Business Insider - The IMF Has Admitted Their Economists Were Wrong

This debate is over whether or not adding government spending during a downturn helps an economy turn up again into growth and surpluses, or whether it instead mainly just adds to the government debt that (according to conservative economists) was the result of too much spending, and that (also according to conservative economists) largely caused the existing “recession.”


Keynes said that the “multiplier” effect of increased government spending is sufficiently large to more-than-counteract the negative economic effect of adding to the government’s debt during an economic downturn. Conservative economists assume instead that the multiplier is too small to counteract that negative effect.

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Now although this seems like a fresh breath of honesty from the IMF about the state of the economy, it appears thinkprogress.org has been talking about the wealth disparity caused by these tax cuts for the rich since September of last year.

Throughout the late-1940s and 1950s, the top marginal tax rate was typically above 90%; today it is 35%. Additionally, the top capital gains tax rate was 25% in the 1950s and 1960s, 35% in the 1970s; today it is 15%. The real GDP growth rate averaged 4.2% and real per capita GDP increased annually by 2.4% in the 1950s. In the 2000s, the average real GDP growth rate was 1.7% and real per capita GDP increased annually by less than 1%. There is not conclusive evidence, however, to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth. Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.

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