Tax cuts for the rich destroy jobs. When the rich get tax cuts, they simply use their newly available money to push CEOs to ship jobs overseas. When the rich have less money, they have less leverage with which to do so.
That’s why, in part, the Clinton years saw an historic explosion of job growth. There were, of course, other factors.
The housing bubble began circa 1994, the tech bubble hit its stride, and interest rates were coming down. However, massive amounts of income were being redistributed to the 1 percent from the 99 percent because of Nafta, which by most accounts, saw a loss of 2.5 million US jobs within a few years after Clinton signed the treaty.
Note something else. Two of the major factors in economic growth during the eight years of Clinton were bubbles. The tech bubble exploded just after Clinton left office. However, the housing bubble marched onward during the reign of George W. Bush.
The housing bubble only occurred because Wall Street investment firms had created a way to buy home mortgages and then issue bonds to rich investors backed by the mortgages. Commercial banks and other lenders no longer held on to mortgages, they simply sold them to Wall Street investment banks. The result was a disaster for middle America. Standards for mortgage borrowers plunged, causing housing prices to explode.
Note that interest rates also came down during the Clinton era. This also spurred economic growth. However, the decline in interest rates occurred because massive amounts of income were being redistributed from the 99 to the 1 percent via Nafta, deregulation and other federal legislation. More and more of the 99 percent couldn’t afford to buy as much stuff as before at higher interest rates. Rates were forced down because demand could not sustain higher rates.
So the Clinton era wasn’t really all that great for the middle class. The 99 percent got bubble created jobs, massive amounts of our income redistributed to the 1 percent, and we got low interest rates to buy houses and cheap plastic junk made in China (which we couldn’t afford). Oh, yes, we also got a ton of debt.
There was one thing we lost during the decade. When Clinton signed Nafta, it signaled the complete corporate takeover by the 1 percent over the Democratic leadership, and about 80 percent of every Democratic congress person. That’s when we should’ve known there was nobody left in the Democratic and Republican parties to represent the 99 percent, at least not in large enough numbers to be meaningful.
John Hively's Blog: News and Analysis of the War Against the Middle Class 