Several months ago, columnist Charles Krauthammer opined that he could live with a Hillary Clinton presidency. As he said of Hillary, "She has no principles. Her liberalism is redeemed by her ambition; her ideology subordinate to her political needs." While I agree with his assessment generally, I do not agree with his conclusion.
Hillary's economic ideology is different in both substance and degree from her husband’s. She clearly does not share her husband’s affinity for business and trade. Hillary's economic views appear socialist if not marxist, and they, in many ways. seem superficial and sophmoric. That notwithstanding, Hillary gives every indication that she intends to push the government into the center of America’s economy if elected as President.
Ms. Clinton has clearly stated her economic philosophy over the years. For example, in a 1996 interview with C-SPAN’s Brian Lamb, Hillary was asked about a quote she had included in her book, "It Takes a Village," that expressed severe criticism of free market economics. The exchange and response were:
LAMB: There's a quote here. I want to ask you if you agree with this. This is from Alan Arenhault, author of "The Lost City" -- you put it in your book. "The unfettered free market has been the most radically disruptive force in American life in the last generation."
CLINTON: I believe that. That's why I put it in the book. . . .
That is an incredibly strong statement. And to the best of my knowledge, it is not one she has ever retracted, either in deed or substance. Further, during the same interview, Hillary discussed her appreciation for the socialist policies of Europe – and I assume here that they are many of the same one’s Sarkozy is today trying to strip from France so that his country can compete economically. As she states:
CLINTON: Well, I am a fan of a lot of the social policies that you find in Europe, . . .
And indeed, in her book, she writes:
"Other developed countries, including some of our fiercest competitors, are more committed to social stability than we have been, and they tailor their economic policies to maintain it."
The NRO reports a 1995 conversation with Dennis Hastert on Social Security in which Hillary argued against personal accounts saying, "We can’t afford to have that money go to the private sector. The money has to go to the federal government because the federal government will spend that money better than the private sector will spend it."
In 2004, Clinton, speaking to an assembly in San Francisco, stated "We're going to take things away from you on behalf of the common good."
All of the above constitute merely antecdotal evidence. But Hillary's specific economic proposals are fully in keeping with this antecdotal evidence. For example, it was not long ago that Hillary proposed to strip American oil companies of their profits so that she can fund R&D for new sources of energy.
She really needs to take a course in basic economics. The oil industry has been the subject of recent investigations – several of them actually – to look into price gouging, price fixing and profits. In no case was anything found to be wrong. And furthermore, the reality is that the majority of their profits were being reinvested into finding and exploiting new sources of energy. I hate to begin to contemplate what damage an unchained Hillary could do to the energy sector, energy supplies and energy prices in the U.S. were she to attempt something so utterly ludicrous as what she has suggested here. (And as an aside, if we wish to achieve energy independance, the first things that we need to do are remove the impediments to exploiting our domestic resources - and Hillary is a major part of that impediment.)
Likewise is her idea to address the problems in the mortgage market:
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19.
A government enforced control such as this would severly distort the market. As the writers at Fortune magazine see it:
. . . such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages.
"It certainly would not speed the recovery of the housing market," says Doug Duncan, chief economist of the Mortgage Bankers Association. "The problem now is that investors are already worried about what the risks are, and (a rate freeze) would only widen risk premiums more."
Do you see a pattern here? Hillary, for all her intelligence, has woeful economic ideas and an anti-business animus that could truly injure our nation’s economy. And, if elected, she fully intends to use the power of government to manipulate the economy.
As she said in the NYT just yesterday, she does not trust "market forces." Rather she believes that the government should "play an active role" to correct "the excesses of the market and of the Bush administration." Compared to her husband, "she has long been more skeptical about the benefits of freer trade and other aspects of a free-market economy." Read the entire article.
I think the only way to characterize Ms. Clinton is as a strongly committed socialist, bordering on being a marxist. Yes, it is possible that she is simply blowing populist smoke at the nation with her incredibly sophmoric suggestions for massive taxation of oil company profits and imposing a five year mortgage interest rate freeze. But I will never vote for someone on the hope that they are lying to me about their intentions. And even if Hillary is more economically sophisticated than her pronouncements suggest, I think that she is sincere when she says that she wants to use the power of government to manipulate the economy. And I beleive she is sincere in her expressions of dislike for free trade or free markets. And lastly, she has convinced me that her knee-jerk reaction will be to intervene with the heavy hand of government in response to any perceived inequities or downturns in the market.
To put this in perspective, we are now facing some rather dismal economic news for which the President and Congress must take responsibility. President Bush’s economic policies have been, I would say, poor. Although we have had good growth and a relatively strong economy under Bush, in the long term, it was not sustainable under his policies. His "weak dollar" policy threatens havoc to the world economy so long as it stays dollar based and he has done nothing to rein in out-of-control spending by Congress. Arguably, the fed held interest rates too low for too long which has had a significant hand in causing the current sub-prime crisis. But indications are that the market is already correcting for these discrepancies, and that we should be able to weather this downturn without too much pain so long as our government does not act irrationally. Some ineffectual intervention – such as the one now being considered by President Bush - is necessary politically because the nation demands the appearance of action. To the extent that intervention is minimized, so much the better.
The next President will inherit the world’s strongest economy – and one that has already weathered or is about to come out of a recession and market correction. We have the world’s largest economy by far because of free market capitalism and free trade - though arguably with far too much existing regulation. That notwithstanding, there has not been a socialist nation yet that can even begin to compete with the U.S. economically. What the next President needs to do to keep our economy strong is, first and foremost, do no harm. Beyond that, the economy would benefit were the next President to pursue more free trade agreements and act to improve the business environment in America by repealing Sarbanes Oxley and by reducing the corporate tax rates that are so high as to be approaching non-competitive. Further, the next President would do well indeed to strengthen the dollar and get spending under control.
Hillary Clinton would seem to be the last person to undertake any of these tasks. Indeed, taking her at her word, she would clearly lead the nation in the opposite direction. The few economic ideas she has posited would be laughable if not for being so utterly dangerous to the economy. And her desire to manage the economy and adopt a socialist economic structure portend only ill. Thus, I am nowhere near as sanguine about a Hillary Clinton presidency as Charles Krauthammer seems to be.
Update: I am not the only person concerned with Hillary's apparent economic illiteracy. She has the EU Trade Commissioner concerned also.