So Who’s Right About Fiscal Policy?
Did the tax cut of 1981 lead to the deficits of the 1980s and the need to raise taxes in 1990 and 1993? Did the 1981 tax cut also lead to the expansion of the 1980s? Did the tax increases of 1990 and 1993 help bring about the 1990s expansion? Did the deficit spending of the early to mid-2000s contribute to that decade’s boom? Did that spending also add unnecessarily to the national debt?
I believe the answer to all those questions is yes. But I also believe that other factors helped the expansions of the 1980s, 1990s, and 2000 along, which together amount to one long, 25-year-plus expansion. The period from 1982 to 2000 was a long boom interrupted by a recession in 1991 and an even milder one in 2001.