By now I’ve pissed off a lot of you. Tuesday, I looked at changes in real GDP per capita over Presidential administrations, on Wednesday I took into account the national debt, thus looking at changes in real GDP less increases in debt per capita over Presidential administrations. Thursday I suggested some reasons why Republican Presidents might perform poorly relative to Democrats, especially when debt is taken into account.
Several readers have suggested the results are nothing more than a coincidence. One might note that I have titled this series somewhat facetiously; even if there is no reason for it other than coincidence, for some reason, we have had higher growth in real GDP less increases in real debt per capita when Democrats have been in office than when Republicans have been in office.
But perhaps, as some readers suggested, the fault lies with Congress. That can be checked.
The growth rate in real (GDP less increases in debt) per capita when both chambers of Congress are Democrat, when both chambers are Republican, and when each chamber is controlled by a different party are as follows:
This would seem to indicate that the results observed by Presidency also apply to Congress…. growth rates of real GDP less real increases in the debt per capita are higher under Democratic Congresses than under Republican Congresses.
But… what about when we take the President into account?
When the President has been a Democrat, growth has been higher when the Congress was also controlled by Democrats.
When the President has been a Republican, growth has been lower when the Congress was also controlled by Republicans. (A mixed congress actually works best under a Republican President – perhaps the split makes it more difficult to make a difficult with Congress to put forth the President’s growth destroying policies.)
Now, these results were somewhat surprising to me. I did not expect a Democratic Congress to perform better than a Republican Congress. I haven’t checked, but I’m told that growth in GDP (nominal, not per capita) is faster under Republican Congresses than under Demcratic Congresses. So what gives? I suspect that despite their respective reputations, Democrats, whether in Congress or in the White House, are less likely to run up the debt. (We’re looking at changes in real GDP less increases in the debt, after all.) Tax and spend seems to be more constructive than don’t tax and don’t spend, especially when the “don’t spend” part drops out of the equation.
As an example… consider the period under Clinton. Growth rates in GDP were higher in the latter half of his term… but the biggest cuts in the deficit (and hence the big slowdowns in the rate of increase in the debt) came early – before the Republican Revolution. Thus, changes in what matters – real (GDP less increases in the debt) per capita were actually slightly higher in the first two years of Clinton’s term than after. Whatever the transmission mechanism, one of the important factors in the difference between Republicans and Democrats is that Republicans are more likely to leave a legacy of debt to the future.
So, in conclusion, whether by coincidence, Act of God, luck, or better policies, growth rates have been higher under Democratic Presidents than under Republican Presidents, and growth rates have been higher under Democratic Congresses than under Republican Congresses.
Debt came 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.
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.
As always, let me know if you want my spreadsheet.