Bill Clinton: “Well, let's analyze it. Let me answer the question on the merit first. What happened in the short run was that NAFTA was…”

“Well, let's analyze it. Let me answer the question on the merit first. What happened in the short run was that NAFTA was a much better deal for us in the first year than we thought it would be. We had a much bigger trade surplus than we thought we'd have. We generated far more new jobs than we thought we would, and they were basically high-wage jobs. And because of the financial difficulties of Mexico, which were unanticipated, it turned out to be a worse deal in the second year than we thought it would be. And because we ran a trade deficit, which we did anticipate once the Mexican economy went down, we have a slight net job loss. Does that mean NAFTA was a mistake? No, for two reasons. Number one, if the Mexican economy had gone through what it has just gone through without NAFTA and without the trading relationship with the United States, they would be in even worse shape. We would have a bigger illegal immigration problem. We would have a bigger period of instability down there. Democracy would be more at risk in Mexico. And we would be worse off than we are with NAFTA. It is unfortunate that the Mexican economy--that they tried to expand it too fast and in some ways it were improvident and they didn't cut back in an election year. And then, from my point of view, there was an overcorrection by the financial markets. They punished them too much. But still, we are better off vis-a-vis Mexico than we would have been if NAFTA hadn't passed. If NAFTA hadn't passed we'd have a trade deficit with Mexico this year be- cause they wouldn't be able to buy anything from us. The second reason it was the right thing to do is, in a period like this where things are changing so rapidly, you cannot calculate from month to month or year to year. If you look at 10 years from now, 20 years from now, 25 years from now, it is plainly the right thing to do. A strong, stable, healthy, democratic Mexico with a sensible economy is plainly in our interest. It will stabilize our borders. It will help us economically. And it will promote our goal of a world trading system and a world moving toward democracy and peace. So I think it's the right to do. On the politics of it, it was always a political risk for a Democrat to do what I did on NAFTA. But I believed in it. And it was one of the changes I thought the Democratic Party had to go for, not to give up fair trade, which is embodied in the Japanese trade agreement, but to go for free trade as well, to go for more open trade. It's just what I believe is the right thing to do, and I'll live with the political consequences. Capital Gains Tax”