According to a recent study by Princeton economists Alan Blinder and Mark Watson, Democrats do better on the economy.  Going back to 1947, the authors found that U.S. GDP grew 1.8% faster under Democratic presidents than under Republican ones.

The authors suggested that this outperformance was partly, but perhaps not entirely, the result of luck.  The outperformance stems in large part from “more benign oil shocks, superior TFP [total factor productivity] performance, and more optimistic consumer expectations about the near-term future.”  In other words, Democrats benefited from superior productivity during their terms in office, higher consumer confidence, and lower and more stable oil prices.

As Blinder and Watson note, outperformance of 1.8% over a period of almost 70 years is “astoundingly large relative to the sample mean.”  That differential may be just too large to be explained by luck.  The authors are not sure.  Can the party in office be held accountable for Mideast oil shocks?  Should it get credit for greater workforce productivity or rising consumer confidence?  Or is there another factor at  work?

A good place to start is with the authors’ statement that “GDP growth rises when Democrats get elected and falls when Republicans do.”  Since there are “no exceptions,” not even under Jimmy Carter (whose weak performance nearly tied that of his predecessor Gerald Ford), it seems an open and shut case.  Democrats do better.

But do they really?  Or do they simply benefit from the sound economic policies of Republicans who precede them in office – policies that are then cast aside once Democrats take control?

One period of outperformance occurred in the 1960s, during the administrations of John F. Kennedy and Lyndon Baines Johnson.  That was the era of the “go-go” economy, a booming stock market (with its “Nifty Fifty” list of growth companies), and relatively full employment.

But were the go-go years the product of liberal policies or the result of the fiscal restraint that had been restored, with considerable difficulty, by the Eisenhower administration?  The answer lies in a consideration of the effects of what followed the Kennedy-Johnson years.

As Blinder and Watson note, Richard Nixon inherited strong economic “momentum” from LBJ.  With the momentum of the late sixties’ expansion behind him, why was the economy entering recession by the time Nixon left office?    

The hidden poison was a massive increase in government spending and debt.  Johnson’s funding of the “Great Society” and of war in Vietnam served as an artificial stimulus that could not be sustained.  The temporary effect was full employment accompanied by rising prices and interest rates.  Once the stimulus was withdrawn, as it must be, the inevitable result was the “stagflation” of the 1970s.  

The effects of these policies began to weigh on the economy long before LBJ left office.  The U.S. stock market peaked in 1966 and began a decline that lasted for 16 years.  Inflation had reached dangerous levels by the end of Johnson’s second term.  Combined with the oil shock of 1973 and “Johnson’s war,” which did not end until 1974, the effects of LBJ’s policies sank the economy for more than a decade after he left office. 

Like every Democrat since Woodrow Wilson, LBJ spent like there were no limits and left the resulting mess for his successor to clean up.  In most cases, that successor was a Republican.  This, in short, is why “Democrats do better.”  They “do better” by pumping the economy and dumping the resulting mess on Republicans.

When Ronald Reagan finally tamed inflation and restored economic confidence with tax cuts and spending restraints, he ushered in a long period of economic growth – but not until Americans had suffered through a severe recession during his first two years in office.  Professor Blinder’s data penalize Reagan for those years of slow growth, but it was Carter and LBJ, and the Democratic Party that controlled Congress continuously from 1955 to 1979, who were to blame.

It’s not just that Democratic presidents dump the consequences of their irresponsible spending on their successors – it’s also the case that they benefit from the spending restraint of Republicans who precede them.  The classic example is Bill Clinton.  If “luck” explains the outperformance of Democrats in the presidency, it’s because they are lucky enough to follow Republicans into office and benefit from their good governance.  Clinton benefited from the extended period of declining interest rates, reduced regulation, and lower tax rates that Reagan initiated.

Clinton did nothing to increase prosperity except, quite reluctantly, to cut federal welfare programs at the insistence of the GOP-led Congress.  The prosperity of the 1990s was the direct product of policies forged by Reagan and largely preserved by George H.W. Bush.

The same Jekyll and Hyde phenomenon can be observed in nearly every Democratic-Republican presidential cycle.  Warren Harding, when he assumed office in 1921, inherited an economic recession from Woodrow Wilson.  Tax cuts and spending restraint soon set the economy on a healthy footing.

Blinder and Watson attribute the recession of 1953-54 to “sharp cutbacks in defense spending” – as if it were possible or desirable to sustain World War II levels of spending.  Where Eisenhower differed from FDR and Truman was in his determination to keep the U.S. out of foreign wars, and he accomplished this feat through the exercise of extraordinary statesmanship.  (For a detailed account, consult Eisenhower: 1956 by David Nichols.)  It was hardly “luck” that Eisenhower left his Democratic successors with the basis of peace and prosperity, nor was it just “bad luck” that LBJ squandered the conditions for well-being that Eisenhower had so carefully nurtured.

When they turn to the earlier period of 1874-1947, Blinder and Watson find that Democrats do better during this period as well, but “entirely due to the economy’s excellent performance under Franklin Roosevelt.”  It seems astounding that anyone would credit FDR, whose policies perpetuated the Great Depression for eight years, with an “excellent performance.”  Again, a Democratic president (and his Democratic successor)  “benefited” from the expenditure of unsustainable stimulus and left his Republican successor with uncontrolled inflation. 

Strictly from the standpoint of GDP growth, the country benefited temporarily from war spending under FDR and Truman, but at a terrible cost.  Indeed, a remarkable fact that Binder and Watson may be said to gloss over is the overall correlation of increased war spending and Democratic presidents.  The fact is that Democratic presidents have presided over every major war since 1900: Wilson in WWI, FDR and Truman in WWII, Truman in Korea, and Johnson in Vietnam.  Less costly conflicts – Bosnia, Kosovo, and the two Gulf wars – have been split between Democratic and Republican presidents.

When Blinder and Watson consider whether war spending explains the difference in GDP growth between the two parties, they conclude that “the answer is probably no.”  It would appear that they arrive at that conclusion by stripping out the effects of Korean War spending during the Truman and first Eisenhower administrations.  That’s like estimating the cost of travelling to the moon without a rocket, since the Korean War was the second-most costly military conflict during the period studied.

All of this brings us to Obama.  No president in history has expanded spending, manipulated interest rates (with the help of a compliant Federal Reserve), and increased regulation to the extent Obama has.  Obama inherited the misguided mortgage policies that originated during the Clinton administration and were perpetuated by a Democratic Congress.  Perhaps calculating that the political cost was too great, George W. Bush failed to restrain this simulative manipulation of the housing market.

By the time Obama took office, the severe recession resulting from the housing bust had ended.  Obama inherited economic policies that were strongly pro-growth, but he has managed to suppress GDP growth to 2% during his first five and a half years in office.  That is a remarkably negative result.  This low growth rate must be attributed to the combination of overregulation and fiscal uncertainty that has prevailed under his administration.

While Obama does not fit the mold – he has managed to create practically zero economic growth while spending more than any president in our history – he is another example of a Democratic president who will leave his successor with a mess to clean up.  According to the non-partisan Congressional Budget Office, current levels of government spending are grossly unsustainable.  Following the Extended Alternative Fiscal Scenario, the more likely of two scenarios analyzed, CBO projects that federal debt will reach 199% by 2037.  The negative effects of such debt will be a permanently lower growth rate and higher interest rates.  Whoever succeeds Obama, it will necessary for him or her to restrain spending and cut regulation.  That is, unless that successor is comfortable with a much longer period of sub-par growth.

If that successor is a responsible conservative, he will apply the needed medicine, which will result in a severe but relatively brief recession.  Liberal scorekeepers will then charge yet another Republican president with substandard GDP growth.  In reality, he should be credited with the future growth that follows, whether during his own or a Democratic president’s administration.

It’s hardly luck that the economy grows faster under Democratic presidents.  It’s that Democrats, even as they inherit the effects of the greater fiscal restraint of Republicans, goose the results with spending and debt.  If Blinder and Watson had considered the extended effects of conservative fiscal policy and taken into account the long-term effects of liberal policies that take years to undo, they might have come up with a very different result.  It is conservative policies that drive economic growth, and liberal policies that undo that growth.  It may be difficult to prove that in an academic study, but every person endowed with common sense knows it to be true.  

Jeffrey Folks is the author of many books on American politics and culture, including Heartland of the Imagination (2011).