I looked into the history of our GDP from 1977 to 2007 and got my statistics from the Bureau of Economic Analysis from the US Department of Commerce. The numbers I found there did not match up with the numbers referenced from the article which leads me to assume there is some misinterpretation or misunderstanding of the numbers so please forgive me (and correct me) if I’m not interpreting them correctly.

The Three Tables I Cited are as Follows:

• Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product
• Table 1.1.5. Gross Domestic Product
• Table 3.1. Government Current Receipts and Expenditures

Average Growth in GDP During Each Presidential Term

What I found was that there was not a large difference between the average annual GDP growth rate amongst presidents during their terms:

• Carter (77-80): 3.3% average annual growth
• Reagan (81-88): 3.425% average annual growth
• Bush (89-92): 2.125% average annual growth
• Clinton (93-00): 3.725% average annual growth
• Bush (01-07): 2.3% average annual growth

Additionally, over the last 30 years there have been only three incidents where there was a period of negative growth in GDP:

• Carter in 1980: -0.2%
• Reagan in 1982: -1.2%
• Bush in 1991: -0.2%

You can see in the graph below, the growth of our GDP for every year over the past 30 years. You can also see the percentage of change over the prior period for each year in the second graph:

External Factors Positively or Negatively Impacting the US Economy

Brandon’s article does a great job citing references to external factors that excuse dips in growth in the early 90’s as well as excess growth during Clinton’s presidency (I highly encourage that you read through the article to understand). But it did not cite the external factor outside of policy makers control which lead to the 1980 recession. That of course was the 1970’s energy crisis and more specifically the energy crisis of 1979.

Carter Did Not Inherit a Good Economy

“In 1973, during the Nixon Administration, the Organization of Petroleum Exporting Countries (OPEC) agreed to reduce supplies of oil available to the world market. This sparked an oil crisis and forced oil prices to rise sharply, spurring price inflation throughout the economy, and slowing growth. Significant government borrowing helped keep interest rates high relative to inflation.”
(Energy Crisis)

“The 1970s are described as a period of stagflation, as well as higher interest rates. Price inflation (a rise in the general level of prices) creates uncertainty in budgeting and planning and makes labor strikes for pay raises more likely.”
(Stagflation And the Appointment of Volcker)

“Led by Volcker, the Federal Reserve raised the discount rate from 10 percent when Volcker assumed the chairmanship in August 1979 to 12 percent within two months.[38] The prime rate hit 21.5 percent in December 1980, the highest rate in U.S. history under any President.[39] Investments in fixed income (both bonds and pensions being paid to retired people) were becoming less valuable. The high interest rates would lead to a sharp recession in the early 1980s.[40]“
(Stagflation And the Appointment of Volcker)

The resulting exchange in world events and policies set forth for conservation by the Carter administration led to:

“After 1980, oil prices began a six-year decline that culminated with a 46 percent price drop in 1986. This was due to reduced demand and over-production, and caused OPEC to lose its unity. Oil exporters such as Mexico, Nigeria, and Venezuela expanded. The US and Europe got more oil from Prudhoe Bay and the North Sea.”
(1979 Energy Crisis)

This reduced our energy prices greatly which most likely had a very positive effect on GDP during Reagan’s term.

Overall, I believe that GDP is more or less a reflection of exchanges in world events and key monetary policies that are controlled by external organizations such as the federal reserve. The presidential tax policy certainly does have an effect as well but it is most likely to a lesser extent.

The Actual Cost of The Tax Cuts

Here is where the real discrepancy is. The expenditures to receipts ratio. Over the past 30 years our country has been in red ink each year with the exception of three years during Clinton’s second term. If you look at the graph of total receipts to expenditures you can clearly see that there is a large spending discrepancy during periods of Republican tax policy. Especially during Reagan and even more so during George H.W. See the graphs below:

The consequences of the Bush tax cut can be seen here. The policies set in place over the last 7 years have passed off massive amounts of debt to my generation. This is the greatest hypocrisy of the neo-conservative movement. They run on a platform of fiscal responsibility and limited government but you don’t see that here. Whether or not there is a democratic or republican president or controlled congress our government’s overall expenditures consistently rise.

In my opinion, the Bush tax cuts are fiscally irresponsible and John McCain’s notion to keep them in effect is reason enough not to vote for him. You can really see the difference when we break down the net lending or borrowing down by each president. Or rather the amount of debt incurred by each of the past five presidents as not a single one has racked up more debt during his term:

The numbers break down as such when written out:

• Carter (77-80): -169.5 (billions of dollars) (-42.375 per year)
• Reagan (81-88): -1443.9 (billions of dollars) (-180.5 per year)
• Bush (89-92): -1083 (billions of dollars) (-270.8 per year)
• Clinton (93-00): -773.9 (billions of dollars) (-96.7375 per year)
• Bush (01-07): -2573.6 (billions of dollars) (-367.65 per year)

It’s clear that each republican administration has significantly over spent in comparison to their democratic colleagues. That is not fiscally responsible. It’s reckless. I’m not opposed to the concept of limited government. But you have to cut spending before you cut taxes. Unless you can first balance the books you can’t cut the taxes. This just kicks the can along to the next generation. Mainly mine.

All in all, the ideal candidate doesn’t exist in my opinion. We are at a point where we need to take both parties ideas – raise taxes and cut spending. But the numbers show – during the period of democratic leadership GDP growed at the same pace or better than when their republican colleagues held office. During these times, the government also did a much better job at managing the federal budget.

Income Inequality is a Serious Problem

One last thing I would point out is that Brandon’s article distorts income equality by making a comparison to the communist form of socialism in the past Soviet Union. This is more so a comparison of communism to democracy than a depiction of the economic results of socialistic policies. If you look at the country with the one of the best ratings on the GINI coefficient, Sweden, you learn a lot. The people in this country and others like it such as Denmark and Switzerland experience a higher quality of life on average. Also, their GDP continues to grow despite high taxes. Sweden’s taxes are nearly twice that of the United States at 51.5% of GDP yet their growth in GDP has faired much better than our own over the past 5 years. This year Mercer rated Stockholm #20 on their best places to live list. Higher than any city in the United States. Clearly we have something to learn from governments other than our own.

* Feel free to digg this article if you appreciated the content.

1. We need to break our dependance of oil from the middle east (and in general.)

For the longest time stupid commentators, especially the ones on FOX, use the same silly argument about spreading democracy in the middle east *by spoon-feeding it to them forcefully*. They argue it’s not an immediate plan but rather one that lies ahead for some decades to come. It’s a long-term initiative. But if that’s the case aren’t we putting our foot in our mouths by empowering the very same corrupt parties that control these people by doing business with them? Should we not break our dependance on oil and put those parties out of business relieving them of their ill-fated control? Shouldn’t that be our twenty year plan instead? Thanks for finally getting one thing right Mr. President.

I’m skeptical to see how much of this plan he’s setting forward isn’t actually just fluff and will eventually come to fruition.

2. We need to remain competitive and creative.

I really liked President Bush’s intentions to bolster our education system to maintain our competitive edge. But what are the details behind this competitive initiative program? The intentions seem good but is it real?

3. Admitting social security is going to need to be saved.

The President made a bold statement tonight about Social Security. Once again he’s being realistic and his intentions are good. But I’m skeptical to hear the actual plan he has. This is a task easier said than done. At least I realize it will be easy for me to keep a job in the future; how much I have to pay in taxes thirty years from now due to loose tax laws and an already staggering deficit awaits to be realized.

4. We have created more jobs than the EU and Japan combined.

Here is president Bush patting himself on the back crediting his tax cuts to improving unemployment. However, what are the quality of all of these new jobs? Are they good jobs? In Arizona we certainly don’t have too many of those. With our wages fairly low relative to many other states but housing costs skyrocketing real estate is quickly becoming an unattainable luxury.

So it’s good to see I can agree on somethings but really. Obviously, if you can’t tell overall I’m not a fan of President Bush and I’ve written about this before. I’m looking forward to seeing FactCheck’s review of the speech to see how much of the Presidents claims actually have merit.