Free Market Clintonism, RIP
The death of the free trade Democrat
Hillary Clinton was angry about free trade, and she wanted Wisconsin to know it. "I'm tired of being played for a patsy," the candidate said, 48 hours before the state's Democrats would hand a 17-point landslide to Barack Obama. "It's time we said to the rest of the world, 'If you want to have anything to do with our market, you have to play by our rules.'?"
That may have been red meat for a hungry crowd in the economically depressed upper Midwest. But Clinton sang the same tune in an interview with the liberal Capital Times newspaper in Madison, railing against a North American Free Trade Agreement (NAFTA), one of her husband's most famous economic initiatives.
"It did not fulfill its expectations and caused a lot of consequences that we're going to have to deal with," she told the paper. "I have clearly stated for a number of years that we need to have the kind of pro-American smart trade that comes from looking at the trade agreements we've already passed, evaluating them and revising them so that they're more in keeping with…the standards that we expect."
The main selling point of Hillary Clinton's campaign, ratcheted up after Barack Obama started scaring her up a ladder, had been her "35 years of experience," along with a certain nostalgia for the 1990s, which both Hillary and Bill smugly described on the campaign trail as having been "pretty good." The linchpin of that claim was the economic boom of the Bill years. Yet last fall Hillary began to soft-pedal or sweep under the carpet the very policies that made the boom possible.
NAFTA was a critical moment in Bill Clinton's presidency, a New Democratic victory over the old union elements of the party. When Clinton signed the final treaties in 1993, he warned that no government action "can change the fact that information can flash across the world, that people can move money around in the blink of an eye." He compared trade skepticism to the ways of old and dying industrial nations: "If we learn anything from the collapse of the Berlin Wall and the fall of the governments in Eastern Europe, [it's that] even a totally controlled society cannot resist the winds of change that economics and technology and information flow have imposed in this world of ours."
As recently as 2006, Hillary Clinton positioned herself as the heir to this trade-accommodating policy. She was not a "die-hard free-trader," she said at the time, but she also wasn't "an unreconstructed protectionist with very little regard, frankly, for how trade agreements are actually working."
It's not a mystery how NAFTA is working, actually. America's GDP and industrial production have grown about 50 percent since the trade pact took effect. Total U.S. unemployment was 6.9 percent in 1993, before NAFTA went into effect; today it's 4.9 percent. Hillary Clinton once considered this an accomplishment.
But then came the 2008 presidential campaign. In a November 2007 Iowa speech to the United Auto Workers, Clinton called for a "time-out" to "take stock of where we are on trade." As the mortgage default wave gathered momentum in late 2007 and early 2008, Clinton proposed freezing adjustable rates by legislative fiat. To help eliminate the gender gap in salaries, Clinton endorsed the Paycheck Fairness Act, which would require a federal study to pave the way for an eventual legislative fix.
Barack Obama, meanwhile, matched her stride for stride toward the old economic left. Before the January 3 Iowa caucus, the Iowa Fair Trade Campaign, a union-backed group that describes NAFTA and the World Trade Organization as "a proven failure for working people," asked the candidates to explain their trade stances. Obama promised that revisiting NAFTA was "one of the first things I'll do as president," language in line with what he's said to other audiences but a lot tougher. (Clinton has vowed to review trade agreements every five years.) Obama also played up his support for the Fair Pay Act, which makes it easier for employees to sue for pay discrimination based on gender.
As the campaigns headed to the populist temptations of Wisconsin, Ohio, and Texas, Clinton put out word that she was never on the record agreeing with her husband about NAFTA. The evidence, apparently, is on her side. In For Love of Politics, Sally Bedell Smith's 2007 biography of the Clintons, former U.S. Trade Representative Mickey Kantor claims he had to convince Hillary Clinton that NAFTA would be good for the country.
"If she would somehow come out and tell the real story of what she fought for in the White House," Hillary biographer Carl Bernstein said in February, "and failed in a big argument with her husband, she would end up moving much closer to those Edwards followers."
That's what Democratic economic politics, and especially trade politics, have been about in 2008: pleasing the John Edwards voter. The slick-talking North Carolina trial lawyer did not win any primaries this year, but he did intuit that the new Democratic majority in Congress was far more trade-skeptical than the one that Bill Clinton split in half to pass NAFTA. Former Rep. David Bonior (D-Mich.), who led his party's charge against the NAFTA vote in the 1990s, was Edwards' campaign manager. Before Edwards dropped out Bonior told me the public's distaste for outsourcing and allegedly rising prices for consumer goods was much more obvious now than when Edwards first ran in 2004.
Jeff Faux, who was president of the liberal Economic Policy Institute during the NAFTA fight, speculates that Hillary Clinton has seen the same trend. "Unlike her husband," Faux says, "who got his political education in Arkansas, she got hers campaigning in upstate New York in 1999 and 2000, in her Senate race. She saw those areas that had been hit by NAFTA. She had to deal with people in mill towns who lost their jobs."
Now Faux, who had been as marginalized within the Democratic Party as Bonior in the early 1990s, couldn't be happier. When Hillary Clinton talks about a "strategic pause" on trade deals, she is using terminology that skeptics have employed since at least 2005, when Faux lobbied Clinton before her vote against the Central American Free Trade Agreement.
The candidates' leftward tack was encouraged by the tight Democratic nomination fight. In early February, Clinton's campaign made it clear that she would need the party's "superdelegates"—bigwig pols who can vote at the convention without regard for the primary results—to win the nomination. The Associated Press reported in mid-February that among the superdelegates were "leaders still angry that Bill Clinton championed the North American Free Trade Agreement as part of his centrist agenda."
There you have one of the lessons of this race: When Obama said, in January, that Ronald Reagan had been a "transformative" president in a way that Bill Clinton had not, he was right. Even if Hillary Clinton wins the party's nomination, she will not do so as a candidate of a lasting Clintonism. The only 1990s economic policies that either Democratic candidate professed to believe in are the slightly higher tax rates that followed President Clinton's 1993 increase. On health care, the candidates proposed bigger and more expensive plans than the last Democratic president ever pondered during his last six years in office. President Clinton once mulled putting Social Security funds in the stock market; candidates Clinton and Obama proposed funding it through transfer payments from here to
eternity.
Knowing all that, the distance Hillary has traveled from free trade to protectionism is no less shocking. Ten years ago, giving advice at a conference for developing economies in Africa, she warned that countries where the skeptics held sway were going to be left behind. "Look around the globe," Clinton advised. "Those nations which have lowered trade barriers are prospering more than those that have not."
It was true in Africa; it's true in America. It will be true when, as seems likely, one of these Democrats gets the nomination and moderates his or her rhetoric. The crucial issue is how much of that rhetoric was mere pandering and how much represents a true political sea change.
David Weigel is an associate editor of Reason.