When historians write of Bill Clinton's presidency, they may stop with the personal scandal that led to his impeachment. But if they go beyond that, my guess is that they will focus on two years--1993 and 1999--and two topics, taxes and trade.
The best claim that can be made for Clinton as a significant, positive force for the nation lies in his willingness to fight the Republicans on taxes and his own party, the Democrats, on trade. On both issues, he has defied the odds and, to a large extent, succeeded.
In 1993, he managed to push through Congress, over unanimous Republican opposition, a budget that raised taxes on upper-income Americans, expanded tax breaks for the working poor and, most important, began to slice away the mountainous deficits he had inherited from the Reagan-Bush years.
In that same year, he lobbied successfully for congressional approval of the North American Free Trade Agreement (NAFTA), bucking determined opposition from the leaders and most members of his own party in the House and Senate.
Those two measures contributed greatly to the near-record run of prosperity this country has enjoyed this decade. And they made it possible for the world to cope with repeated economic challenges--in Asia, in Russia, in Mexico and elsewhere--that otherwise might have set off an international financial crisis.
The two landmark measures of 1993 also unleashed market forces and political changes that are reflected in the two signal events of 1999--the rejection of a Republican plan for a massive, across-the-board tax cut and the accession of China, the world's largest nation and one of its fastest-growing economies, into the open system of international commerce regulated by the World Trade Organization (WTO).
Because of these victories, Clinton can legitimately speak this week to the WTO's conclave in Seattle, launching a new round of barrier-lowering trade negotiations, as a leader whose tenure has advanced the economic well-being not only of his own people but of the world's population.
To be sure, important issues remain. Clinton faces another tough battle in Congress next year for approval of legislation that will permanently grant normal trade relations to China, a precursor to its formal admission to the WTO. And the "Millennium Round" of trade talks being launched in Seattle likely will not conclude until his successor has been elected. Finding ways to include labor protections and environmental standards in the code of international commerce will test the ingenuity of America's negotiators.
But the distance we have traveled in the debates on both taxes and trade since Clinton took office is remarkable. Recall that he was able to pass his first budget--in a Democratic-controlled Congress--by only a one-vote margin in both the House and Senate, because even a modest increase in the marginal tax rate for top-bracket earners was so controversial that many politicians were afraid of the consequences. Republicans argued, with seeming sincerity, that it would cause a recession, and many Democrats feared they might be right.
As Jonathan Chait points out in an important article in the Dec. 6 issue of the fortnightly magazine the American Prospect, the bedeviling question of 1993, whether the lowering of interest rates by "the Fed and the bond market [can] overcome the effects of tight budgets, is no longer in doubt, and therein lies the great transformation of liberal economics." Because Clinton (with major help from Robert Rubin and Alan Greenspan) demonstrated the potency of combining a tight fiscal policy with an easier monetary policy, we now have economic growth, budget surpluses, low unemployment and minimal inflation all at the same time.
The Republican majority's effort to reverse that policy by passing a big tax cut fell flat this year. In the forthcoming issue of the Heritage Foundation's Policy Review, conservative economist Bruce Bartlett argues that "the tax revolt is dead in America--and for perfectly rational reasons," namely, wealth is rising in a period of sustained economic growth and the increased progressivity of the tax structure means it is mainly those with wealth who are paying the additional taxes.
There has been a similar transformation in the politics of trade. Except for Pat Buchanan, every presidential candidate is running as an advocate of reducing international barriers and expanding world commerce. The protesters in Seattle are a healthy reminder that the benefits of free trade must be weighed in human terms, not just increased profits, but the course for the future seems clearly set. That, too, is part of Clinton's healthy legacy.