The Boom Continues


  • Leo Huberman
  • Paul M. Sweezy



Political Economy


Our last analysis of the state of the United States economy appeared just a year ago ("The Kennedy-Johnson Boom," MR, February 1965). There we diagnosed the long upswing of the Kennedy-Johnson years as the result of a new fiscal policy of deliberate deficits engineered by a combination of higher government spending and lower taxes, chiefly on corporations. We quoted Douglas Dillon, then Secretary of the Treasury, to the effect that the cumulative effect of tax changes in 1962 and 1964 would be equivalent to a reduction of the corporate income tax from 52 percent to 34 or 29 percent (depending on the ratio of equity to total capital) or to a reduction in the cost of new capital equipment of 16 percent. "It is hardly surprising," said Dillon in June of 1964, "that investment activity is responding to incentives of this magnitude…and that investment spending is now spearheading the recovery."





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