Monday, February 22, 2010

At PJM: The Glory of Gridlock

As promised, here's my latest column for Pajamas Media. A preview:

The most significant recent spell of divided government fell during the latter half of the 1990s, when Democrat Bill Clinton faced off against a brand-new majority Republican Congress, the first such pairing since the late 1940s. We look back today on the Clinton/Gingrich period as a rare moment of fiscal sanity thanks to the budget surpluses that ran from 1997-2001, but the reality of those years lay much less in clever economics than in plain, old-fashioned personal enmity.

Each side has a preferred version of history here. The Democratic narrative asserts that a “pragmatic” Clinton administration manned by uber-technocrats like Robert Rubin and Larry Summers “ran the economy” to such an efficient level that booming tax receipts and wise budgeting led to a surplus. The Republican narrative just as strongly declares that a noble GOP congress reigned in Clinton’s tax increases and would-be Great Society Junior expansion of government spending, leading to a period of general prosperity.

Both narratives contain germs of truth. After the electoral upheaval of 1994, Clinton (who, unlike Barack Obama, had experienced losing an election himself) had the good political sense to trim his sails, giving more authority to the relatively business-friendly Rubin camp and much less to the Hillary/Robert Reich left faction. But not even Clinton’s Goldman Sachs Masters of the Universe could have predicted, managed, or controlled the tech boom and ensuing productivity explosion that accompanied it.

It’s notable that the economy remained relatively anemic from 1992-1995 (the “worst economy since the Great Depression” of Clinton’s campaign rhetoric actually recovered in early 1992), only hitting its stride about 1996. Some of the credit for that has to go to the new “obstructionist” Congress — although the record here is also not entirely cut-and-dried. While it’s certainly true that the Gingrich Congress brought much-needed stability by standing firmly in the way of further liberal legislation like the massive 1993 tax increase or HillaryCare, spending in the following Bush/Hastert years tends to indicate that once in power, Republicans were considerably less fond of limited government than they were in maintaining that power through spending.

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