Most Americans have one eye on the nation’s financial crises and the other on the presidential election. And they are asking themselves, “Is McCain or Obama, the Democrats or the Republicans, better for the economic health of the country as well as for my own financial well-being?” That is the defining question of this election.
A businessman who voted for Bush twice and Clinton in ‘96, told me, “Barack Obama sounds really impressive and I have to admit that the goals of his social programs—particularly health care, education and the environment—seem good. But I’m worried the Democrats can’t manage the economy as well and they’ll get into my wallet.”
Many voters agree, and a recent poll shows that an overwhelming majority cite the economy as their top concern. For years the pollsters have found that most voters believe the Republicans do better with the economy. I’ve heard the businessman’s basic point—that the Democrats have better social policies but the Republicans are better managers of the economy— more often than I’ve heard Judy Garland sing “Over the Rainbow.” But is it true? Don’t count on this question being examined and answered in a full, open and honest debate.
Twenty-eight years ago—with the election of Ronald Reagan—we entered an entirely new phase of presidential politics. The focus since then has been who can raise the most money and package the best media image, rather than who can demonstrate the most competence and capacity to govern. Our country’s political, economic and social life has been reduced to a battle of 15-second sound bites and 30-second commercials, with results reported like a football score. TV news has turned democracy into “duhmocracy.”
Fortunately, we don’t have to depend on campaign slogans or advertising bucks to frame the debate. We can look to the record. Here’s the Economic Sweepstakes Quiz. The rules are simple. Guess which president since World War II did best on these eight most generally accepted measures of good management of the nation’s economy. You can choose among six Republicans: Eisenhower, Nixon, Ford, Reagan, Bushes I and II; and five Democrats: Truman, Kennedy, Johnson, Carter and Clinton. (No peeking.)
Which president produced:
1. The highest growth in the gross domestic product?
2. The highest growth in jobs?
3. The biggest increase in personal disposable income after taxes?
4. The highest growth in industrial production?
5. The highest growth in hourly wages?
6. The lowest Misery Index (inflation plus unemployment)?
7. The lowest inflation?
8. The largest reduction in the deficit?
The answers are: 1. Harry Truman, 2. Bill Clinton, 3. Lyndon Johnson, 4. John F. Kennedy, 5. Johnson, 6. Truman, 7. Truman, 8. Clinton. In the Economic Sweepstakes, Democratic presidents trounce Republicans eight times out of eight!
If this isn’t enough to destroy the myth that the economy has performed better under Republicans, the stock market has also done better under the Democrats. The Dow Jones Industrial Average during the 20th century has risen 7.3 percent on average per year under Republican presidents. Under Democrats, it rose 10.3 percent—which means investors gained a whopping 41 percent more. And the stock market declined further during George W’s two terms. Moreover, since WWII, Democratic presidents have increased the national debt by an average of 3.7 percent per year and Republican presidents have increased it an average of 10.1 percent. During the same time period, Democratic presidents produced, on average, an unemployment rate of 4.8 percent; Republicans, 6.3 percent. That’s the historical record.
What about economic policies over the past 15 years? The Clinton-Gore administration presided over the longest peacetime economic expansion in our history. The national debt was reduced dramatically, the industrial sector boomed, wages grew and more Americans found jobs. How has the Bush-Cheney team fared? In the past seven years, we have experienced the weakest post-recession job creation cycle since the Great Depression, record deficits, record household debt, a record bankruptcy rate and a substantial increase in poverty. We have gone from being the nation with the biggest budget surplus in history to becoming the nation with the largest deficit in history.
What is downright frightening is that Bush and John McCain seem to still believe that an unregulated free market will solve America’s economic problems. Obama, on the other hand, maintains that government has the responsibility to keep our economy on the right track and he believes in oversight and accountability to protect American taxpayers. Obama says he will work toward reducing the debt and deficit. He pledges to help the middle class and the working poor by maintaining benefit levels and eligibility for the Earned Income Tax Credit. He will hold the line on our tax progressivity and fairness, by rolling back the Bush tax giveaways to taxpayers earning over $250,000 annually. And Obama wants to target health care, education, affordable housing, alternative energy and the environment with critical investments.
McCain wants to privatize Social Security and probably Medicare, although he gets dangerously vague about this at election time. To finance government spending in the wake of his tax cuts for the wealthy, Bush has borrowed heavily from the Social Security Trust Fund. It is likely that McCain will do the same. McCain and George W. are mired in the failed economic policies of their Republican predecessors. In 1980, Bush I called supply-side policies “voodoo economics.” But he embraced these “trickle-down” policies in order to become vice-president and then president.
Reagan and both Bush’s royalist economic policies were failures—a fool’s paradise built on the sands of borrowed time and borrowed money. The consequences were staggering debt, industrial decline, shrinking wages, four painful recessions, increased poverty and structural unemployment. The reckless Reagan-Bush-Bush spending and borrowing has brought us to the brink of social chaos and economic catastrophe.
With respect to the $700 billion bailout plan, McCain’s position is worth examining as a case study. He has cast himself as a reformer, championing the cause of Main Street, who will take on Wall Street and the bankers. Really! In the ‘80s, when deregulation mania drove the Reagan revolution, McCain was all for it. In the late ‘90s when McCain’s economic guru, former Senator Phil Gramm—chair of the Senate Banking Committee—was muscling through Congress the Gramm-Leach-Bliley Act which effectively ended regulation designed to protect Main St. from Wall St.—and a repeat of the Great Depression—McCain was all for it.
For the past seven-and-a-half years while Bush administration appointees at the federal regulatory agencies turned a blind eye to the greedy machinations of Wall St. and those bankers working the sub-prime market, McCain was all for it. He was four-square against regulation, oversight and accountability. Now that the game plan, and policies, he supported for all those years, has gone belly-up and bankrupt, he’s experienced an instant and remarkable transformation. After consulting his inner central casting he has become the nation’s chief tongue-wagger for reform, regulation and oversight. Poof ... the magic candidate. ‘The Enabler’ has become ‘The Savior’. The hypocrisy is breathtaking..
Claims of being a maverick aside, McCain has emerged as nothing more than a supply-sider in the mold of George W. and Reagan. Since George W. took office corporate profits have soared, while workers’ wages and benefits have been flat. That shows just who is the object of Bush’s conservative compassion. And McCain has embraced the very same regressive policies.The facts are that the Bush administration, supported by Republicans on Capital Hill, pushed through a sweeping tax cut in 2001, under which the wealthiest one percent of Americans reaped 43 percent of the gain.
In less than a year and a half, the federal government’s 10-year projected budget surplus of $1.6 trillion had vanished. In 2000, we had a surplus of $236 billion. In 2004, we had a deficit of $413 billion. This dramatic reversal is the direct consequence of Bush’s tax cuts. Since then, the Bush-McCain answer for the nation’s economic woes have been deregulation and more tax cuts for the wealthy individuals and corporations, who by no coincidence contribute to the McCain campaign. It’s “trickle-down” economics with a vengeance.
Since the GOP convention, McCain and his surrogates have been pounding away at the Democrats, labeling them as the “tax-and-spend” party. Yet recent research has shown that over 70 percent of our national debt was created by just three Republican presidents. There’s an old expression in Las Vegas, “Figures don’t lie and liars figure.” Moreover, according to research from Professor Larry Bartels of Princeton, real middle class wage growth is double when a Democrat is president, contrasted to a Republican president.
So, while McCain and Sarah Palin compose hymns to patriotism, rugged individualism, “trickle-down” economics, “staying the course” on Bush’s tax cuts and family values, they are also embracing the very economic policies that both undermine the middle class and subvert the security of American family life. American families need less pious rhetoric, and more policies geared toward a healthy economy, secure jobs, decent health care, affordable housing, quality public education, renewable energy and a sustainable environment.
McCain seems unable, or unwilling, to grasp that the government has an important leadership role in this. In fact, providing tax giveaways for the rich and for corporate America is the only policy that seems to energize McCain and the Republicans in Congress; while Obama has pledged to repeal those very same giveaways. And contrary to the G.O.P. rhetoric 90 percent of Americans—people making under $112,000 a year in individual income—would pay less taxes under Obama’s tax plan.
With four more years of McCain continuing Bush’s failed policies we could very well wake up one morning on “the economic endangered nations” list. Deficits and debt could strangle our economy for the next generation, and all but the wealthy will have a tough time making ends meet. Barack Obama has demonstrated a willingness to confront these painful realities. On overall economic policy, he offers qualities indispensable to genuine leadership for America—patience, fairness, candor and vision. We need an administration that understands and believes in coherent, comprehensive and equitable policies that promote sustainable and healthy economic growth—and, on that count, Democrats have a winning record.
Arthur Blaustein was chairman of the President’s National Advisory Council on Economic Opportunity during the Carter administration and was appointed to the board of the National Endowment for the Humanities by Bill Clinton. He is an adjunct professor at the UC Berkeley, where he teaches urban policy, politics and economic development. His most recent books are Make a Difference and The American Promise.