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Tuesday, October 25, 2016

The Big Lie: Tax cuts for the rich pay for themselves by creating jobs for the middle class.

The Truth: Tax cuts for the richest have a devastating effect on the economy by creating fiscal deficits and fueling income inequality.

Mitt Romney’s campaign has been ripe with a putrid old lie that America’s right wing has been reheating and serving up for years: We understand how the economy works and thus we know how jobs are created!

But when you poke at what the GOP is actually serving, you realize that this collapsed soufflé displays a certain disconnection from reality. The Republican right is stuck with a cult-like devotion to a big lie that has been disproved again and again.

Despite all evidence to the contrary, despite their loud talk of debt and deficits as a “cancer” that will destroy America, Republicans cling to the belief that tax breaks for the rich create jobs. Call it Job Creationism.

The myth of Job Creationism goes like this: Ronald Reagan’s tax cuts created an economic miracle in the 1980s that lasted through the Clinton years and would have worked in the Bush era except Clinton had ruined everything by enjoying his Reagan windfall too much.

Both Reagan and George W. Bush’s tax cuts left us – to paraphrase George H.W. Bush — in deep voodoo. After the Republicans manufactured these massive debts and were then ousted by voters, they decided the bills must be paid immediately with cuts to government services and benefits. Why? Because deficits start to matter as soon as Democrats take office.

If Republicans are so concerned about debt, why not just raise the top tax rates back to where they were during the economic booms of the 1950s, or at least the 90s?

Because in the Job Creationist doctrine, tax increases on the rich – sometimes known as tax increases on small business owners — always kill jobs. Even though they only affect a fraction of actual small businesses.

Job Creationists swear by this dogma, despite the fact that Bill Clinton – facing what now seems like a quaint $300 billion deficit – raised taxes on the rich. Right-wingers falsely called it “the largest tax increase in history” and promised economic doom. What followed was the largest sustained economic boom in American history. Then George W. Bush lowered taxes by trillions and the result was the worst decade of job creation in generations.

Federal taxes as a share of gross domestic product have not been this low in sixty years.

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Copyright 2012 The National Memo

    I am amazed at how both parties have blinders to anything that does not fall into thier preconcieved notions of how the world works. On this one, I have to side with the notion that raising the tax rate back to where it was when Reagan left office would provide some much needed revenue to close the deficit.

    Now, the democrats have to acknowledge that increasing revenues are not going to get us there. Some of the entitlement programs, and some efficiencies in various departments will need to be passed as well. Not just placed on the table, but actually imposed.

    Both parties have to do some compromising, even if it is forced by the shotgun that is the automatic cuts agreed upon by the congress and administration to kick the can down the road the last time the country was on the brink of defaulting.

    There has to be accountability, and these “Statesmen” need to put country before party. This brinksmanship that has become the norm recently is not acceptable. Perhaps the nation will look at thier representation in Washington and make some long overdue changes.

    • First everyone has to get on the same page as to the true meaning of entitlements. The term unfunded mandates and entitlements are tossed about with great ease, but little in the way of actual accountability. Social Security and Medicare should not be thought of as entitlements. I’m receiving both after having worked 50 or more hours per week for over 40 years. I’ve earned them. I put money into both for all of my working life and unlike Romney I don’t consider myself sucking of the Federal teat. My wife and I are among the most responsible people anybody is likely meet. We have been volunters in our community for many years. The pension I receive I also earned by the sweat of my labor and my employer got many of the best years of my life. Romney’s asinine comment to his wealthy friends has left me very, very angry and spoiling for a fight. Also I find it interesting that people never mention that nearly everything having to do with government is an unfunded mandate. The Pentagon budget is also unfunded and is fought over each and every year. However, please don’t get me wrong…I agree totally that the ‘Statesmen’ from all political stripes need to come together and do what is best for the country. Party should be the last thing considered. I can’t wait for November and will be taking advantage of early voting.

      • johninPCFL

        Lynda, UTGDIs comment carries considerable weight when you consider the arithmetic. You worked 40 years and your contribution to SS was under 10% of salary in the early years, growing to 15% today. Your SS payout today probably exceeds your salary in the 1970s. Your life expectancy is longer than in the 1970s, costs are higher than in the 1970s, and the idea that social security was started as a supplement to your retirement savings (my dad always pointed this out) was lost in the 1970s.

        So, today the average recipient lives far longer than was ever envisioned, and the sum total, including accumulated interest, of all of the contributions paid in amounts to one-third of what is paid to recipients. Only a Ponzi scheme generates that kind of return on investment.

        When SS started, there were 15 workers per recipient, and there was one government employee in that group. Today there are 5 workers per recipient, and one is still a government worker (essentially we are paying him to be there.) Earlier, government workers were typically paid less than their private enterprise counterparts, but they had job security that the private sector didn’t. Today government workers are paid more than private sector employees and still have excellent job security, so government employment is far more desirable.

        Another major difference today is that when SS started fewer than 1 in 1000 had retirement savings. Most never retired; they relied on family to support them in their old age. It is common today in Hispanic and Asian families for the elderly to live with the kids, but is far more rare among third and higher generation white American families.

        We applaud the Japanese for their 10% savings rate, but we have a government mandated 15% savings rate. The difference there is that when the elder Japanese runs out of savings, he moves in with kin. When your 15% runs out, you keep on collecting.

        This is a debate we need to have.

        • Sorry Johnin, but you’re analysis is wrong. If you look up the following Fox News story: New Retirees receiving less from social security than they paid in: The article goes into why this is so.

        • I agree with much of what you said. Yes indeed back in the old days there were more workers than recipients and some folks do indeed live longer. However, lets not get lost in the weeds here. While Social Security is in need of another overhaul it is hardly ‘going broke’ as some are inclined to claim.

          This years trustees report found that, if left alone, Social Security system will continue to be able to pay its bills for at least the next 40 years–thanks in part to a $1.4 trillion next egg of Treasury securities stashed away over past couple of decades. Another analysis by the Congressional Budget Office sets the fund as being in good shape until 2052. Take your pick.

          Yes there will be a forthcoming short-fall and the trustees have suggested tht either an increase in taxes today, or a cut in benefits or retiring at a later age…or even a little of all of the above. Under Reagan & the Congress a relatively small tax increase, raising the amount paid from 5.4% to the current 6.2% got us to today with little pain.

          Social Security is the easy fix, but what freightens me is the escalating rise is Medicare cost, which to date has gotten little attention from our leadership.

          • Gammaanya

            Lynda – U R almost correct, but Bush war was run on credit and unfortunately HE did dipped in SS funds.Not much but it took nice chunk of it out. DOn’t forget, every working pwerson contribute to SS and it’s a cash cow for Republicans and investors, that’s why the Repukes are pushing to privatize and so call invest the money. We know what happene dto some of them. Bernie Madoff comes to mind.
            OMG he thinks that Casey Anthony was very GOOD mother. LOL

      • BigGuyDon

        Totally agree with “entitlements” being exclusive of Social Security and Medicare. And not because you paid into them when you were working, but because as a society it’s unacceptable that our elderly should have to end their lives eating dog food or lacking medical care at their most vulnerable. And if those who aren’t yet retired are paying for that assurance for their older loved ones it’s a small price to pay. We should be focusing on how to contain or reduce the costs of these programs (particularly Medicare) without reducing the service provided, not just cutting the services provided.

        The sooner we can put an end to this canard about tax cuts = jobs and tax increases = job killing the better. There is no evidence to support it. And no businessman worth his salt every turned down making more money because he would have to pay taxes on it.


  • Arithmetic can be a bitch. Yeah I know, figures don’t lie and liars figure…at least some of time they do. The fiction of rich job creators has been part of the fabric of American politics for far too long. I just hope that the powers that be within the Democratic Party are not afraid to pick up these facts and run with them. They’ve certainly been too timid in the past and too closely associated with the status quo and the moneyed elites. For the good of the country and middle-class I hope they push forward.

  • bcarreiro

    Hey, even if shelly adelson injected 100 mil into mitt veins he couldnt build a better romney……u cant buy common sense. hey shelly, put 100 million into my campaign and i double that for ya without hurting the little people.

    • johninPCFL

      It’s not a bad bet for Adelson. If he loses, the $100 million is small numbers for him anyway and he’s positioned to be the next kingmaker in the GOP. If he wins and Romney makes the tax cuts he’s proposing, Adelson keeps $2.3B in additional money. That’s a 2300% return on investment.

      Then if he can get Congress, with Mexican Mitt’s help of course, to eliminate the estate inheritance tax, his heirs add another $8B to their bank accounts. All told, a 10,000% return on investment.

  • The only thing the Bush tax cuts accomplished was ending the budget surpluses he inherited, a resumption of deficit spending and accumulation of debt, greater overseas investments, and the near collapse of the U.S. economy. Contrary to what the GOP says government has a role, not only in national defense, but on the implementation of needed social programs, and stimulating the economy when the private sector needs help and consumer confidence is low. Government needs revenues to fund the programs we benefit from, and pay for the services we need without resorting to deficit spending, borrowing and accumulating debt. Republicans know this, and insist on irresponsible tax breaks not because they don’t understand the damage they cause but because of their conviction that government is the problem not the solution.

    • Mikeinthedirt

      No, because they don’t give a hoot. Remember Reagan saying private sector charity would supply the ‘safety net’?

    • RodgerMitchell

      GDP = Federal Spending + Nonfederal Spending – Net Imports.

      Now, explain how deficit spending affects GDP

  • The 47% of our population that Romney, and the GOP, continue to demonize for not paying taxes (I believe the actual number is 46%), includes children under 18, senior citizens on a fixed income, the handicapped…and Mitt Romney!!!

    • neece00

      You’re right, when I heard that comment, I wonder if he was including himself in the number as not paying taxes. Come on election day.

    • johninPCFL

      They also conveniently leave out the thousands of millionaires who pay no income taxes. Why don’t they point these business geniuses, like Romney, out?

      • Early voting starts on 9/27 in Florida, and thanks to our beloved Governor it will only be available a few days…

  • neece00

    It is hard to believe that they still think the wealthy will create jobs.

    • They may be right in one way, they’re spending may create jobs but not in America. Unfortunately, when rich folks get extra cash, they tend to place it offshore where they hope they can hide it..ofshore this may create jobs needed to invest the funds coming from America; and when they need something big, like a yacht, they don’t buy it in America, again they go overseas probably to Italy or Ireland to get it built. And when they go on vacation, where do they probably go, offshore again to an island they almost practically own where again they spend their money offshore. What they don’t realize is that they’re only kidding themselves, many of us know the sham they’re pulling.

      • neece00

        And the latest comment really floored me, middle class is between 200000.00 and 250000.00 per year. Even though 76% of the American people make under 100000.00, if that is the case myself and everyone I know are proverty level, although I was feeling pretty good about myself.

    • ann128

      Mitt Romney, figured out a way to get richer by stealing from the Government.

      The Government is helping the rich get richer when they do not pay their fair share in taxes.

      In order to survive, the less fortunate receive help from the Government. Whereas, the GOP and the rich get richer when they DO NOT pay their fair share in Taxes

      The rich takes from the Government in order to get richer and the less fortunate receives help from the government in order to survive; yet get poorer.

  • johninPCFL

    Yes, Reagan cut taxes, and he raised them too. He also spent like a drunken sailor, adding over $3T to the $400B national debt he inherited from Carter. Keynsians say the spending helped the economy recover, conservatives say the tax cuts helped. So, we have to continue the experiment.

    GHWB inherited massive annual deficits (and Reagan kept military costs out of the budgets to make them look more balanced) and bumped taxes up a bit to offset the growing national debt. Job creation continues and the growth of the debt is reduced. GHWB added only $1T to the debt in his four years.

    Then comes Clinton. He continues the trend of leaving military spending out of the budget, so his budgets actually show a surplus. Social spending declines because jobs are more available, tax revenues are stable, and the national debt stabilizes at about $6T.

    Enter GWB. Since the budget shows a false surplus (no military costs) and “deficits don’t matter”, we once again have the experiment of massive tax cuts. But this time we don’t have Reagan’s massive spending increases, just a continuation (under the GOP congress) of Clinton’s spending. This time the economy floats along (about 1 million added jobs in eight years) then crashes. This time the debt has ballooned to $12T.

    Maybe we’ve found the right formula for tax rates and spending. We just need to go back to it. We don’t need Romney to double down for another round of the same experiment with all of our lives.

  • William Deutschlander

    The Generational Republican is not capable of reason or reality!

  • tokoloshi27

    Mark Twain claimed to have quoted the British statesman Benjamin Disraeli with the statement, “lies damn lies and statistics”.

    The argument in this article is, in my opinion, a red herring. Jobs are created when an economy is doing well; how this relates to taxes becomes opaque when the other factors are ignored. FDR’s “economy” was booming during the Second World War when the nation spent money like a drunken sailor to combat the twin evils of German National Socialism and Japanese Imperial expansion. The tax rates were not restored, on conclusion of the war, to pre-war levels because first the United States had to rebuild the economies that were shattered in that conflict. Successive administrations retained that lip-lock on the income-tax teat (at various level) to maintain the cold war.

    So what is it that we are spending this money on and how does that graph trend? I submit that is a more appropriate concern. We had military spending trending down after the end of the cold war (the so-called peace dividend) where whooie we had budgetary surpluses that could be thrown into vote-buying schemes. The “safety-net” ballooned into today’s “entitlement” rich budgetary situation. Folks that would be working low-wage jobs find it more remunerative not to work, and this causes a demand for undocumented workers to fill those needs. This in turn causes those funds to leave our economy so our economy does poorly.

    So if we are heartless and shrink entitlements we cause those for whom no physical or mental restriction exists to get off the dole and earn their own money, reducing the underground economy and presumably causing some of those low-income workers to re-evaluate their positions and strive to move up (as previous classes have done, where possible). This adds a dynamism to our working population and causes innovative and diversity of thought. Needs are met closer to home and the body politic receives a boost.

    So focusing on taxes alone, especially with the suspect statistics this article includes is only intended to perpetuate the current economic imbalance that is detrimental to the republic.

    • Sand_Cat

      The most suspect thing is your little fairy tale about the benefits of being heartless.

    • You are buying into Romney’s moocher -class rhetoric. Most of the people I know who are on assistance do have at least 1 job. The greater problem is that corporations are hoarding profits, keeping incomes low for their non-executive employees, and refusing the source from within the US because there are so few penalties to doing so.

  • howa4x

    The reality is we have never repealed the Bush tax cuts for the rich. They cost about a trillion dollars and add to the deficit every year. So where are all the jobs? The only thing the wealthy did was invest in financial instruments, like CDO’s, and hedge funds. They also off shored their wealth along with the jobs. Look at Romney as an example. His wealth is estimated at about 250 million, so where are all the jobs he created? He could have easily started a business. Instead he placed his money in Switzerland, the Caymans, and a shell corp in Bermuda. During the bush yrs we exported 2.9 million jobs and that is what we got for giving the 1% a tax cut. Middle class wages were flat and the wealth of the 1% grew at an astonishing 256%, and they still want more! Not only that they want to pollute the enviornment by rolling back the clean air and water act. They can extract gas and coal in an enviornmentally friendly manner but they want that extra 2% profit. Is it worth ruining America so they can have more? So we got nothing for giving the wealthy a tax cut for the last 8 years, no jobs, nothing. Instead of trickle down we got a golden shower.

  • The simple question that the wealthy cannot answer is this – If tax cuts on the wealthy lead to job creation, why did it not work under George the Second, and why is it not working now? After all, taxes, particularly for the wealthy, are considerably lower now than when President Clinton was in office.

    Maybe President Clinton was right. WELFARE FOR THE WEALTHY and deregulation go hand in hand with the destruction of our economic wellbeing.

  • TSB

    The trickle down voodoo only floods the money up and off to the swiss banks and Cayman Islands from the wealthy and doesn’t leave a foggy mist behind for the rest of us.

  • leejam1944

    He likes to say he was misunderstood. Let’s show his action’s, he supported the Viet- Nam War and claimed those that didn’t were Traitor’s, then for him to escape the Draft so he didn’t have to serve He went to France. Question who’s the Traitor and the Liar?

  • Mikeinthedirt

    Good to know that for the 20 most lucrative (and wearing) years of my career I paid twice the tax of the 1%.

  • Why are Romney’s poll numbers still in the high 40’s??? Aren’t Americans’ watching and listening to this fool?

    • grammyjill

      Because they don’t care they just want the black guy gone.

  • Mikeinthedirt

    Your Bible says Bind not the mouths of the kine that tread your grain. 1 Cor 9:9. If they don’t die, they’ll stampede. Get a clue, dudes!

  • alumahead

    Anyone who thinks society benefits by putting more money in fewer hands really isn’t paying attention.

  • The original argument that tax cuts increase revenue is based on the Laffer Curve developed by Arthur Laffer. The curve shows that revenue has a non-linear relationship to top marginal tax rates, with maximum revenues achieved at top marginal rates between 40 and 60%. That is why the Reagan Tax Cuts increased government revenues – they dropped the top marginal rate from the 90s to the 70s. The Bush Tax Cuts dropped the top marginal rate below 40%, thus lowering revenue during a period of national defense crisis during which Defense spending doubled. Actual deficits were twice the budget deficits for eight years, and total national debt doubled in the same period. Whatever that policy was, it was not fiscal responsibility.

    The Bush Tax Cuts expire at the end of 2012. They must be allowed to do so. The difference accounts, by itself, for 1/3 of current deficits. The War in Iraq is over. The War in Afghanistan will be over soon. The military expenditures for these wars accounts for another 1/3 of current deficits. The remaining third is accounted for by mandatory relief spending pursuant to persistently weak economic growth. Once we get GDP growing at 3 or 4 percent per year there will be no deficits at all. It is as if the pension manager lost the investment profits gambling in Las Vegas and then comes back and says we have to reduce benefits. Benefits are not too high. Income taxes are too flat. Congress has mismanaged and misrepresented the economy. Wealth does not create jobs unless invested with the prospect of profit. Profit is from sales, sales is from customers, so no customers, no profits, no investment and no jobs. It is not rocket science.

    The President does not set levels of spending, taxing or borrowing – – he just gets to veto or accept what Congress enacts. Whatever is not right with the economy is the result of some Act of Congress. Whether or not the country gets a new President come January, what it needs is a new Congress – one that understands economics and finance like the present one does not.

  • RodgerMitchell

    “The Truth: Tax cuts for the richest have a devastating effect on the economy by creating fiscal deficits and fueling income inequality.”

    Now for the real Truth: Federal deficits are necessary for economic growth.

    Consider this fundamental equation in economics: GDP = Federal Spending + NonFederal Spending – Net Imports. By definition, increased spending increases GDP. Federal deficits are the result of increased federal spending and/or decreased taxes. NonFederal spending is accomplished through tax cuts and federal spending.

    Deficit reduction (aka “austerity”) is a 100% guarantee of recession.

    Rodger Malcolm Mitchell