Stronger growth rates under Democratic administrations

[WaveStrider]

Quote from eminitrader007:

During W's presidency there was republican congress too and I don't understand why they did not get rid of all the unnecessary spending and balance the budget.

Where do you think future political campaign contributions come from?

Whoever is in power has to divert public money to friends. That way they can tap them later to put enough advertising out there to sway your vote.

Plus, your buddies will always take care of you later personally out of gratitude for filling their pockets.

 

[shaggy]

Quote from Mercor:

The numbers reflect the fact that the republican president left a better economy for the Democrat.

In the first year the president has no input, his is stuck with the budget of the last president. So they need to stagger the time frame by one year , start it in his second year.

If that happens the republicans do better

There actually have been studies that look at exactly what you are trying to say. Unfortunately for your reasoning, no matter what way the studies are done, looking at a year lag, or more, the democratic administrations are always on top.

Here's a couple more fun facts for you:

1. Under democratic administrations, all income levels rise. In fact, the lower income groups rise the fastest of all. Under republicans, only the top groups rise.

"Under Democratic presidents, every income class did well but the poorest did best. The bottom 20% had average pretax income growth of 2.63% per year while the top 5% showed pretax income growth of 2.11% per year.

Republicans were polar opposites. Not only was their overall performance worse than Democrats, but it was wildly tilted toward the well off. The bottom 20% saw pretax income growth of only .6% per year while the top 5% enjoyed pretax income growth of 2.09% per year. (What's more, the trendline is pretty clear: if the chart were extended to show the really rich — the top 1% and the top .1% — the Republican growth numbers for them would be higher than the Democratic numbers.)

In other words, Republican presidents produce poor economic performance because they're obsessed with helping the well off. Their focus is on the wealthiest 5%, and the numbers show it. At least 95% of the country does better under Democrats.

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

2. A fascinating tidbit is that the last year of every republican administration (but probably ending with this one), the last year is much better than the three previous. In every case, the Fed has altered its monetary policy to favor growth. The funny thing is, this only happens in the last year of a republican administration, never a democratic administration. Fed bias, perhaps?

"It shows economic performance during election years and it's a mirror image of the top chart: Republicans produce better overall performance, and they produce especially stupendous performance for the well off. Democrats not only produce poor overall performance, they produce disastrous performance for the well off, who actually have negative income growth.

In other words, voters aren't necessarily ignoring economic issues in favor of cultural issues. Rather, Republicans produce great economic growth for all income classes in election years, and that's all that voters remember. They really are voting their pocketbooks.

Bartels doesn't essay an explanation for this. Do Republican presidents deliberately try to time economic growth spurts — and are Democratic presidents too lame to do the same? Is it just luck? Or is the difference somehow inherent in the different ways that Democrats and Republicans approach the economy (with Democrats typically focusing on employment and Republicans on inflation)? At this point, your guess is as good as anyone's.

Bottom line: if you're well off, vote for Republicans. But if you make less than $150,000 a year, Republicans are your friends only one year in four. Caveat emptor."

same article as above.

 

[jsp326]

Uh, no.

Jeremy Siegel and many others have written about this. Stocks have their best performance by far in states of gridlock...which probably supports libertarianism (i.e, very few new laws or regulations) more than anything else.

I'd be less worried about Obama if Republicans controlled Congress. But if Obama's horrendous tax proposals pass through a Democratic Congress, katy bar the door...

The other thing these studies don't mention is the "lag factor." They assume a President gets full credit (or blame) the first day he's in office. But what about policies enacted the prior 4-8 years, which may be affecting the economy much more than recent legislation? Clinton's 1998 anti-drilling legislation comes to mind.

Quote from walter4:

Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.

ECONOMIC VIEW

http://www.nytimes.com/2008/08/31/business/31view.html


CLEARLY, there are major differences between the economic policies of Senators Barack Obama and John McCain. Mr. McCain wants more tax cuts for the rich; Mr. Obama wants tax cuts for the poor and middle class. The two men also disagree on health care, energy and many other topics.


Such differences are hardly surprising. Democrats and Republicans have followed different approaches to the economy for as long as there have been Democrats and Republicans. Longer, actually. Remember Hamilton versus Jefferson?

Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November.

I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans.

The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats.

That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.

Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril.

The second big historical fact, which might be called the Great Partisan Inequality Divide, is the focus of Professor Bartels’s work.

It is well known that income inequality in the United States has been on the rise for about 30 years now — an unsettling development that has finally touched the public consciousness. But Professor Bartels unearths a stunning statistical regularity: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. And the bad news for America’s poor is that Republicans have won five of the seven elections going back to 1980.

The Great Partisan Inequality Divide is not limited to the poor. To get a more granular look, Professor Bartels studied the postwar history of income gains at five different places in the income distribution.

The 20th percentile is the income level at which 20 percent of all families have less income and 80 percent have more. It is thus a plausible dividing line between the poor and the nonpoor. Similarly, the 40th percentile is the income level at which 40 percent of the families are poorer and 60 percent are richer. And similarly for the 60th, 80th, and 95th percentiles. The 95th percentile is the best dividing line between the rich and the nonrich that the data permitted Professor Bartels to study. (That dividing line, by the way, is well below the $5 million threshold John McCain has jokingly used for defining the rich. It’s closer to $180,000.)

The accompanying table, which is adapted from the book, tells a remarkably consistent story. It shows that when Democrats were in the White House, lower-income families experienced slightly faster income growth than higher-income families — which means that incomes were equalizing. In stark contrast, it also shows much faster income growth for the better-off when Republicans were in the White House — thus widening the gap in income.

The table also shows that families at the 95th percentile fared almost as well under Republican presidents as under Democrats (1.90 percent growth per year, versus 2.12 percent), giving them little stake, economically, in election outcomes. But the stakes were enormous for the less well-to-do. Families at the 20th percentile fared much worse under Republicans than under Democrats (0.43 percent versus 2.64 percent). Eight years of growth at an annual rate of 0.43 percent increases a family’s income by just 3.5 percent, while eight years of growth at 2.64 percent raises it by 23.2 percent.

The sources of such large differences make for a slightly complicated story. In the early part of the period — say, the pre-Reagan years — the Great Partisan Growth Divide accounted for most of the Great Partisan Inequality divide, because the poor do relatively better in a high-growth economy.

Beginning with the Reagan presidency, however, growth differences are smaller and tax and transfer policies have played a larger role. We know, for example, that Republicans have typically favored large tax cuts for upper-income groups while Democrats have opposed them. In addition, Democrats have been more willing to raise the minimum wage, and Republicans have been more hostile toward unions.

The two Great Partisan Divides combine to suggest that, if history is a guide, an Obama victory in November would lead to faster economic growth with less inequality, while a McCain victory would lead to slower economic growth with more inequality. Which part of the Obama menu don’t you like?

 

[jonbig04]

Quote from jsp326:

But if Obama's horrendous tax proposals pass through a Democratic Congress, katy bar the door...

Which horrendous tax proposals exactly?

 

[piezoe]

Quote from jsp326:

But if Obama's horrendous tax proposals pass through a Democratic Congress, katy bar the door...

I am always amazed by the huge percent of the population that does not understand inflation caused by deficit spending (i.e., senseless and endless wars) is a indirect tax. It really makes no difference whether the government takes five buck from you as a direct tax, or makes the ten bucks in your pocket only buy half as much, does it?

You can buy one hell of a lot of social welfare, education, and medical care, for what one ridiculous war costs! And when you get through you have something of lasting value -- something other than destroyed assets and burned out hardware.

When you go up a thousand in the market and then watch your profit become a thousand dollar loss, you didn't lose a thousand, you lose two thousand.

It is the same with war. The cost is double what anyone thinks, because you lose what the war costs plus an equivalent amount of investment in infrastructure that you did not make because the funds for that were diverted to war.

 

[eminitrader007]

Quote from piezoe:

I am always amazed by the huge percent of the population that does not understand inflation caused by deficit spending (i.e., senseless and endless wars) is a indirect tax. It really makes no difference whether the government takes five buck from you as a direct tax, or makes the ten bucks in your pocket only buy half as much, does it?

You can buy one hell of a lot of social welfare, education, and medical care, for what one ridiculous war costs!

Exactly..... tax cuts mean more when the dollar is strong. The purchasing power of the tax cuts are reduced when the dollar is losing it's value.

Atleast the liberals say that they will tax the rich 5% and spend it on social programs and they do it. The conservatives say that they'll cut government spending, balance budgets and give tax cuts to all. They do not do the 2 of the 3 things that they say will do. I'm still trying to figure out what the conservatives are trying to conserve.

 

[eminitrader007]

Quote from jsp326:



The other thing these studies don't mention is the "lag factor." They assume a President gets full credit (or blame) the first day he's in office. But what about policies enacted the prior 4-8 years, which may be affecting the economy much more than recent legislation? Clinton's 1998 anti-drilling legislation comes to mind.

Yeah, everything good that has happened in this country is because of Regan. The 90s bull market is because of Regan, except for that mini-crash in 98 which was Clinton's fault. The industrial revolution of the early 1900s was because of Regan too, the markets knew at that time that Regan will be the president in 80 years.

Regarding the anti-drilling legislation, I can't understand why Bush did not go forward with it when the Republicans had a majority in both the congress and senate. It's because they did not want to, it is more profitable for them to make it an election issue.

 

[sg20]

If we are better off during the Democrat's administration then why did Bill Clinton sold the Port O' Call of Los Angeles to the Chinese, at the same time started a mass exodus of jobs to China? It's the fact that only one out of 4 of the last presidents is a democrat, the very last one was a lame duck pres Jimmy Carter. The very hopeful one for the liberal was controversial and inexperience, can you really trust the democrats to lead this country. Don't you have any better choice than Obama?

sg20

 

[slapshot]

Quote from 1Reason:



I will say that it was Newt Gingrich and the republican overtake of congress that finally put the breaks on the spending

You can talk all day about the president in the white house but it was Democrats that controlled congress for most of the last 50 years. Year after year we saw govt spending go up and up and a deficit getting out of control.

This out of control spending was retarded for a period of time with the republicans taking over the house.

FINALLY - someone who actually gets it. The left wing Dem-controlled media has been perpetuating the lie that all of these economic woes are W's fault. (I'm not saying W is a good Prez).

Well, let's look at the fact - The Democrats have now had control of Congress for the last (approx) 1.5 years - including the Senate Banking Committee.

Is your life any better or cheaper now? How's your 401K doing? Can you get a mortgage? How's your homes value doing?

Over the last 18 months, the Dems have tragically mishandled the housing crisis, banking liquidity and traded 5 new tax hikes hidden in the so called Housing Rescue Bill in lieu of any type of substantive program to actually stabilize the market. It's a farce.

Anyone notice the 8 straight months of unemployment increase?

Get it straight - no sitting President has any significant impact on the economy - the type of macroeconomics that the President can even effect by the Executive Branch takes years or even decades to play out.

Barney Frank and his crew of Dem idiots on Senate Banking have fucked us for the next 20 years. They just don't understand math.

And of course the rich get richer - and you know what? They almost always work harder, longer and with more tenacity.

 

[Gringinho]

Is it better or worse that China has a booming economy?

Is it better to be one rich nation, or several rich nations - raising the levels of all?

Are you a conservative capitalist - looking to isolate your wealth, funnel all growth to yourself by any means possible?

Can you safely live in an environment where you are perceived as abusive, corrupt and unfair without increasing your spending on protecting yourself?



There is something to be said for existing in balance with the rest of the environment - it's called sustainability. Otherwise you define "you and them" - "good or evil", get ready for ever stronger conflict, incur more complexity encumbering everyone and it's plain outright stupid - the only thing conservative capitalism surely entails is that it will bring around its own end.