From Bill Clinton to Barack Obama

Kevin J. Benoy

Bill Clinton• A President who won a recent

war rarely is defeated in the next election.

• Perhaps it was the growing deficit.

• Perhaps it was his avowed dislike of eating broccoli.

• Maybe it was his broken promises of no new taxes.

• Perhaps it was his opponent’s “cool factor” – his appearance playing saxophone on the Arsenio Hall Show – during the campaign.

• In any case, William Jefferson Clinton reversed Bush’s 80% approval rating during the Gulf War and won the presidency.

The Clinton Administration

• Trade policy was important to Clinton, who continued Reagan and Bush’s push for a North American Free Trade Agreement – eventually ratified the deal, signed by his predecessor.

The Clinton Administration• Clinton also pushed for

health care reforms – an effort spearheaded by his wife, Hilary.

• The opposition of corporations involved in the big private systems and fear of anything smacking of socialism meant no real progress was made on this issue. Benefits were extended to some children.

• The United States remained the only industrialized country without a national health care system.

The Clinton Administration• Clinton’s job was made more

difficult when the Republicans won both houses of Congress in 1994.

• However, his personal popularity led him to a second term in 1996.

• His “don’t ask; don’t tell” policy allowed gay and lesbian Americans to serve in the military – as long as they were not open about it.

• Improved Social Welfare benefits were pushed through improving child care and giving tax credits.

Clinton’s Foreign Policy• Failure also marked a few

foreign policy initiatives.• Intervention in Somalia,

originally seen favourably as US and Western forces intervened to help relief supplies reach suffering people, turned bad when the mission drew America into the morass of Somalian factional politics.

Clinton’s Foreign Policy• Targeting General Aideed

and then failing to topple him, then having to negotiate with him, brought great embarrassment.

• The internationally televised scenes of dead American soldiers being dragged naked through the streets of Mogadishu were traumatic to Americans and pointed to the limits to US military power.

Clinton’s Foreign Policy• In Bosnia the Americans

were caught on the horns of another dilemma.

• Should they send in troops to help UN peacekeepers, or stay out?

• Could air power be enough to impose a settlement?

• The US wavered, much to the frustration of allies, like the Canadians, who desperately sought to protect civilians from slaughter in places like the Medak pocket.

Clinton’s Foreign Policy

• Britain too was frustrated with America when an important IRA spokesman (a terrorist in British eyes) went to the US on an officially sanctioned visit.

• The US was also the chief source of funding for the organization.

Clinton’s Foreign Policy

• Most notable was Clinton’s failure to act during the Rwandan genocide – though the same could be said of all countries.

• The shame over this was truly universal.

Clinton and the Economy• The Clinton era was marked by a

vast improvement in America’s financial position.

• Clinton gave tax breaks to those at the lower end of the spectrum and increased taxes for the wealthiest 1.2%.

• He restrained spending and brought in balanced budgets and deficit reduction.

• Economist David Greenburg said of him: “Besides the record-high surpluses and the record-low poverty rates, the economy could boast the longest economic expansion in history; the lowest unemployment since the early 1970s; and the lowest poverty rates for single mothers, black Americans, and the aged.”

Clinton and the Economy• Seeking to improve business,

mistakes were made.• Banks had long called for the

repeal of the Glass-Steagall Act of 1933 – designed to prevent banks getting too big to fail. The act had been weakened over the years, but Clinton sided with the banks and gutted what was left.

• Furthermore, he signed the Commodity Futures Modernization Act, which opened up the use and sale of derivatives – which went a long way toward creating a financial time-bomb that would go off a decade later, triggering a massive recession.

Clinton and the Economy• In an attempt to bring more

investment into poor areas, Clinton also loosened rules around mortgages – encouraging more lending.

• The Clinton years were good ones, so riskier lending was not yet a problem.

• However, the effect of these changes would prove yet another risk for the American and global economy.

Scandal• Clinton had luck with him in

politics, but his private life presented problems.

• He had a reputation as a womanizer and this very nearly brought his undoing.

• He had to settle a law suit with one former lover, then was caught up in a lie when he said he did not have relations with an intern.

• Impeachment proceedings began and for a time it looked like he might lose the Presidency.

Scandal• On February 12, 1999, the

Senate acquitted Clinton.• Impeachment required a

2/3 vote, but those in favour could only muster 50 of 100 votes on the obstruction of justice charge and 45 on a charge of perjury.

• This was only the 2nd impeachment of a President in history. Andrew Jackson also survived such a vote in the 19th century.

The 2000 Election• Unable to run for office again, Clinton passed the Democratic torch on to his Vice

President, Al Gore.• The Republican candidate was the son of former President George Bush, who shared

his father’s name.• The election was close, highlighting the weaknesses of the American Presidential

voting system.• Gore won the most votes with half a million more votes, but Bush took more Electoral

College seats.• The entire election hinged on Florida’s 25 seats, where George’s Brother was

Governor and the Republicans ran the vote counting. Bush won the state – and all 25 seats – by 300 votes.

• Voting machines had rejected 70,000 ballots, so Gore insisted on a recount. The Florida Supreme Court agreed, but the US Supreme Court ordered a halt to the recount the next day. Their ruling contended that since the count could not be completed before the December 12 “safe harbor” date, and that the ballots had once been rejected and were of “questionable legality,” the original certified vote should be made official. George Bush Jr. was now President of the United States of America.

The Bush Administration• The victory was narrow but the

Republicans held the Presidency.• Things began slowly. Bush had his No

Child Left Behind Education Act passed.

• Federal standards were set and standardized testing was implemented to see if they were being met.

• Since funding was based on results, schools scrambled to meet them. Some improved teaching; others cheated.

• Most significantly, the education system now fixated on the tests themselves.

9-11• Domestic Policy was

completely sidetracked by the shocking events of September 11, 2001.

• 19 terrorists hijacked four planes and crashed them into the Pentagon, a field in Pennsylvania and, most notably, the World Trade Center towers in New York.

9-11

• 3,000 people died and another 6,000 were hurt.

• Civil air traffic over North America was shut down for 3 days, an unprecedented move.

• Americans were shocked and enraged.

9-11• Blame fell upon a group knows as

Al-Qaeda, led by a Saudi who fought against the Russians in Afghanistan – Osama bin Laden.

• His group was a loose affiliation of religious fundamentalists, who, like the Iranian regime, opposed the US and the materialism for which it stood.

• He felt the presence of Western troops (including women) in Muslim countries – especially Saudi Arabia – defiled Islamic lands.

9-11• Bin Laden was known to America for a

series of attacks in the past – on an American warship in Yemen and on American embassies in Africa.

• He now presented US policy makers with an opportunity to adopt a robust policy to oppose anti-American interests globally and to vastly increase US military and security capabilities with massive public support.

• The Patriot Act vastly increased government powers, helped by creation of the Department of Homeland Security.

• Essentially war-time powers were given to a nation not at war.

The “War on Terror”• Foreign policy too became more

aggressive.• Bin Laden clearly would be a target –

so Taliban led Afghanistan, which hosted him, would be hit.

• However, even on the afternoon of the attack, Senior American policy makers looked for ways to take advantage of the situation to deal with other targets.

• Secretary of Defense Donald Rumsfeld asked for “Best information fast. Judge whether good enough to hit S.H.” (Saddam Hussein)...-go massive. Sweep it all up. Things related and not.”

The “War on Terror”• George Bush first spoke of a War on Terror on

September 20.• It was a global campaign against al Qaeda and other

organizations deemed terrorist.• These groups were generally understood to be Islamic

fundamentalist groups – but the concept was left vague enough to be expanded at any time.

• Since it was a war on a tactic and not a specifically defined enemy – it was open-ended and infinitely malleable to government aims.

• Bush said “our 'war on terror' begins with al-Qaeda, but it does not end there. It will not end until every terrorist group of global reach has been found, stopped and defeated.“ By definition, this appears to be declaration of war without end.

• Any and all terrorist acts could be and were cited as justification for continuing the campaign.

The “War on Terror”• Phase one was “Operation

Enduring Freedom” – military intervention in Afghanistan to destroy al Qaeda and to bring regime change by deposing the Taliban.

• On other fronts, US and allied forces fought against Islamic insurgents in the Philippines, the Horn of Africa, Kenya and Ethiopia.

• Even before Afghani operations ceased, US forces unleashed another major intervention in Iraq.

The “War on Terror”• George Bush Jr. And his

administration sought to “finish the job” his father had not during the first Gulf War.

• Vice President Dick Cheney and Secretary of Defense Rumsfeld saw an opportunity to depose a deeply unpopular enemy of America.

• When the CIA were unable to produce convincing proof that Saddam Hussein was connected with bin Laden, he set up a new intelligence group to cherry-pick information to establish such a link.

The Iraq War• Cheney, Rumsfeld, Wolfowitz and others created

in 1997 an organization called Project for a New American Century – arguing for renewed American military strength, moral clarity in the world and calling for invasion of a Middle Eastern country to establish an American style democracy in the area. This is eerily similar to America’s stated objective in invading Iraq.

• After 9-11 Bush’s key advisors put together a case linking Iraq to 9-11 on very dubious grounds. Furthermore they claimed that Iraq was developing weapons of mass destruction, with the aim of using them against the West and, perhaps, supplying them to al Qaeda. This evidence was, unconvincing to most of the world and even Canada refused to enter the alliance Bush formed.

The Iraq War• In March, 2003 – with war

continuing in Afghanistan (as it would be even at the time of writing – 2013) and the hunt for bin Laden far from completed, US British and a few (a total of 50 from a number of countries) allied forces began first an air campaign and then a ground invasion of Iraq.

• George Bush Jr. Seemed bound and determined to complete what Bush Sr. left undone.

The Iraq War• Iraq’s military resistance was easily

broken and April saw the fall of Baghdad.• Winning the peace would not be as easy.• Chaos followed the disappearance of

Hussein and Baathist power. Little was done to curb disorder.

• There simply was no plan of how to maintain law and order. The looting of priceless treasures of the Iraq Museum without American intervention, was a clear example of American inability to maintain order.

• While looting was rampant soldiers were deployed looking for weapons of mass destruction that simply did not exist.

The Iraq War• The Plan for a New American

Century envisioned the establishment of a new pro-Western American style democracy.

• This would be a model for change elsewhere in the Arab world.

• Instead, it brought chaos, hundreds of thousands of deaths, sectarian violence and, an ongoing occupation with endless violence.

• Even the withdrawal of American forces in 2011 left a mess, with the current Iraqi government more disposed to anti-American Iran than to the West.

The Iraq War• In retrospect, US involvement

in Iraq proved an expensive mess.

• Curiously it did exactly what al Qaeda’s attack on the US was intended to do – to provoke the US into interventions in Muslim countries that would bring destruction and outrage at US actions – possibly bringing down pro-American governments and strengthening Muslim fundamentalism.

Treatment of Prisoners• One of the nastiest elements

of the war on terror has been the treatment of prisoners.

• US authorities used water-boarding, universally condemned as torture, to gather intelligence. Vice President Cheney publicly defended the technique.

• News of this and other forms of torture at Abu Ghraib prison in Iraq further sullied America’s reputation.

Treatment of Prisoners

• Even more extraordinary measures were taken through extraordinary rendition.

• US authorities flew prisoners to third party countries, where they were tortured on behalf of the Americans.

The 2004 Election• When the American election

was fought in 2004, the US was involved in two large war operations and several small-scale conflicts.

• Four days before the vote a new tape from bin Laden, threatening America, was broadcast on al-Jazeera and rebroadcast widely in the US.

• The timing was perfect for Bush and the Republicans took the Presidency again.

The Bush Doctrine• Bush’s muscular foreign policy

was formulated into what came to be known as the Bush Doctrine.

• What began as a phrase describing America reserving the right to defend itself against countries harbouring terrorists acting against the US, was turned into an argument that the US was justified in launching preventative war against potential future aggressors.

Bush Foreign Policy• The Bush Doctrine was a clear statement that the US had no intention of

being limited in its choice of action. It believed itself the only remaining super-power and sought to exploit this position.

• In 2001 it pulled out of the long-honoured (since 1972) anti-ballistic missile treaty.

• In 2002 the US passed legislation "to protect United States military personnel and other elected and appointed officials of the United States government against criminal prosecution by an international criminal court to which the United States is not a party.“

• In Eastern Europe, the US was encouraged by the decisions of a number of former Soviet satellites to join NATO.

• Bush’s stated belief that anti-missile systems should be installed in Poland and the Czech Republic was seen as highly provocative by the Russians.

Climate Change?• Bush’s pro-business attitude was

nowhere clearer than his long-held position that climate change was a hoax perpetrated by crazies and anti-oil interests. His own family’s wealth came from the oil industry.

• In 2001 the US refused to implement the Kyoto Protocols requiring nations to reduce greenhouse gas emissions.

• In 2005 Hurricane Katrina lashed New Orleans. Al Gore and those arguing Climate Change needs to be addressed, were given powerful ammunition. However, the administration saw it as a one-off event evidence of reason to change.

Domestic Policy Under Bush• As one might expect of a

Republican administration, its key goals were oriented toward encouraging business interests.

• Bush firmly believed in the Chicago School approach – supply side economics – businesses alone create wealth and fortunes need to be made to create employment and allow wealth to flow to the rest of society.

• Tax cuts to corporations and the wealthy , plus deregulation, would create wealth.

The Crash of 2008

• In 1929 stock speculation created the bubble that brought down the economy.

• In 2008 it began with real estate.

• Home ownership was always a goal of Americans.

• Successive governments from the 1970s on saw it as something to be encouraged.

The Crash of 2008• Homes were traditionally seen as solid investments – “safe as houses”

meant solid and reliable.• Years of business deregulation changed things. Investors bet on all sorts of

things – from stocks to commodities to real estate. Complex computer programmes calculated risk and investors took an educated chance that they might win if they bet well. Here lay an opportunity for banks to leverage their “solid” bets by packaging them with other risks to increase their value too.

• Where once banks held the risk of mortgages that might not be repaid, a new policy saw mortgage loans packaged in something called derivatives, investment certificates, like stocks or bonds. Banks put these together and sold them as investment opportunities to private investors and other banks.

• As long as the market rose, there was no problem.

The Crash of 2008• In 2005 came a warning that all

was not well. The Head of derivative sales at Deutsche Bank called these Collateralized Debt Options (CDOs) a Ponzi Scheme – indicating it is a crooked pyramid selling scheme. Even his own bank continued buying and selling them.

• Other financial figures also voiced concern – but the profits generated were huge. Institutions were hooked on them. Profits and bonus payments led to what can only be described as shady practices.

The Crash of 2008• Between 2002 and 2006 banks took

on higher and higher risk mortgages – after all, they no longer carried the risk and they were making commisssion money on the paperwork. These were referred to as sub-prime mortgages. Banks even gave out so-called Ninja loans – no income, no job – but still given a mortgage.

• As more homes were bought – for investment as much as for living in, prices rose. More investors bought in, flipping the houses for almost instant profit. What could go wrong?

The Crash of 2008• Of course what could go wrong

was that prices could stop rising. They did. In 2006 prices peaked.

• Reckless lending meant that people were encouraged to borrow beyond their means.

• Now more and more people defaulted on their mortgage payments – this led to defaults in mortgage bonds too.

• Over leveraged Banks were increasingly threatened in late 2007 as the real estate market crashed.

The Crash of 2008• An era of deregulation and spectacular profits for financial institutions

– with enormous bonus payments to traders and bank heads – led to unprecedented greed and stupidity.

• Government and business fueled the problem. Between 19976 and 2007 house prices rose 171% in the US, 139% in France and 211% in the UK.

• Why did nobody seem to see that this was a classic financial bubble? ... And all of this was made worse by banks failing to understand risk. They thought their securitization was a kind of insurance. Their mortgage debt had been sold to others, so they were not at risk themselves – however, their customers held the risk and would not be able to meet their obligations to the banks. Indeed the banks often held each-other’s securities. They had nothing in reserve to protect them from the effect of toxic debt. Oops.

The Crash of 2008• In 2007 one of the biggest investment

banks, Lehman Brothers feeling that the worst was over spent billions on real estate – and lost.

• Markets everywhere began to question bank solvency.

• In September, 2008 the crisis went critical. A run on the banks began and companies could no longer roll over short term debt. Banks would not lend to each other, let alone private customers – this was a classic liquidity crisis.

• The Banking system was frozen. Only government intervention could save it – and it all happened in the middle of a presidential election.

The Crash of 2008• Thankfully, some of the lessons of 1929

were remembered.• The danger of a deflationary cycle or

depressed investment, laying off of workers and declining consumption was a nightmare that none wanted to repeat.

• Republican candidate John McCain and Barrack Obama took time away from their campaigns to work on a solution with President Bush. The US government pledged $700 billion to prop up the banks – effectively buying their toxic “assets.”

• International leaders, led by Britain’s Gordon Brown heeded their financial advisors and pumped government money into a failed private system.

The Crash of 2008• When Barrack Obama took power he inherited a catastrophe.• First the banks and insurance companies, then a failing auto industry required

government money to prop them up.• In 2011, financial paper Bloomberg reported that worldwide banks received up to

$13 trillion in cheap government loans from the US Federal Reserve Bank. If so, this goes well beyond anything authorized by elected politicians. The New York Times reported $12.2 trillion in commitments, of which $2.5 trillion was spent and $10 trillion recovered in dividends and fees. The numbers are staggering. How would Obama square his financial limitations with the public expectation of positive societal change?

• Indeed the bank bailouts came without any real reform of the banking system. In 2009, Goldman Sachs announce it would pay its employees $23 billion in bonuses – the same employees who helped bring on the crisis and who were bailed out by public money. Has nothing been learned?

• Now the question is whether national debts – partly created to mitigate the banking crisis -- are a threat to the system. Collapse in Iceland and Greece and near collapses elsewhere are a warning that the crisis is not over.

The Obama Administration• Obamas’s government certainly

faced challenges.• Taking a page from Roosevelt,

Obama promised change in his first 100 days – though he said the first 1000 days was really more important.

• Massive government spending, on a scale like Roosevelt was certainly undertaken – though this was really only a continuation of the bailouts started by Bush to keep the economy from collapsing.

The Obama Administration• One of Obama’s key election goals was to ensure that all Americans could

access affordable health care.• This was something Democratic predecessors had tried and failed to do.• A complete rebuilding of how care is delivered was never possible -- but

what Obama did achieve was to ensure that no American could be denied affordable (defined as no more than 8% of yearly income for premiums) health insurance.

• Existing programmes and plans remain in place – “Obamacare” is an additional layer on top. 15 million uninsured Americans gained coverage though 6.1 million remain uncovered because some states refused to provide coverage despite the programme being 100% federally funded for the first 3 years and 90% covered after that.

• Government subsidized health care remains a hugely contentious issue in the US.

The Obama Administration - Finances• Obama began his administration

hoping to get cross-party cooperation to deal with the economy.

• This has been impossible. The Republican Party has long been a coalition of conservatives and libertarians.

• In recent years the libertarians have risen to ascendancy – largely through the efforts of powerful businessmen who favour small government and low taxes – people like the Koch brothers – though their public face is the vocal Tea Party and supporting media – like Fox Television.

The Obama Administration - Finances• Two years into his

government, Obama found the Republicans dominating Congress to the point where neither side could pass the legislation they wanted.

• Even after re-election in 2012 the impasse continued.

• Even something as fundamental as passing a budget eludes government as ideological positions have become entrenched.

The Obama Foreign Policy

• Obama came into office promising to end the wars.

• Troops were pulled out of Iraq in his first term and are set to be pulled out of Afghanistan in his second.

• It is unlikely that either country will have a government favourably disposed to the USA over the medium to long term.

Obama’s Foreign Policy• The mess was hardly his to begin with,

however. Long term occupation of countries always fans resentment.

• In the Arab world this is compounded by strong US support of Israel, which Obama continues.

• The Arab Spring, popular uprisings against Arab governments that have often been close associates of the Americans has resulted in an awkward situation for the US.

• The Moslem Brotherhood were elected in Egypt – an outcome Americans find disturbing.

• Even the likely demise of American opponent Assad, in Syria, is likely to result ultimately in a pro-Iranian regime .

• At least Obama has sounded more sympathetic than predecessors to Arab goals and aspirations. But this is wildly unpopular with most Americans.

Obama’s Foreign Policy• A promise made before his first

campaign was to close the notorious American prison camp at Guantanamo Bay, Cuba. While most prisoners have been moved out – the prison remains open.

• Obama has also continued to authorize drone attacks in many countries, like Pakistan, to kill possible enemies – but often resulting in collateral damage.

Obama’s Foreign Policy• Perhaps most notable of

Obama’s attacks on foreign soil was the special forces raid that killed Osama bin Laden.

• Would America tolerate any country launching such a raid within the US?

• Obama clearly is continuing Bush’s policies in this regard.

Looking Forward• The US remains the world’s most

powerful nation – but it may not stay that way.– Can the US continue to finance its

military to the same extent when domestic needs are growing?

– Will China’s rise continue and will it seek a greater world role?

– Is Russia returning to super power status?

– Are we out of the financial crisis yet?– What will Climate Change bring for

America?

• ...and, of course, there are always unforeseen problems.

finis