Conservatives Blame Bush Recession on Obama
Unsurprisingly, it took less than 24 hours for the conservative chattering classes to blame the Bush recession on President-elect Barack Obama. The usual suspects, including Rush Limbaugh, Fred Barnes and Dick Morris, pinned two days of steep stock market declines on Obama's election. Of course, the recent bloodbath on Wall Street has nothing to do with Obama and everything to do with what John McCain deemed "the fundamentals of our economy" being weak. And as history shows time and again, the American economy and stock market almost always do better under Democratic presidents.
That the economy under Bush's guidance is in dire straits is undeniable. After shedding 1.2 million jobs this year, unemployment jumped to 6.5%, the highest level in 14 years. The number of Americans receiving long-term jobless benefits catapulted to a 25 year high while U.S. manufacturing output plummeted to a 26 year low. Home foreclosures skyrocketed by 71% in the third quarter. Devastated by the credit crunch, the American auto industry teeters on the brink of collapse; GM lost $2.5 billion last quarter and could run out of cash next year. In that same quarter, U.S. GDP slumped by 0.3%. It's no wonder that consumer confidence spiraled to its lowest level on record.
In the midst of the meltdown of the U.S. financial system and the dramatic downturn of the American economy, the increasing volatility - and steep losses - on Wall Street should come as no surprise. As Meg Browne, a currency strategist at Brown Brothers Harriman, put it, "The market already knows the economy is pretty sick."
But to hear the right-wing's water carriers tell it, it's all Barack Obama's fault.
Following the drop-off on Wall Street the past two days, the conservative commentariat placed the blame on the new President who has yet to assume office. Echoing CNBC's Larry Kudlow, Dick Morris claimed the markets will "continue to tank...not just because he's a radical, not just because he's a Democrat, but because he's going to raise the capital gains tax. While Fox News' Gretchen Carlson announced, "there's a lot of feeling in the market not reacting very well to the election of Barack Obama," Fred Barnes proclaimed, "There is great uncertainty out there about [Obama's] policies." And on Thursday, the always execrable Rush Limbaugh laid it all at Obama's feet:
"The Obama recession is in full swing, ladies and gentlemen. Stocks are dying, which is a precursor of things to come. This is an Obama recession. Might turn into a depression. He hasn't done anything yet but his ideas are killing the economy. His ideas are killing Wall Street...
...The market's down today because of the jobless numbers. That's how the Drive-Bys see it. Uhhhhh, we have the largest market plunge after an election in history. Thank you, man-child Barack Obama."
Leaving aside for the moment the obvious fact that Barack Obama is not yet in the White House, the conservative hate machine ignores two inconvenient truths. First, of course, the economic calamity that is the Bush recession is well underway. Second is the inescapable historical record which reveals that the economy and the stock market do better under Democrats.
To highlight this point, the New York Times in October asked readers to imagine having put their money where its mouth is. Contrary to Republican mythology, Americans fare better in the market - much, much better - under Democratic administrations:
As of Friday, a $10,000 investment in the S.& P. stock market index would have grown to $11,733 if invested under Republican presidents only, although that would be $51,211 if we exclude Herbert Hoover's presidency during the Great Depression. Invested under Democratic presidents only, $10,000 would have grown to $300,671 at a compound rate of 8.9 percent over nearly 40 years.
(For the eye-popping chart of the S&P's performance under each of the presidents from Hoover through Bush 43, visit here.)
As the broader record shows, the best path to prosperity is to elect Democratic presidents.
The superior performance of Democratic presidents covers virtually the entire spectrum of economic indicators. As Elliott Parker of the University of Nevada, Reno detailed in a 2006 paper, since 1949 Democratic administrations have done better than Republican ones when it comes to unemployment (5.2% to 6.0%), job creation (-.0.4% decrease in unemployment, compared to 0.3% increase), GDP growth rate (4.2% to 2.9%), and even corporate profits as a share of GDP. And to be sure, he found the Dow benefits from Democrats in the White House.
There's no shortage of studies to show that stock market returns are higher under Democratic leadership. (As it turns out, Wall Street's performance is also better when Democrats control Congress.) In 2000, Pedro Santa-Clara and Rossen Valkanov of UCLA's Anderson School of Business concluded that "that the average excess return in the stock market is higher under Democratic than Republican presidents - a difference of 9 percent per year for the value-weighted portfolio and 16 percent for the equal-weighted portfolio." As the New York Times noted of UCLA study in 2003:
"It's not even close. The stock market does far better under Democrats...
...Professors Santa-Clara and Valkanov look at the excess market return - the difference between a broad index of stock prices (basically the Standard & Poor's 500-stock index) and the three-month Treasury bill rate - between 1927 and 1998. The excess return measures how attractive stock investments are compared with completely safe investments like short-term T-bills.
Using this measure, they find that during those 72 years the stock market returned about 11 percent more a year under Democratic presidents and 2 percent more under Republicans - a striking difference."
In 2002, Slate similarly concluded that "Democrats, it turns out, are much better for the stock market than Republicans":
Slate ran the numbers and found that since 1900, Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republicans only an 8 percent return. In 2000, the Stock Trader's Almanac, which slices and dices Wall Street performance figures like baseball stats, came up with nearly the same numbers (13.4 percent versus 8.1 percent) by measuring Dow price appreciation. (Most of the 20th century's bear markets, incidentally, have been Republican bear markets: the Crash of '29, the early '70s oil shock, the '87 correction, and the current stall occurred under GOP presidents.)
According to almanac editor Jeffrey Hirsch, the presidential party figures are among the most significant he's found. If the stock market were random, we'd expect such a result only one-quarter of the time. "I don't know why people are convinced Republicans are good for the stock market," Hirsch says.
Why? Because the Republican amen corner of Kudlow, Barnes, Limbaugh et al continue - with great success - to perpetuate the myth that the regulation-free policies of the GOP that so benefit them personally somehow help the American people overall. Of course, when those policies invariably fail, Americans become (in Phil Gramm's words) are merely "a nation of whiners" whose perception of the economic downturn (in John McCain's words) is "psychological."
And so it goes. George W. Bush has bequeathed an economic disaster to Barack Obama. By accepting responsibility as President to fix it, according to the fraudsters of the right, Obama assumes paternity as well.
Mercifully, the American people know better and proved it at the polls. This time, they followed the wise counsel of Harry Truman:
"If you want to live like a Republican, vote Democratic."
|
Sorry to be a grammar troll, but I think this sentence is missing a word -
"Of course, when those policies invariably, Americans become (in Phil Gramm's words) are merely "a nation of whiners" whose perception of the economic downturn (in John McCain's words) is "psychological."
- after the word invariably - either fail, or come up short - or something like that.
Thanks for all the background documentation. It will come in handy at the water cooler debates
Posted by wolfie on November 9, 2008 4:56 AMThese people are on the GOPLSD again.
Posted by Lucius Fieldon on November 20, 2008 12:39 AM