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
Are we where we want to be today? No. Is the president satisfied? Of course not. But are we better off than we were when Obama took office? The economy was in freefall. We were losing 750,000 jobs a month. Are we doing better than that today? The answer
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.
Source: 2012 Democratic National Convention speech
, Sep 5, 2012
How to balance budgets? Arithmetic; which GOP ignores
People ask me all the time how we got four surplus budgets in a row. I always give a one-word answer: arithmetic.
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.Republican economic policies quadrupled the national debt in the 12 years before I took office and doubled the debt in the 8 years after I left, because it defied arithmetic.
Source: 2012 Democratic National Convention speech
, Sep 5, 2012
- 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.
- Or, they'll have to cut so much spending that they'll obliterate the budget and put the future on hold.
- 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
The recession occurred because there was too little government oversight of risky loans without sufficient capital to back them up; the recession was prevented from becoming a depression because of a government infusion of cash to shore up the banking
system; and the downturn hurt fewer people because of the stimulus, which supplemented wages with a tax cut, saved public jobs, and created jobs through infrastructure projects and incentives to create private-sector jobs, especially in manufacturing.
Source: Back to Work, by Bill Clinton, p. 6
, Nov 8, 2011
S&P credit downgrade caused by dysfunctional politics
[In August 2011], Standard & Poor's (S&P) downgraded America's long-term credit rating. The decision was criticized in many quarters because no one doubted the ability of the
United States to pay its debts.
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.
Source: Back to Work, by Bill Clinton, p. 9-10
, Nov 8, 2011
Balanced approach to recovery: jobs, investment, and debt
If we can restore economic growth and slow down the rise in health-care costs, we should have a better ratio of workers to retirees and more opportunities to create more broadly shared prosperity.
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.
Source: Back to Work, by Bill Clinton, p.109-113
, Nov 8, 2011
Get $4 trillion in banks back into economy
The right thing is to put America back in the future business. The most successful countries have both vigorous market economies and active, effective governments working together to achieve common goals.
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:
Source: Back to Work, by Bill Clinton, p.117-120
, Nov 8, 2011
- Put as much of the $4 trillion now held in banks and corporate treasuries back into the economy as fast as we can;
- 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
- 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
Q: It seems almost impossible to get Congress to approve anything in any kind of bipartisan way.
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.
Source: Time Magazine on "Back To Work" book tour by Bill Clinton
, Jan 21, 2011
1995-97: Cutting capital gains tax helped eradicate deficit
Clinton wanted to raise taxes. But eventually Clinton came around to the idea of cutting the capital gains tax (which Gingrich had wanted all along). So the tax was cut. And revenue poured in! The deficit, which was supposed to take
Inflation is not the only way to repay the debt. Economic growth is the other way. When Pres. Clinton dueled with House Speaker Newt Gingrich over how to balance the budget in 1995-97, each had his pet hobbyhorse. Gingrich wanted to cut spending.
Yes, more. Even though the rates were lower, the economic growth they kindled brought in hundreds of billions extra each year. The proportion of taxes paid by the richest 1% rose from 37% in 2000 to 40% in 2006, even though their tax rate had been cut!
8 years to eradicate, was gone in less than 2 years.
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?
Source: Take Back America, by Dick Morris, p. 54-55
, Apr 13, 2010
OpEd: Left country on brink of recession in 2001
The massive Clinton tax increase of 1993 resulted in short-term increases in revenues to the government but eventually became an anchor that stopped economic growth. Clinton left the country on the brink of recession at the end of his second term 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.
Source: Saving Freedom, by Jim DeMint, p. 23-24
, Jul 4, 2009
1995: Bill supported balancing budget in 10 years
In 1995, Bill decided to balance the budget in ten years because “the pain we’d inflict on our elderly, our students, and our economy” in the GOP 7-year plan “just isn’t worth it.” He promised to cut taxes on the middle class rather than the rich, and he
drew sharp distinctions between his way and the GOP way, particularly on Medicare-cost savings. He insisted the GOP wanted to raise health care premiums for the elderly, while he planned to cut Medicare costs by reducing payments to hospitals.
Source: For Love of Politics, by Sally Bedell Smith, p.213
, Oct 23, 2007
First modern Pres.to use fiscal discipline to balance budget
The budget deficit inherited from the Bush presidency was staggering. Bill Clinton felt a commitment to the kind of fiscal politics out of which Republican presidents had made rhetorical hay for two generations, while presidents from both parties allowed
debt to pile up.
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.
Source: A Woman in Charge, by Carl Bernstein, p.253-254
, Jun 5, 2007
Ran budget by "PayGo": compensate for any lost revenue
We were told by our President that we could fight two wars, increase our military budget by 74%, spend more on education, initiate a prescription drug plan, have tax cuts, all at the same time. We were told by Congress that they could make up for lost
revenue by cutting government waste.
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.
Source: The Audacity of Hope, by Barack Obama, p.187-189
, Oct 1, 2006
OpEd: 1995 shutdown led to first balanced budget in 40 years
In 1995, Pres. Clinton wanted to phony up the numbers on this first go-round, so we shut down the government. Today, with perspective, pundits look back and suggest that shutting down the government under those circumstances was dumb but I look back and
think it was one of the greatest moments of my career. Why? Well, typically, politicians make their decisions based on votes. And yet in at least this one instance politicians set aside these concerns and stood up for what was right. For our children.
For our shared future. For America. For this one battle, for the time being, we forgot about politics and focused on good government, and if we had to take a beating for it then so be it. And as a direct result of that government shutdown in
1995, we wrote a bill that provided for the first balanced budget in nearly forty years and allowed us to pay down the largest chunk of our staggering national debt in the history of this country.
Source: Stand For Something, by John Kasich, p. 86-87
, May 10, 2006
Borrowing money to pay for the deficit fails our trade laws
With over $400 billion in deficit this year and for years to come, how do they pay for that deficit? First, by taking the Social Security surplus that comes in every month and endorsing the checks of working people over to me to pay for the tax cuts.
But it’s not enough. So they have to go borrow money. Most of it they borrow from the Chinese and Japanese governments. Sure, these countries are competing with us for good jobs, but how can we enforce our trade laws against our bankers? I mean, come on!
Source: Speech to the Democratic National Convention
, Jul 29, 2004
1993 budget signaled the return of fiscal responsibility
Bill's economic plan [finally passed in August 1993]. Before the vote, I had spoken with wavering Democrats. In the end, not a single Republican voted for the balanced budget package. It squeaked through the House by one vote, and Al Gore had to vote to
break a 50-50 vote tie.
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.
Source: Living History, by Hillary Rodham Clinton, p.179
, Nov 1, 2003
New Clintonism demonstrated in 1997 balanced budget
In the summer of 1996, Clinton's grand first-term dreams had shriveled into a set of proposals. He would spend all of 1997 working on a balanced-budget agreement with the Republicans.
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.
Source: The Natural, by Joe Klein, p.158-160
, Feb 11, 2003
1992: Connected with audience on recession's personal effect
There was a touching, uncynical transparency to the 1992 campaign: The candidate actually seemed moved by the stories he heard along the way, and the stories, more often than not, fit his vision of the challenge ahead.
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.
Source: The Natural, by Joe Klein, p. 42-43
, Feb 11, 2003
OpEd: Despite personal issues, ran a disciplined presidency
Despite Clinton's gaudy personal failings, he had run a serious, disciplined, responsible presidency. "If you see a turtle sitting on top of a fence post,"
Clinton would often say, "it didn't get there by accident," by which he meant that the historic prosperity and the global peace that attended his time in office were not accidental.
They were, at least in part, attributable to thousands of decision--subtle, nuanced, often risky decision--that Clinton and his advisors had made over the years, decision that lacked the neon explosiveness of the Lewinsky scandal or the
Marc Rich pardon, but which were the true work of the presidency.
Source: The Natural, by Joe Klein, p. 11-12
, Feb 11, 2003
Reduced federal deficit from eleven zeroes to simply zero
Clinton's next statement, however, brought an explosion of bipartisan cheers: "For three decades, six presidents have come before you to warn of the damage deficits pose to our nation. Tonight,
I come before you to announce that the federal deficit--once so incomprehensibly large that it had eleven zeroes--will be, 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!"
Source: The Natural, by Joe Klein, p. 18
, Feb 11, 2003
1995 budget impasse blamed on Republican intransigence
In the 1995 budget impasse, almost everyone on the White House staff still believed that presidential passivity was the best tactic: Let them suffocate under the weight of their own proposal. But the President was spiritually--and politically--uneasy wit
that course. He said that he might well propose his own version of a balanced budget. With his own balanced budget proposal in place that autumn, Clinton was free to attack the Republicans much harder, and more confidently than he would have it he'd
followed his staff's advice.
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.
Source: The Natural, by Joe Klein, p.144-146
, Feb 11, 2003
Longest Economic Expansion in US History
Source: WhiteHouse.gov web site
, Dec 1, 2000
- 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 1992, the Federal budget deficit was $290 billion - the largest dollar deficit in American history. In January 1993, the Congressional Budget Office projected that the deficit would grow to $455 billion by 2000. The Office of Management and
Budget is now projecting a $211 billion surplus for 2000 - the third consecutive surplus and the largest surplus ever, even after adjusting for inflation.
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.
Source: WhiteHouse.gov web site
, Dec 1, 2000
Cut the deficit to lower interest rates
[We put] the nation’s economic house in order by focusing on cutting the deficit in half, bringing interest rates down, and spurring private investment to fire up the nation’s stagnant economy. When I ran for president, job growth had been at the lowest
level since the Great Depression, unemployment was at 8%, and the deficit was soaring out of control. After I was elected, we waged a brutal fight in Congress to pass a new economic plan.
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.
Source: Between Hope and History, by Bill Clinton, p. 23-24
, Jan 1, 1996
Drew from Robert Reich's book "The Work of Nations"
America spent too much time & money in the 1980s on the present & the past, Clinton said to the Harvard audience, "and too little attention & money on the future. I define 'future' as investments in education, infrastructure, research & development,
and the environment. We have to break out of the old categories and think about whether we are going to invest in the future." Clinton spoke in a quiet tone--intellectual, reassuring, youthful but confident.
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."
Source: The Agenda, by Bob Woodward, p. 20-21
, Jun 6, 1994
Cut the deficit in half over four years
Perot had elevated deficit reduction to topic A. Balancing the federal budget was a matter of common sense and would be simple, Perot claimed. Balanced-budget mania was now sweeping the country. The deficit problem had never been central to
Clinton's vision, but the Clinton team now realized they were obliged to include specific deficit reduction goals in their overall plan. Unfortunately, Clinton's campaign pledges--new investments, a middle-class tax cut, a stimulus of fast-track spending
to jump-start the economy, and health care reform--were expensive and could increase the deficit.
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.
Source: The Agenda, by Bob Woodward, p. 41-42
, Jun 6, 1994
Reich's "human capital theory" became "Putting People First"
Eager to keep an eye on the investment program, Reich read a copy [of Clinton's plan]. One omission was crucial. The draft contained no mention of Reich's theory of human capital, the notion that a county's most important resource was its people.
This theory underpinned the whole argument for investing in education and job training; it was the link between helping people and bringing an economic revival. It meant as much to Clinton as it did to Reich. On the second page of the plan: "The only
resource that's really rooted in a nation--and the ultimate source of all its wealth--is its people."
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."
Source: The Agenda, by Bob Woodward, p. 47-48
, Jun 6, 1994
Economic recovery: "We're all in this together"
[After Clinton's 2001 economic recovery plan, he] assembled a group of CEOs of some of the nation's largest corporations. The executives were in a rage, at times a quiet slow burn and at other times openly hostile. One executive wondered aloud what the
differences were between Clinton's plan and something that George McGovern might have proposed. The executives took issue especially with Clinton's attack on the wealthy, some claiming they were personally offended. Many had started with little and had
worked hard to reach the top.
[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.
Source: The Agenda, by Bob Woodward, p.142
, Jun 6, 1994
Raise short-term rates to keep long-term interest rates low
In Clinton's first term, Fed chairman Alan Greenspan said that the long-term economic outlook was the best and most balanced he had seen in 40 years. Given these great prospects, the chairman said, the president was doing the right thing in pushing
his deficit reduction plan, though he reminded Clinton he was not endorsing the specifics. What the president had done took real political courage, Greenspan said. The magic bullet was to keep those long-term interest rates down, Greenspan added.
So far, that strategy was working. Greenspan added a note of caution. The inflation numbers weren't behaving well, he said.
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%.
Source: The Agenda, by Bob Woodward, p.228
, Jun 6, 1994
Cut defense & ask wealthy Americans to pay their share
Q: You are promising to create jobs, reduce the deficit, reform health care, rebuild infrastructure, guarantee college education, all with financial pain only for the rich. Is it possible?
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
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.
Source: The Third Clinton-Bush-Perot Presidential Debate
, Oct 19, 1992
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
Source: Clinton on Clinton, p. 69, article “Alienated Americans”
, Jul 2, 1980
- Emphasize education and training, not just of our children but also of our adults.
- Give new incentives to the private sector to invest in the economy.
- Think a lot about organizing to make change our friend instead of our enemy.
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