by Gwynn Guilford
Suzy Khimm thinks not – or, at least, adds some sizable caveats to Obama's claim that Clinton-era fiscal and monetary policy will fix the economy:
[E]ven if a budget akin to Clinton’s 1993 package were passed, the U.S. economy isn’t necessarily poised to reap the same benefits, at least in the short term: Interest rates are already at rock bottom, and they still haven’t encouraged the kind of borrowing that low interest rates spurred during the 1990s.
However, Obama's policy of balance is the best one out there, she writes:
[A] balanced fiscal package could still boost the market and consumers in more intangible ways, avoiding the kind of drop-off that we experienced during the debt-ceiling debacle. That’s why [Moody Analytics' Mark] Zandi believes that a fiscal compromise of tax hikes and spending cuts ” is the most important thing the next president can do.” He explains: “There are a lot of parallels between 2013 and 1993: we need to address our long-term fiscal problems, and the only way we can do that is through spending cuts and increased tax revenue.”
Meanwhile, Bruce Bartlett debunks arguments that Clinton-era growth was a mere fluke – and considers the implications for the present day:
I would not argue that tax increases are per se stimulative. It all depends on circumstances. But it is clear from the experience of the 1990s that they can play a very big role in reducing the budget deficit and are not necessarily a drag on growth. And the obvious experience of the 2000s is that tax cuts increase the deficit and don’t necessarily do anything for growth. Those arguing otherwise need to make a much better case than they have so far.