Was Clinton More Market Friendly Than Bush?

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Pals!

At the Mercatus Center's Neighborhood Effects blog, economist Matt Mitchell compares the major economic policies of President Bill Clinton's two terms to those that came out of President George W. Bush's presidency. He concludes that "comparatively speaking…the policies that emerged when Clinton was in office were significantly more market-friendly than those that have characterized the last twelve years." He lists four major reasons why:

Mitchell goes on to note that the Bush years saw spending rise as a share of GDP, the passage of the Medicare prescription drug law, the imposition of high steel tariffs, and more. 

For the most part, I think Mitchell's right. I also think he's right to compate Clinton's relatively small marginal income tax hike with the massive Reagan-era cuts to top marginal rates. Perhaps those hikes were ill advised, but they're best viewed in context. Obviously, it's tough to say exactly how influential the policies he lists were in helping to create the economic boom that happened in the 1990s, but they certainly didn't hurt.  

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  1. “Perhaps those hikes were ill advised ….”

    Excuse me, but why? Democrats passed tax increases that were opposed by every Republican in Congress. The recession ended, unemployment dropped to record lows, tax receipts soared, huge budget deficits were replaced by fat surpluses. So why ill advised? Looks like “well advised” to me. Looks like sometimes raising taxes is the right thing to do.

    1. Post hoc ergo propter hoc?

      1. Democrats passed tax increases that were opposed by every Republican in Congress. In spite of that, the recession ended, . . . due largely to the end of the Cold War and the widespread implementation of information technology in the private sector.

        1. But Clinton was smart enough to make the man that invented TEH INTERWEBZ his VPOTUS.

  2. two words:

    dotcom bubble.

    1. Re: yonemoto.

      dotcom bubble.
      That wasn’t of Clinton’s doing. You can thank Alan Greenspan and the Fed for that.

      1. bollocks. the dotbom bubble was bound to burst sometime.
        And it happened 2001 on GWB?s watch.

        1. Re: blubi,

          bollocks. the dotbom bubble was bound to burst sometime.
          And it happened 2001 on GWB’s watch.

          First, the dot-com bubble bursted in 1999, not 2001. Second, it matters nothing if Bush or Clinton was president: The bubble was entirely a creature of the Fed.

          1. I’m not disputing any of what you’re saying OM, I’m just saying that it explains much of the “positive market effects” that were attributed to Clinton. Probably still better with free markets that Bush, though. (That’s not saying much)

          2. The NASDAQ peaked right at the end of 1999 and then lost 2/3rds of it’s value over the next two and 1/2 years. The selling in the first year of that 30 month period would likely generate gains – selling at pretty close to the top doesn’t guarantee a gain, thanks to ‘pretty close’, but it’s surely more likely. It’s not until the tail of the period that the blood really started to flow.

            Checking the numbers, capital gains tax receipts were $119 billion in 2000, and dropped to $50 billion a year or two later (culled from an opinion piece so I hope that’s right). The sad thing about this is that I look at that $70 billion drop (ignoring the follow on and tangential impacts) and think – that’s rounding. Now (though against a $400 billion deficit not insignificant).

  3. You mean all that deregulating Dubya did was no help to the cause of business enterprise?

    1. Tony|1.19.11 @ 1:07PM|#

      The Bushies did seriously neglect regulation… because they lived by the same childish dogma you guys do, namely, government = bad!

      We’ve had a financial meltdown, a coal mine disaster, and a massive oil leak, just to name a few things, to hit us over the head with this reality.

      I will give him credit though, this took longer to find than I expected.

      1. If you’re going to act like a child, the state is going to treat you like a child. Also if you don’t act like a child.

      2. “”… because they lived by the same childish dogma you guys do, namely, government = bad!””

        Except when it comes to bailing out banks, then they both thought, government=good.

  4. I think the mesc is kicking in for me too Bill!

  5. Wait, Bush had policies that were market friendly?

    1. If you were a defense contractor.

    2. The market for AK-47s in Baghdad was brisk.

  6. “Clinton stands alone among post-WWII presidents in presiding over a period in which federal spending as a share of the economy actually shrank (going from 21.4 percent in 1995 to 18.2 percent in 2001).”

    Who was writing the federal budget prior to 1995? Clinton’s political allies. Who was writing the budget after 1995? Clinton’s political adversaries. Clinton was president during this time, but what happened with the budget did not represent what Clinton would have done if he had been unencumbered by oppositional Congress.

    1. Thank you for stating it as “political adversaries” and “oppositional Congress.” Too often, the ‘Pubs fall back on the “REPUBLICANZ BALANCED DA BUDGET!!1!” meme, and though technically true, they also enabled GWB’s massive federal expansion. The key is not TEAM RED or TEAM BLUE, and the great irony is that as much as we loathe them both, our interests as libertarians, are generally best served when both have some power.

      All that said, one thing that I do have to kind of pick a fight with here is the “federal budget shrinking as a percentage of GDP.” Although technically true, I think you can argue that that would happen under virtually any president short of a Duke Cunningham based entirely on the post Cold War “peace dividend.”

      1. 1980 – 21.2%
        1988 – 20.8%
        1992 – 21.8%
        2000 – 18.0%
        2008 – 20.6%
        2010 – 23.6%

        So down (slightly) under Reagan, up under Bush I, down (significantly) under Clinton, up under Bush II, and up (significantly) under Obama so far.

        1. Reagan had an adversarial Congress, which in one way proves the thesis posed by MJ. Although it should be noted that the gov’t as percentage of economy was only down under Reagan because of the massive increase in the economy, not the decrease in gov’t.

    2. And yet if the article is saying that from a budget perspective Clinton is better, then you have a few years that are more apples-to-apples: the last years of the Bush presidency saw divided gov’t. The republicans still had enough to filibuster the senate, and had the presidency…yet they passed ridiculous budgets anyway. The president may not create spending bills, but he still negotiates with congress over them, and so they do reflect his priorities up to a point. Clinton was willing to concede enough to get some things under control…Bush wasn’t.

      1. Bush did not run as an ideological conservative, he was running as a Clinton from the right, and the GOP congressional caucus had little inclination to oppose a president of their own party.

        1. Yeah, I think everyone forgets that Bush is what he told us he was: A “compassionate conservative.” Hell, he even phrased his two wars as the US benevolently freeing the Iraqis and the Afghans from tyranny.

          Obama’s problem, as I see it, is that he ran as the anti-Bush, but once you get a bite of the Presidential apple of power, you’re hooked.

  7. You could say Clinton signed more market-friendly legislation than Bush (legislation he got from a Republican Congress), but the only one of the four items mentioned above that he spent political capital supporting was free trade. He actually fought the tax reform and welfare reform, so I don’t see how he gets credit for those.

    1. I don’t see how he gets credit for those.

      Same reason he gets credit for the economy. People like simple, and “President causes everything” is simple.

      1. People like are simple…

        FIFY

        1. Look how well the invisible hand of the market crafted this solution to RC’s question, without any central authority directing it!

      2. I had hopes that someone like Suderman would not advance such simplistic cause and effect relationships uncritically. As RC Dean points out, Clinton would have only done the free trade stuff if the GOP majorities had not been pushing them, and Clinton was only successful with freetrade because the GOP Senators largely supported his efforts there.

        1. “”As RC Dean points out, Clinton would have only done the free trade stuff if the GOP majorities had not been pushing them””

          I think that’s bullshit. Clinton was big on free trade and had a bunch of Chinese businessmen flown into Arkansas when he was Gov to talk about trade. The one and only time the Concorde landed at Adams’s field.

          1. I meant that NAFTA only passed because the GOP Senators supported it, the Dems were largely opposed. Clinton was a free trader, but he could not bring his own party along to support that aspect of his policies.

            1. NAFTA is hardly a free trade agreement. Since when do libertarians believe any government-generated acronym (besides CREEP)

    2. Welfare reform was something he mentioned several times while running. He may have resisted the degree to which it eventually passed, but he wasn’t an opponent of the concept.

    3. “” He actually fought the tax reform and welfare reform, so I don’t see how he gets credit for those.””

      Clinton started workfare in Arkansas before he became President. He was pro-welfare reform.

  8. What a load of horse bleep.

    Clinton came into office with a full head of Lefty steam (HillaryCare anyone?) and was shut down by an R Congress. The end.

    What, no mention of Bush going around the country recommending SS privatization? That doesn’t count. Duh. Bush’s ideas and words only matter when they can be used against him.

    Let’s talk about the way both Clinton and Gore bashed Bush for 8 years re: Global Warming, Cap N Trade type stuff, which is anything but free market driven.

    I’m sure that didn’t influence voters, politicians, pundits into support authoritarian schemes.

    1. What, no mention of Bush going around the country recommending SS privatization?

      I remember him cowering with his tail between his legs and pointing at “GAY MARRIAGE!” in order to get the media heat off of him.

  9. Best thing Clinton did was nothing at all so-to-speak. With the internet of all things specifically.

    When the internet was catching on, but before it got Bubbles-Big there were many factions – the Nannies, the Moralizers, the Copywriters, and of course the Cops – who all had big ideas for how the government could totally fuck the internet up. And back then they had a much better shot at fucking it up because no one knew what a ‘free’ internet was like.

    Clinton appointed Ira Magaziner of all people to ‘watchdog’ the internet once the health-care gig was kinda cooked. And time and again Magaziner recommended doing nothing with the internet.

    The allegedly laissez-faire Republicans? They had Billy Tauzin for Christ-sakes. Clinton was instrumental in the internet we have today for he didn’t fuck it up when he had the chance. With Shrub or the HalfHonkey we would’ve ended up with a Department of Digital Insecurity or some bullshit, guaranteed.

  10. All I can say is while I’m no friend of Bill Clinton, I was making money hand over fist during his Presidency. I can’t say the same under Bush.

  11. NAFTA was negotiated by Bush I, not Clinton.”

    Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation’s legislative or parliamentary branch.

    Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim Campbell in Canada, and before the agreement became law, Jean Chr?tien had taken office in Canada.”

    http://en.wikipedia.org/wiki/N….._Agreement

    1. To Clinton’s credit, he did buck the Dems conventional wisdom to usher Bush I’s treaty through.

  12. Clinton stands alone among post-WWII presidents in presiding over a period in which federal spending as a share of the economy actually shrank (going from 21.4 percent in 1995 to 18.2 percent in 2001

    I’m not sure it was for lack of trying = it was probably more a consequence of a obstructionist republican congress and the fact the economy expanded faster than they could pork up the budget

    Could be wrong but that’s my impression; I’m not sure it was due to any fundamental fiscal prudence on Clinton’s part.

  13. sed “s:compate:compare:g”

  14. Markets said…yes.

    Not like it’s a high bar.

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