Come on guys, economies are cyclical. A boom like the one in the 90's was bound to go bust eventually.
Why did the economy boom all through the 1990s, while Clinton was in office?
There are a number of reasons. One of the biggest ones is that the computer and software industry finally came into play, full swing. Before Windows, computers were for secretaries, some number crunchers and some engineers. There were also some home uses, but not that much. Most PC's were high priced 'originals' like IBM and Apple. With the launch of Windows, leading to the increasing availability of inexpensive computers through clone manufacturers like Dell, Compaq and Gateway, huge portions of the U.S. population finally got computers, bought lots of software and learned to use them in order to accelerate their work productivity. This provided a quantum boost to the economy.
Then in the early-mid 90s, something new came up - Internet. Another quantum leap in the computer-related industry which led to entire new business sectors to be born, including the likes of Amazon. All these companies started to do IPOs, and flush with cash, created more jobs, built beautiful houses for themselves (employing the construction industry and roadbuilding to connect them, etc etc. ) Internet increased the usage of the telephone system many times over, and pushed communications companies to invest in finding faster ways of transferring data. E-mail provided another jump in productivity.
This post just barely touches the very tip of the iceberg in what has been an incredible decade of economic change. The last time something like this happened was the advent of common air transportation and direct-dial phones in the 50's (in the U.S. anyway.)
All these huge increases in business result in increased corporate revenue (and employment), which lead to increased tax collection, which leads to budget surpluses, and the high employment lowers the need for lots and lots of unemployment and welfare checks.
In short, the economic boom of the 90's.
What did Clinton-Gore do to cause this economic powerhouse decade? Zero. Zilch. They just happened to be lucky enough to be in office at the time and reap the benefits. They were lucky to have a guy like Greenspan who could deal with the incredible monetary growth needed to keep up with the nation's newly found capacity. And they were lucky to have had the Reagan-Bush years to follow, where the sound, pro-business environment was once again established, enabling private enterprise to come up with all these wonderful toys we now wonder how we could have ever done without.
However, we now know that the "New Economy" of the 90's was in large part a mirage. PE ratios of 100-to-1, even 1000-to-1 were common (Microsoft is now trading at a PE of around 30 to 35, having dropped from astronomical levels. I consider this still to be a little high, but not too bad).
The U.S. economy was hit by the equivalent of a boxing 1-2-3 combination. One was the cyclical downturn which, as was mentioned before, started during Clinton's presidency. Two was the 9/11 attacks. As much as I despise Clinton, I don't see how you can pin that one on him. Three, and probably the most damaging of all, were the corporate accounting scandals, starting with Enron. One and Two hurt the economy, which however still had a solid base. This solid base collapsed when investors realized that "audited" financials were not so trustworthy after all.
People foolishly believed that this was sustainable, even a necessity to the point that shareholders insisted on absurd targets that their managements had to meet, by hook or by crook, or loose their jobs.
Here is one issue where I feel that the Clinton Administration truly failed in their duty. During these booming 90's, when the dynamics of the market were changing due to internet trading, new industries were going through the roof, CEO salaries were being increasingly tied to "performance" through options, etc. etc., Clinton SHOULD have told the SEC to become ever more vigilant to abuse, and should have pursued legislation to ensure that growth was based upon the same valid, trustworthy basis as were applicable before. Instead, he chose to ignore the potential problems, and instead basked in the results of the boom. Clinton truly dropped the ball here.
The stock market is the biggest driver of the U.S. economy, and what drives it is the faith of investors in a company's statements. Auditors were instituted generations ago in order to ensure their reliability. Without this faith, people would not give their money to a company - they would probably feel safer stuffing it under the mattress. This effectively withdraws the money from circulation. Investing means the money stays in circulation, being used to pay salaries, buy new equipment, develop new technologies, etc. That faith MUST be restored as rapidly as possible.
The SEC and the current administration must continue, and accelerate their policy of arresting and imprisoning the leaders of those corporations which falsified their books. They should also imprison the heads of the auditing firms which do the same. Laws should be put in place that make the CEO, CFO, Controller, and even members of the board (perhaps) criminally responsible for what goes on in the company, even if they were "not informed". Same goes for the CEO of Arthur Andersen. It upsets me that he is walking free, and passed the blame on a junior auditor. HE was the boss, and therefore HE is responsible for creating the corporate environment that told this junior guy that the contract was more important than the auditor's integrity.
The last part of my rant: People complain that the "budget surplus" is gone.
What is a budget? It is an estimate of receipts and expenditures. In 1999-2000, just before the economy started going belly-up, Clinton-Gore put forward these projections, based on the "mirage economy" which showed sky-high revenues, and therefore surpluses, from taxes on high corporate profits, which in turn paid good salaries and kept people out of unemployment lines. The "surplus" beyond 2000 was never there to begin with, therefore it was never lost. It was a fiction based on wishful thinking that the boom would last forever.
The only thing you should feel when shooting a terrorist: Recoil.