Reich is wrong

Matt Wessel | Last updated Apr 05, 2011 12:0pm0

Robert Reich's latest column was just grand.

Budget deficits are a good thing. I hadn't realized this. Social Security (SS), Medicare/Medicaid and defense are the biggest budget-busting items we have by far. And no party has the guts to significantly (let alone strategically) cut spending in these areas. I'm sure Reich would agree to Defense cuts, but not SS and Medicare/Medicaid, which are rapidly assuming more of the budget outlays, soon to pass defense: each, not combined.

SS tax revenues can no longer pay for the mandated outlays. This is the new reality. CBO projections have combined government outlays (medicare/medicaid/other spending and debt interest) exceeding 100+ trillion by 2040. That means everybody's friends at the IRS would need to collect eight times current GDP (14 trillion) to pay for one year of SS in 2040.

We won't have 100 percent income tax rates with no deductions (will we?). Clearly, SS won't have the necessary funding if allowed to continue as is, and the system will explode in our seniors' faces (which will be you and me then) unless reformed now.

Reich's contention that running budget deficits creates jobs is ridiculous, as unemployment is still around 9 percent, and almost all of the "jobs" created recently are public employment jobs, thus adding more people to taxpayer-funded salary payrolls, benefits and pensions - which are now on average better packages than private employees are getting. This happened in 2009 for the first time ever. It's well documented (USA Today, March 4, 2010).

Reich has never heard of the Laffer curve (or thinks it's "baloney"), as his main reasoning for why we have budget deficits is that we don't tax the rich and evil corporations (which is EVERY corporation, according to birds of the Reich feather) enough.

Nevermind record government spending (a nice trend exacerbated in the GW Bush/Republican congress years - thanks guys! Now you all know why I voted for Bob Barr).

His example of GE is particularly humorous, as they donated large sums of money to the Obama campaign - which is their right. And besides, why should he care? GE also does all these wonderful green things, so they should get those tax credits. Incentivizing America to do things a certain way (all must buy health insurance) is not social engineering, rather it's good "tax", wait, "commerce clause", wait, "necessary and proper clause," wait, "dammit, we know best so stop interfering with that silly and outdated constitution (lower case c for de-emphasis) of yours" policy.

"Fewer government workers have paychecks to buy stuff from other Americans, some of whom will lose their jobs without enough customers."

This statement caused me to fall off my chair and bruise my glutes from laughing so hard. That's quite a "whopper," to quote the literary genius that is Robert Reich. "Stuff" is such an eloquent synonym for "goods and services." I don't know what he means by "fewer government workers," but if he means numbers, well, that's not true as government employment is on the rise thanks to the stimulus packages that lowered unempl...no, made the deficit...well, nevermind.

If he means paycheck amounts, well, that's not true either because public employees now on average make MORE than private employees. See Cato Institute and links therein for additional documentation. And does he really think that the main source of income for all these other businesses out there are government workers frequenting them to buy, say, paint for their new man-cave? Do others not visit and purchase at these businesses? How does he think government worker paychecks are funded? Clearly somebody somewhere is just printing money for free - oh yeah, the Fed.

Private companies that run continual budget deficits can be described with three simple words: Out of business. In reality, governments are not all that different: Ireland, Greece, Portugal, Spain (coming soon to a European theater