<p>
[quote]
Clinton actually reversed that deficit into a surplus.
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</p>
<p>Well, actually, Clinton was extremely LUCKY to be POTUS during three major bulls runs:</p>
<p>1) the single greatest US stock market bull in history
2) housing boom
3) incredibly strong US dollar</p>
<p>In sum: those three things together erased the deficit. Not Clinton. Period. Clinton was just a lucky dude to be in the right place at the right time to claim credit.</p>
<p>The 90's stock market bull was the single greatest contributor to the sudden increase in government revenue (via taxes, namely capital gains tax paid during the stock market bull run) than anything Clinton did. Further, this stock market "wealth effect" led people to spend way beyond their means -> housing boom -> further stuffing government coffers.</p>
<p>
[quote]
The stock market bubble added more than $8 trillion of paper wealth to the economy. This stimulated the economy in two ways. First, when families see the value of their stock portfolios rise, they spend more, since they feel less need to put money aside for retirement or their kids' education. Just as the textbooks would predict, consumption boomed and savings fell through the floor in the late '90s and 2000.</p>
<p>The stock bubble also stimulated the economy through its effect on investment. Contrary to myth, firms rarely finance new investment by issuing shares of stock. However, the '90s boom was an exception to this rule. With Internet start-ups able to raise billions of dollars by selling shares on the Nasdaq, companies were using stock to finance new investment in a big way. Soaring stock prices fed directly into an investment boom concentrated in telecommunications and other high-tech sectors. Investment in equipment and software rose by more than $300 billion between 1996 and 2000, an increase of more than 45 percent.
[/quote]
</p>
<p>So when the bubble "burst" (conveniently when Clinton was exiting and Bush was entering the White House):</p>
<p>
[quote]
The bursting of the bubble threw this process into reverse. This was seen most clearly with investment, which in both 2001 and 2002 was down by more than $140 billion from its peak in 2000. As we now know, much of the tech investment of the boom years was wasted on wild schemes that will never prove profitable. The tech sectors continue to have vast amounts of overcapacity, which will depress investment in semiconductors, telecommunications, and related sectors for years to come.
[/quote]
</p>
<p>
[quote]
The '90s stock bubble is also partially responsible for other recent problems. One is the switch from surpluses to deficits at both the federal and state levels. The federal government collected almost $120 billion in capital gains tax revenue at the peak of the stock bubble in 2000, most of which came from gains on stock sales. When stock prices plunged, capital gains revenue did also. It is now projected at $51 billion in 2003. Many states, especially California, were similarly affected by the stock crash.
[/quote]
</p>
<p>The consequences of Clinton's "strong dollar" legacy:</p>
<p>
[quote]
To make matters worse, a third bubble from the '90s is also still with us -- the dollar bubble. The Clinton administration deliberately pursued a "strong dollar" policy. This had the desirable short-term effect of restraining inflation and raising domestic living standards by making imports cheaper for people in the United States. (An undesirable short-term effect was the devastation of U.S. manufacturing.) However, in the long-term, the strong dollar policy is unsustainable. As a result of its massive bill for imports, the United States is currently borrowing more than $550 billion a year from abroad (approximately 5.3 percent of GDP), since it is buying much more from abroad than it is selling. This borrowing is paid for by selling off U.S. assets. If the trade deficit remains at its current level, within a decade foreigners will own the entire stock market, much of the government debt and many of our homes.
[/quote]
</p>
<p>All excerpts taken from the following article:
<a href="http://www.alternet.org/story/15975/%5B/url%5D">http://www.alternet.org/story/15975/</a></p>
<p>As an aside: </p>
<p>I totally hate it when people praise Clinton for erasing the deficit. He basically was a lucky mofo who was in the right place at the right time and left the White House just as the stock market bull started to tank straight into bear territory.</p>
