Basic Economics: Video: Uncommon Knowledge: Peter Robinson Interviewing Milton Friedman on Bill Clinton in 1999
Milton Friedman, made the case that the economy deserves most of the credit for the economic boom of the 1990s. That it was really an economic expansion that started in 1983, when the economy broke out of the 1982-83 recession. But what he doesn’t mention is that was that we had a fairly bad recession in 1990-91 and we had mounting debt and deficits, that we were supposed to still be stuck with ten years later. President H.W. Bush, essentially inherited the recession of the early 1990s, with rising interest and inflation rates as well as unemployment. That he addressed in 1990 with the first of two deficit reduction acts. That included budget cuts, budget caps and tax hikes.
Which President Bush got killed for by right-wingers in the 1992 presidential election and one reason why he got a primary challenge from Pat Buchanan in 1992 as well. President Clinton, inherited a large debt and deficit in 1992, an economy that was growing, but barely, with low job growth, high inflation, interest and unemployment rates. And by the time President Clinton left office in 2001, the economy was booming, with 4.2% unemployment, a falling national debt and the first budget surplus since 1969. President Clinton, of course doesn’t deserve all the credit for this, but he did lay down policies that helped bring this about.
In 1993 alone, President Clinton got through Congress two foreign trade deals. NAFTA and GAT and a deficit reduction act, that had budget cuts and tax hikes on the wealthy. NAFTA and GAT allowed for more American products to be sold in Canada and Mexico, as well as more jobs in America to make those products. The Deficit Reduction Act helped to bring down interest and inflation rates, which lowered prices, so people had more money to spend. Which meant consumer spending went up, which led to higher economic and job growth.
The actual size of the Federal Government went down under President Clinton. Now the Republican Congress’s deserve some credit for that, but that process started under President Clinton during the Democratic Congress of 1993-94. It’s really the private sector that deserves credit for the economic boom of the 1990s. Business’s and workers, but President Clinton deserves credit as well. The economy did take off in the 1980s under President Reagan and the Economic Recovery Act of 1981.
But that the 1983 economic expansion lasted about six years from 1983-89. And the economy started to slide in 1989 and we had a recession in 1990-91. The 1990s was a different period, because information technology took off, creating millions of jobs in that decade. With all sorts of new tech companies, with the internet coming on-line in 1991 or 92, with cell phones becoming common at about this time as well.