The Role of Fiscal Policy in The Post-2001 U.S. Economic Expansion

American Council for Capital Formation
By Dr. Allen Sinai, Chief Global Economist, Decision Economics, Inc.
December 2007

(PDF)

This ACCF Center for Policy Research report presents highlights from a recent analysis of the impact of the tax cuts and federal spending over the 2001-2006 period. This retrospective analysis, which was prepared by Dr. Allen Sinai, Chief Global Economist, Decision Economics, Inc., in late 2006, is especially relevant now as policymakers confront the challenge of maintaining strong U.S. economic growth without adding to inflationary pressures.

SUMMARY

In a recent study, Dr. Allen Sinai, Chief Global Economist, Decision Economics, Inc. (DE) finds that the tax reductions in 2001, 2002, 2003 and 2004 for individuals and business had a very positive effect on U.S. economic performance from 2001 through 2006, the period analyzed. While easier monetary policy, increased federal spending and globalization also contributed, tax cuts, including those for individual capital
gains and dividends received, contributed significantly to economic growth, job creation and real per capita
income during this period.

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