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Tax-and-spend Liberal My Ass

This is a continuation of my earlier posts on economic performance of democratic and republican administrations. My earlier posts include:
Politics of the Federal Minimum Wage

Democrats Have Kept Unemployment Low

Democrats care about poor people

Truth About Economic Performance of Political Parties

I like to think I have shed light on some facts and debunked some conventional wisdom. In this post, I will attempt to examine the tax-and-spend liberal label put on democrats.

Republicans often try to label democrats as tax-and-spend liberals who are soft on national security. While the latter point is based on anecdotal evidence, the earlier is amenable to empirical examination. So, I set out to prove or disprove the notion that democrats often tax and spend in a way that does not yield economic growth.

The implication of tax-and-spend liberal is one that puts excessive tax burden on its population and finds inefficient (think socialistic) ways of spending that tax revenue. If the tax revenue is not spent in ways that promote economic growth the tax revenue base would ultimately shrink and lead to large government debt. With that understanding, I compiled some found some useful data I would play with to teach certain conclusions. The all-knowing Wikipedia was obviously my first source. Under "National Debt by US Presidential Terms", I found data on US spending, debt and GDP growth from 1978 - 2008.

Geopolitical circumstances, natural disasters and control of congress not withstanding, it would be fair to compare the performance of presidents in terms of how they managed the US economy. Here is a table to get us started.


Average Revenue
(% of GDP)
Average Spending
(% of GDP)
Average Annual Debt
(% of GDP)
Average Annual
GDP Growth
Democrat
19.52
20.08
0.67
3.03
Republican
17.79
21.43
3.64
2.60

The questions I want answer in particular are:

1) Taxation - Do democratic presidents tax more heavily than their republican counterparts?

The answer is yes. Since 1978, tax revenue as a % of GDP in 12 years of democratic presidents is 19.52%, compared to 17.79% under 18 years of republican presidents. Both the revenue and GDP are adjusted for inflation in 2000 dollars.

2) Spending - Do democratic spend more than their republican counterparts?

No, they don't! Despite collecting less tax revenue, the republicans spending is 21.43% of GDP, in contrast to 20.08% for democrats. This is a surprising finding because one would think the party that collects more tax revenue would have a higher spending, but the opposite is true. Unfortunately, this means republicans pile the sizable difference between their tax revenue and spending on the federal debt.

3) Debt - Do democratic presidents put the country in debt more than their republican counterparts?

Absolutely not. Unbelievably, debt as a % of GDP averages 3.64% under republican presidents in contrast to 0.67% under democratic presidents. This is largely because tax revenues are low and spending is high during republican administrations. On the other hand, democratic administrations keep fairly balanced budgets.

In fact, I went ahead and plotted some data on the annual federal budget deficit since 1978 and it is pretty obvious republicans have singlehandedly ballooned the federal budget deficit.

4) Economic Growth - Do democratic presidents' tax policies hind economic growth compared to their republican analogs?

Certainly not. Average annual GDP growth under democratic presidents has been 3.03%. With a republican president ruling, it is only 2.64%.

===

My quick and dirty study finds that the notion of a tax-and-spend liberal is a giant myth. Economic and tax policies under democratic presidents have been much more responsible than during republican administrations.

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