Apparently we have no choice but to revisit — and re-litigate — the economy of the 1990s, since Hillary Clinton promises to deploy her husband in an economic role while both Donald Trump and Bernie Sanders are criticizing policies that gained traction during his presidency.
If I were a political pundit, I’d say Hillary Clinton added to reasons why she might lose the election by promising an economic role for her husband, former President Bill Clinton, in her administration.
Why? For one thing, first gentleman or first lady is not a constitutionally elected office. The president’s spouse might have considerable behind-the-scenes suasion (think Nancy Reagan), but nobody has elected him or her to anything.
Yves Smith, in a slashing commentary on her popular Naked Capitalism blog, put it this way:
“Since when does a supposedly super competent elected official use their spouse in a policy design and implementation capacity … In banana republics and the Clinton presidency. And remember how well that co-presidency thingie worked out? Hillary’s big special project, health-care reform, was such a bomb that it was over 20 years before the idea could be revived.”
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Bill Clinton’s heightened presence gives more ammo to the insurgency candidates Donald Trump and Bernie Sanders, each running to various degrees on grievances against policies that gained traction during his presidency.
As a result, we have no choice but to revisit, and re-litigate, the economy of the 1990s.
For many Americans, it was the last unalloyed period of good times. Most Americans’ median household incomes peaked in 1999, including those in King County.
This was the time of the dot-com boom, which most prominently gave birth to Amazon. They were heady years in Seattle, depicted in the movie “Disclosure,” even though a federal antitrust investigationhovered over Microsoft.
Many Northwesterners might also recall a more egalitarian Seattle. Tech wasn’t everything. Living costs were manageable, cheap apartments abundant, local shops common and grunge had made the “Seattle sound” world famous.
But that memory risks being clouded by nostalgia. In reality, the booming local economy and newfound prosperity of those years created a fair amount of worry and discontent.
To critics, however, these were years when many of the mistakes that would later detonate with devastating results were planted or enhanced.
Both are right.
Bill Clinton presided over the longest expansion in U.S. history, from March 1991, predating his presidency, through March 2001, after he left office. The economy created 22.9 million net jobs (compared with 16.1 million in the Reagan years).
Job creation was so powerful that even considerable numbers of layoffs meant most workers could easily find new jobs, usually at decent wages. As a result, the civilian unemployment rate hit 3.9 percent in 2000, the lowest since the 1960s.
Abundant jobs addressed long-standing problems. For example, black unemployment fell to a historic low of 7 percent by April 2000. (Last month it was 8 percent).
And these were overwhelmingly real jobs, not “gigs.”
Finally, the deficit “crisis” of the 1980s went away. Clinton handed his successor, George W. Bush, the first federal surplus since 1969. This was partly accomplished by a modest rise in taxes on the rich. It did not prevent them from going on an eight-year spree of investing and creating enterprises.
At the same time, Bill Clinton oversaw passage of the North American Free Trade Agreement (NAFTA). Trade among Mexico, Canada and the United States expanded massively.
However, contrary to its name, NAFTA was a managed-trade agreement and template for future deals. To critics, these agreements give too much power to influential corporate interests. For example, NAFTA prevented Mexico from nationalizing American factories and other interests there.
Opponents, led by colorful Texas businessman and 1992 presidential candidate H. Ross Perot, warned of job losses because of Mexico’s much cheaper labor. The Economic Policy Institute argues that NAFTA cost nearly 700,000 jobs by 2013.
Clinton and his Treasury secretaries, Robert Rubin and Lawrence Summers, helped push for deregulation of the financial sector, from going easy on derivatives to the rise of the big banks and repeal of Glass-Steagall, the Depression-era banking act. Clinton reappointed Alan Greenspan as chairman of the Federal Reserve. A disciple of Ayn Rand, Greenspan supported financial laissez faire. His Fed regulated lightly and kept credit easy for Wall Street.
For those just getting back from the Mars expedition, those policies prepared the ground for the financial collapse and Great Recession.
Timing does count for much.
Bill Clinton came into the presidency with the Cold War ended and the nation truly at peace for the first time since 1941.
The nation’s great industrial base was still intact, despite the dislocations of the 1980s. America was the world’s largest trading nation and largest exporter. The Rust Belt had rebounded well from its pain in the late 1970s and early 1980s. China was not a factor. Thus, it was a credible sell to many people that NAFTA wouldn’t cause major, long-term job losses.
Despite a mild recession in 1990, the decade would be the height of the Great Moderation, with low inflation, strong growth and an end to wild swings of the business cycle.
At the time, policymakers seemed wise. For example, Rubin and Greenspan were credited with keeping the 1997 Asian financial crisis from becoming a world depression. Rubin won accolades for his handling of crises in Mexico and Russia.
And the temper of the times matters.
Neoliberal economics, championed by British Prime Minister Margaret Thatcher and President Reagan, had seemingly triumphed. We were at “the end of history.” Clinton embraced this world view, although advocating a “third way” between right and left.
Importantly, for six of his eight years in office, he had to work with a Republican-controlled Congress that forcefully supported deregulation and other policies for which Clinton alone is now blamed.
Of course history didn’t end. Now it would be as impossible to re-create the 1990s as for a President Trump to reconstitute the 1950s or 1960s.
Whichever candidate, with congressional support, could get the economy growing faster would ease many problems. The temper of these times, at least among many voters, may not have patience for such factual niceties.