Ever since the economy emerged as the top campaign issue, Barack Obama has developed two basic messages. One is that the deregulation John McCain voted for is to blame. The second is that former rivals Bill and Hillary Clinton deserve credit for the prosperity and economic growth in the 1990s.
In the presidential debates, Obama charged that McCain “believes in deregulation in every circumstance,” and claimed “that’s what we’ve been going through for the last eight years.” As a contrast to the Bush II years, Obama said in a speech, his administration would go back to the “shared prosperity . . . when Bill Clinton was president.”
But these two messages are inherently contradictory: Bill Clinton signed nearly all the deregulatory measures John McCain backed. Clinton administration officials have even credited these policies for contributing to the ’90s economic boom — the very “shared prosperity” to which Obama says he wants to return.
Late in Clinton’s tenure, the Clinton White House put forth a document celebrating “Historic Economic Growth” during the administration and pointing to the policy accomplishments it deemed responsible for this growth. Among the achievements on Clinton’s list was none other than “Modernizing for the New Economy through Technology and Consensus Deregulation.”
“In 1993,” the document explained, “the laws that governed America’s financial service sector were antiquated and anti-competitive. The Clinton-Gore Administration fought to modernize those laws to increase competition in traditional banking, insurance, and securities industries to give consumers and small businesses more choices and lower costs.”
The document neglected to credit the GOP-controlled Congress for passing these policies, but the Clinton administration indeed deserves praise for signing and advocating this deregulation. These bipartisan financial policies are the very ones Obama, Joe Biden, and other Democrats attack. “Let’s, first of all, understand that the biggest problem in this whole process was the deregulation of the financial system,” Obama proclaimed in the second presidential debate.
In the financial area, Clinton was actually more deregulatory then Bush II has been. As James Gattuso of the Heritage Foundation points out, while there may have been flawed oversight, there really was no financial deregulation under Bush. Indeed, Bush’s signature achievement in the financial area was the costly and counterproductive Sarbanes-Oxley Act. My CEI colleague Wayne Crews notes in his study “10,000 Commandments” that the Bush administration has set records for the ten of thousands of pages it put in the Federal Register.
To be sure, Obama usually isn’t too specific on what exactly he would re-regulate. But to the extent he is specific, he’s running against not only McCain, and not only Clinton, but also people like Robert Rubin, Larry Summers, and virtually all the Clinton administration economic officials now surrounding, um, Barack Obama.
Take Gramm-Leach-Bliley, the 1999 law Clinton signed repealing the Depression-era Glass-Steagall Act that strictly separated traditional commercial banking from investment banking. Obama supporters claim that getting rid of Glass-Steagall led to the credit blowup. They seize on the first name on the law, that of former senator Phil Gramm, to bash it as a piece of Republican deregulation. Never mind that the Senate passed the legislation 90-8, with many Democrats voting for the final bill, including Joe Biden.