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90’s Boom Tax or Productivity Related?

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James Pethokoukis, writing at the US News & World Reports Capital Commerce blog, asked McCain advisor Douglas Holtz-Eakin about Clintonomics and the economic boom of the 90’s. Holtz-Eakin did not believe it to be correlated with the raise in taxes, but the productivity growth of the Reagan-era deregulation:

There was a lot of investment in IT through the late ’80s, and finally in the mid-’90s we start to see stuff take off…. And what should not be forgotten out of that era is that even though we had the IT bubble in [stock market] valuations, we had real productivity growth, and that was the good thing. The economy survived higher taxes—that doesn’t mean the higher taxes caused it. I am sure it was not true, and it doesn’t mean the higher taxes were a good idea.

I recommend reading the entire entry. It is very difficult to determine the actual success of party and presidential economic policies, because of the time period it takes to recognize it and our perception of correlations.

Note: this is an economic policy/political story, so it is not filed under the “economics” category.

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Written by walonline

April 7, 2008 at 8:39 am

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