The Bush Tax Cuts: Were they well timed to spur economic growth?
Historically, tax cuts aimed at increasing demand and stimulating the economy out of a recession have not worked especially well. Timing has been a major problem. It takes months for Congress to enact tax cut legislation, and often yet more months for the legislation to have a significant economic impact. Not uncommonly, the recession has ended and the economy is on an upswing by the time the stimulus legislation takes effect. The Bush administration’s tax cuts, in contrast, were well timed to address the economic slowdown. The 2001 tax cut (known by its legislative acronym EGTRRA) was enacted while the economy was still in recession, and the 2002 and 2003 tax cuts (the latter known as JGTRRA) were enacted while economic activity remained sluggish. However, as explained in another entry, the tax cuts were designed poorly for the purpose of giving the economy an immediate short-term boost.