Bill Clinton's ability to compromise, adjust, "triangulate," is generally considered more impressive than admirable. Republicans have resented it as an unfair survival trick that allowed Clinton to stay in office by stealing the most-popular parts of "their" message, notably welfare reform. Liberals have seen it as a sign that Clinton could be as untrustworthy in public commitments as in some private ones. Nearly all who encountered him in office came away with similar stories: While in his presence they had had no doubt that he heard, understood, and (the crucial part) agreed with the arguments they were making. Once they went away, they found themselves wondering what it was, exactly, he had promised to do.
In the part of his record most likely to be important historically, however, Clinton's talent for compromise will seem not a gimmick but a wise strategy. Let us stipulate that the U.S. economic record of the past eight years was not perfect and that structural problems and inequalities remain. It was buoyed in part by unsustainably rapid investment in computers, the aftereffect of which may contribute to a slowdown this year. Still, something very impressive happened—more impressive than what is indicated by the standard recent discussions about why "a good economy" should have meant smooth sailing for Al Gore.
During a campaign season "the economy" really means the way the leading indicators have behaved in the preceding year—the unemployment rate above all, but also interest rates, stock-market indexes, overall inflation, and a few visible prices such as those for gasoline and food. In the longer run real economic achievements require the creation of new industries, the application of new technologies, and a consequent rise in fundamental levels of productivity and wealth. These two versions of the economy—the political and the real—are ultimately connected. Without new and more-productive industries, inflation and unemployment eventually get worse. But the politically relevant indicators can be pumped up temporarily during times of no true economic improvement, as they were during the borrowed-money booms of the late 1920s and the middle 1980s.
The surprising achievement of Bill Clinton, political genius and economic amateur, is that during his eight years truly new power—and a great deal of it—was added to the nation's economic base. Canals and nascent factories changed the United States—especially the industrial North—before the Civil War. Expanding railroads changed it thereafter—as did the assembly-line revolution at the turn of the century, the spread of motorized travel and airplanes before World War II, and the boom in the scientific-industrial complex of the postwar era.
The 1990s, I suspect, will be seen as another concentrated period in which technology, industry, and investment suddenly created new economic possibilities—a period like the 1950s, let's say, and unlike the 1970s. The Clinton years were when the information-industrial complex reached early maturity and the potential of biotechnology became impossible to ignore. Obviously, no one Administration deserves all the credit for progress that unfolds over decades. Nor does government deserve all the credit for innovations that are mainly private. But a fair reading of Clinton's influence suggests that his decisions, including several crucial compromises, made a major difference.
The most important achievement in political economy in the Clinton years was reducing the federal deficit. Just before his inauguration Clinton held an economic summit in Little Rock, at which academics, business executives, and financiers one after another moaned about how huge federal borrowing to cover debt was making capital too expensive to allow industry to grow. One year later Clinton had rammed through a tax-and-budget bill that turned a chronic deficit into a surplus.
The anti-deficit drive was controversial within the Democratic Party, because Clinton seemed to be truckling to financial markets rather than spending more for education and health. It was bitterly resisted by the Republicans; every single Republican member of Congress voted against the new taxes in the plan. It was an enormous gamble on Clinton's part: he had Al Gore cast the tie-breaking vote in the Senate. The historical judgment has to be that it paid off, for Clinton and, of vastly more importance, for the country.
"The argument that the economic health of the nation required spending political capital on deficit reduction was made in 1993 by Bob Rubin, Lloyd Bentsen, Laura Tyson, Lawrence Summers, and company," wrote J. Bradford DeLong, an economist at the University of California at Berkeley, near the end of Clinton's second term. "But it had been made back in 1983 by Martin Feldstein, David Stockman, and company. And it had been made in 1989 by Richard Darman, Michael Boskin, and company." DeLong concluded,
The difference between Bill Clinton and his predecessors lies not in the advice that he was given, but in the fact that he had the brains to understand it and the guts to follow through ... Lifting the dead weight of the deficit from the economy cost him essentially all his political capital in 1993. And the rewards in terms of faster economic growth have been greater than anyone in 1993 would have dared predict ... Economists will argue for decades to come over how much of the high-tech high productivity-growth boom we are currently experiencing is the result of the high-investment economy produced by the elimination of the deficit. It is a welcome change from the previous sport that academic economists played, that of assigning blame for relative stagnation.
The list of advisers who guided Clinton's decision embodies the triangulation of his economic strategy: Rubin, a rich and widely respected financier whom bond traders regarded with a trust bordering on reverence; Bentsen, a relic of the days when there were conservatives within the Democratic Party; Tyson and Summers, academic economists from mildly offsetting camps within the mainstream (she of the more applied, "activist" school, having written about industrial policy; he from a "purer" theoretical background). And the most concise way to illustrate the moderation and the effectiveness of Clinton's economic program in general is with another list of names. These are appointees who both shaped and administered Clinton's policy, many of whom served for nearly his whole Administration.