Praising Bill Clinton?

I strongly believe that economics should be the deciding issue for any Presidential contest. A robust economy heals many problems by increasing the size of the pie for everyone. The private sector adds jobs, tax receipts grow, and the annual deficit shrinks. At least that's the theory.

The economy is like a very complex machine, with many inputs. The President sets the national agenda, and has the power to influence some of these inputs. Chief among those are:

• Controlling federal spending
• Liberalizing trade
• Maximizing investment capital

Of course there are many other factors outside the control of the Executive:

• Domino effects from foreign economies
• Consumer spending
  
• Monetary policy controlled by the Federal Reserve
• Energy prices (oil!)

Surprisingly, Bill Clinton did quite well with the top three. On spending, he was checked by a Republican congress for 6 years, and his early first-term healthcare proposal was defeated. On trade, he supported and extended NAFTA, despite the opposition of many Democrats. He also signed GATT, which created the World Trade Organization that is so hated by many progressives. Much of this was due to the Clinton Administration's ties to the Democratic Leadership Council, the New Democrats that advocated liberalizing trade, support for Israel, and more business-friendly policies. Clinton also passed the Taxpayer Relief Act of 1997, lowering capital gains taxes and fueling the superheated economy of his second term.

So, what can we learn in 2008 from all this? Bush does not merit praise for his economic contribution over two terms, especially on federal spending. Outlays as measured against GDP are below the 40-year average, but in the longer term the new Medicare Part D entitlement and Iraq spending will hurt:

Total Revenues and Outlays as a Percentage of Gross Domestic Product

The Democrats running for the nomination are not any better. Both Barack Obama and Hillary Clinton propose new healthcare entitlements which will swell the budget. Both have been shamefully pandering to the rust-belt voters over who can slam NAFTA and globalization more:

Democratic Myths Collide with NAFTA Reality

Passing ECON 101 should be a prerequisite to voting in this country.