No, it is a major quibble. Clinton raised taxes when the economy was booming. Of course the economy still grew…the question is how much more could it have grown in the absence of tax increases. But, the economy did not grow as fast as many expected coming out of a recession. Economic growth accelerated after the 1997 tax cuts and real wages grew at 6.5%. The economy grew by a full percentage point higher than it did between 1993 and the 1997 tax cuts.
Actually, the biggest increase in income came after the modest 1997 tax cuts. Of course there are many factors that go into improving the economy and tax rates are not the only factor.
We can argue for another 3 pages on the effects of tax cuts on economic growth but that’s not the point of this thread. As I’ve stated the rich can move their money to shield it from tax increases. Obama has admitted that there is not a correlation between tax hikes and tax revenue. The question is whether a tax increase on the “rich” will impact small businesses and result in an even larger economic downturn.
Does anyone dispute the Heritage findings? If not, does anyone think a tax increase that could affect 28% of small businesses a good idea in the current economy?
And what happened in 2000? Is the goal of economic policy to encourage growth even if that growth is unsustainable? This is not the only example - a raise in interest rates in the mid-2000s might have slowed the housing bubble and reduced the impact of its inevitable collapse.
Keynes did not say that governments should always run a deficit. He said that in good times taxes should be set to have a surplus (or at least a balance) in order for there to be money to stimulate the economy during recessions. One of Bush’s major sins was running large deficits during good times (thanks to unfunded wars) and thus putting us in a bad position when things crashed.
The CBO’s analysis used similar assumptions. Heritage is partisan, unlike the CEO, but they are a legitimate think tank and it’s unfair to question their credibility simply because they used similar optimistic projections as everyone else.
Heritage uses a different methodology than CBO to come up with higher rates of growth and more tax revenues, and you want to give them credit for that? If gambler A says the 49ers are going to win the 2013 Super Bowl by 5 points, and Gambler B says it’s going to be a 30-point blowout, if the 49ers don’t win, that doesn’t make Gambler B reputable because of what Gambler A said.
Having enough money to employ lots of partisan analysts doesn’t make a think tank legitimate.
The difference between Heritages’ optimistic figures and the CBO’s are not far off. I don’t know the exact numbers, but I do remember that in 2001, the CBO forecast “surpluses as far as the eye can see.”
Think-tanks on the opposite side of the political spectrum (and ones who frankly have a bit track record of honesty than Heritage does) sure do. Here is what the Center for Budget and Policy Priorities says:
More details at the link that I gave.
Look, you don’t have to be a genius to figure out what is going on here. The rebranding of rich folks as “job creators” is just a ploy for the Right to protect their favorite interest group, obscenely rich folks. The people who create jobs are mainly those who buy the goods in our demand-driven economy, which are the working folks.
What do you expect a think-tank completely beholden to the obscenely rich to say? That they are in favor of extending the tax cuts to help their extremely rich friends who all believe that they are obscenely rich because of how wonderful and productive they are and it is a travesty that the society expects them to part with so much of this money?
The Heritage study takes the “pass through” factor into account in calculating the number of small businesses (that employ people and make over 200K) that would be hit with a tax increase. Here is the relevant point:
It seems to me that it would be relatively easy to exclude small businesses that employ people from facing a tax increase. Nobody, at least that I am aware of, has proposed limiting the tax increase to those who do not own small businesses.
Huh? If you want safe, low yielding investments, risk is minor. If you want high yielding investments risk is major. Pretend that isn’t the case, and you wind up with the recent crash.
As near as I can tell, that addresses maybe one of the 4 points that are made in the CBPP analysis and it doesn’t even deal with the more reasonable definition of “small business owner” that the Treasury Dept study uses. And, of course, it doesn’t address at all the points made as to even why the economic case for needing to keep the tax rates low on those small proportion of high income taxpayers who are really small business owners is weak too…E.g., that in the current economic situation, the limiting factor on businesses is weak demand not inability to meet the demand with current capacity and available money to increase capacity.
I refer of course to “Bush’s tax cuts for the wealthy”, which is what Democrats called them when they were first announced.
Of course, since many middle class taxpayers would have to pay thousands more every year if the entire tax cut package were to expire, Dems have changed their tune and now are focused only on cuts affecting the wealthiest.
But you can’t begin to solve the horrendous budget mess just by snipping off the politically easy portion of the Bush tax cuts. Let 'em all expire. Since they were “tax cuts for the wealthy” in the first place, it should be easy to justify eliminating them.
I remember when Peter Orszag told Charlie Rose that the Laffer Curve was bunk. “When you mean to raise taxes, that’s what you do.” I trust Orszag’s economics over Obama’s, Gibson’s, or Rose’s.
But that wasn’t a nationally televised debate. I guess you missed it.