the myth of the fiscal conservative

John pointed out an article in the New York Times magazine that looks in-depth at Obama’s economic plan and why it’s so difficult to classify as liberal or conservative.† The whole article is a great read, but this one passage caught my attention:

The second criticism is that Obamaís tax increases would send an already-weak economy into a tailspin. The problem with this argument is that itís been made before, fairly recently, and it proved to be spectacularly wrong. When Bill Clinton raised taxes on upper-income families in 1993, his supply-side critics insisted that he would ruin the economy. As we now know, Clinton presided over the longest economic expansion on record, the fastest income growth most workers had experienced in a generation and the disappearance of the federal-budget deficit. His successor, Bush, then did exactly what the supply-siders wanted, cutting upper-income tax rates, and the results were much worse. Economic growth wasnít quite as strong or nearly as widespread, and the deficit returned. At the very least, Clintonís increases did no discernible economic damage. Rubin, citing academic work on tax rates, made the case to me that rates under an Obama administration would not be nearly high enough to stifle innovation.

It probably isn’t the first time that admission was made, but it’s the clearest summary I’ve seen to date. In short, Clinton’s policies benefitted the entire economy, while Bush’s policies helped the wealthy at the expense of the economy as a whole.

5 thoughts on “the myth of the fiscal conservative

  1. I’d be careful about the last sentence. Correlation, causation, etc. It’s far more likely that poor economic policy, foreign entanglements and astronomical military spending were the primary culprits in the economic downturn.

    That said, the gist seems true enough. I wouldn’t expect that more taxes on the $100K+ crowd would kill the economy.

  2. Brad: You’re absolutely right: a president’s economic policies don’t just include taxation. Military spending, energy policy, bank regulation, health care, infrastructure programs, borrowing, and other factors affect the economy as much or more.

    The complete article states it better than I do, but my point is that the current administration emphasizes tax cuts in order to appear fiscally conservative, but their full economic policy isn’t designed to improve economic conditions overall.

  3. Oh, come on! Don’t you know that it takes years for an administration’s fiscal policy to have an effect on the economy?

    For example, in G.H.W. Bush’s case, it took four years to have a positive effect, which lasted 8 years.

    Clinton’s policies took 8 years to have a negative effect, one which is still with us to this day. Duh!

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