Clinton rejected Obamanomics as president
When Bill Clinton puts Barack Obama’s name in nomination at the Time Warner Cable Arena in Charlotte, he will be bathed in affection and viewed as a miracle worker. Arguably, despite his impeachment he is the most successful politician of his party since Franklin Roosevelt.
He’s the only Democrat since FDR to win two full presidential terms, presiding over the longest peacetime economic expansion in U.S. history. Unemployment, 7.5 percent when Clinton took office, was down to 4 percent when he left. The Dow Jones industrial average, which roughly charts the growth of pensions and retirement accounts, more than tripled on his watch. Even more stunning, the U.S. government was beginning to sustain the most serious budget surpluses in nearly a century.
But there is much irony in all of this: The great Clinton economy began when he embraced the essence of Reaganomics: tax cuts, spending restraint, welfare reform, free trade and the end of his own budget-crushing entitlement program, universal health care.
Clinton, it is mostly forgotten, was on the verge of becoming a failed president in his
first two years. Even the Democratic-controlled Congress had defeated his much touted stimulus package and an enormous hike in energy taxes. HillaryCare, the forerunner to Obamacare, was dead in the water by the summer of 1994, with the Senate Democrats hoisting the white flag on this signature issue on the eve of the Congressional elections.
Clinton’s most significant achievement was a huge but unpopular tax rate increase that Obama seems determined to duplicate. So unappealing was his record, the Republicans swept both houses of Congress in November for the first time in four decades.
Newt Gingrich, the political warrior who led the GOP comeback, was enthroned as House Speaker, poised to push through his Reaganite Contract with America. Clinton’s first term was in shambles and it was only half over.
A panicky president, consulting Dick Morris, then decided to steal from the Reagan
playbook, though neither Clinton nor Morris has ever given the iconic GOP president the credit he deserves. Slowly but surely Clinton began tacking to the right, (though he had embraced one Republican idea earlier, the NAFTA free trade pact). Beginning in 1995 he deep-sixed HillaryCare for good, then hinted he would work with Republicans on a decent balanced budget proposal. In an October 17 fundraiser in Houston, he signaled tax cuts were very much in play: “I think,” he conceded, “I raised them [taxes] too much.”
“Era of big government over”
His most obsequious genuflection to the GOP came in his 1996 State of the Union address when he grandly pronounced–to roars of approval from the Republican lawmakers present–”The era of big government is over.”
Rhetorically, Clinton had surrendered to conservative ideology, but substance was to follow. In that same election year, he signed, with liberals howling in protest, a historic GOP welfare reform program, largely designed by Reagan’s own welfare expert, Robert Carleson. The initial results—which Clinton trumpeted at the Democratic Convention in 2000—were spectacular, with caseloads on the verge of falling like stones.
More Clinton concessions were to come. In August of 1997, the president signed a bipartisan balanced budget measure, packed with several critical Republican tax relief items, including a solid, pro-family middle-class tax cut that was in Gingrich’s Contract and had been relentlessly pushed by Christian activist Gary Bauer.
He even slashed Reagan’s tax burden on capital gains by nearly one-third (from 28 percent to 20 percent), embraced a serious decrease in estate taxes, backed several pro-business measures and created the Roth IRA retirement savings account, named after conservative Republican Sen. William Roth. The booming economy was also pushed along by two other little-noted factors: Alan Greenspan’s accommodating Federal Reserve policy and, in the words of former Congressional Budget Office Director June O’Neill, “the absence of legislation that meddled with the economy or that had major, long-run spending consequences on the budget.”
There was yet another beneficent outcome of these GOP-inspired programs: historic budget surpluses. The general prosperity brought in huge sums of revenues to the federal government. Income tax revenue soared.
The cap gains tax reduction generated billions of dollars more. The Social Security Trust Fund was beginning to overflow, due in large part to enactment of proposals by the Reagan created Greenspan Commission. The end of the Cold War, again, courtesy of Ronald Reagan, also permitted hefty cuts in military spending.
According to a jointly authored piece by Clinton’s chairman of the Joint Chiefs of Staff and his defense secretary (The Washington Post, Aug 10, 2000): “This ‘peace dividend,’ amounting to about $100 billion a year, has been a major contributor to the balanced budget that our economy now enjoys.”
Bill Clinton, not Barack Obama, will be the man of the hour at Charlotte, but the Democratic delegates there will not have the slightest clue as to why they are drenching him in applause. Nor, you can be certain, will the American media enlighten a single, solitary soul as to the reasons for Clinton’s presidential success.