Congress or the President – Who Affects the Economy More?

Regular readers know I’ve been working on a book looking at how various series from economic growth to crime have changed over the length of each presidential administration since Ike. Republicans, especially when they notice that a bunch of the series seem to indicate that when economic growth is fastest we tend to have a Democrat in the Oval Office, keep telling me it’s Congress.

While I’ve addressed the issue, it doesn’t seem to go away. So I was thinking of how I could nail this coffin shut once and for all without resorting to statistics. And I’d like to share a graph I put into the book last night…

But first, let me reprint a graph I’m kind of fond of… the change in the percentage of people’s income they paid in taxes over the length of each administration:

(Data from here: IRS)

Republicans insist that cutting taxes leads to higher growth. The data doesn’t seem to go out of its way to support that particular story line, but there does seem to be a relationship between taxes and real GDP per capita growth as this other graph I’ve posted before indicates:

(Data comes from the BEA’s NIPA table 7.1.)

Anyway, I think the first graph seems to show reasonably clearly that the President has at least some influence on the tax bite. But what about Congress? Surely, they must have a humongolous effect too, right? And obviously, we should expect to see a Republican Congress ripping and shredding into the amount that people pay in taxes, and a Democratic Congress taxing up a storm to steal money from Paris Hilton and give it to some welfare queen, right?

Maybe not:

There are a lot of things in this graph that cast doubt on the notion that Congress is in the driver’s seat when it comes to taxes. Let me just point out the most obvious one – the tax bite went up quite a bit during the Republican Revolution.

I put the data as well as step by step calculations here:
Tax Bite
Real GDP per capita

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Update… minor change to one sentence for readability.