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Who do you favor in November and why?

Written by Reggie Middleton
Friday, 05 September 2008
Okay, it's time to light the fuse under the political stick of dynamite. Who do you favor in November and why? From war to economics, the two presidential candidates are as different as black and white (seriously, no pun intended). From the NY Times : Many Americans know that there are characteristic policy differences between the two parties. But few are aware of two important facts about the post-World War II era, both of which are brilliantly delineated in a new book, “Unequal Democracy,” by Larry M. Bartels, a professor of political science at Princeton. Understanding them might help voters see what could be at stake, economically speaking, in November. I call the first fact the Great Partisan Growth Divide. Simply put, the United States economy has grown faster, on average, under Democratic presidents than under Republicans. 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. Data for the whole period from 1948 to 2007, during which Republicans occupied the White House for 34 years and Democrats for 26, show average annual growth of real gross national product of 1.64 percent per capita under Republican presidents versus 2.78 percent under Democrats. 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. Such a large historical gap in economic performance between the two parties is rather surprising, because presidents have limited leverage over the nation’s economy. Most economists will tell you that Federal Reserve policy and oil prices, to name just two influences, are far more powerful than fiscal policy. Furthermore, as those mutual fund prospectuses constantly warn us, past results are no guarantee of future performance. But statistical regularities, like facts, are stubborn things. You bet against them at your peril. The second big historical fact, which might be called the Great Partisan Inequality Divide, is the focus of Professor Bartels’s work. It is well known that income inequality in the United States has been on the rise for about 30 years now — an unsettling development that has finally touched the public consciousness. But Professor Bartels unearths a stunning statistical regularity: Over the entire 60-year period, income inequality trended substantially upward under Republican presidents but slightly downward under Democrats, thus accounting for the widening income gaps over all. And the bad news for America’s poor is that Republicans have won five of the seven elections going back to 1980. Related Articles/Posts No related articles/posts were found Add this page to your favorite Social Bookmarking websites Set as favorite Bookmark Email This Hits: 512 Trackback(0) TrackBack URI for this entry Comments (8) Subscribe to this comment's feed ... written by Tony Piggs, September 05, 2008 There is also a paper in the Journal of Finance that finds that the stock market outperforms under democratic presidents versus republican presidents - and it doesn't even include W's golden years in its analysis! +0 ... written by George Schubert, September 05, 2008 I have to beg to differ on the income inequality growth idea. Check out Pally's book called "economic facts and fallacies" +0 So what constitutes Middle Class? written by Kevin Hall, September 05, 2008 Okay, first of all, I'll show my hand. I'm voting for McCain. I voted for him 8 years ago against GW and I still support him. I'm one of those Republicans that drive a Prius, and think that he has enough support to cross the aisle to get something done and is maverick enough to piss off his own party. But here is my burning question. Obama keeps pounding on taxing the rich more and make lives better for the middle class. WHAT IS THE DEFINITION OF MIDDLE CLASS? How much income do you have to make to exceed the limit (and now be part of Obama's tax target)? I know McCain skirted the issue with the smart-a$$ comment about needing to make $5,000,000 to be considered rich. But I still don't know what the "politician's" threshold is for middle class? Is is an AGI greater than $159,000 (the ROTH IRA limits)? My wife works full time as a teacher, I work fulltime as a real estate office manager, and teach part-time at the community college and have a small handyman business. I guess I need to figure out if I need to work (and earn) less or more? +0 ... written by Shawn McFarlane, September 05, 2008 I would guess that most of this blog's readers care more about financials market performance than GDP, unless they invest primarily in Intrade GDP prediction contracts... I need to dig up the source to prove it, but I'm pretty sure that a naive analysis of White House occupancy masks important differences in economic and market performance between "divided govt" (Congress and White House controlled by different parties) and "unified govt." If memory serves, the best S&P and bond market performance was during divided government. Also, we all know that fiscal and monetary policy works with a lag -- often a long lag. So we need to be careful about which months and quarters go into which party's P&L column. Who deserves credit for the upcoming quarters? Will the new President's policies be enacted by 1/1/09? Or even by 3/31/09? Lastly, Reggie, I won't take the bait on predicting the election. Go to Intrade to see what people who are willing to put actual money on it are doing, and read Justin Wolfers' papers on why they're better forecasters than Keith Olberman, Jon Stewart or Bill O'Reilly. +1 ... written by Reggie Middleton, September 06, 2008 Keith Olberman, Jon Stewart and Bill O'Reilly are entertainers, not forecasters. Actually, Bill O'Reily is something else, but I won't go there since this is a family blog +0 ... written by Reggie Middleton, September 06, 2008 Intrtade is a fascinating concept though, and I am a firm believer in putting your money where your mouth is. Those that really do tend to know what they are doing, and vice versa. That is why I tell my friends they should never buy investment advice from someone who doesn't rely on it his/herself. +1 ... written by James Morales, September 07, 2008 Obama's gonna win barring some disaster in the debates. As long as he comes off as competent vs McCain he wins going away. Demographic trends and a desire to reboot the country are what will carry him. As for my personal reasons for supporting him, we gotta get the Republicans as far away from power as possible. Any party that could have been associated with the fiasco called the Bush years is not qualified to hold office. It's scary to think Jeb is probably going to run in 2012 or '16. Also as a person of color and an investor, diversification is always good right? It's way past time we added some low correlated assets to the US' political portfolio...... +1 ... written by Peter Yunis, September 08, 2008 Well statistics are surely whatever you want of them. Tracking these statistics is meaningless. Clinton's economics got the boom of the fall of Communism, a greater global economy (both of which are Reagan's doing) and the tech run up. Bush on the other hand had to suffer a 75% decrease in tech stocks which was none of his doing. This is of course in no way supporting the "spend like a crack addict with a grand in cash in his pocket" policies of the Republicans from 2000-2006. Just a showing that matching the numbers up is impossible. Democrats usually get kicked out of office once they have run our country into the ground (Jimmy Carter) and then the Republican replacements have to suffer the consequences. Bush has done a lousy job on the economy but it will continue for future presidents as the US has reached a tipping point. The truth is there is not much any president can do without completely tearing down the entire system. As for who I support, unfortunately I have to pick one of the above. If I have to it is McCain. I happen to be a capitalist and all I hear from the Obama camp is socialism. No one can argue that socialism is his, and progressives, true beliefs. I just spent two weeks in Europe. Trust me, we don't want to be more like Europe. Furthermore, I am an originalist when it comes to our Constitution so the election of judges is crucial. We can not afford to have a court that rules like in the Kelo decision that government has a right to take our private property if they can make more money on it by giving it to someone else. Liberal judges decide that where the Constitution says that government can take property for public purposes that means that raking in more tax revenues is a public purpose. I believe that a public purpose is a bridge or highway. Either way we are screwed. Our country is completely bankrupt from 50 years of politicians selling us down the river so that they can get elected. The results, as witnessed today, is that the government is willing to spend $200 billion of our money to bail out rich bankers and foreign debt holders and all it took was $200 million in bribes from the Fannie and Freddie guys. Isn't that a great return on your investment, turn $200 mil into $200 billion in ten years. And what do our politicians care, they won't be around when the "chickens come home to roost." +0 Write comment Name Email Website Title Comment smaller \| bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Write the displayed characters
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