Monday, September 29, 2008
Economy fares better under Democrats
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Theodore Fuller
Fuller is a professor of sociology at Virginia Tech.
We are going through tough times economically. Millions are unemployed, and millions more are worried about the security of their jobs. Nearly a million families have lost their homes through foreclosure, and others seem to be on the brink of losing their homes. At a time when a college education is more important than ever, families worry about being able to pay the tuition for their children. As the values in retirement accounts melt away, families wonder if they will ever be able to retire. The dollar has lost about one-third of its value against the euro since January 2001. We have more income inequality now than at any time in a century.
Who will lead us out of the current crisis? It is well known that, economically, the Republican Party represents the business class while the Democratic Party represents the middle class and working class. It is less known, however, that the economy does better when a Democrat is in the White House than when a Republican is in the White House.
Since 1930, the Gross Domestic Product has grown an average of 5.4 percent per year when we had a Democratic president, but only 1.6 percent when we had a Republican president. Since 1900, the S&P 500 has grown at an annual rate of 12.3 percent with Democratic presidents, compared to 8 percent per year with Republican presidents.
Since 1948, with Republican presidents income growth tends to be higher for those at the top of the income distribution, compared to those at the middle or the bottom of the distribution. With a Democratic president, income growth tends to be equal for all income levels. A rising tide lifts all boats -- if a Democrat is at the helm, but not if a Republican is the captain. Interestingly, income growth for the highest income group is just as good with a Democratic president as with a Republican president.
President Reagan famously said, "Government is not the solution to our problem; government is the problem." President Bush and John McCain are firm believers in this philosophical position. McCain recently told the Wall Street Journal, "I am always for less regulation." Recent events have shown the drastic effects that result from this kind of radical "free market" approach. When corporations are given a free hand, we get the kinds of debacles we have seen in the last year or so.
Is McCain the Republican to right our economic ship, where other Republicans have performed in a lackluster way? Not likely. McCain is philosophically opposed to regulation. He admits he doesn't understand the economy very well. He has so many houses he can't remember how many he does have, yet he voted 19 times against increasing the minimum wage. McCain boasts that he has voted with President Bush more than 90 percent of the time. He thinks it is important to extend the tax cuts that benefit the rich, cuts that he once decried as "irresponsible." McCain is also the one who, like Bush, wants to privatize Social Security. This will clearly weaken the Social Security system that is so important to millions of families.
To help the nearly 50 million Americans who do not have health insurance, Barack Obama will attempt to move the country toward a universal health care system. Not socialized medicine, where you have to go to a government doctor, but a system where you go to the doctor you choose, and the government pays the bill.
McCain wants to shift costs to individuals. One step on McCain's path is to tax those who do get health insurance from their employer for the value of that benefit. If your employer pays $400 per month to provide health insurance for you and your family, McCain would count this benefit as income and tax you. This is a tax increase labeled as health care "reform."
We need change in Washington, and while McCain has recently gotten on the change bandwagon, his 25 years in Washington, his ties to lobbyists and his 90 percent support for Bush tell the real story. Obama is the real change candidate. Please send Obama and Mark Warner to Washington.
