Talk about your provocative headlines! The New York Times opinion page recently ran a column titled: “The Economy Does Much Better Under Democrats. Why?”
The column began with an acknowledgement of the limited control presidents exert over the economy. After all, presidents are at the mercy of numerous global and other realities, as the pandemic is currently illustrating. Furthermore, economic performance is determined by literally millions of decisions made every day by businesses and consumers, many if not most of which have little relation to government policy.
So why is there an undeniably “stark pattern” showing that the economy has grown significantly faster under Democratic presidents than Republican ones?
It’s true about almost any major indicator: gross domestic product, employment, incomes, productivity, even stock prices. It’s true if you examine only the precise period when a president is in office, or instead assume that a president’s policies affect the economy only after a lag and don’t start his economic clock until months after he takes office. The gap “holds almost regardless of how you define success,” two economics professors at Princeton, Alan Blinder and Mark Watson, write. They describe it as “startlingly large.”
Since 1933, the economy has grown at an annual average rate of 4.6 percent under Democratic presidents and 2.4 percent under Republicans, according to a Times analysis. In more concrete terms: The average income of Americans would be more than double its current level if the economy had somehow grown at the Democratic rate for all of the past nine decades. If anything, that period (which is based on data availability) is too kind to Republicans, because it excludes the portion of the Great Depression that happened on Herbert Hoover’s watch.
If the disparate results are too clear and too large to dismiss, the reasons are far less obvious. (As the King in “The King and I” liked to say, “It’s a puzzlement.”)
The authors of the study considered and discarded several possibilities. They threw out Congressional control, because the pattern held regardless of which party was running Congress; deficit spending also couldn’t explain the gap, because–contrary to GOP rhetoric–during the past 40 years, Republican presidents have run up larger deficits than Democrats.
If Congressional partnerships and deficit spending couldn’t account for the differences, what might? The authors concluded that the difference could be explained by the willingness of Democrats–but not Republicans–to respect that pesky thing we call evidence.
As they note, Democrats have been far more willing to consider the lessons of economic history–to see which policies have been shown to actually strengthen the economy, and to replicate those approaches. Republicans, on the other hand, have “clung to theories that they want to believe — like the supposedly magical power of tax cuts and deregulation.”
In other words, Democrats have been pragmatists; Republicans have been ideologues.
As the authors note, since 1980, Republican economic policy has boiled down to a single measure: large tax cuts, tilted heavily toward the rich. That may work in countries with very high tax rates, but the United States has had very low tax rates for decades.
It may be that Republicans actually believe in their own prescription, despite the repeated failure of tax cuts to provide the promised economic stimulus and/or job creation. Or it may be–as cynics suggest–that the parties are simply playing to their respective bases of support– responding to the interest groups that support and finance them. Democratic-leaning groups (like labor unions and civil-rights organizations) favor policies aimed at achieving broad-based economic growth; Republicans are pandering to wealthier supporters (those we used to call “country club Republicans), who favor policies that will shift income in their direction.
It will be interesting to see whether Republican ideology shifts as the GOP becomes increasingly the party of whites without wealth or a college education–and as significant numbers of those suburban “country club” Republicans desert a GOP that is firmly in thrall to bigots and crazy people.