Reich Debunks 6 Big Lies About The Economy

Reich Debunks 6 Big Lies About The Economy


One of the big lies that we’ve been told over
and over again for years, and again some Americans start to believe it because they hear it over
and over again, is that if you give tax cuts to the rich and to the corporations everybody
will benefit. It will all trickle down to everybody else. A lie. It has not happened.
It has never happened. They don’t need more tax cuts. Big corporations are now sitting
on two trillion dollars of cash. There are higher corporate profits now then that we
have seen in 35 years. The ratio of corporate profits to wages is now higher than its been
since before the great depression of the 1930s. And so when you hear somebody say the corporations
need tax cuts or they need regulatory so-called relief, they need to cut their costs, they
need in other words to have even more profits to create jobs, don’t you believe them. That
is a downright bold faced lie. Now another lie you hear over and over again:
If you shrink government you’ll create more jobs. This is unbelievable, how it is by shrinking
government you create jobs. I still… I debate a lot of people, a lot of conservative economists
and others on television who keep on saying this. And I keep on saying tell me your theory,
how is it that if you lay off teachers and social workers and firefighters and police
officers, if you have fewer people building the roads, building the highways, building
the infrastructure, fewer people re-building our schools, fewer people doing all of the
public’s work, how can that create more jobs? And the answer I get is: ‘Government always
gets in the way’. I say, ‘But tell me exactly how is it that
if you shrink government you’re going to create more jobs, particularly when consumers are
holding back because they can’t do it.’ And the answer I get is: ‘Government always
gets in the way’. In other words there is no intellectual basis
for the ideology, and it is purely an ideology that says you shrink government you get more
jobs. If you shrink government you get fewer jobs. But when the private sector is unable or unwilling,
that is consumers and businesses unable or unwilling to spend enough to keep the economy
going at full employment, then government is the spender of last resort. We’ve known
this. We’ve known this for 30 years. After…actually we’ve known it for 80 years. We’ve implemented
over the last 50 years, but we’ve known it for 30 years… even those supply economists
started spouted this drivel about low taxes and trickle down economics. We’ve known it. But now we hear this resurgent right saying
no. But beyond a large enough stimulus… and
I think the President did try. I saw his speech. Many of you saw his speech. He sounded as
forceful, as dynamic, as strong as I’ve heard him. And he made all of the right comments
we need… By the way, I wish he would have said one
thing: The primary objective is jobs, not deficit reduction. We need jobs, not more
cuts in the deficit. That is the primary objective. (applause) And he came up with the jobs plan that is
a good beginning, but it’s not nearly large enough to do the size of the job that we need
doing in this jobs crisis, in this economic crisis. You remember the baby boomers? How many of
you were born between 1946 and 1964? All of you. No. (laughter) Well we boomers had the advantage of huge
investments in public education and higher education, in public higher education. Huge
expansion. We invested in infrastructure, we invested in education. We had a tax structure
in those years in which the top income earners never paid below a marginal income tax of
70 percent. 70 percent. In fact under Dwight David Eisenhower, who nobody would call a
socialist, I don’t think we would. Some would now? Yes. (laughter) The top marginal income
tax rate on the top earners was 91 percent. And even with deductions and tax credits that
still meant that they were paying an effective tax rate of hugely higher than they are today.
And yet the economy grew faster. That lie about trickle down, the lie that
we must not tax the rich because that would deter them from working hard and investing
and creating jobs is nothing but a bald-faced lie, based on ideology rather than facts.
(applause) And just like the 1950s when I was told by
my father the debt is going to be the biggest… no! The debt, if you get growth back, if you
get jobs back, the debt shrinks as a proportion of the national economy. It becomes more and
more manageable. And by the way, here’s another lie. They are
saying that the long term debt that’s out there ten years from now is all because of
Medicare and Social Security and all of the spending, it’s not. The long term debt out
there is because of rising health care costs. Medicare is the most efficient system we have.
(applause) The administrative cost of Medicare are so
tiny relative to private insurance that what we really need, if we want to get Medicare
and medical costs down in the future is Medicare for all. (applause). And then we could move from a fee for service
system to a fee for healthy outcomes system and that’s what we need to do. (applause) Now anybody who tells me that Social Security
is a Ponzi scheme, I’ve heard that recently. Can you imagine the irresponsibility, I mean
look it, putting partisanship to one side, how… I’ve never heard a public official
running for national office who lies through his teeth by saying the Social Security system
is a Ponzi scheme. I was a trustee of the Social Security trust
fund. I know exactly what the actuaries project. For the next 26 years is purely solvent, completely
solvent. There’s no problem. Beyond 26 years the only reason there is a problem with potentially
being able to pay out everything that Social Security owes beyond 26 years, you know why?
Because of raging inequality. Because so much money has gone to the top that the proportion
of income subjected to Social Security taxes is not going to be enough. And that’s why
the easiest, most direct response to post-26-years-from-now is to raise the cap on individuals with incomes
over (inaudible)(applause). So we got to tackle inequality, and how do
we tackle inequality? Well one thing we can do is have tax reform that is real tax reform.
Not the kind of Republican tax reform that says we got to raise taxes on the poor, which
is again, as backwards as every other lie they are telling. But the real tax reform
is we got to expand the earned income tax credit which is a great subsidy for the poor.
We’ve got to reduce taxes on the middle and the lower middle and we got to increase taxes
on the top. Have more tax brackets! More brackets. Go back to where we were before. The greatest enemy… the greatest enemy we
have is mass cynicism. When people really get to the point where they think nothing
can be done, the other side wins. That’s what they want, by the way. That’s what they want.
They want government because it is starved for money, because it is going to be underfunded
— all the regulatory agencies—they want government at all levels to function so badly
that people say ‘well government can’t work. I told you.’ And they also want politics to be so bad and
so paralyzed that most Americans say ‘nothing can be done. I’m going to give up on our democracy.’ They win. Don’t allow cynicism to effect our body politic.
Don’t allow cynicism to effect your neighbors or your friends or anybody. (applause) It is easy when they are scared and disorganized
for people to be subject and vulnerable to demagogues who come along and say to them
‘you know, the reason you’re in trouble? The reason you’re in trouble is because of government.
Or it’s because of immigrants. Or it’s because of the poor. Or it’s because of blacks. Or
it’s because of a number of scapegoats that are offered, always offered up. The same scapegoats. But in reality we are all struggling over
a smaller and smaller share of a bigger and bigger pie. And they are deflecting and diverting attention
from the big story which is that more and more of the income and wealth is going to
the big corporations and to the very, very super rich in this country and that is what
has to be reversed. And that is why we have to take back America.

60 Comments on "Reich Debunks 6 Big Lies About The Economy"


  1. Robert Reich and Paul Krugman should run the country. He makes so much sense, its crazy that more people don't listen. I guess the people not listening are wealthy job creators, millions of them out there, not a care in the worl….what, a lot of unemployment, more poverty, more children in poverty…? Oh, pass it on.

    Reply

  2. "They" keep winning because self-defeating liberals suffer from mass cynicism, defeatism and fatalism.

    It's time we snapped out of it.

    Reply

  3. This man has never run a business, but thinks he can tell business owners how they should run a business. Yea, Right!

    Reply

  4. @tsilb demand creates jobs – while there is always the argument for lease paper work – rich people do not create jobs – demand creates jobs – everyone is finding that out now – as the middle class doesn't have the disposable income to spend which equals a stagnant economy. The public and private sector are intertwined and government is NOT evil – people are.

    Reply

  5. @Odysseus087 "…deaf or just plain dumb?" We'll deal with that statement later.
    However, to answer you question,,, That's an easy one. Let's start with his 1st statement "If you give tax cuts to the rich & to the corporations, everybody will benefit, it will all trickle down to everybody else. A Lie, it has not happened it has never happened…" Either mr reich lives in a bubble or he simply ignors history. But then he's never run a real business. Your Turn!

    Reply

  6. @Unklebillybob When have tax cuts for the rich and corporations ever resulted in a better economy? Are you aware that the "Bush tax cuts" added to the deficit $2.3 trillion over 10 years. According to the Congressional Budget Office, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts. You simply don't know what you are talking about.

    Reply

  7. Lie #1. Corporation are sitting on more debt, about $7 trillion in debt. Corprorate profits go to everyone that saves like Ralph Nadar. Instead of living off the public dole, why does he make his own corp.? Lie #2 If you shrink government, it will force people into private sector, thus 2 fence painter will get 50% more money and retirement because the painter will get more help. Lie#3 High taxes takes money away from rich people to build their dreams. Lie#4 Debt steals from poor people.

    Reply

  8. Lie#4 via inflation tax, stealing from a kid so he can't buy his bike. Lie#5, SS is not a ponzi scheme but you are 5 times more likely to be disabled in Alabama than Utah. Obama gutted social security. Lie#6. If a bridge needs to be built, why should a poor person get to use it for free?

    Reply

  9. We need to kick this bum off the government dole so he stops stealing from the taxpayer. You paint your own fence Mr. Reich or contribute to help others. Let the real workers of America keep their money. End minimum wage, end unions, go to full reserve banking, end the department of education, energy, and nasa.

    Reply

  10. It's not a Ponzi scheme when you consider people voluntarily gave their money to Ponzi & Madoff….. The Federal Government has IRS Code 9.2.3.5 that allows them to kill you if you don't comply. Then just based on the ever increasing percentage taken from workers, it is at the very least fraud and immoral. I won't accept it based on the fact that some 25 year old will have to pay 25% of income to afford my SSI benefit….. That is theft and immoral.

    Reply

  11. Reich is a knowledgeable spokesman for the wisdom we learn from understanding our past. The data is there to support all his clarifications of the Republican lies which have no basis in fact.
    How can average citizens fall for these lies – I believe it is because our news has been taken over by the for profit corporations who have gotten richer and richer by hiding the truth from the masses.

    Reply

  12. This guy is an old school socialist stuck in a left-right political dichotomy.
    Although he has some very sympathetic things to say.
    We have more insight now.

    Jobs or creating jobs is not the answer to our problems.
    To design a sustainable society is.

    The jobs are not coming back as most things will be automated.
    Therefore we need a economic paradigm shift and re-evaluate our value system.

    -0-

    Reply

  13. One of the greatest uncorrected travesties this nation continues with are the changes that were made and not fixed in the 1986 tax code.

    Reply

  14. Reich doesn't site any references, he is ignoring decades of evidence, and misrepresenting opposing opinions.
    In the early 20s the Government was cut by 50% and the economy boomed. Same happened in the late 40s. This alone refutes his argument.
    The argument for less spending on Government infrastructure projects, is that they're inefficient, wasteful, they push up prices & discourage private investment. Simple.
    And Medicare & Medicaid already have a bigger budget than defence.
    Very poor video.

    Reply

  15. @LibertyDownUnder "In the early 20s the Government was cut by 50% and the economy boomed."
    ==
    It was followed by the massive crash.
    * Even during that "bubble" banks were failing by 600/yr.
    * The president refused to run for his second term for no particular reason. He didn't see something big coming up?

    You seemed to have no answer for my questions before but still keep posting. How about this time?

    Reply

  16. @MrCally1 "The jobs are not coming back as most things will be automated."
    ==
    You mean Chinese factories are well automated now?

    Reply

  17. "Therefore we need a economic paradigm shift and re-evaluate our value system."
    ==
    What exactly this means?
    Some examples?

    Reply

  18. The crash was unrelated to the ecomonic growth itself, it was due to the Federal reserve increasing the money supply by 50% and then contracting it back after the initial stock market decline.
    If a boom happens due to the Government deregulating and freeing up resources – that's good.
    If it happens due to Governments & banks flooding the market with easy credit – and then pulling it back – that's bad, and it has terrible consequences.

    Reply

  19. "it was due to the Federal reserve increasing the money supply by 50%.."
    ==
    Any document to back it up, or is it your own theory that nobody else agree?
    Why the depression peaked in 1933 then the economy started to pick up?
    Was there any political move before 1933 that correct what you call Fed's fault?

    Reply


  20. "You mean Chinese factories are well automated now?"

    Not now, but they soon will be, as China gains economic momentum fast.
    When human labour is considered to expensive to make profits, you know that this will happen.

    =0=

    Reply

  21. @MrCally1 "We need a new paradigm, which: "
    ==
    What I meant in my previous question is example of "what method".
    Go ahead and answer.

    Reply

  22. @MrCally1 "Not now.."
    ==
    When it will be?
    Any sign of labor cutting back in China because of automation?
    I haven't heard of any, currently nor in near future.
    Please show me.

    Reply

  23. @MrCally1 "Not now.."
    ==
    Automation started soon after the industry revolution began in US, yet it hadn't caused any job loss, in fact it lead to better economy followed by more hiring.
    If I'm missing something, show me a time in the history automation caused loss of jobs.

    Reply

  24. And if you say to people that another system is possible they call you a communist, marxist, socialist and Utopian. /watch?v=4Z9WVZddH9w

    Reply


  25. I am glad that you agree that we need a new economic paradigm.
    And you are right: our economies have become way to financialized.
    And what is much worse is that these economies have lost total touch with what is happening in real life. And noone knows exactly what is going on apart from that some people get vey rich and a lot of people very poor.

    With this system we will be in a continuous recession, which will deepen more and more as the debt spirals unwind. This sh*t has got to go.

    =0=

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  26. I brought up the military to give an idea of how big their budget already is.
    I agree with you that the Government can stimulate some companies, and even entire cities, but it cannot stimulate the economy in the long term as they ultimatley have to send someone the bill for it all.
    There is no example that's proven itself over the long term of any stimulis program ever working and creating sustainable economic growth

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  27. "There is no example that's proven itself over the long term of any stimulis program ever working and creating sustainable economic growth"

    Sustainable economic growth is not sustainable.
    That is because on a finite planet infinite growth is not possible.
    It is sad that our economies still presume infinite growth is possible on this planet.

    =0=

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  28. That's a seperate issue, and is not relevant to the question of wether to stimulate the economy or not.
    But in my opinion we are centuries away from exhausting the planet's resources, even at current rates of consumption. And that's assuming we won't find an efficient way of using solar power, which I think is just a matter of time.

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  29. If you don't think that sustainability is not an important factor whether to stimulate the economy or not then you have lost me. I am sorry.

    =0=

    Reply

  30. Well it's a question about what gets populations back to work and out of financial difficulty, not about the supply of energy, resources etc.

    Reply

  31. I disagree with the poster below. The assertion that we are anywhere near full capacity utilization of the planet earth is, to be frank, wrong. We capture less than 1% of the energy available to the planet and technology is advancing at a pace that can provide energy for many centuries to come. Since the economy is intrinsically linked to technological advancement, what you advocate is "giving up" on advancing society.

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  32. Additionally, we should be water and food secure for the foreseeable future. As western water extraction and food production practices extend to the developing world and continue to improve overall, people should be more well fed in the decades to come if anything. Innovation will propel us forward, of folks can have faith in a god than innovation shouldn't be too much of a stretch.

    Reply


  33. We don't have an energy problem, never had one, it is only the energy companies that make great effort for you to believe we have one.

    This economy is not linked to technolocial advancement, it is even hampering technological advancement.

    The current monetary system and financial markets are living a life of their own now, completely devoid of reality, and very malignant – highly probable letal for us.

    -o-

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  34. We have many more essential needs than water and food.

    There is no indication to expect that water/food production will extend to developing countries.

    This is the same as mr Reich says about the illusion that the poor in a given country will be better of when the rich are more rich. Wealth will not extend to the poor people, never has, never will in this sytem.

    -0-

    Reply

  35. Define "essential".

    It has been occuring for hundreds of years. Ag practices move back and forth between cultures as the benefits become obvious, and the tech becomes obtainable. "Obtainable", mind you, is never impossible, just a matter of time.

    It is not the same, your trying to correlate things that (in this instance) are not the same. Units of tech do not flow like units of wealth, in this case. Ex- the welfare recipient of today uses Iphones. Still "poor" though.

    Reply

  36. Thats good, since I don't think we have an energy "problem" either. The assertion about the big energy cartels is somewhat silly though, Competition in the industry (its a global industry with many small players) is high enough to keep prices roughly honest.

    I got a steam engine that disagrees. The economy is not causual for tech though, if that's what you thought I meant. They are linked nonetheless, capital is necessary like it or not.

    Your opinion. And a poor one, in mine.

    Reply


  37. With "essential" I mean it here in the context of "things you need do be able to live a healthy life". If you have some education in chemistry: it is like essental amino acids.

    Nothing more nothing less.

    Appr. 30.000-40.000 children die every day in this world because of not getting those essential things.
    In my estimation this number will increase mainly due to maco-economical reasons.

    =0=

    Reply


  38. I see that you are still a believer of the "free market" concept.
    You lost me there as the concept of a free market is an non existent utopia and it never will exist.

    You also think that forming of cartels of big companies leads to honest competition.
    I think basicly you need to do more research and see what acutally is happening.

    This monetary system is inherently corrupt.
    Companies, especially big ones, cannot exist without cronyism or corruption even if they wanted to.

    =0=

    Reply

  39. If you shrink government you have fewer government jobs, but you make more private jobs. Too bad those jobs will be with giant private construction and contracting companies that charge insane prices.

    Reply

  40. Actually, quite the opposite of "free market" competition, don't turn me into a stawman.

    National competition, BP (UK) vs Exxon (US) vs Gazprom (Rus) type of competition, is quite fierce. Perhaps you'd need to do the research, as there is really only 1 global scale "cartel", and thats the "big 4" auditing firms. Any other cartels exist -only- within national economies, and these players are still forced to "compete" with foreign companies unless there is active protectionism by the government.

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  41. Sorry to say but who is competing who, or in what manner, is completely irrelevant to me.

    I don't want to be lured into a discussion about market mechanisms or nationalism or globalism. These concepts are all just obsolete and trivial.

    We have to look further now to repair the damage those concepts got us in to.

    =0=

    Reply

  42. Thank you for sharing this video. Reich is a new hero of mine: he's been doing great work. We need pragmatists like him in Washington and everywhere else.

    Reply

  43. we are all part of a mutual fabric. There is no economic individual. People vote themselves out of their own pensions, their children's education and potential for success, and when they realize that life sucks they blame the liberals, how convenient. It's amazing how easily some of US Americans are colluded into believing greedy people are virtuous…

    Reply

  44. Why don't you epxlain to me how Gordon Brown's tax hike on the rich in '09 ended up decreasing revenue, genius?

    Reply

  45. Why are Texas students two years ahead of California students despite less spending per student, per the McKinsey Reports?

    Reply

  46. Can someone please explain to me what happened from 2006 and 2010 with a democratic house majority increased spending shovel ready stimulus how this guy could be right about his economic theory. P.S. the inequality got really bad under Pelosi and reeds leadership and no I am not a Bush fan I am a traditional democrat not a statist authoritarian.

    Reply

  47. Is he saying that the reason Social Security isn't a ponzi scheme is because it's solvent? Is insolvency part of the definition of a ponzi scheme?

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  48. Soo many people believe something because its been repeated do often nobody actually looks at the numbers this guys right in the 60s corporations and the rich paid alot in taxes and the economy boomed I get that its easier to talk shit and all but for reals people do some research the human race isnt stupid the main problem is that a majority of us are ignorant and refuse to do any thinkin or research of their own its sad to be choose2 be liketht when we have acces2 everything at our fingertips

    Reply

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