By Paul Krugman
New York Times
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 U.S. 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.
Partisan positioning on the economy is actually quite strange. 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 that growth will soar and raise revenues. Democrats are far more cautious. Yet Clinton is completely right about the record: Historically, the economy has indeed done better under Democrats.
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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 actually stunning. Last year the 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 percent per year; under Republicans, only 2.54 percent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.
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 favorably on a number of indicators with that of George W. Bush. In particular, despite all the talk about job-killing policies, private-sector employment is 8 million higher than it was when Barack 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.
Blinder and Watson look at a variety of possible explanations, and find all of them wanting. There's no indication that 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: Every candidate with a real chance of getting the GOP nomination is claiming that his tax plan would produce a huge growth surge — a claim that has no basis in historical experience. Why? Part of the answer is epistemic closure: Modern conservatives generally live in a bubble into which inconvenient facts can't penetrate. One constantly hears assertions that 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, however, Republicans need to promise economic miracles as a way to sell policies that overwhelmingly favor the donor class.
It would be nice, for variety's sake, if even one major GOP candidate would come out against big tax cuts for the 1 percent. But none have, and all of the major players have called for cuts that would subtract trillions from revenue. To make up for this lost revenue, it would be necessary to make sharp cuts in big programs — that is, in Social Security and/or Medicare.
But Americans overwhelmingly believe that 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 that tax cuts on high incomes would both pay for themselves and produce wonderful economic gains.
Hence the asymmetry between the parties. Democrats can afford to be cautious in their economic promises precisely because their policies can be sold on their merits. Republicans must sell an essentially unpopular agenda by confidently declaring that they have the ultimate recipe for prosperity — and hope that 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.