Bill Clinton's Out of Touch Economically: That's a Big Deal
He's eloquent, he's popular ... and he's out of touch with the daily lives of most Americans. Bill Clinton's economic worldview spells trouble, both for a party that's still reeling from defeat and for a nation where millions of people struggle just to make ends meet.
Hillary Clinton, the heavily-favored contender for the Democratic nomination, has made Bill's presidency and her role in it an essential part of her resume. But "Clintonism," the Wall Street-friendly economic ideology of a bygone era, has passed its sell-by date. The former president's latest remarks confirm that.
The 1990s are over. This is a different country now, both economically and politically. But the presumptive nominee's partner and most important colleague still holds views which are sharply at odds with both economic reality and the nation's mood. That's a big deal. His opinions could have a profound impact on our political and economic future.
If Hillary Clinton disagrees with the former president's views, she hasn't said so.
When Bill Clinton speaks on economic issues, he reveals a deep wellspring of neoliberal belief and a profound detachment from the lived experience of most Americans. His latest slip took place in a speech he gave this week at the University of Southern California. After some bland bromides ("The Internet has done a lot of good") and self-helpish sounding political advice ("what you gotta have is an agenda and get things done"), the former president said this:
"We are in the best shape of any big country in the world in the next 20 years. No big country that is running this well is as young as we are, as diverse as we are or as technological as we are. In the next 20 years, there will be bad days, there will be bad headlines, but you can keep the trend lines positive."
The millions of Americans who struggle with falling wages, shrinking personal wealth, and rising healthcare costs would presumably be astonished to hear this sunny assessment of their future.
Negative trend lines.
It's true that, for the extremely wealthy, the "trend lines" are positive indeed. For the rest of the nation, not so much. Consider some of these very negative trends:
Real wages have fallen since 2007 for eight out of every ten Americans, rising only for the wealthiest among us. This follows nearly five decades of stagnant or falling wage growth for the middle class, as wealth inequality continues to rise.
Wealth inequality increases since 1979 cost median-income households an average of $9,500 in 2010, according to the Center for Budget and Policy Priorities' Jared Bernstein. When adjusted for inflation, median income has fallen $2,100 since the start of the Obama presidency and $3,600 since 2001.
As a result, the middle class is disappearing. In 1970, 55 percent of households were in the "middle tier" of income. A recent Pew study showed that this figure had fallen to 45 percent by 2013. All the wealth which the middle class accumulated in the growth years after 1940 is now gone.
Wall Street Weak.
The trend lines are pointing the wrong way on Wall Street, too. Banks are increasingly financing highly-leveraged corporate takeovers, and regulators are expressing concerns about the risk. Meanwhile, the bank fraud which exacerbated our financial problems goes on despite slap-on-the-wrist settlements in which bank CEOs agreed to end it, according to prosecutors.
For his part, Clinton mockingly dismissed calls for banker prosecutions. Despite the fact that economists and law enforcement experts agree that punishment is essential to prevent future crimes, Clinton encouraged Treasury Secretary Tim Geithner to go easy on crooked bankers, saying "[I] could take Lloyd Blankfein into a dark alley and slit his throat, and it would satisfy them for about two days. Then the blood lust would rise again."
Unsurprisingly, the authoritative financial journalist William D. Cohan tells us that Wall Street is thrilled by Hillary Clinton's candidacy. Why wouldn't they be? They know her, they've rewarded her with lavish speaking fees, and the financial industry has made the Clintons and their associates very wealthy.
For their part, corporations are jacking up their share prices at the expense of employees - and their own future viability - in order to enrich their executives. (For his part, Bill Clinton suggested that CEOs will soon voluntarily give up the pursuit of profit as a top priority in favor of - an idea Robert Borosage rightly dismissed as Clinton's "corporate fantasy.")
According to a recent analysis by Goldman Sachs, corporate profits grew five times faster than wages last year. Meanwhile, back in the real world ...
This income crisis is also contributing to a retirement crisis. 20 percent of Americans have nothing saved up for retirement. (Teresa Ghilarducci has more.) Far fewer corporations offer secure pension plans, 401(k) plans are miserly, and many "centrist" politicians (including Bill Clinton) have touted plans for cutting Social Security - the only reliable form of post-retirement or post-disability income they have left. (And the waiting list for Social Security disability hearings is worsening, not improving, with nearly a million people now waiting to have their appeals heard.)
A new study predicts that Americans with employer-sponsored healthcare will pay 55 percent more in out-of-pockets costs in 2015 than they did in 2010.
Household debt is soaring for the bottom 25 percent of Americans as they struggle to pay their bills. One-third of American households are living a "paycheck-to-paycheck existence."
Total student debt has more than doubled since 2007, and the amount owed by the average borrower now exceeds $27,000. Less than half of all student borrowers are current on their payments, and a recent study (must complete a form in order to download report) shows that significant student debt harms the borrower's physical and mental well-being.
Oh, and those jobs numbers we've been celebrating? A report from the Conference of Mayors found that the jobs created since the financial crisis pay 23 percent less than the ones they replaced.
Perhaps inevitably, another recent study found that Americans are more depressed today than they were in the 1980s, with depression rates and psychosomatic depression symptoms (sleep loss, etc.) higher for all age groups studied: teens, young adults, and adults.
These Americans, and the others among the vast majority who have suffered economic setbacks, aren't likely to be swayed by Bill Clinton's sunny optimism - or by a candidate or a party which echoes this misguided economic worldview behind it.
No wonder three out of four people say the recession's still going on. It is - for them.
The trend lines are good for some people, of course. The amount of wealth held by the richest 0.01 percent of Americans hasn't been this high since 1916. The top 0.1 percent (that's one-thousandth of the population) now possess as much wealth as the bottom 90 percent. Corporate profits hit record highs last year, and the stock market's skyrocketing numbers continue to break one record after another.
Selling "austerity lite."
Is Bill Clinton worried? He did manage to express concern recently — for corporate executives who feel our corporate tax system is "crazy." His proposed solution is a system of "tax reform" that would lower taxes on US corporations, even though the taxes they actually pay (as opposed to statutory rates) are at or near historic lows.
Even as Hillary maintained a tactical silence on key issues, Bill kept right on talking. He appeared at several "Fiscal Summits," a series of "buy-partisan" propaganda events funded by billionaire Pete Peterson, the conservative opponent of Social Security and Medicare who took an early interest in Clinton's own career. There, Bill joined with the likes of John Boehner and Paul Ryan in an attempt to sell the American people on cuts to these programs.
(But then, Clinton has yet to acknowledge a new analysis which shows that the welfare reform bill he signed turned out to be a destructive failure which has inflicted needless harm on millions of lower-income Americans, especially children).
Bill and Hillary have used their Clinton Global Initiative as a public-relations platform for Goldman Sachs and other bad corporate actors, and to sponsor deceptive campaigns like Peterson's "Up to Us" essay contest on ... you guessed it: the Federal deficit. But Bill Clinton soft-pedals the anti-spending rhetoric of the Peterson crowd even as he uses his considerable skills of persuasion to sell it. You could call it "austerity lite."
The former president has fiercely defended his Administration's destructive Wall Street deregulation policies, even as the Obama Administration's economic team continues to be dominated by the disciples of former Clinton Treasury Secretary and Citigroup CEO Robert Rubin (Sen. Elizabeth Warren calls it "the Citigroup clique") The Rubin team, whose policies proved so destructive to the economy, would undoubtedly have its contract renewed under a Hillary Clinton presidency.
Few people in public life, outside of the Republican Party, are as publicly tone-deaf about the struggles of the American majority than Bill Clinton. Earlier this year he dismissed concerns about inequality by saying "You can say, 'Well, inequality has still increased,' because the top 1 percent did better, but I don't think there's much you could do about that unless you want to start jailing people."
The road ahead.
Clinton knows better - or should. Inequality is the product of a number of policy choices - choices which can be reversed. How could we reverse the inequality trend without jailing people just for being rich? There are dozens of policies which could help. Here are just a few:
We could take steps to reduce the financialization of the economy, in which a non-productive banking sector takes a growing share of corporate profits without producing very many jobs.
We could reinstate Glass-Steagall, break up the big banks, and improve on the Dodd-Frank law to discourage risky banking. (And we could prosecute crooked bankers while we're at it, instead of pretending all that fraud - which has led to many billions of dollars in fines - committed itself.)
We could create regulations to discourage predatory stock-manipulation practices for short-term executive gain.
We could create a better system of taxation, with higher corporate rates and higher top rates for ultra-high-earners. Economic studies show that the ideal top rate for billionaires would be somewhere between 73 percent and 90 percent.
We could pass the Employer Free Choice Act and other legislation to encourage the growth of unions, which have played an essential role in reducing inequality and increasing middle-class wealth. We could encourage the unionization of low-wage workers, raise the minimum wage, and offer tax incentives for labor-intensive enterprises.
We could invest in our crumbling infrastructure, which needs trillions in repairs.
We could lift the cap on Social Security taxes so that millionaires and billionaires pay more, gradually (and slightly) increase payroll taxes by a few dollars a month for the rest of us, and increase its benefits.
Don't buy it.
Instead of fighting for these much-needed reforms, Bill Clinton mocks those who support them with facile and ugly comments about "slit throats" and "jailing people." He brushes aside the day-to-day trials of millions of Americans, dismissing them as nothing more than a few "bad headlines." He pitches a glossy-brochure version of our national condition instead of addressing the real-life problems many people face every day.
The trend lines are undoubtedly positive for the former president and his social circle. But the false reality Bill Clinton is trying to sell us would discourage meaningful action from the powerful while ringing profoundly false to the rest of the nation.
Don't buy it.
We're told that Hillary Clinton's candidacy has a number of demographic and political trends working in its favor. But if she shares Bill's views, as seems to be the case, she will be bucking those trends by selling bromides and evasions instead of insights and solutions. That kind of candidacy would almost certainly drag the rest of the ticket down, regardless of the presidential race's outcome.
Then there are the implications for the future. if Hillary Clinton embraces this worldview and wins, the same Citigroup-clique thinking which has contributed so much to our current difficulties would continue to guide our economy for another four or eight years.
It isn't working today. It won't work tomorrow. The country deserves better.