Are Democratic administrations better, or worse, for the economy?

**Norman Bernstein** · 08-15-2012, 08:19 PM

This is the stuff I alluded to in a previous thread, while talking with Rum_pirate.

This comes from a book entitled 'They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010... an encapsulation of numerous studies which come to a conclusion that some people here are not going to like.... in each case, the data is footnoted and referenced to the authors, so please don't adk for links; you can Google this stuff to your heart's content if you don't believe it.

First, how about the issue of stock market performance? How well does the market do, in either Democratic or Republican administrations?

Sean D. Campbell (of the Federal Reserve Board), and Canlin Li (of U. Cal. Riverside), issued their FEDS Working Paper No. 2004-69 in November 2004, “Alternative Estimates of the Presidential Premium,” and reported that, “During periods in which annual market volatility has been in excess of 25%, approximately 11% of the time between 1927-1998, Democratic administrations have experienced vastly better stock market performance than Republican ones,” and that this difference largely accounted for the superior Democratic stock-market performance over that long period. Factoring out this superior performance during volatile markets, “In the case of large stocks we find that the estimated Democratic return premium falls from 8.93% per year … to between 2.95% and 5.41% per year, depending on the specific estimator employed. In the case of small stocks the estimated premium falls from 15.67% in the case of OLS [ordinary least squares] to between 4.85% and 12.10% per year.” Those differences too are enormous. This study’s “Abstract” opened with the following summary of the prior literature on the subject: “Since the early 1980’s much research, including the most recent contribution of Santa-Clara and Valkanov (2003), has concluded that there is a stable, robust and significant relationship between Democratic presidential administrations and robust stock returns. Moreover, the difference in returns does not appear to be accompanied by any significant differences in risk across the presidential cycle.” Thus, beyond any reasonable doubt, from the economic standpoint, Democrats in the White House are far better than Republicans, notwithstanding the common myth to the contrary, that “Republicans are good for business.”*

This isn't the only study, though:

Also, Carol Vinzant of slate.com, using a different data-set, carried the analysis back a full century, to 1900, and came up with essentially the same finding, that Democrats are far better for investors than are Republicans, and that this is true not only for presidents, but for congresses; i.e., a Republican congress is bad for investors. Headlining, on 4 October 2002, “The Democratic Dividend: The Stock Market Prefers Democratic Presidents to Republicans,” she found that “Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republicans only an 8 percent return. In 2000, the Stock Trader’s Almanac, which slices and dices Wall Street performance figures like baseball stats, came up with nearly the same numbers (13.4 percent versus 8.1 percent) by measuring Dow price appreciation. (Most of the 20th century’s bear markets, incidentally, have been Republican bear markets: the Crash of ‘29, the early ‘70s oil shock, the ‘87 correction, and the current stall occurred under GOP presidents.)”

She continued: “According to almanac editor Jeffrey Hirsch, the presidential party figures are among the most significant he’s found. If the stock market were random, we’d expect such a result only one-quarter of the time. ‘I don’t know why people are convinced Republicans are good for the stock market,’ Hirsch says.”

The stock market isn't the only indicator of economic health, though... what about GDP?

From the study above:

Then, she added: “Nor does having a Republican Congress help the market. A Democratic Senate showed returns of 10.5 percent (versus 9.4 percent for a GOP upper chamber), and a Democratic House returned 10.9 percent versus 8.1 percent for the Republicans.”

These aren't the only ones to report on this phenomenon:

A month later, Mark Hulbert at cbs.marketwatch.com headlined on 12 November 2002 “Pop Quiz on Politics and the Markets: Which is better, Republicans or Democrats?” and he used inflation-adjusted data from Ned Davis Research, which showed that, “On average during the 28 years since 1901in which a Republican has been President and Democrats have controlled Congress, the DJIA has produced a 2.2 percent real return (before dividends). On average during the 25.8 years in which the Republican party has controlled both branches of government, in contrast, the Dow … has produced an inflation-adjusted return of just 1.2 percent.” No results were shown for periods when Democrats occupied the White House. Ned Davis Research concluded overall that the average annual market return under a Democratic president has been 7.2%, while under a Republican president the average annual return has been only 3.7%.

On 22 February 2012, Bloomberg News bannered “Stocks Return More With Democrat in White House,” and Bob Drummond reported that, from 1960-2012 (till February 21st), $1,000 invested in the S&P throughout all of the 28 years of Republican Presidencies would now be $2,087, but in all 23 years of Democratic Presidencies would now be $10,920 – a 992% gain, vs. the mere 109% gain under Republican Presidents – and this despite the fact that there were actually five more years for the money to grow during Republican Presidencies. “The Democratic edge is so large that the party comes out ahead even without counting Bill Clinton (the Democrat with the biggest S&P gain) and George W. Bush (the Republican with the worst market record).” The Democratic advantage was enormous: “It’s not even close.”

More on the GDP, this time considering who controls the House of Representatives as well as the Presidency:

Adding depth to Vinzant’s findings about the economic impact of Party control in the U.S. House of Representatives is the following: On 6 June 2004, under the heading, “If You Want to Live Like A Republican, Vote Democratic (part II),” at http://rtorgerson.blogspot.com/2004_...n_archive.html, the professional investment manager Richard Torgerson calculated the annual inflation-adjusted GDP growth in the U.S. for each year from 1950 to 2003, separately under four categories of U.S. political leadership; and these were the historical growth-percentages in each of the four categories:

Democratic President, Democratic House: 4.5%.
Democratic President, Republican House: 3.9%.
Republican President, Democratic House: 3.0%.
Republican President, Republican House: 2.1%.

On 22 December 2010, Doug Short at businessinsider.com headlined “Politics And GDP: Which Party Is Really Better For The Economy?” He found that, during the period he examined, 1947-2009, GDP rose:

Democratic President: 4.19%.
Democratic Congress: 3.41%.
Republican President: 2.63%.
Republican Congress: 2.98%.

But what about the size of government? This is a big deal to the right wing. Sorry to say, but the numbers here don't look too god for their side, either:

For example, to document Democrats producing smaller government as measured by the number of federal employees, that site points to “Just for the Record Part II,” which provides the federal workforce numbers, and the changes in those numbers, during each of the Presidents from Kennedy through Clinton, and it concludes: “Under the 20 years of Republican administrations the number of non-defense government employees rose by 310,000. Under the 20 years of Democratic administrations, the number of non-defense government employees rose by 59,000. Of the 369,000 employees added between 1962 and 2001, 84% were added under Republican administrations and 16% were added under Democratic administrations.” The only Administration that reduced the number of federal employees (by 310,000) was Clinton (largely because of the recommendations of V.P. Gore’s study commission on improving government-efficiency). By contrast, the Republican President who increased the federal workforce the least was Reagan, who added 3,000 federal employees.

By now, there's someone reading who says that these analyses are flawed, because they don't account for the 'spillover' of Republican policies that bear fruit during Democratic administrations. Sorry, but that won't wash either:

On 5 October 2002, a more sophisticated statistical analysis, covering “the postwar period 1948-2001,” appeared from Kevin Drum (later with Mother Jones magazine), at http://calpundit.blogspot.com/2002_0....html#82576526, in which three different lag-times of “3 Yrs,” “4 Yrs,” and “5 Yrs” were applied in order to give a more accurate picture of the cause and effect of each President’s policies. Results were calculated for three measures: “GDP Growth,” “Unemployment,” and “Inflation.” The conclusion was: “No matter what time lag you choose, Democrats post higher GDP growth, lower unemployment, and lower inflation.”

(cont'd)

**Norman Bernstein** · 08-15-2012, 08:20 PM

(cont'd)

[Norm's note: the numeric data to support this is in a chart in the book... sorry, can't reproduce it here... you'll have to fork over $3 to Amazon to buy the e-book yourself]

The criteria, so far, for economic success, doesn't really factor in everything.... there's more than just stock market prices, GDP growth, or size of government:

Yet another type of analysis was published by Arthur Blaustein in the Los Angeles Times, on 19 September 2004, in an op-ed titled “Who’s Better in the Driver’s Seat?” He considered seven independent measures of a President’s economic success, and asked, for each measure, which President, since World War II, has scored the highest? There were six Republican Presidents and five Democrats to choose from since WWII, so the odds for each measure were that a Republican would probably score the highest. But, stunningly, none of the six Republicans did. Here were the “prize” winners in each of the seven categories: Highest growth in GDP: Truman. Highest growth in jobs: Clinton. Highest growth in personal disposable after-tax income: Johnson. Highest growth in industrial production: Kennedy. Highest growth in hourly wages: Johnson. Lowest misery index (inflation plus unemployment): Truman. Largest reduction in the deficit: Clinton. The six Republican booby-prize-winners, each scoring 0 for 7, were: Eisenhower, Nixon, Ford, Reagan, Bush I, and Bush II. Only Carter shared their prize.

By now, we might want to consider which segment of the population does better under Democratic or Republican administrations. The only big surprise: The top 5% do BETTER, in absolute terms, with Democratic presdients... they've been backing the wrong horse!

Furthermore, Princeton University’s Larry M. Bartels, who has studied, in more detail than any other researcher, the irrationality of Americans’ voting overwhelmingly against their own economic self-interests, and tried hard to explain it, documents in his Feb. 2004 historical study, “Partisan Politics and the U.S. Income Distribution,” that there has been a strikingly consistent record of Democratic U.S. Presidents producing a thriving U.S. economy that benefits all socio-economic classes, and of Republican U.S. Presidents producing a stagnant or worse U.S. economy, all of whose meager benefits go to only the top 20%, and almost all of whose benefits go to only the top 5%. Dr. Bartels points out, in addition, that even the top 5% typically do better, in absolute terms, under Democrats than under Republicans. During Democratic Presidencies, the real income growth-rates for even the wealthiest 5% of the population, the 95th percentile group, were slightly higher than during Republican Presidencies. However, figures weren’t shown for the top 1% – perhaps this tiny group actually does benefit from Republican rule. In any case, the Republican Party has historically increased inequality in the United States, and has harmed all income-groups except, perhaps, the top 1%. Some highlights from this study were published on 26 September 2003 in the Los Angeles Times, in an op-ed by Bartels titled “GOP Always Falls Down on the Jobs.” Of course, the superior jobs-growth under Democrats has been one of the major reasons for the superior growth in GDP under Democrats; the direct Democratic concern to “spread the wealth” has ended up producing a larger total amount of wealth within the nation; more people earning more money creates a bigger GDP; and that’s a major reason why the Republicans’ “supply-side” or “trickle-down” policies have failed time after time (except, perhaps, for the few people who are hyper-wealthy, who are the only real beneficiaries of Republican policies, if there are any real beneficiaries).

So, if you're part of the 99% (or the 95%, which was the threshold for this next clip), guess who treated you better:

This study by Bartels showed that during the period studied, from 1948 onward, “Democratic presidents have produced slightly more income growth for poor families than for rich families, resulting in a modest decrease in overall inequality. Republican presidents have produced a great deal more income growth for rich families than for poor families, resulting in a substantial increase in inequality.” Scholars normally think in terms of a trade-off between equality and productivity, but Bartels showed that, to the contrary, Democratic Presidents enhanced both simultaneously. Moreover, the difference was greatest at the income-extremities, and, “On average, families in the 95th percentile of the income distribution [the very rich] have experienced identical growth under Democratic and Republican presidents, while those at the 20th percentile [the poor] have experienced more than four times as much income growth under Democrats as they have under Republicans.” Democratic Presidents produced higher income-growth for each of the five income-categories studied, but the highest benefits accrued at the lower end.

And what about jobs?

Furthermore, Democratic Presidents produced far higher GDP growth-rates (4.08% vs. 2.86%) and substantially lower unemployment rates (4.84% vs. 6.35%). Inflation-rates were virtually identical under both Republican and Democratic Presidents.

On 8 May 2012, Bloomberg’s Bob Drummond bannered “Private Jobs Increase More With Democrats in White House,” and he reported that, during the period January 1961 through April 2012, in which Democrats occupied the Oval Office for 23 years, and Republicans for 28, private-sector job-growth averaged 150,000/month under Democratic Presidents, and 71,000/month under Republicans.

Now we move on to the debt.... the great bugaboo of Republican fear politics.... how have Presidents historically done, when it comes to the debt? Remember, since WWII, there hasn't been a financial crash anywhere near as severe as the one Obama faced when he took office:

According to the wikipedia article on “National Debt by U.S. Presidential Terms,” the column “Increase debt/GDP (in percentage points)” shows that under Democrat FDR’s final term, 1941-45, when the U.S. was waging WWII, the debt soared 67.1%. During Democrat Truman’s first term, 1945-49, it declined 24.4%. During Truman’s second term, 1949-53, it declined 21.7%. During Republican Ike’s first term, 1953-57, it declined 11.0%. During Ike’s second term, it declined 5.2%. During the Democrat Kennedy/Johnson term, it declined 8.3%. During Johnson’s second term, it again declined 8.3%. During Republican Nixon’s first term, 1969-73, it declined 3.0%. During the Nixon/Ford term, it rose 0.2% – the first rise since WWII. During Democrat Carter’s one term, 1977-81, it again declined, this time by 3.3%. Then, in came Republican Reagan (whom opinion polls that have been taken after the year 2000 show that Republican voters consider to have been the greatest President of all time), and in his first term, 1981-85, it soared upward, 11.3%. In Reagan’s second term, it again soared, this time by 9.3%. During Republican George H.W. Bush’s term, 1989-93, it soared even more, 13.0%. During Democrat Clinton’s first term, 1993-97, it declined 0.7%. In his second term, it again declined, 9.0%. During Republican George W. Bush’s first term, 2001-05, it again rose, 7.1%. During his second term, it soared, 20.7%.

Deficits really started with Ronald Reagan, who slashed top-bracket taxes during peacetime and thereby deprived the federal coffers of essential income, with the resulting deficits all going onto the nation’s credit card as a problem for future generations to deal with. The economist Satyajit Das wrote in 2011 about “The Problem of US Debt,” and he said: “Between 1981 and 1989, tax cuts and peacetime defense spending contributed to an increase in the debt of $1.9 trillion. [When Reagan had entered office, the entire federal debt was only $1 trillion; he nearly tripled it, during peacetime. His Presidency was a fiscal disaster.] … Under President George Bush Senior, the national debt increased another $1.5 trillion. … Under President Bill Clinton, national debt increased $1.4 trillion [but GDP soared vastly more]. … Between 2001 and 2009, President George Bush Junior added $6.1 trillion in debt [he doubled it].” America was now a nation that was soaring its debt during peacetime. Republican Presidents, and Republican congresses, were destroying the country, by Republican corruption.

There is much more in this book.... this covers only the highlights of the first 40% of the book... but the evidence trail is pretty clear.

So, will all that, I have a question:

After reading this, who still thinks that the Republicans are the party of fiscal responsibility?

And even MORE importantly:

After reading this, if you had planned to vote for Mitt Romney, why do you think that he will reverse the 90 year trend line?

(Credit: Zuesse, Eric (2012-06-21). THEY'RE NOT EVEN CLOSE: The Democratic vs. Republican Economic Records, 1910-2010 (Kindle Location 785). CreateSpace. Kindle Edition.)

**wardd** · 08-15-2012, 08:58 PM

too many facts

**Norman Bernstein** · 08-15-2012, 09:00 PM

Some people don't like to be confused with the facts.... For many republicans, I'd say that the reason they. Don't like facts is enumerated in the OP

**Paul Pless** · 08-15-2012, 09:03 PM

fascinating

**tigerregis** · 08-15-2012, 09:12 PM

Rhetoric is for stimulation, like Ex-lax is for being full of ****.

**Norman Bernstein** · 08-15-2012, 10:33 PM

Originally Posted by Paul Pless

fascinating

I can usually detect your sarcasm, but I admit I've got no clue right now

**Norman Bernstein** · 08-16-2012, 07:46 AM

bump, so some people who were talking about this issue can see it

**Rum_Pirate** · 08-16-2012, 08:00 AM

Hmm, Interesting selection.

Taking the first quotation

First, how about the issue of stock market performance? How well does the market do, in either Democratic or Republican administrations?

Sean D. Campbell (of the Federal Reserve Board), and Canlin Li (of U. Cal. Riverside), issued their FEDS Working Paper No. 2004-69 in November 2004, “Alternative Estimates of the Presidential Premium,” and reported that, “During periods in which annual market volatility has been in excess of 25%, approximately 11% of the time between 1927-1998, Democratic administrations have experienced vastly better stock market performance than Republican ones,” and that this difference largely accounted for the superior Democratic stock-market performance over that long period. Factoring out this superior performance during volatile markets, “In the case of large stocks we find that the estimated Democratic return premium falls from 8.93% per year … to between 2.95% and 5.41% per year, depending on the specific estimator employed. In the case of small stocks the estimated premium falls from 15.67% in the case of OLS [ordinary least squares] to between 4.85% and 12.10% per year.” Those differences too are enormous. This study’s “Abstract” opened with the following summary of the prior literature on the subject: “Since the early 1980’s much research, including the most recent contribution of Santa-Clara and Valkanov (2003), has concluded that there is a stable, robust and significant relationship between Democratic presidential administrations and robust stock returns. Moreover, the difference in returns does not appear to be accompanied by any significant differences in risk across the presidential cycle.” Thus, beyond any reasonable doubt, from the economic standpoint, Democrats in the White House are far better than Republicans, notwithstanding the common myth to the contrary, that “Republicans are good for business.”*

There is no reference included to how the market did under the Republicans only on Democrats. Is there a reference/link to the entire report?

**Norman Bernstein** · 08-16-2012, 08:05 AM

Originally Posted by Rum_Pirate

There is no reference included to how the market did under the Republicans only on Democrats. Is there a reference/link to the entire report?

I think you've misread the C&P... the 'return premium' being referred to IS a comparison of Republican v. Democratic performance.... it's not an evaluation of only Democrats.

**Rum_Pirate** · 08-16-2012, 08:13 AM

Originally Posted by Norman Bernstein

I think you've misread the C&P... the 'return premium' being referred to IS a comparison of Republican v. Democratic performance.... it's not an evaluation of only Democrats.

Far be it from me to further your side of the discussion, but IF what you say above is true then the Democrats did worse???

“In the case of large stocks we find that the estimated Democratic return premium falls from 8.93% per year … to between 2.95% and 5.41% per year, depending on the specific estimator employed.

In comparison to the Republican figures.

In the case of small stocks the estimated premium falls from 15.67% in the case of OLS [ordinary least squares] to between 4.85% and 12.10% per year.”

In comparison to the Republican figures.

You may wish to reconsider.

Can you post the references links to the sources for those reports.

**Norman Bernstein** · 08-16-2012, 08:18 AM

Sorry, but you are still misreading it.

They are referring to the 'Democratic return premium', which is the percentage or amount by which the returns during Democratic administrations exceeded the returns produced during Republican administrations. The percentages quoted all refer to the amount by which Democratic performance exceeded Republican performance.

If this were not the case, they couldn't have come to their conclusion:

Thus, beyond any reasonable doubt, from the economic standpoint, Democrats in the White House are far better than Republicans, notwithstanding the common myth to the contrary, that “Republicans are good for business.”*

The reference is right there in the part you quoted.

**Rum_Pirate** · 08-16-2012, 08:24 AM

Can you post the references links to the sources for those reports so I can read them in their entirety?

**Norman Bernstein** · 08-16-2012, 08:27 AM

For the particular study you're referring to, the reference is right there!

"Sean D. Campbell (of the Federal Reserve Board), and Canlin Li (of U. Cal. Riverside), issued their FEDS Working Paper No. 2004-69 in November 2004, “Alternative Estimates of the Presidential Premium”

I don't know if it's on the net...you can google if you like.

Most of the other studies are indeed on the net... and can be readily found.

**Rum_Pirate** · 08-16-2012, 09:25 AM

Originally Posted by ljb5

Sorry, Rummy. Norman is right.

Basically, what that says is no matter how you look at it, the stock market did better under Democrats.

8.93% better if you look at all the data.

If you filter out the very best times, Democrats did 3 to 5% better.

I am not necessarily disagreeing, I only asked because in the quotation Norman posted
“In the case of large stocks we find that the estimated Democratic return premium falls from 8.93% per year … to between 2.95% and 5.41% per year, depending on the specific estimator employed. In the case of small stocks the estimated premium falls from 15.67% in the case of OLS [ordinary least squares] to between 4.85% and 12.10% per year.” there is no reference to the Republicans or as Norman purports in his post 'a comparison of Republican v. Democratic performance'. See #10. Where is the comparison??

BTW from OP 1st quote

approximately 11% of the time between 1927-1998, Democratic administrations have experienced vastly better stock market performance than Republican ones,”

So what happened the other 89% of the time??

**Flying Orca** · 08-16-2012, 09:26 AM

It wasn't vastly better, it was just better.

**Rum_Pirate** · 08-16-2012, 09:34 AM

I'd like to see the supporting evidence with references/links.

I post mine and many occasion individuals poo poo them as being 'political biased', so want to be able to confirm that these are not 'political biased'.

After all it is easy to paste in eg "Susan Q. Obromney (of the Federal Reservise Board), and Cantit Bedone (of U. Cal. Riverside), issued their FEDS Working Paper No. 2004-691 in November 2004, “Alternative Estimates of the Presidential Premium,” and reported that, “During this period a load of rubbish took place inn the White House".

OK so you wont be able to find it, and I am not saying it was done, but you get my drift of taking it to the n'th degree.

**Norman Bernstein** · 08-16-2012, 09:38 AM

Originally Posted by Rum_Pirate

there is no reference to the Republicans or as Norman purports in his post 'a comparison of Republican v. Democratic performance'. See #10. Where is the comparison??

What part of 'Democratic return premium' do you not understand?

If it weren't a comparison of the premium returned by democratic administrations over that of Republican administrations, then how could it be a premium at all?

I think you're being a bit disingenuous here.... but no matter, you can discard THAT study if you like... what about the rest?

**Norman Bernstein** · 08-16-2012, 09:42 AM

Originally Posted by Rum_Pirate

I'd like to see the supporting evidence with references/links..

Virtually every C&P in the OP attributes to the source... they just don't happen to be in the form of links, but if you doubt any of them, you can easily find the original information on nearly ALL of them. Sorry, but I'm giving you the references.... I'm just not doing your own scut work. If you suspect that the information is false, then you can easily find this stuff.....

....on the other hand, there is so much evidence here, are you sure you want to try?

**Norman Bernstein** · 08-17-2012, 08:26 AM

Let's face it: this is a truth that is VERY hard to choke down, by our right wing friends.... because it destroys a myth fundamental to their views. Just look what Rum's reaction was: no comment on the overall collection of evidence, just a rather lame attempt to attack one part of it, based on a complete misinterpretation of the wording.