Myth busting Right Winger talking points on Economics

[one...two...tree 2,762]

When you turn on the TV, all you hear are the same pack of talking heads delivering the same manufactured economic sound bites: taxing the rich kills jobs, the stimulus failed, the defecit is out of control. These zombie talking points aren't just wrong; they're dangerous. If we're ever going to revive the economy, we've got to tackle them head on. Here are six of the worst.

Myth #1: The stimulus failed.

Everyone from the nonpartisan Congressional Budget Office (PDF) to private-sector forecasting firms have concluded that the 2009 stimulus package increased economic growth, reduced unemployment, and put millions of people back to work. It just wasn't big enough, or long-lasting enough.

Bust or Boost?

Myth #2: The deficit is our biggest problem right now.

It's true that we need to address our long-term deficit problem—a problem almost entirely due to Medicare and other health care expenditures. But that's in the long term. Right now, our problem is a sluggish economy and too many people out of work. And let's not forget that the Bush tax cuts, not stimulus spending, will also fuel defecits for the forseeable future.

The Bush Effect

Only an Idiot Turns Down Free Money

The real answer to future deficits is to spend money now to get the economy growing again. Yields on federal bonds are at record lows. That means, as University of California-Berkeley economist J. Braford DeLong has calculated, that the government could inject a big stimulus into the economy at an unbeatably low price: Spend $1 trillion but (because of low interest rates and the tax revenue from a faster-growing economy) borrow only $400 billion. Act now!

Myth #3: Lower taxes are the best way to grow the economy.

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.

If a Tax Rate Falls...

Will the Economy Notice?

Myth #4: Regulatory uncertainty is clogging the economy.

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. This is backed up by another survey by the Small Business Majority, in which nearly half of respondents said economic uncertainty was one of their business' top problems; 13 percent said regulation.

The Bottom Line Is the Bottom Line

Myth #5: Obama is debasing the dollar.

There's just no basis to the claim that Obama has debased the currency. And that's unfortunate. As economist Dean Baker is fond of pointing out, if we want to get our national savings rate up and our long-term budget deficit down, there's only one way to do it: by fixing our massive trade deficit. We have to import less and export more, and one way to make that happen is with a weaker dollar. A weaker dollar makes foreign goods more expensive, so we'll buy less of them, and makes American goods cheaper, so others will buy more of them.

Bad News for Tourists...

Is a Holiday for Manufacturers

Myth #6: If you unshackle the rich, they'll rev up the economy.

Think of this as the supermyth—the one underlying so many other fallacies. But here's a pesky fact neither corporate America nor the GOP establishment is trumpeting: After-tax corporate profits are currently at an all-time high. The problem businesses face isn't lack of cash but rather a lack of confidence that consumer demand will pick up in the future. So they're not expanding or hiring at the rate they should be.

Wall Street's Gain...

Main Street's Pain

Sources

Impact of stimulus: Congressional Budget Office (PDF)

Source of defecit: Center on Budget and Policy Priorities

Cost of government spending: Prof. Braford Delong, Treasury Department

Effective tax rates: Remapping Debate, The Tax Foundation

Change in GDP: Bureau of Economic Analysis

Small-business survey: National Foundation of Independent Business (PDF)

Exchange value of dollar: Federal Reserve

US exports: Bureau of Economic Analysis

Corporate profits: Bureau of Economic Analysis

Unemployement rate: Bureau of Labor Statistics

[Obama 2012 1,714]

this thread actually tries to say a weaker dollar is a good thing.

Many the idiocy that left-wing economic lunacy can bring.

as far as "Myth #4" goes, poor sales are from a lack of certainty in the market. I don't care if you want to raise or lower taxes, increase or decrease regulations. Whatever you do though, you need to make it "stick" for a long time. 5+ - 10+ years. None of this "temporary" bullshit. You want the economy to grow, you need to give it a stable environment to grow.

[skiptex 225]

DFH..

you don't get out much do you..

[SMR 368]

To Myth number 2: Any chart that blames the deficit on one specific part of the government or another is disingenuous. The deficit is 1.5 trillion. That's the general fund so any part of the budget can be blamed for that. Any part of any past budget can also be blamed because it contributed to past deficits which contributes to current debt which contributes to current debt payments. Saying that it's all the Bush tax cuts is like a welfare recipient that buys lottery tickets but claims that he or she doesn't use welfare money to buy lottery tickets.

[Captain Oates 911]

It's an ill wind that blows nobody good

The collapse in the US dollar that saw it fall to 2.14 against the British Pound, allowed me to buy a mansion in the US for the price of a cardboard box in the UK

That kick-start means I can spend all my 3 pensions into the US economy without paying back a mortgage

Now that the pound has dropped to 1.55, I can now leave my daughter, who lives in the UK, a far bigger inheritance and some nice xmas prezzies before then

Funny thing exchange rates - " Money isn't made or lost, its simply transferred" : Gordon Gecko

When I was 17, I realized that accountants were simply leeches on society and were overpaid and had cushy jobs out of the rain and surrounded by girls - my reaction was to become one

Summary: If you cant beat em - join em

[Usui Takumi 1,562]

this thread actually tries to say a weaker dollar is a good thing.

Then why is currency manipulation always towards weaker values?

Even Japan has been fighting to lower the value of the Yen in fear it is damaging the economy.

Edited October 11, 2011 by Sousuke

[Captain Oates 911]

Then why is currency manipulation always towards weaker values?

I remember Harold Wilson claiming that devaluation of the GBP wasn't a devaluation of 'The pound in your pocket'

Devaluation of the USD is great for exporting companies and their owners (me)

Its bad for consumers of imported gods which inflate (Walmartians)

At the moment the USD is getting stronger, but as soon as the fear factor recedes from the world - its due for a header in my opinion

The US political system is built for 1787 and not 2012

[Usui Takumi 1,562]

I remember Harold Wilson claiming that devaluation of the GBP wasn't a devaluation of 'The pound in your pocket'

Devaluation of the USD is great for exporting companies and their owners (me)

Its bad for consumers of imported gods which inflate (Walmartians)

At the moment the USD is getting stronger, but as soon as the fear factor recedes from the world - its due for a header in my opinion

The US political system is built for 1787 and not 2012

When the value of the USD drops, imported goods drop.

[Captain Oates 911]

When the value of the USD drops, imported goods drop.

Marginally...but that is because people are doing without - thus living at a lower standard

That's why Bangladesh doesn't import a lot of Ferraris

Cop this for a con man. He was a Yorkshireman like Mr Devon - some things never change

[Usui Takumi 1,562]

Marginally...but that is because people are doing without - thus living at a lower standard

That's why Bangladesh doesn't import a lot of Ferraris

Cop this for a con man. He was a Yorkshireman like Mr Devon - some things never change

Yep, Its not like the US can continue to run massive trade deficits.

[mawilson 2,133]

Only an Idiot Turns Down Free Money

The real answer to future deficits is to spend money now to get the economy growing again.

We've been doing this for years (borrow, spend now, avoid pain later) and now the chickens have come home to roost.

There's no such thing as "free money", of course. We will pay for it with higher taxes, slower growth, debased currency - all the "myths" this article is trying to "debunk".

[Captain Oates 911]

Yep, Its not like the US can continue to run massive trade deficits.

The only thing holding the dollar up is its status as a reserve currency in times of fear.

When the fear passes, and it will, the funds will flow out and the dollar will drop. The few exporting companies will do well. The economy is 70% consumption and the goods for that are Chinese etc - so the Walmartians will see steep price rises and a low dollar means high oil prices. I have just about the smallest car in this town - its a V6 3.5 liter 268 horse power Toyota so....

My German stocks have gone up 13% in the last few days as the fear comes out... we have nothing to fear but the lack of fear as far as the dollar is concerned

[mawilson 2,133]

Then why is currency manipulation always towards weaker values?

Helps companies' bottom lines. Doesn't help you and me (the consumer).

[Obama 2012 1,714]

Then why is currency manipulation always towards weaker values?

Even Japan has been fighting to lower the value of the Yen in fear it is damaging the economy.

because it makes it easier to hide what sort of catastrophe you have created. You can create a scenario where you screw over lenders, but at the same time you royally screw the average American. It's a 'win' for government, but a lose lose situation for everyone else.

Here in the United States we get to hide how much of a catastrophe it is quite well because we can form money with the flick of a pen. We almost instantly can create inflation ( or deflation for that matter ) and don't necessarily need people to 'buy' dollars to do what we want to do. It's why the stimulus packages were a joke. They weren't a stimulus at all. They were the FED and the government creating a situation to where they could greatly alter the value of the dollar. In turn rising prices occurred and people didn't seem to understand why. This isn't to say that the value of the dollar isn't affected by investments; it is, but the rollar coaster value has more to do with what the FED does than any other factor.

Americans need to learn to accept the idea of deflation and a stronger currency. The only reason deflation becomes a 'negative' is because people aren't willing to 'adjust' with it. We create these little economic 'safety' mechanisms such as minimum wage, etc. yet we aren't willing to reduce any of them once we increase them. However with a stronger valued currency and falling prices, people should be willing to accept a loss in wages as it's the only reasonable outcome. If we expect wages to rise in times of inflation, we should expect them to fall in times of deflation. It's the same scenario that gets many unions in trouble. A company is losing money and not making a profit and yet the unions want more and more. Just as they should expect more compensation during profitable years, they should expect to make concessions during non-profitable years.

The only reason we make such a big deal about the negative aspects with deflation comes from our 'global' position. If we were to create strong trade tarriffs and rules, then we could delfate the hell out of the US dollar and live a very comfortable lifestyle for all Americans. Pay off the debt to China and then leave the rest to domestic issues. After all the majority of the US debt is held by the Federal Reserve, then the states, and then the American people. It wouldn't be too hard for the US Congress to "wipe the slate clean" of the debt held by teh Fed first and foremost, and then deal with the states and the people accordingly as well. Hell, we could even force China to forgive all of our debt in a heartbeat. Granted we should be ready to start WWIII, but it is technically possible ( and i know a few in the intelligence industry who have hinted at this).

[Usui Takumi 1,562]

The only thing holding the dollar up is its status as a reserve currency in times of fear.

When the fear passes, and it will, the funds will flow out and the dollar will drop. The few exporting companies will do well. The economy is 70% consumption and the goods for that are Chinese etc - so the Walmartians will see steep price rises and a low dollar means high oil prices. I have just about the smallest car in this town - its a V6 3.5 liter 268 horse power Toyota so....

My German stocks have gone up 13% in the last few days as the fear comes out... we have nothing to fear but the lack of fear as far as the dollar is concerned

All of this is good IMO anyway. Its going to force the hard decisions, and the US will be better for it.

Edited October 11, 2011 by Sousuke