Republicans Versus Democrats on Debt and Budget Elements

Since the "Great Recession" is over, Presidential campaigns are looming and Obama has submitted his final Budget, I have decided to update some past postings in which I have rated the Presidential terms (and Parties) since Kennedy.  As before, I have downloaded all the historical spending and forecasts from the 2016 Budget package.  These can be found on the Office of Management and Budget website.

Looking at the actual budget incremental numbers by year would clearly bias conclusions for the most recent Presidential terms since our economy is steadily growing.  Therefore, all of my analysis is based on the growth rate of budget numbers expressed as percent growth compounded annually for each Presidential term.  There are an equal number of terms for both Republicans and Democrats in my analysis with each party also having one 4 year term.  In addition, Kennedy/Johnson were combined into one 8 year term as was Nixon/Ford.  Since Obama has submitted the 2016 Budget, the 2015 budget is half over, so that estimate should be fairly close and I am using the 2016 estimate to round out his 8 year term.

Below is the graph for Obama's 8 year term and this same technique was used for all Presidential terms on each budget category.

The total Budget Outlays are graphed above, beginning in 1961 through 2020, with the last 6 years being budget estimates.  The statistics are calculated, in this example, from 2009 thru 2016 which will be Obama's 8 years.  You will notice some red boundaries on the graph, for this period, which reflect the bounds of expected variation in the annual Outlays.  This would let you know if there was "unusual" year among his 8.  Centered under the graph, is a table of statistics, including the Compound Annual Growth Rate (CAGR) of 1.5% which is just above the blue highlighted entry.  Therefore, during Obama's 8 years (1 1/2 are forecasted), Government spending has grown 1.5% each year, compounded.  You should be able to d-click on this graph to see a larger version.

This type of analysis was done for every Presidential Term on the following Budget categories:

• Real GDP
• Nominal GDP
• Individual Income Tax Receipts
• Payroll Tax Receipts (Social Security and Medicare)
• Corporate Tax Receipts
• Total Receipts
• Total Outlays
• Annual Deficit
• Supplemental Spending (off budget - calculated by Total Debt - sum of deficits)
• Total Debt at the end of the year.

I also calculated, for evaluation, three additional categories of Budget line growth minus GDP growth.  This would show if a budget item is growing faster (positive number) or slower (negative number) than the economy:

• Total Receipt growth minus GDP growth
• Total Outlay growth minus GDP growth
• Total Debt growth minus GDP growth 

The table below summarizes these findings.

As I have done in the past, to evaluate each Term relative to the others, I have defined "Best" as Receipts with the highest growth rates and Outlays, Deficits, Supplementals and Debt with the lowest growth rates.  In short anything that makes the Debt fall.  In the table above, magenta color reflects the "Best" performance in each budget category.  Likewise, the orange color represents the "Worst" performance.  Any underlined number was found to be statistically different from all other results.  At the bottom of the table is the average growth for all Democratic terms and the average growth for all the Republican terms.

Below are my highlights from the table:

1. Real GDP, which represents economic growth, grew 1% better for Dems.  Kennedy/Johnson had the highest growth at 5.4%
2. Individual and Corporate Tax receipt growth was higher for Dems (6.1% and 2.1% respectively).  Could it be that HIGHER taxes yield HIGER economic growth???  Notice for Bush 1, who had the lowest growth rate in both Individual and Corporate Taxes, he also had the lowest Real GDP!
3. Total Receipt growth was 3.6% higher for Dems which is likely due to both higher tax rates and higher economic growth.
4. Total Outlay growth was 1%  for Republicans.  I thought they valued SMALLER government.
5. Supplemental Spending was 20 times higher for Republicans!!  Reagan had the highest rate at 46.6%.
6. Total Federal Debt grew 5% faster under Republicans!  Reagan had the highest Debt growth at 15.1% likely caused by the high Supplemental.  The only other term with double digit growth was Bush 1 at 11.8% when his Outlay growth was twice the Receipt growth.

Finally, to determine the Best and Worst Presidential Terms, I evaluated each of Budget Categories I listed earlier, eliminating GDP but keeping Real GDP.  I also included the 3 additional calculated categories bulleted above.

I assigned 2 points for the best growth rate in each category and 1 point for second best.  (There was a tie in one category).  Likewise I assigned -2 points for the worst growth rate and -1 point for second worst.  Finally I added up the scores for each Presidential Term.  Here are the results:

I was very surprised by these results as they are different than in my earlier post!  So I tried a different approach using only Real GDP and my 3 calculated categories which should have negated any inflation issues.  To my surprise again, the results were very much the same.  Carter dropped to 4th (inflation issues) and Reagan switched with Bush 1 for last place!

I know there are many ways to evaluate a Presidency, with historians having a strong say.  However, as a data monger, I am glad that I have some data analysis approaches to use as I begin to think about the upcoming election cycle and all the rhetoric.  Good luck to us all!