gracchusdixit

The Republican Party and its paid propagandists would have us believe that Democrats are wasteful spendthrifts who produce nothing but disaster for the financial markets, “job creation,”  and the broader economy.   Every Republican candidate for President recites this refrain as if it were the Pledge of Allegiance, and some, like Mitt Romney, have predicated their entire candidacies on it.  The trouble is, it’s a complete and utter myth.  Either that, or a bold-faced lie.

I recently examined the performance of the S&P 500 since 1926, the first year for which data are available.  I did some quick arithmetic to calculate the annual returns produced under Democratic and Republican presidents.   Guess what?   Over the last 84 years, the average return produced under Republican administrations was 8.1 percent.  Under Democrats, it was 15.5 percent.

But maybe that’s unfair.  Maybe Republican presidents were dealt a bad hand of cards by their spendthrift Democratic predecessors, and it took them a few years to clean things up.  So, I looked at the difference between first and second terms in office.  Under second-term Democrats, returns averaged 14.6 percent.  Under the first-term Republicans who succeeded them, they dropped to seven percent.  Oops.

But did things get better when Republicans got their own second four years in office?  They did.  Returns during Republican second terms rose to 11.5 percent.  That’s better—but still an embarrassing four points lower than under the Democrats they replaced.  Another oops.

And what about Ronald Reagan, whose presidency, we are constantly told, was a boom for the markets and led to a booming economy?  Under Reagan, the S&P produced a 14.7 annual return.  That’s certainly better than the overall Republican record.   But it’s still lower than the Democratic average.  Indeed, it’s little better than the record of Reagan’s much-maligned predecessor, Jimmy Carter, and it’s much worse than the returns produced during the first two years of the Obama administration.  Oops again.

Of course, the stock market and the overall economy aren’t the same thing.   Most Americans are far more worried about their paychecks than their portfolios.  So, I also took a look at GDP, the broadest measure of economic activity.   Since 1926,  our total economy grew, on average, 1.8 percent a year under Republicans and 4.8 percent under Democrats.  That may be the biggest oops of all.

I’m not at all sure that I will vote for Barack Obama next November, but if I do, it may be for an altogether counter-intuitive reason:  another four years of a Democrat in the White House will be better for business.  You’re not seeing double.  That’s what I said:  “Better for business.”