President Bill Clinton's Economic Policies
Why President Bill Clinton's Economic Policies Were Effective
William Jefferson Clinton was the 42nd U.S. president, serving from 1993 to 2001. He was the first Democratic president to win re-election since Franklin Roosevelt. Clinton is the most admired president in the past 25 years. Why is he so popular, despite being impeached? Primarily because his economic policies created a decade of prosperity. During his presidency:
- More than 18.6 million new jobs were created, more than any other president.
- Unemployment dropped from 7.5 percent to 4 percent.
- Home ownership was 67.7 percent, the highest rate ever recorded.
- The budget deficit dropped from $290 billion to a budget surplus of $128 billion.
- The poverty rate dropped to 11.8 percent.
What exactly did Clinton do? He enacted contractionary fiscal policy. First, he raised taxes with the Omnibus Budget Reconciliation Act of 1993, his first budget. The Deficit Reduction Act raised the top income tax rate from 28 percent to 36 percent for those earning more than $115,000, and 39.6 percent for income above $250,000. It increased the corporate income tax from 34 percent to 36 percent for corporations with incomes over $10 million. It also ended some corporate subsidies, taxed Social Security benefits for high-income earners, and created the earned income tax credit for incomes under $30,000.
It raised the gas tax by 4.3 cents per gallon. It also limited the ability of corporations to claim entertainment tax deductions.
Second, he cut spending by reforming the Temporary Assistance for Needy Families program, commonly known as welfare. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 required recipients to get a job within the first two years. It limited the total time they could receive benefits to five years. The number of TANF recipients fell by two-thirds. It went from 12.2 million in 1994 to 4.5 million in 2004.
Clinton regrets that he did not restructure Social Security and Medicare. He also failed to achieve universal health care. In a June 20, 2004, interview with 60 Minutes, he admitted, "I'm sorry on the home front that we didn't reform health care and that we didn't reform Social Security."
Although Hillarycare did not pass, Clinton used its momentum to create two other health care laws. He worked with Democratic Senator Edward Kennedy of Massachusetts and Republican Senator Nancy Kassebaum of Kansas who sponsored the Health Insurance Portability and Accountability Act of 1996. It permits workers to keep their company-sponsored health insurance plan for 18 months after they were laid off.
Hillary worked with Senators Kennedy and Orrin Hatch to sponsor the Children's Health Insurance Program. It subsidizes health insurance for children in families that earn too much to qualify for Medicaid. It covers 8 million children.
From Deficit to Surplus
Clinton created a total $63 billion surplus during his two terms. Here's the year-by-year breakout:
- FY 2001 - $128 billion surplus.
- FY 2000 - $236 billion surplus.
- FY 1999 - $126 billion surplus.
- FY 1998 - $69 billion surplus.
- FY 1997 - $22 billion.
- FY 1996 - $107 billion.
- FY 1995 - $164 billion.
- FY 1994 - $203 billion.
Compared to the deficits of other presidents, Clinton did very well. Despite this, he did not do as well when comparing debt by president. There are many reasons why the sum of all budget deficits is lower than the amount added to the debt.
William Jefferson Clinton graduated from Georgetown University and in 1968 won a Rhodes Scholarship to Oxford University. He received a law degree from Yale University in 1973 and entered politics in Arkansas.
He was defeated in his campaign for Congress in Arkansas's Third District in 1974. The next year he married Hillary Rodham, a graduate of Wellesley College and Yale Law School. In 1980, Chelsea, their only child, was born.
Clinton was elected Arkansas Attorney General in 1976. He won the governorship in 1978. After losing a bid for a second term, Clinton regained the office four years later. He served until he defeated incumbent George Bush and third-party candidate Ross Perot in the 1992 presidential race.
Clinton and his running mate, Tennessee's Senator Albert Gore Jr., then 44, represented a new generation in American political leadership. For the first time in 12 years, both the White House and Congress were held by the same party. But that political edge was brief. The Republicans won both houses of Congress in 1994.
Since Leaving Office
As president, Clinton's salary was $200,000 a year with $50,000 in expense. As ex-president Clinton received $969,000 in FY 2016. That includes $215,000 in personnel compensation and benefits. It also includes $218,000 in his own pensions and benefits. He has no travel budget but receives $429,000 for his presidential office space and $62,000 for other costs.
Clinton's net worth was $80 million in 2018. He earned it from speaking engagements and book sales. When he left office, he was $16 million in debt. In his first out of office, he gave 57 speeches and earned $13.7 million.
In 2001, he created the Clinton Foundation. It has five areas of focus: improving global health, increasing education for girls, reducing childhood diseases, creating economic opportunity, and climate change. It works through local community partnerships. He has served as UN Envoy for Tsunami Recovery and is a Special Envoy to Haiti.
He has written five books: “Back to Work: Why We Need Smart Government for a Strong Economy” in 2011; “Giving: How Each of Us Can Change the World,” 2007; “My Life,” 2004; “Between Hope and History,” 1996; “Putting People First: How We Can All Change America,”1992.