Originally posted by SDW2001
There is a concept that I have heard referred to as the "Lag Theory"...which basically states that any major economic plan takes at least 2-3 years to take effect. That would fit with what both Reagan and Bush 43 have done re: cutting taxes.
As for Clinton, there is a little bit of historical revision going on. We need to look at the causes of the boom, which really lasted for about 2 years...from 1998-2000. There was economic expansion, but to listen to Democrats today, you'd think the entire 1990's was fantastic. Back in the early to mid nineties, the economy was referred to as the "anemic" 1990's. It is only the latter part of the decade that saw superb growth, largely fueled by the dot-com bubble and exploding tech sector, not to mention low energy prices for most of the country. On thing I will say for Clinton is that he relentlessly pursued US business interests overseas...though this often came at the price of national security (particularly with China and North Korea).
In other words, the economy was good in spite of the tax rate. If someone would like to point out what Clinton did to help the economy through his policies, I'd like to see it. It succeeded in spite of him. Once the tech bubble collapsed, the natural business cycle took effect, and energy prices went through the roof, a very different tax policy was needed.
Clinton opened trade, yes, but the other policy that was key was reducing the deficit. That brings confidence to the US economy and keeps interest rates low, which is good for the economy.
I'd argue that the big dot-com boom you mention of the late 90s probably wasn't
a good thing. The slow growth of the mid-90s was the right way to go. The anemic period was more in the early 90s, when, just like in the early 2000s, there was a jobless recovery. But the jobless recovery of the 2000s, which seems to be over now, turned out to be much longer than the one in the early 1990s. And anyway, the entire 1990s was fantastic. It was the longest period of growth in modern American history.
Tax cuts are good for the economy, but only if they're offset with spending decreases. If they're not offset, they just increase government spending because they increase interest payments on the debt. Tax cuts increase government spending
unless they're explicitly offset by spending decreases.