The complicated history of Bill Clinton and the economy

For someone who says America is still great – and doesn't need to be great again – Hillary Clinton has taken a very nostalgic turn.

At a campaign stop in Kentucky this week, the Democratic presidential front-runner told a supporter that her husband, former President Bill Clinton, would be put in charge of "revitalizing the economy."

"I want to help bring back the economy that worked for everyone in the 1990s," Mrs. Clinton said, according to The Washington Post. "I've already told my husband, if I'm so fortunate enough to be president and he's the first gentleman, I expect him to go to work … and get incomes rising."

To some who have worked with Mr. Clinton, he combines the right balance of economic acumen and political experience for the task. The question is whether that acumen or experience has been rendered moot by the country’s changing economy and political dynamics.

The economic and political challenges are very different today than in the 1990s. Relative global peace, low oil prices, and the dot-com boom helped lift the United States economy under Clinton from a recession through one of the longest sustained periods of economic growth in the nation’s history. And through much of his presidency, Clinton was able to work constructively across the aisle with a Republican-controlled House and Senate.

The next president will adopt an economy facing wage stagnation and growing income inequality, not to mention historic levels of political polarization.

As a sign of how much has changed, two core principles of Mr. Clinton’s economic philosophy – free trade and unshackling Wall Street – are essentially what insurgent voters in both parties are fighting against.

Two of Clinton's main economic achievements were the creation of the North American Free Trade Agreement and the passage of the Financial Services Modernization Act in 1999, a financial deregulation bill allowing banks, insurance companies, and securities firms to merge.

"We're sort of diametrically opposed on these issues today compared to where we were in his presidency," says Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.

The deregulation of the financial sector Clinton oversaw, and which some blamed as a partial cause of the Great Recession, has since been scaled back with the 2010 Dodd-Frank Act. And both Bernie Sanders and Donald Trump have vigorously questioned free trade, forcing Mrs. Clinton to back off her support for the Trans-Pacific Partnership. 

"There's a bit of an anti-trade vein running through this [election] cycle, which again was sort of the polar opposite of what [Mr. Clinton] was pushing and the policies he pursued in his administration," says Professor Snaith.

"But the [current] environment policy-wise, regulation-wise, is not conducive to the type of growth that happened during the Clinton administration," he adds.

To some officials who worked with Clinton, though, his value is not in his adherence to those particular policies, but in his ability to diagnose a problem and work a solution.

"Knowing what to do really requires high economic intelligence. Knowing how to do it requires political skills, and you need both in order to get things done," says Robert Lawrence, an economist at the Harvard Kennedy School of Government and who served on the Council of Economic Advisers during the Clinton administration. "He had both, he has both." 

There was more to Clinton than free trade and Wall Street, adds Jeffrey Frankel, another economist at the Harvard Kennedy School of Government who served on the Council of Economic Advisers during the Reagan and Clinton administrations.

"Globalization, technological change, the issues of regulation and deregulation, issues of fiscal policy, the tax system, I see them as basically the same" no matter the era, Mr. Frankel says.

"The big issue is pretty much the same," he adds. "You need a safety net."

Clinton advanced several policies to help the working poor, including reducing the payroll tax and expanding the earned income tax credit, and during his administration median wages grew and labor force participation increased. Unemployment also hit its lowest mark in decades.

Of course, how much credit should be given to Clinton – or any president – for the performance of the economy is a matter of debate. Lots of other factors come into play.

And in the polarized Washington of today, Clinton would be hard-pressed to get such bills passed. Indeed, Clinton represented a breed of Democrat that now no longer exists: the Southern moderate.

"We've seen a disappearance of moderates in the Republican Party, but we've also seen it in the Democratic Party," says Shanna Pearson-Merkowitz, a political scientist at the University of Rhode Island.

In that way, Clinton potential success would hinge just as much on his ability to find partners in Congress. That means having strong relationships with legislators.

President Obama made Joe Biden his vice president in large part because Mr. Biden’s close relations with legislators, notes Professor Pearson-Merkowitz. Clinton would fulfill a similar role for his wife, she says.

"The extent to which Bill Clinton would be effective at managing the economy, to the extent those policies have to go through Congress, is based on how good he is at working with Congress," she says. "I don't know if he's maintained and cultivated relationships with congressmen, and that's how you get things done.”