Four years ago at the beginning of the last American presidential campaign, the US economy was enjoying a nine-year expansion: strong growth, low unemployment and inflation, rising incomes, a soaring stock market, and large federal budget surpluses. At the time, many observers from both left and right accorded the policies of the Clinton administration – in particular its support for significant deficit reduction – at least partial credit for the economy’s strong performance.

Today, the US economy appears poised for another period of high growth following a spectacular stock market correction, a painful recession, and an anaemic recovery characterised by persistent job losses, stagnant incomes and ballooning budget deficits. The economy’s performance and future prospects will be big issues in this year’s presidential campaign. The Republicans will claim that Bush’s economic policies, in particular the two large tax cuts of 2001 and 2003, have triggered renewed economic expansion, while the Democrats will argue that these policies have caused large job losses, rising income inequality and huge budget deficits. The debate is sure to be heated and not very enlightening.

Luckily for those trying to understand what has really happened, a new book, In an Uncertain World: Tough Choices from Wall Street to Washington, by Robert Rubin, secretary of the treasury for most of the Clinton presidency, provides a compelling and largely dispassionate analysis of recent US economic history. Another book, The Roaring Nineties: A New History of the World’s Most Prosperous Decade, by Joseph Stiglitz, a chairman of the council of economic advisers during President Clinton’s first term, confuses the picture with an analysis that, while occasionally insightful, is marred by inconsistencies and exaggerations. I worked alongside both Rubin and Stiglitz during the first Clinton term. I served as chair of the council of economic advisers between 1993 and 1995 and succeeded Rubin as the president’s national economic adviser and chair of the national economic council in 1995 and 1996. I recommended Stiglitz’s appointment as a member of the council of economic advisers in 1993 and his subsequent appointment as its chair when the president asked me to succeed Rubin. As a central member of the president’s economic team during his first term, I have first-hand knowledge of the policymaking process and the different positions of the participants.

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