Ed Lotterman: Economic history favors Democratic presidents | Edward Lotterman's columns | Idaho Statesman
Former Congressman Newt Gingrich recently asserted that, since Ronald Reagan, the Republicans have been ”the party of paychecks“ and the Democrats ”the party of food stamps.“ It was a snappy sound bite, but the assertion that job creation is stronger under Republican presidents than under Democrats is at odds with the historical record. This is true both for the entire post-World War II period and the three decades since Ronald Reagan was elected.
But first, a reminder that presidents have less influence over the economy than most people think. Congress and the Federal Reserve also play roles in setting economic policies. Moreover, other factors, such as technological change and international wrangling, usually are more important.
Moreover, to the extent that presidential actions can affect the economy, there is usually a lag of a year or two after inauguration day. But Gingrich avoids that fact because it would exonerate Barack Obama almost completely of anything that has happened in the 20 months since he took office.
Until Obama took office, the administrations with the highest average unemployment rates were those of Gerald Ford and Ronald Reagan, a fact some partisans like Gingrich prefer to forget, just as Democrats ignore the fact that unemployment under John Kennedy was a full percentage point higher than under the Eisenhower administration that JFK had excoriated for economic ineptitude in the 1960 campaign.
But what is striking is how little difference there is between the averages for the two parties over the long run. Yes, the unemployment rate averages about a half-point higher during the terms of Republican presidents, both in the entire post-WWII period and in the past 30 years, but that difference is small relative to absolute levels of 5 percent to 6 percent.
The difference in growth rates for total numbers of jobs is more striking, with average growth more than twice as large during Democratic presidencies as during Republican ones.
Most Americans age 60 and older probably would remember the 1960s as a time of economic growth, despite much social and political conflict. That is borne out by the 3.3 percent average annual growth of jobs that prevailed during the Kennedy-Johnson years. But few would think that the Carter years came close at 3.1 percent.
When one thinks about demographic change in the period, this makes sense, however. The first baby boomers graduated from high school the spring after Kennedy was assassinated and from college the year Nixon was elected. This stream of new working-age people became a torrent in the 1970s, boosting job growth numbers for the entire decade. But by the time Ronald Reagan was sworn in, the youngest boomers were 16 and the baby boom-driven expansion of the labor force was largely history.
Similarly, increases in the proportion of women working outside the home were greatest from the late 1960s to the late 1980s. This added to the baby boom shock, boosting labor force growth. But the major change was largely complete by the 1980s and did not similarly bolster job growth in the Reagan years.
Responsible economists would not attribute causation to the simple question of which party has the White House. That would be a post-hoc fallacy. But it is the argument that Gingrich makes.
If we take into account that making policy changes takes time, and that the effects of such changes take even longer and adjust the data for this lag, the numbers look different in some cases. This is particularly true when such a lag shifts a recession from one presidency to another, as the one in 1960-1961 does for Eisenhower and Kennedy or the back-to-back recessions in 1980-1982 do for Carter and Reagan. But the overall pattern of somewhat better labor market conditions during Democratic presidencies, including in the past 30 years, remains similar.
Economist Edward Lotterman teaches and writes in St. Paul, Minn. Write him at ed@edlotterman.com.
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