Bill Clinton’s Presidency Was a Disaster for Labor

Though Bill Clinton ran for president on promises of empowering workers, in office he gutted welfare and passed NAFTA, undermining organized labor and driving working-class voters away from the Democratic Party. We’re still living with the consequences.

Bill Clinton's neoliberal agenda deliberately gutted social security and facilitated the offshoring of manufacturing. (Getty Image)

After twelve years of Republican rule, an air of high anticipation permeated Washington as forty-six-year-old William Jefferson Clinton, former Arkansas governor and Georgetown graduate, took office in 1993. But it quickly became clear that “a revival and modernization of New Deal-style liberalism,” something many Democrats had been waiting for, “was stillborn at the dawn of the Clinton era.”

So write Nelson Lichtenstein and Judith Stein in A Fabulous Failure: The Clinton Presidency and the Transformation of American Capitalism. In their recently published book, the noted labor historians offer a compelling account of how Bill Clinton’s initial promises of empowering American workers and encouraging progressive values rapidly turned into failure.

A product of Stein’s (who died in 2017) time studying Clinton’s early political career in Arkansas and developed with this impulse by Lichtenstein, the book puts particular focus on Clinton’s deep roots in right-to-work Arkansas and the cronyism between Clinton and his profoundly anti-union donors.

It was in this state, according to a clothing workers’ organizer quoted in the book, that Clinton acted as “an opportunist, sometimes creatively adventurous,” but simultaneously “a cynic and a cad,” always willing to drop friends and promises if his personal political project was “faced with the sort of opposition all too common in a state once loyal to the old Confederacy.” Many, particularly in organized labor, were to face Clinton’s “calculated betrayal.”

The Neoliberal Turn

By the end of the 1990s, after the biggest stock market boom the country had ever seen — real wages were rising, the federal budget was actually running a surplus, and high tech and finance were flying high — things would come to a devastating stop, and everything would disintegrate, leading to, according to Lichtenstein, the 2008 bubble that caused a near decimation of the global finance world.

Today Clinton’s presidency wins little respect. Few liberals want to return to the Democratic Party of the 1990s because so many see his presidency as a betrayal of the progressivism that was once the hallmark of the New Deal and the Great Society. According to Lichtenstein and Stein, his presidency was merely an “accommodation to an ideology that privileged trade liberalization, financial deregulation, and privatization of government services, while tolerating the growth of class inequalities.”

In addition to servicing longtime Democratic donors, at the heart of the presidency was a growing belief that America’s high-tech “new economy” was unlike any other that the nation had witnessed. The Silicon Valley high-tech industry — sustained by four decades of large federal subsidies — would come into its own in the stock market during the 1990s. The economy grew for 116 months, with economic growth averaging 4 percent a year and twenty-two million private sector jobs being created.

But as Lichtenstein and Stein remind readers, much of this was impressive in numbers alone. Most of the job growth was in retail trade, hospitality, care work, and so on. These sorts of jobs — which Clinton had created as Arkansas governor — had no health benefits, pensions, or decent working conditions, and would soon morph into the “gig economy” work blighting the world today, with workers additionally subject to a growing culture of surveillance and workplace spying. The benefactors were companies such as Walmart, McDonald’s, Amazon, and FedEx, not the software engineers and new technical specialists that many anticipated.

In his first administration, a much-touted health care reform bill led by Hillary Clinton failed badly. By 1994, it was dead on arrival. As Secretary of Labor Robert Reich finally conceded, “The quest for universal health provision had . . . [a] rich history, but ‘managed competition’ was something brand-new. Designed to placate all the powerful interest groups, . . . this scheme had few defenders who were both knowledgeable and committed.” It was a profound failure among those who had long wanted an extension of Medicare, passed in the 1960s by Lyndon B. Johnson in his Great Society program.

What did get passed was the North American Free Trade Agreement (NAFTA). Though it was not the most economically consequential, the authors argue that it “remains the most politically and ideologically toxic” issue pushed by Clinton, a “political blunder of the first order” that opened up an opportunity for the Republicans in the 1994 midterm elections and alienated large segments of the working class who, as Lichtenstein underscores, eventually became a significant proportion of today’s Donald Trump supporters.

Although Northerners were the most vocal opponents of NAFTA, it hit the South harder than the North. No demographic in the United States shifted more decisively to the GOP in 1994 than Southern whites, particularly those whose education ended with a high school degree or less. Ironically, NAFTA’s impact on US employment was not great. In the two decades after the trade bill passed, just forty thousand jobs were lost each year, a very small fraction of the nation’s larger job churn. In contrast, Mexican employment in agriculture tripled in just four years to 762,000 jobs.

But there was a deeper impact. Blue-collar workers were constantly attacked by threats that their plants would be closed if they tried organizing or striking, keeping organized workers very much on the defensive.

From Workers to Wall Street

Peter Edelman, long one of Clinton’s most progressive colleagues, was more than upset when Clinton signed a bill overhauling the country’s welfare system — the Temporary Assistance for Needy Families. It had attracted many Republican votes in Congress, turning welfare over to states with a huge emphasis on “welfare to work” — a system predicated on mothers getting back to work no matter how young their children.

“After all the noise and heat over the past two years about balancing the budget,” Edelman pointed out, “the only deep, multi-year budget cuts actually enacted were those in this bill, affecting low-income people.” A decade later, around 60 percent of mothers had found some work, but that statistic would deteriorate after the 2008 crisis, when poverty made a serious comeback.

In the 1990s, as Clinton became more dependent on Republicans, Social Security — the nation’s emblematic retirement program — was under severe pressure. A multimillion-dollar public relations program preached that it would soon run out of money and needed to be privatized — run by Wall Street, which was salivating to get its hands on the FDR-mandated fund.

Relatively few realized that Social Security was severely hampered by a regressive cap, which could and would greatly increase everyone’s benefits if lifted. Yet during the Clinton years, the public was under the belief that social security was close to failure. At no time had it come so close to being taken over by Wall Street, a situation that Clinton was reportedly considering seriously.

A strange phenomenon occurred. As the Monica Lewinsky scandal unfolded, Clinton was forced to turn to old-style Democrats for votes to help him stay in office. It was their support — at that moment — that pushed the administration away from privatizing Social Security. As Clinton confided to Republican apparatchik William Archer, “I’ve stiffed organized labor on trade. I can’t stiff them again.”

Afterward, he became estranged from the most consequential trade issues his administration would face. “That vacuum would be filled by men and women whose ideology, and the deregulatory free market statecraft that flowed from it, did much to firmly stamp the label ‘neoliberal’ on the Clinton presidency,” write Lichtenstein and Stein.

At a Manhattan meeting of the prestigious Council on Foreign Relations, Wall Street insider and attacker of Social Security Pete Peterson introduced Treasury Secretary Robert Rubin — a former CEO of Goldman Sachs — by saying “people sleep better because Bob Rubin is secretary of the treasury.” Rubin had become the most powerful cabinet head by this time and, by some count, almost a de facto president.

A big part of the neoliberal appeal was that it offered those with the right educational and cultural backgrounds a “transnational capacity to . . . build new careers.” When the average Joe began actively trading in the stock market, Wall Street insiders could start cashing out.

The most cataclysmic event during these years was the so-called shock therapy applied to Russia, throwing millions into poverty as jobs vanished, the ruble was devalued, and life became extremely precarious. Although company seizures and privatizations were propelled by Russian oligarchs, they were, according to Lichtenstein and Stein, “offered ideological guidance and financial support by the same Treasury circles that had played such an influential role in the IMF effort to transform Asian capitalism along lines more attuned to Wall Street standards.”

The political tone of the late 1990s was captured by the New York Times’ Thomas Friedman sneering at anti-globalization protestors in Seattle as a “Noah’s Ark of flat-earth advocates, protectionist trade unions and yuppies looking for their 1960’s fix.” Clinton’s main public relations ploy was to cast the World Trade Organization (WTO) meeting — which collapsed on multiple fronts — as “globalization with a human face.”

Yet globalization, write Lichtenstein and Stein, carried on brutally on the American end. Of the 3.5 million jobs lost in the United States over this period, at least half were from an influx of imported Chinese products. After a while, it became clear that China’s accession to the WTO generated a “China shock,” with one academic paper analyzing the “surprisingly swift” decline of US manufacturing during the end of the Clinton years.

Although it had taken a decade for Congress to pass legislation clearing China’s entrance to the WTO, things happened quickly. Only 35 percent of Democrats voted for the agreement, but the Senate easily passed it. From then on, issues like trade would be handled by the WTO. Within months of its passage, more than 80 corporations, from Walmart to Home Depot, announced plans to shift production to China, with retailers telling numerous small and medium-size US manufacturers that if they could not meet “the China price” — a phrase Business Week called “the three scariest words in U.S. industry” — they could either close up or transfer production to China.

By 2006, Walmart was responsible for $27 billion in US imports from China — up from $9.5 billion in 2001. By then, 80 percent of the six thousand foreign factories in Walmart’s supplier database were located in China. One thing to be learned from A Fabulous Failure is that, in many ways, Bill Clinton was the best “good ol’ boy” governor the region had ever produced for its wealthiest citizens. It was, and still is, a massive corporate bonanza — certainly not for the many, but for those who really counted.

In the days leading up to his nomination, few saw who Clinton really was. By the time he ascended to power, it was too late. And in writing off decent, well-paid American blue-collar jobs as integral to the economy, the devastation he wrought has not ended. Clinton marked the end of the Democratic Party as a body naturally supported by the working class, spawning instead the incredible popularity of Trump.