Thursday evening in the House of Representatives, House Democratic Leader Steny Hoyer gave a forceful speech regarding the "Obama-Republican Tax Deal." He pointed out that in 1993, we raised taxes on the top earners in the country and gained 22 million jobs in the following years. Mr. Hoyer suggested -- as many Democrats do, including Clinton himself -- that raising taxes on the rich actually propelled our economy in the nineties, just as -- in the words of Dems -- cutting taxes in 2001 hurt the economy. I feel the pain of Democrats in losing a decade-old talking point, but it is more accurate to say that the economy in the 1990s continued growing strong despite the tax increases! In fact, the economy was strong enough before Congress voted on the tax bill that it was able to digest the tax increases which were signed August 10, 1993. Let's look at the numbers as to how things were following the downturn of two decades ago.
- The economy was out of recession in March of 1991. This is em, er...before Clinton announced in October of that year that he was running for president, and almost two and a half years before President Clinton signed his tax law.
- In the twelve months leading up to the tax signing (August 1992-July 1993), the economy gained 2,023,000 jobs, which is 168,000 jobs per month. To put things into perspective: in the four years during which Democrats recently controlled Congress, we did not have a twelve-month period where the economy gained 100,000 jobs on a monthly average, let alone 168,000 to meet an economy of fifteen years earlier.
- In the six months (February-July 1993) leading up to the tax signing, the monthly average job gain was already 208,000, which shows that the economy was growing stronger by the month, well before the bill was signed.
- The unemployment rate peaked July 1992 -- more than six months before Clinton stepped into the Oval Office, and more than twelve months before Congress voted on the tax bill. In fact, the rate lost almost a full percentage point in the twelve months leading up to the tax signing.
- The Dow Jones Industrial Average reached a low (of less than 2,400) in October 1990, and then things turned around, which is em...say...three years before your Clinton taxes "gave us" a good economy!
From its recession low of minus 2,400, the Dow grew almost 50% to approximately 3,600 before we got to August 1993. This amounts to a 16% annual gain if any Dem had his/her money in an Index fund piggybacked to the Dow.
The list goes on, and the numbers, as people say, don't lie. The best number to look at is jobs, since jobs are the last thing to come around in a recovering economy. Yet the job market was in recovery during the very time that Clinton ran around during the 1992 election season saying "it's the economy, stupid." The American people -- for good reason -- did not buy Clinton's talk, as we see that he got only 43 percent of the popular vote, which is less than the poor 45.6% picked up by Michael Dukakis four years earlier. Clinton walked into the White House with a solidly recovered economy and a victorious United States (following the Soviet collapse and Gulf War One), which was the best plate handed over to any U.S. president in recent memory. Indeed, the smorgasbord was better than what Clinton left for his successor, George W. Bush, which included an economy one foot in a recession, a crashing stock market, corporate America cooking the books, and a corroding jobs market (read here all the numbers). Of course, let's not tell anyone that despite Clinton's tax increases, most tax rates were still closer to Reagan levels than to pre-1980 days, which again proves that the lower Reagan tax rates indeed helped the economy in the 1990s, too. In addition, let's -- for argument's sake against low taxes -- forget that in 1997, taxes were cut on multiple fronts, which continued to drive the economic boom. Finally, when Democrats speak as to how budgets were balanced in the 1990s, they should never mention that in Clinton's final six budgets, spending on education, health, and many more domestic programs was increased on a steeply slower pace than the increases of his "anti-poor" successor Bush during his Republican Congress years. Let's not talk about this because it will show that Bush too -- despite tax cuts, the 9/11 attacks, Medicare Part D, and two "unfunded wars" -- could have also balanced a few of his budgets, if only he was willing to do it on the backs of the poor, as Clinton did.
All in all, the economic boom of the 1990s started two years before Clinton took office, and it was kaput by the time he left.