History of miscalculated moves: Republicans and the bane of economic slump

On Thursday, Joe Biden addressed the country as the official nominee of the Democratic Party. If the voters decide on Nov 3 to make him president, he will face a big job on a lot of fronts. One of them is the economy: He will be the third consecutive Democratic president, going back a full three decades, who has had to clean up a mess left for him by a Republican predecessor. Yes, that’s three Republican economic failures in a row. When will the American people figure out that we have a pattern here?

Well, for starters, when Democrats get around to telling them. For my money, that is Biden and his party’s No 1 job between now and Election Day: Make it clear that Democrats have been better stewards of the economy — for decades, and by far.

Many people don’t believe this. The perception that Republicans are better at handling money is hard-wired. In a new NBC News-Wall Street Journal poll, President Trump enjoyed a 10-point margin over Biden on the question of who would handle the economy better — even as 77 per cent of respondents rated the economy today as “only fair” or “poor.”

But it’s true. As I’ve been arguing for some time (most recently in The Daily Beast), the country has done better for decades under Democrats, by nearly every major economic measure. From John Kennedy through Barack Obama — 56 years during which, as it happens, we had a Democratic president for 28 years and a Republican president for 28 — we saw more than 50 million jobs created under Democrats and just 24 million jobs created under Republicans. Even the stock market has performed better under Democratic presidents.

It’s true that just toting up numbers by the months each party had in power is imprecise. But there’s no better way to do it, and if all these numbers were reversed, Republicans would make sure Americans knew about it. They would also make sure Americans were well aware of such an important and consistent failure from the other party. But Democrats have largely failed to punch home just how destructive Republican economic stewardship has been.

George HW Bush presided over a modest failure compared with the recent ones. He was in office for a recession in 1990-91. In fairness, little about that recession was his fault. It was brought on by factors beyond his control, among them measures taken by the Federal Reserve to lower inflation and the oil price shocks in the wake of Iraq’s 1990 invasion of Kuwait. The recession ended in time for the 1992 election, but the recovery was largely jobless. And on those crucial occasions when President Bush was called on to show he understood the American people’s hardships, he flubbed it. While he signed a tax increase to raise revenue (and paid a big political price for breaking his “read my lips” promise), he did little in policy terms to get the country moving again.

Bill Clinton came in and presided over — yes, Ronald Reagan fans — the most economically successful eight years in the last half century. The Clinton recovery started, it’s worth noting, with a budget bill in his first year that received not a single Republican vote in Congress. And while it’s true that Clinton made moves that have come to be criticised — like following the lead of Wall Street-friendly advisers like his secretary of Treasury, Robert Rubin, and signing a Republican bill that deregulated banking — he left office having created 22 mn jobs and reduced the budget deficit, as he liked to put it, from 11 zeros to simply zero. (In fact, he left a budget surplus.)

Seven years later, in 2008, George W Bush came razor-close to overseeing a collapse of the global economy. Much of it was his fault, or his administration’s. The most notable misstep was a lack of regulation of the banking sector. In 2008, the economy lost around 2.5 mn jobs, an average of around 215,000 a month for the entire year.

Liberals will forever debate whether Barack Obama did enough. (Should the stimulus have been larger? Should some bankers have been prosecuted?) Still, the country went from losing 700,000 jobs a month when Obama took office to gaining, over his second term, an average of about 199,000 jobs a month. He did this despite Republicans’ rediscovery of austerity, which they imposed through wall-to-wall obstruction, even risking the country’s credit standing by tying a debt-limit increase to spending-cut demands.

President Trump’s economy — enhanced by massive deficit spending, which somehow ceased to bother Republicans — was chugging along before the pandemic, creating around 6.6 mn jobs, or about 175,000 a month (still lower than Obama’s second term average). He made no effort to address the longstanding problem of economic inequality and arguably exacerbated it with his 2017 tax cut. And since the coronavirus crisis, according to the St. Louis Fed, the economy has lost nearly 13 million jobs, leaving Trump, for now, more than six million jobs in the red. Obviously, the coronavirus was not Trump’s fault. He can be faulted, however, for the botched response to it and for much of the resulting economic mess. A national lockdown from March to June, besides limiting the number of deaths, would have made that illusory “V-shaped recovery” far more likely and the economy far more resilient.

But the Trump administration didn’t do that. And experts foresee more economic duress. The Conference Board, for example, predicts a baseline contraction of gross domestic product by about 5 per cent in 2020. These Republican failures are not an unhappy coincidence. They’re a result of conservative governing practice. Republicans no longer fundamentally believe in the workings of government, so they don’t govern well. Their contempt for government is a result of conservative economic theory. Yet somehow, perhaps in part because liberals have sometimes borrowed or adapted some of the economic theories espoused by Republicans, Democrats rarely manage to convey this. I know what I’ll be listening for in Biden’s acceptance speech — and in every speech that he and other Democrats give until Nov 3.