Earth to Santorum

Rick Santorum appears to be engaging in a bit of economic/historical revisionism.

You probably remember well when Bill Clinton and the Democrats passed the largest single tax increase in our nation’s history in 1993, $293 billion.

That sent our nation into an economic slump.

Uhhh…what? As David Adesnik suggested, maybe Santorum is confusing 1993 with 1893. From March 1991 to February 2001 the economy was growing. Granted the growth in 1991 and 1992 was fairly anemic, but 1993 was actually pretty good. Below is the graph of payroll employment,

payrollemp1991-1995.gif

While there is a small dip in employment in 1993, I don’t think it hardly qualifies as a “slump”. Especially when one considers that it happened in March of 1993–i.e. about one month after Clinton was in office and before his tax increase was passed (in August of 1993).

What complete nonsense.

FILED UNDER: Campaign 2006, Economics and Business, US Politics, , , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. JohnJ says:

    Dude, tax increases take a couple of years to have an effect. Note how Bush’s tax cuts didn’t immediately make the economy surge ahead. 1991 and 1992 came before 1993. What relevance does econmomic growth prior to the tax increase have? Obviously there’s no time for the tax increase to have any effect the year they were passed. I’m no expert, but even I know that you can’t cut or raise taxes and expect an immediate response from the economy.

  2. Steve says:

    1991 and 1992 came before 1993. What relevance does econmomic growth prior to the tax increase have? Obviously there’s no time for the tax increase to have any effect the year they were passed.

    No kidding? Really, I’m shocked. Never mind that my point was that the economy was growing in 1991 and 1992, hence no slump either. For that matter the economy kept growing till March of 2001, in short phenomal economic growth.

    As for your claim about the delayed effect of tax cuts and increases that doesn’t help Santorum either either since 1994, 1995, 1996, 1997, 1998 1999, and 2000 were all growth years. In short, Santorum is just sh*t-outta-luck here.

    I’m no expert, but even I know that you can’t cut or raise taxes and expect an immediate response from the economy.

    Yes and Clinton raised taxes and the economy kept growing. What a shock, but thanks for making my point again, and again.

    Oh wait, I get it, Clinton’s tax increase sent the economy into recession 8 years later. Damn that is one Hell of a lag effect.

  3. JohnJ says:

    Just to be clear, I don’t disagree with you there. My only point was that it didn’t make sense to me to rebut the claim that a tax increase created a sluggish economy by looking solely at economic indicators prior to the tax increase. Information about what happened to the economy after the tax increase would have been (and is) more relevant.

  4. Cernig says:

    Hi Steve,

    Hey, dont you know facts don’t matter? Tax cuts = good, tax rises = bad.

    Never mind that its reached an equivalent level with pawning all the furniture then standing on your lawn waving the cash and yelling “look how much money I have!” Just don’t look behind you.

    Hey, did you notice that every foreign economic advisor is taking ir for granted that the U.S. will enter recession next year? Most are wondering how China will be affected.

    More? Have a look at the “puts” on the market. Two thirds predict a huge fall.

    Regards, C

  5. […] Earth to SantorumOutside Beltway – Note how Bush s tax cuts didn t immediately make the economy surge ahead. 1991 and 1992 came before 1993. What Never mind that its reached an equivalent level with pawning all the furniture then standing on your lawn waving the cash and […]