November 3, 2008


  • The Clinton increase was passed in 93. During the early 90s, annual GDP growth fluctuated between 2.67% and a peak of 4.5% in 97. After that began a steady fall in GDP growth, bottoming at 0.75% in 2001 when Bush took office. He passed his first tax cut that same year, and GDP rose back to 3.64% in 2004. GDP has since fallen steadily to 2.00% in 2007, and possibly a negative growth in 2008. So, it appears the Bush tax cuts have actually followed the same pattern as the Clinton tax hike. My guess is that a significant changes in economic policy are enough to temporarily improve expectations about the economy: if we are raising taxes, that must mean the economy is doing well so I'll go out and buy/invest; if we are cutting taxes that means that more money will stay in the system, so I'll go out and buy/invest. Any thoughts?