HIS AND HER CLINTONOMICS
THE WALL STREET JOURNAL
Democratic presidential candidate Hillary Clinton and former President Bill Clinton on May 7 in Los Angeles. PHOTO: ZUMA PRESSIn his 1992 campaign Bill Clinton liked to tell voters they’d be getting two for the price of one, and now Hillary Clinton is dusting off the same promise. She said this weekend in Kentucky that she’d put the First Husband “in charge of revitalizing the economy,” and she’s since added that “he’s got to come out of retirement” to raise incomes and put people back to work.
Mrs. Clinton’s remarks are a revealing turn, not least because so far she’s been running for President Obama’s third term. But since Democrats seem to agree that the economic status quo is dismal, and thus they can’t run on Mr. Obama’s record, the presumptive nominee is trying to confuse voters with halcyon memories of the 1990s boom.
The Clinton gang has since “clarified” that Mr. Clinton’s ministrations will be confined to distressed U.S. regions like inner cities or coal country. Maybe they realized that vowing to outsource one of her most important jobs might diminish her as a candidate.
Her larger problem is that the Obama-era Democratic Party has repudiated the Democratic Party’s Bill-era centrist agenda. They now call themselves progressives, not New Democrats, and they take their marching orders from Bernie Sanders and Elizabeth Warren,not Larry Summers and Alan Greenspan. Mrs. Clinton has accommodated this trend to the pre-Bill left.
The Clinton contradiction is that she claims she’ll produce economic results like her husband did with economic policies like Mr. Obama’s. For the record, let’s lay out the differences between the agenda that helped drive the prosperity of 1993-2001, when the U.S. economy expanded by 3.8% annually on average, and what Mrs. Clinton is proposing to close out the 2010s, when GDP growth has failed to exceed 2.5% in a single year.
• Taxes. Bill Clinton raised income taxes in 1993 to a top rate of 39.6%, but Democrats lost Congress in 1994 and he never did that again. In 1997 Mr. Clinton even compromised with the Newt Gingrich Republicans and cut the top capital gains tax rate to 20% from 28%. His wife wants to nearly double the top tax rate on long-term cap gains to 43.4% from 23.8%, in the name of ending “quarterly capitalism.” That’s higher than the 40% rate under Jimmy Carter, and she’d also impose a minimum tax on millionaires and above, details to come.
Today’s progressives remember the 1990s expansion not for increasing opportunity but increasing income inequality, and Mrs. Clinton has adopted this obsession. Presidents who prioritize equality over growth tend to end up with less growth and opportunity that benefits everyone, and thus with more inequality—as in the Obama years.
• Trade. The global trading system had a great decade in the ’90s, not least because of Mr. Clinton’s leadership. Most consequentially, he spent political capital to move the North American Free Trade Agreement and the Uruguay Round of global tariff reductions through Congress. His Administration also brokered China’s entry into the World Trade Organization.
Mrs. Clinton has repudiated the Trans-Pacific Trade Partnership that she had praised as Secretary of State. She supported Nafta as First Lady but, asked in March if the deal was a mistake, she replied, “You will have to ask the experts, who say on balance some people were helped and some people were hurt.” Now there’s a profile in courage. Perhaps Mrs. Clinton is dissembling on protectionism as Mr. Obama did in 2008, though in this age of populist furies she will have a harder time reneging.
• Regulation. Mr. Clinton maintained most of the deregulatory gains that began in the Carter Administration and continued through the Reagan years, and he also liberalized ownership restrictions that had applied to the telecom industry. In 1999 he modernized financial services regulation, repealing the 1932 Glass-Steagall Act that separated commercial and investment banking.
Progressives still haven’t forgiven him, and Mrs. Clinton as penance has picked up the Sanders-Warren theme that Wall Street is rigged so rich financiers can steal from the little guy. She wants to extend Dodd-Frank regulation to nonbanks, and she promises to entrench Mr. Obama’s anticarbon central planning at the EPA and expand ObamaCare with price controls on new medicines.
• Labor markets. The ’90s saw the lowest U.S. unemployment rate in a generation, which drove wage growth, especially for lower-skilled workers and minorities. The 1996 welfare reform helped by including work requirements and time limits on benefits, expanding the labor force and putting low-income workers on the ladder to upward mobility.
Congress has since added a profusion of new federal tax credits that phase out as incomes rise and thus create infra-marginal tax cliffs that make it harder to escape poverty. Mrs. Clinton is proposing to impose many more such work disincentives. She’ll bestow tax credits on everything from child care to elderly care, from college tuition to businesses that share profits with workers.
To the extent her new mandates for family leave, the minimum wage, overtime and “equal pay” increase the cost of labor, she’ll drive more Americans out of the workforce. Oh, and while her husband spoke of reforming entitlements, Mrs. Clinton wants to “enhance” Social Security benefits and make Medicare available to pre-retirees.
***
The Clinton Administration was no free market paradise. And arguably his worst economic-policy instinct was making his wife “co-President” for health care—though the implosion of the new entitlement she tried to create helped usher in the Gingrich Congress, which pulled Mr. Clinton to the political center.
The point is that Mrs. Clinton really is now running to be co-President, but this time her ex-President partner won’t be the Bill everybody remembers from the 1990s. At least on economics, her co-President will be Mr. Obama, whose policy results everybody can see in stagnant paychecks and diminished economic prospects. Once was enough.
