There are several continual lies from the RWNW about economics. Regardless of the actual facts that clearly contradict these statements, the RWNM continues to spew them out. So, below is a list of the most common lies from the RWNM with an explanation of why they are wrong.
Tax cuts pay for themselves; or, tax cuts increase revenues
Go to the CBO website. Reagan cuts taxes in 1981 and raised them in 1983. From 1981 - 1983, tax revenue was 599 billion, 617 billion and 600 billion respectively. It wasn't until 1984 - after Regan raised taxes and the economy entered an expansion - that tax revenue increased.
The same thing happened with Bush II. He cut taxes in 2001. From 2001-2005, total tax revenue (in billions) was 1,991, 1,853, 1,782, 1,880 and 2,142 respectively. In addition, these figures are not adjusted for inflation.
The facts are clear: tax cuts do not increase revenue.
Tax cuts create economic growth
I explained this in depth in this diary. The reality is interest rates have a much stronger impact on economic growth. Lower rates, and the economy grows; raise them and the economy slow.
I should disclose I am more of a monetarist than some of my other center-left economic brethren. This may be because of my previous job trading bonds or the fact that I agree in part with some of Milton Friedman's analysis.
Tax cuts create jobs.
Clinton raised taxes. Bush cut them. Clinton's economy created 22 million jobs. To date, Bush's has created a little under 5 million. Any questions?
Tax increases lead to recession.
Clinton raised taxes in 1994. That was followed by 6 years of economic expansion. Reagan raised taxes in 1984. That led to 6 years of expansion.
It's very important to remember that when tax increases are supposedly aimed at deficit reduction, the markets will typically purchase longer-dated Treasuries, lowering yields, making the cost of borrowing cheaper, increasing growth. Look at this chart. After Reagan raised taxes (in theory to reduce the deficit), the bond market reacted as previously described. The same is true of Clinton's increases.
Tax cuts for the rich and/or corporations "trickle down" to the middle class.
Corporations are the only constituent part of the economy with any meaningful savings over the last 5 years. At the same time, wages for non-supervisory employees after inflation have increased .5% over the last 5 years. Someone is getting richer, and someone isn't.
Please feel free to add your own.