Journalism in the Public Interest

Economic Myths: We Separate Fact From Fiction

Taxes are too high, the stimulus was too little. What’s true?


A sign about jobs created is posted at the Caldecott Tunnel construction project on Aug. 17, 2011, in Oakland, Calif. (Justin Sullivan/Getty Images)

With the recent Iowa straw poll and President Obama's bus tour, Americans are hearing a cacophony of arguments about the wobbly economy. The federal stimulus package passed in 2009 was either a deficit-busting failure full of wasteful projects or an unparalleled rescue that would have been more successful if it had only been bigger. Taxes are either stifling or the lowest they've ever been. America needs to invest in infrastructure, or "infrastructure" is merely a euphemism for more government spending. So, here's our guide to the most prevalent economic myths.

1. Taxes have been going up and are high compared to levels in other countries.

The first part is wrong; the second is also wrong but contains a grain of truth.

The percentage of income that Americans spend on taxes is the lowest it's been since 1958, according an analysis by USA Today. And with the exception of five years after the 1986 Tax Reform Act, the highest marginal income and corporate tax rates are the lowest they've been since World War II.

Federal taxes as a share of GDP are at their lowest point since 1950, according to the nonpartisan Congressional Budget Office. When all taxes, including state and local, are added up, the proportion of GDP going to taxes has been essentially flat for nearly half a century, according to the Organization for Economic Cooperation and Development.

The OECD figures also show that, as a share of GDP, taxes in the United States are lower than in most other developed nations:

Graphic by Paul Kiel and Krista Kjellman Schmidt, ProPublica

Source: Organization for Economic Cooperation and Development

The only income tax hike passed during the Obama administration was part of the health-care reform bill, through which Congress, among other things, raised the Medicare payroll tax for high earners, said Curtis Dubay, a senior tax policy analyst at the Heritage Foundation. The excise tax on cigarettes and other tobacco products was also raised as part of a children's health insurance bill in February 2009.

The problem, he said, is the federal corporate tax rate, which stands at 35 percent.

"We have the highest corporate tax rate in the industrialized world," Dubay said. "It's driving new investments overseas and the jobs that come with that overseas as well."

While it's true the official rate is high, few corporations pay it, said Roberton Williams of the Tax Policy Center.

"The effective tax rates that corporations pay actually goes down a lot with deductions and puts us closer to the middle of the pack," he said. "It complicates the tax system substantially and makes it more difficult for corporations to figure out what their taxes are."

A study he oversaw at the Congressional Budget Office illustrates the point. While the United States has one of the highest tax rates for investments in machinery financed with equity (Figure 2-14), it offers a generous deduction for investments in machinery funded by debt (Figure 2-23).

2. The stimulus failed./The stimulus rescued the economy.

Neither. It clearly hasn't hauled the country back to full employment, but widely-cited economic models show it probably prevented a deeper downturn.

Many economists and nonpartisan forecasting firms have credited the American Recovery and Reinvestment Act with increasing employment by at least two million jobs (see Table 8). Although the unemployment rate remains stuck at 9 percent, several economists estimate that unemployment would have been as high as 12 percent and remained high longer without the act.

One of the most prominent studies on the stimulus was put out by the economists Alan Blinder and Mark Zandi in July 2010. The pair concluded that while the bank bailout and actions by the Federal Reserve had a greater impact in ending the recession, the stimulus was a critical part of the remedy. "We do not believe it a coincidence that the turnaround from recession to recovery occurred last summer, just as the ARRA was providing its maximum economic benefit," they wrote.

Other analyses have shown less of an impactthat aid for state budgets and education "funded staffing that would have occurred anyway" and that the stimulus saved government jobs while doing little to boost private-sector employment.

Critics say it failed because it fell short of what administration officials claimed it would do. They point to a chart, produced shortly before Obama's inauguration by two of his economic advisers, Christina Romer and Jared Bernstein, which showed that if the stimulus plan were passed, unemployment wouldn't top 8 percent. But the recession turned out to be much more severe than they and blue-chip economists realized.

The goal of the stimulus "was to end the Great Recession and jumpstart our recovery," said Zandi, who has advised John McCain but has said he's a registered Democrat. "It did that. It was never intended nor should it be expected to be the source of long-term growth. The plan was always to hand the baton to the private sector. And that was going smoothly until we got creamed" by the European debt crisis and rising gas prices.

3. The stimulus should have been bigger.

This is a red herring. Politically, the initial stimulus package almost certainly couldn't have been bigger because the moderate senators who provided the key votes wouldn't stomach a package over $800 billion. Indeed, late in the game, Sen. Susan Collins, R-Maine, and others were looking to trim the bill to $650 billion.

Regardless of the politics, many economists, including New York Times columnist Paul Krugman, insist the stimulus was too weak to deal with the crisis. Other economists, including John F. Cogan and John B. Taylor at Stanford University and the Hoover Institution, argue that the amount of stimulus spending wouldn't have mattered because it mainly reduced borrowing by state and local governments rather than increasing spending. So, they contend, the predicted benefits were washed out.

In any case, the total stimulus is bigger than you might have thought. Since the Recovery Act, Congress has approved hundreds of billions of dollars in additional stimulus measures, including the renewal of unemployment benefits, this year's payroll tax cut and the extensions of the education jobs fund and the homebuyer tax credit. The total is now well over a trillion dollars.

But even that isn't sufficient knowing what we do now, according to Romer. As she recently told the Washington Post's Ezra Klein, the economy "probably needed about $2 trillion given what we were actually up against."

4. The stimulus was all projects.

Nope. The Recovery Act as passed was estimated to cost about $787 billion. More than a third of that was tax cuts, and another third was entitlements, such as unemployment benefits and Medicaid assistance. Of the $275 billion in spending by federal agencies, less than $200 billion was dedicated to projects.

The projected cost of the Recovery Act is now $830 billion, largely because of the qualification of more people for entitlements and the popularity of some tax credits.

5. The stimulus will have no lasting legacy.

False. It's been said that while the New Deal left behind a landscape of bridges and dams, the stimulus did little more than fill potholes and create a lot of temporary jobs. In truth, the Recovery Act provided critical funding for a number of projects that people will be able to point to generations from now.

Here are 10 significant projects, most under construction, funded by the Recovery Act:

Name Description State Money
BrightSource Ivanpah Solar Project With a capacity to generate 400 megawatts, the array in the Mojave Desert will be one of the largest solar power plants in the world. Under construction; targeted for completion 2013. CA $1.6 billion loan guarantee
Caithness Shepherds Flat Wind Farm At 845-megawatt capacity, it will be the largest wind farm in the world.* Under construction; expected to start commercial operation 2012. OR $1.3 billion loan guarantee
Savannah River Site Environmental Cleanup Thousands of workers cleaned up radioactive waste at the Cold War nuclear plant and sealed up two reactor buildings with cement. Mostly completed 2011. SC $1.6 billion
Johnson Controls battery plant The new plant is part of a $2.4 billion program to create a battery industry for hybrid and electric vehicles in the United States. Completed 2011. MI $299 million
Caldecott Tunnel Fourth Bore The new tunnel will ease traffic on the heavily traveled highway between Oakland and the suburbs. Under construction; targeted for completion late 2013/early 2014. CA $176 million
Cleveland Innerbelt Bridge The funding is helping to replace a 50-year-old bridge in downtown Cleveland. Under construction; targeted for completion 2014. OH $79 million
Crow Creek Tribal School A new K-12 school on the Sioux Tribe’s Crow Creek Reservation. Under construction; targeted for completion 2012. SD $37 million
Moynihan Station A new Amtrak train hall at the site of the Beaux Arts monument James A. Farley Post Office building. Under construction; targeted for completion 2016. NY $83 million
Coast Guard headquarters The first phase of the new Homeland Security headquarters, which the White House has called the largest federal building project since the Pentagon. Under construction; targeted for completion 2013. DC $650 million (for DHS headquarters project)
Camp Pendleton Naval Hospital The new military hospital will contain four levels and 500,000 square feet. Under construction; targeted for completion 2014. CA $394 million

*House Republicans have argued that an internal White House memo indicates that subsidies for the wind farm might be overly generous.  

Are the jobs only temporary? A lot of stimulus money allowed schools to retain permanent employees, and some short-term workers landed full-time jobs. As for construction work, it's by nature a compilation of temporary jobs. When business is strong, workers move from one project to the next earning steady paychecks. During cold spells and downturns, work dries up and the firms lay off their crews for months at a time.

6. The stimulus has been full of/free of fraud, waste and abuse.

After Hurricane Katrina and the Iraq reconstruction, many analysts predicted that the federal stimulus program would be rife with fraud, waste and abuse. At least so far, it hasn't been.

Earl Devaney, the inspector general put in charge of stimulus oversight, testified at a congressional hearing in June that "there have been only 144 convictions involving a little over $1.9 million." That's less than 0.01 percent of the total program.

Still, criminal fraud cases take a long time to develop. Since Devaney spoke, 41 new convictions have been added to the books, and more could come. The Recovery Accountability and Transparency Board has received more than 7,000 complaints leading to 1,500 open investigations.

None of this accounts for waste, which is ultimately subjective. Sen. Tom Coburn has now released three reports detailing hundreds of projects that didn't pass his smell test. Here they are if you want to judge for yourself:

7. Infrastructure is the answer for unemployment.

Partly, but not as much as advocates have claimed. After the debt-ceiling compromise, President Obama said:

"We also need to give more opportunities to all those construction workers out there who lost their jobs when the housing boom went bust. We could put them to work right now by giving loans to private companies that want to repair our roads and our bridges and our airports, rebuilding our infrastructure."

The construction industry was one of the hardest-hit sectors in the recession, with 27 percent unemployment at its worst. (It's now 14 percent.) But building homes requires skills different from building infrastructure, said Ken Simonson, economist for the construction trade group Associated General Contractors of America. And unemployment is running high in heavy and civil engineering construction, which has lost 160,000 jobs since July 2007, nearly twice as many as the stimulus transportation projects created. Those workers are likely to land infrastructure jobs ahead of the 400,000 homebuilders who lost their jobs over the same period.

For all sectors of the economy, a grim problem is the long-term unemployedthose out of work six months or longerwho now make up 44 percent of the total jobless pool. The Federal Reserve reported in July that workers unemployed a month or less had a three in 10 chance of finding a job while the odds for the long-term jobless were one in 10.

Author Michael Grabell is working on a book Money Well Spent?: What Really Happened to the Trillion-Dollar Stimulus Plan, due out in January from PublicAffairs.

Correction: An earlier version of this story incorrectly said the only tax increases passed during the Obama administration were part of the health-care reform bill. In fact, the excise tax on cigarettes and other tobacco products was also raised as part of a children's health insurance bill in February 2009.

Taxes: The percentage of income that Americans spend on taxes is the lowest it’s been since 1958

Only if you look at federal income taxes and neglect state and local taxes. While federal taxes have remained pretty consistent between 17.5% and 20%, local taxes have gone from about 5% in the late 50’s to nearly 10% today. So yes, the percent of income Americans spend on taxes is much higher than in 1958.

Ahhh manipulated statistics … a reporters best friend!

Mark Erickson

Aug. 18, 2011, 4:30 p.m.

Red Herring?!? Do you know what that means? Because you go on to discuss the claim after your first paragraph. And while pitting “many” liberals vs. “other” conservatives (with the quoted two being paid to be conservative) economists is technical balance, it terrible journalism. See Jay Rosen on the “view from nowhere.” Unfortunately, it prevents you from declaring an answer, like you do in every other point.

Most of this article was fine, but number 3 is a joke and an embarrassment to ProPublica.


Aug. 18, 2011, 4:33 p.m.

Not sure what state you are noting but living in Tenn, I have no state income tax. And when i lived in some states with taxes, the rate never increased as noted 100%?! Most are getting additional revenues from lotteries, property taxes and voter approved tax increases (eg, sales, etc) so one can build huge stadiums to watch sports normally.
Net, the report as outlined was to compare FEDERAL TAXES WITH OECD NATIONS.


The independent Tax Foundation calculated that the per capita tax burden for 2010 was 27%. Under President Reagan, it ranged from 29-31%. 

This calculation included federal (including taxes labeled something other than taxes like Social Security), corporate, state (including sales, property taxes, and fees), and local taxes.

Daniel De Groot

Aug. 18, 2011, 6:51 p.m.

“Politically, the initial stimulus package almost certainly couldn’t have been bigger because the moderate senators who provided the key votes wouldn’t stomach a package over $800 billion”

I have yet to see any evidence that Collins/Snowe/Specter had a hard ceiling figure in mind for stimulus prior to the Obama admin releasing its proposal.  Instead, their “ceiling” was simply “less than Obama asked for” - if Obama had asked for $950B, they would have demanded it be $850B, if he had asked for $1 trillion, they would have demanded it be $950.

Obama’s approval was over 70% in spring 2009.  I find it really hard to believe the Republicans would really have utterly blocked the stimulus.

At any rate, in a “myth busting” article, this is a subjective opinion of the author and really doesn’t belong, at least absent some strong proof that there were 41 Senators willing to actually block anything over the amount that passed.

Regarding the earlier comments on tax burden, it is helpful to read the text. As it says, the graph of tax burden over time is for *ALL* taxes, and while that graph is crippled by a lack of grid lines (fire your designers or at least train them!) it does show that we are at the lowest total tax load of the period shown. The reason this may *feel* wrong for many people in the middle class (and especially upper middle class) is that de facto tax burdens actually peak in the low 6-digit income range and fall rather swiftly above the last bracket level due to the fact that most people with much higher incomes are able to manipulate it into forms that legally are treated as capital gains: taxed at 15%. That 15% tax rate creates a big incentive to find ways to divert income into capital gains, especially at the very high end.

Resdidential and building construction is seasonal only in the northern states , but even there work continues once indoor work begins. In midle an southern states work goes year around. My advice: promote resiiedential poejects “for rent"where onerous new credit requirements will not prevent people from having a decent roof over their heads.

To Mike H,

State income taxes are deductible from Federal income taxes. Congratulations.

Ah, the smell test.

The bottom 50 % of income earners pay no income tax at all. That is why tax revenue is low. A flat tax is the solution. Everyone should have skin in the game and a flat tax could be adjusted to help the poorer of our society.

The comment about 50% of income earners pay no income tax maybe true, but 80% of the US population lives on 15% of the wealth, according to a Pew report.  It is best to have lots of money and pay some taxes, or have some money and pay lots of taxes than to have no money and pay no taxes.  What do you spend money on when you have no money?  You don’t spend money on anything.

geoff, that is a fox news talking point that has no basis in reality. The bottom 50% struggle to afford daily necessities. Creating jobs for those in the bottom 50% who are unemployed or under-employed should be priority number one, not protecting the wealthy.

@ Daryl

A deduction is not the same as a credit. Thanks for trying though.

As regards Point 6:

You don’t mention the $41 billion dedicated to the Iraq reconstruction that just disappeared into thin air. To this day, it has been unaccounted for. Can you say “graft” or “corruption”? This is related to blindly paying grossly inflated invoices from firms “rebuilding” targeted areas.

When it’s the taxpayers’ money, what the hell, right? You don’t feel the pain. You just spend the money.

#1 - “...the highest marginal income and corporate tax rates are the lowest they’ve been since World War II…”

I don’t have the time now to do the proper research, but why cherry-pick which are the “lowest they’ve been” if the assertion that taxes are high is false?  It seems like what we want is total tax, fee, toll, etc. revenue per capita taken in by governments, no?  Any other measurement is playing with semantics.

#2 - So the fact is that it might have helped, but nobody knows?  Really?  Nobody has actually looked at where the money went and analyzed the possible alternative options?  If they haven’t, then no economist you cite should have been given their degree.

#3, #5, #7 - The money should have gone into a single large-scale, public science project.  The most successful investment ever made in our history was the Apollo program, which netted a 15:1 return, all told, catapulted science and technology through the roof, and created an obscene number of permanent, well-paid jobs throughout the country, either directly or by turning the science into products.

This trickle-down/trickle-up (Reagan/anti-Reagan, I guess) methodology of trying to find the right person to give free money to is never going to fix things more than trivially (and never has), because it doesn’t attack the root problem that American companies don’t employ Americans to make things that anybody wants to buy.

Giving rich people money to hire Chinese kids to work in a sweat shop doesn’t work.  Giving poor people money to buy Chinese-manufactured plasma TVs doesn’t work.  What’s so hard about this?

If we must spend directly on people, at least subsidize food and oil prices so that people can survive on less (and make it to their jobs!) and companies can function with fewer surprises.

Anyway, it’s a nice try at debunking, but a lot of this seems just as much opinion and half-factual as the myths themselves.

Michael Grabell

Aug. 19, 2011, 10 a.m.

Mike H:
The tax burden being the lowest since 1958 includes federal, state and local taxes. Here’s the link:

“Americans are paying the smallest share of their income for taxes since 1958, a reflection of tax cuts and a weak economy, a USA TODAY analysis finds.

The total tax burden — for all federal, state and local taxes — dropped to 23.6% of income in the first quarter, according to Bureau of Economic Analysis data.”

Please send a link if there’s another source that you’re using.

The full situation on taxes has been dissected by Reagan adviser Bruce Bartlett at

As he says, Americans remain the most lightly taxed major nation in the developed world by far.

However, excessive health insurance costs soak up all of the benefits of our lighter taxation. If we had European style taxes and European style benefits, the budget would be in surplus.

As, of course, it was before the tax cut of 2001.

Joel, there’s a mild flaw in your (and Bartlett’s) argument in that such a path may well also grant us the blessing of European-style debt crises and European-style rioting.

It’s further off-topic, but the healthcare problem could be pretty easily solved by charging people for the actual cost of treatment, rather than whatever the AMA decides doctors are going to charge.  When it doesn’t cost fifteen thousand bucks to tie a splint to a broken leg, I’ll be happy to pay for public healthcare.  But paying for extortion and to drug our kids senseless?  That doesn’t strike me as a bargain, frankly.

Another flaw in Bartlett’s article is simply mathematical.  He tells us European taxes are higher than ours, then tells us that families with children get an allowance from the tax revenue that should be viewed as “negative taxes,” showing why Europeans pay them with less of a burden.  I’m not sure what to make of it, but either they pay more per person (or household) or less, but he wants it to be both.

As I said earlier, I’m too busy to go off and pull the numbers together, but it seems like Europe is only attractive if you ignore that Greece, Ireland, Iceland, Sweden, France, Germany, and England have all been undergoing some serious problems, these days, far worse than anything we see here on our worst days.

The following are quotes by FDR which could be said today and be 100% adequate:

The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have little.

But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.

Here is my principle: Taxes shall be levied according to ability to pay. That is the only American principle.

In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people.

Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country.

Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men.

The school is the last expenditure upon which America should be willing to economize.

Are you sure this article wasn’t vetted (it certainly was not edited for balance, fairness, completeness and accuracy) with the White House or Axelrod/Plouffe?

What is so so sad is how journalists have lost their way.  This story lacked so much depth and scope it reads like a hardly veiled re-election message explaining why nothing is Obama’s responsibility.  WHY is there no discussion of the restraining impact on businesses and the economic recovery of this administration’s choking regulatory initiatives (EPA, NLRB, Interior, Energy, etc…), the large and still being determined cost of Obamacare, the smothering and costly impact of Dodd-Frank without addressing the real cause of the financial meltdown, government housing and mortgage policy executed though Fannie, Freddie and FHLA, the bashing/demonizing of business and the class warfare against the job creators.

Net-net the Obama Administration’s policies do not engender growth, but rather retard it, block it a almost every turn, all while playing to special interests including creating incentives that no business person with any common sense would accept.

I thought Propublica was supposed to bring to the public’s attention information the main stream media didn’t adequately address.  Somewhere you have lost your way.  This story reads more like you’re making excuses for Obama’s policies being only modestly effective, rather than getting to the heart of the matter, that those policies are infact the headwinds we’re facing.

Being truly supportive of business with actions that drive real growth is what’s needed, NOT more of the same one-time “stimulus” injections of money (we don’t have); transfer payments and one-time projects do NOTcreate any type of sustained economic growth needed for everyone to experience a better life style.

You might consider a followup story unless of course you’re writing to like minded people who have no vision of reality and what it takes to create jobs and growth.

The bottom 50% of the population control 2% of the wealth! Lets raise their taxes so they have even less wealth! The bottom 50% earn on average $25k and if the average family is 4 people, lets raise their taxes so they can live on even less.  Why do they need refrigerators as Fox said,questioning why they need them and I agree. With less money they won’t need one because they won’t be able to buy food

Michael Rogers

Aug. 19, 2011, 2:19 p.m.

FDR said all that needs to be learned/done!
I’d guess that his standards are the exact opposite of those of the tea party

The author must debunk the argument below:

Government cannot spend anything that it does not confiscate from us. Every government program results in a net loss of jobs. If we give the government, say, a hundred million dollars of our hard-earned wages to spend on a government program, it would create jobs [A]. If we withhold the hundred million dollars and instead spend and invest it ourselves, it would also create jobs [B]. If [A] > [B], we should give government at least 90% of our hard-earned wages and, still, there would never be enough workers to go around to fill all the vacancies. (The Soviet Union was run on this myth that [A]>[B])

However, if [B] > [A], as is always the case, we should only give government our hard-earned wages to take care of essential service, not try and encourage home ownership, not subsidize education (government subsidies are the greatest cause of price inflation in education*), not wage wars abroad to democratize or build nations, change regimes and annex oil fields, etc. etc.

* When the home-buy credit expired, home prices dropped. The tax credit just allowed sellers to ask more, because buyers were deluded in believing the government was paying $8,000 of the purchase price.

Singapore’s GDP per capita was $600, below that of Guatemala, 44 years ago. They decided to keep the size of government at about 12% of GDP.  Such a small government means the highest individual tax rate is 20% and corporations pay 18%, but manufacturers get tax holidays. Hence, manufacturers, especially those in California, are relocating to Singapore. Malaysia is now copying Singapore.

Small government and low taxes meant that today, GDP per capita in Singapore is close to $43,000, making it the 4th richest country in the world. It has a population of 5 million and it generates $240 billion in GDP for a country one-eight the size of Delaware. Government spending does not create prosperity. Singapore is the 40th largest economy in the world. Greece’s GDP is $300 billion, so large that the global economy is being shaken by its economic woes. Imagine if Greece had adopted the Singapore model. Singapore has no natural resources and has to import all raw materials and agricultural products. United Emirates and Venezuela, just above Singapore in the GDP race have huge oil revenues, without which they would fall well below Singapore. Singapore produces more GDP than Egypt, Nigeria (with its 80 million population and huge oil reserves can’t match Singapore’s GDP), Israel, Chile, Portugal and Algeria. Singapore is still growing at 9% p.a., its long-term growth rate. At this rate, five years from now, Singapore will be in top 30 in the GDP contest. (Washington take note: the highest paid politicians in the world are is Singapore.)

We live in a totally different world. We are now competing against the likes of China, Singapore and even Canada, where they have brought the corporate tax rate down to 15%. Talking about Canada. The country can afford universal health care because it only spends $20 billion a year on defense. They rely on us to defend them. So do Korea, Europe, Taiwan, Australia and a 130 other countries. Including the wars we will spend a trillion dollars on the military this year. Canadian taxpayers won’t spend that in fifty years, sponging of us. It makes no sense to waste money on infrastructure projects in Afghanistan and Iraq (a billion dollar embassy the size of the Vatican and 14 military bases).

As noted, many US corporations have moved their manufacturing facilities to Singapore, in part to enjoy the tax holiday and lower labor costs. Capital flows to areas where the returns are the highest. High labor costs and high taxes depress returns, hence capital goes abroad. We can’t create jobs without capital. Higher taxes chase capital abroad. It is self-evident logic.

The government collects less than $250 billion a year in corporate tax, and that is at a 35% rate. If they cut the rate, like in Canada to 15%, a lot of capital will come back from abroad and create jobs here in the US. We think they should give manufacturers here in the US a tax-free holiday for at least five years, and lower corporate tax for all others to 15%. They can fund these tax cuts by cutting the defense budget by $500 billion a year and tell our allies that in future they would have to take of their own defense.

Firing missiles into Libya has nothing to do with our safety: oil and military interests alone drive these military misadventures. Excluding Social Security and Medicare (self-funding through payroll contributions), the 2011 budget will amount to $2.215 trillion. Military spending of $712 billion (not including cost of wars, Veterans Administration and Homeland Security) comprises 32% of the budget. We are defending 130 countries with 900 military bases. Homeland defense would cost a fraction, but this budget item evidence of the overbearing influence of the military-industrial complex.

clarence swinney

Aug. 19, 2011, 3:40 p.m.

6   can you recall 6 numbers
a few simple numbers tel what Warren buffett said:“Class warfare?Yes! My side is winning”

No Warren Your Side has WON.

5% own 62% Net Wealth
80% own 15%

20% own 93% Financial Wealth
80% own 7%

25% get 62% individual income
70,000,000 get 13%

62/15   93/7   62./13 = class warfare won

Democrats will not tell the people Will You?  6 numbers
6 numbers that could win an election
clarenceswinney Lifeaholics of america 2008 tax summary

Jon Stewart had an excellent segment on 8/18 regarding the Republican view that we can’t solve our debt problem by increasing taxes by 4% (from 35 to 39%) on the richest Americans which is about $700 Bn over the next decade. He shows the usual Fox News demagoguery and, then takes the other side. He goes along with Fox by taking half of the total net worth of the bottom 50% of the population which also equals $700 Bn. In other words, if slightly increasing taxes by just 4% on the upper income earners is not practical, how can the rich argue that taking half of the entire net worth of the bottom 50% of Americans is somehow fair? The facts are undeniable.—-the-poor-s-free-ride-is-over?xrs=share_copy

You’re misrepresenting Singapore, it’s is one of the most tightly regulated mixed economies in the world - more than half of their economy is composed of state owned monopolies and government imposes very strict economic planning.  While base taxation rates may seem low, you’re ignoring high import taxes and fee-based usage of public facilities, and value added taxes. 

Holding up tax rates as the primary condition for growth is too simplistic, it’s like saying all you need to build a good race car is to slap on the biggest engine you can find.

Stephan, I am not advocating Singapore’s social or political systems. I am saying that when you analyze the country’s phenomenal economic success, it is closely linked to low taxes and small government, not unlike Hong-Kong. Cuba, on the other hand, is the antithesis of Singapore where government expenditures are equal to 85% of GDP. Nothing wrong with government imposing strict economic planning, but then it steps aside and allow private capital to operate within the planning limits. No I am not ignoring those taxes. This is the way to tax. Allow people to keep their hard-earned wages and then tax them indirectly. These taxes are more than adequate to meet government expenditures because of the small size of the government.

If government expenditures and budget deficits create jobs, then no country in the world has ever seen the kind of spending and deficits that we have experienced during the past decade, and we have the highest unemployment rate in 50 years… maybe longer.

Nomi Prinz writes, “Basically, what all these numbers show is that; public debt has nearly doubled since before the big bailout, while intragovernmental debt has increased just 15%. Some (like Geithner, Bernanke, etc.) may argue that this balloon in public debt was required to save our economy, though there’s little evidence of it doing anything but cheaply floating our financial system, not least because nearly half of the additional $4.4 trillion of public debt that was created is stashed at the Fed as either excess reserves or QE2.

John Taylor was on NPR a few days ago with Stiglitz.  Taylor spewed the list of Republican talking points, without anything of value.  Are you sure you want to use him as a credible source?

Bill amichtom

Aug. 20, 2011, 1:35 a.m.

Another reason the “red Herring” claim is fallacious is that Obama provided no pressure to get the conservative Dems to change their votes. When the Progressive Caucus said they would not vote for war funding, Obama told them they wouldn’t get DNC funding for their campaigns. They came around.

He never did this with the DINOs.

Roger Burgess

Aug. 20, 2011, 1:37 a.m.

Albert said, “Government cannot spend anything that it does not confiscate from us.”

And with that, you lost your credibility.  Anything further you have to say on the topic of political or economic policy should not be given much weight. 

I mean, you could, at the very least, update your political philosophy to John Locke’s era.

Libertarians have spent the last 30 years debunking their own arguments by practicing them.  They didn’t work so well in the era where slavery was legal, what makes you think they work well now?

I saw a poll just before the 2010 election that verified 60% of Republican voters believed their taxes had risen between 2008 and 2010 when they had, in fact, fallen.  Voters who believed their taxes had risen often cited the Affordable Care Act, which the CMS actuaries now tell us is reducing Medicare spending preemptively because most of the provisions have not kicked in yet.  I don’t think its honorable to rail against parts of the polity because they are misinformed or uninformed - we are all in this together, sink or swim - but what the media now calls “low information voters” is becoming a national problem when these huge economic considerations become part of national elections.  The Founders said we needed an informed electorate to make this republic work and we are failing them very badly.  To reiterate, taxes have not gone up and the stimulus bill’s main problem was that it contained anothr $284 billion in unneeded tax breaks instead of more direct aid to the states for infrastructure projects.  Did it work?  Yes and no, but probably as well as it could have given our divisive politics and voter apathy.  We are in real trouble if the next election is a repeat of the last one.

No Public Works Admin here. Perhaps, when the next major Act of God
strikes a very Red state, we should stand & watch. If they scream, we
should calmly & politely noted they’ve been shouting how Uncle Sam
is a monster. Not a scenario I wish but the shock that’s needed. BTW,
what makes us Americans? That is, in significant part, an economic &
financial question.

Albert Meyer, where can I read more of your stiff?

Singapore is a very much government directed success story. Their educational & health systems, housing & transportation infrastructure
did not pop out of nowhere. It is very dynamic but not a democracy. Should there be any governments? If not, who makes the decisions & controls the assets, including especially the human ones?

This person MAY have the facts correct, BUT the conclusion that wealth should be equal is…wrong and ...well communism,… the best, brightest, and hardest working WILL have more wealth then the vast majority of us. That is just a fact, and the sad fact is I’m not one of them…yet?
clarence swinney
Yesterday, 4:40 p.m.
6 can you recall 6 numbers
a few simple numbers tel what Warren buffett said:“Class warfare?Yes! My side is winning”
No Warren Your Side has WON.
5% own 62% Net Wealth
80% own 15%
20% own 93% Financial Wealth
80% own 7%
25% get 62% individual income
70,000,000 get 13%

It’s US the Government of this Representative Republic responsibility to impeach President and recall every Representative of US the Government. That defies demands of Natural Law: what Mother Nature, God, or Whatever Power decreed to be the reality of the real world, democracy, capitalism, the US Constitution, and free, fair, and affordable commerce?

Demanding every corporation, farmer, business, outsourcer sweatshop, and nonprofit, tax-exempt, organization and Church markets the cost in the wholesale and retail price of his or her product and service. Of every workers, consumers, and taxpayers living including pension and health care. Enabling parents to love, nurse, nurture, discipline, protect, and provide, for every child (job) they conceive and fund schools, infrastructure, local and national security, government services, and etc.; with money derived from wages or independent business profit.

Greg D, the conclusion is that a nation’s long-term prosperity (meaning prosperity for the greatest number of people) and well-being depends on it being able to meet its very legitimate needs, and we are seeing that this is increasingly impossible under conservative economic philosophy and policy.  If the U.S. can’t do that then there really is no reason to pretend we are the UNITED States of America.

Additionally, conservatives don’t seem to grasp that we’re a complex state level society with various forms of built in stratification, not an unusually large band of egalitarian hunter gathers.

Half of the people in America pay no taxes so the “average” is mathematically irrelevant.  Over the period of time that this article purports to cover, taxes on those that actually have a tax burden have gone up.  Also, the cost of compliance of exponentially increased regulations on investing, business, etc. have become a further burden on those that pay taxes and create jobs.  Those costs are not accounted for here as an obligation to the government that further takes from those that are successful.

The author of this piece did a lousy, cursory job that unfairly distorts the facts.  Continue the distortion and class warfare and those with money will continue to find other ways to deploy it besides creation of jobs.

This continues to be the Marxist checklist towards Socialism plain and simple.  See #‘s 15, 30, 32, 36, 37 specifically as it relates to this article.

You state opinions as facts! I say it’s a bunch of manipulated propaganda crap! And you’re spouting it like we’re mental incompetents. Go back to good reporting and stop allowing yourself to be the mouth piece of corporate interests.

I really can’t stand the way the GOP keeps coming up with one fantasy after the next to lure voters and simultaneously blow smoke in their eyes: so they won’t see the party’s true aims and their true raison d’être: to keep chipping away at the wealth, happiness and rights of those without super piles of money.

The NYT ran letters the other day with people pro and con Warren Buffett’s editorial on taxing the rich. One of them, from a Club for Growth person I think. was to the effect that of course there are people with huge piles of capital because this is a capitalist society.

“Of course.” But what this nutjob does NOT realize is that:1) the idea that some just happen to grow superrich under capitalism is not supposed to be true of modern rational capitalism.

This kind of capitalism where only a few profit immensely and disproportionately is what Max Weber labeled ‘BOOTY’ capitalism.Weber said that booty capitalism was both technically pre-rational capitalism [remember the ‘Robber Barons”] and that not only did it run counter to whatever was good rational capitalism could do, it would actually DESTROY capitalism if it continued to run unfettered.

2) the fact that NO ONE can really accumulate huge riches without impoverishing their neighbor. I don’t think moderate capitalism MUST always do this, but BOOTY capitalism always does.

Remember the Reagan epoch, “the one who ends up with the most toys wins?” .... Up until about a year ago, it seemed we were experiencing vampiric capitalism—- now, cannibalistic capitalism appears more exacting. The financial & extractive industries are in overdrive to destroy all life & for good measure - disembowel the planet - simply because it can be done.


Today, 8:39 a.m.

Albert Meyer, where can I read more of your stuff?

Tom, here: Change the XX to tt… scroll down and look for my name


Roger Burgess

Albert said, “Government cannot spend anything that it does not confiscate from us.”

And with that, you lost your credibility.  Anything further you have to say on the topic of political or economic policy should not be given much weight.” 

Come on Roger. I never claimed to have any credibility. However, you know I’m right when I say that “it is all self-evident logic.” So, you have to attack my credibility. Well, I have zero credibility. I’m just am old bum. Spare me dime, guy.

Now, if you want more wars, more money for the war profiteers, more money for special interests, more deficits, more debt, more stimulus spending, more welfare, more warfare, look up the Treasury’s website and make some additional contributions to this great machine of economic growth, the creator of wealth and prosperity, called the government.

Fact is (self-evident) all George Bush and Barack Obama’s horses and men could not get this Humpty Dumpty economy together again, despite record deficits, record borrowing, record stimulus spending, record money printing, yeah, even a record number of trillion dollar wars (Paul Krugman’s favorite means of stimulating the economy).

Time to look at other alternatives. The smaller the government, the greater the people’s prosperity. Incontrovertible truth. Ask the folks in Cuba and Venezuela about big government spending. I own stock in a steel company that had a subsidiary, huge steel mill, in Venezuela. It was very profitable. The government nationalized it a couple of years ago. The bureaucrats ran it into the ground. Now they are importing steel from the parent company of the subsidiary that they nationalized. This is not unique to Venezuela, as the Soviet Union, East Germany and North Korea taught us.


The 50 percent you alluded to is a FAUX talking point and a misguided one at that, for multiple reasons.

First, that figure was from 2009; an anomaly. In that year, two things occurred which exempted a greater number of people - the “Making Work Pay” tax cut and the exemption from taxes on the first $2400 for the unemployed.  Generally, the 50 percent you refer to is in the 38-39 percent range.

Also, that figure does not include payroll tax.  Given that incomw tax is just one of several FEDERAL taxes, your FAUX induced talking points are very misguided.

BTW, the top 400 Americans own more than the bottom 150 million Americans.

Robert Holmgren

Aug. 20, 2011, 8:41 p.m.

“but widely-cited economic models show it probably prevented a deeper downturn.”

Nice use of weasel wording.  Measuring ‘what ifs’ and ‘probably’ isn’t proof of of anything except the ability of people to make stuff up.  The FACT is that things did not improve by the measure set out at the time.

the most important myth to debunk about the amerikan economy, let alone the global economy, is that you can’t have infinite growth on a finite planet: period.

this article does not separate fact from fiction.

and it certainly isn’t, “Journalism in the public interest”.

it is propaganda in the corporate-fascist-capitalist debt-as-money System interest.

the cold, harsh, indifferent fact is, we’re not going to grow, consume, indebt and complicate our way out of the problems of growth, consumption, debt and complexity:

“The world population, currently at seven billion, is well beyond Earth’s ability to sustain. By 2050, with a projected population of 10 billion people and without a change in consumption patterns, the cumulative use of natural resources will amount to the productivity of up to 27 planet Earths, the study found.

“Sustaining the current seven billion people on the planet requires a major shift in resource use. At present, the average U.S. citizen’s ecological footprint is about 10 hectares, while a Haitian’s is less than one. The planet could sustain us if everyone’s footprint averaged two ha, Mora said.”

doesn’t matter which modern, industrial, infinite-growth political-fantasy you subscribe to: fake-Left, nonexistent-Middle or real-Right.

until pseudo-journalists (State propagandists) like Michael Grabell find the guts and integrity to report the Truth, People will continue to get the Shaft.

and rebuilding car-dependent infrastructure—roads, highways, bridges, etcetera—in the age of Peak Oil (1) will be a tragic waste and counterproductive boondoggle.

i continually return to Kirkpatrick Sale’s prescient words from his 2005 article titled, Imperial Entropy:

“Jared Diamond’s recent book detailing the ways societies collapse suggests that American society, or industrial civilization as a whole, once it is aware of the dangers of its current course, can learn from the failures of the past and avoid their fates. But it will never happen, and for a reason Diamond himself understands.

“As he says, in his analysis of the doomed Norse society on Greenland that collapsed in the early 15th century: ‘The values to which people cling most stubbornly under inappropriate conditions are those values that were previously the source of their greatest triumphs over adversity.’ If this is so, and his examples would seem to prove it, then we can isolate the values of American society that have been responsible for its greatest triumphs and know that we will cling to them no matter what. They are, in one rough mixture, capitalism, individualism, nationalism, technophilia, and humanism (as the dominance of humans over nature). There is no chance whatever, no matter how grave and obvious the threat, that as a society that we will abandon those.

Hence no chance to escape the collapse of empire.”



From the Article:  “One of the most prominent studies on the stimulus [14] was put out by the economists Alan Blinder and Mark Zandi in July 2010. The pair concluded that while the bank bailout and actions by the Federal Reserve had a greater impact in ending the recession, the stimulus was a critical part of the remedy. “We do not believe it a coincidence that the turnaround from recession to recovery occurred last summer, just as the ARRA was providing its maximum economic benefit,” they wrote.”

@ Robert Holmgren

“What if” you read the whole analysis instead of making things up or quoting half-sentences out of context.

People need to spend a little time thinking about just exactly what the Republicans have already done and now wish to inflict upon the American people.

1)  Our economy works because of the flow of wealth

2)  Our economy’s circulatory system has had great gushing wounds inflicted upon it which are inhibiting that flow:

  a)  Flood-up/trickle-down economics allows the wealthy to sequester vast amounts and effectively remove that wealth from circulation forever, and further incentivizes the suppression of American salaries and wages…what they don’t pay you, they can keep.

  b)  Deregulation allows the wealthy to drain the savings of the American people…so what they do pay you, they can siphon off at a later date (at their whim, and strangely routinely, don’t you think? with “S&P downgrades”?)

  c)  Enforced oil payments - payments that not only drain our economy, but fund the purchase of the materials of war that the Middle Eastern nations use against their own citizens, Israel, Europe, the former territories of the U.S.S.R., and us

  d)  Monster trade deficits…deficits we’re destined to keep not only because our wealthy are making great sums of money eradicating American jobs but because offshore nations realize that it is to their advantage to rig their currency exchange rates to keep America non-competitive; we have taught them that wars can be won both with weapons and by accumulating the means of transforming raw materials into useful things (which would also include weapons, of course)

  e)  And apparently because the other methods weren’t working fast enough, the enormous expenses of a mismanaged war in Afghanistan and a totally and outstandingly bogus war in Iraq.

3)  To date, we have coped with these great gushing wounds in the circulatory system that is our economy in much the same way the emergency room saves you after you introduce your car to a bridge abutment:  By pumping new blood in…or printing money, as it were.

4)  The right - lead by Perry - is beginning to demand that we stop printing money; they’re even going so far as to label the act “treason”.  Understand that if we keep bleeding at the rate we are and we stop printing money, our economy will die when the flow of money that is its lifeblood stops.

Understand that when the economy stops in a capitalistic society, then the tens…hundreds of millions who are dependent upon the that economy perforce will suffer and likely die.  I see no alternative to concluding that is what, in fact, the right seeks….that is what Perry and the Republicans seek:  Suffering and, eventually, death; on a massive scale…at a level that will even surpass the 1930s, for the right have despised and sought to destroy all things FDR continuously over the intervening 80 years and will do what they can - anything and everything they can - to ensure we cannot be saved again.

That is not hyperbole; look at what the Republicans have done to America…look at where America stands (wobbles, rather) today…look at what the Republicans seek in speech after speech after speech.

We are at war…get used to the idea, and you might be able to save your kids, if not yourselves.

ibsetve, your analysis is pretty good, except for the fact that you blame it on the Republicans. (I hate the GOP Politburo with a passion.)

The same special interests that fund the political campaigns of Republicans also bankroll Democrats. Correct?

The two parties both espouse welfare and warfare; maybe in varied proportions, but in the end it’s a wash. Correct?

Regardless of who is in power, the war profiteers, the bankers and special interests continue to loot the Treasury through lucrative contracts, tax loopholes and a host of others means in which they enrich themselves as our expense - as you so lucidly point out. Correct?

Congress (except for Ron Paul) is utterly beholden to special interests. Both parties bequeathed $14 trillion of debt to us, our children and our grandchildren. Heaven help us when interest rates start to go up. Our current $200 billion interest bill could reach a trillion dollars. Correct?

Go Green. Recycle Congress.

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