Thursday, July 15, 2010

Krugman Compares Economy Under Clinton And Bush, Finds That Facts Have A Liberal Bias

Senator Jon Kyl, Republican of Arizona and Senate Minority Whip, insists that extended unemployment benefits, which his party has been filibustering, be paid for through tax increases or spending cuts. What about renewing the Bush tax cuts, a Republican goal that mostly benefits the wealthy? Those need not be paid for, according to the GOP. Minority leader Mitch McConnell (R-KY) offers a novel explanation:

...there's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

The Bush tax cuts increased revenue? Paul Krugman compares the Clinton and Bush years and finds that McConnell is not entitled to his own facts:

We’ve now been through two two-term administrations, one of which raised taxes, the other of which cut them. Which looks like it presided over a more vibrant economy?

And who in their right mind would describe the Bush economy as “vibrant”, anyway? Even during the peak of the housing bubble, it never achieved the kind of job growth that was routine in the Clinton years.

Oh, and as for revenue: we have a growing economy, which means that revenue tends, other things equal, to rise over time. But here’s what real federal revenue looked like since 1992:

Rapid, steady growth in the Clinton years; much less thereafter, even if you stop the clock just before the housing bubble burst.

In short, the notion that tax cuts pay for themselves has no empirical support. And yet the GOP leadership — which claims to be oh so worried about the deficit — is willing to stake America’s solvency on its belief that tax cuts are free.

Update: Also, for those readers who complain that I’m too partisan, that I should admit that there are two sides to the issues, this is a prime example of my problem. How am I supposed to pretend that these are serious people? The facts really do have a well-known liberal bias.


Charles said...

Compare bush to clinton, fine. But careful not to use that comparison to indicate a difference between regulation/bigger government/higher taxes on the clinton side and true deregulation/free market economy on the bush side. The bush era expanded government in obscene ways, and the clinton administration presided over the lobbied deregulation of the fancy banking procedures that led to a lot of our trouble right now....

Once again, in a world where people are "polarized", they are easily duped into thinking there are too sides. Im, frankly, not happy with the over-all performance of any recent president....

but then again.... i'm 25....

Jeff Tone said...

You are correct when you cite the deregulation of the Clinton era. His "triangulation" policies have been referred to as Republican lite.

I wouldn't, however, say that there's no difference between a Democratic and Republican administration. The health care and financial reform we've just seen–and yes, one can say that neither went far enough–did not take place during the Bush era. Quite the contrary.

Charles said...

lol. This is our agree to disagree spot.

I'm frightened by the implications of the healthcare reform. The way it came out, to me, just seems like a bail-out/stimulus for the already monstrously rich insurance industry.

As for financial reform: I remain skeptical. It's one thing to dissolve existing loopholes in financial law, but what Krugman advocates, to me, seems disastrous. I just don't trust that any government entity is going to be able to spend my money more efficiently for the economy than I can. I fear government waste not because I sense it coming but because I see it all around me.

rico said...

Definitely your post provides a great and useful resource every reader must adhere. This is truly a must read and admire. Thanks a lot for sharing!

Liberal Bias