The seven biggest economic lies
By ROBERT REICH
President Obama’s jobs bill doesn’t
have a chance in Congress — and the
Occupiers on Wall Street and else-
where can’t become a national move-
ment for a more equitable society —
unless more Americans know the truth
about the economy.
Here’s a short effort to rebut the
seven biggest whoppers now being
told by those who want to take Amer-
ica backwards. The major points:
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 richest Ameri-
cans faced a top marginal tax rate of 70
percent or above. Under Dwight Eisen-
hower 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 busi-
nesses would be hurt by a higher mar-
ginal tax; fewer than 2 percent of small
business owners are in the highest tax
bracket.)
3. Shrinking government gener-
ates more jobs. Wrong again. It means
fewer government workers – everyone
from teachers, fire fighters, police offi-
cers, 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 econ-
omist 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.
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. One of the
best ways of slowing these costs is to
use Medicare and Medicaid’s bargain-
ing power over drug companies and
hospitals to reduce costs, and to move
from a fee-for-service system to a fee-
for-healthy outcomes system. And
since Medicare has far lower adminis-
trative costs than private health insur-
ers, we should make Medicare avail-
able to everyone.
6. Social Security is a Ponzi
scheme. Don’t believe it. Social Secu-
rity is solvent for the next 26 years. It
could be solvent for the next century if
we raised the ceiling on income sub-
ject 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 pay-
roll taxes, sales taxes, user fees, and
tolls than everyone else.
Demagogues through history have
known that big lies, repeated often
enough, start being believed — unless
they’re rebutted. These seven eco-
nomic whoppers are just plain wrong.
Make sure you know the truth – and
spread it on.
(Editor’s Note: Robert Reich is
chancellor’s professor of public policy
at the University of California at
Berkeley. He has served in three ad-
ministrations, most recently as secre-
tary of labor under President Bill Clin-
O PEN
F ORUM
ton. His “marketplace” commentaries
can be found on publicradio.com.)
‘Bakers Union saved my life’
To The Editor:
I have been a member of the Bak-
ery, Confectionery, Tobacco, & Grain
Millers Union, Local 114, for 14 years.
I am currently retired, but I have been
active in the union, serving as shop
steward and on the Executive Board. I
have always had an appreciation for the
benefits that I enjoy by being union, but
it wasn’t until recently that I realized
just how good my health insurance is.
In 2009, after injuring my ribs at
work, a blood test discovered that I
have a rare blood cancer called multi-
ple myeloma. The cancer was found in
my bones, which made them brittle
and prone to breaking. I was no longer
able to work.
I also risked the spread of the can-
cer throughout my body because it was
being transported through my blood.
As part of my treatment, I had to take a
prescription drug that cost $7,400 a
month. Once I reached my maximum
out-of-pocket for the year, it was fully
covered by my insurance.
I would never be able to afford this
prescription without my excellent
health insurance negotiated by the
union.
At Providence Hospital in Portland,
I was shocked to witness people wait-
ing for treatment while their insurance
company decided whether they were
going to cover it. Not only did I not
have this problem, I was able to be
treated at the Seattle Cancer Care Al-
liance (SCCA), which includes the
University of Washington Medical
Center and the Fred Hutchinson Can-
cer Research Center. It is one of 40
hospitals nationally that draws the best
doctors and researchers around the
world to find a cure for cancer.
While at SCCA, I was assigned a
team of doctors, with one nurse who
stayed with me during my entire treat-
ment.
I certainly couldn’t have made it
without the support of my partner,
Pam.
And I am thankful for the love and
care of my extended family from the
Mt. Hood Masters Swim Team, and
friends — many of whom are union
members who I have worked with over
these past 14 years at the Kroger Bak-
ery.
I would like to recognize the union
for all it has done to preserve my
health insurance. I did not have to sell
my house or go into bankruptcy to pay
for my treatment, and I received world
class, cutting edge care that has led to
my cancer’s remission.
That is why I say the union saved
my life!
Nancy Milner
Bakers Local 114
Portland
Paid for and authorized by Require Local Vote on Urban Renewal, 2236 SE 10th Ave., Portland, OR 97214
OCTOBER 21, 2011
NORTHWEST LABOR PRESS
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