I stumbled across a posting on Facebook called “7 Biggest Economic Lie” by Robert Reich. (See the picture to the right. To read his actual words go here). As I read through them I could not help but think that this was once again pure propaganda by the liberal left. I am a bit familiar with Robert Reich. He was Bill Clinton’s Secretary of Labor and Harvard educated in Politics and Economics. In short he should know better. At best these are all half truths and misrepresentations. At worse, to someone completely unfamiliar with these issues, they are lies. In subsequent blogs I might more directly rebut what Mr. Reich has to say. But for now, how about a list of “Seven Undisputable Economic Truths”

1) Someone has to first create wealth before it can be taxed.

You would think that there is no reason to explain this one, but for the liberal left, which Reich is a card carrying member, there is. It is impossible to tax good intentions. In order for there to be money to pay for anything government provides, someone, like the stigmatized “rich” must
created a good or service. Producing that good or service creates jobs. The jobs created income. The income is taxed. There is no other way. Anything that government pays for; be it the Army, a teacher’s salary, to build a road, or the National Endowment for the Arts is done so with money from the wealth created by others. Period.

2)  A Tax Rate Cut is not the same as a Tax Cut

A Tax Rate is the level at which a dollar of income is taxed. The tax is the amount of money collected. These are not the same thing. You can tell when a politician is either ignorant or lying to you when he or she says “tax cuts for the rich” When Reagan and Bush II cut the tax RATES, the amount of money that the federal government collected went up. Again, the amount of money collected, the tax, went up. This is because “the rich” are not stupid. When tax RATES are too high, they find a way to not expose that income to be taxed. When the RATES are lower, it is not worth the effort. This relation ship is expressed in the Laffer curve. Learn about it here.

3)   Government jobs are overhead.

Every single government job is funded by taking money from someone else. I am not saying that government jobs are not needed. Soldiers, police, firemen, and many more are vital to society, and needed to be funded by the public. But, that does not alter the fact that all of those jobs are overhead. Every government job, and the overpaying of a government job (caused by public sector labor unions) takes money away from the public. That is money that the public could be spending to produce a reason for private sector jobs to exist. Private sector jobs actually add to the treasury, instead of subtracting from it. Private sector jobs are good. Public sector jobs are a drain on the economy and need to be held to a minimum.

In my last blog I explain what the Buffett Rule (a minimum 30% tax on those making a million or more) and why it is nothing but a ploy from our president to pit everyone else against the millionaires. His plan is to convince everyone that Obama the Great is looking out for them and only he will make the millionaires pay their fair share. I also pointed out that the top 1% of taxpayers pays 37% of the total taxes collected. Those 1% encompass taxpayers who make $344,000 and above. 

Assume for a minute that Obama gets his way and he gets the Buffett Rule through Congress (he won’t; it won’t pass either house), and he signs it. Then what? Well, let’s start with what Obama said it would do when he introduced it back in September

“and that basic principle of fairness, if applied to our tax code, could raise enough money that not only do we pay for our jobs bill but we would stabilize our debt and deficit for the next decade. And as I said when I made the announcement, this is not politics, this is math.

The italics in the quote are mine. So this would stabilize our debt and deficit for the next decade and this is math, not politics. So why don’t we apply a little math to the Buffett Rule. First, how
much money is this 30% tax rate going to bring in? 

Well according to the Congressional Joint Committee on Taxation it will raise 5.1 billion dollars in 2013.Now if that was my lottery winnings I would think it a lot of money. But, compare it first to the 2013 project budget (3800 billion) and more importantly the deficit, which is the amount of
money we need to somehow find to make how much we spend and how much we take in
balance (1300 billion)

So let’s do the math. We need 1300 billion. The Buffett Rule would raise 5 billion. Does this sound like it will stabilize our debt and deficit? 

This like your spouse telling you that we need to buy a $1000 refrigerator. You know that you have $660 dollars in savings. But, your spouse knows a great way to get the rest of it; we check the couch for change. You do and glory be, you find exactly $1.32; problem solved.