December 7, 2019

Image result for neoliberalism and the democratic partyIt’s common to hear Democrats touting the Bill Clinton presidency as the gold standard of American prosperity with millions of jobs created, and a flourishing economy the kind of which has not been experienced since.

In light of this claim, I decided to take a look at some of the things President Clinton did while in office, and how it has affected the country’s economy since that brief economic flourish.

Democratic Leadership Council (DLC)

Bill Clinton’s first order of business as president was to bring the Democratic Leadership Council (DLC) policies to national fruition. The DLC supported everything neoliberals both Democrats and Republicans have offered and passed into law since it came into existence in 1985. Welfare reform, such as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, President Clinton’s expansion of the Earned Income Tax Credit, all came from the DLC’s bag of tricks.

The DLC also supports expanded health insurance via tax credits for the uninsured and opposes plans for single-payer universal health care. Perhaps Hillary Clinton saying that “single payer healthcare will never come to pass” starts to make sense to you upon this revelation. The DLC supports universal access to preschool, charter schools, and measures to allow a greater degree of choice in schooling (though not school vouchers), and supports the No Child Left Behind Act. The DLC supports both the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA).

In 2006, the DLC also urged Senate Democrats to vote against Bush’s nomination of Samuel Alito to the U.S. Supreme Court “on principle”, but firmly opposed any filibuster of the nominee.

New Deal Banking Reform

Bill Clinton repealed the New Deal Banking Reform which was put in place by President Franklin D. Roosevelt on March 9, 1933, and was a strong pillar that helped hold up the banking system.

The New Deal Banking Reform expanded presidential authority during a banking crisis, including retroactive approval of the banking holiday and regulation of all banking functions, including “any transactions in foreign exchange, transfers of credit between or payments by banking institutions as defined by the President, and export, hoarding, melting, or earmarking of gold or silver coin.

It gave the comptroller of the currency the power to restrict the operations of a bank with impaired assets and to appoint a conservator, who “shall take possession of the books, records, and assets of every description of such bank, and take such action as may be necessary to conserve the assets of such bank pending further disposition of its business.”

It allowed the secretary of the treasury to determine whether a bank needed additional funds to operate and “with the approval of the President request the Reconstruction Finance Corporation to subscribe to the preferred stock in such association, State bank or trust company, or to make loans secured by such stock as collateral.”

It gave the Federal Reserve the flexibility to issue emergency currency—Federal Reserve Bank Notes—backed by any assets of a commercial bank.

Repeal of Glass/Steagall

Today, you would hear certain people talking down the effects of the repeal of Glass/Steagall, and how it had very little to do with the market crash of 2008, so, I want to give you a brief history of the origin of Glass/Steagall.

In 1929, the music stopped, the stock market crashed and the Great Depression began. It took eight years from the start of the boom to the bust. Subsequent investigations revealed the extent of the fraud that preceded the crash. In 1933, Congress passed Glass-Steagall in response to the abuses. Banks would be allowed to take deposits and make loans. Brokers would be allowed to underwrite and sell securities. But no firm could do both due to conflicts of interest and risks to insured deposits. From 1933 to 1999, there were very few large bank failures and no financial panics comparable to the Panic of 2008. The law worked exactly as intended.

In 1999, Democrats led by President Bill Clinton and Republicans led by Sen. Phil Gramm joined forces to repeal Glass-Steagall at the behest of the big banks. What happened over the next eight years was an almost exact replay of the Roaring Twenties. Once again, banks originated fraudulent loans and once again they sold them to their customers in the form of securities. The bubble peaked in 2007 and collapsed in 2008. The hard-earned knowledge of 1933 had been lost in the arrogance of 1999.

 It was Glass-Steagall that prevented the banks from using insured depositories to underwrite private securities and dump them on their own customers. This ability along with financing provided to all the other players was what kept the bubble-machine going for so long.

Welfare Reform

Bill Clinton campaigned on the promise to “end welfare as we know it,” and he succeeded. Before his welfare reform was passed, 13 million people received cash assistance from the government in 1995. Today, just 3 million do.

People see those numbers and think his reform worked, but given that extreme poverty has doubled since the time of the welfare reform, it’s clear that what Mr Clinton did was simply push people away from welfare into suffering and extreme poverty.

The chart below explains more.

NAFTA

You would regularly hear Democrats brag about how Bill Clinton was a friend to workers unions and protected workers. Well, Bill Clinton signed NAFTA into law and this is what NAFTA did to American workers. If this was friendship and protection, you decide.

The North American Free Trade Agreement (NATFA) was the door through which American workers were shoved into the neoliberal global labor market.

By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers, which had driven the expansion of the middle class since the end of World War II. The result has been 20 years of stagnant wages and the upward redistribution of income, wealth and political power.

NAFTA affected U.S. workers in four principal ways. First, it caused the loss of some 700,000 jobs as production moved to Mexico. Most of these losses came in California, Texas, Michigan, and other states where manufacturing is concentrated. To be sure, there were some job gains along the border in service and retail sectors resulting from increased trucking activity, but these gains are small in relation to the loses, and are in lower paying occupations. The vast majority of workers who lost jobs from NAFTA suffered a permanent loss of income.

Second, NAFTA strengthened the ability of U.S. employers to force workers to accept lower wages and benefits. As soon as NAFTA became law, corporate managers began telling their workers that their companies intended to move to Mexico unless the workers lowered the cost of their labor. In the midst of collective bargaining negotiations with unions, some companies would even start loading machinery into trucks that they said were bound for Mexico. The same threats were used to fight union organizing efforts. The message was: “If you vote in a union, we will move south of the border.” With NAFTA, corporations also could more easily blackmail local governments into giving them tax reductions and other subsidies.

Third, the destructive effect of NAFTA on the Mexican agricultural and small business sectors dislocated several million Mexican workers and their families, and was a major cause in the dramatic increase in undocumented workers flowing into the U.S. labor market. This put further downward pressure on U.S. wages, especially in the already lower paying market for less skilled labor.

Fourth, and ultimately most important, NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor. The U.S. governing class—in alliance with the financial elites of its trading partners—applied NAFTA’s principles to the World Trade Organization, to the policies of the World Bank and IMF, and to the deal under which employers of China’s huge supply of low-wage workers were allowed access to U.S. markets in exchange for allowing American multinational corporations the right to invest there.

The Crime Bill

Just an interesting factor. Two after Clinton signed the big crime bill in September 1994, he enacted the Riegle-Neal interstate banking bill, the first in a series of moves deregulating the financial industry. The juxtaposition between the two is kind of shocking, when you think about it: low-level drug users felt the full weight of state power at the same moment that bankers saw the shackles that bound them removed.

For one class of Americans, Clinton brought emancipation, a prayed-for deliverance from out of Glass–Steagall’s house of bondage. For another class of Americans, Clinton brought discipline: long prison stretches for drug users; perpetual insecurity for welfare mothers; and intimidation for blue-collar workers whose bosses Clinton thoughtfully armed with the North American Free Trade Agreement. The rich got the carrot, the poor got the stick. The beginning of a pattern?

What you hear today from Clinton apologists is that the mass imprisonment of people of color was an “unintended consequence” of the 1994 crime bill. This is flatly, glaringly false, and the final, ugly chapter of the crime bill story confirms it.

Back in the early 1990s, and although they were chemically almost identical, crack and powder cocaine were regarded very differently by the law. The drug identified with black users (crack) was treated as though it were 100 times more horrible than the same amount of cocaine, which is a drug popular with affluent professionals. This “now-notorious 100-to-one” sentencing disparity, as the New York Times put it, had been enacted back in 1986, and the 1994 crime law instructed the US Sentencing Commission to study the subject and adjust federal sentencing guidelines as it saw fit.

 The Sentencing Commission duly recommended that the 100-to-1 sentencing disparity be abolished, largely because “The 100-to-1 crack cocaine to powder cocaine quantity ratio is a primary cause of the growing disparity between sentences for black and white federal defendants.” By the time their report was released, however, Republicans had gained control of Congress, and they passed a bill explicitly overturning the decision of the Sentencing Commission. (Bernie Sanders, for the record, voted against that bill.)

The bill then went to President Clinton for approval. Meanwhile, Shortly before the bill came to his desk, he gave an inspiring speech deploring the mass incarceration of African Americans. “Blacks are right to think something is terribly wrong,” he said on that occasion, “… when there are more African American men in our correction system than in our colleges; when almost one in three African American men, in their twenties, are either in jail, on parole, or otherwise under the supervision of the criminal system. Nearly one in three.”

Two weeks after that speech, however, Clinton signed the bill retaining the 100-to-1 sentencing disparity, a disparity that had brought about the lopsided incarceration of black people. Clinton could have vetoed it, but he didn’t. He signed it.

Today they claim mass incarceration of African Americans was basically collateral damage, but for that to be true, Clinton would have not only had to be unaware of the Sentencing Commission’s findings but he would also have been unaware of the newspaper stories appearing all around him on the issue.

Even civil rights organizations had led a telephone campaign to pressure the president to veto the bill. At a rally he organized around that period, the Rev Jesse Jackson said that Mr Clinton had the chance, ‘with one stroke of your veto pen, to correct the most grievous racial injustice built into our legal system.’

Maybe Bill Clinton didn’t understand what everyone was saying, or the speech he himself gave about how terrible African Americans’ incarceration was, otherwise, why would he and his wife be claiming today that it was all an accident?

It did happen, though, and you can find Bill Clinton’s signing statement on the website of the American Presidency Project. Yes, the 100-to-1 disparity was finally reduced in 2010, after decades of decimating African American families, but Democrats can’t keep ignoring what Clinton did in 1995.

As a matter of fact, Democrats can’t keep ignoring all the things Clinton did during his presidency which helped in no small measure to bring this country to this economy of the ‘haves’ and the ‘have nots.’   Ignoring these facts, at this point, looks like the ostrich which buries its head in the sand under the illusion that it cannot be seen, because Americans know.

Like the popular movie “I know what you did last summer,” Americans know what role Democrats played in the lead up to the economic mess this country is in today, and the blame is finally getting to where it belongs. We live in an information age, and information is getting around more widely and quickly than ever.

What Democrats need to do is acknowledge what everyone already knows, apologize, and take concrete steps to move away from the neoliberalism that Bill Clinton established in the party. Claiming that what everyone knows happened didn’t happen is never the way to go.

While Bill Clinton’s neoliberal policies created a short term boom in the economy, it’s always the long term effects that are more important, and the long term effects of those policies have been devastating. He and his backers knew what was going to happen, but probably believed they would be long gone, and in the clear by the time the shit would hit the fan.

What they didn’t count on was the manner in which information sharing would evolve over the following years. The Internet, especially, Google has not been very kind to the Clintons.

 

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