We have not seen an advance copy of President Clinton’s speech, scheduled for tonight, but we already know the message Democrats wish to convey with it. They seek to associate President Obama with the prosperity of the Clinton years. Democratic policies worked in the 1990s, they will argue, and they can work again. This story won’t sell, because the gap between Obama’s record and Clinton’s is so vast and obvious.
Clinton bucked most House Democrats to liberalize trade. He signed Republican bills to reform welfare, restrain spending, and cut taxes on investment. Obama has done none of these things. He has weakened welfare reform by telling states that the administration will waive work requirements. He has greatly increased spending. He has raised taxes on investment and wants to raise them more. Obama is no Bill Clinton: good news for the first lady, not so much for the rest of us.
The main continuity between the two Democrats’ economic policies is that Clinton raised the top income-tax rate and Obama wants to do so as well. It is certainly true that we had both stronger economic growth and higher tax rates in the 1990s. It does not follow that the higher tax rates contributed to that growth then, or that they would do no damage now. The country enjoyed favorable circumstances in the ’90s — technological, demographic, and geopolitical — that we do not now enjoy and cannot replicate. Hiking taxes would likely lead to worse results today than it did then.
The argument for Clintonomics was that raising taxes would lower the deficit, a lower deficit would bring down interest rates, and lower interest rates would bring economic growth. It didn’t actually work that way in the ’90s: Interest rates fell only when Republicans took control of Congress. The logic is in any case inapplicable now, because interest rates are already very low.
Clinton knows, we suspect, that higher taxes will not bring back the economy of the 1990s. He knows too that Obama has not governed — has never had any interest in governing — as Clinton did. It will be fascinating to see how the Clintonite wing of the Democratic party will react if Obama loses. In that case we will be listening to Clinton with close attention, after the election.