Obama’s speech in Roanoke, VA, has been justifiably panned for its almost absurd degree of leftist sloganeering. If you’re rich, you didn’t get there on your own, he says. Also, we don’t each all have our own fire station—which presumably proves the case for big government.
Yet I want to focus on one point I have not heard him precisely make before, although perhaps he has: That Clinton’s combination of moderate cuts and tax increases ushered in a period of great prosperity, and the rich did just fine. Putting aside post hoc ergo propter hoc, let us for the sake of argument assume that Clinton’s policies did in fact lead to great prosperity, low unemployment, a budget surplus, and tens of millions of new jobs, all without hurting the rich. Obama pretends as though Clinton’s policies were mostly about tax increases. But there were many other things he did—or rather, things he did not do, that would seem to carry some relevance.
Under George W. Bush, we saw a massive increase in regulations, particularly Sarbanes-Oxley, the greatest expansion of welfare since the 60s with Medicare D, the vast explosion in education spending, considerable credit expansion, the war on terrorism, expenditures rising on virtually every program, and the massive TARP bailout—along with some minor tax cuts. Obama came in and delivered more of the same, the auto bailouts, more wars, far more borrowing, bureaucratic and regulatory growth in every direction, and Obamacare, perhaps the most significant aggrandizement of nationalist corporate liberalism since the New Deal. Obama too approved some minor tax cuts.
I am against tax increases, but I would have a very different opinion of Obama if all he was pushing was a restoration of Clintonian government. The status quo ante Bush was in fact a much better atmosphere for economic growth for virtually all Americans except for the most politically connected, but I’d attribute this to the government having been radically smaller and less intrusive in the marketplace way back in the horse-and-buggy days of the 1990s. Federal outlays in the fiscal year 2001, the first third of which Clinton was president, totaled about $1.9 trillion. The last fiscal year in which Bush was president, 2009, saw outlays of $3.5 trillion, nearly twice as much. Even before TARP, Bush was spending almost three trillion a year—50% more than Clinton. The projected outlays for fiscal year 2012 are around $3.8 trillion.
In other words, the federal government now spends twice what it did when Clinton left the White House. And in so many other areas, government has grown in intrusiveness and power. Sure, his marginal tax rates were a bit higher, but are we really to believe that the better economic climate of the 1990s should be attributed to some of Clinton’s policies but not all? That the much lower spending, by today’s standards, had no part in the prosperity in the twilight of the 20th century? That the decidedly un-Keynesian reliance on relatively balanced budgets had nothing to do with the much lower unemployment rates, whereas today deficit spending and regulatory expansion are all fine and dandy and the only problem with the economy is insufficient tax revenue?
On economic theory, Obama seems to be touting balanced budgets, not Keynesian deficit spending—so this raises the question: Where is the trillion dollar annual shortfall (give or take) going to be closed? In tax increases? Obama says the federal government has cut a trillion and cut a trillion more, but this is based on a decade of projected spending and is virtually meaningless in the scheme of America’s outrageous deficits.
I oppose returning to Clinton levels of taxation, but if we were to also return to Clinton levels of spending and regulation, I think the U.S. would on balance be a much freer and more prosperous country. Obama isn’t actually proposing that, of course. He wants the state to have its hand in everything in which it currently meddles and he has another thousand plans for more.