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In 1993, Vice President Al Gore took part in an unusual debate about trade: He went on Larry King’s CNN show to spar with Ross Perot—the third-party candidate President Bill Clinton had beaten in the previous year’s election—over the impending North American Free Trade Agreement. During the campaign, Perot had warned that NAFTA would create a “giant sucking sound” as high-paying manufacturing jobs drained out of the country. About a year later, Clinton was trying to push it through, and so Gore was dispatched to debate NAFTA’s most high-profile opponent.1 Ad Policy In This Review Bill Clinton By Michael Tomasky Buy this book Shattered: Inside Hillary Clinton’s Doomed Campaign By Amie Parnes and Jonathan Allen Buy this book

Most observers concluded that Gore won handily. But he didn’t convincingly put away Perot’s arguments; instead, he took his opponent down with a lot of cheap rhetorical tricks—most especially, baiting Perot’s notorious temper by constantly interrupting him. Perot’s peevish “Could I finish?” was turned into a punch line by comedian Dana Carvey, and that was that. It was a tactical success for Clinton, who wanted to build a new base for his party among the executive and financier class and high-income voters. NAFTA was eventually approved by the Senate and signed into law by Clinton on December 8, 1993.2

In the end, however, Perot turned out to be more right than wrong about NAFTA—and not only on economic but on political terms. While NAFTA’s overall effects weren’t that large, there were far bigger losses after Clinton signed another trade deal, this time with China, in 2000, and the wreckage left by the outsourcing and deindustrialization that followed would come back to haunt his wife in the 2016 election. The Democrats’ embrace of free-market policies, which reached its apex under Clinton, may have helped rejuvenate the party in the 1990s and early 2000s, but that embrace has now crippled it. Hillary Clinton’s shocking loss to Donald Trump—whose signature economic pledge was to reverse the “bad deals” of the past few decades—simply highlights a generation of Democratic Party politics that has now come crashing to an end.3

Two new books help fill in the details of the rise and fall of Clintonian economics and politics: Bill Clinton, a short biography by Michael Tomasky, and Shattered, a narrative account of Hillary’s 2016 election loss by Jonathan Allen and Amie Parnes. These demonstrate neatly how Clintonism—a politics of triangulation in a neoliberal age—eventually undermined itself.4

As its title suggests, Tomasky’s volume—an entry in the Times Books series on American presidents—is a brief, crisp, and overly sympathetic telling of Bill Clinton’s story. It covers, with aplomb, his early career as Arkansas governor, his long-shot campaign for president, and his later career as a globe-trotting philanthropist. At the center of the book, however, is not only the tale of a president from a town called Hope but also the outlines of how Clintonism, as an expression of post-welfarist liberalism, came into being.5

Early in his presidency, Clinton developed what would become the key feature of his politics: Recognizing that the New Deal coalition between Southern Democrats and the Northern working class had fallen apart, he set out to win over those people who voted for the GOP. This required triangulation, especially in a context in which the free-market right had won a near consensus over the perceived failures of the welfare state. As Tomasky argues, Clinton was genuinely concerned with improving the lot of working-class Americans. Yet all of his policies to that end were hemmed in by a neoliberal framework that had been embraced by both sides of the aisle by the 1990s. Sometimes this was against his wishes—when discussing his first budget, Clinton famously complained, “You mean to tell me that the success of my economic program and my reelection hinges on the Federal Reserve and a bunch of fucking bond traders?” But it also became a central feature of Clintonism.6

This economic straitjacket was the result of a fight that had started decades before. After the Great Depression and the Second World War, classical laissez-faire economics had been profoundly discredited, and the Democratic Party had come to accept that strict controls on the markets and protections for workers—in the form of pro-union legislation, the regulatory state, antitrust policy, and so on—were needed to moderate the ruthless swings of capitalism.7 Current Issue View our current issue

But many still hated the New Deal—and that included a faction within the Democratic Party. When, in the mid-1970s, the United States suffered the twin problems of high inflation and high unemployment—or “stagflation”—these anti–New Dealers pounced. Blaming the problem on New Deal structures, they insisted that only deregulation, union-busting, and tight money would restore growth and stabilize prices. Under the direction of Al From and his Democratic Leadership Council (DLC), of which Clinton was a charter member, this group of “New Democrats” consolidated in the 1980s and gradually rooted most of the old New Dealers out of leadership roles in the Democratic Party, and eventually out of the party altogether.8

Democratic presidential candidates from 1976 on were, on the whole, increasingly neoliberal. Clinton’s victory proved that they could win, and his reelection—the first Democrat reelected after a full term since FDR—cemented the idea that the New Deal was dead and buried. By the late 1990s, only a handful of stubborn populists—for example, Paul Wellstone and Howard Metzenbaum—clung to the New Deal tradition.9

From his election in 1992 until his wife’s defeat in 2016, Bill Clinton’s New Democrats would have a stranglehold on what was considered politically serious among Democratic elites. His “Third Way”—also embraced by Tony Blair in the UK and Gerhard Schröder in Germany—was seen as a compromise between old welfare-state politics and the more brutal right-wing neoliberalism of Ronald Reagan and Margaret Thatcher. But the old New Dealers would not have allowed bond traders to have a veto over economic policy, whereas Clinton’s Democratic Party had come to accept, or even champion, the idea that one could not meddle with the financial system without causing disaster.10

The ideological clout of neoliberalism became even clearer in other places. Clinton pushed through NAFTA against the wishes of both a majority of Americans and his own party’s caucus. He campaigned on, and eventually signed, a welfare-reform bill against the wishes of many of his advisers—even including the financial titan Robert Rubin. Policies like free trade, financial deregulation, and forcing the poor into the labor market so that they could earn “a paycheck, not a welfare check,” as Clinton put it in his press conference announcing welfare reform, were thought to be matters of simple economic necessity, no matter how unpopular they might be. Poor people must take their tough medicine, the thinking went, so that we could have growth and jobs.11

Tomasky is much too charitable about the effects of welfare reform, which changed Aid to Families With Dependent Children from a federal entitlement program to a state block grant, built in several new eligibility requirements, and capped spending. He writes that while benefits “were slashed dramatically” in some states, in others “the results were tolerable and sometimes even good.” In reality, the overall result was an increase in extreme poverty of roughly 150 percent—and even if states tried to preserve the generosity of the original program, the spending cap made it impossible to respond when economic disaster struck. Today, the replacement welfare program helps few poor families.12

But assessed on the DLC’s terms, welfare reform was a classic success. Bob Dole, the Republican senator from Kansas who would become Clinton’s opponent in the 1996 election, “had nothing, really, to run on,” Tomasky writes. All the president had to do was betray a few million of the poorest people in the country. Clinton did support a few policies that sought to assist the “deserving” poor and working class, but only if they could fit within the New Democrats’ market assumptions. For example, he championed and passed a significant boost to the Earned Income Tax Credit (EITC), so that poorer people with at least some work would keep more of their wages at tax time, but he necessarily left out the very poorest families that traditional welfare had benefited.13

All of this seemed fairly reasonable at the time, since it appeared that the New Democrats’ policies were delivering the goods. The basic bargain that the New Democrats proposed during the Clinton presidency was that, if the nation sacrificed the old New Deal structures, growth and jobs would follow—and the people left behind could be rescued with narrowly means-tested handouts like the EITC. Clinton also had the good fortune to preside over a tremendous boom in the high-tech industries, and even better luck when Alan Greenspan, the former Ayn Rand acolyte in charge of the Federal Reserve, decided to keep interest rates low in 1996 to see how hot the economy could run without rapid inflation. The result was the fastest sustained economic growth in 20 years—but this time with rock-stable prices and low unemployment.14

As a result, Clinton became tremendously popular, which went no small distance toward buoying him up through the Lewinsky scandal, which consumed the final years of his presidency. Many Republicans—including House Speaker Newt Gingrich, who was cheating on his own wife at the time, and chief deputy whip Dennis Hastert, who was later revealed to be a child molester—were quite obviously unconcerned with the actual moral lapse at hand. But some liberals also sacrificed principles on the altar of political expediency. Gloria Steinem, for instance, leveraged her feminist credentials in a now-infamous New York Times op-ed to excuse a president conducting a wildly inappropriate affair with a 21-year-old subordinate.15

But despite his caveats, Tomasky also comes down on Clinton’s side. While he knocks the 42nd president for being “unfathomably irresponsible,” he also faults the Washington press for pursuing Clinton with an unhinged hysteria, as well as the conspiracy of Republican hacks who searched relentlessly for some pretext to drive him from office. Those are fair qualifications, but, like Steinem, Tomasky doesn’t really grapple with the fact that the Lewinsky affair wasn’t just a private sexual indiscretion; it was an abuse of power. Worse, he doesn’t even mention Juanita Broaddrick, who plausibly alleges that Clinton violently raped her in 1978. Like too many liberals, Tomasky has allowed the unfairness of the Republican campaign of dirty tricks to lead him to underplay the extent of Clinton’s abuses.16

Tomasky is right to conclude that such tactics did win the political argument for the Democrats: “The American public had clearly decided that Clinton was a good president who had rescued the economy and, even if he did diddle around with this intern, they didn’t exactly approve of course but it simply wasn’t a high crime or misdemeanor warranting his removal from office.” Not for the last time, Republicans badly overreached and paid a political price, at least in the short term. In retrospect, however, it was a Pyrrhic victory: There were serious structural problems festering below the surface of the Democrats’ economic and political achievements.17

The engine of neoliberalism, in both its left- and right-inflected versions, is money. Deregulating finance and busting unions, for example, leads to rapid increases in the share of income going to corporate executives and shareholders, who can then put that money behind more neoliberal policy. The result is a self-perpetuating cycle of inequality.18

There was genuine ideological zealotry behind the neoliberal turn in the 1970s, but the fuel behind it was (and remains) the money of the ultra-rich, especially on Wall Street, which goes to campaign contributions as well as funding various think tanks, political nonprofit groups, and economics departments.19

Clinton was no exception—in some cases, his policy amounted to top-down class war. In particular, he cemented the idea that antitrust law should mostly be abandoned as a bipartisan consensus. Only upper-class power can explain the wide acceptance of Robert Bork’s absolutely preposterous attack on antitrust law as somehow harming the consumer.20

Worse still was Clinton’s approach to finance. He signed broad financial deregulation in 1994 and again in 1999, both times resulting in a wave of consolidation across the industry. Wall Street got huge—and hugely profitable, soaring to a peak of around 40 percent of corporate profits after the second round of deregulation. One resulting irony was the increasing fragility of the financial sector, leading to failures requiring more government intervention. This was clear during Clinton’s presidency with the huge failure of Long-Term Capital Management in 1998—with contagion averted only by a bailout coordinated by Greenspan’s Federal Reserve. But that, of course, was only a tiny preview of the literally trillions in cash and credit that was jammed into the failing financial system during the 2008 crisis.21

That process was started by George W. Bush, but it was Barack Obama who would oversee the full response to the crisis. In doing so, he followed the Clinton playbook almost to the letter—and in the process he became the fullest incarnation of Clintonism. In terms of raw political talent, Obama was head and shoulders above either Clinton or, indeed, every president since Franklin Roosevelt: An oratorical grandmaster, an inspirational organizer, and personally squeaky-clean, he sought to create a bipartisan politics that might transcend (one could also say “triangulate”) differences on the right and left. Partly as a result, Obama managed to deliver on health-care reform—long the liberal lodestar.22

But unlike the Clinton presidency, Obama’s strain of New Democrat politics, implemented in the wake of the 2008 crash, did not deliver the economic goods as advertised. Both output and job growth were pathetically weak after the immediate crisis and remained so throughout Obama’s two terms. Not only was there no catch-up growth to heal the damage of the Great Recession; it has actually been far below the postwar average. As a result, today American output is further below the pre-2007 trend than it was in 2010. However, corporate profits, which had dipped badly during the crisis, quickly soared to the greatest fraction of total output in postwar history, and have stayed nearly that high.23

Despite the absence of tawdry Clinton-style personal drama, Obama turned a blind eye to far more fundamental ethical violations. The upper class now had a veto over the rule of law itself, as the Justice Department demonstrated that criminal law essentially no longer applied to the economic elite, particularly in finance. In contrast to the savings-and-loan crisis in the 1980s and the Enron debacle in the early 2000s, virtually no one went to jail as a result of the 2008 crisis. The Justice Department leveled wrist-slap fines for things like market rigging and even money laundering for the drug cartels. Worst of all, it did almost nothing to halt the systematic mortgage fraud that swept the nation after the financial crisis, as banks foreclosed on millions of people with blatantly forged documents. This added terrific economic damage to what had already been done to the rule of law.24

The reason for this was simple: Obama’s top priority was to protect the gigantic, top-heavy financial system at all costs. Banks weren’t compelled to absorb the losses from the burst housing bubble, which were pushed onto homeowners instead. As Treasury Secretary Tim Geithner told Elizabeth Warren, then chair of the Congressional Oversight Panel, in 2009, foreclosure policy should merely “foam the runway” and provide the banks with a safe landing. Meanwhile, the sheer size of the system led to a widespread fear of financial instability if crimes were punished, as Attorney General Eric Holder testified to Congress in 2013.25

The president’s signature health-care reform shared a similar defect. In order to make it attractive to the economic elite, Obama negotiated by preemptively buying off well-heeled interest groups, from medical providers to insurance companies. The result, while undoubtedly a sharp improvement over the status quo, was a plan that didn’t cover even half of the uninsured population. Its jerry-built individual markets proved complicated and difficult to implement (not to mention obnoxious), and their resulting unpopularity sandbagged the law’s political strength. Notably, the expansion of the more social-democratic Medicaid program proved far more successful and popular than the Obamacare exchanges.26

The economic and political costs of the New Democrats’ neoliberal policies provide a good interpretive context for understanding Hillary Clinton’s defeat last year, which is compellingly narrated in Shattered. Naturally enough for a book so closely concerned with the campaign’s minute-by-minute details, Allen and Parnes suggest that Hillary’s poor tactical decisions and chaotic staffing played a large part in her defeat. And they’re not entirely wrong.27

The Clintons, for instance, were obsessed with personal loyalty. Two of Hillary’s aides created “loyalty scores” for members of Congress after her failed 2008 run, and, according to Shattered, Bill even helped knock some of the lower-ranked officials out of office by campaigning against them in primary elections. This made the Clintons’ entourage extremely reluctant to give Hillary bad news, or to dish to the press about incompetent management, for fear of retribution—all of which led to a variety of blind spots in the campaign. “It was a self-signed death warrant to raise a question about Hillary’s competence—to her or anyone else—in loyalty-obsessed Clintonworld,” Allen and Parnes write.28

But the deeper problem with Hillary—unlike FDR or Lincoln—was that she was an unpopular candidate because of her politics. The most shocking evidence of this is the decision by Clinton’s team to limit her campaigning in Michigan. “Our strategy was from all the data we saw,” one unnamed source from the Clinton world explained to Allen and Parnes. “Every time there was a mention of the election there, we did worse. To make the election a bigger deal was not good for our prospects in Michigan.” Perhaps their source wasn’t wrong: Despite having campaigned very heavily in Pennsylvania, she lost there, too—and it seems unlikely that any number of personal appearances would have helped her in those Rust Belt states.29

Still, a politician who avoids campaigning in a particular location because she fears that doing so will cause people to vote for her opponent is about the most fundamental political failure possible. What happened? The answer is that the basic premise of Clintonism had collapsed. Instead of being politically advantageous to triangulate between the interests of upper-class-friendly neoliberalism and the Democrats’ traditional working- and middle-class base, it became a huge liability.30

Even though the primary campaign against Bernie Sanders resulted in a pretty good Democratic Party platform for Hillary in the general election, much of her advertising focused on personal attacks instead, and she was a singularly noncredible messenger for it in any case. After her long career of buck-raking speeches, top-level political jobs, and hobnobbing with the world’s cosmopolitan elite, Hillary was perceived—unalterably, and only somewhat unfairly—as the candidate of the despised status quo. She wanted to be president for the same reason every major politician does: personal ambition. But she couldn’t grasp the depth of the New Democrats’ failure, much less articulate a convincing way to fix it. Occasionally, this seemed to break through even to Hillary’s staff. The first step in launching a campaign is to advocate a political vision, but Allen and Parnes report a top aide saying critically of Clinton: “I would have had a reason for running, or I wouldn’t have run.”31

This allowed Donald Trump to get to Clinton’s left on economics, especially trade, and to win the three critical Rust Belt states through a combination of peeling off a small minority of disgruntled Obama voters; capitalizing on depressed turnout and defection to third-party candidates among the Democratic base; and banking on the fact that most Republicans are perfectly fine voting for an incompetent game-show host, with a mile-long history of sexual-assault allegations, who is constantly spewing gutter racism.32

Through a sustained campaign of political battering, an updated flavor of laissez-faire has become the hegemonic ideology in both parties. It was generally agreed that you could not run afoul of its basic postulates and still win—indeed, the New Democrats thought it would be affirmatively bad to do so. But neoliberalism has now led to economic disaster in almost exactly the same fashion as its 1920s ancestor: skyrocketing inequality, a bloated and crisis-prone financial sector, and a gigantic economic collapse. In the 1930s, New Deal Democrats realized that the correct approach was not to accommodate the economic elite but rather to bring it to heel. Wall Street was chained, monopolies were either broken up or sharply regulated, and upper-class power was constrained with sharp increases in taxation. Meanwhile, working-class and middle-class power was bolstered through new legal protections for unions, new social-insurance programs, and benefits like the GI Bill.33

In similar circumstances, the Obama Democrats—following the basic formula of Clintonism—rescued the banks with gobs of public money. They did not return to vigorous antitrust enforcement. They largely stood aside while financial criminals plowed a ragged hole through the rule of law. The Dodd-Frank financial-reform bill, though it did many laudable things, did not meaningfully restrain Wall Street’s power. (And many of its key regulations were effectively slow-walked by Obama’s regulatory czar.)34

This disastrous record proved to be Hillary’s main problem in 2016. Unlike Obama, she had all the Clinton baggage, yet without her husband’s personal touch or charisma. Suddenly bereft of anyone to sell it, the economic record of the Democratic Party stood on its own—and the party lost to the most unqualified buffoon in the history of presidential politics (helped by FBI director James Comey and Russian hackers, it should be noted). At this point, it should also be clear that the route to long-term electoral success lies not in doubling down on Clintonism, but in returning to New Deal–style policy and politics, updated for a modern age (especially by removing the racist elements intended to appeal to Southern Democrats in the 1930s and ’40s).35 Related Article Hillary Clinton’s If-Onlys Elizabeth Drew

But it’s worth considering one final point: that the basic premise of Clintonism was never true. It was never necessary to bow before neoliberalism to achieve growth and employment. Indeed, the phrase “stagflation” is somewhat misleading, since growth as such was never the problem. While the 1970s did have high inflation and unemployment, it was a high-growth decade—average real GDP growth per year was higher than in the 1980s and much higher than in the 2000s or ’10s. The decade’s real problems were the oil shocks, the continued wasteful spending on the Vietnam War, and a huge surge into the labor force as women got jobs en masse and the baby boomers came of age at the same time. Super-high demand led to rising prices and fast growth, but there still weren’t enough new jobs to completely absorb a huge increase in the working-age population. All this caused a reversal of the US balance of trade, which helped break the Bretton Woods currency system and led to more problems.36

Make no mistake: These were all serious issues. But none of them were caused by the basic New Deal framework (with the partial exception of mass unionization, which did help fuel inflation through cost-of-living contract stipulations). And while the New Democrats did occasionally make some good points about sclerotic or captured regulatory agencies, rolling them back didn’t unleash a massive surge of growth. On the contrary, growth since the 1970s has largely been middling to poor, with the brief exception of the late-’90s tech boom—and even that didn’t hold a candle to the explosive boom of the 1960s. Then too, regulation by state agencies was merely replaced by even worse and less accountable regulation by monopolist corporations.37

In the context of postwar politics, the upper class accommodated itself to a truce in the class war, for about three decades. But when the system came under strain, the elites launched a renewed class war, leveraging stagflation to destroy and devour the welfare state. Clintonism could work in the early stages of that process, buoyed by the economic bubble of the 1990s. But when the inevitable disaster struck, it would become an anchor around the neck of the Democratic Party—and it remains one to this day.38