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Robert Rubin Revisited

Economists and historians will long debate the contrast between the economic policies of the presidencies of Bill Clinton and George W. Bush. The Clinton administration took office with remarkably few cards, and the cards it held were dreadful: a long-term legacy of extremely slow economic growth, huge federal budget deficits created by the Ronald Reagan/George H. W. Bush administrations of 1980-1992, a relatively high "natural" rate of unemployment, and growing inflationary pressure.

By contrast, George W. Bush's administration took office with stunningly good cards: a budget in substantial surplus, a trend of rapid productivity growth as the information-technology revolution reached critical mass, and a very low "natural" rate of unemployment.

Despite its handicaps, nearly everything that the Clinton economic policy team touched turned to gold. Led by Robert Rubin, first as an Assistant to the President and later as Secretary of the Treasury, it turned the gargantuan Reagan/Bush deficits into huge surpluses; it successfully enhanced America's high-investment/high productivity growth recovery; it pursued initiatives to reduce trade barriers. The Clinton team could also take credit for the largely successful handling of the 1994 Mexican and 1997-1998 Asian financial crises.

By contrast, nearly everything that George W. Bush's economic policy team has touched has turned to, well, if not lead, at least to a state that inspires observers, both inside and outside the administration, to shake their heads and mutter about a horribly wasted opportunity. On trade, on fiscal policy, on reform of social entitlements, on almost every issue you can name, the Bush team has worsened conditions substantially.