Bill Clinton’s Democratic Vision of Economy

September 6, 2012

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In his nominating address at the Democratic National Convention last night, Former President Bill Clinton defended President Obama’s economic record by relating it to a broader Democratic approach to economic growth and job creation. He described the Democratic economic philosophy this way:

We Democrats — we think the country works better with a strong middle class, with real opportunities for poor folks to work their way into it, with a relentless focus on the future, with business and government actually working together to promote growth and broadly share prosperity. You see, we believe that “we’re all in this together” is a far better philosophy than “you’re on your own.”  It is.

….It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics. Why? Because poverty, discrimination and ignorance restrict growth. When you stifle human potential, when you don’t invest in new ideas, it doesn’t just cut off the people who are affected; it hurts us all. We know that investments in education and infrastructure and scientific and technological research increase growth. They increase good jobs, and they create new wealth for all the rest of us.

I hope the key idea here–that “advancing equal opportunity and economic empowerment is both morally right and good economics”–receives the attention and discussion it deserves. It implies that certain kinds of assistance to people who are economically struggling is a good investment, not just a handout that undermines competition by rewarding failure and punishing success (taxing the rich to help the poor), as laissez-faire economics would have it. Here the choice between a new progressive vision and the prevailing conservative philosophy seems clear. However, as Clinton acknowledged, neither side in a debate is right all the time. When someone claims that a particular government program is an investment in economic growth, I think that fiscal conservatives may reasonably subject that claim to careful scrutiny.

Clinton used job-creation statistics since 1961 to defend the Democratic record. In the 24 years with Democratic presidents, 42 million private-sector jobs were created; in the 28 years with Republican presidents, only 24 million. Of course, one doesn’t have to hold the President solely responsible for the job market, but a lot of people like to do that, so they might as well have the numbers. Clinton defended the Obama record by pointing to the millions of jobs saved or created by the American Recovery and Reinvestment Act and the rescue of the automobile industry, and he pointed out that we would have had more if Congressional Republicans hadn’t blocked his American Jobs Act. Acknowledging that a lot of people haven’t felt the improvement yet, he summarized the Republican case for replacing the President this way:

In Tampa, the Republican argument against the president’s re-election was actually pretty simple — pretty snappy. It went something like this: We left him a total mess. He hasn’t cleaned it up fast enough. So fire him and put us back in.

Then he made the case for the President’s re-election:

He inherited a deeply damaged economy. He put a floor under the crash. He began the long, hard road to recovery and laid the foundation for a modern, more well-balanced economy that will produce millions of good new jobs, vibrant new businesses and lots of new wealth for innovators.

Clinton emphasized the connection between creating jobs and helping people acquire the education and training to do them:

Of course, we need a lot more new jobs. But there are already more than 3 million jobs open and unfilled in America, mostly because the people who apply for them don’t yet have the required skills to do them. So even as we get Americans more jobs, we have to prepare more Americans for the new jobs that are actually going to be created. The old economy is not coming back. We’ve got to build a new one and educate people to do those jobs.

As reasonable as that seems, the education-jobs connection requires some qualification. Keynesian economists argue, with a lot of factual support, that demand for goods and services drives the employment rate much more than the skills of the labor force. If demand is low, even more educated workers will lose jobs; if demand is high, even less educated workers can find them. If the issue is the quality of jobs rather than just the number of jobs, an educated labor force is more important, but even there labor demand is crucial. If the jobs being created don’t require much skill, as many of today’s service economy jobs don’t, then an increase in education and training could just result in more skilled workers waiting on tables. Statements like Clinton’s, as common as they are, raise troubling questions about the future of work.

The Romney-Ryan campaign has devoted a large portion of its advertising to two particular charges against the President: that he cut Medicare in order to fund Obamacare, and that he ended the work requirement for welfare recipients. President Clinton tried to set the record straight. On Medicare:

Look, here’s what really happened. You be the judge. Here’s what really happened. There were no cuts to benefits at all. None. What the president did was to save money by taking the recommendations of a commission of professionals to cut unwarranted subsidies to providers and insurance companies that were not making people healthier and were not necessary to get the providers to provide the service.

And instead of raiding Medicare, he used the savings to close the doughnut hole in the Medicare drug program and — you all got to listen carefully to this; this is really important — and to add eight years to the life of the Medicare trust fund so it is solvent till 2024.

On welfare reform:

When some Republican governors asked if they could have waivers to try new ways to put people on welfare back to work, the Obama administration listened because we all know it’s hard for even people with good work histories to get jobs today. So moving folks from welfare to work is a real challenge.

And the administration agreed to give waivers to those governors and others only if they had a credible plan to increase employment by 20 percent, and they could keep the waivers only if they did increase employment. Now, did I make myself clear? The requirement was for more work, not less.

Clinton discussed the problem of deficit reduction at some length, contrasting President Obama’s “balanced approach” (increasing revenue and cutting spending) with the Romney-Ryan proposal for additional tax cuts to be offset by closing unspecified tax loopholes. He argued that one of three things would happen under the latter plan: (1) middle-class taxes would have to rise to pay for tax cuts for the wealthy, (2) the loss of revenue would require drastic cuts in all domestic spending, damaging the programs that “empower the middle class and help poor kids”, or (3) the deficit would soar, as it did under the last two Republican administrations that pursued the same policies.

The former President ended by contrasting two kinds of futures:

My fellow Americans, all of us in this grand hall and everybody watching at home, when we vote in this election, we’ll be deciding what kind of country we want to live in. If you want a winner-take- all, you’re-on-your-own society, you should support the Republican ticket. But if you want a country of shared
opportunities and shared responsibility, a we’re-all-in-this-together society, you should vote for Barack Obama and Joe Biden.

Moving forward together through cooperation was a major theme throughout the speech. Yet Clinton also rejected the idea that Democrats are against free enterprise or individual initiative, implicitly recognizing that competition also has its place. If the ethic and the economy of cooperation sound so refreshing at the moment, maybe it’s because the Republicans have become so exteme in their support of rugged individualism. Or maybe the kinds of big challenges we face require a more collective response.