Economy Does Better Under Democrats

Like it or not the data shows the economy does much better under Democrats. This article from Marketwatch:





Opinion: Lucky or not, the economy does better under Democrats
By Paul Brandus
Published: Oct 27, 2015 12:43 p.m. ET

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Growth is stronger with Democrats in the Oval Office
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Divided government — like here with a Democratic president and a Republican House — is the norm.
Listening to all this campaign mudslinging (just 12 more months to go!) I can’t figure out whether it’s the Republicans who are going to destroy the U.S. economy if they win the White House or if the Democrats will. I guess it depends on whatever side I’m watching, reading or listening to that day. This much is clear: each side is convinced that if the other side wins the White House, we’re going to hell in a hand basket.

But what does history tell us? How has the economy done under Democratic and Republican presidents? Has one side tended to be better for the economy than the other? As it happens, the answer—based on seven decades worth of economic stats going back to the end of World War II—is yes.

Since 1945, American voters have swung back and forth between both parties: seven Democratic presidents and nine Republican ones. Economic growth in real terms (in other words adjusted for inflation) averaged 2.54% per year under Republican presidents, but 4.35% per year under Democratic ones. That annual difference of 181 basis points, say Alan Blinder and Mark Watson, the two economics professors at Princeton who conducted the study, really adds up over time. It means that real GDP expanded 18.6% during a “typical Democratic four-year term, but only by 10.6% during a typical Republican term.” Adding more fuel to the argument, The Economist notes that better job creation and stock market performance also coincide more with Democratic presidents than Republican ones.


Here’s the part where you might say, yeah, but Congress is what counts here, because it controls the budget, taxes, passes economic legislation, and so forth. Fair enough. Yet over the same 70 year period—1945 to now—the government has been generally divided, with one party in the White House and one controlling at least one chamber of Congress (the House or Senate) 58 of 70 years. In just 13 years has one party controlled the White House and both chambers. In other words, government where power is divided among both ends of Pennsylvania Avenue has been not the exception, but the norm. So most presidents, whatever the party, have had to deal with the same thing: an opposition party that controlled part, if not all, of Congress.

So how to explain the better performance under Democratic presidents? Perhaps it’s just luck and timing. Or, perhaps, it’s philosophical differences. Take two of our more recent and economically successful presidents, Bill Clinton and Ronald Reagan. Reagan cut tax rates for the wealthy, but Bill Clinton raised them. Yet the Clinton economy slightly outperformed Reagan’s.

Perhaps federal deficits have something to do with it? Under Reagan, deficits soared; Clinton ran a surplus during his last four years in office. . But doesn’t federal spending, like Reagan’s, stimulate the economy? If so, then why didn’t Reagan’s spending increases and tax cuts produce faster growth than Clinton’s?

And then, this pattern was reversed by our two most recent presidents. Clinton’s tax increases on the wealthy were reversed by George W. Bush—and growth rates lagged. Under Barack Obama, the average federal rate paid by the top 1% of households went up, yet growth rates in the much-maligned Obama economy have outperformed the lower-tax rate Bush one. Go figure.

Even odder, Blinder and Watson point out that monetary policy—one domain of the Federal Reserve—has been “more pro-growth under Republican presidents.”

But don’t get too gleeful, Dems: One theory as to why things have been better under Democratic presidents has little to do with whoever’s president—and that is the many external factors that are largely beyond any politician’s control. For example, Clinton took office as the Cold War ended; he benefitted from the“peace dividend” that Reagan helped provide. Clinton also enjoyed the huge technology boom—the internet revolution—that boosted economic productivity throughout the 1990s. Just as Clinton left, the tech bubble burst—sparking a recession. And just as Bush inherited a downturn from his predecessor, he bequeathed one—far worse—to Obama. All presidents inherit, for better or worse, the economic conditions of their predecessor.

So what does all this mean for our next president? Whoever he, or more likely, she is will inherit a stronger economy than Obama inherited in 2009—but with plenty of time bombs. The deficit—down 70% on Obama’s watch, is back to its average post-war level relative to GDP. But it’s set to surge past $1 trillion again in the next decade, as unchecked—and mandatory—entitlement spending surges.

Assuming interest rates move higher in the years ahead, interest on the $18 trillion debt (up 80% since 2009) will rise, squeezing available capital that could go to more productive places. Then there are those lucky, external factors mentioned earlier. What happens if China continues to slow? The E.U. sinks into yet another recession? What if there’s, god forbid, another terror attack, or war breaks out and oil prices shoot back up? Who knows what could happen. The luck that has tended to help Democrats more than Republicans in recent decades could run out at any time.

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I agree. The economy is better when a Democrat is in the White House.

 

It doesnt matter who is president congress controls spending. The last time we had a good economy was under republican congresses during the Clinton-Bush years

 

the question becomes... is the economy stronger under democrats because of laws passed by republicans prior to democrats taking power? and vice versa...

see laws usually take a couple years to take effect in the economy, and show us whats really going to happen, as companies and individuals adjust and settle in... so you could almost argue quite easily, the reason why democrats look better is because of the laws passed prior to them entering office... you know, much like everyone blames Bush for the failures in the first couple years of Obama taking office... which would hold true, we can see how those failures took years to settle out and affix themselves to normalcy in society... and likewise we can see the effects of the bailouts taking years to finally take root and make a difference...

so while democrats may want to take credit for it, they may want to dodge the credit once they realize this also shows they often create the declines as well that brings out a republican change to change the economy... I know this will fly over the head of most people reading this, and they will say thats stupid and impossible and thats now how economics works... all I would ask is for them to follow the bills, and track when society finally reacted to them... and what administration those bills quite often overlap into and take full effect... you can review the thousands of government studies done on the effects and costs of bills over the years... don't take my word for it... do the reading... it will probably make those who want to show this as proof democrats are better, to tuck tail a little and not make a big stink before it turns around on them... but it will also reconfirm to democrats who ruined the economy and how they aren't to blame for the slow recovery... both sides will have firepower when they realize this...

P.S. here is the link below to the article the original poster quoted, since it seems to be missing...

http://www.marketwatch.com/story/lucky-or-not-the-economy-does-better-under-democrats-2015-10-27

 

So the sluggish recovery from the GR is the Republican's fault?

You have a point. They are the ones who forced austerity on us.

 

They sure have the Reps set up to take the fall this time when all the bad stuff Obama has planted comes home to roost like the taxes on Obamacare.

 

Obama wasn't the one who forced austerity on the economy.

 

You could just as easily state the data and history shows the Democrats free spending creates unsustainable good economic conditions due to manipulation of market conditions, and the Republicans have to deal with the collapse and put the recovery in place. There are exceptions to that just as there are exceptions to the OP claim.

But if you are going to play a shallow game and claim the economy is better with one party or the other in office, either party can be made to be the better party. In reality, they both share the blame for the failing situation. Conservatives recognize that truth, "progressives" do not - hence the prog claim such as this OP.

 

Except for the first time ever the next gen will be worse of then the gen before it. RAISE THE DEBT LIMIT!!!!

 

There's actually a lot more data supporting the idea that Democrats are better for the economy than Republicans. I created a thread on it a few months back:
http://www.politicalforum.com/political-opinions-beliefs/406634-gops-economic-problem.html

Besides the measure listed by the OP, we also have a lot of comparisons between blue states and red states. We even have a comparison with states specifically praised by Arthur Laffer and the conservative lobbying group ALEC.

Guess what? In each of those measures, the economy does better when Dems are in charge -- or at least, when Dem economic policies are in place.

The states singled out for praise by conservatives? They lagged the rest of the country in subsequent years. The more Laffer/ALEC liked a state's economic policies, the worse that state did.

Red states? On average, lower economic strength and social cohesion than blue states.

The list goes on. I invite you to read the thread above. It presents a lot of data, and conservatives were unable to rebut it.

 

The Republicans fix things. The Democrats benefit from them, and break them. Then the Republicans fix them again. Of course the dems look better, they govern the fixed version, and slowly break it.

 

I decided to review your data... you know what the problem of the data is... many of those states went from blue to red, and because they had a republican governor they are now lumped into the data... despite democrats having the majority control for much of the history of those states... and when you further break down the data sets by city and county... you find those in rural areas often run by republicans, compared to larger cities often run by democrats, you can see the cities massively bring down the numbers that are far far better in the rural economies... so essentially its a net number much lower than the areas run by each political party...

now what would be interesting, is to see a county by county comparison with a weighted difference for state level elections obviously influencing local politics... but the data you're using to "prove" it... actually disproves it quite heavily when you expand that data set to a much larger time period to allow for control of other political parties to have control... simply using governors as the end-all method to declare a state red or blue is so warped...

I'm not saying one is better than the other, being independent, I find both quite repulsive to be honest... they aren't running for americans, they are running for their political party... which is disappointing to me... we can provide examples of both sides being more successful, and we can provide examples of both being failures... however when we want to cherry pick stats to push a political agenda, I get offended by the horrible use of data to do so...

this reminds me of people who scream gun control gun control... and point to the national average... or use a major city as an example of gun deaths per capita... take those same numbers, and slide over to the suburbs, to the rural areas... where gun ownership is higher, and yet gun deaths are almost non-existent... you compare those in the rural areas look better than many european countries, while those in the massive urban centers have those of a 3rd world country... and it just averages out to a national average... yet when you break them down, clearly you can cite local laws by each, and if they are effective or not... chicago being the prime example, with laws so tough and clearly cracking down, yet they are 20x worse than the rural towns surrounding them without those same gun laws...

this is why data sets and facts annoy the heck out of me... people prove things using a sliding scale, and slide it around until it fits their agenda... not the truth...

P.S. when you further break down your data, and compare states that have a true history of being republican majorities prior to and after the collapse... the republican ones are almost equal to and in some instances better... its actually a back and forth tossup from the numbers I am reviewing... but one significant thing that seems to be overlooked is they lost less jobs overall, so they have less gains to make up... further muddying the "facts" when you want to make a comparison without the whole picture... you really need to dig down WAY further...

 

Oh yea, the economy was so damn terrific under Carter I could barely stand it.

 

Nope!

Best economy was under Clinton.

Under Bush sr there was a severe recession and under Bush jr we had an economic collapse that was entirely because of Republican deregulation of the financial sector.

 

That's a lot of assertion without any data to back it up. And it's frankly false/irrelevant in some cases -- the Laffer/ALEC data, for example.

I agree. But you haven't demonstrated that my data is cherry-picked.

Again, a lot of assertions with ZERO data to back up the claims. If you're going to make the claim, please provide the data you base the claim on.

 

No we had a collapse because of Clintons community reinvestment act causing the housing bubble and if you noticed dems taking over congress. It was when the reps took over congress under Clinton that the economy started to improve

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If your talking sequester that was Obamas idea

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Sure he was

 

Bush II really threw you off then, didn't he? He took eight years to negate Clinton's Surpllus and put us into the crapper so deep it almost triggered another Great Depression. Good thing we had Obama to fix that/

After 2000-2008 I think anyone voting Republican is either somewhat slow, mentally ill or probably both

 

You mean it only took two years of a dem congress to make things go south

 

Of course they will go up, they are currently at historic lows and you are correct as soon as they return to normal, they will suck up an incredible amount of discretionary budget.

 

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I know you'll completely ignore anything I say. Maybe this guy will hold more sway.

[video=youtube;hDou01X5d28]https://www.youtube.com/watch?v=hDou01X5d28[/video]

I see. Obama, who conservatives call such a big spender, came up with the idea of cutting federal spending and wanted austerity.

It's easy to be a conservative when you can hypocritically employ rank double standards.

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Things were going South before there was a Dem Congress.



By 2007 the housing bubble had imploded to its absurd levels and started imploding, and the crash and great recession were just a matter of time.

 

Like Coolidge and Hoover? They really "fixed things" up good....

 

Let's do a quick review.

Clinton inherited UR at 7.5% and left with the UR at 3.2%. Bush inherited the 3.2% and left office at 7.8% (and skyrocketing upward). Obama inherited a 7.8% UR and its down to 5.1% now.

Maybe you can explain how that is Republicans "fixing things" and Democrats breaking them in your view.

 

Since I posted the entire article it seemed a link was unnecessary. Fact is the economy does do better under the Democrats no matter what Republican excuses are offered.

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You could but it would be intellectually dishonest.

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Data doesn't lie. Excuses are always fun but are still excuses!

 

The economy does best with a small federal government. Look at growth in the 1800's compared to today.

A big government weighs down an economy.

 

Actually the data appears to prove the exact opposite.

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OK, post the GDP data from the 1800's. Or are you just making this all up?