Purging the Ghost of Bill Clinton's Economics From the Holy Spirit of Barack Obama
One of the more interesting and regrettable ideological developments over the past eight or so years has been the Democratic Party's repudiation of Bill Clinton's economic policies (a repudiation, fortunately for Clinton, that does not require rejecting the Big Dog himself, nor renouncing credit for his economic successes).
What form does the Clintonomics-purging take in our current political context? In complaints that President Barack Obama's economic policies are being guided by Clinton deficit-scold holdovers who do not sufficiently understand that deficits don't matter right now. Here's Jim Tankersley, writing in The Washington Post:
[Clinton Treasury Secretary Robert] Rubin espoused an economic philosophy that would dominate Democratic policy circles through the Great Recession: one that favored opening global markets, deregulating Wall Street and limiting federal budget deficits. […]
For all its success in the 1990s, much of Rubin's philosophy took a beating in the following decade. The financial crisis spurred a move back to stricter rules on Wall Street institutions and financial products such as derivatives, which Rubin had advised Clinton against regulating. The disappearance of millions of manufacturing jobs in the face of technological change and foreign competition cast the downsides of free trade in a harsher light. […]
But the Rubinesque focus on the deficit, if anything, is stronger in the Obama administration than it was in Clinton's. Even before his first inauguration, while the economy was in a job-shedding, recessionary free fall, Obama's advisers were discussing an eventual pivot to deficit reduction. Now, by tapping Lew as Timothy Geithner's successor at Treasury, the president is signaling clearly that budget negotiations with congressional Republicans will dominate economic policymaking in his second term.
Tankersley's canned history of the last two decades omits a crucial word: spending. (Except for this sentence: "Protecting federal spending on education and innovation is an attempt to keep the middle class from slipping even further, but it's nowhere near the fundamental overhaul in skills training that many economists believe is necessary….") Federal spending, in fact, has doubled since Bill Clinton left office. At least some of the economic thinkers who Tankersley disagrees with believe that jacking up government spending produces the very economic sluggishness he aims to combat, and that cutting spending would spur growth.
Democrats talk differently about spending than they did four years ago. Then, the president who had campaigned on a "net spending cut" was promising that "the hard decisions" on long-term entitlement promises would be "made under my watch, not someone else's," because "we are now at the end of the road and are not in a position to kick [the can] any further." Now, the president has reportedly declared that "we don't have a spending problem," a motion quickly seconded by the liberal commentariat.
What about debt and deficits? Well, back in July 2008, candidate Obama called George W. Bush's record of adding $5 trillion to the national debt "irresponsible" and even "unpatriotic." The Democratic Party platform that year vowed to "not mortgage our children's future on a mountain of debt." But now it's common to hear that the deficit/debt problem is not much of a problem after all.
Here's Kevin Drum at Mother Jones:
Tim Geithner says, correctly, that we're actually pretty close to fixing our long-term deficit problems.
Geithner's actual words could have been more accurately condensed by replacing "pretty" with "theoretically," but the outgoing treasury secretary indeed posited the long-term fiscal situation as well within some minor technocratic tweaking. Meanwhile, New York Times columnist Paul Krugman tells us to relax, because deficits "have started to decline." And Slate's Matthew Yglesias assures us that "When it comes to spending, really nobody cares about debt or deficits." I feel so much better already!
But here's the problem: Every time the Congressional Budget Office conducts a "long-term budget outlook," the result is always horror. Meaning, a chart that already starts out like this:
Ends up looking more like this:
And what happens when you grow that much debt? Your outlays become an interest-payment machine:
So while the Hendrik Hertzbergs of the world may be swooning over their president's new out-and-proud economic liberalism, the project of routing the last remaining Clintonomics-practitioners faces a familiar obstacle bigger than the Bubba himself: arithmetic.
"We've got to deal with this big long-term debt problem," he warned, in a less ballyhooed part of his famous 2012 Democratic National Convention speech, "or it will deal with us." And, he might have added, with those who claimed it was never a problem to begin with, at least not as long as Democrats control the White House.
RELATED: "Please read this if you think deficits don't matter and that spending doesn't drive deficits."
