With the presidential election barely 18 months away, the Democrats are hoping a weak economy will give them a chance to win back the White House. It worked in 1992 when Bill Clinton defeated a popular George Herbert Walker Bush, who had driven Saddam Hussein out of Kuwait but seemed clueless how to respond to the relatively mild recession that followed the Gulf War. Clinton operatives summed up their entire winning strategy in one phrase: "It's the economy, stupid." Now, a new batch of Democrat contenders are hoping they can convince Americans it's still the economy -- but voters have gotten a lot smarter.
The American economy is so large -- more than $10 trillion -- there's very little any president can do to stimulate economic growth and create jobs in the short run. President Reagan -- who had the largest impact on the economy of any recent president -- cut taxes, encouraged the Federal Reserve board to keep interest rates high in order to bring down inflation, and slowed the growth of government spending on domestic programs. But even Reagan was only partly responsible for the tremendous expansion in the economy that began during his tenure and has continued to the present. Stable oil prices helped keep inflation low. The advent of corporate raiders forced American companies to stay lean and mean. The influx of immigrant workers and the relative weakness of American labor unions kept inflationary wage increases in check. The expansion of free trade policies in markets around the world and the explosion in technology also contributed to a healthy U.S. economy through the 1990s until now.
Bill Clinton, who is credited with presiding over a robust economy for eight years, succeeded more because of what he couldn't accomplish than anything he actually did. In his first year in office, Clinton tried to nationalize some 7 percent of the U.S. economy with Hillary's health care proposal and, luckily, failed. He increased government spending, but only modestly, thanks to the Republican takeover of Congress in 1994. He raised taxes, but only once -- which nonetheless explains why the economy grew at a slower rate in the 1990s compared to the boom period between 1982-1990. Had Clinton succeeded at the usual Democratic interventionist economic policies, his tenure would have been a huge bust.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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