www.csua.org/u/j3f -> economistsview.typepad.com/economistsview/2007/06/bruce_bartlett__1.html
I compared the state of the economy today to where it was at the exact same point during the previous business cycle. Thus, according to the National Bureau of Economic Research, the most recent recession ended in November, 2001.
For example, real GDP has risen at a 31 percent annual rate since the end of the recession. But in areas such as this, there are no objective criteria for saying what is a good performance from a bad one; First, when Bill Clinton ran for president in 1992, he repeatedly said that the economy was the worst since the Great Depression, and he continued saying so well after he took office--two years into the recovery. In other words, the recovery from the 1990-91 recession was so anemic that voters elected a new president in order to get the economy moving. Therefore, we are not comparing today's economy to one that was historically robust, but one that was widely viewed as being exceptionally weak. Second, the data raise serious questions about the role of taxes. Republicans are convinced that the Bush tax cuts saved us from doom. But there is really no evidence whatsoever to support this claim. Unless one believes that there would have been no recovery at all and that we would still be mired in recession without the tax cuts, it is hard to find any positive evidence of their economic impact. Investment stinks, employment growth has been mediocre, and even the stock market increase is nothing to brag about. Third, it is worth remembering that Clinton raised taxes right out of the box in 1993. Every Republican opposed it and virtually every conservative economist predicted disaster. Yet it is hard to find any evidence that the tax increase had any negative effect whatsoever. One can easily argue the opposite based on the economic results. I am not arguing for a reversal of the tax cuts or in favor of a tax increase. I am just saying that one has to do more than mindlessly repeat mantras about the benefits of tax cuts or the horrors of tax increases if you want to be taken seriously in this debate. I also wish the mindless repetition of false mantras would end, but I don't expect it to change much. In the media, the commodity being sold is entertainment, not information, so it shouldn't be too surprising that the two will come into conflict even on shows labeled as news. Still, I would have thought there would be more market discipline than exists now. There seems to be little penalty for providing false or misleading information (even if it leads to war) so long as the entertainment value is high enough (unless you count even more bookings and more exposure in the media as a penalty). I wish I knew how to bring the information and entertainment objectives into better alignment, we need it, but I don't know what the answer is. But one area that could stand improvement is the level of competition in the market for news and entertainment. We need to ensure that robust competition is present in this marker so that whatever market discipline does exist with respect to the presentation of accurate information and informed analysis has a chance to fully express itself.
"First, when Bill Clinton ran for president in 1992, he repeatedly said that the economy was the worst since the Great Depression" Yes, he lied then and kept lying right through his 8 years. The recession of the early 80's was FAR worse than the extremely mild recesion of 1991 "It is obvious that by every standard, the recovery and expansion after the 1990-91 recession was significantly better than that after the 2001-01 recession" And late into that recession there were tax cuts, the capital gains tax cuts of 1997 were a huge economic stimulus for the expansion of the late 90's. "but one that was widely viewed as being exceptionally weak" Widely viewed "exceptionally weak" only by the ignorant, the economy had already been growing strong before clinton took office, and actually grew more the year before he took office than the year he took office. "Republicans are convinced that the Bush tax cuts saved us from doom. But there is really no evidence whatsoever to support this claim." There is overwhelming evidence, the Bush tax cuts of the lower three tax brackets were enacted in mid 2001 and for almost the next 2 years we had negative job growth and anemic GDP growth. Almost immediately after the top two tax bracket cuts were enacted in June 2003 the economy exploded into growth and since then we have a net gain of over 9 million jobs created. And now, as in the expansion of the 90's, real wage growth comes in late in the expansion and we have had very solid wage growth. "Third, it is worth remembering that Clinton raised taxes right out of the box in 1993. Every Republican opposed it and virtually every conservative economist predicted disaster. Yet it is hard to find any evidence that the tax increase had any negative effect whatsoever" Hard to find evidence? Only if your eyes are closed, look at the massive slow down of economic growth in 1995, no negative effect? "I am just saying that one has to do more than mindlessly repeat mantras" Yes and will you and your kind stop mindlessly repeating your idiotic mantras of tax cuts don't work.
bruce bartlett, as always, reminds us what an honest conservative looks (and thinks) like. TB reminds us what a dishonest shill of the american right-wing looks like. sadly, as our host noted, the ignorance of the TBs rules our discourse, while the honesty of bruce bartlett got him fired from a supposed think tank.
TB - As an unreconstructable left winger, I'll admit I'm biased toward thinking that tax cuts for high income brackets don't usually stimulate the economy, but I'm open to being convinced. Now you have brought forth quite a bit of evidence to support your thesis that the Bush tax cuts for the rich did stimulate the economy. To me, however your evidence seems largely circumstantial. Other factors were involved, including exceptionally low interest rates, and a massive increase in government spending. This means that it's hard to prove your point with macroeconomic evidence. What puzzles me the most is exactly what have the very rich done with all the money that Bush has left them? In fact, what hits the headlines is companies buying back their stock, because they don't know what to do with their money. My impression is that the very rich are simply contributing to speculative bubbles while US industry continues getting hollowed out. You seem to be a proponent of faith based economics, which is often an important positive factor. So please restore my faith that capitalism is good for America.
That was no evidence whatsoever: in the Clinton case, TB claims that 93 tax increases were responsible for a slowdown in 95, but that 2003 tax cuts on the very rich were responsible for immediate growth. So, the real message is: when there is a tax increase, we'll say that the next slump in the future is clear proof of the destructive effects of taxes, and when there is a tax cut, well any growth (however sluggish compared to previous recoveries) in the future or indeed at the very same time, even though there will not have been any time for investment to take place, shows us that tax cuts pay for themselves.
Cyrille, in simple times, TB's lag times for the effects of tax cuts / increases to work through the economy are different. Farrar R is spot on in saying it is erronous to state only one thing led to the economic growth that occured, while we all know reality is quite complex and a bunch of factors influence to a greater / lesser extent the economy at any particular time.
Bruce Bartlett is quite right in analysis, since both the general extent of growth and even more so the quality of growth from the recession end in November 2001 has been inferior to that after the recession ending in 1991. The extent to which the middle class has gained since 2001 is distinctly inferior to gains made after 2001.
The question of how economic structure has changed since 2001, limiting general economic growth and the ways in which the proceeds of growth are being shared is continually masked by looking beyond domestic economic structu...
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