The American Politics Thread

Yes, the recession had started, which is why that was exactly the wrong time to implement an economically stifling tax.  The direct effects are well documented.  The “rich” simply cut back on buying luxury goods.  The effect was felt across the economic spectrum, but most painfully in the yacht building industry.  The problem was that the reduction in consumption of luxury goods actually led to a net loss in tax revenue.  Worse yet was the loss of jobs… blue collar and administrative jobs… as a result, these sectors not only had less employment, they also now required unemployment, welfare, and they couldn’t contribute to the economy.  This then permeated throughout the economy and the death spiral began.  Yes, an economic downturn was already in the works, but this exacerbated it greatly and submarined any chance of recovering before it got deep. 

Don’t get me wrong here; I’m not some rabid anti-tax fanatic, and I reserve judgment on the recent tax cuts.  The US has some of the highest corporate tax rates in the world, so the corporate tax cut may or may not bear out to be a bad thing, but the reduction in the top level income tax was almost certainly uncalled for. 

Of course I expected Clinton to harp on “Read My Lips.”  My point was that the whole thing was set up brilliantly.  Indeed Perot hurt as well.  Clinton won (both times) with far less than a majority and there’s no doubt the businessman siphoned off more votes from the Republican side than he did the Democratic side.