Saturday, August 18, 2012
Bill Clinton; Economic Guru?...or Damned Lucky?
How many times have you heard Democrats boast during the past few years of Bill Clinton's fantastic success in boosting the American economy. They also assert that Clinton's tax hikes were the reason our economy began to take off in the mid 1990's. Let's look at the facts to see if success should indeed go to Bill Clinton, or whether other factors were in play.
When Clinton took office in 1993, after campaigning on a "I feel your pain" mantra, the economy remained sluggish during that year. One of the problems dragging the economy down was that Bill Clinton, like Obama, led off his Presidential agenda with HillaryCare, the 90's edition of Obamacare. Hillarycare proved to be a disaster and we're more than willing to give Clinton credit for abandoning it, unlike Obama.
Still, by early 1994, Bill Clinton was still spending like a drunken sailor, having generated additional revenue through tax hikes on the middle class; and the economy continued to stumble. Then, during the next twelve months two things happened to save Bill Clinton's bacon. In November of 1994 the Republicans captured both houses of Congress through their Contract With America campaign. Once in control the Republicans immediately cut spending, reduced regulation, and passed Welfare Reform which said to life long welfare tit suckers, "if you want a cent of welfare money you're going to have to go out and work in day care centers, rake leaves in the park or contribute something to the community. The result of that legislation led to half of all welfare recipients voluntarily abandoning a welfare check and all of a sudden the federal government realized billions of dollars in savings from a program that had been ripe with fraud, waste and abuse.
The second fortunate thing that helped the Clinton economy came in the spring of 1995. It was a stock market phenomenon called the Internet Boom. From 1995 to 2000 the Nasdaq market index grew from less than 1000 to a peak of over 5,000 in 2000, before the bubble finally burst. Anyone remember a company called Geo Cities and a share price of $1,305 per share (before it went bust) Does anyone remember America Online and their stratospheric stock price? Millions of Americans were playing the Internet market (to their eventual detriment) and the only winner in the end was the federal government who gained trillions into the national treasury in capital gains revenue. However, during that five year period the federal government ran a balanced budget for four of those five years. The combination of Republican budget cuts and the Internet boom allowed Clinton to claim sole victory for those who are naive enough to believe him. He never mentions the Contract With America and the Republican revolution of 1994.
Here's a look at how that Internet Boom, with those explosive capital gains tax accruals contributing to federal revenue during those five years:
Here's what the Congressional Budget Office said of capital gains revenue during the period:
"Largely because of the stock market boom of the 1990s, gains rose as a percentage of individual income tax receipts from about 7 percent in each year in the first half of the decade to about 12 percent in 2000. The jump in realiza- tions in the late 1990s accounted for about 30 percent of the growth in income tax receipts in excess of GDP growth that occurred from 1994 to 1999.3"
What Clinton won't talk about is the year 2000 when the Internet boom busted and left America again in a recession, just as he was fortunate enough to be leaving office.
Let's be fair to Clinton; while he can't truly claim sole credit for the prosperity of the late 90's, at least he didn't declare war on business, and, after refusing to sign Welfare Reform on the first two go-arounds, he finally did sign it and told America, and I quote "the time for big government is over". Was Clinton an economic guru? Well, the CBO statement and the above chart shows Clinton just happened to be there at the right time and was smart enough to get out of the way of business and let it prosper!
Now we have a President who demonizes business and says loud and clear "the time for big government is now!" Oh, remember that Welfare Reform that Clinton signed? Last week Obama told those on Welfare that they didn't have to trouble themselves with seeking work...he's ready to grant one of his notorious "waivers". And a balanced federal budget is but a distant dream.
Sad. Damned Sad.