The Obama Administration is confusing correlation and causation when it come to the Clinton tax hikes. Obama does not realize that the economy grew in spite of the policies not because of them.
Someone should remind the incoming President of the explosion of technology that took place from 1990-1995. This growth was a tidal wave. Clinton’s taxes did not cause it but neither could they stop it. Unless America experiences another such serendipity, the Obama tax plan will plunge the country into a dark depression.
President-elect Obama says he’s modeling his recovery plan on Clintonomics because it pulled the economy out of a ditch last decade. But that’s an old myth – and a dangerous one at that.”
“I’ve got an economic plan similar to Bill Clinton’s,” Obama has said, including tax hikes on the rich and Keynesian pump-priming, among other new government spending.
He rationalizes that Clinton raised taxes during a recession, and look what happened — average wages went up, along with economic growth and the stock market. And eventually the Treasury reported surpluses after decades of deficits.
The bull market took off precisely when then-Fed Chairman Alan Greenspan took his foot off the brakes and hit the gas in 1995. It was also then that Republicans took control of Congress — further blunting the effects of the Clinton tax torpedo that had taken effect the previous year.
Clinton also benefitted from innovations long in the making, including the Pentium chip released in March 1993 and Microsoft’s Windows program released in August 1995. These together made the Internet boom possible.
As for the budget surpluses, they came as a complete surprise to Clinton economic forecasters, whose static models only predicted their tax hikes on the rich would narrow the budget gap, not get it into the black.
Their “deficit-reduction plan” didn’t create the surpluses at all. They were a direct result of a tidal wave of capital-gains revenues generated by the GOP-led stock boom.
Investor’s Business Daily has the entire article.