Wednesday, February 3, 2021

The cold, hard numbers tell a story many Americans don't want to hear: The economy is stronger under Democratic presidents than under Republicans


One of the persistent myths in American society is that our economy tends to be stronger under Republican presidents than under Democrats. An item from a New York Times e-newsletter shows the myth is wildly wrong-headed. Writes David Leonhardt:

Has the economy fared better under Democratic presidents or Republican presidents over the past century? The sensible answer might seem to be: It’s probably been similar.

Presidents, after all, have only limited control over the economy. They don’t have much influence over the millions of decisions every day, made by consumers and business executives, that shape economic growth, jobs, incomes and stock prices. Over the course of a century, it seems logical that the economy would have performed similarly under Democrats and Republicans.

But it hasn’t.

The economy has fared far better under Democrats. The gap, as one academic paper puts it, is “startlingly large.”

Leonhardt presents a chart that shows annual growth rate in nonfarm jobs is 2.8 percent under Democratic presidents and 1.0 percent under Republicans, while GDP growth is 4.6 under Democrats and 2.4 percent under Republicans.

Another chart shows five of the top six annual GDP growth rates have come under Democrats -- Roosevelt, Kennedy, Johnson, Clinton, and Carter. Reagan is the only Republican in the top six. Why the gap?

The gap exists not only for G.D.P. and jobs but also for incomes, productivity and stock prices. The gap also exists if you assume that a president’s policies affect the economy with a lag and don’t start his economic clock until months after he takes office. Virtually any reasonable look at the data shows a big Democratic advantage.

My colleague Yaryna Serkez and I have just published a piece documenting the pattern and the potential reasons. A few possibilities are easy to reject. It’s not about congressional control, nor is it about Democrats running up larger budget deficits. (Republican presidents have run up larger deficits in recent decades.)

Coincidence surely plays some role — but it’s highly unlikely to account for the entire gap, given its size, breadth and duration. Yaryna’s and my piece explores some of the most plausible explanations:

  • Republican presidents have been slow to respond to recessions and other crises — Donald Trump and both George Bushes being examples. (Herbert Hoover was too, and the partisan gap would be even bigger if the data went back far enough to include him.)
  • Recent Democratic presidents have been more pragmatic, willing to listen to the evidence about when the economy would benefit from deficit reduction and when it needs government support for education, infrastructure, scientific research and more.
  • Republican presidents over the past 40 years have pursued one economic policy above all others — tax cuts, skewed heavily toward the affluent — and there is little evidence that they do much for economic growth.

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