Politics

Created 2/21/1996
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Clinton Policy Accomplishments

(Economic and Social Policy)

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Clinton v. Dole on Trade

A short speech I gave on why Bill Clinton would be a better president from the standpoint of America's exports and international trade than Robert Dole.

Where the Deficit Came From

There is a recurrent (and highly false) line that the deficits of the 1980s came about because Congress busted the budget by refusing to follow Presidential recommendations to cut spending. Here are some--very basic--data on exactly how false this line is. I calculate it as 94% false.

Administration Successes

Cut the federal deficit by more than half. Aided by favorable macroeconomic conditions, the deficit as a share of national product is down from 4.9% of national product when Clinton took office to 2.1% of national product today.

A Lloyd Bentsen Op-Ed on the Deficit that I drafted, and of which I am proud. It ran in the Wall Street Journal on Thursday, November 3, 1994.

It is interesting that Newt Gingrich voted for neither of the major deficit reduction packages--the Bush package of 1990 and the Clinton package of 1993--that have turned the federal deficit from a crisis in to a worry, and yet claims to be deeply concerned about the deficit.

Secured the passage of the Uruguay Round of the GATT, projected (by me) to lower tariffs worldwide by $744 billion over ten years. The Uruguay Round cuts tariffs on manufactured goods by more than one-third overall, and eliminates tariffs in major markets in a number of sectors especially important to the U.S.

Secured the passage of NAFTA, which increases the chances that Mexico will make a rapid and peaceful transition to a developed, high-productivity, democratic society. I have strong views on this topic: see the WWW page on The Mexican Peso Crisis, which is a longer version of an article I published in the May-June 1996 issue of Foreign Affairs.

Expanded the Earned Income Tax Credit [EITC], thus boosting the rewards to work for low-income workers, and reducing the tax burden levied on 15 million working and lower middle class households. (The EITC survived an exceptionally mean-spirited attempt by Republican leaders to prune it back in 1995.)

Contained the winter 1994-1995 Mexican peso crisis. In the absence of the U.S.-led support package, Mexico might very well be in the middle of a Great Depression (rather than a severe recession) today. Other emerging market economies would have faced similar crises in the past year if the Mexican one had not been properly handled. I have strong views on this topic: see the WWW page on The Mexican Peso Crisis, which is a longer version of an article I published in the May-June 1996 issue of Foreign Affairs.

Made the federal income tax more progressive (still not clear whether this was a good idea or not; we'll see how much revenue is raised from the higher rates).

Signed the Family and Medical Leave Act, which had been vetoed by Bush. (Recent data appears to suggest that the Act has greatly improved the lives of many workers at very little cost to employers.)

Improved the targetting of education funds by channeling more to school districts with large numbers of poor children.

Established a voluntary national service program.

Reduced the cost of student loans for college.

Increased Head Start funding by 20 percent, expanding coverage by 100,000 children. Broadened food stamp aid by an additional $2.5 billion over the next five years.

Doubled training funds for dislocated workers, to $1.1 billion a year.

Accelerated compliance with Montreal Protocols on global warming.

Administration Failures

• Failed to design and pass a comprehensive health care reform program. (This issue will be back; it was big and nasty in 1993-1994; it will be bigger and nastier when it returns.)
• Failed to shift the distribution of federal spending priorities away from excessive defense and "corporate welfare" spending and toward public investment.
• Failed (save through the expansion of the EITC) to make significant progress in halting the slow transformation of the U.S. into a relatively unequal society, in which opportunity is hard to come by if you are born in the wrong place. Tax policies appear to be moving further in the direction of tilting the distribution of opportunity toward those who happen to be born in the right places: see A Capital Gains Tax Cut Op-Ed that David Levine and I wrote.
• Failed to reform welfare in a way that would (a) remove the disincentives to work-for-pay and maintaining stable families found in a current system, and yet (b) maintain the safety net--and continue to invest in future generations, for today's poor children are a sizable chunk of tomorrow's American labor force. For exactly what I think of the direction that welfare reform discussions have taken, see the page for A Welfare Reform Op-Ed that David Levine and I wrote.
• International Relations

Politics

Why We Are in This Politics Business Anyway:

• An eloquent short speech given by Gene Sperling in the White House the evening that the 1993 budget reconciliation package was passed, with some surrounding material.

Our Friends Across the Water:

• There are a bunch of similarities between the economic policies that we worked in in 1992-1993 and those that the British Labour Party's Shadow Treasury Ministry is trying to prepare for when and if Labour returns to office. Shadow Chancellor the Exchequer Gordon Brown's had a good piece on his Medium Term Growth Strategy. Robert Shapiro of the PPI has a defense of the applicability of new thinking about the sources of economic growth that I have entitled New Democrats and New Growth. And I am writing a short piece on Endogenous Growth and Economic Policy as well.

Could It Happen Here?:

• I have often said (for example, in the draft article on "The Mexican Peso Crisis") that those who worked in the Administration during the 1993 debate over NAFTA, the 1994 debate over the Uruguay Round, and the 1995 debate over the peso-support package smelled for the first time a whiff of Europe's politics of the 1930s--when Communists and Fascists joined forces to overwhelm the center, both left and right thinking that they would be the ones to pick up the pieces when the center collapsed.
  
  
• The right was correct.
  
  
• Others have reminded me that people on the conservative side smelled the same whiff at the end of the 1960s. And this has provoked me to start putting up some stuff relevant to the long-run stability of political democracy under the heading Could It Happen Here?

Paul Krugman's Fears:

• Paul Krugman continues to doubt the commitment of the Clinton Administration to free trade and liberal internationalism,and dourly predicts the growth of the influence within Administration councils of the strategic traders--who he thinks are as dangerous threats to American prosperity as the supply siders were.
  
  He may be right; in Lecture Thirty Four of my spring 1996 undergraduate macroeconomics class I briefly discussed a bureaucratic effort to establish, under the auspices of the National Economic Council and the National Security Council, "a team to produce an analysis for the President of the nation's structural current account deficit. The project will analyze the underlying causes and composition of our deficit and the economic problems it may cause for current and future living standards. The study will be global in scope, with particular emphasis on our economic relations with Asian nations....The effort will be coordinated by Ira C. Magaziner..."

I could understand this only as an attempt to find a job for the President's friend Ira, after his breathtaking display of incompetence in health care reform, where he could do some Japan bashing.

• Among the most dangerous of the strategic traders is Clyde Prestowitz

Politics

Created 2/21/1996
Go to Brad De Long's Home Page

Associate Professor of Economics Brad DeLong, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/