What were Clinton's economic policies while president and what effect
(positive or negative) did they have on economic growth during that
time? Were his policies actually responsible for the growth during his
presidency? (Any information regarding the economics of Clinton's
policies is useful.) THANK YOU!

I'm no Clinton expert, however I think he played a very safe game as
president (not that that's a good or bad thing... just a thing).  He
didn't drastacally change anything, he simply went with what he was
given and let the economy develop as it did.

It is very important to note however that economies aren't changed
over night.  Most experts agree that anything done today will take a
minimum of 2 years to have a major real effect (not a quick burp in
the stock market).  Then for the full effect of the policy on the
economy we have to wait 5 or 10 years.

The economic boom of the '90's was spurred by the internet, which was
invented by...Al Gore!  So Clinton definitely gets some credit there,
too.

Ah, how could I have forgotten that.  So true Pafa.  Al Gore is my hero!

Do I need to clarify this question? Many GOP supporters believe that
the robust growth during Clinton's administration was a result of
economic policies of the Bush and Reagan administrations. I'm not
looking for a political debate, but mostly for an analysis of what
kinds of economic policies, from an executive standpoint, have a
positive or negative affect on growth.

BTW - The Al Gore thing is a little more complicated than that:
http://www.cs.ucsd.edu/users/goguen/courses/275f00/invented.html.

But it was funny anyway.

drcorday-ga,

Your question is clear enough, I suspect.  It's the answer that's
unclear.  With so many pundits arguing -- over whether Clinton's
policies created the economic boom, helped it along, impeded it, rode
the Reagan-era coattails, or were innocent bystanders -- how could we
mere researchers hope to sort it all out?

Yeah, pafa, you're right. It's kind of a mess. We'll see if anyone can
put together an answer that holds water.

Thanks for your comments!

The idea that Reagan's policies would still have a resounding effect a
decade later is more a tenet of faith than of rationality.  Especially
when you consider that his signature effort, the reduction of the tax
rate, was partially repudiated by him with his tax increases later in
his terms.

As for Clinton, I think he profited more from the productivity gains
from the PC revolution than the Internet revolution - indeed, the VC
money poured into dot coms was an indication of how well things were
going than a driver of improvements.

I think once we get to the point where economics is more of a real
science, we will realize that the economic growth under Clinton was as
much a matter of getting a lot of little things right (and not too
much really wrong) than any grand economic policies. On the other
hand, I think the current administration will be characterized by
getting a lot of little things wrong (increased government spending
rather than tax cuts in times of a recession are pretty much the
proven method to health) resulting in a deeper and longer recession
than necessary.

Before Reagan, the tax rate for the rich (making approx. more than
$200,000) was 70%/50% (50% for earned income).  Reagan successfully
lowered the 70% to 50% in 1982.  Then in 1987 he lowered both rates to
38.5%.  During the Bush Sr years, that rate was lowered to 33% and
finally 31.9%.

Lower taxes are clearly an economic spur (when people assume they are
going to be lasting).  I don't know any economist who would debate
that given other constant conditions.

In 1993 Clinton raised the tax on the rich to about 40% (rich now
defined as making more than $250,000).

http://home.att.net/~Resurgence/TaxTimeline.htm

As I stated before, the full effect of economic policies takes several
years (atleast) to be seen.  I'm not at all saying that Clinton's tax
increase caused the bust in 2000.  But it was clear even to most
Reagan haters in the 80s that his huge tax cuts spurred economic
growth over the next decade.

Unfortunately in the 90s there was a huge dot com bubble.  The economy
thrived on it.  Dispite the higher taxes, people kept pouring money
into it.  And like every bubble, it had to burst.  In my oppinion when
Clinton saw that the budget was well under control in 1998 and 1999,
he should have cut back the tax increase that he had implemented and
the burst likely would have been much softer and the recovery would
have happened sooner.

However, like I said before... Clinton seemed to avoid controvertial
decisions and seemed to lay low under the radar most of the time with
his policies so it would have been un-Clinton-like to take such an
action.  And of course I am now looking at Clinton policy with hinde
sight much like many people are now looking at early Bush decisions
with hinde sight.

Any more information on the Reagan cuts? I would like to have some
more specific dates, and a clearer explanation of what they did for
the economy. I'm getting irritated with the blanket partisan
explanations.

I do not, however, want to ignore other key economic factors that may
have played a role. Inflation, the budget, the national debt, interest
rates and trade ratios also may be key. I really cannot believe it's
as simple as "tax cuts vs. no tax cuts." Maybe, though. Either way, we
need some data.

A drastic lowering of the marginal tax rate may indeed spur the
economy, but meandering around in the thirties (marginal rates) is
unlikely to cause any noticeable change.  The two major effects that
are supposed to happen is that rich people will work substantially
less hard if their marginal rate changes by 6%, and that the higher
tax rate will drive up investment costs (by lowering the savings rate
and thus sponging up loose capital). Neither of these seem
particularly believable at today's rates.

The "all else being equal" part is a lie, though. A drop in rates will
not leave everything else equal. The government will either have to
cut spending or dig deeper into deficit (dynamic scoring being a
myth). The former drives up the cost of capital immediately as well as
having long-term effects. As for the latter, much of government
spending does work as a boost to growth. There is an immediate effect
to government spending as money is paid out in wages. Depending on the
type of payment, there can be a significant multiplier effect to this
disbursement. Unemployment insurance, for example, is an immediate
boost (no 2-year lag) to the economy. However, according to the
analysts, construction has the biggest multiplier effect.

There is another aspect to government spending in that some of it is a
type of investment. Building freeways, legal infrastructures and
pollution-free neighborhoods work to increase the over-all
productivity of a nation. Another example, of course, is the Internet,
originally built on the government's dime. It is possible that Al
Gore, by allowing the commercialization of the Internet, had a bigger
influence on GDP growth than either Clinton or Reagan. I don't know,
but the point is that sometimes the smaller, less-visible decisions
are the ones that really matter, and we may not be able to tweak out
those effects from the news-makers.

To post more directly to Dr. Corday's question, let me steal at length
from a famous economist (answer to Dr. Corday's question in the
paragraph preceded by **):

http://www.pkarchive.org/economy/TaxCutCon.html

Ronald Reagan put supply-side theory into practice with his 1981 tax
cut. The tax cuts were modest for middle-class families but very large
for the well-off. Between 1979 and 1983, according to Congressional
Budget Office estimates, the average federal tax rate on the top 1
percent of families fell from 37 to 27.7 percent.

So did the tax cuts promote economic growth? You might think that all
we have to do is look at how the economy performed. But it's not that
simple, because different observers read different things from
Reagan's economic record.

Here's how tax-cut advocates look at it: after a deep slump between
1979 and 1982, the U.S. economy began growing rapidly. Between 1982
and 1989 (the first year of the first George Bush's presidency), the
economy grew at an average annual rate of 4.2 percent. That's a lot
better than the growth rate of the economy in the late 1970's, and
supply-siders claim that these ''Seven Fat Years'' (the title of a
book by Robert L. Bartley, the longtime editor of The Wall Street
Journal's editorial page) prove the success of Reagan's 1981 tax cut.

But skeptics say that rapid growth after 1982 proves nothing: a severe
recession is usually followed by a period of fast growth, as
unemployed workers and factories are brought back on line. The test of
tax cuts as a spur to economic growth is whether they produced more
than an ordinary business cycle recovery. Once the economy was back to
full employment, was it bigger than you would otherwise have expected?
And there Reagan fails the test: between 1979, when the big slump
began, and 1989, when the economy finally achieved more or less full
employment again, the growth rate was 3 percent, the same as the
growth rate between the two previous business cycle peaks in 1973 and
1979. Or to put it another way, by the late 1980's the U.S. economy
was about where you would have expected it to be, given the trend in
the 1970's. Nothing in the data suggests a supply-side revolution.

Does this mean that the Reagan tax cuts had no effect? Of course not.
Those tax cuts, combined with increased military spending, provided a
good old-fashioned Keynesian boost to demand. And this boost was one
factor in the rapid recovery from recession that developed at the end
of 1982, though probably not as important as the rapid expansion of
the money supply that began in the summer of that year. But the
supposed supply-side effects are invisible in the data.

While the Reagan tax cuts didn't produce any visible supply-side
gains, they did lead to large budget deficits. From the point of view
of most economists, this was a bad thing. But for starve-the-beast
tax-cutters, deficits are potentially a good thing, because they force
the government to shrink. So did Reagan's deficits shrink the beast?

A casual glance at the data might suggest not: federal spending as a
share of gross domestic product was actually slightly higher at the
end of the 1980's than it was at the end of the 1970's. But that
number includes both defense spending and ''entitlements,'' mainly
Social Security and Medicare, whose growth is automatic unless
Congress votes to cut benefits. What's left is a grab bag known as
domestic discretionary spending, including everything from courts and
national parks to environmental cleanups and education. And domestic
discretionary spending fell from 4.5 percent of G.D.P. in 1981 to 3.2
percent in 1988.

But that's probably about as far as any president can shrink domestic
discretionary spending. And because Reagan couldn't shrink the belly
of the beast, entitlements, he couldn't find enough domestic spending
cuts to offset his military spending increases and tax cuts. The
federal budget went into persistent, alarming, deficit. In response to
these deficits, George Bush the elder went back on his ''read my
lips'' pledge and raised taxes. Bill Clinton raised them further. And
thereby hangs a tale.

For Clinton did exactly the opposite of what supply-side economics
said you should do: he raised the marginal rate on high-income
taxpayers. In 1989, the top 1 percent of families paid, on average,
only 28.9 percent of their income in federal taxes; by 1995, that
share was up to 36.1 percent.

Conservatives confidently awaited a disaster -- but it failed to
materialize. In fact, the economy grew at a reasonable pace through
Clinton's first term, while the deficit and the unemployment rate went
steadily down. And then the news got even better: unemployment fell to
its lowest level in decades without causing inflation, while
productivity growth accelerated to rates not seen since the 1960's.
And the budget deficit turned into an impressive surplus.

Tax-cut advocates had claimed the Reagan years as proof of their
doctrine's correctness; as we have seen, those claims wilt under close
examination. But the Clinton years posed a much greater challenge:
here was a president who sharply raised the marginal tax rate on
high-income taxpayers, the very rate that the tax-cut movement cares
most about. And instead of presiding over an economic disaster, he
presided over an economic miracle.

**Let's be clear: very few economists think that Clinton's policies
were primarily responsible for that miracle. For the most part, the
Clinton-era surge probably reflected the maturing of information
technology: businesses finally figured out how to make effective use
of computers, and the resulting surge in productivity drove the
economy forward. But the fact that America's best growth in a
generation took place after the government did exactly the opposite of
what tax-cutters advocate was a body blow to their doctrine.

They tried to make the best of the situation. The good economy of the
late 1990's, ardent tax-cutters insisted, was caused by the 1981 tax
cut. Early in 2000, Lawrence Kudlow and Stephen Moore, prominent
supply-siders, published an article titled ''It's the Reagan Economy,
Stupid.''

But anyone who thought about the lags involved found this implausible
-- indeed, hilarious. If the tax-cut movement attributed the booming
economy of 1999 to a tax cut Reagan pushed through 18 years earlier,
why didn't they attribute the economic boom of 1983 and 1984 --
Reagan's ''morning in America'' -- to whatever Lyndon Johnson was
doing in 1965 and 1966?

Thank you, mczagros, you and jack of all trades are bringing me much
closer to answering my own question, actually. Especially because I
have tidbits of each side's discussion of the economic theory, and
mczagros's last response had some more interesting information that
the comments have not yet provided.

Noting that the subject has been somewhat partisan (which I do expect,
but am trying to avoid in a more, well, unbiased approach to the
truth), my curiousity got the best of me and wanted to see which
presidential candidate was supported by the "expert economists" so
frequently quoted but rarely identified.

And the Oscar goes to...: I did a google search first for
"economists+2004" and "economists+election," the former basically
coming up dry, but the second providing some fascinating insights on
the candidate's policies and the economic critique thereof:
http://economics.about.com/od/nobelprizeineconomics/a/election_nobel_4.htm

This article has the background and arguments of 6 Bush-leaning
economists and 14 Kerry-leaning economists. I was hesitant to accept
the article's validity, as it clearly showed and quantitative bias
toward the Democratic candidate, but now have given it serious
consideration due to a much simpler Google query.

I decided to take a shot in the dark for "economists endorse" and end
the search terms right there. Result number one was: "Ten nobel prize
winning economists endorse Kerry," followed by article after article
about Kerry economists. I still haven't dismissed a possible bias
here, and want to underscore that there are significant benefits to
supply-side economics. I am also not an expert in either politics or
economics, so I don't presume to know "the correct answer" on how to
make the economy grow from an executive point of view, but I am
finding some patterns. Thanks a lot for your comments!

I am still looking for a more comprehensive answer... but thank you all, again.

I decided to look into these nobel prize winners and found this interesting site:
"Who Are These Nobel Prize Winning Economists Supporting Bush or Kerry?"
http://economics.about.com/od/nobelprizeineconomics/a/election_nobel.htm

It give a bit of background info on each economist and then a blurb of
what they said about Kerry/Bush.
Unfortunately what you're asking is impossible to answer as even these
16 nobel prize winning economists would probably tell you.  And a
warning about the article... here is the "conclusion":

"There are prominent economists with a great deal of knowledge of
economic policy on both sides of the election divide. It is clear from
the facts given that the choice for these economists to support Kerry
or Bush is somewhat based their own ideological biases. What is
unclear is if these Nobel Prize winners in Economics have more insight
into which candidate would make the best President as any other
informed voter has."

Any quest to find knowledge is a good quest, but few things in the
world are cut and dry enough to get a complete, correct answer.

That is kind of a weird article in that it is only about looking for
biases, that is why they state their conclusion as they do. Come on,
these guys are professionals and are the top people in their field,
and they break 2 to 1 for a Democrat. It is interesting, and more
relevant to this question, that both one of the pro-Bush and one of
the pro-Kerry economists praise the Clinton years.

In any event, a better source is the Economist's survey of 100
economists that breaks it down to specific policy areas.  Again, there
is generally a 2 to 1 agreement that Kerry's proposed policies are
better.  Over 70% think Kerry was better on tax cuts, promoting fiscal
discipline and on energy policy. They do think Bush is better on
trade.

http://www.economist.com/world/na/displayStory.cfm?story_id=3262965

That's a fun site Mczagros, I love those graphs (I'm a huge graph fan
myself).  It sounds like the survey was conducted in a very
professional, unbiased way.  Unfortunately they state in the article
themselves that...
"Though most of our professors claim they are not interested in
working in Washington, 80% of those who would accept a policy job
would prefer to work for Mr Kerry."

The university professors do tend to vere towards the democrats. 
However the data is good stuff regardless and I got much out of it.

I think finding unbiased people in our world when it comes to politics
(especially when it comes to Bush) is a difficult task.

I doubt that this is all that biased. The economists were asked their
professional opinion. If that opinion "biases" them to one side or
another, that is different than a bias that predisposes them to only
seek confirming evidence.

In any event, the numbers suggest a limitation to their bias and that
is that the numbers vary according to which question is asked. For
example, only about 35% support Kerry on trade issues while 70% agree
with him on other issues. That suggests that a good third at least are
not blind partisans.