Tax cuts don’t cause recessions
Dear editor:
This letter is in response to an Aug. 4 letter submitted by John “Doc” Crawford in which among other things, claims tax cuts cause recessions. Of course, that’s nonsense, there is no evidence to support that assertion.
He first mentions the cuts that came under the first President Bush, and claims if he hadn’t raised them back a heavy recession would’ve resulted. There was no evidence of an impending recession. At that time, the Congress was controlled by Democrats and months of partisan wrangling over possible tax increases and spending cuts had ended in a stalemate. To break the stalemate, Bush compromised (he shouldn’t have) and agreed to raise the taxes back. It cost him the election, but there was never any danger of a recession due to the tax cuts.
Next Mr. Crawford tries to say the Reagan tax cuts caused a major recession. Again facts don’t bear that out; in fact, the tax cuts along with monetary policy and deregulation brought us out of a recession (that lasted through 1982) that started under Carter. From 1983 through 1989, the average GDP was 4.2 percent — hardly a recession. Keep in mind, it can take one to two years for tax policy to take effect. Reagan did indeed raise some other misc. taxes like Social Security and some excise taxes, but not the federal income tax.
Finally, Mr. Crawford claims the President G.W. Bush tax cuts caused a major recession. Again, pure nonsense. The recession of 2007 was mainly caused by Democrat housing policies (Community Reinvestment Act) that eventually caused the subprime mortgage industry
to collapse. The GDP percentage before 2007 ranged in the high twos and low threes, for the most part.
Tax cuts tend to have a stimulative effect on economies, not the opposite. They also, after two years or so, tend to bring in more revenue to the Treasury than before they were implemented. A check of the IRS tables will show this happened under JFK, Reagan, and Bush. Predictions show this should happen as well after 2019 with the Trump cuts. Long-term, excessive spending cause deficits and debt, not tax cuts. Mike Williams Hot Springs Village