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I was on Bill Bennett’s always-excellent “Morning in America” radio program today, and a caller asked me — basically — to provide talking points on why the 1990s Clinton economic boom “wasn’t really that good.” (The caller probably wanted ammo against liberal coworkers or relatives when they used Bill Clinton’s economic record as reason to support Hillary Clinton.) My response was, “Well, the Clinton years really were pretty good!”
How could I say otherwise? Why would I say otherwise? The economy grew by nearly 4% annually during the Clinton years, creating 24 million jobs and driving the unemployment rate to a superlow 3.9%. Incomes and stocks were way up, inflation and interest rates were way down. Budget deficit? What budget deficit?
Perhaps the most common criticism of the Clinton boom, at least on the right, is that it was a “bubble economy” inflated by easy money and irrational enthusiasm for technology stocks. Even as Clinton was leaving office, the bubble was popping. Clinton inherited an expansion from Bush I, and bequeathed a recession to Bush II. The problem with that line of criticism is that, despite bear market and recession, the productivity boom kept booming from 1996 through 2005. And the tech craze left us some pretty important companies, including Google and Amazon. Beneath the froth, some really lasting and important stuff was happening.
But there is more to the story, of course. A few things comes to mind: First, income inequality soared, and the”financial industry exploded,” as the Washington Post puts it. Two WaPo charts:
Kind of ironic given the emerging themes of Hillary Clinton’s candidacy. Certainly there is an argument that some seeds of the financial crisis were sown during the Clinton years.
Second, Bill Clinton’s “bond market strategy” to boost growth didn’t really seem to click until the GOP took over Congress.
Third, Reaganomics arguable deserves some share of the credit for Clintonomics. Economist Michael Mandel has written that “the impact of the policies Reagan set out in the 1980s, which slowly worked their way through the economy, helped lay the groundwork for the Information Revolution of the 1990s.” And a Brookings study recently noted that “income progress was broad and robust through the Reagan and Clinton years.”
Fourth, Bill Clinton had policies — NAFTA, welfare reform, financial deregulation, capital gains tax cuts, the idea of investing Social Security surpluses into the stock market — that might seem a misfit for the Obama-era Democratic Party.
Now I don’t know if any of that stuff works as anti-Hillary talking points. Don’t really care. But it does provide a more nuanced view of Bill Clinton’s economic record, a record sure to be discussed and examined as the 2016 presidential campaign heats up.