Even the Shutdown Can’t Kill Old Republican Fallacies

Annualized Growth in Real GDP per Capita, by President

Old fallacies die hard.

You would think, for instance, that Americans wouldn’t trust Republicans anymore. Poll after poll has shown that the American public holds them responsible for the government shutdown — and the American public hated the shutdown. Their approval rating plummeted to 21 percent, while President Obama’s held steady at 42 percent.

And yet, according to a Pew Research survey released at the end of the shutdown, Americans still believe that Republicans do a “better job dealing with the economy” than Democrats.

Clearly, it will take more than a two-week shutdown to kill the myth that simply won’t die.

And it is a myth. Since the government started collecting economic data around World War II, we have accumulated plenty of evidence to measure each party’s success at “dealing with the economy” — and none of it makes Republicans look good.

In their book Presimetrics: What the Facts Tell Us About How the Presidents Measure Up on the Issues We Care About, economist Mike Kimel and journalist Michael E. Kanell use this data to calculate the performance of the economy under every president from Dwight D. Eisenhower to George W. Bush. Here’s what they found…

Real GDP per capita. The most basic measure of economic success is the growth of output per person, adjusted for inflation. The fastest growth came in the Kennedy/Johnson years, when “real GDP per capita” grew 3.48 percent per year. The second-fastest came in the Clinton years, a strong 2.49 percent per year. Compare those numbers to laggards like Eisenhower and Bush Sr., who oversaw annual growth of 1.11 percent and 0.93 percent, respectively. When you add up all the Democratic years and all the Republican years, you find that the economy grew 2.82 percent per year under Democratic presidents and 1.54 percent under Republicans.

You may say, “What about the Great Depression? Aren’t they cherry-picking numbers by excluding the biggest economic event of the 20th century?” Actually, if you add Hoover, Roosevelt, and Truman, the Democrats’ average score goes up, and the Republicans’ goes down.

Another common criticism is that presidents inherit the problems of their predecessors. Should we really hold them responsible for the beginning of their term, when the economy’s fate is decided largely by the last guy’s policies? Fair enough. Let’s exclude the first year of each president’s term and recalculate the numbers. Guess what? Again, the Democrats’ score goes up, and the Republicans’ goes down.

Employment-to-population ratio. Instead of focusing on output, we could focus on jobs. Is the economy creating enough jobs to employ the same percentage of the population? Under Democrats, the employment-to-population ratio increased. Under Republicans, it decreased.

Real average weekly earnings. Often, economic growth doesn’t translate into the average American’s pocketbook. Why not look at weekly wages? Okay. Under Democrats, average weekly earnings, adjusted for inflation, increased. Under Republicans, they decreased.

Real median income. But wages only tell part of the story. Maybe Americans work more hours or get more income from investments. Let’s look at the average household — the “median” — and see how their inflation-adjusted income changed: Under Democrats, it increased much faster than it did under Republicans.

Real net average disposable income. But Democrats are known for raising taxes (and, indeed, Kimel and Kanell find that the tax burden went higher under Democrats than Republicans). What if all that income growth winds up in the government’s pocket, negating the gains? Let’s measure average income after taxes: Still, the Democrats oversaw much faster income growth than Republicans!

Poverty rate. Under Democrats, the poverty rate decreased. Under Republicans, it increased.

Real adjusted S&P 500. The stock market grew much faster during Democratic administrations than it did during Republican presidencies.

Value of the dollar. Under Democrats, the dollar appreciated, as foreigners invested more in us. Under Republicans, the dollar depreciated, as foreigners invested less.

Of course, the picture is incomplete. Someday, we will add the completed Obama presidency to the list, and the numbers will change. But already GDP growth under Obama is faster than it was under George W. Bush, and it’s only improving. The stock market is surging up, and the shutdown confirmed what the data has proven: Republicans do not do a “better job dealing with the economy.”

The longer we believe that fallacy, the more shutdowns and recessions we will invite.

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This op-ed was published in the South Florida Sun-Sentinel.

Syria

by Norman Horowitz


I ponder where the truth is told.
At 81, I think back
To time I served our country.
‘Tis easy to lose track.

I never shot at anyone.
I never held a gun.
I did teach electronics;
Chased women and that was fun.

I was then apolitical.
I did not have the time.
Between school and work, my life was full.
Still, women were sublime.

I went to work at a studio.
Many of them were crooks.
I wondered often about their books.
They pretended they were honest, and I wondered, “Why not?”
Their producers stole from them but only if they could.
‘Twas never important if indeed they often should.

I left to work for CBS.
I worked there three years.
The feds scared them all the time
I understood their fears.
If the FCC was angry,
It worried them to tears.

Our President was Nixon,
Who was an angry guy.
He hated Walter Cronkite as well as all the rest.
He mostly wanted them to die.
He had no litmus test.

Seems Obama’s just a decent guy.
A Nixon he is not.
I think he hates mass killings.
That angers the right a lot.

I wonder why they hate him.
He seems like a decent guy.
He’s against killing innocents
With bombs falling from the sky.

In Syria, innocents are worried.
Bombs fall where they may.
I wonder why destroying them
Just seems to make their day.

We are a warlike nation.
We look around us to find someone to attack.
I hope he tries to stop it:
Our President Barack.

Why President Obama Is Right to Focus on Inequality

Real Household Income, 1967 to 2012

In his recent speech at Knox College, President Obama renewed the nation’s focus on income inequality, drawing criticism from the right for pandering to the usual Democratic interest groups instead of addressing real economic issues like jobs and growth. This reaction stems from a misunderstanding of recent history that is sadly prevalent among the American public. To set the record straight, let’s take a trip back in time…

Three decades ago, we awoke to Ronald Reagan’s “Morning in America.”

It was 1983, and our economy had been through the deepest recession since the Great Depression. Reagan had slashed tax rates and broken the unions. In return, we were promised a bright future with faster economic growth for all.

At first glance, it looks like the Gipper delivered on his promise.

From 1983 to 2013, our economy’s output more than doubled, even after adjusting for inflation. The average worker today is 85 percent more productive than their predecessors were when Reagan took office. Taxes take a much smaller bite out of our income than they did in Reagan’s day, and American businesses are more profitable than ever before.

If the story ends there, it’s not hard to see why Republicans still believe in the power of Reaganomics.

But, as in every good story, there’s a twist. In this case, the twist is inequality, a politically charged word that Republicans rarely speak of. And for good reason: It invalidates their entire belief system.

The aggregate data leads you to believe that everyone’s income doubled, but that’s so far from the truth that it’s nearly criminal to foist that story on the public.

In fact, since 1983, the only incomes that have doubled after inflation are the incomes of the richest 0.1 percent of Americans. That’s one-tenth of the infamous “One Percent.” For the other 99.9 percent of Americans, inflation-adjusted incomes have grown by less than 20 percent.

But that’s a high threshold. In order to be a member of the top 0.1 percent, you have to earn over $1.5 million. What if we set the bar at a more reasonable level? Let’s exclude everyone making over $110,000. That’s a pretty good cutoff for what we consider to be “rich,” and it still leaves us with 90 percent of Americans earning less than that. These are the people who were supposed to enjoy the benefits of Reagan’s “trickle-down economics.” How much didthey gain since 1983?

Nothing.

For the 90 percent of Americans earning less than six figures, there has been absolutely zero income growth after inflation in the last three decades.

Sit back and contemplate that fact for a moment. During a period when the economy doubled in size, the total income earned by 90 percent of Americans didn’t increase by a single penny. All the gains went to the richest 10 percent.

Of course, the size of the economy is not directly comparable to the incomes of individual households. The economy grows when the population grows, even if individual incomes don’t grow. Also, the individual statistics don’t include taxes and transfers like Social Security and unemployment insurance. However, none of these facts change the big picture: After three decades of strong economic growth, the average American’s paycheck has barely budged.

You have to ask yourself: What’s the point? Why do we work so hard to make the economy grow if none of it is going into our pockets?

It hardly seems fair, but that’s not the only problem. Inequality isn’t just the by-product of a broken system; it’s a cause of the brokenness as well.

A growing economy is like a growing child. It needs to be fed often and well. The more an economy produces, the more its citizens must consume. If most Americans aren’t earning more money, they can’t afford all that extra consumption. So they borrow more than they should, but all that borrowing requires growing paychecks to repay the loans. When debt outstrips income, they default, and the economy comes crashing down.

That’s what President Obama meant when he said this crisis has been three decades in the making. That’s why it has become his highest priority. All our economic problems — high unemployment, weak economic growth, excessive debt and financial instability — have the same root cause: Most people aren’t earning enough money — and it’s not because the economy isn’t producing it. It’s because a tiny portion of the population is siphoning too much of it for themselves.

It’s not just a matter of politics, as the President’s critics would have you believe. It’s a matter of basic economics. “Morning in America” has only been bright for a select few. For most Americans, it’s been as dark as night.

The Reaganomics experiment has failed. It’s time for all of us to see the light.

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This op-ed was originally published in today’s Huffington Post.

The Republican Riddle: What the States Know That the Feds Don’t

Screen Shot 2013-10-07 at 3.00.13 PM

I’m going to tell you a riddle. It’s a paradox of sorts, and it’s confounding some of the brightest political minds of our time. Here it is…

The Republican Party has lost the last two presidential elections. In the House of Representatives, they lost the majority of the nation’s votes. In the Senate, they’re outnumbered 55 to 45.

The future looks even dimmer. The youngest generation is more liberal than its immediate predecessors, and they’ve been turning out in record numbers. The electorate is becoming more educated and more diverse — two liberal trends that don’t show signs of stopping anytime soon.

And yet, at the state level, the story is completely reversed. Republican governors outnumber Democrats 30 to 20, and they control a majority of state legislatures.

How can that be? What are Republican politicians doing right at the state level that they aren’t doing at the federal level?

I’ll give you a hint: They aren’t who they say they are.

The answer to this riddle is the greatest act of hypocrisy in modern politics. It’s a magic act, really. An illusion. Don’t be fooled by appearances. Look at what they do, not what they say.

Republican politicians say they want smaller government. They say the states are better at governing than the feds. They say we can afford tax cuts. They say we need tax cuts.

But their actions tell a different story.

Take Obamacare for example. The Affordable Care Act instructed the states to set up exchanges where people could purchase affordable health insurance that they weren’t getting from their employers. Twenty-six governors declined, choosing to let the federal government do it for them. Of these twenty-six, twenty-four were Republican.

These Republican governors, who say the states are better at governing than the feds, ceded enormous power to the federal government, violating a core principle of their party’s ideology. And then they crowed that Obamacare was a failure because it required a massive federal bureaucracy — the very bureaucracy that they chose to create!

The dirty little secret of Republican politicians at the state level is that they love the federal government. They need it. They depend on it.

In fact, Republican states receive far more federal spending, relative to the taxes they pay, than Democratic states. For every dollar they put in, Republican states get $1.46 back. Democratic states get $1.16. Of the 22 states that voted for John McCain in 2008, 86 percent received more federal funding than they paid in taxes, compared to only 55 percent of the states that voted for Barack Obama.

Then the Republican politicians have the temerity to brag that their states have lower taxes. Well, of course they can afford lower taxes: The feds are picking up the tab!

What they don’t tell you is that they’re spending just as much money. They’re just being subsidized by the Democratic states!

It’s no surprise, then, that Republican state governments are more popular than Democratic ones. They have lower taxes and more federal funding — both of which are very popular.

Thus the riddle is solved: At the state level, Republicans are cynically and diabolically riding to victory on the wings of a big federal government while claiming to be doing the exact opposite.

At the national level, meanwhile, they’re just starting to learn how to play this game. In Washington, Republicans really have been trying to shrink the federal government, so much so that they threatened to default on the nation’s debt and blow up the global economy if the President didn’t agree to cut spending on everything, including retirement programs.

It wasn’t until they realized that the spending cuts were extremely unpopular — because, you see, the public actually needs the services that the government provides — that they backtracked and claimed that they never supported them in the first place. And when the President finally proposed cuts to retirement programs, they attacked him for even considering such an idea…even though they basically forced him to do it.

But the award for worst hypocrisy surely belongs to Oklahoma Senators Jim Inhofe and Tom Coburn, who went all-out to prevent sending federal aid to Hurricane Sandy victims and then demanded that the federal government send aid to their home state in the wake of the recent tornado disaster.

Maybe they’re finally starting to figure out what state-level Republicans have already discovered: The government is an essential part of our social fabric. It does important things, and someone has to pay for those important things. You can’t cut spending without hurting people, and you can’t cut taxes without cutting spending or blowing up the deficit.

There’s no such thing as real magic. Anyone who says differently is trying to trick you.

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An abbreviated version of this op-ed was published in today’s South Florida Sun-Sentinel.