What Are Some Common Myths About the Economy

 

 Six Myths About the U.S. Economy

MYTH #1: THE STIMULUS FAILED

For the first four years of his presidency, Franklin Roosevelt tackled the Great Depression with inflation, easy monetary policy, and government spending. But in 1937, FDR's advisers persuaded him to reverse gears. After all, interest rates had been close to zero for years, commodity prices were climbing, and fear of inflation was on the rise.
Bust or Boost?

What happened next is now called the "Mistake of 1937" (PDF). Federal spending was cut and monetary policy was tightened up, with disastrous results: GDP immediately began to plummet, and industrial production fell by a third. Within a year everyone had had enough. In 1938 the austerity program was abandoned, and the economy started to grow again.

The truth is that stimulus worked in 1933 and it worked in 2009. So why is our economy still in such bad shape? For one, partly due to political considerations and partly because it wasrushed through Congress, the 2009 stimulus wasn't as well designed as it could have been. It was also sold badly. If the bill passed, administration economists predicted, unemployment would peak at 8 percent and then start declining (PDF). But the recession was far worse than the White House originally thought. Unemployment peaked in the double digits, and that's made the stimulus a fat target for Republican critics ever since.

...MYTH #2: THE DEFICIT IS OUR BIGGEST PROBLEM

If your credit card company offered you $30,000 interest-free to buy a car, would you take the deal? Sure you would. It's a three-way win: You replace your clunker, the auto industry keeps its assembly lines humming, and the credit card company is happy to have made a safe loan, even at no interest. Apparently, they think you're a pretty good credit risk.

The Bush Effect

This is pretty much the situation the US government is in now. If our national debt were really at dire and unsustainable levels, as conservative economists and Republican leaders have taken to arguing, nervous investors would be driving up interest rates on federal borrowing. But just the opposite has happened: As I'm writing this, 10-year real treasury yields are at 0.00 percent. The seven-year rate is actually negative. Apparently, the financial markets think we're a pretty good credit risk.

...MYTH $3: LOWER TAXES ARE THE BEST WAY TO GROW THE ECONOMY

There's no greater orthodoxy in the Republican Party than unconditional fealty to tax cuts. In a recent GOP debate, when the candidates were asked whether they'd walk away from a deficit deal that included just $1 in tax increases for every $10 in spending cuts, every single hand shot up.

Taxes have been the third rail of American politics ever since the California tax revolt of 1978. Even Democrats are nervous about touching them: President Obama has famously called for letting some of the Bush tax cuts expire, but he's always careful to make it clear that he wouldn't change rates for anyone earning less than $250,000 per year. In other words, he'd repeal less than a quarter of the Bush tax cuts.

This fear is easy to understand. No one likes paying higher taxes. But do lower taxes actually spur economic growth? Bruce Bartlett, an economist in the Reagan administration, has compared tax rates in various rich countries in 1979 to each country's growth rate since then. His conclusion? There's virtually no correlation.

Recent US history backs this up too. Bill Clinton raised tax rates in 1993, and Republicans insisted it would cripple the economy. Instead, the economy boomed. In 2001 and 2003, George W. Bush lowered taxes and Republicans insisted the economy would flourish. Instead, we got the weakest expansion of the past century.

...MYTH #4: REGULATORY UNCERTAINTY IS CLOGGING THE ECONOMY

Are American businesses paralyzed by fear of a tidal wave of new regulations? WhenMcClatchy reporter Kevin Hall went out and asked small-business owners about this, he got a clear answer. "Absolutely, positively not," said one. "Government regulations are not choking our business," said another. In its most recent quarterly survey (PDF) of small-business trends, the National Federation of Independent Business reports that sales—i.e., lack of demand—is the No. 1 concern, beating out taxes, regulations, inflation, and everything else.

The Bottom Line Is the Bottom Line

In any case, regardless of what the Wall Street Journal editorial page says, the Obama administration has hardly been a whirlwind of regulatory activity. Its health care reform will have very little effect on either small businesses (which are exempt) or large businesses (which mostly offer health plans already) and only a modest effect on medium-size businesses (PDF). Its financial reform bill affects only the financial sector. Its proposed new air-quality regulations will mostly affect old coal-fired electrical plants that would have shut down anyway (PDF).

Dumb and outdated regulations are no friends to the economy—and the Obama administration has undertaken a regulatory review that's projected to save an estimated $10 billion during the next five years. 

 The full article with the links to the studies(pdf files) are at the link along with the last two myths. Remember that best selling book that everything they teach you, especially about history, in public schools is wrong ( everything is whitewashed so no one is offended) that is what these myth busters do to what bone headed conservatives and libertarians tell America about the economy. The conservative and libertarian models never have worked, at least not before they cause a big crash. 

To Protect and Serve? Occupy Wall Street and the hijacking of the First Amendment.

To Protect and Serve? Occupy Wall Street and the hijacking of the First Amendment.

A funny thing happened to the First Amendment on its way to the public forum. According to the Supreme Court, money is now speech and corporations are now people. But when real people without money assemble to express their dissatisfaction with the political consequences of this, they’re treated as public nuisances and evicted.

First things first. The Supreme Court’s rulings that money is speech and corporations are people have now opened the floodgates to unlimited (and often secret) political contributions from millionaires and billionaires. Consider the Koch brothers (worth $25 billion each), who are bankrolling the Tea Party and already running millions of dollars worth of ads against Democrats.

Such millionaires and billionaires aren’t contributing their money out of sheer love of country. They have a more self-interested motive. Their political spending is analogous to their other investments. Mostly they want low tax rates and friendly regulations.

Wall Street is punishing Democrats for enacting the Dodd-Frank financial reform legislation (weak as it is) by shifting its money to Republicans. The Koch brothers’ petrochemical empire has financed, among many other things, candidates who will vote against environmental protection.

This tsunami of big money into politics is the real public nuisance. It’s making it almost impossible for the voices of average Americans to be heard because most of us don’t have the dough to break through. By granting First Amendment rights to money and corporations, the First Amendment rights of the rest of us are being trampled on.

This is where the Occupiers come in. If there’s a core message to the Occupier movement it’s that the increasing concentration of income and wealth poses a grave danger to our democracy.

Yet when Occupiers seek to make their voices heard—in one of the few ways average people can still be heard—they’re told their First Amendment rights are limited.

The New York State Court of Appeals along with many mayors and other officials say Occupiers can picket—but they can’t encamp. Yet it’s the encampments themselves that have drawn media attention (along with the police efforts to remove them).

A bunch of people carrying pickets isn’t news. When it comes to making views known, picketing is no competition for big money .

Yet if Occupiers now shift tactics from passive resistance to violence, it would spell the end of the movement. The vast American middle class that now empathizes with the Occupiers would promptly desert them.

But there’s another alternative. If Occupiers are expelled from specific geographic locations the Occupier movement can shift to broad-based organizing around the simple idea at the core of the movement: It’s time to occupy our democracy.

This post originally appeared at RobertReich.org. Reprinted here for educational purposes.

Robert Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley.

I am afraid because of a few bad apples and the hyping of those bad apples by far Right extremists in the media like the anti-American Fox News, it might be best for OWS to move on to less public demonstrations. They have a great message, like this - The Average Bush Tax Cut For The 1 Percent This Year Will Be Greater Than The Average Income Of The Other 99 Percent. They should not let that message get lost in all the unhinged attacks against them.

Republicans Say Americans Are Lazy. Something Obama Never Said

Republicans Say Americans Are Lazy. Something Obama Never Said

GOP State Rep: Obama ‘Enables’ ‘Lazy’ Americans By Extending Unemployment Benefits | Conservatives have pounced on President Obama for the completely false story that he called Americans “lazy.” But one Iowa Republican is publicly agreeing with the disparaging characterization Obama never made. State Rep. Josh Byrnes doesn’t think all Americans are lazy — just the 14 million who are unemployed. And he blames Obama for the problem, writing:

    I might have to partially agree with President Obama on this one. I don’t think Americans as a whole are lazy, but we have some pockets of Americans that appear lazy. Ironically, the president has helped enable some of these pockets by doing things like extending unemployment benefits.

Byrnes also says people who are out of work could find jobs if they wanted to, but are simply too proud: “There are jobs out there and I think the problem is that some people think some of these jobs are beneath them.”

In other words this freak thinks Americans would rather loose their homes, have no money, hope they can get a few dollars a day in food with food stamps all to avoid work. There are lazy Americans out there. Some of them are like Byrnes collect a pay check but never do any actual work for the American people. Republicans have tried to mangle Obama's speech to make it look like he said something he never did - Lazy Lying Republicans – Obama Calls U.S. Corporatists ‘Lazy,’ GOP Falsely Claims He Was Referring to All Americans and here Perry Ad Distorts Obama ‘Lazy’ Comment

“Can you believe that? That’s what our president thinks is wrong with America? That Americans are lazy? That’s pathetic,” Perry says in the spot that’s airing in Iowa and New Hampshire. 

The only problem: the full context of Obama’s remarks made Saturday during a meeting of CEOs in Honolulu indicates he wasn’t suggesting that at all.

Boeing CEO James McNerney asked Obama about his thinking on the perception by some countries of “impediments to investment” in the U.S.

Obama replied that “we’ve been a little bit lazy” about actively trying to attract private foreign investors to U.S. soil — referring broadly to American government and business sectors, not the American people themselves.

Perry and other right-wing conservatives are lying once again. That should tell America a lot about the real integrity of the "values" party.

Is Obama a Socialist? Big Banks made more profit in the first 2½ years of the Obama administration than they did during the entire Bush administration, industry data show.

Is Obama a Socialist? Big Banks made more profit in the first 2½ years of the Obama administration than they did during the entire Bush administration, industry data show.

The largest banks are larger today than when Obama took office and are returning to the level of profits they were making before the depths of the financial crisis in 2008, according to government data. Wall Street firms — either independent companies or the high-flying trading arms of banks — are doing even better. They’ve made more profit in the first 2½ years of the Obama administration than they did during the entire Bush administration, industry data show.

    ....A recent study by two professors at the University of Michigan found that banks, instead of significantly increasing lending after being bailed out, used taxpayer money to invest in risky securities to profit from short-term price movements. The study found that bailed-out banks increased their returns by nearly 10 percent as a result.

    ....“The too-big-to-fail banks got bigger profits and avoided failure because of trillions of dollars of loans directly from the Federal Reserve,” said Linus Wilson, assistant professor of finance at University of Louisiana at Lafayette. “Today their profits are boosted by lower borrowing costs because their managers and creditors expect a Fed lifeline when markets get jittery.”

    Banks have also benefited from the massive increase during the recession in unemployment insurance, which is a joint federal and state program. Increasingly, banks offer debit cards to the unemployed to collect their benefits. These debit cards carry a range of fees that bolster bank bottom lines.

Those wacky conservatives claim Obama is a socialist or a martian or whatever. One thing is certain is that if he is a socialist he is the worse ever. he has turned Marxism upside-down helping the trend that started with Ronnie Reagan, redistributing income upward to the wealthy. Could the reality be that Obama is, at least on economic issues, to the Right of Reagan.


Subprime Loans, Foreclosure, and the Credit Crisis. What Happened and Why? - A Primer

If Obama is a Socialist Then Reagan Was The Biggest Marxist Ever

Why Do Republicans Claim Obama is Redistributing Income When Taxes Are Lower Now Than Under Reagan

President Obama met with House Republicans today(06-01-2011) at the White House to discuss ways to move forward on negotiations regarding the nation’s debt ceiling and the budget. During the discussion, talk evidently turned to taxes, and when Obama noted that taxes today are lower than they were under President Reagan, the GOP, according to The Hill, “engaged in a lot of ‘eye-rolling’“:

    Republicans attending a White House meeting on Wednesday didn’t take kindly to President Obama telling them tax rates were higher during the Reagan administration. GOP members engaged in a lot of “eye-rolling,” according to a member who was on hand to hear Obama, who invited House Republicans to the White House for discussions on the debt ceiling. [...]

    “[The President] made a comment like the tax rate is the lightest, even more than (under former President) Reagan,” Rep. Lee Terry (R-Neb.) told The Hill following the meeting. House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) joked that during the meeting, “We learned we had the lowest tax rates in history … lower than Reagan!”

That House Republicans find this preposterous is symptomatic of the hold Reagan mythology has over them. After all, for seven of Reagan’s eight years in office, the top tax rate was higher than the current 35 percent. In six of those years, it was 50 percent or more. And every year that Regan was in office, the bottom tax bracket was higher than the current ten percent.

For a family of four, the “average income tax rate under Reagan in 1983 was 11.06 percent. Under Clinton in 1992, it was 9.18 percent. And under Obama in 2010, it was 4.68 percent.” During Reagan’s time, income tax revenue ranged from 7.8 to 9.4 percent of GDP. Last year, it was 6.2 percent and is not projected to climb back to 9 percent until 2016. In fact, in 2009, Americans paid their lowest taxes in 60 years.

Republicans are very fond of saying that the U.S. has “a spending problem, not a revenue problem.” But the truth is that revenue has plunged due to the recession and to continued misguided tax cuts, and revenue needs to be raised to eventually bring the budget into balance. And Reagan knew that taxes were an important part of the budget equation. After all, he “raised taxes in seven of his eight years in office,” including four times in just two years.

The rants, articles, blog posts and so forth are all over the internet: President Obama is a Kenyan Marxist who is redistributing income from high taxes on hard working Americans to lazy socialists. If that is true and our measure of Marxism is high taxes than Reagan was a much bigger Marxist than Obama. Reagan raised taxes 7 times including the biggest peace time increase in modern history. Thus Reagan was a Marxist. Bush 41 raised taxes once - he's a Marxist too obviously. Obama has cut small business taxes 16 times.