Thanks for your comments. You make some good points. Let me address them one by one below:

1. These are not straw-man arguments. A straw-man is an argument which I myself make to contradict my own theory, in order to tear them down in support/defense of that theory. I didn’t pick the arguments: these are the common arguments made by an endless stream of Republican politicians against Democratic ones. Nor do I defend my own hypothesis; my intention is only to refute the Republican hypothesis the Democrats are bad for business. If you find these arguments to be simplistic and unconvincing (which I assume you do as you call them “straw-men”) then we are in agreement. They ARE simplistic and unconvincing, as well as untrue;

2. “The Clinton years were the best years so far in my lifetime but with the advent of the PC and the internet the decade should have been much better.” The first half of the sentence is perfectly true. The Clinton Administration did benefit from the crest of the wave of PC and internet innovation, which really began in the early 1980’s. This “digital revolution” or “Third Industrial Revolution” as I call it (see my article “The World Has Moved On” for more on this topic) enabled the U.S. economy to enjoy productivity gains not seen since the previous industrial revolution. Those gains have played themselves out, which is one of the reasons that growth was much flatter in the 2000’s. The second half of the sentence is purely speculative. I tend to think that a GOP president would have made no difference to the overall economic performance of the country – at most, it would have led to larger deficits and more concentration of wealth. But again, speculation leads us nowhere;

3. “I wonder how the economy and jobs relates to government spending. I would bet that government spending is directly proportional to the economy.” No doubt about it! The definition of gross domestic product includes government consumption; so yes, government consumption leads directly to increased GDP.

GDP = Private consumption + Government consumption + Fixed Capital Investment + (Exports – Imports)

So long as the government is willing to finance its consumption with deficits and borrowing, rather than with tax increases, GDP will go up by the same amount as consumption.

The only clarification I’d make is that government spending and government consumption are not the same. The government could spend on something which doesn’t contribute to GDP, for example, when it pays the interest on the national debt, that spending does not contribute to GDP directly;

4. “Reagan achieved a high GDP considering his first years we were in a severe recession.” Yes, that’s true. Reagan did achieve high GDP growth, and unemployment did go down. I might clarify that he did it by running huge deficits, taking advantage of the equation I just went over. I might also add that Reagan ran such big deficits that he was forced to raise taxes twice in his second term and H.W. Bush again during his term, in order to get the deficit under control. That is hardly in line with GOP economic orthodoxy. I might also mention that the economy was already starting to recover during the election year, but too late for it to benefit Carter. Unemployment was already falling before Reagan had even taken the oath of office.

I’m not knocking Reagan with this, I’m merely explaining that Reagan used very Keynesian means to get the US economy back on track; the very same tactics that Republican legislators have denied to President Obama since 2010. Of course, the situation was very, very different back then, which is why historical examples are dangerous.

5. “There are many factors that play into the economy. From my experience, the economy is good when the private sector creates jobs and invents good products.” You’ll get no argument from me there. I agree completely.

6. “The only way a president can affect the economy is through government spending or tax policy.” That’s not true at all. For one thing, government spending and fiscal policy are both in the hands of Congress, not the President. Of course the Administration often has a leading role in crafting these; but often enough, Congress does something different. So even when I said previously “Reagan ran big deficits” what I really mean is that “Reagan proposed to run big deficits and Congress agreed to it.”

What the President can control directly, without Congressional approval or oversight, is the implementation and enforcement of regulations; like interstate commerce regulations, labor regulations, environmental regulations, etc. Not financial regulations, at least not directly. He (or she) can choose to be very strict or very lax in enforcing these, which has a certain amount of impact on the business climate (but not as much as one would think). The President can also choose to use the Justice Dept. more or less aggressively to focus on white collar crime and corruption: the whole LIBOR scandal was going on for years and had serious economic costs attached to it. Think Enron also, as an example.

Finally to say “government spending” only, referring I assume to the total amount of the budget, is misleading. WHERE the money is spent is far more important than the TOTAL amount spent. $100 spent on federal salaries is not the same as $100 spent on defense, or $100 spent on roads and bridges. In general, when the President submits the budget, the amounts spent on discretionary items has a major impact on the economy and internal improvements (like transportation) have traditionally generated more than $1 in growth for every $1 invested, which makes it a good deal. I would argue that the same goes for investments in education, especially as the economy has become so much more focused on information and innovation products;

7. “The 90s the economy was mostly driven by the private sector and had zero to do with Clinton.” I both agree and disagree. The economy is ALWAYS mostly driven by the private sector, in every decade you care to look at: that’s the whole basis for my argument. Presidents have only a limited impact on the economy – unless they do something stupid like start unnecessary wars or help create financial bubbles. Presidents CAN make a difference by “priming the pump” which is kick-starting the economy through government spending until the private sector recovers confidence and starts growing again. That is what Reagan did (with Congressional approval). To say Clinton did “zero” is ungenerous. Clinton ran small fiscal deficits and then small surpluses at the end of this second term, which benefited the economy; he was not “anti-business” and didn’t ask for any new or onerous regulations – if anything, he helped screw up the financial system when he signed Gramm-Leach-Bliley and finished of Glass-Steagall once and for all;

8. “Reagan created jobs through the private sector by his tax policies.” I would disagree with that statement completely. Taxation has almost no direct correlation with job creation at the levels we are discussing. The famous Laffer Curve does exist, but at marginal rates well above 50%. There is enough economic literature on this for me not to go into more detail. Reagan helped create jobs by increased government spending, period. I would add, to his credit, that Reagan changed the tone of the country to one of optimism, which also helped tremendously. But it wasn’t because of lower taxes (the economy still grew and jobs were still created when he was forced to raise taxes, when H.W. Bush raised taxes, and when Clinton raised taxes to balance the budget).

9. “I go by personal experiences and my life was better in the 80s, 90s and the Bush years.” The 1980’s and 1990’s were precisely the years of the digital revolution, when the U.S. outpaced all other advanced economies through early adoption of these technologies. It was also the last years of the Cold War, and before competition from the Emerging Markets really picked up. I would disagree about the “good times” of the W. Bush years – I remember them as being extremely worrying from an economic perspective, with only 2 decent years out of 8 and none that were comparable to the 1990’s.

As for our personal anecdotes, I don’t think they are really valid for extrapolation to the whole country. I’m sure there were plenty of people that had a rotten time, even in the “Golden ‘90’s”;

10. “You use the excuse Obama had poor economic growth because of the recession.” Incorrect, I don’t use the recession as an excuse, but I do say that you can’t directly compare a recessionary period with a non-recessionary period. “Reagan had a very bad recession with interest rates of 15%, double digit inflation and unemployment of well over 10%. He seems to have good GDP numbers. Maybe Obama needs to spend less and lower business taxes.” Reagan also spent a lot more than Obama did to get the economy back on track. If you don’t believe me, look up the numbers, adjusted for inflation. Don’t look only at the total deficit numbers, look at the actual difference in outlays and receipts. Obama’s deficit has a much higher proportion coming from decreases in receipts rather than increases in outlays; which is the opposite of Reagan. If Obama had spent like Reagan, we would have had a bigger deficit and bigger debt, but shorter recession. The only stimulus packages Obama was able to pass was the big one in 2009 and a much, much smaller one in 2010 (an extension of the 2009 stimulus actually).

After that, Republicans in the House have made sure that Obama has not been able to follow in Reagan’s footsteps and spend his way out of the recession.

Thanks again for writing on the site, Dale. I hope you’ll read some more. I look forward to hearing from you again.