Ignoring Reality
Last night I watched the third Republican Debate. The issues in any of these debates revolve around a combination of social policies, global defense policies and economic policies. Everyone in politics is pretty clear that social and defense policies can stir people up, but nothing gets them more riled up than economic policies. It is fair to say that Republicans have always (at lest since WWII, which is the timeframe I can at least say I have directly observed) claimed that they are the party that maximizes economic freedom and general prosperity. If you asked people what Reagan and all those who follow in his footsteps stand for, it would be strong economic performance. It therefore stands to reason that conservatives, who are generally people of wealth, favor Republican candidates and policies. Self-interest is very much the hallmark of Republican policies, which is certainly one way to go in politics, but to vote for self-interested policies should require some connection to reality as displayed in hardcore economic data. The problem is that the data shows quite convincingly that Republican leadership and policies underperform economically on a very consistent basis. In fact, since WWII economic growth during Democratic administrations has been 1.6X greater than during Republican administrations. There is always a cause and effect problem when assessing economic impact, especially due to the time lags involved with measuring economic outcomes but there has been enough time duration variability between governance cycles since WWII to wash away the majority of bias concerns. Note the cycles:
45-53 – Truman – Democrat – 4 years
53-61 – Eisenhower – Republican – 8 years
61-69 – Kennedy/Johnson – Democrat – 8 years
69-77 – Nixon/Ford – Republican – 8 years
77-81 – Carter – Democrat – 4 years
81-93 – Reagan/Bush – Republican – 12 years
93-01 – Clinton – Democrat – 8 years
01-09 – Bush – Republican – 8 years
09-17 – Obama – Democrat – 8 years
17-21 – Trump – Republican – 4 years
21-23 – Biden – Democrat – 3 years
The big measures of economic prosperity are generally measured by economic growth, job creation and industrial production. Some might want to add inflation to the list, but inflation gets reflected in those core three and is less a measure than a subset condition. In fact, a survey of the factual evidence shows consistent results that no matter what measure you choose to use to examine the dual performance of Republicans and Democrats, Democrats outperform by a considerable margin. Using stock market returns alone as a measure of wealth accumulation shows quite starkly that Democratic policies create more national wealth than Republican policies. Average economic growth during Republican administrations has been 2.5% versus 3.9% during Democratic administrations as follows:
45-53 – Truman – Democrat – 4.9%
53-61 – Eisenhower – Republican – 2.4%
61-69 – Kennedy/Johnson – Democrat – 5.3%
69-77 – Nixon/Ford – Republican – 2.7%
77-81 – Carter – Democrat – 3.4%
81-93 – Reagan/Bush – Republican – 3.4%
93-01 – Clinton – Democrat – 3.7%
01-09 – Bush – Republican – 1.6%
09-17 – Obama – Democrat – 2.0%
17-21 – Trump – Republican – (3.4%)
21-23 – Biden – Democrat – 3.1%
Job creation is perhaps one of the easiest measures to measure and peg directly to a political administration. There are certainly external factors that affect given timeframes, but those are generally impossible to neutralize for and must just be included in the mix least we spend our entire analysis rationalizing. Job creation has also over performed during Democratic governance as follows:
45-53 – Truman – Democrat – 2.7%
53-61 – Eisenhower – Republican – 0.5%
61-69 – Kennedy/Johnson – Democrat – 3.0%
69-77 – Nixon/Ford – Republican – 1.7%
77-81 – Carter – Democrat – 3.3%
81-93 – Reagan/Bush – Republican – 1.7%
93-01 – Clinton – Democrat – 2.6%
01-09 – Bush – Republican – (.04%)
09-17 – Obama – Democrat – 1.2%
17-21 – Trump – Republican – (.02%)
21-23 – Biden – Democrat – 4.2%
When one looks at the final fact-checked economic statistics from the Trump administration, one sees a much higher unemployment number of 6.3% than exists now (3.9%). Some will suggest that the Trump pre-Pandemic unemployment numbers show much better at 3.5%, but where one draws the lines on extraneous events is, as I said, problematic.
Industrial production provides an interesting chart to examine because it generally has been in an upward sloping posture ever since WWII. The notable points to make are that there have been two specific and rather dramatic downward adjustments to that trend and they have both occurred specifically at the end of a Republican administration, first in 2008 after the Bush administration and the second in 2020 after the Trump administration. I think we all know the underlying reasons for those setbacks, but it is hard not to attribute some if not all of those effects on the prior administration, since, presumably, the job of the governance leadership is to avoid such events.
If we just look at the contribution of each administration to the national debt we can learn a lot:
45-53 – Truman – Democrat – $423MM
53-61 – Eisenhower – Republican – $20.3B
61-69 – Kennedy/Johnson – Democrat – $52.8B
69-77 – Nixon/Ford – Republican – $208.6B
77-81 – Carter – Democrat – $208.9B
81-93 – Reagan/Bush – Republican – $2,811.6B
93-01 – Clinton – Democrat – $1,262.7B
01-09 – Bush – Republican – $4,217.3B
09-17 – Obama – Democrat – $7,663.7B
17-21 – Trump – Republican – $6,700.5B
21-23 – Biden – Democrat – $2,500B
Democrats. – 35 years – $11,688.5B – $334B/year (since 2001 – $924B/year)
Republicans – 36 years – $13,358.3B – $371B/year (since 2001 – $910B/year)
It is also somewhat instructive to look at budget deficit total by presidential administration as follows:
45-53 – Truman – Democrat – $5B (4 of 8 years in surplus)
53-61 – Eisenhower – Republican – $15B (3 of 8 years in surplus)
61-69 – Kennedy/Johnson – Democrat – $54B (1 of 8 years in surplus)
69-77 – Nixon/Ford – Republican – $151B (no surpluses)
77-81 – Carter – Democrat – $253B (no surpluses)
81-93 – Reagan/Bush – Republican – $2,448B (no surpluses)
93-01 – Clinton – Democrat – $63B (4 or 8 years in surplus)
01-09 – Bush – Republican – $3,293B (no surpluses)
09-17 – Obama – Democrat – $6,781B (no surpluses)
17-21 – Trump – Republican – $6,612B (no surpluses)
21-23 – Biden – Democrat – $5,900B (no surpluses)
I believe what this should all tell us is that both parties have more or less equally contributed to the national debt and despite the Republicans making it a constant campaign issue, they have done nothing of note to address either deficit spending or the overall stock of the national debt while they have been in office. It doesn’t take too much thinking to understand how that happens with Republicans focused on cutting taxes and Democrats generally wanting to increase spending on social, public works and infrastructure programs.
What this should all tell anyone who wants to really examine the numbers on a non-partisan basis and ask the question as to which party’s policies have worked better for the economic health of the country (not even trying to deal with the manner of the allocation of that economic success), one must admit that Democrats have been better stewards of the economy overall and have created more prosperity for the country. I think it is also fair to say that both parties equally share responsibility for the national debt and Democrats have a slightly better history of balancing the budget than do Republicans. The history of the last century of economic life in America has shown anyone who wants to honestly look at the data that advancing the consumer economy and broadening and deepening the middle class is the best way to stimulate economic growth and prosperity on a sustainable basis. It’s fine that Republicans think and say that they believe in taxing and spending less, but it is simply misleading for them to say that they are better at creating economic prosperity overall. But then again, my observation of modern-day Republicans is that they a re best at ignoring reality, so none of this might actually sink in.