The Great Depression started while Herbert Hoover was president and ended while Franklin Roosevelt was president, but the story doesn’t end there. From the Great Depression to the current day, the economy has performed better during Democratic administrations and worse during Republican Administrations.
Democrats and Republicans have different ideas about how to stimulate growth. History has shown that the Democratic ideas work better than the Republicans ideas.
Republicans try to stimulate growth from the top. Their favorite approach is to cut income tax rates. Income tax rate cuts give more money to wealthy people, less money to middle income people, and almost no money to poor people.
Republicans say wealthy people will use their tax savings to create jobs, but this is nonsense. Job creators don’t create jobs because they have money in their pockets. They create jobs when their customers have money in their pockets.
Democrats understand that the best way to grow the economy is to stimulate it from the bottom. That puts money in the pockets of people who will spend it. Businesses need employees to serve customers. When people spend more money, businesses hire more employees.
Bill Clinton raised taxes on the wealthy and reduced military spending. Republicans predicted Clinton’s tax increases would hurt the economy. Clintonomics eliminated the budget deficit and created the only budget surplus in modern American history. Clinton’s tax increases were followed by one of the most robust economic expansions in American history.
George W. Bush cut taxes in 2001 and 2003. Wealthy people got most of the cuts. Middle income people saw small cuts. Poor people saw safety net cuts.
The Bush tax cuts were followed by a short term improvement in the economy, but the longer term impact of Bush’s economic policies was the Great Recession. Bush inherited an annual budget surplus of $236 billion, but he accumulated a $2 trillion deficit over the course of his administration. The stock market fell 25% during the Bush administration, and American employment fell by more than 4.5 million jobs. Bush’s Great Recession was the worst period of job destruction since the Great Depression.
Barack Obama’s payroll tax cuts put money in the hands of middle and lower income Americans. Despite Republican resistance to further stimulus, Obama’s actions were followed by gradual economic recovery. The stock market started the longest bull market in modern history, and employers resumed a steady pace of job creation. The stock market grew more than 148% during Obama’s time in office. In other words, the Dow-Jones closed on the last day of the Obama Administration at two and one half times the closing value on the first day of the Obama Administration.
The take-away message: The economy does better under Democrats. The stock market does better under Democrats. Job creation is better under Democrats. Everyone does better under Democrats, with the possible exception of a handful of plutocrats who get handouts from Republican policies.
