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  • Two Huge Flaws in the Legend of the Clinton Economy

    Two inescapable flaws mar the Clinton economic legend. One is conveniently papered over; the other conveniently forgotten. Even so, a flawed legend is better than the economic reality President Obama’s policies have produced, so it is no surprise the sitting President has outsourced his economic messaging to the former President.

    The first flaw, described here and here, is that President Clinton raised taxes and the economy boomed. The flaw in the narrative is it ignores the passage of time—four years, to be exact. The timeline matters. Clinton raised taxes in 1993 just as the economy was set to take off from a recession, and instead job and wage growth sputtered for four years. The famous Clinton era boom started four years after the tax hike, in 1997, and was triggered at least in part by the Republican tax cut of that year. Four years may seem like a detail, but details like this matter.

    The second flaw marring the Clinton economic story is recession. President Clinton did not leave his successor a booming economy. He left President George W. Bush a recession. The recession began in March of 2001, two months after Clinton left office. Even the most rabid leftist cannot blame George Bush for the 2001 recession. It was the Clinton recession.

    So Bill Clinton came into office and raised taxes on an accelerating economy, and produced a lethargic economy. Republicans pushed through a tax cut in 1997 and thereby launched the famous Clinton boom. Then Clinton left his successor with a nasty recession. And from this is fashioned a legend of economic performance. Damage done on both ends and a prosperity at least shared by Republicans—and yet the legend lives on.

    As long as the legend endures, President Obama sensibly would want to set aside past differences and wrap himself in the Clinton flag. Obama’s alternative is to defend his own record, which he simply cannot do, even giving himself a grade of “incomplete” while his wife pleads for “more time.”

    Incomplete after four years? More time to press the case for higher spending, higher taxes, and more regulation, all of which have served only to restrain the most prosperity-oriented economy in the world?

    President Obama can be given credit for trying to apply his economic philosophy with fervor and conviction. His has been an all-in presidency from the start. He tried his best, but his approach failed anyway, as was inevitable; a fact reinforced yet again with today’s jobs report showing an unemployment rate of 8.1 percent and 12.5 million Americans out of work.

    These statistics don’t tell the whole story, however. The workforce itself shrunk dramatically since Obama took office, as many Americans have given up looking for jobs that are nowhere to be found. The failure was not for lack of thought, or of effort. The failure was assured at the start as a failure of conception. Continuing to follow a bad design can only produce more bad outcomes. In the meantime, with neither a record from the past or a program for the future to tout, outsourcing his economic message to Clinton is about all Obama has left.

    Posted in Economics [slideshow_deploy]

    13 Responses to Two Huge Flaws in the Legend of the Clinton Economy

    1. Bill Ramia says:

      This is quite enlightening and would explain more than few things about the grand economic Clinton miracle we hear so much about.

    2. Two Huge Flaws in the Legend of the Clinton Economy. What are they?

    3. Mike Miller, MT HD84 says:

      I'd suggest the author take a look at the monetary policies in place at that time under Alan Greenspan. Also I believe Clinton rolled over a lot of 30 year bonds into new 2-5 year bonds to get lower interest rates, lowering the interest payment amount in the budget. The Internet was booming, the stock market was making lots of gains for many people. The money supply was rapidly increasing. Y2K was coming and companies were hiring like crazy. It was a bubble – which as all bubbles do, it broke.

      And, even though things were booming in the late 90's, the national debt continued to increase – EVERY year as it had since 1958.

    4. ??? says:

      Overall your argument lacks the intellectual rigor I would expect from a PhD holder. You say his tax hike created a lousy economy, but the tax cuts created the Clinton boom. However, he then left Bush with a recession. What if the tax cuts caused the Bush recession? You have had enough training to understand the global economy is much more complicated than taking a couple facts and extrapolating a concrete cause and effect relationship between them. Might it have been coincidental? Since your review of statistics is clearly done with the intent of proving a predetermined point (Republicans deserve the credit), I cannot be certain that an alternative explanation wouldn't prove more compelling.

      • Bobbie says:

        You're pretty rude. Two huge flaws are serious to a "couple of facts." Is it difficult for you to grasp happenings and circumstances? What's your point about the extrapolating regulations unconstitutionally imposed on businesses today?

    5. KevinH says:

      So its simple – reduce taxes and the economy will blossom.

      George W Bush cut taxes and private sector employment boomed. Obama didn't and there has been no increase in private sector employment.

      Question – how does private sector employment compare between Bush and Obama? Perhaps you could address this with numbers?

    6. hippotential says:

      Slick Willy would want to know what your definition of "is" is. Likewise, Obama is under the false impression that, given another four years, he could implement programs that would reduce joblessness under 8%. The lack of experience in anything other than politics and lawyering has been a problem for anyone charged with guiding decisions on economic policy. When we have had chief executives who held roles in industry prior to the White House, their time in office has shown understanding of the basic concept that taxes on small businesses shrink the economy rather than grow it.

    7. Jeanne Stotler says:

      I don't see or hear anyone mention that the House controls the purse strings, that it has been almost 4years since the Senate has even submitted a budget. Under Clinton, he had a Rb. Congress that worked well, GW had a Dm. Congress his last 2 years that DID NOT work with him, even worked against him. Obama had 2 years with a Dem Congress to get things going, BUT he con't to spend like a kid in the candy store and now wines and cries because the house is holding him back from spending more and he won't work with them to LOWER the deficit. Just common sense, you have to stop spending in order to get out of debt.

    8. Wesin the midwest says:

      The voters this year only have to do one thing. Just look at the states that have
      Republican governors. Most are going ahead with reforms that are working.
      That in itself will tell you which party we need in the White House. The states that are
      in a mess and getting worse usually have a Democratic governor.
      Califirnia, Illinois, etc.

    9. Mark says:

      I have to agree somewhat with the asian moniker. If the republicans were responsible for the economic boom starting in1997, why don't they share the blame (if not all of the blame) for the "Clinton" recession of 2001?

    10. Gerald Miller says:

      "The workforce itself shrunk dramatically since Obama took office, as many Americans have given up looking for jobs that are nowhere to be found."

      The workforce SHRANK dramatically.

    11. basavaraj says:

      Q: You claim you can create 12 M jobs. What is your plan?
      A” As an Example” you all know APPLE is an American company, but you all also know their manufacturing is in China/ Taivan. They also have $47 Billion Cash. As soon as I become a president, I will sit with the CEO and my policy will be what we can go do to help them to invest in research , development and manufacture in US. By not taxing that 47 billion ( currently not taxed in US) one company may be able to create 5000 jobs. With the multiplier effect ( supply chain, distribution chain and service sector jobs) the effect is 35,000 jobs. With the low risk of low interest rates, many companies will take more risk in research and development.

      Like wise there are more than 500 companies sitting on 2 trillion or 2000 billion or 2million of millions dollars sitting which can come back to US and create investment and jobs, essentially creating ore than 14 million jobs. This is not Rocket science, we just have to understand the business and without spending a dime of government money US companies can grow the economy to 4 or above GDP.

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