By Josh Marks
Many progressives will never forgive former President William Jefferson Clinton for the sin of signing away the Glass-Steagall Act. Also called The Banking Act of 1933, Glass-Steagall separated commercial and investment banking activities after the Great Depression in order to prevent another economic catastrophe. In 1999 Clinton signed the Gramm-Leach-Bliley Act because Citibank merged with Travelers Insurance a year earlier and a law needed to be passed to make the merger legal. While repealing Glass-Steagall didn’t directly lead to the 2008 financial crisis, it was one of a series of post-Depression financial industry regulations stripped away, starting when Ronald Reagan took office, that allowed Wall Street to bring the world to the brink of another Great Depression. (Click here to read an appeal by former Clinton Labor Secretary Robert Reich to bring back Glass-Steagall).
Could Clinton have known how ruinous to the economy repealing Glass-Steagall would be when the financial industry went into a tailspin more than a decade later after years of risky bets? How many countless Americans have lost their jobs and their faith in the American system after this economic collapse?
Well, I’m here to tell you that Clinton is making amends and his new book “Back to Work: Why We Need Smart Government For a Strong Economy” is a must read. There is a lot for progressives to like about Clinton’s approach to solving the big issues of the day.
That said, Clinton still doesn’t take full responsibility for the damage done when he repealed Glass-Steagall, however he does point out that he regrets not making a bigger push to regulate financial derivatives, although he was up against a Republican Congress hostile to any regulations.
Clinton starts out “Back to Work” with an impassioned defense of the important role government plays in society and calls out the Tea Party wing of the GOP for its irrational and self-destructive hatred of the public sector. What Clinton does in this book is give a global perspective to America’s political paralysis and inability to work towards solutions to our problems. This, I believe, is a result of the humanitarian work Clinton has done around the world through the Clinton Foundation, where he has helped poor people around the world improve their health care and be economically empowered. Through the book, Clinton compares the United States to other countries, giving perspective to our problems. In the opening chapter he lays out his vision for a more prosperous and fair society.
“I believe the only way we can keep the American Dream alive for all Americans and continue to be the world’s leading force for freedom and prosperity, peace and security, is to have both a strong, effective private sector and a strong, effective government that work together to promote an economy of good jobs, rising incomes, increasing exports, and greater energy independence. All over the world, the most successful nations, including many with lower unemployment rates, less inequality, and, in this decade, even higher college graduation rates than the United States, have both. And they work together, not always agreeing, but moving toward common goals. In other countries, conservatives and liberals also have arguments about taxes, energy policy, bank regulations, and how much government is healthy and affordable, but they tend to be less ideological and more rooted in evidence and experience. They focus more on what works.”
This is Clinton’s framework to set up a scathing rebuttal to the anti-tax, anti-government ideological extremists who have hijacked the political system in this country for the past thirty years.
Clinton is very effective when he uses charts and figures to explain our positions relative to other nations. For example, the United States spends only 1.7 percent of GDP on infrastructure, compared with 4 percent in Canada or 9 percent in China. And the World Economic Forum ranks the United States 24th in the quality of overall infrastructure, right behind Malaysia (Switzerland ranks first). Also, the U.S. ranks 15th in broadband connection speed, just behind Luxembourg. No. 1 South Korea’s broadband connections is four times faster than ours. And Clinton points out that the U.S. spends a whopping 17.4 percent of GDP on health care compared to France at 11.8 percent and Japan at 8.5 percent.
Not everything Clinton writes will please progressives. For example, he isn’t critical of the American Recovery and Reinvestment Act for not being big enough in stimulating job creation. Clinton believes that the $800 billion stimulus (only a third went into direct job projects) “was designed to put a floor under the collapse and begin the recovery.” That’s all well and good, but economists like Paul Krugman were warning that the stimulus wasn’t big enough and that the Republicans would manipulate the slow job growth that follows as saying that government spending doesn’t work. Now it is nearly impossible to pass a second stimulus, as President Obama tried to do with the American Jobs Act. So it would have been helpful if Clinton would have admitted the stimulus wasn’t big enough and that we need more fiscal stimulus to plow our way out of this depression (I’m reading Krugman’s excellent new book “End This Depression Now!” and plan to write a review).
Clinton also devotes an entire chapter to the debt (Krugman makes a compelling case that deficit hawks are misguided and that the debt is blown way out of proportion when the focus should be on the government creating jobs). However, Clinton does acknowledge that dealing with the deficit needs to be delayed until full employment is achieved and healthy economic growth is restored. With the ridiculous obsession with the debt and deficits among the political and media class in Washington, it is encouraging to hear a voice of reason like Clinton’s saying that, yes, we need to tackle the deficit (although again, Keynesian economists like Krugman would argue that deficits aren’t as bad as people think), but right now the sole priority and topic of conversation should be focused on how government spending can create jobs and grow the economy.
Ultimately Clinton is optimistic, and he is confident America will get past this current state of dysfunction and ideological warfare.
“We’re in a mess now. At the dawn of the new century, after years of strong job growth, rising incomes, and declining debt, we abandoned a proven path to shared prosperity in favor of doubling down, once more, on anti-government ideology. Now we’re paying for it. The only sensible thing to do is for all of us to take some responsibility for changing things. The world is moving on, and if we want to stop falling behind, we have to get back in the game. Let’s ditch the stale certainty of ideology and bring our values, ideas, experiences, and dreams to a real debate about the future. Think how exciting it would be if all of us — Democrats, Republicans, and independents, conservatives, liberals, progressives, and libertarians — had real arguments based on real facts that produced real results through principled compromise based on what works.”