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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: J_F_Shepard who wrote (621794)	7/29/2011 5:49:14 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 1575303

"The largest in history" on tax increases, tax cuts, deficits, etc., is one of those statements that is in a sense technically accurate, but is most often misleading. At the time, the tax increase was the largest in history, in nominal dollar terms, but nominal dollars don't mean a lot when comparing deficits over the decades, when you have both inflation and economic growth. Every new tax increase, when you have had one recently, is likely to be "the biggest ever" if you are measuring with nominal dollars, the same holds true for debt, deficits, tax cuts, and other things. Adjusting for inflation and using real dollars, would make for a somewhat better comparison (despite the difficulties involved in accurately adjusting for inflation), but still rather imperfect. Sure you would be measuring the real size of the tax increase (or cut, or deficit, or whatever), but lets say its 50% bigger than the next biggest, but the economy is now 5 times as big (numbers picked to show the idea, I'm not claiming either is even remotely accurate about actual specific real world tax changes), the impact isn't going to be as large. If you want to consider how much of an impact a tax increase, tax cut, deficit, debt, or surplus, might have on the economy its normally best to measure as a percentage of GDP. By that measure Clinton's tax increases where not close to the largest. Which is not to say that they where not economically harmful, but the restraint on spending, relatively low energy prices, technological improvements and the vast expansion of the internet, and many other factors (including the fact that the economy had come out of a recession before Clinton was elected, and had some bounce back growth to come), and managed to hold off from the next one until a couple of months after Clinton left office, set him up for strong economic growth during his time in office, a lot more than the tax increase hurt growth.