By Kevin D. Williamson
Tuesday, May 17, 2016
The most enduring and destructive superstition about
American politics is that the president is “in charge of” the economy, and so
it was no surprise to hear Hillary Rodham Clinton yesterday say that she’d put
her husband “in charge of revitalizing the economy.” As my colleague Charles C.
W. Cooke points out, this is an example of “talismanic” thinking, that what
makes the world go ’round is having the tribal chieftain do that voodoo that he
does so well.
There are some obvious problems with this line of
thinking, the main one being that it is complete and utter undiluted poppycock.
It is true that the U.S. economy performed to general
satisfaction during Bill Clinton’s presidency. But most of the big economic
news of the 1990s had little or nothing to do with Bill Clinton, with
government policies that were uniquely or mainly the work of Bill Clinton, or
with the day-to-day management of public resources by the Clinton
administration.
The Clinton-era boom was in no small part a continuation
of the Reagan-era boom, which was, like the performance of the economy under
previous and subsequent presidents, only partly a product of the president’s
economic philosophy and policies. Two of the great economic-policy successes of
the Reagan era — the taming of inflation and the bundle of reforms generally
described as “deregulation” — were rooted in Carter-era policies. Ronald Reagan
knew enough to understand that enduring the recession engineered by Paul
Volcker and the Fed was necessary to wring inflation out of the economy, but he
wasn’t terribly happy about it, and neither were voters: Reagan’s approval
ratings were at 41 percent at the end of 1982, and his unpopularity cost
Republicans a couple seats in the House. At the beginning of 1983, Reagan’s
job-approval number was down to 35 percent. But in May of 1980, inflation had
been 14.4 percent; in May of 1986, it was 1.5 percent, and Reagan’s approval
number roughly doubled.
Was taming inflation Reagan’s doing? Volcker’s doing? Do
we give Carter credit for choosing Volcker, or do we penalize him, knowing that
he hadn’t wanted to do so but was pressured into it? Robert J. Samuelson and
Paul Krugman have argued that out at some length, and the answer is
inconclusive.
“Inconclusive” is the conclusion more often than not in
these kinds of debates. The federal budget was in surplus (“primary surplus”)
toward the end of the Clinton administration, as Mrs. Clinton points out. Why?
Partly because of tax increases that Republicans fought vigorously against;
partly because of spending controls that Democrats fought vigorously against;
partly because of a stock-market bubble that liberated both the Clinton
administration and congressional Republicans from making some really tough
decisions.
Mere coincidence doesn’t actually tell a very good story
for the Clinton administration: During the last quarter of his predecessor’s
presidency, real GDP growth was 4.33 percent; during the last quarter of
Clinton’s presidency, it was down to 2.89 percent and plunging. By September
2001, U.S. GDP growth was down to less than one-half of one percent and by the
end of the year growth was only 0.21 percent. Maybe you think that was the
lingering effect of Clinton policies; maybe you think Bush policies took an
immediate effect; maybe you think it was other events (there was some economic
disruption in September of 2001). In general, the people who know the most
about these issues have the least certain opinions on that.
There were two big economic events during the Clinton
administration that had profound effects on the world economy. One was the
emergence of the web as an important cultural and economic phenomenon, a
blessing for which we may thank, among others, Tim Berners-Lee and Marc
Andreessen (and a whole lot of
taxpayers from around the world) and which the Clinton administration had
effectively nothing to do with. The other, which seems to be largely forgotten
in the English-speaking world, was the 1997 Asian financial crisis, which was a
catastrophe but one that spurred important corporate and banking reforms (especially
in the Republic of Korea) that helped lay the foundations for much of the
prosperity of developed Asia today. That has profound effects on the U.S.
economy, too, which are not mainly the result of policies pursued by the
Clinton administration or any other administration.
Still, Mrs. Clinton insists that when it comes to
revitalizing a national economy, her husband is the man who “knows how to do
it.” Certainty in these matters is always suspect: It wasn’t long ago that
David Sirota and the geniuses at Salon
were hailing “Hugo
Chavez’s economic miracle” in Venezuela, which has been reduced to utter
primitivism by socialism. And the Right is vulnerable to this kind of thinking,
too: When challenged about the difficulty of achieving sustained real GDP growth
comparable to that of the Reagan era, my friend Larry Kudlow declared: “I did
it before, and I’ll do it again.” He was being funny — a little bit funny — but
he and others who share his views do assume a rather more linear and immediate
connection between policy changes and broad economic outcomes than seems to be
warranted by the facts.
Those ideological positions may be unnecessarily narrow
and oversimplified, but they are magnificent intellectual achievements compared
with the magic-fetish view put forward by Mrs. Clinton and other practitioners
of her simpleton politics. And there are more of them than you’d think: Those
who obsess over marginal tax rates point to top income-tax brackets during the
Eisenhower administration (91 percent!) and declare that that was the key to
the golden postwar era. (Which looks a good deal less golden the more you know
about it.) Their opposite numbers point to the fact that while theoretical top
marginal rates were higher, actual taxes collected were lower and spending as a
share of GDP was lower, too — a-ha!
It wasn’t big taxes, it was small government! Some of my hawkish friends will
note that between 1950 and 1957 we doubled military spending (from 4.9 percent
of GDP to 9.8 percent of GDP) and ran a budget surplus. So maybe the key to
national happiness is doubling military spending to the exclusion of most
everything else in the federal budget — or, maybe, 2016 isn’t very much like
1957.
Maybe you think that Bill Clinton can turn around the
U.S. economy because, as Mrs. Clinton insists, “he knows how to do it.”
If he does, why didn’t he tell President Obama?
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