May 2, 2012

Bill Clinton Knocks Austerity, Says Growth Only Way Out of Economic Woes

At Milken Institute conference, the former president urges practical approach to problem solving; question is ‘how’ not ‘how much’

Bill Clinton, seen above speaking at an April event, spoke at the Milken Institute conference on Thursday. (Photo: AP) Bill Clinton, seen above speaking at an April event, spoke at the Milken Institute conference on Thursday. (Photo: AP)

Former President Bill Clinton said the biggest problem in the U.S. was not division between the political left and right, but rather the divide between “communitarians” seeking common solutions and what he called “separatists” who fear a government that is going to take things away from them.

Delivering the final keynote at the Milken Institute Global Conference in Beverly Hills on Wednesday, Clinton assured the gathering of international policymakers and financial executives that “it is a great mistake to write the epitaph of this country,” and the way forward, he said, was to focus less on ideology and more on practicality.

The former president said the key question policymakers and the media paid attention to during his political career were “What are you going to do?” and “How much are you going to spend on it?” But the most important question, he said, was the one few people asked: How do you propose to do it? “That’s the most important question for the 21st century,” Clinton said.

It’s also a question given short shrift in current policy debates surrounding the stalled euro zone and weak U.S. economies, where “the austerity prescription is pushed despite evidence it won’t work,” Clinton said.

“There is no private demand, interest rates are already functionally zero. In an economy like this, premature austerity means revenue will drop,” Clinton said, adding “you can only reduce public debt with growth, proper budget restraints and adequate growth. You can’t get blood out of a turnip.”

The former president said the need for economic growth was just reality, regardless of right-left political posturing, saying “what the world wants most now is another job, is more things to do for people when they get up in the morning.”

So while measures such as 3% caps on budget growth might be a good thing, “it only works in times of growth,” and policymakers should therefore not lose sight of policies that will bring more jobs and growth per invested euros and less on the appearance of “fiscal rectitude.”

Clinton described his travels in the developing world and the daily problems people in these countries face just to get clean water, access to sanitation and reliable communications. He said the challenge for them, and for advanced economies alike, is not how much, but how—“How are we going to build systems in the poor countries? How are we going to repair systems in rich countries?”

In that regard, Clinton warned of the current presidential race, “70% of what we hear won’t make a lick of sense as relates to what we must do to solve our problems.”

“We have to get back into the future business,” the former president concluded.

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