Monday, May 23, 2016

Why Worry About a Clinton Presidency?

I have no love whatever for either Bill or Hillary Clinton, mostly because I remember how Bill worked harder than anybody in Washington to get the Republican economic plan enacted.

"Wait a minute," you say. "Bill's a Democrat. Are you saying there's no difference between the parties?" No, there is a difference between the parties... but when it comes to strictly economic matters, it's very hard to find it.

Let's begin with this interview with Thomas Frank, author of What's the Matter With Kansas? and The Wrecking Crew and, most recently, Listen, Liberal, a scathing critique about how the centrist-led Democratic Party has abandoned everyone except the wealthy upper class for the past quarter century. Frank lines up the major policy victories the Clinton administration claimed.

"Fulfilling so much of the GOP agenda": That is a point worth reiterating. Clinton had five major achievements as president: NAFTA, the Crime Bill of 1994, welfare reform, the deregulation of banks and telecoms, and the balanced budget. All of them -- every single one -- were longstanding Republican objectives. His smaller achievements were more traditionally Democratic (he raised the earned-income tax credit and the minimum wage), but his big accomplishments all enacted conservative wishes, and then all of them ended in disaster.

. . .

The final conservative consequence of the impeachment, although this one was surely not intended: impeaching Clinton made him a martyr and hence a hero to Democrats. It secured his family's and his faction's grip on the Democratic Party apparently forever.

Let's omit the Crime Bill of 1994, which is not exclusively economic in nature. (Also worth noting: it's the only one of those five that either Bill or Hillary has expressed any remorse over.)

The same interview, Mr. Frank on NAFTA:

Clinton never had a really great relationship with workers' organizations, but the worst thing Clinton he did to them was NAFTA. There were many trade agreements, of course, but NAFTA was the one that mattered, both because it was the first one and because labor put everything into stopping it. Indeed labor had stopped it when George H. W. Bush tried to get it through Congress. Clinton got it done, however, with a little muscle and a vast fog of preposterous claims about how NAFTA would increase exports and manufacturing employment.

His admirers saw NAFTA as his "finest hour," because he had stood up to a traditional Democratic constituency. What an achievement. NAFTA handed employers all over America the ultimate weapon against workers: They could now credibly threaten to pick up and leave at the slightest show of worker backbone -- and they make such threats all the time now.

This is why union leaders picked Clinton, but union members picked Sanders in the primaries. The leaders are part of the Democratic power structure, but the actual rank and file remember full well how routinely and thoroughly Bill Clinton shafted them.

For a bit more detail on this and the other points, quoting from These United States by Glenda Elizabeth Gilmore and Thomas J. Sugrue:

Clinton was the most prominent member of the Democratic Leadership Council (DLC), a group of insurgent Democrats founded in 1985 who argued that for the Democratic Party to survive, it needed to move rightward on civil rights, foreign policy, and especially economic policy. DLC members argued that liberals had lost touch with the majority of voters, particularly white working- and middle-class men...

The DLC was particularly attractive to younger Democrats from the Sunbelt. Its first six chairs were all from southern or border states... The DLC's pro-business politics attracted substantial corporate support. By 1991-92, of its one hundred "sustaining members", fifty-seven were corporations and another twelve were professional and trade associations...

At its 1990 conference, the DLC laid out its principles in the "New Orleans Declaration," a document that became a blueprint for Clinton's candidacy. The "Democratic Party's fundamental mission," it stated, "is to expand opportunity, not government." This meant embracing pro-business policies, including free trade, a streamlined, business-friendly tax code, and government subsidies for high-tech research and development. It criticized welfare for maintaining the poor "in dependence." Finally, the DLC echoed Republican calls for "individual responsibility"...

... Most Republicans supported NAFTA, but it faced stiff opposition among Democrats, who argued that it would accelerate "runaway jobs" to Mexico, where companies would have easy access to cheap labor without the burdens of environmental and safety regulations. Clinton countered that NAFTA would encourage American "competitiveness" and, over time, expand American firms' job share...

I'll just pause in the quotes to point out two things. First, in an open market, when people compete, prices come down. In this case, the competition is between American workers and peasant or slave labor in places like Mexico, China, Bangladesh, etc. etc. etc. "Competitiveness" means lower American wages in this context. Second, expanding American firms' job share is not the same thing as expanding American incomes. In fact the opposite has happened; while American firms did indeed expand their "job share," American workers have seen their jobs vanish and their pay stagnate or fall. Looking at the evidence, there's no doubt in my mind that this was deliberate on the part of conservatives. The best you can say for the Clintons is that they aided and abetted the mechanism, even if you can't prove lowering American wages was their goal.

Continuing quotes from These United States:

Since his days in the DLC, Clinton had argued for "personal responsibility." He and conservatives alike argued that poverty was the result of dysfunctional families, parents who lacked the motivation to work, and teens who engaged in crime and promiscuous sex. Behind all these changes was an overgenerous welfare system. Poor people needed a dose of "traditional values" like thrift, deferred gratification, and work discipline.

This criticism of welfare focused mostly on urban African Americans, who lived in communities that had been hit the hardest by disinvestment and depopulation...

In 1996 President Clinton and Speaker Gingrich negotiated the Personal Responsibility and Work Opportunity Reconciliation Act. A triumph of bipartisanship, it abolished AFDC, replacing it with a new program called Temporary Assistance for Needy Families (TANF). ... It was telling that ending poverty was not even listed as one of the law's primary goals. As Representative E. Clay Shaw (R-FL), one of the bill's sponsors, argued, TANF was about discipline. "You're going to have some who are just not going to be able to make it," he stated. Welfare reform "presented a certain amount of pain for not being able to take control of your life." The reform forced individuals to fend for themselves, whatever the consequences might be.

... The new, daunting eligibility rules discouraged many needy parents from applying for TANF, even though they were eligible for support. In the decade following the enactment of TANF, welfare rolls nationwide dropped by nearly 60 percent. By contrast, poverty rates fell modestly in the late 1990s... a 1999 study of poor families in thirteen states reported finding "evidence of lives made harder by the loss of cash assistance." To make ends meet, families often missed rent and utility payments... When poverty began rising again in 2001, their situation would get worse.
Another pause here. Without saying so outright, These United States portrays Bill Clinton as someone who believes the poor, and especially the African-American poor, need to be punished for being poor so they will be forced to work and get out of poverty. The problem with this is twofold. First, work requirements only function if there are sufficient jobs available for all those who seek work. As happened during the 2000-2002 recession and again in the 2008 crash and its aftermath, when jobs dry up during hard times, Clinton's reforms guaranteed there would be no aid for those who needed it most. Second, by requiring work as a condition for public aid, Clinton and Gingrich effectively converted Welfare from an anti-poverty program to a business subsidy for low-wage jobs. The work requirement effectively kills the ability of poor people to reject low-paying, hazardous or degrading work conditions, thereby allowing big business to save money and increase profits at the expense of their workers. Again, the kindest thing you can say about Clinton here is that he was complicit.

One more trawl from the book:

 The most sweeping transformations in the 1990s involved the deregulation of the financial sector. Here too Clinton found common cause with conservative Republicans. Beginning in 1995, the president's economic advisers pushed for a "financial services modernization," including repeal of one of the signature New Deal regulations, the Glass-Steagall Act, which forbade banks to speculate in stocks and real estate using individual depositors' money... Clinton's aides knew that "allowing banks to engage in riskier activities like securities or insurance could subject the deposit insurance fund to added risk." It was a risk they were willing to take.

In 1999 Clinton signed the Gramm-Leach-Bliley Act, which undid Glass-Steagall... Over the next eight years, banks created all sorts of new high-risk financial products, without close regulatory scrutiny.

The riskiest involved home mortgage lending, one of the Clinton administration's top priorities... By the late 1990s, lenders, including Washington Mutual, New Century, and Countrywide, began targeting working-class and minority communities with high-interest loans, often with substantial up-front closing costs and hidden fees. The loans were immensely profitable but also incredibly risky.

Predatory loans were especially appealing to those working Americans whose wages had stagnated or fallen...

The book doesn't mention that, under the guidance of conservative Democrats Robert Rubin and Lloyd Bentsen, and ex-Nixon staffer Leon Panetta (who went on to become CIA Director under Obama), Bill Clinton had pushed for financial industry deregulation from his first day in office, while he still had Democratic majorities in both houses of Congress, and less than four years after the economic shock of the savings and loan collapse. Bill Clinton believed strongly in deregulating Wall Street, and the kindest thing you can say is that he never foresaw the consequences. And even that is hard to say, considering he continues to defend all his deregulatory accomplishments, and considering Hillary Clinton, for her talk of reforming Wall Street, is still opposed to restoring Glass-Steagall barriers to using federally insured deposits for stock market gambling.

And then let's look at the second biggest thing (after health care reform) that Clinton attempted and failed: privatizing Social Security.

Yes, I'll repeat that: Bill Clinton tried to privatize Social Security. The linked article quotes from The Pact by Steven M. Gillon:

There were also hopeful signs that the public was ready for a serious discussion about Social Security reform. An August 1997 survey by Clinton pollster Mark Penn found that 73 percent of Democratic voters favored some form of privatization, and support was especially strong among younger workers. Independent polls also showed that many young people believed that without significant change the programs would not be able to provide for them in their old age...

Given the high risk involved, Clinton realized that he could not undertake this without bipartisan support, and, Chief of Staff Erskine Bowles reflected, "He knew to do this he needed to work with Gingrich.'' He was confident that he could hold moderate and conservative Democrats and bring enough Republicans to the table to make significant reform...

It did not take long, however, for Gingrich to recognize the potential of a possible Social Security reform package. Bowles provided Gingrich with the same assurances that the president offered to Archer. The president would take the political heat for controversial proposals. Politically, the president and the speaker were closer than anyone realized. They recognized that their parties needed to change in response to new circumstances. They both believed that any effort to update Social Security would require government to incorporate some measure of choice, and that meant some form of privately managed account.

...Instinctively, both men still wondered whether the other was setting a trap in preparation for the upcoming elections. Would Clinton leak word that Gingrich was once again trying to tamper with Social Security and Medicare, reinforcing his image as hostile to the old and poor? Would Gingrich tell reporters that the president was ready to accept the centerpiece of Republican proposals for Social Security: privately funded accounts?
All the key players—Clinton, Gingrich, Bowles, White House congressional liaison John Hilley, and Bill Archer—were cautiously optimistic. ''It wasn't crazy for them to think that if they could do the impossible and pass welfare reform and the balanced budget bill, they could do Social Security,'' reflected Bruce Reed, the president's chief domestic policy adviser.

A couple of names you might recognize: Mark Penn was the pollster-turned-campaign-manager whose incompetence and double-dealing was probably the reason we aren't talking about the successor to President Hillary Clinton right now. Erskine Bowles went on from being Clinton's chief of staff to being hand-picked by Barack Obama, along with Alan "Social Security is a sow with a million teats" Simpson, to chair Obama's deficit reduction supercommittee, which had fourteen out of eighteen members picked who supported either privatization or outright abolition of Social Security. (For more on how Obama has continued centrist austerity policy, read this (admittedly biased) blog post.)

Most pundits argue that the Social Security deal was sunk by the Lewinsky scandal and Clinton's impeachment. According to at least one source, however, Clinton himself didn't see it that way:

But Kies remembers differently. As he told me when I was researching my book, The People's Pension: The Struggle to Defend Social Security Since Reagan, the secret talks continued without missing a beat. They even expanded, to include outreach to members of Congress such as Democratic Sen. Bob Kerrey of Nebraska and even officials in the mutual fund industry. Clinton’s advisors pursued more public discussions with lawmakers about a Social Security deal as well. Keeping all options open, Clinton’s advisors told some reporters the president hadn't rejected partially privatizing the program by carving private investment accounts out of workers' payroll tax contributions.

By early December 1998 -- shortly before Clinton's impeachment -- Sperling and Kies had come very close to a deal. Later dubbed by Kies the Social Security Guarantee Plan, the proposal called for setting up mandatory private savings accounts for every American worker. The federal government would fund these accounts with annual contributions equal to 2 percent of the wage base used to compute old-age and survivors' benefits under Social Security. Workers’ payroll tax contributions would continue to go into Social Security as before; there would be no “carve-outs” to fund the private accounts. When the worker was ready to retire, the Social Security Administration would calculate a monthly stream of payments based on the balance in her account. If the amount was less than her expected benefit under traditional Social Security, the program would make up the difference. If the amount exceeded her entitlement, she could keep the extra for herself.
 . . .
The prospect seemed almost too good to be true.

Which, indeed, it was. Despite the absence of carve-outs, a study released the following year by the Center on Budget and Policy Priorities, after the plan became public, found that it suffered from many of the same deficiencies as outright privatization. First, there were transition costs -- the massive borrowing needed to fund the private accounts. This would cost the Treasury some $300 billion to $600 billion a year from 2016 to 2042... The accounts might not be the windfall their proponents expected, either. Investment providers would be able to charge their administrative and marketing costs against the assets, pocketing some $34 billion a year by 2030 and more thereafter. Only affluent households would likely enjoy much upside from the accounts, according to the CBPP, since only they would accumulate enough assets to exceed their projected income from Social Security. That in turn would undermine better-off Americans’ support for Social Security, since their entire contribution to the program would, effectively, be used to fund other people’s benefits.

Yet Kies recalls no pushback from White House negotiators in “detailed” talks about the Guarantee Plan in fall 1998. Mostly, they focused on the details. The administration wanted to add a Social Security benefit enhancement for lower-wage workers to the package, while Gingrich and the Republicans wanted retirees to be able to pass on any unused private-account assets to their heirs.
 - See more at:
Up to now I've made a point of saying, "The kindest thing you can say about Clinton is that he aided and abetted." But when you take all these things together, how credible is it that a supposedly super-intelligent man, a Yale Law School graduate, did all of these things in his presidency without realizing their likely outcome? Others may have doubts, but I don't; Bill Clinton spent his entire presidency working to loot the lower and middle classes for the benefit of the wealthy, and he's not one damn bit sorry about the consequences.

"But the American economy was great under Bill!" his supporters will cry. Eh... not all that great. There was a brief burst of explosive growth in his first two years, which became weaker and weaker despite the dot-com boom and bust, ending with a recession that technically began during his last months in office. As Paul Krugman points out, the Clinton economy was more a matter of Bill Clinton being lucky than his policies being wonderful:
Specifically, the 1990s were the decade in which American business finally figured out what to do with computers — the decade in which offices became networked, in which retailers like Wal-Mart learned to use information technology to manage inventories and coordinate with suppliers. This led to a surge in productivity, which had grown only sluggishly for the previous two decades.

The technology takeoff also helped fuel a surge in business investment, which in turn produced job creation at a pace that, by the late 1990s, brought America truly full employment. And full employment was the force behind the rising wages of the 1990s.

Oh, and yes, there was a technology bubble at the end of the decade, but that was a fairly minor part of the overall story — and because there wasn’t a big rise in private debt, the damage done when the tech bubble burst was much less than the wreckage left behind by the Bush-era housing bubble.

But back to the boom: What was Mr. Clinton’s role? Actually, it was fairly limited, since he didn’t cause the technology takeoff. On the other hand, his policies obviously didn’t get in the way of prosperity.

 My personal theory is that the combination of GHWB's tax hikes and Clinton's lesser tax hike in the early 1990s, combined with the new technologies and opportunities Krugman mentions, caused the investor class to relax their grip on their money, pouring cash back into the economy and enabling a bottom-up period of economic growth. Previously, under Reagan and GHWB, the wealthy had been squeezing corporations, workers, the government, anything and everything for every penny they could get, building up enormous piles of wealth, and sitting on them. This behavior resumed immediately after GWB was elected, and it's continued ever since, with the result that any inflation from economic growth is offset by the deflation of money removed from circulation for the purposes of wealth-hoarding.

In short: the Clinton economic boom, which was big only in comparison to the truly anemic Reagan-era economy, was due not to his big-business economic policies but rather in spite of them, as an offshoot of the wealthy seeking to evade higher tax brackets and to gamble on the dot-com bubble. Ten years earlier or ten years later, his policies would have been indistinguishable from Reagan's or George W. Bush's- with identical results.

 And why does any of this matter? Supporters of Hillary Clinton in 2016, when confronted with Bill Clinton's regressive economic policies, insist, "They're two different people. Hillary wasn't really involved in economic policy during Bill's presidency." I say: hogwash. Bill and Hillary were sold to the American people as a two-for-one package deal from the very beginning, indeed from Bill's first run for governor of Arkansas. A large portion of Hillary's "25 years of national experience" is her time in the White House, when she was referred to as the "co-President". The two are, politically speaking, a unit.

The most recent proof? Hillary has declared her intent to put Bill in charge of her economic policies once elected.

"I've told my husband he's got to come out of retirement and be in charge of this because you know he’s got more ideas a minute than anybody I know," she said, while talking about manufacturing and jobs. 
 That's right. More ideas a minute. Ideas like gutting the social safety net, free-trade agreements that offshore jobs while allowing corporations to evade American taxes, deregulating an already shamelessly corrupt financial industry, and cutting or privatizing Social Security.

It's this sort of thing which makes Hillary Clinton's claims that she will protect Social Security ring hollow:

In a September 2007 MSNBC debate, Clinton held up the 1983 bipartisan deal between President Reagan and House Speaker Tip O’Neill as a model for how Social Security’s long-term solvency problems needed to be addressed. That was the deal that gave us the increase in the retirement age from 65 to 66 now and 67 by 2027, as well as an increase in the payroll tax. “I think we do need another bipartisan process,” she said at the time. “You described what happened in ’83. It took presidential leadership, and it took the relationship between the White House and Capitol Hill to reach the kind of resolution that was discussed.”
She also put a heavy emphasis on “fiscal responsibility.” Specifically responding to a question of whether she would support lifting the cap that now exempts earned income above about $118,000 from Social Security payroll taxes, Clinton said, “Well, I take everything off the table until we move toward fiscal responsibility and before we have a bipartisan process. I don’t think I should be negotiating about what I would do as president. You know, I want to see what other people come to the table with.”
Clinton’s desire to leave herself negotiating room “until we had a much better understanding of what I would accept and what I would not accept as president” was not only in sharp contrast to the bright lines drawn by Sanders – “… [O]ur job cannot be to cut Social Security. Our job must be to expand it” – but in ran counter to the demands of the coalition of organizations at the forefront of the fight to defend Social Security that recently launched a petition drive calling for Social Security expansion.
Any of this sound familiar?

And as for the Trans Pacific Partnership trade deal, which Clinton was "for it before she was against it" (paraphrasing John Kerry's 2004 campaign-dooming gaffe), there's plenty of reason to doubt her current opposition:

As President Obama seeks fast-track authority for a 12-country Pacific trade deal and Congress inches toward giving it to him, Clinton is hedging on a deal she once strongly backed.

"She will be watching closely to see what is being done to crack down on currency manipulation, improve labor rights, protect the environment and health, promote transparency and open new opportunities for our small businesses to export overseas," an aide said in a statement Friday. Additionally, any trade deal would need to pass two tests for Clinton to support it, the campaign said: (1) Protect U.S. workers and raise wages, and (2) strengthen national security.

Yet, previously as secretary of state, Clinton called the Trans-Pacific Partnership the "gold standard in trade agreements." In her second memoir, Hard Choices, released in 2014, Clinton lauded the deal, saying it "would link markets throughout Asia and the Americas, lowering trade barriers while raising standards on labor, the environment, and intellectual property." She even said it was "important for American workers, who would benefit from competing on a more level playing field." She also called it "a strategic initiative that would strengthen the position of the United States in Asia."

"But that was her job as Secretary of State," Clinton supporters will argue, "to support the President's policy." Two points: first, all that does is make Barack Obama equally complicit in working to lower wages and boost corporate profits at the expense of ordinary Americans. Second, her memoir was released after she resigned as Secretary of State. She was under no obligation whatever to continue delivering Obama's message; we must assume, therefore, that what she wrote in Hard Choices is her own belief at the time.

Considering that Hillary Clinton only becomes an opponent of unlimited free trade when she's running for office, and then becomes an enthusiastic supporter once actually in office, it's only sensible to assume that her current lukewarm opposition to TPP will turn to enthusiastic support for ratification if and when she becomes president- with all TPP's many horrible anti-democratic features intact.

And certainly Wall Street doesn't think much of Clinton's promises to reform and regulate them. Going back to where we began, quoting from Listen, Liberal:

"None of them think she really means her populism," wrote a prominent business journalist in 2014 about the bankers and Hillary. The Clinton Foundation has actually held meetings at the headquarters of Goldman Sachs, he points out. He quotes another Morgan Stanley officer, who believes that "like her husband, [Hillary] will govern from the center, and work to get things done, and be capable of garnering support across different groups, including working with Republicans."

How are the bankers so sure? Possibly because they have read the memoirs of Robert Rubin, the former chairman of Citibank, the former secretary of the Treasury, the former co-head of Goldman Sachs. One of the themes in this book is Rubin's constant war with the populists in the Party and in the Clinton administration -- a struggle in which Hillary was an important ally. Rubin tells how Hillary once helped him to get what he calls "class-laden language" deleted from a presidential speech and also how she helped prevent the Democrats from appealing to "class conflict" in a general election -- on the grounds that it "is not an effective approach" to the "swing voters in the middle of the electorate."

When all else fails, Clinton supporters will pull out the old centrist Democrat standby: "It's us or the Republicans! Are you really willing to throw the election to Trump just to show what a good purist you are, you horrible socialist splitter?" It's a cudgel the Clintons have used many times before, and are still using today, to blame voters for their lack of enthusiasm for anti-worker, neo-liberal policies.

Answer: no, probably not. Clinton probably won't throw liberals into concentration camps, and Trump probably will, if his rhetoric is to be believed.

But given all the above, you might understand why a lot of economic liberals will be throwing the lever for Clinton with a feeling of disgust, disappointment, and sadness that the abuse of the American worker and the glorification of the American plutocrat will continue for at least another eight years.

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