Steve May 3, 2022
no,-republicans-aren’t-better-at-managing-the-economy-than-democrats

President Biden’s standing with Americans has improved slightly over the past two months, but he remains in negative territory in most assessments of his performance in office and Republicans hold substantial advantages over Democrats on key economic indicators that are shaping the midterm election year, according to a Washington Post-ABC News poll.

The Washington Post, May 1, 2022

In the first-ever televised debate between vice-presidential candidates in 1976, Kansas Republican Robert Dole deflected a question about his running mate Gerald Ford’s pardon of Richard Nixon by accusing the Democrats of habitually starting wars. The Nixon pardon was “an appropriate topic,” Dole famously said, 

but it’s not a very good issue any more than the war in Vietnam would be or World War II or World War I, or the war in Korea, all Democrat wars, all in this century.

I figured up the other day, if we added up the killed and wounded in Democrat wars in this century, [that] would be about 1.6 million Americans, enough to fill the city of Detroit. If we want to go back and rake that over and over and over, we can do that. I think Senator Mondale doesn’t want to do that. 

Dole’s “Democrat wars” dig got him pegged as mean-spirited, but he was telling the truth. All the major wars of the 20th century up to that point had been entered under Democratic presidents, for reasons well understood by students of history, and Dole’s arithmetic on casualties was about right. The next three major wars—two in Iraq and one in Afghanistan—would all be entered by Republican presidents (two guys named George Bush), but of course Dole couldn’t know that at the time. 

Dole’s “Democrat wars” jab was a rare challenge to the widespread belief, later articulated by Chris Matthews, that Republicans—pardon the gender stereotypes—are the Daddy Party (strong defense, hard-headed management of the economy) and Democrats the Mommy Party (peace-loving, soft-headed about money). That’s an accurate description of what the public thinks. It’s also quite wrong.

Voters think Republicans are stronger on defense and the economy because Republicans throw money (soft-headedly) at the Pentagon and big business. But if anybody’s the Daddy Party, it’s the Democrats. In addition to embroiling the United States, for good or ill, in more and bigger wars than Republicans over the past century, Democrats have done a demonstrably superior job, during the same period, of managing the economy. To borrow Dole’s methodology: The United States has had 17 recessions over the past 100 years. Want to guess how many began under a Republican president? Thirteen Republican recessions, including the absolute biggest downturns: the Great Depression and the recessions of 1981, 2007, and 2020. The last of the four Democrat recessions since 1922 occurred 42 years ago, in the final year of Jimmy Carter’s presidency.

Pick a metric, any metric. 

Economic growth? Going back to Franklin Roosevelt, the four presidents who logged the biggest growth in Gross Domestic Product were, in declining order, the Democrats Roosevelt, Kennedy, Johnson, and Clinton, according to a February New York Times infographic by David Leonhardt and Yaryna Serkez. Three of the four presidents who logged the smallest GDP growth were Republicans. (The exception was Harry Truman. The other three were George Bush père et fils and, in last place, Donald Trump.)

Job creation? The six presidents with the fastest job-growth rate (per Leonhardt and Serkez) were the Democrats Roosevelt, Johnson, Carter, Truman, Kennedy, and Clinton. The four presidents who logged the slowest job-growth rate were all Republicans (Eisenhower, the two Bushes, and, again in last place, Trump, the only president in the past nine decades to lose more jobs than he created.)

The deficit? Democrats are spendthrifts, right? Wrong. President Ronald Reagan inherited from Jimmy Carter a deficit of $78.9 billion, according to Politifact. When he left office, it was $152.6 billion. When his successor, President George H.W. Bush, left office, it was $255 billion. 

It fell to President Bill Clinton to clean up this mess; by the time he left office the federal budget was in surplus to the tune of $236 billion. President George W. Bush, whose vice president famously said the lesson from Reagan’s presidency was that deficits didn’t matter, eliminated the surplus in record time with income-tax cuts and the wars in Iraq and Afghanistan; when Dubya left office, the deficit was $1.41 trillion. President Barack Obama halved that to $584.6 billion. Trump pushed it back up to $3.1 trillion, and Biden last year nosed it down to $2.8 trillion. A graph created by Simon Rosenberg, who runs a liberal think tank called NDN, reproduced two years ago on the Daily Beast website by Michael Tomasky, now editor of The New Republic, looks uncannily like a roller coaster.

/  Free Pick of the Week: Homeland Security’s New Disinformation Board Is a Bad Idea, Just Not for the Reason Tucker Carlson Says It Is.

Median household income? Another roller coaster, per another Rosenberg graph. It goes up steeply under Clinton, then falls during George W. Bush’s first term, then rises during Bush’s second term, then falls hard in Bush’s final year. It keeps falling through Obama’s first term and then shoots up during his second. To be fair, the Obama increase in median household income continued under Trump. But on an inflation-adjusted basis, it started falling about halfway through Trump’s final year in office. 

The stock market? Up 226 percent under Clinton, up 145.4 percent under Obama, per Rosenberg and Tomasky. By comparison, it was up 45.7 percent under George H.W. Bush and up 36.7 percent under Trump. This is a rare metric where Trump doesn’t come in last; that honor goes to George W. Bush, who presided over a 23.7 percent stock market drop.

Rosenberg’s chart didn’t include Ronald Reagan, so I consulted a separate CNN S&P tally. It showed that stock performance under Reagan lagged stock performance under Clinton and Obama (because of the Black Monday crash in October 1987) . A 2016 paper by the Princeton economists Alan Blinder and Mark Watson calculated S&P returns from Harry Truman’s presidency through President Barack Obama’s first term and found stock prices rose more than twice as high under Democrats as under Republicans. Corporate profits and labor productivity were higher under Democrats, too.

Inflation? Inflation is what’s dragging down Biden’s approval rating; only 28 percent approve of how Biden’s handling inflation, against 68 percent who disapprove, according to the Washington Post-ABC News poll quoted in the epigraph above. Here public opinion isn’t completely at odds with the Democrats’ historic record. According to Blinder and Watson, from April 1945 through January 2017, inflation rose more under Democrats than under Republicans. But when you ponder inflation as a social and economic problem, the most significant metric isn’t how much it’s rising, but how high it is in absolute terms. How bad is it? Worse under Republicans. Since Truman, inflation has been higher under Republicans than under Democrats. (Again, that excludes Obama’s second term and Trump’s one-term presidency, but inflation was very low during both.)

“There is a systematic and large gap,” write Blinder and Watson, “between the US economy’s performance when a Democrat is president of the United States versus when a Republican is. Democrats do better on almost every criterion.” 

What accounts for this?  Historic circumstances (also known as dumb luck) helped. “Democratic presidents,” Blinder and Watson write,

have experienced, on average, better oil shocks than Republicans (some of which may have been induced by foreign policy), faster growth of defense spending (if the Korean War is included), and a better record of productivity shocks (which may relate to many different policies). More tenuously, both in terms of sample size and statistical significance, Democratic presidents may have also benefited from stronger growth abroad. 

Still, Blinder and Watson conclude that these factors accounted only for 56 percent of the Democrats’ superior economic performance. The rest, they say, was “a mystery.” 

Allow me to solve this mystery. 

For the past century, and especially the past half-century, there’s been an observable gap in economic competence between the two major parties. Republicans have sought to please big business, while Democrats have sought to improve life for the broad public. For a long time Republicans didn’t heed economists because they assumed economists were just a bunch of Bolskeviks. Eventually they warmed to the profession, but they developed a weakness for hucksters like Jude Wanniski, Arthur Laffer, Stephen Moore, and Larry Kudlow who told them what they wanted to hear. Democrats, meanwhile, consulted mainstream academic economists. Republicans came to believe, or at least pretend to believe, in what George H.W. Bush during the 1980 presidential primaries rightly labelled “voodoo economics,” by which he meant supply-side economics, a harebrained trickle-down theory that posited tax cuts would boost tax revenues, which they don’t. Democrats paid more careful attention to the actual consequences of their economic policies. 

The competence gap grew wider in the Reagan years, and wider still when George W. Bush was president. During Donald Trump’s presidency it grew wider than the Grand Canyon. It’s not that Democrats are so very smart about economics. It’s that Republicans have very determinedly been dumbing themselves down on economic policy for four decades. The results speak for themselves.

Why don’t Democrats talk more about their superior record on economics? Partly because some of that record is based on doing things, like raising taxes, that aren’t especially popular. Partly because Democrats fear coming across as pointy-headed coastal elites. I would guess, too, that some of the ways Democrats do better than Republicans are, in Democrats’ eyes, a little embarrassing. Talk about higher corporate profits under Democrats and you’re liable to get hammered by the right for pampering woke corporate capitalists or by the left for advancing the (genuinely troubling) shift in national income from labor to capital. 

But it’s past time Democrats let everybody else in on the secret. The economy does better under Democrats than under Republicans. The United States doesn’t have a Mommy Party and a Daddy Party. It has a governing party and a screwing-around party. Talking up their superior economic record would help Democrats make that a lot clearer to voters.

Read More