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Originally Posted by Ustwo
You mean the recovery which started before Clinton was president, and the 1994 republican revolution which crushed all his hopes and dreams of passing things like Hilarycare?
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In this 2002 Article, The type of tax cuts that Bush was proposing were predicted to "not have an effect on aggregate economic activity," while
the effect of Clinton's 1993 tax increases was, "Yet what eventually followed was the longest expansion in U.S. history, a big surplus, and an unemployment rate that fell below 4%."
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<a href="http://www.businessweek.com/magazine/content/02_52/b3814032.htm">http://www.businessweek.com/magazine/content/02_52/b3814032.htm</a>
The Great Budget Debate
Supply siders and deficit hawks will square off over the best way to rev up the recovery .........................
If income taxes are not overly oppressive today, what are the economic arguments for further cuts in tax rates?
In the short term, tax cuts clearly pump up the economy by putting more money in consumers' pockets. It does matter, however, which taxes are cut. Lowering taxes paid by high-income filers is likely to hike savings, which could give an upward jolt to the stock market. In contrast, a cut in the Social Security payroll tax paid by employees would mostly benefit low-income workers, who are more likely to spend it quickly.
The more difficult question, though, is the impact of tax cuts on long-term growth. The core of supply-side theory is that people are discouraged from working harder, investing in themselves, and taking risks if they have to give much of their additional income to the government in the form of taxes.
But after countless economic studies, it's clear that those arguments have been overstated. The positive incentive of lower tax rates on the labor supply is limited. Research shows that it applies mainly to married women, who face high marginal tax rates on their income. Yet this group makes up only 30% of the adult population. As a result, the sort of tax cuts being proposed by Bush "will not have an effect on aggregate economic activity," says Joel B. Slemrod, a tax economist at the University of Michigan.
Moreover, a moderate tax increase appears not to hurt the economy, despite what supply siders claim. In 1993, as President Bill Clinton's tax hike was passed, then-Representative Newt Gingrich (R-Ga.) declared that "the tax increase will kill jobs and lead to a recession." Yet what eventually followed was the longest expansion in U.S. history, a big surplus, and an unemployment rate that fell below 4%.
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