Posted: 11/29/12 15:09, Edited: 11/29/12 15:16
by Dave Mindeman
Mitch Berg is a conservative blogger/radio host who writes a blog at Shot in the Dark. He likes to "fisk" other posts or articles - fisking is a point by point counterargument - in his own particular style.
He decided to counter argue a post of mine - Business Will Do Fine With Democrats In Charge.
OK. So be it. But let's talk about this. First, let's put some facts on the table.
1. According to McGraw-Hill?s S&P Capital IQ, the S&P 500 has rallied an average of 12.1% per year since 1901 when Democrats occupy the White House, compared with just 5.1% for the GOP.
2. Gross domestic product has increased 4.2% each year since 1949 when Democrats run the executive branch, versus 2.6% under Republicans.
3. S&P 500 GAAP earnings per share climbed a median of 10.5% per year since 1936 during Democratic administrations, besting an 8.9% median advance under Republicans, S&P said.
And just in case Mr. Berg wants to highlight Obama's tenure....
A. Corporate profits have surged an average of 51.8% under Obama, the best out of any stretch of party control since 1933, S&P said.
B. The S&P 500 has also climbed an average of 12.3% each year since Obama's inauguration, far outpacing the 3.3% mean return for his predecessor.
And just in case you question my sources... they all come from Fox Business News...an analysis from September 4, 2012.
But facts never settle anything for conservatives. They prefer to analyze based on their perception. Quoting Berg:
Republicans and business also favor paring back excessive regulation, and reforming taxes in the long term so that they don?t structurally hinder growth. Mindeman didn?t mention that ? but to be fair, no Democrat ever does.
I have yet to see a comprehensive tax reform plan from a Republican that doesn't simply center only on tax cuts and deregulation. In regards to taxes, they don't delve into loopholes like hiding money in the Cayman Islands or tax incentives and writeoffs that give Exxon billions in profits while paying zero taxes. Despite the numbers that show a slower economy under Republicans, they continue to pursue the same exact policies.
And as for regulation. The deregulation of the financial sector was a high priority for George W. Bush (and to be fair, it began in the Clinton administration), and we have pretty vivid evidence that this nearly caused a full collapse of our economic system. A similar deregulation focus is centered on environmental restrictions. And how far that will go, who knows. Could the entire planet be in danger?....I think it's possible.
But let's get back to the competing economics argument. Berg doesn't completely dispute the numbers (he can't), but he offers a myriad of reasons why Democrats have been "lucky" with economic statistics.
The left?s been circulating a graph that shows the economy grew faster under Democrat presidents than Republicans. It tries to link a correlation ? numbers on a time-line ? to the President at the time.
We don't "try" to link it....it just is.
The chanting point - ?the economy does better under Democrats? ? is perfectly true, provided you completely ignore the macroeconomic and political context.
But, of course, Berg slants his version of "macroeconomic and political context" to meet his particular need for an explanation. I won't go into all the details (he gives "excuses" for every positive Democratic administration), but it is worth noting his point on Reagan....
The Reagan Recovery is a matter of record.
Yes it is. Here is some of that record.....
1. Spending during Reagan's two terms (FY 1981?88) averaged 22.4% GDP, well above the 20.6% GDP average from 1971 to 2009.
2. The public debt rose from 26% GDP in 1980 to 41% GDP by 1988.
3. Unemployment averaged 7.5% during the Reagan years. The unemployment averaged 6.4 percent under President Carter and 7.8 percent under President Ford. (The actual fluctuations were that unemployment rate rose from 7% in 1980 to 10.8% in 1982, then declined to 5.4% in 1988.) It is worth noting that the current unemployment is 7.9% under Obama - we shall see how the full 8 years compare to Reagan).
4. The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, which was achieved by applying high interest rates by the Federal Reserve (peaked at 20% in June 1981). Inflation has never been a problem during the Obama tenure....always under 2%.
5. Regan tripled the national debt.
6. Then there is defense spending --Reagan significantly increased public expenditures, primarily the Department of Defense, which rose (in constant 2000 dollars) from $267.1 billion in 1980 (4.9% of GDP and 22.7% of public expenditure) to $393.1 billion in 1988 (5.8% of GDP and 27.3% of public expenditure). Numbers that would stagger a Keynesian.
So yes, there is that record.
Berg also criticizes the Obama recovery as being much slower than any previous recession recovery. And while this is true, economists have classified this particular recession in larger terms than previous recessions. A more proper comparison would be the Great Depression. Recovery needs a bigger perspective.
As for Minnesota, I do believe that business will benefit from Democratic control of state government. True tax reform can actually happen because all aspects of it will be scrutinized. Infrastructure will get a boost which business will applaud. And education will be put back on a path to greatness that will also help business upgrade its workforce.
I realize that conservatives will focus solely on the superficial again. Taxes - up or down. Regulations - added or subtracted. Business priorities - emphasized or deemphasized.
But there is a more important measure to be monitored. Will Minnesota grow and prosper or will it not.
I say it will.