On Friday morning, April 5, the latest jobs report showed that the roaring Biden economy had added a mind-blowing 303,000 new jobs in the month of March.
The story was instantly buried by a 4.8 earthquake in the Northeast corridor, where cellphones lit with Instagram clips of coffee cups shaking for fourteen seconds before everything returned completely to normal. CNN instantly began its nonstop coverage of the fourteen-second non-thing that caused no damage and no injuries.
The jobs report? Gone from the news cycle, never to return.
It’s been that kind of year for Joe Biden on issues related to the economy.
The economy is sizzling. The financial powers that be in Washington – Biden, his economic team, and the Fed – appear to have threaded a fiscal needle, growing the economy and tamping inflation, all while avoiding a recession. The jobs report – the only thing actually buried under the earthquake -- was indeed stunning, adding to the Biden administration’s already powerhouse record job performance. Inflation is now 3.5%. Yes, that’s up from 3.2% last month, but down from 5.0% last year, and way down from 9.1% in June, 2022, when inflation peaked as the economy choked on Covid-related supply chain dysfunction.
Once upon a time, 3.5% inflation, 3.8% unemployment, and a 2023 GDP increase of 6.1% were the stuff incumbent presidents dreamed of as election day approached.
The stock market hit record highs before its recent slight retreat. Many Democrats don’t like to talk about strong stock market performance, worried that it comes off as elitist – the rich getting richer. They seem unaware that 36% of U.S. Households have an IRA, and those folks – some 40 million people -- are likely to be pretty damn happy about the performance of the stock market under Joe Biden.
Yes, the price of milk and gas is still higher than in the Trump years. No one can diminish the significance of this fact, and the severe challenges it creates for millions of Americans who live on the edge, paycheck to paycheck.
But the fact is that with inflation – and more importantly, a very robust jobs market -- wages are also on the increase. Little known fact: wages have been growing at a faster rate than inflation every month since February, 2023. But – Biden’s fate -- no one seems to talk about that.
Somehow, in the nation’s staggering case of Trumpnesia, there are people who think we had it better under a president who wanted us to ingest bleach, who separated children from their families at the border, coddled dictators, and who led an insurrection to overthrow democracy and the rule of law.
The truth is that it is hard to imagine an administration that inherited a mess borne of a once-in-a-century pandemic doing a better job. Yet Biden’s approval rating for “handling the economy” is lower than his overall rating, and the population at large gives Donald Trump higher ratings for his ability to manage the economy.
The result: we hear Republicans who willingly acknowledge that Trump is a loathsome, corrupt, spiteful, destructive, utterly selfish authoritarian conclude they will support him because “Republicans are better stewards of the economy than Democrats.”
It’s infuriating. It is unjustified. More than anything, it is ignorant. It is historically inaccurate.
That inaccuracy is a huge problem for Joe Biden, because James Carville’s Rule # 1 of presidential politics has been proven over and over again: “It’s the economy, stupid.” A strong economy keeps a political party in power, and the perception of a flailing and failing economy gets you fired. No matter how great a job Joe Biden has done on Covid relief, infrastructure, prescription drug prices, microchip manufacturing, and global crisis management, it is always going to come back to the price of a quart of milk at Kroger’s.
So it is time to puncture, once and for all, the “other Big Lie” – that Republicans do a better job of managing the economy than Democrats. This column arms you for the next time that annoying neighbor of yours tells you that sure, Trump has his flaws, but hey, I’m voting with my wallet and I just have to vote Republican.
There are three critical points to be made to Republicans who, absent fact and data, mindlessly parrot ignorant claims that Republicans have historically outperformed Democrats on economic measures.
1. Over the past 100 years, the stock market has performed better under Democrats than Republicans. Not by a little… by a huge margin. The strongest stock market performance by a two-term president was a Democrat. So was the second strongest stock market performance by a two-term president. The worst? That was a Republican.
2. Today’s “Republican” is an isolationist, deficit-spending, reality-challenged, anti-government, anarchist who worries about the “gazpacho police.” Today’s MAGA Republican has absolutely no idea of what is meant by traditional “Republican economic theory.”
3.Here’s the piece that academic economists seem to completely miss: the one sure way that a president can most directly and profoundly influence the economy is by making stupid policy decisions. The two most recent Republican presidents severely damaged the economy – not by making bad specifically economic decisions -- but making stupid policy decisions. All the theory in the world is meaningless if your policy decisions crater the economy.
First, the raw facts.
Since 1992, two Democrats each presided over eight years of booming economic growth and left office with unquestionable statistical proof that the nation was better off than it had been went they took office. All you Republicans who vote solely based on your portfolios? In Bill Clinton’s eight years in office, the Dow Jones Industrial Average increased by 227%. In Barack Obama’s eight years, the Dow increased by 138%.
Since 1992, two Republicans have served as president. The first, George W. Bush, ended his two terms in office leaving the nation in its worst economic collapse since the Great Depression. At the end of Dubya's eight-year term, the DJIA actually was down 25%. The second Republican president, Donald Trump, was thrown out of office after one chaotic term in which he increased the national debt by 25% in just four years. The supposed fabulous stock market performance? Trump’s increase of 50.9% was well below the first term performance of either Clinton (105.8%) or Obama (73.2%).
And yet I can still hear you Republicans refusing to accept the truth: that’s an unfair comparison! You are just focusing on the last 30 years! If you took a much longer-term view, surely you’d have a different answer.
Well, yes, you would. On the longer term, it is even more unambiguous that stock market performance is stronger under a Democratic administration than a Republican one. Consider this from a report published by the National Bureau of Economic Research:
"Stock market returns in the United States exhibit a striking pattern: they are much higher under Democratic presidents than under Republican ones. From 1927 to 2015, the average excess market return under Democratic presidents is 10.7% per year, whereas under Republican presidents, it is only -0.2% per year."
Republicans, now getting desperate, may ask why I cite data from the Dow Jones Industrial Average rather than the S&P. Have at it, dude, do your diligence. The numbers for the S&P make the same points.
How about this question: who was in the White House for the worst stock market crashes of all time? Let’s start the granddaddy of them all -- in 1929 under Republican Herbert Hoover. How about the single biggest one-day nose-dive in DJIA history? That happened on Black Monday, October 19, 1987, when 22.6 percent of market value evaporated in a single session. That was under Republican Ronald Reagan. And who can forget the global market meltdown of 2008 under Republican George W. Bush?
Even the articles I found on this subject in what I view to be conservative financial journals agreed that the stock market performed better under Democrats. They simply tried to make the argument that the 120 years of superior market performance was not because Democrats were in office. Here’s my favorite tidbit from a conservative analysis aching to deny the reality: stock market gains were “easy” for Barack Obama, one writer asserted, because the stock market was so far in the toilet when he was elected. Uh, who do you think put it in the toilet?
And the writer thought those gains were “easy?” The economy was in meltdown when Obama was elected president, and his decisive actions with the stimulus and saving the domestic automobile industry were critical to reversing a slide that could have caused a Chernobyl-grade market catastrophe. Many Republicans seem to have selective memory in their recollection of how a GOP White House brought the global economy to its knees …and how a Democratic administration saved it.
But to even talk about “Republican economic theory” in today’s MAGA alternate reality is lunacy. Donald Trump has no idea of what even “Republican economic theory” is.
When it comes to “traditional Republican economic philosophy” on issues like economic controls, discipline, borrowing, debt, balanced budgets, free trade, an independent Fed, and wise investment in growth industries and in our nation’s – and our planet’s -- future, Donald Trump is AWOL.
However, far beyond alleged beliefs in and adherence to a code of economic principles associated with a political party, there is actually a far bigger determinant of our nation’s economic fate. This is where we depart from the theories of traditional economists to arrive at a very reasonable explanation for the vast difference in performance between Republican and Democratic administrations over the past 30 years.
Our hypothesis today is that the biggest reason for the strong performance of the economy under Bill Clinton and Barack Obama was simply that neither made a huge, epic, stupid decision on a matter unrelated to the economy. The two Democratic presidents governed adroitly and competently, and the vast engine of capitalism hummed away, growing organically, churning with innovation and investment, happily uninterrupted for eight years by a policy catastrophe.
The two Republican presidents in question, however, each made monumental errors on matters that, at face value, were not related to the economy. Except, uh, everything is related to the economy. If you make huge, stupid decisions about a war, a pandemic, or a natural disaster, you are going to have a huge impact on the economy. Throw in George Bush’s obscenely lax regulation of the financial industry, and you understand why the stock market actually declined over his eight years in office.
Let’s review the Bush record first. George Dubya was steamrolled by Dick Cheney and Donald Rumsfeld to use phony intelligence about weapons of mass destruction to link Saddam Hussein and Iraq with 9/11. Using this bogus justification, Bush allowed our country to become engulfed in an endless quagmire that divided the nation, drained our economic resources, and led to mushrooming debt.
Bush’s administration turned a lazy regulatory blind eye to a tsunami of arcane financial instruments that were metastasizing on Wall Street, and could only watch as trillions of dollars of investment and savings vaporized when the house of cards collapsed. Bush’s inexperience, poor judgment, terrible decision making, and abdication of financial stewardship led to economic carnage.
On to Donald Trump, who claimed that his brilliant leadership was responsible for strong stock market growth and employment numbers. These assertions are easy to challenge.
First and foremost, he inherited a strong economy from the Obama administration – unlike Obama himself, who won the presidency in the darkest abyss of Wall Street carnage under Bush’s watch. Both GDP growth and the decline in unemployment recorded under Trump prior to the coronavirus were a continuation of the trajectory established for years under Obama.
Second, Trump eased government regulations across a broad swath of industry sectors, particularly in the financial and energy sectors. It is a no-brainer that reducing the direct and indirect cost of regulations will pump up corporate profits and stock prices. America will pay the price in the long term, of course, as we fall behind in renewable energy sources and continue to damage our climate.
Third, Trump’s tax policy – a sloppy wet kiss to his wealthy donors and big companies – was passed with the assurance that the Federal deficit would be reduced because of the organic growth the tax cuts would stimulate. Instead, the deficit ballooned under Trump. Indeed, according to the Daily Beast, Trump was warned in 2017 about an inevitable debt crisis, and an eyewitness reported Trump’s response: “yeah, but I won’t be here.” Hey, it’s easy to pump up stock prices if your grandchildren are paying for it.
It is worth noting
in this context that Trump is just the latest in a long line of Republican
presidents -- including Reagan and George W. Bush -- to promise that a tax cut
will stimulate growth and result in increased revenues to the government that could be used to reduce the debt. It never happens. Nothing ever "trickles down."
Deficits and debt rise faster in Republican administrations than when a
Democrat is in office. Why? The last time a tax cut resulted in offsetting
growth was during the administration of John F. Kennedy, who took this step in
an environment of very high marginal taxes... a situation that did not exist
for Reagan, Bush, or Trump. It is easier to get a stimulus when you are taking
high rates down, not as easy when you are taking low rates down. And, yes,
Kennedy was a Democrat.
How about trade policy? Trump efforts to play hardball with China largely
puzzled Republicans, who readily acknowledge that it is Americans who pay
the tariffs. Republicans generally abhor tariffs as a bargaining tactic.
People who only look at the economy through the single lens of narrow fiscal policy theories can happily conclude that a person who claims to believe in balanced budgets, supply-side economics, and smaller government is the right candidate for them. Somehow, they fail to assess whether Trump actually understands, believes, or acts on any of those economic principles.
By the end of Trump’s term, any claims to economic triumph – stock market growth, unemployment, trade agreements -- had been overwhelmed by the emergence of a global pandemic. Trump has been roundly criticized for exacerbating its impact on the American economy by virtue of his failure to act decisively, comprehensively, centrally, and quickly to contain the coronavirus.
Trump’s profound incompetence on matters wholly unrelated to the economy had a crushing impact on economic vitality. He failed to grasp the potential scope and impact of the COVID-19 pandemic, seemed to simply wish and hope it would end quickly, and failed to take the rapid decisive actions that other world leaders took and that the medical and scientific community so strenuously urged. He did nothing to create a centralized, coordinated, and immediate national response based on mitigating contagion, and failed to invoke his presidential powers to ramp up a properly scaled national testing program.
People are quick to give him credit for his efforts to develop vaccines, but ironically this was the single area of his most egregious mismanagement. Yes, vaccines were quickly developed and manufactured -- but Trump's White House had no plan for distributing the vaccines. When Joe Biden was sworn in, his team learned that half the available vaccine doses were sitting unused, as absolutely no thought had been given to getting them into the arms of eager people. Biden put Jeff Zients on the task and the problem was rapidly solved.
Trump's final Covid failure: once the vaccines had been developed, he hastily retreated from them, fearful of MAGA nation’s negative reaction. He failed to create the robust endorsement of the vaccines that could have rapidly built-up societal immunity.
We return to our core thesis: there is no economic policy on earth that can devastate the American economy as quickly and as comprehensively as a lazy and ignorant president who is not up to the job, and who is an abject failure in a crisis.
So let me spell this out for all you Republicans, so you can baste is the sour brine of irony: it is extremely reasonable to hypothesize that the economic toll of the coronavirus was far more devastating than it would have been had an Obama, Bill Clinton, or Hillary Clinton been president. Any of those three individuals were completely committed to soliciting and respecting expert opinion. Each would have listened to the scientists, and the doctors. They would have acted more quickly, and the economic impact of the pandemic would have been less damaging than what occurred under Trump.
What does it all mean for 2024?
If your lazy-minded Republican neighbor says he has decided to vote with his wallet in 2024, tell him that’s a brilliant idea.
Tell him that if he really wants to be as selfish as possible and base his entire decision on the 2024 election on which candidate will be best for his own financial gain, then there is only one candidate to choose.
Joe Biden.
Tell your pal that Joe Biden has delivered an outstanding fiscal record as President of the United States.
Tell him that if he is considering voting for Trump because Republicans are “better stewards of the economy,” show him the numbers that prove that Republicans are historically far worse at delivering personal wealth than Democrats.
Tell him that if he is a huge fan of Republican fiscal policy, Donald Trump – with his deficit spending, tariffs, and global isolationism is about as far from any known Republican economic dogma as you can find.
And tell him that all the economic theory and policy in the world is meaningless if the decision maker in the White House is a selfish, uninformed lightweight who makes terrible policy decisions.
Trump 2024? Get ready for an avalanche of stupid policy.
Trump will abandon Ukraine and take the United States out of NATO, which will embolden Putin and very likely lead to a far larger and catastrophic war in Europe. That war will make the Dow Jones nosedive following the invasion of Ukraine look like a pothole.
The total focus of Trump’s presidency will be revenge on perceived domestic enemies in government and the press, the destruction of independent government institutions that would challenge his authority, and making personal financial gains at the expense of American taxpayers.
This singular focus, coupled with his naïve admiration for fellow authoritarians like Putin, Xi, and Kim Jong Un, will leave our nation -- and our allies -- extremely vulnerable to foreign challenges in energy, cyber-warfare, and manufacturing.
And heaven help us if there is another pandemic or natural disaster that Trump is not up to managing.
If you are voting for Trump because you think it is good for your wallet, ask your broker how the markets generally react to chaos. Because chaos is what you’ll get with Trump.
Ask analysts what behaviors they look for in Fortune 500 CEOs when they make recommendations about their stocks. My bet: it is not ignorance, impulsiveness, vindictiveness, self-worship, and deceit.
Then ask yourself if you’d trust Donald Trump with your own portfolio.
There are dozens of reasons to re-elect Joe Biden. That he is not Donald Trump is number one on my list, but I know many see things differently. And many think that stewardship of the economy is a reason to change course.
This, friends, is the last reason to change course. The economy is strong and getting stronger. We’ve recovered from Covid as fast as any nation on earth. The key indicators of vitality – jobs, GDP, markets – are all surging.
Most of all, consider this. Joe Biden will not make a big, stupid policy decision that craters our economy. He will not implement “shock and awe” in Iraq on phony pretenses. He will not pretend that a global pandemic will just go away.
Yes, if you couldn’t care less about reproductive rights, the preservation of democracy, standing with our allies in Ukraine,, NATO, gun control, civil rights, and are solely, wholly, and totally focused on your own personal economic health and your damn portfolio, then by all means, buddy… vote for your wallet.
Vote for Joe Biden.
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Well written and true; which will win: the will to destroy or the will to live?
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