Bill Clinton on Budget & Economy President of the U.S., 1993-2001; Former Democratic Governor (AR)

No one could fix mess in 4 years; but policies are working

A lot of Americans are still angry and frustrated about this economy. If you look at the numbers, you know employment is growing. But too many people do not feel it yet. I had this same thing happen in 1994 and early `95. We could see that the policies were working, that the economy was growing, but most people didn't feel it yet. Thankfully, by 1996, the economy was roaring, everybody felt it. But the difference this time is purely in the circumstances. Obama started with a much weaker economy than I did. No president--not me, not any of my predecessors--no one could have fully repaired all the damage that he found in just four years. But he has laid the foundations. And if you will renew the president's contract, you will feel it.

How to balance budgets? Arithmetic; which GOP ignores

If the Republicans stay with this $5 trillion tax cut plan in a debt reduction plan, the arithmetic tells us, no matter what they say, one of three things is about to happen.
1. They'll have to eliminate so many deductions, like the ones for home mortgages and charitable giving, that middle- class families will see their tax bills go up an average of $2,000, while anybody who makes $3 million or more will see their tax bill go down $250,000.
2. Or, they'll have to cut so much spending that they'll obliterate the budget and put the future on hold.
3. Or, in spite of all the rhetoric, they'll just do what they've been doing for more than 30 years. They'll go and cut the taxes way more than they cut spending.

Too little government oversight caused 2010 recession

S&P credit downgrade caused by dysfunctional politics

S&P stated clearly that what really upset it was the politics of Washington, the slow recovery from the recession, and the fact that over the next few years debt in several wealthy countries is projected to go down as a percentage of GDP but the U.S. debt probably will not do so, mostly because the United States, along among wealthy nations, has had no effective restraint on health-care costs. Above all, S&P thinks America's politics have become dysfunctional.

Balanced approach to recovery: jobs, investment, and debt

America is also still the world's more entrepreneurial country. It's easy to start a small business, and for several years small businesses have accounted for a majority of our new job growth.

We simply are not doing what we have to do to stay ahead of the competition for good jobs, new businesses, and breakthrough innovations. Lots of other countries are hot on our heels with rising incomes, declining inequality, increased educational attainment, and big investments in key drivers of today's and tomorrow's economy.

As the economy recovers, I want America to embrace a balanced approach that creates jobs, raises incomes across the board, and deals with our long-term investment and debt challenges.

Get $4 trillion in banks back into economy

After World War II, until 1981, government policies helped us build the world's greatest middle class; reduce discrimination based on race, gender, and sexual orientation; lower poverty rates; open wide the doors of college; increase access to health care; and clean up our environment in a way that promoted economic growth:

1. Put as much of the $4 trillion now held in banks and corporate treasuries back into the economy as fast as we can;
2. concentrate on the areas most likely to produce good jobs that have a positive ripple effect, jobs in modern infrastructure building, high-end manufacturing, green technologies, and exported goods & services; and
3. do literally dozens of other things that, when combined, can make a real impact now and also increase our long-term economic growth.

If Congress won't legislate, fix by Executive Order

A: If [the President] can't get Congress to act, he's got to do everything he can by Executive Order. I understand why he's frustrated, because a lot of these proposals that he's made are ideas that were first proposed by Republicans, who are all of a sudden now against them and seem to be against them just because [Democrats are] for them. But he ought to keep fighting for his ideas in Congress. These kinds of financial/housing crises, if you go back hundreds of years, tend to take five to 10 years to get over.

1995-97: Cutting capital gains tax helped eradicate deficit

The results of the 2001 Bush tax cut were similar. Bush sliced the top rate from Clinton's 39.6% to 35% and cut the capital gains rate from 20% to 15%. The result? The rich paid more in taxes! MORE?

OpEd: Left country on brink of recession in 2001

The Republican Revolution of 1994 initially proved to be a good counterbalance to Clinton's attempt to expand government. The Republicans stopped Clinton's attempt to take over America's health-care system, forced him to sign a welfare reform plan (after two vetoes), and finally balanced the federal budget for the first time in decades.

The achievement of the balanced budget was short-lived (it was actually never even close to being balanced if you count what was being borrowed from the Social Security Trust Fund) and more the result of America's economic expansion than anything done by the Republicans or Clinton.

Unfortunately the good economy and balanced budget created an excuse to increase spending dramatically.

1995: Bill supported balancing budget in 10 years

First modern Pres.to use fiscal discipline to balance budget

Most of the platform that had been the foundation for Clinton’s victory, which featured a menu of social programs, was instantly challenged. Ironically, those first 100 days, while the bottom sometimes seemed to be falling out of the new presidency, the course was actually set for a historic economic recovery and boom.

Clinton alone among contemporary presidents grasped the possibilities of the global economy, and what the explosive power of America’s technical invention & new industries could do for the domestic economy. He became the first modern president to actually exercise, as opposed to merely talk about, the fiscal discipline necessary to cut and even balance the federal budget.

Ran budget by "PayGo": compensate for any lost revenue

The result is the most precarious budget situation we have seen in years. We now have an annual budget deficit of almost $300 billion, not counting more than $180 billion we borrow every year from the Social Security Trust Fund.

It is not the debt that is most troubling. The bulk of the debt is a direct result of the President’s tax cuts, 47.4% of which went to the top 5% income bracket.

We can eliminate tax credits that have outlived their usefulness & close loopholes that let corporations get away without paying taxes. We can restore a law that was in place during the Clinton presidency--called Paygo--that prohibits money from leaving the treasury without some way of compensating for the lost revenue.

OpEd: 1995 shutdown led to first balanced budget in 40 years

1992: A deficit hawk elected to fix the economy

Laminated cards had been printed up to highlight his achievements. "The Clinton Economic Record" card compared the "Before" condition of what Clinton had inherited with "After 2 Years." The annual deficit already had been cut nearly in half. Job growth, auto production, business investment and home sales were up, while the critical yardsticks that were supposed to be down were down: unemployment, federal employment, inflation and mortgage interest rates.

Clinton wanted to run on what he had done. "The things we set in motion in 1993," the president said. "What I came here to Washington to do without a lot of help, without a lot of experience, without a lot of knowledge about how Washington works. What we started in '93 was the right thing to do."

1995: balance the budget in ten years

Lieberman thought about the old Hebrew saying, Don't ask the rabbi a question unless you know the answer. Clinton seemed to be looking for a fortification. Lieberman played his assigned role. He agreed strongly that it was very important, that it would take guts. Yes, Clinton should engage the Republicans on principle and national goals, with a balanced budget by a certain date. "The sooner the better," Lieberman said. "You don't have to present a full plan." It would make Clinton almost "sublime" while the Republicans were still out there arguing with each other about the details.

Lieberman considered Dick Morris's influence the best occurrence of the year in the Clinton White House. Lieberman thought his arrival an "act of God" to save the party.

"Balance the budget in 10 years," he proposed on Tuesday June 13.

Borrowing money to pay for the deficit fails our trade laws

1993 budget signaled the return of fiscal responsibility

The plan wasn't everything the Administration had wanted, but it signaled the return of fiscal responsibility for the government and the beginning of an economic turnaround for the country, unprecedented in American history. The plan slashed the deficit in half; extended the life of Medicare Trust Fund; expanded a tax cut called the Earned Income Tax Credit, which benefited fifteen million lower-income working Americans' reformed the student loan program, saving taxpayers billions of dollars; and created empowerment zones an enterprise communities that provided tax incentives for investing in distressed communities. To pay for these reforms, the plan raised taxes on gasoline and on highest-income Americans.

New Clintonism demonstrated in 1997 balanced budget

The 1997 Balanced Budget Agreement--the first nominally balanced budget in 30 years--received insufficient attention. It was, in a way, the ultimate demonstration of the New Clintonism. The real victory wasn't in the "zero" at the bottom line, but in the dozens of line-item skirmishes won.

There was the more than $30 billion in new tax credits for higher education. There was also $24 billion for a children's health program. He also was able to make the welfare reform revisions he had promised.

The 1997 BBA was an achievement ignored by Clinton's critics on the left (who wanted bigger social programs), on the right (who wanted less spending), in the press (who mostly didn't notice), and in academia. "These aren't big pieces of legislation. These are scraps off the table," said one critic.

1992: Connected with audience on recession's personal effect

On Oct. 15, 1992, toward the end of a presidential debate, an African-American woman asked a confusing question: "How has the national debt personally affected each of your lives?"

Bush: "I'm sure it has. I love my grandchildren. I'm not sure I get... help me with the question."

After more struggle, it was Clinton's turn--and he did something quite extraordinary. He took three steps toward the woman and asked her, "Tell me how it affected you again?"

The woman was speechless. Clinton helped her along, but the words weren't as important as the body language: the three steps he had taken toward the woman spoke volumes about his empathy, his concern, his desire to respond to the needs of the public.

OpEd: Despite personal issues, ran a disciplined presidency

Reduced federal deficit from eleven zeroes to simply zero

The President basked in the cheers, his jaw set, smiling slightly. For a moment, the Lewinsky business seemed very far away. And now, he was ready to take his big gamble: "If we balance the budget for the next year, it is projected that we'll have a sizable surplus in the years that immediately follow. What should we do with the projected surplus?" He paused for effect. "I have a simple four word answer: Save...Social...Security...First!"

1995 budget impasse blamed on Republican intransigence

The Gingrich Republicans proved perfect opponents for the President. They refused to compromise on the budget. The new fiscal year began without an agreement and the federal government, consequently, shut down for lack of funds in October; then, after interim negotiations, it shut down for a second time in December. The President, of course, was complicit in this, but the Republicans, who had flaunted their intransigence throughout the year, were blamed for the spectacle.

Longest Economic Expansion in US History

• In February 2000, the United States entered the 107th consecutive month of economic expansion -- the longest economic expansion in history.
• 22.2 million new jobs have been created since 1993, the most jobs ever created under a single Administration -- and more new jobs than Presidents Reagan and Bush created during their three terms. 91 percent (19.9 million) of the new jobs have been created in the private sector, the highest percentage in 50 years.
• Unemployment is down from 7.5 percent in 1992 to 4.0 percent in June 2000, and in April the unemployment rate was the lowest in over 30 years. The unemployment rate has fallen for seven years in a row, and has remained below 5 percent for 34 months in a row.
• The poverty rate has fallen from 15.1 percent in 1993 to 12.7 percent in 1998. That’s the lowest poverty rate since 1979 and the largest five-year drop in poverty in nearly 30 years.

Pay off National Debt to reduce interest payments for all

In 1998 and 1999, the debt held by the public was reduced by $140 billion, and the government is projected to pay down an additional $184 billion in public debt this fiscal year alone. Debt reduction brings real benefits for the American people -- a family with a home mortgage of $100,000 might expect to save roughly $2,000 per year in mortgage payments. Reduced debt also means lower interest rates and reduced payments on car loans and student loans. With the President’s plan, we are now on track to eliminate the nation’s publicly held debt by 2012.

Zero deficit, not 11 zeroes, for first time in 30 years

Turning a sea of red ink into black is no miracle. It is the product of hard work by the American people and of two visionary actions in Congress: the courageous vote in 1993 that led to a cut in the deficit of 90%, and the truly historic bipartisan balanced budget agreement passed by this Congress. Here's the really good news: If we maintain our resolve, we will produce balanced budgets as far as the eye can see.

Cut the deficit to lower interest rates

Well, three and a half years later, we cut the deficit by more than half. In fact, we would have a budget surplus today but for the interest we pay on the debt run up in the twelve years before I took office.

Cutting the deficit further until we balance the budget is vital to our future. The burden of this deficit drags us down today and jeopardizes our children’s future tomorrow. Lowering it brings interest rates down so more Americans can buy homes and cars, start businesses, go to college, and build a better future for themselves and their families.

Drew from Robert Reich's book "The Work of Nations"

Clinton drew extensively from Robert Reich's book, "The Work of Nations," [which called for a] government investment revolution. "If you let 10 to 20 more years go on where the middle class keeps losing ground," he continued, "this won't be the America any of us grew up in. And, I will say again, it is a question of organization, will, and leadership. It has nothing to do with the American people....They have not been properly led. And I hope that this will be the beginning of turning that around. If it is, we'll owe a lot of it to Bob Reich."

Cut the deficit in half over four years

Promising to balance the federal budget at the end of a 4-year presidential term was standard campaign fare. Someone suggested that Clinton promise instead to cut the deficit in half at the end of 4 years, a more realistic goal. Clinton approved.

Reich's "human capital theory" became "Putting People First"

Clinton wanted to tie the plan's title to Reich's "human capital theory." But Reich's phrase, while an economist's delight, was a sloganmaker's nightmare and had zero voter appeal. They had to translate the notion into plain English. Finally they came up with a name: "Putting People First."

Economic recovery: "We're all in this together"

[One adviser] said, "Mr. President, you're being seen as anti-business. You're seen as punishing the rich." The executives felt that the speech and pan insinuated that it was immoral to be rich. To have worked hard and been well paid did not make them guilty of 1980s-style greed. Particular criticism had been leveled at the president's line, "We're all in this together," when it seemed to them that the wealthy were being singled out.

Raise short-term rates to keep long-term interest rates low

Clinton made it clear that he fully understood the seeming paradox of raising short-term rates to keep long-term rates low. Largely because of the inflation expectations, the 30-year long-term rates were up around 7%, while shot-term rates sat at 3%.

Cut defense & ask wealthy Americans to pay their share

CLINTON: I believe we can increase investment and reduce the deficit, if we not only ask the wealthiest Americans to pay their share; we also provide $100 billion in tax relief and $140 billion of spending cuts. Take money from defense cuts and reinvest it in transportation, communications and environmental clean-up systems.

BUSH: I don't like trickle down government. Clinton says grow government. Government doesn't create jobs. If they do, they're make-work jobs. It's the private sector that creates jobs.

PEROT: We still have a significant deficit under each of their plans. There's only one way out of this, and that is to have a growing job base. My plan balances the budget within 6 years. We didn't do it faster than that because we didn't want to disrupt the economy.

Focus on education, investment, and change

We need a national economic strategy as well as a human-development strategy that recognizes that what people earn depends largely on what they can learn and whether their economies are organized for change. So the three central ideas in my economic policy are:
1. Emphasize education and training, not just of our children but also of our adults.
2. Give new incentives to the private sector to invest in the economy.
3. Think a lot about organizing to make change our friend instead of our enemy.