New research by two Harvard economists proves that Democratic presidents do a better job of growing the economy than Republicans.
Jared Bernstein summed up the findings of economists Alan Blinder and Mark Watson:
The two looked at key macroeconomic variables averaged over 64 years (16 four-year terms), from Harry Truman to Barack Obama. Mr. Blinder and Mr. Watson focus mostly on the 1.8 percent annual difference in real G.D.P. growth. That is, over the full study, real G.D.P. growth averaged 3.33 percent per year. But under Democratic presidents the economy grew 4.35 percent and under Republicans 2.54 percent.
Under Democratic presidents, the economy also spent fewer quarters in recession; added more jobs and more hours worked; and posted larger declines in unemployment and higher corporate profits than under their Republican counterparts. Stock market returns were a lot higher under Democrats as well, but because equity markets are so volatile, that difference is not statistically significant. (By the way, since March 2009, the S.&P. stock index is up 160 percent).
Republicans have long claimed that Democrats inherit a better economy when they take office, but the Blinder/Watson paper reveals that the opposite is true. Democrats leave the economy in good shape, and Republicans drive it into a recession, “The figure also shows that Democrats inherit growth rates averaging 0.6% from the final year of the previous Republican president, while Republicans inherit growth rates averaging 3.8% from outgoing Democrats. Thus, the election of a Democrat seems to turn things around on a dime while the election of a new Republican seems to signal a recession.”
The economists could answer the question of why Democratic presidents grow the economy better than Republicans through an examination of economic factors such as monetary policy, outside shocks to the economy, wars, etc., while political ideology doesn’t control the cycle of the economy, policy choices can help or hinder economic growth.
Data has consistently shown that tax cuts for the wealthy don’t grow the economy. In fact, tax cuts can hinder economic growth. Unlike poor and middle-class people, the wealthy don’t put the benefits that they receive back into the economy. When a person in the middle class gets a tax cut, they spend the money to pay bills or buy needed goods and services. The wealthy and corporations tend to not spend money that is a gained from tax cuts.
The Great Recession has demonstrated that the economy grows less when the government cuts taxes for those at the top while slashing spending. The tax-cutting strategies by Republican governors in states like Kansas and Wisconsin have caused those states to lag behind the rest of the nation in job creation. Meanwhile, Democratic Gov. Jerry Brown did the exact opposite in California. Voters raised taxes for everyone, and the state now has the third strongest economy in the country.
One of the main reasons why the recovery from the current recession has been so slow is because Republicans have refused to raise taxes and increase spending. The fact that the economy is beginning to take off after taxes were raised on the wealthy suggests that Republicans are holding the economy back by clinging to an economic ideology that has been unsuccessful for decades.
Political choices do make a difference. If growing the economy was as easy as just electing Democrats, Republicans would never win another election. It is more complicated than just winning elections, but it is clear that Democratic presidents have more success with growing the economy because they aren’t welded to one ideology.
It is now a proven fact that Democratic presidents are better at growing the economy. The Republican snake oil and pipe dream promises that tax cuts for the wealthy will lead to prosperity for all has once again been debunked by facts and data.
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