More economic "facts"

The Oklahoman has run a number of incredible letters of late and many of them deserve attention. But for now, let's focus on the one from Mike Jones of Oklahoma City. Titled "Basic facts about our economy" by the editors, it is a litany of things that can hardly be described as "facts" in any real sense. He starts off:

The 40th president inherited an economy worse than the economy inherited by President Barack Obama. Fortunately, No. 40 majored in economics and knew what to do to turn the economy around. Ronald Reagan didn't need graphs, charts or formulas.

OK. So... while I was alive in 1980, I wasn't paying much attention to the economy back then. Still, it's safe to say that by any reasonable measure, the global economic crisis that we saw in 2008 was far worse than what was seen in 1980.

And also, seriously? Yes, Reagan majored in Economics and Sociology. At Eureka College. He GRADUATED IN 1932. That's at the start of the Great Depression. After that, he went into acting. It's hard to imagine that he was keen on economics given that he last studied it 50 years before becoming President.

WHAT THE HELL?!?

And I love the "didn't need graphs, charts or formulas" bit.

Wait. What's that? Oh, never mind.

Anyhow, he goes on:

He understood the most basic and most important fact regarding any nation's economy: Every dollar that passes from a private citizen to a government agency weakens the economy. It doesn't matter if the dollar goes for income taxes, sales taxes, excise taxes, tariffs, traffic tickets, permits, licenses, fines or whatever. It doesn't matter if the government agency is local, county, state or federal.

That dollar is one less dollar each citizen will spend with our nation's companies. Then, the companies will make fewer sales, will need fewer employees and will pay less income tax. The revenue to the companies and the government will decrease. The citizens and the government will have less money to pay their debts; private and government debt will increase. Sound familiar?

Where do we start here? His simplistic argument is that when the government takes money from people, it's money that people can't spend. But what does he imagine the government is doing with its money? Just sitting on it? Or does the government spend money on salaries for employees, and on things that "our nation's companies" provide, like infrastructure and defense?

More interesting than his misunderstanding of what the government does with its money is the chain of events he constructs:

1) When people spend less, companies make less;
2) Companies that make less need fewer employees;
3) There will be fewer taxes paid to the government and debt will increase;

He asks if it sound familiar-- and IT DOES! But this isn't because of higher taxes!! It's because the economy cam crashing down due to the housing crisis! Our government debt isn't because of some huge tax increase, it's because people are out of work and thus not paying taxes!!

Also, let's be clear: Reagan did cut taxes-- mostly on the the highest income brackets. But he raised taxes, too. As one historian noted, these actions "constituted the biggest tax increase ever enacted during peacetime." Thus, it is sort of comical when Mr. Jones writes,

Does this mean that no money should pass from a citizen to his government? Of course not. Governments need money for defense and for the minimum constitutional functions of operating a government. Reagan finally got taxes reduced and the country entered the longest period of peacetime prosperity it's ever known. The quickest way to wreck this prosperity is to increase government spending while simultaneously extracting more money from the private sector to fund the increased government spending. Sound familiar?

Jesus. Defense and the "minimum constitutional functions"? Does that sound odd to anyone else? Like, is defense outside of the constitutional functions of an operating government? Or does it just not need to be "minimum"? He doesn't make that clear, but that's because Mr. Jones is a typical right-wing economic hypocrite. As the Oklahoman has advocated plenty of times, spending money on defense is always good-- it helps the country. But spending on anything else is bad, as it robs citizens of their ability to spend. It's no wonder they ran Jones' letter-- it parrots their own points perfectly. Unfortunately, their own points are as wrong as Mr. Jones'.