History shows that Democrats are good for U.S. economy
As we prepare for another presidential campaign, a theme one hears from Republicans is that their party is better for the economy.
So I put on my historian hat and checked the record for the last century. The generally accepted benchmarks to measure the health of the economy have traditionally been the strength of the Dow Jones Industrial Average, the unemployment rate and the inflation index. For good measure, let’s throw in the annual deficit.
Generally, if the Democrats win, the Dow goes up over the next four years; when Republicans win, it goes down, according to U.S. News and World Report.
The exceptions are Calvin Coolidge and the two-term presidencies of Dwight Eisenhower and Ronald Reagan. In both cases, the stock market sputtered in the first couple of years but eventually took off.
The one time the market dropped when a Democrat won was in 1937, after Franklin Roosevelt’s 1936 landslide, but thanks to the advent of World War II, it began its climb after 1940. The effect of the 1929 crash, the year after Herbert Hoover was elected, was such that it took 24 years for the Dow to recover to its 1929 peak. So if one is an investor in the stock market, the smart thing would seem to be to vote for the Democrats.
As for inflation, the record is a little more mixed and tends to favor Republicans. That’s partly because inflation usually drops during bad economic times. If you have a lot of money to spend, that might make you happy, but those out of a job or heavily invested in stocks suffer.
The worst inflationary period in the 20th century was in the years just after WWII, when the rate soared to 17.6%, though it soon settled down to about 2%. Inflation rose in the 1970s during the years of Richard Nixon, Gerald Ford and Jimmy Carter but has been tamed in the last few years.
Finally, there’s the federal deficit. Combine the total annual deficits since 1941 under Democratic administrations and you get just under $5.3 trillion — about 90% of that in the last six years. Republicans have run up the bill to $6.26 trillion — well over half of that amount during the last Bush administration and about a quarter of it during the Reagan years.
The only Republican administration that ever produced a budget surplus was Eisenhower’s, and that happened only a couple of times. FDR was a big spender, thanks to the war, but presidents Harry Truman, John Kennedy, Lyndon Johnson and Bill Clinton all had years when they balanced the budget.
Clinton actually comes out ahead. In the eight years of budgets produced under his administration, he actually gets a $62 billion credit. While Barack Obama has taken some heat for running up the bill, the annual deficit has actually been dropping since 2011, while it continued to go up during the preceding Bush years. So if it’s a balanced budget you want, then, once again, the Democrats come out ahead.
LENARD DAVIS lives in Newport Beach.