On Tuesday night, Fox Business will host the next debate between the 2016 GOP presidential contenders. All involved are hoping to avoid a repeat of the last such event, the CNBC fiasco which left the moderators embarrassed and the campaigns whining. But while the Republicans have been fretting about the debate format, questions, opening and closing statements, bathroom breaks and even the room temperature, the GOP White House wannabees have a much bigger problem. As a spate of recent analyses once again confirmed, the U.S. economy almost always does better under Democratic presidents.
Going back to Herbert Hoover, the economy grew faster, job creation accelerated, incomes expanded and stock prices jumped higher when a Democrat sat in the Oval Office. And as the New Democrat Network documented last month, the last four presidencies are no exception (see chart above):
Republican Presidencies have led to recessions and larger deficits; Democratic Presidencies have led to growth, job gains and lower annual deficits. In short, the Democratic approach to the economy over the past generation has worked. The Republican approach hasn't. And this dramatic difference becomes even more pronounced when one considers the how shockingly wrong the GOP's bet the house predictions of the failure of both the 1993 Clinton budget and the "job-killing" ACA have been.
Even leaving aside for the moment today's low energy prices and the dramatic reduction in the ranks of the uninsured thanks to the Affordable Care Act, Bill Clinton and Barack Obama literally beat the Bushes:
Job Growth: Over the Clinton and Obama Presidencies, over 30m new net jobs were created. Over the two Bush Presidencies, 3.5m. On a yearly basis, perhaps a more fair comparison, the two Democrats have produced jobs at 7 times the rate of the two Bushes: 2.1m vs. 300,000 per year.
Unemployment Rate: Both Democratic Presidents saw more than a 3% point [drop] in the unemployment rate during their terms. The Bushes saw increases in the unemployment rate by more than 2% and 3% points respectively.
Numbers like these pose a problem for the Republican field trying to win over the Fox Business audience. After all, Jeb Bush has promised to deliver four percent annual economic growth over his presidency. Sadly, no President named Bush achieved that figure even once over 12 years. As for Marco Rubio, who claimed that "jobs are created by the private sector" and that "the government doesn't create jobs outside of the government," there is another small problem. The only jobs created by the last Republican president were government jobs. As Paul Krugman explained with a single chart:
During the 2012 campaign, Mitt Romney and his conservative amen corner repeatedly claimed "Obama made the economy worse." It's bad enough for Republicans that their fraud was easily debunked at the time. As a new analysis from Alan Blinder and Mark Zandi showed, the combined federal efforts to rescue the American economy from its greatest collapse since 1929 "dramatically reduced the severity and length of the meltdown that began in 2008; its effects on jobs, unemployment, and budget deficits; and its lasting impact on today's economy." The impact of the measures taken in 2008 and 2009, including the Troubled Asset Relief Program (TARP), the $800 billion Obama stimulus program, Obama's auto bailout and the Federal Reserve's "quantitative easing," is simply staggering. Without those policy responses--almost all of which were opposed by Congressional Republicans--Blinder and Zandi estimate:
- The peak-to-trough decline in real gross domestic product (GDP), which was barely over 4%, would have been close to a stunning 14%;
- The economy would have contracted for more than three years, more than twice as long as it did;
- More than 17 million jobs would have been lost, about twice the actual number.
- Unemployment would have peaked at just under 16%, rather than the actual 10%;
- The budget deficit would have grown to more than 20 percent of GDP, about double its actual peak of 10 percent, topping off at $2.8 trillion in fiscal 2011.
Now, this isn't the first time Bill Clinton's former head of the Council of Economic Advisers and John McCain's 2008 economic adviser touted the success of the stimulus. In the summer of 2010 the duo similarly concluded, "We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0." But Blinder and Zandi had plenty company from the overwhelming consensus of American economists including the nonpartisan Congressional Budget Office (CBO).
As the Washington Post reported in June 2012, the House Budget Committee heard testimony from the CBO chief answering a simple question: did the $787 billion Obama stimulus work? Unfortunately for Republican propagandists, Elmendorf clearly refuted Mitt Romney's claim that the American Recovery and Reinvestment Act (ARRA) was "the largest one-time careless expenditure of government money in American history."
Under questioning from skeptical Republicans, the director of the nonpartisan (and widely respected) Congressional Budget Office was emphatic about the value of the 2009 stimulus. And, he said, the vast majority of economists agree.
In a survey conducted by the University of Chicago Booth School of Business, 80 percent of economic experts agreed that, because of the stimulus, the U.S. unemployment rate was lower at the end of 2010 than it would have been otherwise.
"Only 4 percent disagreed or strongly disagreed," CBO Director Douglas Elmendorf told the House Budget Committee. "That," he added, "is a distinct minority."
Not content with that response, Kansas Republican Rep. Tim Huelskamp tried again. "Where did Washington mess up?" Huelskamp demanded. "Because you're saying most economists think it should've worked. It didn't." As the Post's Lori Montgomery detailed, Elmendorf drove home the point:
Most economists not only think it should have worked; they think it did work, Elmendorf replied. CBO's own analysis found that the package added as many as 3.3 million jobs to the economy during the second quarter of 2010, and may have prevented the nation from lapsing back into recession.
As it turns out, the Obama stimulus would have even more effective had it not been offset by draconian spending cuts by state and local government. By May 2013, the Hamilton Institute estimated those austerity policies cost 2.2 American million jobs and resulted in the slowest recovery since World War II. In April 2012, the Economic Policy Institute explained:
The current recovery is the only one that has seen public-sector losses over its first 31 months...If public-sector employment had grown since June 2009 by the average amount it grew in the three previous recoveries (2.8 percent) instead of shrinking by 2.5 percent, there would be 1.2 million more public-sector jobs in the U.S. economy today. In addition, these extra public-sector jobs would have helped preserve about 500,000 private-sector jobs.
Even with these setbacks from the states, President Obama like Bill Clinton easily outperformed his Republican predecessor. And Obama did it even as he cut annual budget deficits by two-thirds and kept spending flat since he first took the oath of office.
Regardless, the United States has outperformed most of its global economic competitors, especially in Europe where austerity was the choice of policymakers. As Paul Krugman summed it up in April, the Republican austerians here at home still need to learn their lesson:
Since the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer, with the depth of the suffering closely related to the harshness of the austerity. In late 2012, the IMF's chief economist, Olivier Blanchard, went so far as to issue what amounted to a mea culpa: although his organization never bought into the notion that austerity would actually boost economic growth, the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.
As for the likes of Marco Rubio, Ben Carson, Jeb Bush, Donald Trump and company prepare to battle it out in Milwaukee, the media may focus on credit card expenses, Baby Hitlers and who stabbed or hammered who. For her part, tonight's Fox Business moderator Maria Bartiromo promised to steer clear of the pitfalls of the last one:
"After that [CNBC] debate, I realized, I knew my marching orders. It was clearer than ever what my marching orders are, and that is to help the viewer, help the voter better understand what each candidate's plan is; is it a realistic plan, can it work and how is it different from the next guy or gal, and that's what I plan to focus on."
But if she really wants to inform her viewers, Bartiromo should ask the assembled Republicans why voters should believe any of them when it comes to the economy. After all, the 800-pound donkey in the room is that Democratic presidents, Barack Obama included, consistently outperform their Republican counterparts.