Old Media Again Lets Clinton Take Credit for 1990s Economy

I see that Bill Clinton is once again taking credit for the "good things" that happened in the 1990s, as Jack Tapper at ABC's Political Punch reports:

"There are two competing moods in America today," Clinton said. "People who want something fresh and new -- and they find it inspiring that we might elect a president who literally was not part of any of the good things that happened or any of the bad things that were stopped before. The explicit argument of the campaign against Hillary is that 'No one who was involved in the 1990s or this decade can possibly be an effective president because they had fights. We're not going to have any of those anymore.' Well, if you believe that, I got some land I wanna sell you."

I also see that Tapper is letting Mr. Clinton's claims pass as if they are undeniable facts, as others in Old Media have done for so many years:

Presumably, by "any of the good things that happened" in the 1990s, Clinton is referring to the things he did as president (except for the ones his wife now distances herself from, such as NAFTA).

The "good things" that happened in the 1990s were primarily economic. There's little doubt that Mr. Clinton's latest brags capitalize on the established folklore that his administration is responsible for the good things that happened in the 1990s economy, but not for the difficulties that became evident during the final year of his stewardship and carried into the administration of George W. Bush.

So let's recount the economy of the 1990s:

  • First, give Mr. Clinton credit for NAFTA (sorry, anti-free traders), which helped set the table for feast to come later.
  • That said, really good things didn't start consistently happening until 1996, shortly after the 1994 Gingrich Revolution, when the GOP took over Congress and the Senate.
  • During its first couple of years, the GOP-controlled Congress made progress in getting the federal budget under a semblance of control, especially on the spending side of the ledger. The economy and the stock market responded positively; unfortunately, the non-defense spending improvements didn't last.
  • For four years starting in 1997, welfare reform, which Clinton only signed once it was clear that his political survival depended on it (4th para at link), stimulated the economy to an underappreciated degree. First, it put an average of over 500,000 new adults per year into the workforce during that time. Second, the addition of so many new workers with additional spending power had a unquantifiable but very real multiplier effect. Finally, the two points just mentioned improved the federal budget situation, as it reducted dependency outlays while increasing tax collections from the newly productive and their multiplier-effect beneficiaries.
  • The gutting of the military (something, it should be noted, Congress failed to adequately resist) had a positive economic impact, but a horrible longer-term effect on national security.
  • Also in 1997, a GOP-driven supply-side capital gains tax cut (8th para at link), not exactly the Clintonians' favorite idea, further fueled the prosperity and created yet another tax-collections boomlet.

Sadly, by early 2000, investment community hype (check the party affiliations and political contributions of many of those most involved in it sometime), investor greed, and lax Clinton Administration SEC enforcement led to the bursting of the NASDAQ/Internet bubble, which officially began on March 10 of that year.

By the third quarter of 2000, the economy was in near-recession. Only years later did we see that the economy contracted 0.5% during that quarter. The government's final revision at the time said that the economy grew 2.2%. Hmmm.

The historical record shows that besides helping to push through NAFTA, Bill Clinton and his administration had very little to do with the good things that happened in the mid/late-1990s US economy, and quite a bit to do with how it came tumbling down from 2000-2002.

Moving to the present, a Hillary Clinton Administration probably won't have a fiscally conscious GOP-led Congress around to make her look good. Little if anything in what Mrs. Clinton wants to do would substantively improve the economy, and many of her ideas would clearly make things worse.

Following a long tradition with Democratic presidential contenders, Old Media isn't exploring the potential negative economic impact of what Mrs. Clinton is proposing.

Cross-posted, with minor revisions, at BizzyBlog.com.

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