Do Dem or Rep presidents most help the poor?

Dec. 3, 2012

By John Seiler

Sometimes I wonder if people can think anymore.

Today the L.A. Times ran an op-ed piece, “Why the poor favor Democrats.” Subheadline: “Data show unequivocally that minorities do better under Democratic administrations than under Republican ones.” It’s by Zoltan Hajnal, a poli sci prof at UC San Diego, and Jeremy D. Horowitz, a doctoral student at the school. They write:

“The data we analyzed show unequivocally that minorities fare better under Democratic administrations than under Republican ones. Census data tracking annual changes in income, poverty and unemployment over the last five decades tell a striking story about the relationship between the president’s party and minority well-being.

“Under Democratic presidents, the incomes of black families grew by an average of $895 a year, but only by $142 a year under Republicans. Across 26 years of Democratic leadership, unemployment among blacks declined by 7.9%; under 28 years of Republican presidencies, the rate increased by a net of 13.7%. Similarly, the black poverty rate fell by 23.6% under Democratic presidents and rose by 3% under Republicans.”

But they overlook two crucial things: First, it’s Congress, not the president, that passes budgets and other legislation. The president proposes, the Congress disposes, as the old line has it.

In the past 50 years, here’s what happened: In the early 1960s, Congress was controlled by Southern Democrats — the “Solid South.” After shedding segregationism, they later switched and became today’s Republican-controlled South.

Anyway, in the early 1960s, the most powerful Democrat on finances was Harry F. Bird, the chairman of the Senate Finance Committee. As Robert Caro recounts in the latest volume of his biography of Lyndon Johnson, “The Passage of Power,” in early 1964, just after President Kennedy was assassinated, new president LBJ was pushing for the Kennedy tax cuts, which dropped the top income tax rate from 91 percent to 70 percent.

“Old Harry,” as Byrd was called, balked until LBJ cut $5 billion in spending to effectively balance the budget. LBJ, who later became a massive spendthrift, agreed. The tax and spending cuts were passed — and the massive 1960s economic boom zoomed upward.

Caro’s book ends in early 1964. But in 1968, with his Great Society welfare waste and the Vietnam War costs escalating, LBJ pushed through a 10 percent income surtax. It slammed the economy in 1969 — when Richard Nixon was president. LBJ even forced Nixon to pledge not to end the surtax. Nixon also increased taxes on his own in 1969, at the behest of Sen. Teddy Kennedy. And in 1971, Nixon took America off the gold standard, raised taxes and imposed protectionism with his Nixon Shock.

The economy crashed in 1974 into the 1970s “malaise” economy of “stagflation” — stagnation plus inflation.

Then there was Bill Clinton, who increased taxes in 1993 — but not by much, and with bare majorities in each house of Congress, In 1994, Congress went Republican. It was this Congress that passed three capital gains tax cuts between 1996 and 2000, as well as welfare reform. To his credit, Clinton signed those bills. But the key, again, was Congress.

Only one good GOP prez

The second thing the poli sci experts failed to note was that, on growth economics, the Democrats have had two-and-a-half presidents who were pretty good: Kennedy, Johnson (until 1968) and Clinton. And they had two who were bad: Carter and Obama.

But Republicans had only one who was good: Reagan. His tax cuts and stable money boosted the economy for everybody. As our colleague Joseph Perkins detailed:

“But the reality is, the 1980s, with a conservative, free-market Republican in the White House, were a boom time for black America.

“Indeed, Andrew Brimmer, the Harvard-trained black economist, the former Federal Reserve Board member, estimated that total black business receipts increased from $12.4 billion in 1982 to $18.1 billion in 1987, translating into an annual average growth rate of 7.9 percent (compared to 5 percent for all U.S. businesses.

“The success of the black entrepreneurial class during the Reagan era was rivaled only by the gains of the black middle class.

“In fact, black social scientist Bart Landry estimated that that upwardly mobile cohort grew by a third under Reagan’s watch, from 3.6 million in 1980 to 4.8 million in 1988. His definition was based on employment in white-collar jobs as well as on income levels.

“All told, the middle class constituted more than 40 percent of black households by the end of Reagan’s presidency, which was larger than the size of black working class, or the black poor.

“The impressive growth of the black middle class during the 1980s was attributable in no small part to the explosive growth of jobs under Reagan, which benefited blacks disproportionately.

“Indeed, between 1982 and 1988, total black employment increased by 2 million, a staggering sum. That meant that blacks gained 15 percent of the new jobs created during that span, while accounting for only 11 percent of the working-age population.

“Meanwhile, the black jobless rate was cut by almost half between 1982 and 1988. Over the same span, the black employment rate – the percentage of working-age persons holding jobs – increased to record levels, from 49 percent to 56 percent.”

GOP duds

The other Republican presidents all were terrible. We’ve discussed Nixon. Ford continued Nixon’s high-tax, high-spending, anti-gold standard policies. In 1991, President George H.W. Bush broke his 1988 “Read my lips! No new taxes!” pledge, increased taxes, tanked the economy, and was replaced by Clinton.

George W. Bush was a complete disaster economically. Inheriting budget surpluses from Clinton, he went on a massive spending binge and bankrupted the country. His tax cuts, foolishly, were temporary — hence the battles over “extending the Bush tax cuts” that have brought contention and economic uncertainty to the economy. And Bush allowed Fed chairmen Greenspan and Bernanke to inflate the currency, while keeping interest rates close to zero — effectively destroying the savings of the middle class.

Meanwhile, after Republicans took over the U.S. House in 2011, they refused to insist on permanent tax cuts and an end to Obama’s own deficits, which have topped $1 trillion each of his four years in office.

Obviously the poor — and everyone else — are helped by sensible economic policies, and hurt by foolish ones. But the context is crucial.

As Bill Clinton said at this year’s Democratic National Convention: Do the math.