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Guest Column
Huh, so the economy performs better under Democratic presidents | Column
Should pro-business Republicans consider changing their party?
President Joe Biden speaks after signing an executive order relating to U.S. supply chains, in the State Dining Room of the White House on Wednesday.
President Joe Biden speaks after signing an executive order relating to U.S. supply chains, in the State Dining Room of the White House on Wednesday. [ EVAN VUCCI | AP ]
Published Feb. 27
Updated Feb. 27

Florida senator and wannabee president Marco Rubio has tweeted that President Joe Biden’s Cabinet picks went to Ivy League schools, have strong resumes, attend all the right conferences and will be polite and orderly caretakers of America’s decline. This was a magnificent display of derision with a dollop of condescension by the Sunshine State’s senior senator. In contrast, he supports America’s greatness.

Murad Antia is a finance instructor in the Muma College of Business at USF
Murad Antia is a finance instructor in the Muma College of Business at USF [ USF ]

But if the good senator is really vested in America’s greatness, he might want to nix any presidential aspirations and support the 2024 Democratic ticket. Better still, perhaps he should switch party affiliations. In fact, all patriotic conservatives should do so, and that’s something for attendees at this weekend’s Conservative Political Action Conference in Orlando to ponder.

Here’s why. In a 2016 paper published in the American Economic Review, Princeton economists Alan Blinder and Mark Watson compared economic performance between Democrat and Republican presidents going back to Franklin D. Roosevelt (I’ve paraphrased many of their phrases in this piece.) They found a systematic and large gap in the economy’s performance between the two. Using real GDP growth over the full sample, the gap is 1.8 percentage points, 4.3 percent for Democrats versus 2.5 percent for Republicans.

From Presidents and the U.S. Economy: An Econometric Exploration
From Presidents and the U.S. Economy: An Econometric Exploration [ Provided ]

The study includes Barack Obama’s first term, when he inherited an economy mired in one of the worst recessions ever, leaves out his second term when growth rebounded, and leaves out Donald Trump’s term altogether, which experienced weak performance. Including those years would make the difference even larger. And if data prior to Roosevelt’s presidency were used, the spread would have been even wider because it would have included Republican, Herbert Hoover’s dismal performance during the Great Depression.

This difference is stunningly large relative to the sample average. The growth advantage corresponds with Democratic control of the White House, and independent of which party controls Congress. On the spending side, much of the Democratic-Republican growth gap in the United States comes from greater business spending on fixed investment and greater consumer spending on durables. And it comes mostly in the first year of a presidential term. The superior growth record cannot be attributed to inheriting superior initial conditions.

Democrats would probably like to attribute a large portion of the Democratic-Republican growth gap to better fiscal and monetary policies, but the results do not support such a claim. If anything, both fiscal and monetary policy actions seem to be a bit more pro-growth when a Republican was president, even though GDP grows significantly faster under Federal Reserve chairpersons appointed by Democrats than by Republicans.

The data shows that GDP growth rises when Democrats get elected and falls when Republicans do. There are no exceptions. Closer inspection of the data reveals that the five highest growth rates in the sample all came under Democratic presidents, while four of the five lowest came under Republicans. And the Democratic-Republican gap is not the result of a few outliers. Dropping the four largest and four smallest quarterly growth rates for both Democrats and Republicans reduces the Democratic-Republican gap to 1.6 percentage points.

And it is not only about economic growth. Stock market performance favors Democrats by a wide margin. Aren’t Republicans supposed to be the pro-business party? Also, the unemployment rate fell during Democratic presidential terms, while it rose during Republican terms.

What is clear is that there is zero evidence that tax cuts, deregulation, trickle-down economics — or whatever Republican policies were prior to Ronald Reagan — has led to superior economic growth. Republicans talk a good game, but as the old Wendy’s commercials asked, Where’s the Beef? Their pro-business, lower taxes, fewer regulations, or any of their prior policies have not translated into superior economic numbers. The proof of the pudding is in the data.

Lastly, the trade deficit was worse over the past four years (Trump) compared to the prior four years (Obama). What happened? The greatest dealmaker in history was going to win-win-win on trade deals. Didn’t happen. Given all these measures, I hope attendees at this weekend’s Conservative Political Action Conference switch their party affiliation. Pronto.

Murad Antia teaches finance at the Muma College of Business, University of South Florida, Tampa.