After having institutionalized the neoliberal economic policies that have enriched the 1% and particularly the 0.1% at the expense of everyone else, Hillary Clinton wants to give the long-suffering citizenry an even bigger dose. As she said in Fort Mitchell, Kentucky:
“My husband, who I’m going to put in charge of revitalising the economy, because you know he knows how to do it,” Clinton said in Fort Mitchell, Kentucky, on Sunday. And especially in places like coal country and inner cities and other parts of our country that have really been left out.”
This plan is revealing, and in not a good way.
There Goes Hillary as “Most Qualified Candidate Evah” . Since when does a supposedly super competent elected official use their spouse in a policy design and implementation capacity outside of existing bureaucratic role and capacities? In banana republics and the Clinton presidency. And remember how well that co-presidency thingie worked out? Hillary’s big special project, health care reform, was such a bomb that it was over 20 years before the idea could be revived. And after that debacle, she retreated from taking on high-profile tasks and moved in the direction of a more traditional First Lady role.
Needless to say, if Hillary doubts she can get the job done with her Cabinet and if needed, a czar here or there, and needs to bring in Bill too, this is an admission that her vaunted experience is not what it is cracked up to be. Hillary has the classic resume of someone who has failed upward: a series of every-splashier job titles, but with no or negative accomplishments.
For instance, I was told about a friend’s mother, who is the prototypical Hillary voter: retired financial services industry professional, liberal, Jewish, very very well off. A couple of years ago, she decided she wasn’t so keen on Clinton: “She likes war too much.” She nevertheless asked a friend of hers who was a Clinton bundler to tell her what Clinton had achieved as Secretary of State. The response? A few necdotes about how she’d been a more inclusive manager.
Bill as Big Shiny Object. This prospective appointment suggests Hillary she feels pressed enough by Sanders and Trump to give Bill a more prominent campaign role so as to remind voters of how great things were in the 1990s. In reality, she can’t propose policies that will appeal to both “moderate Republicans” and progressives. In other words, they should just trust Bill and not worry about pesky details.
Hillary Doubles Down on Failed Neoliberal Policies After Kinda Sorta Distancing Herself From Them. As average wages have stagnated since the mid-1970s, and the salient characteristic of the Obama “recovery” was that the top 1% gained in income at the expense of all other groups, it behooves candidates to make plausible-souding noises about what they will do to straighten out what went wrong. Since the Clinton-Obama program was all of a muchness (Obama brought back the Clinton economics team, after all), and Clinton defends the Obama administration’s record regularly, hauling Bill out of mothballs is a way to pretend things might change (by virtue of the 1990s being so far away the campaign will reimage it in magic pixie dust) when the message to the cognoscenti is that nothing will change, save maybe bigger-scale looting. Expect “revitalization” to consist heavily of “public private partnerships”.
Let’s consider a few of the Clinton-era policies that Hillary supported then but has disowned more recently:
Trade deals. Hillary supported Nafta was a huge promoter of the TPP until it was clear it was becoming a liability. Now she wants some not very clearly articulated changes made.
Social Security. Bill, in true “only Nixon can go to China” fashion, was prepared to push for the privatization of Social Security. He’d even worked out a deal with Newt Gingrich. But Monica Lewinsky intervened. The nation owes her its gratitude.
Hillary has made noises meant to sound as if she intends to strengthen Social Security as a social safety net, but which are troublingly vague. She has said she will not privatize it, but that she intends to “preserve and strengthen” it. But does that mean benefits or the funding of the system? Recall that Bill appointed Janet Yellen to head the Council of Economic Advisers. Yellen was and remains a forceful proponent of chained CPI, which is a stealthy way to lower benefits in real terms by having them lag inflation (particularly as experienced by seniors, who are over-exposed to medical cost increases) even more. Similarly, one of Hillary’s innocuous-sounding Trojan horses for “fixing” Social Security is to effectively means test benefits by increasing taxes on the wealthiest recipients. That moves Social Security away from being a universal safety net toward being a welfare program… and welfare programs have this nasty way of being cut. Never forget Lambert’s second rule of neoliberalism: “Go die.”
Bank deregulation. Lest you have forgotten or are too young to have lived through it, please have a look at Bill Clinton, Larry Summers, and Phil Gramm Have a Love Fest Over Repeal of Glass Steagall to remind yourself of how utterly convinced Team Clinton was of the benefits of letting banks free to roam and forage on their own. We know how that movie ended.
Clinton embraced the idea of the primacy of banking enthusiastically. Treasury Secretary Bob Rubin, in one of his early moves, raided the Exchange Stabilization Fund, a kitty created during the Depression to defend the dollar if needed, to instead rescue Mexican banks (to which firms like Morgan Stanley were overexposed, see Frank Partnoy’s Fiasco for details) when Congress nixed a bailout. Clinton reappointed Ayn Rand stalwart Alan Greenspan, who let a thousand derivatives bloom despite a derivatives crash in 1994-1995 that destroyed more value than the 1987 crash. Needless to say, that also led to the infamous fight with Brooksley Born of the CFTC who had the temerity to suggest she was considering regulating credit default swaps.
It was Greenspan who also decided the stock market was part of the Fed’s job (per a May 2000 Wall Street Journal story describing how for years Greenspan had had bright young Fed economists try to figure out what determined the general level of stock prices). And he also institutionalized the Greenspan put, of quickly lowering rates any time the Market Gods got unhappy, but was nowhere as concerned when markets got frothy. That turned the traditional role of the Fed, described by William McChesney Martin as “taking the punch bowl away when the party starts getting good” on its head.
Destructive debt reduction. Bob Rubin and Clinton himself took misguided pride in the reduction of Federal debt outstanding during the Clinton administration. In fact, the only time for a currency issuer to run a surplus is when the economy is in danger of overheating, as in when unemployment is very low, wage growth is high, and labor has strong bargaining rights. The last time we had those conditions was in the 1960s, when Johnson was unwilling to raise taxes to fund an unpopular war, despite warnings from both Keynesians and Milton Friedman. Economists are still using the excuse of fighting that now 50 year old war (whose severity was greatly amplified by the 1970s oil shock) as the excuse for continuing to squeeze labor.
The results of the Clinton surpluses was the early 2000s recession, which Greenspan saw as sufficiently serious that he pushed real interest rates negative for an unprecedented nine quarters (the norm in past downturns was one). That in turn did more to stimulate leveraged speculation in assets (hedge and private equity funds, and investment in residential housing) than real economy investment. As we wrote at the time, corporations were actually net savers, an unheard of development in an expansion, while households ran at zero or even negative savings levels, which was another unprecedented and unhealthy development.
On a broader basis, the undershooting of federal deficit spending meant some other sector – households, businesses, or the export/import sector – had to take up the slack. It was the household sector, which showed rising debt loaned in the 1990s, which dropped modestly (but stayed well above their pre-Clinton era levels) before exploding in the early 2000s through the crisis. Household debt growth is unproductive, yet Clinton era policies encouraged it.
So American voters are told they should welcome the return of the Clinton dynasty in the White House. Those outside the 1% who understand how the Clintons undermined their economic well-being have every reason to be leery. Like the Bourbons, they appear to have learned nothing and forgotten nothing.