There are many independents who normally lean toward the Democratic Party, but who are now voting Republican simply because the Democrats have strayed too far from their historical norm.
While much of today’s Democratic Party is leaning far to the left, their core is trying to return toward a more centrist position. This is the position that Bill Clinton took when he was president. Clinton recognized that he had to change some of his views in order to win a second term.
In 1996, Clinton was seeking re-election. Since he raised taxes early in his first term, the recovery from the 1991 recession was sluggish. During his 1996 campaign, he promised to jump-start the economy. He abandoned any thoughts of a National Health Insurance policy, which he studied in 1993. He had placed wife Hillary Clinton on the commission to study the health care problem.
Hillary came up with a complete National Healthcare system where each citizen would get a health care card similar to a Social Security card. This would be a complete takeover of health care by the government. In 1994, the voters soundly rejected her plan and the GOP gained control of the House of Representatives for the first time in forty years.
Bill knew he had to pivot in order to win re-election. To jump-start the economy, prior to the 1996 election, Clinton asked Congress to reduce the capital gains tax rate from 28% to 20%. In addition, he declared that the “era of big government is over” during his 1996 state of the union speech. This view was in contrast to the views of many in his party.
The result was that Clinton won re-election and economic growth averaged more than 4% annually for the next four years. Clinton was also able to work with the Republican-controlled House of Representatives. Working with Speaker of the House Newt Gingrich, Clinton reduced the rate of growth of government spending.
Because of the reduction in the capital gains tax rate and resulting in high economic growth, revenue from the capital gains taxed increased. This is simply because the reduced rate encouraged more capital investment and more economic growth so the low rate was applied to larger amounts of income. After all isn’t 20% of $1,500 ($300) more than 28% of $1,000 ($280)?
The independents and some Republicans who voted for Clinton in 1996 did so because they agreed with his reduction of taxes and holding the line on government spending. They believed their vote for Clinton was justified since the federal government eliminated the deficit and ran a budget surplus annually from 1997 to 2000.
In 2000, Al Gore barely lost the presidential election for a number of reasons, but one primary reason was that he wanted to expand the role of the federal government. For instance, Gore opposed across-the-board tax cuts that would further stimulate the economy. Instead, Gore wanted tax cuts targeted to lower income earners while raising taxes on the top 1% of income earners.
Gore’s cuts would have reduced capital formation and slowed the economy. In addition, Gore wanted to expand government involvement in health care, while having the government pay for high-priced prescription drugs for selected groups of Americans.
Voters recognized that Gore’s position would slow the economy and would increase government spending so that the federal government budget would again run a deficit. As a result, Gore attracted an insufficient number of independent voters.
President Obama took the Democratic Party further away from Clinton’s principles. Obama raised taxes on all Americans, particularly the highest income earners and vastly increased government spending, causing huge budget deficits. In fact, Obama added more than $9 trillion to the $11 trillion that was the total of all deficits for every president prior to Obama.
Where are the Bill Clinton Democrats? What happened Clinton’s policies of lower tax rates, a reduced role for the federal government, and the elimination of budget deficits?
Today’s Democratic Party has embraced the concept of government control of key markets like health care and education, higher taxes on all Americans, particularly the highest income earners, increased government spending, and a complete lack of fiscal control.
While those policies may appeal to Americans who have suffered because of the 2% growth economy the U.S. experienced from 2006 to 2016, it won’t appeal to the majority of Americans. And it won’t appeal to independents.
Where are the Bill Clinton Democrats?
Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 40years. @mbusler www.facebook.com/fundingdemocracy