A Brief History of the New Democrats During the Clinton and Obama Years

They have been called centrists, Clintonites and center-right. These are the New Democrats, who began to gain acsendency in the late 1980s within the Democratic Party. They have pushed for a "Third Way," embracing the "free" market as a cure-all to society's ills and taking liberal positions on social issues.

When Bill Clinton became President of the United States, his name became synonymous with the New Democrats. Clinton and the New Democrats supported deregulation, and applying that on a large scale to agriculture and the telecommunications industries. (The documentary entitled "Inside Job" by director Charles Ferguson gives details of what led up to the 2008 Great Recession, one of those factors being deregulation.) They were responsible for the enactment of the North American Free Trade Agreement (NAFTA) in 1993. NAFTA was unpopular with the working class, both liberal and conservative.

Clinton also repealed what was left of Glass-Steagall in 1999. Glass-Steagall separated commercial banks from investment banks, thereby preventing wide and wild speculation in the financial sector. (But in 2010, Barack Obama signed the Dodd-Frank bill into law. This brought back regulation to maintain financial stability and consumer protections. Trump, however, signed an order which brought back further deregulation, thus endangering Dodd-Frank.)

Norman Solomon wrote in TruthDig that Clinton was hailed in the media "as a visionary who had overcome left-leaning liberalism to set the party straight. Although candidate Clinton had criticized Republican trickle-down economics and about the need for public investment by the federal government, as president he proceeded" to move on a course of "'fiscal conservatism and social liberalism.' That formula provided the template that the next Democratic president Barack Obama, deftly filled.

"Both Clinton and Obama were youthful and articulate, breaths of fresh air after repugnant Republican predecessors in the White House. Yet [they] were down with corporate power–not as far down as the GOP, but nevertheless in the thrall of Wall Street and the big banks."

The cabinet of Bill Clinton included elements of Wall Street and big business. Robert Rubin was co-chair of Goldman Sachs (making $17 million in 1992) before nailing down a post on Clinton's National Economic Council, where he earned the title "economic czar." After two years, Rubin became secretary of the treasury. Ron Brown, corporate lawyer and lobbyist for American Express, became a supervisor at the Department of Commerce. Solomon quoting economic analyst Doug Henwood: "'Mickey Kantor, corporate lawyer, would negotiate trade deals. Warren Christopher, corporate lawyer, would oversee the New World Order. Hillary Rodham Clinton, corporate lawyer and board member at Walmart, the low-wage retailer that's destroyed countless rural downtowns, would supervise healthcare."'

Clinton, with assistance from Treasury Secretary Larry Summers and Robert Rubin, had plans to privatize Social Security. But that was prevented when the Monica Lewinsky scandal broke. Clinton then moved left (temporarily) to reassure his anti-privatization base.

Ryan Cooper wrote in the Nation that "...Clinton wanted to build a base for his party among the executive and financier class and high-income voters." The "Democrats embrace of free-market policies may have helped rejuvenate the party in the 1990s and early 2000s, but that embrace has now crippled it." And that's another important reason why the Democrats should run on a bold, progressive message.

For Obama in 2008, his campaign donors included Wall Street investment banks. But, according to Solomon, his major contributer was Penny Pritzker, a "billionaire real estate magnate" who made tremendous profits off of the "2008 subprime mortgage disaster that befell so many low- and moderate-income Americans, a large proportion of them people of color." Pritzker became secretary of commerce in Obama's cabinet. Others in Obama's cabinet included Timothy Geithner, who became treasury secretary. Geithner was influenced by Robert Rubin. There was Jack Lew, who became treasury secretary in Obama's second term. Lew was head of "a unit of Citigroup which made money betting against the housing market as it prepared to implode."

And Larry Summers became chief economic advisor for Obama. Mike Whitney wrote in Counterpunch, "[Summers] figured that bigger deficits and slower growth [of the economy] would create the rationale for slashing entitlement spending and crushing organized labor (particularly public unions). In other words, the economy was weak, because the policy was designed to make it weak." More specifically, "Summers wanted a flagging economy so he could torpedo Social Security, Medicare and Medicaid."

Obama was/is impressed with Ronald Reagan, as he compared himself to him. Obama also said that if he were a politician in the 1980s, he would have been considered a moderate Republican.

But there were positive things that came out of the Clinton and Obama administrations. Clinton ran a surplus at the end of his second term. He cut taxes for the working class while raising them on the 1%. Obama signed into law the Affordable Care Act (which is a step but it's not enough). He also signed marriage equality into law. And he established diplomatic relations with Cuba. So, positive things stand out. But the negative policies have had their effect, overshadowing the positive.

Cooper implies that these negative policies are outdated: "Hillary Clinton's shocking loss to Donald Trump–whose signature economic pledge was to reverse the 'bad deals' of the past few decades–simply highlights a generation of Democratic Party policies that has now come crashing to an end." But the New Democrats still exist. And they are probably pushing for the same, or similar, policy agenda that Cooper says came crashing down.

Lessons are to be learned, hopefully. If the New Democrats do not learn from their own history, then they are doomed to repeat it with their "Third Way" agenda.