Hillary Clinton, who is now running for president, will do what all liberals love doing: pointing to the 1990s and claiming that it was a time of economic greatness. Unemployment fell, the budget was balanced, and welfare reform was passed. Now, I do have to give some credit to the Clinton's: they are pragmatists. If the GOP controls congress Hillary will do similar things to her husband. She will pass things like welfare reform which benefit everyone. But to claim Bill's economic legacy was a success is just incorrect, and it should worry everyone.
Bill Clinton was lucky. And I think Hillary is a lot more liberal than he is. She probably believes that high tax rates cause economic growth. And to an untrained observer this may seem true: the growth in the 90s was pretty high and Clinton raised taxes. But, as Forbes explains, it wasn't high taxes that causes growth. He reduced tariffs and encouraged free trade, passed welfare reform, reduced the capital gains tax by 8%, reduced the death tax rates, reduced spending, and encouraged a strong and stable dollar. As the article states, it wasn't high taxes that caused growth, but instead caused by "freeing America’s poor from a punitive welfare system, lowering tariffs, reducing tax rates on the creators of wealth, limiting the growth of federal government expenditures, and providing a strong and stable dollar to businesses and families in America and throughout the world."
So... What will Hillary do? Hillary voted yes for the stimulus packages. This is an issue because debt levels have been convincingly linked to reduced economic growth. The Heritage Foundation, citing an interesting study by Reinhart, Reinhart, and Rogoff has demonstrated that economic growth is reduced when debt levels increase. And as I have explained before, monetary policy pretty much overrides fiscal stimulus, so the effect is zero. And in the long term, it is negative. Ben Bernanke, former Fed Chairman, has argued that increasing deficits pose a danger to the economy. Bernanke was quoted as saying, "Over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus reduce productivity growth". Clinton's spending policies are not as responsible as her husbands and pose a real threat to the American people.
Just a note, the Economist claims that the Reinhart study is flawed. However, even in the research criticizing the approach, even they find that excessive debt levels are associated with reduced growth--they just put the level a bit lower than the Reinhart study.
Hillary also favors increasing tax rates. This is worrisome because, as noted, the growth in her husband's career is attributed to him reducing taxes, not because he raised them. The Tax Foundation has found that increased taxes reduce growth, and research on the 1993 Clinton tax increases finds that income was reduced 8% as a result. Income would have been higher had Clinton not raised taxes--and that is exactly what Hillary wants to do. And this is worrisome because Clinton inherited office after a period of growth in the 1980s. And although Bush's economy was in recession, it wasn't his fault and was ending as Clinton took over. Clinton inherited growth, and slowed it down. But the growth was so fast no one even noticed. Hillary, if she wins, will not inherit a strong economy. Increasing taxes like she wants to will destroy the little progress Obama has made.
We need a candidate who supports strong monetary policy but also sound fiscal ones, too. The Rubio Tax Plan will lead to a huge amount of economic growth. Rubio's plan would "boost investment by nearly 49 percent, wages by 12.5 percent, and raise the level of employment by nearly 2.7 million jobs." And although Rubio's opinion on the Fed is unclear, it is possible that he would support common-sense monetary policies which would increase growth. Rubio is one of the smartest, best speaking, and youngest candidates we have. Hopefully he will win the election and spar with Clinton. His story of being raised by immigrants while supporting pro-growth reforms will save the United States. I am not necessarily endorsing him, but I think conservative or moderate interested in the primaries should really give him a chance.
Hillary will be a disaster. From what we know now (which is not very much), her policies will not benefit the wealthy, the poor, or the middle class whom she claims to champion.
Bill Clinton was lucky. And I think Hillary is a lot more liberal than he is. She probably believes that high tax rates cause economic growth. And to an untrained observer this may seem true: the growth in the 90s was pretty high and Clinton raised taxes. But, as Forbes explains, it wasn't high taxes that causes growth. He reduced tariffs and encouraged free trade, passed welfare reform, reduced the capital gains tax by 8%, reduced the death tax rates, reduced spending, and encouraged a strong and stable dollar. As the article states, it wasn't high taxes that caused growth, but instead caused by "freeing America’s poor from a punitive welfare system, lowering tariffs, reducing tax rates on the creators of wealth, limiting the growth of federal government expenditures, and providing a strong and stable dollar to businesses and families in America and throughout the world."
So... What will Hillary do? Hillary voted yes for the stimulus packages. This is an issue because debt levels have been convincingly linked to reduced economic growth. The Heritage Foundation, citing an interesting study by Reinhart, Reinhart, and Rogoff has demonstrated that economic growth is reduced when debt levels increase. And as I have explained before, monetary policy pretty much overrides fiscal stimulus, so the effect is zero. And in the long term, it is negative. Ben Bernanke, former Fed Chairman, has argued that increasing deficits pose a danger to the economy. Bernanke was quoted as saying, "Over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus reduce productivity growth". Clinton's spending policies are not as responsible as her husbands and pose a real threat to the American people.
Just a note, the Economist claims that the Reinhart study is flawed. However, even in the research criticizing the approach, even they find that excessive debt levels are associated with reduced growth--they just put the level a bit lower than the Reinhart study.
Hillary also favors increasing tax rates. This is worrisome because, as noted, the growth in her husband's career is attributed to him reducing taxes, not because he raised them. The Tax Foundation has found that increased taxes reduce growth, and research on the 1993 Clinton tax increases finds that income was reduced 8% as a result. Income would have been higher had Clinton not raised taxes--and that is exactly what Hillary wants to do. And this is worrisome because Clinton inherited office after a period of growth in the 1980s. And although Bush's economy was in recession, it wasn't his fault and was ending as Clinton took over. Clinton inherited growth, and slowed it down. But the growth was so fast no one even noticed. Hillary, if she wins, will not inherit a strong economy. Increasing taxes like she wants to will destroy the little progress Obama has made.
We need a candidate who supports strong monetary policy but also sound fiscal ones, too. The Rubio Tax Plan will lead to a huge amount of economic growth. Rubio's plan would "boost investment by nearly 49 percent, wages by 12.5 percent, and raise the level of employment by nearly 2.7 million jobs." And although Rubio's opinion on the Fed is unclear, it is possible that he would support common-sense monetary policies which would increase growth. Rubio is one of the smartest, best speaking, and youngest candidates we have. Hopefully he will win the election and spar with Clinton. His story of being raised by immigrants while supporting pro-growth reforms will save the United States. I am not necessarily endorsing him, but I think conservative or moderate interested in the primaries should really give him a chance.
Hillary will be a disaster. From what we know now (which is not very much), her policies will not benefit the wealthy, the poor, or the middle class whom she claims to champion.
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