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The big lie

Robert Reich, professor of public policy | January 4, 2011

Republicans are telling Americans a Big Lie, and Obama and the Democrats are letting them. The Big Lie is our economic problems are due to a government that’s too large, and therefore the solution is to shrink it.

The truth is our economic problems stem from the biggest concentration of income and wealth at the top since 1928, combined with stagnant incomes for most of the rest of us. The result: Americans no longer have the purchasing power to keep the economy going at full capacity. Since the debt bubble burst, most Americans have had to reduce their spending; they need to repay their debts, can’t borrow as before, and must save for retirement.

The short-term solution is for government to counteract this shortfall by spending more, not less. The long-term solution is to spread the benefits of economic growth more widely (for example, through a more progressive income tax, a larger EITC, an exemption on the first $20K of income from payroll taxes and application of payroll taxes to incomes over $250K, stronger unions, and more and better investments in education and infrastructure.)

But instead of telling the truth, Obama has legitimized the Big Lie by freezing non-defense discretionary spending, freezing federal pay, touting his deficit commission co-chairs’ recommended $3 of spending cuts for every dollar of tax increase, and agreeing to extending the Bush tax cuts for the wealthy.

Will Obama stand up to the Big Lie? Will he use his State of the Union address to rebut it and tell the truth? Maybe, but so far there’s no evidence.

In his weekly address yesterday, the President restated his “commitment” for 2011 “to do everything I can to make sure our economy is growing, creating jobs, and strengthening our middle class.” He added that it’s important “to look ahead – not just to this year, but to the next 10 years, and the next 20 years” to find ways to stimulate the economy through innovation. And that it is critical that the U.S. discover ways to “out-compete other countries around the world.”

Become more innovative? Out-compete? Who or what is he talking about? Big American corporations are innovating like mad all over the world, with research and development centers in China and India. And their profits are soaring. They’re sitting on almost $1 trillion of cash. But they won’t create jobs in America because there’s not enough demand here to justify them.

In the Republican address in response, U.S. Senator-elect Kelly Ayotte (R-N.H.) restated the Big Lie. “The American people sent us to Congress with clear instructions: make government smaller, not bigger,” she said. Deficit reduction “isn’t a Republican problem or a Democrat problem — it’s an American problem that will require tough decision-making from both parties.” And the way to shrink the deficit is to cut government. The extension of the 2001 and 2003 tax cuts over the next two years, she said, was an “important first step” to jump-start the economy.

Starting Wednesday, when the 112th Congress convenes with a Republican majority in the House, we’ll be hearing far more of the Big Lie.

George Orwell once explained that when a public is stressed and confused, a Big Lie told repeatedly can become the accepted truth. Adolph Hitler wrote in Mein Kampf that “the size of the lie is a definite factor in causing it to be believed” and that members of the public are “more easily prey to a big lie than a small one, for they themselves often tell little lies but would be ashamed to tell big ones.”

Only the President has the bully pulpit. But will he use it to tell the Big Truth?

Cross-posted from Robert Reich’s blog.

Comments to “The big lie

  1. What amazes me is the perpetuation of the myth that taxes stifle economic growth, and that cutting people’s taxes will help re-invigorate the economy. The truth is that sensible consumers will, especially in uncertain times, save some portion of money they get to keep because of reduced taxes, where as government is more likely to spend it, thereby stimulating the economy.

  2. Robert, it is also interesting that you quoted Hitler and Orwell because a reason why We Never Learn from history and literature is that we live in an age when far too many leaders and role models in the world’s capitals and Ivory Towers are failing to tell people the Big Truth.

    The reality of our way of political and intellectual life today is that it is far too easy for politicians and intellectuals to attack each other to obfuscate the truth.

    Obama’s biggest problem is that he is trying to do the right things in a world dominated by leaders of all institutions who find it far too easy to enable themselves to sell their morals and ethics to the highest bidder to satisfy their personal priorities of wealth and power, leaving someone who actually has integrity in the position of being attacked by all sides and negated.

    After 16 years of ethical and moral failures by leaders like Clinton and Bush, it almost impossible to tell what the Big Truth is anymore when someone like Obama finally comes along and tries to promote it.

  3. I totally agree Robert! Also the ones who control the majority of the wealth are ‘saving’ it which keeps it from being spent or dispersed and therefore you have a slow economy that needs that cash to move from one person to another. Great post!

  4. Why Do We Never Learn?

    Robert, you are right about lies as far as you went.

    But the Big Truth is that the Bush Administration and republican leaders told Big Lies for eight years, and so did the Clinton Administration and democratic leaders, which is why we have all the out of control problems we have today.

    A Bigger Truth is that American Democracy is being destroyed by the failures of both political parties to serve We The People instead of special interests.

    It should also be noted that far too many intellectuals are failing to meet the challenges of change also, and we are paying a totally unacceptable price for failures by politicians and intellectuals to protect humanity as their highest priority.

  5. All but three of the presents under our tree came from China. We create jobs, not government. Why were all those presents from China? Because the products made in China provided the best apparent value. When local suppliers provide the best value, our consumption will create jobs here. Part of the value equation should be ethical cost. Would you buy cheap goods if you knew they were stolen? Would you buy goods that were cheap as a result of the adverse environmental impact of production? We do if there’re not made in our backyard. America’s problems begin with me. I need to ask myself if I really need that $3.69 container of blueberries, just flown in from Chile. We need willpower, not regulations or herds of government workers to set an example of how responsible consumption can drive a viable economy.

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