The US Economy Performs Better Under Democratic Presidents

[finehoe]

It turns out that the US economy grows faster – indeed, performs better by almost every metric – when a Democratic president occupies the White House.



The data hold more surprises. Here are a few:

1.Even though the US Constitution assigns power over the budget (and most other economic powers) to Congress, not to the president, there is no difference in growth rates depending on which party controls Congress. It's the presidency that matters.
2.The Democratic growth advantage is concentrated in the first two years of a presidency, especially the first, even though Republicans bequeath much slower-growing economies to Democrats and US GDP growth is positively serially correlated (ρ ≈ 0.40 in quarterly data).
3.As indicated both by time series models and by genuine ex ante forecasts, Democrats do not inherit economies that are poised for more rapid growth. Granger-causality runs from party-to-growth not from growth-to-party.

http://www.voxeu.org/article/us-economy-performs-better-under-democratic-presidents-why

[JeffreyS]

It is funny that it isn't obvious to everyone that the Dems preform better.

[spuwho]

It's an interesting representation of the data, however I think the translation needs more than a punch line to understand what it means.

I will read the underlying analysis that is driving the charts but there are lots of questions. Monetary supply during those periods, amount of deficit spending by Congress, inflationary impacts. All of these can influence the numbers.

Again, as soon as I read the source data I will know.

[JeffreyS]

I've posted the Princeton study this is based on before I will find it tonight and link it.

[fsquid]

Looks like the economy does better with a republican house and senate.

[finehoe]

Looks like the economy does better with a republican house and senate.

How do you arrive at that conclusion when the study specifically says "there is no difference in growth rates depending on which party controls Congress"?

[Rob68]

This isnt news.. republican ideas rules regulation and action are what cause these depressions when republicans lead...when will they learnthat they suck at it?

[JayBird]

As an employee of JPMorgan Chase, and spending my days in between NASDAQ and NYSE, I would say this is garbage. The economy actually can't be measured by which party was in power ... and they all bend over for the larger corporations. Like I have said many times, the unique thing about statistics is that you can always skew the numbers to represent your intended goal. Anyone in the finance industry or political sciences arena will be the first to point out that most corporate rules enacted by various government agencies are not effective immediately. From proposal to refining to approving to enacting usually takes 2-3 years, meaning that what an administration pushes will actually see results under the next term. I made my bones sitting along the walls during the big meetings with many politicians on both sides of the aisle pushing stuff long enough to realize that whether they are Democrat, Republican, Independent, Green or Libertarian ... they all want to improve their own status and that of those whom helped them get there.  Party ethics/principals/credos have nothing to do with it.

Actually, what I take away from this study and graphic is you can clearly see a decline in the overall economy. So for the past decade that I've been reading about the back and forth between these studies produce, it all avoids having to face the real issue ... that we are losing money and no party has the cure as to how to stop that.  In my opinion, it would take a paradigm shift that even I couldn't fathom right now.

[finehoe]

It's no big mystery why this would be true.  Even though, as JayBird says, they all bend over for the larger corporations, at least the Democrats are willing to throw a few crumbs to the middle and working classes.  The Republican are only interested in giving more to those who already have more than they know what to do with.  The evidence is incontestable that the more money that is spread around to the 99%, the better off the economy as a whole does.  If the gains only go to the 1%, they only hoard it or send it to their offshore accounts.

[spuwho]

While the 1% may hoard it, it only take 3 generations for that "hoard" to be disseminated by the ancestors who don't come with the same proclivity.

Infighting, family lawsuits, usually drive the breakdown.

Don't discount the crumbs sprinkled by philanthropy.  Not all crumbs arrive via laws or mandates.

[finehoe]

While the 1% may hoard it, it only take 3 generations for that "hoard" to be disseminated by the ancestors who don't come with the same proclivity.

Infighting, family lawsuits, usually drive the breakdown.

Don't discount the crumbs sprinkled by philanthropy.  Not all crumbs arrive via laws or mandates.

Can we wait three generations for an improved economy?

[JayBird]

While the 1% may hoard it, it only take 3 generations for that "hoard" to be disseminated by the ancestors who don't come with the same proclivity.

Infighting, family lawsuits, usually drive the breakdown.

Don't discount the crumbs sprinkled by philanthropy.  Not all crumbs arrive via laws or mandates.

Can we wait three generations for an improved economy?

I sure hope not. Or rather, I sure hope that eventually the masses realize how long that is and stand up for what is theirs. This is actually what intrigued me about the Tea Party in its origins ... but then they got a little ... well bonkers.

Even though I do a lot of work with nonprofits, I'm not entirely sold on the philanthropy of returning "crumbs". Most of that is given in good heart, but also to save millions on taxes to Uncle Sam. So if the IRS was collecting those revenues, they'd provide a better service to those whom need it. Then again, thats a utopian point of view, because realistically they would take it and give it to the same friends and then ask for more.

[fsquid]

Looks like the economy does better with a republican house and senate.

How do you arrive at that conclusion when the study specifically says "there is no difference in growth rates depending on which party controls Congress"?

I'd like to see their work on that, since that's contrary to whatever seen from other sources.

One thing that I think is a factor is that democrats focus on stimulating demand, which may be better in the short run but probably negative in the long run, whereas republicans focus more on investment and supply side incentives that are better in the long run. That democrats tend to do better early in their terms than late would appear to be consistent with that.

[finehoe]

I'd like to see their work on that, since that's contrary to whatever seen from other sources.

Feel free to post these other sources.

[ChriswUfGator]

Looks like the economy does better with a republican house and senate.

How do you arrive at that conclusion when the study specifically says "there is no difference in growth rates depending on which party controls Congress"?

I'd like to see their work on that, since that's contrary to whatever seen from other sources.

One thing that I think is a factor is that democrats focus on stimulating demand, which may be better in the short run but probably negative in the long run, whereas republicans focus more on investment and supply side incentives that are better in the long run. That democrats tend to do better early in their terms than late would appear to be consistent with that.

Reaganomics are not better in the long run, the crisis we just endured was the direct result of deregulation.