With Barack Obama surrounding himself with Clinton-era economic advisers, many have questioned his commitment to changing the system that led to the current economic crisis. Robert Pollin is one of many who have raised this point. An expert on Clintonomics, Pollin points out the similarities between Obama today and Bill Clinton in 1992, including the voices that they are listening to.
Obama and Clintonomics
Producer: Jesse Freeston
JESSE FREESTON, TRNN: In less than one month, Barack Obama will take his oath as the 44th president of the United States. In doing so, he will link his own destiny with that of the global economic crisis that he has inherited. Many have expressed concern with Obama’s decision to surround himself with Clinton-era economic advisers, who have been accused by many of helping to create the current crisis. One such critic is Robert Pollin, author of Contours of Descent, a scathing critique of Clintonomics. Robert notes that the history of Clinton’s transition period as a president-elect in 1992 may serve as a cautionary tale for those expecting drastic measures out of Obama.
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PROF. ROBERT POLLIN, ECONOMICS, UNIVERSITY OF MASSACHUSETTS: When Clinton got elected in 1992, his platform was not that different from Obama’s. Of course the circumstances have changed, the emphases have changed, but it was called “putting people first.” That was the platform on which Clinton got elected. It was about investing in the public infrastructure, stimulating economic growth, stimulating jobs, raising wages. That was the centerpiece. Once he got elected, he immediately came under the sway of Robert Rubin and Alan Greenspan, representing the viewpoint of Wall Street. And the Wall Street view at the time was the necessity of balancing the fiscal budget. And so that became the cornerstone of Clintonomics. Now, Alan Greenspan has now confessed he was wrong.
US House Oversight Committee Hearing
October 23, 2008
REP. HENRY WAXMAN (D-CA), CHAIRMAN, HOUSE OVERSIGHT COMMITTEE: You found a flaw in the reality—.
ALAN GREENSPAN, FORMER CHAIRMAN, US FEDERAL RESERVE: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
WAXMAN: In other words, you found that your view of the world, your ideology, was not right, it was not working.
Now, since Obama’s gotten elected and he’s broadened out his group of advisors, Rubin himself is a major adviser. Larry Summers was also Treasury secretary after Rubin. Rubin, Summers, and the people under Clinton all were cheerleaders for financial deregulation. You can go back and read the economic report of the president. The very last one that Clinton put out in 2000 argued strenuously on behalf of deregulating the financial market. This was only months before the Wall Street crash of 2001. So we have this image of Clinton and Clintonomics as having managed this successful economy. They just barely got out before the financial collapse of 2001. So they are highly responsible with respect to the auto industry as well as the Clinton team, as well as the Republicans. We’re not able to get done something around health insurance. That is the single biggest factor which has made our auto industry and manufacturing in general uncompetitive. Of course there’s bad decisions in Detroit and they need to be shaken up a lot, but in order for us to be competitive in manufacturing, we have to take the burden of health insurance off of the hands of the employers and do it the way every other advanced economy does it, which is to have some serious form of national health insurance.
FREESTON: Given that Obama has surrounded himself with Clinton’s economy’s starting lineup, should we expect a similar post-election transformation out of Obama to the one that we saw with Clinton in ’92, ’93?
POLLIN: I don’t think so, and the reason is that the circumstances have changed so dramatically. We are now in a severe economic crisis, the most severe since the 1930s, far more than what occurred when Clinton was coming into office. The financial markets have collapsed. The legitimacy of financial market players seems to me to be as low as it’s been in 70 years. I don’t quite understand why Robert Rubin himself is still considered a serious figure. I mean, he was Treasury secretary when we deregulated the financial markets, when he’d been manager of Citigroup, which is on the brink of collapse itself. So I think that the dynamic is very different. It’s fluid. I think there’s a lot of opportunity for a dramatic change. I mean, the most specific thing going on now is everybody agrees to have a fiscal stimulus, government spending to put a floor on the economy and to prevent further decline. And everybody agrees that the number, the amount of spending that has to take place, is going to be gigantic, which I support, but even right now Larry Summers and Robin Rubin support. So the task now is to sharpen that argument and get the types of policies in place that will be transformative under Obama. The stimulus program that I would like to see should be at least as large in proportional terms as the stimulus was in 1982 and ’83 under, yes, the ultra-Republican Ronald Reagan. The stimulus then or the increment to the deficit was about two percentage points of GDP. That would mean $300 billion in spending now on top of all this stuff that’s already gone into the financial markets. And what should we spend on? We start with taking care of people that are really hurting. Those are the unemployed, people that are poor, people about to lose their homes. We’ve got to allow people [to] stretch out their loans and let them stay in their homes. That will stabilize their lives, that will reduce uncertainty, and it is the humanitarian thing to do. Now, beyond that, where do we go? We need to invest in public infrastructure and green infrastructure. Now, what I mean by green infrastructure, immediately I mean energy efficiency. The renewable energy investments are important in solar or wind, geothermal, but they’re going to take a little bit of time before they become commercially viable. In the meantime we have the opportunity to make investments in energy efficiency—building retrofits, public transportation, improving the electrical grid systems—that will create jobs immediately, that will drive down energy costs, and over a matter of a year or two. So these are the things that could be done now. And I’ve tried to calculate the job effects. We can generate three million jobs. That doesn’t mean that we immediately eliminate unemployment; it means we counteract the forces of recession that are driving those jobs away from us. So that’s what I would like to see.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.