Why the economy fares much better under Democrats
On job and income growth, the record couldn't be clearer.
John McCain is a maverick and Barack Obama is a postpartisan problem-solver. But you wouldn't know it by looking at their economic plans. Both candidates' proposals faithfully reflect the traditional economic priorities of their respective parties. That makes the track records of past Democratic and Republican administrations a very useful benchmark for assessing how the economy might perform under a President McCain or a President Obama. The bottom line: During the past 60 years, Democrats have presided over much less unemployment and much more robust income growth.Skip to next paragraph
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The $52.5 billion plan Senator McCain announced last week includes $36 billion in tax breaks for senior citizens withdrawing funds from retirement accounts and $10 billion for a reduction in the capital gains tax. Those are perks for investors, most of whom are relatively affluent. (McCain is also proposing a two-year suspension of taxes on unemployment benefits, but that's a fraction of the plan's cost.) He also favors broader tax cuts for businesses and wants to extend President Bush's massive tax cuts indefinitely, even for people earning more than $250,000 per year.
McCain's proposals reflect the traditional Republican emphasis on cutting taxes for businesses and wealthy people in hopes of stimulating investment – "trickle down" economics, as it came to be called during Ronald Reagan's administration. But will proposals of this sort really "stop and reverse the rise of unemployment" and "create millions of new jobs" as McCain has claimed? The historical record suggests not.
President Bush's multitrillion-dollar tax cuts, which were strongly tilted toward the rich, could not prevent (and may even have contributed to) significant job losses. On the other hand, when Bill Clinton raised taxes on affluent people to balance the federal budget (while significantly expanding the Earned Income Tax Credit for working poor people), unemployment declined substantially. Under Clinton's watch, 22 million jobs were created.
Prefer a broader historical comparison? In the past three decades, since the Organization of the Petroleum Exporting Countries oil price shocks of the mid-1970s and the Republican turn toward "supply side" economics, the average unemployment rate under Republican presidents has been 6.7 percent – substantially higher than the 5.5 percent average under Democratic presidents. (The official unemployment rate takes no account of people who have given up looking for work or taken substantial pay cuts to stay in the labor force.) Over an even broader time period, since the late 1940s, unemployment has averaged 4.8 percent under Democratic presidents but 6.3 percent – almost one-third higher – under Republican presidents.