FactCheck: Economic myths

August 19, 2011 8:22:28 PM PDT
With the Republicans campaigning in Iowa and the president's Midwest bus tour this week, it seems a good time to fact check some popular economic myths you're likely to hear from the campaign trail. ProPublica, the independent, nonprofit, Pulitzer Prize winning organization based in New York recently published a list of such economic myths.

With candidates taking their swings on the campaign trail, ProPublica's Michael Grabell took a hard look at the most common economic exaggerations.

"Probably the biggest one is taxes being the highest they've ever been or higher than they are in other countries," Grabell said.

Grabell says a fact check shows the high tax claim is just wrong. America's tax burden is the lowest it's been since 1958.

And as for taxes being higher here than other countries?

"There are very few developed countries that have lower taxes than we do, most have much higher taxes," UC Berkeley economist Prof. Alan Auerbach said.

And the often repeated claim that U.S. business pay more taxes?

"We have one of the highest corporate tax rates in the industrialized world, however when you look at the effective tax rate after you take out the deductions, we actually end up closer toward the middle of the pack," Grabell said.

Republican presidential hopefuls often call the president stimulus spending a failure.

The president says it saved the economy.

"Neither of these is actually true, it's somewhere in the middle," Grabell said.

Economists can disagree on the impact of the stimulus. It comes down to speculation on what would've happened if there had been no stimulus.

"And people do differ in their views of how strong an effect the stimulus had, but I don't think it's a common view that the stimulus didn't help," Auerbach said.

Was the stimulus was full of fraud and abuse?

"The facts show there has been some fraud and abuse, but it's very minimal," Grabell said.

The inspector general has found $1.9 million in fraud tied to the stimulus, but out of nearly $800 billion, that's less than .01 percent of the total program.

How about that the stimulus may fill pot holes but will leave no lasting benefit?

"Right and Martians are about to land on earth, there are a lot of things that people say, but it doesn't make them true," Auerbach said.

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