Dems often argue 'Bring back the Clinton tax rates,' look how the economy boomed!
E. Thomas McClanahanI’ve seen this argument repeatedly in letters and email: If low taxes are essential why did the country do well in the late 90s when rates were higher? The implication is, restore the Clinton rates, get the prosperity back.
We’re about to run an experiment on that question.
Right now, it looks as if we’re headed over the fiscal cliff, the moment the Clinton-era tax rates will return and millions of people will realize that the tax cuts of the Bush years weren’t just for the rich. On Jan. 1, they will expire and taxes will go up for everyone.
The Dems who have been arguing for an end to the Bush rates will get their wish and we’ll learn the result. The CBO thinks the higher rates, and the spending cuts in the sequester, will bring on a recession.
President Obama wants to end the Bush rates just for the rich. That may or may not tip us into recession, but it won’t help. The economy is weak as it is under current rates. Yanking more money out of the private economy will only make it weaker.
In any case, if the fiscal cliff fiasco does cause a recession, then economists may someday compare Oama’s policies to the error of FDR, who raised taxes in 1937 and the economy slumped badly.
Mark Hastert
5 months, 3 weeks ago“the error of FDR, who raised taxes in 1937”
Interesting reference because it was at the insistence of the conservatives in government that FDR not only raised taxes but more importantly cut stimulus spending on New Deal programs which was the greater problem. Conservatives were worried about the deficit and inflation (sound familiar?) So yes by all means let’s not make that mistake again. But on to the question at hand.
After more than ten years we KNOW that the Bush/Reagan/Trickle down/Supply side tax cuts failed to produce the promised jobs and prosperity on which they were sold. We KNOW that essentially all the wealth produced went to the small handful of very wealthy and that the middle class slipped lower into the economic spectrum. A tax increase for the wealthy would be little more than pocket change and it would not alter their investment in the least. In fact it’s more likely that they would work harder.
We also KNOW that things were better during the Clinton years.
George Hunsucker
Northland
5 months, 3 weeks agoI am all for a return to Clinton tax rates AND SPENDING, which was 500 BILLION less then zero’s.
Libs want this, so let’s do it!!!!
JR Beillenhouser
5 months, 3 weeks agoThe Democrats are the party of science, you know. They have that knack of taking complex systems such as the economy and the environment and reducing them down to one variable. Then they fight tooth and nail for changes to the one variability. It is an extremely ignorant view of the world.
Forbes had a great article about this same thing. Yes rates were higher in the Clinton years, but the entire dynamic of the economy is different than the Clinton years. As George notes, spending is much less, there were many less entitlements.
Go ahead and raise the rates, it’s what Dems live for. But it won’t work unless you get a handle on entitlements and spending. There isn’t enough money.
Republicans should start controlling the dialog. If the rich are not paying their fair share, what is their fair share? Demand an answer from the administration.
Mark Robertson
5 months, 3 weeks agoYes, and we all know FDR did exactly what Republicans told him to do. FDR was an economic disaster. The New Deal was a disaster. The Republican Congress actually cut taxes after WW II overriding the veto of President Truman. That was a main reason for the post war boom. “Bush/Reagan/trickle down, supply side tax cuts failed to produce the promised jobs and prosperity on which they were sold.” That’s laughable. The great Ronald Reagan entered office with 20 percent interest rates, 14 percent inflation and unemployment that got as high as 11 percent before he broke the recession. He got taxes cut across the board, cutting the top rate from 70 to 50 percent in 81, then to 28 percent in 86. He also greatly cut regulation. His actions lead to a 25 year economic boom that created over 50 million jobs. Treasury revenues nearly doubled in the 80s and inflation and interest rates dramatically dropped. As is always the case after tax cuts, the wealthy paid more in taxes because of the always corresponding economic growth. The top one percent went from paying 17 percent of the taxes in 81 to 25 percent of the taxes in 89. Charitable giving increased in the 80s 55 percent over the previous 25 years.(The Real Reagan Record, National Review, August 31st, 1992.) It was actually Ronald Reagan and Jack Kemp who said that the Reagan boom would eventually produce a surplus. The huge 1993 Clinton tax increase actually hindered the surplus. If tax cuts brought on an economic boom in the 80s, how could a tax increase bring on a boom in the 90s. The 90s were strong because of the continuation of the Reagan boom. The Republican Congress also got tough on spending, got capital gains tax cuts and welfare reform passed.(Unfortunatley, the disastrous Obama has wiped much of that out.)I will give Clinton credit though for his excellent trade policy. The Bush tax cuts of 01 and 03 created 8 million jobs and brought in record Treasury revenue from 05 to 07. Tax payments by millionaires more than doubloed from 132 billion in 03 to 273 billion in 07.(WSJ, The Dead Enders, 12-1-10, p.A-18) IRS data shows that the richest 1 percent paid 84 billion more in taxes in 2007 than they had in 2000, a 23 percent increase, even though their tax rates went down.(Bush Tax Cut Secret: Rich Paid Even More, by John Merline, Investors Business Daily, 11-28-12) The economic meltdown was causeed by the housing collapse. That was largley brought about by the Carter, Clinton, Community Reinvestment Act.Lenders were forced to make loans to those who couldn’t afford them.(See the book-Meltdown, by Thomas Woods) The Bush Administration had warned in 03 that Fannie and Freddie were heading for a meltdown. They were then attacked by the pathetic Barney Frank and other Democrat crooks. They were even accused of racism. Thank you. Mark Robertson Independence
James Kidwell
5 months, 3 weeks agoMr. Hastert, with all due respect, don’t sepeak for me and say “we know” this or that. That’s your opinion, and in my opinion you are wrong. I’m sure we could have a long debate on Bush years vs. Obama so far.
Mark Hastert
5 months, 3 weeks ago“Republicans should start controlling the dialog. If the rich are not paying their fair share, what is their fair share? Demand an answer from the administration.”
Oo! Oo! Leave income rates as they are now and tax capital gains as regular income. Eliminate other boutique loopholes that only the rich enjoy. That will level the playing field
Mr Kidwell, The economy under Clinton isn’t opinion. It’s a fact. It’s good to know there are still Bush boosters out there.
Matt Henry
5 months, 3 weeks agoUhhh, I’ve looked several times for a “We know…” and can’t find one. Even if it’s there, OF COURSE it’s an opinion. It’s an opinion piece. Duhhhhhhh….
Lots of things are different now than they were in the ‘90s. Out of control spending. The imminent disaster of entitlement programs; in fact, remember Clinton’s “surplus”? It was only that because the gov’t was, as always, considering the SS trust fund income as general revenue. You take that out and the gov’t was still spending way more than it took in. Now those days of free money from the trust fund to fund gov’t spending habits are over.
Lastly, when are libs who defend these big government policies going to finally understand that a conservatives were out-of-their-minds p.o.’d about Bush’s out-of-control spending. He didn’t lose Congress in 2006 because of Iraq; he lost it because of big-gov’t programs like Medicare Part D that he made no effort to pay for. Congress went along like lemmings and they paid the price.
Mark is right; upper income tax increases would be a drop-in-the-bucket (with regards to gov’t income so why is the Big O pushing for them so hard?) But his armchair psychology is nonsense; the stats all bear out the notion that it absolutely WILL change how people with large incomes invest their money. It WILL cost people jobs. Chapter and verse, both statistical and anecdotal, can be cited, but you can’t argue with something who doesn’t give two bleeps about truth, only protecting their ideological needs.
Phil Cardarella
5 months, 3 weeks agoOK, Mac, nice try comparing those apples and oranges … oh, and cantaloupes.
First of all, Obama has not advocated for returning ALL tax rates to 2000. Only the upper 2%. If ALL tax rates go up on 1/1, that will be the fault of the House — which merely has to pass the Senate bill now pending.
Raising the rates on the upper 2% will have NO adverse impact on the economy. Even Mitt will be able to afford his $50K foreign car. (Frankly, we should return the rates on folks making over $1M to the Eisenhower years — adjusted for inflation You may recall that the economy did well under that ol’ commie pinko. And, there were fewer nutty billionaires trying to buy elections — which was a GOOD thing.)
And, that increase in revenue will make it a lot easier to negotiate any needed cuts.
Of course, this whole Fiscal Cliff thing is silly. Congress is perfectly capable of avoiding or reducing it.
Besides, the DUMBEST thing we can do is what FDR did do in 1937 — place a balanced budget over economic stimulus. Right now, money is so cheap that big corporations are borrowing money to pay dividends to their (family) shareholders before 1/1 brings higher tax rates. We should be deficit spending to create jobs to stimulate spending. Paychecks pay taxes — and revenues rise. Wealth does NOT trickle down. It flows UP! Rising tides raise boats, remember?
This is NOT a theological issue — except for Randians and anarchists who think all government is evil and must be starved.
Econ 101, fellas.
Matt Henry
5 months, 3 weeks agoMark Robertson - way to lay on the statistics. Of course, Hastert says higher taxes will make rich people “work harder,” like they don’t already work hard enough. I laughed out loud when I heard that one….
And you are dead-on right about the cause of this recession; interventionist government policies that created an unsustainable housing bubble. Policies the Bush administration tried to revisit but were shut out by the likes of Barney Frank.
This administration has said they would sacrifice “growth” for “fairness”. Why are we working so hard not to believe them?
Matt Henry
5 months, 3 weeks agoCan you back up in any way the statement that tax increases on the top 2% will have no adverse effect on the economy? I mean, in any way other than your “it doesn’t make sense to me so it must not be possible” third-grade logic sort of way? Because I know very good and well you can’t support that statement with any real data.
You think money will be cheap forever? What happens when the money is not flowing like water? What happens to all that gov’t debt sitting out there and our ability to cover even the interest, let alone our actual expenditures? You think the debt will disappear when rates go up, which they will as true as the rising of the tides?
Econ 101 doesn’t originate in the imagination part of your own personal brain.
Mark Hastert
5 months, 3 weeks ago” I mean, in any way other than your “it doesn’t make sense to me so it must not be possible” third-grade logic sort of way?”
Well Matt wrap your third grade sort of thinking around the fact that in the 1950’s a period of very high tax rates the rich worked hard, made money and paid their taxes, and the economy and the middle class grew. Same in the 1960’s and 1970’s the Clinton years too. The nonsense about taxes discouraging investment is hooey and without any real world support.
As for how long money will be cheap? The Fed says through 2014 so let’s use it to full advantage. The US should refinance it’s mortgage with cheap money.
Let’s go back to those golden years of “the great Ronald Reagan” and tax capital gains as regular income. Lets eliminate loopholes only the rich can use and level the playing field.
Rush is right, your America doesn’t exist anymore. Taxes are going up on the rich, you lost the argument. Go ahead though, keep fighting for the privileges and rights of the big people. It’s a winner for you.
Phil Cardarella
5 months, 3 weeks agoOK, let us take this slowly. Don’t take any FOX breaks.
When tax rates were higher on the wealthy — say from Eisenhower through Clinton — the economy generally grew and the incomes of middle class Americans generally grew (not a coincidence) and the government had enough money to pay its bills, pave the roads, defend the shores and care for the poor and elderly. Oh, and disproportionate wealth and income did not entirely warp our democratic system by filling it with nutty billionaires who want to buy elections.
Think Golden Age.
Then came W and the idea that the wealthy were “job creators” who had to be bribed to do what they had been doing reasonably well until then without the bribe: Be Capitalists. Really, does anyone but the most hardcore Randian think that if we raise the rates on the 2% to the Clinton years rates (where, lest we forget, they all made out like bandits) they would all decided to stop all that “job creating” and go live in a secret valley in the Rockies with John Galt?
With W, what we got was wage stagnation, income inequality, deficit spending, the collapse of the world economy because of unregulated greed, unemployment growing at the rate of 750,000 jobs per MONTH (!) entire forclosed neighborhoods (!) and Wall Street Bonus Babies. Oh, and a bunch of nutty billionaires paying to have every darn-fool idea that pops into their heads made into bad laws and policies.
Think Gilded Age II.
Actually, I’m a history major. We are taught to learn from the past. It really does come in handy.
FYI: The FOX fantasy that the housing “bubble” was created when the evil Feds forced honest bankers to make sub-prime loans to poor (read “black” or “brown”) folks is just that. No law or regulation required any bank or lender to lend to unqualified borrowers. They just could not discriminate among qualified ones.
For the most part, loans on single family homes of modest cost even in low-income neighborhoods did not get foreclosed upon unless they “ballooned” (something over which the borrowers had no control) and the payments rose deamatically. Although the Fed was giving money to the banks, the banks were not lending to anyone but each other.
Or, once the Bush Recession was underway, the homeowner lost his/her job in the wave of unemployment (somethong over which the borrower had no control). With no jobs to be had, no payments could be made. Of course, foreclosing made no sense — and destroyed the property values around — but bbanks do dumb stuff. In any case, the bubble was not caused by a bunch of folks buying $100,000 houses in which to raise their families.
Greed — pure, unregulated, often-criminal greed caused the collapse. It is the poor and the middle-class that are the victims of that greed. The Wall Street Bandits — of both political parties — are doing quite well. But — as in any crime — the preferred defense is to blame the victims.
Matt Henry
5 months, 3 weeks agoHooey and without any real support? Seriously? How many articles do you want? Why did Democrat Demigod John F. Kennedy push for and receive a massive tax reduction for the wealthy because, as he said, “a rising tide raises all ships”? His wasn’t a model of class warfare; it was one in which the rich got richer, but so did the middle class and the poor.
Read this then tell me if there is no “real support” or if higher taxes will just motivate rich people to work harder.
http://www.nytimes.com/2010/10/10/business/economy/10view.html
Your can’t make things up as you go and call it reasonable.
Phil Cardarella
5 months, 3 weeks agoHere is where it is handy to know history: The rates JFK cut were at @ 90%.
He also said the this father, Joe, was right: Big business men are a bunch of lying SOBs.
Oh, and the W cuts created a “tide” that only lifted yachts. Sense a difference?
George Hunsucker
Northland
5 months, 3 weeks agolet’s go off the cliff and get $100 Billion less spending by the spendthrift libs!!!!
Mark Hastert
5 months, 3 weeks agoJohn F. Kennedy push for and receive a massive tax reduction for the wealthy because, as he said, “a rising tide raises all ships”
Ah yes a favored platitude of “the great Ronald Reagan” too. What they didn’t tell you is that your dingy doesn’t get any bigger. For the record I’ll happily go back to the Kennedy tax rate for the rich! Please!
Mark Robertson
5 months, 2 weeks agoThere were actually 3 recessions during the Eisenhower years: July 1953 to May 1954-August 1957 to April 1958 and April 1960 to February of 1961. The 90% top tax rate was very harmful. The economy was strong in the 90s despite the Clinton tax increase, not because of it. Could someone please explain how Reagan’s tax cuts created 18 million jobs in the 80s, but the reverse policy of a tax increase created 20 million jobs in the 90s.(This ought to be good.) The 90s were a continuation of the Reagan boom. It was helped out by the Republican Congress cutting spending, and the Republican capital gains tax cut and welfare reform. Clinton did have an excellent trade policy. Government stimulus spending has never brought on a strong economy.(See FDR and Obama.) It can’t. As has been said, it’s like taking water from the deep end of the pool and pouring it into the shallow end. The fact is that the economy has boomed after all of the tax cuts the last hundred years: in the 20s, post war 40s, 60s,80s and early 2000s. What is now needed, among many things, is tax cuts on the “wealthy.” Thank you. Mark Robertson Independence
George Hunsucker
Northland
5 months, 2 weeks agoWhy don’t libs understand the problem is the spending????
Their ONLY solution is to raise taxes and let themselves continue the wild spending…
Prepare yourselves for Greece in America.
Matt Henry
5 months, 2 weeks agoCan we at least stipulate to one thing? That the tax increases that the President wants, even if you take these increases as producing revenue at face value (which they won’t), they will generate revenue at what amounts to an extremely small percentage of the actual annual deficit. They will truly make little to no difference in the fiscal health of the nation. The wildest number I can find in the positive for these increases is that they would generate $850billion over 10 years, absolute best case. The federal deficit this year alone was nearly double this figure and is about 5% of our current outstanding debt as it stands now, and it is projected to get much, much worse while we stand here arguing about something that will have no real effect.
If this is the case, something that is truly knowable and basically unarguable, and if there are legitimate concerns that these increases will have a dampening effect on economic activity and job creation (what the President and even the Star says is most important), then there has to be some other reason for pushing so hard for these increases than that it is good for the economy and the country. There is really almost no chance that it is good but a real chance that it is bad.
So what could be motivating O and all of his drones to push for these increases when they don’t really help but could genuinely hurt?
I want a real answer to this, no some claptrap about how people on the right are stupid or want poor people to die. Deal with this or you are charlatans.
Phil Cardarella
5 months, 2 weeks agoThe problem, Matt, is that no one actually thinks that the higher rates on the 2% will actually hurt the economy — and it is a lot onf money to help pay for the needs of government. Dropping those rates in 2001 certainly did not create any jobs or increase middle-class wealth. And, the majority of folks think that returning those rates to at least the Clinton rates is necessary to make tolerable any needed cuts in spending.
Hey, Romney did us all a favor — and his rich pals must hate him for it. He revealed just how privileged the rich are, paying taxes at a rate less than his chauffeur or secretary. 10%? 13% Seriously? Now, the peasants are revolting with sharpened pitchforks, demanding a bit of tax justice.
Of course, the deficit is actually dropping from the time Obama inherited the need to prop up the collapsed economy. It would actually be shrinking more if we had actually had a real stimulus. (The stimulus bill of 2009 actually helped more by slowing the rate of job loss than creating new ones because it was WAAAAAY too small.)
What we should be doing is borrowing more to rebuild our infrastructure (which would created jobs in the USA) while intrest rates are so low. Just like it is a good idea for you to refinance your house. Just like family-owned mega-corporations are borrowing money to pay out dividends in anticipation of a tax increase on 1/1. If it is good sense for the Waltons, it is good sense for the nation.
Budget-balancing austerity programs only prolong recessions. If you want any boats to rise, you have to get that water flowing for the folks who will spend it. And, right now, that water is really cheap — so we should take advantage of that.
Matt Henry
5 months, 2 weeks agoNow come on, Phil. I’m trying to interact on a real level here. No BS, no ideological pre-narrative. Can you HONESTLY say that NOBODY thinks these tax increases will hurt the economy? Nobody? Would you like me to post 5 links or 50 or 5000? Did you see the link I posted yesterday to the professor who chooses not to work more because of the tax burden? To dismiss this by saying nobody really thinks this is just plain head-in-the-sand ignorant at best or purposefully deceitful to advance a personal agenda at worst.
And you still don’t want to address my post. You’re just spitting out a bunch of talking points. Romney’s secretary; good lord. When Romney pays capital gains taxes he pays on money he invested that he paid taxes on when EARNED. This whole apples-to-oranges comparison between Romney (or John Kerry) and his secretary is nonsense, especially when you consider the fact that half the country doesn’t pay taxes at all. But it sure makes for good class warfare! We could do this d-bag back and forth nonsense all day, if you want. But it’s stupid.
You say that it provides “a lot of money” to help pay for gov’t. Assuming it provides as much as the highest speculation, you still haven’t dealt with my question. Simple math says it would provide somewhere in the neighborhood of 2% of the annual operating costs of the federal government. It would reduce the annual deficit by around 5%, assuming no increase in spending (which the Big O wants). Annualized (instead of the more impressive 10 year figure) it represents about 1/2 of 1% of our current national debt. They do absolutely nothing to address the coming entitlement crisis, and in fact confiscation of all “wealthy” incomes wouldn’t come close to dealing with this problem.
You deal in hyperbolic sophistry and speculation. Address the fact that these taxes would represent a percentage of the national budget, national debt and national deficit that is so low that they would make virtually no difference to the long-term well-being of the country. They do not address the most pressing need of the federal budget, which is the entitlement crisis, at all.
Obama is pushing this, and his minions are all for it, not because they are interested in the economic well-being of the country. They believe they or others like them have been cheated by the rich and they are going to have their piece of flesh whether it hurts people or not. It is a hateful, divisive, partisan position that hurts the ones they claim to care about the most.