The 1990s: from bust to boom to bust

Clinton and the Democrats’ return

 The 1992 Election Campaign
BUSH: CLINTON:
•Hurt by •« New
recession Democrat »
•Broke tax •Fiscally
promise conservative,
•Strong foreign socially
policy less progressive
important •United the
post-USSR, Iraq Democratic Party
ROSS PEROT •Baby Boomer
•Independent candidate (new generation of
•Billionaire politicians
•Anti-NAFTA
Economic Shifts in the 1990s: from
Manufacturing to Service
 Shift from Manufacturing to
Service (2): effects on workers
• Manufacturing jobs: more likely too be
unionized, well paid, stable (until the 1970s)
• Service jobs: less well-paid, not generally
unionized, less stable
• >> Standard of living for workers is lower
• >>Job security for worlers is lower
• >>Different set of skills required
 1992 elections
• Clinton: former governor Arkansas, charismatic
• Platform: social liberalism + conservative economic
policies (Blamed deindustrialization, not welfare (≠
Republicans)
• George Bush: 29% popularity, out of touch
• Pat Buchanan (conservative) : attack on gays,
feminists, abortion rights (speech Republican
National Convention)
• Ross Perot (independent, millionaire): economic
know-how
A Move to the Right: Pat Buchanan

“America First”
• Clinton Campaign poster: « It’s the economy,
stupid. » Seen as strong on social issues AND
fiscal policy
• Bush drawn to the Right, the Christian
Coalition: lost moderate Republican votes
• Ross Perot (independent) participated in
debates, drained votes from both candidates.
• Attacks on Clinton’s character
(Vietnam,marijuana, infidelity) not very
effective.
• Final vote Clinton 43%, Bush 37%, Perot 19%.
 Clinton’s First Term
• 1992 Clinton elected president
• (pro-choice, pro-gay rights (Don’t Ask , Don’t
Tell), pro-affirmative action, AND
• Pro-free trade, anti-big government
• diversified the cabinet (Janet Reno, Attorney
General)
• Pushed the Supreme Court to the left
(Ginsburg, Breyer)
• Raised taxes on the wealthy
• Expanded Earned Income Tax Credit
• NAFTA (North American Free Trade
Agreement)
• 1993 Attempted to establish
Universal Health Care (failed)
 Power Struggles in Congress
• 1994: Republican House, Senate
• House cut spending on social,
educational, environmental programs
(including Medicare)
• Clinton threatened to veto
• No budget agreement
• December 1995: Government shut down
 Clinton’s Second Term
• Telecommunications Act of 1996
(deregulated telephone, broadcast
companies)
• Changed welfare to « Welfare to work »
• (« triangulation »)
• Easily defeated Bob Dole in 1996: First 2-
term Democratic President since FDR.
OUTSIDE INFLUENCES: CULTURAL CONFLICTS

• Multiculturalism and increased

tolerance vs. tensions over ethnicity,
religion, sexual orientation
• Identity crisis, cultural conservatism
• Radical anti-government fringe
(Waco, Texas; Timothy MacVeigh)
 Outside influences: cultural conflicts

• Tensions over ethnicity, religion,

sexual orientation
• Identity crisis, cultural
conservatism
• Radical anti-government fringe
(Waco, Texas; Timothy MacVeigh)
 Clinton and Foreign Policy
• Primarily focused on domestic policy, but was
concerned with peace in troubled areas, human rights
• 1993 Oslo Accords (Israel, Palestinian Liberation
Organization)
• Balkan Crisis (Bosnia, Kosovo)
• NATO intervention in Bosnia, Kosovo
• Human rights abuses as justification for intervention
• Difficult to balance human rights issues and national
economic interests (e.g. no action in Rwanda, 1994)
 CLINTON’S SECOND TERM: THE ECONOMY
• Low unemployment low inflation
• Steady prices, increased oil production
• Economy continually expanded
• Balanced budget, surpluses
• Manufacturing replaced by the production
and sale of information
« The longest uninterrupted period of economic
expansion in the nation’s history. » (Eric Foner)
• « Information Superhighway »
• development of the microchip
• The Internet expanded the flow of information
and communications more radically than any
invention since the printing press
• Spread of the English language and of
American culture
Background to Clinton’s Impeachment:
Cultural Conservatism in the 1990s
The Christian Coalition (Pat Robertson)
– Anti-abortion, anti-gay rights, anti-evolution, anti-
secularism in schools anti-gpvernement aid to
« indecent » art, Defense of Marriage Act (1996)
– « sixties values » blamed for nation’s problems
– Number of « traditional families » shrinking
(40.3% in 1970, 23.5% in 2000)
Clinton symbolized everything conservatives
hated about the 1960s: marijuana, antiwar
protests, feminism, multiculturalism, gay
rights, popularity among many Americans
 Clinton’s Impeachment
• Impeachment: « To charge (a public official)
with improper conduct in office before a
proper tribunal. »
• December 1998: Clinton accused of perjury,
obstruction of justice by the House of
Representatives
• Acquitted in 1999
 The Stock Market boom and the rise of the
« dot-coms »
• $$ poured into the stock market
• Discount brokerage firms
• 2000: most Americans owned stock
• S&P (Standard and Poor) 500 index
up 20%/year 1996-1999
• NASDAQ ( up 500% from 1998-1999
 Bursting the Silicon Bubble
• 2000-2002: NASDAQ down by 80%
• (Y2K?)
• Tax revenues down
• Fruits of Deregulation:
• No regulatory group watching out for
the public interest
• 1999 repeal of the Glass-Steagall Act
 The Enron Scandal: A Case Study
• Energy company based in Houston, Texas
(gas, electricity)
• Power plants, pipelines, energy
companies
• Provided profits for Enron’s other market
ventures
• 1999: Enron Online
• 1990s: deregulation of gas and electricity sales
• Enron established « special purpose entities »
(limited partnerships controlled by Enron)
• Used to conceal losses, allowed profits to
seem unnaturally high, increase stock value
• More and more $$ on online trading, less and
less into actual energy production
• reduced cash flow
 Factors to Enron’s downfall
• Unclear reporting practices for stockholders
• Lack of outside regulation
• Auditors, Arthur Andersen, also on payroll as
consultants (conflict of interest)
• Approved risky practices
• October 2001: Enron’s credit rating downgraded
• Company leaders sold their shares before bankruptcy
• Enron employees lost their retirement and savings
• Reaction: Sarbanes-Oxley Act of 2002
 Sarbanes-Oxley 2002
• 1. Auditors MUST be independent, change
every 5 years

• 2. Companies must provide clear and

transparent reports

• 3. CEOs and CFOs are PERSONALLY responsible

for their companies’ practices