Tidbits about Bill Clinton's Presidency
I recently read Princeton University economist Alan Blinder’s 2003 interview with the Miller Center about his experience with Bill Clinton’s campaign and administration. Here are a hodgepodge of things that I found interesting.
Clinton’s judgement that the budget deficit needed to be reduced was politically driven by the fact that Ross Perot garnered 19 percent of the vote in the 1992 presidential election. Before the transition period, Clinton had not given the budget deficit much attention. According to Blinder:
The perceived political wisdom at the time was that doing so was political poison. After all, deficit reduction is about cutting somebody’s program or raising somebody’s taxes. You don’t have to have studied political science a lot to know that that’s probably not a winning formula, and Clinton was very much aware of that. It was the Perot thing, I think, that changed that.
Around the time of the Republican convention in 1992, during a meeting, Clinton quizzed a team of economists about whether the decline of manufacturing in the United States was something to worry about. The economists who attended that meeting, included Paul Krugman, James Tobin, Lawerence Summers, Laura Tyson, and Blinder himself. According to Blinder, the consensus answer among the economists to Clinton’s question was “no.” Clinton believed otherwise. One economist who took Clinton’s side was Laura Tyson.
Blinder emphasized to Clinton that the success of his deficit reduction program rested on two things. The first was the response of the bond market. The second was the response of Federal Reserve chairman Alan Greenspan. Otherwise, reducing the deficit risked throwing the economy into a ditch.
One of the more fascinating, deep-in-the-weeds tidbits was the influence of then Federal Reserve Chairman Alan Greenspan on Clinton’s deficit reduction program. According to Blinder:
The only part that I questioned [Bob] Woodward on, and he then later showed me the proof—he’s a good reporter—was the notion that the $140 billion number, which is that fourth-year deficit annual target that we settled on, came from Alan Greenspan. I never heard that in any of our meetings, never ever. But one day it was kind of anointed. I remember one White House meeting we came in and we were all around the table, and somehow it had been decided that 140 was the number. And Laura [Tyson] and I looked at each other, Where did that come from? And it was never attributed to Alan Greenspan in any of those meetings that I attended.