The 1993 Clinton Debt Reduction Program

Here is an excellent Post to read about the 1993 Clinton Budget Reduction program. It gives a fair sample of the general Economist expectation of the Effect of the program. The reduction of the National Debt had some impact in creation of the Boom of the 1990s, though not overly large, is that Sentiment. I, on the other hand, take a more militaristic approach, and that the actual turnaround of Debt growth was a schwerspunt, which altered the Business plans inside the Economy massively. It was this alteration of Business format which brought on the Boom.

The repayment of National Debt threatened a real reduction, if not in the Money Supply itself, then in the growth of the Money Supply. Higher taxation of Business Profits actually led to more determined investiture in Capital, in a recognized Need to obtain larger Profit revenues to maintain the same Take-Home funds after Taxation. Business leadership knew they had to hide major amounts of their Profits in their own Debt Service, lest they face horrid (at least to themselves) levels of Tax payments. It created the major source of the Investment of the Era.

Study of pre-Boom eras suggests this Profits-Hiding in Debt Service to avoid Taxation is one of the major compulsions of Capitalization; so that actually raising Marginal Tax rates may in itself be an economic incentive. Maybe I am back to not understanding the modern economy again, but maybe I am not. I do know that Business personnel actually work harder, and longer hours, when Marginal Tax rates are high. I know Production efficiency rates seem to increase under the impact of higher Marginal Tax rates. I deeply suspect that Percentage volumes of Capitalization debt increase under higher Marginal Tax rates. I may even get Radical, and states that high taxes is Good for Business, if they are not too high. lgl