Greenspan Has Left the Building

BERKELEY – The first time I went to Washington, DC, as an adult was in 1993, when I arrived to work for President Bill Clinton in the Treasury Department. Back then, America urgently needed to rebalance the federal budget to rein in explosive growth in the debt/GDP ratio; to overhaul America’s extraordinarily expensive and inefficient health-care system; and to begin to deal with global warming via a slow ramp-up of a carbon tax.

Beyond these three immediate issues were long-run policy challenges: updating the country’s pension system to deal with an aging population and the decline of defined-benefit pensions; improving the education system so that more people would bear the risk of pursuing higher education; and reversing the erosion of America as a middle-class society.

None of these goals (perhaps with the exception of the last one) were partisan issues. The long-run deficit, health-care financing, and global warming, no less than securing retirement income and enabling educational opportunity, were issues on which bipartisan progress and agreement should have been easily attained. Yet we Clintonites received absolutely no cooperation from either Republican officeholders or Republican policy intellectuals.

Figures like Senators Pete Domenici and Alan Simpson, who talked a good game about the long-run deficit, never met a budget-busting Republican program that they would oppose or a deficit-reducing Democratic initiative that they could support. Economists who, under Presidents Ronald Reagan and George H. W. Bush, talked such a good game about excessive tax burdens and the importance of balanced budgets went very quiet after Clinton took office in January 1993, and stayed quiet after January 2001, when George W. Bush’s administration dismantled so much of what the Clinton administration had accomplished.