SYNOPSIS: Clinton's fiscal prudence helped greatly in the recent Economic boom.

America's economic miracle -- which Bill Clinton claimed as vindication in his Monday speech, but George W. Bush insists was an act of God -- didn't begin when Mr. Clinton took office in 1993. And no, it didn't begin with Ronald Reagan either. In fact, it didn't really start until 1996 or so. In other words, this boom is still in its infancy; and like all infants, it remains vulnerable. Mr. Clinton's greatest achievement is that during his second term he avoided the fiscal irresponsibility that might have strangled our "new economy" at birth -- irresponsibility that his opponent in the 1996 election would have practiced. Will his successor emulate his example?

Of course, Mr. Clinton prefers to think that everything good that happened these past eight years was his own doing. You can see why: Republicans confidently predicted that his 1993 tax increase would produce disaster -- a recession, an even worse budget deficit. So Mr. Clinton has an understandable urge to crow over the fact that even in his first term things turned out pretty well.

But we're talking analysis here, not poetic justice; and the truth is that growth from 1992 to 1996 -- like growth from 1982 to 1989 -- was just an ordinary business cycle recovery, with no sign of an upturn in the economy's sluggish long-term trend. And business cycles have very little to do with the administration that happens to be in office; they are determined mainly by the actions of the Federal Reserve, not the president. Jimmy Carter and George Bush got blamed for the recessions that happened on their watches, Ronald Reagan and Bill Clinton got credit for the recoveries that happened on theirs; but neither the credit nor the blame was deserved.

It was only in 1996 -- even as the right was comparing Mr. Clinton's recovery unfavorably with Mr. Reagan's -- that things really began to change. Productivity, which had grown at a snail's pace for two decades, began to accelerate -- and accelerate, and accelerate, with recent numbers so high they take one's breath away. Unemployment began falling to levels not seen since the inflationary years of the late 1960's -- but this time without inflation. And from these fundamentals many other good things flowed, from falling poverty and plunging crime rates to a record budget surplus.

Did the Clinton-Gore administration create this miracle? Of course not. The best guess is that a long process of technological innovation finally reached critical mass, creating new opportunities that American business was uniquely ready to exploit. But the right question isn't whether the policies of this administration gave birth to the new economy; it is whether different leadership would have killed it. Not to put too fine a point on it: What would have happened if Bob Dole had won?

I've been going back over Mr. Dole's economic program -- which, remember, was centered on huge tax cuts -- and trying to calculate what today's economy would look like if those tax cuts had been enacted. One clear conclusion is that even if the economy had grown as fast as it actually did, the federal budget -- certainly the non-Social-Security budget, and probably the whole shebang -- would still be in deficit. And it seems to me that our morale, not to mention business confidence, would be a lot lower if that budget were still out of control.

Anyway, the economy surely wouldn't have grown as fast as it did. Our soaring productivity didn't come out of thin air; an important, perhaps crucial ingredient was an amazing surge in business investment, especially in information technology. And this surge didn't have to happen. In a full-employment economy like that of America in the late 1990's, budget deficits mean that the government is borrowing money that would otherwise have been invested. This drives up interest rates, depresses asset prices and crimps business plans. Had Mr. Dole's tax cuts been enacted, the resulting deficits would surely have crowded out a lot of investment -- and quite possibly have crowded out the productivity boom.

Not long ago America faced a choice between sober, sensible fiscal discipline and huge, irresponsible tax cuts. We chose discipline, and were rewarded with growth beyond our wildest dreams. So why would anyone today propose exactly the kind of irresponsibility we were lucky to avoid four years ago?

Originally published in The New York Times, 8.16.00