Democrats Make the Best Republicans, Economically Speaking

For many national election cycles, I have listened to the Republicans express their platform positions of: Smaller Government, Lower Taxes, Smaller Federal Debt, and Higher Economic Growth.   As I am now living off of my savings, these topics are ever more important to me; especially the last one!  So, as I listen to all of the current Presidential Primary debates, rhetoric and talking heads, it is difficult to distinguish how any of the candidates will help my current standard of living be maintained.  So back to the data and facts I go, to help me understand the actual execution against the 4 Republican Platform positions mentioned above.  As it turns out, my previous posts were a great place to start.

In this post, the Presidents since JFK have been evaluated on many Federal Budget Spending categories as was done in the earlier post.   They have been evaluated individually and collectively as Republicans and Democrats.  So, in addition to updating the data with one more year of data from the 2017 Federal Budget Package, I also added a new category of the Dow Jones Industrial Average at beginning of each year over this same timeframe.  This, with the Gross Domestic Product, gives a good overview of the macro economic picture.  In summary, the Democrats did better in delivering 3 of the 4 Republican Platform components listed above!  Surprised like me??  Read on.

As way of review for those of you who are new my blog here is a bit of background. Looking at the actual Federal Spending by year would clearly bias conclusions for the most recent Presidential terms since our economy and budgets are steadily growing. Therefore, all of my analysis is based on the growth rate of budget spending 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 2017 Budget, the 2016 budget is half over, the 2016 estimate should be fairly close and will round out his 8 year term.

Although there are several ways to establish compound growth rate for these Presidential terms, I am using a statistical tool called Control Charts.  They are graphs of the actual budget spending, by year. An average is calculated for each Presidential term, which in this case is the exponential growth average.  Around this average, are placed "Upper and Lower Control Limits" which are the plus/minus 3 sigma boundaries of annual spending. This allows for the determination of any statistical anomalies during a Presidential term, which in turn would unduly influence the compounded growth rate calculation.  For example, here is the growth of the Dow Jones Industrial Average (DJIA) during Obama's term:

The time frame on this is from 1961, JFK, through 2016, end of Obama's term.  At the end of this graph you will notice the colors are stronger, which means that all the statistical calculations were done over the 8 year term of Obama, 2009 - 2016.  In this 8 year section of the graph, you will notice 3 colors.  The green "zone" is the +- 1.5 sigma zone where most of any consistent results should fall.  Where it turns from white to red is the +- 3 sigma boundary or Upper Control Limit (UCL) and the Lower Control Limit (LCL) where 99.7% of any consistent results should fall.  For Obama, this would mean that there are not any "outlier" years in his term, and ,therefore, the calculated Annual Compound Growth Rate (CAGR) of 10.8% is accurate.  The CAGR can be found in right hand box under the graph just above the light blue highlighted number.  To note, double clicking on any graph or picture will allow you to see a larger version.

Staying with the DJIA, here is a graph for the term of Bush 2:

Over his 8 year term, the years all fall within the UCL and LCL and all but one in the "Green Zone" signifying his years are consistent (no outliers).  His CAGR for the Dow Jones is 4.0%.  This same analysis was done for 14 Federal Budget and economic categories for each Presidential term from JFK forward.  The good news is that the graphs for all Presidential terms did not show any statistical outlier years and, therefore, their spending growth rates are true.

Below you will see the summary table of the Presidential terms with all the budget categories evaluated for each term.  There are two key numbers for each term and budget category: the average annual spending which is presented for context (Federal Debt is at the end of Term) and the Compound Annual Growth Rate (CAGR) which is the key focus of this analysis.

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 related to Republican platform components mentioned at the beginning of this post:

1. SMALLER GOVERNMENT:  Total Federal Outlay growth was 1% smaller for Democrats.  Obama had the lowest growth at 1.5%.  I also evaluated Government employee growth.  Unfortunately, this data only existed from 1981 to 2016.  In this case the Democrats grew Federal employees 1.6% slower than Republicans.  So, Democrats actually create SMALLER government than Republicans!
2. LOWER TAXES:  Total Receipt or Tax growth was lower for Republicans by 3.6%.  The lowest Receipt growth was 3.2% for Bush 2.  And Republicans argue LOWER taxes yield HIGER economic growth (trickle down)???  Unfortunately this does not seem to be the case, since the Real GDP grew 1% slower for Republicans AND the Dow Jones grew 1.3% slower as well.  Another way to look at Receipts/Taxes was to ratio the average annual receipts divided by the average GDP for each Term.  In this case the Republican "Tax" rate is only 0.1% lower than Democrats.  So, Republicans do deliver on this platform element.  But...
3. SMALLER FEDERAL DEBT:  Every President has grown the Federal Debt!  However, the Democrats grow the debt 5.1% slower than Republicans.  Debt growth was the smallest for Kennedy/Johnson at 2.9%.  So, the combination of higher taxes and smaller government by Democrats has caused lower growth in the Debt.  
4. HIGHER ECONOMIC GROWTH:  Real GDP, which represents economic growth, was 1% higher for Democrats.  Kennedy/Johnson had the highest growth at 5.4%.  Using the Dow Jones Industrial Average as another Economic indicator shows growth 1.3% higher for Democrats.  Clinton had the highest growth at 20.4%.  So, again, the Democrats grow the economy faster than Republicans!

So, in the upcoming election, if you are Socially Conservative and Fiscally Conservative, put any money you have under your mattress.  However, if you are Socially Liberal and Fiscally Conservative, do I have a Political Party for you.