Pethokoukis, Economics, U.S. Economy

Hillary tries to say Reaganomics was a failure — and totally different than (Bill) Clintonomics

Image Credit: kyle tsui (Flickr) CC

Image Credit: kyle tsui (Flickr) CC

It appears a Hillary Clinton presidential campaign would attempt to persuade the public that a Hillary presidency would (a) be Bill’s de facto third term and (b) that Bill’s first two terms were not part of the pro-market turn in US economic policy that began under Ronald Reagan. Because, you know, President Obama says the Reagan presidency marks when America went off course. All Reaganomics did was increase income inequality. Here is Hillary on last night’s Charlie Rose show:

[I]f you look … at two Republican two-term presidents, Ronald Reagan and George W. Bush, and two Democratic two-term presidents, Bill Clinton and now Barack Obama, and if I just were to compare Reagan’s eight years with Bill’s eight years, it’s like night and day in terms of the effects, the number of jobs that were created, the number of people lifted out of poverty — 100 times more when Bill was president. And did policies have something to do with that? I would argue that they did.”

Wait, what? “Night and day” — with Reagan as the “night” and Clinton the “day”? Conservatives tend to look at the 1980s and 1990s as one long, pro-market policy continuum of lower taxes and deregulation. Economists generally call this period “The Great Moderation.” Sure, Bill Clinton raised the top marginal income tax rate — although at 40% it was still lower than the 50% rate instituted by Economic Recovery Tax Act of 1981 — but he also lowered investment taxes and signed NAFTA, which was a different kind of tax cut. (And don’t forget the role of the Gingrich-led Congress in pushing those pro-growth policies, including a balanced budget.) Even the policy mistakes were similar. Banks bailouts and TBTF really started in the 1980s and continued through the Clinton years. I am also sure Hillary would like to forget that Bill signed financial deregulation in 1999.

And guess what, Barack Obama also sees the 1980s and 1990s and 2000s as all part of the same grand policy mistake, as he made crystal clear in his 2011 Osawatomie, Kansas speech. He doesn’t give Bill a pass. Clintonomics was as much a part of the problem, as Obama sees it, as Reaganomics. But Hillary is trying to revise history by arguing that Clintonomics was something completely different and apart.

She is also arguing, astonishingly, that Clintonomics was a success, Reaganomics a failure. Really? Even a cursory examination of the data dispels that claim. Reagan took office after more than a decade of economic tumult and raging inflation. America was supposedly in irreversible decline. But from 1981 through 1988, inflation was tamed. Real GDP growth averaged 3.5%, and employment rose by 18% despite the nasty, Fed-induced recession of 1981-82.

Just as important, the more business-friendly tax and regulatory structure — not to mention the restructuring of Corporate America — set the stage for continued growth in the 1990s. Clinton stood on Reagan’s shoulders. Real GDP growth averaged 3.9% and employment increased by 23% from 1993 through 2000. Given the head of steam Reagan gave the 1990s, plus the fall of the Soviet Union and the Internet boom and declining energy prices, it may have been impossible to mess up that decade. Bill started on third base, and Hillary thinks he hit a triple.

One more thing: Hillary Clinton is apparently going to make a big deal about income inequality. So here is a stat for her. The top 1% US income share in 1992 was 13.5%, according to the World Top Income Data Base. When Bill Clinton left office in 2000, the share had risen to 16.5%. Indeed, high-end inequality rose more during the Clinton presidency, 3.01 percentage points, than during the Bush presidency, 1.4 percentage points

No one tell Elizabeth Warren!

Follow James Pethokoukis on Twitter at @JimPethokoukisand AEIdeas at @AEIdeas.

7 thoughts on “Hillary tries to say Reaganomics was a failure — and totally different than (Bill) Clintonomics

  1. Hillary is full of shit. Regan was a great president! He doesn’t like big government and cut taxes. She is so delusional.

  2. Median household income stats, one of the best and most objective gauges of national prosperity, grew strongly under both Reagan and Clinton, suggesting both Reaganomics and Clintonomics were successful. In great contrast, MHI is actually lower now than when Obama took office. Hillary should separate herself from Barack, and talk up both the Gipper and Bill. The American people are ready to get back to work.

  3. James. You and the Republicans are never going to win with intellectual arguments – on any issue, in any race. The voters you need to come to our side, just don’t have the attention span to read and understand your articles.

    Every republican candidate needs a bumper-sticker campaign – a bumper sticker for every issue.

    I know it’s a challenge. But, it’s also a BIG opportunity for the party leadership. Here’s what I mean:

    Have the Republican candidates get all their constituents involved in coming up with a bumper sticker for each issue. Don’t give the task to the campaign staffs. You only get a few ideas that way. Show you have faith in the people. You’ll get tens of thousands of ideas.

    Offer a substantial financial reward for each winning idea. You might want to offer a prize for winning entries that work in Spanish as well as in English.

    With this approach, you’ll not only get better bumper stickers, you’ll be demonstrating something much more important. You’ll be showing the Republican Party is the party of the people. You’ll be actually demonstrating that it is the Republicans who believe in the power and creativity of the people. You’ll be demonstrating that the Republican candidate believes in financially rewarding creativity as opposed to government handouts the dems advocate.

    “Rewards for bumper stickers” is just a simple example. There are many more things you can do, once you get this basic idea – that there still is power in the people. You don’t have to depend on the political elites to solve problems. Virtually every problem we face can be solved by the people.

    Think about it

  4. Hillary Clinton overstates the differences, and Obama understates them. Clinton’s GDP and GDP/capita growth rates roughly matched Reagan’s if we start the clock after the severe recession engineered by Reagan and Volcker to tame inflation and we focus on the subsequent recovery period. Neither era came close what was achieved by JFK/LBJ, but both were somewhat better than the Ike years and the 1970s, and both were much better than the two Bush eras (and Obama years to date). Clinton did better than Reagan on some other measures, like balancing the budget rather than greatly increasing deficits, while raising the real minimum wage and achieving full employment. That said, Clinton mostly tweaked Reaganomics (featuring, depending on your political leanings, “supply side” or “trickle down”) in ways that proved superior to those of either Bush presidents.

  5. @RJBJr

    No one has ever been tricked into being rational.

    If your goal is only to manipulate irrational voters by appeals to emotion, you are playing right into the Democrat/’Progressive’ wheelhouse. They will always be better at making emotionalistic arguments. Fundamentally ‘Progressives’ live in a world in which reason is futile anyway.

    Anyone capable of manipulating the voters to reject the disingenuous machinations of the ‘Progressives’ by demonstrating an even more unprincipled and insidious engineering of public sympathies is ethically unfit to wield such power. We already have an amoral ruling class populated by high-functioning anti-social personalities, we don’t need another.

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