AP Photo/J. Scott Applewhite
The sight of Bill Clinton back on the White House podium defending tax cuts for the super-rich was more a sick joke than a serious amplification of economic policy. How desperate is the current president that he would turn to the great triangulator, who opened the floodgates to banking greed, for validation of the sorry opportunistic hodgepodge that passes for this administration's economic policy? A policy designed and implemented by the same Clinton-era holdovers whose radical deregulation of the financial industry created this mess in the first place.
As a candidate running against Hillary Clinton, Barack Obama quite accurately excoriated the economic policies of the Clinton years when the Democratic president united with congressional Republicans, led by Senate Banking Committee Chairman Phil Gramm, to obliterate sensible regulations of the New Deal. The result, as candidate Obama noted in March 2008, has been chaos:
"Unfortunately, instead of establishing a 21st century regulatory framework, we simply dismantled the old one--aided by a legal but corrupt bargain in which campaign money all too often shaped policy and watered down oversight. In doing so, we encouraged a winner-take-all, anything-goes environment that helped foster devastating dislocations in our economy."
These dislocations were authorized when Clinton signed off on the Gramm-Leach-Bliley Act, which reversed the Glass-Steagall Act's separation between the high rollers of investment banking and the properly conservative, insured and regulated activities of commercial banks entrusted with the life savings of ordinary folks. With a stroke of a pen that he then presented as a gift to Citigroup CEO Sandy Weill, Clinton opened the door to the too-big-to-fail monstrosities that have caused so much misery.
Back in 1999, even though he had been warned of the coming financial instability, foreshadowed by the collapse of Long-Term Capital Management, Clinton was giddy in signing the bill: "Over the past seven years we have tried to modernize the economy," he enthused. "And today what we are doing is modernizing the financial services industry, tearing down those antiquated laws and granting banks significant new authority."
