1. In reality, compared to previous years and compared to the rest of the world, Americans are under-taxed.
According to the Commerce Department’s Bureau of Economic Analysis, by historical standards, what we pay in federal taxes — rich, poor and everyone in between — has been heading down.
“Americans on average saw 17.3 percent of their income go to federal taxes in 2009 and 2010. The last time the percentage was this low was 1975, and during the late 1960s. If you exclude social insurance taxes on wages — for Medicare and Social Security — the share of taxes as a percentage of income drops to 9.4 percent in 2009 and 9.3 percent in 2010, the lowest since 1950.”
2. The American economy can be fixed by spending more money–for the right things.
Any traditional economist will tell you, with the economy at a near standstill, is exactly the wrong time to cut spending. We need to stimulate growth or face more recession. Only after getting the economy moving in the right direction, can we tackle the debt.
According to Adam Hersh, an economist at the Center for American Progress, the data shows that states which have cut spending are doing poorly in comparison to thestates that have resisted cuts. Those states which have increased spending have stronger records on employment and economic growth than states who drank from the “cut spending” Kool-Aid.
Louis Woodhill, a conservative engineer and software entrepreneur writing in Forbes, wants Republicans to recognize that spurring economic growth is more important than cutting spending. “From a purely financial point of view” he points out, “it is 27 times more important. This is because, in terms of federal solvency, increasing our GDP growth rate by 0.1 percentage points has 27 times the impact of cutting spending by 0.1% of GDP.”