There’s a new phrase in the tax debates in the nation, and it’s somewhat misleading: “Clinton-era tax rates.” Those were, of course, higher tax rates than exist today, since President George W. Bush cut taxes drastically in his first term.
By the end of President Bill Clinton’s two terms, the budget was in balance.
By the end of Bush’s first term, and more so his second, deficits were out of control and financial markets had collapsed, leading to even worse deficits as automatic expenditures like unemployment insurance soared.
The “Clinton-era tax rates” may sound ominous but are nothing to be afraid of.
They did not impoverish the financial class. Wealth soared in this country, even as the government balanced its books.
However, it’s worth remembering the Clinton-era financial success was more than about the levels of tax in the tables.
Rather, the policies succeeded in part because new technologies were being absorbed into the economy.
Who paid the price for success?
Not Clinton, but Bush’s father.
In a recent admiring documentary about George H.W. Bush, the former president said he did not regret the 1990 tax deal that cut the budget deficit, even as it broke his “read my lips, no new taxes” campaign pledge.
“It was right,” Bush told an interviewer tersely. The documentary does not note Bush was forced to recant it during the 1992 campaign, in which Clinton won the presidency, then benefited from the budget deal struck by his predecessor.
With the financial bust still a recent memory, simply reverting to “Clinton-era tax rates” probably isn’t particularly wise policy. Economic underpinnings are not the same as in the early 1990s.
Still, balancing the budget — with taxes as well as budget cuts — remains a policy with a sound and recent pedigree.