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OpEdNews Op Eds    H2'ed 5/14/20

Things We Should Know but We Don't

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"It is not nearly as widely known as it should be.

The U.S. economy performs much better when a Democrat is president than when a Republican is. By some measures, the partisan gap is so large it strains credulity."

"Presidents and the U.S. economy, an Econometric Exploration"

Alan Blinder and Mark Watson, Economists, Princeton University

THE ECONOMY

We should all know which party is best at handling the economy. But very few of us do. A large portion of Americans believe Republicans are better at managing the economy simply because they have been told that. Few people have the interest to dig into the facts to find out which party actually has the better track record.

Blinder and Watson, Princeton economists, have studied this question, as have others. Their findings leave little doubt that the economy does better under Democrats. Below are econometric data for the past 50 years. This data is readily available in public government databases such as those of the US Department of Labor. You will notice that in this period, Democrats created almost twice as many jobs, four times the stock market returns, 1.6 times the GDP increase, and 3.7 times the income growth compared to Republicans. The economy has done better under Democrats. Yet people who care about the economy vote for Republicans anyway. There is a serious shortfall of the public's awareness of these facts.

Democrat & Republican Econometrics
Democrat & Republican Econometrics
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TAX CUTS

A main tenet of Republican fiscal policy is that tax cuts for the wealthy and corporations lead to an increase in income and jobs. This is called "Trickle Down" economics. There is no evidence to support this claim. The Kansas experiment is one example where the opposite happened. In 2012, Kansas implemented deep tax cuts for the wealthy and for businesses. Soon after the tax cuts, Kansas went into a steep decline in jobs and in state revenues. Republicans have the false idea that employers expand or contract their operations as taxes are lowered or raised. Commercial operations are driven by consumer demands not by taxes. The drop in state revenues meant that Kansas could no longer continue with the same number of teachers, services and operations. Unemployment increased, public schools in rural areas were closed, and government services were reduced. In 2017 Kansas had to repeal all the tax cuts they had given the wealthy.

This is an example of why the economy has done better under Democrats. Unfortunately few voters are aware of this. Meanwhile Republicans continue to give big tax breaks to millionaires while telling us how good things will be when the billionaires have more money.

DEREGULATION

Both the Great Depression (1929) and the Great Recession (2008) started during Republican administrations and with similar causes of illogical insatiable speculations in the sock markets. The Glass-Steagall bill was passed to prevent a repeat of these high-risk speculations that helped trigger the Great Depression. Of course there were other factors involved in the depression, but unsecured high-risk speculation by investment banks played a major roll. In general, Republicans are opposed to all regulations. Glass-Steagall successfully prevented major market crashes for several decades. But then Republicans led the effort to repeal Glass-Steagall. Alan Greenspan, the staunch conservative Chairman of the Federal Reserve for 19 years, was one of the leaders of the repeal effort.

This repeal of Glass-Steagall regulations, led to the Great Recession of 2008. Alan Greenspan admitted to congress that the repeal of Glass-Steagall banking regulations was a big mistake. Even though Greenspan is one of the top economists, he did not anticipate the disastrous effects of removing banking regulations. Republican opposition to appropriate and necessary regulations is one reason the economy has not done as well under Republicans as under Democrats.

FREE MARKETS

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The author was a Spacecraft Engineer on NASA's Apollo program and a Computer Science instructor at California State University. He holds a Master's degree in Systems Engineering from the University of California and has traveled extensively (more...)
 

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