Do parties matter in Presidential economics?
The well regarded Liscio report is now blogging.
They did a very nice job analyzing the various economic and market results under all of the Presidents since FDR.
Of course, it is arguable as to how much impact any President has on the economy in general.
However, I think we can all agree that certain presidents who made major policy changes -- think Roosevelt and Reagan -- had major impacts on the economy. Other Presidents -- like Clinton and Bush -- also had a major impact through their actions and inactions.
The entire piece is worth a look . . .
GDP by Party
CPI by Party
Source:
Presidential economics: Do parties matter?
July 07, 2008
http://tlrii.typepad.com/theliscioreport/2008/07/presidential-ec.html
Wednesday, July 09, 2008 | 04:00 PM | Permalink
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BR -
I think that the President's party is far overemphasized, since for day to day operations, we have to pass laws through the House, the Senate, and then the President. So I think to be fair, we can only look at periods where it's D,D,D or R,R,R, respectively. Since those periods are rare (I believe), we get a vanilla mixture (DDR or RRD), and therefore it doesn't matter much. However, I think the high probability of DDD in the upcoming elections is probably not good (not to say the recent RRR was any better, though)
Just my two cents...
HCF
Posted by: HCF | Jul 9, 2008 4:13:21 PM
If Party A elects a President who says we can continue our oil addiction forever and get a free lunch and a pony, and the Party B elects a President who says we need, as a nation and economy, to get off our oil addiction, and both Parties implement these contrasting visions via policies and lack thereof, then the answer to your question is yes.
Posted by: Douglas Watts | Jul 9, 2008 4:15:37 PM
Somehow I think it's the lobbyist who doles out the contributions who most determines public policy in the US of A. Want something done? Go to the side of the aisle who will listen.
In the words of saloon/brothel owner Al Swearingen of HBO's "Deadwood", "Who gets paid?"
Posted by: Chief Tomahawk | Jul 9, 2008 4:16:52 PM
Gotta filter inflation out of those GDP numbers for it to mean anything.
Posted by: mappo | Jul 9, 2008 4:17:04 PM
I think this underestimates the difference between economic performance under democrats and republicans because it includes the early Roosevelt years. Those years were the worst of any covered and arguably more the responsibility of the preceding Republican administrations. Of course, once one opens that door, there are endless ways to nudge the data in whichever direction is desired.
At a minimum though, I'd love to see the chart with about a one-year lag. For example, the early 2001 decline is clearly more Clinton's responsibility than Bush's.
And yes, I don't see the president or his party making that much difference, but except for Roosevelt I/II, the blue is concentrated at the top and the pink at the bottom.
Posted by: Jessica | Jul 9, 2008 4:25:41 PM
real gdp growth in the first four years under FDR averaged 9%. The only 4 year period history that is better than this is 1940-44.
Jessica you are making the common error of attributing the Hoover years to FDR.
Posted by: spence | Jul 9, 2008 4:46:07 PM
From my very own crack research dept. (referring to the point I brought up above):
There are only 5 periods post WWII when House, Senate, and Presidency were controlled by a single party:
DDD in 1949-1953
DDD in 1961-1969
DDD in 1979-1981
DDD in 1993-1995
RRR in 2003-2007
Incidentally the post WWII recessions have been in
'53-'54
'57-'58
'73-'75
'80-'82
'90-'91
'01-'03
'08-?? (my call, not 'official')
With the exception of the '90-'91, it seems every recession follows 4-8 years after the start of a DDD/RRR reign.
My theory is that the really wacky fiscal and social policies get put in when one party is fully in control, and since it takes half a decade to a decade for the effects to seep in, we're never far from trouble after one party is in control.
So maybe grid-lock IS good... Both parties are too busy fighting each other to drive us off the cliff...
HCF
Posted by: HCF | Jul 9, 2008 4:46:22 PM
The stock market has done slightly better under presidents who are Democrats than has been the case with Republicans.
However, when the House, Senate and the White House are all controlled by the Dems, I don’t think that financial history provides reason for optimism.
Posted by: DL | Jul 9, 2008 4:50:52 PM
Angry Bear did this analysis over a year ago. They went farther into depth with poverty rates, employment, normalizing results for year (election year or not) and congress.
To do this work and give no shout out to Angry Bear is a piss poor way of joining the economics blogs.
~~~
BR: You are being a bit too harsh -- these guys do all their own research, build their own databases, and create their own charts.
There was no need to shout out to everyone else who ever did this sort of analysis before -- the list goes far beyond AB.
Posted by: Walker | Jul 9, 2008 5:01:15 PM
One of them better deal with crap like this.
Toxic CDOs Given Up for Dead Coming to Life With Pension Funds
By Jody Shenn
July 8 (Bloomberg) -- CDOs are back.
Collateralized debt obligations that helped drive banks to $400 billion of writedowns and credit losses are finding buyers under a different name: Re-Remics.
Goldman Sachs Group Inc., JPMorgan Chase & Co. and at least six other firms are repackaging unwanted mortgage bonds as sales of CDOs composed of asset-backed securities fall to less than $1 billion this year from $227 billion in 2007 because of the global credit crunch. Re-Remics contain parts that are structured to guard against higher losses on underlying loans than most CDOs, allowing holders to sell or retain other sections at lower prices that can translate to potential yields of more than 20 percent.
``It's just the reincarnation of the CDO,'' said Paul Colonna, who manages more than $100 billion as chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut. ``The mechanics are the same, but you're getting in at a much different level of valuation.''
GE Asset Management has considered buying the debt, Colonna said. The General Electric Co. unit may also have Re-Remics made out of bonds it owns if disposing of the riskier pieces boosts the securities' overall value.
Re-Remic stands for ``resecuritizations of real estate mortgage investment conduits,'' the formal name of mortgage bonds. Sales of the securities may help revive the market for new home-loan debt, according to Bernard Maas, an analyst in New York at credit-rating firm DBRS Ltd.
http://www.bloomberg.com/apps/news?pid=20601109&
Posted by: Stuart | Jul 9, 2008 5:10:52 PM
It would take some time for presidents to make policy changes and for those changes to have an impact. So this evaluation would need to account for this lag time, not necessarily their years in office.
Posted by: Duke | Jul 9, 2008 5:43:07 PM
As long as we have continual campaigns with a year long primary, the lobbyists will control the debate and parties mean little with regard to public policy. That is why the R's shifted to the collection of special interest wackos (anti-abortion, christianists, gun lovers, etc.). Before someone takes issue with my use of the word wacko, my definition of a wacko issomeone that votes solely on a candidates position on social issues. $800 billion in Iraq borrowed from China, no problem, he's against abortion, as an example. The same holds true of the greenies that blindly vote Democratic. The end result is that no party develops cognent public policy and we end up with the present Bush vacuum, where nothing is being addrfessed except his legacy.
Posted by: larster | Jul 9, 2008 5:51:23 PM
I'm reluctant to read much into these "superficial" numbers. (I use "superficial" in the literal sense but don't intend to belittle the numbers, as they should perhaps provide the start of any analysis.) I'd be more inclined to drill down (like HCF and/or Angry Bear...and maybe farther) to properly understand the following for each period:
(a) "economic cross-currents" (e.g., disease, dust bowl, war mobilization, demobilization, etc?)
(b) the balance of power in Congress (and possibly in state and local governments)
(c) the major policies promoted (i.e., was the whole country "moving right" like it was during the 90's, so that "Dem" was quite like "Republican" of earlier eras?)
Since I question what we can conclude from these numbers, I hope this thread doesn't trigger emotional responses.
Posted by: wunsacon | Jul 9, 2008 6:13:56 PM
At the very least, the period of time for comparison should be offset. The economy of the first six months a President takes office probably has more to do with the former President's policies than the new President's policies. A President's effect, be it large or small, lasts months or perhaps years into the term of the next President. Gathering up stats for the days he actually sat in the oval office seems to muddle things.
Posted by: Doug_S | Jul 9, 2008 6:20:10 PM
What's always notable about these performance analyses is that no matter how they twist the data and rejigger the starting and ending points the Republican presidents and congresses never do as well as the Democrats.
Posted by: parsec | Jul 9, 2008 6:32:11 PM
Doesn't this relate directly back to the causality thing just discussed? Isn't it far more likely that the party of the president elected is more likely as a result of the previous economy than the the economy is the result of the president currently in office? Therefore the economy under a party is more a result of the state of the economy just prior to being elected (i.e. Roosevelt, the "change" candidate, inherited a poor economy and therefore there would be great gains in GDP throughout the course of his presidency as the economy improved from its trough). Or as a liberal cynic might say, Democrats keep having to clean up the mess that the Republicans made and the American people can't seem to stop voting for Republicans to mess it up again, all because they have a grudge on some some insignificant social issue (that's supposed to be funny, so no one get in a huff)!
Posted by: Brendan | Jul 9, 2008 6:46:32 PM
Hey Barry,
Why aren't you also parsing out the pre-1983 CPI data from the bogus inflation numbers we have now? And remember it has been mostly republican with the cooked books!
~~~
BR: This was quick pointer to a new and based on their prior research, a worthy blog.
I don'y have the bandwidth and tine to fisk every data point that comes down the pike!
Posted by: metroplexual | Jul 9, 2008 7:01:24 PM
Walker,
Thanks for the attribution. This was explored in depth, and comments and objectins so far had been included in the series.
Barry,
What happened to my comment and links? If you want a full analysis, I or cactus can supply myiad charts and real numbers.
~~~
BR: I don't see any others on this post -- you had 3 comments today -- all 3 are still up.
By all means, we love analysis, charts and real numbers !
Posted by: rdan | Jul 9, 2008 8:07:19 PM
Lag time (1 year, 2year), business cycles, inflation, congressional impacts, fed policy, cherry picking, cause/effect arguments, only policy matters, head winds and tail winds of data sets, employment, and population to employment ratios, political winds, etc. we got it.
Posted by: rdan | Jul 9, 2008 8:18:26 PM
Lag time (.5,1 or 2 years), business cycle, economic head winds and tail winds, congressional composition and tone, cherry picking years in data sets, employment, crisis and cross currents, lag for when tax cuts implemented, etc.
Posted by: rdan | Jul 9, 2008 8:22:39 PM
Um, if you want to say something, just post an excerpt and a link- not an essay, please.
~~~
BR: -- forget that dolt -- he's been unpublished and banned as a spammer
Posted by: ronin | Jul 9, 2008 8:35:26 PM
I think it is silly to say that presidents don't have an immediate effect on the economy. OK, they still have the previous budget, but they are the ones who can immediately put new people into those federal departments to determine the real spending of money, and can decide which laws they are going to focus on or enforce at all. It doesn't take a law to deregulate, it just takes an administration deciding they will no longer be trying to enforce a particular regulation anymore. And Greenspan showed how happy the Fed could be with quick changes in policy.
Look at TR, a few months in and he is going after monopolies, dealing with strikes, moving new people into federal departments, and so on. How long did it take for Bush II to alter tax rates (retroactively!), shift money between projects (no more for birth control overseas, but now more to religious organizations), and so on.
Hell, just look at the financial effect of dropping the ball on 9/11/01. who knows what the economy would have been like if they had continued the anti-terrorism focus instead of trying to sell Star Wars II against "rogue" nations?
Of course a president has dramatic effect on an economy, even if they don't have nearly the precise control they pretend to have.
Posted by: Mysticdog | Jul 9, 2008 9:04:08 PM
I've wondered before reading thru this thread if corporate figure heads ever make decisions in a way to send disruptive waves at the party they dislike? Or visa-versa. Kinda like support the team. There I go again, assuming this is a game and not a concert.
Posted by: Greg0658 | Jul 9, 2008 9:28:08 PM
Many people have commented that we cannot take these numbers as if they were in a vacuum.
Perhaps if we first put all the politicians in a vacuum......
Actually heard an interesting analysis of why the more affluent should pay higher tax rates. The idea was when they have to pay much higher rates on income, they avoid taking it and plow the money back into their companies for expansion and r and d thus really benifitng the country. Interesting no?
Posted by: alexd | Jul 9, 2008 11:04:28 PM
I'd be interested in seeing how the money supply data, interest rates and thus the influence the Fed is able to exert on those outcomes using those factors
Posted by: DavidB | Jul 10, 2008 12:01:36 AM
