Were recent Republican presidents really responsible for recessions or is this a myth?

[OrphanSlug]

In the comments for some financial and political articles I have repeatedly heard the general idea that Republican presidents were supposedly responsible for the most recent recessions and that Democrat presidents have supposedly had to come in and clean up the mess and basically save the day.

Is there really anything to this? Can anyone here show a stronger connection than just the basic timing of events or clearly refute this claim once and for all? I wasn't an economics major and wasn't paying very close attention in detail to what was happening at the time and only vaguely remember the most recent recessions.

Of course there is more to the US economy than just the stock market. Right now I would be much more concerned about inflation and the relatively high number still unemployed than the stock prices for Amazon, Netflix, Facebook, etc.

The real myth is that any one President on their own has control over the economy, the stock market, interest rates, or really anything else along those lines. As influencers to the economy, fiscal matters is under a different branch and monetary matters is handled by the Fed (at the risk of oversimplification.)

One could argue that a President's intentions and rhetoric could be mild influencers on many things but ultimately our bubble and pop economic model is based on several underlying faults that no single President can do much about.

In a natural economy based on mixed model principles there will always be the same cycle of expansion to a peak, the recession to a trough, then repeat. The distance between those points on a timeline results in trend growth line.

The rub comes into the mix when fiscal policy is out of alignment with monetary policy in terms of what the economy needs at a given time. Add in trade policy faults and you get larger amplification of the economic cycle, or bubble and pop economics where the peak is a bubble waiting to pop and the collapse is short term and extremely painful for usually the lower income quintiles.

No Congress can magically fix all of that in a single "recovery act," but it is still an influence when changing taxation and spending to prop up aggregate demand. There is no real "saving the day" here so much as really saving additional pain from the complication of vulture economics.

The easiest way to explain why more recent recessions are more painful and recovery takes longer is one of our underlying economic faults is the wealth gap, another is concentration of larger businesses controlling more of a given market, with a close 3rd being we are largely a services oriented economic model damn near reliant on foreign trade to actually make products for our economy. A 4th is a toss up between political climate and the balance of regulation to business operations.

Any one of those things (or others) show fault and it is very difficult for Congress to address things with taxes and spending fast enough, very difficult for the Fed to deal with interest rates and toxic asset removals, and often those two are entirely out of sync anyway. Politics drives Congress, monetary and asset valuation in terms of economic expansion drives the Fed, and you get those two in the room and it is your basic shit show.

The result is Congress running deficits no matter the condition of the economy and the Fed propping up whatever economic path we are on ignoring the bubble forming.

The President in that equation... well... he can give a speech, complain to Congress, complain to the Fed, start a useless trade ware, and that is about it.

 

[uptower]

I wasn't trying to blame the presidents; so far I actually agree with you that there's only so much a president can do on their own without congress. I guess executive orders and their appointments to cabinet positions could have some impact on the economy but I wouldn't expect it to be nearly enough to directly trigger a full-blown recession by itself.

Partly due to marketing. The Republicans sell themselves as great on "the economy" (actual meaning is subjective) yet the economy more often seems to take a lasting hit during or at the end of their presidencies. If they're so great why don't they leave something good that lasts?

 

[OpportunityCost]

Great Recession

Would Gore or Kerry have pushed financial deregulation? I doubt it.

The housing bubble was not big enough to do serious damage. The financial reg changes allowed all sorts of exotic deals to go down, and ultimately a whole lot of money was riding on absolute crap

Now, the GOP liked to claim that it's really down to Democrat stuff from the prior decade in pushing home ownership. Put aside that that the GOP does exactly the same thing. Any bubble caused by that could not alone cause the Great Recession.



COVID cluster****

Trump? Well, when the president spends the first months of a pandemic telling everyone that there's nothing to worry about instead of taking immediate strong action (lockdowns, etc), and then continues to stock resistance to measures to the point where a year later, he can claim false credit for the existence of all vaccines and tell a crowd to get vaccinated, whereupon they boo him.

When that happens and a pandemic wipes out people and the economy they drive, yeah, you can blame the president if his policies made it far more likely for exactly that to happen.


Whaddabout Biden?

And that last thing is why it's wrong to blame Biden for Afghanistan. The last 20 years of failure and lies, our having set up a corrupt government the Afghans did not want, guaranteed that whenever we left, it would fall. Did he predict the near insta-collapse? No, but then neither did anyone else. And the only other thing we could have done is a troop surge to maintain the

As it is, only about 100 Americans stayed behind. As it is, the interpreters are the problem. But again, that special visa process was set up to take years and the last three presidents didn't do much of anything to speed it up (Trump shrunk numbers, and then the pandemic hit). How much could Biden do in that time? I don't know. But that one is on all of us - anyone who voted for the presidents who sat - because we didn't demand loudly enough that we get those damn people out.

Someone wants to blame Biden for that? Actually learn the damn process for once and explain yourself in detail. Say "he should have done this. He could have done it by changing X,Y,Z regs.....but that takes quite a long time because an agency can't just change a reg. They have to jump through hoops set by the Adminstrative Procedure Act. (The whole reason Trump's attempt to get rid of DACA failed was because he had his DHS ignore statutory requirements...which is because he didn't actually wanted to deport them; he wanted them here for Trumpists to squeal about)

The establishment was all in for deregulation on Glass Steagal, the opposition was the far right and far left. Gore or Kerry would not have pushed it but they would have signed it, FYI Clinton signed the big deregulation not Bush.

Second, the housing market was approximately $20 trillion. It was definitely large enough to hurt the US economy as it was twice the GDP at the time.

The housing bubble was born out of greed at every step of the process, from buyers to realtors to appraisers to politicians to rating shops to tranche sellers and buyers. Along with the firm belief that everything would be backed by the US taxpayer.

 

[highroller]

The establishment was all in for deregulation on Glass Steagal, the opposition was the far right and far left. Gore or Kerry would not have pushed it but they would have signed it, FYI Clinton signed the big deregulation not Bush.

Second, the housing market was approximately $20 trillion. It was definitely large enough to hurt the US economy as it was twice the GDP at the time.

The housing bubble was born out of greed at every step of the process, from buyers to realtors to appraisers to politicians to rating shops to tranche sellers and buyers. Along with the firm belief that everything would be backed by the US taxpayer.

And they were right.

BTW, I firmly believe the choices (bank deregulation and trade deals) made by Bill Clinton affected the outcome of the 2016 election.

 

[Indydave]

In the comments for some financial and political articles I have repeatedly heard the general idea that Republican presidents were supposedly responsible for the most recent recessions and that Democrat presidents have supposedly had to come in and clean up the mess and basically save the day.

Is there really anything to this? Can anyone here show a stronger connection than just the basic timing of events or clearly refute this claim once and for all? I wasn't an economics major and wasn't paying very close attention in detail to what was happening at the time and only vaguely remember the most recent recessions.

Of course there is more to the US economy than just the stock market. Right now I would be much more concerned about inflation and the relatively high number still unemployed than the stock prices for Amazon, Netflix, Facebook, etc.

yes ...... all the major depression/recessions in the last 100 years have been during or right after a repub or conservative administration....

 

[bomberfox]

The great recession of 2008 was due to the Bush tax cuts.

The tax cuts created a strain on the lending pool while creating a lending bubble. The same thing was happening after the Trump tax cuts of 2017.

Al Gore would not have made such tax cuts, therefor he would have had no recession.

Moreover, the Great Depression of 1929 came after eight years of Republican President.

Sure others are responsible too, but the President is responsible for what goes down on his ship.

Moreover with Al Gore would be debt free, for he would have extended the Clinton boom.

Well, at least now we know, now go vote in 2022.

The .com bubble collapse would have still been a thing to contend with.

 

[Exquisitor]

The .com bubble collapse would have still been a thing to contend with.

It wasn't a dot com bubble, it was a lending bubble, created by the wealthy getting a tax break.

 

[bomberfox]

It wasn't a dot com bubble, it was a lending bubble, created by the wealthy getting a tax break.

Yeahhhh it was a .com bubble that collapsed, the .com boom was unstable.

 

[Cordelier]

I'm more interested in cause-and-effect than playing the blame game.... and I kind of picture the economy like an internal combustion engine - you need the right mix of fuel and air to make it run efficiently. For an economy, supply and demand are that fuel and air. Get the right balance, and the economy will respond accordingly.

So, that being said, let's go back to when Reagan took over from Carter. At that point, after 40+ years of demand-side New Deal economics, the economy was running terribly. This isn't a condemnation of the New Deal - just an acknowledgement that we had gone far too long without adjusting the economy back to more supply-side policies. We needed to re-tune the engine - it was running to lean.

So Reagan came into office, and he did his supply-side Kemp-Roth tax cuts, and the economy responded in kind. He had a good mix in place, and that got him his second term. So he figures, since that worked so well, why not double down and make it permanent? So he re-writes the tax code in 1986, and really opens up the gas.... this new engine was really high-octane and it served to power the tech boom of the 1990's. It was a great time. But then we we found ourselves at the end of the 90's with too much capital chasing too few sound opportunities. It happens - capital markets get saturated.

So investments started getting frothier and frothier and we ended up with the dot com bubble roughly at the time Bush, Jr. came into office. That would have been a great time to dial back the supply-side policies... maybe choke off some the fuel and not run the engine quite so rich. But Bush decided to do the opposite - he was going to double down on Reaganomics. So the economy started getting even more frothier again... and, well, you know the result of that.

Truth be told, we still haven't dialed back on the supply-side.... the wealthy are still getting more capital than they know what to do with.... and the working classes are still getting squeezed.... and that mix is keeping demand from being where it should be for an efficiently-running economy. Just like the New Deal needed to be re-adjusted after 40+ years from demand to supply, so now does Reaganomics needed to be re-adjusted after 40+ years from supply to demand.

It's past time we re-wrote the tax code. The one we have now used to serve us well, but it has outlived it's usefulness... and that's the true root of our present economic woes. We need a new engine.

 

[Exquisitor]

Yeahhhh it was a .com bubble that collapsed, the .com boom was unstable.

Only because of the tax cut.

The same thing was happening under Trump, a lending bubble, and revenue was not keeping up with deficit.

 

[frontline grunt]

Only because of the tax cut.

The same thing was happening under Trump, a lending bubble, and revenue was not keeping up with deficit.

Sounds like a made-up story to me. The truth is that it was already an inflated dot-com bubble before Clinton left office. Bush didn't have time to do much of anything before it peaked in March 2000. Everything I have read about the 2001 tax cuts says it was already technically a recession by then and the tax cuts were basically a reaction to that to try to stimulate the economy. So there's no way the 2001 tax cuts could have caused the recession because it had already started by then.

Same thing with the Trump tax cuts, what do you mean that a supposed bubble was happening under Trump? The taxes haven't changed yet and might not anytime soon because Manchin and Sinema didn't like the original "build back better" plan so why would everything magically be alright now? Just because a Democrat is in the White House? All I see so far is that the economy weathered the COVID storm and already bounced back fairly well before Trump left office. It could easily be much worse considering it was a worldwide "pandemic" and not just isolated to the U.S. economy.

 

[Exquisitor]

Sounds like a made-up story to me. The truth is that it was already an inflated dot-com bubble before Clinton left office. Bush didn't have time to do much of anything before it peaked in March 2000. Everything I have read about the 2001 tax cuts says it was already technically a recession by then and the tax cuts were basically a reaction to that to try to stimulate the economy. So there's no way the 2001 tax cuts could have caused the recession because it had already started by then.

Same thing with the Trump tax cuts, what do you mean that a supposed bubble was happening under Trump? The taxes haven't changed yet and might not anytime soon because Manchin and Sinema didn't like the original "build back better" plan so why would everything magically be alright now? Just because a Democrat is in the White House? All I see so far is that the economy weathered the COVID storm and already bounced back fairly well before Trump left office. It could easily be much worse considering it was a worldwide "pandemic" and not just isolated to the U.S. economy.

Sure Bush had time, he passed his tax cut and the beneficiaries all put their money into sub prime lending schemes.

Fantasy, delusion, lie.

 

[frontline grunt]

Sure Bush had time, he passed his tax cut and the beneficiaries all put their money into sub prime lending schemes.

Fantasy, delusion, lie.

I was talking about the dot-com crash (2000-2002), not the Great Recession (2007-2009). It sounded like you were trying to say Bush tax cuts caused the dot-com crash as if it would have just been steady growth if Gore had been elected instead. But there is no way Bush tax cuts could have caused the crash because it had already started by then.

The tax cut explanation for the Great Recession also sounds way too simplistic and unrealistic to believe based on what I have read about it so far like it was mostly just political hype spread by Hillary Clinton and others playing the blame game to try to pin it all on Bush after the fact. Are there any good sources that aren't hyper-partisan propaganda to show why we should believe this in depth?

 

[Exquisitor]

I was talking about the dot-com crash (2000-2002), not the Great Recession (2007-2009). It sounded like you were trying to say Bush tax cuts caused the dot-com crash as if it would have just been steady growth if Gore had been elected instead. But there is no way Bush tax cuts could have caused the crash because it had already started by then.

The tax cut explanation for the Great Recession also sounds way too simplistic and unrealistic to believe based on what I have read about it so far like it was mostly just political hype spread by Hillary Clinton and others playing the blame game to try to pin it all on Bush after the fact. Are there any good sources that aren't hyper-partisan to show why we should believe this in depth?

No, the dot com crash was just a market adjustment, no more than 1987.

Sorry, this is the second time, I've missed the issue lately, must be something in the stars.

Simple, it was simple, give a bunch of rich people money and and they go crashing through the fence like a bull, I would rather see "Baboons running through town with it in their fists."

Sources? Sorry, these are my observations.

 

[ataraxia]

The OP does what many on this site does....

Blames the man at the top for what the congressional critters are actually doing

The president has two choices

Sign a bill, or VETO a bill

That is it.....he can only sign or VETO bills that are written in the house, and approved in the senate

To think that a R or a D in front of a president signifies whether or not they were to blame for significant events during their reign is just asinine

They might be blamed for wars, police actions, and the such....but legislation....that is on the IDIOTS we all elect to the two houses in DC

The pervasive economic problem with Republican administrations is that they always promise to cut taxes and spending to get elected. Once elected though, they deliver on the first but not the second. And that's why the deficit goes through the roof every time with them in office. At what point is the American public going to figure out that trick and stop falling for it?

 

[uptower]

 

[LostInSeattle]

It's complicated. Capitalist economies experience business cycles, regular expansions and contractions of economic activity. It's how markets self-regulate themselves, and Presidents have little to no control over that. However, Presidents do at least some control over regulatory, tax and trade policies. Clinton was as responsible for 2008 as Bush was, since he and Rubin were the ones who eliminated Glass-Steagall, stupidly removing the separation between commercial and investment banking that had worked well for so many years. Bush failed to impose reasonable oversight on bank investments and to require banks to maintain higher cash reserves.

What financial regulation should do is to dampen the economic peaks and soften the economic lows of the business cycle, so that recessions are smaller and shorter. It's not ****ing rocket science, but when the financial sector has politicians in their pocket, imposing sensible regulation becomes very difficult. We should have let a few more banks fail in 2008, to put the fear of God into the financial world to better manage themselves. "Too big to fail" was a tremendous error. Unfortunately, the SEC is woefully underfunded and understaffed. All the sketchy as shit financial instruments such as credit default swaps should have been inspected and exposed under a microscope, instead of operating unchecked outside public knowledge.

2008 was also a result of the great inequity of distribution of money. Lots of people scraping by and a relative few with tons of cash looking for somewhere to park it. Hence, mortgage-backed securities went through the roof. Small bubbles are unavoidable. Big ones are.

 

[Indydave]

It's complicated. Capitalist economies experience business cycles, regular expansions and contractions of economic activity. It's how markets self-regulate themselves, and Presidents have little to no control over that. However, Presidents do at least some control over regulatory, tax and trade policies. Clinton was as responsible for 2008 as Bush was, since he and Rubin were the ones who eliminated Glass-Steagall, stupidly removing the separation between commercial and investment banking that had worked well for so many years. Bush failed to impose reasonable oversight on bank investments and to require banks to maintain higher cash reserves.

What financial regulation should do is to dampen the economic peaks and soften the economic lows of the business cycle, so that recessions are smaller and shorter. It's not ****ing rocket science, but when the financial sector has politicians in their pocket, imposing sensible regulation becomes very difficult. We should have let a few more banks fail in 2008, to put the fear of God into the financial world to better manage themselves. "Too big to fail" was a tremendous error. Unfortunately, the SEC is woefully underfunded and understaffed. All the sketchy as shit financial instruments such as credit default swaps should have been inspected and exposed under a microscope, instead of operating unchecked outside public knowledge.

2008 was also a result of the great inequity of distribution of money. Lots of people scraping by and a relative few with tons of cash looking for somewhere to park it. Hence, mortgage-backed securities went through the roof. Small bubbles are unavoidable. Big ones are.

yup......and the bottom line is recessions and depressions are the mother of revolutions......we can agree or disagree on the pros and cons of our capitalism but if millions of people are economically pssd off they will vote for the candidate who tells them what they want to hear.....'too big too fail' was the fear of God that Bush experienced when he realized the specter of making the wrong/right decision could be chaos

 

[highroller]

The OP does what many on this site does....

Blames the man at the top for what the congressional critters are actually doing

The president has two choices

Sign a bill, or VETO a bill

That is it.....he can only sign or VETO bills that are written in the house, and approved in the senate

To think that a R or a D in front of a president signifies whether or not they were to blame for significant events during their reign is just asinine

They might be blamed for wars, police actions, and the such....but legislation....that is on the IDIOTS we all elect to the two houses in DC

The executive at the top sets the tone. Example: Trump dismantled the pandemic response team because he saw no use for it.

 

[highroller]

In the comments for some financial and political articles I have repeatedly heard the general idea that Republican presidents were supposedly responsible for the most recent recessions and that Democrat presidents have supposedly had to come in and clean up the mess and basically save the day.

Is there really anything to this? Can anyone here show a stronger connection than just the basic timing of events or clearly refute this claim once and for all? I wasn't an economics major and wasn't paying very close attention in detail to what was happening at the time and only vaguely remember the most recent recessions.

Of course there is more to the US economy than just the stock market. Right now I would be much more concerned about inflation and the relatively high number still unemployed than the stock prices for Amazon, Netflix, Facebook, etc.

If they are not, it is one hell of a coincidence that these things keep happening under them

 

[Alexios Makaris]

The influence a President has, particularly in a single term, on the economy tends to be dramatically overrated. When the economy is good, the credit the President deserves for that is vastly exaggerated, and when the economy is bad, the blame the President receives tends to be vastly exaggerated. Generally speaking, this breaks down along partisan lines, Democrats will point to growth periods under Democratic Presidents as clearly because of the Democratic President's wise rule, and Republicans will do the same, and vice versa, a Democrat will quickly blame the bad economy on a sitting Republican President while ignoring one under a sitting Democrat, and Republicans will do the same.

Humans like simple systems, we like the idea of if a President is "good" he makes the economy good. If the President is "bad" he makes the economy good. If we're Democrats we want our Presidents to be good, and if Republicans we want the same. The reality is the economy is complex and also tied into a large global economy. None of this is to say the President has no influence on the economy, but often times it's about how they react to a broader economic situation they did not create/control. Another thing that confuses things is there is a multi-year process during which many Federal regulations get "phased in", same for many pieces of legislation (although some do take effect instantly, many don't.) This means sometimes a President may be feeling the consequences of policies a President 4 or 5 years ago implemented, for good or bad.

One of the best / classic examples is the 1990s boom and then the early 2000s bust. The 1990s boom was driven almost entirely by entrepreneurship in the technology sector, the explosion of the personal computer, software for the personal computer, the Internet. This drove innovation after innovation and explosive growth. Businessmen in that sector, around the globe, drove this boom--not Bill Clinton, who frequently in American political discourse was given credit for it. As the 90s ended, we had the "Dot Com bust" and a period of recession. So whose fault was that? Was it Clinton because he had overseen the boom? Bush because he was the new President? The reality is--no one. It was a classic business cycle--a boom led to overvaluations, speculative investing, and reckless behavior as investors drunk on gains assumed the good times would never end. Then they did and people panicked, and things crashed down. That is frankly a normal, and actually healthy, economic cycle. Neither Clinton or Bush deserve much credit or blame for any part of it.

 

[TurtleDude]

Recover? Clinton had it booming.

He lucked into the dot.com bubble and corporate belt-tightening under the Late President Bush helped him. The economy soared DESPITE his tax hikes, not because of them.

 

[Jason Warfield]

In the comments for some financial and political articles I have repeatedly heard the general idea that Republican presidents were supposedly responsible for the most recent recessions and that Democrat presidents have supposedly had to come in and clean up the mess and basically save the day.

Is there really anything to this? Can anyone here show a stronger connection than just the basic timing of events or clearly refute this claim once and for all? I wasn't an economics major and wasn't paying very close attention in detail to what was happening at the time and only vaguely remember the most recent recessions.

Of course there is more to the US economy than just the stock market. Right now I would be much more concerned about inflation and the relatively high number still unemployed than the stock prices for Amazon, Netflix, Facebook, etc.

Largely speaking, presidents on their own hook don't control the market and economy...what they CAN influence is the impact (note my word choice).

When the economy and markets start to do poorly, Republican presidents tend to not deal with the problems in any truly meaningful way that help the nation as a whole, but usually the rich as it is their belief that if you help the rich out, you help everyone out...and that has yet to work for the nation, but certainly for the rich and corporations.

Democrat presidents tend to look at the whole picture and spread out the pain somewhat and make recovery plans that affect all levels of the nation to one degree or another and that does tend to work. Not all the time, but more often than not. Actually, the Democrats follow the same game plan as the Republicans, the only true difference is that the Republicans only focus on what element to spur the economy whereas the Democrats try to involve as many as possible.

But to be clear: neither side will ever have control of the economy and markets...good or bad. But the Democrats tend to mitigate negative effects better and spur the economy into a better directions in the hopes the economy will restart itself.

It's not that the Republicans don't want to save the day (well, until Trump became president and destroyed the establishment conservatives), they just don't do a good job of it.

 

[bomberfox]

Only because of the tax cut.

The same thing was happening under Trump, a lending bubble, and revenue was not keeping up with deficit.

It would have busted with or without a tax cut. The boom was unsustainable.

 

[Hughinn]

Coming behind a modern democrat party administration is sort of like coming into an amusement park after a drunken mob has thoroughly trashed the place.

Feces in the streets, crime soaring, poverty spreading, drugs and homelessness rampant. Just see any place they've had sole control for any lengthy period of time for reference.

Foreign policy wise, they're children will be stealing from the neighbors, pisssing on other people's lawns and throwing thier trash in the sidewalk. Knocking up the poorer neighborhood girls...etc. See hunter biden and Paul pelosi for reference.

There's always bills to be paid, trash to take out and cleaning to be done after the spoiled children thrown thier big party.

That's what anybody coming behind a democrat party administration will be facing. So of course