Will Marshall and I certainly agree on one point: Bill Clinton’s economic policies “were more progressive than he gets credit for.” I’d emphasize that many of those policy initiatives ended in failure, but nevertheless, Marshall is right that to simply label Clinton a “neoliberal” would be a considerable mistake, even as the contemporary meaning of that pejorative word has become far too fuzzy and expansive. A consideration of Clintonite progressivism is one of the main themes in my new book, A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism.

Marshall and I disagree on what constituted the actual content of Clinton’s progressivism. While Clinton was certainly a leading figure in the political universe constructed by the “New Democrats,” whose major institutional expression was the Democratic Leadership Council (DLC), he was hardly a creature of that political tendency. Indeed, in his campaign and in the first couple of years of his Administration, Clinton put DLC initiatives on the margins and instead pushed programs that had been condemned as “liberal fundamentalism” in the DLC’s famous 1989 manifesto, “The Politics of Evasion.” Clinton’s health security plan sought to restructure and manage one-seventh of the U.S. economy, the kind of ambitious reorganization of corporate America that the DLC thought hostile to market forces and rooted in New Deal-era thinking. And his effort to “manage” trade with Japan, pushed forward by industrial policy advocates like Jeffrey Garten, Laura Tyson, and the President himself, was anything but free trade. Compared to NAFTA, which opened the relatively small Mexican market to greater U.S. trade and investment, the conflict with Japan, then the second-largest economy in the world, was far more consequential. Welfare reform, while eventually passed in 1996, was put on Clinton’s back burner during most of the President’s first term. Indeed William Galston, a key architect of New Democratic thinking, remembered that in the early years of the new Administration, he saw himself as an “alien anthropologist” within an Administration where his like-minded comrades seemed but “a few raisins in a very large cake.”

Thus Marshall mischaracterizes the main thrust of Clinton’s 1992 presidential campaign. Strategist James Carville famously posted the slogan “The economy, stupid” on the wall of the Little Rock campaign war room. It was designed to remind everyone to keep a laser focus on the economic welfare of middle-class Americans and avoid the culture war memes pushed forward by an increasingly desperate Republican Party as well as by those in the DLC camp. The latter favored small-bore proposals like community policing and national service for young people, and they ignored or favored the status quo on the big economic issues, including health provision, tax policy, and trade—issues that would prove crucial to the success or failure of the Clinton Administration. The New Democrats thought that middle-American voters would be won to the Democratic banner through an appropriation—perhaps lite and judicious—of GOP culture war themes.

So it was that Clinton, heeding the advice of the cynical Dick Morris as well as DLC-oriented advisers like Bruce Reed and Elaine Kamarck, signed the welfare reform of 1996. Marshall is correct that poverty did in fact decline in the late 1990s, though the degree to which welfare reform per se, with its draconian work requirements and time limit cutoffs, contributed to that phenomenon is hard to say. But the DLC’s main interest in welfare reform was not actually its impact on the lives of the poor or near poor, but as a cultural marker designed to counter GOP demagoguery on that issue. When Clinton announced that he would sign the bill in August 1996, shortly before that year’s Democratic convention, he asserted: “After I sign my name to this bill, welfare will no longer be a political issue. The two parties cannot attack each other over it.” The welfare system did become less of a political football in subsequent campaign cycles, but the underlying racialization of American social policy remained as divisive as ever. “I really believed that if we passed welfare reform,” Clinton later remarked, “we could diminish at least a lot of the overt racial stereotypes that I thought were paralyzing American politics.” But as the Clintons and so many other liberals have come to understand, there is no way to appease the right—from George W. Bush to Donald Trump—on any cultural issue and come out a winner.

Will Marshall calls the 1990s “a golden age of pragmatic liberalism,” but I’d argue that the policy victories within the Clinton Administration were devoted to a set of propositions that were in fact highly ideological. While I have emphasized that Clinton and the more progressive elements in his Administration sought various ways to manage and channel investment in a capitalist economy, Treasury officials Robert Rubin and Larry Summers, plus Alan Greenspan—whom Clinton twice appointed chair of the Federal Reserve—held fast to a set of economic ideas that history has shown to be highly problematic. These figures were seduced by the vision of a Silicon Valley-oriented “new economy” that would substitute technological innovation for enforcement of antitrust laws and eliminate the need for banking and stock market regulation, and they asserted that introducing capitalist property relations abroad—from Russia to China—would undoubtedly create the basis for a free press, civil society, and the growth of a stabilizing middle class.

In the crucial budget debates of 1993, Rubin and other economically orthodox figures within the Administration argued that only a balanced budget would convince the bond traders of the world that government spending would not “crowd out” private investment, thus generating interest rates low enough to spark an investment boom. This highly ideological argument, widely accepted from the Treasury to the Office of Management and Budget, irritated Bill Clinton no end, which is why he cursed the bond market in periodic moments of distemper. And Clinton was right, if ineffectual, because there was little relationship between an austerity budget and a low-interest rate economic environment, which Rubin would come to acknowledge in his memoirs and which President Biden is demonstrating today. But the damage was done, early in the Clinton years, when the liberals lost their battle for a more expansive and stimulative fiscal policy.

Marshall reiterates key New Democratic themes when he argues that Clinton and his DLC sponsors overcame a long presidential losing streak “widely attributed to an exhausted liberalism,” which he asserts “had degenerated into little more than a stapled-together sheaf of interest-group demands.” Of course, those were the “interest groups” that constituted the heart of Democratic Party voting power: civil rights organizations and the millions of African American voters they represented, trade unions whose current revitalization holds untold social promise, environmental groups that sought to politicize and regulate investment decisions, and what was then called the gay rights movement. The congressional liberals who defended an updated version of the New Deal’s social and regulatory legacy were hardly pandering to a set of special interests.

In his essay, Marshall is rightly skeptical of the word “neoliberalism,” a pejorative encompassing policy ideas disdained by many liberals as well as some conservatives, with the latter particularly hostile to “globalizers” and Silicon Valley. However, there are good reasons to hold that by the end of Clinton’s second term, his Administration did indeed embody a neoliberal approach to economic issues both global and domestic, a stance that would generate enormous damage in the years just after he left office. In my book recounting economic policymaking in the Clinton era, I posit that the unfettered and unregulated mobility of capital, in all its variegated forms, constitutes the essence of contemporary neoliberalism. This encompasses not just free trade and global investment, but also the deregulation of finance at home and policies, both fiscal and monetary, that would ensure a regime of low interest rates and a strong dollar, both of which Wall Street found highly attractive. Industrial America was happy to take the low interest rates, but found free trade and a strong dollar deadly to any effort designed to scrape the rust off the steel belt. Thus, I call the effort to “manage” trade with Japan, the key Clinton trade initiative during his first term, “a detour on the road to neoliberalism.” It failed, but the attempt was indicative that there was a real debate inside the Administration on such issues.

All this is important because it explains how and why Clinton can be denounced by progressives as a neoliberal when he and several of his close advisers were also advocates of so many of the welfare state initiatives that Marshall highlights. Treasury Secretary Rubin and National Economic Council Director Gene Sperling, neoliberal ideologues of enormous influence, were nevertheless proponents of a modest welfare state. Sperling later wrote a book titled The Pro-Growth Progressive defending Clintonite welfare state initiatives while ignoring Clinton’s role in the deregulation of finance and the growth of the derivatives monster. (Sperling today is a top aide to Joe Biden and an advocate of the industrial policy initiatives put forward by the present Administration, an ironic shift in economic outlook from the one he propounded 30 years ago.) Rubin, in fact, opposed Clinton’s 1996 welfare reform on the grounds that capitalism produces victims whose misfortune is hardly their own fault. But in the larger perspective, the neoliberal financial posture advocated and achieved by such Clinton Administration figures stood in contradiction to their social policy progressivism. If budget deficits were anathema and the regulation of capital out of the question, then any effort to redistribute income, strengthen unions, or construct a stable prosperity was untenable, as history would demonstrate during the first decades of the twenty-first century. After the Great Recession, the Obama Administration, where Robert Rubin acolytes were in charge of economic policy, presided over years of slow-growth austerity; in contrast, President Biden’s decision to run the economy hot after the pandemic, even if that entailed large budget deficits, has generated a rapid recovery and a tight labor market, a good environment for a revival of the labor movement.

Moreover, Marshall still longs to apply many of the discredited policy solutions of the past to current social and economic problems. For example, he cavalierly characterizes “public school choice” as a solution available to families “trapped in failing urban schools.” But today, it has become clear that the growth of charter schools constitutes a stalking horse for right-wing attacks on the entire system of public education, even as the bulk of the Democratic Party has rejected school choice as an anti-union, rent-seeking educational failure that discriminates against an entire bottom stratum of the urban population, especially those whose English skills are poor and whose home life is unstable.

Indeed, it is hard for me to fathom Marshall’s political/policy posture when he criticizes progressives for denouncing the manifest inequalities proliferating in our society and—yes—the victimization of millions of Americans at the hands of a “rigged” economy that has generated a new cohort of billionaires amidst a working population whose incomes have stagnated. His solution: tell a “hopeful and uplifting story of how today’s economic changes and technological advances can make their lives better.” Successful politicians do have to envision a future better than the past, and a policy path toward getting there, but just telling an optimistic story is going to fall on millions of skeptical ears. The lesson we must draw from the Clinton era is that we need a government with the will and capacity to tax, regulate, and channel the ebb and flow of capital from Silicon Valley to Wall Street, from China and Mexico to the new electric vehicle and silicon chip factories arising in middle America. If we fail to learn that imperative, any prosperous moments, such as those years of low unemployment enjoyed by Americans in the late 1990s, will be but fragile economic interludes.