Bill Clinton’s Economic Policy
One of President Bill Clinton’s biggest accomplishments during his presidential term is his policy to stimulate the American economy. In 1993, Clinton and his vice president Gore released the economic strategy for their term. Most believed it wouldn’t do much to spur our economy but in 1997 positive outcomes began to surface as the national deficit began to shrink. (Schaller, Anderson, and Schulzinger 514) Clinton faced a high unemployment rate, record deficits, and rising inflation left by previous administrations. In response he created a booming economy through establishing fiscal discipline, keeping interest rates low, investing in government programs that spurred educational growth, and opened our foreign trade market in order to stabilize the United State’s budget.
In 1992 the national debt quadrupled since 1982, that created a national deficit of $290 billion that was predicted to be $455 billion by 2000. Clinton’s unpopular economic policy resulted in an eight-year deficit reduction to become America’s first experienced fiscal improvement. (Historic Economic Growth) Vice President Gore brought the new three-part Budget Reconciliation to congress on August 6, 1993 in order to reverse the trickle down economic strategy that had been in place the previous 12 years. Without receiving a single Republican vote in Congress, Clinton signed the bill into law four days later. One of these parts was establishing fiscal discipline that aided in the largest budget surplus in United States history. The economic plan that passed in 1993 had a projected $500 billion deficit cut for the first five years. Prior to the 1997 Balanced Budget Agreement, Clinton and Gore cut the deficit by 92 percent. (Clinton and Gore Economic Plan) The Balance Budget Agreement of 1997 was a bipartisan agreement that would eliminate the national deficit completely. Along with eliminating the deficit, plans for economic growth and investment into education and health for the public were created. A big part of Clinton’s economic discipline was lowering government spending from 22.2 percent in 1992 to 18 percent in 2000, the lowest level since 1966. Another and most noticeable, result was the largest fiscal surplus of $237 billion in 2000. This was aided by the largest debt pay-down in the previous three years. Publicly owned debt was reduced by $363 billion and had the national debt predicted to be completely paid off by 2009. (Historic Economic Growth) Our country had a hard time meeting this prediction due to the costly foreign policies in Afghanistan and Iraq along with new economic strategies enacted by the Bush administration.
A result of Clinton’s economic discipline was lowered interest rates throughout the United States public. The reduced debt created lower interest rates on mortgages, car loans, and student loans. A family with a house mortgage of $100,000 was expected to save $2,000 a year that acted like a tax cut. (Budget & Economy) The shot-term mortgage rates were driven down while bond traders slashed the long-term rates. 30-year fixed mortgage interest rate went from 8.31 percent to 6.83 percent in 11 months during 1993. Homeowners grew to 67 percent by 1999 the highest homeownership rate on record. (Clinton and Gore Economic Plan) This extra money could be used elsewhere or put back into American’s homes to allow them to be paid off sooner. Clinton’s plan, “by focusing on cutting the deficit in half, bringing interest rates down, and spurring private investment to fire up the nation’s stagnant economy,” encouraged American’s to buy homes, cars, start businesses, and go to college in order to create a better future for the average American seeking ‘The Dream’. (Budget & Economy) In turn America saw an increase in job creation, wages, and national productivity. The major drop in interest rates created a boom of investors in new technology, which gave birth to what Business Week dubbed, “the New...
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