Run on the real record

By W. James Antle III
web posted August 21, 2000

The Democratic National Convention was amusing in its defensiveness, as the record Bill Clinton and Al Gore have for eight years invoked with smugness is now being touted with something like desperation.

Rep. Charles Rangel (D-NY) may be sufficiently detached from reality to maintain in an interview with USA Today that "America loves Bill Clinton," but Gore is not. He knows that while Clinton's record is what he must rely upon to be elected, Clinton the man is an albatross around his neck. That was the message reinforced by his selection of Joe Lieberman as his running mate, and also the message of his single, almost incidental reference to the president in his acceptance speech. In 1992 and 1996, Clinton ran masterful campaigns against inept opponents, had every political and economic condition running in his favor, and still received less than half of the popular vote each time.

Gore not only makes the early ‘90s, before he and Clinton came to deliver us from fiscal evil, sound like the Depression but he states that the 1980s were a period of recession. This accomplishes three objectives: It assigns credit for the current expansion to Clinton-Gore policies, punishes the son (George W. Bush) for the sins of his father, and attempts to undermine public support for the more Reagan-like weapons in Gov. Bush's policy arsenal.

Unfortunately, like so much of the Clinton-Gore legacy, it just ain't so. Ronald Reagan presided over what was at the time the longest continuous peacetime economic expansion, during which GDP increased by the size of West Germany, real per capita incomes grew by one-fifth, the rate of manufacturing productivity growth tripled, exports doubled, unemployment and inflation were halved, and Americans enjoyed 21 million net new jobs and 4.5 million new businesses. The record Clinton and Gore today vilify sounds very much like the one they are trying to run on, except Reagan's numbers are all the more impressive because of the Carter malaise he had to build on and the smaller national population.

Indeed, between 1983 and 1989 the economy grew by 4 percent annually. It grew by 2.6 percent annually during most of Clinton's term. In order for this period of growth to be the longest economic expansion in history, Clinton and Gore must concede that it began 21 months before they took office, under the presidency of George Herbert Walker Bush. Otherwise, Reagan's record for the longest peacetime expansion still stands.

Moreover, the transformation in our economy that has brought us our present prosperity began under Reagan and can be traced to his policies of tax-rate reduction, deregulation, trade liberalization and sound money. Interest rates, inflation, unemployment and poverty have all trended downward since 1982. Since the dawn of Reaganomics, the economy has been in recession a mere 3 percent of the time, compared to the historic trend of one-third.

The stock market is at 11,000 today but was only 800 in 1982. It tripled in value during Reagan's presidency and quadrupled during the 1990's. Nearly 90 percent of the stock market's rise during Clinton's presidency occurred after the Republicans took control of Congress, introducing a permanent brake on his policies of raising taxes, nationalizing health care and expanding social spending.

Clinton and Gore may wish to claim credit for turning the deficits into surpluses. But prior to the Republicans taking control of Congress, Clinton never proposed to do anything more than reduce the deficit. He never argued for a balanced budget. His own budget office and Democratic prognosticators at the CBO both were projecting deficits in excess of $200 billion far into the foreseeable future. In 1995, GOP congressional leaders had to push Clinton to submit five budgets before he would agree to a balanced-budget plan and he actually vetoed two balanced budgets.

It remains a matter of record that the Republican Congress turned what was going to be a $3.9 trillion increase in the national debt into some $2 trillion in surpluses over the same period, a dramatic turnaround that Clinton and Gore were not hoping to engineer though they now wish to take full credit for it.

Furthermore, Clinton took an economy that was growing at a 4 percent annual rate in the fourth quarter of 1992 and with his record 1993 tax increase managed to depress that growth rate to 2.4 percent annually throughout his first term. The Clinton tax increase is not what ultimately led to the balanced budget (again, there was no plan for a balanced budget until the Republicans took over Congress) and it in fact cost Americans $300 billion in output, $264 billion in disposable income, $138 billion in savings and 1.2 million jobs. The economy did not again resume 4 percent annual growth until after the Republican Congress finally got Clinton to sign a capital-gains tax cut.

Incidentally, it was the spike in the growth rate, not Clinton's tax increase or imaginary budget cuts, that increased revenues to the point where we now have a surplus. Nearly all of the spending cuts that took place during the Clinton-Gore reign were in defense, cuts made possible only by Reagan's victory in the Cold War.

Growth rates are now being exaggerated by a reckless monetary policy that has been lax with credit and increasing the money supply by nearly 10 percent annually. If Clinton and Gore want to take credit for Alan Greenspan's accomplishments, they should take credit for his folly as well. This imprudent expansion of credit and the money supply could well cause recession, something still possible notwithstanding the propagandistic sloganeering about the "New Economy" (a phrase used to describe every period of robust growth in the 20th and late 19th centuries, only to be refuted by recession). Tax-rate cuts and sound money would be the proper antidote.

But easy money is actually the basis of the Clinton-Gore economic approach. They claim their tax increases have reduced the deficit, lowered interest rates and growth was then stimulated by the ease with which people could borrow. Never mind that between the Clinton-Gore tax increase (it became law because of Gore's tie-breaking Senate vote) and the beginning of the Republican Congress in 1995, interest rates rose some 50 basis points. This method of stimulating growth is a proven failure, as the crowning economic achievements of a credit-happy Federal Reserve are the stagflation of 1967 to 1982 and the Great Depression.

Keeping inflation from returning is not bad for the economy. In fact, sound money is the only context in which Clinton's tax policies are compatible with growth. The tax-cut effect disinflation brought about in the form of cutting business' depreciation costs offset his higher tax rates.

If Al Gore wants to run on Bill Clinton's record, so be it. It is up to the informed to point out the realities of that record. Economically, Clinton and Gore have been in the right place at the right time. Which is nothing unusual. I've often said that if the Second Coming of Christ were to occur during this administration, Clinton would take credit for making it happen and Gore would insist it was originally his idea.

W. James Antle III is a regular contributor to Enter Stage Right.

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