Democrats and Republicans Fix the Economy
Time to compare how Democrats and Republicans fix the economy? Let's do it. Let's start by comparing the Bill Clinton and George W. Bush economic performances.
When Bill Clinton took office as President in 1993, the GDP was at $7,451 billion (at the end of 1992). By the end of 1993 GDP had reached $7,952 b, and it continued to advance every year of his presidency, reaching $9,888 b by the end of 2000, which was an increase of $2,437 b, the longest advance of GDP in American history. During George W. Bush's presidency, the first year, in 2001, the GDP fell initially to $9,876 b, which can be assumed to be a result of Clinton's policies, but by the end of 2001 it had rebounded to $9,910 b, after which it advanced continuously to $11,676 b at the end of 2007, the latest figure available. This represents an increase of $1,788 b during the seven years of his presidency. Were we to compare this figure with that of Clinton at the end of seven years, we find an increase of $2,221 b for Clinton. That is: the gain under Clinton for seven years was $2,221 b; under Bush, $1,788 b. Now, to continue to the present date of April 3, 2008, the economy is reported to be heading towar a recession. About that, we'll have to wait and see. In any case, the economic growth under Bush has been the slowest of any postwar expansion, averaging just 2.8 percent a year, far below the 4.8 percent average posted by earlier postwar business cycles of similar length.
Now to look at the rate of unemployment. Following the same timetable as above, unemployment during the first seven years of Clinton's presidency dropped from 6.9 percent in 1993 to 4.0 percent in 2000, a drop of 2.9 percentage points. During the first seven years of Bush's presidency, unemployment rose from 4.7 percent in 2001 to 5.3 percent in 2008, an increase of 0.6 percentage points.
What about those budget deficits Democrats are so often accused of? Clinton's presidency ended with a surplus of $5.6 trillion. Bush spent all of that and had accumulated a deficit of $8.5 trillion by July, 2006. It continues to grow.
How did they do this? There are two major tools available: monetary policy and fiscal policy. As for monetary policy, both parties generally favor lowering the rate of interest to stimulate the economy and both have had occasion to do this during their tenure. Although this can be done only by the Federal Reserve, the Fed has during these two presidencies been quite cooperative, lowering rates when indicated.
This leaves fiscal policy, the other major tool. The Democratic philosophy is to pursue a progressive tax structure and to use government spending as a stimulus as needed. Clinton as soon as he assumed the presidency raised taxes on the top brackets from 35 percent to 39 percent and lowered taxes on the lowest brackets by increasing the Earned Income Tax Credit. These actions bore fruit with eight years of increasing GDP, as noted above, and even a budget in surplus (the last budget surplus prior to Clinton's had been achieved by Lyndon Johnson in 1969.) The Republicans, on the other hand, tend to favor lowering taxes on the rich to stimulate the economy through increased investment. This policy has been pursued by Bush, with the results noted above--less growth and more unemployment than under Clinton, plus something we haven't yet noted here, huge budget deficits. The $3 trillion budget proposed by Bush for Fiscal Year 2009 has a proposed deficit of $400 billion, along with cuts in Medicare and Medicaid, health and human services, and education--cuts that will fall more heavily on lower income recipients. The Bush budget deficits, I would suggest, have been a major factor in keeping the economy going during most of the Bush presidency, although now, even with huge deficits, we appear to be going toward recession.
One extraneous point, if I may: I would fault Clinton for not using some of his surplus for needed social programs and/or such useful national projects as improving Amtrak.
When Bill Clinton took office as President in 1993, the GDP was at $7,451 billion (at the end of 1992). By the end of 1993 GDP had reached $7,952 b, and it continued to advance every year of his presidency, reaching $9,888 b by the end of 2000, which was an increase of $2,437 b, the longest advance of GDP in American history. During George W. Bush's presidency, the first year, in 2001, the GDP fell initially to $9,876 b, which can be assumed to be a result of Clinton's policies, but by the end of 2001 it had rebounded to $9,910 b, after which it advanced continuously to $11,676 b at the end of 2007, the latest figure available. This represents an increase of $1,788 b during the seven years of his presidency. Were we to compare this figure with that of Clinton at the end of seven years, we find an increase of $2,221 b for Clinton. That is: the gain under Clinton for seven years was $2,221 b; under Bush, $1,788 b. Now, to continue to the present date of April 3, 2008, the economy is reported to be heading towar a recession. About that, we'll have to wait and see. In any case, the economic growth under Bush has been the slowest of any postwar expansion, averaging just 2.8 percent a year, far below the 4.8 percent average posted by earlier postwar business cycles of similar length.
Now to look at the rate of unemployment. Following the same timetable as above, unemployment during the first seven years of Clinton's presidency dropped from 6.9 percent in 1993 to 4.0 percent in 2000, a drop of 2.9 percentage points. During the first seven years of Bush's presidency, unemployment rose from 4.7 percent in 2001 to 5.3 percent in 2008, an increase of 0.6 percentage points.
What about those budget deficits Democrats are so often accused of? Clinton's presidency ended with a surplus of $5.6 trillion. Bush spent all of that and had accumulated a deficit of $8.5 trillion by July, 2006. It continues to grow.
How did they do this? There are two major tools available: monetary policy and fiscal policy. As for monetary policy, both parties generally favor lowering the rate of interest to stimulate the economy and both have had occasion to do this during their tenure. Although this can be done only by the Federal Reserve, the Fed has during these two presidencies been quite cooperative, lowering rates when indicated.
This leaves fiscal policy, the other major tool. The Democratic philosophy is to pursue a progressive tax structure and to use government spending as a stimulus as needed. Clinton as soon as he assumed the presidency raised taxes on the top brackets from 35 percent to 39 percent and lowered taxes on the lowest brackets by increasing the Earned Income Tax Credit. These actions bore fruit with eight years of increasing GDP, as noted above, and even a budget in surplus (the last budget surplus prior to Clinton's had been achieved by Lyndon Johnson in 1969.) The Republicans, on the other hand, tend to favor lowering taxes on the rich to stimulate the economy through increased investment. This policy has been pursued by Bush, with the results noted above--less growth and more unemployment than under Clinton, plus something we haven't yet noted here, huge budget deficits. The $3 trillion budget proposed by Bush for Fiscal Year 2009 has a proposed deficit of $400 billion, along with cuts in Medicare and Medicaid, health and human services, and education--cuts that will fall more heavily on lower income recipients. The Bush budget deficits, I would suggest, have been a major factor in keeping the economy going during most of the Bush presidency, although now, even with huge deficits, we appear to be going toward recession.
One extraneous point, if I may: I would fault Clinton for not using some of his surplus for needed social programs and/or such useful national projects as improving Amtrak.
posted by Gladys at 7:14 PM
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