Proof: Democrats Are Better For the Economy

Today I'll be on KTLK at 11:30 CST to talk about the economy.

We've seen a wave of news stories that Wall Street is scared of Obama, or the Obama will lead to a market crash or that Obama will kill the economy. First -- it's not like the Republicans have a lot to crow about here. We're currently dealing with the long term effects of Republican excesses and the results are terrible. Secondly -- and more importantly, the historical record (those pesky facts again) indicate that Democrats are far better for the economy than Republicans.

The following charts are from the Liscio report blog.

The blog notes:

Democrats have a clear edge on GDP growth: 4.4% vs. 2.6%. Even if you start the clock with Truman in 1949 (eliminating the war boom and immediate postwar bust), the Dem advantage survives, with average growth of 4.5%. The partisan difference is widespread, too, not dependent on a few strong or weak readings: the blue bars stack towards the top of the graph, and the red bars towards the bottom. It might surprise some readers to learn that the Carter years weren't quite as bad as some remember -- though the inflation performance was miserable.

But Republicans are the party of big business! They know the economy! Actually, the facts indicate the Democrats are simply put better at initiating policies that help the whole economy -- not just small segments of it.

Democrats also create more jobs than Republicans. However -- here is a very important caveat. Over the last three expansion we've seen an overall decrease in the total number of jobs created. That is, the total number of jobs created during Clinton were less than Reagan and the total number of jobs created under Bush were less than Clinton. The point here is there is an overall trend in business to continually hire fewer and fewer people. The primary reason for this is two fold. First, there has been a massive increase in productivity over the same time period which means a business needs fewer people to do more stuff. Secondly, business has become more and more cost conscious and employment is typically the most expensive part of a businesses expenses.

Income inequality as measured by the Gini index increases under Republicans and decreases under Democrats. I think this is a very revealing statistic because it gets to the heart of the primary difference between the parties. The Republicans typically cut taxes on upper-income taxpayers, which leads to an increase in income inequality. While some inequality is going to naturally occur and in fact is healthy because it creates a societally wide incentive, the question of how much is an important policy debate well worth having. Now -- because Republicans cut taxes but not spending...

They increase deficits a hell of a lot more than Democrats. The report explains:

Though the picture so far is of the Republicans as the party of austerity and the Democrats as the party of stimulus, there's a surprise when it comes to changes in the federal deficit: Republicans are more liberal with the red ink than Dems. On average, a Republican in the White House has meant a shift of -1.9% of GDP in the government's budget balance (i.e., towards smaller surpluses or bigger deficits), while a Dem has meant a 1.5% improvement in the budget position (or 1.8%, if you start in 1949, thereby omitting the huge World War II deficit). And in this case, the average is a faithful representation of the distribution, with only one Democrat in the minus column and only one Republican in the plus.

Some of this reflects different tax policies, with Reagan and Bush 43 cutting, and Clinton raising income taxes. But it also reflects the partisan difference in GDP growth.

And for the investor class -- as Larry Kudlow likes to say -- you may want to help elect Obama because Democrats are better for stocks:

This gets back to the first chart of GDP growth. Simply put the economy grows more under Democrats than Republicans. That means higher profits which -- again as Larry likes to say -- are the mother's milk of stock profits (So Larry -- why are you a Republican again?????)

In all seriousness -- these data points are extremely telling about the effects of the policies both parties implement. The Democrats clearly have a better record of growing the economy for more people. Those are the facts, not the spin.

Comments

[dobberdoss]

``Clear as mud`` as they say. Lets hope you Dems get your act together this time, This from an foreigner There are many of us watching this election from outside your country by the way.
Put another Repug in office & we will pull the plug on you guy`s & try the Communists instead. Remember, `WE ARE WATCHING YOU!``

[swift goat pet for truth]

Put McSame in office, and I am moving.

Got any recommendations?
Canada's close, but Europe seems nicer, at least until their economy crashes.

[swift goat pet for truth]

Here is another graph, showing who BENEFITTED from the Bush Boom.

http://krugman.blogs.nytimes.com/2008/07/07/

[isis]

But of course if history holds, the economy will take a sudden and Temporary upswing just before the election

http://www.washingtonmonthly.com/archives/individual/2005_05/006282.php

[Pdubya]

democrats are less brazen when they participate in the shell game, no doubt.

how about eliminating the shell game though?

good for stocks?

would that be chinese, european, mining, or saudi arabian stock?

cuz the dollar ain't worth the paper its on.

[swift goat pet for truth]

You could look good for business, too, if you "borrowed" money from the future and gave the money to business.

Guess who pays that money back.

Our $9 Tril National debt, about $7 Tril is Reagan-Bush-Bush.
The rest is everyone else.

[KillTheMessenger]

To most businesses this does not matter. The only "winners" under BushCheney are military-industrial and energy. Everybody else lost.

[swift goat pet for truth]

Directly, yes. But the military-industrial complex is quite far reaching.

Furthermore, GOP tax laws favor corporations. As do Congress and the SCOTUS.
But as the tax laws give breaks to business, guess who picks up the slack.

[KHAAANNN]

Why are most business people in the Fortune 1000 (not small business mind you) Republicans?
Very simple.
Being a Democrat means you care about others at SOME level and usually reflect that in your dealings with others.
Being a Republican allows you to be the selfish prick that you really are. To a selfish prick, it is quite liberating to be a Republican.
A very good study done a few years ago showed that the 10 most desirable personality traits of a prospective CEO as defined by the average Board of Directors in the Fortune 1000 mapped perfectly with the 10 most significant personality traits of a clinically defined Sociopath.
Is it any wonder then that these people care nothing for anyone but themselves and how much THEY make?

[bgregs]

Lets be fair here. I know many republicans who are NOT that way, just like I know a few democrats who ARE that way. The deciding factor seems to be wealth, NOT political party!

[KHAAANNN]

Notice that I limited my analysis to the Fortune 1000. Republicans outnumber Democrats on that list by 20 to 1.
It is true that there is an exception to every rule, including this one........;-)

[truthynesslover]

Have you seen the movie the yes men?Id highly recommend it.And its not just wealth I know many republicans who are not wealthy and they are nice people if you their freind but theyd walk over your writhing body in the street, and dont give a crap about the environment.Why is it only republicans dont believe in climate change??

[thepeoplechoose]

It would seem that democrats are more in touch with reality on this (and many other things).

What I mean is democrats have a clearer grasp that there needs to be a firmly controlled regulatory scheme to protect capitalism from its own excesses. Without that it quickly gets out of control and ends up bad for everybody. That's human nature and if you don't account for it you are in for a rude awakening. That's where we are right now.

[PresidentJoe]

Excellent article, especially the graphs. If you want to see some additional economic indicators, I posted a number of them at http://home.att.net/~rdavis2/kinsley1.html . This was based on an article by Michael Kinsley back in 2004.

[themodernleader]

Tlhis Country is so indeted that the past may not be helpful to predict the future performance.
Historically, in corrupt South American countries the dictator would fly high with policies that ultimately left the organization in captive debt of outsiders and poverty for the many citizens.
The democratic, disposed rulers would take over and their sound economic policies would so infuriate enough citizens that a charlatan with a smooth tongue would overthrow the democracy and repeat the cycle.
I believe we are in such a deep hole that reform, unless prudently and sagaciously enacted could provoke disastrous consequences. Our citizens are not of the same character as those of the Great Depression. The welfare dependency upon government largess of our citizens, especially of the upper and lower levels of society, has weakened our motivation to achieve and strive for self-sufficiency and independence. Such citizens are susceptible to simple solutiions and "the faith that moves mountains".

[olephart]

"Using the Dow Jones industrial average as the benchmark, Stock Trader's Almanac shows a $10,000 investment compounded during Democratic presidencies since 1901 would be worth $279,705 after 48 years. The same $10,000 investment during 56 Republican years would have been worth just $78,699."

http://www.usatoday.com/money/perfi/columnist/krantz/2005-12-02-presidents_x.htm

[SCHx]

This just confirms what I've observed for a number of years - Republicans talk a big game but can't deliver on anything.

Hopefully, the Republicans will be permanently reduced to the roll of the 'loyal opposition'.

[Uosdwis]

That's the best: The Bush father and son are together at the BOTTOM in job growth.

[UnbiasView]

As a guy who usually writes some good stuff, this post is quite the stretch. You are basically crediting one man to an entire era and forgetting that there are millions of factors included in the US economy.

Do you really give Bill Clinton credit because he walked into a technology boom in the 90s (Internet, Cellular, PC) that created millions of jobs and billions of dollars?

[bknott]

Absolutely. Personally, I think Democratic presidents make much better economic policy, and I think that Clinton was a very good president - but he just got really lucky with the tech boom.

[UnbiasView]

Clinton was very good economically, he was however not a liberal on his economic policies. He even cut taxes and didn't believe in redistribution of wealth (i.e. stealing from the productive and giving to the non-productive).

[stopbeingSMUG]

the surplus durning Clinton's final term in office was the result of enormous defense spending cuts, a benefit of the Reagan peace dividend, a republican Congress which kept spending in check and a roaring, private sector, high technology economy which dramatically increased government tax recipts.

[bgregs]

First, let's be serious here. The president doesn't do all that himself, no doubt, but he is the PRIMARY single influence on the economy. HIS policies are the ones which LEAD the economy!

Second, there would not have been the same tech boom (or even one at all) if we'd had bush I stay on for another four years. Nor if we'd had Dole for the LAST four years. Once again, it is the policies that the President puts forward that cause the booms!

[UnbiasView]

"there would not have been the same tech boom (or even one at all) if we'd had bush I stay on for another four years"

Please explain your logic . . . are you saying Bill Gates wouldn't have released Microsoft? Are you saying that the cell phone companies would have never come out? The Internet?

[Eoin45]

Facts really bug you don't they Unbias. Clearly it is not just the actions of one person, but there is certainly an overall pattern over time and it clearly shows that the policies of Democratic administrations are better for average folks. The Republican party has never been concerned with the welfare of the many. All they do is toss rhetorical bones in our direction to deflect our attention from the fact that their sole purpose is to transfer as much wealth as possible upwards. Unfortunately for dupes like you, you continue to swallow their propaganda and vote against your own best interests. Believe me they're laughing at you down at the country club.

[MourningDude]

I don't like this contempt for people that vote for the greater good rather than their own self-interests.

" A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage. "

I find it very troubling that the party that gave us "Ask not what your country can do for you, but what you can do for your country" is now the party asking 'What has the government done for you lately?' and playing these class warfare games.

[bgregs]

No, I think that he IS one laughing at the country club!

[KillTheMessenger]

And you are proving that all Republicans squirm in pain when presented with their own incompetence.

[truthynesslover]

And who help create the legislation to facilitate the internet?

[Jane]

I've noticed this, too. My analysis is that the republicans golf together, and therefore know that all REpublicans are cheaters, so as soon as they take office, they get worried (as they did in 2001), knowing that all information wil now be falsified, and all regulations (which actually make things easier) will now stop working. IN fact, the Republicans don't actually want to live in the criminal dog eat dog world that they say they prefer, but they have to pretend they do because being a criminal is the more manly option. That's America, folks!

[elizaW]

Do you have a chart showing us how much taxes (on the middle class) went up under democratic presidents and how much they will go up with Obama in The White House? That's the only chart many of us care about. If you're raising taxes to an extreme rate, you might (as Roosevelt did) create more jobs but people (and it's always the middle class) play dearly for that. By leaving out the tax chart, your information is useless.

[rickd24]

You don't need a chart for Obama. He says that he will only raise taxes (meaning returning them to the pre-Bush tax cut levels) if you make over $250,000 per year. If you make less than that, your federal taxes won't go up at all. And a 0% increase doesn't sound extreme to me. Unless you consider people making over $250,000 per year in the middle class. And even they will only have their rates go back up to the Clinton levels, which were NOT extreme, no matter what the Republicans tell you.

[mh01]

And if you believe that personal income taxes are the only federal tax you pay, then go ahead and vote for Obama. The rest of us will worry about Obama's plan to raise social security taxes, raise capital gains taxes, and remove the cap on payroll taxes. ALL of these dramtically effect people making less than $250,000.

So yes, you need a chart for obama's tax policy. But its a simple chart, its one line starting in the lower left hand corner (for low taxes) and rising steadily to the upper right hand corner (for higher taxes)

And a second line which starts in the upper left hand corner (I get to keep more of my money) and decreasing to the lower right hand corner (I get to keep less of my money).

The X those two lines make on the chart is the sign you make on your ballot next to John McCain.

[elizaW]

First of all like everything else with Obama, that figure of those only making over 250 is misleading. He'll be taxing those making over ninety thousand by uncapping social security and ninety thousand is the middle class. This doesn't even take into count so many other areas of our daily lives that will see an increase in taxes. Obama is going to tax, tax, tax and anyone who denies that has blinders on.

[stopbeingSMUG]

Obama pledges to double the capital gains tax.

Let's take a look at today.... American banks are failing because of a lack of capital. Our biggest financial institutions are selling pieces of their equity " and their souls " to sovereign wealth funds to raise cash. The debt pyramid constructed by Fannie Mae and Freddie Mac is tottering. All because of a lack of invested capital. After all, why should anyone invest in American stocks? The market is dropping, the dollar is weakening, and interest rates are the lowest in the world.

Now Obama pledges to double the capital gains tax. This is unforgivable policy will drive capital off shore and turn a flow into a torrent. The financial problems of American banks will greatly increase

[pokethis]

It won't be any worse than this inflation tax we are paying now under Repugnant rule.

[DexGor]

That was the whole point of the inequality chart. It shows that income inequality is actually reduced during those administrations. If the middle class were suffering, income inequality would be growing.

[elizaW]

There's a big difference between income and net pay. I can make a good living until Obama takes a huge chunk out of it and then though my income may look good on paper, I'm worse off than before.

[swift goat pet for truth]

Yes, and that is why the economy as a whole does better.

Trickle down just does not work.
Put money into the hands of the middle class. They will spend it on things that make their lives better, and the top line (Sales) of MANY companies will grow, as will their bottom lines.

Put money into the hands of the rich few, and they will invest it, and it will circulate less, a lot less, in the economy.

[bgregs]

Well, let's see. In the middle class, the taxes under Clinton went up by around 1%. By contrast, under raygun they went up 6.2% when he doubled the FICA tax.

[Schallvain]

Um... never mind.

[MourningDude]

So you're blaming Reagan for saving a broken ponzi scheme, implemented by a Democrat?

[Rule Of Law]

Inflation IS a tax.

Negative wage growth IS a tax.

Erosion of the buying power of your dollar IS a tax.

The Debt created by two wars, the largest expansion of Federal Government in history, no bid contracts, and bailouts with Your money, IS a tax, and one that you and your kids and their kids and their kids will be paying on while the heirs of the elites are vacationing in exotic places on your money.

[Schallvain]

Ok so if inflation, negative wage growth and devaluation of the dollar are taxes, than explain to me what these taxes are funding? How are they incorporated into the budget?

[truthynesslover]

How much do you think you would be paying in taxes if we werent puting everything on our chinese credit card??How much do you think we are paying in interest to the communist chinese govt.?Of course taxes HAVE to go up.We havent been paying our bills,thats how the republicans play.They bribe fools with tax cuts and put what the govt. costs on a credit card so the democrat has to come in and clean everything up!Obama want to RAISE taxes on people making over 2 hundred thousand the same ones who have benefited from bushes tax cuts.Sound like justice to me.