Ezra Klein: The graph that all tax cutters need to grapple with

The graph that all tax cutters need to grapple with
By Ezra Klein

Every time Republicans say you can’t reconcile higher taxes and growth, someone should flash this graph:



The causal story off that graph is something like “in the ’90s, bringing down the deficit through a balanced mix of tax increases and spending cuts was a net positive for growth.” The correlation story off that graph is “the ’90s were a good time for the global economy, and Clinton’s economic management was, at best, a small part of the decade’s successes.” The obviously wrong stories are “tax increases are incompatible with growth” and “Bush’s management of the economy was successful.”

And yet those are the stories that best fit the policies both parties are proposing today. At least when it comes to taxes, both the Obama White House and the GOP are closer to George W. Bush’s approach than to Bill Clinton’s. The GOP thinks all of the Clinton-era tax rates were too high and all of the Bush tax cuts should be made permanent while the Obama administration says that most of the Clinton-era tax rates were too high and the vast majority of the Bush tax cuts should be made permanent, the exception being the cuts for income over $250,000.

By Ezra Klein
05/18/2011

http://www.washingtonpost.com/blogs/ezra-klein/post/taxes-are-not-incompatible-with-growth-in-one-graph/2011/05/09/AFSlNW6G_blog.htm