Who *Really* Does It Better?

An analysis of economies under Democratic and Republican leadership

Rueters recently wrote an article about its new poll showing Democrats losing ground among millennials. In that article, a man named Terry Hood was quoted:

Terry Hood, 34, an African-American who works at a Dollar General store in Baton Rouge, Louisiana and took this year’s poll, said he voted for Democrat Hillary Clinton in the 2016 presidential election. But he will consider a Republican for Congress because he believes the party is making it easier to find jobs and he applauds the recent Republican-led tax cut. “It sounds strange to me to say this about the Republicans, but they’re helping with even the small things,” Hood said in a phone interview. “They’re taking less taxes out of my paycheck. I notice that.”

Another interviewee said that “she would likely vote for a Democrat, but her peers nationally are increasingly looking to Republicans for economic leadership.” The poll showed that millennials are increasingly believing that the Republican Party is a “better steward of the economy.”

I’m increasingly concerned about the misinformation and lack of understanding about reality that so many Americans seem to have. For example, the economy has clearly and consistently done better under Democrats in the White House. Research has also shown that the economy does better when Democrats are in Congress and when a Democrat has appointed the Federal Reserve chair. In writing about a book detailing the research, Adam Hartung noted the following:

· Personal disposable income has grown nearly 6 times more under Democratic presidents;

· Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents;

· Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year);

· Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end);

· Republican presidents added 2.5 times more to the national debt than Democratic presidents; and

· The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations.

Job creation has also historically done significantly better under Democrats, both at the national and the state level. Nationally, unemployment rates are historically lower under Democrats than Republicans. The vast majority of states with the highest median income are Democratic while the vast majority of states with the lowest median income are Republican. Standard of living is also significantly higher among Democratic states than Republican ones, and people in Democratic states have longer lifespans than those in Republican states. So what “economic leadership” exactly are these voters looking for?


Certainly, workers continue to struggle in today’s economy regardless of state. That’s especially true of low-wage workers such as Mr. Hood. But would Republicans help him? Not according to history. Or common sense. Republican policies have allowed CEO-to-employee pay ratios to balloon. Historically and through the 1970s, CEOs earned about 20–30 times what an average employee earned. In the 1980s, the ratio began increasing. Today, CEOs earn more than 250 times what an average employee earns. CEO pay has increased 930 percent since 1978, growing faster than the stock market or any other wages, while wages for the average employee have remained stagnant since the 1970s. In fact, hourly inflation-adjusted wages for a typical worker have grown only 0.2% per year.


So all of the profits that companies make go to the CEO rather than benefiting the employees who make the company run. While Democrats have tried tactics to decrease this ratio, such as the Dodd-Frank rule requiring companies to disclose their ratios, Republicans continue to fight against any regulations, not only for these issues, but regulations for anything. In fact, Republicans have fought hard for, not against, financial deregulation, which, according to the Economic Policy Institute, allows professionals to obtain excessive pay and bonuses by “simply hiding risk that they should be managing” and using political power to “ensure that economic policy favors low inflation rates over low unemployment rates.” In other words, Republicans work for the top one percent of the population by making sure the laws are in their favor to treat employees in any way necessary in order to maximize their own profits.

Why did this start in the 1980s? During that time, a group of “free-market thinkers” (Republicans) chanted the idea that a company’s primary purpose is to maximize shareholder value, or put profits above all else, so loudly that the entire country bought into it. And this was before Fox “news” or social media existed! The pressure of this chant “paved the way for an economy in which companies are increasingly disconnected from the state of the nation, laying off workers in huge waves, keeping average wages low and threatening to move operations abroad in the face of regulations and taxes.” Thus, policies related to taxes and corporations are typically geared toward maximizing wealth and profits for those already at the top rather than company behavior or ensuring a fair working environment or fair wages for the average worker. As just one example, one IBM factory had 10,000 workers and today has about 700 after years of layoffs and shipping jobs overseas.

Why the stagnation in average worker pay? According to the Economic Policy Institute, the “dismal wage growth is the result of intentional policy choices made on behalf of those with the most income, wealth, and political power.” On behalf of corporations, Republicans have dismantled unions across the country, and we know that union membership is directly related to income inequality. Republicans have also fought against minimum wage increases. The current minimum wage, adjusted for inflation, is less than what it was in 1968, even though the low-wage workforce today is older and more educated than ever before, as Mr. Hood undoubtedly knows. Economists have noted that this freeze in the minimum wage accounts for about two-thirds of income inequality today. Republicans have also fought against the rights of workers to earn overtime pay, and fought for policies that allow employers to misclassify workers to pay them lower, as well as for policies that exploit some workers, which lowers the wages of all workers in similar fields of work. Further, Republicans have fought hard against modern-day labor standards such as mandatory paid sick leave and paid family leave that would increase earnings, especially for those low-wage earners.

Mr. Hood also suggested that he has benefited from Trump’s tax cut. The reality, however, is that the average American, and certainly low-income Americans, have not benefited from tax cuts historically. In fact, for those in the lower half of income earners, income actually shrank after Reagan’s and Bush’s tax cuts. The ones who benefited were those in the top one percent. Sound familiar? Nor have tax cuts always stimulated the economy as Republicans like to trumpet. Trump’s tax cut is no different. In fact, Trump’s tax cut is widely expected to increase, not decrease, income inequality by acting as one of the biggest transfers of wealth to the richest Americans in history. So far, those expectations have been met, despite any small savings Mr. Hood may have noticed in his paycheck. Initial estimates showed that benefits from Trump’s tax cuts are skewed to the top while hurting many low- and middle-income Americans. By 2025, these tax cuts are expected to boost the income of households with incomes over $1 million while giving households with incomes of $50,000 about a quarter of what millionaires will see. In addition, the cuts will reduce the income of households earning below $30,000 and do nothing at all for those earning between $30,000 and $40,000.


This is all not to say that some middle-class families won’t see temporary small gains. But in reality, under Trump’s tax cuts, the average American middle-class family will pay more in at least 15 ways, including by cutting the personal exemption for families with children, ending deductions for senior care, cutting medical and dental deductions, capping mortgage interest deductions, cutting state and local tax deductions, eliminating the deduction for moving expenses for a job, and reducing deductions for charitable donations, a move that experts estimate will devastate nonprofits by cutting between $16 billion and $24 billion from the nonprofit sector. In addition, Americans who take advantage of Obamacare will see increases in their premiums thanks to this tax bill. The tax cut also puts social security and Medicare on the table for cuts to pay for the tax cuts. Many were lucky: Originally, Republicans wanted to target student loan interest deductions and graduate student income, among other things that escaped. And an entire volume could be written about the long-term consequences of not having adequate funding for things like education, not to mention the massive increase to the deficit unlike any before, which apparently conservatives no longer care about. So much for being a “better steward of the economy.”

Even Republicans are now admitting truth about the tax cuts. Marco Rubio said, “There’s no evidence whatsoever that the money’s been massively poured back into the American worker.” And Republicans have proudly admitted that the tax bill is aimed at hurting Democrats, with one tax policy advisor saying, “It’s death to Democrats.” And Bruce Bartlett noted that these tax cuts will hurt Americans, but it will be Democrats, not Republicans, who Americans blame.

Should we be surprised that Trump and Republicans lied to the public to get this tax bill passed? Probably not, judging from Trump’s character and history (In the nearly 500 days since taking office, Trump has lied more than 3,000 times).

It’s evident to most that Republican policies are a direct cause of the severe, third-world-style income inequality in this country that is leading to the obliteration of the middle class. The US currently ranks 23 out of 30 developed nations on the “inclusive development index,” which factors in data on income, health, poverty, and sustainability. We ranked particularly low in the areas of social protection, which were defined as efficiency of public goods and services and robustness of social safety nets, and in employment and labor compensation. This is a direct result from Reagan-era “trickle down” economic policies and financial deregulation and a culture that is plagued with a prominent philosophy of “I’ve got mine, you’re on your own.” Yet average Americans continue to buy into the idea that they are just one lucky promotion or lottery win away from being among the one percent, and thus vote as if they already are — that is, voting for people and policies that only benefit the one percent.

Nearly 100 years of economic history has shown “serious inconsistency between the common viewpoint of America’s dominant parties and the reality of how America has performed since the start of the Great Depression.” As just one example, in 2015, a third of Americans — and 53 percent of Republicans — mistakenly believed that the unemployment rate was worse than it was when President Obama took office, which was immediately after the global economic collapse. From where does this inconsistency, cognitive dissonance, and belief in outright misinformation stem? In short, the American people are easily duped and pay far more attention to fake news than they do to facts and data. More than one study has shown that those who watch Fox “news” are not only less informed than those who watch other news networks, but are less informed than those who watch no news at all. And recent studies have shown what a strong effect fake news has on Americans, including the effect of electing a reality TV narcissist as President of the United States of America.

Fake news isn’t the only culprit. The average American doesn’t pay attention to political nuance. Bruce Bartlett, an advisor to Ronald Reagan and George H.W. Bush, detailed how Republicans strategically pass legislation that they know will hurt the middle class, understanding that the consequences of the legislation won’t appear until the opposite party is in power later so they can blame any negative consequences on that opposite party. This “time–inconsistent” theory is one that Republicans have regularly used and have used to push through Trump’s unpopular tax cuts. As Bartlett noted,

Republicans are pushing the tax cut at breakneck speed precisely because they know they are probably going to lose next year and in 2020 as well. The tax cut, once enacted, however, will bind the hands of Democrats for years to come, forcing them to essentially follow a Republican agenda of deficit reduction and prevent any action on a positive Democratic program. The result will be a steady erosion of support for Democrats that will put Republicans back in power within a few election cycles.

Because voters typically attribute whatever is currently happening to the current party in power with no regard to the past, the negative effects of all Republican administrations are mistakenly blamed on Democrats at a later date. Or the positive effects of Democratic administrations aren’t attributed to Democrats. Bartlett gave a great example of this:

Bill Clinton was elected in 1992 on an activist agenda. But once in office, he was persuaded to reverse course and put all his efforts into deficit reduction. . . . Its key element was a significant tax increase that every Republican in Congress voted against. They said it would crash the economy, but was instead followed by an economic boom. Unfortunately, the boom didn’t become apparent until after the 1994 election in which Democrats took heavy losses — in large part because of the tax increase. Republicans got control of both houses of Congress for the first time in 40 years.

Nor does the average American pay attention to economic academics. In one study, nearly three-quarters of economists surveyed favor the concept of wealth redistribution — a well-established economic principle that every developed world except the US buys into. One hundred percent of economists surveyed agree that cuts to federal income tax rates would not raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut. Not mentioned in the Rueter’s poll or by Terry Hood, but 94 percent of economists also support taking action against climate change. So why do the Terry Hoods of the country believe that Republicans — who push for the exact opposite of what has been shown to be sound economic policy — have their best interests in mind?

All of this doesn’t even touch on the fact that Republicans are notoriously bad for people of color and women. The tax bill that Mr. Hood seems to like so much specifically is likely to hurt generations of black families and women. In fact, the faith community warned that working people and communities of color will be among hardest hit by the tax bill. Trump has also escalated the war on women to new heights.

Yet working class people, people of color, and women continually vote against their own best interests, making life that much harder not only for themselves, but for the country as a whole. Or, as one writer puts it, allow themselves to be played for saps. This includes making the choice to simply not vote at all. In the Reuters poll, a growing percentage of millennial voters suggested that they might not vote at all. Considering that nationally, voter turnout for midterm elections is typically about 38 percent, it’s no wonder why people who are bad for The People remain in power. This won’t change unless everyone participates; Democracy is not a spectator sport. And as much as it might feel good to vote for a third-party candidate in a presidential election, our electoral system is designed to be a contest between the two major parties. So voting for a third-party candidate does exactly one thing only: Helps one of the major party candidates get elected. In 2016, those third-party votes were effectually votes for Trump.

Politicians count on, recognize, and exploit political ignorance. As political scientists have noted, “Misleading rhetoric is strategic. It attempts to confuse the public about who is affected by the tax [for example]. And this strategy of confusion has worked.” Even when policies, such as Trump’s tax bill, are widely unpopular and rammed through anyway, voters tend to forget about that particular policy or issue by the time election day comes. Republicans understand that the average voter is going to believe what they tell them rather than their own eyes. Unless and until Americans choose to educate themselves and actually show up at the polls for every single election, the Terry Hoods of America will drive a fall that we haven’t seen since the Roman Empire. And then where will they be? Where will we all be?



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