Reagan On Religious Discrimination

"We must never remain silent in the face of bigotry. We must condemn those who seek to divide us. In all quarters and at all times, we must teach tolerance and denounce racism, anti-Semitism, and all ethnic or religious bigotry wherever they exist as unacceptable evils. We have no place for haters in America -- none, whatsoever."

-- President Ronald Reagan

Presidents and Jobs (Average Private Payrolls Added Per Month Since Carter)

Given that Republicans are often billed as the pro-business party, shouldn't we find business booming under Republican Presidents? Shouldn't we find payrolls rising significantly from all that business expansion?

For President Reagan, to be fair, we should note that his early years were hurt by the same force that crushed payrolls under President Carter during April through July of 1980: the high rates with which Paul Volcker battled inflation. Double-digit prime interest rates diminished employment under both Presidents Reagan and Carter. While those unusually high interest rates may have been necessary to get control over inflation, those high rates severely slowed expansion and thus hiring. However, that doesn't remove the possibility that President Reagan's descent from Carter's payroll numbers hinted at the start of a Republican trend under Trickle-down policies. After all, the Bush I policies were largely a continuation of the Reagan policies. If we average together the Reagan and Bush I months, together they get 113.3 thousand jobs / month. That's less than either of Carter or Clinton. And it's also less than the rate of increase we've seen since the turn-around on 2/1/2010 under President Obama.

While these figures aren't conclusive proof alone, add them together with a few other factors such as that GDP growth has lagged under the lowest top marginal tax rates. It sure looks like Trickle-down (or Supply-side economic or Reaganomics) failed us in a big way.

Maybe we should stop accepting the notion that talking about lowering taxes and deregulating would actually be business-friendly. Maybe we should instead consider ways to return to the sort of sensible, progressive tax structures we had before Reagan lead us down the road to decline. Instead of calling it red tape, maybe we should consider regulation's value for helping business manage risk, compete on a level playing field, and have more predictable returns. And maybe we should get back to expecting serious infrastructure projects and demanding aggressive investments in our research and development programs to build our avenues for growth.

Notes on methodology: Generally speaking, the January in which the executive transitions from one branch to another will be almost entirely impacted by the outgoing President's policies and not those of the incoming President. As such, the average uses the change in monthly manufacturing payrolls starting with the change from the first full month of the President's term (i.e., from the February that is the first full month to the March thereafter) and going until the first full month after the President's term (i.e., the last change counted is from the January during which the President in question is last in office to the February thereafter). Data from BLS/FRED.

Presidents and Manufacturing

Average manufacturing jobs / month gained or lost for the past half dozen Presidents and since the turn-around on January 2010.

Notes on methodology: Generally speaking, the January in which the executive transitions from one branch to another will be almost entirely impacted by the outgoing President's policies and not those of the incoming President. As such, the average uses the change in monthly manufacturing payrolls starting with the change from the first full month of the President's term (i.e., from the February that is the first full month to the March thereafter) and going until the first full month after the President's term (i.e., the last change counted is from the January during which the President in question is last in office to the February thereafter). Data from BLS/FRED.

Socialist Presidents? Who Comes Closer: FDR, Obama, or Reagan?

We seem to have a resurgence of folks worrying about socialism. Those claiming rampant socialism have particularly fretted about certain Presidents, but more on that later. First, let's get an overview of private industry's percentage of all payrolls since 1939 via the BLS data to put it into broad perspective. If there's one clear, defining trait of socialism, it'd be that folks work for the government rather than private industry. After all, to qualify as socialism requires social ownership of the means of production. Private employers aren't socially owned. So the private % of payrolls tells us just how much we're still a [mostly] capitalist society.

What do we see here? Rather little change in the broad perspective. Clearly we'll need to get a close up in order to see any differentiation from President to President. Let's get right to looking at how they stack up. Sadly, using the BLS data only gets us back as far as 1939, so that'll have to do.

Up there we've got a picture of the average % private industry occupied of total nonfarm payrolls during each President's active years. With a high of 86.64% and a low of 80.95%, it's a rather tight range. It takes a close up to see a difference. But while it's neck and neck, Truman gets the high mark. Honorable mention should obviously go to that bastion of small government, Franklin D. Roosevelt, with an average of 86.08% private payrolls during the latter part of his term (1939 onward). Ironically, the low mark goes to a man who bore the same surname as an auto industry magnate, President Ford.

Many have focused on the current President lately. In particular, there's a virtual cottage industry for discussing President Obama in the light of things said by President Reagan. So let's focus on how those two compare.

The private share of payrolls under President Obama rises a bit above the private share under President Reagan. So if President Obama were a socialist as alleged, that'd make President Reagan a socialist ... and an even more effective one at that. Not that President Reagan really was, of course. But this should make it quite clear to anyone who isn't arguing from an unreasoning bias that President Obama has maintained the largely capitalist nature of America. In his first three years, President Obama has presided over a mostly growing private share of payrolls that has averaged higher than that under half of the preceding Presidents since JFK.

Reagan, Tax Cuts, and GDP

In honor of the 100th anniversary of President Reagan's birth, lets take a look at the effect of his tax cuts for the top marginal rate. When we looked at the course of the past 80 years as a set, it looks as if there isn't a particularly clear correlation between top marginal tax rates and GDP growth. But what if we weren't looking close enough? After all, the last few decades seemed to have a noticeable symmetry.

Where should we look? For President Reagan, whose tax cuts came into play around 1982, we should see those rates working their magic on the economy by two years later in 1984. The rates would continue any effect after President Reagan left office, so lets keep looking up through 1992.

Tax rates on left scale; GDP growth rates on right scale

Inspiring, don't you think? Apparently that GDP growth going down in about the same slope that top marginal tax rates were going down must have been what they meant by "trickle-down."

Of course, that might not be entirely fair. We should probably look at the President's entire term and see what happened in case we can credit the tax cuts immediately with a big initial boost that gradually faded.

Tax rates on left scale; GDP growth rates on right scale

As seen in the chart of 1980 to 1992, there is indeed a big spike in GDP growth immediately after the tax cuts begin. Yet that conflicts with what we see in the rest of the chart. Why would lowering taxes correspond with expansion in one section of the chart and contraction in another? In this case, we need additional data: the Fed rate. The Fed ramped up interest rates brutally high for the early 80s in order to tame massive inflation. The Fed rate had been slowly ratcheted up over 1978 and 1979. The rate for 1979 started at 10% and went up to almost 14%. For 1980, the rate averaged 13%. For 1981, the rate averaged over 16%. The prime interest rate even ventured into the 20s in 1982. These high rates did tame the inflation, but in doing so they brought on the recession of 1981-1982 because they made it much harder to borrow to invest for growth. Naturally, when the brutal interest rates were eased back down in 1982, there was some pent up thirst for financing just waiting for lower interest rates.

What can we draw from 1980 through 1992 as far as taxes and GDP? If these years are indicative of anything, it is that under relatively normal interest rates lowering the top marginal tax rate appears to come with a corresponding drop in GDP. Whereas during a period of extreme high interest rates, there appears to be no correlation between top marginal tax rates and GDP because of the growth-blocking effect of extremely high interest rates.

For the Gipper, unfortunately, that top marginal tax cut play doesn't seem to have been a win.