Clintonomics was Foundation For The Bush Era

by Alexander Cockburn

So just get a Democrat, any Democrat, back in the White House, and the skies will begin to clear again.

But suppose a less forgiving scrutiny of the Clinton years discloses that these years did nothing to alter the rules of the neoliberal game that began in the Reagan/Thatcher era with the push to boost after-tax corporate profits, shift bargaining power to business, erode social protections for workers, make the rich richer, the middle tier, at best, stand still, and the poor get poorer.

We now have just such an unsparing scrutiny of Clintonomics in the form of Robert Pollin's "Contours of Descent," subtitled "U.S. Economic Fractures and the Landscape of Global Austerity."

Across his 238 pages Pollin is unambiguous. "It was under Clinton," he points out, "that the distribution of wealth in the U.S. became more skewed than it had at any time in the previous forty years. Inside the U.S. under Clinton, the ratio of wages for the average worker to the pay of the average CEO rose from 113 to 1 in 1991 to 1 to 449 when he quit. In the world, exclusive of China, between 1980 and 1988, and considering the difference between the richest and poorest 10 percent of humanity, inequality grew by 19 percent; by 77 percent, if you take the richest and poorest 1 percent.

The basic picture? "Under the full eight years of Clinton's presidency, even with the bubble ratcheting up both business investment and consumption by the rich ... average real wages remained at a level 10 percent below that of the Nixon-Ford peak period, even though productivity in the economy was 50 percent higher under Clinton than under Nixon and Ford. The poverty rate through Clinton's term was only slightly better than the dismal performance attained during the Reagan-Bush years." We had a bubble boom, pushed along by consumer spending by the rich.

Through the Clinton era, the bargaining power of capital to cow workers, to make them toil harder for less real money, increased inexorably. Speculative rampages were given a green light.

To be sure, in accord with the captious laws of class-based mechanics, the bubbling tide did raise boats, albeit unevenly. The yachts of the rich lofted magnificently on the flood. Meaner skiffs rose an inch or two. In those bubble years businesses needed more workers, and for a brief moment, the labor shortage gave them some leverage to get more pay.

At the end of eight years, when the bubble tide had ebbed, what did workers have by way of a permanent legacy? Clinton, Pollin bleakly concludes, "accomplished almost nothing in the way of labor laws or the broader policy environment to improve the bargaining situation for workers ... Moreover, conditions under Clinton worsened among those officially counted as poor."

Nowhere is Pollin more persuasive than in analyzing the causes of the fiscal turnaround from deficit to surplus, an achievement that had Al Gore in 2000 pledging to pay down the entire federal debt of $5.8 trillion. Was this turnaround the consequence of economic growth (producing higher tax revenues), along with the moderate rise in marginal tax rates on the rich in 1993? If indeed these were the causes of fiscal virtue, we might take a benign view of Clinton's fiscal policies. On the other hand, if surplus was achieved by dint of hacking away at social expenditures and at social safety nets, plus gains in capital gains revenues stemming from the stock market bubble, then progressives, even Democratic candidates, might not so eagerly extol the Clinton model.

In a piece of original and trenchant analysis Pollin shows that almost two-thirds of Clinton's fiscal turnaround can be accounted for by slashes in government spending relative to GDP (54 percent) and on capital gains revenues (10 percent). Pollin then asks the question: Suppose there really had been a peace dividend after the end of the Cold War was won. We could have had a few less weapons systems, 100,000 new teachers, 560,000 more scholarships, 1,400 new high schools and still had a budget surplus of $220 billion.

Wall Street applauded the surpluses, and the ordinary folk paid the costs of all those slashes in the budget: fewer teachers, a dirtier environment.

You think the next Democratic nominee is going to address the long and short-term horrors engendered by the neoliberal credo to which Clinton paid such fealty? Of course not. What, at minimum, would have to be done? Pollin doesn't shirk the questions, and he suggests answers that steer past easy rhetorical flourishes about trade protections. If we are to move toward a world in which families don't have to line up outside churches to stay alive and teenagers don't have to work for 20 cents a day in Third World sweatshops, we have to have policies here that promote full employment and income security.

Such policies would have to include a strengthening of workers' legal rights to organize and form unions, and also to fight on a level playing field in the conduct of strikes. To get a measure of fairness and stability in the financial system, financial institutions would have to honor asset-based reserve requirements, of which one example would be the margin requirements Greenspan failed to impose in September 1996. This same policy instrument could be used to channel credit to socially beneficial projects such as low-income housing.

Despite the best efforts of our doctrinal leaders, the moral sentiments of the people are not entirely corrupted. Consumers, for example, are prepared to pay a premium if they can be assured they are buying products not made in sweatshops. And third-world countries need not survive only under the sweatshop conditions ("tremendous good news") praised by Krugman and his colleague at the Times, Nicholas Kristof. They have to be permitted to return to the somewhat protected conditions encouraged in the development policies of an earlier era, without agencies of the U.S. government decreeing that their reformers and their union organizers be murdered by death squads.

I'm sorry, but you won't be hearing these ideas from Howard Dean.