Yesterday I had a post looking at changes in real GDP per capita over Presidential administrations beginning with Ike. However, real GDP per capita can be boosted by Federal spending, and in any given year, Federal spending can be paid for by debt. Because, as PGL and others keep reminding us, increasing the debt is merely a way to postpone taxes (preferably into someone else’s administration), it makes sense to look at the growth per capita in the real GDP less the change in the real debt.
Data for the total debt held by the public from from 1950 to 2005 can be obtained from the Treasury; this data set provides data from 1953 to 1985 for December 31st of each year, and for 1985 to 2005 for September 30th of each year. Data for September 2006 was also obtained from the Treasury.
As in yesterday’s post, real GDP per capita came from BEA’s NIPA Table 7.1. However, to match the debt series, this time I used Q4 data through 1985, and Q3 data thereafter.
Table 1 below shows the annualized percentage change in real GDP less debt per capita. It also shows the results for the best and worst years or the administration, and the average of the annual growth rates when the best and worst years are left out. Growth rates are calculated using the last year before the administration took office to the last full year for which the administration was in office.
Table 2 is similar to Table 1, but it assumes an administration may have little control over results for its first year. Thus, growth rates are calculated using the first year in which the administration is in office to its last full year in office.
Whether we look at things Table 1’s way, or Table 2’s, the 3 best performing administrations were the 3 Democratic administrations. If I remember my probability theory, if you have an urn with 8 balls that differ only by color, where are 3 black balls and 5 are white balls, the odds of randomly selecting all 3 that are white when 3 of them are removed from the urn are (3/8) * (2/7) * (1/6) or 1.8%.
Put another way, Democratic administrations produce better growth than Republican administrations. Either its because Democratic administrations have tended to behave more rationally, or its because God really, really doesn’t like it when we vote for Republican Presidents. Take your pick.
Note… in the comments to yesterday’s post, it was noted that Congress has a lot to do with this. I hope to have a follow up using Congressional data some time soon.