Reagan introduced a revolution in economic thinking into the practice of governmental finance. It was as important as the original introduction of fiat currency. One satisfied the natural demand for currency while the other maximized taxation by positioning the tax take inside the curve rather than succumbing to a natural inclination to go to the other side.
Political enthusiasm is once again raging at the grabbing at the carrot and must be halted. When crisis sets in it appears the every ancient economic dogma gets hauled out of the attic and dusted of. It isn’t just the gold crowd that we must fear who wish to replace fiat currency with a so called gold backed currency that will merely return our economy to an inflexible rapid cycle of boom and bust. And forget about frills like pensions and medical care. For that you will need a chicken coop in the back yard.
And the wacko left is eager for the good old days of grabbing control of productive assets to show what splendid managers they are by possibly imposing an even higher wage structure than has brought industry to its knees in the first place. I do not think that these people are ever capable of learning and should not be let out to rant on their soap boxes.
We have a president who appears deficient in economic depth as shown by his ready reach for the platitudes of the old left. There are folks who love such nonsense, but it is a poor basis for solving today’s problems.
This article is a restoration of Bill Clinton’s Economic reputation who did have a better grasp of economic thinking than either of his successors. Bush will be remembered not for the bubble economy that arose under his watch but his failure to even recognize the risks been run and for a singular lack of intellectual curiosity about it all. I suspect every mature mind warned against what was unfolding.
How in the desperate aftermath of the collapse of the credit bubble and all the related promises coming home to roost, we have a president who is not giving direction because he also knows and understands far too little. And bankers are the deer in the headlamps who can only see their capital disappearing and whose only solution is to throw money at it and hope somehow it will stop. They do not have a clue how to solve it. Yet their folly and financial gaming is destroying the wealth of their customers who are the only source of recovery.
Clinton made mistakes and so did Reagan, but they created a sound model for government finance and taxation. Try to go back to that and perhaps this will begin to turn around. Better still adopt my suggestions for foreclosure rules and let the American people turn this around.
Obama Needs Clintonomics — and Soon
By: Christopher Ruddy
CIA Director Leon Panetta has some urgent advice for President Obama: Read “Clintonomics” and use it!
Panetta’s advice is no secret. He is referring to a new book just out, “Clintonomics: How Bill Clinton Reengineered the Reagan Revolution,” (AMACOM) by Dr. Jack Godwin, a political scientist.
Here’s what Panetta said about “Clintonomics”: “This book is a must read for those struggling to figure out the present economic crisis.”
As we all know, Obama is one of those struggling.
Before Panetta assumed his CIA post, he had served as President Bill Clinton’s chief of staff. Panetta is a pragmatic man, not an ideologue.
So his praise for this new book should come as no surprise.
But what is surprising is that, as a Republican of the Reagan type, I couldn’t agree more with Panetta’s assessment.
Author Godwin’s basic point is that, contrary to widely held opinion, Clinton did not seek to turn back the economic policies of Ronald Reagan, dubbed “Reaganomics.” Instead, he embraced them and perfected them.
Godwin’s point of view is even more interesting because he served in the Clinton administration as deputy secretary of the Department of Interior.
When Clinton came to office in 1993, the economy was in a downturn.
“Clinton attributed the country’s less than optimum economic performance to low productivity, low growth, stagnant wages, unemployment, budget deficits, and high healthcare costs, among other things,” Godwin observes.
“He outlined the essential components of his economic plan: shifting our emphasis from consumption to investment; making public policy friendlier to workers and families; reducing the federal deficit and cutting government waste; reforming the tax code; and, of course, creating jobs.”
Clinton, in short, sought to put a happy face on Reaganomics. [Godwin points out that Reagan himself disliked the characterization that it sounded like an “aerobic exercise or fad diet.”]
Reagan strongly believed that “government is not the solution to our problem; government is the problem.” Though Clinton did not agree with that view, he did believe that government needed to be both improved and downsized.
Both Clinton and Reagan grasped the notion that the private sector, not the public one, is the primary productive engine of the economy.
Thus Clinton offered a “New Covenant,” which Godwin writes “was indeed based on an old idea — the idea that with opportunity comes responsibility. Clinton wanted to create a leaner, not meaner government . . . In practice, this meant downsizing the federal government, cutting unnecessary and wasteful spending, and bringing down the deficit.”
I can hear the Gipper applauding Clinton’s sentiment.
Clinton is even quoted as saying that he was “the man who downsized the government more than President Reagan did.” This is true.
Democrats have long complained that Reagan gave us huge budget deficits and grew the national debt dramatically.
This also is true.
Some on the left even saw a conspiratorial overtone to the Reagan deficits. Reagan ran up huge deficits to prevent the Democrats from funding new entitlement programs, so the theory went.
Although Reagan did run up the national debt wildly, it had nothing to do with entitlements. Reagan repeatedly stated, before and after his election in 1980, that he would opt for large deficits if he needed them to bankroll his military buildup to counter the Soviet Union.
Indeed, Reagan’s plan worked. The massive military buildup not only helped defeat the Soviet empire but also left the U.S. a sizable “peace dividend” in the 90s.
Ronald Reagan set the stage for Bill Clinton. Clinton’s brilliance was in realizing the gift he had received from the Reagan years. He easily could have moved to shift the “peace dividend” from declining defense expenditures to social programs. But he didn’t.
Instead, he reduced the growth of government, ultimately leaving his successor, George W. Bush, a budget surplus.
When Clinton came into office, he tinkered with nationalizing healthcare with the so-called “Hillarycare” program. But Congress thwarted his plans.
It was the best thing that ever happened to Clinton. After the healthcare debacle, he moved to the center. He adopted a bipartisan approach and even worked with Newt Gingrich in some areas, including welfare reform and cutting the capital gains tax.
“Bill Clinton launched his campaign to end welfare as we know it because he . . . believed millions of people were trapped in the system,” Godwin notes.
“When Clinton signed welfare reform legislation in 1996, he passed the greatest test of federalism, according to the standard set by Ronald Reagan himself.”
Clinton argued that entitlement programs do not work if the government does not require something in return from the recipient. He often referred to “the politics of entitlement” as a way of criticizing his own party.
“Some, but not all, in the national Democratic Party have placed too much faith in the whole politics of entitlement, the idea that big bureaucracies and government spending, demanding nothing in return, can produce the results we want,” he said in a speech.
“We know that is simply not true. There is a limit to how much government can do in the absence of an appropriate response by the American people at the grass-roots level.”
Clinton’s approach is starkly different from President Obama’s. With strong majorities in the House and the Senate, Obama has brushed aside a bipartisanship approach. And unlike Clinton, he clearly favors the public sector over the private sector in restoring economic growth.
As Godwin says, Clinton’s governing philosophy was the logical corollary to the Reagan Revolution, stressing fiscal discipline and the end of big government.
“In public, Clinton positioned his governing philosophy as the antidote to Reaganomics,” Godwin writes. “In fact, Clinton and Reagan are fellow travelers separated more by party affiliation than political ideology.”
Barack Obama does have something to learn from Bill Clinton and “Clintonomics.”
Many Republicans have been reevaluating the Clinton years and realizing, as I have, that the country prospered under a more centrist approach. Obama should take the advice of his CIA director.