Monday, February 27, 2017

Bill Clinton: A good fiscal president, bad role model

George H.W Bush failed to hold true to his pledge not to raise taxes, and this angered the conservative base. This, coupled with the successful independent campaign of Ross Perot, allowed William (Bill) Jefferson Clinton to slip into the office of the President without garnishing a majority of support among voters.

He ran as a "new" democrat. By this, he was trying to make it look like he was not the same old type of liberal democrat as was portrayed in the 1960's. However, there was nothing new about the Bill Clinton's agenda other than he attempted to run as a moderate (conservative) democrat rather than a liberal democrat. However, once elected he would run as a liberal. 

So, the claim of being a "new" democrat, the fact that the country was ready for something other than a republican, the fact that Bush was perceived as not conservative enough, or as a person who is not true to his word, gave us Bill Clinton. 

Bush made very little effort to change domestic policy; he essentially rode the wave of Reaganomics. By the end of his term, a mild recession was in process, and this may have been partially due to Bush's allowing Congress to raise some existing taxes. However, the recession was short lived and is generally considered one of the mildest recession in U.S. history. The Reagan economic boom continued throughout much of the Clinton administration. 

The result was Bill Clinton became President in 1992. The economy quickly recovered and continued to soar. Bill Clinton's popularity soared as he rode the economic tide created by Reagan. The economy created by Reaganomics was so strong the Bush recession turned out to be but a minor blip in the road.

My dad, a person I would consider a conservative republican, has said to me on numerous occasions that he thought Clinton was a good President just by the fact that he created a sound economic environment. My dad said that he decided to sell his business while the economy was still doing well, and this was mainly because of Clinton. 

While it's easy to give Clinton credit, he probably doesn't deserve it. Here is why.

During the 1980s, Reagan cut regulations and cut taxes in order to stimulate the economy. At the same time, to help win the cold war, he increased military spending. He believed it was important to have the mightiest military in the world but to not need it. He referred to this as "Peace through strength."

To offset this, a democratic controlled Congress promised to cut spending. Congress would later renege on this promise. So, by the end of the Reagan-Bush era, the national debt was at an all-time high. Bill Clinton believed he could pay off some of this debt by cutting military spending and raising taxes on the wealthy. So, in 1993, he signed a bill that would do just that.

As far as the military, throughout his terms, the military budget was repeatedly cut, and this resulted in reductions at the Pentagon, a closing of military bases, a pullout of many troops from Europe, and many military bases were shut down.

By the end of Clinton's term in office, the military was severely depleted. While conservatives saw this as problematic, liberals see this as a good thing. They believe a powerful military just makes the U.S. look arrogant to people in nations like Iran and Iraq.

For instance, when radical Muslims commit acts of terror against us, it's our fault more so than theirs. To fix the problem, rather than built up the military, they tear it down.

You see, this is the kind of nonsensical stuff your dealing with when a liberal posing as a moderate is elected President.

In fact, after 911, Clinton's former Defense Secretary, Casper Weinberger, said Clinton had cut defense spending so much, and the military was so depleted, that he didn't think we could fight and win a war on terrorism.

He also raised taxes on the wealthy. One of the myths of Keynesian economics is that raising money on the wealthy is a viable method of raising governmental revenue. The problem with this is wealth cannot be taxed, only income can be taxed. Most people who are wealthy have their money invested, and so they don't make income per se.

Plus, on the income they do make, as their taxes go up, they just find ways of getting around paying it. It's not worth doing this when taxes are low, but when they are perceived as too high, the extra effort is worthwhile.
In either case, tax hikes usually result in a short-term revenue increase, althoug a long-term decline in revenue. Liberals believe this is okay so long as it allows them to push forth their progressive agendas. 

However, this agenda was repudiated by voters in the 1994 mid-term elections as republicans gained control of the House of Representatives and the Senate for the first time in 40 years. This is often referred to as the "republican revolution," and was lead by Speaker of the House Newt Gingrich. It's also often referred to as the "Newt Gingrich Revolution." 

Gingrich's House, capped by the Contract with America, powered Conservatives, and united republicans. The most important thing on that Contract with America called for tax cuts -- particularly capital gains tax cuts. 

Due to his desire to get along with Congress to pass his agenda later, Clinton (perhaps due to bad advice from his staffers), signed the Gingrich tax cuts into law. 

This, in my opinion, is why the economy continued to boom. This tax cut offsets the Bush and Clinton tax hikes and allowed the economy to continue to soar. Now, of course, we also have to recognize the Internet boom also played a role. But I think the Newt Gingrich Contract with America, while helping to reinvigorate republicans, also saved the Clinton administration, making it look good. 

The 1964 election put Clinton up against moderate republican Bob Dole. Clinton rode the economic wave through the election, beating Dole by an electoral vote of 379 to 159. However, once again he failed to gain a majority of support of the voters, as he garnished only 49.2% of the popular vote (although this was more than Dole's 40.7%). 

As you might imagine, the liberal media makes sure most people know that it was Bill Clinton's economy. And that's fine with me, as the President should get credit for the economy. I mean, think of it this way: he could have vetoed the tax cuts. But he didn't. He signed them into law, and in this way, he should get credit.

Still, liberals sight the booming 1990s economy as a result of the Clinton tax hikes. They often cite this as evidence that tax hikes can stimulate the economy. Conservatives understand that it was the tax cuts that did this, not the tax hikes. But, this is one of the reasons there are two parties, so one can act like kids and skrew things up, and the other can act as adults and fix things while not caring that the other gets credit.

In December of 1993, he worked with democrats and republicans in Congress to pass the North American Free Trade Agreement (NAFTA). This bill removed tariffs on trade between the U.S., Canada, and Mexico.

 Critics said this bill would cause industries to move out of the U.S. and open shop in those other countries where workers were paid less, and then they would sell their products back in the U.S. while making a higher profit. Supporters claimed the bill would benefit both countries equally.

This criticism was brushed off by democrats and republicans alike until Donald Trump came around 23 years later and informed voters that NAFTA had resulted in 75,000 industries leaving the country. So, in the end, while seen as necessary in the modern global economy, it would end up benefiting other nations at the expense of American jobs.

So, NAFTA would wind up being one of the worse bills ever signed by any President.

One other really good thing he did was, on August 22, 1996, sign the welfare reform bill called The Personal Responsibility And Work Opportunity Reconciliation Act. It required able-bodied people on Welfare to work, and it limited the number of years they could receive government assistance. His Welfare to Work Partnership helped people get the needed education and training they needed to get jobs.

It worked. Between 1994 and 2004, the number of people on welfare declined by 60%.Plus, many studies showed that in 1996, 60% of mothers removed from welfare were able to find jobs, and after a period of several months 80% held jobs. U.S. Census data also showed that between 1993 and 2000 the percentage of low-income, single mothers, with a job grew from 58-75%, an increase of almost 30%. In those same years, the percentage of never-married mothers in the workforce increased from 44-66%, an increase of 50%.

All of these were unprecedented improvements. Another neat statistics is that, between 1994 and 2000, child poverty fell every year. By the year 2000, the poverty rate of black children was at the lowest it had ever been.

Liberals see this as bad, claiming it means there are people who need assistance are not getting it. Conservatives believe success is not based on how many people need government assistance, but by how many people can make it on their own. By the conservative definition, Clinton's welfare reform was a huge success. 

Clinton also faced his share of scandals, including various accusations that had sexually assaulted or raped women, and one woman by the name Monica Lewinski who claimed that she gave him a blowjob in the Oval Office. Clinton at first denied these claims, although later evidence forced him to appear on national television one evening to apologize to voters. That must have been humiliating.

So, I list Clinton in my second tier of Presidents called, "They did some good things, but they also did some bad things. Fiscally he was a pretty decent President. Along with raising taxes and cutting military spending, he also succeeded at cutting 377,000 government jobs and sharply reduced government spending.

This was so successful that, in 1999, it was announced that he and Congress had succeeded at balancing the Federal budget. By the time his term ended there was even a surplus. It's also important to mention that he helped create an economic environment that saw the creation of 20 million new jobs.

Again, people who credit the tax hikes for these successes are not being honest. The true reason for the good Clinton economic years were the tax cuts, particularly on Capital Gains. It should be noted that the best way to get a stagnant economy moving is by cutting capital gains taxes. 

Regardless, by the end of his terms, the Internet Bubble had burst. This caused a recession. I think it's fair to say that, by our own rule of giving a President credit for the state of the economy, we can duly call it the Clinton Recession. It was in this state that Clinton saw his Vice-President nominated as the democratic candidate for President in 2000.

Perhaps a repudiation of sorts on the Clinton years was that Gore lost in in closely contested election to George W. Bush, the son George H.W. Bush. Overall, however, Clinton's economy was pretty good, and for that, we can mark him as a pretty good fiscal President. Socially, however, he was a horrible role model for a nation that truly needed one.