Bill Clinton seems the perfect validator for
Barack Obama -- which is why the President is utilizing the former
president for selling his tax deal. After all, the economy boomed when
Clinton was president and 22 million net new jobs were created. What's
more, Bill Clinton was reelected -- even though he lost both houses of
Congress in the 1994 midterms.
But the analogy falls apart as soon as you realize Clinton's economy
was vastly different from Obama's. The recession Clinton inherited was
relatively small, and caused by the Fed raising interest rates too high
to ward off inflation. So it could be reversed by the Fed lowering
interest rates -- as the Fed did in 1994. By 1995, the so-called "jobless
recovery" had morphed into a full-blown jobs recovery. By 1996, at
pollster Dick Morris' urging, Clinton could proclaim to the American
people "you've never had it so good, and you ain't seen nothing yet."
The Great Recession has been far larger, caused not by the Fed
raising interest rates but by the bursting of a giant housing bubble. In
2008, the biggest asset of most middle-class people, upon which they
borrowed and that they assumed would be their nest eggs for retirement,
collapsed. Housing prices continue to fall in most parts of the country.
The Fed has lowered interest rates all it can, and unemployment remains
Bill Clinton presided over an economic boom engineered by Fed chair
Alan Greenspan, who felt confident he could drop interest rates far
lower than anyone expected without risking inflation. The result was 4
percent unemployment in many parts of America, as well as the best jobs
recovery in history.
The price Greenspan exacted from Clinton -- and a resurgent Republican
congress demanded -- was a balanced budget. As a result, Clinton had to
give up much of his "investment agenda" in education, infrastructure,
and other long-neglected means of building the productivity of average
working Americans. The economy enjoyed a huge cyclical recovery.
But the economy's underlying structure remained as it had been
before, including stagnant wages for most Americans. Within a few years
the middle and working class was treating their homes as ATMs, borrowing
trillions of dollars in order to maintain their standard of living, and
at the same time demand enough goods and services to keep almost
everyone in jobs.
Those days are over. The Democratic Party can no longer ignore
critical investments in the productivity of average workers. Nor can it
ignore the increasing concentration of income and wealth at the very
top, and the inability of America's middle and working class to get the
economy moving again.
The GOP hasn't changed their story or their strategy since the 1990s.
It's the fault of big government. That was false then, and it's false
now. The structural problems are now much worse, and the cyclical
recovery from the Great Recession pathetically anemic.
If the Democratic Party has stood for anything over the years it is
to maintain and restore upward mobility for the majority of working
Americans, ensure that the playing field isn't tilted in the direction
of the privileged, and limit the power of the richest among us to
entrench themselves and their heirs into a semi-permanent plutocracy.
Continuing the Bush tax cuts of 2001 and 2003, including a sharp cut
in the estate tax, violates these core principles. Doing so in the midst
of an economic emergency that demands bold measures to rescue America's
vast middle and working class adds further insult. For President Obama
and former President Clinton to tell America there's "no other choice"
or that "this is the best we can do" -- when Democrats remain putatively
in control of the House, Senate, and the presidency -- is misleading.
I admire Barack Obama and Bill Clinton. I advised the former and
worked for the latter. They are good men. But they have either been
outwitted by the privileged and powerful of America, or seduced by those
on Wall Street and the executive suites of America into believing that
the Republican nostrums are necessary, or succumbed Democratic advisers
who think in terms of small-bore tactics rather than large and
I urge congressional Democrats to remember the larger principles --
not in order to be purist or make the perfect the enemy of the better,
but to move toward an economy and a society that we believe in, that
reflects the needs of the vast majority of Americans at this difficult