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What the Bush Tax Cuts Can Teach Us About Trump/Ryan Tax Cuts

Posted by Vident Financial on 6/4/18 12:35 PM

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 the right formula is tax cuts for the poor and middle class only, and not for the wealthy as well, should look at the lackluster growth of 2001-2002. 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.

Bush Tax uts


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. Cheney 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.

 

Topics: Economics

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