Gerstle’s treatment of the 1990s is perhaps the most compelling section of his book. He tells the story of how neoliberalism became as much a creed of the Democratic Party as of the GOP, focusing on how the Clinton administration embedded neoliberal perspectives into the logic of policy-making and helped advance legislation that extended the Reagan-era rollback of the federal regulatory apparatus. Clinton oversaw the passage of the North American Free Trade Agreement, the repeal of the Glass-Steagall Act (which had kept commercial and investment banking separate), the deregulation of the telecommunications industry, and the enactment of punitive welfare reform. Even the administration’s failed attempt to create a national health insurance system relied on the private sector to underwrite the program. “Across his two terms,” Gerstle writes, “Clinton may have done more to free markets from regulation than even Reagan himself had done.”
In all of this, Clinton exemplified the continuing shift in the Democratic Party toward neoliberal principles, which had become more pronounced by the mid-1980s. It was championed by senators like Gary Hart, Paul Tsongas, Bill Bradley, and Al Gore and governors like Michael Dukakis as well as Clinton, all of whom believed that the party needed to move to the center and embrace ideas that stepped outside the framework of the New Deal order. Sometimes called “Atari Democrats” for their interest in the emerging high-tech sector, they created the Democratic Leadership Council, which was tasked with refashioning the party’s agenda and supporting candidates who were ready to pull it in this new direction. Indeed, the developing connections between these new centrist Democrats and Silicon Valley entrepreneurs were indicative of how neoliberal sensibilities were seeping into many areas of American social and political life, even tapping into the personal-liberation politics and anticorporate outlooks of the counterculture and the New Left. Ralph Nader, who once seemed the quintessential critic of capitalism, serves as an early example: His work in the 1970s, while riling conservatives and corporate executives, nonetheless focused on making markets more responsive to consumer needs rather than on decoupling government regulatory agencies from corporate control. Subsequently, many who came of age in the 1960s and ’70s and had their own suspicions of the state and its projects found some of neoliberalism’s libertarian and entrepreneurial values very appealing. The hegemonic nature of neoliberalism was best expressed by Lawrence Summers, an economic adviser to both Clinton and Barack Obama. “Not so long ago, we were all Keynesians,” Summers observed candidly in 2006. “Equally, any honest Democrat will admit that we are now all Friedmanites.”