Obama is No Bill Clinton!
To paraphrase Lloyd Bentsen's famous retort to Dan Quayle in the 1988 Vice Presidential debate, Barack Obama is no Bill Clinton. There were three parts to the Bill Clinton Administration. The first part was Clinton going sharply to the left in his first two years, including trying to get his version of Obamacare passed. Influenced by his wife and some of the more leftist members of his staff, Clinton went for transformation and failed. Except for increasing marginal tax rates, he accomplished very little and he paid for it in 1994 when Republicans took over the House.
The second part of the Clinton’s years was the rejection of his first two years and a sharp turn to the center; which laid the background for significant expansion of the economy and his re-election. The third part was survival as he dealt with the Monica Lewinsky affair, but it had very little to do with his performance in office since expansion continued.
After the 1994 midterm election, Clinton's move to the center allowed him to not just survive but push the Democratic Party to the center and allowed the Democrats to make inroads in areas previously belonging to the Republicans, including suburban and blue collar whites. This allowed Clinton to neutralize the Republican base in the South and Southwest.
Clinton tackled the deficit as he reduced the federal spending as a share of the GDP from 21% to 18% when he left. While much of this was due to reducing defense spending, spending on domestic discretionary program stayed flat. Obama has massively increased Federal Spending and it is presently close to 25% of the GDP. Obama has no plan to reduce that significantly; and while Clinton actually cared about the deficit, Obama doesn’t, which is shown in his budget.
Clinton was a masterful politician, and he worked well with Newt Gingrich to pass budgets that reflected both Parties' interests. Obama has shown to be an obstacle to any real serious budget discussion as recent stories in the Washington Post have shown. Obama had a deal within reach and possibly a grand compromise that could have led to a Bowles-Simpson version of tax and budget reforms, but Obama's incompetence and ideology ended that chance. Obama has made it clear; he plans to press the advantage to transform America if he wins. Forget compromise or working with the Republicans. He hasn’t done if for four years, and he won’t do it for the next four years. While the left talks repeatedly about how Clinton raised taxes and the economy hummed as a result, they fail to look at the 1990’s in its entirety. Clinton’s first two years in office saw economic expansion match what he inherited from Bush, and yes, the economy was expanding when Clinton took office.
What is often forgotten is that there were no major tax increases after 1995, and there was actually a capital gains tax cut that raised billions more in revenues than predicted. The budget became balanced when taxes were not raised in the mid 90’s! Under Obama's proposal, capital gains and dividend tax rates will go up, not down, plus he plans to raise the top rate among the wealthy. The Middle class will get nailed through Obamacare, as nearly three quarter of the taxes needed to fund Obama's free health care for Americans will come from those Middle Class who were promised no new taxes. Clinton pushed free trade and trade expanded. (It could be argued that these agreements were defacto tax cuts that helped the Middle Class with cheaper goods and the economy expanded that included many high paying jobs for the Middle Class. In the Reagan and Clinton era, more Middle Class moved up the economic ladder than down. Clinton rode on a liberal version of Reaganonmics. I will add that much of our housing crisis has its origin in the Clinton’s years, but that is something for another article.)
Clinton worked with Gingrich to pass welfare reform, the first real entitlement reform. It should be noted that Clinton vetoed the bill twice before signing it, but he did sign it. Obama is attempting to weaken welfare reform through the back doors. Before readers start writing, “Tom, did you not know that Obama is making tougher decisions on welfare recipients,” the real reason that Obama allowed the waivers was to set up loopholes to ensure that the whole thing came crashing down in an Obama second term. Robert Rector from the Heritage Foundation has documented the game plans in a series of articles. (I have referenced these studies in back issues.)
If Obama wants to be like Clinton, he has to do the following:
- While I don’t buy that we need to be raising marginal tax rates among the wealthy, at least Clinton understood that raising taxes on capital was not good economics so Obama needs to lower capital gains and dividend tax rates. (I should add that I am not alone on not raising the marginal tax rates among the wealthy; even liberals like Erskine Bowles and Senator Ron Wyden are on record saying marginal tax rates should be lower across the board.)
- He needs to cut trillions of dollars from the budget to match Clinton's performances.
- Repeal all of Obamacare and start all over again.
- Expand free trade agreements.
- Reform entitlements, and since there are plenty of bipartisan plans out there, this could happen; but under a second Obama administration, it won’t.
The heart of Clinton's economic plan enacted after 1994 was a rejection of Obamanomics. Barack Obama's economic plan is no Bill Clinton economic plan.