What The Bush Boom Can Teach Us About Trump/Ryan Tax Cuts

Posted: Mar 12, 2018 11:39 AM
What The Bush Boom Can Teach Us About Trump/Ryan Tax Cuts

We recently created a short course on advanced economics to study the effects of George W. Bush's small tax cut in 2001 and his large tax cut in 2002. Anyone who thinks that tax cuts for poor and middle class only and not for the wealthy too is the right formula should look at the lackluster growth of 2001-2002 when that's what US tax policy was. Bush ran on the promise of across the board tax cuts, but in negotiation with Democrats in Congress, caved in to demands that the tax cuts for the rich be largely deferred into the distant future.

As you can see in the graph below, initial tax cuts for the wealthy were extremely small, and so was the recovery from the Clinton recession.

Eventually, Vice President Cheney (according to my sources) intervened with the President and persuaded him, despite reluctance, to go back to Congress and take a harder line, pushing for immediate implementation of the upper income cuts. He also argued for investment tax cuts.

The result was an immediate boom. It is reasonable to anticipate a growing economy to be the result of the Trump/Ryan tax cuts as well. To view the whole video (significantly less than 10 minutes long) and get an exposure to a topic in advanced economics in a way which is easy to understand (because true economics is always easier to understand than false economics) watch the video below.