Best of Chicago voting is live now. Vote for your favorites »
“The 1990s recovery provides a useful comparison. Like the current recovery, the 1990s recovery was initially relatively weak, with investment growth in particular resuming only about eighteen months into the recovery. But in the 1990s, investment growth recommenced without any tax cuts — and then strengthened modestly following a tax increase. Moreover, overall investment growth during the 1990s business cycle, with its large tax increases in 1990 and 1993, was substantially stronger than during the current business cycle, with its large tax cuts in 2001 and 2003. If major economic developments were generally attributable to tax policy, then the 1990s experience could lead one to conclude that tax increases provide more potent economic stimulus than tax cuts. The more appropriate lesson to draw, however, is probably that weak recoveries tend to return to historical norms, whether taxes are cut, increased, or left unchanged.”
