2008-09-05 Republicans Are Not Better At The Economy

t is the conventional wisdom of the Red Meat crowd that Republicans are better stewards of the economy.  This assumption is apparently based on their near religious conviction in trickle down economics and the view that Republican administrations are reliably more sympathetic to big business and the rich.  In this article I show that at least as a matter of economic performance that the Republicans are no better stewards of the economy.  On the contrary, the evidence indicates slightly higher economic returns under Democratic administrations.  What wealthy Republican voters are doing of course is trying to balance their desire for personal tax cuts with the fictitious economic stewardship argument so that they can feel less guilty about their own greed.

Over the years, stock analysts have suggested that the stock market prefers Republicans in the White House.   The following table shows stock market returns under Republican and Democratic Administrations 1901 to 2004 according the Stock Trader's Almanac.

In short, a $10,000 investment compounded during Democratic presidencies since 1901 would be worth $279,705 after 48 years. The same $10,000 investment during the 56 Republican years would have been worth just $78,699.  Adjusted for inflation the difference is less significant but still favors the Dems. [1]

Well you might say maybe the Democrats spend more money in the public sector, improving economic performance in the private sector by bloating the Federal Budget Deficit.  Previously I blogged on this exact issue. [2] 

(Click on the chart above to enlarge.)

What this chart clearly shows is that whereas National Debt has continuously risen, without exception, every Republican administration since 1977 has increased the national debt as a percentage of GDP while every Democratic administration has reduced it.  For me this is a moral issue.  Borrowing from future generations to pay for the greed of the top 10% of Americans is both economically senseless and immoral.

What about overall federal spending? Growth in federal spending has averaged 6.96% under Democratic Administrations compared to 7.57% under Republicans. [3]

What about unemployment?  On the day that US unemployment hit 6.1% it is worth noting that from 1962 to 2001, unemployment averaged 5.1% under Democratic Administrations and 6.75% under Republicans. [4]

GDP Growth? GDP growth from 1962 to 2001 has averaged 3.9% under Democratic Administrations and 2.9% under Republicans. [5]

Inflation?  You guessed it.  Inflation under Democratic Administrations at 4.26% between 1962 to 2001 trailed average inflation rates under the Republicans at 4.96% [6]

Comments

[Dimitri]

I think I have some republican pals who would be tickled by all this.

[Matthew]

This is the kind of things that Democrats need to seize upon in the coming campaign. But of course they won't. Gore didn't. Kerry didn't. Maybe Obama will, but my hopes aren't high.