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WaPo: Would We Be Better Off Under President Hillary Clinton?

November 6, 2010

We knew it was coming, right? The media honeymoon with Barack Obama is over and now they are wondering if THEY (the media) picked the wrong horse in this race. Of course they are pretending that this has nothing to do with them (the media).

Let me start off by answering the question posed in the article and in the title of this post with a clear “yes” but I also want to deconstruct the media narrative, which I don’t trust. I agree with Dana Milbank (see excerpt below) that Hillary would have had a laser-like focus on the economy and jobs, unlike Obama. That said, I simply don’t trust the media’s johnny-come-lately mea culpa/second-guessing. Call me paranoid. Or just call me sick and tired of the mainstream media. Maybe they should have realized that Obama’s lofty, unrealistic rhetoric during the 2008 primaries was just that- lofty, unrealistic rhetoric. Obama did everything but offer us all free ponies.

Here is an excerpt:

As I sat in the East Room last week watching a forlorn President Obama account for his shellacking, I listened with concern as he described the presidency as a “growth process” and suggested that the midterm setback was somehow inevitable. “You know, this is something that I think every president needs to go through,” he said.

It brought to mind Hillary Clinton’s 3 a.m. phone-call ad from the 2008 campaign, and her withering criticism of Obama: “When there is a crisis . . . there’s no time for speeches or on-the-job training.” I wondered whether Democrats would be in the fix they’re in if they had chosen a different standard-bearer.

Would unemployment have been lower under a President Hillary? Would the Democrats have lost fewer seats on Tuesday? It’s impossible to know. But what can be said with confidence is that Clinton’s toolkit is a better match for the current set of national woes than they were for 2008, when her support for the Iraq war dominated the campaign.

Back then, Clinton’s populist appeal to low-income white voters, union members and workers of the Rust Belt was not enough to overcome Obama’s energized youth vote. But Clinton’s working-class whites were the very ones who switched to the Republicans on Tuesday.


Clinton campaign advisers I spoke with say she almost certainly would have pulled the plug on comprehensive health-care reform rather than allow it to monopolize the agenda for 15 months. She would have settled for a few popular items such as children’s coverage and a ban on exclusions for pre-existing conditions. That would have left millions uninsured, but it also would have left Democrats in a stronger political position and given them more strength to focus on job creation and other matters, such as immigration and energy.

The Clinton campaign advisers acknowledge that she probably would have done the auto bailout and other things that got Obama labeled as a socialist. The difference is that she would have coupled that help for big business with more popular benefits for ordinary Americans.

Clinton, for example, first called for a 90-day foreclosure moratorium in December 2007, as part of a package to fight the early stages of the mortgage crisis with a five-year freeze on subprime rates and $30 billion to avoid foreclosures. But an Obama campaign adviser dismissed Clinton’s moratorium, saying it would “reward people for bad behavior.”

Calls for a moratorium returned a few weeks ago with news of lenders’ foreclosure abuses. Polls indicate public support for a moratorium, but Obama ruled it out. It’s a safe bet Clinton would have done otherwise.

Some differences would have been stylistic. As a senator from New York, Clinton had good relations with Wall Street. As the heir to her husband’s donor base, she would have had more executives in government – envoys who would have been able to ease the uncertainty about tax and regulatory policy that has been crippling business.

Most important, there can be little doubt that, whatever policies emerged, she would have maintained a laser focus on the economy; after all, she did that during the 2008 campaign, when it wasn’t as central an issue. She got little credit, for example, when she gave a speech in Iowa in November 2007 warning about the dangers of new financial instruments. Now, it seems prescient; then, it sounded boring.

There was plenty not to like about Clinton’s campaign, particularly her persistence in the race long after she had a chance. Had she beaten Obama, she might have introduced her own problems (a new entanglement with Iran, perhaps?). But a failure to connect with the common man would not have been among them.

Back in April 2008, a Clinton ad delivered a populist blow to Obama: “When the housing crisis broke, Hillary Clinton called for action: a freeze on foreclosures. Barack Obama said ‘no.’ . . . People are hurting. It’s time for a president who’s ready to take action now.”

I agree with Milbank on a lot of points, but notice what he is saying- or inferring- that Hillary Clinton would have, in effect, cozied up with the very Wall Street interests who caused the global financial crisis- how in the world is that helping the little guy/woman? He seems to imply that Hillary would not have challenged Wall Street and thus not dealt with the underlying problem by championing meaningful Wall Street reform. I find that to be contradictory and so typical of the media. Despite some always claiming the media is oh-so-liberal, they are in fact, very pro-corporate.

In my view, what Hillary probably would have done was deal with the economy and Wall Street reform first thing upon taking office- when corporate malfeasance was on every worker’s radar. She wouldn’t have waited two years to start to try to make the case that the average worker got screwed by Wall Street gambling and corporate tax breaks which sent tens of thousands of jobs overseas. She probably would have extended the Bush tax cuts ONLY for the middle class, realizing that to balance the budget, she can’t hand the top 1% 700billion in tax breaks. She’s been consistently very clear that the wealthy need to pay their share. And keep in mind, most top corporations pay ZERO federal income tax, so don’t think that such populist talk is wealth redistribution- it’s not- it’s simply cutting out some of the ridiculous perks that allow the wealthiest people and businesses to pay less income tax than you and I do. You know, as in zero income tax, which is certainly less than what I pay every year.

Hillary may very well have not even attempted health reform until the economy was in better shape- say, in a second term. But the idea that Hillary wouldn’t have done everything possible to prevent another global economic catastrophe, including taking on Wall Street by championing Wall Street reform, which seems to be what Milbank is suggesting? No, I don’t buy that. I do believe that Hillary likely would have done a much better job of taking on Big Business without all the political fall-out. I do believe Hillary would have navigated that minefield in a more adept fashion. Ironically, Obama’s Wall Street reform has so many loop holes that Wall Street has no business complaining. At all. Nick Kristoff has a very good commentary over at the NYT today about the stupidity of extending all of the Bush tax cuts- trickle down economics has NEVER worked.

I think there is little doubt that a Clinton presidency would have had a much better messaging operation. Why on earth do most Americans still think their taxes have been raised when they are actually lower than they have been in decades? Why do Americans think the bank bailouts originated under Obama, when they originated under Bush? Why don’t most Americans know about the successes of this administration in terms of reigning in insurgents in Afghanistan (controversial, yes, but it sure contradicts the notion that Dems are weak on national security)? The DNC and Obama’s political aides should be ashamed. Nothing rivals the GOP/right wing noise machine but it’s like the Democrats didn’t even TRY to get the facts out. The Clintons are much better at messaging. Milbank is in effect saying that Hillary would have been Republican Lite, but I’m not convinced that is the case. If so, I’m not sure how he can write off the potential reaction of the Democratic base- a group that is incredibly crucial in all get out the vote efforts.

So, while I personally think we would be better off under a President Hillary Clinton, I find Milbank to be a bit disingenuous and a tad late in his analysis. Notice that he gets in a little jab in about the primaries and reminds us that he didn’t like how the Clinton campaign conducted itself in the end. Totally unnecessary. Also, I can’t help but notice that when Republicans suffer huge electoral losses the media chalks it up to the politics of personality rather than ideology. I have NEVER heard the media say “these election results indicate the GOP needs to move more to the center or the left.” Yet when Democrats suffer losses, and this was the case during Bill Clinton’s tenure, their immediate response is to opine that the party is too leftist and needs to move to the right.

Don’t take this post as a defense of Barack Obama, it’s not. Instead, it’s a slap at the media for doing everything they could to impugn Hillary Clinton’s campaign as a business-as-usual, dynastic enterprise while propping up Barack Obama. And now they are trying to evade responsibility for that.

25 Comments leave one →
  1. HillaryFan permalink
    November 6, 2010 11:34 am

    Great post. It’s tempting to see the title of the Washington Post article and think “oh, finally, the media gets it” but I agree with you now that I’ve read it twice and after reading your post- the media is trying to pretend like they had no role in the election outcome and they are doing what they always do- once something becomes unpopular they jump ship. They cheered on the Iraq War (which I supported btw) until it became unpopular and then they pretended they had always been against it. They cheered on Barack Obama and now that he’s not turned out to be the Savior, they are tossing him aside too. I wish they would just do their damn job and be objective.

    You brought up something I didn’t initially pick up on but I think you’re being more liberal than many other Hillary supporters may be why- the whole thing about the Clintons being so pro-corporate. Yes, that perception can help but you bring up a good point about how it could also hurt. I can’t help but think the media would be tearing her apart for corporate cronyism if she had allied herself with Wall St. I also agree that she would have had the guts to really take them on and win, without turning all of Wall Street against the dems. Its a tough political dance but I think they could pull it off.

  2. Thaddeus permalink
    November 6, 2010 12:53 pm

    Good analysis Stacy. Thanks for injecting some realism into the debate and not just doing the fall-back “of course Hillary would have saved the world and we would all be singing kumbaya…” which is what others are taking from this article on conservative websites and on some facebook groups and conveniently avoiding that Milbank was anti-Clinton during the election and ignoring that the tea party would probably be calling her a socialist right about now too.

    I think Hillary would have done more for the economy and less showboating on issues like health reform. Milbank assumes she would have tried health reform but given what happened to her in the 1990’s what makes him think that? It would almost be suicidal.

    The media seem to be pushing this notion that Hillary is really a RHINO- that she’s a hawk that would have bombed Iran and that she is very cozy with Wall Street. I’m not sure if that’s all that helpful to her in the long run because even if it is/was true, the real hawks and Wall Street apologists will always vote GOP/Tea Party.

  3. filipino-american4hrc permalink
    November 6, 2010 1:25 pm

    Would Hillary have reined in Wall Street? You betcha!

    “In a Wall Street Journal opinion piece, Senator Hillary Clinton has advocated addressing the rate of mortgage defaults and foreclosures that ignited this crisis, not just bailing out Wall Street firms: “If we do not take action to address the crisis facing borrowers, we’ll never solve the crisis facing lenders.” She has proposed a new Home Owners’ Loan Corporation (HOLC), similar to that used after the Depression, which was launched in 1933. The new HOLC would administer a national program to help homeowners refinance their mortgages. She is also calling for a moratorium on foreclosures and freezing of rate hikes in adjustable rate mortgages.[96]” (

    Excerpts from Hillary’s WSJ piece dated 25 September 2008 (

    “Second, American taxpayers should have a voice and a stake in the resolution of this market crisis. If the Treasury proposal is enacted in its current form, the American government would assume enough financial risk to become the majority shareholder in the companies rescued by taxpayer dollars.

    “The American people are bearing the risk and therefore deserve to reap the rewards of a shared equity model. And mortgage securities bought by taxpayers must be valued accurately at prices disclosed in real time, with checks and reporting requirements to prevent abuse.

    “Third, taxpayers are being asked to bear an unparalleled degree of financial risk. We cannot allow taxpayers to take on this burden so that Wall Street and the Bush administration can hit the “reset button.” This historic intervention demands a historic shift in priorities: an end to the broken culture on Wall Street, and the broken economic policies in Washington.

    “Corporations that will benefit must be held accountable, not only to large shareholders but also to the American people, who are rightly tired of business as usual: short-term profit at the expense of long-term viability; lax oversight and regulation; obscene bonuses and golden parachutes regardless of performance; reckless risk-taking that has placed the markets in jeopardy; rewards for foreclosing on middle-class families and selling mortgages designed to fail; and outsourcing good jobs to serve short-term stock prices instead of America’s long-term economic health.”

    I’m trying to find news about Hillary’s attempt to introduce an amendment to TARP in 2008 that would have given govt the authority to effectively take charge of banks and other financial institutions that would have availed of TARP, by turning the bail-out funds into govt equity and enabling the govt to reorganize/restructure the bailed out companies. Needless to say, her amendment was ignored by Dodd and Reid; the old white boys thought she was nothing but a has-been.

    Regarding Hillary’s “prescience” over the mortgage crisis, here is what Michelle Malkin had to say about it:

    One thing is certain, if Hillary were the POTUS, howls of “Socialist!” would still be heard from the Right side of the political wilderness.

    • November 6, 2010 1:38 pm

      Exactly, and that was sort of the point of my post although I was too lazy to chase down all the links.

      I agree with Milbank that we would be better off under Hillary but I disagree with his reasoning- the idea that Hillary would have essentially let Wall Street continue their shenanigans and perhaps use our military against Iran? His analysis doesn’t make sense and I don’t think it gives her enough credit- something the media continues to do- not give her enough credit and instead painting she and Bill as corporate sell-outs. Also, the idea that the GOP would play nice with her is a real stretch- they want nothing more than to paint any democrat as a socialist (how many times did Chris Mathews call her a socialist during the primaries? A lot) and obstruct everything so the economy stays in the tanker so they can improve their chances of retaking the WH. It’s all so cynical.

      • filipino-american4hrc permalink
        November 6, 2010 1:49 pm

        This whole faux-Hillary praise from Dana “Mad Bitch Beer” Milbank and the others just makes me mad, Stacy. Whatever Hillary decides to do with her future, I just want to make sure that her stated positions on the housing and economic crises are there for everyone to see. The past few days I have been poking my friends for falling in love with the idea of voting for a black man who does not threaten white privilege and losing their heads in the process. I’m sorry if that sounds harsh, but that’s how I see it.

        Anyway, just one more item in re Milbank and Wall Street — Hillary in 2008 on executive compensation:

  4. November 6, 2010 3:18 pm

    f-a4hrc- yes and when I first saw the headline and read Milbank’s take part of me wanted to just say “oh good, you all finally get it” and let it rest but then I realized having watched everything that went down in 2008, having watched the media help determine the outcome and having been a very liberal supporter of Hillary when almost all of my liberal friends voted for Obama (and gave me a hard time because they thought I was being a hypocrite and selling out liberal ideals), this sort of wishy-washy, after-the-fact nonsense from Milbank should be given a more thorough vetting.

    I know some Hillary fans may be tempted to just take Milbank’s conclusion (which I ultimately agree with- that we’d be better off) and run with it but I find him utterly disingenuous and quite condescending to Hillary. While I agree Hillary would have been much better for the economy than Obama, I think Milbank reaches his conclusion the wrong way- he admits that Hillary was right about foreclosures and taxes and Wall Street but then at the same time he seems to suggest that she would be successful because of the Clinton’s close relationship to Wall Street. How does that make sense? Which is it? Had she taken on Wall Street, issued a moratorium on foreclosures, refused to extend tax cuts for the rich, fought the outsourcing of jobs, refused to cave to the pollution lobby on environmental issues (Milbank doesn’t raise that issue)- all things she talked about in her campaign and things I believe she would have done and done with more skill than Obama- she would have been criticized by losers like Milbank for doing all that- he’d be the first one calling her a leftist. I get so suspicious when conservatives try to paint Hillary as a DINO when they find it convenient only then to call her a socialist when she’s actually in office.

  5. Tovah permalink
    November 6, 2010 3:24 pm

    Interesting debate you guys are having. I forgot about the whole “mad bitch beer” thing- what a jerk he is.

    Stacy- I can see why you are a lawyer- you picked up on stuff I didn’t really even see at first glance.

    People like Milbank shouldn’t be confused with journalists. They are pundits and sorry ones at that. Milbank has written several columns of late criticizing the democrats for being too liberal. Funny, I don’t see too much liberal going on- health reform wasn’t really health reform because the democrats caved to the pharm/insurance lobbies, Wall St. reform was window dressing and we are bogged down in afghanistan. About the only liberal thing I see is Elizabeth Warren. It’s also interesting that Obama’s economic team is made up almost entirely of Clintonites. But even those Clintonites can’t work magic when the GOP obstructs every damn thing in the hopes of having Obama and his team fail.

  6. Tovah permalink
    November 6, 2010 3:28 pm

    Even without the sexist Hillary comment the whole thing is lame

    • Thain permalink
      November 6, 2010 7:12 pm

      What asses those two are! They should be totally embarrassed because not only was it offensive it wasn’t even funny- none of it was. I can’t believe they actually get paid for this. The WaPo has sort of become a joke which is too bad because they have a few actual journalists. Not many, but a few.

  7. TheyBothSuck permalink
    November 6, 2010 3:56 pm

    Give me a break. Hillary was one of the biggest big business suck ups until it became politically problematic. She supported NAFTA until she didn’t. She was buddy buddy with Colombia’s former President- a guy whose military murders labor unionists, including women but then once again, she was against free trade with Colombia when she needed votes. Now both she and obama think colombia is wonderful and free trade is wonderful again. Until it isn’t. They were both SOOOOOOOOOOO tough on China when it was just lofty rhetoric and I think it’s fair to say Hillary has been terrible on Chinese human rights. What did she say not long after she became secretary of state- that human rights wouldn’t interfere with more important matters? Of course Obama is a big wuss too.

    Lets face it, the Democrats say everything people want to hear and then they get elected and do the opposite. If Hillary were POTUS we’d probably be at war with Iran on behalf of Israel and there is really no reason to believe that Hillary would suddenly start demanding that free trade agreements include more worker protections.

    Lets also remember that Bill Clinton’s economic team laid the foundation for the global financial crisis. Rubin, Summers, Greenspan, Jacob Lew and Clinton ensured the votes of independents and big business by fighting any attempts to regulate hedge funds and risky derivative trading and the now-infamous bundled securities. Yes, the economy was great during the Clinton years because it was a big fat greedy bubble that was about to burst and he was just lucky it didn’t burst on his watch. He helped deregulate the financial industry in a way that would make the most conservative Republican proud. The history books will be uniformly critical of the Clinton years of so-called peace and prosperity because it was during that period that Al Qaeda was growing and the financial markets were about to crumble.

    If you guys have the guts, read this article and then tell me how great Bill Clinton was for the average working stiff. Hillary practically worships Lord Bill, do you really think she would divert from his policies at all, let alone work to repeal them had she become POTUS?

    • Thain permalink
      November 6, 2010 7:16 pm

      You kinda suck too.

    • Hako permalink
      November 6, 2010 9:32 pm

      Many of your points are widely held, and also frequently inaccurate or exaggerated. The NAFTA thing for example. Hillary was totally against it. Bill Clinton will say that quite openly if asked. She argued vigorously against it, but at last did what her husband, the actual President, asked of her….. get behind him and support the idea. Hillary was smart enough to see the dangers and problems, but was not in the position to impose her own ideas. She has her flaws, but she is smarter than anyone else in Washington these days, and smarter and tougher than anyone that may be thinking of running for the POTUS in 2012.

      • November 6, 2010 9:34 pm

        Agreed. They often try to fault her for things when she wasn’t even holding office at the time.

  8. TheyBothSuck permalink
    November 6, 2010 4:04 pm

    From Professor Canova’s article I linked to above:

    “THE CLINTON administration’s free-market program culminated in two momentous deregulatory acts. Near the end of his eight years in office, Clinton signed into law the Gramm-Leach-Bliley Financial Services Modernization Act of 1999, one of the most far-reaching banking reforms since the Great Depression. It swept aside parts of the Glass-Steagall Act of 1933 that had provided significant regulatory firewalls between commercial banks, insurance companies, securities firms, and investment banks.

    Wall Street had been lobbying for years for an end to Glass-Steagall, but it had not received much support before Clinton. Among those with a personal interest in the demise of Glass-Steagall was Robert Rubin, who had months earlier stepped down as treasury secretary to become chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary. Although Rubin openly boasted of his lobbying efforts to abolish Glass-Steagall, the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act.

    Rubin also appealed to liberal sentiment. He claimed to have urged Congress and the White House to preserve the Community Reinvestment Act (CRA), which sought to prod banks to channel a portion of their lending to poor, inner city areas. But there was already widespread evidence that CRA was falling short by permitting banks to engage in meaningless reporting requirements in place of substantive investment in low- and moderate-income communities. The real action was not CRA renewal but the demise of the Glass-Steagall firewalls. Banks were suddenly free to load up on riskier investments as long as they did so through affiliated entities such as their own hedge funds and special investment vehicles. Those riskier investments included exotic financial innovations, such as the complex derivatives that were increasingly difficult for even experts to understand or value.

    In 1998, the sudden meltdown and bailout of the Long-Term Capital Management hedge fund showed the dangers of large derivative bets staked on borrowed money. But by March 1999, Greenspan was once again praising derivatives as hedging instruments and as enhancing the ability “to differentiate risk and allocate it to those investors most able and willing to take it.”

    In 1993, the Securities and Exchange Commission (SEC) had considered extending capital requirements to derivatives, but such proposals went nowhere, and Wall Street lobbied to prevent any regulation of derivatives. Then in December 2000, in his final weeks in office, Bill Clinton signed into law the Commodity Futures Modernization Act, which shielded the markets for derivatives from federal regulation.

    Since then, derivatives have grown in size and become gigantic wagers on the movement of interest rates, commodity prices, and currency values. First came the CDO bubble, which acted as a transmission belt by which the subprime mortgage cancer metastasized and spread through financial institutions around the globe. Warren Buffett, legendary investor and chair of Berkshire Hathaway, would soon refer to such derivatives as “weapons of mass destruction.”

    Since the collapse of the CDO market, the next derivatives bubble may be the market for credit default swaps, which are credit insurance contracts designed to cover losses to banks and bondholders when companies fail to pay their debts. Today the notional amount of the credit default swap market is at least $45 trillion, about half the total U.S. household wealth and about five times the national debt.

    When Bear Stearns melted down this past spring, it was holding $2.5 trillion in credit default swaps that were worth perhaps $40.3 billion in fair market value. The run on Bear Stearns was largely caused by the collapsing mortgage and CDO markets. But it was the market for credit default swaps that may have led the Federal Reserve to intervene. If Bear Stearns had been allowed to fail, countless counterparties on these credit default swaps would have faced enormous losses. The shock waves could have taken down major insurance companies.

    This is why George Soros, billionaire hedge-fund manager, has voiced his fears about the unregulated market for credit default swaps. According to Soros, the prospect of cascading defaults hangs over the financial system like a sword of Damocles. He has not called for outlawing the market but for its regulation by establishing a clearinghouse or exchange for the market, capital requirements, and strict margin requirements for all existing and future credit default swap contracts.

    Chickens Come Home to Roost

    HISTORY SHOULD deal harshly with Bill Clinton. Throughout his terms, real wages stagnated, manufacturing and service jobs moved overseas in large numbers, and the middle class was squeezed. With the federal government asleep at the wheel, there was a significant rise in predatory lending practices by banks and mortgage companies. By Clinton’s final years in office, all of these trends had contributed to an ominous rise in delinquencies and foreclosures on subprime mortgage loans. This was particularly pronounced in urban America. In Chicago, for instance, foreclosures on subprime mortgages rose from 131 in 1993 to more than 5,000 in 1999.

    By the time Bush took office in 2001, the Federal Reserve was once again stepping on the accelerator. The collapse of Enron, a wave of corporate governance scandals, and then the September 11, 2001, terrorist attacks were a drag on economic activity, and so the Fed lowered interest rates from 6 percent to 1 percent between January 2001 and June 2003.

    The lower interest rates helped revive the stock market and housing bubbles. It was like pouring gasoline on a fire. By July 2005, the Economist was referring to the U.S. housing market as “the largest financial bubble in history.” Some officials began to sound the alarm. The debt of American households was climbing nearly 20 percent a year, the savings rate had fallen below zero, and the cash being pulled out of homes from mortgage refinancings had reached about 5 percent of GDP. This fueled an enormous consumption binge and a growing trade deficit that put downward pressure on the dollar. Oil producing countries, paid in dollars, began raising oil prices to make up the difference.

    It was clear the housing bubble had spread into an even larger dollar bubble. Something had to be done. But without margin requirements or any other selective credit controls, the Federal Reserve could only raise short-term interest rates to cool the housing market and encourage household savings. Starting in 2004, the Fed began tapping on the brake, raising short-term interest rates seventeen consecutive times from 1 percent to 5.25 percent over a two-year period.

    If Greenspan was worried that the rise in interest rates could lead to panic, he tried not to show it. “The vast majority of homeowners,” he said, “have a sizable equity cushion with which to absorb a potential decline in house prices.”

    Greenspan could not have been more wrong. The steep rise in home foreclosures, now at an all-time record high, has contributed to a downward spiral of housing prices, which in turn has contributed to more foreclosures. By last August, there were more than 200,000 monthly foreclosure filings nationwide. For all of 2007, 1.2 million properties—more than 1 percent of all U.S. households—were in some stage of foreclosure, up 75 percent in only a year. By April 2008, about 2 percent were in foreclosure, and nearly 9 percent, some 4.8 million home loans, were past due or in foreclosure.

    Losses from the subprime meltdown have surely passed half a trillion dollars, and some estimates now exceed a trillion dollars. Major U.S. financial institutions have turned for help to central banks and sovereign wealth funds from abroad. The housing market is in its worst decline in memory, the dollar is falling to record lows, and the U.S. economy may be heading into recession.

    Many observers have linked the costs of the war in Iraq to economic problems at home, and certainly the billions of dollars being spent in Iraq could be better invested in the nation’s declining infrastructure. But perhaps most overlooked has been the adverse impact of the war on the value of the dollar and the price of oil. As America’s standing has declined in the world, in large part a result of this war, the dollar and dollar-denominated investments have also suffered. Past U.S. housing declines, such as during the savings and loan crisis of the late 1980s, were somewhat shielded from global financial forces. With the rise of the euro and the yen as viable alternative currencies, a declining dollar now poses a far greater threat to continued American prosperity than in the past.

    Another factor that contributed to the final Clinton surplus was the inflated U.S. dollar and huge capital inflows that were attracted to dollar-denominated investments, all of which pumped up economic growth and tax revenues. It was therefore Clinton’s commitment to the Washington Consensus platform of free trade and unrestricted capital mobility that made those hot money inflows possible while also setting the stage for the reversal of portfolio capital flows and today’s declining dollar.

    During Clinton’s first three years in office, the federal government borrowed more than $1 trillion, much from abroad. Then between 1996 and 1998, foreign ownership of U.S. government securities rose 26 percent, from $669 billion to $847 billion. Under Bush, foreign ownership of U.S. government securities rose another 88 percent to $1.6 trillion by 2005.

    During the Clinton years, mortgage debt grew by nearly two-thirds, from $4.1 trillion to $6.8 trillion. Under Bush, mortgage debt then doubled to $13 trillion in 2006. Likewise, under Clinton, consumer debt doubled from $856 billion to $1.7 trillion. Under Bush, it grew by another one-third to $2.3 trillion in 2006.

    Much of this debt was borrowed from foreigners flush with dollars, a result of our huge trade deficits. This was the underside of the Clinton bubble economy, and it set the course for the Bush years. U.S. trade deficits also translated into increased foreign ownership of corporate America. Foreign ownership of U.S. corporate stocks and bonds rose nearly 50 percent in Clinton’s final three years, from $1.9 trillion to $2.8 trillion, and then another 53 percent under Bush to $4.3 trillion.

    A comparison of all foreign-owned assets in the United States, including U.S. government and corporate securities, foreign direct investment, and private debt, shows remarkable similarities between the administrations. In Clinton’s final three years, foreign-owned assets in the United States rose nearly 30 percent from $5.9 trillion to $7.6 trillion. Under Bush, foreign ownership of U.S. assets rose by another two-thirds to $12.7 trillion by 2005.

    Unfortunately, the myth of the Clinton economy has too often served to limit discussion about the political forces behind the present crisis in the Washington Consensus. For instance, Hillary Clinton, in promising a high-level emergency panel to recommend ways to overhaul at-risk mortgages, proposed in March that such a council of wise men should include two of the people most responsible for undermining the integrity of financial markets, former treasury secretary Robert Rubin and former Federal Reserve chair Alan Greenspan.“.

    • November 6, 2010 5:55 pm

      Right, it’s all Hillary’s fault. Deregulation didn’t start with Clinton, it had started long before that. Doing away with Glass-Steagall was a mistake and I am no fan of Rubin, Summers or Greenspan. Bill Clinton has admitted that he made some mistakes in following the advice of some on his economic team, but hindsight is 20/20 vision. That said, if one thing has become clear over the decades, the two-party system which allows no third party to challenge their dominance, has been a boon to Wall Street. I don’t think anyone can talk about economic policy without talking about the need for meaningful to reign in how these campaigns are financed. McCain-Feingold made some important inroads but Wall Street has been fighting it, and winning, in the courts. Both parties are beholden to Wall Street because of the role Big Business plays in throwing campaign cash at them.

      What I find interesting is that even though Wall Street essentially brought about the near collapse of the global financial system, there is no real outrage, no real call for meaningful financial reform except on the so-called “far left” of the Democratic Party. The GOP was swept into office on the promise that they would do away with Wall Street reform and further deregulate the industry! I think it’s becoming more clear every day that the Tea Party is financed by Big Business as opposed to being a legitimate grass roots “common man” organization.

      The idea that Hillary Clinton would simply be a shill for corporate interests because of some of the things that took place during the Clinton administration is totally unfair. She is her own person and there is no reason to assume that she wouldn’t confront the problems of today head on and as fa4HRC noted in the comments above, while holding elected office she tried to reign in the banks and deal with the looming foreclosure crisis.

  9. Steve permalink
    November 6, 2010 5:09 pm

    OT: Stacy, did you hear about this event in NYC? My son and I are joining the protest against the so-called memorial for Meir Kehane. I know you follow this stuff pretty closely and you read Alex Kane’s blog. Some of my fellow Jews on the Upper West Side of NY will be celebrating a member of the Israeli far right (and a racist) who advocated violence and forced relocation of Arabs out of Israel. He was killed 20 years ago and there will be celebrations honoring his memory tomorrow at different locations including at Ground Zero (so they can also protest the Cordoba House and radical Islam). He certainly shouldn’t have been killed, but it’s pretty amazing that his views have become kind of mainstream despite his group, the JDL, being considered a terrorist organization by the State Dept. and FBI. It seems like more and more of the American Jewish community seems to be what I call “LIE”- Liberal Except Israel. Luckily there will be some more moderate members of the community there who want to make it known this is not what we stand for.

    • November 6, 2010 6:06 pm

      Steve- I had not seen that particular article. I haven’t been to Kane’s blog for a few days. I think there is no doubt that politicians like Avigdor Lieberman are very similar to Meir Kahane and I did read the Haaretz editorial last week about just that- that the Israeli far right, which has taken over the entire political system there, is walking dangerously in Kahane’s footsteps.

      I do agree with you that even in this country we have started to appropriate the language of Kahane and ethnocracy. As a nation we don’t want to admit that our close ally is using some of their very legitimate security concerns in a very cynical way- they are appealing to people’s fears and appealing to the worst in people, rather than the best in people- sort of like in this county with all the crazy Islamaphobia! Underneath the request for Israel to be recognized as solely a “Jewish” state is a less than benign desire to privilege a particular religion and ethnicity over all others. This sort of thing, if done by any other country, would likely be denounced by the US. The continued land grabs and “Judification” efforts- ie., efforts to get rid of Arab neighborhoods, Arab culture and identity and to actually physically remove Arabs from their lands and home, is very ugly indeed. The new loyalty oath required of non-Jewish citizens is a huge blow to Israel’s democratic ideals. And here in the US we just stick our fingers in our ears, ignore it and try to push the idea that anyone who speaks out against this is trying to “delegitimize” Israel.

      I’m glad to hear that you, your son and other members of the more moderate Jewish community are standing up against this lunacy.

    • Thain permalink
      November 6, 2010 7:19 pm

      Hey, I wish I had known about that sooner! I’m in CT and I could have gone down there for the protest. Thanks for the link- I’ve never read Alex Kane but I’m going to start- I was looking at his blog after I read that article and he has some good stuff. It’s a nice counter-balance to the MSM which only ever gives us one side of the story. I also like Philip Weiss and Adam Horowitz over at Mondoweiss- they are on top of everything going on.

  10. November 6, 2010 9:13 pm

    Amen, Stacy! Great post!

  11. Susan permalink
    November 6, 2010 10:38 pm

    Great post Stacy and great discussion here in the comments- I’ve enjoyed reading it all.

  12. filipino-american4hrc permalink
    November 7, 2010 1:09 am

    Re Tovah above — “It’s also interesting that Obama’s economic team is made up almost entirely of Clintonites. But even those Clintonites can’t work magic when the GOP obstructs every damn thing in the hopes of having Obama and his team fail” and TheyBothSuck’s diatribe — I defer to Anglachel (

    “This is also why the growing meme of ‘This is Bill Clinton’s old financial team, so really it’s all his fault because he started it, and Obama inherited his problems from Clinton, and it’s all due to the evil Clinton cabal!’ can’t hold water. If the economic choices of the Clinton administration were wrong, then Obama should have had the wisdom to chose different advisers. There was time enough to see the long-term effects of those past political choices, with special emphasis on how the loopholes of the legislation (loopholes demanded by both Republicans and Democrats, each in turn guided by that cross-party interest group, Wall Street) were exploited under an out-of-control Republican regime.


    “This is what Galbraith points to when he says a president has to be able to criticize and reverse previous administrations. Obama should have been able to identify the bad eggs from the last two administrations . . .Instead, we get the worst people from Big Dog’s collection kowtowing to the worst elements from W, while people like Joe Stiglitz go begging and Elizabeth Warren is treated as an enemy.”

    Oh, and the famous “Dr. Gloom,” Nouriel Roubini — the “Cassandra of the mortgage crisis” — worked for Clinton in both terms, the latter as adviser to then Treas. Asst. Sec. Geithner. Shouldn’t the Obots, the Clinton Haters and faux liberals crucify Roubini for failing to make a clone out Geithner? And just to specify what Anglachel was talking about: the repeal of Glass-Steagall Act through the Gramm–Leach–Bliley Act of 1999 was “passed in the Senate 90–8 (one not voting) and in the House: 362–57 (15 not voting)”?

    Sure, Bill Clinton signed it, but maybe we should line up to face the firing squad all the Republicans and DEMOCRATS that enabled this legislation.

  13. discourseincsharpminor permalink
    November 7, 2010 8:06 am

    I’m sorry for coming in late on this one, but I think you’re right. Now that the Obama party is over, the media has woken up and they are looking back on their behavior and trying to figure out how they can claim not to be taking a walk of shame. They would be shredding Hillary Clinton any way they could if the primary had gone differently.

    “Free ponies”, LOL!

    • November 7, 2010 10:20 am

      You mean Obama did NOT promise free ponies?? JK

      I did hear Howard Kurtz admit the other day that the media, during the 2008 campaigns, fluctuated between comparing Obama to Lincoln and FDR… I remember that.

      It is eye-opening that Hillary was writing letters to the administration and speaking publicly about derivative swaps and the sub-prime mortgage issues back in 2007, when most Dems and GOP were in denial.

      I am hoping that Obama will heed the advice that is now coming loudly from the media and other Dems to open up his inner circle. 2012 has well over 20 Dem senators up for reelection and less than 10 GOP senators. The GOP has already drawn blood and they’ll be going in for the kill in 2012. Obama needs to start showing some leadership, and even his (formerly) avid fans in the Dem party and MSM are admitting that… Throughout the whole health insurance bill congressional soap opera, he never even stepped up and said these are the parameters the bill needs to cover. The Congress didn’t even know exactly where he stood on a public option. He didn’t need to write the whole bill, just be decisive and willing to confront others for his principles and for what he thought the American people needed.

    • November 7, 2010 1:27 pm

      It’s all about the free ponies!


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