Robert Reich Wrongly Claims Bill Clinton Inherited a Recession
The staggering ignorance and/or blatant dishonesty of liberal economic commentators never ceases to amaze me.
Consider the following item from former Clinton labor secretary Robert Reich published at the Huffington Post moments ago (picture courtesy Life magazine):
The recession Clinton inherited was relatively small, and caused by the Fed raising interest rates too high to ward off inflation.
The recession Clinton inherited? What recession?
According to the National Bureau of Economic Research - the group charged with determining the official start and end dates for such things - the early '90s recession ending in March 1991. As the Commerce Department's Bureau of Economic Analysis website indicates, the gross domestic product grew by 2.7 percent in the 2nd quarter of that year, followed by gains of 1.7 and 1.6 percent in the remaining quarters.
And that's when things really started cooking, for the first quarter of 1992 saw a GDP rise of 4.5 percent followed by 4.3, 4.2, and 4.3 percent in the subsequent quarters.
As such, when Clinton took office, quite contrary to what his former labor secretary might think, the economy was booming.
Now, in fairness, despite this GDP expansion, unemployment continued to rise throughout much of 1992 not peaking until June of that year. But this was by no means out of the ordinary as companies normally take their time in adding to payrolls once business begins to improve.
Regardless, calling what Clinton inherited a recession is either the height of ignorance or blatant dishonesty.
Of course, it's really not surprising to see this from someone affiliated with that administration, as Clinton continued to tell voters the economy was in a recession right up until Election Day.
His view of things conveniently changed though when it was announced three weeks later that the GDP in the third quarter had grown by an unexpected 4.2 percent, and he announced that the middle-class tax cuts he had campaigned on were no longer necessary.
But there was more to Reich's trickery:
Bill Clinton presided over an economic boom engineered by Fed chair Alan Greenspan, who felt confident he could drop interest rates far lower than anyone expected without risking inflation. The result was 4 percent unemployment in many parts of America, as well as the best jobs recovery in history. [...]
But the economy's underlying structure remained as it had been before, including stagnant wages for most Americans. Within a few years the middle and working class was treating their homes as ATMs, borrowing trillions of dollars in order to maintain their standard of living, and at the same time demand enough goods and services to keep almost everyone in jobs.
Interesting how Reich completely ignored the impact of an unprecedented technological boom and a stock market bubble on both the economy and employment.
Yes, Greenspan's easy money policy played a huge role in the growth we saw during the tail end of the '90s, but as we've seen in the past several years, there's more to an expanding economy than low interest rates.
What Clinton supporters all seem to ignore is that much like the somewhat fallacious nature of the economic expansion under George W. Bush, the '90s was also an asset-bubble based boom that was unsustainable.
This not only padded the payroll numbers, but also the tax receipts.
As such, the constant congratulations media give to the 42nd president for his booming economy and unified budget surpluses should be tempered with the qualifier of the unsustainable nature of both.
If Intel wouldn't have figured out how to go from a 486 to a 586 platform in its computer chips, and routers hadn't been invented to enable average people to access the internet - both things having nothing to do with Clinton or Nobel Laureate Al Gore for that matter! - the '90s recovery would have looked far different as would the Clinton legacy.
An accurate assessment of that decade seems essential not just from a media standpoint, but also an economic policy one.
As we muddle through our third straight jobless recovery, we should be honest with what happened to get us out of the previous two if we want a prayer of getting out of this one.
As I asked NewsBusters and Fox Forum readers almost two years ago, can we grow our economy without a bubble?
As we are now almost a year and a half into this "expansion" with unemployment still at a staggering 9.8 percent, that question seems just as important today as it was on January 10, 2009.