Almost as soon as our Republican majorities were elected in November 1994, the economic climate began to change. Our approach to fiscal discipline and smaller government was seen as credible and real and the results were lower interest rates, faster economic growth, and more job opportunities. To make the point, some of the key economic and budgetary events of the past several years are listed below. Interest rates begin to rise.
Interest rates peak the day before the congressional elections.
Republicans pledging lower taxes, smaller government, and a balanced budget sweep into majorities in both the House and Senate. Interest rates begin to fall immediately, as financial markets view the Republican budget strategy as credible and real. Clinton rejects Congress s proposals to balance the budget and cut taxes. Clinton again dodges Congress s overtures toward a budget deal. Still, markets reward Congress s sustained efforts with further interest rate declines.