Clinton’s Long Economic Shadow, Pt. 2

By Nelson Lichtenstein

Tagged Bill ClintonEconomicsneoliberalism

This is the fourth part of an exchange with PPI President Will Marshall. Read parts 1, 2, and 3.

Will Marshall charges that pro-labor progressives like myself remain critical of Bill Clinton because he “didn’t set out to transform capitalism.” True, Clinton wasn’t the radical of our desire—no Bernie Sanders or Elizabeth Warren, let alone a President Franklin Roosevelt. But in the whole era since the late 1970s, the main task of the left has been not to yank the economy toward some collectivist utopia, as Marshall alleges, but to thwart the effort by Republicans and centrist Democrats to undertake their own quite radical, “neoliberal” transformation of U.S. capitalism. Clinton could see the problem, and in the early years of his Administration he sought to do something about it. But in the end, Clinton’s deregulation of finance and telecommunications, his failure to use the budget surplus in any substantially progressive fashion, and the unmanaged expansion of world trade with nations that suppressed working-class voice and living standards enhanced the power and privilege of capitalist radicals from Wall Street to Silicon Valley.

So, while Clinton did expand the Earned Income Tax Credit and the Children’s Health Insurance Program, raise the minimum wage, and preside over a real increase in wages for the bottom of the working class, such reformism had little impact on the reactionary trajectory that was restructuring the economy, eviscerating the labor movement, and weakening other elements of the U.S. welfare state, including Social Security, which some Clintonites were willing to begin to privatize. The fact that Clinton ended his presidency with a 65 percent approval rating proved no insurance against the dot-com bust of 2001, the financial meltdown of 2008, the continued growth of inequality throughout the first decades of the twenty-first century, and the rise of right-wing forces taking advantage of such social and economic maladies.

What is “economic determinism”? It is a pejorative that Marshall pins on the American left, and that could apply to the not so left as well, because I think the bulk of the Democratic Party believes that enhancing the economic well-being of ordinary Americans remains an essential, party-defining task whose fulfillment will generate a decisive political payoff. So, if Marshall and like-minded strategists got their way, does that mean that liberals should abandon any effort to raise the living standard of the working class, discard James Carville’s “The economy, stupid” as a mere slogan, and instead emphasize culturally inflected programs not unlike welfare reform or national service, which the DLC championed during Clinton’s 1992 campaign? That hardly seems a winning strategy. When Clinton ran for office, working-class incomes had stagnated for nearly two decades; today, they have barely inched upward in almost half a century. If nothing is done about that, the Democrats are doomed. (And I’d add here that most Democrats, including the current President, were enthusiastic supporters of the United Auto Workers in its fight to boost wages back to the level extant before the Great Recession. I hope Will Marshall also endorsed that effort.)

And a note here on the Clinton-Gore-William Galston-Elaine Kamarck “reinventing government” initiative lauded by Marshall. Direct federal government payrolls declined during the Clinton presidency, but this was largely a function of downsizing the post-Cold War Defense Department and outsourcing many other jobs. However, the employment count of those funded by the federal government—as contractors and grant recipients, or via block grants to the states and other mechanisms—actually increased substantially during the 1990s, even as the core institutional capacity of many governmental agencies eroded.

Charter schools are another form of outsourcing and privatization that Marshall heartily endorses. I’m happy to align myself with U.S. teachers unions in opposition. Two issues are at stake. First, are charter schools superior to traditional public ones when it comes to student performance? The affirmative answer offered in the 2023 study cited by Marshall has been subject to withering critique, summarized in a 3,500-word Washington Post article titled “Why What Looked Like Good News for Charter Schools Actually Wasn’t.” The study by the Center for Research on Education Outcomes came out of the conservative Hoover Institution—not the Stanford Graduate School of Education—and was underwritten by charter school advocates and funders, including the Walton Family Foundation.

But second, and equally important, the charter school movement, which did indeed begin among liberals and civil rights veterans as an effort to improve education for minority children, has been largely captured by those on the right—and not only the evangelical right—who want to destroy a vital public resource and the unions that defend it. It is simply not true, as Marshall argues, that progressives hostile to the growth of charter schools have opened the door to Republican voucher schemes. Those funding and advocating for charters—billionaires like the Waltons, the Fisher family of the Gap clothing empire, and California homebuilder Eli Broad—have made little effort to distinguish the push for charters from their efforts to restrict the power of elected school boards and advance state-level voucher plans that divert public funds to private schools.

Nor is it true that the defenders of public education have “no school reform agenda of their own.” On the contrary, they have called for “community school” programs, in which the neighborhood school provides wraparound social services, from emotional counseling for students to parent participation in school governance. As opponents of privatization in the Clinton and Obama years argued, so argue organized teachers today: Success requires funding, and that is why successful progressive unions like the United Teachers Los Angeles and the Chicago Teachers Union have made enhanced funding integral to their contract negotiations and have waged citywide strikes on behalf of that program.

It is sometimes hard to know to which political party Will Marshall lends his allegiance. When he writes that most Americans “aren’t ready to trade market competition and free enterprise, which they rightly link to America’s world-leading living standards and technological prowess, for democratic socialism,” he sounds like a Republican, if only because socialism is hardly the only alternative on offer to the dysfunctionalities of our twenty-first century version of a market economy. The task before us today is the reanimation of the social democracy once linked to the urban industrial wing of the New Deal. Some old ideas, properly updated for our time, are still worth fighting for.

This is the fourth part of an exchange with PPI President Will Marshall. Read parts 1, 2, and 3.

Read more about Bill ClintonEconomicsneoliberalism

Nelson Lichtenstein is Research Professor at the University of California, Santa Barbara. He is the author, with Judith Stein, of A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism.

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