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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (732403)	3/16/2006 10:06:38 AM
From: DuckTapeSunroof	Respond to of 769670

Re: "Raising taxes eliminated the deficit in the 90s. It would work again." Er... where to start? A few quick points: 1) Clinton *both raised* AND lowered taxes --- same as Reagan. (Making it a bit more difficult to suss-out the connection to subsequent economic events.) 2) IMO, the more beneficial results on the deficit came --- not from his tax increase --- but from the relative degree of discipline on the spending side*. Discressionary spending was subjected to some level of control (PAYGO rules, an opposition Congress, etc.) and this resulted in a lower rate of increase for that portion of the budget. Furthermore, the Treasury's new policy of actually PAYING DOWN some of the national debt (actually buying it back in the open market and retiring it in advance of it's maturation) had an out-sized salutorious effect on interest rates... and these LOWER INTEREST RATES increased the rate of economic growth, which in turn raised the government's tax revenue: a 'virtuous circle'. It just goes to show that the government doesn't have to solve* the entire national deficit in one fell swoop --- simply taking modestly responsible actions to reduce spending and lower the rate of increase in debt is WILDLY APPRECIATED by the markets... and this feeds back into higher growth, lower interest rates, and ultimately a lower structural deficit.