Which Party Is Better for the Economy? Neither!Michael Kinsley
March 2 (Bloomberg) -- Every year around late February, the government puts out the Economic Report of the President, which includes a whole bunch of historical charts on the state of the economy that you can download as Excel spreadsheets. Most years I combine them all into one big spreadsheet and try to draw some conclusions.
The exercise has been fun because through the 1990s and 2000s, it showed that, on average, Democratic presidents make better Republicans than Republicans do. That is, if you’re interested in higher growth, lower inflation, less government spending and taxes, and so on (and even if you don’t care much about the poverty rate or number of Americans without health-care insurance), your best bet over the past half-century -- on average -- has been to vote Democratic for president.
Of course, this assumes falsely that the president controls the economy all by himself, without Congress or the Federal Reserve or the laws of nature playing any role. But then, the same false assumption is the basis for most of our presidential politics. You can also quarrel with my “methodology,” if it even deserves such a term. But any conceptual errors or mistakes of math on the attached spreadsheet are truly accidental and don’t skew the results in favor of my own preferences. Honest.
However, my own preference this year was to skip the whole thing, because I feared the result. When George W. Bush was busy turning a federal surplus into an enormous deficit, the spreadsheet provided plenty of opportunity to gloat. But now that President Barack Obama -- though largely for good reason -- has made Bush and all his other predecessors look like pikers in the deficit department, I worried that the spreadsheet might spread disenchantment.
Smaller Is Better
Before you indignantly start to defend recent fiscal policy as essential to an economic recovery, let me say that I agree with you, pretty much. Remember, this exercise is about Republican economic goals and who has done better in achieving them. So it assumes that smaller government -- less spending, lower taxes, smaller deficits -- is always good.
There is no perfect way to compare presidential statistics from 50 years ago to those from today. Today’s numbers are all bigger, for better or for worse, because of inflation, real growth and population growth. Just comparing, say, unemployment under Richard Nixon with unemployment under Obama would be unfair to Nixon -- something we should all strive to avoid. Therefore the figure I use, in most cases, is the change in a factor in “real” terms (adjusted for inflation) as a percentage of gross domestic product.
The president supplied most of the numbers. I calculated all the “change” figures and plugged a few holes with numbers from reliable sites elsewhere on the Internet. (That irritating “transition quarter” from the late 1970s -- some kind of fiscal leap year -- I just ignored.)
Anyway, here’s the recipe. Take key statistics from the past 50 years. (Why 50? Because that’s how far back most of the figures in the Economic Report of the President go.) Measure changes each year in terms of share of GDP. Assign each year to the Republicans or the Democrats depending on which party holds the White House. Average all the Republican years and all the Democratic years. Compare and contrast.
So, what conclusions can we draw? On unemployment, for example, Mitt Romney has been claiming that, as a former businessman, he knows how to create jobs. (How? So far, he’s kept that a secret.) But the spreadsheet says that, over the past half-century, the unemployment rate has fallen under Democratic presidents and risen under Republicans. This remains true even if you assume a one-year lag in the time it takes for a president’s policies to take effect.
Which party’s presidents have done better with the most important statistic, which is GDP -- basically the size of the economy? Incredibly, it’s a tie! Applying a one-year lag, the Democratic presidents surge ahead by a minuscule 0.01 percent. Inflation? A straight comparison shows that Democrats have done a better job, but the one-year lag gives lower inflation to the Republicans.
Republicans win on lower taxes -- no surprise there -- but lower spending (the stat I’d been dreading) goes to the Democrats. Put it all together and neither party has anything like a monopoly on economic virtue, even when defined in strictly conservative terms. I’m sorry for this anticlimactic result, but numbers don’t lie.
(Michael Kinsley is a Bloomberg View columnist. The opinions expressed are his own.)
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