Fiscal Conservatism: Rhetoric Reality

Peter Zylstra-Moore

One of the defining myths of the Republican Party is the concept of fiscal conservatism, as opposed to the so-called, “tax and spend liberals.” With economic concerns rising to the top among voters it is important to separate myth from reality. It is important to look at different factors including, overall growth, the national deficit, income growth of the rich and poor, and taxation rates and policy.

If we consider some actual numbers from 1948 to 2005, a common measure of economic growth, Real per capita GNP, grew significantly faster under the Democrats. During their 26 years of office, after accounting for inflation, GNP grew an average of 2.78% per year. Under 32 years of Republican administration, real GDP grew an average of 1.64% annually, over whole percentage point lower than Democrats. In other words, our economy grew 2/5 more quickly under the Democrats.

Not only has economic growth actually been slower with the Republicans, but they have also significantly increased the deficit. In fact the national deficit has increased 36.4% or 2.25% per year, in Republican administrations since 1978. The Democrats, on the other hand, have increased the deficit a total of 4.2%, or.35%, per year in office. We have spiraled into debt seven times quicker with the Republicans. Per year in office, government spending rose .76% under the Republicans, while it grew .83% per year under the Democrats. Government spending has grown only .07of a percent faster under the Democrats. The reason for this slight difference in spending is because Democratic administrations have made payments on the deficit rather than taken out substantially higher debt. It should also be recognized that one of the main reasons for a growing deficit is the fact that both Republican and Democratic budgets include irrationally high spending on the military.

In considering the economic effects of each political party it is important to also consider the distribution of wealth. Princeton Professor, Larry Bartel did a mass study of political parties and their effects on economic growth for various groups in American society. He found that after accounting for inflation, the era of Roosevelt’s New Deal policies which began in response to the Great Depression not only provided the most economic growth overall but also the most equitable growth. Starting with Reagan, the income gap between rich and poor in the United States has increased with every Republican administration. Including Roosevelt, the gap between the rich and the poor has declined slightly with all Democratic administrations except under Carter who was hurt by oil inflation. According to Bartel, during Democratic administrations, Real Incomes (the amount you can buy with each dollar) grew twice as fast for middle-class families and six times as fast for working-poor families than with Republicans in office.

Yearly Real Income Growth Rate, 1948-2005 (Bartels, 32)

Democrats Republicans
Poorest 20th percentile 2.64% .43%
Bottom 40th percentile 2.46% .8%
Middle Class 60th percentile 2.47% 1.13%
Upper 80th percentile 2.38% 1.39%
Highest 95th percentile 2.12% 1.9%

It is fascinating to note that even the richest 5% grow quicker under Democrats (2.12% compared to 1.9%). Thus even if we don’t care about the poor we should vote Democrat. If we look back on history if we vote Republican for economic reasons, then it is because we want inequality, stunted growth, and deficits.

Examining what has actually happened under each administration, we recognize that with Republicans our national debt has increased along with the disparity between rich and poor. At the same time their overall tax revenues have been equal to those of Democratic administrations. Finally per capita income has slid under Republicans. With Republicans, tax cuts for the poor and middle class which create consumption and equality are replaced with tax cuts for the rich and business, which leads to increased indebtedness and more frequent recessions. Even growth for the rich slows, because they can only produce profitably in relation to what is demanded. When we separate rhetoric from reality, it becomes clear; if we really want a government that will grow our economy and balance the budget, we had better vote Democrat.

It is time for the Democrats, but not the Democrats of the past 30 years who look more and more like the Republicans. It is time for labor. It is time for unions. It is time to accelerate progressive taxation. It is time for big businesses to start paying taxes again and to start paying workers again. It is time for higher minimum wages. It is time for estate taxes. It is not about giving the poor handouts, but allowing the poor and middle class to compete. It is time for the Fed to be run not by big banks and their friends, but by democratically elected governments. It is time to improve rather than undercut our public education. It is time for an efficient single-payer medical system. It is time to create new, high-paying jobs; green jobs in producing renewable electricity and making our homes and businesses more efficient, infrastructure jobs to maintain and repair our country. It is time to focus our technology not on the military but on things that actually improve our lives and the lives of our children. It is time for the Democrats and it is time to demand of the Democrats a new New Deal.