Is Obama the Bizarro Clinton?
Team Obama is finally trotting out this campaign meme: Obamanomics means a return to the booming 1990s economy. Over on CBS's Face the Nation yesterday morning, former Clinton Treasury Secretary Robert Rubin told host Bob Schieffer—who had just asked whether the economy, which grew 1.9 percent last quarter, is in a recession or headed toward a depression—that Obama would bring back the higher tax rates of the Clinton era, "which brought us the longest economic expansion of all times." And there was former Clinton administration economist Laura Tyson on CNN's Late Edition with Wolf Blitzer:
A final quick comment is that we need to understand that what Senator Obama is proposing bodily on taxes is rolling back some of the Bush tax cuts for those who make over $250,000 a year to levels you saw in the 1990s. I will only point out again the 1990s had the longest and strongest economic expansion in our history.
A few thoughts here:
1) It must have been Opposite Day in Obamaland. See, Bill Clinton tossed his pricey infrastructure agenda in order to focus on balancing the budget. Obama wants to do just the opposite. He wants to spend hundreds of billions on an infrastructure and energy agenda and merely get the budget on a "path" to being balanced at some point in the future. So basically, we are talking about $500 billion deficits—or more—as far as the eye can see. So, isn't Obama doing exactly the opposite of Clinton here?
2) Clinton signed a capital gains tax cut. Obama wants to increase capital gains taxes from 15 percent to at least 25 percent. Again, bizarro economics.
3) The '90s expansion was really two expansions. After the 1993 Clinton tax increases, the economy grew 3.2 percent—a so-so performance coming out of the 1990-91 recession.(By the way, the four quarters of 1992 saw GDP growth of 4.0 percent, 3.9 percent, 4.0 percent, 4.5 percent, so the Clinton economic team really started out on third but somehow think they hit a triple.) But after the 1997 cap gains cut, the economy grew at an average annual rate of 4.2 percent. When people refer to the '90s economic boom, it's really the 1997-2000 era that they're taking about.
Tags: economics | Barack Obama | Bill Clinton
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Reader Comments
Government and the economy
Mr. Pethokoukis, I really enjoy reading your blog and seeing you on CNBC as you regularly have interesting points to add to the overall political economic discussion (many of which I agree with). That said, this post surprises me on how misleading it is. The entire notion that government and, by extension, the particular adminstration in control of the state at any one time can somehow be responsible for creating the wealth that figures into the overall GDP statistics is incredibly wrongheaded. The only way the government can help spur growth is by rolling back the degree of intervention embedded within the market economy. But that still does not mean it follows that the government "created" any of the subsequent economic growth.
I like to share with you one of my favorite quotes from Ludwig von Mises' short book titled, A Critique of Interventionism.
"Government cannot create anything; its orders cannot even evict anything from the world of reality, but they can evict from the world of the permissible. Government cannot make man richer, but it can make him poorer."
It's the concept found in that short quote--that government can never be a source of wealth creation--that is unfortunately missing from any discussions of our current political economy.
$500 billion deficits
I'm pretty sure that no matter who gets elected, we'll have $500 billion deficits until the Federal Reserve Act is repealed and we can hold someone in the Fed accountable
Fox7777...
"Corrupt Republicans have created a huge mess over the last 8 years and the challenges for Barack Obama are similar to the mess left by the Republican Hoover Administration during the great depression of the 1930's. President Barack Obama will be surrounded by a smart team similar to the 1990's that will guide our country back to prosperity."
...that's not exactly a good analogy. Read "The Forgotten Man". Most economists now say that Roosevelt's policies prolonged the Great Depression insteadof shortening it.
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