The ratification and signing of the North American Free Trade Agreement was the highlight of the economic policies implemented in the first term of Bill Clinton’s presidency. The second most important step was expansion of the Earned Income Tax Credit.
First Phase of Clinton's Presidency Clinton’s fist term in the office of President came at a time when the American economy was enjoying an upswing of sorts towards the end of the George H. Bush era. Clinton successfully transformed it into a veritable economic boom for the US near the end of his first term. This boom would continue till about the very end of his second term in 2001.
Clinton's Budget Policy An overwhelming budget surplus, ranging to the scale of the $10,000 bn was the biggest legacy of the Clinton era. However, the mode of utilization of that surplus also became a potent bone of contention among the Democrats and the Republicans. The question was how that surplus was to be utilized, for tax cuts or reduction of national debts.
Basis of Clinton's Economic Policy Clinton’s economic policy was based on a decision to reduce debts rather than cut taxes to bolster USA’s economic growth. By following this policy faithfully even in the face of strong Congressional opposition at times, Clinton succeeded in putting the economic condition of US in its best shape for decades towards the end of his first term in 1996.
Clinton's Role in North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA) was conceptualized by George H. Bush along with Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas de Gortari. It was visualized as a tripartite free trade treaty, with an objective to form a North American trade bloc.
Clinton made the legislation of the bill one of his priorities right from the time he took office. It was not, however, without opposition from within the Democratic fold as well as from Republican protectionists. There were large scale protests and oppositions in Canada and Mexico as well. However, Clinton successfully negotiated the bill through the Congress at 234 against 200. It was turned into legislation and signed by President Clinton on January 1, 1994.
Clinton's Role in NAAEC (North American Agreement on Environmental Cooperation) and NAALC (North American Agreement on Labor Cooperation) Clinton successfully brought about the inclusion of NAAEC (North American Agreement on Environmental Cooperation) and NAALC (North American Agreement on Labor Cooperation) within the terms of NAFTA. The former endeavored to introduce clear sets of environmental regulations. NAALC was an agreement that laid down a common foundation of ways to deal with labor related problems in all three countries. It also endeavored to enhance cooperation among labor unions of all three countries.
Impact of NAFTA The impact of NAFTA is ambiguous. Some have thought it to be much oriented towards the industrial elite at the behest of common labors and agriculturists. Others have contended that it was solely responsible for amelioration of poverty to a great extent in Mexico after dire economic crisis, by increasing real income scales.
Expansion of Earned Income Tax Credit Bill Clinton’s second important legislation during his tenure as the president was the expansion of the Earned Income Tax Credit. With this legislation, Clinton extended the scope of what is considered to be the greatest anti-poverty tool in the US.
The global crisis changed the face of monetary policy. Central banks deployed new tools to counter the effects of the crisis, which have reduced the risk of deflation, stabilised the financial system and calmed financial markets; but potential negative side effects remain.
Two weeks ago, the IMF organized a major research conference, in honour of Stanley Fischer, on lessons from the crisis. Here is my take. I shall focus on what I see as the lessons for monetary policy, but before I do this, let me mention two other important conclusions.
Professor at Columbia University. Recipient of the Nobel Memorial Prize in Economic Sciences in 2001 & the John Bates Clark Medal in 1979. Author of "Freefall: America, Free Markets", "The Sinking of the World Economy", "Globalisation and its Discontents" & "Making Globalisation Work".
CEO and co-CIO of PIMCO. Served as President and CEO of the Harvard Management Company for 2 years, while also working at the IMF for 15 years. In 2008, his book "When Markets Collide", won the Financial Times award for Business Book of The Year in addition to being named as the one of the best business books of all time by The Independent.
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