his teeth by saying the Social Security system is a Ponzi scheme.

I was a trustee of the Social Security trust fund. I know exactly what the actuaries project. For the next 26 years is purely solvent, completely solvent. There’s no problem. Beyond 26 years the only reason there is a problem with potentially being able to pay out everything that Social Security owes beyond 26 years, you know why? Because of raging inequality. Because so much money has gone to the top that the proportion of income subjected to Social Security taxes is not going to be enough. And that’s why the easiest, most direct response to post-26-years-from-now is to raise the cap on individuals with incomes over (inaudible)(applause).

So we got to tackle inequality, and how do we tackle inequality? Well one thing we can do is have tax reform that is real tax reform. Not the kind of Republican tax reform that says we got to raise taxes on the poor, which is again, as backwards as every other lie they are telling. But the real tax reform is we got to expand the earned income tax credit which is a great subsidy for the poor. We’ve got to reduce taxes on the middle and the lower middle and we got to increase taxes on the top. Have more tax brackets! More brackets. Go back to where we were before.

The greatest enemy… the greatest enemy we have is mass cynicism. When people really get to the point where they think nothing can be done, the other side wins. That’s what they want, by the way. That’s what they want. They want government because it is starved for money, because it is going to be underfunded — all the regulatory agencies—they want government at all levels to function so badly that people say ‘well government can’t work. I told you.’

And they also want politics to be so bad and so paralyzed that most Americans say ‘nothing can be done. I’m going to give up on our democracy.’

They win.

Don’t allow cynicism to effect our body politic. Don’t allow cynicism to effect your neighbors or your friends or anybody. (applause)

It is easy when they are scared and disorganized for people to be subject and vulnerable to demagogues who come along and say to them ‘you know, the reason you’re in trouble? The reason you’re in trouble is because of government. Or it’s because of immigrants. Or it’s because of the poor. Or it’s because of blacks. Or it’s because of a number of scapegoats that are offered, always offered up. The same scapegoats.

But in reality we are all struggling over a smaller and smaller share of a bigger and bigger pie.

And they are deflecting and diverting attention from the big story which is that more and more of the income and wealth is going to the big corporations and to the very, very super rich in this country and that is what has to be reversed. And that is why we have to take back America.

Michael McIntee

Michael McIntee is a former network TV news executive with more than 30 years of broadcasting experience. He began his broadcasting career at the University of Minnesota's student radio station. He is an expert producer, writer, video editor who has a fondness for new technology but denies that he is a geek. More about Michael McIntee »

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