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The 7 Biggest Economic Lies

by Robert Reich[column width="48%" padding="4%"]Here’s one effort to rebut the seven biggest whoppers now being told by those who want to take America 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 Americans faced a top marginal tax rate of 70% or above. Under Dwight D. Eisenhower it was 91%. 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 businesses would be hurt by a higher marginal tax; fewer than 2% of small business owners are in the highest tax bracket.)

3. Shrinking government generates more jobs. Wrong again. It means fewer government workers – everyone from teachers, fire fighters, police officers, 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 economist 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.[/column][column width="48%" padding="0"]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 bargaining 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 administrative costs than private health insurers, we should make Medicare available to everyone.

6. Social Security is a Ponzi scheme. Don’t believe it. Social Security is solvent for the next 26 years. It could be solvent for the next century if we raised the ceiling on income subject 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 payroll 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 economic whoppers are just plain wrong. Make sure you know the truth — and spread it on.

Robert Reich has served in three administrations, most recently as Secretary of Labor under President Bill Clinton.  He is the author of 13 books, the most recent is Aftershock [2011] and you can check out his blog at www.robertreich.org.[/column][end_columns]


  1. Spartacus 20 May, 2012 at 04:52 Reply

    The BIGGEST LIE of all is this article!!   What a giant pile of propoganda….  Dare yourself to do some honest research and fact checking, the fog will clear and you will see that you are being lied to.  Don’t let yourself be manipulated… you are much smarter than to gulp this down.

    • Guest 25 May, 2012 at 01:47 Reply

      I agree, Spartacus! Just more political BS from one of the fuzzy-headed liberals at the Redlands Reader. The coupons just aren’t worth the left-wing muck you have to wade through. I try to ignore the articles every time I open it, but I just can’t seem to look away. Usually I just end up angry, not really in the mood to shop at any of the businesses who advertise with these nuts.

      • Sean2267 26 June, 2012 at 05:31 Reply

        I think it’s funny that you took the time to come to the site and post a comment … since don’t use the reader mag… it’s like the howard stern of publishing haha but in a very good way 😉

        • Josie-Lynn 30 June, 2012 at 23:36 Reply

          If you support your community and all the good about it , then it goes hand in hand with supporting the Redlands Reader because it is one of the best things about Redlands. And about Yucaipa and about Loma Linda, and all the other cities there is a Reader for. 

    • ctheodore 25 May, 2012 at 05:11 Reply

      Thank you for your comment, Spartacus.  What is it in the article that you don’t agree with or find untrue that would lead you to calling it “the biggest lie of all”?  You mention the article is “a great pile of propoganda [sic]” and encourage others to do some “honest research”, etc.  I’m sure you’d like to convince others that you are correct and your views and ideas make sense. And yet, why should I agree or believe your view if it cites no evidence or reasons that I can understand? In truth, the article that you have named as a “lie” is full of specific explanations for each of the ideas presented. In contrast, the comment you’ve made has no explanation, no reasoning, and no evidence to support it.

      Finally, if there is information in the article you disagree with, why don’t you state what it is rather than call the article a lie? Why haven’t you proposed a counter view with counter evidence, based on your “honest research”?  I would be interested to know what exactly you found “untrue” in the article. Thanks again for your comment.

  2. Thomas 23 May, 2012 at 18:14 Reply

    this article is finally addressing issues within the system and demonstrates in a palatable way how we can fix things within the confines of the current system. What is a lie is everything that aims to maintain the status quo which is a system that works for you only if you’re the 1%!

  3. Gen Z 28 May, 2012 at 20:01 Reply

    Reading this article has led me to some realizations. 1st, I agree about them being really big lies intended to justify the government’s shortcomings towards its people. 2nd, These lies have been existent for so long…practically a way of life. 
    What does that say for the people, whose ears they were meant for???

  4. mariuswatz 30 April, 2013 at 05:10 Reply

    The artwork shown at the top of this article is mine and is used without permission. (Reference: Please remove it.

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