,,Is There a Clinton Crunch? How the 1993 Budget Plan Affected the Economy

Is There a Clinton Crunch? How the 1993 Budget Plan Affected the Economy


 

Publication Date: October 2002

Publisher: Heritage Foundation (Washington, D.C.)

Author(s): Scott A. Hodge; William W. Beach; Mark Wilson

Research Area: Economics

Keywords: Budget

Type: Report

Abstract:

The evidence does not support the Administration’s claim that the 1993 budget plan triggered stronger economic growth. On the contrary, the critics of the 1993 legislation appear to be correct that because of it Americans are caught in what some refer to as the “Clinton Crunch,” the dual effect of declining real wages combined with higher taxes. The analysis by Heritage Foundation economists, using the WUMM model, indicates that OBRA-93 has had a damaging impact on the nation’s economy. Removing the effects of OBRA-93 in an econometric simulation shows that the economy would have been performing better today had Congress not enacted the legislation.