When Tax Cuts Work, and When They Don't

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By Albert R. Hunt

Recent U.S. economic history complicates Mitt Romney's claim that his huge tax cuts will be the engine for jobs and growth.

The examples of President Bill Clinton and George W. Bush on taxes are illustrative.

    In 1993, Clinton engineered a tax increase on upper-income Americans, along with higher gas and payroll taxes. In 2001, the first year of his presidency, Bush pushed through a sizable tax cut for most Americans, though especially for wealthier taxpayers.

    In the seven years after the Clinton tax increases, there were almost 20 million new jobs created. In the same period after the Bush tax cuts, there were only 3 million net jobs added. Throughout the 1990s, the economy grew at about a 4 percent clip. In the Bush era, it was less than 2 percent.

     The Romneyites often harken back to the initial Ronald Reagan tax cut, which did produce robust growth for the rest of his term. Still, it didn't produce as many jobs as during the Clinton years. And the Reagan administration, over the years, accepted five tax increases to offset some of the excesses of the original cuts.

     Some conservatives debunk the Clinton and Bush comparisons. For example, Senator Ron Johnson, a Wisconsin Republican, attributes the roaring 1990s to the Reagan policies from the previous decade. That's a tough case for Romney to embrace; he'd have to then attribute some of the economic problems under the administration of President Barack Obama economic problems to the previous Republican administration.

 (Albert R. Hunt is Washington editor at Bloomberg News and a Bloomberg View columnist. Follow him on Twitter.)

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-0- Sep/16/2012 22:07 GMT