Almost from the first day President Obama took office, conservatives have howled about his economic policies. They blamed him for growing the national debt. They blamed him for record deficits. They created the Tea Party to protest taxes, even though they were at historic lows.They labeled Obama a socialist for saving the auto industry. They called him a fascist and a communist for signing the Affordable Care Act. And they campaigned on the need for government budget cuts in 2010 and 2012.
Democrats countered that the growing debt and deficits were the result of President George W. Bush’s policies. For his part, President Obama refused to place blame on the previous administration. Instead, he pointed to the irresponsible behavior of Wall Street and the resulting economic crash. And though he has cut the deficit faster than any previous president, he has repeatedly stated that unemployment is still too high and the economy too fragile for more draconian cuts.
So what’s the reality? Who’s right?
Bob Deitrick, a principal of Polaris Financial Partners, and Lew Goldfarb, a business attorney, conducted an exhaustive study of US presidencies from 1929 to 2009. That particular time period was selected because each party controlled the White House for exactly 40 years during that time. What Deitrick and Goldfarb found was that Democratic presidents have been better for the economy than Republicans! Their findings were published in the book Bulls, Bears and the Ballot Box.
Interestingly, the administration that ranked highest was the JFK/LBJ administration. (The authors combined the two due to Kennedy’s assassination.) In descending order, the next five were Clinton, FDR, Eisenhower, Truman and Reagan.
The book did not cover Obama’s performance since he had not been in office long enough to make judgments. Yet when Deitrick discussed more recent data in a Forbes interview, he declared, “By all measures, President Obama has outperformed every modern president.” That’s because Obama has reduced the deficit from 10 percent of GDP (Gross Domestic Product) at the end of the Bush presidency to just 4 percent today! This is more the result of growth than budget cuts. It’s the result of Obama’s stimulus plan combined with his decision to save the auto industry. And as the economy continues to grow, the deficit is expected to be just 2 percent of GDP by 2015.
Obviously, presidents who refuse to cut taxes for the wealthy and who refuse to start unnecessary wars are good for the economy.
Still, President Obama is facing a particularly troubling economic reality – that of income inequality. As a report by the nonpartisan Congressional Budget Office has shown, from 1979 to 2007, the share of income for the top fifth of our population has grown 10 percent. During the same period, all other households saw their share of income decline by 2-3 percent.
This can be fixed. But it will likely take more than a Democrat in the White House. It will take a Democrat-controlled Congress.