Bill Clinton’s Economic Plans: They’re Good, but They’re Not Perfect

Now that Bill Clinton’s presidential campaign is riding so buoyantly on the post-convention bounce, it is time to take seriously the economic implications of a Clinton presidency.

The Clinton campaign has released a reasonably detailed economic position paper, “Putting People First: A National Economic Strategy.” What would the prospective Clinton program do for the wobbling U.S. economy?

In my view, the Clinton economic program has a couple of strengths and several glaring weaknesses. It takes a few steps forward but frequently loses track of the problems it’s confronting. I would give it a B or B-.

First the good news. “Putting People First” has three notable virtues:

First, it takes seriously the underlying economic afflictions of the vast majority of U.S. workers and households and the structural faults of the U.S. economy.

Such concern was notably absent from the two preceding Democratic presidential campaigns, whose economic programs could have fit on the head of a pin.

Mondale trumpeted, in effect, “Read my lips, I shall raise taxes.” Dukakis mumbled, “Read my lips, I have nothing to say about the economy.”

Clinton argues that “we have no economic vision, no economic leadership and no economic strategy.” He intends to provide one. For the effort and attention alone, he deserves considerable credit.

Second, the Clinton program’s commitment to a more active government role, and especially to a program of public investment in infrastructure, education and training, is urgently overdue.

It proposes to “rebuild America,” investing more than $50 billion each year for the next four years, placing high priority on investment in transportation, information networks, environmental technology and defense conversion. Although I have not yet seen the detailed numbers underlying the program’s fiscal proposals, it appears that the campaign has attended to the problems of financing this investment program credibly and responsibly.

As with Jesse Jackson’s economic program in 1988, Clintonomics points toward both expanded government programs and federal deficit reductions--proposing to pay for expanded public investment through some tax increases on the most affluent households, some spending cuts and some tightening of corporate loopholes. These dimensions of the Clinton program make sense and hold promise.

Third, the Clinton program makes a serious effort to address the crisis of health care in this country. While I worry that the Clinton program for “quality, affordable health care” is a bit of a mishmash of disparate policy initiatives, and that a simpler, bolder initiative for universal health care, more closely resembling the Canadian system, would prove much more effective, at least the Clinton campaign has spoken clearly about health care and proposed to begin moving in constructive directions.

Compared to the Clinton proposals on health care, the Bush Administration’s policy initiatives look and smell like Pablum.

But the Clinton economic program also has some significant shortcomings. These weaknesses leave it both misdirected and seriously incomplete.

Its first flaw stems from the narrowness of its vision of economic affliction. As has been true throughout Clinton’s campaign, his position paper shines the spotlight on the problems of the “forgotten middle class” that “took it on the chin” during the reign of Reagan-Bushonomics. This emphasis has obvious appeal to Clinton’s campaign as a political strategy. But as economic analysis, it conveys some seriously misleading impressions.

It is true that middle-class households “worked harder for lower incomes and paid higher taxes.” But it is not true that the middle class has suffered the most during the Republican regime or that its members most urgently deserve redress. Poor and working-class families have been abused much more egregiously during the last 12 years than have middle-class households.

If we look just at trends in real household incomes, for example, we find that the deprivation has been more and more severe the closer we get to the bottom of the income distribution. The top fifth of the income distribution, which certainly includes much of the “middle class” to which Clinton and Al Gore are appealing, has done fairly well.

This may be partly a problem of political semantics. At times Clinton’s position paper appears to encompass nearly everyone under the “middle-class” label--as long as they “work hard and play by the rules.” Substantively, however, Clintonomics proposes little that would directly support those poor and working households that most need aid, such as raising the minimum wage or helping the millions of workers who want to form or join unions but who, under the right-wing reign, have found it more and more difficult to do so.

The program bemoans the “forgotten” middle class. In its unyielding incantation of that lament, however, it threatens to slight millions of equally forgotten poor and working households.

The second flaw involves problems of both diagnosis and prescription. “Putting People First” seems entirely to ignore the fundamental problems of corporate waste, mismanagement and concentrated power.

As I have argued numerous times in previous columns, U.S. corporations rely on top-heavy, heavy-handed, ham-fisted methods for organizing production and pursuing innovation. While corporations in most of the leading competing economies guide with a carrot, our corporations wield a bureaucratic club.

The vast majority of workers in the United States have few rights. Legions of managers and supervisors wage war against malfeasance. To cite only one example of this bureaucratic burden, the proportion of employees in the United States working in managerial and administrative occupations is roughly three times as great as in Germany or Japan. Corporate executives would rather pay themselves huge salaries and hire their friends than give workers a chance to improve the way we run our economy.

This set of problems is arguably at least as important a source of eroding economic performance in the United States as our crumbling infrastructure. And yet the Clinton program concentrates on the latter while completely ignoring the former. We face a crisis of corporate governance in this country. In the face of this crisis, Clintonomics appears to have its head in the sand.

The Clinton program equally ignores another grave crisis--the problem of financial fragility and bank management. The Republican era of bank deregulation helped give us the savings and loan crisis, whose bailout bills our children will be paying into the 21st Century. As millions of Americans now seem to recognize, we need to both redistribute the cost burdens of the S&L; debacle and to re-regulate the industry to cut down on its greed and abuse. The cost of the bailout continues to mount while the threat of financial instability continues to spread. Clintonomics appears to be looking in another direction.

“Putting People First” is certainly an improvement over past Democratic economic platforms. But to say that there is room for improvement in Clintonomics would be the understatement of the campaign.