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Five myths about the Bush tax cuts

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  • A gloomy economic outlook...has given rise to a number of stubborn myths about what extending the Bush tax cuts would -- or wouldn't -- do.
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  • Tax the rich more. (They can take it.)
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  • Trickle Down Economics doesn't work
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  • Top 5 Social Security Myths
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William G. Gale, Star Tribune | MN

Tax cuts enacted in 2001 and 2003, known as the Bush tax cuts, are set to expire Dec. 31, and the fight over what to do is heated.

The cuts lowered tax rates across the board on income, dividends and capital gains; eventually eliminated the estate tax; further lowered burdens on married couples, parents and the working poor, and increased tax credits for education and retirement savings. President Obama's proposal would extend most of these reductions, allowing only those for individuals making more than $200,000 and families making more than $250,000 to expire.
Complicating the debate is a gloomy economic outlook, decidedly different from the rosy scenario that prevailed at the beginning of the last decade. That has given rise to a number of stubborn myths about what extending the Bush tax cuts would -- or wouldn't -- do.

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Tax the rich more. (They can take it.) Richard R. Miller, StarTribune | MN
Dayton's campaign cry is really quite reasonable when you look at how state taxes have changed over the years.

Trickle Down Economics doesn't work says Alan Blinder. Here’s what does, Posted by rmontero, AlterNet

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  • Redirecting money from the expiring Bush tax cuts to unemployment benefits would be a net job creator and give the economy a much-needed boost.
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  • Long-Term Economic Pain
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Top 5 Social Security Myths, Nita Chaudhary, MoveOn.org Political Action
We've put together a list of the top five myths about Social Security, along with the real story.

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Top 5 Social Security Myths

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We've put together a list of the top five myths about Social Security, along with the real story.

Nita Chaudhary, MoveOn.org Political Action

Submitted by Evergreene Digest Contributing Editor Connie Choiuinard

Social Security is under attack and we need to fight back against the lies.

Have you heard that Social Security is going bankrupt? Driving up the deficit? In crisis? Well none of that is true. These are all myths that opponents of Social Security have been spreading to scare people into accepting benefit cuts this fall. But the myths are taking hold—so we have to fight back with the facts. So we've put together a list of the top five myths about Social Security, along with the real story.

Can you check out the list and then share it with your friends, family, and coworkers? Share the list by clicking here. If you're on Facebook, share it by clicking here. If you're on Twitter, tweet it here.

Top 5 Social Security Myths

Myth #1: Social Security is going broke. Reality: There is no Social Security crisis.  By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a 'T').  It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever.1 After 2037, it'll still be able to pay out 75% of scheduled benefits—and again, that's without any changes. The program started preparing for the Baby Boomers' retirement decades ago.2  Anyone who insists Social Security is broke probably wants to break it themselves.

Myth #2: We have to raise the retirement age because people are living longer. Reality: This is a red-herring to trick you into agreeing to benefit cuts. Retirees are living about the same amount of time as they were in the 1930s. The reason average life expectancy is higher is mostly because many fewer people die as children than they did 70 years ago.3 What's more, what gains there have been are distributed very unevenly—since 1972, life expectancy increased by 6.5 years for workers in the top half of the income brackets, but by less than 2 years for those in the bottom half.4 But those intent on cutting Social Security love this argument because raising the retirement age is the same as an across-the-board benefit cut. 

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Myth #3: Benefit cuts are the only way to fix Social Security.  Reality: Social Security doesn't need to be fixed. But if we want to strengthen it, here's a better way: Make the rich pay their fair share.  If the very rich paid taxes on all of their income, Social Security would be sustainable for decades to come.5 Right now, high earners only pay Social Security taxes on the first $106,000 of their income.6  But conservatives insist benefit cuts are the only way because they want to protect the super-rich from paying their fair share.

Myth #4: The Social Security Trust Fund has been raided and is full of IOUs Reality: Not even close to true. The Social Security Trust Fund isn't full of IOUs, it's full of U.S. Treasury Bonds. And those bonds are backed by the full faith and credit of the United States.7 The reason Social Security holds only treasury bonds is the same reason many Americans do: The federal government has never missed a single interest payment on its debts. President Bush wanted to put Social Security funds in the stock market—which would have been disastrous—but luckily, he failed. So the trillions of dollars in the Social Security Trust Fund, which are separate from the regular budget, are as safe as can be.

Myth #5: Social Security adds to the deficit Reality: It's not just wrong—it's impossible!  By law, Social Security's funds are separate from the budget, and it must pay its own way. That means that Social Security can't add one penny to the deficit.8 Defeating these myths is the first step to stopping Social Security cuts.  Can you share this list now? Thanks for all you do. –Nita, Duncan, Daniel, Kat, and the rest of the team

Sources:

1."To Deficit Hawks: We the People Know Best on Social Security," New Deal 2.0, June 14, 2010 

2. "The Straight Facts on Social Security," Economic Opportunity Institute, September 2009

3. "Social Security and the Age of Retirement," Center for Economic and Policy Research, June 2010

4. "More on raising the retirement age," Washington Post, July 8, 2010

5. "Social Security is sustainable," Economic and Policy Institute, May 27, 2010

6. "Maximum wage contribution and the amount for a credit in 2010," Social Security Administration, April 23, 2010

7. "Trust Fund FAQs," Social Security Administration, February 18, 2010

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8."To Deficit Hawks: We the People Know Best on Social Security," New Deal 2.0, June 14, 2010

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Rachel Maddow Takes Out Bill O the Clown

White House 'Inexplicably Keeps Falling For' Fox News Stunts

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Rachel Maddow, MSNBC, in Democratic Underground

Submitted by Evergreene Digest Contributing Editor Thomas Sklarski

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White House 'Inexplicably Keeps Falling For' Fox News Stunts, Rachel Maddow, MSNBC, in Huffington Post

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  • "Fox does what Fox does, that is dog bites man, that is not interesting. What is interesting about this story is that the Obama administration inexplicably keeps falling for it. Means be damned, it works. Who's next?" -- Rachel Maddow
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  • The shame of right-wing "journalism"
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The Strange World of Emmer Math

After doing a little math, it turns out that real (i.e., inflation-adjusted) per capita state general fund spending has grown by 5.1% from FY 2000-01 to FY 2010-11.  This translates to an average annual growth rate of one-half percent.

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Jeff Van Wychen, Minnesota 2020

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Gubernatorial candidate Tom Emmer made a shocking statement on Thursday’s (June 15) Midmorning program on MPR: “Spending has almost doubled in the last decade in this state.”  The statement is false.

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In order for something to double, it must grow by 100%.  From FY 2000-01 to FY 2010-11, total state spending is projected to grow by 62.7%.  (A more common measure of state spending—general fund spending—is projected to increase by 28.7% over this period.)  By no stretch of the imagination can 62.7% be called “nearly 100%” and thus it is not “nearly double.”

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My sister Donna is 63 years old.  According to Emmer math, she is “nearly 100.”  (Sorry, Donna.)  The statement that Donna is “nearly 100” is more accurate than Emmer’s statement that state spending has “nearly doubled,” since Donna at age 63 is closer to 100 than growth in state spending is to 100%.

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Even so, 62.7% growth over the course of a decade might seem like a lot of growth, but let’s dissect this number.  The combined rate of inflation and population growth over the last decade is approximately 54.7%.  After doing a little math, it turns out that real (i.e., inflation-adjusted) per capita state general fund spending has grown by 5.1% from FY 2000-01 to FY 2010-11.  This translates to an average annual growth rate of one-half percent.

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