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J. Bradford DeLong
I also argued for Gore on Michael Krasny's show, KQED's Forum, on November 1...
What would the economy be like if we elect Al Gore president this November? The president has power to accomplish a very few select--but important--priorities. Because Gore has been an important substantive part of the Clinton administration, and because there will be substantial continuity in personnel between a Clinton and a Gore administration, there is a record to run on. To look forward at a Gore administration, look back at the Clinton-Gore administration. There is a record to run on, and it is by and large a good--although not a perfect--one.
If you asked Clinton and Gore what they successfully accomplished three tasks: restored responsibility and put the underclass back on the road to inclusion in America with welfare reform, that they created jobs and expanded opportunities for Americans to export through NAFTA and GATT, and that they removed the dead weight of the deficit that had hobbled American economic growth.
On welfare reform I think Clinton and Gore deserve no credit at all. Back at the very start of 1993 they were warned that welfare reform would be expensive: it was, after all, cheaper to pay single women with few skills and dependent children cash than it would be to equip them with the skills they would need to keep jobs, give them the help they would need to find jobs, and enable them to afford the day care they would need while they were at their jobs. Yet the welfare reform Clinton signed contained no new money--it just shoved all the problems off onto the states. States now have to do what the old welfare system did and they have to provide their parents with the resources--the education, the skills, the help with searching for jobs--to become and remain attached to the labor force as well. It may yet work--a high-pressure economy with low unemployment is the best of all welfare reform policies. But if it does, it's not because of Clinton, or Gore.
On international trade Clinton and Gore deserve more credit. They did not have to spend scarce early political capital on rallying support for George H.W. Bush's NAFTA, and for the Uruguay Round of the GATT. They did do so because they thought that these two trade agreements were good for America and for the world--in spite of the fact that it was very unpopular with powerful elements of the Democratic coalition. That kind of willingness to risk splitting your political coalition by doing what is right is nice to see.
Last--and by far the most important--comes the deficit. By 1993 it had long been clear that whatever supply-side gains in productivity were produced by the Reagan tax cut were vastly outweighed by the negative consequences of high deficits that drained the pool of capital for financing investment and slowed economic growth. Depending on which set of economists you asked, the four percent of GDP or so that was diverted to buying government bonds to finance the deficit slowed American growth by between one-half and one percent per year. It had left America by 1992 between 4 and 8 percent poorer than it might have been had the budget been balanced.
Outside economists and inside economic advisors had been making these points for a decade before 1993. The argument that the economic health of the nation required spending political capital on deficit reduction was made in 1993. But it had been made back in 1983 under Reagan by Marty Feldstein. And it had been made in 1989 by Michael Boskin. There is a good deal of truth in the claim that our current surpluses have a bipartisan origin: a lot of credit has to go to the members of George Bush the First's team who negotiated the 1990 deficit reduction agreement and, particularly, the Budget Enforcement Act that shifted the ground on which congress operates.
But George Bush the First is not running. The people who will staff the media-savvy and politics-savvy parts of the next Republican administration have rejected his policies. Newt Gingrich, Dick Armey, and company double-crossed George Bush the First in 1990 and rejected his deficit reduction program. Ever since it has been an article of Republican faith that the 1990 deficit-reduction agreement was a mistake into which a naive and trusting president was tricked by nasty Democrats. Ask George Bush the Second today, and he wll tell you that in the context of the pledges given during the 1988 campaign his father's 1990 deficit-reduction agreement was his father's worst mistake.
So here I think there is an important advantage to Clinton-Gore. They--unlike their predecessors--had the brains to understand what their analysts were telling them about the deficit, and they had the guts to follow through. Here Clinton-Gore deserves full credit. And lifting the dead weight of the deficit from the economy may well have gained us rewards in faster economic growth greater than anyone in 1993 would have dared predict. Larry Summers and company have convinced Gore to aim for zero national debt by 2012. As best as I can judge, the Bush-Cheney projections still have $3 trillion in outstanding debt by 2012. That's a big difference indeed, with very powerful implications for capital formation and economic growth:
Economists will argue for decades to come over how much of the high-tech high productivity-growth boom we are currently experiencing is the result of the high-investment economy produced by the elimination of the deficit. It is a welcome change from the previous sport that academic economists played, that of assigning blame for relative stagnation. But one thing is clear: a Bush the Second economy would in all probability lead to a poorer America than a Gore economy.
This year we seem to have a Republican candidate with no weaknesses--the perfect president-to-be. I've talked about a flawed--but I think an extremely well-qualified--candidate with a long track record full of things to like and dislike. How is it that the Republican candidate has no weaknesses? Because he is an unknown governor--someone without significant relevant experience, someone on whom everyone can project all their hopes as one projects them onto a blank screen. We have elected two unknown governors in the recent past. And I don't think anyone here would say that either Jimmy Carter or Bill Clinton has lived up to anyone's hopes. I don't think anyone today would say that either Jimmy Carter or Bill Clinton was the best that the Democratic Party had to offer.
If you believe the polls George Bush the Second has a lead of between one and six percentage points, and we are on the verge of electng another unknown southern governor. What will his flaws turn out to be? In context it's pretty scary. I don't think we should encourage this pattern: I very much hope that George Bush the Second is the last unknown governor that either party nominates. And I think the only way to ensure this is to convince both parties' establishments that nominating unknown southern governors is a bad idea--not only because of the quality of governance we get, but also because we can make it no longer be a road to the White House.
Answers to questions (not all used in the debate)
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