Paul Krugman: Democrats have best record on economy

Last week the Wall Street Journal published an op-ed article by Carly Fiorina titled "Hillary Clinton Flunks Economics", ridiculing Clinton's assertions that the US economy does better under Democrats. "America," declared Fiorina, "needs someone in the White House who actually knows how the economy works."

Well, we can agree on that much.

Republicans talk about economic growth all the time. They attack Democrats for “job-killing” government regulations, they promise great things if elected, they predicate their tax plans on the assumption growth will soar and raise revenues. Democrats are far more cautious. Yet Clinton is completely right about the record: historically, the economy has done better under Democrats.

This contrast raises two big questions. First, why has the economy performed better under Democrats? Second, given that record, why are Republicans so much more inclined than Democrats to boast about their ability to deliver growth?

Before I get to those questions, let’s talk about the facts.

The arithmetic on partisan differences is stunning. Last year economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Democratic and Republican presidents since 1947. Under Democrats, the economy grew, on average, 4.35 per cent per year; under Republicans, only 2.54 per cent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.

Obama years

But isn’t the story different for the Obama years? Not as much as you think. Yes, the recovery from the great recession of 2007-2009 has been sluggish. Even so, the Obama record compares favourably with that of

George W Bush

. In particular, private-sector employment is eight million higher than it was when Obama took office, twice the job gains achieved under his predecessor before the recession struck.

Why is the Democratic record so much better? The short answer is that we don’t know.

There’s no indication the Democratic advantage can be explained by better monetary and fiscal policies. Democrats seem, on average, to have had better luck than Republicans on oil prices and technological progress.

Overall, however, the pattern remains mysterious. Certainly no Democratic candidate would be justified in promising dramatically higher growth if elected. And in fact, Democrats never do.

Republicans, however, always make such claims. Why?

Conservative bubble

Part of the answer is epistemic closure: modern conservatives generally live in a bubble into which inconvenient facts can’t penetrate. One constantly hears

Ronald Reagan

achieved economic and job growth never matched before or since, when the reality is that

Bill Clinton

surpassed him on both measures.

Right-wing news media trumpet the economic disappointments of the Obama years, while hardly ever mentioning the good news. So the myth of conservative economic superiority goes unchallenged.

Beyond that, Republicans need to promise economic miracles as a way to sell policies that overwhelmingly favour the donor class.

It would be nice if even one major GOP candidate came out against big tax cuts for the 1 per cent. But none has, and all the major players have urged cuts that would take trillions from revenue. To make up for this lost revenue, it would be necessary to make sharp cuts in big programmes – ie social security and/or Medicare.

But Americans overwhelmingly believe the wealthy pay less than their fair share of taxes, and even Republicans are closely divided on the issue. And the public wants to see social security expanded, not cut.

So how can a politician sell the tax-cut agenda? The answer is, by promising those miracles, by insisting tax cuts on high incomes would both pay for themselves and produce wonderful economic gains.

Asymmetry

Hence the asymmetry between the parties. Democrats can afford to be cautious in their economic promises precisely because their policies can be sold on merits. Republicans must sell an essentially unpopular agenda by confidently declaring they have the ultimate recipe for prosperity – and hope nobody points out their historically poor track record.

And if someone does point to that record, you know what they'll do – start yelling about media bias. – (New York Times service)