The Clinton economic era was not a Democratic golden age

I just want to bring this to your attention. I’ve been making the point for a while that while power-holding Democrats are getting better on identity issues (issues around minority rights and related issues), they’ve been universally bad on economic issues. In fact, the whole bipartisan Beltway consensus is built around both parties making sure that billionaires never lose.

The centerpiece (and original sin in the modern era) for that movement is these NAFTA-style trade agreements, the ones that protect capital and profit — and nothing else in the world. Not environments; not labor; not the climate; not the sovereignty of national governments; not humans in any form but the baronial. Nothing else in the world.

And while Reagan started the move of U.S. manufacturing overseas (he initiated the death of high-tech wafer fabrication in the U.S., one of our strongest new industries, and was well-paid in dollars for it by the Japanese as soon as he left office), it was Clinton who campaigned on and gave us NAFTA.

What’s wrong with this picture?

This view of Clinton is at odds, however, with the way his era is often portrayed and praised, as (relatively speaking) economic good times and proof of Democratic economic goodness. Now comes Dean Baker to show why the Clinton “good times” era was not what we think it was — thus reinforcing my main point about Democrats, that they’re as terrible for the country economically as any of the other “free traders” of either party.

Dean Baker begins (my emphasis and paragraphing):

There is widely held view in Washington policy circles that the economy was golden in the Clinton years. We had strong growth, low unemployment, rising real wages, a soaring stock market and huge budget surpluses. According to this myth, George W. Bush ruined this Eden with his tax cuts for the rich and wars that he didn’t pay for.

While there are plenty of bad things that can be said about George W. Bush, his tax cuts for the rich and his wars (whether paid for or not), this story of paradise lost badly flunks the reality test. At the most basic level, the chain of causation is fundamentally wrong.

Dean points to the soaring Clinton stock market as the symbolic evidence most people use to “prove” the Clintonian economic goodness, but in fact that market was a huge bubble, which burst, as Dean notes, before Clinton left office.

Though Baker doesn’t mention it, I’m pretty certain that the left-progressive desire to lay the dead cat of the burst economy on Bush’s door (a desire that increased with the start of the Iraq war) was an equal partner in the promotion of this myth from the left. The “loyal Bushies” of the time wanted to lay that cat on Clinton’s door, which fueled the resistance.

Back to Baker. He offers a graph showing that the Bush tax cuts didn’t cause the deficit — the economy did:

[T]he budget would have shifted from surpluses to deficits in 2002 even if there had been no tax cuts and no increase in military spending associated with the wars in Afghanistan or Iraq. While neither of these may have been good uses of public money, they did not cause the deficit. The downturn following the collapse of the stock bubble led to the deficits in 2002-2005.

That graph is below. Start reading it from the y-axis, with the Clintonian surplus in 2001, and note the zero-deficit line (the x-axis). In 2001, the “deficit” was below the zero-deficit line; in other words, it was a surplus. Now note the effect of the dark blue band, the “economic downturn,” as the years advance.

The Bush deficit came from the crash of the Clinton economy.

The Bush deficit came from the crash of the Clinton economy.

Do read the rest. I don’t want to crib the entire paper; it’s not long and very well done. The sentences I excluded are fascinating. His conclusion:

It is not a good idea to rely on asset bubbles to fuel economic growth or to provide the basis for fiscal responsibility. The result was disastrous when Bush led us down this path. The picture was not much prettier when Clinton went the same route a decade earlier.

So there. Clinton created an asset bubble, the stock market, or at least relied on it for economic cred. Busted. So we’re back to my own bottom line — the Dems can’t be trusted on economic issues, and Clinton (and Obama) are still Rubinite free-trade freaks.

The lesson of 1066

As in 1066, in 2012 there were two armies in the field arrayed against the good guys (progressives) — troops led by Romney, Duke of Bain, and the army of Prince Obama. We defeated Duke Romney, cleverly using Prince Obama against him. Now we must defeat (or at least contain) the Prince. He’s ruled by the baronial class as well, and cannot be allowed to advance their looting, anymore than we could have allowed Romney that opportunity.

If we don’t achieve both goals — if we don’t defeat both opposing forces — the nation will ultimately lose. I know I’m right; the evidence is overwhelming. Thanks to Dean Baker for clearing up the last bit of confusion. But it still leaves us with our problem, two armies arrayed against us.

In 1066, when the Danish-descended King Edward the Confessor died, he named Harold Godwinson king of England — thus King Harold. Two outsiders claimed the throne, Harald Hardrada of Norway and William of Normandy (“Normandy” means “Norsemanland,” it’s where Vikings permanently settled in France). Harald Hardrada landed first in the north of England. Our Harold rode north with his army and defeated him. Then William landed in the south (near Hastings) and Harold turned his tired army around and rode south. As it turned out, twice was not the charm, at least for Harold.

Two armies in the field — we’ve got the problem Harold had. We now have half of what he achieved. Let’s work toward a different second result.

Historically yours,


[Update: Some phrasing tweaked for clarity.]

To follow or send links: @Gaius_Publius

Gaius Publius is a professional writer living on the West Coast of the United States.

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33 Responses to “The Clinton economic era was not a Democratic golden age”

  1. GaiusPublius says:

    Not without doing a ton of research. But check out the speeches Reagan gave in Japan right after he left office. If memory serves, he got $2 million for three speeches. Kevin Phillips, Nixon-era Republican consultant and writer, reacted at the time with disgust. Not sure if any of that info is web-available, since the year was 1989, but you might check.

    The history of wafer-fab in the U.S. would be worth finding documentation for. (Wafer-fab: In the high-tech world, computer chips are manufactured many at a time on large circular “wafers” — things that look like huge communion hosts. There are 20 or more chips on one wafer. Then each “site” is tested, the good ones are cut out of the wafer and kept, and the bad thrown away. The good ones, as chips, are then speed-tested, packaged (put in a casing with pins) and sold.)

    The U.S, used to own that business. We designed the chips, we build them, we sold them. Reagan served the interests of those who wanted to see that business go overseas. Was it labor-cost issues for U.S. interests, or just plain corruption serving foreign interests? Both? Dunno. If anyone has the data or the links, it would help if you would drop them here.

    Good question; unfortunately this is all I can say right now.


  2. GaiusPublius says:

    Thanks, pappyvet. If you have a link for that jobs-lost number, please post it here. I’d love to check it out.


  3. pappyvet says:

    NAFTA, republican idea signed by a democrat.
    American jobs lost to China alone just between the years 2001 and 2011 are estimated to be more than 2.7 million U.S. jobs, over 2.1 million of which were in manufacturing. This according to a study by the Economic Policy Institute. The “giant sucking sound” of good paying jobs happened as planned.

    10% of our population now controls 90% of our wealth. And,50 of the world’s wealthiest countries are not countries but transnational corporations. Lincoln’s “suicide” has turned into out and out murder.

  4. nicho says:

    Actually, the deficit is shrinking — but do go on.

  5. Bill_Perdue says:

    Looked at from the perspective of working people, Democrats and their Republican cousins are the enemy.

    Specifically in the case of Bill Clinton, he did far more damage than the Republicans, confirming the perception that the fact that Democrats lie better is only significant difference between the two parties. There is no question that we are living in the Clinton Depression. His signature on NAFTA and the Republican deregulation bills of 1999, the Gramm-Leach-Bliley Act aka the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 created massive exports of union jobs and the current Depression.

    Since the Nixon administration, the goal of both parties has been union busting via deregulation and encouraging and abetting the export of union jobs. The result it a huge droop in the standard of living of workers and membership in unions. That is the fundamental cause of the abiding depth and length of the Clinton Depression. Things are not help by the fact that Obama is Clinton clone.

    Barring a significant turn to the right by the twin parties of the rich, the Clinton Depression will continue until workers form our own parties and soon after that, our own government and state. That is the only viable solution to the problems of the wars, racism, encroaching theocracy and depression that constitute the cornerstones of the policies of Democrats and Republicans alike.

  6. lynchie says:

    That would make a good article. All for the betterment of the big corporations. The looting continues. Regan had the S & L collapse and Obama did the same with looting our treasury with bailing out the criminal actions of Wall Street and the Banks. Corzine lost a couple of billion and I have heard nothing since he declared he did not know where the money went. Holder, Congress and our President complicit in their inaction to prosecute the aristocracy. But the chase every pot smoker and petty thief.

  7. Naja pallida says:

    Indeed, it would have been really nice to have seen the surplus dumped directly into infrastructure and/or education spending. Both of those would have made a much more significant impact.

  8. Ford Prefect says:

    Not it’s not going to be “hell.” Well, there’s no reason for it to be, even though that is obviously what our corporate overlords have planned for us.

    Reducing the deficit (not eliminating it) can be done by: 1) Seriously raising taxes on the rich and redistributing that capital downward (through rational spending priorities) where it will spur the economy; 2) creating good paying jobs, which will increase revenues in multiple ways; 3) Not blowing deficit spending on stupid things with little or no economic payoff–like wars and corporate welfare.

    The US is a sovereign state with a currency of its own issuance. It can therefore print money to pay off the bankers. Avoiding hyperinflation is easy with sound economic policies that pay off.

    Lastly, deficits are now and always have been a pro-growth policy. Reining them in or eliminating them during a downturn is economic sabotage. Cut spending and taxes, unemployment goes up… and so does the deficit, which will require more cuts, more unemployment and so on. This is what is in store for all of us.

    So don’t play into that game. This isn’t a business or a household. It’s not even a state or local government that can’t print its own money. If you could print up enough cash to pay off all your debts and engage in economically productive spending that will result in positive returns, would you have a debt problem?

  9. guest1 says:

    You are right but do you realize that surpluses are the only way to pay back the deficit and right now the deficit is increasing rapidly. Going to be hell paying back this much debt

  10. Ford Prefect says:

    True dat. Although that proposed tax cut wouldn’t have been nearly as beneficial as say, infrastructure spending or lowering the Medicare eligibility age. In the end, tax cuts go overwhelmingly to the rich and that too is deflationary, since that just goes to accumulation rather than spending.

  11. Kelvin Mace says:

    “And while Reagan started the move of U.S. manufacturing overseas (he
    initiated the death of high-tech wafer fabrication in the U.S., one of
    our strongest new industries, and was well-paid in dollars for it by the
    Japanese as soon as he left office)”

    GP, could you expand of this? I have heard this before but no details.

  12. karmanot says:


  13. karmanot says:

    Giving away American sovereignty over toxic disasters to a Court in Belgium.

  14. karmanot says:

    Thank you! I’ve been waiting for history to catch up with Clinton.

  15. Naja pallida says:

    In 2000 Clinton proposed a relatively modest 350 billion dollar tax cut to offset the economic impact of the surplus, of course, by that point, nobody in Congress was going to listen to anything he had to say anyway… but what we ended up getting in 2001 was effectively swatting a fly with a Buick.

  16. Ford Prefect says:

    Authoritarianism: It’s not just for Republicans anymore.

  17. Ford Prefect says:

    In retrospect, she deserves some kind of medal.

  18. Ford Prefect says:

    Indeed, as if the entire nation decided to ape the sequence in Lost In America without thinking about the likely downside: “Put it all on 22!”

    I tend to think that’s where a lot of the tolerance for official corruption comes from.

  19. lynchie says:

    He also embraced NAFTA.

  20. Ford Prefect says:

    To some extent you’re correct. But Clinton’s “strong dollar” policy, coupled with a budget surplus, led to the recession of 2001. A sovereign government is not a business or a household. Surpluses are deflationary because they take cash out of the economy. As such, it was always a toxic idea.

    And they knew that much. It was merely the setup for what followed.

    Yes, he raised taxes on the rich a wee bit. But it didn’t go far enough to mitigate the economic sabotage the rest of his program amounted to.

  21. cambridgemac says:

    Bwahahahaha. You may have exposed our incredible evilness and our devotion to the Dark Lord of….um….whatever…. But it will do you NO GOOD! Obama Bashenda Est!

  22. BeccaM says:

    Just like the ones in the early 2000s who decided to get into real estate so they could ‘flip’ properties.
    A few got rich. Most lost everything or are teetering on the edge of financial ruin. Our former landlords are in that last category, having leveraged and overextended.

    But Ford’s right: The worst of it is in the 90s, Americans were taught not to plan, but to take chances on the gigantic slot machines of the stock and real estate markets — both of which inevitably crashed as all bubbles do.

  23. BeccaM says:

    And the fact Bill and the Dems did kill Welfare.

  24. bergamot5 says:

    The original design concept of the blog was cute Obama YouTube clips then bashing kittens, but that was eventually rejected.

  25. nicho says:

    That’s exactly what the pom-pom crowd wants us to do — much like the Freepers ignored Bush’s atrocities.

  26. Naja pallida says:

    Maybe if they didn’t do so much worthy of bashing. Do you expect us just to ignore it when they act more like Republicans than progressives?

  27. Naja pallida says:

    Clinton was the best Republican President of my lifetime. Don’t forget, in his last year in office he was pushing for tax cuts, and for what later became Medicare Part D.

  28. nicho says:

    Not to mention that Bill & Hillary Inc. was planning to do away with Social Security and Medicare and their plans were stopped only by Monica Lewinsky on bended knee.

  29. nicho says:

    I know two people who quit their jobs in the ’90s to become day traders. I know other families who spent all day in front of the TV watching the stock tape on CNBC and cheering as they watched themselves on their way to becoming billionaires. Now, they’re all struggling. It was a sickness.

  30. nicho says:

    Admit it. You do come for the puppies and kittens, don’t you?

  31. Tornado says:

    Just more bashing democrats one has come to expect here. It’s cute puppy YouTube clips then bash President Obama then Cute kitten YouTube clips then bash democrats and around and around.

  32. Ford Prefect says:


    Yes, bubbles were needed to mask the effect of off-shoring the productive economy, stagnant or falling wages and the wholesale loss of sovereignty that is the single biggest feature of “free trade” fundamentalism. Add in wholesale deregulation, repealing all the New Deal banking reforms and a budget surplus that was guaranteed to contribute to the recession that followed shortly after The Big Dog left office… and well, it’s a socio-economic massacre out there.

    Clintonomics convinced Americans to become gamblers, rather than producers. Wages are stagnant, so bet on your house and the rigged financial markets! IOW, become a mark for the con men (and women) of Wall Street.

    With that frame in mind, how can anyone view Clinton–or current Dem leadership–with non-jaundiced eyes?

    This is nothing new, though. I remember the early ’90s very well and the intra-party arguments that were had at the time. As late as ’99, there were still a couple Democrats who managed to predict everything that’s happened since, right down to the Financial Crisis. Of course, they were steamrolled by the corrupt.

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