Bill Clinton and the New Economy


In addition to shifting the Democratic Party to the moderate center on economic issues, Clinton tried to break new ground on a number of domestic issues and make good on traditional Democratic commitments to the disadvantaged, minority groups, and women. At the same time, he faced the challenge of domestic terrorism when a federal building in Oklahoma City was bombed, killing 168 people and injuring hundreds more.

Healthcare Reform

An important and popular part of Clinton’s domestic agenda was healthcare reform that would make universal healthcare a reality. When the plan was announced in September of the president’s first year in office, pollsters and commentators both assumed it would sail through. Many were unhappy with the way the system worked in the United States, where the cost of health insurance seemed increasingly unaffordable for the middle class. Clinton appointed his wife, Hillary Clinton, a Yale Law School graduate and accomplished attorney, to head his Task Force on National Health Care Reform in 1993. The 1,342-page Health Security Act presented to Congress that year sought to offer universal coverage (Figure). All Americans were to be covered by a healthcare plan that could not reject them based on pre-existing medical conditions. Employers would be required to provide healthcare for their employees. Limits would be placed on the amount that people would have to pay for services; the poor would not have to pay at all.

A photograph shows C. Everett Koop and Hillary Clinton in profile. They sit beside one another; Clinton speaks and gestures with her hands.
C. Everett Koop, who had served as surgeon general under Ronald Reagan and was a strong advocate of healthcare reform, helped First Lady Hillary Clinton promote the Health Security Act in the fall of 1993.

The outlook for the plan looked good in 1993; it had the support of a number of institutions like the American Medical Association and the Health Insurance Association of America. But in relatively short order, the political winds changed. As budget battles distracted the administration and the midterm elections of 1994 approached, Republicans began to recognize the strategic benefits of opposing reform. Soon they were mounting fierce opposition to the bill. Moderate conservatives dubbed the reform proposals “Hillarycare” and argued that the bill was an unwarranted expansion of the powers of the federal government that would interfere with people’s ability to choose the healthcare provider they wanted. Those further to the right argued that healthcare reform was part of a larger and nefarious plot to control the public.

To rally Republican opposition to Clinton and the Democrats, Newt Gingrich and Richard “Dick” Armey, two of the leaders of the Republican minority in the House of Representatives, prepared a document entitled Contract with America, signed by all but two of the Republican representatives. It listed eight specific legislative reforms or initiatives the Republicans would enact if they gained a majority in Congress in the 1994 midterm elections.

View the Contract with America that the Republican Party drafted to continue the conservative shift begun by Ronald Reagan, which promised to cut waste and spend taxpayer money responsibly.

Lacking support on both sides, the healthcare bill was never passed and died in Congress. The reform effort finally ended in September 1994. Dislike of the proposed healthcare plan on the part of conservatives and the bold strategy laid out in the Contract with America enabled the Republican Party to win seven Senate seats and fifty-two House seats in the November elections. The Republicans then used their power to push for conservative reforms. One such piece of legislation was the Personal Responsibility and Work Opportunity Reconciliation Act, signed into law in August 1996. The act set time limits on welfare benefits and required most recipients to begin working within two years of receiving assistance.

Don’t Ask, Don’t Tell

Although Clinton had campaigned as an economically conservative New Democrat, he was thought to be socially liberal and, just days after his victory in the 1992 election, he promised to end the fifty-year ban on gays and lesbians serving in the military. However, in January 1993, after taking the oath of office, Clinton amended his promise in order to appease conservatives. Instead of lifting the longstanding ban, the armed forces would adopt a policy of “don’t ask, don’t tell.” Those on active duty would not be asked their sexual orientation and, if they were gay, they were not to discuss their sexuality openly or they would be dismissed from military service. This compromise satisfied neither conservatives seeking the exclusion of gays nor the gay community, which argued that homosexuals, like heterosexuals, should be able to live without fear of retribution because of their sexuality.

Clinton again proved himself willing to appease political conservatives when he signed into law the Defense of Marriage Act (DOMA) in September 1996, after both houses of Congress had passed it with such wide margins that a presidential veto could easily be overridden. DOMA defined marriage as a heterosexual union and denied federal benefits to same-sex couples. It also allowed states to refuse to recognize same-sex marriages granted by other states. When Clinton signed the bill, he was personally opposed to same-sex marriage. Nevertheless, he disliked DOMA and later called for its repeal. He also later changed his position on same-sex marriage. On other social issues, however, Clinton was more liberal. He appointed openly gay and lesbian men and women to important positions in government and denounced discrimination against people with AIDS. He supported the idea of the ERA and believed that women should receive pay equal to that of men doing the same work. He opposed the use of racial quotas in employment, but he declared affirmative action programs to be necessary.

As a result of his economic successes and his moderate social policies, Clinton defeated Senator Robert Dole in the 1996 presidential election. With 49 percent of the popular vote and 379 electoral votes, he became the first Democrat to win reelection to the presidency since Franklin Roosevelt. Clinton’s victory was partly due to a significant gender gap between the parties, with women tending to favor Democratic candidates. In 1992, Clinton won 45 percent of women’s votes compared to Bush’s 38 percent, and in 1996, he received 54 percent of women’s votes while Dole won 38 percent.

Domestic Terrorism

The fears of those who saw government as little more than a necessary evil appeared to be confirmed in the spring of 1993, when federal and state law enforcement authorities laid siege to the compound of a religious sect called the Branch Davidians near Waco, Texas. The group, which believed the end of world was approaching, was suspected of weapons violations and resisted search-and-arrest warrants with deadly force. A standoff developed that lasted nearly two months and was captured on television each day. A final assault on the compound was made on April 19, and seventy-six men, women, and children died in a fire probably set by members of the sect. Many others committed suicide or were killed by fellow sect members.

During the siege, many antigovernment and militia types came to satisfy their curiosity or show support for those inside. One was Timothy McVeigh, a former U.S. Army infantry soldier. McVeigh had served in Operation Desert Storm in Iraq, earning a bronze star, but he became disillusioned with the military and the government when he was deemed psychologically unfit for the Army Special Forces. He was convinced that the Branch Davidians were victims of government terrorism, and he and his coconspirator, Terry Nichols, determined to avenge them.

Two years later, on the anniversary of the day that the Waco compound burned to the ground, McVeigh parked a rented truck full of explosives in front of the Alfred P. Murrah Federal Building in Oklahoma City and blew it up (Figure). More than 600 people were injured in the attack and 168 died, including nineteen children at the daycare center inside. McVeigh hoped that his actions would spark a revolution against government control. He and Nichols were both arrested and tried, and McVeigh was executed on June 11, 2001, for the worst act of terrorism committed on American soil. Just a few months later, the terrorist attacks of September 11, 2001 broke that dark record.

Photograph (a) shows the bombed federal building in Oklahoma City. Photograph (b) shows the siege of the Waco compound; flames shoot from the top of the Mount Carmel center.
The remains of automobiles stand in front of the bombed federal building in Oklahoma City in 1995 (a). More than three hundred nearby buildings were damaged by the blast, an attack perpetrated at least partly to avenge the Waco siege (b) exactly two years earlier.