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Monday, October 24, 2011

Bust these MYTHS NOW!!

Royalist Myth 2: Tax cuts stimulate economic employment and growth.

Fact: Pres. Reagan engaged a voodoo (words of Pres. Bush Sr.) economist (Laffer) to contrive a tax function claiming tax cuts are best to stimulate economic growth. Almost every economist including Nobel’s finds no factual basis for this claim. Reagan’s economic growth came from government deficit spending (that the 1% rail against while loving Reagan) and expansive monetary policy. What is called the tax multiplier (amount a tax cut would add to GDP) is calculated by everyone to be about 1.0 that is no gain. The government and monetary multipliers are between 2.0 and 3.0 hence better tools. So much for the 1% myth that tax cuts for them stimulates the economy. If that were true, Bush would not have lost 7 Mil. jobs. Because these better tools don’t directly give more money to the 1%, they are against them. As shown by Anderson and Jordan (American Economic Review, 1968), these multipliers drove the Reagan growth hence made it look like the tax multiplier was contributing. Not so.

Stay tuned for 9 more myths that have been misleading American voters.

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