In his folksy speech at the Democratic National Convention, former President Bill Clinton introduced a clever new measure of presidential performance: the "jobs score."
Clinton pointed out that under Democratic presidents since 1961, the economy has added 42 million private-sector jobs, while under Republicans it has added just 24 million. He used the same concept to argue that President Obama has outscored both congressional Republicans and his GOP presidential opponent, Mitt Romney, in terms of creating jobs.
Clinton has some intriguing facts on his side. Aside from a rounding error, his historical numbers are accurate (figures from the Bureau of Labor Statistics show that the tally under Democrats since 1961 rounds to 41 million, not 42 million). I crunched the numbers a few different ways to see if Clinton was cherry-picking the best numbers. His figures measure job gains from the month a president took office until the month he left. Since it takes a year or so for any president's policies to go into effect, I also measured job gains from one year after each president took office till one year after he left. Here's the score by that measure: Democrats: 38 million new jobs, Republicans, 27 million.
Clinton only mentioned private-sector jobs, so I pulled the data for all jobs, including government. Again, the Dems have a big edge, accounting for 48 million new jobs, compared with 31 million for Republicans. If you push the boundaries out one year for each president, the gap narrows to 44 million new jobs under Democrats, and 34 million under Republicans.
Other measures also show that the economy performs better under Democratic presidents. Sam Stovall, chief equity strategist for S&P Capital IQ, conducted an analysis recently showing that GDP, stock prices, and corporate earnings have all increased more under Democratic presidents than under Republicans.
The S&P 500 stock index, for example, has risen 12.1 percent per year under Democratic presidents since 1900, and just 5.1 percent under Republicans. Since 1949, GDP has grown 4.2 percent per year under Democrats and 2.6 percent per year under Republicans. The same trend extends to corporate profits, which have grown 10.5 percent under Dems and 8.9 percent under Republicans.
The irony is obvious, since Republicans are considered the business-friendly party, while "tax and spend" Democrats are regarded as redistributionists eager to transfer wealth from those who have it to those who don't. But it's probably fallacious to simply ascribe the economy's strong performance under Democrats to Democratic policies, and vice versa.
For one thing, some economic policies take years to filter into the real economy, and it's possible that higher spending under Democrats gives the economy a short-term boost that drags down the economy in later years, after the Democrat has been replaced in the White House by a Republican. Plus, traditional labels don't necessarily apply to each party anymore. Though taxes fell under President George W. Bush, for example, spending rose substantially. The same trend has continued under Obama.
It's also possible that the economic-performance numbers are skewed by a few boffo years for Democrats, such as the eight years Clinton was in the White House. Democrats like to believe that Clinton's policies were responsible for strong job growth and a booming economy in the '90s, but Clinton also had the good fortune to preside over the second half of an economic surge that lasted nearly 20 years.
Between 1983 and 2001, the economy added nearly 44 million jobs, with a boom that began under President Reagan continuing under Clinton. There was a minor recession from 1990 to 1991, when George H. W. Bush was president, but in retrospect that seems like a temporary slowdown that simply allowed the economy to catch its breath. It's even possible that tax reform and other policies that Reagan implemented set the stage for a long growth spurt that fully flowered under Clinton.
That ended in 2001 and has never resumed. It's facile to blame President George W. Bush, who cut taxes, boosted spending, increased the national debt, and departed in 2009 amid a financial crisis and deep recession. But other factors have surely contributed to a deflated U.S. economy, including globalization and the digital technology revolution—which both entail cheaper alternatives to traditional American labor. The net effect of such trends on jobs and economic growth is something economists have already spent years trying to understand, with no firm conclusions so far.
President Obama is now grappling with the same abstruse forces, while trying to persuade voters that his policies will make a difference and help turn the economy around if he wins another four years in office. Bill Clinton may have made a strong case for the Democratic policies of yore, but the real question is whether such policies will work in the future. Or whether any policy will do much to harness economic forces that may be more powerful than any president.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.