Does slowing economy from housing bust disprove Bush's claim that tax cuts were the fuel for the recovery?

Question

Third quarter economic growth slowed to just 1.6% pushed down by the bust in the housing market.

But doesn't this mean that it was the booming house market (which was fueled by the Fed's low interest rates), and not the tax cuts, that fueled the recovery from the recession at the start of Bush's term in office?

After all, the tax cuts are still in effect, so if they were what was fueling the economy, we wouldn't see this slowdown, right?

Source:
http://news.yahoo.com/s/ap/20061027/ap_on_bi_go_ec_fi/economy

Answer 1

Tax rates have no significant impact on the overall economy. There have been recessions in the past that we recovered from without cutting taxes, there have been recessions that we recovered from while RAISING taxes. Whether taxes go up or down is totally immaterial to the strength of the economy. It goes up, it goes down, and there's not much the government can do to stop that.

Answer 2

The Bush tax cuts didn't speed up the economy. Why should their expiration slow them down. Inheritance tax doesn't Impact anyone who isn't inheriting millions, how many people do you know like that? Capital gains is income you make that you don't work for. It is why billionaires pay an 11% rate while their secretary's pay a 35% tax rate. It is a perfect example of a tax system designed to give the rich more and take more from the middle class. If you have so much that you don't have to work for your money, you just sit back and collect capital gains, so sorry, you are not an engine of job creation and a couple percent difference in your tax rate has exactly no impact on your LifeStyle. The saver's credit is very insignificant and does not impact a lot of people. The benefits are very small, and most people do not qualify for it anyway. As for the child tax credit, I don't think having multiple children when you are in the lower income range should be rewarded by tax cuts. And what about the deficit? How do all of you screaming about the deficit expect it to go away if no one pays taxes? I'm in the high end of middle class income and the Bush tax cuts had no impact on my financial health. Their expiration will have no inpact on my financial health.

Answer 3

No necessarily could be there excess inventory in the manufacturing, and commodities sector, and with Bernake playing sprinkler technician with the economy. I would not worry too much the housing prices will flatten out for the next couple years with growth in the 2% to 2.75% not too bad. Economy is always cyclical, but the liberals will always blame taxes. Yet, those tax cuts went into industrial, and banking investments. 1.6% growth alright it will pick up in later 2007 or Early 2008, just cyclical nature of the economy unemployment is low, and inflation is under control. Interest rates will hold I bet for a while if there more deacceration in the economy Beranke will reduce interest rates. The housing bust will only effect the stupid people getting interest only mortgage, and the market will keep on churning along.

Answer 4

The current economic growth in the USA is the "greatest story never told". In spite of inheriting a recession, the dot-com bubble burst, the attack from terrorists, runaway petroleum prices, and funding the wars in the middle east, the American economy has been on a tear for the past 6 years.

The housing market is not in a bust. It is experiencing a normal business cycle. The Fed rates have the greatest impact on interest bearing accounts such as housing. As soon as the Fed begins lowering rates then there should be an up-tick in the housing market again.

The current economic miracle has us with very low unemployment and that is in spite of all the illegal migrant workers here, and jobs that have been sent overseas. The current economic miracle has companies making record profits, and the stock market at record levels. The average American is better off now than at any time in our history.

We often blame politicians for bad economic periods and give them credit for good times (if we are members of the same political party), however, the influence of politicians is always questionable. We should remain objective and admit that these are good economic times.

Answer 5

In my town the town fathers have stooped issuing housing permits because we have so many housing developments we can not keep up . This means more families, more children in the schools, more road repairs, more water& sewer use. Most of these houses have already been sold before they were built.I am talking about 35 in one development & we have 6 at the presant time. That does not include the 3 hotels & 2 new apartment bulidings being built. The population of my town is 24,000 but growing faster then we can keep up. So in our town there is no slow down in housing, We just do not have enough low cost housing because no one wants to build it. Why should a developer get $500to $750 amonth rent when he can get $550,000 to 1,300,000 for a house.I guess the tax cuts did help the houseing market. Somebody has money because one of those developers in my town is my brother in law & he does not spend his money on anything that does not give him a good return. Thats how he went from rags to riches.

Answer 6

Well, one thing for sure, nothing that happens while Bush is in office will ever receive any credit from a Democrat such as you. When housing prices exploded in the first 5 years of Bush, you complained that his policies were pricing the little guy out of the market. When prices showed a 3% drop YTD, now its his policies that caused that.
The economy is continuing to grow. in fact the average growth over the past 6 years is higher than the average growth of the first 6 years of Clinton. That sir, is a fact.

Answer 7

Funny how the republicans were crowing about the great housing market and the tax cuts. Fact is taxcuts only do short term good, if they have much effect at all. Now that the housing market has dipped, they crow about the dow. What will be the flavor next week?

Answer 8

Housing prices are just a correction in a market that was way over valued for a long time. The US stock market is at record levels, inflation is low and unemployment is low.

Answer 9

no it doesn't! it means the economy is just cooling a little,alot of things effect the market! our consumption of consumer products is a better indicator,as far as the homes go,the older homes are still at a all time high,just because the new home sales are down it could mean we're leveling off with our growth as a nation!

Answer 10

Don't try to make sense of repuglican supply side economics, only the rich get richer nothing else happens, Michigan is in a deep recession right now because of the Bush tax cuts. Think of it this way, somebody is going to have to pay the debt. It won't be the rich.