Fighting Ignorance

Robert Borosage at Campaign for America's Future has put together a series of posts that put a lie to the economic myths repeatedly spewed by conservatives, but which are not adequately rebutted by the Democrats or challenged by the media.

Myth #1.  The Tax Lie:  Tax hikes will "wreak havoc on the economy," as House Speaker John Boehner puts it, and will undermine job creation.  When taxes were raised during Bill Clinton's presidency, however, private investment took off. and a record number of jobs were created.  When taxes were cut under George Bush, private investment, and job growth slackened.  Here's the graphic:

Myth #2. The Spending Cuts Lie: Cutting government spending creates jobs, even in the midst of a recession.  But, as Borosage says, "there’s no economic theory that would suggest that in current conditions, cutting government spending would create jobs."  We have just seen that cuts in government spending at the state level have cost thousands of jobs without anything close to an explosion of jobs in the private sector.  The following chart "shows that while different economic conditions produce widely different outcomes, in the states, larger government spending cuts have tended to produce higher unemployment."

















Simply put, "deep spending cuts will lay off government workers and contract employees, reduce demand and customers. It takes a blind belief in market fundamentalism – divorced from any known economic model – to believe that deep cuts in government spending now will magically generate private sector job growth."

Myth #3. The Revenue Problem:  As Eric Cantor put it, "Washington doesn't have a revenue problem, it has a spending problem." 

Here's the chart disproving this canard:

The fact of the matter is that "Americans are paying the lowest percentage of their income in taxes since 1958. Corporate taxes which brought in over 6% of GDP in 1950 are now near historic lows of barely 1%."  Worse, "the IRS reports that the richest 400 Americans – who made an average of $354 million a year in 2007 – paid an effective tax rate of 16.6%, down from 30% in 1995 and 23% in 2002. Even as their incomes doubled from 2001 to 2007, their effective tax rates were virtually halved from 1995.."

As Borosage says, "clearly we have a “revenue problem” – and a major league indecency problem."