Bring Back President Clinton! Sadly, Barack Obama is No Bill Clinton

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By Mike Griffith, Staff Writer

Under Bill Clinton, who came into office during a recession in 1993, we ended deficit spending and began to pay off the national debt.  During the Clinton years, federal spending rose at the rate of only 9%, the lowest rate of increase in the last forty years.  Although President Clinton raised taxes in 1993, he did so while restraining spending, and in 1997 he signed huge tax cuts that sparked the boom years of the late 1990s.  President Clinton also signed the historic Welfare Reform Act, which finally halted the practice of rewarding states for increasing their welfare roles and resulted in a substantial drop in the welfare rolls.

 

In contrast, President Obama is on the verge of setting new records for debt, deficits, spending, and taxes.  He has already spent $1.2 trillion on the stimulus bill and the pork-filled omnibus spending bill.  Now, the President is pushing through Congress a budget that, if passed, will raise spending by 70%, that will give us record deficits for the foreseeable future, that will increase the national debt, that will raise the amount of money required to service the national debt, and that will raise taxes by at least $600 billion net (that’s after the tax cuts programmed in his budget–some experts estimate the net tax increase will be double that amount).  And, in the area of welfare reform, President Obama has already repealed Clinton’s Welfare Reform Act via provisions in the stimulus bill.

     

To gain some appreciation for what President Clinton did, and for how far President Obama is departing from the Clinton legacy, consider the following:

* Under President Clinton, between 1998-2000 the national debt was reduced by $363 billion.  That was the largest three-year pay-down of the national debt in American history.  Under the Obama budget, there is no plan to begin paying down the debt; instead, his budget, by its own admission, will give us deficits for the next ten years.

* President Clinton reduced federal government spending as a share of GDP from 22.2% in 1992 to 18% in 2000.  That was the lowest level since 1966, and it represented a drop of over 20%.  The Obama budget, on the other hand, actually states that government spending as a share of GDP will be more ten years from now than it was just a few months ago.  Under the Obama budget, the government will still be consuming 22.6% of GDP by 2019 vs. 20.7% in 2008-and this is assuming that all the rosy predictions in the President’s budget come to pass.

* Under President Clinton, federal spending rose by only 9%, the lowest rate of increase in over forty years.  In contrast, President Obama’s budget would raise federal spending by a staggering 70%.  His budget calls for taking us from $3.1 trillion to $3.5 trillion in its first year alone.  That’s an increase of nearly 16%, in just one year, at a time when we’re already $11 trillion in debt and running a record deficit.  What happened to his campaign promise that under his administration there would be a net reduction in federal spending? 

* Under President Clinton, federal taxes as a percentage of GDP were only slightly more than they were under Ronald Reagan.  Under President Reagan, federal revenues were 18.1% of GDP.  Under President Clinton they were 18.8% of GDP, an increase of less than one percentage point (0.8%–which equals a rate change of less than 5%).  Under the Obama budget, in its first year alone federal taxes as a percentage of GDP would go up as much as they did during the entire eight years of the Clinton presidency.  The President’s budget calls for an increase of 0.8% in federal taxes as a share of GDP just for fiscal year 2010.

* During the Clinton years, the federal tax burden for the average American family dropped to its lowest level since the 1960s.  Unfortunately, President Obama is pursuing a very different approach, even though he keeps insisting he’s only going to raise taxes on 5% of Americans.  He has already raised taxes on millions of low-income and middle-income Americans with a massive tax increase on tobacco products.  In addition, if President Obama gets his way on taxing carbon emissions, all Americans, rich and poor, will see their energy bills rise dramatically-the increase would more than offset his tax cut.  Moreover, the Obama budget calls for raising taxes on capital gains and dividends by 25%, which will affect every American who has a 401K or an IRA.  The President’s budget even calls for more than doubling the tax rate on carried-interest income, an ill-advised move that most financial experts agree would discourage venture capital investment, the very kind of investment that creates long-term jobs.  The President also wants to raise taxes on anyone earning over $200,000 a year by at least three percentage points (which translates into a rate increase of around 12%).  Some may think this won’t affect anyone else, but at least one-third of all small business owners make over $200,000 a year.  Businesses large and small surely will pass at least part of that tax increase onto their customers in the way of higher prices. 

We should keep in mind, too, that Bill Clinton came into office during adverse economic times.  When he entered the White House, the deficit was at an historic high of $290 billion.  Even worse, 10 million Americans were out of work, and economic growth was at its lowest rate in more than half a century.  How did he turn things around?  He restrained federal spending, cut key taxes while raising others, and reformed welfare. 

Sadly, President Obama is pursuing quite a different strategy: He’s exploding federal spending, pushing for huge tax hikes that will dwarf his tax cuts, bailing out mismanaged companies that should and could be allowed to fail, and repealing welfare reform.

Dr. Veronique de Rugy, an economist with the Mercatus Center at George Mason University, summarizes the implications of President Obama’s budget:

While President Obama promises an era of new responsibility, his first budget indicates a return to the dramatic fiscal policy of the 1970s. Based on his budget, the only promises the President can credibly make are high marginal rates, higher tax burdens for all, dramatic spending increases, and unprecedented and sustained levels of debt for the American people, their children, and grandchildren. Unfortunately, we know the consequences of such policies: slower growth rates, higher unemployment rates, lower standards of living, and higher levels of poverty. ("President Obama’s First Budget," Mercatus Center, George Mason University, March 25, 2009)

To be sure, all this spending will eventually lead to some kind of a recovery, perhaps even a seemingly robust one, but it will be an illusory one; it will be a "recovery" that will have have been purchased with trillions of dollars of borrowed money and that will only be putting off the day of reckoning.  We can’t keep borrowing and spending like this forever.  Sooner or later, we will have to pay the bills and start living within our means again–and doing so will be painful for a time.  The sooner we do this, the better things will be for everyone in the long run.

Let’s hope and pray that President Obama changes course and starts following the example of Bill Clinton when it comes to the budget and the economy.

Sources for Further Study:

Obama’s Unintended Consequences    

Auditors Project Deeper Deficits for Obama Budget

Obama Budget Raises Taxes on 100% of Americans       

Confidential President Obama’s First 

Obama’s First Budget                                

The President’s Budget: A Bold Approach with Many Risks

The Obama Budget: Spending, Taxes, and Doubling the National Debt                                                            

The Clinton Presidency: Historic Economic Growth

America by the Numbers: Comparing the Presidents’ Economic Records   

The Clinton Economic Record and Rising Tides

Debunking Liberal Myths About Tax Cuts and the Economy

The Obama Budget 

Government Spending                                 

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Visit Mike Griffith’s Real Issues Home Page

 

 

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