Your Salary in 2016 -- The Big Difference Between a McCain or Obama Administration

During his acceptance speech at Invesco Field in August, Barack Obama earned big applause for a line that compared Democratic and Republican economic policies. "We measure progress," he told the partisan crowd, "in the twenty-three million new jobs that were created when Bill Clinton was president -- when the average American family saw its income go up $7,500, instead of go down $2,000, like it has under George Bush."

As rhetoric, it was effective. But was it a fair point, or a cheap shot? It's true that the Bush expansion was one of the weakest economic recoveries in postwar history, but can you really lay the blame for that at the feet of the president? Isn't it the case that, ritual campaign promises to the contrary, presidents actually have very little influence on the economy?

The conventional wisdom among economists says yes, but a growing mountain of historical data suggests that they may be wrong. In the postwar era, it turns out, Democratic presidents consistently produce higher growth rates, lower unemployment, better stock market growth, and less income inequality than Republican presidents. Nobody quite knows why, but the results are surprisingly robust.

Within the economics profession this topic is known as the study of "political business cycles," and I first became interested in it ten years ago, before the dot-com boom of the Clinton era and the weak recovery of the Bush era. Even back then the data was clear. Add up growth rates under Democratic administrations, and you get a higher number than under Republican administrations. Ditto for employment levels. Inflation rates are about the same. Do it again with lag times, since presidents inherit economies from their predecessors, and you get the same result. Change the lag time from one year to two, or three, or four, and you still get the same result. Fast-forward to 2008, and the results become even more dramatic. We've now had eleven presidents since World War II, with over sixty years of data points to draw from, and no matter how you slice the results, Democratic presidents are better for the economy.

Why? The answer is complicated, not least because it's a subject that's inherently partisan and most economists probably prefer to stick to more neutral ground. Nonetheless, it's been a small but active area of interest among academic economists for more than thirty years, and it's one that recently got some time in the limelight thanks to the publication of Unequal Democracy, a book about political business cycles by Princeton political scientist Larry Bartels that's accessible to professionals and laymen alike.

To begin with, Bartels lays out the basic evidence for partisan economic differences since World War II. Annual economic growth is over a point higher under Democrats than Republicans. Unemployment is more than a point lower. Income growth among poor families is two points higher, among the middle class a point higher, and even among the rich about 0.2 percent higher. And growth is spread more evenly under Democrats too: income inequality stays about the same under Democratic administrations but grows consistently under Republicans. Inflation rates, meanwhile, which conventional wisdom suggests should be a Republican strong point, are about the same no matter who's in power. What's more, none of this is a coincidence. It's not just that Republican presidents are unlucky. The results stay robust even under a wide range of statistical tests.

Still, not everyone is convinced. Princeton economist and New York Times columnist Paul Krugman, for example, said recently that he had not written about Bartels's results before now because he couldn't figure out a "plausible mechanism" that might account for them. But then he went on to draw an intriguing parallel to Alfred Wegener, the German geologist who first proposed the theory of continental drift in 1912 but was roundly ignored during his lifetime. Why? Because even though Wegener had accumulated plenty of evidence in favor of his theory, there was no plausible mechanism to explain it. Continents are big pieces of rock, after all. How can they drift?