(EMF) Bill Clinton’s Thoughts On Obama’s Tax-and-Spend Policies

November 14th, 2009

by Mark Skousen, Contributing Editor
Thursday, November 12, 2009: Issue #1136

“It’s illegal, but I’ll do it anyway.”

Famous last words by former President, Bill Clinton.

Last month, I had a chance to talk one-on-one with Clinton at the annual International Crisis Group Award Dinner at the Waldorf Astoria Hotel in New York City. I was the guest of Frank Holmes, president of US Global Funds and co-chair of the dinner.

It was my second meeting with Clinton. The first was after the 1996 presidential debates when I jogged with him for 30 minutes on a beach in San Diego, surrounded by Secret Service agents. It was there that Clinton said those immortal words when I asked him to sign a dollar bill: “It’s illegal, but I’ll do it anyway.”

Inevitably, I asked him what he thought of President Obama’s first year in office – especially his tax-spend-and-regulate policies. And what Clinton told me was very revealing…

The Middle East Conundrum

The IGG doesn’t play favorites. About 400 people came to witness former Presidents George H.W. Bush and Bill Clinton receive the Fred Cuny Award for the Prevention of Deadly Conflict, followed by a short concert by James Taylor.

Bush had a prior obligation and couldn’t attend, but Clinton spoke passionately for half an hour on armed conflict around the world. Much of his remarks were pointed toward the Obama administration, warning that the United States needs to “walk a tightrope” when it comes to Middle East peace negotiations.

“Ultimately,” he said, “the Middle East must do it on their own.” He continued by saying the Israelis and Palestinians must be willing to “get over it,” referring to past wars and hatred, and when they do, they will become a region known “not for energy, but for enterprise.”

He pointed to Rwanda as an example. In 1994, the central African nation was torn apart by a bloody civil war between the Hutus and Tutsis, resulting in the mass murder of one million civilians. But Clinton’s State Department sat around and did nothing to stop it, for which Clinton later apologized.

But Clinton said the Rwandans have moved beyond the genocide and have made tremendous progress in rebuilding their country. And while nations like Haiti have seen no increase in per capita income, Rwanda’s has tripled.

Everyone can agree on the evils of war. But after Clinton finished his speech, I had the chance to ask him about what he thought about Obama’s tax-and-spend policies.

Clinton Calls for Corporate Tax Relief

Specifically, I asked: “You left the presidency with a budget surplus, but since then our country has seen massive deficits. What went wrong?”

He bluntly replied that while he had a “pro-surplus” policy, George Bush had a “pro-deficit” policy and that President Obama has inherited an even worse “pro-deficit” policy. (My note: I personally believe that this is why Wall Street hasn’t gone anywhere in 10 years.)

Clinton said he understood and approved of the need for running deficits this year to avoid another Great Depression, but that unlike the 1930s, foreigners are financing a great deal of the federal deficit these days – specifically, the Chinese.

“That’s a serious danger,” Clinton said. (My note: I believe that’s why the dollar keeps falling.)

Then, raising his finger, Clinton emphasized that President Obama must “cut spending” when the economy finally recovers. So I followed with: “What about raising taxes? Do you favor cutting the corporate income tax to stimulate job creation?”

Clinton’s answer surprised me: “Our tax system is anti-business and too complex. Now more than ever, we need tax relief for American business.”

Of course, both Clinton and I know that no such government cutbacks will happen under Obama, especially as he and the Democrats push through an expensive healthcare program.

But Clinton’s message to me was clear: Obama is no Clinton. In fact, I got the distinct impression that Clinton thought President Obama was anything but a “pro-growth” new Democrat.

The question is: What does this mean for investors?

Three Stocks to Combat Three Big Problems

Simple: Look for more deficits, higher taxes, and slower growth under Obama.

To combat this potent mix, I recommend investing abroad. Specifically, buy these three stocks…

Templeton Emerging Markets Fund (NYSE: EMF): It’s shot up by 107% this year and I believe it’s likely to go even higher.
SPDR Gold Trust (NYSE: GLD) and the iShares Silver Trust (NYSE: SLV): It never hurts to hit the traditional safe havens of gold and silver – especially with precious metals faring well under the Fed’s zero interest rate policy.

Good investing – AEIOU,

Mark Skousen

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