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Of course, my friend is right - we need to be cautious about looking at charts and drawing conclusions.
For example, in looking at the chart above a Democrat might declare that Clinton was more fiscally effective than Reagan. But the fact of the matter is that a chart like this does not tell the whole story.
We should not blame the President for every problem our country is tackling or to give him credit for every triumph our nation celebrates. The President's powers are limited and each branch of our Government plays an critical role in the management of our country.
Checks and Balances = Share of the Fame, Share of the BlameSo I set about doing some research to see if there is any obvious correlation between the President's party, the House Majority, and the Senate Majority in terms of effectively managing our economy. Although there are many ways to examine the strength of an economy, I decided to look at Federal Public Debt as a percentage of our Gross Domestic Product (GDP). This is similar to looking at my paycheck compared to my mortgage - how much of my paycheck (GDP) is being spent on my mortgage (Debt)?
In general, the goal is to keep the Debt to as small a portion of GDP as possible. For example, 30% is better than 50%.I went online and pulled some data (sources are cited below) going back to 1981. I was pretty excited, expecting to find some clear patterns. The chart below shows the data - click on the image so you can read the information.
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Starting in 1981, we had 12 years of Republican presidents (Reagan and Bush, Sr). During this period, the Democrats held House Majority the entire time, and held the Senate Majority for 6 years. Not only did our Debt-to-GDP ratio rise by 33.44%, the unemployment rate peaked at 9.71% in 1982 - higher than our current rate. The combination of GOP presidents and Democrat Congresses failed to produce good results in terms of Debt-to-GDP.So, for now at least, my conclusion is that neither Party is more fiscally effective than the other. There are too many factors (wars, recessions, etc) that come in to play. Also, did you notice that over the past 30 years (since 1981), our Debt-to-GDP ratio has increased by 61.43%? At the risk of over simplifying, America has given in to some bad spending habits!
After the Reagan/Bush era, we had 8 years of a Democratic president (Clinton) while the GOP ruled the House and the Senate. Over the past 30 years, this is the only administration that managed to reduce the Debt-to-GDP ratio. So the combination of a Democratic President and a GOP Congress produced some excellent results.
Then we had 8 years of a completely Republican majority - the President (Bush Jr) and Congress. Surely this combination would be a silver bullet? Uh, No. The surplus left by the Clinton administration quickly evaporated and by the end of the 8 years our Debt-to-GDP ratio had surged from 56.09% to 84.11%.
The bottom line is that if you believe voting for one party over the other will ensure we turn our economy around, you might want to reconsider.
Do you have information that paints a different picture? If so, please share.
SOURCES
PART 1 - You say - Starting in 1981, we had 12 years of Republican presidents (Reagan and Bush, Sr). During this period, the Democrats held House Majority the entire time, and held the Senate Majority for 6 years. Not only did our Debt-to-GDP ratio rise by 33.44%, the unemployment rate peaked at 9.71% in 1982 - higher than our current rate.
ReplyDelete(Remember that our unemployment under Pres Obama peaked at over 10% from 7.6% when he took office. See: http://www.bls.gov/opub/ted/2009/feb/wk2/art02.htm and just look how low it was up until June 2008) Also, when Reagan took office he inherited a very deep double-dip recession which went from 1980–82 due to recession from Jimmy Carter’s disastrous 4 years that took 3 years to get under control. I was young, but I remember vividly the gas lines everywhere in the late 70s and home mortgage rates at 18% in the fall of 1980. And that horrible malaise speech to the nation from Carter.
During the first Bush, the Dems were in charge of both the House and Senate the entire time and must have just run him over as the Debt-to-GDP ratio change rose significantly after Reagan brought it down during each Congress while he was president. Then we had the Early 1990s recession from July 1990 – Mar 1991 under the first Bush after the Dems spent us into oblivion during his 4 years. (reference further down the page)
--You say - After the Reagan/Bush era, we had 8 years of a Democratic president (Clinton) while the GOP ruled the House and the Senate.
--Wrong (Your chart is correct, but your words in the blog post are incorrect.) The Dems ruled the House and Senate for the entire 103rd Congress, Clinton’s first 2 years, where the Debt to GDP ratio still went up, although smaller. Then the next 6 years when the GOP controlled both Senate and House, the Debt to GDP ratio change went down during all three Congresses and actually, it is the only 6 years on your chart that it shows a negative in the change.
--You said -. The surplus left by the Clinton administration quickly evaporated and by the end of the 8 years our Debt-to-GDP ratio had surged from 56.09% to 84.11%.
--Wrong - if you look at the Debt to GDP ratio increase during the 107th Congress after 6 straight years of decrease to negative numbers under 6 years of GOP control of the House and Senate, the Dems take over the Senate and get their way no matter who is in charge of the House. (when Dems controlled the Senate, we all know nothing gets through the Senate if the Dem Leader chooses not to bring up the GOP House bills. The wheeling and dealing has to take place and it is never in favor of the House). We have gone through the same thing since the GOP took the House in Jan 2011. There are 30 job creation related bills sitting in the Senate that the GOP House has passed in the last year, that the Dem Senate Majority Leader has refused to bring to the floor. Plus, Clinton left Bush Jr. a recession as well. (Early 2000s recession, March 2001–Nov 2001).
PART 2 - The collapse of the speculative dot-com bubble, and a fall in business outlays and investments in 2000 and early 2001, and the September 11th attacks brought the decade of growth to an end. Despite these major shocks, the recession was brief and shallow.
ReplyDelete--You say - Then we had 8 years of a completely Republican majority - the President (Bush Jr) and Congress. Surely this combination would be a silver bullet?
--Wrong! The facts are, Bush Jr only had a GOP Senate for less than 4 ½ years of the 8 years. Like you said “we need to be cautious about looking at charts and drawing conclusions.” Both charts used (yours) and the reference you used (http://www.infoplease.com/ipa/A0774721.html) are wrong because you are trying to show a correlation between Party and Effectiveness of fiscal management. If so, it requires that the charts show who controlled the Senate and not just the result of an initial election vote by party, but with the info of who caucused with what party, determining who was controlling the agenda, making the rules and what party the Senate Majority leader was from.
On Jan 3, 2001- until Bush was sworn in, the 107th Congress Senate was majority Dem because it was 50-50 with VP Gore still the swing vote and a Dem was Majority leader until VP Cheny was sworn in a few weeks later and became the swing vote. We were also going into a recession at the time and if I had time to do a bit of research, I‘d bet there was some lightning fast legislation blowing through that Senate those first few weeks of Jan. BUT….Then less than 6 months later on June 6, 2001: Vermont Senator Jim Jeffords, previously a Republican, declared himself an independent and announced he would join the Democratic caucus, giving Democrats control in the Senate with a one-seat. (Even before his party switch, his voting record was liberal which has long been typical of Republicans from New England. By the time of his switch, no Republican Senator had a lower lifetime score from the American Conservative Union.) His vote was never with the GOP majority that first 5 months, as he voted against them and even with VP Cheney, the GOP only had 50 votes and the Dems 51. Democrat Tom Daschle (D-SD) became Senate Majority Leader on June 6, 2001, for the next 1 ½ years until the beginning of the 108th Congress. (See http://en.wikipedia.org/wiki/107th_United_States_Congress)
Then you look at the the 108th and 109th Congresses when the GOP controlled the Presidency, the House, and the Senate for 4 years…Debt to GDP ratio change continues down again during both Congresses.
--Wrong again about the last 2 years of Bush Jr. - Now we are back to the start of the 110th Congress. (Bush’s last 2 years) Jan 2007 started the 110th Congress when Dems took over both the House and Senate.
PART 3- Although a tie of 49-49 in the Senate, The Democratic Party controlled a majority in both chambers for the first time since the end of the 103rd Congress in Jan 1995. Although the Democrats held fewer than 50 Senate seats, they had an operational majority because the two independent senators, Bernie Sanders (I-VT) and Joe Liebermann (I-CT) caucused with the Democrats for organizational purposes. Sen Harry Reid (D-NV) became the Senate Majority leader and Rep Nancy Pelosi (D-CA) became the House Speaker in Jan 2007. (See http://en.wikipedia.org/wiki/110th_United_States_Congress) Exactly 1 year after Dems take full control of the 110th Congress where we had the two lowest years of Debt to GDP ratio change under total GOP control, we have the Late-2000s recession from Dec 2007-June 2009. Not hard to see when the Dems spent like wild drunks for that entire first year. The Debt to GDP ratio change absolutely balloons by a change of +20.53 from 63.58 to 84.11 in one Dem controlled Congress. (See List of recessions in the United States: http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States) and a great chart below that shows the recessions left for Reagan, the recession of the first Bush after 3 years of Dem rule in the House and Senate and the one left by Clinton from the late 2000’s and early 2001 for Bush Jr. Also key is that the recession Reagan inherited was even deeper than the Dec 2007 - June 2009 one, although he managed to keep the Debt to GDP ratio change relatively low and under control by stoking unprecedented growth. (http://en.wikipedia.org/wiki/File:GDP_growth_1923-2009.jpg)
ReplyDeleteI can surely find a very clear correlation between Party and effectiveness of fiscal management, especially if you factor in recessions, but clearly hard not to see the correlation is there without even factoring in wars or recessions. Democrats love to spend wildly! Just think if we just elect a government completely controlled by a GOP Pres, GOP House, and GOP Senate at this time of great economic need in our country. Two of the lowest years of Debt to GDP ratio changes out of the 15 years on your chart occurred under that scenario. The very clear thing about it is, the changes between Debt and GDP ratio change, the debt almost always balloons up under a Congress controlled by Dems. Especially if they have a 60 vote majority and a Dem president like in 2009 and the same three in charge in 2010 and two of the three in charge in 2011. Yet, in the 108th and 109th Congresses controlled by the GOP and a GOP president the Debt and GDP ratio change was so small.
You say - So, for now at least, my conclusion is that neither Party is more fiscally effective than the other. There are too many factors (wars, recessions, etc) that come in to play. I say, I do believe you need to look much closer at the actual data, because the conclusion is crystal clear. This is eye opening: http://www.usgovernmentspending.com/downchart_gs.php?year=1980_2010&view=1&expand&units=p&log=linear&fy=fy12&chart=H0-fed&bar=1&stack=1&size=l&title&state=US&color=c&local=s
PART 4 - Plus, that reference you used (http://zfacts.com/p/1195.html%20) is a mess and the work of blogger who pays little attention. The chart is wrong and the debt is wrong. The actual numbers are: When Bush was sworn in on January 20, 2001, the national debt was $5,727,776,738,304.64. When he left office on January 20, 2009, the national debt was $10,699,804,864,612.13. (which included the bank Bailout of 700 Billion which initially all 198 GOP House members voted against, and mostly every Dem House member voted for. Enough House Blue Dog Dems voted against it and it failed by just a few votes. They finally convinced a few to change their votes and it passed.) The final Bush Jr Nat Debt total also included the first bailout GM and Chrysler. In September, 2008 the Big Three asked for $50 billion to pay for health care expenses and avoid bankruptcy and ensuing layoffs, and Congress worked out a 25$ billion loan. By December, President Bush had agreed to an emergency bailout of $17.4 billion with an initial payment and the remaining funds to be distributed by the next administration in January and February. (even though Pres Obama neglects to mention they would have gone into a normal structured bankruptcy with the loss of worker benefits and pension restructuring long before he took office without Bush actually signing the bill Congress passed and setting up the rules they had to follow) See: (http://en.wikipedia.org/wiki/Automotive_industry_crisis_of_2008%E2%80%932010)
ReplyDeleteWhen Bush Jr left office in Jan 2009, the total his administration added to the Nat Debt in after 8 years was: . $4,972 Trillion. See: (http://nationaldebtbusters.blogspot.com/2009/01/newest-national-debt-statistics-posted.html and http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm) I got the exact figures from numerous websites.
The debt ceiling was raised again on January 30, 2012, to a new high of $16.394 trillion. Remember, the Nat Debt is the amount the US Govt is already obligated to pay out, per the Treasury Secretary during last summer’s Congressional hearings on raising the limit. Most business analysts and economists agree the limit will most likely need to be raised again right before the Nov 2012 election. So, in 3 years, 9 days, the total Pres Obama has added to the Nat Debt is $5.694 Trillion. Hard to imagine the total if he gets a total of 8 years! He may just put the final nail in the country’s coffin and bankrupt us! If you have children or grandchildren or any young people you care dearly about, just imagine the future we are burdening them with. It is tragic!
It is time for a competent economic manager who surrounds them self with actual economists and people who have actually run businesses, created jobs, and met payrolls, to take over. These old anti-war radicals, pretty much Marxist Academia Professors, previously radical community organizers and left wing activists working in this administration will never correct a thing! Just more debt!
Using your reference (http://en.wikipedia.org/wiki/Debt-to-GDP_ratio) the 2011 data is out. The Debt and GDP ratio change went from 93% to about 110%.