For years Americans have been told it is Republicans who they want to trust the government’s money with, while Democrats destroy the economy with money management akin to Paris Hilton on her birthday. But now the secret is out on this administration’s disregard for our future economic welfare, and George W. Bush is looking more and more like an emperor without his clothes.
This point is perfectly illustrated by two recently published books based on the observations of treasury secretaries in the Clinton and Bush administrations. The portraits they paint could not be more divergent, and it is clear which administration was serious about fiscal responsibility.
When Bill Clinton came into the White House there was a deficit of almost $300 billion. When he left, not only was the deficit gone, but there was a 10-year projected surplus – forecasted by the non-partisan Congressional Budget Office – of $5.6 trillion. Yet after three years of W., Goldman Sachs estimates an $11 trillion swing in 10-year projections, and we are now facing one of the worst long-term deficit projections since World War II. How did this happen?
Bush defenders point to technological progress in the ’90s, and terrorism after that, as the reason for such trends, but these two books make a very persuasive case that the success of the Clinton years had as much to do with their ability to make difficult economic decisions, while the Bushies would rather administer our money with political motives in mind.
Robert Rubin’s “In a World of Uncertainty: Tough Choices from Wall Street to Washington” paints a remarkable picture of the Clinton economic years. Rubin was treasury secretary from 1995 to 1999, after heading Clinton’s National Economic Council from 1993 to1995.
Rubin, along with many economists, asserts that the prosperity of the ’90s would have been “choked off” by high interest rates had the Clinton administration not proved to investors its fiscal responsibility and attention to deficit reduction. The deficit was consuming almost 5 percent of our gross domestic product by 1992, and this had slowed down the economy; large deficits will drive up interest rates and undermine confidence in government.
Clinton, with Rubin’s help, rebuffed liberals by not spending on many of their favorite causes and also angered conservatives by raising taxes on the top 2 percent of Americans. He did this because the deficit had to be paid down. For political reasons, he would have loved to give a tax cut in 1993 but resisted this temptation in favor of getting serious about America’s economic future.
Contrast this with the Bush White House.
In “The Price of Loyalty: George W. Bush, the White House and the Education of Paul O’Neill,” the most unforgettable scene features O’Neill, the loyal Republican treasury secretary, sitting in on a meeting about a second round of enormous tax cuts. At the suggestion of another tax cut, even President Bush is taken aback, asking, “Haven’t we already given money to rich people? This second tax cut’s gonna do it again?” O’Neill agreed, citing more pressing government bills. Of course, these bills include Social Security, Medicare and now $87 billion on a controversial war. O’Neill relates that even Alan Greenspan saw the first round of tax cuts as “irresponsible fiscal policy.”
But back at the Bush White House, it was not the distinguished, and politically conservative, economist that prevailed on Bush. It was election guru Karl Rove. The rich got their second tax cut, and for the moment the economy seems to be headed in the right direction (though unemployment has not changed). However, more ominous signs are on the horizon, signs that will reveal what will be the true legacy of the Bush tax cut.
Last week the International Monetary Fund held a press conference to discuss the careless economic management of a country. But they were not talking about a third world nation, they were talking about the United States. The IMF has become alarmed by our “unprecedented level of external debt for a large industrial country.” Bush’s fondness for giving money to his rich buddies has driven up interest rates around the world and has caused many foreign investors to sell the dollar. Even Republicans like William Safire have compared this administration’s fiscal discipline to that of a “drunken sailor.”
Clinton showed it did not have to be this way. Choosing responsibility over political expediency, whether it be in tax cuts or excess government spending, is hard for politicians in any country. Nonetheless, the fact that the elimination of the deficit came with the largest period of economic expansion ever recorded shows that, as with anything in life, responsibility breeds success. Unfortunately, we will be bearing the burden of George Bush’s inability to learn this lesson until a president with the courage of Clinton comes along again.
-The writer is a junior majoring in American studies.