Who Manages the Economy Better – Republicans or Democrats?

GUEST BLOGGER By Arthur I. Blaustein, Professor Community and Economic Development and Public Policy at the University of California, Berkeley

Most Americans have one eye on the nation’s economic crises and the other on the presidential election. And they are asking themselves, “Are the Democrats or the Republicans better for the economic health of the country as well as for my own financial well-being?” That is the defining question of this election. A businessman who voted for Bush twice and Obama in 2008, told me, “The goals of Barack Obama’s social programs-particularly health care, education and the environment-seem good. But I’m worried the Democrats can’t manage the economy as well.” Many voters agree, and a recent poll shows that an overwhelming majority (70 percent) cite the economy as their top concern. For years the pollsters have found that most voters believe the Republicans do better with the economy. I’ve heard the businessman’s basic point-that the Democrats have better social policies but the Republicans are better managers of the economy-more often than I’ve heard Judy Garland sing “We’re Off to See the Wizard.” But is it true? Don’t count on this question being examined and answered in a full, open and honest debate. Thirty-two years ago-with the election of Ronald Reagan-we entered an entirely new phase of presidential politics. The focus since then has been who can raise the most money and package the best media image, rather than who can demonstrate the most competence and capacity to govern. Our country’s political, economic and social life has been reduced to a battle of 15-second sound bites and 30-second commercials-most of them negative attack ads-with results reported like a football score. TV news has turned democracy into “duhmocracy.” Fortunately, we don’t have to depend on campaign slogans or advertising bucks to frame the debate. We can look to the record. Here’s the Economic Sweepstakes Quiz. The rules are simple. Guess which president since World War II did best on these eight generally accepted measures of good management of the nation’s economy. You can choose among six Republicans: Eisenhower, Nixon, Ford, Reagan, Bushes I and II; and six Democrats: Truman, Kennedy, Johnson, Carter, Clinton, and Obama. (No peeking.)

1. The highest growth in the gross domestic product?

2. The highest growth in jobs?

3. The biggest increase in personal disposable income after taxes?

4. The highest growth in industrial production?

5. The highest growth in hourly wages?

6. The lowest Misery Index (inflation plus unemployment)?

7. The lowest inflation?

8. The largest reduction in the deficit?

The answers are 1.Harry Truman, 2.Bill Clinton, 3.Lyndon Johnson, 4.John F. Kennedy, 5.Johnson, 6.Truman, 7.Truman, 8.Clinton. In the Economic Sweepstakes, Democratic presidents trounce Republicans eight times out of eight!
If this isn’t enough to destroy the myth that economy has performed better under Republicans, the stock market has also done better under the Democrats. The Dow Jones Industrial Average during the 20th century rose 7.3 percent on average per year under Republican presidents. Under Democrats, it rose 10.3 percent-which means investors gained a whopping 41 percent more. And the stock market during George W’s two terms took a nosedive while it recovered handsomely under Obama. Moreover, since WWII, Democratic presidents have increased the national debt by an average of 3.9 percent per year and Republican presidents have increased it an average of 10.3 percent. During the same time period, Democratic presidents produced, on average, an unemployment rate of 4.9 percent; Republicans 6.4 percent. That’s the historical record. What about economic policies over the past 20 years? The Clinton administration presided over the longest peacetime economic expansion in our history. The national debt was reduced dramatically, the industrial sector boomed, wages grew and more Americans found jobs. How did the Bush-Cheney team fare? In their eight years, we experienced the weakest post-recession job creation cycle since the Great Depression, record deficits, record household debt, a record bankruptcy rate, and a substantial increase in poverty. We went from being the nation with the biggest budget surplus in history to becoming the nation with the largest deficit in history. When Obama took office in January of 2009, this was the America that he inherited from Bush-one that was reeling from the economic fallout from the Great Recession and the worst environmental disaster in our history; a housing mortgage meltdown, with families losing their homes; skyrocketing health-care costs; unacceptable levels of unemployment and underemployment; and an aging and broken infrastructure. If this were not bad enough, local governments, states, and cities-some close to bankruptcy and others already bankrupt-were faced with massive layoffs of teachers, police, firefighters, and human-service professionals. These were hard times, and a growing majority of Americans have been telling the pollsters, for the past twelve years, that “our nation is headed in the wrong direction” and that “their children will be the first generation to do worse than their parents.” Bush and his economic team allowed the banks, Wall Street wheelers and dealers, and real estate speculators to drive the country into near-bankruptcy. And when Obama proposed economic stimulus legislation to get us out of this financial ditch; the Republicans in Congress opposed it and complained about the size of the tow truck. From the first day Obama took office Republican leadership in Congress dusted off their old Nancy Reagan “Just Say No” buttons and purposefully and cynically obstructed any effort by Obama to get the economy back on the right track and to create more jobs. In spite of this political reality Obama’s critics-in the media and the Republican Party–never let up attacking and blaming. They behaved like we live in the unreal world of television commercials, where a problem gets resolved in sixty seconds. You buy a new car and mysteriously, the guy or gal of your dreams suddenly appears. You switch stock brokerage firms, and you suddenly make a bundle of money. You take a pill, and all your sexual problems are resolved. All this happens with the snap of a finger. In the real world, especially politics, nothing works that way. There are no quick or painless fixes. I am reminded of an admonition from the Old Testament prophet Isaiah: “Judge us not by the heights we have achieved but by the depths from which we have come.” Considering the absolutely dire circumstances of the economy and the total opposition of the Republicans, Obama has done a better than decent job. His American Recovery and Reinvestment Act-the economic stimulus package-spurred economic growth, created and saved 2.6 million jobs and prevented the unemployment rate from climbing to over 12 percent. What is downright frightening is that Mitt Romney and Paul Ryan seem to still believe that an unregulated free market will solve America’s economic problems. They want to privatize Medicare and water down Social Security. They want to return to the very same failed “trickle down” economic policies of Reagan and both Bushes. In 1980, Bush I called supply-side policies “voodoo economics.” But he embraced these “trickle-down” policies in order to become Vice-President and then President. Reagan’s and both Bushes’ royalist economic policies were failures-fool’s paradises built on the sands of borrowed time and borrowed money. The consequences were staggering debt, industrial decline, shrinking wages, six painful recessions, increased poverty and structural unemployment. The reckless Reagan-Bush-Bush spending and borrowing brought us to the brink of social chaos and economic catastrophe. With Romney and Ryan, (as Yogi Berra observed) “it’s déjà vu all over again.” Just like in “The Wizard of Oz,” when we finally get to see who is operating the smoke puffing machine, we find a consummate pitchman. If his overall Etch A Sketch campaign policies are dictated by holding a finger to the wind, the economic policies of the Wizard of Bain defy the basic rules of math and gravity. When you get beyond the smoke and mirrors it is essentially the same economic game plan of George W. Bush: cut taxes and reduce regulation to jump-start the economy. It’s the new-old “trickle down” potion; and as grandpa always said: “snake oil sells but it doesn’t cure.” Beyond that, Romney’s deficit reduction scheme, tax plan, and proposal for creating 12 million new jobs are all based on vague pledges and bogus numbers that are seemingly plucked out of thin air. So, while the Romney-Ryan ticket composes hymns to patriotism, rugged individualism, “trickle-down” economics, “staying the course” on Bush’s tax cuts and family values, they are also embracing the very economic policies that both undermine the middle class and subvert the security of American family life. American families need less pious rhetoric, and more policies geared toward a healthy economy, secure jobs, decent health care, affordable housing, quality public education, renewable energy and a sustainable environment. Romney seems unable, or unwilling, to grasp that the government has an important leadership role in this. In fact, providing tax giveaways for the rich and for corporate America is the only policy that seems to energize Romney and the Republicans in Congress; while Obama has pledged to repeal those very same giveaways. And contrary to the G.O.P. rhetoric, 90 percent of Americans-people making under $112,000 a year in individual income-would pay less taxes under Obama’s tax plan. Moreover, according to research from Professor Larry Bartels of Princeton, real middle class wage growth when a Democrat is President is double that of when a Republican is President.
With four years of Romney continuing Bush’s failed policies, we could well wake up one morning on “the economic endangered nations” list. Deficits and debt could strangle our economy for the next generation, and all but the wealthy will have a tough time making ends meet because of a shredded social safety net. On the other hand, Obama has demonstrated a willingness to confront these painful realities. On overall economic policy, he offers qualities indispensable to genuine leadership for America-patience, fairness, candor, and vision. At this critical time we need an administration that understands and believes in coherent, comprehensive and equitable policies that promote sustainable and healthy economic growth-and, on that count, Democrats have a winning record.

About Arthur Blaustein
Professor Arthur Blaustein teaches Community and Economic Development and Public Policy at the University of California, Berkeley. His most recent books are Democracy Is Not a Spectator Sport… and The American Promise-Justice and Opportunity. He served as chairman of the Presidents National Advisory Council on Economic Opportunity under Jimmy Carter and on the board of the National Endowment for the Humanities under Bill Clinton.

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