Tax Cuts Aren't the Only Way Out of Recession

Supporters of tax cuts also hate comparisons to the 1990s. Treasury Secretary Robert Rubin counseled then-President Bill Clinton to follow a circumspect fiscal policy aimed at cutting budget deficits. This included a tax on the wealthiest Americans. Taxing the wealthy did not prolong the recession of the early '90s; rather, it helped put America's fiscal house in order.

The study notes that the economic expansion in the '90s beat the most recent one in the following ways: higher rate of GDP growth, more rapid net worth growth, stronger job growth, and better fixed non-residential investment growth. One area it did not outperform: corporate profit growth. Profit growth in the 2000s easily outstripped the 1990s.

Will these facts find their way into the presidential debate?

McCain has questions to answer on tax cuts. He voted against the Bush tax cuts in 2001 and 2003, though he recently changed his mind. Yes, the straight-talker flip-flopped. McCain not only now endorses Bush's tax cuts and wants to extend them, but he also prefers Bush's solution to the economic downturn: tax rebates.

Those tax rebates will soon be arriving in Americans' mailboxes. It's not clear whether consumers will save or spend their checks, but it is clear that a shallow recession greatly favors McCain. He will argue that once again tax cuts were good for the economy and are the answer to all economic problems. I predict this effort will work. The electorate has a much more myopic view of the economy, forgetting the good times of the 1990s.