In an otherwise factual and persuasive speech, Bill Clinton made one argument so astonishingly brass I half-expected the crowd to laugh him out of the hall. It came when Clinton cited his own presidency as a bygone era of partisan cooperation, when he couldn’t hate the Republican Party, and the two sides would come together for the good of the country. This nostalgic riff went down like a charm, not only with the partisan crowd but with the blown-away commentariat afterward. Did none of them remember the Clinton presidency? Where the mainstream Republicans accused him daily of socialism and the conservative ones accused him of being a murderer? The apocalyptic government shutdown fights? Impeachment?
And then it occurred to me that Clinton’s fairy tale went down so smoothly not just because of the soothing passage of time but also because nobody has an interest in reminding America of the blinding derangement that defined the Clinton-era GOP. Clinton doesn’t, as he enjoys his post-presidential role as beloved elder statesman. Republicans don’t, because they want to portray Obama as uniquely radical, and their Spartans-at-Thermopylae stand against him as a justifiable reaction to an unprecedented threat, not just the recurrent partisan hysteria that overtakes them during any Democratic presidency. And Obama doesn’t, because he wants to cast Republican opposition of his agenda as unprecedented.
But the truth is that the Clinton-era Republicans believed, just as the Obama-era version of their successors, that the president was a wealth-confiscating Marxist. (The role of Chicago/Kenya, as the incubator of the president’s secret radical agenda, was the sixties–Yale–Hillary Clinton.) And this forgotten past actually lends us crucial insight into the economic debate occurring at this very moment.
Clinton’s first year was consumed by a massive conflagration over his plan to reduce the deficit. The contours of the fight were nearly identical. Democrats accepted the need to reduce federal spending, but demanded an upper-income tax hike, so that the middle class would not bear the whole burden of reducing a deficit that had originally been created in large part through regressive tax cuts. The tax demand rendered the plan radioactive to the GOP. Zero Republicans supported Clinton’s deficit reduction plan.
I’ve written many times about the wildly fearful invective that characterized the opposition. Republican dogma held as an absolute truth that raising tax rates on the rich must, by reducing the work incentive, slow the economy and thereby fail to raise the projected new revenue. Even the most respected Republican-affiliated economists, like Harvard’s Martin Feldstein, insisted “there is no possibility that the Clinton plan will produce the deficit reduction that it projects.”
Ground zero of opposition was the Wall Street Journal editorial page, which fashioned a running graphic for its crusade against Clinton’s plan, entitled “The Class Warfare Economy,” decorated with an illustration of a guillotine. The day Clinton’s plan passed the House of Representatives in a dramatic vote, the Journal editorialized, “We are seeing the early signs of the stagflation that we knew so well during the Carter presidency.”
The current parties are currently engaged in a stalemate over similar fault lines. The Republicans may have a more radical counter-proposal now, but the Democratic position is similar — okay, we’ll cut spending, but only if it comes along with a tax hike on the rich. Republicans have again decried this as class warfare and a destructive assault upon the bedrock of the economy.
Obama has argued, persuasively, that the record of the last two administrations blows up the conservative economic position on taxes. Republicans insisted Clinton’s tax hike on the rich would crush the recovery and lead to lower tax revenue, when the opposite happened. Then they took power and cut taxes, arguing that it would spur growth and produce higher-than-expected revenue, only to result in a historically anemic recovery. As Obama has said:
I’m also going to ask anybody making over $250,000 a year to go back to the tax rates they were paying under Bill Clinton, back when our economy created 23 million new jobs, the biggest budget surplus in history and everybody did well. Just like we’ve tried their plan, we tried our plan — and it worked.
Romney, naturally, seized upon the last line (“we tried our plan and it worked”) to cut an ad inaccurately suggesting that Obama was boasting that his own plan worked — i.e., Mission Accomplished, Obama thinks the economy is wonderful. Obviously Obama was claiming that the plan he proposes to implement was tried in the nineties and worked.
Other conservatives have tried a more subtle response. National Review editorializes that, since other factors help produce the economic growth of the nineties, higher taxes on the rich don’t automatically guarantee faster growth. The Wall Street Journal editorial page attempts a more audacious historical rewrite, insisting that the nineties boom was really driven by things like spending restraint. Both these revisionist efforts obscure how badly wrong they were at the time of the Clinton tax hike. Conservatives didn’t argue that higher taxes on the rich were sort of a bad idea, but might work out anyway if we hold spending down. They argued that higher taxes on the rich would absolutely, necessarily fail.
And their current line implies that higher taxes on the rich, in conjunction with spending restraint, is perfectly compatible with fast economic growth. Which it is! The obvious lesson of the Clinton and Bush years is that the difference in incentive effects of tax rates between the low thirties and forty percent is negligible at best. Conservatives may think it’s unfair to raise taxes on the rich, but the economic arguments against doing so have been pretty well refuted.
Americans still remember the outcome of the Clinton administration, but they don’t remember the policy fights that occurred at the time. The Republicans' current line rests upon a historical revisionism so blatant they are holding up Clinton himself as an ideological ally, a fellow moderate, in opposition to Obama’s radical class warfare. It’s important to remember that Republicans made the same hysterical accusation against Clinton, even if Clinton himself has no interest in reminding us.