Welcome to the first of many installments of Economic History.  The series will focus on history during a specific political period, as often times economic cycles coincide with politics.  We will start the series with Bill Clinton.

The Clinton years started before he took office in January of 1993.  There may never have been any Clinton Years without Ross Perot.  Perot ran as an independent and garnered as much as 19% of the popular vote.  The majority of this came from those that would have voted for Bush (1.0), possibly tipping the scales enough to put the Democrats in office for the first time since Mr. Peanut Farmer.  Many conservatives also voted for Clinton because of his “New Democrat” political ideology, which encouraged small government.

First Term
Clinton ran for president on a platform of job creation, environmental protection, and healthcare reform.  In the first few years of the presidency, Clinton was a busy man actually following through on his campaign promises.  His wife, (you may have heard of her) Hillary, was charged with leading a task force to create a universal healthcare program in the United States.  Initially, the idea was well received.  However, well organized opposition quickly won over the public.

In an effort to make government more transparent, Clinton launched the first Whitehouse website and in later years issued an executive order to have all branches of government create websites and embrace information technology.  The rise of “the information superhighway” and the coming “dot com” boom coincided with this movement.  The 90s will always be remembered for the technology sector, Bill Clinton did his part as president to encourage this progression.

The North American Free Trade Agreement (NAFTA) was approved by the Senate in 1993, which opened trade between the US, Canda, and Mexico.  This was and remains a controversial agreement, and opposition came from every side of the political spectrum.  Manufacturing companies strongly supported agreement, which lead to many factories moving to our north and south.  NAFTA is the reason GM and Ford make most of their vehicles in Canada and Mexico now.  This of course lead to the loss of jobs in the United States.  Though it was signed into law under Clinton and did carry his support, credit must go to his predecessor, George Bush, for getting the process in motion.

Along with job creation, Bill Clinton was also very adamant about raising citizens out of poverty.  Two bills were passed designed to help those with lower incomes.  The first was the Earned Income Tax credit.  Those just above the poverty line were incented to work instead of collect welfare.  In other words, it worked out better for them in the long run to work.  Previously, this was sometimes not the case.  Clinton also passed the Welfare Reform Act which moved welfare control to the states.  This was a highly libertarian move that lost him much support from liberal democrats.

Second Term
Clinton ran against Bob Dole in 1996 on a campaign of basically, “things are going great let’s not change them”, just not in so many words.  Clinton won, with Ross Perot again providing a cushion of protection from the Republicans.

In 1998 the Digital Millennium Copyright Act (DMCA) was passed.  The DMCA gave copyright a new arena in intellectual property.  It essentially extends copy write protection to digital properties, most notably music and video.  The reason Napster was taken down and YouTube can’t show videos from TV shows is the DMCA.  Rightfully so perhaps, but media companies have abused the DMCA to sue their customers.

Towards the end of his presidency the tech bubble was in full swing.  Investment in new companies was still growing exponentially, and the new trend in stock purchasing was basically to buy any and all tech companies that were going public that week.  Amazon and Microsoft were possibly the two biggest brands to benefit from this expansionary period.  Amazon was born from the tech bubble, and was one of the few to survive the bust.  Microsoft’s founder, Bill Gates, saw the realization of his dream of a PC in ever home and classroom.  Most of those PCs were Windows machines, and Bill Gates became a household name.

Clinton’s second term will always be overshadowed by the scandals involving his personal life, which is unfortunate.

Legacy
The Clinton Administration takes credit for many achievements during this time.  Most notably is balancing the budget.  Having come out of the Regan and Bush Administrations where spending was not really monitored, our nation had one heck of a budget deficit.  Under Clinton, the budget was balanced.  However, history tends to ignore the fact that two years after Clinton took office, Republicans took control of Congress for the first time in 40 years.  Think about it, Democrats control Congress for 40 years and the deficit gets out of control.  Republicans come in and in 4 years balance the budget.  They tried to add an amendment to the Constitution that required a balanced budget, however Clinton exercised his veto.

Clinton also takes credit for the job creation and economic health that resulted in the 90s.  Most of this can be traced to the tech bubble, which popped about the time George W. Bush took office.  While times were good during Clinton’s years, they were not because of Clinton.  Because of the burst and fallout later, times weren’t even as good as we thought they were.  Add in historically low interest rates from the Fed and no president can take credit for economic health.

Clinton was overall an effective president, winning favors from both sides of the political aisle.  He left office with a 65% approval rating, which is very high.  While I don’t believe any one person can be responsible for so many things, Clinton should get credit for inspiring innovation, encouraging economic expansion, and cutting taxes for the middle class while raising the taxes for the wealthy.

More Reading
Cliffs Notes
Wikipedia

Related posts:

1. The Flaws of the Clinton Gas Tax Holiday
2. Weakon 117: Intro to Government Spending
3. Weakonomics Economic Review of the First Half of 2008
4. Weakon 231: How the Mortgage Industry Works (or Worked!)
5. The Weakonomist Reads a Book: Confessions of an Economic Hit Man

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