Three Economic Myths Republicans Would Like You to Believe

Sep 11 2010 Published by under Featured News, Issues, White House

Listen very carefully while I try to keep a straight face

Everyone is by now familiar with the image of John Boehner, Republican House Minority Leader, lecturing President Obama on economics.

Everyone is familiar with the 8-year administration of George W. Bush, another Republican, and no one at all is unfamiliar with the economic crisis of 2008, since it laid waste to the world economy.

And everybody remembers that Barack Obama, while campaigning for the presidency, ran not only against John McCain but against the failed Republican economic policies of the past eight years; the same policies that had gotten us into that mess by 2008 and the same policies John McCain was peddling as a way to get us out of them.

President Obama is right today in arguing that a return to those policies will finish us off.

A recent poll shows that most Americans (correctly) blame Bush for our economic woes. But what exactly are we talking about when we speak of Republican and Democratic economic policies? Is one really preferable to the other?

Republicans will give you the unequivocal answer: Democratic economic policy leads to ruination.

Perhaps we should look at some facts before we believe them. After all, we have some elections coming up and we should be as well informed as we can make ourselves.

And remember all the Republican rhetoric as you read this. It’s important.

Over the past 50 years – as long as I’ve been alive – we have done better economically under Democratic administrations.

  • From 1948-2007, per capital GDP (Gross Domestic Product – a measure of a country’s overall economic output) grew 2.78% under Democrats and 1.64% under the Republicans.
  • Family income growth from 1948 to 2005 was 2.6% under Democrats versus 0.4% under Republicans for the bottom 20 percent;
  • This growth was 2.1% vs. 1.9% for the top 5%.

Yes, Virginia, even the rich do better under Democratic administrations.

As Alan Blinder, discussing Unequal Democracy, by Larry M. Bartels, wrote in the New York Times in 2008, “The stark contrast between the whiz-bang Clinton years and the dreary Bush years is familiar because it is so recent. But while it is extreme, it is not atypical.” And as Blinder points out, “That 1.14-point difference, if maintained for eight years, would yield 9.33 percent more income per person, which is a lot more than almost anyone can expect from a tax cut.”

The Democrats have given us solid economic growth, more money than the GOP’s desperate cries for tax cuts can provide; tax cuts that wouldn’t be an issue if the Republicans hadn’t destroyed our economy in the first place.

“Over the entire 60-year period (1948-2007), income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all.” As Blinder puts it, “the bad news for America’s poor is that Republicans have won five of the seven elections going back to 1980.”

We do not have to look far for the reasons for America’s current economic condition.

Tommy McCall, writing in the New York Times, illustrates the relative merits of Republican and Democratic economic policies. If you invested $10,000 in stock market and index securities during the 40 years that Democrats ran the country from 1929-2008, you’d have more than $300,000. The same money, if invested during Republican administrations, would yield you only 51,000 – a staggering one-sixth. If Hoover’s Administration is included, the Republican total shrinks to $11,733.

Boehner’s “Economic Plan” would increase the deficit by 3.781 trillion dollars over 10 years. This is the plan of the party of fiscal responsibility. (For an analysis of the impact of the New Boehner Economic Plan go to http://ndn.org/blog/2010/08/ndn-analysis-fiscal-impact-new-boehner-economic-plan)

We can talk about globalization too, since it’s another favorite Republican rant. It turns out, though the Republicans will never tell you this, that global inequality ceased growing from 1980 to 2000 and in many respects began to shrink and that income inequalities are largest within the nations least touched by globalization. As Professor Timothy Ferris writes in his new book The Science of Liberty (2010), “Ideologues blame globalization for the world’s ills” but economists like Paul Collier know that “We need stronger and fairer globalization, not less of it.”

This may seem shocking but you have to consider that both George W. Bush and Ronald Reagan ran up huge deficits and increased the size of government, and that it was a reviled Democratic president. Clinton, who last balanced the budget and reduced the deficit. Clinton even reduced the size of government.

Reagan increased the nation’s debt from 23% to 69% of the GDP (Harry Truman shrank it 8.6% and Clinton 1.8%).

You might remember too while we go into the final weeks of the pre-mid-term election cycle, that when President Obama was elected Republicans cautioned America with regards to all the Clintonites in his administration and how following into Clinton’s footsteps would harm the country.

I don’t know, but it sounds like we could do a lot worse than to emulate Clinton.

You have to think too about the fear-mongering the Republicans like to engage in. Look at it this way:  As Professor Ferris puts it, if the so-called “urban elites” did what the Republicans say we must do and cut taxes and slash federal government spending, the people worst impacted would be the rugged individualists in the red counties – Sarah Palin’s “real” Americans.

Boehner is apparently unaware of the irony in his words that “”Never before has the need for a fresh start in Washington been more pressing.”

We got that fresh start in 2008, Mr. Boehner. And we’re all better off for it. While things may not be great right now, they could be a lot worse. And if America listens to you, they will be.

23 responses so far