05-13-2011, 03:06 AM
freeradical wrote:
Tax cuts do grow the GDP. This model is still taught in entry level macro courses.
Just because this benefits the wealthier more than people at lower points on the economic food chain is besides the point. If you want to grow the middle class, which is a very good thing, you need to come up with a real plan to make this happen. After WWII, returning vets had the GI bill etc. which did grow the middle class substantially. Of course it also helped that we had the only economy left standing after the war so we had no economic competitors. I have yet to see any real plan from any politician that addresses exactly how we're going to help out the middle class. Instead we have nonsense where the Federal Government is guaranteeing $729,000 mortgages etc.
The real scoop on the 90's. Every other decade can "boast" a statistic. The 90's claim to fame was the go go stock market.
http://research.stlouisfed.org/publicati.../cover.pdf
The chart you cite shows the opposite of what you're saying.
For example, tax rates declined from the 1960's through the 1990's. The GDP rate of growth went DOWN.
As for what's taught in basic macro classes, there is a dispute about that within the economic profession. The vast majority of economists DON'T agree with that assessment. The evidence over the years, as your chart shows, doesn't support tax cuts growing GDP.