Republicans Aren’t Even Good for the Rich

"The Republicans only help the rich." We hear it all the time, and there is rarely disagreement over any word in the sentence other than "only." Almost everyone accepts it as axiomatic that Republican administrations and their policies are beneficial to the rich; the argument is over whether they are also helpful to other income groups. It seems certain that the socio-economic segment of the electorate most solidly in favor of the reelection of George W. Bush is the very rich. If the readership of the Wall Street Journal were a state, it would appear on the electoral map as even more brilliantly red than Mississippi.

No one ever seems to stop to ask the key question: Why?

Asking such a question is considered a waste of time. There are certain things that everyone knows. The rich get richer faster during Republican administrations. Such self-evident "facts" are accepted without reference to evidence. Yet there is evidence available against which to test the belief, which most rich people seem to accept as an article of faith, that Republican administrations are better for the rich.

United States Census Bureau data on mean household income from the beginning of the Nixon Administration through 2002 (the last year for which these data are currently available) show that this almost universally held belief is simply, almost spectacularly, wrong. During that period, Republicans held the White House for 22 years and Democrats for 12 years. In constant 2002 dollars, the average annual gain in income by the richest five percent of American households under Republicans (Nixon, Ford, Reagan, and the two Bushes) was $1706. Under Democrats (Carter and Clinton), the richest five percent saw their income rise by an annual average of $6,921.

The startling bottom line is that over the last three-plus decades the income of the richest Americans has risen at a rate four times faster under Democrats than under Republicans.

Above that bottom line are other findings that should be sobering to wealthy Americans intoxicated by the ideology and tax cuts preached and practiced by Republicans. A few examples:

• All of the comparatively small cumulative gain in income by the rich under Republicans came during the Reagan years. Under the other four Republican administrations since 1969, the richest five percent of households lost an average of $444 per year.
• In nine of the last 34 years, the income of the richest five percent declined. Eight of those nine years of loss for the rich came when a Republican was in the White House. The only year under a Democrat in which the richest Americans did not gain was the last year of Jimmy Carter's presidency, 1980.
• During the last fourteen years for which these data are available-the presidencies of the two Bushes and Clinton-the contrast in how the rich fared is especially stark. In the eight years under Clinton, the richest five percent gained an annual average of $10,241; in the six years so far calculated under the Bushes, the rich lost an annual average of $1999.
• It is true that the rich fared well during the Reagan years: an average annual gain of 3.6 percent with his huge tax cuts and massive deficits. Yet under Clinton, with his tax increase on upper income people (which Republicans insisted would cause economic ruin and against which every Republican in Congress voted) and ultimate balancing of the budget, the mean income of the rich increased at the significantly faster annual rate of 4.9 percent.

A similar story emerges from a look at the stock market, usually seen as another benchmark of how the rich are faring. During the same administrations, from Nixon to the second Bush, the Dow has gained an annual average of 7.1 percent under Republican administrations and 11.1 percent under Democrats. Here, too, the difference is more striking when the comparison is limited to the two Bushes and Clinton: a 6.7 percent gain under the Bushes and a 16.8 percent gain under Clinton.

UNDER WHICH PARTY DO THE RICH FARE BETTER?

Since 1968 (Nixon Through G.W. Bush)

Since 1988 (The Two Bushes Compared with Clinton)

If the rich are, surprisingly, so much better off under Democratic presidents, what about the rest of us? Other economic statistics, which are available over a longer period of time (1930-2003; 34 years of Republican administrations; 40 years of Democratic administrations), tell basically the same story for the economy as a whole.

Over this period of roughly the last three-quarters of a century, real disposable personal income for all Americans has grown nearly twice as fast under Democrats as under Republicans. (The annual mean growth in real disposable personal income under Republicans has been 2.3 percent; under Democrats, 4.3 percent.)

Republicans have traditionally identified themselves as the party of fiscal discipline, but over the last three-quarters of a century, Republican administrations have increased federal debt at a rate more than four times faster than have Democrats. (This statistic, moreover, includes a decade and a half of combating the Depression and fighting World War II under Democrats and does not include this year’s record Republican deficit of more than $400 billion.) A comparison of the presidencies of the two Bushes and Clinton in the area of fiscal responsibility is especially dramatic. The average annual deficit under Clinton was $40 billion. Under the Bushes (again, not yet including this year’s $400-plus billion deficit), the federal government has gone more deeply into debt at the rate of $256.3 billion per year, meaning that deficit spending has been more than six times worse under the Bushes than Clinton--and that difference grows greater by the day.

President Bush's claims that his economic policies are working are absurd, considering that the massive deficits his tax cuts have produced have yielded only an anemic improvement in the economy. Such improvement as there has been is the Keynesian result of the huge deficits. As Sen. Lloyd Bentsen remarked to me during the Reagan recovery in the mid-1980s, "When you're writing $200 billion in hot checks every year, you can't help but produce some stimulus." Vice President Dick Cheney's rejoinder to then-Treasury Secretary Paul O'Neill's concern about growing deficits speaks volumes about how fiscally irresponsible the Republican party has become: "Reagan proved deficits don’t matter."

Here, perhaps, is the answer to the question of why the Republican states are labeled "red states," which seems so odd in light of the GOP's traditional fervent anti-communism. What makes it appropriate to call Republican states red is the color of the ink needed for the party's budgets.

What of overall economic growth? During the period from Herbert Hoover's presidency onward, the American economy (GDP) has grown nearly three times as fast under Democrats as Republicans. (The annual mean growth in real GDP under Republican Presidents has been 1.8 percent; under Democrats, 5.1 percent.)

UNDER WHICH PARTY DO AMERICANS IN GENERAL FARE BETTER?

Since 1929 (Hoover Through G.W. Bush)

Since 1968 (Nixon Through G.W. Bush)

Since 1988 (The Two Bushes Compared with Clinton)

These statistics show that the popular Democratic slogan, "If you want to live like a Republican, vote for the Democrats," is true--even for the rich.

Are the remarkably better economic results achieved by Democrats due to better policies? Such significant differences over such a long period of time strongly suggest that they are. Some might argue, though, that the Democrats just have better luck. Even if that were the explanation, that luck has been so much better for so long that it would seem foolish for the rich, as well as everyone else, not to vote for a party with such good luck.

SOURCES:

Mean Household Income for Top 5% in 2002 dollars:

U.S. Census Bureau, Historical Income Tables - Households, Table H-3, http://www.census.gov/hhes/income/histinc/h0301.html, accessed 12 August 2004.

Percent Change from Preceding Period in Real Disposable Income:

U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts Table, Table 2.1—Personal Income and Its Disposition, Line 40: Percent Change from Preceding Period: Disposable Personal Income, Chained (2000) Dollars, http://www.bea.doc.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=58&FirstYear=1999&LastYear=2004&Freq=Qtr, accessed 31 July 2004.

Annual Surplus or Deficit:

Budget of the United States Government, Historical Tables: Fiscal Year 2004, Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits, 1789-2008, http://www.gpoaccess.gov/usbudget/fy04/sheets/hist01z1.xls, accessed 1 August 2004.

Percent Change from Preceding Period in Real Gross Domestic Product:

U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts Table, Table 1.1.1—Percent Change from Preceding Period in Real Gross Domestic Product, Line 1. http://www.bea.doc.gov/bea/dn/nipaweb/TableView.asp?SelectedTable=1&FirstYear=1999&LastYear=2004&Freq=Qtr , accessed 29 July 2004.