Tea Party's Math and Clinton Policies
This is my full response to the people in the Tea Party movement who are agitating for more tax cuts or claim that tax cuts have always resulted in prosperity.
When Clinton raised taxes on higher incomes in a serious effort to tackle the deficit, that increased investor confidence in American economy, which helped create the 90s boom. As deficit declined, the investment capital that was tied up in government bonds was freed for constructive sectors of the economy, which was another factor that helped along the boom of 1990s.
When Bush cut taxes on higher incomes, immediately there's again a hole in the budget and immediately again the investment capital gets tied up in bonds rather than being available for investment. So, surprise surprise - no growth, no jobs, and an extra $6 trillion in debt.
Meanwhile the federal budget, under Bush and Republican Congress, went from $1.8 trillion a year that it was at the end of the Clinton administration to $2.9 trillion at the end of Bush.
There are some times and places for cutting taxes. Now, what is needed for the economy to recover is assurance that the deficit is being brought under control. Which means restoring the Clinton-era responsible fiscal policies that America had the last time there was prosperity in America.
Cutting taxes even below the present level, while raising military spending, as the Right wants to do, is kiss of death. It would make the deficit even bigger than it is now, and investors will lose
confidence in American economy entirely while government bond yields will rise sky-high. We will be looking at government debt default and a crisis as bad as in Argentina in 2001-2002, but with America being a much larger economy on a much larger scale.
No competent leadership would be agitating for cutting taxes AND raising military spending when the deficit is over $1 trillion a year and the boomers are only beginning to retire. The Tea Party's math does not work.
As for their blaming Obama for the ongoing economic problems: Obama was bequeathed a vast economic crisis by the preceding administration. His spending kept the crisis from becoming much worse than it has been. As a Clinton Democrat, I am not in favor of unlimited spending; however the Obama spending is already producing results, as companies such as General Motors are repaying the loans that the government has extended them back into the treasury. And given the vast mess in which Bush Republicans placed America, it is wrong to blame Obama for the sluggish economy.
And it is even more wrong to think that cutting taxes while continuing to raise military spending will solve the problem instead of making it much worse than it is.