Academic journal article Independent Review

A New Democrat?: The Economic Performance of the Clinton Presidency

Academic journal article Independent Review

A New Democrat?: The Economic Performance of the Clinton Presidency

Article excerpt

When it comes to talk about the Clinton legacy, one question repeatedly asked--if not as often as more awkward alternatives--concerns the president's political philosophy. What kind of a Democrat has Bill Clinton been? It is now part of political folklore that during the 1992 presidential campaign, Clinton declared himself a "New Democrat." On economic issues, the New Democrat label meant that Clinton intended to stake out positions more conservative than those adopted by previous Democratic presidents. The liberal of a of big government, he declared once in office, was over. And indeed, as president, Clinton has certainly promoted major legislation that breaks with liberal orthodoxy. The 1996 welfare overhaul, for instance, ended the sixty-year-old Democratic policy of Aid to Families with Dependent Children. Moreover, a 1997 legislative agreement with congressional Republicans pledged to balance the federal budget for the first time since 1969.

Yet not all of Clinton's major economic policy initiatives have tracked in a New Democrat direction. Although unsuccessful, the president sought to enact sweeping reform of the nation's health-care system. His plan relied on more not less government intervention, on old not new Democrat principles (Skocpol 1996). In 1993, Clinton tried to get Congress to accept a $30 billion economic stimulus package. That year he also promoted and approved one of the largest tax increases in U.S. history--$240 billion over five years. Designed to erode the deficit--which is a conservative economic-policy goal--that legislation, in liberal fashion, contained a tax hike targeted mainly at the wealthiest Americans.

In this article, we examine the Clinton economic record in order to discover whether the president has governed as a New Democrat. This task is important in at least two regards. First, for reasons of democratic accountability, it is critical for citizens of this country to be able to evaluate whether presidents have followed through on campaign pledges. Second, over the course of the post-World War II era, Democrats and Republicans have generally favored different macroeconomic, fiscal, monetary, and regulatory policies (Coleman 1996; Hibbs 1987; Quinn and Shapiro 1991; Tufte 1978).(1) Consequently, which party wins control of the presidency has significant implications for the U.S. economy.(2) Democratic administrations have tended to stress lowering unemployment and interest rates, stimulating economic growth, spending federal money on domestic programs, and increasing government regulation of business. Republicans, conversely, have emphasized lowering inflation and spending less money on federal projects. Vis-a-vis Democrats, they have also stressed lower deficits and less government regulation of business and have been less inclined to place emphasis on economic growth and reducing interest rates.(3) If Clinton is, as he claims, a New Democrat, he will, at the very least, reveal himself to be an anomaly. We may even be witnessing a shift in the economic policy outcomes that can be expected under Democratic administrations.

To assess Clinton's performance, we compare policy outcomes in the Clinton era with those of other postwar Democratic and Republican presidencies. We evaluate four policy areas: macroeconomic policy, fiscal policy, monetary policy, and regulatory policy. We understand that presidents alone do not control economic outcomes. They operate within an environment requiring compromise and negotiation with Congress, especially but not only during periods of divided government. In addition, the Federal Reserve wields significant power over monetary policy, which in turn gives the nation's central bank influence over general macroeconomic conditions. All presidents are also at the mercy of the domestic business cycle--swings in the U.S. economy that politics cannot completely explain--and of the policies of other countries, as well as of the vicissitudes of international capital markets. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.