As the fight continues over whether to raise taxes to ratify the additional $3.6 trillion President Obama and the Democrats have spent in just 27 months, you hear the same refrain from Democrats: We must raise taxes to the levels of the Clinton administration. This is always followed by flights of exaggeration portraying the Clinton era economic record as "The Greatest Peacetime Expansion in American History," or in world history, or in galactic history.
They seem to think it was the tax hikes that produced the prosperity.
The economy did expand during Bill Clinton's presidency -- though not quite as much as it had during the Reagan years. Ronald Reagan's presidency required a steep recession to undo the mistakes of his predecessors. Despite that, his overall record was astounding. Real GDP increased 32 percent under Reagan (it was 31 percent under Clinton). Disposable income grew 22.7 percent under Reagan versus 20.4 percent under Clinton. Obviously, both look luxurious from this remove.
Reagan overcame more serious economic woes, including raging inflation and interest rates. Clinton was more fortunate in his timing. By the time Clinton took the oath of office, the economy was already rebounding from a recession. And it's worth noting that as Clinton departed, the economy was dipping into recession again; whereas, the Reagan recovery was still skimming along the waves when the Reagans boarded Air Force One for the ranch in Simi Valley.
But fine, let's give all honor to Clinton for the things he did right. Memo to Democrats: We know you liked the Clinton tax increases, but why do you not praise the other aspects of Clinton's tenure such as the spending restraint, the strong dollar, free trade and the capital gains tax cut?
Clinton deserves credit for his staunch free-trade policies. He had to withstand pressure from unions, a key Democratic constituency, to pursue lower tariffs. Both Clinton and Al Gore stared down the unions in shepherding NAFTA to passage. And though Ross Perot had famously warned that NAFTA would lead to a "giant sucking sound" as American jobs were lost to Mexico, the agreement actually increased U.S. exports and U.S. jobs. Clinton later lost his nerve a bit on trade issues, but for the most part, his was a free-trade administration.
Democrats never laud Clinton's trade record. The Obama administration is certainly not guided by it, preferring, in docile obedience to the unions, to block trade agreements already negotiated by the Bush administration.
As for Clinton's fiscal record, well, everyone remembers the surpluses, but no one seems to recall the etiology. Like Obama, Clinton came to town with a Democratic Congress. Like Obama (though not at the same reckless level), he introduced budgets that gave no thought to balance. He introduced a form of nationalized health care (which would have included increased taxes of $1.5 trillion over five years) and a stimulus bill. He also promised to reform Social Security (nothing happened) and vowed to reduce the growth in Medicare and Medicaid spending (on the contrary, spending shot up).
But Clinton was lucky. His health care bill failed. Congress tossed his stimulus bill into the trash, as well. And when the voters delivered a head smack in the form of handing Congress to the Republicans in 1994, Clinton began to veer away from the policies that would have damaged the economy and the country.
Everyone now recalls Clinton as the victor in the great budget wars of 1995. And while it's true that public opinion backed Clinton over Newt Gingrich in the confrontation that led to the temporary government shutdown, it was ultimately Clinton who changed course.
It was Republicans in Congress who insisted upon balanced budgets. After protesting that a balanced budget was out of the question, Clinton was finally forced, by Republican pressure, to produce one (it was his fifth budget of the year). That's how Clinton arrived at spending restraint. Clinton also reversed himself on welfare reform, finally signing (after two vetoes) a Republican reform in 1996.
Those Democrats who get goose bumps remembering the Clinton tax hike of 1993 are forgetting a lot. Those tax increases failed to yield the kind of revenue the Clinton administration had advertised. While the economy expanded during the first years of the Clinton presidency, it really took off only after Congress passed and the president reluctantly signed the capital gains tax cut in 1997.
So by all means praise Clinton -- the later Clinton, the Clinton who did many of the right things because Republicans had him in a half nelson.