Friday, August 31, 2012
1912-2012: Grading the Presidents pt 4: Clinton to Obama
Part 1: http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-1-taft.html
Part 2: http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-2.html
Part 3 : http://ants-and-grasshoppers.blogspot.com/2012/08/1912-2012-grading-presidents-pt-3.html
And quite honestly, this is by far our most difficult task. Not only because we're talking about a very recent period of time (1993 to the present) which means all readers have preconceived biases and 'favorties', thus will judge what we write based on that pre-determined prism, but because quite honestly, most economic policy in the modern era isn't determined by Presidents but, by the Federal Reserve.
So a President may push forth a particular piece of economic legislation or seek taxes to be lessened or raised, but in the overall day to day economy which we all are dependent, a President's power is very, very minimal.
So when we judge the accomplishments (or lack there of) concerning Clinton, Bush 43 and Obama, not only must we be consistent in not letting non-economic issues sway, but being able to analyze the health/weakness of the economy and separate Presidential from Fed actions.
Lastly, don't let party affiliations distract you.. the three of them are all good buddies and pretty much have governed economically the same way
So we begin..
Clinton finished his Presidency as the first Democrat since FDR to complete two terms of office, and in spite of certain scandals of sexual and/or constitutional ethics, left office quite popular. But we are not interested in any of that.. only the economy.
Clinton can be called the first Wall St Democrat President. He made no secret of his admiration and allegiance toward the financial sector, as well as doing everything humanly possible as President to help the banking sector's profits expand.
When Clinton took office the stock market's Dow was around 3,400 and would surpass 3,500 for the first time ever in May, 2003. When Clinton's Presidency had completed, the Dow was around the 11,700 mark, It disproportionately rose over 300% in a span of approximately 8 years. Remember, it took approximately 210 years to get to that initial 3,400 mark.
A lot of this had to do with speculative bubbles created by the Federal Reserve to get people investing in stocks and politicians grabbed route as a means or growing the private sector. The 'Dot-Com' bubble of the late 1990's is the best example.
But ultimately that wasn't based on Clinton policy as much as Fed Chair (at the time) Alan Greenspan's decision to take a laissez-faire attitude to the economy and let businesses essentially do as they want, trusting they were best to check n' balance themselves.
So much of the faux illusion of a prosperous US and widening economic gap between 'have' and 'have not' originated from that decrepit cadaver Greenspan we'd need another 10-20 paragraphs to get into it all.
But let's get back to Clinton and look specifically at his policies. As we mentioned in part 3, he forcefully pushed until successful to get Republican-negotiated NAFTA approved which has had terrible consequences for millions of workers, especially those who once held good paying jobs that have been relocated mostly to the south.
Another piece of Republican-led legislation that supposed 'liberal' Democrat President Clinton signed into law was welfare reform which was part of Newt Gingrich's "Contract with America" and introduced by those who believed welfare was partly responsible for bringing immigrants to the United States.
Some positives of Clinton's economic record were pushing forth policy that created children's health insurance which provided coverage for up to 5million kids, and legislation which reduced taxes for 97% of working Americans while raising taxes on the wealthiest 1.2% as well as mandating balanced budgets.
There's two questions left that needs to be answered in assessing Clinton's Presidency: During the Clinton administration was the federal budget balanced? And was the federal deficit erased?
The answer is... Yes and No to both... Depends on whether Social Security is included.
Clinton was able to acquire additional revenue to pay on the deficit by taxing the rich (good) and making some cuts to the federal budget. Then there's the Soc. Sec surplus based on the payroll tax. Social Security taxes brought in more than the cost of current benefits,so the figures looked better than they would if Social Security wasn’t counted.
So like Bush 41 and Reagan before him, Clinton took from the Soc. Sec. surplus which was meant to guarantee that there would always be a secure fund for the elderly. He spent the surplus on paying down the US deficit. That's where the extra revenue came from to pay it down and why Social Security is still set to run out of funds by 2035.
So in summary, we find Clinton's economic track record to be a lot like Reagan and because we found Reagan's love affair with Wall St to be destructive for so many working people, we must apply the same feelings toward Clinton; a Democrat in name only.
The entire Clinton Presidency was a continuation of the sugar-high originated during Reagan. The deficit was paid using money meant to protect Social Security and the National Debt still rose under Clinton as we spent billions upon billions to involve ourselves in the Balkans, Somalia and other humanitarian 'hotspots'.
Clinton will always be a popular President, especially among Democrats. He's charming, affable, and at the same time intelligent. And while overall times were good economically under Clinton, he's as much responsible for the mess we're in today as Reagan and the Bush boys.
Once again, this is a very difficult analysis because even more so than previous Presidents, the Fed made most economic related decisions outside of tax reduction that its hard to directly credit or blame any recent or current sitting President.
When Bush took office, the budget had a surplus. When he left office, it had a severe deficit. That's what funding two on-going wars with no end in sight will do to the national treasury.
The biggest pre-9/11 decision he made economically were is now-famous tax cuts to the wealthy. Originally they were supposed to extend through the entire 2000 decade but Pres. Obama has since extended it twice and it is feared, he probably will make them permanent (though we hope not) in December.
After 9/11, Bush told everyone grieving and full of anger not to take matters into their own hands or to seek revenge.. No the best way to show the terrorists they didn't win was to keep shopping. Keep that 1st class flight reservation to Hawaii or Sydney; keep those 24k gold diamond earrings with matching tennis bracelet, etc..
After 9/11, the country was in a recession. How to get out of it? Bush and Greenspan had a 'brilliant' idea of stimulating and growing a housing bubble which would grow the economy out of recession, cause the stock market to artificially skyrocket even higher, and allow people (even though with bad credit or low paying jobs) to get homes they had no normal right to expect to be able to afford.
And from this genius idea, came out the filth from the woodwork: the predatory lenders who hoodwinked the poor into destroying their credit by attracting them to sign on the dotted line with 'teaser' APR rates.
The black and Hispanic communities in particular were very susceptible to these evil lending practices because for generations, they were so used to redlining (being purposely denied loans or offered at higher interest rates than Caucasians) that they jumped at the opportunity at home ownership.
And from this, came the housing collapse of 2007 which led to the beginning of the recession-depression we're all living through presently, and triggered the Wall Street crash of 2008.
And who can forget impotent Bush standing side by side which his arch nemesis, Nancy Pelosi as they both begged Congress to pass the $700 billion TARP program even though it had no oversight to check how the money was actually to be used...
Oh, and did we mention all those billions upon billions to fight and spread democracy throughout the Middle East.
A lot of people who got wealthy under Reagan/Bush, then super-wealthy under Clinton, became Super-Duper wealthy under Bush Jr. while increasingly the bottom 99% saw their home values and 401k's begin to plummet.
Over time, we don't think historians will be too kind in evaluating Bush's economic policies, and neither will we.. The only thing that saves Bush from a complete F was that, as we've stated repeatedly, the Federal Reserve created the sugar high, the market bubbles, the asset over-valuations in the stock market and every other bad thing which causes the bottom 99% to have less upon less.
Bush in some respects, really was the naive, over-trusting dupe that he was famously portrayed as on SNL and because of that, and not having the guts or balls to Not bailout the finance industry, we give him F+
What can be said about Obama's economic policies? Really little to nothing. For that's what Obama has done for close to four years... little to nothing.
His political enemies labelled him a Socialist-- utterly wrong. Had he been one (and one can be a socialist-capitalist), he would have pushed massive legislation in his first two years in office to copy FDR's job creation programs. He would have pushed for a massive stimulus bill.. He would have privatized the banks and fixed the rot while maintaining governmental control.
Obama did little to nothing.
A stimulus bill was passed but very small in size, scope and cost. He pushed a 'cash for clunkers' program to stimulate car buying in exchange for turning in your old car but that simply increased purchasing when program was in effect, then caused dramatic slow-downs in purchasing immediately after it was completed..
Obama talked a good game and did little to nothing.. He was too busy wasting away the fact he had a Democrat controlled Congress in the first half of his administration, to shove his Obamacare (a nationalized version of RomneyCare from Massachusettes); a program that most Republicans hate as being too intrusive and many Democrats hate as not being strong enough.
Most if not all economic policies of Obama have meant to help Wall St and the financial class. He briefly took over GM which in turn dramatically raised the prices of its vehicles then later in 2009 opened a new manufacturing plant in China
Obama has allowed Bernanke to push through QE1, QE2, two seperate "Operation Twists" and a possible QE3 without so much as a peep of dissent even though the Fed's actions have skyrocketed the National Debt from around $10 Trillion when Bush left to now close to $16 Trillion
And despite the desperation of biased sources like the National Association of Realtors, housing has not recovered. Far from it, the industry is in the midst of a double-dip recession with no clear cut bottom point, especially when there is such a glut of new inventory; newly built homes just sitting vacant without owners.
In summation, Obama has been terrible. In many ways he's conducted his economic policy (and foreign policy) exactly as we'd expect Bush to, had he had a 3rd term. And in spite of all the rhetoric that Obama is a leftist, he shown himself to be equally pro-Wall St as Clinton.
Obama came into office with an enormous amount of support and belief from others that he'd be different and set a different economic course from the Bush years. Whether intentional or just way over his head, Obama has failed miserably and thus we give him the same grade as Bush Jr-- F+.
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There's many reasons the US economy has steadily deteriorated over the last 41 years. Weak and/or shortsighted leadership is a major reason. No President who has taken office has any background in economics or finance. Perhaps some had business skills but you don't run government like the private sector; it is not designed nor set up to make cut-throat profit.
Because of this, no President especially from Nixon to Obama has known what to do to strengthen and protect the US economy from outside harm. The goal is always very short-term quick fix policies that last through the mid-terms or next Presidential election. They put too much faith and trust in despicable Fed Chairs whose interests is solely with the banks; never nations or citizenry.
Have good Labor Day weekend.. we'll be back Tuesday unless something worthy to write about before then...