Tag: bill clinton

Meet the Press, Check the Facts

By
Steve H. Hanke

This Sunday (2 December 2012), David Gregory hosted a lively session of NBC’s Meet the Press. The focus of Sunday’s program was the so-called Fiscal Cliff. Gregory rounded up many of the usual Washington suspects, including Treasury Secretary Timothy Geithner, and drilled them on their talking points.

Several times, in the course of Gregory’s questioning, he referred to President Bill Clinton’s tough 1993 budget deal. Throughout the broadcast, Gregory kept stressing the fact that the 1993 deal included defense cuts. For Gregory, those cuts were the flavor of the day.

This isn’t surprising. Indeed, most members of Washington’s chattering classes parrot the line that the economy boomed during the Clinton years because Clinton was the beneficiary of the so-called peace dividend, which allowed him to cut defense expenditures.

In fact, if we look carefully at the federal budget numbers, while Clinton did cut defense expenditures, as a percent of GDP, the majority of the Clinton squeeze came from non-defense expenditures. Indeed, as can be seen in the accompanying table, the non-defense squeeze accounted for 2.2 percentage points of President Clinton’s 3.9 total percentage point reduction in the relative size of the federal government.

Clinton squeezed the budget and squeezed hard, from all major angles. This was a case in which a president’s actions actually matched his rhetoric. Recall that, in his 1996 State of the Union address, he declared that “the era of big government is over.”

Clinton’s 1993 deal marked the beginning of the most dramatic decline in the federal government’s share of the U.S. economy since Harry Truman left office. The Clinton administration reduced government expenditures, as a percent of GDP, by 3.9 percentage points. Since 1952, no other president has even come close. At the end of his second term, President Clinton’s big squeeze left the size of government, as a percent of GDP, at 18.2 percent—the lowest level since 1966.

The table contains the facts. President Clinton knew how to squeeze both defense and non-defense federal expenditures. Indeed, he squeezed non-defense a bit harder than defense. Since 1952, the only other president who has been able to reduce the relative share of non-defense expenditures was Ronald Reagan. Forget the “peace dividend”—it’s all about the Clinton “squeeze dividend.”

Topics: 
Cato Publications, Foreign Policy and National Security, General, Government and Politics, Tax and Budget Policy

Clinton and Obama, Polar Opposites

By
Steve H. Hanke

Last night, Bill Clinton introduced President Barack Obama as the Democratic nominee. He went to great lengths to stress their similarities, but failed to mention their divergent views on the appropriate size of government.

When President Clinton took office in 1993, government expenditures were 22.1% of GDP, and when he departed in 2000, the federal government’s share of the economy had been squeezed to a low of 18.2%. As the accompanying table shows, during the Clinton years, federal government expenditures as a percent of GDP fell by 3.9 percentage points. No other modern president has come close.

 

And, that’s not all. During the final three years of the former President’s second term, the federal government was generating fiscal surpluses. Clinton was even confident enough to boldly claim, in his January 1996 State of the Union address, that “the era of big government is over.”

When it comes to the appropriate size of government, Clinton and Obama are polar opposites.

Topics: 
General, Government and Politics, Tax and Budget Policy

Clinton vs. Obama

By
David Boaz

Over the weekend I stumbled upon C-SPAN’s broadcast of Bill Clinton’s 1992 speech accepting the Democratic nomination for president, and I remembered how he seemed like a “different kind of Democrat” at the time. As I started watching, I heard Clinton saying:

The most important family policy, urban policy, labor policy, minority policy, and foreign policy America can have is an expanding entrepreneurial economy of high-wage, high-skilled jobs …

Soviet communism has collapsed and our values—freedom, democracy, individual rights, free enterprise—they have triumphed all around the world.

And then he got into the meat of the “new Democrat” message:

To turn our rhetoric into reality we’ve got to change the way government does business, fundamentally. Until we do, we’ll continue to pour billions of dollars down the drain.

The Republicans have campaigned against big government for a generation, but have you noticed? They’ve run this big government for a generation and they haven’t changed a thing. They don’t want to fix government; they still want to campaign against it, and that’s all.

But, my fellow Democrats, its time for us to realize we’ve got some changing to do too. There is not a program in government for every problem, and if we want to use government to help people, we have got to make it work again….

Now, I don’t have all the answers, but I do know the old ways don’t work. Trickledown economics has sure failed. And big bureaucracies, both private and public, they’ve failed too.

That’s why we need a new approach to government, a government that offers more empowerment and less entitlement. More choices for young people in the schools they attend- in the public schools they attend. And more choices for the elderly and for people with disabilities and the long-term care they receive. A government that is leaner, not meaner; a government that expands opportunity, not bureaucracy; a government that understands that jobs must come from growth in a vibrant and vital system of free enterprise.

He made his famous promise to “end welfare as we know it.”

That’s not President Obama’s style. He’s not that kind of Democrat. He doesn’t talk about free enterprise as an American value, not even when speaking of freedom to students in China. Search for “free enterprise” on the White House website, and the first hit is to his famous “You didn’t build that” speech in Roanoke—which doesn’t include the word “enterprise,” or the word “free.” He doesn’t say that big bureaucracies have failed, or that we need more choice in education and health care.

Which presumably means Bill Clinton will have to write a different speech when he nominates President Obama for reelection on Wednesday night.

Now don’t get me wrong. There was plenty of old-fashioned Democratic liberalism in Clinton’s 1992 speech. He talked about “what all of us must give to our Nation,” which fits well with Obama’s view. He denounced outsourcing, he proclaimed that “health care is a right,” he promised billions in new federal spending and lots of programs.

He even deplored polarization and “the stereotypes that blind us,” reminding us that today’s complaints about polarization are nothing new. And I was struck by the way he delivered that complaint. He said that “for too long politicians have told the most of us that are doing all right that what’s really wrong with America is the rest of us—them.” And he elaborated:

Them, the minorities. Them, the liberals. Them, the poor. Them, the homeless. Them, the people with disabilities. Them, the gays.

All good points. Too much stereotyping. Too much polarization. Too much partisanship. Except that his list of stereotypes was very partisan. What about “Them, the conservatives”? “Them, the rich”? Aren’t those polarizing stereotypes too? You’d think a different kind of Democrat would have deplored all the stereotypes that politicians use to divide people.

David Maraniss writes in today’s Washington Post that “on most of the big issues, there is little or no space between [Clinton and Obama] as pragmatic liberals.” Maybe so, but in his campaign—and in his response to a midterm electoral rebuke—Clinton certainly gave voters the impression that he was a “different kind of Democrat,” one who appreciated the limits of government and the virtues of free enterprise. This week he’ll presumably have to give a full-throated defense of a president who never said that the era of big government is over, who increased the food stamp rolls by 14 million after Clinton reduced them by 11 million, who increased the national debt by $5 trillion compared to $1.6 trillion in the Clinton years. No doubt he’ll do a great job.

Topics: 
General, Government and Politics

President Obama Accuses Bill Clinton of ‘Thinly Veiled Social Darwinism’

By
Daniel J. Mitchell

Actually, Bill Clinton must be something even worse than a social Darwinist. That’s because the title of this post is wrong. Obama said that Paul Ryan’s plan (which allows spending to grow by an average of 3.1 percent per year over the next decade) is a form of “social Darwinism.”

But the proposal from the House Budget Committee Chairman only reduces the burden of federal spending to 20.25 percent of GDP by the year 2023.

Yet when Bill Clinton left office in 2001, following several years of spending restraint, the federal government was consuming 18.2 percent of economic output.

And by the President’s reasoning, this must make Clinton something worse than a Darwinist. Perhaps Marquis de Sade or Hannibal Lecter.

Here’s a blurb from the New York Times on Obama’s speech.

Mr. Obama’s attack, in a speech during a lunch with editors and reporters from The Associated Press, was part of a broader indictment of the Republican economic blueprint for the nation. The Republican budget, and the philosophy it represents, he said in remarks prepared for delivery, is “antithetical to our entire history as a land of opportunity and upward mobility for everyone who’s willing to work for it.” …“Disguised as a deficit reduction plan, it’s really an attempt to impose a radical vision on our country. It’s nothing but thinly veiled social Darwinism,” Mr. Obama said. “By gutting the very things we need to grow an economy that’s built to last — education and training, research and development — it’s a prescription for decline.”

I’m particularly amused by the President’s demagoguery that Ryan’s plan is “antithetical to our entire history” and “a radical vision.”

Is he really unaware that a small and constrained central government is part of America’s history and vision? Doesn’t he know that the federal government, for two-thirds of our nation’s history, consumed less than 5 percent of GDP?

Of course, that was back in the dark ages when people in Washington actually believed that the Constitution’s list of enumerated powers in Article 1, Section 8, actually enumerated the powers of the federal government. How quaint.

No wonder this Ramirez cartoon is so effectively amusing. It certainly seems to capture the President’s view of America’s founding principles.

Topics: 
General, Government and Politics, Tax and Budget Policy

Will ‘the People’ Fall for It?

By
Roger Pilon

Today POLITICO Arena asks:

President Barack Obama is taking a cue from President Bill Clinton by pushing a series of bite-sized policies. Among them: a new fatherhood pledge, graphic tobacco warnings, updated sunscreen requirements, an anti-bullying summit and entertainment discounts for fathers to spend more time with their kids. Can he use this “school uniforms” approach to effectively appear above the daily partisan Washington sniping? And is this “small ball” approach a retreat from the grander “change we can believe in” vision candidate Obama touted in the 2008 campaign?

My response:

The president has two main responsibilities: internationally, to oversee the nation’s foreign policy; domestically, to see that the laws be faithfully executed. For Obama to devote his attention to trivia like this is not only to demean the office of the presidency – recall Clinton’s “boxers or briefs” incident – but to play to the basest instincts of the electorate.

Unfortunately, in a country in which nearly 60 percent of adults don’t know when we declared our independence and a quarter don’t know from what country, Obama’s “small ball” politics may work. This is a president who couldn’t get a budget passed for two years, despite having huge majorities in Congress, yet he’s got time for this. Perhaps H.L. Mencken put it best: “People deserve the government they get, and they deserve to get it good and hard.” I didn’t know Obama was a student of Mencken.

Topics: 
Government and Politics

Clinton, Obama, and Hayek

By
David Boaz

President Obama has been saying that if the United States government can find and eliminate Osama bin Laden after ten years of searching, it can do anything:

Already, in several appearances since the raid, Obama has described it as a reminder that “as a nation there is nothing that we can’t do,” as he put it during an unrelated White House ceremony Monday. On Sunday night, during his first comments about the operation, he linked it to American values, saying the country is “once again reminded that America can do whatever we set our mind to.”

This is, of course, nonsense. Finding bin Laden, difficult as it proved to be, was an incomparably simple task compared to using coercion and central planning to bring about desired results in defiance of economic reality. You can’t deliver better health care to more people for less money by reducing the role of incentives and markets, even if you set your mind to it. As Russell Roberts said about a similar concept, “If we can put a man on the moon, then…”:

Putting a man on the moon is an engineering problem. It yields to a sufficient application of reason and resources. Eliminating poverty is an economic problem (and by the word “economic” I do not mean financial or related to money), a challenge that involves emergent results. In such a setting, money alone—in the amounts that a non-economic approach might suggest, one that ignores the impact of incentives and markets—is unlikely to be successful.

Obama should listen to Bill Clinton, who last fall seemed to be channeling Hayek:

Friedrich Hayek, The Fatal Conceit: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Bill Clinton, 9/21: “Do you know how many political and economic decisions are made in this world by people who don’t know what in the living daylights they are talking about?”

Topics: 
Government and Politics

The 1993 Clinton Tax Increase Did Not Lead to the Budget Surpluses of the Late 1990s

By
Daniel J. Mitchell

Proponents of higher taxes are fond of claiming that Bill Clinton’s 1993 tax increase was a big success because of budget surpluses that began in 1998.

That’s certainly a plausible hypothesis, and I’m already on record arguing that Clinton’s economic record was much better than Bush’s performance.

But this specific assertion it is not supported by the data. In February of 1995, 18 months after the tax increase was signed into law, President Clinton’s Office of Management and Budget issued projections of deficits for the next five years if existing policy was maintained (a “baseline” forecast). As the chart illustrates, OMB estimated that future deficits would be about $200 billion and would slightly increase over the five-year period.

In other words, even the Clinton Administration, which presumably had a big incentive to claim that the tax increase would be successful, admitted 18 months after the law was approved that there was no expectation of a budget surplus. For what it’s worth, the Congressional Budget Office forecast, issued about the same time, showed very similar numbers.

Since the Clinton Administration’s own numbers reveal that the 1993 tax increase was a failure, we have to find a different reason to explain why the budget shifted to surplus in the late 1990s.

Fortunately, there’s no need for an exhaustive investigation. The Historical Tables on OMB’s website reveal that good budget numbers were the result of genuine fiscal restraint. Total government spending increased by an average of just 2.9 percent over a four-year period in the mid-1990s. This is the reason why projections of $200 billion-plus deficits turned into the reality of big budget surpluses.

Republicans say the credit belongs to the GOP Congress that took charge in early 1995. Democrats say it was because of Bill Clinton. But all that really matters is that the burden of federal spending grew very slowly. Not only was there spending restraint, but Congress and the White House agreed on a fairly substantial tax cut in 1997.

To sum things up, it turns out that spending restraint and lower taxes are a recipe for good fiscal policy. This second chart modifies the first chart, showing actual deficits under this small-government approach compared to the OMB and CBO forecasts of what would have happened under Clinton’s tax-and-spend baseline.

Topics: 
Government and Politics, Tax and Budget Policy

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