MacKenzie: Did you know it was Bill Clinton who repealed Glass-Steagall?
Will: Everybody knows that. — Conversation on HBO’s The Newsroom, originally broadcast July 22, 2012
With little success on the economic front to boast about, President Barack Obama in 2012 is reprising much of his 2008 economic message. And he has two basic arguments. One is to blame the supposed deregulation policies of the George W. Bush administration that Obama and his surrogates endlessly say “got us into this mess.” And the second is to (sometimes literally) hug former rivals Bill and Hillary Clinton as hard as he can and hearken back to the prosperity and economic growth of the 1990s.
There is one problem with this argument. The Obama campaign’s twin messages of bashing deregulation and embracing the Clinton years are inherently contradictory. He is telling Americans to look at the ’90s as our economic model, but not to look too closely, lest they see that the ’90s, perhaps even more than the ’80s, were a decade of deregulation.
In a much-hyped pro-Obama ad running in swing states such as Virginia, Clinton warns that a Mitt Romney presidency would “go back to deregulation.” Clinton made similar claims Wednesday night in his prime-time speaking slot at the Democratic convention, arguing that Republicans want to “get rid of those pesky financial regulations.” But regardless of how one views Obama’s economic record, the fact remains that on financial regulation, Bill Clinton as president was actually more of a deregulator than Bush was.
The characters quoted above, in the preachy new HBO drama from West Wing creator Aaron Sorkin, are not the only liberals who have noted that Clinton pushed for and signed the very deregulatory measures they blame (however wrongly) for causing the financial crisis of 2008. Once the 2008 election returns were in, and Obama no longer needed Clinton’s support (and thought he would never need it again), many on the left let loose on Clinton, warning Obama not to follow Clinton’s deregulatory ways.
In late November 2008, American Prospect co-editor Robert Kuttner expressed concern in TheHuffington Post that Obama was filling his economic team with “Clinton retreads — the very people who brought us the deregulation that produced the financial collapse.” If he must have them on board, Obama should ignore their advice and simply utilize their presence “so that he can govern as a progressive in pragmatist’s clothing,” Kuttner advised.
Obama largely followed Kuttner’s advice on financial regulation, most notably by ramming through the 2,500-page Dodd-Frank “reform” in 2010, which has attracted bipartisan criticism for its Byzantine complexity and its provisions on issues that had nothing to do with the crisis, such as price controls on what retailers pay to process debit cards.
It turned out that, without the ’90s policies of liberalization, mere window dressing from that decade could not reproduce its economic success. And leaving aside his statement in the Obama commercial, Clinton knows this. He and his administration officials credited deregulation for contributing to the ’90s economic boom — the time of “shared prosperity” that Obama says he wants to resurrect.
Late in Clinton’s tenure, the White House put forth a document celebrating “historic economic growth” during the administration and pointing to the policy accomplishments it deemed responsible. Among the achievements on Clinton’s list were “modernizing for the new economy through technology and consensus deregulation.”
“In 1993, the laws that governed America’s financial service sector were antiquated and anti-competitive,” the document explained. “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.”
Everything in that passage is true. All that’s missing is mention of the credit owed to the GOP-controlled Congress elected in 1994, which also helped pass those policies. These bipartisan financial reforms, however, were the very same policies that Obama, Joe Biden, and other Democrats attacked during the campaign of 2008 and throughout the next three and a half years, shoehorning them into their strategy of blaming the previous administration.