Clinton-Assisted Economic Suicide
Anthony, Mark, Insight on the News
Bill Clinton was reelected largely on the perception of economic tranquility. Was that perception correct or just a result of shameless media flecking for Bill Clinton? After four years of varying degrees of opinion-based reporting which declared the economy vibrant as a result of the president's economic package, the exit-polling data were not surprising. The Voter News Service indicated that 53 percent of voters believed the economy is in good condition, up from 18 percent in 1992, while 33 percent thought their families are better off then they were four years ago, up from 24 percent in 1992.
However, facts belie the perception as well as the rhetoric on which it is based. As the economy staggers toward recession, a more relevant question was neither asked nor answered: Why isn't the average family better off now than it was 10 years ago?
Dramatic declines in the rate of private savings, investment, productivity, income growth and job creation normally do not happen in concert without the negative stimulus of flawed economic policy. Such is the legacy of "Clintonomics." Data from the departments of Commerce and Labor as well as the Census Bureau clearly show that Clinton's massive retroactive tax increase in the embryonic stage of an economic recovery set in motion a chain reaction. Sharp declines in private savings and investment led to historic lows in productivity, which put downward pressure on economic growth, hourly wages, family income and the quality of job creation.
Since 1992, taxes have increased 60 percent faster than national income. Personal taxes have risen by 25.3 percent, while corporate taxes are up 55 percent. Combined federal, state and local taxes reached an astonishing 31.4 percent of total national income in 1995.
The massive transfer of wealth from the private to the public sector caused gross private savings to fall to 14.6 percent of gross domestic product, an all-time low. The net investment rate dropped to 3.8 percent, nearing an all-time low. The decline in private savings and investment produced an unprecedented drop in productivity (the increase in the amount of goods and services produced per hour of work) from 3.6 percent in 1992 to an average rate of .3 percent between 1993-95, also an all-time low.
In 1992, while candidate Clinton was calling the economy the worst since the Great Depression, the economy was growing at 3.7 percent, considerably better than the 3.2 percent average annual rate achieved from 1946-1988. Clinton inherited an economy already 11 months into a recovery. However, by 1995 the economy had slowed to an anemic 2 percent growth rate, while the fourth quarter to fourth quarter rate of growth, a far more accurate gauge of economic strength, tumbled to 1.3 percent. Clinton unabashedly proclaimed the economy the best in 30 years while ignoring the previous five economic expansions which averaged a 4.4 percent annual growth. The Clinton economic recovery, by comparison, has produced an average growth rate of 2.4 percent, ranking as the worst economic recovery in more than a century.
This sharply diminished economic growth put downward pressure on wages and income growth. Hourly wages have fallen .4 percent under Clinton. By 1993, the number of Americans living in poverty reached the highest level since 1963, as 1.3 million more Americans fell below the poverty line. …