The initial parties were known as the federalistsand the Democratic-Republicans, the first of which soon diminished and the latereventually bisected. The result is the two party Democrat and GOP system whichthe majority of politicians of current day subscribe. However, many politicaland economic analysts find themselves perplexed by an incredible new phenomenonradiating from the white house – the economic policies of President Bill Clinton. This dilemma has left many wondering, did we elect a democrat or a republican?Has Clinton unintentionally begun a campaign to reunite the two rivals? Thetelltale signs of Clinton’s political ambiguity include reminiscently republicantechniques of reducing the budget, creating jobs, lowered productivity, andshaping the tax code.
During Clinton’s 1992 campaign, balancing the budget was not among the countriesmain economic objectives (Miller 4). However, after close scrutiny, theeconomic woes of the approaching millennium were projected as “higher then wethought it would be” (Miller 4). In fact, “in the twelve years before Clintontook office, the deficit quadrupled in size” (deficit 1). As a result, Clintonmust engage in creative cost cutting techniques to keep the budget under control. Money afforded to state and local governments for development programs, such asthose which relieve “urban blight,” will eventually be cut by two-thirds, athird more then Gingrich’s last congress proposed (Rauch 2).
In addition, cutsto transportation aid will prove fifty percent greater then republicanpropositions (Rauch 2). According to Clinton, all of these maneuvers willresult in the lowering of the deficit by $600 billion, or almost one-third bythe year 1998 (progress 1). Economists speculate that these reforms may producethe desired effect (Rauch 2). However, putting these measures into action maycontradict one of Clinton’s main election tenets – to preserve the status quo asit relates to government programs. The final budget will include one-seventhfor interest on the national debt.
A whopping two thirds will go towardentitlement, one sixth for defense programs and another one-sixth for “non-defense discretionary spending” (Rauch 2). Perhaps the most touted aspect of the initial Clinton administration was itsability to “create” jobs. According to the White House, almost six million jobshave been created in the past four years, and the unemployment rate in Texas hasdropped from 7. 5% to 5. 8% (Progress 1). This is a level well below the 6% ratewhich many economists regard as full employment.
However, there may be a greatdeal more then meets the eye when it comes to these “promising” statistics. Thelabor force had been predicted to grow at a rate of more than 1. 3 percent peryear, however, it has failed to grow by even one percent annually under Clinton(Reynolds 3). In other words, unemployment has “gone down,” by way ofunderstatement. The number of those counted as actual members of the labor forcehas lowered while the number of jobs has moderately increased.
It is estimatedthat one million men between the ages of twenty-five and fifty-five have leftthe labor force as discouraged workers during the four-year span of 1992to 1996(Reynolds 3). Had these men remained in the force as possible applicants, theunemployment rate may actually read as high as 8%, as it was during the Reaganadministration (Miller 3). It seems a case of playing with numbers in order todisguise the truth. Whatever one chooses to call it, Clinton’s policies of jobcreation place discouraged middle class workers between a rock and a hard place.
Conservative economist Alan Reynolds views it as a technique of “achieving lowunemployment . . . by discouraging millions of people,” and remarks that “it isnothing to brag about” (Reynolds 3). Productivity growth, “measured as the number of units of output per hour ofwork” has grown just 1 percent each year since 1973 (Miller 3).
Under usualcircumstances, gradual increases in productivity directly correlate to anincrease in workers’ wages. However, the Clinton Administration has seen atotal productivity increase of 2. 1% over a four year period, while wages havedeclined by . 2% (Miller 3). In the next seven years, Clinton’s team anticipatesan annual productivity increase of 1.
2% (Miller 5). Considering the vastmajority of employment created under this administration is classified as “bluecollar,” it may be inferred that wages will continue to fall. Indeed, it seemsClinton has managed to contradict a fundamental premise of economics. And whobenefits from this lower wage – higher productivity combo? In a word, industry.
Economist Stephen Roach sees it as “a dramatic shift in the distribution ofincome away from the agents of productivity, workers, toward the owners ofcapital” (Miller 3). The outcome? An era eerily reminiscent of the Reagan era,where the rich only seem to get richer. Traditionally, aspiring presidents promise one (or several) things in regard totaxes during the election, yet deliver an entirely different bag of goods uponactual inhabitance of the white house. Clinton proved no exception by raisingthe marginal tax rates in 1993.
At the current time, Clinton is considering amodified capital gains tax cut, despite the fact that this taxation has madesizable contributions to the lessening of the deficit (Miller 4). It is a movethat could prove immensely beneficial to the upper percentages of income earners. Clinton has made moves such as this one in the past, in the form of “an earnedincome tax credit which increased the share of loot given to those with incomeswell above the poverty level” (Reynolds 3). These policies, according to WallStreet Journal columnist Paul Gigot, “have done best by the same people Mr.
Clinton accused Reaganomics of benefitting most – the wealthy. “Thus, the question remains . . . will Clinton’s ambiguous policies fair wellwhen presented to a blatantly republican Congress? It is a fact which remainsto be seen. Robert D.
Rieschauer, former head of the congressional budgetoffice, views Clinton’s economic misidentity as a clear-cut case of Gingrichinduced skitzopreniea, noting that “in the world of the campaign, Clinton wasthe anti-gingrich . . . in his actual budgets . . .
he is Gingrich” (Reynolds1). It leaves us, as voters, to the task of defining Clinton’s party loyalties.