Wednesday, August 11, 2010

Republicans, Democrats and the Past 40 Years of the US Economy

Figures below refer to US median household income, in 2008 dollars, and come from the US Census Bureau.

How a Republican would see it:
1978: $45,625 one year after Carter takes office
1983: $42,910 (-6% in 5 years) two years after Carter leaves office
1989: $48,463 (+13% in 6 years) the year Reagan leaves office, and just before Bush Sr. betrays Reagan by raising taxes
2004: $50,535 (+4% in 15 years) three years after Clinton leaves office
2007: $52,163 (+3% in 3 years) just before the financial crisis caused by government intervention in the mortgage market

How a Democrat would see it:
1969: $43,557 the year Nixon takes office
1976: $43,649 (0% in 7 years) the last year of the Ford presidency
1979: $45,498 (+4% in 3 years) the 3rd year of the Carter presidency, just before the Fed got serious about inflation
1993: $45,839 (+1% in 14 years) the year Clinton takes office
2000: $52,500 (+15% in 7 years) the last year of the Clinton presidency
2008: $50,303 (-4% in 8 years) the last year of the Bush presidency

The truth, of course, is somewhere in the middle. Nixon/Ford were unlucky to face the Oil Crisis; the Fed's inflation fighting destroyed Carter's record and gave Reagan an artificially low base to start from; Bush Sr. had to raise taxes due to Reagan's deficits; Clinton probably benefited from Reagan deregulation; Bush Jr. cannot be held solely, or perhaps even mainly, responsible for the financial crisis, which had roots in the Reagan reforms and in the Fed's actions mitigating the bursting of the Clinton tech bubble.

Given this history, you can be sure that 25 years from now, people will still be arguing whether the sluggishness of the current recovery is Bush Jr.'s or Obama's fault.

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