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Which Party is Better for the Economy?

Citizens Oversight (2011-05-17) Raymond Lutz

This Page: https://copswiki.org/Common/M1168
More Info: Budget And Taxation, Political Philosophy

DEMOCRATS v. REPUBLICANS on the issue of the U.S. ECONOMY

The following research was reproduced from the site: http://www.eriposte.com/economy/other/demovsrep.htm. Although now a bit dated, (2004 was the last update) this analysis obviously still holds true. The pronoun "I" below refers to eriposte. This section is lightly edited to make it more current. The analysis period is convenient because we had 20 years of Democratic presidents and 20 years of Republican presidents.

(Here is a graphical and condensed format of the same data -- PartyComparisonCharts.pdf: Party Comparison Charts)

INTRODUCTION

In this section, I feature statistics on commonly used metrics used to measure U.S. economic growth and strength, and the relative impact that Democratic Presidents have had with respect to Republican Presidents. For the moment, I am largely featuring links to already published data on the web, but I hope to review and analyze the data myself sometime in the future. The data is in the table below and my own comments are below the table.

A common refrain from Republicans and Independents who have doubts about Democratic Presidents, is that Democrats raise taxes and cause economic trouble. This page proves that this concern is unfounded because it has no basis in reality.

This is shown in two ways.
  1. First the data compiled in the table below shows that there is no proof that Republican Presidents are better for the U.S. economy than Democratic Presidents. Indeed, the data indicates the opposite is likely true.
  2. There are multiple other facts in addition to this data that show that the superficial argument about taxes is just that: superficial.

DATA TABLE

Acronyms: BLS = U.S. Bureau of Labor Statistics; BEA = U.S. Bureau of Economic Analysis

Metric Source of data/
analysis
Average under
Democratic 
Presidents/
Administrations
Average under
Republican 

Presidents/
Administrations
Who measured better 
on this metric?
(See critiques page)
Average Ranking (lower the 
number the better
)
for 
highest GDP growth,

real disposable personal 
income, employment/
unemployment, deficit reduction

1953-2001
Average rank calculated 

from ranking data from 
Dan Ackman, Forbes.com
Overall rank: 4.58 
(top 3 are Democrats)

GDP rank: 3.8

Real Disposable 

Personal Income 
rank: 5.0

Employment rank: 4.6

Deficit Reduction 
rank: 4.2

Overall rank: 6.44

(Reagan is #4)

GDP rank: 7.2

Real Disposable 
Personal Income 
rank: 6.0

Employment rank: 6.4

Deficit reduction 
rank: 6.38

Democratic 
Presidents

[Also see this data 

comparison from Michael
Kinsley in the 
Washington Post
]

Real Disposable Personal 
Income Growth per year

1953-2001
Dan Ackman, Forbes.com 3.65% 3.08% Democratic 
Presidents
Employment gains per year
1953-2001
Dan Ackman, Forbes.com 1.684 million/year 1.279 million/year Democratic 
Presidents
Unemployment

1962-2001
P.L.A., using data 
from the BLS
5.1 % 6.75 % Democratic 
Presidents
Unemployment
1947-2001

Assuming that each President's 
policies took effect 1 year after 
his inauguration
Larry Bartels, Los 
Angeles Times
4.8 % 6.3 % Democratic 
Presidents
(trend similar if 2
year shift assumed)
Unemployment:
1948-2001
Assuming Presidents are also
responsible for economic 

performance 3-5 years after 
they leave office
CalPundit, using 
data from the BLS
3-yr lag: 5.06 %

4-yr lag: 5.04 %

5-yr lag: 5.01%

3-yr lag: 6.16 %

4-yr lag: 6.18 %

5-yr lag: 6.21 %

Democratic 

Presidents
Average After-Tax Return on 
Tangible Capital:

Jan 1952 - June 2004
Roger Altman, 

Wall Street Journal
(data from Federal Reserve)
4.3% 3.2% Democratic 
Presidents

[For a Bush I + Bush II
vs. Clinton comparison,
see here]
GDP growth

1962-2001
P.L.A., using data 
from the BEA
3.9 % 2.9 % Democratic 
Presidents
GDP growth:
1948 - 2001

Assuming Presidents are also
responsible for economic 
performance 3-5 years after 
they leave office
CalPundit, using 
data from the BEA
3-yr lag: 3.56 %

4-yr lag: 3.78 %

5-yr lag: 3.71 %

3-yr lag: 3.35 %

4-yr lag: 3.16 %

5-yr lag: 3.21 %

Democratic 
Presidents
GDP growth
1930-2000
Carol Vinzant 
in Slate
5.4% 1.6 % Democratic 
Presidents
Inflation
1962-2001
P.L.A., using data 
from the BLS
4.26 % 4.96 % Democratic 
Presidents
Inflation:

1948-2001
Assuming Presidents are also
responsible  for economic 
performance 3-5 years 

after 
they leave office
CalPundit, using 
CPI data from 

Economagic
3-yr lag: 3.33 %

4-yr lag: 3.07 %

5-yr lag: 3.20 %

3-yr lag: 4.36 %

4-yr lag: 4.60 %

5-yr lag: 4.48 %

Democratic 

Presidents
Percentage growth in
Total Federal Spending
:
1962-2001
P.L.A., using data 
from the U.S. Govt.
Budget 2003
6.96 % 7.57 % Democratic 

Presidents if lower 
Govt. spending is 
better
; Republican 
Presidents if higher 
spending is better

NEW Note, however, that 
total spending other
than for Medicare and
Social Security has 
been dropping since
1983
(CalPundit using

U.S. Govt. Budget
data
). The decrease
was more significant
in the 90s under Clinton.

Percentage growth in
Non-Defense Federal Spending
:
1962-2001
P.L.A., using data 

from the U.S. Govt.
Budget 2003
8.34 % 10.08 % Democratic 
Presidents if lower 

Govt.  spending is 
better
; Republican 
Presidents if higher 
spending is better

NEW Note, however, that 
total spending other
than for Medicare and
Social Security has 
been dropping since
1983
(CalPundit using

U.S. Govt. Budget
data
). The decrease
was more significant
in the 90s under Clinton.

Non-defense Federal 
Government Employees
:
1962-2001
P.L.A., using data 

from the U.S. Govt.
Budget 2003
Rose by 59,000
(16 % of total rise
over 40 years)
Rose by 310,000

(84% of total rise 
over 40 years)
Democratic 
Presidents
(assuming smaller 

Govt. is better
)
Yearly budget deficit:
1962-2001
P.L.A., using data 
from the U.S. Govt.
Budget 2003
$36 billion $190 billion Democratic 

Presidents
Increase in National Debt:
1962-2001
P.L.A., using data 

from the U.S. Govt.
Budget 2003

See follow-up by P.L.A.
solidifying the 
conclusions

Total debt 
increased by 
$0.72 trillion
(20 years)
Total debt 
increased by 

$3.8 trillion
(20 years)
Democratic 
Presidents
Annual stock market return:

1927 (through) 1998
Pedro Santa-Clara and 
Rossen Valkanov
Research Paper, UCLA
 
(via Atrios)

Results are "statistically 
significant" 

Also reported by 
CNN Money

~ 11%
(value weighted CRSP 
index minus 3 month 
Treasury Bill)
~ 2%
(value weighted CRSP 

index minus 3 month 
Treasury Bill)
Democratic 
Presidents

(Delta increases to 16% for 
equal-weighted case)

The study says:
"
The difference comes from 
higher real stock returns and 
lower real interest rates, 
is statistically significant

and is robust in subsamples. 
The difference in returns is not 
explained by business-cycle 
variables related to expected 
returns, and is not concentrated 

around election dates. There 
is no difference in the riskiness 
of the stock market across
presidencies that could 
justify a risk premium."

Annual stock market return:
(1900) 1927 - 2000
Carol Vinzant 

in Slate
12.3 % (S&P 500) 8.0 % (S&P 500) Democratic 
Presidents
Annual stock market return:
(1900) 1927 - 2000
Carol Vinzant 
in Slate
Democratic Senate 
10.5 % (S&P 500)
Democratic House 
10.9 % (S&P 500)
Republican Senate 

9.4 % (S&P 500)
Republican House 
8.1 % (S&P 500)
Democratic 
Senate or

House (but see article
for qualifications
)
Annual stock market return:

(1900) 1927 - 2000
Stock Traders' Almanac 
as reported by 
Carol Vinzant in Slate
13.4 % (Dow) 8.1 % (Dow) Democratic 
Presidents
Rankings

for highest GDP growth,
biggest increase in jobs, biggest 
increase in personal disposable 
income  after taxes, biggest rise in 
hourly wages, lowest Misery Index 

(inflation  plus unemployment), etc. 
(until 2001)
Arthur Blaustein, 
Mother Jones
N/A.

But all these best case 
metrics were under
Democratic Presidents
N/A Democratic 
Presidents
. . . . .
District spending by Congress:
1995 - 2001
Associated Press

report: 1, 2
Democratic districts:
$3.9 billion in 1995 to
$5.2 billion in 2001

(34% increase)
Republican districts:
$3.9 billion in 1995 to
$5.8 billion in 2001
(52% increase)
Hard to say who is 
better but certainly 
not
 Republicans, who 
shifted spending to 

RICHER
districts from poorer
.

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Title Which Party is Better for the Economy?
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Author Raymond Lutz
Pub Date 2011-05-17
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Topic revision: r2 - 11 Mar 2015, RaymondLutz
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