by Mitch Kokai
Senior Political Analyst, John Locke Foundation
You’ve got to hand it to Team Hillary Clinton. Its message discipline is awesome — at least in terms of taxes. It reminds me of the orderly march of the Chinese Red Army on the way to battle.
Here’s the latest message: The George W. Bush tax cuts were responsible for the financial meltdown and recession of 2008-09. That’s a new low for Hillarynomics.
In this week’s debate, Clinton said: “Trickle-down it did not work. It got us into the mess we were in in 2008 and 2009. Slashing taxes on the wealthy hasn’t worked.”
OK. So in 2003, President Bush got a modest reduction in the top income tax rate and bigger reductions in the tax rates on capital gains and dividends. And this caused the financial crisis? How it did is virtually unknowable.
My pal, American Enterprise Institute scholar Jim Pethokoukis, who’s no Trump supporter, put it like this: “Wouldn’t the George W. Bush tax cuts — most of which President Obama extended — have stimulated demand and/or improved supply-side incentives to work, save and invest?”
Pethokoukis cited an AEI study on inequality that found “strong evidence linking credit booms to banking crises, but no evidence that rising income concentration was a significant determinant of credit booms.” He also pointed out that the Financial Crisis Inquiry Commission report blamed banks, regulators, government agencies and credit raters for the recession.
I would add to this list of culprits a boom-and-bust Federal Reserve policy, where interest rates were held too low for too long. And let’s add federal housing mandates that virtually eliminated income and job qualifications for loans, as well as highly overleveraged bank mortgage loans and derivatives.
But not the Bush tax cuts.