- - Sunday, September 18, 2016

Hillary Clinton stands at a fork in the federal fiscal policy road. In one direction runs Bill Clinton’s performance; in the other, Barack Obama’s. Despite claiming both legacies, all indications are that Hillary is choosing President Obama’s direction.

There could not be a greater divide between the last two Democratic administrations than in fiscal policy. While Mr. Clinton’s course was thrust upon him by a Republican Congress, it proved his greatest legacy. In contrast, Mr. Obama has followed his own course and it has become one of his administration’s weakest areas.

Bolstered by an economy already in recovery in 1992 and a tax hike he later admitted was too large, Mr. Clinton saw revenues during his eight years in office that averaged $1.5 trillion — $455 billion above their 1992 level. Federal spending averaged $1.6 trillion from 1993 to 2000 — $205 billion above its 1992 level. The period’s average deficit was just $40 billion — $250 billion lower than 1992’s.

The economy did well. Real gross domestic product (GDP) growth averaged 3.9 percent from 1993 to 2000 — hitting 3.8 percent in 1996 and then staying well above 4 percent annually. The fiscal and economic combination produced dramatic results relative to GDP.

From 1993 to 2000, federal receipts averaged 18.4 percent of GDP. Spending averaged 19.2 percent of GDP — 2.3 percent below its 1992 level. Aided by surpluses beginning in 1998, the deficit averaged just 0.8 percent — 3.8 percent better than in 1992. Most impressive was the effect on federal debt: It fell almost one-third, from 46.6 percent of GDP in 1992 to 33.6 percent in 2000.

Eight years later, Mr. Obama chose a different course. While still not over — using Congressional Budget Office estimates for 2016 — its trajectory is clear.

With an economy already in recession, Mr. Obama waited on his tax hike. Together, these make 2009-2016’s $2.7 trillion average revenue level (just $144 billion above 2008’s) somewhat misleading. After Mr. Obama’s tax hike in 2013, revenues jumped to $3.5 trillion in 2014 and are estimated to reach $3.9 trillion this year.

Federal spending has been Mr. Obama’s real fiscal driver, averaging $3.6 trillion — $596 billion above 2008’s level. As a result, the deficit has averaged $911 billion — $452 billion above 2008’s.

With the economy’s continuing weakness, averaging just 1.6 percent from 2009 to 2016 (even dropping 2009’s contraction, it averages just 2.2 percent), the key fiscal variables look particularly poor. Revenues have averaged 16.25 percent of GDP, (0.9 percent below 2008’s), spending has averaged 22.1 percent (1.9 percent above 2008), and the deficit has averaged 5.8 percent of GDP.

All of these factors have had a hugely adverse impact on the federal debt, which is projected at $14.1 trillion this year — well over twice 2008’s $5.8 trillion mark. As a percentage of GDP, it is projected to reach 76.6 percent this year, almost double 2008’s 39.3 percent.

Facing these diametrically different courses, which will Mrs. Clinton take? In her July 28 Democratic National Convention acceptance speech she described her route, saying she would “pass the biggest investment in new, good-paying jobs since World War II invest in infrastructure now make college tuition-free liberate millions of people who already have student debt help more people learn a skill or practice a trade make it easier to get credit [and] provide affordable child care and paid family leave.”

She also stated: “[W]e’re not only going to make all these investments, we’re going to pay for every single one of them. And here’s how: Wall Street, corporations and the super-rich are going to start paying their fair share of taxes.”

Even taking Mrs. Clinton at her word — and not presuming these new federal programs follow history and outspend their funding — the effect would be spending and revenue hikes beyond Mr. Obama’s levels.

When her husband took office, he was working off comparatively low levels of taxing, spending, deficits and debt. Not so now. What’s more, today’s levels are not static, either.

According to the Congressional Budget Office, assuming current policy remains in place, today’s fiscal levels will grow absolutely and relatively. Revenues as a percentage of GDP are projected to rise to 18.2 percent, spending to 21.6 percent, deficits to 3.3 percent, and debt to 78.4 percent. All will occur without further policy additions.

When Bill Clinton was confronted by a Republican Congress after two years in office, he plotted his “third way” — resisting tax cuts, despite increasing surpluses — and accepting Republicans’ spending cuts, stating in his 1996 State of the Union Speech “the era of big government is over.”

When Mr. Obama was confronted by a Republican Congress after two years in office, he pushed through a tax hike and already had his spending in place.

Hillary Clinton holds unique claim to two diametrically divergent policy courses. Both are legacies of the party whose presidential nomination she now holds. For any politician, it would be tempting, like the Scarecrow from “The Wizard of Oz,” to choose both to go in both directions. But only in politics and Oz is that possible. Everywhere else, you can choose only one, and it is clear that Mrs. Clinton has chosen hers.

J.T. Young served in the Treasury Department and the Office of Management and Budget, and as a congressional staff member.

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